UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
COMMISSION FILE NO. 1-2714
(Mark One)
(X) Quarterly Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the quarterly period ended September 30, 2002 or
( ) Transition Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the transition period from _________ to ________
ATLAS MINERALS INC.
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(Exact name of small business issuer as specified in its charter)
COLORADO 84-1533604
- ------------------------------------- ------------------
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
10920 W. Alameda Ave., Suite 205, Lakewood, CO 80226
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(Address of principal executive offices) (Zip Code)
303-306-0823
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(Issuer's telephone number)
Check whether the issuer (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the 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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Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes X No
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As of November 12, 2002, 5,915,103 shares of Common Stock, par value $0.01 per
share, were issued and outstanding.
Transitional Small Business Disclosure Format (Check one):
Yes No X
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Page 1 of 20
INDEPENDENT ACCOUNTANTS' REPORT
The Board of Directors and Stockholders
Atlas Minerals Inc.
We have reviewed the accompanying consolidated balance sheet of Atlas Minerals
Inc. and subsidiaries as of September 30, 2002 and the related consolidated
statements of operations for the three-month and nine-month periods ended
September 30, 2002 and 2001 and cash flows for the nine-month periods ended
September 30, 2002 and 2001. These consolidated financial statements are the
responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial statements consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with auditing standards generally accepted in the United States of
America, the objective of which is the expression of an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express such an
opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying consolidated financial statements for them to be in
conformity with accounting principles generally accepted in the United States of
America.
We have previously audited, in accordance with auditing standards generally
accepted in the United States of America, the consolidated balance sheet as of
December 31, 2001, and the related consolidated statements of operations,
stockholders' equity and cash flows (not presented herein) for the year then
ended; we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying
consolidated balance sheet as of December 31, 2001, is fairly stated in all
material respects, in relation to the consolidated balance sheet from which it
has been derived.
HORWATH GELFOND HOCHSTADT PANGBURN, P.C.
Denver, Colorado
November 12, 2002
Page 2 of 20
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
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Atlas Minerals Inc.
Consolidated Balance Sheets
(in Thousands)
September 30, December 31,
2002 2001
- ----- -----------------------------------------------------------------------------------------------------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 416 $ 417
Trade and other accounts receivable
7 --
Assets held for sale -- 250
CGL claims receivable
-- 1,549
Prepaid expenses and other current assets 41 26
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Total current assets 464 2,242
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Property, plant and equipment 206 5
Less: accumulated depreciation, depletion and amortization (8) (4)
------- -------
198 1
Deferred acquisition costs
45 --
Assets held for sale 1,004 1,192
Other assets 4 5
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$ 1,715 $ 3,440
======= =======
LIABILITIES
Current liabilities:
Trade accounts payable $ 40 $ 139
Accrued liabilities 32 70
Estimated reorganization liabilities 32 647
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Total current liabilities 104 856
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Estimated reorganization liabilities 443 962
Deferred gain 44 --
Other liabilities, long-term 132 142
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Total long-term liabilities 619 1,104
------- -------
Total liabilities 723 1,960
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Commitments and contingencies
STOCKHOLDERS' EQUITY
Preferred stock, par $1 per share; authorized 1,000,000; no shares issued and
outstanding -- --
Common stock, par value $0.01 per share; authorized 100,000,000; issued and
outstanding, 5,915,000 at September 30, 2002 and 6,062,000 at December 31, 2001 59 61
Capital in excess of par value 2,980 2,999
Deficit (2,047) (1,580)
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Total stockholders' equity 992 1,480
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$ 1,715 $ 3,440
======= =======
See notes to consolidated financial statements.
Page 3 of 20
Atlas Minerals Inc
Consolidated Statements of Operations
(In Thousands, Except Per Share Data, Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
2002 2001 2002 2001
------- ------- ------- -------
Mining revenue $ 5 $ -- $ 5 $ --
Costs and expenses:
Production costs 48 -- 48 --
Depreciation, depletion and amortization 4 -- 4 2
General and administrative expenses 213 125 433 232
------- ------- ------- -------
Gross operating loss (260) (125) (480) (234)
Other (income) and expense:
Interest expense -- -- -- 1
Interest income (2) -- (7) (5)
Impairment of assets held for sale 60 -- 60 --
Gain on settlement of CGL claims -- -- (66) --
Other -- -- -- (1)
------- ------- ------- -------
Total other income 58 -- (13) (5)
Loss before income taxes (318) (125) (467) (229)
Provision for income taxes -- -- -- --
------- ------- ------- -------
Net loss $ (318) $ (125) $ (467) $ (229)
======= ======= ======= =======
Basic and diluted loss per share of common stock $ (0.05) $ (0.02) $ (0.08) $ (0.04)
======= ======= ======= =======
Weighted average number of common
shares outstanding 5,963 6,064 6,028 6,064
======= ======= ======= =======
See notes to consolidated financial statements.
Page 4 of 20
Atlas Minerals Inc.
Consolidated Statements of Cash Flows
(In Thousands, Unaudited)
Nine Months Ended
September 30,
------------------------------
2002 2001
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Operating activities:
Net loss $ (467) $ (229)
Add (deduct) non-cash items
Impairment of assets held for sale 60 --
Gain on settlement of CGL claims (66) --
Depreciation, depletion and amortization 4 2
Net change in non-cash items
Related to operations (Note 3) (190) (148)
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Cash used in operating activities (659) (375)
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Investing activities:
Additions to property, plant and equipment (201) --
Reduction in cash resulting from abandonment of Arisur -- (6)
Investment in CGL claims receivable (24) (320)
Investment in assets held for sale (71) (90)
Settlement of estimated reorganization liabilities (50) --
Deferred acquisition costs (45) --
Proceeds from settlement of CGL receivable 1,639 710
Proceeds from sale of assets held for sale 60 82
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Cash provided by investing activities 1,308 376
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Financing activities:
Payment of estimated reorganization liabilities (650) (50)
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Cash used in financing activities (650) (50)
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Increase (decrease) in cash and cash equivalents (1) (49)
Cash and cash equivalents:
Beginning of period 417 119
------------ ------------
End of period $ 416 $ 70
============ ============
See notes to consolidated financial statements.
Page 5 of 20
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item
310(b) of Regulation S-B. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. There has not been any change
in the significant accounting policies of Atlas Minerals Inc. (the
"Company") for the periods presented.
In the opinion of Management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. The results for these interim periods are not necessarily
indicative of results for the entire year. These statements should be read
in conjunction with the consolidated financial statements and notes thereto
included in the Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 2001.
2. The accompanying consolidated financial statements include the accounts of
Atlas Minerals Inc. ("Atlas") and its subsidiaries as follows: Atlas
Precious Metals Inc. ("APMI") (approximately 85% owned at December 31, 2001
and 96% owned at September 30, 2002), which in turn owns Atlas Gold Mining
Inc. ("AGMI") (approximately 63% owned at December 31, 2001 and 89% owned
at September 30, 2002), and as of July 2002, White Cliffs Mining, Inc., a
wholly-owned subsidiary in which the White Cliffs property is held (Note 4)
(collectively the "Company").
3. The components of the net change in items other than cash related to
operating activities as reflected in the Consolidated Statements of Cash
Flows are as follows:
Nine Months Ended
September 30,
----------------------------------------
(in thousands) 2002 2001
------------------------------------------------- ------------------ -----------------
Add (deduct) items other than cash:
Trade and other accounts receivable $ (7) $ (3)
Prepaid expenses and other current assets (35) (12)
Trade accounts payable (99) (94)
Accrued liabilities (39) (28)
Other liabilities, long-term (10) (11)
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$ (190) $ (148)
================== =================
During the quarter ended March 31, 2001, the Company abandoned its
investment in Arisur.
Assets abandoned: (thousands)
Current assets, net of cash and cash equivalents $2,517
Property plant and equipment, net 3,601
Long-lived assets 17
------
6,135
------
Liabilities abandoned:
Current liabilities 5,710
Long-term liabilities 431
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6,141
------
Cash and cash equivalents abandoned $ 6
======
Page 6 of 20
4. In June 2002, the Company purchased the White Cliffs Diatomite Mine and
processing facilities located approximately 30 miles north of Tucson,
Arizona ("White Cliffs") for $50,000. The property, which has been dormant
for several years, consists of approximately 3,200 acres of unpatented
placer claims, a fully permitted mine and a processing plant with a nominal
annual capacity of at least 50,000 tons of finished product. The property
was purchased from Arimetco, Inc., of which the Company's Chairman and
Chief Executive Officer, is President. Through September 30, 2002, the
Company purchased approximately $147,000 of operating equipment in order to
place the White Cliffs property in commercial operation. During the last
week of September 2002, White Cliffs shipped 44 tons of product to a single
customer under a 220-ton contract, with an additional 71 tons shipped
during October 2002.
5. In July 2002, the Company paid its one secured creditor, who held a lien on
the Gold Bar mill site and equipment as part of a Court-approved claim
against the Company, $60,000. The secured creditor is the Company's
President and Chief Financial Officer.
6. During the third quarter 2002, the Company and the Pension Benefit Guaranty
Corporation (PBGC) entered into a transaction whereby the Company
effectively settled a portion of its "estimated reorganization
liabilities". The Company paid $50,000 to PBGC in exchange for PBGC's
rights to receive future creditor distributions under APMI's and AGMI's
2000 bankruptcy reorganization plan as well as to acquire the portion of
APMI's and AGMI's outstanding common stock owned by PBGC. The common stock
owned by PBGC consisted of 133 common share of APMI (11.41% of outstanding
shares) and 391 common shares of AGMI (25.78% of outstanding shares). Under
the bankruptcy reorganization plan, APMI and AGMI are to sell the "assets
held for sale" and distribute the related proceeds to their creditors. At
September 30, 2002, APMI and AGMI have no other assets. Therefore, the
Company believes that the common stock acquired from PBGC has little to no
fair value as of September 30, 2002 and the Company allocated the $50,000
cash paid to the effective settlement of the estimated reorganization
liabilities. The carrying value of PBGC's portion of the estimated
reorganization liabilities was approximately $94,000. The Company has
deferred the $44,000 settlement gain because the ultimate realization of
the gain is not assured until APMI and AGMI sell their assets and
distribute the proceeds, which management expects to occur over the next
several years.
7. In September 2002, the Company signed a 120-day exclusive option agreement
to acquire 100% of the outstanding shares of Western Gold Resources, a
private Florida company whose primary asset is the Estrades polymetallic
mine. During the option period, the Company will conduct extensive due
diligence of the property and seek financing for the project as will be
required should the Company exercise the option and proceed with
development.
Assuming positive results from the due diligence and approval from the
Board and, as required, by the Company's shareholders, the Company would
subsequently merge with Western Gold Resources. The Board has approved the
terms of the merger, which contemplates the issuance of 1.2 common shares
of the Company for each share of Western Gold, payment of $150,000 in cash,
and other considerations. Western Gold has outstanding 11,550,000 shares.
The primary shareholder of Western Gold Resources is the Company's Chief
Executive Officer. The Company has spent $45,000 as of September 30, 2002
Page 7 of 20
in deferred acquisition costs relating to this option agreement. Should the
Company exercise the option agreement, the related deferred acquisition
costs will be added to the purchase price and allocated to the assets
acquired. If the Company does not exercise the option agreement, the
deferred acquisition costs will be expensed.
8. Ongoing management assessment of the carrying value of the assets held for
sale at Gold Bar resulted in third quarter 2002 reductions in the carrying
value of assets held for sale and the related estimated reorganization
liabilities of $450,000 and $390,000, respectively, and an impairment
charge of $60,000. The impairment was deemed necessary due to the
continuing depression in the mining industry and less than anticipated
equipment sales during the year.
9. On August 9, 2002, stock options for 125,000 shares were granted to
employees under the Atlas Minerals Inc. 2001 Stock Option Plan. The options
granted were at an exercise price of $.21, being the quoted market price of
the Company's shares at the date of grant, and expire on August 9, 2007.
Page 8 of 20
Item 2. Management's Discussion and Analysis
------------------------------------
"SAFE HARBOR" STATEMENT UNDER THE UNITED STATES PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995.
This Form 10-QSB contains forward looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Atlas Minerals Inc. is referred to herein as "we" or
"our". The words or phrases "would be," "will allow," "intends to," "will
likely result," "are expected to," "will continue," "is anticipated,"
"estimate," "project," or similar expressions are intended to identify
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Actual results could differ materially from
those projected in the forward looking statements as a result of a number
of risks and uncertainties. Statements made herein are as of the date of
the filing of this Form 10-QSB with the Securities and Exchange Commission
and should not be relied upon as of any subsequent date. Except as may
otherwise be required by applicable law, we do not undertake, and
specifically disclaim, any obligation to update any forward-looking
statements contained in this Form 10-QSB to reflect occurrences,
developments, unanticipated events or circumstances after the date of such
statement.
RECENT EVENTS
On September 22, 1998, Atlas filed a petition for relief under Chapter 11
of the federal bankruptcy laws in the United States Bankruptcy Court for
the District of Colorado. On January 26, 1999, APMI and AGMI also filed
petitions for relief under Chapter 11. On December 11, 1999, the Bankruptcy
Court approved the Reorganization Plan of Atlas, APMI and AGMI (the
"Reorganized Company"). Having consummated the Reorganization Plan, Atlas,
APMI and AGMI emerged from Chapter 11 on January 10, 2000. Final decrees
were issued by the Bankruptcy Court officially closing the APMI and AGMI
cases on November 8, 2000 and the Atlas case effective December 31, 2001.
As a result of the bankruptcy proceedings, the majority of any remaining
claims against the Company are unsecured claims (the "Creditors"). Under
the Reorganization Plan, these Creditors received stock representing 67.5%
of the Reorganized Company. In addition, the Creditors will receive a
percentage distribution upon receipt of proceeds from certain assets of the
Reorganized Company. These assets include: 1) proceeds from the salvaging
of the Company's Gold Bar mill facility and related assets located near
Eureka, Nevada (reorganization value of $940,000 of which Creditors receive
approximately 86.4% of net proceeds); 2) proceeds from the sale of the
Company's Grassy Mountain property located in eastern Oregon
(reorganization value of $925,000 of which Creditors receive approximately
78.8% of net proceeds) and 3) proceeds from commercial general liability
claims ("CGL Claims") against various insurance carriers for reimbursement
of costs incurred in decommissioning and reclaiming a uranium millsite
located near Moab, Utah that was previously owned and operated by the
Company. (reorganization value of $1.5 million of which Creditors receive
10% of the first $1.5 million of net proceeds and 50% thereafter).
Effective May 2002, the Company received cash settlements from all
insurance carriers regarding the ongoing CGL Claims litigation. These
settlements in aggregate provided the Company with $2,373,000 cumulative
net proceeds during the year 2001 through May 21, 2002. Based on these
agreements, Management determined the recorded book value of the asset at
Page 9 of 20
December 31, 2001 was undervalued and increased the carrying value by
$898,000. The final resolution of such claims resulted in a gain from
settlement of CGL claims during second quarter 2002 of $66,000.
On May 9, 1999, Arisur (the Company's former subsidiary which owned and
operated a mine in Boliva) defaulted on a payment of $478,000 due under its
loan agreement with Corporacion Andina de Fomento ("CAF"). During the first
quarter of 2001, CAF began foreclosure proceedings against Arisur, and the
Company's participation in Arisur's operations was terminated. As a result
of this action, the investment in Arisur was effectively abandoned as of
January 1, 2001. During the year ended December 31, 2000, the Company
recorded an impairment charge of $683,000 related to the Andacaba mine.
Neither the Company nor its subsidiaries have guaranteed any liabilities of
Arisur. As a result, all revenue, cost of operations, assets and
liabilities of Arisur have been eliminated from the financial statements of
the Company during 2001 and future years.
During December 2001, the Company took additional steps to ensure that any
and all remaining liabilities associated with termination of Arisur's
operations were extinguished. On December 24, 2001, the Company transferred
all of the common stock of Arisur to a Bolivian group, which signed an
agreement releasing and indemnifying the Company from any and all
liabilities that could be associated with Arisur.
In May, 2002, the Company moved from the NQB Pink Sheets and was listed on
the OTC Bulletin Board.
In June 2002, the Company purchased the White Cliffs Diatomite Mine and
processing facilities located approximately 30 miles north of Tucson,
Arizona ("White Cliffs") for $50,000. The property, which has been dormant
for several years, consists of approximately 3,200 acres of unpatented
placer claims, a fully permitted mine and a processing plant with a nominal
annual capacity of at least 50,000 tons of finished product. From previous
drilling, face sampling, and testing, approximately 2,500,000 tons of
diatomite mineralization has to date been identified on the property. The
property was purchased from Arimetco, Inc., of which the Company's Chairman
and Chief Executive Officer, is President.
In July 2002, the Company incorporated in Arizona a new wholly-owned
subsidiary, White Cliffs Mining, Inc., in which the White Cliffs mine and
related assets will be held. Through September 30, 2002, the Company has
purchased approximately $147,000 of operating equipment. In August 2002,
the Company commenced commercial mining operations on its White Cliffs
diatomite mine. During the last week of September 2002, White Cliffs
shipped 44 tons of product to a single customer under a 220-ton contract,
with an additional 71 tons shipped during October 2002.
In July 2001, an agreement was reached with TRW, Inc. ("TRW") to settle the
one remaining adversary proceeding. Under the terms of the agreement, the
Company agreed to make a total cash payment of $30,000 to TRW in three
equal installments due in October 2001, January 2002, and April 2002. In
exchange, TRW agreed to transfer back to the Company all common stock of
the Company (146,415 shares) owned by it upon payment of the final
installment. In July 2002, the final payment was accepted by TRW from the
Company and the 146,415 shares of common stock held by TRW were transferred
to the Company. These shares were cancelled during the third quarter of
2002.
Page 10 of 20
In September 2002, the Company signed a 120-day exclusive option agreement
to acquire 100% of the outstanding shares of Western Gold Resources, a
private Florida company whose primary asset is the Estrades polymetallic
mine. During the option period, the Company will conduct extensive due
diligence of the property and seek financing for the project as will be
required should the Company exercise the option and proceed with
development.
The Estrades property, located approximately 120 miles northwest of
Val-d'Or in northwestern Quebec, hosts a polymetallic deposit known to
contain gold, silver, lead, copper and zinc. The Estrades property consists
of a fully developed mine and mine complex. The mine was last operated in
1992 before reportedly being idled due to depressed metal prices and high
contract mining and toll milling costs.
Based on the preliminary results of the due diligence work on the Estrades
property, current conceptual operating plans envision a mining rate of 500
tonnes per day. Both a copper concentrate and a zinc concentrate would be
produced. The Company is currently evaluating the possibility of
constructing a mill on site to produce the concentrates as opposed to toll
milling.
Assuming positive results from the due diligence and approval from the
Board and, as required, by the Company's shareholders, the Company would
subsequently merge with Western Gold Resources. The Board has approved the
terms of the merger, which contemplates the issuance of 1.2 common shares
of the Company for each share of Western Gold, payment of $150,000 in cash,
and other considerations. Western Gold has outstanding 11,550,000 shares.
The primary shareholder of Western Gold Resources is the Company's Chief
Executive Officer.
During the third quarter 2002, the Company and the Pension Benefit Guaranty
Corporation (PBGC) entered into a transaction whereby the Company
effectively settled a portion of its "estimated reorganization
liabilities". The Company paid $50,000 to PBGC in exchange for PBGC's
rights to receive future creditor distributions under APMI's and AGMI's
2000 bankruptcy reorganization plan as well as to acquire the portion of
APMI's and AGMI's outstanding common stock owned by PBGC. The common stock
owned by PBGC consisted of 133 common share of APMI (11.41% of outstanding
shares) and 391 common shares of AGMI (25.78% of outstanding shares). Under
the bankruptcy reorganization plan, APMI and AGMI are to sell the "assets
held for sale" and distribute the related proceeds to their creditors. At
September 30, 2002, APMI and AGMI have no other assets. Therefore, the
Company believes that the common stock acquired from PBGC has little to no
fair value as of September 30, 2002 and the Company allocated the $50,000
cash paid to the effective settlement of the estimated reorganization
liabilities. The carrying value of PBGC's portion of the estimated
reorganization liabilities was approximately $94,000. The Company has
deferred the $44,000 settlement gain because the ultimate realization of
the gain is not assured until APMI and AGMI sell their assets and
distribute the proceeds, which management expects to occur over the next
several years.
It is the intention of Management for the Company to remain in the business
of development and exploitation of natural resource properties.
Management's current efforts regarding this are being directed toward the
identification of possible acquisition opportunities of smaller-scale
properties, primarily in the sectors of industrial minerals, base metals,
Page 11 of 20
precious metals and oil/natural gas. In the opinion of Management, the
Company may have a competitive edge in making such acquisitions in that,
being smaller than many of its competitors, it may be able to act more
quickly and the smaller, possibly higher grade, properties on which it will
most likely focus its efforts should be of little interest to the larger
companies.
CAPITAL RESOURCE REQUIREMENTS AND LIQUIDITY
As of September 30, 2002, the Company's working capital was $360,000,
compared to $1,386,000 as of December 31, 2001. The decrease of $1,026,000
was primarily the result of utilizing cash to fund operations for the nine
months of 2002. Proceeds from CGL claims were $1,639,000; however, this
amount was offset by expenses for the CGL receivables of $25,000, the
payment of estimated reorganization liabilities of $650,000, additions to
property, plant and equipment of $201,000, settlement of APMI and AGMI
estimated reorganization liabilities of $50,000, deferred acquisition costs
on the Estrades property of $45,000 and a reduction of current assets held
for sale of $200,000.
As described above, effective May 2002, the Company received cash
settlements with all insurance carriers regarding the CGL Claims
litigation. These settlements in aggregate provided the Company with
$2,373,000 cumulative net proceeds during the year 2001 through May 21,
2002. The Company expects these proceeds will be adequate to pay general
administrative and other operating expenses through 2002.
Remaining assets held for sale include the Grassy Mountain property and the
Gold Bar mill and related assets. While the Company is confident in the
ultimate realization of these assets, it cannot be certain as to the timing
or the exact amount of proceeds that will be received.
Final pieces of mobile equipment were purchased and commercial operations
commenced on the White Cliffs property during the most recent quarter.
Pending completion of ongoing marketing studies, should the Company decide
to install a calciner at the mill, up to an additional $100,000 may be
required. However, it is currently the intention of the Company to trade
where possible idled equipment at the Gold Bar mill for additional
equipment needs at White Cliffs.
Future cash requirements will be funded from the sources noted above and/or
alternative sources of financing including loans against the aforementioned
assets, equity financing or project financing as deemed necessary.
RESULTS OF OPERATIONS
The Company had revenues from production of diatomite at the White Cliffs
property, which commenced mining operations in August, of $5,000 during
both the three-month and nine-month periods ended September 30, 2002
compared to zero for comparable periods in 2001. Production costs, which
included expenses associated with mill start-up at White Cliffs, were
$48,000 during both the three-month and nine-month periods ended September
30, 2002 compared to zero for comparable periods in 2001.
General and administrative expenses for the nine months ended September 30,
2002 were $433,000 compared to $232,000 for the comparable period in 2001.
Salaries and benefit costs increased for the nine months ended September
30, 2002 to $127,000 from $59,000 during the same period in 2001. The
Page 12 of 20
increase in salaries and benefits is due to hiring 2 non-production related
employees at White Cliffs, amounting to $15,000 in related labor and
benefit costs, and an increase in employees at the parent company from 1
during the nine month period in 2001 to 3 at September 30, 2002. Directors'
fees and expenses increased from $22,000 to $33,000. During the first nine
months of 2002, the Board met five times, the Audit Committee twice and the
Compensation Committee twice, compared to four Board meetings in the first
nine months of 2001. Other professional fees increased from zero for the
first nine months of 2001 to $92,000 for the same period in 2002. The
increase in other professional fees is due to the hiring on a contract
basis a mine manager and various other consultants at White Cliffs prior to
employment, $48,000; contracting with a former employee to assist with
general administrative matters, $21,000; the retaining of a compliance
specialist, $9,000; and outsourcing a part-time administrative assistant,
$9,000. Insurance costs increased from $18,000 for the first nine months of
2001 to $36,000 for the comparable period in 2002 due to increased premiums
for additional coverage for the Company's directors and officers insurance
which became effective in February 2002. During the first nine months of
2002, travel and entertainment costs were $22,000 compared to zero for the
same period in 2001 due to travel related to the White Cliffs project of
$8,000 and other travel by the Company executives to visit existing
properties and promote the Company of $14,000. Partially offsetting the
above increases was a $45,000 decrease in legal fees for the nine months
ended September 30, 2002 of $29,000 compared to $74,000 for the same period
in 2001. The fees related to the 2001 period were higher due to the legal
fees associated with the take-over bid by the new management in September
2001.
General and administrative expenses for the three-month period ended
September 30, 2002 were $213,000 compared to $125,000 for the comparable
period in 2001. The increase in costs during the quarter of $88,000 is
primarily due to the higher fees paid to outside professionals, higher
insurance premiums and higher travel costs as discussed above. In addition,
salary and benefits for the quarter ended September 30, 2002 were $81,000
compared to $18,000 for the same period in 2001. The increase is due to
having three employees at the parent company and two non-production
employees at White Cliffs during third quarter 2002 versus one during most
of third quarter 2001.
Interest income was $7,000 for the nine-month period ended September 30,
2002 versus $5,000 for the same period in 2001. Although the average cash
balance was higher during the nine month period in 2002, interest rates
were lower during 2002 versus 2001 resulting in little variance between the
two periods.
During the three-month period ended September 30, 2002, the Company
recorded a $60,000 impairment of assets held for sale relating to Gold Bar.
The impairment charge was the net result of reducing the assets held for
sale by $450,000 and the related estimated reorganization liabilities by
$390,000.
The gain on settlement of CGL claims of $66,000 during the nine months
ended September 30, 2002 arose as the anticipated net proceeds from the
final cash receipts exceeded the carrying value of the CGL claims and the
related estimated reorganization liabilities.
Item 3. Controls and Procedures
-----------------------
On November 11, 2002 ("Evaluation Date"), the Company's management concluded its
evaluation of the effectiveness of the design and operation of the Company's
disclosure controls and procedures. As of the Evaluation Date, the Company's
Page 13 of 20
President and Chief Financial Officer and its Chief Executive Officer concluded
that the Company maintains disclosure controls and procedures that are effective
in providing reasonable assurance that information required to be disclosed in
the Company's reports under the Securities Act of 1934 (Exchange Act) is
recorded, processed, summarized and reported within the time periods specified
in the SEC's rules and forms, and that such information is accumulated and
communicated to the Company's management, including its President and Chief
Financial Officer and its Chief Executive Officer, as appropriate, to allow
timely decisions regarding required disclosure. The Company's management
necessarily applied its judgment in assessing the costs and benefits of such
controls and procedures, which, by their nature, can provide only reasonable
assurance regarding management's control objectives. There have been no
significant changes in the Company's internal controls or in other factors that
could significantly affect these controls subsequent to the Evaluation Date.
Page 14 of 20
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
None
Item 2. Changes in Securities
---------------------
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. Exhibits
99.1 Certification of Chief Executive Officer
pursuant to 18 U.S.C. 1350. Page 19
99.2 Certification of Chief Financial Officer
pursuant to 18 U.S.C. 1350. Page 20
b. Reports on Form 8-K
A press release dated August 22, 2002 and filed on September 4, 2002,
with the Securities and Exchange Commission, announcing that
commercial mining operations commenced on the Company's White Cliffs
diatomite mine in Arizona, with first production from the property
pre-sold primarily as livestock feed supplement.
A press release dated and filed on September 9, 2002, with the
Securities and Exchange Commission, announcing a 120-day exclusive
option agreement to acquire 100% of the outstanding shares of Western
Gold Resources, a private Florida company whose primary asset is the
Estrades polymetallic mine located in Quebec and which asset consists
of a fully developed mine and mine complex. During the option period,
the Company will conduct extensive due diligence of the property and
seek financing for the project as will be required should the Company
exercise the option and proceed with development.
Page 15 of 20
SIGNATURES
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 thereunto duly authorized.
ATLAS MINERALS INC.
-------------------
(Registrant)
Date: November 12, 2002 By: /s/ H.R. (Roy) Shipes
---------------------
H.R. (Roy) Shipes
Chief Executive Officer
Date: November 12, 2002 By: /s/ Gary E. Davis
-----------------
Gary E. Davis
President and Chief Financial Officer
Page 16 of 20
CERTIFICATION PURSUANT TO RULE 13A-14 OR 15D-14 OF THE SECURITIES EXCHANGE ACT
OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, H.R. (Roy) Shipes, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Atlas Minerals
Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report.
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us during the period
in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report; and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of that date;
5. The registrant's other certifying officers and I have disclosed to the
registrant's auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: November 12, 2002
/s/ H.R. (Roy) Shipes
----------------------
H.R. (Roy) Shipes
Chief Executive Officer
Page 17 of 20
CERTIFICATION PURSUANT TO RULE 13A-14 OR 15D-14 OF THE SECURITIES EXCHANGE ACT
OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Gary E. Davis, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Atlas Minerals
Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report.
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us during the period
in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report; and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of that date;
5. The registrant's other certifying officers and I have disclosed to the
registrant's auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: November 12, 2002
/s/ Gary E. Davis
------------------
Gary E. Davis
President and Chief Financial Officer
Page 18 of 20
Exhibit 99.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Atlas Minerals Inc. (the "Company")
on Form 10-QSB for the period ending September 30, 2002, as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, H.R.
(Roy) Shipes, Chief Executive Officer of the Company, certify, pursuant to 18
U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley
Act of 2002 that:
1) The Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934, and
2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
By: /s/ H.R. (Roy) Shipes
------------------------
H.R. (Roy) Shipes
Chief Executive Officer
November 12, 2002
Page 19 of 20
Exhibit 99.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Atlas Minerals Inc. (the "Company")
on Form 10-QSB for the period ending September 30, 2002, as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Gary E.
Davis, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C.
section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of
2002 that:
1) The Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934, and
2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
By: /s/ Gary E. Davis
-----------------
Gary E. Davis
Chief Financial Officer
November 12, 2002
Page 20 of 20