SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to .
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Commission File Number 0-18565
SEMPER RESOURCES CORPORATION
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(Exact name of small business issuer as specified in its charter)
Nevada 93-0947570
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(State or other jurisdiction of
incorporation or organization (IRS Employer Identification Number)
8484 Wilshire Blvd., Suite 525, Beverly Hills, CA 90211
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(Address of principal executive offices)
(213) 658-1477
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(Issuer's telephone number)
5277 Cameron Street, Suite 130, Las Vegas, NV 89118
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(Former name, former address and former fiscal year if changed since last
report)
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 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
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As of October 31, 1996 there were 25,207,964 shares of the issuer's Common
Stock, $.001 par value, outstanding.
SEMPER RESOURCES CORPORATION
INDEX
Page
Number
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets as of September 30, 1996
and December 31, 1995..........................................3
Statements of Operations for the Three Months and
Nine Months Ended September 30, 1996 and 1995..................4
Statements of Cash Flows for the Nine Months
Ended September 30, 1996 and 1995..............................5
Notes to Financial Statements..................................6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................8
PART II - OTHER INFORMATION.............................................10
SIGNATURES..............................................................11
PART I - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
SEMPER RESOURCES CORPORATION
BALANCE SHEETS (Unaudited)
September 30, December 31,
1996 1995
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ASSETS
Current assets:
Cash $ 114,383 $ 151
Prepaid Expenses 38,110 -
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Total current assets: 152,493 151
Property & equipment, net - -
Other assets:
Joint venture timber concessions 7,098,948 7,098,948
Goodwill, net 103,071 108,626
Royalty advances 68,620 -
Deposits 110,169 -
Other 6,750 -
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Total other assets 7,387,558 7,207,574
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Total assets $ 7,540,051 $ 7,207,725
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LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Accounts payable $ 29,923 $ 10,000
Accrued expenses 10,884 2,670
Advances from related parties 4,045 5,100
Notes payable due related parties 100,077 70,000
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Total current liabilities 144,929 87,770
Stockholders' equity
Common Stock, $.001 par value 25,208 118,690
Preferred Stock $.001 par value, Series A 1 -
Additional paid in capital 10,627,874 10,022,643
Accumulated deficit (2,471,991) (2,471,991)
Deficit accumulated during the development stage (785,970) (549,387)
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Total stockholders' equity 7,395,122 7,119,955
Total liabilities and stockholder' equity $ 7,540,051 $ 7,207,725
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See accompanying notes to financial statements
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SEMPER RESOURCES CORPORATION
STATEMENT OF OPERATIONS (Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
1996 1995 1996 1995
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Revenues
Sales $ - $ - $ - $ -
Expenses:
Selling, general &
administrative 89,756 32,775 227,813 57,635
Depreciation and amortization 1,852 47 5,555 281
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Total expenses 91,608 32,822 233,368 57,916
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Loss from operations (91,608) (32,822) (233,368) (57,916)
Other income (expenses)
Interest expenses (3,027) - (8,214) -
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Net loss $ (94,635) $ (32,822) $ (241,582) $ (57,916)
========== ========= ========== =========
Loss per share $ (.00) $ (.01) $ (.01) $ (.02)
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Weighted average shares
outstanding 25,207,964 3,379,279 25,087,964 3,066,498
========== ========== ========== =========
See accompanying notes to financial statements
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SEMPER RESOURCES CORPORATION
STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended September 30,
1996 1995
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(241,582) $ (57,916)
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation & Amortization 5,555 281
Changes in assets and liabilities:
Prepaid expenses (38,110) -
Other assets (increase) (178,789) -
Accounts payable and other liabilities 27,082 (2,017)
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Net cash (used in) operating activities (425,844) (59,652)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sales of common stock 280,000 26,850
Proceeds from sales of preferred stock 230,000 -
Loan proceeds 30,076 50,000
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Net cash provided by financing activities 540,076 76,850
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Net increase (decrease) in cash 114,232 17,198
Cash and cash equivalents, at beginning
of period 151 27
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Cash and cash equivalents, at end of period $ 114,383 $ 17,225
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See accompanying notes to financial statements.
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SEMPER RESOURCES CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. INTERIM FINANCIAL PRESENTATION
The financial statements have been prepared by the Company without audit
and are subject to year-end adjustment. Certain information and footnote
disclosure normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission. These interim statements should be
read in conjunction with the audited financial statements filed by the
Company on Form 10-K with the Securities and Exchange Commission. The
financial statements reflect all adjustments (which include only normal
recurring adjustments) which, in the opinion of management, are necessary
to present fairly the Company's financial position, results of operations
and cash flows.
Results of operations for the three months and nine months ended September
30, 1996 and 1995, are not necessarily indicative of results to be
achieved for the full fiscal year.
2. SHAREHOLDER'S EQUITY
During the nine months ended September 30, 1996, the Company issued, for
$230,000, 230 shares of Series A 12% Preferred Stock to an offshore
investor pursuant to Regulation S under the Securities Act of 1933, as
amended. The preferred shares are convertible into common stock, at the
option of the holder until December 31, 1997, at a price of $1.50 per
share. The preferred shares are entitled to receive a 12% dividend
payable semi-annually in cash or, at the Company's option, in common stock
(at $1.50 per share).
The preferred shares have a liquidation preference of $1,000 per share and
are subject, at the Company's option, to forced conversion or redemption
at $1,000 per share on or after December 31, 1997.
During the nine months ended September 30, 1996, the Company issued 20,000
shares of common stock at $1.50 per share for a total of $30,000 and
83,333 shares of common stock at $3.00 per share, or a total of
$250,000. Both were issued pursuant to a private placement under
Regulation D of the Securities Act of 1933, as amended. Pursuant to
the placement of those shares, the Company granted to the holders of
such shares demand registration rights commencing August 24, 1996 and
expiring February 24, 1997.
3. PROPOSED ACQUISITION OF FREMONT FOREST PRODUCTS
In September of 1996, the Company entered into an Asset Purchase and Sale
Agreement with Fremont Forest Products ("Fremont") pursuant to which the
Company agreed to purchase, through a subsidiary, and Fremont agreed to
sell substantially all of the assets utilized by Fremont in the operation
of a lumber and building products dock terminal business in Long Beach and
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Whittier, California. The purchase price of the assets to be acquired is
$1,300,000 plus 500,000 shares of common stock. $100,000 of the purchase
price was paid on execution of the agreement with the balance being
payable at closing which shall be no later than December 4, 1996.
In connection with the proposed purchase of the assets of Fremont, the
Company agreed to loan $500,000 of working capital to its newly formed
subsidiary for use in connection with the acquired operation. As a
condition of the contemplated purchase and sale, the Company and the two
principal officers of Fremont will enter into a Consulting and
Noncompetition Agreement providing for monthly consulting fees of $4,000
to the President of Fremont and an Employment Agreement providing for a
base salary of $100,000 annually to James Salo, the former Vice President
of Fremont, who will serve as President of the Company's newly formed
subsidiary.
Consummation of the Fremont acquisition is subject to various
contingencies, including the arrangement of financing for the purchase.
As of November 1, 1996, the Company lacked adequate funds to complete the
acquisition and had no commitments from third parties to provide such
funding. In the event the Company is unable, or elects not, to close the
acquisition, other than as a result of Fremont's failure to deliver the
assets to be acquired, the $100,000 deposit paid by the Company shall be
forfeited to Fremont.
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ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
MATERIAL CHANGES IN RESULTS OF OPERATIONS
There were no revenues for either the nine months ended September 30, 1996 or
September 30, 1995 as the sole business activity of the Company was its search
for a business to acquire and the acquisition of certain timber concessions and
the planning for their development.
Operating expenses increased by $175,452, or 302.9%, to $233,368 from $57,916
for the nine months ended September 30, 1995. This increase is the result of
costs incurred in evaluating the acquisition of certain timber concessions and
planning their development. In addition, the Company incurred interest expense
of $8,214 on a shareholder loan for the nine months ended September 30, 1996.
The Company had no interest expense for the corresponding period of the prior
year.
As discussed below, the Company has entered into an agreement to acquire
substantially all of the assets of Fremont Forest Products ("Fremont") in the
operation of a lumber and building products dock terminal. In the event the
Company is successful in acquiring the Fremont assets, future operating results
are expected to change materially to reflect such operations.
CHANGES IN FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
For the past twelve months, the Company has funded its operating losses and
capital requirements through the sale of stock and loans from its shareholders.
As of September 30, 1996, the Company had a cash balance of $114,383 and
working capital of $7,563.
Net cash used in operating activities increased to $425,844 from $59,652 for
the nine months ended September 30, 1996 and 1995, respectively. The increase
in cash used in operations resulted from the evaluation of the timber
concessions and the planning for their development.
Net cash provided by financing activities increased to $540,076 from $76,850
for the nine months ended September 30, 1996 and 1995, respectively. This
increase is attributable to increased sales of common stock and preferred stock
and a loan from the principal shareholder.
At September 30, 1996, the Company had a demand loan payable to a shareholder
of $100,077.
In September of 1996, the Company entered into an Asset Purchase and Sale
Agreement with Fremont Forest Products ("Fremont") pursuant to which the
Company agreed to purchase, through a subsidiary, and Fremont agreed to sell
substantially all of the assets utilized by Fremont in the operation of a
lumber and building products dock terminal business in Whittier, California.
The purchase price of the assets to be acquired is $1,300,000 plus 500,000
shares of common stock. $100,000 of the purchase price was paid on execution of
the agreement with the balance being payable at closing which shall be no later
than December 4, 1996.
In connection with the proposed purchase of the assets of Fremont, the Company
agreed to loan $500,000 of working capital to its newly formed subsidiary for
use in connection with the acquired operation. As a condition of the
contemplated purchase and sale, the Company and the two principal officers of
Fremont will enter into a Consulting and Noncompetition Agreement providing for
monthly consulting fees of $4,000 to the President of Fremont and an Employment
Agreement providing for a base salary of $100,000 annually to James Salo, the
former Vice President of Fremont, who will serve as President of the Company's
newly formed subsidiary.
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Consummation of the Fremont acquisition is subject to various contingencies,
including the arrangement of financing for the purchase. As of November 1,
1996, the Company lacked adequate funds to complete the acquisition and had no
commitments from third parties to provide such funding. In the event the
Company is unable, or elects not, to close the acquisition, other than as a
result of Fremont's failure to deliver the assets to be acquired, the $100,000
deposit paid by the Company shall be forfeited to Fremont.
The Company has experienced significant operating losses throughout its
history, and the acquisition of Resources of the Pacific, Inc. will require
substantial funds for the development of its business. Therefore,
the Company's ability to survive is dependent on its ability to raise capital
through the issuance of stock or borrowing of additional funds. Without the
success of one of these options, the Company will not have sufficient cash to
satisfy its working capital and investment requirements for the next twelve
months.
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
Exhibit
Number Description
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2.1 Asset Purchase and Sale Agreement
3.1 Restated Articles of Incorporation
3.2 Certificate of Designation Fixing terms of Series A
Preferred Stock
b. Reports on Form 8-K
None
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereto duly authorized.
(REGISTRANT) SEMPER RESOURCES CORPORATION
BY (SIGNATURE) /s/ Robert A. Dietrich
(NAME AND TITLE) Robert A. Dietrich, President and
Chief Executive Officer
(DATE) November 18, 1996
BY (SIGNATURE) /s/ John H. Brebbia
(NAME AND TITLE) John H. Brebbia, Chief Financial Officer
(DATE) November 18, 1996
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