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 December 31, 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
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(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
3435 South Yosemite Street, Suite 100, Denver, CO 80231-4601
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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
New Telephone Number: 720-748-7786
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 December 31, 2001, there were 99,975,149 common shares issued and
outstanding, $.001 par value.
ITEM 1 - Financial Statements
STANSBURY HOLDINGS CORPORATION AND SUBISIDARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2001
2001
Assets
Current Assets:
Accounts Receivable $ 3,984
Inventory $ 120,471
Prepaid expenses $ 17,541
Other
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Total Current Assets $ 141,996
Land $ 120,000
Property and Equipment, at cost:
Undeveloped mineral claims and
projects, using full-cost method $ 23,604,554
Buildings $ 1,520,043
Other property and equipment $ 14,798
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$ 25,139,395
Less: accumulated depreciation $ (592,808)
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Net Property and Equipment $ 24,546,587
Other Assets:
Reclamation bonds $ 45,100
Investment in Resource Vermiculite LLC $ 50,000
Deposits $ 260
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Total Other Assets $ 95,360
Total Assets $ 24,903,943
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Liabilities and Stockholders' Equity
Current Liabilities:
Bank overdrafts $ 307
Elk Creek acquisition obligations $ 969,000
Los Banos acquisition obligation $ 350,000
Sweetwater acquisition obligation $ 123,000
Current installments of long-term debt $ 820,718
Convertible notes payable to officers
and shareholders $ 614,846
Convertible note payable to related party $ 130,000
Other notes payable $ 2,275,774
Accrued Expense $ 15,826
Accrued interest $ 746,550
Accrued Payroll tax $ 241,709
Trade accounts payable $ 1,725,622
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Total Current Liabilities $ 8,013,350
Long-Term Debt $ --
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Total Liabilities $ 8,013,350
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Stockholders' Equity:
Common stock, par value $0.001,
authorized 100,000,000, issued
and outstanding 99,975,149 and
99,717,149 at December 31, 2001 and
2000, respectively $ 99,975
Paid-in capital $ 33,334,486
Accumulated deficit $(16,543,868)
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Total Stockholders' Equity $ 16,890,593
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Total Liabilities and Stockholders' Equity $ 24,903,943
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See Accompanying Notes to Consolidated Financial Statements
2
STANSBURY HOLDINGS CORPORATION AND SUBISIDARIES
CONSOLIDATED STATEMENTS OF OPERATION
FOR THE SIX MONTHS ENDING DECEMBER 31, 2001 AND 2000
2001 2000
Sales $ -- $ 45,638
Cost of sales $ -- $ --
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Gross profit $ -- $ 45,638
Expenses:
Operating $ 267,687 $ 390,195
General and administrative $ 704,108 $ 1,394,180
Interest, conversion premiums,
and equity inducements $ 76,494 $ 1,124,078
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Total Expenses $ 1,048,289 $ 2,908,453
Loss from operations $ (1,048,289) $ (2,862,815)
Other income $ -- $ --
Loss before extraordinary item $ -- $ --
Extraordinary gain from debt restructuring $ -- $ --
Net Loss $ (1,048,289) $ (2,862,815)
Basic and diluted earnings per share:
Loss from continuing operations $ (0.01) $ (0.03)
Extraordinary gain $ -- $ --
Net Loss $ (0.01) $ (0.03)
Basic and diluted weighted average
shares outstanding 99,975,149 99,717,149
See Accompanying Notes to Consolidated Financial Statements
3
STANSBURY HOLDINGS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
December 31
2001 2000
OPERATING ACTIVITIES
Net Income (Loss) $(1,048,290) $(2,862,815)
Adjustments to reconcile
Net Income (loss) to net cash provided
by operations:
Stock issued for interest,Debt inducement and $ (72,500)
compensation
Accounts Receivable $ 4,620 $ (29,726)
Depreciation $ 39,214
Prepaid Expenses $ 5,564 $ (26,380)
Inventory $ 14,269 $ --
Accounts Payable $ 310,610 $ 523,644
Other Assets
Accrued Interest Payable $ 38,518 $ 592
Other Current Liabilities $ 57,112 $ 18,600
Net cash provided by (used in)
Operating Activities $ (650,883) $(2,376,085)
INVESTING ACTIVITIES
Mineral property $(2,211,263)
Land $ (120,000)
Other Property and Equipment $ (97,616) $(2,773,408)
Development Costs $ (88,200) $ (19,250)
Net cash provided by (used in)
Investing Activities $ (185,816) $(5,123,921)
FINANCING ACTIVITIES
Notes Payable $ 1,160,000
Payments on Elk Creek obligations
Payments on Sweetwater obligations $ 421,449
Payments on convertible notes
Satisfaction on convertible notes to shareholders
Increase in Accrued Interest on Convertible notes
and Notes payable
Stock Issued for conversion of Term Debt $ 278,150 $ 6,348,051
Net cash provided by (used in) $ 699,599 $ 7,559,099
Financing Activities
Net cash increase for period $ (137,100) $ (85,763)
Cash at beginning of period $ (19) $ 52,228
Cash at end of period $ (306) $ 9,848
See Accompanying Notes to Consolidated Financial Statements
4
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.
5
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.
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 December 31, 2001, it's negative working
capital was approximately $7.9 Million, and accumulated deficit was
approximately $16.5 Million.
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.
6
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. 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, although
the Garnet Operations resumed on January 15, 2002, with the additional funding
forthcoming.
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 December 31, 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 December 31, 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 December 31, 2001.
7
ITEM 2 - PLAN OF OPERATIONS:
GENERAL
Management's goal for Stansbury is to rapidly evolve the company from
an exploration and development stage 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 preceding 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.
8
(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. However, the lenders resumed
funding in January, 2002, and operations resumed on January 15, 2002.
The unanticipated circumstances which have frustrated the Company's
attempts to sustain operations during the preceding 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 under funding represented by the
shortfall of $1,780,000 of anticipated loan proceeds which were essential to the
ongoing operations of the company.
9
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 of January 2002: 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 website,
www.sweetwatergarnet.com, is now operational as an informative and
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interactive order placement site for customers and distributors.
10
(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 in
December 2001 tested a 100 pound sample of coarse ore from Uganda, and
is pleased with the results. Negotiations are underway to obtain
sufficient quantities of that ore to enable the Los Banos project to
maintain a stand alone profit center for the company.
(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 STAGE ACTIVITIES
The Company contemplates a re-evaluation of its ore reserve
position in Hamilton. 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.
11
(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. In January, 2002, the court in Montana ruled
that the plaintiff's may proceed to foreclosure, and that the counterclaims of
the company are properly to be arbitrated. Since that ruling, other claimants to
the property have petitioned to intervene in the case.
(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. An action to collect the royalties pursuing to
the default, and to seek other remedies was filed by the assignee of the Pierce
Trust and KPS Mining, in the final calendar quarter of 2001.
(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 show $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.
12
(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 $100,000.
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:
None
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: February 14, 2002 STANSBURY HOLDINGS CORPORATION
By:/s/ Aldine J. Coffman, Jr.
--------------------------------------
ALDINE J. COFFMAN, JR.,
Chief Executive Officer and
President
By:/s/ Eldon W. Brickle
--------------------------------------
ELDON W. BRICKLE, Chief Operating
Officer, Director and
Vice-President
13