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 September 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)
801-426-5155
(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 November 14, 2000: 30,563,260
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 - September 30,
2000 (unaudited) and December 31, 1999 4
Condensed Consolidated Statements of
Operations (unaudited) for the Three
Months and Nine Months Ended September 6
30, 2000 and 1999
Condensed Consolidated Statements of Cash
Flows (unaudited) for the Three Months 7
and Nine Months Ended September 30, 2000
and 1999 9
Notes to Consolidated Financial
Statements 14
Item 2. Management's Discussion and
Analysis of Financial Condition or Plan
of Operation
Other Information 18
Item 6. Exhibits and Reports on Form 8-K 20
Signatures 20
(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
LIBERTY MINT, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
[Unaudited]
ASSETS
September 30, December 31,
2000 1999
________________________
CURRENT ASSETS:
Cash and cash equivalents $ 43,131 $ 53,858
Accounts receivable, net of $26,965 and
$0 allowance 97,115 303,624
Inventory 160,263 816,943
Prepaid expenses 208,635 204,856
____________ ___________
Total Current Assets 509,144 1,379,281
PROPERTY AND EQUIPMENT, net 175,158 14,697
OTHER ASSETS 6,193 6,400
____________ ___________
$ 690,495 $ 1,400,378
____________ ___________
[Continued]
4
LIBERTY MINT, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
[Unaudited]
[Continued]
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
September 30, December 31,
2000 1999
____________ ___________
CURRENT LIABILITIES:
Accounts payable $ 178,802 $ 76,521
Factoring advances 17,945 98,185
Accrued expenses 396,352 452,712
Customer deposits 63,997 799,622
Notes payable - related party 200,000 200,000
Liabilities of discontinued operations 630,931 655,596
____________ ___________
Total Current Liabilities 1,488,027 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, 30,563,260 and 26,095,363
shares issued and outstanding 30,563 26,096
Capital in excess of par value 3,641,351 3,242,797
Retained (deficit) (4,345,238) (3,901,943)
____________ ___________
(673,324) (633,050)
____________ ___________
Less Stock Subscriptions Receivable (124,208) (249,208)
____________ ___________
Total Stockholders' (Deficit) (797,532) (882,258)
____________ ___________
$ 690,495 $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.
5
LIBERTY MINT, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
[Unaudited]
For the Three For the Nine
Months Ended Months Ended
September 30, September 30,
2000 1999 2000 1999
SALES, net of returns and discounts $ 221,385 $ 22,026 $ 1,976,672 $ 153,261
COST OF GOODS SOLD 133,884 10,572 1,499,185 73,277
GROSS PROFIT 87,501 11,454 477,487 79,984
OPERATING EXPENSES:
General and administrative 163,346 505 414,057 66,718
Selling expense 123,941 58,630 457,579 288,500
Total Operating Expenses 287,287 59,135 871,636 355,218
LOSS FROM OPERATIONS (199,786) (47,681) (394,149) (275,234)
OTHER EXPENSE):
Interest expense (11,539) - (49,147) -
Other expense - - - -
Total Other (Expense) (211,325) (47,681) (443,296) (275,234)
LOSS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES
CURRENT TAX EXPENSE - - - -
DEFERRED TAX EXPENSE - - - -
LOSS FROM OPERATIONS BEFORE
DISCONTINUED OPERATIONS (211,325) (47,681) (443,296) (275,234)
DISCONTINUED OPERATIONS:
Loss from discontinued operations - - - (307,458)
Loss on disposal of discontinued
operations - - - -
Total loss from discontinued
operations - - - (307,458)
NET (LOSS) $(211,325) $(47,681) $ (443,296) $(582,692)
(LOSS) PER COMMON SHARE:
Loss from operation (.01) (.00) (.02) (.01)
Loss from discontinued operations - - - -
Loss from disposal - - - (.02)
$ (.01) $ (.00) $ (.02) $ (.03)
The accompanying notes are an integral part of these unaudited
condensed financial statements.
6
LIBERTY MINT, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
[Unaudited]
For the Nine
Months Ended
September 30,
_______________________
2000 1999
______________________
Cash Flows Provided by Operating Activities:
Net loss $ (443,296) $ (582,692)
______________________
Adjustments to reconcile net loss
to net cash used by operating activities:
Depreciation and amortization 17,255 122
Non-cash expenses, including stock issued for
services & interest expense 223,021 -
Bad debt expense 51,732 -
Changes in assets and liabilities:
Decrease in accounts receivable 154,777 8,505
(Increase) decrease in inventory 656,680 7,851
Decrease in prepaid expenses (3,779) (18,000)
(Increase) in other assets 207 -
Increase in accounts payable 102,282 14,607
(Decrease) in factoring advances (80,240) -
(Decrease) in accrued expenses (56,360) -
(Decrease) in customer deposits (735,625) -
(Decrease) in liabilities of discontinued operations (24,665) -
______________________
Net Cash (Used) by Operating Activities (138,011) (569,607)
______________________
Cash Flows Provided by Investing Activities:
Purchases of property and equipment (177,716) -
______________________
Net Cash (Used) by Investing Activities (177,716)
______________________
Cash Flows Provided by Financing Activities:
Proceeds from Issuance of common stock 305,000 538,396
Increase in notes payable - related party - -
______________________
Net Cash Provided by Financing Activities 305,000 538,396
______________________
Net Increase (Decrease) in Cash and Cash Equivalents (10,727) (31,211)
Cash and Cash Equivalents at Beginning of Period 53,858 52,223
______________________
Cash and Cash Equivalents at End of Period $ 43,131 $ 21,012
______________________
[Continued]
7
LIBERTY MINT, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
[Continued]
For the Nine
Months Ended
September 30,
________________________
2000 1999
_______________________
Cash Flows Provided by Operating Supplemental Disclosures of Cash
Flow Information:
Cash paid during the period for:
Interest $ 49,148 $ -
Income taxes $ - $ -
Supplemental Disclosures of Non-Cash Investing and Financing
Activities:
For the nine months ended September 30, 2000:
The Company issued a total of 2,531,724 shares of common
stock for $183,271 of services rendered.
The Company issued 315,000 shares of common stock to an
employee for $21,000 of services payable.
The Company issued 100,000 shares of common stock valued at
$18,750 in connection with a stock guarantee.
For the nine months ended September 30, 1999:
None
The accompanying notes are an integral part of these unaudited
condensed financial
statements.
8
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 proprietary 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 September 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 September 30, 2000 are not necessarily
indicative of the operating results for the full year.
9
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 relating to these operations was $4,081,880.
NOTE 3 - GOING CONCERN
The Company has incurred significant losses during 2000 and
1999 and has current liabilities in excess of current assets
at September 30, 2000. As of September 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
September 30, 2000 and December 31, 1999:
September 30, December 31,
2000 1999
_____________ _______________
Production and refining equipment $ 183,858 $ 14,903
Lease hold improvements 8,954 -
Less: accumulated depreciation
and amortization (17,654) (206)
______________________________
$ 175,158 $ 14,697
_______________________________
Depreciation and amortization expense for the nine months
ended September 30, 2000 and 1999, amounted to $17,654 and
$122, respectively.
10
LIBERTY MINT, LTD. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - ACCRUED LIABILITIES
The following is a summary of accrued liabilities:
September 30, December 31,
2000 1999
_____________ _____________
Payroll costs $ 135,878 $ 205,400
Conversion feature of
notes payable (Note 7) 133,334 133,334
Contingency on stock guarantee 62,500 42,500
Accrued interest 64,640 46,478
Cost prepayment - 25,000
_____________ _____________
$ 396,352 $ 452,712
_____________ _____________
NOTE 6 - CAPITAL STOCK
During February 2000, the Company issued 1,200,000 shares of
common stock in exercise of options. Proceeds received
amounted to $80,000, (or $.07 per share).
During March 2000, the Company issued 90,000 shares of common
stock to a consultant for services performed, valued at
$6,000, (or $.07 per share).
During March 2000, 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).
During March 2000, the Company issued 36,000 shares of common
stock to consultants for services performed valued at $2,400
(or $.07 per share).
During April 2000, the Company issued 105,000 shares of common
stock to a consultant for services performed, valued at $7,000
(or .07 per share).
During July 2000, the Company issued 600,000 shares of common
stock for $100,000 in cash (or $.1667 per share).
During September 2000, the Company issued 180,000 shares of
common stock to an attorney for services performed, valued at
$45,000 (or .25 per share).
During September 2000, the Company issued 100,000 shares of
common stock valued at 18,750 or .1875 per share related to a
stock guarantee [See Note 10].
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 September 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 is due on demand. At
September 30, 2000, accrued interest amounted to $64,640.
11
LIBERTY MINT, LTD. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7 - RELATED PARTY TRANSACTIONS [Continued]
The Company had at September 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).
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 September 30, 2000, unused
operating loss carryforwards of approximately $4,345,000
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 $1,477,000 as
of September 30, 2000, with an offsetting valuation allowance
at year end of the same amount resulting in a change in the
valuation allowance of approximately $151,000 during the nine
months ended September 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 nine
months ended September 30, 2000, and 1999:
For the Nine
Months Ended
September 30,
______________________
2000 1999
____________________
Loss from continuing operations available
to common stockholders (Numerator) $(443,269) $ (275,234)
Loss from discontinued operations (numerator) - (307,458)
Weighted average number of common shares
outstanding used in basic earnings per share
(Denominator) 28,914,878 18,858,973
12
LIBERTY MINT, LTD. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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. During September 2000 the Company
issued an additional 100,000 share of common stock at .1875
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 $62,500
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 corporations,
associations, government agencies, 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 entertainment and
sports related collectibles.
The Company has identified three areas which it will attempt to
cultivate through its marketing efforts: 1) gift items of
general interest and custom coins 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 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.
14
The Great Western Mint, Inc.
For the present time, GWM will focus only on its core custom
minting sales until such time as targeted goals are met. To
this end, GWM has implemented a sales program and is hiring
additional employees to support this effort. The program is
designed to be a business to business marketing effort whereby
the Company is vigorously targeting business, institutions and
agencies around the country to purchase the Company's custom
minted products. The Company anticipates increased sales as a
result of the new sales program.
In keeping a focus on custom minting sales, GWM has entered an
agreement with Cargill Consulting Group, Inc., whereby Cargill
provides leads for sales of custom minted products. Cargill
uses a variety of methods to generate inquiries and then provides
a profile for each inquiry. After the initial contact, Cargill
will follow up with the inquiry. Management expects the Cargill
system will create efficiencies and help enable GWM to meet its
sales targets in 2001. Cargill was paid $16,500 for initial
consulting services and set-up of the system. GWM has agreed to
pay $2,500 on a monthly basis for as long as Management is
satisfied with the services provided by Cargill. Any monthly
fees accrued are deferred until January 2001.
Liberty Mint Marketing, Inc.
The Company has achieved a measure of industry recognition with
its SCCS products. As a result, the Company is beginning to
attract the interest of other merchandisers of music related
products. Management's current strategy is to penetrate the
market with SCCS products by entering strategic alliances with
these merchandisers thus allowing the Company to take advantage
of already developed marketing channels.
The Company is currently negotiating with a number of
merchandisers to enter such alliances.
General
On August 1, 2000, the Company entered a consulting agreement
with RealSense.com, an investor relations firm. The term of the
agreement is for six months and is at a rate of $4,000 per month.
RealSense will facilitate the Company's public relations,
arranging market awareness of the Company, respond to investor
inquiries and provide strategic planning for additional exposure.
During the third quarter of 2000, through the consulting company,
The WebCom Group, Inc., the Company activated three websites;
www.libertymint.com., www.greatwesternmint.com and
www.superstarseries.com. The Company entered a management
agreement with The WebCom Group, Inc. to maintain and promote the
web sites.
During the first three quarters 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 three quarters 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 three quarters of
2000 is significantly
15
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 50% 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 September 30, 2000 and 1999
Gross revenues for the quarter ended September 30, 2000 were
$221,385 compared to $22,026 for the same period in 1999, an
increase of $199,359. The gross revenues for September 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 $133,884 or 67% of revenues for the
quarter ended on September 30, 2000, compared to $10,572 or 48%
of revenues for the third quarter of 1999.
Gross profit was $87,501 for the quarter ended on September 30,
2000 and $11,454 for the comparable quarter in 1999. Gross
profit as a percentage of revenues was 44% and 52%, respectively.
General and administrative expenses were $287,287 for the quarter
ended September 30, 2000 and $59,135 for the comparable period in
1999, an increase of $228,152. 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 $199,786 during the quarter
ended September 30, 2000 compared to an operating loss of $47,681
for the comparable quarter in 1999. Approximately 50% of the
losses are due to increased operating costs of Liberty Mint, Ltd.
The increase is because of the Company's efforts to file a
registration statement with the Securities and Exchange
Commission and to file quarterly reports thereafter. These
expenses accrued over approximately nine months but were only
booked this quarter. The remaining losses are attributed evenly
between the Company's two subsidiaries.
During the quarter ended September 30, 2000, the Company incurred
interest expenses in the amount of $11,539. During the
comparable period in 1999, the Company incurred interest expenses
in the amount of $-0-. The primary reason for the increase is
factoring costs incurred by The Great Western Mint.
Nine Month periods Ended September 30, 2000 and 1999
16
Gross revenue for the nine months ended September 30, 2000 were
$1,976,672 compared to $153,261 for the same period in 1999, an
increase of $1,823,411. The gross revenues for the nine months
ending September 30, 2000 were higher than the comparable period
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 $1,499,185 or 75.8% of revenues for the
nine months ended on September 30, 2000, compared to $73,227 or
47.8% of revenues for the nine months ended September 30, 1999.
Gross profit was $477,487 for the nine months ended on September
30, 2000 and $79,984 for the comparable quarter in 1999. Gross
profit as a percentage of revenues was 24% and 52.18%,
respectively.
General and administrative expenses were $871,636 for the nine
months ended September 30, 2000 and $355,218 for the comparable
period in 1999, an increase of $516,418. 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 $394,149 during nine months
ended September 30, 2000 compared to an operating loss of
$275,234 for the comparable period in 1999.
During the nine months ended September 30, 2000, the Company
incurred interest expenses in the amount of $49,147. During the
comparable period in 1999, the Company incurred interest expenses
in the amount of $-0-. The primary reason for the increase is
factoring costs incurred by The Great Western Mint.
Capital Resources and Liquidity
At September 30, 2000, the Company had current assets of $509,144
and total assets of $690,495 as compared to $1,379,281 and
$1,400,378, respectively at December 31, 1999. The Company had a
working capital deficit of $4,345,238 compared to a working
capital deficit of $3,901,943 at December 31, 1999.
The stockholders' deficit in the Company was $797,532 as of
September 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 continues to be under-capitalized. However,
management believes it has identified the areas in which the
company can generate revenue and be effective. To this end, the
Company is implementing two new strategies to increase sales and
generate additional
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revenue. In an effort to accelerate the implementation of these
strategies, management intends to pursue raising additional
capital through equity financing.
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 it 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. The
Company anticipates entering a settlement agreement with both
agencies whereby the Company will be obligated to make monthly
payments. 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 extended a
settlement offer of its common stock to the parties who are owed
money by Liberty Mint, Inc., and anticipates completing
negotiations by mid November, 2000. To date, none of the
approximately 15 parties nor the UDCA have formally filed any
charges 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 $33,000, with which the Plaintiff agrees. The
Company is currently negotiating settlement terms with the
Plaintiff and anticipates reaching a satisfactory agreement in
the near future.
The Company received a Complaint filed in District Court, Clark
County, Nevada, Case No. A423386, Dept. No. XVII, dated August
24, 2000, naming Liberty Mint, Ltd., as defendant
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among other parties. The Complaint was brought by Jerry Schuetz
as Plaintiff. The Compliant alleges that Liberty Mint, Ltd. as
alter ego of other named defendants, executed silver leases with
the Plaintiff and has not made the required payments. The
Complaint asks for an award of in excess of $150,000 along with
interest, punitive damages in an amount in excess of $10,000 and
attorney's fees and costs. The Company believes it should not be
a party to the Complaint and that the alleged events occurred in
1985 and 1986, at a time when the Company did not exist and
therefore could not be an alter ego of the named defendants. The
Company has denied any responsibility. However, the Company is
in discussions with other defendants to explore the possibility
of a mutually satisfactory settlement among defendants and the
Plaintiff.
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 2. Change in Securities and Use of Proceeds
On July 2, 2000, the Company issued 600,000 shares of common
stock for $100,000 cash to an accredited investor. The Company
relied on the exemption from registration under section 4(6) of
the 1933 Act. The shares were not issued in connection with any
public offering and no commissions were paid on the transaction.
On September 19, 2000, the Company issued 180,000 shares of
common stock valued at $45,000 to an individual for services
rendered to the Company pursuant to a written compensation plan.
The Company registered the shares under an S-8 registration
statement filed with the Securities and Exchange Commission.
On September 30, 2000, the Company issued 100,000 shares of
common stock valued at $50,000 to Donna O'Dell. The stock was
issued pursuant to an agreement entered in 1998 whereby the
Company received ITEX barter credits and further guaranteed the
value of its shares to be $1.00 after one year. If the shares
were not valued at $1.00 after one year the Company committed to
issuing additional shares to bring the total value of all shares
issued to Donna O'Dell to $100,000. The Company relied on
Section 4(2) of the Securities Act of 1933 to effect the
transaction. The shares were not issued in connection with any
public offering and no commissions were paid on the transaction.
Item 5. Other Information
The Company effected a six for one forward split of its issued
and outstanding common stock for shareholders of record on August
11, 2000.
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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 September 30, 2000.
Exhibit No. SEC Ref. Title
Location
1 10 RealSense Contract Attached
2 27 Financial Data Schedule Attached
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: November 14, 2000 /s/ Dan Southwick
President, Chief Executive Officer and Director
Date: November 14, 2000 /s/ Eugene Pankrantz
Eugene Pankrantz
Controller
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