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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 QUARTER ENDED DECEMBER 31, 2000
OR
[ ] Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from to
Commission File No. 0-15474
AMERALIA, INC.
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(Exact name of Company as specified in its charter)
A Utah Corporation
I.R.S. Employer Identification No. 87-0403973
818 TAUGHENBAUGH BLVD, RIFLE, CO 81650
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(Address of Principal Executive Offices)
(970) 625 9134
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(Company's telephone number, including area code)
311 Raleigh Road, Kenilworth, IL 60043
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(Address of former Principal Executive Offices)
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.
As of February 1, 2001 the number of shares outstanding of the company's $.01
par value common stock was 11,857,290 and the number of shares of $.05 par value
preference stock was 82.
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AMERALIA, INC.
INDEX TO FORM 10-Q
PAGE
PART I: FINANCIAL INFORMATION
Item 1: Financial Statements
Balance Sheets - December 31, 2000 and June 30, 2000 1
Statements of Operations for the Quarters and Half Years
ending December 31, 2000 & 1999 and from the beginning of
Development Stage on July 1, 1992 to December 31, 2000 3
Statements of Cash Flows for the Quarters and Half Years ending
December 31, 2000 & 1999 and from the beginning of Development
Stage on July 1, 1992 to December 31, 2000 4
Notes to Financial Statements 6
Item 2: Management's Discussion and Analysis of Financial Condition
and Results of Operations. 7
PART II: OTHER INFORMATION
Item 2: Changes in Securities 10
SIGNATURE 10
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AMERALIA INC
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
December 31 June 30
2000 2000
----------- -----------
(unaudited)
ASSETS
Current Assets:
Cash at bank $ 154,058 $ 4,980
Related party receivables 60,046 57,071
Prepaid expenses 74,667 30,152
Interest receivable 2,713 2,713
----------- -----------
Total Current Assets: 291,484 94,916
Fixed Assets 26,545 24,524
Other Assets:
Lease acquisition and development costs 3,633,844 3,565,267
Plant construction in progress 7,689,202 6,994,642
Deferred financing costs 970,773 392,020
Note receivable - related party 20,000 20,000
Deposits & bonds 43,513 650
----------- -----------
Total Other Assets: 12,357,332 10,972,579
----------- -----------
Total Assets: $12,675,361 $11,092,019
=========== ===========
(Continued over page)
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AMERALIA INC
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS (CONTINUED)
December 31 June 30
2000 2000
------------ ------------
(Unaudited)
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 267,293 $ 727,812
Royalties payable 391,667 354,167
Bank overdraft 16,116 38,356
Accrued expenses 17,938 91,862
Due to related parties 100,562 131,762
Guarantee fees payable 1,350,000 520,000
Notes payable 8,125,583 5,504,000
Interest payable 67,668 110,815
------------ ------------
Total current liabilities 10,336,827 7,478,774
------------ ------------
Commitments and contingent liabilities -- --
SHAREHOLDERS' EQUITY
Preferred stock, $0.05 par value; 1,000,000 authorized; 82 issued at
December 31, 2000 and 2,986 at June 30, 2000: 4 149
Common stock, $.01 par value; 100,000,000 shares authorized;
Issued at Dec 31, 2000: 11,857,290 and at June 30, 2000: 8,765,699: 118,573 87,657
Additional paid in capital 19,243,867 19,068,338
Prepaid construction costs (1,300,000) (1,300,000)
Accumulated deficit (15,723,910) (14,242,899)
------------ ------------
Total Shareholders' Equity: 2,338,534 3,613,245
------------ ------------
Total Liabilities & Shareholders' Equity: $ 12,675,361 $ 11,092,019
============ ============
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AMERALIA INC
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(UNAUDITED)
From the
Beginning of
Development
Qtr Qtr Half yr Half yr Stage on
ending ending ending ending Jul 1, 1992 to
Dec 31 Dec 31 Dec 31 Dec 31 Dec 31
2000 1999 2000 1999 2000
------------ ------------ ------------ ------------ --------------
REVENUES $ -- $ -- $ -- $ -- $ --
EXPENSES
General & administrative 321,189 442,084 760,412 1,028,057 8,350,241
Depreciation & amortization 3,500 2,517 7,000 5,180 88,195
------------ ------------ ------------ ------------ ------------
Total Expenses: 324,689 444,601 767,412 1,033,237 8,438,436
------------ ------------ ------------ ------------ ------------
(LOSS) FROM OPERATIONS (324,689) (444,601) (767,412) (1,033,237) (8,438,436)
------------ ------------ ------------ ------------ ------------
OTHER INCOME (EXPENSE)
Other income -- -- -- -- 29
Investment income -- -- -- -- 89,760
Other financing costs (157,633) (130,833) (302,031) (130,833) (737,533)
Gain on settlement of debt -- -- -- -- 53,800
Interest income 629 23,019 5,452 37,822 324,859
Interest expense (184,271) (93,182) (342,370) (107,880) (1,336,953)
Foreign currency gain (loss) -- -- -- -- (63,572)
------------ ------------ ------------ ------------ ------------
Total other income (expense) (341,275) (200,996) (638,949) (200,891) (1,669,610)
------------ ------------ ------------ ------------ ------------
NET LOSS BEFORE
INCOME TAX EXPENSE (665,964) (645,597) (1,406,361) (1,234,128) (10,108,046)
------------ ------------ ------------ ------------ ------------
Income tax expense -- -- -- -- --
------------ ------------ ------------ ------------ ------------
NET LOSS $ (665,964) $ (645,597) $ (1,406,361) $ (1,234,128) $(10,108,046)
============ ============ ============ ============ ============
BASIC NET LOSS PER SHARE $ (0.065) $ (0.080) $ (0.144) $ (0.157)
WEIGHTED AVERAGE
SHARES OUTSTANDING ('000) 10,310 8,059 9,800 7,860
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AMERALIA INC
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
From the
Beginning of
Development
Qtr Qtr Half yr Half yr Stage on
ending ending ending ending Jul 1, 1992 to
Dec 31 Dec 31 Dec 31 Dec 31 Dec 31
2000 1999 2000 1999 2000
------------ ------------ ------------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (665,964) $ (645,597) $ (1,406,361) $ (1,234,128) $(10,108,046)
Adjustments to reconcile net loss to
net cash used by operating activities:
Bad debt -- -- -- -- 624,798
Stock issued for services rendered 57,000 -- 57,000 -- 122,000
Depreciation & amortization 3,500 2,517 7,000 5,180 97,773
Exchange (gain) loss -- -- -- -- (168,556)
Gain on settlement of debt -- -- -- -- (53,800)
Change in Operating Assets and Liabilities:
(Increase) Decrease in:
Prepayments -- -- -- -- 18,000
Notes receivable -- -- -- -- 1,300,497
Restricted cash -- 4,123,830 -- 900,442 --
Accounts & interest receivable -- (409) -- (846) (2,048)
Related parties receivables (924) (2,500) (2,975) (45,000) (60,046)
Prepaid expenses 29,500 3,816 (44,515) (45,434) (74,667)
Deposits & bonds (42,863) -- (42,863) -- (43,513)
Other assets (99,250) (368,206) (578,753) (428,706) (910,773)
Increase (decrease) in:
Bank overdraft 16,116 -- (22,240) (5,702) 16,116
Due to related parties 16,750 10,200 (31,200) 23,804 19,260
Accounts payable and royalties payable (147,051) 419,794 (423,019) 474,742 650,156
Accrued expenses 5,604 (66,749) 726 (73,827) 24,205
Guarantee fees payable 251,100 450,000 830,000 450,000 1,350,000
Interest payable 51,706 4,778 (43,147) 19,430 (51,398)
------------ ------------ ------------ ------------ ------------
Cash flows from operating activities (524,776) 3,931,474 (1,700,347) 39,955 (7,250,042)
CASH FLOWS FROM INVESTING ACTIVITIES
Lease exploration & development expenditure (68,577) -- (68,577) -- (2,788,447)
Plant construction (44,560) (4,453,650) (694,560) (5,442,335) (7,689,202)
Purchase of property & equipment (5,361) -- (9,021) (2,862) (112,097)
Cash paid on note receivable - related -- 5,000 -- 5,000 (25,000)
Liquidation of RIT investment -- -- -- -- 418,346
Cash received from notes receivable -- -- -- -- (139,853)
------------ ------------ ------------ ------------ ------------
Cash flows from investing activities $ (118,498) $ (4,448,650) $ (772,158) $ (5,440,197) $(10,336,253)
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AMERALIA INC
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
From the
Beginning of
Development
Qtr Qtr Half yr Half yr Stage on
ending ending ending ending Jul 1, 1992 to
Dec 31 Dec 31 Dec 31 Dec 31 Dec 31
2000 1999 2000 1999 2000
------------ ------------ ------------ ------------ --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash received from issuance of stock $ -- $ -- $ -- $ 625,000 $ 9,166,596
Additional capital contributed -- -- -- -- 307,372
Cash received from notes 500,000 300,000 2,621,583 4,500,000 8,878,805
Payments on notes -- -- -- (612,658)
------------ ------------ ------------ ------------ ------------
Cash flows from financing activities 500,000 300,000 2,621,583 5,125,000 17,740,115
NET INCREASE (DECREASE) IN CASH (143,274) (217,176) 149,078 (275,242) 153,820
Cash and cash equivalents at beginning of period 297,332 254,038 4,980 312,104 238
------------ ------------ ------------ ------------ ------------
Cash and cash equivalents at end of period $ 154,058 $ 36,862 $ 154,058 $ 36,862 $ 154,058
============ ============ ============ ============ ============
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
Income taxes $ -- $ -- $ -- $ -- $ --
Interest $ 132,565 $ 88,404 $ 385,517 $ 88,450 $ 912,900
NON CASH FINANCING ACTIVITIES
Common stock issued for payment of obligations $ -- $ -- $ -- $ -- $ 668,781
Common stock issued for services rendered $ 57,000 $ -- $ 57,000 $ -- $ 122,000
Payment of preferred stock dividends
through the issuance of additional
common and preferred stock $ 149,300 $ 74,650 $ 149,300 $ 149,300 $ 1,592,713
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AMERALIA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
As at December 31 and June 30, 2000 and
for the Periods ended December 31, 2000 and 1999
NOTE 1. MANAGEMENT ADJUSTMENTS
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. These financial statements should be
read in conjunction with AmerAlia's June 30, 2000 Annual Report on Form 10-K.
The results of operations for the periods ended December 31, 2000 and 1999 are
not necessarily indicative of operating results for the full years.
The Financial Statements and other information furnished herein reflect
all adjustments which are, in the opinion of AmerAlia's management, necessary
for a fair presentation of the results of the interim periods covered by this
report.
In October 2000, AmerAlia formed a wholly owned subsidiary, Natural
Soda, Inc., to hold AmerAlia's soda assets and conduct its soda business. The
financial statements present the consolidated financial statements of AmerAlia,
Inc. and its subsidiary, Natural Soda, Inc..
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AMERALIA, INC.
(A DEVELOPMENT STAGE COMPANY)
Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Forward Looking Statements Disclaimer pursuant to 1933 & 1934 Securities Acts
AmerAlia's future conduct depends on a number of factors beyond our
control, so we cannot offer any assurance we will be able to conduct AmerAlia's
operations as we contemplate in this report. This report contains various
statements using the terms "may", "expects to", and other terms denoting future
possibilities. They are forward-looking statements. We cannot guarantee the
accuracy of these statements as they are subject to a variety of risks beyond
AmerAlia's ability to predict or control. These risks may cause actual results
to differ materially from the projections or estimates contained in this report.
These risks include, but are not limited to, the possibility the described
operations, reserves, exploration or production activities will not be completed
on economic terms. Undertaking exploration, development and mining of mineral
properties, significant construction projects, and the manufacture and marketing
of chemical products is risky. Many of these risks are described in the
Company's filing on Form 10-K for the fiscal year ended June 30, 2000 and it is
important each person reviewing this report understands the significant risks
accompanying the establishment of AmerAlia's proposed operations.
Liquidity and Capital Resources
AmerAlia does not generate any operating income and, therefore,
continues to rely on raising capital from its existing shareholders and from
private offerings of its securities to finance its operations. During the
December quarter, AmerAlia borrowed a further $500,000 in addition to the
$2,121,583 it had borrowed during the September quarter from a commercial bank,
increasing its bank debt at December 31 to $7,825,583. This loan is guaranteed
by AmerAlia's principal shareholder as explained in our current filing on Form
10K at Item 13(a) - "Certain Relationships and Related Party Transactions". In
September, as set forth in the Form 10-K, we renegotiated and extended the term
of the total borrowing with the bank and a new guarantee fee payable to the Mars
Trust. On December 1, 2000 we again renegotiated this guarantee and increased
the associated bank loan facility, as explained in our filing on Form 8K. The
total guarantee fee payable has now increased to $1,350,000 and will be met
through the issue of a number of shares to be determined by future events. A
full discussion of the nature of this fee and the provision for its payment is
set forth in our Form 8K filing. In January 2001, we borrowed another $500,000
increasing the total borrowing from this bank to $8,321,583. We can borrow a
further $600,000 subject to the conditions of the guarantee agreement.
During the half year to December 31, 2000 we used the funds to invest
$772,158 in construction and permitting activities, reduce net accounts and
royalties payable by $423,019, interest payable by $43,147, reduce the bank
overdraft by $22,240 and liabilities to related parties by $31,200. We applied
$42,863 to bonds and $44,515 to prepaid expenses. We also funded the cash
operating loss of $504,831 for the December quarter ($1,097,330 for the half
year).
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After approximately two years of permitting process, including a public
review, the US Environmental Protection Agency has issued its final Area Permit.
This permit allows full commercial development of our sodium bicarbonate
resource without limiting the number of production wells or the production rate.
Over the last twelve months, we installed five water monitoring wells and have
collected baseline water data. The Colorado permitting agency, the Division of
Minerals and Geology, requires the collection of five quarterly periods of data
which we will complete in February 2001. This clears the way to begin solution
mining activities. Like the EPA permit, we are not limited in our production
rates.
While the US Department of Interior has previously authorised the
recovery of nahcolite from our resource at 50,000 tons per year, we are now
applying for permits to extend this permitted production to allow a seamless
transition to a larger scale project consistent with our business plan and
financial forecasts. We will be able to commence on site construction and
nahcolite recovery when we have obtained approximately $32,000,000 in take out
financing for the construction, completed the water monitoring process and
posted the land reclamation bonds. We have instructed US Filter to proceed with
further detailed engineering of the proposed plant. This work, currently
underway, will nearly complete the engineering required to complete our plant
and facilities. Significant equipment fabrication has been completed and
approximately 75% of all required plant equipment has been fabricated or
ordered.
AmerAlia plans to transport fabricated items for the plant to the site
and commence construction as soon as winter weather abates, we have secured
approvals for the necessary take out financing and engineering is complete. US
Filter has agreed to provide construction financing when we have long term
financing in place to replace the construction finance upon completion of
construction and startup. The project has been independently reviewed to the
satisfaction of R.W. Beck, consulting engineers. We are continuing negotiations
with several lending institutions to determine the availability and terms of
this take out financing.
Our cash flow estimates indicate that more than $1.5 million will be
required to meet our obligations through the balance of the current fiscal year,
and significantly more financing would be required for AmerAlia to commence any
further activities on its Rock School lease. AmerAlia has historically derived
its liquidity from raising new equity investment or by issuing notes payable.
AmerAlia's ability to ensure its long-term survival continues to be dependent
upon AmerAlia constructing the proposed plant and securing financing for its
construction, estimated to be up to $50 million.
AmerAlia does not favor issuing its equity at the current low price of
its common stock, but may be required to do so. Any equity issued at current
prices will significantly dilute our existing shareholders. Until AmerAlia
obtains permanent financing for its plant construction, it is not likely that
AmerAlia will be able to obtain other debt financing without one or more of its
shareholders agreeing to be personally responsible for AmerAlia's obligations,
as has been the case with the Mars Trust's guaranty of AmerAlia's existing
obligations to the Bank of America, now approximately $8,300,000. We will
continue to engage in appropriate cash management techniques and continue our
negotiations to raise further funding to support our project development,
financing and operating costs.
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A potential source of equity capital is through the exercise of our
outstanding common stock purchase warrants and options. A total of 1,727,000
options is currently outstanding. The outstanding options, if exercised in whole
or part, would result in additional capital for AmerAlia. The option exercise
prices range from $1.00 to $6.00.
Results of Operations
Since AmerAlia does not receive revenues from operations, any income it
receives is generally derived from interest earned on funds on deposit resulting
from stock subscriptions or borrowings. Interest income during the December
quarter was $629 and for the half year, $5,452 (December 1999 quarter: $23,019;
half year: $37,822).
General and administrative expenditures were less this quarter
($321,189) and half year ($760,412) compared to last year ($442,084 and
$1,288,057). Interest expense was considerably higher for the quarter ($184,271;
December 1999: $93,182) and for the half year ($342,370; December 1999:
$107,880) due to the increased debt. We expect our general and administrative
expenses to increase further as we advance our corporate activities in
anticipation of financing and commencement of construction.
The December quarter's net loss of $665,964 was similar to that of the
same period last year ($645,597); and the half year's loss was higher,
$1,406,361 (1999: $1,234,128). We anticipate our losses will continue, and
possibly increase, as we proceed toward obtaining finance and commencing plant
construction. We anticipate our losses will decrease after completion of the
plant when we shall be able to commence sales of sodium bicarbonate we produce
from the plant.
As discussed above, the company has incurred a liability for guarantee
fees paid to establish debt facilities. Whilst these guarantee fees will be
satisfied through the issue of shares in the future, the cost of these fees is
amortised over the period of the debt. This non-cash amortisation expense in the
December quarter was $157,633 and half year $302,031 (December 1999 quarter:
$130,833 and half year: $130,833). Depreciation expense for the half year was
$7,000; 1999: $5,180.
Until AmerAlia achieves its objective of establishing a plant for the
recovery and production of sodium bicarbonate, it will not be able to generate
operating revenues. Whilst we are progressing negotiations with various
prospective investors and financiers, we have not reached any definitive
agreements to enable us to build our proposed facilities. We estimate more than
$50 million will be required to fund construction and the associated working
capital requirements until profitable operations are established. There is no
assurance that AmerAlia can obtain this financing and, in the meantime, we must
fund our operating losses from our own resources as discussed above.
Impact of Inflation
We believe the Company's activities are not materially affected by
inflation.
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PART II: OTHER INFORMATION
Item 2: Changes in Securities
As disclosed in the company's filing on Form 10Q for the September 2000
quarter, the following events occurred during the December quarter: 149,300
shares of common stock were issued in lieu of dividends payable on the Series E
Preferred Stock; 22,291 shares of common stock were issued in satisfaction of
fees payable of $45,000 in connection with the Company's financing efforts and
16,000 shares of common stock were granted to an officer of the company as a
stock bonus. Under the statement of preferences governing the Series E Preferred
Stock, the rights of the preferred stockholders to convert their shares into
common stock expired October 31, 2000. Holders of 2,904 shares of preferred
stock exercised their conversion rights during October; 82 shares of preferred
stock remain. During October, as foreshadowed in the Company's annual report on
Form 10-K, officers and directors accepted offers of options to acquire 400,000
shares of common stock at $1.09 per share until April 30, 2005.
SIGNATURE
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 duly authorized representative.
AMERALIA, INC.
February 9, 2001 By: /s/ Robert van Mourik
------------------------------------
Robert van Mourik
Executive Vice President, Chief
Financial Officer and principal
financial and accounting officer.
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