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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 MARCH 31, 2001
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)
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 April 27, 2001 the number of shares outstanding of the company's $.01 par
value common stock was 11,903,710 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
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PART I: FINANCIAL INFORMATION
Item 1: Financial Statements
Balance Sheets - March 31, 2001 and June 30, 2000 1
Statements of Operations for the Quarters and Nine Months
ending March 31, 2001 & 2000 and from the beginning of
Development Stage on July 1, 1992 to March 31, 2001 3
Statements of Cash Flows for the Quarters and Nine Months
ending March 31, 2001 & 2000 and from the beginning of
Development Stage on July 1, 1992 to March 31, 2001 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 9
SIGNATURE 10
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AMERALIA INC
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
March 31 June 30
2001 2000
----------- -----------
(unaudited) (audited)
ASSETS
Current Assets:
Cash at bank $ 478,022 $ 4,980
Related party receivables 57,071 57,071
Prepaid expenses 54,167 30,152
Interest receivable 3,617 2,713
----------- -----------
Total Current Assets: 592,877 94,916
Fixed Assets 28,250 24,524
Other Assets:
Lease acquisition and development costs 3,724,044 3,565,267
Plant construction in progress 8,144,497 6,994,642
Deferred financing costs 823,069 392,020
Note receivable - related party 15,000 20,000
Deposits & bonds 43,513 650
----------- -----------
Total Other Assets: 12,750,123 10,972,579
----------- -----------
Total Assets: $13,371,250 $11,092,019
=========== ===========
(Continued over page)
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AMERALIA INC
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS (CONTINUED)
March 31 June 30
2001 2000
------------ ------------
(Unaudited) (Audited)
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 174,588 $ 727,812
Royalties payable 410,417 354,167
Bank overdraft -- 38,356
Accrued expenses 1,290 91,862
Due to related parties 77,534 131,762
Guarantee fees payable 1,350,000 520,000
Notes payable 9,225,583 5,504,000
Interest payable 27,928 110,815
------------ ------------
Total current liabilities 11,267,340 7,478,774
------------ ------------
Commitments and contingent liabilities -- --
SHAREHOLDERS' EQUITY
Preferred stock, $0.05 par value; 1,000,000 authorized; 82
issued at March 31, 2001 and 2,986 at June 30, 2000: 4 149
Common stock, $.01 par value; 100,000,000 shares authorized;
issued at March 31, 2001: 11,903,710 and at June 30, 2000: 8,765,699: 119,037 87,657
Additional paid in capital 19,290,808 19,068,338
Prepaid construction costs (1,300,000) (1,300,000)
Accumulated deficit (16,005,939) (14,242,899)
------------ ------------
Total Shareholders' Equity: 2,103,910 3,613,245
------------ ------------
Total Liabilities & Shareholders' Equity: $ 13,371,250 $ 11,092,019
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AMERALIA INC
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(UNAUDITED)
From the
Beginning of
Development
Qtr Qtr Nine Mths Nine Mths Stage on
ending ending ending ending Jul 1, 1992 to
Mar 31 Mar 31 Mar 31 Mar 31 Mar 31
2001 2000 2001 2000 2001
------------ ------------ ------------ ------------ ------------
REVENUES $ -- $ -- $ -- $ -- $ --
EXPENSES
General & administrative 277,304 568,558 1,037,716 1,596,615 8,627,545
Depreciation & amortization 3,500 2,700 10,500 7,880 91,695
------------ ------------ ------------ ------------ ------------
Total Expenses: 280,804 571,258 1,048,216 1,604,495 8,719,240
------------ ------------ ------------ ------------ ------------
(LOSS) FROM OPERATIONS (280,804) (571,258) (1,048,216) (1,604,495) (8,719,240)
------------ ------------ ------------ ------------ ------------
OTHER INCOME (EXPENSE)
Other income -- -- -- -- 29
Investment income -- -- -- -- 89,760
Other financing costs (213,400) (158,227) (515,431) (289,060) (950,933)
Gain on settlement of debt -- -- -- -- 53,800
Interest income 2,409 1,575 7,861 39,397 327,268
Interest expense (57,739) (120,080) (128,454) (227,960) (1,123,037)
Foreign currency gain (loss) -- -- -- -- (63,572)
------------ ------------ ------------ ------------ ------------
Total other income (expense) (268,730) (276,732) (636,024) (477,623) (1,666,685)
------------ ------------ ------------ ------------ ------------
NET LOSS BEFORE
INCOME TAX EXPENSE (549,534) (847,990) (1,684,240) (2,082,118) (10,385,925)
------------ ------------ ------------ ------------ ------------
Income tax expense -- -- -- -- --
------------ ------------ ------------ ------------ ------------
NET LOSS $ (549,534) $ (847,990) $(1,684,240) $ (2,082,118) $(10,385,925)
------------ ------------ ------------ ------------ ------------
BASIC NET LOSS PER SHARE $ (0.05) $ (0.10) $ (0.16) $ (0.25)
WEIGHTED AVERAGE
SHARES OUTSTANDING ('000) 11,880 8,375 10,335 8,175
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AMERALIA INC
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
From the
Beginning of
Development
Qtr Qtr Nine Mths Nine Mths Stage on
ending ending ending ending Jul 1, 1992 to
Mar 31 Mar 31 Mar 31 Mar 31 Mar 31
2001 2000 2001 2000 2001
------------ ------------ ------------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ ( 549,534) $ (847,990) $ (1,684,240) $ (2,082,118) $(10,385,925)
Adjustments to reconcile net loss to
net cash used by operating activities:
Bad debt -- -- -- -- 624,798
Stock issued for services rendered 47,405 -- 104,405 -- 169,405
Depreciation & amortization 3,500 2,700 10,500 7,880 101,273
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 -- (1,108) -- 899,334 --
Accounts & interest receivable (904) (350) (904) (1,196) (2,952)
Related parties receivables 2,975 (15,500) -- (60,500) (57,071)
Prepaid expenses 20,500 13,232 (24,015) (32,202) (54,167)
Deposits & bonds -- (46,904) (42,863) (46,904) (43,513)
Other assets 147,704 78,240 (431,049) (350,466) (763,069)
Increase (decrease) in:
Bank overdraft (16,116) -- (38,356) (5,702) --
Due to related parties (23,028) 13,661 (54,228) 37,465 (3,768)
Accounts payable and royalties payable (78,105) (243,596) (501,124) 231,146 572,051
Accrued expenses (16,648) (2,127) (15,922) (75,954) 7,557
Guarantee fees payable -- 70,000 830,000 520,000 1,350,000
Interest payable (39,740) 11,215 (82,887) 30,645 (91,138)
------------ ------------ ------------ ------------ ------------
Cash flows from operating activities (501,991) (968,527) (1,930,683) (928,572) (7,480,378)
CASH FLOWS FROM INVESTING ACTIVITIES
Lease exploration & development expenditure (90,200) -- (158,777) -- (2,878,647)
Plant construction (183,640) (230,148) (1,149,855) (5,672,483) (8,144,497)
Purchase of property & equipment (5,205) (8,685) (14,226) (11,547) (117,302)
Cash paid on note receivable - related 5,000 -- 5,000 5,000 (20,000)
Liquidation of RIT investment -- -- -- -- 418,346
Cash received from notes receivable -- -- -- -- (139,853)
------------ ------------ ------------ ------------ ------------
Cash flows from investing activities $ (274,045) $ (238,833) $ (1,317,858) $ (5,679,030) $(10,881,953)
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AMERALIA INC
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
From the
Beginning of
Development
Qtr Qtr Nine Mths Nine Mths Stage on
ending ending ending ending Jul 1, 1992 to
Mar 31 Mar 31 Mar 31 Mar 31 Mar 31
2001 2000 2001 2000 2001
------------ ------------ ------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash received from issuance of stock $ -- $ 250,000 $ -- $ 875,000 $ 9,166,596
Additional capital contributed -- -- -- -- 307,372
Cash received from notes 1,100,000 1,000,000 3,721,583 5,500,000 9,978,805
Payments on notes -- -- -- -- (612,658)
------------ ------------ ------------ ------------ ------------
Cash flows from financing activities 1,100,000 1,250,000 3,721,583 6,375,000 18,840,115
NET INCREASE (DECREASE) IN CASH 323,964 42,640 473,042 (232,602) 477,784
Cash and cash equivalents at beginning of period 154,058 36,862 4,980 312,104 238
------------ ------------ ------------ ------------ ------------
Cash and cash equivalents at end of period $ 478,022 $ 79,502 $ 478,022 $ 79,502 $ 478,022
============ ============ ============ ============ ============
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
Income taxes $ -- $ -- $ -- $ -- $ --
Interest $ 232,577 $ 108,865 $ 618,094 $ 197,315 $ 1,145,477
NON CASH FINANCING ACTIVITIES
Common stock issued for payment of obligations $ -- $ -- $ -- $ -- $ 668,781
Common stock issued for services rendered $ 47,405 $ - $ 104,405 $ -- $ 169,405
Payment of preferred stock dividends
through the issuance of additional
common and preferred stock $ -- $ 74,650 $ 149,300 $ 223,950 $ 1,592,713
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AMERALIA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
As at March 31, 2001 and June 30, 2000
and for the Periods ended March 31, 2001 and 2000
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 March 31, 2001 and 2000 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 March
quarter, AmerAlia borrowed a further $1,100,000 from a commercial bank,
increasing its bank debt at March 31 to $8,921,583. This loan is guaranteed by
AmerAlia's principal shareholder as fully explained in our filing on Form 8K.
AmerAlia continues to have a working capital deficit (approximately
$10,700,000 at end March), largely because we have used this short-term bank
debt to fund investment in our project's development and working capital. We
have been able to continue operating by negotiating extensions of payment
obligations and the increased borrowings made available through our principal
shareholder's guarantee. However, we will not be able to sustain the costs
associated with these loans and our operating expenses unless we raise new
equity. We are continuing our negotiations with prospective lenders and
investors so that we can undertake our business plans.
During the nine months to March 31, 2001 we used the funds to invest
$1,322,858 in construction and project development activities, reduce net
accounts and royalties payable by $501,124, interest payable by $82,887, reduce
the bank overdraft by $38,356, accrued expenses by $15,922 and liabilities to
related parties by $54,228. We applied $42,863 to bonds and $24,015 to prepaid
expenses. We also funded the operating loss of $549,534 for the March quarter
($1,684,240 for the nine months). It should be noted, however, that these
operating losses include the non-cash amortization of the guarantee fee of
$213,400 for the March quarter ($515,431 for the nine month period). During the
quarter, a note payable became due and we negotiated an extension to July 1,
2001 in exchange for the payment of 30,000 shares of restricted common stock.
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 eighteen months, we installed five water monitoring wells and have
collected baseline water data. In February, we completed the collection of five
quarterly periods of baseline data required by the Colorado permitting agency,
the Division of Minerals and Geology. This clears the way to begin solution
mining activities. Like the EPA permit, we are not limited in our production
rates.
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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 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 or ordered. We plan to
transport fabricated items for the plant to the site as soon as we have
completed our engineering and have determined how we shall finance construction
of the project. The project has been independently reviewed to the satisfaction
of R.W. Beck, consulting engineers.
US Filter has agreed to provide interim financing when we have
acceptable long term financing that can be used to repay US Filter upon
completion of construction and startup. We are currently negotiating with a
lending institution terms for a $32 million, ten year loan for this repayment
financing, although we have not reached any definitive agreement. Under this
scenario, we will ultimately require total funding of approximately $55 million
by the time construction is completed. This amount includes approximately $9
million we have already borrowed to fund working capital and $7 million of the
project's development.
We may be able to fund development through raising new equity. If we
could do this, we would be able to achieve substantial savings in our capital
expenditures and our funding requirements would be reduced significantly. We
could then establish new debt facilities at a later date to further develop the
business or to pursue other opportunities in the sodium bicarbonate industry.
Our cash flow estimates indicate that approximately $1 million will be
required to meet our obligations through the balance of the current fiscal year.
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, securing financing for its construction and funding our business
development as discussed above. 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.
Results of Operations
Since AmerAlia does not receive revenues from operations, any income we
receive is generally derived from interest earned on funds on deposit resulting
from stock subscriptions or borrowings. Interest income during the March quarter
was $2,409 and for the nine months, $7,861 (March 2000 quarter: $1,575; nine
months: $39,397).
General and administrative expenditures were less this quarter
($277,304) and nine months ($1,037,716) compared to last year ($568,558 and
$1,596,615). Interest expense was considerably reduced for the quarter ($57,739;
March 2000: $120,080) and for the nine months ($128,454; March
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2000: $227,960) because we are capitalising qualifying interest expense incurred
on debt used to fund our project construction.
The March quarter's net loss of $549,534 was less than the same period
of last year ($847,990); and the nine month's loss was also lower, $1,684,240
(2000: $2,082,118). These reductions are due to close attention to operating
costs and the capitalisation of project development expenses which we would
have expensed last year because our lease permits had not yet been issued. 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
March quarter was $213,400 and nine months $515,431 (March 2000 quarter:
$158,227 and nine months: $289,060). Depreciation expense for the nine months
was $10,500; 2000: $7,880.
Impact of Inflation
We believe the Company's activities are not materially affected by
inflation.
PART II: OTHER INFORMATION
Item 2: Changes in Securities
During the March quarter, 30,000 shares of common stock were issued to
an unaffiliated, accredited investor as a fee for the extension of the due date
on a $300,000 note payable and 16,420 shares were issued to two additional,
accredited investors in settlement of legal fees of $17,406. During October, as
foreshadowed in the Company's annual report on Form 10-K, officers and directors
accepted, subject to shareholder approval, offers of options to acquire 400,000
shares of common stock at $1.09 per share until April 30, 2005. In March, 2001
an officer accepted, subject to shareholder approval, 100,000 options to acquire
shares at $1.09 until March 31, 2003 and two directors each accepted, subject to
shareholder approval, options to acquire 75,000 shares at $1.09 until April 30,
2005.
AmerAlia did not use an underwriter for the offer or sale of these
securities and no commissions or other compensation was paid in connection with
their offer or issue. Inasmuch as the directors are also accredited
investors, AmerAlia relied on the exemptions provided in Sections 4(2) and 4(6)
of the Securities Exchange Act of 1933, as amended, and Rule 506 thereunder for
these issuances. In no case was there any public advertising or general
solicitation attendant with these issuances.
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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.
May 14, 2001 By: /s/ Robert van Mourik
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Robert van Mourik
Executive Vice President, Chief
Financial Officer and principal
financial and accounting officer.
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