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 JUNE 30, 1998
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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
(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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<PAGE>
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
November 19, 1997.
Transitional Small Business Disclosure Format (check one):
Yes ________ No ____X____
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<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
UTAH RESOURCES INTERNATIONAL, INC.
Consolidated Balance Sheets
For The Dates Indicated
<TABLE>
<S> <C>
Quarter
Ended
Assets 06/30/98
Cash and cash equivalents 283,947
Accounts receivable 481,937
Notes receivable 206,574
Property and equipment, net of
accumulated depreciation and
amortization of 55,645 2,170
Real estate held for resale 886,193
Royalty interest in petroleum and mineral
production, net of amortization of $49,403 807
Other assets 53,287
Total Assets 1,914,915
Liabilities and Stockholders' Equity
Accounts payable 387,400
Accrued expenses 884,402
Earnest money deposits 36,000
Notes payable 476,930
Total liabilities 1,784,732
Minority interest 89,799
Commitment and contingencies
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
Note Receivable from Stock Sale (3,633,159)
Retained deficit (1,009,970)
Total stockholders' equity 40,384
Total stockholders' equity & liabilities 1,914,915
</TABLE>
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<PAGE>
UTAH RESOURCES INTERNATIONAL, INC.
Consolidated Statement of Operations
For The Periods Indicated
<TABLE>
<S> <C> <C> <C> <C>
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
6/30/98 6/30/97 6/30/98 6/30/97
------------ ------------ ---------- ----------
Sales - 429,523 - 517,066
Cost of Sales - 203,448 - 205,009
Gross profit - 226,075 - 312,057
General and administrative 204,205 231,314 457,538 456,874
Income from operations (204,205) (5,239) (457,538) (144,817)
Other income (expense):
Royalty income 52,825 37,703 102,548 106,276
Interest and dividend 55,908 6,950 110,400 14,723
income (expense)
Total other income (expense) 108,733 44,653 212,948 120,999
Income (loss) before minority interest
and provision for income taxes (95,472) 39,414 (244,590) (23,818)
Minority interest in net income of - - - -
subsidiaries
Income (loss) before provision for
income taxes (95,472) 39,414 (244,590) (23,818)
Income tax (provision) benefit - - - -
Income (loss) from continuing
operations (95,472) 39,414 (244,590) (23,818)
Net income (loss) (95,472) 39,414 (244,590) (23,818)
Weighted Average Shares
Outstanding 2,522,808 2,522,808 2,522,808 2,522,808
Earnings (loss) per share (0.038) 0.016 (0.097) (0.009)
</TABLE>
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<PAGE>
UTAH RESOURCES INTERNATIONAL, INC.
Consolidated Statement of Cash Flows
For The Dates Indicated
<TABLE>
<S> <C> <C>
Six Months Six Months
Ended Ended
06/30/98 06/30/97
Cash flows from operating activities:
Net Income (loss) (244,590) (23,818)
Adjustments to reconcile net income (loss)
to net cash (used in) operating activities:
Depreciation and amortization 5,005 1,673
Minority interest in net (income)
of subsidiaries
(Increase) decrease in:
Accounts receivable (109,179) (34,402)
Real estate held for resale (31,186) 45,333
(Decrease) increase in:
Accounts Payable 106,598 153,128
Accrued expenses 161,750 (261,585)
Net cash used in continuing operations (111,601) (119,671)
Net cash (used in) operating activities (111,601) (119,671)
Cash flows from investing activities:
Purchase of property and equipment 12,011 879
Payments on notes receivable 29,172 (128,019)
Increase (decrease) in minority interest - -
Decrease (increase) in other assets - 124,629
Net Cash (used in) investing activities 41,183 (2,511)
Cash flows from financing activities:
Proceeds from notes payable 191,136
Payments on notes payable (3,272)
Net cash (used in) financing activities 191,136 (3,272)
Increase in cash 120,717 (125,454)
Cash and cash equivalents, beginning of year (period) 163,230 517,858
Cash and cash equivalents, end of year (period) 283,947 392,404
</TABLE>
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<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation.
Results of Operations
The Company had no land sales in the quarter ended June 30, 1998, as
compared with land sales of $429,523 in the quarter ended June 30, 1997. The
Company had no land sales for the six months ended June 30, 1998 as compared
with land sales of $517,066 for the same period in 1997. The Company had
interest income in the amount of $110,400 during the first six months of 1998
(which includes accrued interest under the Inter-Mountain Capital Corporation, a
Delaware corporation ("IMCC") Promissory Note, dated as of July 3, 1996, and
which note is more fully described below), as compared with interest income of
$14,723 for the same period in 1997. Income on royalties from production under
oil and gas and mineral leases amounted to $52,825 for the second quarter of
1998, which was up from the $37,703 figure for the same period in 1997. The
income on royalties from production under oil and gas and mineral leases for the
six months period ended June 30, 1998, is $102,548 which figure is less than the
$106,276 which was earned during the same period in 1997.
There was no cost of land sold in the first six months of 1998 as compared
to $205,009 for the same period 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 June 30, 1998, was approximately 1.07 to
1. The Company's assets as of June 30, 1998 were valued at $1,914,915 as against
liabilities of $1,784,732.
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 are $204,205 for the second three
months in 1998 which is a decrease from $231,314 for the same period in 1997.
General and administrative expenses for the year in 1998 are $457,538 as
compared to $456,874 for the same period in 1997.
The Company is continuing in its efforts to effectuate a reverse stock
split and subsequently take the Company to a non-SEC reporting status. In
February 1997, the Company filed a Schedule 13e-3 and Preliminary Proxy
Statement with the SEC. 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 issues with respect to the financial statements which were a part of
the Company's 1996 Form 10-KSB.
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<PAGE>
The Company filed its revised Schedule 13e-3 and Preliminary Proxy
Statement and as a result of the shares being offered to the Company's
shareholders pursuant to the terms of the reverse stock split, the Company also
filed a Form S-1 Registration Statement with the SEC on February 25, 1998. On
March 26, 1998, the Company filed its amended Schedule 13e-3 and Preliminary
Proxy Statement and amended Form S-1 Registration Statement. The SEC commented
on these documents in correspondence to the Company dated April 29, 1998. The
Company is in the process of preparing its response to the SEC. These documents
provided that the reverse stock split would be considered and voted upon at
a special meeting of the shareholders.
The Company holds an annual meeting of the shareholders each year for
the purpose of, among other things, electing directors to serve on the Board.
The Company wishes to minimize the costs and expenses associated with holding
two separate meetings, by combining the meeting addressing the issues raised in
the Schedule 13e-3 and Preliminary Proxy Statement and Form S-1 Registration
Statement with the Annual Meeting of the shareholders.
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
second quarter of 1998, $6,031 was expended toward this clean-up operation and
approximately $10,176 has been expended by the Company from January 1, 1998 to
date. The Company has expended approximately $325,000 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
anticipates sales of real estate lots in the near future since the Company has
obtained preliminary plat approval and has commenced development.
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.
As of July 3, 1996, the Company holds a promissory note from 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, and is adjusted on each anniversary of the Note to the applicable
short-term federal rate in effect on such anniversary date and is payable in
arrears on each anniversary date. 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.
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<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
Case Number 98 cv 0900576.
On or about January 20, 1998, Mark G. Jones, a former director of the
Company together with his wholly owned corporation Mark Technologies Corp., a
greater than 10% shareholder of the Company ("MTC") filed suit against the
Company, John Fife, President, CEO, Chairman of the Board and sole shareholder
of IMCC, the majority shareholder of the Company, David Fife, a director of the
Company, Lyle D. Hurd, Jr., a director of the Company and Gerry Brown, Vice
President of the Company, in the Third Judicial District Court, in Salt Lake
County, Utah, in a suit captioned, Mark G. Jones and Mark Technologies Corp. vs.
Utah Resources International, Inc., et al., case number 98 cv 0900576.
Mr. Jones, on behalf of himself and MTC, claims that the defendants
violated a certain settlement agreement by and among the Company, R. Dee
Erickson, E. Jay Sheen, Lyle D. Hurd, Jr., Mark G. Jones, MTC, Anne Morgan,
Victoria Morgan, Inter-Mountain Capital Corporation, John Fife and Robinson &
Sheen, L.L.C. (the "1996 Settlement Agreement"). A copy of the 1996 Settlement
Agreement is attached as Exhibit 10.38 to the Company's Form 10-KSB for Fiscal
Year End 1995. Mr. Jones alleges that the defendants breached the 1996
Settlement Agreement by: (i) failing to execute a written employment agreement
between John Fife and the Company; (ii) failing to use their best efforts to
unwind the Company's contractual relationship with Morgan Gas & Oil Company;
(iii) recognizing the Company's issuance of stock options to Messrs. Hurd and
Brown; (iv) failing to reimburse Mr. Jones and MTC for all of the additional,
remaining costs which Mr. Jones claimed were not previously reimbursed pursuant
to the 1996 Settlement Agreement; and (v) failing to pay Mr. Jones for expenses
incurred by him while acting as a director of the Company. Mr. Jones and MTC are
seeking relief in the form of specific performance of the Settlement Agreement
and for attorneys' fees and costs incident to the suit.
The Company had moved for summary dismissal of the complaint on the
grounds that the issues complained of are moot and without factual or legal
basis. On June 25, 1998, the Court stayed the Company's motion for summary
dismissal pending discovery. On August 5, 1998, the Company received notice that
the Court denied its motion to dismiss certain counts of the complaint. The
Company is in the process of preparing a response to the complaint.
Case Number 98 cv 0500904.
On or about April 17, 1998, MTC and Mark G. Jones filed a second suit
against the Company in the Fifth Judicial District Court, Washington County,
Utah, captioned, Mark Technologies Corp., and Mark G. Jones vs. Utah Resources
International, Inc., et al., case number 98 cv 0500904. The defendants in the
suit are the Company, John Fife, David Fife, Lyle D. Hurd, Jr., Gerry Brown and
Ladd Eldredge, Secretary and Treasurer of the Company.
Mr. Jones, on behalf of himself and MTC, claims that the individual
defendants have, among other things: (i) wasted corporate assets; (ii) failed to
pursue corporate opportunities; (iii) mismanaged the Company; and (iv) failed to
follow general rules of corporate governance. He is seeking appointment of a
receiver and the judicial dissolution of the Company.
On May 29, 1998, the Company filed a motion to strike the complaint as
legally insufficient. The Court has denied the Company's motion to strike. The
Company is preparing a response to the complaint which it will file on or about
August 21, 1998.
Item 2. Changes in Securities.
None
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<PAGE>
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>
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: August 13, 1998 /s/ John Fife
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John Fife, President and CEO
Date: August 13, 1998 /s/ Ladd Worth Eldredge
------------------------------
Ladd Worth Eldredge, Chief Financial
Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UTAH
RESOURCES INTERNATIONAL, INC. JUNE 30, 1998 FINANCIAL STATEMENTS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 283,947
<SECURITIES> 0
<RECEIVABLES> 688,511
<ALLOWANCES> 0
<INVENTORY> 886,193
<CURRENT-ASSETS> 0
<PP&E> 57,815
<DEPRECIATION> 55,645
<TOTAL-ASSETS> 1,914,915
<CURRENT-LIABILITIES> 0
<BONDS> 476,930
0
0
<COMMON> 252,281
<OTHER-SE> (211,897)
<TOTAL-LIABILITY-AND-EQUITY> 1,914,915
<SALES> 0
<TOTAL-REVENUES> 212,948
<CGS> 0
<TOTAL-COSTS> 457,538
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (244,590)
<INCOME-TAX> 0
<INCOME-CONTINUING> (244,590)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (244,590)
<EPS-PRIMARY> (.097)
<EPS-DILUTED> (.097)
</TABLE>
