U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
[ ] 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. 0-27409
LIBERTY MINT, LTD.
(Exact name of small business issuer as specified in its
charter)
Nevada 84-1409219
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
975 North 1430 West, Orem, Utah 84057
(Address of principal executive offices)
801-426-6699
(Issuer's telephone number)
Not Applicable
(Former name, address and fiscal year, if changed since last report)
Check whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the
preceding 12 months (or for such shorter period that the issuer
was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [ X] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Check whether the registrant has filed all documents and reports
required to be filed by Sections 12, 13, or 15(d) of the
Exchange Act subsequent to the distribution of securities under
a plan confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's
classes of common equity, as of August 14, 2000: 29,683,260
shares of common stock.
Transitional Small Business Format: Yes [ ] No [ X ]
FORM 10-QSB
PATRIOT INVESTMENT CORPORATION
INDEX
Page
PART I. Financial Information
Item I. Financial Statements (unaudited) 3
Condensed Balance Sheets - June 30, 2000
(unaudited) and December 31, 1999 5
Condensed Statements of Operations
(unaudited) for the Three Months and Six
Months Ended June 30, 2000 and 1999, and
for the Period from January 13, 1986
(Inception) to June 30, 2000 7
Condensed Statements of Cash Flows
(unaudited) for the Three Months and Six
Months Ended June 30, 2000 and 1999, and
from the Period from January 13, 1986
(Inception) to June 30, 2000 8
Notes to Consolidated Financial
Statements 10
Item 2. Management's Discussion and
Analysis of Financial Condition or Plan
of Operation 14
PART II. Other Information 17
Item 6. Exhibits and Reports on Form 8-K 18
Signatures 19
(Inapplicable items have been omitted)
2
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
In the opinion of management, the accompanying unaudited
financial statements included in this Form 10-QSB reflect all
adjustments (consisting only of normal recurring accruals)
necessary for a fair presentation of the results of operations
for the periods presented. The results of operations for the
periods presented are not necessarily indicative of the results
to be expected for the full year.
3
ACCOUNTANTS' REVIEW REPORT
Board of Directors
LIBERTY MINT, LTD. AND SUBSIDIARY
Orem, Utah
We have reviewed the accompanying condensed consolidated balance
sheet of Liberty Mint, Ltd. and Subsidiary as of June 30, 2000
and the related condensed consolidated statements of operations
for the three and six months ended and cash flows for the six
months ended June 30, 2000. These financial statements are the
responsibility of the Company's management. All information
included in these financial statements is the representation of
management of Liberty Mint, Ltd. and Subsidiary.
We conducted our review in accordance with standards established
by the American Institute of Certified Public Accountants. A
review consists principally of inquiries of Company personnel and
analytical procedures applied to financial data. It is
substantially less in scope than an audit in accordance with
generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an
opinion.
Based on our review, we are not aware of any material
modifications that should be made to the condensed financial
statements reviewed by us, in order for them to be in conformity
with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming
that Liberty Mint, Ltd. and Subsidiary will continue as a going
concern. As discussed in Note 3 to the financial statements,
Liberty Mint, Ltd. and Subsidiary have current liabilities in
excess of assets and have not yet been successful in establishing
profitable operations, raising substantial doubt about its
ability to continue as a going concern. Management's plans in
regards to these matters are also described in Note 3. The
financial statements do not include any adjustments that might
result from the outcome of these uncertainties.
PRITCHETT, SILER & HARDY, P.C.
August 11, 2000
Salt Lake City, Utah
4
LIBERTY MINT, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
[Unaudited - See Accountants' Review Report]
ASSETS
June 30, December 31,
2000 1999
________________________
CURRENT ASSETS:
Cash and cash equivalents $ 8,233 $ 53,858
Accounts receivable, net of
$2,454 allowance 172,753 303,624
Inventory 182,685 816,943
Prepaid expenses 212,660 204,856
____________ ___________
Total Current Assets 576,331 1,379,281
____________ ___________
PROPERTY AND EQUIPMENT, net 180,689 14,697
____________ ___________
OTHER ASSETS:
Other assets 6,193 6,400
____________ ___________
Total Other Assets 6,193 6,400
____________ ___________
$ 763,213 $1,400,378
____________ ___________
(Continued)
5
LIBERTY MINT, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
[Unaudited - See Accountants' Review Report]
[Continued]
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
June 30, December 31,
2000 1999
____________ ___________
CURRENT LIABILITIES:
Accounts payable $ 152,946 $ 76,521
Factoring advances 12,475 98,185
Accrued expenses 425,820 452,712
Customer deposits 83,136 799,622
Notes payable - related party 200,000 200,000
Liabilities of discontinued operations 638,794 655,596
____________ ___________
Total Current Liabilities 1,513,171 2,282,636
____________ ___________
1,513,171 2,282,636
____________ ___________
COMMITMENTS AND CONTINGENCIES
[See Note 10] - -
____________ ___________
STOCKHOLDERS' (DEFICIT):
Preferred Stock, $.001 par value,
10,000,000 shares authorized, no
shares issued and outstanding - -
Common stock, $.001 par value, 50,000,000
shares authorized, 29,683,260 and
26,095,363 shares issued and outstanding 29,683 26,096
Capital in excess of par value 3,478,482 3,242,797
Retained (deficit) (4,133,915) (3,901,943)
____________ ___________
(625,750) (633,050)
____________ ___________
Less Stock Subscriptions Receivable 124,208 249,208
____________ ___________
Total Stockholders' (Deficit) (749,958) (882,258)
____________ ___________
$ 763,213 $1,400,378
____________ ___________
Note: The balance sheet at December 31, 1999 was taken from the
audited financial statements at that date and condensed.
The accompanying notes are an integral part of these unaudited
condensed financial statements.
6
LIBERTY MINT, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
[Unaudited - See Accountants' Review Report]
For the Three For the Six
Months Ended Months Ended
June 30, June 30,
_______________________________________________
2000 1999 2000 1999
_____________________________________________
SALES, net of returns
and discounts $ 844,763 $ 16,353 $1,755,287 $ 131,236
COST OF GOODS SOLD 695,115 13,159 1,365,301 62,704
_____________________________________________
GROSS PROFIT 149,649 3,194 389,986 68,531
_____________________________________________
OPERATING EXPENSES:
General and administrative 280,955 177,811 588,626 290,010
Bad debt expense - - 1,106 -
____________________________________________
Total Operating Expenses 280,955 177,811 589,732 290,010
_____________________________________________
LOSS FROM OPERATIONS (131,300) (174,617) (199,746) (221,479)
_____________________________________________
OTHER EXPENSE):
Interest expense (9,902) (6,072) (30,900) (6,072)
Other expense (709) - (1,326) -
_____________________________________________
Total Other (Expense) (10,611) (6,072) (32,226) (6,072)
_____________________________________________
LOSS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES (141,911) (180,689) (231,972) (227,551)
CURRENT TAX EXPENSE - - - -
DEFERRED TAX EXPENSE - - - -
_____________________________________________
NET (L0SS) $(141,911) $(180,689) $(231,972) $ (227,551)
_____________________________________________
(LOSS) PER COMMON SHARE $ (.00) $ (.01) $ (.01) $ (.01)
_____________________________________________
The accompanying notes are an integral part of these unaudited
condensed financial statements.
7
LIBERTY MINT, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
[Unaudited - See Accountants' Review Report]
For the Six
Months Ended
December 31,
_______________________
2000 1999
______________________
Cash Flows Provided by Operating Activities:
Net loss $(231,972) $ (227,551)
______________________
Adjustments to reconcile net loss
to net cash used by operating activities:
Depreciation and amortization 11,577 122
Non-cash expenses, including stock issued for
services & interest expense 239,272 -
Changes in assets and liabilities:
Decrease in accounts receivable 130,871 1,776
(Increase) decrease in inventory 634,258 (95,846)
Decrease in prepaid expenses (7,804) (18,000)
(Increase) in other assets 207 -
Increase in accounts payable 76,425 73,704
(Decrease) in factoring advances (85,710) -
(Decrease) in accrued expenses (298,865) -
(Decrease) in customer deposits (716,486) -
(Decrease) in liabilities of discontinued
operations (16,802) (269,988)
______________________
Net Cash (Used) by Operating Activities (265,029) (535,783)
______________________
Cash Flows Provided by Investing Activities:
Purchases of property and equipment (177,569) -
______________________
Net Cash (Used) by Investing Activities (177,569) -
______________________
Cash Flows Provided by Financing Activities:
Proceeds from Issuance of common stock - 538,396
Decrease in stock subscription receivable 125,000 -
Increase in notes payable - related party 271,973 -
______________________
Net Cash Provided by Financing Activities 396,973 538,396
______________________
Net Increase (Decrease) in Cash and Cash Equivalents (45,625) 2,613
Cash and Cash Equivalents at Beginning of Period 53,858 52,223
______________________
Cash and Cash Equivalents at End of Period $ 8,233 $ 54,836
________________________
[Continued]
8
LIBERTY MINT, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
[Unaudited - See Accountants' Review Report]
[Continued]
For the Six
Months Ended
June 30,
________________________
2000 1999
_______________________
Cash Flows Provided by Operating Supplemental
Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ 3,902 $ -
Income taxes $ - $ -
Supplemental Disclosures of Non-Cash Investing
and Financing Activities:
For the six months ended June 30, 2000:
None.
For the three months ended June 30, 1999:
None.
The accompanying notes are an integral part of these unaudited
condensed financial statements.
9
LIBERTY MINT, LTD. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business and Basis of Presentation - The consolidated
financial statements include the following accounts:
i) Liberty Mint, Ltd. (Parent), was originally formed as a
Colorado Corporation on March 13, 1990. On October 8, 1999 the
Parent changed its domicile to Nevada. Parent's name was Hana
Acquisitions, Inc. (Then a shell entity with no operations) prior
to reverse merger with Liberty Mint, Inc. on June 24, 1997. The
Parent presently operates through its Subsidiaries.
ii) Liberty Mint, Inc. (Former Subsidiary), a Utah corporation
primarily engaged in production of silver bullion. Parent sold
its 90% stake in Former Subsidiary on September 23, 1999.
iii) Liberty Mint Marketing, Inc. (Subsidiary), a Utah
corporation engaged in licensing and marketing entertainment
related collectibles. Subsidiary was organized on July 2, 1998
and is wholly owned by Parent.
iv) The Great Western Mint, Inc. (Subsidiary), a Utah
Corporation engaged in custom minting, marketing and sales of
sculpture, and the creation of propriety minted collectibles.
Subsidiary was organized on September 20, 1999 and is wholly
owned by Parent.
Consolidation - On June 24, 1997, the Parent acquired a
majority interest (approximately 90%) in Liberty Mint, Inc.
(Former Subsidiary), by issuing 3,725,436 shares of the
Parent's common stock for 7,450,864 shares of common stock of
Liberty Mint, Inc. (Former Subsidiary). The acquisition was
accounted for as a recapitalization of the Former Subsidiary
as the shareholders of the Former Subsidiary controlled the
combined Company after the acquisition. There was no
adjustment to the carrying values of the assets or liabilities
of the Parent or Former Subsidiary as a result of the
recapitalization. The merger has been accounted for as a
reverse merger. Accordingly, Former subsidiary is treated as
the purchaser in the transaction.
During 1997, the Parent purchased an additional 82,353 shares
of Former Subsidiary common stock for $28,000. During 1998,
the Parent purchased an additional 28,510 shares of Former
Subsidiary common stock for $8,078 in cash and by issuing
2,376 shares of common stock at $.06 per share. Subsequent to
the reverse merger in June 1997, the Parent formed two
additional wholly owned Subsidiaries; namely, Liberty Mint
Marketing, Inc. on July 2, 1998 and The Great Western Mint,
Inc. on September 20, 1999. On September 23, 1999 the Parent
sold all of its shares in Former Subsidiary (See Note 2). The
1999 consolidated financial statements include the accounts of
the Parent, Former Subsidiary, and the two subsequently formed
Subsidiaries. All significant intercompany transactions
between Parent, Former Subsidiary, and the two remaining
Subsidiaries have been eliminated in consolidation.
Condensed Financial Statements - The accompanying financial
statements have been prepared by the Company without audit.
In the opinion of management, all adjustments (which include
only normal recurring adjustments) necessary to present fairly
the financial position, results of operations and cash flows
at June 30, 2000 and 1999 and for the periods then ended have
been made.
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 condensed financial statements be
read in conjunction with the financial statements and notes
thereto included in the company's December 31, 1999 audited
financial statements. The results of operations for the
periods ended June 30, 2000 are not necessarily indicative of
the operating results for the full year.
10
LIBERTY MINT, LTD. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - DISCONTINUED OPERATIONS
During September 1999, the Company sold its stock in the
subsidiary Liberty Mint, Inc. for $25 in cash and effectively
discontinued its bullion and foundry business. All revenues and
expenses associated with this business have been netted and
reclassified as discontinued operations on the income statement
for all periods presented. Revenue for the years ended December
31, 1999, and 1998 relating to these operations was $4,081,880
and $4,430,950, respectively.
NOTE 3 - GOING CONCERN
The Company has incurred significant losses during 1999 and
1998 and has current liabilities in excess of current assets
at June 30, 2000. As of June 30, 2000, the company does not
have the ability to pay off liabilities of discontinued
operations without additional funds provided through loans
and/or through additional sales of its common stock. These
items raise substantial doubt about the ability of the Company
to continue as a going concern.
Management's plans in regards to these matters are as follows:
Management is proposing to raise necessary additional funds
not provided by operations through loans and/or through
additional sales of its common stock. Management believes
that it can improve operations, refinance debt, convert debt
to equity, and reduce expenses. Management believes that a
combination of these efforts will be necessary to continue
as a going concern.
The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern.
The financial statements do not include any adjustments
relating to the recoverability and classification of recorded
asset amounts or the amounts and classification of liabilities
that might be necessary should the Company be unable to obtain
additional financing, establish profitable operations or
realize its plans.
NOTE 4 - PROPERTY AND EQUIPMENT
The following is a summary of property and equipment - at
cost, less accumulated depreciation and amortization as of
June 30, 2000 and December 31, 1999:
June 30, December 31,
2000 1999
_____________ _______________
Production and refining equipment $ 183,858 $ 14,903
Lease hold improvements 8,614 -
Less: accumulated depreciation
and amortization 11,783 206
______________________________
$ 180,689 $ 14,697
_________________________________
Depreciation and amortization expense for the six months ended
June 30, 2000 and 1999, amounted to $11,577 and $0,
respectively.
11
LIBERTY MINT, LTD. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - ACCRUED LIABILITIES
The following is a summary of accrued liabilities:
June 30, December 31,
2000 1999
_____________ _____________
Payroll costs $ 191,346 $ 205,400
Conversion feature of
notes payable (Note 7) 133,334 133,334
Contingency on stock guarantee 42,500 42,500
Accrued interest 58,640 43,479
Cost prepayment - 25,000
_____________ _____________
$ 425,820 $ 452,712
_____________ _____________
NOTE 6 - CAPITAL STOCK
The Company issued 1,200,000 shares of common stock in
exercise of options. Proceeds received amounted to $80,000,
(or $.07 per share).
The Company issued 90,000 shares of common stock to a
consultant for services performed, valued at $6,000, (or $.07
per share).
The Company issued 2,156,724 shares of common stock to
shareholders of the Company for services rendered valued at
$143,782, (or $.07 per share).
The Company issued 36,000 shares of common stock to
consultants for services perfomed valued at $2,400 (or $.07
per share).
The Company issued 105,000 shares of common stock to a
consultant for services performed, valued at $7,000 (or .07
per share).
Restatement - The financial statements have been restated for
all periods presented to reflect a six for-one forward stock
split effective August 11, 2000.
NOTE 7 - RELATED PARTY TRANSACTIONS
The Company entered into certain transactions with related
individuals and entities resulting in the following balances
at June 30, 2000.
Notes Payable to stockholders - During December 1997, a
shareholder of the Company loaned the Company $200,000 at 12%
interest compounding yearly. The note due on demand. At June
30, 2000, accrued interest amounted to $58,640.
The Company had at June 30, 2000 and 1999, options and
warrants outstanding to purchase 19,821,390 and 11,513,400
shares of common stock, respectively, at prices ranging from
$.07 to $2.16 per share, that were not included in the
computation of diluted earnings per share because their effect
was anti-dilutive (the exercise price of the options was
greater than the average market price of the common shares).
12
LIBERTY MINT, LTD. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 - INCOME TAXES
The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes". FASB 109 requires the Company
to provide a net deferred tax asset/liability equal to the
expected future tax benefit/expense of temporary reporting
differences between book and tax accounting methods and any
available operating loss or tax credit carryforwards.
The Company has available at June 30, 2000, unused operating
loss carryforwards of approximately $3,900,000 which may be
applied against future taxable income and which expire in
various years through 2019.
The amount of and ultimate realization of the benefits from
the operating loss carryforwards for income tax purposes is
dependent, in part, upon the tax laws in effect, the future
earnings of the Company, and other future events, the effects
of which cannot be determined. Because of the uncertainty
surrounding the realization of the loss carryforwards the
Company has established a valuation allowance equal to the
amount of the loss carryforwards and, therefore, no deferred
tax asset has been recognized for the loss carryforwards.
The net deferred tax assets are approximately $1,326,000 as
of June 30, 2000, with an offsetting valuation allowance at
year end of the same amount resulting in a change in the
valuation allowance of approximately $34,000 during the three
months ended June 30, 2000.
NOTE 9 - LOSS PER SHARE
The following data show the amounts used in computing loss per
share and the effect on income and the weighted average number
of shares of potential dilutive common stock for the six
months ended June 30, 2000, and 1999:
For the Six
Months Ended
June 30,
______________________
2000 1999
____________________
Loss from continuing operations available
to common stockholders (Numerator) $(231,72) $(227,551)
Weighted average number of common shares
outstanding used in basic earnings per
share (Denominator) 28,452,948 15,226,467
____________________
Weighted average number of common shares
and potential dilutive common shares
outstanding used in dilutive earnings
per share (Denominator) N/A N/A
______________________
NOTE 10 - LITIGATION, CONTINGENCIES AND COMMITMENTS
Stock guarantee - During December 1998, the Company issued
60,000 shares of its common stock for advertising services
performed valued at $60,000. The Company guaranteed the
advertising company that one year from the date of issue they
would be able to sell their 60,000 shares of common stock for
a minimum price of $1.00 per share (or for a total of
$60,000). During September 1999 the Company issued an
additional 40,002 shares of common stock at $.07 per share
under the same agreement. The Company further agreed to issue
a sufficient amount of shares to the advertising Company in
order to sell and receive total proceeds of $100,000 if the
trading price is less than $1.00 per share. As of December
31, 1999 the Company has recorded a $42,500 accrued expense as
the market price of the common stock was less than the
guaranteed amount.
13
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION OR PLAN OF OPERATION
Forward-Looking Statement Notice
When used in this report, the words "may," "will," "expect,"
"anticipate," "continue," "estimate," "project," "intend," and
similar expressions are intended to identify forward-looking
statements within the meaning of Section 27a of the Securities
Act of 1933 and Section 21e of the Securities Exchange Act of
1934 regarding events, conditions, and financial trends that may
affect the Company's future plans of operations, business
strategy, operating results, and financial position. Persons
reviewing this report are cautioned that any forward-looking
statements are not guarantees of future performance and are
subject to risks and uncertainties and that actual results may
differ materially from those included within the forward-looking
statements as a result of various factors. Such factors are
discussed under the "Item 2. Management's Discussion and
Analysis of Financial Condition or Plan of Operations," and also
include general economic factors and conditions that may directly
or indirectly impact the Company's financial condition or results
of operations.
The Company
Liberty Mint, Ltd., a Nevada corporation (the "Company"),
operates through two subsidiaries. The Great Western Mint, Inc.
("GWM") provides custom minting services for government
agencies, companies large and small, and any other
organization that desires to produce a custom coin or
commemorative. The GWM also conceives and markets proprietary
coin related products and sculpture. The Company's second
subsidiary, Liberty Mint Marketing, Inc., creates and markets
licensed sports and entertainment related collectibles.
The Company has identified three areas which it will
attempt to cultivate through its marketing efforts: 1) themes
of general interest and gift items manufactured by GWM, 2)
sports and entertainment collectibles under the trade name of
Superstar Commemorative Collector Series ("SCCS"), and 3)
western art and collectibles under the trade name of Jackson Hole
Collectibles. The Company does not anticipate actively pursuing
the Jackson Hole Collectibles until sometime in mid-2001.
In addition, the Company remains focused on increasing sales
through improving and expanding upon its present marketing and
distribution methods. At present and in the near term, the
Company will seek relationships with established marketing
partners to assist in distribution and sales of the Company's
newly developed collectible products. As a result of the
Company's new direction, it has successfully begun to market
its products on a limited basis to businesses
14
and the public. Many of the Company's new product lines are
derived from licenses and rights to produce various
collectibles featuring public personalities, special events
or popular art. The Company intends to continue licensed-based
marketing by obtaining additional licenses with public appeal. As
new products are developed the Company will proceed with its
efforts to expand marketing strategies and develop increased
demand for its products.
General
During the second quarter of 2000, through the consulting
company, The WebCom Group, Inc., the Company established a web
site at www.libertymint.com. In addition, the Company
established web sites for its subsidiaries, Great Western Mint at
www.greatwesternmint.com and Liberty Mint Marketing at
www.superstarseries.com. The Company intends to enter a
management agreement with The WebCom Group, Inc. to maintain and
promote the web sites.
The Company has changed its transfer agent to from Corporate
Stock Transfer in Denver, Colorado to Interwest Transfer Company
at 1921 East 4800 South, Suite 100, Salt Lake City, Utah 84117.
The change in transfer agent was made for convenience of the
Company.
During the first half of 2000, the Company continued to improve
its financial condition. The Company increased its revenues
over the comparable quarter in 1999. As a direct result of
increased revenues for the first half of 2000 and the year ended
December 31, 1999, the Company's overall financial health
significantly improved. While the Company is still showing an
overall loss, the amount of loss for the first half of 2000 is
significantly less than the loss shown for the comparable period
in 1999. The Company continues to stabilize its financial
position and losses are significantly reduced from the same
period as last year, approximately 80% reduction in losses.
The Company will continue to focus on its foundation business of
custom minting programs through The Great Western Mint, Inc. to
increase revenue to bring the Company into profitability. At
such time as the Company achieves and can sustain profitability
on the custom minting programs, the Company will then
aggressively pursue its dual marketing plan including the
Superstar Commemorative Collector Series and Jackson Hole
Collectibles.
Results of Operations
Three Month periods Ended June 30, 2000 and 1999
Gross revenue for the quarter ended June 30, 2000 were $844,763
compared to $16,353 for the same period in 1999, an increase of
$838,410. The gross revenues for June 30, 2000 were higher than
the comparable quarter in 1999 due to revenues generated by the
Company's new subsidiary, The Great Western Mint, Inc., which
only commenced operations in September 1999.
Costs of revenues were $695,115 or 82% of revenues for the
quarter ended on June 30, 2000, compared to $13,159 or 80% of
revenues for the second quarter of 1999.
15
Gross profit was $149,649 for the quarter ended on June 30, 2000
and $3,194 for the comparable quarter in 1999. Gross profit as a
percentage of revenues was 17.7% and 19.53%, respectively.
General and administrative expenses were $280,955 for the quarter
ended June 30, 2000 and $177,811 for the comparable period in
1999, an increase of $103,144. The primary reason for the
increase was additional costs associated with the operations of
The Great Western Mint.
The Company had an operating loss of $141,911 during the quarter
ended June 30, 2000 compared to an operating loss of $180,689 for
the comparable quarter in 1999. The reduction of the Company's
operating loss for the quarter ended June 30, 2000 as compared to
the quarter ended June 30, 1999 was primarily attributable to the
fact the Company has greater gross profits.
During the quarter ended June 30, 2000, the Company incurred
interest expenses in the amount of $9,902. During the comparable
period in 1999, the Company incurred interest expenses in the
amount of $6,072. The primary reason for the increase is
factoring costs incurred by The Great Western Mint.
Six Month periods Ended June 30, 2000 and 1999
Gross revenue for the six months ended June 30, 2000 were
$1,755,287 compared to $131,236 for the same period in 1999, an
increase of $1,624,051. The gross revenues for June 30, 2000
were higher than the comparable quarter in 1999 due to revenues
generated by the Company's new subsidiary, The Great Western
Mint, Inc., which only commenced operations in September 1999.
Costs of revenues were $1,365,301 or 77.7% of revenues for the
six months ended on June 30, 2000, compared to $62,704 or 47.7%
of revenues for the six months ended June 30, 1999.
Gross profit was $389,986 for the six months ended on June 30,
2000 and $68,531 for the comparable quarter in 1999. Gross
profit as a percentage of revenues was 22.2% and 52.21%,
respectively.
General and administrative expenses were $589,732 for the six
months ended June 30, 2000 and $290,010 for the comparable period
in 1999, an increase of $299,722. The primary reason for the
increase was additional costs associated with the operations of
The Great Western Mint.
The Company had an operating loss of $231,972 during six months
ended June 30, 2000 compared to an operating loss of $227,551 for
the comparable period in 1999.
During the six months ended June 30, 2000, the Company incurred
interest expenses in the amount of $30,900. During the
comparable period in 1999, the Company incurred interest expenses
in the amount of $6,072. The primary reason for the increase is
factoring costs incurred by The Great Western Mint.
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Capital Resources and Liquidity
At June 30, 2000, the Company had current assets of $576,331 and
total assets of $763,213 as compared to $1,379,281 and
$1,400,378, respectively at December 31, 1999. The Company had a
working capital deficit of $4,133,915 compared to a working
capital deficit of $3,901,943 at December 31, 1999.
The stockholders' deficit in the Company was $749,958 as of June
30, 2000, compared to $882,258 as of December 31, 1999.
Due to the Company's losses prior to its divestiture of its
former subsidiary, Liberty Mint, Inc., in September of 1999 the
Company continues to experience cash flow shortages. To satisfy
its cash requirements, including debt service, the Company must
periodically raise funds from external sources. This has
occasionally involved the Company conducting exempt offerings of
its equity securities.
The Company does not currently anticipate any capital commitments
within the next twelve months.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
The Company has engaged the services of Taylor Walton, Solicitors
in Bedfordshire, England to pursue a claim against Liberty Mint
Manchester Ltd. in the amount of approximately $90,000. The
Company shipped product for which is was not paid and incurred
costs for custom materials. The Company is attempting to collect
on the debt and resolve any contractual problems. At the time of
this report, no formal complaint has been filed. However, if
necessary, the Company will pursue all available legal action to
collect the outstanding debt.
Both the Internal Revenue Service ("IRS") and the state of Utah
have contacted the Company regarding past withholding tax due
regarding Liberty Mint, Inc. The Company owes approximately
$150,000 to the IRS and $35,000 to the state of Utah and has
acknowledged the debt on the Company's balance sheet. The
Company has responded to the IRS and the state of Utah with a
proposal on repayment of the outstanding debt and is awaiting a
response as to whether or not the proposal is acceptable. At the
present time, there is no current legal action against the
Company on either of these issues.
The Utah Department of Consumer Affairs ("UDCA") contacted the
Company on behalf of approximately 15 parties who are owed money
by Liberty Mint, Inc. The UDCA requested a plan from the Company
to resolve the outstanding debt. The Company has responded to
the UDCA indicating the Company will actively pursue capital
raising activities in order to settle all outstanding debt. The
UDCA and the Company are monitoring progress toward this goal on
a monthly basis. To date, none of the approximately 15 parties
nor the UDCA have formally filed any charges against the Company.
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The Company received a Complaint filed in the District Court,
City and County of Denver, State of Colorado naming Liberty Mint,
Ltd., Liberty Mint, Inc., The Great Western Mint, Inc., Daniel R.
Southwick and Ron Lewis as Defendants. The Complaint was dated
May 25, 2000 and was brought by Royal Gold, Inc. as Plaintiff.
The Complaint alleges that Liberty Mint, Inc., agreed to
fabricate gold coins from gold inventory provided by Royal Gold
and that Liberty Mint, Inc. failed to fully perform and that
Liberty Mint, Inc. owes Royal Gold 30 gold coins. The Complaint
asks for an award of damages and attorneys fees. The Company has
entered a settlement agreement with Royal Gold for $12,000
payable in eight consecutive payments of $1,500 per month
beginning October 1, 2000. Should the Company default in the
settlement agreement, a judgment will be entered against the
Company.
The Company received a Complaint filed in the Superior Court of
California, County of Orange naming Liberty Mint, Ltd. aka
Liberty Mint Marketing, Inc., successor to Liberty Mint, Inc. as
defendant among other parties. The Complaint was dated April 13,
2000 and was brought by Thomas P. Crawford as Plaintiff. The
Complaint alleges that Liberty Mint, Inc. violated the terms of
an agreement whereby Liberty Mint, Inc. was to hold monies in
trust for the Plaintiff. The Complaint asks for an award of
$100,000 from Liberty Mint, Inc. The Company has investigated
the claims and has determined it may have liability in the amount
of approximately $30,000. The Company is currently negotiating a
settlement with the Plaintiff anticipate reaching a satisfactory
agreement in the near future.
The above legal proceedings are a result of Liberty Mint, Inc.
actions and not a result of current Company operations. The
Company has since divested itself of Liberty Mint, Inc. and is
attempting to settle all outstanding claims.
Item 5. Other Information
Subsequent to the date of this report, the Company effected a six
for one forward split of its issued and outstanding common stock
for shareholders of record on August 11, 2000.
Item 6. Exhibits and Reports on Form 8-K.
Reports on Form 8-K: No reports on Form 8-K were filed by the
Company during the quarter ended June 30, 2000.
Exhibits: Included only with the electronic filing of this report
is the Financial Data Schedule for the six month period ended
June 30, 2000 (Exhibit ref. No. 27).
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SIGNATURES
In accordance with the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned thereunto
duly authorized.
LIBERTY MINT, LTD.
Date: August 14, 2000 /s/ Dan Southwick
President, Chief Executive Officer
and Director
Date: August 14, 2000 /s/ Eugene Pankrantz
Controller
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