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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
FOR THE QUARTER ENDED MARCH 31, 2000
OR
[ ] 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. 0-15474
AMERALIA, INC.
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(Exact name of Company as specified in its charter)
A Utah Corporation
I.R.S. Employer Identification No. 87-0403973
311 RALEIGH ROAD, KENILWORTH, IL 60043
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(Address of Principal Executive Offices)
(847) 256 9021
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(Company's telephone number, including area code)
Registrant (1) has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 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.
As of May 1, 2000 the number of shares outstanding of the company's $.01 par
value common stock was 8,691,049 and the number of shares of $.05 par value
preference stock was 2,986.
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AMERALIA, INC.
INDEX TO FORM 10-Q
Page
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PART I: FINANCIAL INFORMATION
Item 1: Financial Statements
Balance Sheets - March 31, 2000 and June 30, 1999 1
Statements of Operations for the Quarters and Nine Months
ending March 31, 2000 & 1999 and from the beginning of
Development Stage on July 1,1992 to March 31, 2000 3
Statements of Cash Flows for the Nine Months ending
March 31, 2000 & 1999 and from the beginning of Development
Stage on July 1, 1992 to March 31, 2000 4
Notes to Financial Statements 6
Item 2: Management's Discussion and Analysis of Financial Condition
and Results of Operations. 7
PART II: OTHER INFORMATION
Item 2: Changes in Securities 8
SIGNATURE 8
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AMERALIA INC
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
March 31 June 30
2000 1999
------------- -------------
ASSETS
Current Assets:
Cash at bank $ 79,502 $ 312,104
Restricted cash 91,971 991,305
Prepaid expenses 62,284 30,082
Interest receivable 2,363 1,167
Related party receivables 103,508 43,008
------------- -------------
Total Current Assets: $ 339,628 $ 1,377,666
Fixed Assets $ 27,869 $ 24,202
Other Assets:
Lease acquisition and exploration costs $ 3,023,287 $ 3,023,287
Plant construction 8,222,483 1,250,000
Deferred financing costs 520,466 110,000
Note receivable - related party 20,000 25,000
Deposits 72,810 25,906
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Total Assets: $ 12,226,543 $ 5,836,061
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(Continued over page)
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AMERALIA INC
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
March 31 June 30
2000 1999
------------ ------------
LIABILITIES & SHAREHOLDERS' FUNDS
Current liabilities:
Accounts payable $ 710,713 $ 232,017
Royalties payable 335,417 279,167
Bank overdraft -- 5,702
Accrued expenses 12,265 88,219
Due to related parties 46,798 9,333
Notes payable - current portion 5,504,000 4,000
Interest payable 31,935 1,290
------------ ------------
Total current liabilities $ 6,641,128 $ 619,728
Long term liabilities -- --
------------ ------------
Total liabilities $ 6,641,128 $ 619,728
------------ ------------
Commitments and contingent liabilities -- 303,800
SHAREHOLDERS' EQUITY
Preferred stock, $0.05 par value; 1,000,000 authorized; 2,986
issued at March 31, 2000 and June 30, 1999: 149 149
Common stock, $.01 par value; 100,000,000 shares authorized;
Issued at March 31, 2000: 8,691,049 and at June 30, 1999: 7,659,766: 86,910 76,598
Subscriptions receivable 520,000 --
Additional paid in capital 18,994,434 16,545,797
Accumulated deficit (14,016,078) (11,710,011)
------------ ------------
Total Shareholders' Funds: $ 5,585,415 $ 4,912,533
------------ ------------
Total Liabilities & Shareholders' Equity: $ 12,226,543 $ 5,836,061
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AMERALIA INC
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
From the
Beginning of
Development
Qtr Qtr Nine mths Nine mths Stage on
ending ending ending ending Jul 1, 1992 to
Mar 31 Mar 31 Mar 31 Mar 31 Mar 31
2000 1999 2000 1999 2000
----------- ----------- ----------- ----------- --------------
REVENUES $ -- $ -- $ -- $ -- $ --
EXPENSES
General & administrative 568,558 421,913 1,596,615 904,258 7,662,727
Depreciation & amortization 160,927 1,129 296,940 4,375 366,910
----------- ----------- ----------- ----------- -----------
Total Expenses: $ 729,485 $ 423,042 $ 1,893,555 $ 908,633 8,029,637
----------- ----------- ----------- ----------- -----------
(LOSS) FROM OPERATIONS $ (729,485) $ (423,042) $(1,893,555) $ (908,633) $(8,029,637)
----------- ----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE)
Other income -- -- -- -- 29
Investment income -- -- -- -- 89,760
Interest income 1,575 7,464 39,397 15,572 318,913
Interest expense (120,080) (4,199) (227,960) (17,467) (865,008)
Foreign currency gain (loss) -- 6,210 -- 16,414 (63,572)
----------- ----------- ----------- ----------- -----------
Total other income (expense) (118,505) 9,475 (188,563) 14,519 (519,878)
----------- ----------- ----------- ----------- -----------
NET LOSS BEFORE
INCOME TAX EXPENSE $ (847,990) $ (413,567) $(2,082,118) $ (894,114) $(8,549,515)
----------- ----------- ----------- ----------- -----------
Income tax expense -- -- -- -- --
----------- ----------- ----------- ----------- -----------
NET LOSS $ (847,990) $ (413,567) $(2,082,118) $ (894,114) $(8,549,515)
----------- ----------- ----------- ----------- -----------
BASIC NET LOSS PER SHARE $ (0.10) $ (0.06) $ (0.25) $ (0.14)
DILUTED NET LOSS PER SHARE $ (0.07) $ (0.04) $ (0.19) $ (0.10)
WEIGHTED AVERAGE
SHARES OUTSTANDING ('000) 8,375 6,996 8,175 6,489
FULLY DILUTED AVERAGE
SHARES OUTSTANDING ('000) 11,361 9,982 11,161 9,250
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AMERALIA INC
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
From the
Beginning of
Development
Nine mths Nine mths Stage on
ending ending Jul 1, 1992 to
Mar 31 Mar 31 Mar 31
2000 1999 2000
------------- ------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (2,082,118) $ (894,114) $ (8,549,515)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Bad debt -- -- 624,798
Stock issued for services rendered -- -- 65,000
Depreciation & amortisation 296,940 4,375 376,488
Exchange (gain) loss (16,414) (168,556)
Change in Operating Assets and Liabilities:
(Increase) Decrease in:
Prepayments -- -- 18,000
Notes receivable -- -- 1,300,497
Restricted cash 899,334 -- (91,971)
Accounts & interest receivable (1,196) -- (1,698)
Related parties receivables (60,500) (175,996) (103,508)
Prepaid expenses (32,202) (41,400) (62,284)
Deposits (46,904) -- (72,810)
Other assets (119,526) -- (229,526)
Increase (decrease) in:
Bank overdraft (5,702) -- --
Due to related parties 37,465 (31,728) (34,504)
Accounts payable 174,896 6,473 685,609
Accrued expenses (75,954) -- (56,118)
Royalties payable 56,250 56,250 297,917
Interest payable 30,645 430 (87,131)
------------- ------------- -------------
Cash flows from operating activities (928,572) (1,092,124) (6,089,312)
CASH FLOWS FROM INVESTING ACTIVITIES
Lease exploration & development expenditure -- (390,000) (2,177,890)
Plant construction (5,672,483) -- (6,922,483)
Purchase of property & equipment (11,547) (17,148) (103,076)
Cash paid on note receivable - related 5,000 (25,000) (20,000)
Liquidation of RIT investment -- -- 418,346
Cash received from notes receivable -- -- (144,853)
------------- ------------- -------------
Cash flows from investing activities (5,679,030) (432,148) (8,949,956)
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AMERALIA INC
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
From the
Beginning of
Development
Nine mths Nine mths Stage on
ending ending Jul 1, 1992 to
Mar 31 Mar 31 Mar 31
2000 1999 2000
----------- ----------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash received from issuance of stock $ 875,000 $ 3,570,224 $ 9,166,596
Additional capital contributed -- -- 307,372
Cash received from notes 5,500,000 -- 6,257,222
Payments on notes -- (9,278) (612,658))
----------- ----------- -----------
Cash flows from financing activities 6,375,000 3,560,946 15,118,532
NET INCREASE (DECREASE) IN CASH (232,602) 2,036,674 79,264
Cash and cash equivalents at beginning of period 312,104 707,199 238
----------- ----------- -----------
Cash and cash equivalents at end of period $ 79,502 $ 2,743,873 $ 79,502
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
Income taxes $ -- $ -- $ --
Interest $ 197,315 $ 17,037 $ 476,688
NON CASH FINANCING ACTIVITIES
Common stock issued for payment of obligations $ 223,950 $ 223,750 $ 832,731
Common stock issued for services rendered $ -- $ -- $ 65,000
Payment of preferred stock dividends through
the issuance of additional common and preferred stock $ -- $ 209,215 $ 1,294,113
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AMERALIA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
As at March 31, 2000 and June 30, 1999 and
for the Periods ended March 31, 2000 and 1999
NOTE 1. MANAGEMENT ADJUSTMENTS
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. These financial statements should be
read in conjunction with AmerAlia's June 30, 1999 Annual Report on Form 10-K.
The results of operations for the periods ended March 31, 2000 and 1999 are not
necessarily indicative of operating results for the full years.
The Financial Statements and other information furnished herein reflect
all adjustments which are, in the opinion of AmerAlia's management, necessary
for a fair presentation of the results of the interim periods covered by this
report.
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AMERALIA, INC.
(A DEVELOPMENT STAGE COMPANY)
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The future conduct of AmerAlia is dependent upon a number of factors
and there is no assurance that AmerAlia will be able to conduct its operations
as contemplated in this report. Certain statements contained in this report
using the terms 'may', 'expects to', and other terms denoting future
possibilities, are forward-looking statements. The accuracy of these statements
cannot be guaranteed as they are subject to a variety of risks which are beyond
AmerAlia's ability to predict or control. These risks can cause actual results
to differ materially from the projections or estimates contained in this report.
These risks include, but are not limited to, the possibility that the described
operations, reserves, or exploration or production activities will not be
completed on economic terms, if at all, as well as our significant working
capital deficit at March 31, 2000 and other risks described below and in our
annual report on Form 10-K for the year ended June 30, 1999. The exploration,
development and mining of mineral properties is an enterprise attendant with
high risk. Many of these risks are described in this report and it is important
that each person reviewing this report understands the significant risks which
accompany the establishment of AmerAlia's proposed operations.
Liquidity and Capital Resources
AmerAlia does not generate any operating income and, therefore,
continues to rely on raising capital from its existing shareholders and from
private offerings of its securities. During the nine months to March 31, 2000 we
borrowed $5.2 million from a commercial bank and $300,000 from an unaffiliated
investor; and raised $875,000 from the sale of common stock for cash to
accredited investors. The commercial bank loans are guaranteed by AmerAlia's
principal shareholder as explained in our current filing on Form 10K at Item
13(a) - "Certain Relationships and Related Party Transactions". Additional
funding of $230,000 was derived through an increase in accounts and royalties
payable and a further $68,000 through increases in interest payable and
liabilities to related parties.
At March 31, 2000, AmerAlia had a working capital deficit of $6.3
million as a result of our short term bank loan and other current liabilities.
We are continuing our efforts to complete the construction of our processing
plant near Rifle, Colorado under the Design/Build Agreement with US Filter for a
fixed price of $33.2 million; but we are dependent on raising a significant
amount of additional capital before we will be able to achieve that objective.
We are continuing to seek permanent financing acceptable to US Filter so that US
Filter will advance the funds necessary to complete the construction of the
plant. We have been negotiating with several different financing sources and we
are continuing negotiations with one financing source for the necessary
permanent financing, but we have not received approval for financing and we
cannot offer any assurance that our negotiations with this source, or any other
source, will be successful. In the past and recently, AmerAlia has been able to
pay its current liabilities as they have become due through financing provided
by accredited investors and by extending the maturity date of certain
obligations, although certain of our obligations are past due. AmerAlia will
attempt to meet its current obligations through funds made available to it by
shareholders and other accredited investors.
Under its Design/Build Agreement with US Filter, funding has been held
in an Escrow account. This funding has now been paid to US Filter to progress
the design and construction of the facilities proposed for the Rock School
Lease. A total of $5.1 million has been paid to US Filter in the nine months to
March 31, 2000 and a further $420,000 expended in the drilling of holes on the
lease. In addition, the Bureau of Land
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Management has now issued the necessary permits to enable construction on the
lease to proceed. The costs of obtaining these permits have been written off in
the company's accounts. Funding has also been applied to sustaining the
operating loss for the period, and increases of $60,500 in related party
receivables, $32,000 in prepaid expenses, $47,000 in prepaid expenses and
$120,000 in deferred financing costs. Accrued expenses have been reduced by
$76,000. The company has incurred costs in establishing its debt facilities as
discussed above. Of these costs, $520,000 will be satisfied by the issuance of
shares based on a formula related to the company's share price. This liability
is recorded as Subscriptions Receivable in the Company's accounts.
Results of Operations
The Company's net loss for the quarter was $848,600 compared with
$413,600 for the same period of the previous year. For the nine month period to
March 31, the loss was $2,082,000 compared with $894,100 for the prior period.
The increase is due to higher staffing, consultant and travelling costs expected
to continue as the company increases its efforts to fund and develop its
operating facilities as discussed above. However, as the level of debt carried
by the company has increased significantly, interest expense has increased to
$120,080 for the December quarter ($227,960 for the nine months). A contingent
liability disclosed in the company's accounts at June 30, 1999 for $303,800 as a
result of a dispute with a contractor was settled in January 2000 for $250,000.
Impact of Inflation
The Company believes that its activities are not materially affected by
inflation.
PART II: OTHER INFORMATION
Item 2: Changes in Securities
During the quarter ended March 31, 2000, 74,650 shares of common stock
were issued in lieu of $74,650 of dividends on Series E Preferred Stock and an
additional 100,000 shares were issued to an accredited investor for cash.
Another 24,000 shares were issued in satisfaction of loan establishment fees and
433,333 shares were issued to an accredited investor in connection with a
construction contract valued at $1.3 million.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned duly authorized.
AMERALIA, INC.
May 15, 2000 By: /s/ Robert van Mourik
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Robert van Mourik
Executive Vice President, Chief Financial
Officer and principal financial and
accounting officer.
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
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27 Financial Data Schedule