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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 SEPTEMBER 30, 1999
OR
[ ] Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
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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
311 RALEIGH ROAD, KENILWORTH, IL 60043
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(Address of Principal Executive Offices)
(847) 256 9021
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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.
The number of shares outstanding of the Company's $.01 par value common stock as
of November 1, 1999 was 8,434,066. Shares of preference stock, $0.05 par value,
outstanding as of November 1, 1999 was 2,986.
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AMERALIA, INC.
(A DEVELOPMENT STAGE COMPANY)
INDEX TO FORM 10-Q
Page
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PART I: FINANCIAL INFORMATION
Item 1: Financial Statements
Balance Sheets - September 30, 1999
and June 30, 1999 1
Statements of Operations for the Quarters
ending September 30, 1999 & 1998 and from
the Beginning of Development Stage on
July 1, 1992 to September 30, 1999 3
Statements of Cash Flows for the Quarters
ending September 30, 1999 & 1998 and from
the Beginning of Development Stage on
July 1, 1992 to September 30, 1999 4
Note to Consolidated 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 9
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AMERALIA INC
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
Sept 30 June 30
1999 1999
----------- -----------
CURRENT ASSETS
Cash $ 254,038 $ 312,104
Restricted cash 4,214,693 991,305
Related party receivables 85,508 43,008
Prepaid expenses 79,332 30,082
Interest receivable 1,604 1,167
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Total Current Assets 4,635,175 1,377,666
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FIXED ASSETS 24,401 24,202
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OTHER ASSETS
Lease acquisition and exploration costs 3,023,287 3,023,287
Plant construction deposit 2,238,686 1,250,000
Deferred financing costs 170,500 110,000
Note receivable - related party 25,000 25,000
Deposits 25,906 25,906
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Total Other Assets 5,483,379 4,434,193
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TOTAL ASSETS $10,142,955 $ 5,836,061
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(Continued over page)
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AMERALIA INC
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
Sept 30 June 30
1999 1999
------------ ------------
CURRENT LIABILITIES
Accounts payable $ 268,215 $ 232,017
Royalties payable 297,917 279,167
Bank overdraft -- 5,702
Accrued expenses 6,491 88,219
Due to related parties 22,937 9,333
Notes payable - current portion 4,204,000 4,000
Interest payable 15,942 1,290
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Total Current Liabilities 4,815,502 619,728
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Total Liabilities 4,815,502 619,728
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COMMITMENTS AND CONTINGENCIES 303,800 303,800
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STOCKHOLDERS' EQUITY
Preferred stock, $.05 par value; 1,000,000 authorised;
2,986 and 2,986 issued and outstanding; respectively 149 149
Common stock, $.01 par value; 100,000,000 shares
authorised; 8,434,066 and 7,659,766 issued and
outstanding respectively 80,591 76,598
Additional paid in capital 17,316,104 16,545,797
Accumulated deficit (12,373,191) (11,710,011)
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Total Stockholders' Equity 5,023,653 4,912,533
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 10,142,955 $ 5,836,061
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AMERALIA INC
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
From the
Beginning of
Development
Stage on July 1,
Quarter ending Quarter ending 1992 to Sept 30,
Sept 30, 1999 Sept 30, 1998 1999
-------------- -------------- ----------------
REVENUES $ -- $ -- $ --
EXPENSES
General & administrative 585,973 159,684 6,652,085
Depreciation & amortisation 2,663 2,157 72,633
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Total Expenses 588,636 161,841 6,724,718
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LOSS FROM OPERATIONS (588,636) (161,841) (6,724,728)
OTHER INCOME (EXPENSE)
Other income -- -- 29
Investment income -- -- 89,760
Interest income 14,803 6,974 294,319
Interest expense (14,698) (8,602) (651,746)
Foreign currency gain (loss) -- 12 (63,572)
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Total Other Income (Expense) 105 (1,616) (331,210)
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NET LOSS BEFORE INCOME TAX EXPENSE (588,531) (163,457) (7,055,928)
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Income tax expense -- -- --
NET LOSS $ (588,531) $ (163,457) $(7,055,928)
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BASIC NET LOSS PER SHARE $ (0.073) $ (0.30)
DILUTE NET LOSS PER SHARE $ (0.053) $ (0.016)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING ('000) 8,047 5,439
FULLY DILUTED AVERAGE NUMBER OF SHARES OUTSTANDING ('000) 11,033 10,307
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AMERALIA INC
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
From the
Beginning of
Development
Stage on July 1,
Quarter ending Quarter ending 1992 to Sep 30,
Sept 30, 1999 Sept 30, 1998 1999
-------------- -------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (588,531) $ (163,457) $(7,055,928)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Bad debt -- -- 624,798
Stock issued for services rendered -- -- 65,000
Depreciation 2,663 2,157 82,211
Exchange (gain) loss -- (12) (168,556)
(Increase) decrease in:
Restricted cash (3,223,388) -- (4,214,693)
Accounts and interest receivable (437) -- (939)
Deposits -- -- (25,906)
Notes receivable -- -- 1,300,497
Related parties receivables (42,500) 17,674 (85,508)
Prepaid expenses (49,250) (42,000) (61,332)
Other assets (60,500) -- (170,500)
Increase (decrease) in:
Bank overdraft (5,702) -- --
Accounts and royalties payable 54,948 5,724 503,528
Accrued expenses (7,078) -- 12,758
Due to related parties 13,604 12,076 (58,365)
Interest payable 14,652 215 (103,124)
Contingent liabilities -- -- 303,800
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Net Cash (Used) in operating activities (3,891,519) (167,623) (9,052,259)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Lease exploration & development expenditure -- -- (2,177,890)
Plant construction deposit (988,686) -- (2,238,686)
Purchase of property & equipment (2,861) -- (94,390)
Liquidation of RIT investment -- -- 418,346
Cash paid on note receivable related -- -- (25,000)
Cash received from noted receivable -- -- (144,853)
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Net Cash (Used) in investing activities (991,547) -- (4,262,473)
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AMERALIA INC
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS (CONTINUED)
From the
Beginning of
Development
Stage on July 1,
Quarter ending Quarter ending 1992 to Sep 30,
Sept 30, 1999 Sept 30, 1998 1999
-------------- -------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash received from issuance of stock 625,000 10,000 8,916,596
Additional capital contributed -- -- 307,372
Cash received from notes 4,200,000 -- 4,957,222
Cash payments on notes payable -- (177,893) (612,658)
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Cash flows from financing activities 4,825,000 (167,893) 13,568,532
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NET INCREASE (DECREASE) IN CASH (58,066) (335,516) 253,800
Cash and cash equivalents at beginning of period 312,104 707,199 238
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Cash and cash equivalents at end of period $ 254,038 $ 371,683 $ 254,038
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SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
Income taxes $ -- $ -- $ --
Interest $ -- $ 95 $ 279,373
NON CASH FINANCING ACTIVITIES
Common stock issued for payment of obligations $ -- $ 223,750 $ 608,781
Common stock issued for services rendered $ -- $ -- $ 65,000
Payment of preferred stock dividends through
the issuance of additional common and
preferred stock $ -- $ 63,400 $ 1,144,813
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AMERALIA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTE TO FINANCIAL STATEMENTS
As at September 30, 1999 and June 30, 1999
and for the Periods ended September 30, 1999 and 1998
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. It is suggested that these financial
statements be read in conjunction with the Registrant's June 30, 1999 Annual
Report on Form 10-K. The results of operations for the periods ended September
30, 1999 and 1998 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 management of the Registrant,
necessary for a fair presentation of the results of the interim periods covered
by this report.
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AMERALIA, INC.
(A DEVELOPMENT STAGE COMPANY)
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The future conduct of AmerAlia is dependent upon a number of factors and
there is no assurance that AmerAlia will be able to conduct its operations as
contemplated in this report. Certain statements contained in this report using
the terms 'may', 'expects to', and other terms denoting future possibilities,
are forward-looking statements. The accuracy of these statements cannot be
guaranteed as they are subject to a variety of risks which are beyond AmerAlia's
ability to predict or control. These risks can 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 that the described
operations, reserves, or exploration or production activities will not be
completed on economic terms, if at all. The exploration, development and mining
of mineral properties is an enterprise attendant with high risk. Many of these
risks are described in this report and it is important that each person
reviewing this report understands the significant risks which accompany 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 September
quarter AmerAlia raised a further $625,000 through the sale of common stock for
cash to accredited investors. We borrowed $4.2 million from a commercial bank.
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". Additional funding of $83,204 was derived from increases in
accounts payable, liabilities to related parties and interest payable.
We provided $4.2 million in additional funding to the escrow account under
the Design/Build agreement with US Filter of which $988,686 was expended by US
Filter. Funding was applied to the operating loss of $588,531 for the quarter
and outlays on related party receivables ($42,500), prepaid expenses ($49,250)
and deferred financing costs ($60,500). As a result of the fund raising
throughout the quarter, total assets increased to $10,142,955 from $5,836,061 at
June 30, 1999.
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 obtaining all permits
necessary for the proposed plant and financing for its construction, estimated
to be in excess of $35 million. As advised previously, AmerAlia reached an
agreement with US Filter to provide construction financing, but US Filter's
agreement is subject to numerous conditions and, to date, US Filter has not
advanced any funds pursuant to that agreement. We have complied with our
obligation to provide $6.4 million to initiate the design and construction
activities.
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We are negotiating with prospective investors and financiers to achieve this
financing objective, although there can be no assurance we will be able to
complete this financing.
We do not anticipate any difficulties with our computers and their systems
as the year 2000 approaches as our computers and software are relatively new
systems. The manufacturers and suppliers have represented to us the equipment is
Y2K compliant.
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. Interest income during the September quarter was about
$15,000 (September 1998: $6,974).
General and administrative expenditures were significantly higher this
quarter ($585,973) than for last year ($159,684) due to the increased activity
associated with obtaining funding for the development of AmerAlia's lease and
construction of production facilities. Interest expense for the quarter was
higher ($14,698; September 1998: $8,602) due to the increased debt.
Consequently, the September quarter's net loss of $588,531 significantly
exceeded that of the same period last year ($161,841). Contributing to this loss
was an expenditure of approximately $250,000 paid to external consultants in
connection with developing the permitting applications and development plans
associated with the development of our resource. We have a dispute with Raytheon
concerning additional work it performed last fiscal year which we consider to be
outside the specifications of the work orders. We are disputing this amount and
have agreed with Raytheon to go to mediation and/or arbitration to settle the
matter. Meanwhile, we have a contingency of $303,800 in our financial
statements.
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
$35 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
During the quarter, 74,650 shares of common stock were issued in lieu of
$74,650 of dividends on Series E Preferred Stock and an additional 74,650 shares
were issued in satisfaction of dividends previously declared. A further 625,000
shares were issued to accredited investors for cash.
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.
November 12, 1999 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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EXHIBIT INDEX
Exhibit No. Description
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27 Financial data Schedule