UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO
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ALTAIR INTERNATIONAL INC.
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(Exact name of registrant as specified in its charter)
Province of
Ontario,
Canada 1-12497 None
--------------------------- --------------------- -------------------
(State or other jurisdiction (Commission File No,) (IRS Employer
of incorporation) Identification No.)
1725 Sheridan Avenue, Suite 140
Cody, Wyoming 82414
-----------------------------------------------------------------
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (307) 587-8245
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 [ ].
As of June 30, 1999, the registrant had 15,424,915 Common Shares outstanding.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
ALTAIR INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
(Expressed in United States Dollars)
<CAPTION>
June 30, December 31,
1999 1998
----------- ----------
unaudited) (audited)
ASSETS
Current
<S> <C> <C>
Cash and short-term investments $ 3,381,263 $3,100,577
Other current assets 115,595 130,642
----------- ----------
3,496,858 3,231,219
Capital
Office equipment, vehicles, jigs and testing
equipment (Cost, net of amortization) 643,215 462,417
Centrifugal jig patents and related expenditures
(Cost, net of amortization) 3,449,662 3,609,024
Mineral properties and related deferred exploration
expenditures 1,715,725 1,399,802
Goodwill, net 9,290 9,590
----------- ----------
Total Assets $ 9,314,750 $8,712,052
=========== ==========
LIABILITIES
Current
Accounts payable and accrued liabilities $ 79,207 $ 165,979
Current portion of notes payable 67,442 73,533
----------- ----------
Total Liabilities 146,649 239,512
----------- ----------
SHAREHOLDERS' EQUITY
Capital stock issued
15,424,915 common shares at June 30, 1999; 15,174,915
shares at December 31, 1998 18,212,463 16,462,463
----------- ----------
Contributed Surplus 655,098 655,098
----------- ----------
Deficit
Balance, beginning of period (8,645,021) (6,303,879)
Accretion of equity element of convertible debentures -- (144,801)
Premium on conversion of convertible debentures -- (244,915)
Convertible debenture issuance costs -- (21,887)
Capital stock issuance costs (87,500) --
Net loss for the period (966,939) (1,929,539)
----------- ----------
Balance, end of period (9,699,460) (8,645,021)
----------- ----------
Total Shareholders' Equity 9,168,101 8,472,540
----------- ----------
Total Liabilities and Shareholders' Equity $ 9,314,750 $8,712,052
=========== ==========
</TABLE>
2
<PAGE>
<TABLE>
ALTAIR INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in United States Dollars)
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------- ------------------------------
1999 1998 1999 1998
--------------- --------------- -------------- --------------
Operating Expenses
<S> <C> <C> <C> <C>
Testing, research and development $ 62,159 $ 66,641 $ 142,096 $ 133,691
Wages and administration 132,655 54,491 215,702 82,261
Professional fees 29,192 93,529 55,524 133,144
Shareholder relations 72,820 41,946 114,087 64,842
Shareholders' meetings and reports 59,417 84,883 80,370 108,772
General and office 46,209 27,310 75,603 43,177
Travel 36,659 21,959 53,877 34,046
Occupancy costs 17,451 18,001 34,702 34,552
Stock exchange fees -- (299) 18,505 78,675
Insurance 14,092 19,881 29,292 35,575
Government fees and taxes (6,564) 20,132 14,116 23,038
Loss (Gain) on foreign exchange (2,270) 1,251 (3,375) 7,722
Transfer agent's fees 805 3,184 1,323 4,705
Corporate services 2,133 3,129 4,229 5,244
Bank charges 410 613 587 1,325
Loss on disposal of fixed assets -- -- -- 4,417
Amortization 105,341 166,652 204,182 319,377
----------- ----------- ----------- -----------
570,509 623,303 1,040,820 1,114,563
Interest expense 1,966 14,720 1,966 26,536
Interest income (43,605) (98,986) (75,847) (218,658)
----------- ----------- ----------- -----------
Net loss for the period $ 528,870 $ 539,037 $ 966,939 $ 922,441
=========== =========== =========== ===========
Basic loss per share $ 0.03 $ 0.04 $ 0.06 $ 0.06
=========== =========== =========== ===========
</TABLE>
3
<PAGE>
<TABLE>
ALTAIR INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in United States Dollars)
(Unaudited)
<CAPTION>
Six Months Ended
June 30,
---------------------------------
1999 1998
----------- ----------
<S> <C> <C>
Cash flows from operating activities
Net loss for the period $ (966,939) $ (922,441)
Adjustment to reconcile net loss for the period
to net cash (used):
Amortization 204,182 319,377
Interest on convertible debentures -- 35,594
Loss on disposal of fixed assets -- 4,417
----------- -----------
(762,757) (563,053)
Changes in assets and liabilities:
Other current assets 15,047 22,312
Accounts payable and accrued liabilities (86,772) (80,953)
----------- -----------
Net cash used in operating activities (834,482) (621,694)
----------- -----------
Cash flows from investing activities
Purchase of mineral properties and related
deferred exploration expenditures (315,923) (295,859)
Purchase of capital assets (223,469) (18,593)
Purchase of centrifugal jig patents and related
expenditures (1,849) (40,097)
----------- -----------
Net cash used in investing activities (541,241) (354,549)
----------- -----------
Cash flows from financing activities
Issuance of common shares for cash 1,750,000 113,664
Payment of notes payable (6,091) (206,888)
Convertible debenture issuance costs -- (22,702)
Capital stock issuance costs (87,500) --
----------- -----------
Net cash provided by (used in) financing activities 1,656,409 (115,926)
----------- -----------
Net increase (decrease) in cash and short-term investments 280,686 (1,092,169)
Cash and short-term investments, beginning of period 3,100,577 8,161,770
----------- -----------
Cash and short-term investments, end of period $ 3,381,263 $ 7,069,601
=========== ===========
</TABLE>
4
<PAGE>
ALTAIR INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1. Basis of Preparation of Financial Statements
These unaudited interim financial statements of Altair International
Inc. and its subsidiaries (collectively, the "Company") have been prepared in
accordance with the rules and regulations of the United States Securities and
Exchange Commission (the "Commission"). Such rules and regulations allow the
omission of certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles, so long as the statements are not misleading. In the opinion of
Company management, these financial statements and accompanying notes contain
all adjustments (consisting of only normal recurring adjustments) necessary to
present fairly the financial position and results of operations for the periods
shown. These interim financial statements should be read in conjunction with the
audited financial statements and notes thereto contained in the Company's Annual
Report filed on Form 10-K for the year ended December 31, 1998 filed with the
Commission on March 18, 1999.
The Company is an Ontario corporation and, in the past, has prepared its
interim and year-end financial statements in accordance with generally accepted
accounting principles in Canada ("Canadian GAAP"). Because the Company's
operations are centered in the United States, the Company determined effective
January 1, 1997 that its functional currency is the U.S. Dollar and determined
effective January 1, 1998 to prepare its interim financial statements in
accordance with accounting principles generally accepted in the United States
("U.S. GAAP"). Accordingly, the foregoing unaudited interim financial statements
are denominated in U.S. Dollars and presented in accordance with U.S. GAAP.
The results of operations for the three-month and six-month periods
ended June 30, 1999 are not necessarily indicative of the results to be expected
for the full year.
Note 2. Capital Stock
During the three months ended June 30, 1999, options to purchase 285,000
common shares of the Company ("Common Shares") were issued to employees and
other service providers at prices equal to the market price on the Nasdaq Stock
Market on the day prior to the date of issuance. During the same period, no
options were exercised. As of June 30, 1999, options to purchase 2,265,000
Common Shares were outstanding.
5
<PAGE>
Note 3. Development Stage Company
As of June 30, 1999, the Company would be characterized as a development
stage enterprise under Statement of Financial Accounting Standards No. 7 ("SFAS
7"). The following is a summary of the deficit accumulated during the
development stage prepared in accordance with SFAS 7:
Accumulated deficit
during the
development stage
-----------------------
Professional fees $ 1,407,737
Salaries and wages 2,087,931
Shareholders' expenses 1,072,108
Office and general 2,123,645
Loss on sale of mining claims 101,047
Amortization 1,741,734
Interest on long-term debt 97,001
Write off of mineral properties and related
deferred exploration expenditures 1,292,354
Write off of organization costs 8,563
-----------
9,932,120
Less:
Interest income (522,456)
Gain on sale of marketable securities (35,773)
Lease payments (143,754)
Gain on forgiveness of debt (728,531)
Option payments (70,906)
-----------
Total accumulated loss 8,430,700
Convertible debenture costs 537,731
Share issue costs 148,057
Accretion of equity element of convertible debentures 144,801
Premium on conversion of convertible debentures 244,915
Premium on redemption of convertible debentures 193,256
-----------
Accumulated deficit, June 30, 1999 $ 9,699,460
===========
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion summarizes the material changes in the
Company's financial condition between December 31, 1998 and June 30, 1999 and
the material changes in the results of operations and financial condition of the
Company between the three- and six-month periods ended June 30, 1999 and June
30, 1998. This discussion should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1998.
Results of Operations
The Company has earned no operating revenues to date. Basic net losses
totaled $966,939 ($.06 per share) for the six months ended June 30, 1999 and
$922,441 ($.06 per share) during the same period of 1998. Principal factors
contributing to the losses during these periods were the absence of revenue
together with the incurrence of operating expenses.
Six-Month Periods Ended June 30, 1999 and 1998. Operating expenses for
the six months ended June 30, 1999 decreased by $73,743 from the six-month
period ended June 30, 1998. Stock exchange fees were a contributing factor,
decreasing by $60,170 from the same period in 1998. In January 1998, the
Company's common shares were initially listed on the Nasdaq National Market
System and certain initial listing fees were incurred. Similar fees were not
incurred during the six months ended June 30, 1999. In addition to this,
professional fees declined by $77,620, principally due to a decrease in legal
fees associated with external financing and regulatory compliance, and a
decrease in consulting fees related to external financing. Also, the Company
experienced a decrease in amortization of $115,195 caused by a two-year
extension in the life of the centrifugal jig patents. Amortization expense has
been reduced to account for the longer lives of the patents.
These decreases in expense were partially offset by increases in other
expense categories. Wages and administration expense increased by $133,441 over
the same period in 1998 due to the addition of five new employees in the Reno
office which occurred in February, April and July, 1998 and May 1999.
Shareholder relations expenses increased by $49,245 over the same period in
1998, as the Company has increased its efforts to develop and maintain investor
contacts. General and office expenses increased by $32,426 over the comparable
period of 1998 due primarily to the addition of the new employees described
above.
Interest income for the six-month period ended June 30, 1999 decreased
by $142,811 from the same period in 1998 due to a decrease in the amount of cash
invested in temporary investments following the redemption of the Company's
convertible debentures in August 1998.
Three-Month Periods Ended June 30, 1999 and 1998. Operating expenses for the
three months ended June 30, 1999 decreased by $52,794 from the comparable period
of 1998. This decrease was primarily the result of a decrease in Professional
fees by $64,337, which decrease was principally due to the existence of
significant external financial transactions during the three-month period ended
June 30, 1998 and the absence of any such transaction, and associated legal and
consulting fees, during the three-month period ended June 30, 1999. In addition,
the Company experienced a decrease in amortization of $61,311 caused by a
two-year extension in the life of the centrifugal jig patents.
These decreases in expense between the three-month period ended June 30,
1998 and the three-month period ended June 30, 1999 were partially offset by
increases in other expense categories, principally wages and administration,
which increased by $78,164 over the same period in 1998 due to the addition of
three new employees in the Reno office which occurred in July, 1998 and May
1999.
Interest income for the three-month period ended June 30, 1999 decreased
by $55,381 from the same period in 1998 due to a decrease in the amount of cash
invested in temporary investments following the redemption of the Company's
convertible debentures in August 1998.
7
<PAGE>
Liquidity and Capital Resources
The Company has financed its operations since inception primarily by the
issuance of equity securities and convertible debt (common shares, convertible
debentures, and options and warrants to purchase common shares) with cumulative
aggregate net proceeds of $18,867,561 as of June 30, 1999. The Company received
cash proceeds of $1,662,500 from sales of common shares and warrants during the
first six months of 1999.
The Company has earned no revenues and has incurred recurring losses. At
December 31, 1998 the Company's accumulated deficit was $8,645,021. The deficit
increased by $1,054,439 to $9,699,460 during the first six months of 1999, due
to the net loss for the period of $966,939 and capital stock issuance costs of
$87,500.
The Company currently maintains working capital which management
believes will be sufficient for the Company's needs through the end of the 1999
fiscal year at the current level of operations. However, the Company's
exploration and development program may result in business opportunities that
require additional capital resources for development of mineral properties and
construction of Jigs. When and if such capital resources are required, the
Company intends to assess equity and/or debt financing sources. Nevertheless,
there can be no assurance that the Company will be able to continue to raise
capital to fund its long-term capital requirements. At June 30, 1999, the
Company had $3,381,263 in cash and short-term investments available to meet its
near-term development and operating needs.
The Company continues to use its working capital to invest in the
testing and development of the Jig and to invest in mineral properties suitable
for development and processing with the Jig. In addition, the Company has built
three Series 30 Jigs to be used for bulk sample testing at the Company's
Tennessee mineral property, or for potential commercial installation. During the
first six months of 1999, the Company invested $83,578 in development of the
Jig, $315,923 in the exploration of its Tennessee and California mineral
properties, and $187,176 in construction of additional Jigs.
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Statements in
this report regarding the sufficiency of the Company's working capital,
development of the Jig or any mineral properties, and any future acquisition
activities are forward-looking statements. Words such as "expects", "intends",
"believes", "anticipates" and "likely" also identify forward-looking statements.
Actual results could differ materially from those anticipated for a number of
reasons, including, among others, the failure of the Jig to prove economically
attractive to end users, the development of a substitute for the Jig by a
competitor, the unforeseen need for and/or inability to raise capital to
complete testing and development of the Tennessee mineral property, the Jig, or
other ongoing or new projects. Risk factors, cautionary statements and other
conditions that could cause actual results to differ are contained in the
Company's filings with the Securities and Exchange Commission, including the
Company's Annual Report on Form 10-K for the year ended December 31, 1998.
8
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
The Company held an Annual Meeting of Shareholders on June 10, 1999 at
which the Company's shareholders considered and voted as follows on the items
described below:
1. The shareholders of the Company considered whether to elect the
following persons as directors of the Company, each to serve until the next
annual meeting of shareholders of the Company and until his respective successor
shall have been duly elected and shall qualify:
<TABLE>
<CAPTION>
Name of Nominee Votes For Votes Withheld/Abstentions Broker Non-Votes
<S> <C> <C> <C>
William Long 11,951,990 99,789 -0-
James Golla 11,951,990 99,789 -0-
George Hartman 11,951,790 99,989 -0-
Robert Sheldon 11,951,790 99,989 -0-
</TABLE>
2. The shareholders of the Company considered whether to appoint
McGovern, Hurley, Cunningham as auditors of the Company and authorize the Board
of Directors to fix their remuneration. There were 11,931,596 votes cast in
favor, no votes cast against, 120,183 abstentions, and no broker non-votes.
Item 6. Exhibits and Reports on Form 8-K
(a) See Exhibit Index attached hereto.
(b) No reports on Form 8-K have been filed during the second quarter of
1999.
9
<PAGE>
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.
Altair International Inc.
August 10, 1999 By: /s/ William P.Long
--------------- ----------------------------------------------
Date William P.Long, President
August 10, 1999 By: /s/ C. Patrick Costin
--------------- ----------------------------------------------
Date C. Patrick Costin, Vice-President
(Principal Financial or Accounting Officer)
10
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Incorporated Filed
No. Exhibit by Reference Herewith
---------- --------------------------------------------------------- -------------- -----------
<S> <C> <C> <C>
3.1 Articles of Incorporation of the Registrant (1)
3.2 Amendment to Articles of Incorporation of the (2)
Registrant dated November 6, 1996
3.3 Bylaws of the Registrant (1)
4.1 Form of Common Stock Certificate (1)
4.2 Form of Warrant (related to Convertible Debentures) (3)
4.3 Form of Series J Warrant
(4)
27 Financial Data Schedule (5)
- -----------------------
</TABLE>
(1) Incorporated by reference to Registration Statement on Form 10 SB filed
with the Commission on November 25, 1996.
(2) Incorporated by reference to Amendment No. 1 to Registration Statement on
Form 10 filed with the Commission on December 23, 1996.
(3) Incorporated by reference to the Current Report on Form 8-K filed with the
Commission on January 13, 1998, as amended by Amendment No. 1 to Current
Report on Form 8-K/A filed on January 21, 1998.
(4) Incorporated by reference to the Quarterly Report on Form 10-Q filed with
the Commission on May 5, 1999.
(5) Filed herewith.
11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> APR-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 3381263
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3496858
<PP&E> 882943
<DEPRECIATION> (239728)
<TOTAL-ASSETS> 9314750
<CURRENT-LIABILITIES> 146649
<BONDS> 0
0
0
<COMMON> 18212463
<OTHER-SE> (9044362)
<TOTAL-LIABILITY-AND-EQUITY> 9314750
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 570509
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1966
<INCOME-PRETAX> (528870)
<INCOME-TAX> 0
<INCOME-CONTINUING> (528870)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (528870)
<EPS-BASIC> (.03)
<EPS-DILUTED> 0 <F1>
<FN>
<F1>
Fully diluted EPS not computed on loss.
</FN>
</TABLE>
