SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the quarterly period ended March 31, 2000.
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the transition period from ___________ to ___________ .
Commission file number: 0-27409
-------
LIBERTY MINT, LTD
-----------------
(Exact name of small business issuer as specified in its charter)
Nevada 84-1409219
-------- -----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
975 North 1430 West, Orem, Utah 84057
------------------------------- ------
(Address of principal executive office) (Zip Code)
(801) 426-6699
----------------------
(Issuer's telephone number)
Check whether the issuer: (1) 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 XX No
The number of outstanding shares of the issuer's common stock, $0.001
par value (the only class of voting stock), as of May 10, 2000 was 4,947,210
1
<PAGE>
TABLE OF CONTENTS
PART I
ITEM 1. FINANCIAL STATEMENTS..................................................3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS..................................4
PART II
ITEM 2. RECENT SALES OF UNREGISTERED SECURITIES...............................6
ITEM 5. OTHER INFORMATION.....................................................7
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K......................................7
SIGNATURES.....................................................................8
INDEX TO EXHIBITS..............................................................9
[THIS SPACE HAS BEEN INTENTIONALLY LEFT BLANK]
2
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
As used herein, the term "Company" refers to Liberty Mint, Ltd., a
Colorado corporation, and its subsidiaries and predecessors unless otherwise
indicated. Consolidated, unaudited, condensed interim financial statements
including a balance sheet for the Company as of the quarter ended March 31, 2000
and statements of operations, and statements of cash flows for the interim
period up to the date of such balance sheet and the comparable period of the
preceding year are attached hereto as Pages F-1 through F-11 and are
incorporated herein by this reference.
[THIS SPACE HAS BEEN LEFT BLANK INTENTIONALLY.]
3
<PAGE>
LIBERTY MINT, LTD. AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
PRITCHETT, SILER & HARDY, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
<PAGE>
LIBERTY MINT, LTD. AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONTENTS
PAGE
-- Accountants' Review Report F-2
-- Unaudited Condensed Consolidated
Balance Sheets, March 31, 2000 and December 31, 1999 F-3 - F-4
-- Unaudited Condensed Consolidated Statements of Operations,
for the three months ended March 31, 2000 and 1999 F-5
-- Unaudited Condensed Consolidated Statements of Cash Flows,
for the three months ended March 31, 2000 and 1999 F-6 - F-7
-- Notes to Unaudited Condensed Consolidated Financial Statements F-8 - F-11
F-1
<PAGE>
[Letterhead of PRITCHETT, SILER & HARDY, P.C.]
ACCOUNTANTS' REVIEW REPORT
Board of Directors
LIBERTY MINT, LTD. AND SUBSIDIARY
Orem, Utah
We have reviewed the accompanying condensed consolidated balance sheet of
Liberty Mint, Ltd. and Subsidiary as of March 31, 2000 and the related condensed
consolidated statements of operations and cash flows for the three months ended
March 31, 2000. These financial statements are the responsibility of the
Company's management. All information included in these financial statements is
the representation of management of Liberty Mint, Ltd. and Subsidiary.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review consists principally of
inquiries of Company personnel and analytical procedures applied to financial
data. It is substantially less in scope than an audit in accordance with
generally accepted auditing standards, 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 review, we are not aware of any material modifications that should
be made to the condensed financial statements reviewed by us, in order for them
to be in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that Liberty
Mint, Ltd. and Subsidiary will continue as a going concern. As discussed in Note
3 to the financial statements, Liberty Mint, Ltd. and Subsidiary have current
liabilities in excess of assets and have not yet been successful in establishing
profitable operations, raising substantial doubt about its ability to continue
as a going concern. Management's plans in regards to these matters are also
described in Note 3. The financial statements do not include any adjustments
that might result from the outcome of these uncertainties.
/s/ PRITCHETT, SILER & HARDY, P.C.
PRITCHETT, SILER & HARDY, P.C.
May 8, 2000
Salt Lake City, Utah
F-2
<PAGE>
LIBERTY MINT, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
[Unaudited - See Accountants' Review Report]
ASSETS
March 31, December 31,
2000 1999
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 19,438 $ 53,858
Accounts receivable, net of $2,454 allowance 486,310 303,624
Inventory 619,023 816,943
Prepaid expenses 221,600 204,856
---------- ----------
Total Current Assets 1,346,371 1,379,281
---------- ----------
PROPERTY AND EQUIPMENT, net 175,599 14,697
---------- ----------
OTHER ASSETS:
Other assets 6,193 6,400
---------- ----------
Total Other Assets 6,193 6,400
---------- ----------
$ 1,528,163 $ 1,400,378
========== ==========
[Continued]
F-3
<PAGE>
LIBERTY MINT, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
[Unaudited - See Accountants' Review Report]
[Continued]
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
March 31, December 31,
2000 1999
------------ -----------
CURRENT LIABILITIES:
Accounts payable $ 186,882 $ 76,521
Factoring advances 107,132 98,185
Accrued expenses 346,599 452,712
Customer deposits 595,595 799,622
Notes payable - related party 290,000 200,000
Liabilities of discontinued operations 618,180 655,596
---------- -----------
Total Current Liabilities 2,144,388 2,282,636
---------- -----------
2,144,388 2,282,636
---------- -----------
COMMITMENTS AND CONTINGENCIES
[See Note 17] - -
STOCKHOLDERS' (DEFICIT):
Preferred Stock, no par value,
10,000,000 shares authorized,
no shares issued and outstanding - -
Common stock, no par value,
25,000,000 shares authorized,
4,929,710 and 4,349,256
shares issued and outstanding 3,501,164 3,268,893
Retained (deficit) (3,993,181) (3,901,943)
---------- -----------
(635,888) (633,050)
---------- -----------
Less Stock Subscriptions Receivable (124,208) (249,208)
---------- -----------
Total Stockholders' (Deficit) (616,225) (882,258)
---------- -----------
$ 1,528,163 $ 1,400,378
========== ===========
Note:The balance sheet at December 31, 1999 was taken from the audited
financial statements at that date and condensed.
The accompanying notes are an integral part of these unaudited condensed
financial statements.
F-4
<PAGE>
LIBERTY MINT, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
[Unaudited - See Accountants' Review Report]
For the Three
Months Ended
March 31,
--------------------------
2000 1999
------------- ------------
SALES, net of returns and discounts $ 910,523 $ 114,882
COST OF GOODS SOLD 670,186 49,545
----------- ----------
GROSS PROFIT 240,337 65,337
----------- ----------
OPERATING EXPENSES:
General and administrative 309,577 111,566
Bad debt expense - 1,926,634
----------- ----------
Total Operating Expenses 309,577 2,038,190
----------- ----------
LOSS FROM OPERATIONS (69,240) (1,972,853)
----------- ----------
OTHER INCOME (EXPENSE):
Interest expense (20,998) (6,072)
----------- ----------
Total Other Income (Expense) (20,998) (6,072)
----------- ----------
LOSS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES (90,238) (1,978,925)
CURRENT TAX EXPENSE - -
DEFERRED TAX EXPENSE - -
----------- ----------
NET LOSS $ (90,238) $ (1,978,935)
=========== ==========
LOSS PER COMMOM SHARE $ (.02) $ (2.10)
=========== ==========
The accompanying notes are an integral part of these unaudited
condensed financial statements.
F-5
<PAGE>
<TABLE>
LIBERTY MINT, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
[Unaudited - See Accountants' Review Report]
Increase (Decrease) in Cash and Cash Equivalents
<CAPTION>
For the Three
Months Ended
December 31,
------------------------
2000 1999
----------- -----------
<S> <C> <C>
Cash Flows Provided by Operating Activities:
Net loss $ (90,238) $ (1,978,935)
------------ ------------
Adjustments to reconcile net loss
to net cash used by operating activities:
Depreciation and amortization 5,582 -
Non-cash expenses, including stock issued for
services & interest expense 152,271 -
Bad debt expense - 1,926,634
Changes in assets and liabilities:
(Increase) in accounts receivable (182,686) (76,304)
(Increase) decrease in inventory 197,920 (23,869)
(Increase) decrease in prepaid expense (16,744) (18,000)
(Increase) in other assets 207 (5,771)
Increase in accounts payable 110,361 85,541
Increase (decrease) in factoring advances 8,947 -
Increase in accrued expenses (106,113) 29,760
Increase (decrease) in customer deposits (204,027) 110
(Decrease) in liabilities of discontinued operations (37,416) -
------------ ------------
Total Adjustments (72,698) (1,918,012)
------------ ------------
Net Cash (Used) by Operating Activities (162,936) (60,834)
------------ ------------
Cash Flows Provided by Investing Activities:
Purchases of property and equipment (166,484) (1,833)
------------ ------------
Net Cash (Used) by Investing Activities (166,484) (1,833)
------------ ------------
Cash Flows Provided by Financing Activities:
Proceeds from Issuance of common stock 80,000 -
Decrease in stock subscription receivable 125,000 -
Proceeds from notes payable - related party 90,000 -
------------ ------------
Net Cash Provided by Financing Activities 295,000 -
------------ ------------
Net Increase (Decrease) in Cash and Cash Equivalents $ (34,420) $ (62,667)
Cash and Cash Equivalents at Beginning of Period 58,858 82,223
------------ ------------
Cash and Cash Equivalents at End of Period $ 19,438 $ 19,556
============ ============
</TABLE>
[Continued]
F-6
<PAGE>
<TABLE>
LIBERTY MINT, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
[Unaudited - See Accountants' Review Report]
Increase (Decrease) in Cash and Cash Equivalents
[Continued]
<CAPTION>
For the Three
Months Ended
December 31,
------------------------
2000 1999
----------- -----------
<S> <C> <C>
Cash Flows Provided by Operating Supplemental
Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ 1,972 $ -
Income taxes $ - $ -
Supplemental Disclosures of Non-Cash Investing
and Financing Activities:
For the three months ended March 31, 2000:
The Compny issued 380,494 shares
of common stock for services rendered
value at $152,198(or $.40 per share).
For the three months ended March 31, 1999:
None.
</TABLE>
The accompanying notes are an integral part of these unaudited
condensed financial statements.
F-7
<PAGE>
LIBERTY MINT, LTD. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business and Basis of Presentation - The consolidated financial statements
include the following accounts:
i) Liberty Mint, Ltd. (Parent), currently organize as a Nevada
Corporation as of October 8, 1999 having been originally formed as a
Colorado Corporation on March 13, 1990. Parent's name was Hana
Acquisitions, Inc. (Then a shell entity with no operations) prior to
reverse merger with Liberty Mint, Inc. on June 24, 1997. The Parent
presently operates through its Subsidiaries.
ii) Liberty Mint, Inc. (Former Subsidiary), a Utah corporation primarily
engaged in production of silver bullion. Parent sold its 90% stake in
Former Subsidiary on September 23, 1999.
iii) Liberty Mint Marketing, Inc. (Subsidiary), a Utah corporation engaged
in licensing and marketing entertainment related collectibles.
Subsidiary was organized on July 2, 1998 and is wholly owned by
Parent.
iv) The Great Western Mint, Inc. (Subsidiary), a Utah Corporation engaged
in custom minting, marketing and sales of sculpture, and the creation
of propriety minted collectibles. Subsidiary was organized on
September 20, 1999 and is wholly owned by Parent.
Consolidation - On June 24, 1997, the Parent acquired a majority interest
(approximately 90%) in Liberty Mint, Inc. (Former Subsidiary), by issuing
620,906 shares of the Parent's common stock for 7,450,864 shares of common
stock of Liberty Mint, Inc. (Former Subsidiary). The acquisition was
accounted for as a recapitalization of the Former Subsidiary as the
shareholders of the Former Subsidiary controlled the combined Company after
the acquisition. There was no adjustment to the carrying values of the
assets or liabilities of the Parent or Former Subsidiary as a result of the
recapitalization. The merger has been accounted for as a reverse merger.
Accordingly, Former subsidiary is treated as the purchaser in the
transaction.
During 1997, the Parent purchased an additional 82,353 shares of Former
Subsidiary common stock for $28,000. During 1998, the Parent purchased an
additional 28,510 shares of Former Subsidiary common stock for $8,078 in
cash and by issuing 396 shares of common stock at $.34 per share.
Subsequent to the reverse merger in June 1997, the Parent formed two
additional wholly owned Subsidiaries; namely, Liberty Mint Marketing, Inc.
on July 2, 1998 and The Great Western Mint, Inc. on September 20, 1999. On
September 23, 1999 the Parent sold all of its shares in Former Subsidiary
(See Note 2). The 1999 consolidated financial statements include the
accounts of the Parent, Former Subsidiary, and the two subsequently formed
Subsidiaries. All significant intercompany transactions between Parent,
Former Subsidiary, and the two remaining Subsidiaries have been eliminated
in consolidation.
Condensed Financial Statements - The accompanying financial statements have
been prepared by the Company without audit. In the opinion of management,
all adjustments (which include only normal recurring adjustments) necessary
to present fairly the financial position, results of operations and cash
flows at March 31, 2000 and 1999 and for the periods then ended have been
made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
condensed financial statements be read in conjunction with the financial
statements and notes thereto included in the company's December 31, 1999
audited financial statements. The results of operations for the periods
ended March 31, 2000 are not necessarily indicative of the operating
results for the full year.
F-8
<PAGE>
LIBERTY MINT, LTD. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - DISCONTINUED OPERATIONS
During September 1999, the Company sold its stock in the subsidiary Liberty
Mint, Inc. for $25 in cash and effectively discontinued its bullion and
foundry business. All revenues and expenses associated with this business
have been netted and reclassified as discontinued operations on the income
statement for all periods presented. Revenue for the years ended December
31, 1999, and 1998 relating to these operations was $4,081,880 and
$4,430,950, respectively.
NOTE 3 - GOING CONCERN
The Company has incurred significant losses during 1999 and 1998 and has
current liabilities in excess of current assets at March 31, 2000. As of
March 31, 2000, the company does not have the ability to pay off
liabilities of discontinued operations without additional funds provided
through loans and/or through additional sales of its common stock. These
items raise substantial doubt about the ability of the Company to continue
as a going concern.
Management's plans in regards to these matters are as follows:
Management is proposing to raise necessary additional funds not
provided by operations through loans and/or through additional sales of
its common stock. Management believes that it can improve operations,
refinance debt, convert debt to equity, and reduce expenses. Management
believes that a combination of these efforts will be necessary to
continue as a going concern.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The financial statements do not
include any adjustments relating to the recoverability and classification
of recorded asset amounts or the amounts and classification of liabilities
that might be necessary should the Company be unable to obtain additional
financing, establish profitable operations or realize its plans.
NOTE 4 - PROPERTY AND EQUIPMENT
The following is a summary of property and equipment - at cost, less
accumulated depreciation and amortization as of March 31, 2000 and December
31, 1999:
March 31, December 31,
2000 1999
------------- -------------
Production and refining equipment $ 181,387 $ 14,903
Less: accumulated depreciation
and amortization (5,788) (206)
-------------- --------------
$ 175,599 $ 14,697
--------------- --------------
Depreciation and amortization expense for the three months ended March 31,
2000 and 1999, amounted to $5,582 and $0.
F-9
<PAGE>
LIBERTY MINT, LTD. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - ACCRUED LIABILITIES
The following is a summary of accrued liabilities:
March 31, December 31,
2000 1999
------------- -------------
Payroll costs $ 118,125 $ 205,400
Conversion feature of
notes payable (Note 7) 133,334 133,334
Contingency on stock guarantee 42,500 42,500
Accrued interest 52,640 43,479
Cost prepayment - 25,000
----------- ----------
$ 346,599 $ 452,712
----------- ----------
NOTE 6 - CAPITAL STOCK
The Company issued 15,000 shares of common stock to a consultant for
services performed, valued at $6,000, March 31, 2000
The Company issued 200,000 shares of common stock in exercise of options.
Proceeds received amounted to $80,000, (or $.40 per share).
The Company issued 6,000 shares of common stock to consultants for services
perfomed valued at $2,400 (or $.40 per share).
The Company issued 359,454 shares of common stock to shareholders of the
Company for services rendered valued at $143,782, (or $.40 per share).
NOTE 7 - RELATED PARTY TRANSACTIONS
The Company entered into certain transactions with related individuals and
entities resulting in the following balances at March 31, 2000.
Notes Payable to stockholders - During December 1997, a shareholder of the
Company loaned the Company $200,000 at 12% interest compounding yearly. The
note due on demand. At March 31, 2000, accrued interest amounted to
$52,640. During the three months ended March 31, 2000 shareholders of the
Company loaned $90,000 to the Company at 12% interest. The notes are due on
demand.
The Company had at March 31, 2000 and 1999, options and warrants
outstanding to purchase 3,303,565 and 1,918,900 shares of common stock,
respectively, at prices ranging from $.40 to $12.96 per share, that were
not included in the computation of diluted earnings per share because their
effect was anti-dilutive (the exercise price of the options was greater
than the average market price of the common shares).
F-10
<PAGE>
LIBERTY MINT, LTD. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 - INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes". FASB
109 requires the Company to provide a net deferred tax asset/liability
equal to the expected future tax benefit/expense of temporary reporting
differences between book and tax accounting methods and any available
operating loss or tax credit carryforwards.
The Company has available at March 31, 2000, unused operating loss
carryforwards of approximately $3,900,000 which may be applied against
future taxable income and which expire in various years through 2019.
The amount of and ultimate realization of the benefits from the operating
loss carryforwards for income tax purposes is dependent, in part, upon the
tax laws in effect, the future earnings of the Company, and other future
events, the effects of which cannot be determined. Because of the
uncertainty surrounding the realization of the loss carryforwards the
Company has established a valuation allowance equal to the amount of the
loss carryforwards and, therefore, no deferred tax asset has been
recognized for the loss carryforwards. The net deferred tax assets are
approximately $1,326,000 as of March 31, 2000, with an offsetting valuation
allowance at year end of the same amount resulting in a change in the
valuation allowance of approximately $34,000 during the three months ended
March 31, 2000.
NOTE 9 - LOSS PER SHARE
The following data show the amounts used in computing loss per share and
the effect on income and the weighted average number of shares of potential
dilutive common stock for the three months ended March 31, 2000, and 1999:
<TABLE>
<CAPTION>
For the Three
Months Ended
March 31,
----------------------
2000 1999
---------- ----------
<S> <C> <C>
Loss from continuing operations available
to common stockholders (Numerator) $ (90,238) $ (1,978,935)
Weighted average number of common shares
outstanding used in basic earnings per share
(Denominator) 4,537,298 943,446
---------- ----------
Weighted average number of common shares and potential
dilutive common shares outstanding used in
dilutive earnings per share (Denominator) N/A N/A
----------- -----------
</TABLE>
NOTE 10 - LITIGATION, CONTINGENCIES AND COMMITMENTS
Stock guarantee - During December 1998, the Company issued 10,000 shares of
its common stock for advertising services performed valued at $60,000. The
Company guaranteed the advertising company that one year from the date of
issue they would be able to sell their 10,000 shares of common stock for a
minimum price of $6.00 per share (or for a total of $60,000). During
September 1999 the Company issued an additional 6,667 shares of common
stock at $.40 per share under the same agreement. The Company further
agreed to issue a sufficient amount of shares to the advertising Company in
order to sell and receive total proceeds of $100,000 if the trading price
is less than $6.00 per share. As of December 31, 1999 the Company has
recorded a $42,500 accrued expense as the market price of the common stock
was less than the guaranteed amount.
F-11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Company
Liberty Mint, Ltd., a Nevada corporation (the "Company"), operates through two
subsidiaries. The Great Western Mint, Inc. ("GWM") provides custom minting
services for government agencies, companies large and small, and any other
organization that desires to produce a custom coin or commemorative. The GWM
also conceives and markets proprietary coin related products and sculpture. The
Company's second subsidiary, Liberty Mint Marketing, Inc., creates and markets
licensed sports and entertainment related collectibles.
The Company has identified three areas which it will attempt to cultivate
through its marketing efforts: 1) themes of general interest and gift items
manufactured by GWM, 2) sports and entertainment collectibles under the trade
name of Superstar Commemorative Collector Series ("SCCS"), and 3) western art
and collectibles under the trade name of Jackson Hole Collectibles.
In addition, the Company remains focused on increasing sales through improving
and expanding upon its present marketing and distribution methods. At present
and in the near term, the Company will seek relationships with established
marketing partners to assist in distribution and sales of the Company's newly
developed collectible products. As a result of the Company's new direction, it
has successfully begun to market its products on a limited basis to businesses
and the public. Many of the Company's new product lines are derived from
licenses and rights to produce various collectibles featuring public
personalities, special events or popular art. The Company intends to continue
licensed-based marketing by obtaining additional licenses with public appeal. As
new products are developed the Company will proceed with its efforts to expand
marketing strategies and develop increased demand for its products.
General
During the first quarter of 2000, the Company continued to improve its financial
condition. The Company increased its revenues over the comparable quarter in
1999. As a direct result of increased revenues for the first quarter of 2000 and
the year ended December 31, 1999, the Company's overall financial health
significantly improved. While the Company is still showing an overall loss, the
amount of loss for the first quarter of 2000 is significantly less than the loss
shown for the comparable period in 1999.
Results of Operations
Gross revenues for the quarter ended March 31, 2000 were $910,523 compared to
$114,882 for the same period in 1998, an increase of $795,641. The gross
revenues for March 31, 2000, were higher than the comparable quarter in 1998 due
to revenues generated by the Company's new subsidiary, The Great Western Mint,
Inc.
Costs of revenues were $670,186 or 74% of revenues for the quarter ended on
March 31, 2000, compared to $49,545 or 43% of revenues for the first quarter of
1999. The percentage increase in the cost of revenues is primarily due to the
fact that the Company's first quarter sales consisted primarily of manufactured
goods as opposed to the previous period when the bulk of the Company's sales
were of brokered goods.
Gross profit was $240,337 for the quarter ended on March 31, 2000 and $65,337
for the comparable quarter in 1999. Gross profit as a percentage of revenues was
26% and 57%, respectively.
4
<PAGE>
General and administrative expenses were $309,557 for the quarter ended on March
31, 2000 and $111,566 for the comparable period in 1999, an increase of
$197,991. The primary reason for the increase was additional costs associated
with the operations of the Company's new subsidiary, The Great Western Mint.
The Company had an operating loss of $90,238 during the quarter ended on March
31, 2000, compared to an operating loss of $1,978,925 for the comparable quarter
in 1999. The reduction of the Company's operating loss for the quarter ended
March 31, 2000, as compared to the quarter ended March 31, 1999, was primarily
attributable to the fact the Company expensed $1,972,853 from the divestiture of
its unprofitable subsidiary.
During the quarter ended March 31, 2000, the Company incurred interest expenses
in the amount of $20,998. During the comparable period in 1999, the Company
incurred interest expenses in the amount of $6,072. The primary reason for the
increase is factoring costs incurred by The Great Western Mint.
Capital Resources and Liquidity
At March 30, 2000, the Company had current assets of $1,346,371 and total assets
of $1,528,163 as compared to $1,379,281 and $1,400,378, respectively at December
31, 1999. The Company had a working capital deficit of $3,993,181 at March 31,
2000 compared to a working capital deficit of $3,901,943 at December 31, 1999.
The stockholders' deficit in the Company was $616,225 as of March 31, 2000,
compared to $882,258 as of December 31, 1999.
Due to the Company's losses prior to its divestiture of its former subsidiary,
Liberty Mint, Inc., in September of 1999 the Company continues to experience
cash flow shortages. To satisfy its cash requirements, including debt service,
the Company must periodically raise funds from external sources. This has
occasionally involved the Company conducting exempt offerings of its equity
securities. However, during the first quarter of 2000, the Company did not issue
any equity securities to finance its operations.
Year 2000 Compliance
The Year 2000 problem is a result of computer programs being written using two
digits to define the applicable year. If not corrected, any programs or
equipment that have time sensitive components could fail or create erroneous
results. As of April 21, 2000, The Company has not experienced any year 2000
problems.
[THIS SPACE HAS BEEN LEFT BLANK INTENTIONALLY.]
5
<PAGE>
PART II
ITEM 2. RECENT SALES OF UNREGISTERED SECURITIES
On November 5, 1999, the Company issued 15,000 shares of common stock, to
Richard D. Surber for consulting services rendered to the Company pursuant to an
October 15, 1999 consulting agreement. The shares were issued pursuant to
section 4(2) of the Securities Act of 1933 in an isolated private transaction by
the Company which did not involve a public offering. The Company made this
offering based on the following factors: (1) The issuance was an isolated
private transaction by the Company which did not involve a public offering; (2)
there was only one offerree who was issued stock for services rendered to the
Company ; (3) the offeree did not resell the stock but has agreed to hold it for
investment purposes; (4) there were no subsequent or contemporaneous public
offerings of the stock; (5) the stock was not broken down into smaller
denominations; and (6) the negotiations for the sale of the stock took place
directly between the offeree and the Company.
On February 15, 2000, pursuant to an option agreement, the Company issued
200,000 Common Shares to Creed and Clarene Law for $80,000, pursuant to section
4(2) of the Securities Act of 1933 in a private transaction by the Company which
did not involve a public offering.
On February 25, 2000, pursuant to an option agreement, the Company issued 17,500
shares of common stock, at $0.40 per share, in lieu of salary owed for October,
1999, to Rob Joyce, pursuant to section 4(2) of the Securities Act of 1933 in an
isolated private transaction by the Company which did not involve a public
offering. At the time of this transaction, Mr. Joyce was an officer of the
Company. The Shares were sold to Mr. Joyce pursuant to section 4(2) of the
Securities Act of 1933 in a private transaction by the Company which did not
involve a public offering.
On March 3, 2000, pursuant to an option agreement, the Company issued 3,000
shares of common stock to Donna Saltzman, 1,000 shares of common stock to Linda
Memmo, 1,000 shares of common stock to A. Ferracuti, and 1,000 shares of common
stock to Franco Poletti, as compensations for services rendered by SF
Investments Co. in updating the Company's Internet website. The shares were
issued pursuant to section 4(2) of the Securities Act of 1933 in an isolated
private transaction by the Company which did not involve a public offering. The
Company made this offering based on the following factors: (1) The issuance was
an isolated private transaction by the Company which did not involve a public
offering; (2) there were only four offerrees who were issued stock for services
rendered to the Company by SF Investments Co.; (3) the offerees did not resell
the stock but have agreed to hold it for at least twelve months; (4) there were
no subsequent or contemporaneous public offerings of the stock; (5) the stock
was not broken down into smaller denominations; and (6) the negotiations for the
sale of the stock took place directly between the offerees and the Company.
On March 6, 2000, pursuant to an option agreement, the Company issued 306,954
shares of common stock to American Investment Properties ("AIP") at $0.40 per
share for cash, pursuant to section 4(2) of the Securities Act of 1933 in an
isolated private transaction by the Company which did not involve a public
offering. At the time of this transaction AIP was an accredited investor, as
defined in Rule 215, whose employee, William Schmidt, served on the Board of
Directors of the Company. The shares were sold to AIP to provide working capital
for the Company for the purpose of allowing operations of the Company to
continue.
On March 20, 2000, the Company issued 15,000 shares of common stock, to Richard
D. Surber for consulting services rendered to the Company pursuant to a December
15, 1999 Consulting Agreement. The shares were issued pursuant to section 4(2)
of the Securities Act of 1933 in an isolated private transaction by the Company
which did not involve a public offering. The Company made this offering based on
6
<PAGE>
the following factors: (1) The issuance was an isolated private transaction by
the Company which did not involve a public offering; (2) there was only one
offerree who was issued stock for services rendered to the Company; (3) the
offeree did not resell the stock but has agreed to hold it for investment
purposes; (4) there were no subsequent or contemporaneous public offerings of
the stock; (5) the stock was not broken down into smaller denominations; and (6)
the negotiations for the sale of the stock took place directly between the
offeree and the Company.
On March 29, 2000, pursuant to an option agreement, the Company issued 35,000
shares of common stock, at $0.40 per share, in lieu of salary owed for November
and December, 1999 to Rob Joyce, pursuant to section 4(2) of the Securities Act
of 1933 in an isolated private transaction by the Company which did not involve
a public offering. At the time of this transaction, Mr. Joyce was an officer of
the Company. The Shares were sold to Mr. Joyce pursuant to section 4(2) of the
Securities Act of 1933 in a private transaction by the Company which did not
involve a public offering.
On April 1, 2000, pursuant to an option agreement, the Company issued 17,500
shares of common stock, at $0.40 per share, in lieu of salary owed for January,
2000, to Rob Joyce, pursuant to section 4(2) of the Securities Act of 1933 in an
isolated private transaction by the Company which did not involve a public
offering. At the time of this transaction, Mr. Joyce was an officer of the
Company. The Shares were sold to Mr. Joyce pursuant to section 4(2) of the
Securities Act of 1933 in a private transaction by the Company which did not
involve a public offering.
ITEM 5. OTHER INFORMATION
During January and February of 2000, the Company moved its offices to 975 North
1430 West, Orem, Utah 84057. The Company now shares an office with its
subsidiary, The Great Western Mint. The Company has no lease on the office space
and pays no rent to The Great Western Mint.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits Exhibits required to be attached by Item 601 of Regulation S-B are
listed in the Index to Exhibits on page 10 of this Form 10-QSB, and are
incorporated herein by this reference.
(b) Reports on Form 8-K. No reports were filed on Form 8-K during the quarter.
-------------------
[THIS SPACE HAS BEEN LEFT BLANK INTENTIONALLY.]
7
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized, this 11th day of May 2000.
LIBERTY MINT, LTD.
/s/ Dan Southwick
------------------
Dan Southwick
President, Chief Executive Officer and Director
/s/ Eugene Pankrantz
------------------
Eugene Pankrantz
Controller
8
<PAGE>
Index to Exhibits
EXHIBIT PAGE
NO. NO. DESCRIPTION
2 * Plan of Reorganization of Liberty Mint, Inc. (incorporated herein
by reference from Exhibit 2 to the Company's Form 10-SB/A-2 as
filed with the Securities and Exchange Commission on March 27,
2000).
3(i) * Articles of Incorporation of the Company formerly known as St.
Joseph Corp. VI, a Colorado corporation, dated March 15, 1990
(incorporated herein by reference from Exhibit 3(i) to the
Company's Form 10-SB/A-2 as filed with the Securities and
Exchange Commission on March 27, 2000).
3(ii) * Articles of Amendment for St. Joseph Corp., dated July 26, 1993,
changing the name of the Company to Petrosavers International,
Inc. (incorporated herein by reference from Exhibit 3(ii) to the
Company's Form 10-SB/A-2 as filed with the Securities and
Exchange Commission on March 27, 2000).
3(iii) * Articles of Amendment for Petrosavers International, Inc., dated
August 19, 1996, changing the name of the Company to Hana
Acquisitions, Inc. (incorporated herein by reference from Exhibit
3(iii) to the Company's Form 10-SB/A-2 as filed with the
Securities and Exchange Commission on March 27, 2000).
3(iv) * Articles of Amendment for Hana Acquisitions, Inc., dated June 9,
1997, changing the name of the Company to Liberty Mint, Ltd.
(incorporated herein by reference from Exhibit 3(iv) to the
Company's Form 10-SB/A-2 as filed with the Securities and
Exchange Commission on March 27, 2000).
3(v) * Articles of Incorporation of Liberty Mint, Ltd., a Nevada
corporation, dated May 26, 1999 (incorporated herein by reference
from Exhibit 3(v) to the Company's Form 10- SB/A-2 as filed with
the Securities and Exchange Commission on March 27, 2000).
3(vi) * Articles of Merger of Liberty Mint, Ltd. changing domicile to
Nevada (incorporated herein by reference from Exhibit 3(vi) to
the Company's Form 10-SB/A-2 as filed with the Securities and
Exchange Commission on March 27, 2000).
3(vii) * By-laws of Liberty Mint, Ltd., a Nevada corporation (incorporated
herein by reference from Exhibit 3(ii) to the Company's Form
10-SB/A-2 as filed with the Securities and Exchange Commission on
March 27, 2000).
27 __ Financial Data Schedule "CE"
9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED FINANCIAL STATEMENTS FOR THE PERIOD ENDED MARCH 31, 2000 THAT
WERE FILED WITH THE COMPANY'S REPORT ON FORM 10-QSB AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001042420
<NAME> Liberty Mint, LTD
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-1-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 19,438
<SECURITIES> 0
<RECEIVABLES> 486,310
<ALLOWANCES> 0
<INVENTORY> 619,023
<CURRENT-ASSETS> 1,346,371
<PP&E> 175,599
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,528,163
<CURRENT-LIABILITIES> 2,144,388
<BONDS> 0
0
0
<COMMON> 3,501,164
<OTHER-SE> (3,993,181)
<TOTAL-LIABILITY-AND-EQUITY> 1,528,163
<SALES> 910,523
<TOTAL-REVENUES> 910,523
<CGS> 670,186
<TOTAL-COSTS> 309,577
<OTHER-EXPENSES> (20,998)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (90,238)
<INCOME-TAX> 0
<INCOME-CONTINUING> (90,238)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (90,238)
<EPS-BASIC> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
