UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the Quarterly Period ended September 30, 2001
Commission File Number: 0-6034
STANSBURY HOLDINGS CORPORATION
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(Exact Name of Issuer as Specified in its Charter)
UTAH 87-0281239
- ------------------------------- ---------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
3435 South Yosemite Street, Suite 100, Denver, CO 80231
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(Address of Principal Executive Offices)
(720) 748-1407
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(Registrant's Telephone Number, Including Area Code)
Old Address: 8811 East Hampden Avenue,#100
Denver, Colorado 80231
No Change in telephone numbers
Indicate by check mark whether the 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.
YES [ X ] NO [ ]
Indicate the number of shares outstanding of the issuer's classes of common
stock as of the latest practicable date.
At September 30, 2001, there were 99,932,149 common shares issued and
outstanding, $.001 par value.
ITEM 1 - Financial Statements
STANSBURY HOLDINGS CORPORATION AND SUBISIDARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2001
2001
------------
Assets
Current Assets:
Cash and cash equivalents $ 11,487
Accounts receivable 3,984
Inventories 120,471
Prepaid expenses 15,024
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Total Current Assets 150,966
------------
Property and Equipment, at cost:
Mineral claims and projects,
using full-cost method 22,130,234
Buildings and mining equipment 3,040,574
Other property and equipment 14,798
------------
25,185,606
Less: accumulated depreciation (515,427)
------------
Net Property and Equipment 24,670,179
------------
Other Assets:
Reclamation bonds 45,100
Investment in Resource Vermiculite LLC 50,000
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Total Other Assets 95,100
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Total Assets $ 24,916,245
============
Liabilities and Stockholders' Equity
Current Liabilities:
Bank overdrafts
Elk Creek acquisition obligations $ 969,000
Los Banos acquisition obligation 350,000
Sweetwater acquisition obligations 138,000
Current installments of long-term debt 815,718
Convertible notes payable to officers
and shareholders 629,846
Convertible note payable to related party 130,000
Other notes payable 2,172,515
Accrued interest 746,550
Accrued payroll taxes 212,667
Trade accounts payable 1,419,509
------------
Total Current Liabilities 7,583,805
Long-Term Debt 0
------------
Total Liabilities 7,583,805
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Stockholders' Equity:
Common stock, par value $0.001,
authorized 100,000,000, issued
and outstanding 99,772,149 and
94,748,901 at September 30, 2001 and
2000, respectively 99,932
Paid-in capital 33,323,779
Accumulated deficit (16,091,271)
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Total Stockholders' Equity 17,332,440
------------
Total Liabilities and Stockholders' Equity $ 24,916,245
============
See Accompanying Notes to Consolidated Financial Statements
F-4
STANSBURY HOLDINGS CORPORATION AND SUBISIDARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTH'S ENDING SEPTEMBER 30, 2001 AND 2000
2001 2000
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Sales $ -- $ 9,756
Cost of sales 0 0
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Gross profit 0 9,756
Expenses:
Operating 180,674 156,889
General and administrative 354,125 686,314
Interest, conversion premiums,
and equity inducements 60,928 435,884
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Total Expenses 595,727 1,279,087
------------ ------------
Loss from operations (595,727) (1,269,331)
Other income 34 0
------------ ------------
Net Loss $ (595,693) $ (1,269,331)
============ ============
Basic and diluted earnings per share:
Net Loss $ (0.01) $ (0.02)
============ ============
Basic and diluted weighted average
shares outstanding 99,772,149 69,914,869
============ ============
F-5
STANSBURY HOLDINGS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
September 30
2001 2000
----------- -----------
OPERATING ACTIVITIES
Net Income (Loss) $ (595,693) $(1,269,331)
Adjustments to reconcile
Net Income (loss) to net cash provided
by operations:
Stock issued for interest,Debt inducement and (62,500) 661,974
compensation
Accounts Receivable 4,620 0
Depreciation 39,893 0
Prepaid Expenses 8,340 (32,342)
Inventory 14,269 (45,888)
Accounts Payable 56,008 179,376
Other Assets
Accrued Interest Payable 38,263 592
Accrued Payroll Taxes 12,500 0
Other Current Liabilities 20,890 2,688
----------- -----------
Net cash provided by (used in)
Operating Activities (463,410) (502,931)
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INVESTING ACTIVITIES
Mineral property 0 (2,211,263)
Land 0 (120,000)
Other Property and Equipment (23,826) (2,503,143)
Development Costs (88,200) (14,632)
----------- -----------
Net cash provided by (used in)
Investing Activities (112,026) (4,849,038)
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FINANCING ACTIVITIES
Payments on Elk Creek obligations 0 0
Payments on Sweetwater obligations 333,190 0
Payments on convertible notes 0 0
Satisfaction on convertible notes to shareholders 0 0
Increase in Accrued Interest on Convertible notes
and Notes payable 0 0
Stock Issued for conversion of Term Debt 195,000 5,342,037
----------- -----------
Net cash provided by (used in) 528,190 5,342,037
----------- -----------
Financing Activities
Net cash increase for period (47,247) (9,932)
Cash at beginning of period (58,734) 52,228
----------- -----------
Cash at end of period $ 11,487 $ (62,160)
=========== ===========
F-6
STANSBURY HOLDINGS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Stansbury Holdings Corporation ("Stansbury") was incorporated in 1969 under the
name Stansbury Mining Corporation. In 1985, Stansbury changed its name to
Stansbury Holdings Corporation.
Stansbury, and its wholly owned subsidiaries, to wit:
Elk Creek Vermiculite, Inc.,
Dillon Vermiculite Limited LLC,
International Vermiculite (Montana), Inc.,
International Vermiculite (California), Inc., and
Sweetwater Garnet, Inc.,
are referred to collectively herein as the "Company."
The Company's business is the acquisition, exploration, development and
operations of industrial mineral properties, particularly vermiculite and garnet
mineral projects.
NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation - The consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. These statements do
not include any adjustments that might result from the outcome of this
uncertainty. These financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, such interim statements reflect all adjustments
(consisting of normal recurring accruals) necessary to present fairly the
financial position and the results of operations and cash flows for the interim
periods presented. The results of operations for these interim periods are not
necessarily indicative of the results to be expected for the full year. These
financial statements should be read in conjunction with the audited consolidated
financial statements and footnotes for the year ended June 30, 2000, filed with
the Company's Form 10-KSB.
Principles of Consolidation - The consolidated financial statements include the
accounts of the Company and its wholly owned subsidiaries. All intercompany
balances and transactions are eliminated in consolidation.
Cash and Cash Equivalents - The Company considers all highly liquid investments
purchased with a maturity of three months or less to be cash equivalents.
Inventory - Inventory is stated at the lower of cost or market.
Undeveloped Mineral Claims and Projects - The Company follows the full-cost
method of accounting for its mineral claims and projects. Accordingly, all costs
associated with the acquisition, exploration, and development of mineral
properties, including directly related overhead costs, are capitalized. Once
these properties are developed, the capitalized costs will be amortized on the
unit-of-production method using estimates of proved reserves. In addition, the
capitalized costs are separated into cost centers on a state-by-state basis. The
capitalized costs for each cost center are subject to a "ceiling test", which
limits such costs to the aggregate of the estimated present value of future net
revenues from proved reserves, plus the lower of cost or fair market value of
undeveloped and unproved properties.
Other Plant, Property, and Equipment - Other plant, property and equipment,
consisting of the Los Banos exfoliation plant, two buildings, and office
equipment, are recorded at cost. Depreciation is calculated using the
straight-line method over the estimated useful lives of the assets, which are 20
years for the plant and buildings, and 5 years for the office equipment.
F-7
Revenue Recognition - Revenue is recognized when products are shipped to
customers.
Income Taxes - The Company uses the asset and liability method of accounting for
income taxes. Under the asset and liability method, deferred tax assets and
liabilities are recognized for the estimated future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. This method also
requires the recognition of future tax benefits such as net operating loss
carryforwards, to the extent that realization of such benefits is more likely
than not. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled.
Earnings (Loss) Per Share - Basic earnings (loss) per share are based on the
weighted average shares outstanding. Outstanding stock options and convertible
debt obligations are generally treated as common stock equivalents for purposes
of computing diluted earnings per share. However, since the Company reported net
losses for the years ended June 30, 2000 and 1999, these common stock
equivalents are excluded from the computation of diluted earnings per share
because their effect on net loss per share would be anti-dilutive.
Use of Estimates - The preparation of consolidated financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the consolidated financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
NOTE 2 - GOING CONCERN STATEMENT
The Company emerged from Chapter 11 bankruptcy proceedings during 1985, and was
non-operating until June, 2000. At September 30, 2001, its negative working
capital was approximately $7.6 million, and accumulated deficit was
approximately $16.1 million.
During calendar 1999, the Company hired Aldine J. Coffman, Jr., as a new
president who also now serves as chairman of the Board of Directors and chief
executive officer. Eldon W. Brickle, Chief Operating Officer and Executive
Vice-President, was elected to the Board on August 18, 2000. Daniel Yeungling
and Dennis Staal were elected to the Board in early, 2000. Messrs. Coffman,
Brickle, Yeungling and Staal constitute the entire Board of the Company. Messrs.
Coffman, Brickle and Staal are members of the board or management committees of
all wholly owned subsidiaries. Mr. Yeungling resigned from the board on November
6, 2001, "due to differences in opinions on management decisions."
There can be no assurances that the Company will be successful in obtaining the
financing necessary to develop its mineral reserves. Nor can there be any
assurances that other sources of funds can be obtained to cover general and
administrative costs.
The Company's independent public accountants have included a "going concern"
emphasis paragraph in their audit report accompanying the June 30, 2001,
consolidated financial statements reported in the Company's 10K-SB for that
reporting period. The paragraph states that the Company's recurring losses and
negative working capital raise substantial doubt about the Company's ability to
continue as a going concern and cautions that the financial statements do not
include adjustments that might result from the outcome of this uncertainty.
Management believes that, despite the financial and funding difficulties going
forward, it now has a business plan that, if successfully funded and executed,
will result in the development of its mining claims thereby improving operating
results. Operations of both the vermiculite and garnet projects continued during
the reporting quarter, although vermiculite mining and concentration operations
were temporarily suspended on March 8, 2001, pending certain plant
rehabilitations, and Garnet operations were curtailed November 6, 2001, pending
further funding.
F-8
NOTE 3
Common Stock to Issue represents monies received for common stock subscriptions
for which stock was issued subsequently to the reporting period or remains
obligated to be issued.
NOTE 4- COMMITMENTS AND CONTINGENCIES
The Company is obligated to the federal government for approximately $19,100 per
year to maintain the ownership of its mineral claims. These funds are due and
payable by noon, on September 1, each year, and have been paid through August
31, 2002.
Various legal proceedings and claims are pending against the Company. Some of
the plaintiffs in these matters are certain of the Company's shareholders and
former officers and directors, and others are trade creditors.
Actions brought by shareholders and former officers and directors generally
pertain to default in the repayment terms of amounts loaned to the Company. The
Company is accruing interest on these amounts pursuant to the terms of the
underlying obligations. At September 30, 2001, the principal amount of these
obligations is included in short-term debt under the caption "officers,
directors and shareholders."
Actions brought by certain trade creditors and others have resulted in the
Company issuing promissory notes payable to those creditors. The Company is
accruing interest on these amounts pursuant to the terms of the promissory
notes. At September 30, 2001, the principal amount of these promissory notes is
included in long-term debt under the caption "other".
Actions have also been brought by the Company with respect to the debt
obligations that resulted from the Elk Creek acquisition and Los Banos
acquisition, as well as for certain equipment acquisitions. Management believes
that these matters will be settled for an amount not greater than the recorded
amount of those obligations at September 30, 2001.
F-9
ITEM 2 - PLAN OF OPERATIONS:
GENERAL
Management's goal for Stansbury is to rapidly evolve the company from an
exploration and development entity to an operating and production entity,
capable of sustaining itself financially from revenues from production. During
the fiscal year, the company at one time or another commenced operations at its
Dillon Vermiculite Mine and Mill, its Los Banos Exfoliation Plant, and its
Sweetwater Garnet mine and mill, and had revenues from each source. However, the
working capital of the company was insufficient to sustain operations until cash
flow could be sustained.
These operations may be summarized as follows:
(1) Dillon Vermiculite Mine and Mill: The Mine operation and mill operation
began in earnest in November 2000, when the forest fire hazard was
extinguished by winter snows. The operations continued until the end of
February. During this four month period (with contained long holidays for
Thanksgiving, hunting season Christmas and New Years) approximately 450
tons of vermiculite concentrate were produced, of which 120 tons were sold
as concentrate, and 330 tons shipped to Los Banos for further processing.
Overnight temperatures at the mine frequently touched 30 degrees below
zero, Fahrenheit; employees worked 4x12, and moved campers to the mine to
avoid the daily commutes home in the severe weather. All diesel equipment
had to be left idling overnight, or it could not be started in the morning.
The maintenance toll on equipment was prohibitive, and ever increasing
breakdowns of the mill compounded with longer shut-downs following each
breakdown, led management to conclude that replacing certain aging key
segments of the mill would be mandatory before re-opening the mill. Among
the key items were the replacement or reconfiguration of the concentration
equipment, which struggled to maintain a 70% concentrate, and proved unable
to produce the industry standard of 90%, which left the Los Banos facility
as the sole suitable market source for concentrate. However, Los Banos's
capacity of 5000 tons per year meant that the Dillon plant's product would
have no market beyond 5000 tons per year. Budget estimates for capital
equipment replacement varied, depending on sources and condition, but
settled at about an expected cost of $350,000.
(2) Los Banos Exfoliation Plant: all 330 tons shipped to Los Banos were
exfoliated and most of the product sold, accounting for the majority of the
revenue from sales for the year ($135,000). However, the processing of the
ore in the rotary furnaces failed to give the full expansion rate, due to
lower than required furnace temperatures, resulting in less than projected
revenue per ton, since sales prices were based upon volume. An investment
in new temperature probes and controls was made in February, and the higher
temperatures for exfoliation appeared to correct the problem, although the
higher temperatures also threatened a compliance problem in terms of
nitrous oxide emissions. The exfoliation plant was shut down and its crew
also laid off during the spring, 2001, due to lack of product supply from
Dillon. To re-start the Los Banos Plant, with new "NoNox" burners, would
require a capital expenditure of $90-120,000, in order to ensure compliance
with volume "Nox" emissions, which otherwise constrain operations to six
hours per day.
In February, 2001, the last of the funds to be raised under a $2.5 million
private placement, were received, for a total of $960,000, leaving a
shortfall of $1,540,000 in anticipated working capital for operations and
equipment at both the Dillon Vermiculite and Los Banos operations. The
inability of the placement agent to procure these fund is attributable
primarily to the market crash of October/November, 2000.
(3) Sweetwater Garnet Mine and Mill: The garnet operation was chosen in the
late spring to become the primary operation of the company. It was a new
mill, with reliable equipment, and needed little further capital
expenditure. A loan was negotiated for up to $1,000,000, and draws against
that loan, thru November 1, 2001, totaled $660,000. A new wash plant was
acquired, buildings to house it and product storage were acquired, and
concentrating equipment for the mine (which was a dry process, eliminating
the need to shut down the mine during the winter months when using the
existing wet concentration process). By the end of the summer, 1000 tons of
ore concentrate had been produced from equipment ordered and installed on
portable units for concentrating the mine feed. By October, 2001,
concentrate was being fed into the mill, sized, given a final purity
concentration, and then bagged, palletized and shrink wrapped for shipment.
This operation was curtailed on November 6, when the lenders advised the
company that in the present stock market conditions, they could not assure
the delivery of the balance of the $1,000,000. Projected additional working
capital requirements of the garnet operation through pro-forma positive
cash flow (end of January 2002) as of November 6, was $220,000. At that
time, indications to the company were that it could sell out its entire
capacity of 12,000 tons per year to just three customers.
The unanticipated circumstances which have frustrated the Company's
attempts to sustain operations during the fiscal year for each facility are
numerous. Among these circumstances were:
(a) The forest fires of the late summer and early winter of 2000,
which prompted the US Department of Interior (through its Bureau of Land
Management) and the State of Montana, to essentially shut down all mining
operations on the public domain in the areas of our vermiculite and garnet
facilities, from mid-summer until the onset of winter in November, 2000.
(b) The immediate onset of a harsh winter, which terminated the forest
fire induced shut-down, but left no mild weather transition time for
orderly restarting of the operations of the public domain.
(c) The vermiculite operations through the winter, until March 8,
2001, provided valuable lessons in the maintenance and operation of
equipment in exposed severe temperatures, and revealed the weak links in
the processing equipment of the vermiculite mill. The frequency of
breakdowns, and the weather dictated delays occasioned in obtaining
replacement parts and effecting repairs, led to the decision to temporarily
suspend vermiculite mining and milling until weather and funding permitted
an orderly replacement of the weak links with reliably operating items.
(d) Product quality issues became manifest in both the grade control
at the concentrating mill, and the temperature of furnaces at the
exfoliation plant. Both are being addressed, but require additional capital
to be fully corrected.
(e) Finally, the consequences of the financial market crash in
October/November, 2000, which have negatively impacted several funding
programs upon which the Company was depending in order to timely obtain the
capital needed for both equipment acquisitions and working capital
resources. This recession/depression led to (i) the closing of funding by
the Placement Agent of the $2.5 million loan for the vermiculite operation
at a maximum of $960,000, and (ii) the curtailment of further funding by
the Placement Agent of the $1.0 million loan for the garnet operation at a
maximum of $660,000. The company is working to replace the this working
capital underfunding represented by the shortfall of $1,780,000 of
anticipated loan proceeds which were essential to the ongoing operations of
the company.
Meanwhile, there are two items which can impact the future plans of
operations of the Company's subsidiaries:
(i) June 30, 2001, was the compliance deadline with California's newer
restrictive air emissions standards; to meet those standards so as to
allow the continued operation of the Los Banos exfoliation plant will
entail a capital cost. Relocation of the plant in California, or to
Nevada or Montana, has been under review, if funding cannot be found
for the capital cost of obtaining compliance meeting equipment
("NoNox" burners").
(ii) The company also watching closely the impact of rule 43 CFR 3809,
published by President Clinton on his last day in office, which
requires that small mining operations (disturbances of less than five
acres) on the public domain now have an approved Plan of Operations,
including an approved EPA document. Current small mine operations,
such as Dillon Vermiculite, have until January 20, 2003, to come into
compliance. President Bush immediately suspended the new 3809 rules
until July 20, 2001, to give his new Secretary of the Interior, Ms.
Gale Norton, time to review and recommend any action with respect to
these rules. While some new rulings have been made under the new
administration, the Company and others in the mining industry, are
still unable to determine the compliance requirements and cost
thereof, due to uncertainties and ambiguities manifest in the interim
guidelines.
Fortunately for the Company, the garnet mine and mills are entirely on
private land and private mineral estates, so that the Department of Interior has
no jurisdiction over Sweetwater Garnet's operations. On the other hand, the
Dillon Vermiculite mine and mill are entirely on the public domain, and are
directly impacted by the new 3809 rules.
As a consequence of all of the foregoing, the company has chosen to
focus first on placing the garnet operations into full production, then
re-activating the vermiculite mining and milling operation if such proves
feasible under the final form of Rule 3809. The schedules for such are as
follows:
(a) As soon as funds are available: Garnet mine and mill
operation, with mine and mill production at a monthly rate of 1000
tons of product (equivalent to an annual rate of 12,000 tons per year
of product); the company has approximately 2000 tons of contained
garnet in 90% plus concentrate stockpiled, which is immediately
available for final processing. An extensive distributor network is
planned, and is in the process of being implemented. The Company's new
website, www.sweetwatergarnet.com, is now operational as an
informative and interactive order placement site for customers and
distributors.
(b) As soon as funds are available: Re-start or possible
relocation, of exfoliation plant from Los Banos, California, and
upgrade of the plant as necessary to meet permit compliance
requirements at the situs of the relocation. Several sources of
vermiculite concentrate have been established to assure adequate feed
to the relocated plant, in the event that the Dillon mine and mill are
not operational in time to meet supply requirements. The company is
testing a 100 pound sample of coarse ore from Uganda, and if it proves
to expand in the furnaces at the represented rate, the plant could be
a stand alone profit center utilizing ore imported from this source.
(c) Reactivation of Dillon vermiculite mine and concentration
mill, upon completion of mill rehabilitation when such funding becomes
available and the rule making is finalized.
EXPLORATION ACTIVITIES
The Company contemplates a re-evaluation of its ore reserve position in
Hamilton, and contemplates a drilling or other exploration program outside the
currently established ore deposits. However, no date has been set for this
activity. During the summer of 2001, the company completed the reclamation of
the 1985-90 disturbances at the Hamilton site, subject to reseeding the sight in
the Spring of 2002.
In the late summer of 2001, the company determined that a portion of
several vermiculite claims contained a shallow but high grade (50%) garnet
deposit. This site was subsequently permitted for exploration with the right to
remove up to 1000 tons of garnet for assaying and evaluation. The full extent of
this additional ore body is unknown, but further exploration drilling and
digging is on the site is planned in order to develop engineered ore reserves.
LIQUIDITY AND FINANCE
The Company has been inactive and non-operating for most of its 30 years
prior to the current fiscal year; consequently, it is questionable as to whether
or not it can remain a going concern. The primary activity in the past few years
has been to preserve and maintain mineral leases and claims. Little actual
mining has occurred since the Company acquired its, until the commenced its
operation late in the Fiscal Year ending June 30, 2000. The Company has had no
income since 1991, until the forth quarter the Fiscal Year ending June 30, 2000,
and has utilized proceeds of loans from shareholders and the issuance of capital
stock for meeting its operating capital commitments, as well as four secured
loans obtained in the current fiscal year.
PART II - OTHER INFORMATION:
ITEM 1 - LEGAL PROCEEDINGS:
(1) An action against the Company by Ellsworth, Wiles & Chalphin, P.C.,
filed in the Court of Common Pleas, Bucks County, Pennsylvania, on September 14,
1998. James G. Wiles ("Wiles") acted as former counsel to the Company as partner
in Ellsworth, Wiles & Chalphin, P.C. The complaint alleges $69,654.95 is due for
legal services rendered by Wiles on behalf of the Company. The matter has been
settled for $60,000, to be paid on a scheduled pay-out.
(2) The Montana Department of Environmental Quality issued two Notices of
Noncompliance regarding disturbances at the Dillon Vermiculite Property and the
Hamilton Property with Civil penalties totaling $42,950. With respect to Dillon
Project, the Company is currently negotiating with the Department of
Environmental Quality to pay $20,000 and to complete $20,000 in reclamation work
on various abandoned mine sites around the State. With respect to the Hamilton
Project, the proposed penalty is $500.
(3) A Notice of default on the note with Nevada Vermiculite ,L.L.C. that
the Company has failed to make a $130,000 mortgage principal payment plus
interest due October 28,1999. Nevada Vermiculite has filed a foreclosure action,
and the company has responded by counterclaiming against Nevada Vermiculite for
damages for breach of its obligation to provide the working capital for the
mining and milling operation at Dillon. Trial on the issues will be scheduled
pending resolution of pretrial motions.
(4) A Notice of default on payment of minimum royalties by the Company,
issued by the Bill and Helen Hand Estate, Roger Pierce Trust and KPS Mining
Company for failure to pay approximately $147,000 plus interest. The Company is
pursuing financing to cure the default. No action has been filed by the claiming
party.
(5) An Action has been filed by James R. Hindman, a former director, and
four Hindman family members for various claims for the payment of monies, which
the Company has denied in part, and counterclaimed as to the claim of James R.
Hindman. Total monies owed under the combined claims are estimated by the
company to be under $75,000.
(6) An Action has been filed by Martin Peskin, a former director, for the
repayment of a $10,000 loan to the company in 1998 and a $5000 loan in 2000, of
which company records should $13,500 has been repaid. Since the litigation has
commenced, the amount sought was reduced by $3,500, and is expected to be
reduced by the further credit of $10,000. The company has cancelled checks for
the payments.
(7) An Action has been filed by Sami Samani, a former director, for the
repayment of loan to the company made between 1989 and 1991. The amount loaned
is in dispute, the Plaintiff claiming $325,000, and the company disputing that
amount based upon its audited financials for the periods from 1989 forward. In
the same action, Peter Samani sued for $12,000 plus interest for a loan from
1994 or so; company records reflect that Peter Samani converted a loan for
$12,000 to equity and received shares therefore in or about 1995. The company is
also contesting Peter Samani's claim.
(8) An Action has been filed by the assignor of Theodore Cohn for the
repayment of $30,000 loan to the company in 2000; this action has been formally
settled for $30,000, with scheduled payments, and $10,000 has been paid pursuant
to the settlement, leaving a balance to be paid.
(9) The seller to Stansbury of the Los Banos Exfoliation Plant has filed a
foreclosure action in California for the recovery of the balance of the monies
due on the acquisition, of $350,000, plus interest. The dispute is the subject
of current settlement negotiations.
(10) The company owes a defunct entity in connection with a debt of Dillon
Vermiculite LLC, which existed on its books prior to acquisition. The Company
has acquired an 11% equity (the "Hindman family interest") of the defunct
creditor, procured the appointment of a receiver for the defunct creditor, and
is renegotiating the debt due to the failure of the creditor to deliver certain
assets for which the debt was payment.
(11) Old creditors matters (prior to 1996)
(a) A judgment obtained by Dorsey & Whitney, a general partnership, in
December, 1994, for $52,683 in principal, along with prejudgment
interest of $32,527, the total amount of which is $85,210 and is
accruing interest at an annual rate of 12% from December 1994; at June
30, 2000 a proposed settlement of $90,000 was in negotiation.
(b) A judgment obtained by Martineau & Co. in Salt Lake City, Utah, for
$12,587,
(c) A judgment obtained by Bruce Blessington, in Salt Lake County, Utah,
for $14,674.
(d) Charles McLaughlin is one of several defendants in a legal action
commenced by the Company in the Federal District Court in Salt Lake
City, Utah, in 1995, and the last active party with whom the Company
had not settled. Agreement has been reached to dismiss this action.
This matter is settled in principle, and is awaiting the exchange of
paperwork.
(12) Recent operations (see Plan of Operations, below), have resulted in
new unpaid trade payables from vendors to the Dillon Vermiculite Operation and
Los Banos Operation. Several of these vendors have filed suit and two have
obtained judgment. Payments are being made, or are planned, for the disposition
of these matters. The totals in litigation are less than $75,000.
ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS:
None.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES:
None.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
None.
ITEM 5 - OTHER INFORMATION:
None.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K:
(a) A Form 8-K filed was filed during the three months ended September 30,
2001, respecting a change in auditor for the company, for fiscal year ending
June 30, 2001.
(b) This 10-Q and the 10-K for the period ending June 30, 2001, both
contain references to the resignation, effective November 6, 2001, of Daniel
Yeungling as a director, "due to differences in opinions on management
decisions."
SIGNATURES:
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
DATED: November 16, 2001 STANSBURY HOLDINGS CORPORATION
By:/s/ Aldine J. Coffman, Jr.
ALDINE J. COFFMAN, JR.,
Chief Executive Officer and
President
By:/s/ Dennis R. Staal
DENNIS R. STAAL, Chief Financial
Officer and Secretary-Treasurer, Director and
Vice-President