<PAGE>
United States
Securities and Exchange Commission
Washington, DC 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Quarter Ended Commission File Number
September 30, 2000 0-29491
THE NEW ANACONDA COMPANY
-------------------------
(Exact name of registrant as specified in its charter)
UTAH
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(State or other jurisdiction of incorporation or organization
87-0405529
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(I.R.S. Employer Identification No.)
136 East South Temple, Suite 1700-A
Salt Lake City, Utah 84111
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(Address of principal executive offices)
(801) 355-1341
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(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12 (b) of the Act:
None
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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.
X Yes No
--- ---
State the number of shares outstanding of each of the registrants classes
of common equity, as of the latest practicable date.
Common stock, par value $.001; 95,000,000 shares outstanding
as of November 10, 2000
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THE NEW ANACONDA COMPANY
FORM 10-Q
For the Quarter Ended September 30, 2000
INDEX
PART I--FINANCIAL INFORMATION:
Item 1. Financial Statements
Consolidated Balance Sheet -
September 30, 2000 and March 31, 2000 3
Consolidated Statement of Operations -
Six months ended September 30, 2000 and 1999 4
Consolidated Statement of Cash Flows -
Six months ended June 30, 2000 and 1999 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II--OTHER INFORMATION
Item 1. Legal Proceedings 8
Item 5. Other Information 8
Item 6. Exhibits and Reports on Form 8-K 8
Signatures 9
2
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<PAGE> PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE NEW ANACONDA COMPANY AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
September March
30, 2000 30, 2000
------------- -------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 1,976 $ 1,825
Prepaid expenses - 21,204
------------- -------------
Total Current Assets 1,976 23,029
PROPERTY AND EQUIPMENT
Mineral interests in property 29,146,369 29,146,369
Mineral rights 1 1
Office equipment 93,867 93,867
Plant equipment 782,418 790,987
Automobiles 56,388 56,388
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30,079,043 30,087,612
Less: Accumulated Depreciation (459,578) (389,914)
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NET PROPERTY AND EQUIPMENT 29,619,465 29,697,698
------------- -------------
TOTAL ASSETS $29,621,441 $29,720,727
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 81,483 $ 81,483
Accrued liabilities 913,282 668,519
Capital lease obligations 121,966 122,076
Notes payable - current portion 29,150 29,150
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TOTAL CURRENT LIABILITIES 1,145,881 901,228
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LONG-TERM LIABILITIES
Note payable to related party 1,802,578 1,744,971
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TOTAL LONG-TERM LIABILITIES 1,802,578 1,744,971
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STOCKHOLDERS' EQUITY (DEFICIT)
Common stock - $0.001 par value; 100,000,000
shares authorized; shares issued and
outstanding: June 30, 2000 - 95,000,000,
March 31, 2000 - 95,000,000 95,000 95,000
Additional paid-in capital 68,097,583 68,097,583
Deficit accumulated during the
development stage (41,519,601) (41,118,055)
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TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 26,672,982 27,074,528
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Total Liabilities and Stockholders' Equity $29,621,441 $ 29,720,72
============= =============
</TABLE>
F-3
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THE NEW ANACONDA COMPANY AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Cumulative
from January
1, 1993
(Date of
Inception)
For the Six Months Through
Ended September September
30, 2000 30, 1999 30, 2000
------------ ------------ ------------
<S> <C> <C> <C>
SALES $ - $ - $ -
COST OF SALES - - -
------------ ------------ ------------
GROSS PROFIT - - -
------------ ------------ ------------
OPERATING EXPENSES
General and administrative 401,546 6,904,584 16,278,590
Research and development 3,145 4,761,551
------------ ------------ ------------
TOTAL OPERATING EXPENSES 401,546 6,907,729 21,040,141
------------ ------------ ------------
LOSS FROM OPERATIONS (401,546) (6,907,729) (21,040,141)
------------ ------------ ------------
OTHER INCOME AND (EXPENSES)
Other income 60,664
Sale of precious metals 125,022
Interest expense (11,494) (25,850,045)
Loss on disposal of equipment (73,151) (520,101)
------------ ------------ ------------
NET OTHER EXPENSES (84,645) (26,184,460)
------------ ------------ ------------
LOSS BEFORE EXTRAORDINARY ITEM (401,546) (6,992,374) (47,224,601)
------------ ------------ ------------
EXTRAORDINARY GAIN ON
EXTINGUISHMENT OF DEBT,
NO TAX EFFECT 5,705,000
------------ ------------ ------------
Loss $ (401,546) $(6,992,374) $ (41,519,601)
============ ============ ============
LOSS PER SHARE $ $ (0.10) $ (0.73)
============ ============ ============
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 87,111,314 71,247,253 56,991,013
============ ============ ============
</TABLE>
F-4
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THE NEW ANACONDA COMPANY AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Cumulative
from January
1, 1993
(Date of
Inception)
For the Six Months Through
Ended September September
30, 2000 30, 1999 30, 2000
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (401,546) $(6,992,374) $(41,519,601)
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation 69,664 21,835 540,153
Amortization of discount on notes payable - - 1,429,989
Stock issued for services - 6,750,000 7,386,765
(Gain) loss on the sale of property and
equipment - 73,150 416,183
Gain on extinguishment of debt - - (5,705,000)
Exchange of services for vehicle - - 2,000
Changes in operating assets and liabilities,
net of effects of businesses acquired:
Accounts receivable - - -
Inventory - - -
Prepaid expenses 21,204 (7,500) -
Accounts payable - 53,316 81,483
Accrued liabilities 244,763 23,749 1,163,309
Accrued interest payable - 131 24,298,576
------------ ----------- ------------
NET CASH FROM OPERATING ACTIVITIES (69,915) (77,693) (11,906,143)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property and
equipment 8,569 - 226,417
Capital expenditures - (1,348,575)
------------ ------------ ------------
NET CASH FROM INVESTING ACTIVITIES 8,569 - (1,122,158)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of stock - - 10,000
Principal payments under capital lease (110) (14,755) (101,079)
Principal payments on notes payable - (4,077) (8,468,988)
Proceeds from issuance of debt - - 9,567,919
Principal payments on related party debt - - (3,310,981)
Proceeds from issuance of related party
debt 57,607 144,084 15,333,406
------------ ------------ ------------
NET CASH FROM FINANCING ACTIVITIES 57,497 125,252 13,030,277
NET INCREASE (DECREASE) IN CASH 151 47,559 1,976
CASH - BEGINNING OF PERIOD 1,825 2,457 -
------------ ------------ ------------
CASH - END OF PERIOD $ 1,976 $ 50,016 $ 1,976
============ ============ ============
</TABLE>
F-5
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THE NEW ANACONDA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
CONDENSED FINANCIAL STATEMENTS The accompanying unaudited consolidated
financial statements include the accounts of The New Anaconda Company and
its subsidiaries ("Anaconda"). These financial statements are condensed
and, therefore, do not include all disclosures normally required by
generally accepted accounting principles. These statements should be read
in conjunction with Anaconda's most recent annual financial statements
included in the Company's report on Form 10-KSB for the year ended March
31, 2000. In particular, Anaconda's significant accounting principles were
presented as Note 1 to the Consolidated Financial Statements in that
Report. In the opinion of management, all adjustments necessary for a fair
presentation have been included in the accompanying condensed financial
statements and consist of only normal recurring adjustments. The results
of operations presented in the accompanying condensed financial statements
are not necessarily indicative of the results that may be expected for the
full year ending March 31, 2001.
BUSINESS CONDITION Anaconda and its subsidiaries have accumulated
deficits of $41,118,055 since their inception in 1993 through March 31,
2000 and $41,519,601 as of September 30, 2000. They have had losses from
operations and negative cash flows from operating activities during each of
the three years in the period ended March 31, 2000. These conditions raise
substantial doubt regarding the Company's ability to continue as a going
concern. Although the Company had positive stockholders' equity at March
31, 2000 and September 30, 2000, realization of the investment in
properties and equipment is dependent on Anaconda's obtaining financing for
the further development and utilization of its technology to extract
precious metals from mineral reserves and other sources.
NOTE 2 RELATED PARTY NOTES PAYABLE
During the second quarter of 2001 Anaconda continued to rely on its major
stockholder for financing the Company's limited operations. The loans are
intended to be long-term in nature as it is determined that the Company
will need what resources it is able to obtain in the near future for
current operations and not to reimburse the stockholder for loans made to
the Company.
NOTE 3 COMMITMENTS
The Company has defaulted on its capital lease obligations. Certain
equipment has been repossessed and it is expected that other equipment will
also be repossessed by the creditors. All outstanding lease obligations
have been reclassified to current liabilities.
6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
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The Company had cash on hand of $1,976 as of September 30, 2000.
Since inception, the Company has been engaged in research and
development and raising the needed capital to bring technology to the
production level and, therefore, is considered a development stage
enterprise. The Company's ability to move from the development stage is
dependent upon its ability to generate sufficient cash flow from operations
to meet its obligations on a timely basis, to obtain additional funding as
may be required, and ultimately to attain successful operations. Management
has been authorized by the board of directors to issue up to 5,000,000
shares of its common stock to the public for additional financing sometime
in the future. Management is negotiating with a source of equity financing.
The Company is also holding discussions with additional private placement
sources in case anticipated financing does not materialize. No firm
commitments have been received. There is no assurance the Company will be
able to raise any capital or that the Company will receive sufficient
capital to continue in operation. The company's activities have been placed
on hold, until new funding is secured. The minimum expenses incurred during
the quarter have been funded by the Company's largest shareholder on a
long-term loan basis. Management believes that the shareholder will use its
best efforts to continue to provide subsistence funding, however no
agreement to do so exists, and the shareholder's ability to do so on an
extended basis is doubtful. Future capital commitments, including the
funds needed to complete the pilot plant, are also on hold subject to the
equity financing mentioned above. Repayment of debt is anticipated to come
from operating profits to be generated when the pilot and or subsequent
plants are in operation. No debt repayment is planned from the anticipated
financing, should it be successfully concluded.
Results of Operations
---------------------
COMPARISON OF THE SIX MONTHS ENDED SEPTEMBER 30, 2000 AND THE SIX
MONTHS ENDED SEPTEMBER 30, 1999.
The Company had no revenue during the six months ended September 30,
2000 or during the same 1999 period.
General and administrative expenses of $401,546 incurred in the six
months ended September 30, 1999 are $6,503,038 less than the $6,904,584 for
the six months ended September 30, 1999. $6,750,000 of the difference is
the expense of having issued 3,000,000 at $2.25 per share in the six months
ended September 30, 1999. These shares were issued for services. No
comparable transaction occurred in the 2000 year. Net of this single,
transaction general and administrative expenses are $246,962 higher in the
half ended September 30, 2000, than in the comparable 1999 period.
The six months ended September 30, 2000 general and administrative
expenses consist of operating expenses in the Victoria Plant of $33,724,
$243,000 of accrued salaries, $42,032 in travel expenses, $69,664 in
depreciation and $13,126 in legal expenses. The $33,724 in operating
expenses at the Victoria plant are for facilities expenses such as
telephone, utilities and rent only as the plant is not conducting any
activities at this time. The 1999 comparable period expenses are also for
the facilities expenses but include additional salaries and wages as well
as a small amount of laboratory expenses. The 1999 six month period did not
include the accrued salaries as two of the officers had waived the
liability and one was not yet employed.
7
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PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As disclosed by the Company in its Form 10, filed on February 14,
2000, it may have potential liability under the Comprehensive Environmental
Remediation, Compensative and Liability Act. There were no changes in the
status of this matter during the quarter. The Company is not involved in
any other legal proceedings.
ITEM 5. OTHER
On February 14, 2000, the Company filed a Form 10. On April 13, 2000,
the Securities and Exchange Commission sent a deficiency letter to the
Company requesting additional information and disclosure be added to the
registration statement. Pursuant to Section 12(g) of the Securities
Exchange Act of 1934, the Form 10 filing went effective 60 days after it
was filed. On November 13, 2000, the Company filed Form 10/A-1, amending
the original Form 10 and responding to the comments of the Securities and
Exchange Commission. After its review of the Form 10/A-1 the Securities
and Exchange Commission may have additional comments. The Company will not
be eligible for relisting on the Over-the-Counter Bulletin Board until such
time as all comments have been cleared.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
(27) Financial Data Schedule
(b) Reports on Form 8-K
None.
8
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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.
The New Anaconda Company
November 13, 2000 /s/ Paul A. de Rome
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Paul A. de Rome, President
November 13, 2000 /s/ John F. Pope
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John F. Pope, Chief Financial Officer
9
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