U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
__ TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to __________
Commission File Number: 0-6088
EARTH SCIENCES, INC.
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(Exact name of small business issuer as specified in its charter)
Colorado
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(State of other jurisdiction of incorporation or organization)
84-0503749
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(I.R.S. Employer Identification No.)
910 12th Street, Golden, Colorado 80401
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(Address of principal executive offices) (Zip Code)
(303)279-7641
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(Issuer's telephone number)
Not Applicable
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(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reported 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_____
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of July 28, 1996: 6,898,089 Shares of Common Stock, one cent
par value.
Transitional Small Business Disclosure Format: Yes _____; No X
FINANCIAL STATEMENTS
Earth Sciences, Inc. and Subsidiaries
Consolidated Balance Sheet
June 30, 1996
UNAUDITED
<TABLE>
<CAPTION>
Assets (amounts in thousands)
Current assets:
<S> <C>
Cash, and cash equivalents $ 181
Certificates of deposit 1,600
Receivables 158
Prepaid expenses and other 50
------
Total current assets 1,989
Property, plant and equipment, at cost 16,547
Less accum. depr. and amort. (4,921)
------
Net property and equipment 11,626
------
$13,615
======
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable and current
installments of long-term debt $ 15
Accounts payable 4
Accrued expenses 59
------
Total current liabilities 78
Long-Term Liabilities:
Deferred revenues 9,382
Long-term debt, excluding current installments 555
Other liabilities 450
Accrued decommissioning liability 221
------
10,608
Stockholders' equity:
Common stock $.01 par value 69
Additional paid-in capital 7,444
Retained deficit (2,808)
Cumulative translation adjustments (1,775)
Treasury stock (1)
------
Total stockholders' equity 2,929
------
$ 13,615
======
</TABLE>
See accompanying notes.
Earth Sciences, Inc. and Subsidiaries
Consolidated Statements of Operations
Three and Six Months Ended June 30, 1996 and 1995
UNAUDITED
<TABLE>
<CAPTION>
1996 1995
Qtr. 6 Mos. Qtr. 6 Mos.
(amounts in thousands, except per share and shares outstanding)
REVENUES:
<S> <C> <C> <C> <C>
Royalty income $ 223 430 246 474
Other 23 31 15 25 246 461
---- --- --- ---
246 461 261 499
EXPENSES:
Operating 94 177 76 157
General and administrative 134 228 70 150
Interest expense 17 34 21 42
Depreciation and amortization 60 117 58 115
---- --- --- ---
305 556 225 464
---- --- --- ---
Net earnings (loss) $ (59) (95) 36 35
==== === === ===
Net earnings (loss) per
common share $(.01) (.01) .01 .01
==== === === ===
Weighted average common
shares outstanding 6,448,765 6,418,272 6,355,456 6,355,456
========= ========= ========= =========
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
Earth Sciences, Inc. and Subsidiaries
Consolidated Statements of Accumulated Deficit
Six Months Ended June 30, 1996 and 1995
<TABLE>
UNAUDITED
<CAPTION> 1996 1995
(amounts in thousands)
<S> <C> <C>
Retained deficit as of January 1 $ (2,713) (2,851)
Net earnings (loss) for the period (95) 35
----- -----
Retained deficit as of June 30 $ (2,808) (2,816)
===== =====
</TABLE>
See accompanying notes.
Earth Sciences, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 1996 and 1995
<TABLE>
UNAUDITED
<CAPTION> 1996 1995
(amounts in thousands)
<S> <C> <C>
Cash flows from operating activities:
Cash received from customers $ 508 464
Cash paid to suppliers and employees (424) (317)
Dividends and interest received 14 13
Interest paid (14) (21)
---- ----
Net cash provided by operating
activities 84 139
Cash flows from investing activities:
Collection on notes receivable 22 130
Notes receivable funded (70) (130)
Capital expenditures (13) (9)
Purchase of certificates of deposit (1,125) -
Payments on notes and long-term debt - (111)
----- ----
Net cash used (1,186) (120)
Cash flow from financing activities:
Sale of common stock 1,021 -
----- ----
Net increase (decrease) in cash and
cash equivalents (81) 19
Cash and cash equivalents at beginning
of period 262 323
----- ----
Cash and equivalents at end of period $ 181 342
===== ====
</TABLE>
<TABLE>
Reconciliation of net earnings (loss) to net cash provided by operating
activities:
<S> <C> <C>
Net earnings (loss) $ (95) 35
Adjustments to reconcile net loss to net
cash provided by (used in) operations:
Depreciation and amortization 117 115
(Increase) decrease in receivables 61 (21)
(Increase) decrease in other assets 5 (4)
Increase in payables (4) 14
--- ---
Net cash provided (used) by
operating activities $ 84 139
==== ===
</TABLE>
See accompanying notes.
Earth Sciences, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
June 30, 1996
(1) General
The accompanying consolidated financial statements were prepared in accordance
with generally accepted accounting principles and reflect all adjustments which
are, in the opinion of management, necessary for fair representation of the
financial results for the interim periods shown. Such statements should be
considered in conjunction with Registrant's 1995 Form 10-KSB.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
In the second quarter of 1996, a net of $1,021,000 was raised from placements of
equity with a number of foreign investors. Management believes that existing
working capital and the continuing royalty income from the San Luis gold mine
are sufficient to fund existing operations, and the anticipated equipment and
construction costs for conversion of the Calgary facility for the production
of purified phosphate products. Additional funds will be required to initiate
start-up, for inventory and for other working capital.
Based on current estimates, the Calgary facility will require approximately $5
million to re-start for the production of purified phosphoric products, planned
for late 1996/early 1997. Financing options involving equity placements and
private borrowing are being evaluated to fund the additional capital needs at
the Calgary extraction facility.
Registrant is funding the majority of cash costs of the Venezuelan gold
exploration activities. Activities planned on the existing concession and on
those concessions expected to be acquired in the future can be met through
existing working capital. Registrant plans to raise the additional capital,
if and when needed, for increased activities in Venezuela, through further
private placements of stock and joint venture arrangements, if appropriate.
Cash flow from operations totaled $84,000 for the first half of 1996 as compared
to $139,000 for the same period in 1995. Cash flow from investing activities
included collection on and funding notes receivable of $22,000 and ($70,000),
respectively, capital expenditures of $13,000 and purchase of certificates of
deposit of $1,125,000. Cash flow from financing activities consisted proceeds
from the sale of stock of $1,021,000.
Results of Operations
Total revenues for the 1st half of 1996 were somewhat less than the same period
in 1995. Total gold total ounces produced were somewhat lower (32,400 oz. in
1996 vs. 35,200 in 1995) on production achieved by Battle Mountain Gold Company
(BMGC) at the San Luis gold mine from which Registrant receives a 3 1/2% gross
royalty. Production was lower due to equipment problems and lower grade of ore.
Total targeted production by BMGC for 1996 remains at 72,000 ounces the same as
was achieved in 1995.
Expenses for the 1st half of 1996 were higher than for the same period in 1995
due to increased activity at the Calgary extraction facility for permitting,
final engineering and equipment procurement.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Reported in Item 3 of Registrant's 1995 Form 10-KSB.
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
A Proxy Statement has been filed and mailed to shareholders of record as of June
28, 1996 to vote at a Special meeting of the shareholders to be held August 15,
1996 for the increase in the authorized capital of the Registrant from
10,000,000 shares of $.01 par value Common Stock to 25,000,000 shares.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
No change from Item 13 of Registrant's 1995 Form 10-KSB.
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.
Earth Sciences, Inc.
Registrant
Date: July 26, 1996 /s/ Mark H. McKinnies
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Mark H. McKinnies
President and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 181
<SECURITIES> 0
<RECEIVABLES> 158
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1989
<PP&E> 16547
<DEPRECIATION> 4921
<TOTAL-ASSETS> 13615
<CURRENT-LIABILITIES> 78
<BONDS> 555
0
0
<COMMON> 69
<OTHER-SE> 2929
<TOTAL-LIABILITY-AND-EQUITY> 13615
<SALES> 0
<TOTAL-REVENUES> 461
<CGS> 0
<TOTAL-COSTS> 556
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 34
<INCOME-PRETAX> (95)
<INCOME-TAX> 0
<INCOME-CONTINUING> (95)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (95)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
