UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
__________________________________________________________________
(Mark one)
[XX] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
______________________________________________________________________________
Commission File Number: 0-6334
AURIC METALS CORPORATION
(Exact Name of small business issuer as specified in its charter)
Nevada 87-0281240
(State of Incorporation) (IRS Employer ID Number)
1475 Terminal Way, Suite E, Reno, Nevada 89502
(Address of principal executive offices)
(318) 343-4448
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or 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. YES [XX] NO [ ]
State the number of shares outstanding of each of the issuer's classes of
common equity as of the latest practicable date:
981,309 shares as of December 31, 1999, not including a total of 16,511
shares held in treasury.
Transitional Small Business Disclosure Format (check one): YES[ ] NO [XX]
AURIC METALS CORPORATION
Form 10-QSB for the Quarter ended December 31, 1999
Table of Contents
Part I - Financial Information Page
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis or Plan of Operation 11
Part II - Other Information
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
AURIC METAL CORPORATION AND SUBSIDIARY
BALANCE SHEETS
December 31, 1999 and March 31, 1999
ASSETS
Unaudited
Dec. 31, March 31,
1999 1998
------------- ------------
CURRENT ASSETS:
Cash and cash equivalents $ 171,868 $ 203,489
------------- ------------
Total Current Assets 171,868 203,489
------------- ------------
INVESTMENTS:
Marketable equity securities (Notes 3) 198,050 137,376
Other investments (Note 3) 150,824 129,224
------------- ------------
348,874 266,600
------------- ------------
PROPERTY AND EQUIPMENT AT COST
Equipment 5,375 5,375
------------- ------------
5,375 5,375
Accumulated depreciation (2,933) (2,333)
------------- ------------
2,442 3,042
------------- ------------
$ 523,184 $ 473,131
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accrued liabilities $ 25,000 $ 490
------------- ------------
Total current liabilities 25,000 490
------------- ------------
STOCKHOLDERS' EQUITY:
Common stock, $0.01 par value; Authorized:
25,000,000 shares Issued: 1,000,000 shares
(including treasury stock) 10,000 10,000
Additional paid-in capital 342,847 342,847
Unrealized loss on securities available
for sale (Note 3) ( 65,928) ( 81,577)
Accumulated earnings 224,471 212,396
Common stock in treasury at cost 18,691 shares
December 31,1999, 16,511 shares March 31,1999 ( 13,205) ( 11,025)
------------- ------------
498,185 472,641
------------- ------------
$ 523,185 $ 473,131
============= ============
The accompanying notes are an integral part of these
consolidated financial statements.
3
AURIC METAL CORPORATION AND SUBSIDIARY
UNAUDITED STATEMENTS OF CONSOLIDATED INCOME (LOSS)
For the Three Months Ended December 31, 1999 and 1998
For the Nine Months Ended December 31, 1999 and 1998
Three Three Nine Nine
Months Months Months Months
1999 1998 1999 1998
----------- ----------- ----------- -----------
REVENUES:
Oil and gas sales $ - $ - $ - $ 323
Mineral royalty 25,000 - 26,000 -
Interest income 2,054 3,081 4,706 6,786
Dividends 10,500 - 20,500 20,000
----------- ----------- ----------- -----------
37,554 3,081 51,206 27,109
----------- ----------- ----------- -----------
EXPENSES:
Mineral exploration - - 47 284
Mineral claims leasing - - 2,900 6,467
Depreciation - 210 600 629
Legal and accounting 435 1,616 7,527 7,100
Travel and lodging ( 723) - 12,362 7,638
Directors' fees - - 2,995 2,995
Office expense (Note 5) 3,000 2,000 9,000 11,000
General and administrative 527 643 3,699 8,532
----------- ----------- ----------- -----------
3,239 4,469 39,130 44,645
----------- ----------- ----------- -----------
INCOME (LOSS) 34,315 ( 1,388) 12,076 (17,536)
=========== =========== =========== ===========
NET INCOME (LOSS) PER
COMMON SHARE - basic $ .03 $ - $ .01 $ (.02)
=========== =========== =========== ===========
Weighted average number of
shares outstanding
(excluding treasury stock) 981,309 983,489 982,030 983,820
=========== =========== =========== ===========
The accompanying notes are an integral part of these consolidated
financial statements.
4
AURIC METALS CORPORATION AND SUBSIDIARY
UNAUDITED STATEMENTS OF CONSOLIDATED CASH FLOWS
Nine Months Ended December 31, 1999 and 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Dec. 31, March 31,
1999 1998
------------- ------------
Net income (loss) $ 12,075 $ (17,536)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion, amortization
And valuation allowance 600 629
Increase (decrease) in accrued liabilities 24,510 (1,028)
------------- ------------
Total adjustments 25,110 (399)
------------- ------------
Net cash provided (used) by operating activities 37,185 (17,935)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of securities and other investments (66,625) (62,703)
Purchase of office equipment - (3,802)
------------- ------------
Net cash (used) by investing activities (66,625) (66,505)
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock (2,180) (1,050)
------------- ------------
Net cash (used) by financing activities (2,180) (1,050)
------------- ------------
NET (DECREASE) IN CASH AND EQUIVALENTS (31,620) (85,490)
Cash and equivalents, beginning of period 203,489 264,819
------------- ------------
Cash and equivalents, end of period $ 171,869 $ 179,329
============= ============
The accompanying notes are an integral part of these consolidated
financial statements
5
AURIC METALS CORPORATION AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
(1) Operations:
Auric Metals Corporation (the "Company") was incorporated in Utah in May of
1969 to engage in mineral exploration. In 1985, the Company became a Nevada
corporation by merging with a wholly-owned Nevada corporation created solely
for the purpose of changing the Company's state of domicile. In subsequent
years, the Company has also engaged in oil and gas exploration, development
and production activities. The Company holds working interests in various
patented and unpatented mining claims in the Tintic Mining District of Utah.
The Company leases mining claims near Elko, Nevada from Hillcrest Mining
Company of Denver and has subleased the claims to United States Steel
Corporation. The Company presently holds a working interest in one oil and gas
well near Oklahoma City, Oklahoma which provides nominal revenue.
(2) Significant Accounting Policies:
Cash Equivalents:
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments purchased with a maturity of three months to be cash
equivalents.
Principles of consolidation:
The consolidated financial statements include the accounts of Auric Minerals
Corporation. Intercompany accounts and transactions have been eliminated in
consolidation.
Investment securities
Management determines the appropriate classification of investment securities
at the time they are acquired and evaluates the appropriateness of such
classification at each balance sheet date. Available-for-sale securities
consist of marketable equity securities not classified as trading securities.
Available-for-sale securities are stated at fair value, and unrealized holding
gains and losses, net of the related deferred tax effect, are reported as a
separate component of stockholders; equity.
Investment in unconsolidated affiliates:
Investments in affiliated companies in which ownership is 20% or more are
carried at the Company's original cost plus equity in earnings since date of
acquisition.
Investments in less than 20% owned affiliates are carried at cost or estimated
net realizable amounts, whichever is lower.
6
AURIC METALS CORPORATION AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
Mining:
Exploration and development expenditures are generally charged to expenses as
incurred until a decision is made to develop a mineral reserve. Expenditures
to bring new properties into production and major expenditures of a
nonrecurring nature are deferred and amortized ratable over production
benefitted. Expenditures for continuing development required to maintain
production are charged to expenses as incurred.
Depreciation:
Equipment is recorded at cost and depreciated on a straight-line method and
declining balance method over a five year estimated useful life.
(3) Investments consist of the following at September 30, 1999 and
December 31, 1999:
Hillcrest Mining
The Company acquired an 8% interest in Hillcrest Mining for a cost of $21,600.
Robbie claims investment
The Company acquired a 25% interest in the "Robbie" gold prospect claims owned
by Hi-Tech Exploration at a cost of $3,567. The Company's President, Mr.
James F. Fouts is also an owner of a 25% interest in these claims.
LaFonda investment
The Company owned, as of December 31, 1999, 10,000 shares of the common stock
of Corporacion De La Fonda, Inc., or approximately 10% of that company's
outstanding shares. De La Fonda, Inc. is a New Mexico hotel operation. Prior
to 1984, the Company owned more than 20% of De La Fonda and accounted for its
investment by the equity method. Since 1983, the Company's investment has
been less than 20% and the cost method of accounting has been used. The
carrying value of the investment includes $102,648 of cumulative undistributed
earnings of La Fonda added to the investment under the equity method. Income
taxes have been recognized under the assumption that undistributed earnings
would eventually be distributed as dividends, thereby qualifying for
dividends-received deductions. If the undistributed earnings are eventually
received in taxable transactions other than as dividends, an unrecognized tax
of approximately $34,900 under current rates could result.
Since the Company's President, Mr. James F. Fouts, has positions, interests or
shareholdings, in La Fonda, any transaction between the Company and this
entity cannot be deemed to be at arm's length
AURIC METALS CORPORATION AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998
December 31, March 31,
1999 1999
------------- -------------
Hillcrest Mining $ 21,600 $ -
Robbie claims investment 3,567 3,567
LaFonda investment 125,657 125,657
------------- -------------
Other investments $ 150,824 $ 129,224
============= =============
Dynamic Oil Ltd. and Great Basin Gold
Effective April 1, 1994, the Company adopted SFAS No. 115 on accounting for
certain investments in debt and equity securities. This new standard requires
that available-for-sale investments in securities that have readily
determinable fair values be measured at fair value in the balance sheet and
that unrealized holding gains and losses for these investments be reported in
a separate component of stockholders' equity until realized. At December 31,
1999 and March 31,1999 marketable investments classified as available for sale
included the following:
December 31, March 31,
1999 1999
------------- -------------
Dynamic Oil Ltd. shares at cost $ 218,953 $ 218,953
Gross unrealized holding loss 72,505 81,577
------------- -------------
Dynamic Oil Ltd. at fair value 146,448 137,376
------------- -------------
Great Basin Gold shares at cost 45,025 -
Gross unrealized holding loss 7,225 -
------------- -------------
Great Basin at fair value 52,250 -
------------- -------------
$ 198,050 $ 137,376
============= =============
No sales of Dynamic Oil or Great Basin Gold were made in 1999.
(4) Stock options:
All previously outstanding stock options expired during September 1999.
8
AURIC METALS CORPORATION AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
(5) Related party transactions:
The amounts paid to officers and directors have not been, in any sense,
negotiated at arm's length. Payments of $9,000 were made during the nine
months ended December 31, 1999 to The Fremont Corp., a corporation in which
the Company's president is principal shareholder. These payments are for
office use, bookkeeping and clerical services. Refer to Note (3) for
additional related party transactions related to the Robbie claims investment
and the LaFonda investment.
(6) Federal and state income tax:
Effective April 1, 1993, the Company adopted Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes. The cumulative effect of the
change in accounting principle is immaterial. At March 31, 1999, the Company
had, for federal tax reporting purposes, an operating loss carryforward of
approximately $50,363. This carryforward begins to expire in 2011. No benefit
has been reported in the financial statements, however, because the Company
believes there is at least a 50% chance that the carryforward will expire
unused. Accordingly, the tax benefit of the loss carryforward has been offset
by a valuation allowance of the same amount.
(7) Commitments and contingencies:
The Company is required to pay the Bureau of Land Management $100 annually on
29 leased mining claims for $2,900. Additionally the Company pays Hi-Tech
Exploration $3,567 annually for its 1/3 share of 107 leased BLM mining claims.
Rates are subject to change and failure to pay results in loss of mining
rights. The payments to BLM are in lieu of assessment work which was required
previously. The leases are cancelable annually upon notice to lessor.
(8) Fair values of financial instruments:
The amount reported in the financial statements for cash and cash equivalents,
marketable securities, and accrued liabilities approximates fair market value.
Fair market value of marketable securities was estimated using quoted market
prices. For the investment without quoted market prices, it was not possible
to estimate fair value without incurring significant costs. Additional
information is included in the footnote for the investment without fair value
disclosure.
9
AURIC METALS CORPORATION AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
December 31, 1999 March 31, 1999
Carrying Fair Carrying Fair
Amount Value Amount Value
---------- ---------- ---------- -----------
Assets:
Cash and cash
equivalents $ 171,868 $ 171,868 $ 203,489 $ 203,489
Marketable
securities 198,050 198,050 137,376 137,376
Other investments:
Investment for which it is
not practicable to determine
fair market value:
La Fonda 125,657 - 125,657 -
Hillcrest Mining 21,600 - - -
Other investment 3,567 3,567 3,567 3,567
Liabilities:
Accrued liabilities 25,000 25,000 490 490
The carrying amounts reported in the summary table, above, are shown in the
balance sheets using the same account titles and carrying amounts.
The fair value of a ten percent investment in common stock of the untraded
company (Corporacion De La Fonda, Inc.) is not disclosed, because it was not
practicable to estimate the fair value. La Fonda had net earnings for the
fiscal year ended October 31, 1998 of $1,530,036 and stockholder's equity as
of October 31, 1998 of $11,008,007. The Company has received dividends from
La Fonda averaging $1.16 per share over the last five years. The fair value
of an eight percent investment in common stock of the untraded company
(Hillcrest Mining) is not disclosed, because it was not practicable to
estimate the fair value.
10
Part I - Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
(1) Caution Regarding Forward-Looking Information
This quarterly report contains certain forward-looking statements and
information relating to the Company that are based on the beliefs of the
Company or management as well as assumptions made by and information currently
available to the Company or management. When used in this document, the words
"anticipate," "believe," "estimate," "expect" and "intend" and similar
expressions, as they relate to the Company or its management, are intended to
identify forward-looking statements. Such statements reflect the current view
of the Company regarding future events and are subject to certain risks,
uncertainties and assumptions, including the risks and uncertainties noted.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially
from those described herein as anticipated, believed, estimated, expected or
intended. In each instance, forward-looking information should be considered
in light of the accompanying meaningful cautionary statements herein.
(2) Results of Operations
Auric Metals Corporation (the "Company") is a Nevada Corporation, which
holds interests in certain natural resource properties, and a minority
interest in a corporation which owns a hotel operation in Santa Fe, New
Mexico. Over the past several years, the Company has principally been engaged
in the acquisition, exploration and development of interests in various
natural resource properties, primarily through participation with other
parties in natural resource joint ventures or other arrangements. The
Company's involvement in natural resource projects over the past few years has
decreased.
The Company is not aware of any trends that have or are reasonably likely
to have a material impact on its liquidity, net sales, revenues, or income
from continuing operations. There have been no events which have caused
material changes from period to period in one or more line items of the
financial statements or any seasonal aspects that have had a material effect
on the financial condition or results of operation.
During the preceding year, the Company has not experienced any material
changes in results of operation. For the three months ended December 31, 1999
and 1998, the Company had revenues of $37,554 and $3,081, respectively,
expenses of $3,239 and $4,469, respectively, resulting in net income of
$34,315 and a net loss of $1,388, respectively. For the nine months ended
December 31, 1999 and 1998, the Company had revenues of $51,206 and $27,109,
respectively, and expenses of $39,130 and $44,645, respectively, resulting in
net income of $12,076 and a net loss of $17,536, respectively.
11
(3) Liquidity and Capital Resources
The Company has not experienced a material change in financial condition
over the past year. At December 31, 1999, the Company had total assets of
$523,184, current liabilities of $25,000, and stockholders' equity of
$498,185. As of the year ended March 31, 1999, the Company had total assets
of $473,131, total current liabilities of $490, and stockholders' equity of
$472,641. Current assets as of December 31, 1999, consist of cash and cash
equivalents in the amount of $171,868; marketable equity securities and other
investments in the amount of $348,874; and equipment in the amount of $5,375
less depreciation.
The Company is currently seeking a suitable opportunity or opportunities
in the natural resource areas, or some other industry. As indicated, the
Company believes it has adequate capital and liquidity at the present time,
unless the Company should enter into a transaction requiring substantial
capital.
Part II - Other Information
Item 1 - Legal Proceedings
None.
Item 2 - Changes in Securities
None.
Item 3 - Defaults on Senior Securities
None.
Item 4 - Submission of Matters to a Vote of Security Holders
During the quarter ended December 31, 1999, the Company held no regularly
scheduled, called or special meetings of shareholders during the reporting
period, nor were any matters submitted to a vote of this Company's security
holders.
Item 5 - Other Information
None.
Item 6 - Exhibits and Reports on Form 8-K
None.
12
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
AURIC METALS CORPORATION
February 8, 2000 /s/ James F. Fouts
--------------------
James F. Fouts
President and Principal Executive Officer
AURIC METALS CORPORATION
February 8, 2000 /s/ Elizabeth B. Fouts
--------------------------
Elizabeth B. Fouts
Secretary/Treasurer