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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
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Commission File No. ___________
UTAH RESOURCES INTERNATIONAL, INC.
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(Exact Name of Small Business Issuer as Specified in its Charter)
Utah 87-0273519
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
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297 W. Hilton Drive, Suite #4
St. George, Utah 84770
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(Address of Principal Executive Offices)
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(801) 628-8080
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(Issuer's Telephone Number, Including Area Code)
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(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
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.
(1) Yes X No
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(2) Yes X No
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APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity as of the latest practicable date: 2,522,808 shares as of
September 30, 1997.
Transitional Small Business Disclosure Format (check one):
Yes No X
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PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
UTAH RESOURCES INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
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<S> <C>
Cash and cash equivalents $ 334,919
Accounts receivable 303,560
Notes receivable 259,659
Property and equipment, net of accumulated depreciation
and amortization of $46,430 23,347
Real estate held for resale 838,454
Royalty interest in petroleum and mineral production,
net of amortization of $46,055 3,318
Other assets 12,382
$1,775,639
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
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Accounts payable $ 417,249
Accrued expenses 309,755
Earnest money deposits 36,000
Notes payable 287,838
Total liabilities 1,050,842
Minority interest 110,903
Stockholders' equity:
Common stock; par value $.10 per share, 5,000,000 shares
authorized, 2,522,808 shares issued and outstanding 252,281
Additional paid-in capital 4,431,232
Stock subscription receivable (3,633,159)
Retained (deficit) (436,460)
Total stockholders' equity 613,894
$1,775,639
==========
</TABLE>
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UTAH RESOURCES INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
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THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Sales $ - $ - $ 517,066 $ 178,070
Cost of sales - - 205,010 60,286
Gross profit - - 312,056 117,784
General and administrative expenses 137,475 828,042 594,349 1,066,144
Loss from operations (137,475) (828,042) (282,293) (948,360)
Other income (expense):
Royalty income 37,919 45,674 144,194 120,574
Interest income (expense) - 47,702 22,396 5,016
Other income 7,672 600 - 600
Total other income 45,591 93,976 166,590 126,190
Loss before minority interest and
income taxes (91,884) (734,066) (115,703) (822,170)
Minority interest in net loss of subsidiaries - 3,631 - 4,679
Loss before provision for income
taxes and discontinued operations (91,884) (730,435) (115,703) (817,491)
Income tax benefit - deferred - - - 29,600
Loss from continuing operations (91,884) (730,435) (115,703) (787,891)
Discontinued operations:
Income (loss) from discontinued
operations net of income taxes of
$-0-, $-0-, $-0-, and $68,000 - - - 132,140
Loss from disposal of discontinued
operations net of income tax benefit
of $-0-, $-0-, $-0-, and $48,200 - (15,878) - (109,572)
Total discontinued operations - (15,878) - 22,568
Net (loss) income $ (91,884) $ (746,313) $ (115,703) $ (765,323)
========= ========== ========== ==========
</TABLE>
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UTAH RESOURCES INTERNATIONAL, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Loss per share $ (.36) $ (.30) $ (.06) $ (.37)
Weighted average shares 2,522,808 2,522,808 2,522,808 2,075,068
========= ========== ========== ==========
</TABLE>
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
<TABLE>
<CAPTION>
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1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(115,703) $(765,323)
Less income from discontinued operations - (132,140)
Add loss for disposition of discontinued operation - 109,572
Adjustments to reconcile net loss to net cash
(used in) operating activities:
Depreciation and amortization 5,694 6,820
Minority interest in net loss of subsidiaries - (4,679)
(Increase) decrease in:
Accounts receivable (40,892) 90,640
Real estate held for resale 37,634 199,688
Income tax receivable - (9,800)
(Decrease) increase in:
Accounts payable 164,785 (85,057)
Accrued expenses (236,315) (47,871)
Net cash used in continuing operations (184,797) (638,150)
Net cash provided by discontinued operations - 23,273
Net cash used in
operations activities (184,797) (614,877)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (512) (616)
Increase (decrease) on notes receivable (118,987) 21,535
Decrease in other assets 124,629 -
Cash provided by investing activities - continuing operations 5,130 20,919
Cash from investing activities - discontinued operations - -
Net cash provided by
investing activities 5,130 20,919
</TABLE>
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UTAH RESOURCES INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
CONTINUED
<TABLE>
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<S> <C> <C>
1997 1996
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on notes payable (3,272) (419,270)
Issuance of common stock - 641,146
Purchase of common stock - (135,849)
Cash used in financing activities - continued operations (3,272) 86,027
Cash for financing activities - discontinued operations - -
Net cash provided by
financing activities (3,272) 86,027
Decrease in cash (182,939) (507,931)
Cash and cash equivalents, beginning of period 517,858 765,831
Cash and cash equivalents, end of period $334,919 $257,900
======== ========
</TABLE>
SUPPLEMENTAL SCHEDULE FOR NON-CASH ACTIVITIES:
1996
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In July 1996, the Company sold 1,275,912 shares of the Company's common stock
for $3.35 per share. The Company received $641,146 in cash and a receivable
for the balance of $3,633,159.
The Company also issued 2,625 shares of stock to an individual to relieve a
liability that had been accrued in the amount of $11,180.
As part of the split up with Midwest Railroad, the Company received back
590,000 shares of its own common stock.
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UTAH RESOURCES INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
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(1) The unaudited financial statements include the accounts of Utah Resources
International, Inc., and subsidiaries and include all adjustments
(consisting of normal recurring items) which are, in the opinion of
management, necessary to present fairly the financial position as of
September 30, 1997 and the results of operations for three and nine months
ended September 30, 1997 and 1996, and cash flows for the nine months
ended September 30, 1997 and 1996. The results of operations for the
three and nine months ended September 30, 1997 are not necessarily
indicative of the results to be expected for the entire year.
(2) Loss per common share is based on the weighted average number of shares
outstanding during the period.
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Item 2. Management's Discussion and Analysis or Plan of Operation.
RESULTS OF OPERATIONS
The Company did not have land sales during the quarter ended September 30,
1997 or during the quarter ended September 30, 1996. The Company had land
sales of $517,066 for the nine month period ended September 30, 1997, as
compared with land sales of $178,070, for the nine month period ended September
30, 1996. There was interest income (net of interest expenses) in the amount
of $22,396 during the first nine months of 1997, as compared with interest
income (net of interest expenses) of $5,016 for the same period in 1996, the
difference between the two is due in part, to payments due under the Mortenson
Note, which note was paid in full in 1996. Income on royalties from production
under oil and gas and mineral leases amounted to $37,919 for the quarter ended
September 30, 1997, which was down from $45,674 for the quarter ended September
30, 1996. However, the income on royalties from production under oil and gas
and mineral leases for the nine month period ended September 30, 1997, is
$144,194, which is an increase over the $120,574 which was earned over the same
period in 1996.
There was no cost of land sold in the third quarter of 1997 and 1996. For
the nine month period ending September 30, cost of land sold rose from $60,286
in 1996 to $205,010 in 1997.
LIQUIDITY AND CAPITAL RESOURCES
Cash requirements of the Company are met by funds provided from operations
consisting of (a) the sale of improved lots and undeveloped property; (b)
royalty income; (c) interest income earned on money held in interest bearing
accounts; and (d) interest income earned on the IMCC Note, as discussed below.
The ratio of assets to liabilities at September 30, 1997 was approximately 1.69
to 1. The Company's assets as of September 30, 1997 were $1,775,639, as
against liabilities of $1,050,842.
The Company presently anticipates that cash from land sales and royalties
will be the primary sources for future additional liquidity for the Company.
General and administrative expenses decreased from 1996 to 1997 for the
nine month period ended September 30. For the third quarter, general and
administrative expenses fell from $828,042 in 1996 to $137,475 in 1997.
Furthermore, for the nine month period ended September 30, general and
administrative expenses decreased from $1,066,144 in 1996 to $594,349 in 1997.
A significant portion of such expenses in 1996 and 1997 were legal fees and
expenses incurred on behalf of the Company. The large general and
administrative expenses in 1996 were due in large part to litigation and
payment of legal fees incident to the settlement of litigation involving the
Company. Furthermore, from July of 1996 through the present, the Company has
been engaged in activities to: (i) bring the Company into compliance with
various state and federal securities laws; (ii) hold an annual meeting for
shareholders; (iii) perform a 1,000 to 1 reverse stock split at $3.35 per
share, as required by the 1996 Settlement Agreement; and (iv) take the Company
to a non-Securities and Exchange Commission ("SEC") reporting status. In order
to bring the Company into SEC reporting compliance, the Company filed its; (1)
1995 Form 10-KSB with the SEC on January 8, 1997, (2) Form 10-QSB for the
first, second and third quarters of 1996 on January 22, 1997, (3) 1996 Form
10-KSB on May 28, 1997, (4) first quarter 10-QSB on June 5, 1997 and (5) Form
10-QSB for second quarter 1997 on August 14, 1997. With respect to the reverse
stock split, in February 1997, the Company filed a Schedule 13e-3 and
Preliminary Proxy Statement with the Securities and Exchange Commission (the
"SEC"). The Schedule 13e-3 and Preliminary Proxy Statement related to a
solicitation of proxies by the Company to be used at an anticipated meeting of
the shareholders of the Company to consider
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<PAGE> 9
and vote upon: (i) a proposal to amend the Company's Articles of Incorporation
to effect a reverse split of the Company's issued and outstanding stock on the
basis that each 1,000 shares of the common stock then outstanding will be
converted into one share, at $3.35 per share pre-reverse-split price, with
fractional shareholders given the option to either receive cash in lieu of
their resulting fractional shares or purchase additional fractional shares at
$3.35 per share to round up to one whole share following the reverse split;
(ii) the election of directors; (iii) an amendment to the by-laws changing
the annual meeting date; (iv) certain proposals submitted by Mark G. Jones on
behalf of Mark Technologies Corporation, a greater than 10% shareholder of the
Company, and other matters.
The SEC reviewed the Schedule 13e-3 and Preliminary Proxy Statement and
issued a comment letter to the Company, dated March 28, 1997. The Company
revised the Schedule 13e-3 and Preliminary Proxy Statement, which documents
were filed with the SEC on June 5, 1997. On June 27, 1997, the SEC issued the
Company a second comment letter. The SEC's second comment letter included
additional issues with respect to the financial statements which were a part of
the Company's 1996 Form 10-KSB. These financial issues required additional
supplemental disclosure of the accounting treatment of the Company's
partnership interests, greater detail on the reporting of the discontinuance of
the Midwest Railroad Construction and Maintenance Corporation of Wyoming
transaction, and a detailed disclosure of the Company's oil and gas royalty
interests pursuant to FASB 69. The FASB 69 disclosures sought by the SEC took
almost four months to complete since the Company's access to the oil and gas
disclosure information was limited and required the Company to obtain an
independent petroleum engineers report which encompassed all of the FASB 69
disclosures.
Because the Company has not had an annual meeting of its shareholders
since January, 1995, and because the Company cannot control the SEC review
process (which has now gone on for more than 7 months), the Company has chosen
to proceed with an annual meeting of shareholders to elect directors and to
consider certain shareholder proposals. Once the SEC satisfactorily completes
its review of the Schedule 13e-3 and Preliminary Proxy Statement and other
required documents (including a registration statement), the Company plans to
hold a shareholders meeting.
These activities have imposed a significant drain on the Company's
resources. The Company anticipates that once the reverse stock split is
completed and the Company ceases to be an SEC reporting Company, the Company's
future legal fees and other administrative expenses will decrease
significantly.
The Company also expects to be required to expend funds for the cleanup of
gasoline which has apparently leaked from tanks owned by the Service Station
Partnership, which have been replaced. Engineering estimates of total cleanup
costs are not determinable due to uncertainties with respect to state
compliance requirements and the, as yet, unknown extent of the contamination.
During the third quarter of 1997, $11,476 was expended toward this clean-up
operation and approximately $48,288 has been expended by the Company from
January 1, 1997 to date.
It is anticipated that the Company's need for cash in excess of its
present resources will be met through revenues and real estate secured
borrowings. The Company does not have backup lines of credit.
The Company has no additional plans for major capital expenditures beyond
the cost of improving portions of its' real property.
The Company's business is influenced by interest rates, inflation and
market demands. Its' royalty income from oil and gas interests is affected by
fluctuations in the price of oil and the related decisions to drill new wells
and the rates at which wells are pumped. The Company has no control over the
oil and gas field operations.
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<PAGE> 10
As of July 3, 1996, the Company holds a promissory note from
Inter-Mountain Capital Corporation, a Delaware corporation ("IMCC"), which is
wholly owned by John Fife (the President and CEO of the Company), in the
original principal amount of $3,633,159.42 (the "Note"). The Note bears
interest at a rate equal to the short-term applicable federal rate published by
the Internal Revenue Service in effect at the time of closing the Stock
Purchase Agreement, by and between IMCC and the Company dated as of July 3,
1996, and is adjusted on each anniversary of the Note to the applicable
short-term federal rate in effect on such anniversary date. Interest on the
Note is expected to be paid currently in arrears on each anniversary of the
Note. At the closing, IMCC paid the Company $197,872.52, which amount
represented the present value first year of interest due under the Note. The
principal and any unpaid interest accrued under the Note is due and payable
August 1, 2001. The Note is secured by the 1,275,912 shares purchased by IMCC
as evidenced by a stock pledge agreement, dated as of July 3, 1996 between IMCC
and the Company (the "Stock Pledge Agreement"). Pursuant to a separate
written guaranty agreement, John Fife personally guaranteed payment of 25% of
all amounts due under the Note.
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.
None.
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<PAGE> 11
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.
Utah Resources International, Inc.
Date: November 13, 1997 /s/ John Fife
------------------------------------
John Fife, President and CEO
Date: November 13, 1997 /s/ Ladd Worth Eldredge
------------------------------------
Ladd Worth Eldredge, Chief Financial
Officer
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UTAH
RESOURCES INTERNATIONAL, INC. SEPTEMBER 30, 1997 FINANCIAL STATEMENT AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 334,919
<SECURITIES> 0
<RECEIVABLES> 563,219
<ALLOWANCES> 0
<INVENTORY> 838,454
<CURRENT-ASSETS> 0
<PP&E> 69,777
<DEPRECIATION> 46,430
<TOTAL-ASSETS> 1,775,639
<CURRENT-LIABILITIES> 0
<BONDS> 287,838
0
0
<COMMON> 252,281
<OTHER-SE> 361,613
<TOTAL-LIABILITY-AND-EQUITY> 1,775,639
<SALES> 519,066
<TOTAL-REVENUES> 683,656
<CGS> 205,010
<TOTAL-COSTS> 799,359
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (115,703)
<INCOME-TAX> 0
<INCOME-CONTINUING> (115,703)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (115,703)
<EPS-PRIMARY> (.06)
<EPS-DILUTED> (.06)
</TABLE>
