UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For quarterly period ended June 30, 2003
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number: 000-27409
LIBERTY MINT, LTD.
(Exact name of registrant as specified in its charter)
Nevada 84-1409219
(State of incorporation) (I.R.S. Employer Identification No.)
105 S. State Street, #123, Orem, Utah 84058
(Address of principal executive offices) (Zip code)
Issuer's telephone number, including area code: (801) 836-9262
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 registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes [ X ] No [ ]
As of July 28, 2003, the registrant had 999,991 post-split shares of common
stock outstanding
Transitional small business disclosure format: Yes [ ] No [X]
TABLE OF CONTENTS
PART I: FINANCIAL INFORMATION
Item 1: Financial Statements...............................................3
Item 2: Management's Discussion and Analysis...............................8
Item 3: Controls and Procedures............................................9
PART II: OTHER INFORMATION
Item 1: Legal Proceedings.................................................10
Item 2: Changes in Securities and Use of Proceeds.........................10
Item 6: Exhibits and Reports on Form 8-K..................................10
Signatures.................................................................10
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
The financial information set forth below with respect to our statements
of operations for the three and six month periods ended June 30, 2003 and 2002
is unaudited. This financial information, in the opinion of management,
includes all adjustments consisting of normal recurring entries necessary for
the fair presentation of such data. The results of operations for the six
month period ended June 30, 2003, are not necessarily indicative of results to
be expected for any subsequent period.
2
Liberty Mint Ltd.
(a Development Stage Company)
Financial Statements
June 30, 2003
3
Liberty Mint, Ltd.
(a Development Stage Company)
Balance Sheets
ASSETS
June 30, December 31,
2003 2002
------------- -------------
(Unaudited)
Current Assets
Cash and Cash Equivalents $ - $ 20
------------- -------------
Total Current Assets - 20
------------- -------------
Total Assets $ - $ 20
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 37,371 $ -
Accounts Payable - Related Party 428 -
Liabilities from Discontinued Operations 411,836 708,487
------------- -------------
Total Current Liabilities 449,635 708,487
------------- -------------
Stockholders' Equity
Preferred Stock, Authorized 10,000,000
Shares, No Par Value, No Shares Issued
and Outstanding - -
Common Stock, Authorized 50,000,000 Shares
of $.001 Par Value, Issued and Outstanding
999,991 and 856,670, Respectively 1,000 857
Additional Paid in Capital 6,847,167 6,595,519
Retained Earnings (Deficit) (7,297,802) (7,304,843)
------------- -------------
Total Stockholders' Equity (449,635) (708,467)
------------- -------------
Total Liabilities and Stockholders' Equity $ - $ 20
============= =============
4
Liberty Mint, Ltd.
(a Development Stage Company)
Statements of Operations
(Unaudited)
From
Inception of
Development
Stage
For the For the For the For the January 1,
Three Months Three Months Six Months Six Months 2003
Ended June 30, Ended June 30, Ended June 30, Ended June 30, to June 30,
2003 2002 2003 2002 2003
-------------- -------------- -------------- -------------- --------------
Revenues $ - $ - $ - $ - $ -
Cost of Sales - - - - -
-------------- -------------- -------------- -------------- --------------
Gross Profit (Loss) - - - - -
-------------- -------------- -------------- -------------- --------------
Operating Expenses
General & Administrative 37,799 - 38,049 - 38,049
-------------- -------------- -------------- -------------- --------------
Total Expenses 37,799 - 38,049 - 38,049
-------------- -------------- -------------- -------------- --------------
Net Operating Income (Loss) (37,799) - (38,049) - (38,049)
-------------- -------------- -------------- -------------- --------------
Other Income(Expense)
Other Income - - 230 - 230
Interest Expense - - - - -
-------------- -------------- -------------- -------------- --------------
Total Other Income
(Expense) - - 230 - 230
-------------- -------------- -------------- -------------- --------------
Income (Loss) Before
Income Taxes (37,799) - (37,819) - (37,819)
Provision (Benefit)
for Income Taxes - - - - -
-------------- -------------- -------------- -------------- --------------
Income (Loss) from
Continuing Operations (37,799) - (37,819) - (37,819)
-------------- -------------- -------------- -------------- --------------
Discontinued Operations:
Gain (Loss) from
Discontinued Operations
(Net of Income Taxes of $0) - 14,084 - (62,022) -
Gain (Loss) on Disposal
(Net of Income Taxes of $0) - - 44,860 - 44,860
-------------- -------------- -------------- -------------- --------------
Income (Loss) from
Discontinued Operations - 14,084 44,860 (62,022) 44,860
-------------- -------------- -------------- -------------- --------------
Net Income (Loss) $ (37,799) $ 14,084 $ 7,041 $ (62,022) $ 7,041
============== ============== ============== ============== ==============
Net Income (Loss) Per Share $ (0.04) $ 0.02 $ 0.01 $ (0.07) $ 0.01
============== ============== ============== ============== ==============
Weighted Average
Shares Outstanding 1,002,291 856,278 973,273 856,278 973,273
============== ============== ============== ============== ==============
5
Liberty Mint, Ltd.
(a Development Stage Company)
Statements of Cash Flows
(Unaudited)
From
For the Six Months Ended Inception of
June 30, Development Stage
--------------------------- January 1, 2003 to
2003 2002 June 30, 2003
------------- ------------- ------------------
Cash Flows from Operating Activities
Net Income (Loss) $ 7,041 $ (62,022) $ 7,041
Less: Loss (Gain) from Discontinued Operations (44,860) 62,022 (44,860)
------------- ------------- --------------
Income(Loss) from Continuing Operations (37,819) - (37,819)
Adjustments to Reconcile Net Loss to Net Cash
Provided by Operations:
Depreciation & Amortization - - -
Change in Assets and Liabilities:
(Increase) Decrease in:
Accounts Receivable - - -
Receivable - Related Party - - -
Prepaid Expenses - - -
Interest Receivable - - -
Increase (Decrease) in:
Accounts Payable and Accrued Expenses 37,799 - 37,799
Deferred Revenues - - -
------------- ------------- --------------
Net Cash Provided (Used) by Operating Activities (20) - (20)
------------- ------------- --------------
Cash Flows from Investing Activities: - - -
------------- ------------- --------------
Cash Flows from Financing Activities:
Proceeds from Notes Payable - - -
Proceeds from Notes Payable - Related Party - - -
------------- ------------- --------------
Net Cash Provided(Used) by Financing Activities - - -
------------- ------------- --------------
Net Cash Provided (Used) by Continuing Operations (20) - (20)
Net Cash Provided (Used) by Discontinued Operations - (579) -
------------- ------------- --------------
Increase (Decrease) in Cash (20) (579) (20)
Cash and Cash Equivalents at Beginning of Period 20 579 20
------------- ------------- --------------
Cash and Cash Equivalents at End of Period $ - $ - $ -
============= ============= ==============
Cash Paid For:
Interest $ - $ - $ -
Income Taxes $ - $ - $ -
Supplemental Disclosures of Non-Cash Investing
and Financing Activities:
Stock Issued in Settlement of Liabilities $ 251,790 $ - $ 251,790
6
Liberty Mint Ltd.
(a Development Stage Company)
Notes to the Financial Statements
June 30, 2003
GENERAL
- -------
Liberty Mint Ltd., the Company, has elected to omit substantially all
footnotes to the financial statements for the six months ended June 30, 2003
since there have been no material changes (other than indicated in other
footnotes) to the information previously reported by the Company in their
Annual Report filed on Form 10-KSB for the fiscal year ended December 31,
2002.
UNAUDITED INFORMATION
- ---------------------
The information furnished herein was taken from the books and records of the
Company without audit. However, such information reflects all adjustments
which are, in the opinion of management, necessary to properly reflect the
results of the interim period presented. The information presented is not
necessarily indicative of the results from operations expected for the full
fiscal year.
DEVELOPMENT STAGE
- -----------------
As of January 1, 2003, the Company is in the development stage as defined in
Financial Accounting Standards Board Statement No. 7. The Company has no
operations and is currently seeking business opportunities or potential
business acquisitions.
LIABILITIES FROM DISCONTINUED OPERATIONS
- ----------------------------------------
June 30, 2003 December 31, 2002
------------- -----------------
Current Liabilities:
Accounts Payable $ 86,863 $ 194,651
Accounts Payable - Related Party - 160,836
Accrued Interest - Related Party 101,315 120,000
Convertible Note Payable - Related Party 135,000 135,000
Contingent Stock Guarantee 88,658 98,000
------------- --------------
Total Current Liabilities $ 411,836 $ 708,487
============= ==============
REVERSE STOCK SPLIT
- -------------------
In February 2003, the Board of Directors authorized a 50 to 1 reverse stock
split. The financial statements have been retroactively restated for the
reverse stock split.
7
In this quarterly report references to "Liberty Mint," "we," "us," and
"our" refer to Liberty Mint, Ltd.
FORWARD LOOKING STATEMENTS
This report contains certain forward-looking statements and for this
purpose any statements contained in this report that are not statements of
historical fact may be deemed to be forward-looking statements. Without
limiting the foregoing, words such as "may," "will," "expect," "believe,"
"anticipate," "estimate" or "continue" or comparable terminology are intended
to identify forward-looking statements. These statements by their nature
involve substantial risks and uncertainties, and actual results may differ
materially depending on a variety of factors, many of which are not within
Liberty Mint's control. These factors include but are not limited to economic
conditions generally and in the industries which Liberty Mint may participate;
competition within Liberty Mint's chosen market and failure by Liberty Mint to
successfully develop business relationships.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
We have a limited operating history, have sustained operating losses since
inception and have ceased development of our products. As of January 1, 2003,
we are a development stage company and for the six month period ended June 30,
2003, we had a retained deficit of $7,297,802. These factors raise a
substantial doubt about our ability to continue as a going concern.
Management is seeking potential merger candidates or business opportunities
and anticipates that we will fund our operations through additional sales of
our common stock.
Results of Operations
The following discussions should be read in conjunction with the
financial statements included with this report and comparisons are presented
for the three and six month periods ended June 30, 2003 and 2002.
As a result of divesting ourselves of our operating subsidiaries in late
December 2001, our financial statements do not show revenues for the three and
six month periods ended June 30, 2003 and 2002. We recorded operating
expenses of $38,049 for the 2003 six month period and $37,799 for the 2003
second quarter, while not recognizing any expenses in the 2002 comparable time
periods.
We recorded income from disposal of discontinued operations of $44,860
for the 2003 six month period compared to a loss from discontinued operations
of $62,022 for the 2002 six month period. We did not recognize a loss or gain
from discontinued operations in the 2003 second quarter compared to a gain
from discontinued operations of $14,084 for the 2002 second quarter.
Our net income per common share was $0.01 for the 2003 six month period
compared to net loss per share of $0.07 for the 2002 six month period. We
recorded a net loss per share of $0.04 for the 2003 second quarter compared to
net income per share of $0.02 for the 2002 six month period. The financial
statements have been retroactively restated to reflect a 50-to-1 reverse stock
split completed in February 2003.
Liquidity and Capital Resources
At June 30, 2003, we had no cash on hand and total current liabilities of
$449,635 compared to $20 cash on hand and total current liabilities of
$708,487 at December 31, 2002. Our total current liabilities were primarily
related to $411,836 of liabilities from our discontinued operations.
Related parties have paid expenses on our behalf, forgiven notes payable
or advanced funds to us. We also relied on the issuance of common stock to
pay for services rendered to the company or to convert debt. Management
anticipates that additional capital for cash shortfalls will be provided by
loans from related parties or private placements of our common stock. We
expect to issue any stock pursuant to exemptions provided by federal and state
securities laws rather than conduct a public offering. The purchasers and
manner of issuance will be determined according to our financial needs and the
available exemptions. We also note that if we issue more
8
shares of our common stock our shareholders may experience dilution in the
value per share of their common stock.
Commitments and Contingent Liabilities
Our liabilities at the end of the 2003 six month period were primarily
related to liabilities from our discontinued operations. These liabilities
included accounts payable of $86,863, a convertible note of $135,000, accrued
interest of $101,315 and a contingent stock guarantee liability of $88,658.
Subsequently, in July 2003 litigation was instigated seeking $90,000 in legal
fees (See, "Part II, Item 1: Legal Proceedings," for further details).
The stock guarantee liability is related to two transactions that occurred
in 1998 and 1999. In October of 1998 we issued 1,200 post-split shares of
common stock to Donna O'Dell for advertising services valued at $60,000. Then
in September 1999 we issued another 800 post-split common shares to Ms. O'Dell
for advertising services valued at $40,000. We guaranteed that the shares
would be able to be sold one year later for at least $1.00 per share. When
the market price was below a $1.00 one year later, we were obligated to issue
more shares to Ms. O'Dell. In 2000 we issued an additional 2,000 post-split
shares as partial settlement of the guarantee. In March 2003, this agreement
was assigned to an unrelated third party. In the event the third party elects
to pursue a settlement, we may be required to issue approximately 1.5 million
shares (based on our recent trading price of $0.06 per share) which may result
in that third party holding over 50% of our issued and outstanding shares. At
June 30, 2003, we recorded a $88,658 accrued expense related to this
guarantee.
During the 2003 first quarter we settled an outstanding liability related
to litigation instigated in prior years. A lawsuit was filed in May 1999 in
which we were named and which alleged various causes of action related to the
liabilities of Liberty Mint, Inc., our former subsidiary. In January of 2001
management settled the suit for a total of $33,000, to be paid in six $1,000
monthly payments, six $2,000 payments and five $3,000 payments. However, we
defaulted on the required payments and in March 2003, we settled the remaining
obligation with the issuance of 6,639 shares of common stock valued at
approximately $35,000.
Financing
If we fail to raise the necessary funds through private placements, we
anticipate we will require debt financing from related or third parties. We
have not investigated the availability, source and terms for third party
financing at this time and we can not assure that funds will be available from
any source, or, if available, that we will be able to obtain the funds on
terms agreeable to us. Also, the acquisition of funding through the issuance
of debt could result in a substantial portion of any future cash flows from
operations being dedicated to the payment of principal and interest on the
indebtedness, and could render us more vulnerable to competitive and economic
downturns.
ITEM 3: CONTROLS AND PROCEDURES
Our President, who is our Chief Executive Officer and acts in the
capacity of our principal financial officer, caused disclosure controls and
procedures to be designed and established to ensure that material information
is made known to him in a timely manner by others within the company. Our
President reevaluated the effectiveness of these disclosure controls and
procedures as of the end of the period covered by this report and determined
that there continued to be no significant deficiencies in these procedures.
Also, our President evaluated the design and operation of our internal
control over financial reporting which relates to our ability to record,
process, summarize and report financial information. He did not find any
significant deficiency or material weakness which would require changes to be
made or corrective actions to be taken related to our internal control over
financial reporting. Nor did he identify fraud that involved management or
other employees who had a significant role in our internal control over
financial reporting.
9
PART II: OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
On July 9, 2003, Richard D. Surber filed a complaint in the Third
Judicial District Court in and for the County of Salt Lake, State of Utah,
alleging that Liberty Mint, Ltd. owed him approximately $90,000 for legal
services provided to the company from 1999 to the present. Management intends
to contest the fees and has filed an answer to the complaint.
ITEM 2: CHANGES IN SECURITIES AND USE OF PROCEEDS
Stock Reverse
On February 12, 2003, our board of directors authorized a 50-to-1 reverse
split of our common stock which reduced our issued and outstanding shares from
50,000,000 to 999,991. As a result, our common stock listing on the NASD OTC
Bulletin Board changed to the symbol "LBRM."
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
Part II Exhibits
3.1 Articles of Incorporation of Liberty Mint, Ltd. (Incorporated by
reference to Form 10-SB/A2, filed March 27, 2000)
3.2 Articles of Merger of Liberty Mint, Ltd. (Incorporated by reference
to Form 10-SB/A2, filed March 27, 2000)
3.3 Bylaws of Liberty Mint, Ltd (Incorporated by reference to Form
10-SB/A2, filed March 27, 2000)
31.1 Section 302 Chief Executive Officer Certification
31.2 Section 302 Principal Financial Officer Certification
32.1 Section 1350 Certification
Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act,
the registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
LIBERTY MINT, LTD.
/s/ Daniel R. Southwick
Date: August 8, 2003 By:_______________________________________________
Daniel R. Southwick
President, Secretary/Treasurer and Director
CEO and Principal Financial Officer
10