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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 MARCH 31, 1998
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Commission File No.
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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
November 19, 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.
Consolidated Balance Sheets
For The Dates Indicated
<TABLE>
<CAPTION>
Quarter
Ended
03/31/98
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<S> <C>
ASSETS
Cash and cash equivalents 127,492
Accounts receivable 440,306
Notes receivable 265,314
Property and equipment, net of
accumulated depreciation and
amortization of 53,979.86 3,835
Real estate held for resale 865,739
Royalty interest in petroleum and mineral
production, net of amortization 1,644
Other assets 40,726
TOTAL ASSETS 1,745,057
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable 554,991
Accrued expenses 600,498
Earnest money deposits 36,000
Notes payable 327,912
TOTAL LIABILITIES 1,519,402
Minority interest 89,799
Commitment and contingencies
5,000,000 shares authorized,
2,522,808 shares issued and outstanding 252,281
Additonal paid-in capital 4,431,232
Note Recievable from Stock Sale -3,633,159
Retained earnings -914,498
TOTAL STOCKHOLDERS' EQUITY 135,856
TOTAL STOCKHOLDERS' EQUITY & LIABILITIES 1,745,057
</TABLE>
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Utah Resources International, Inc.
Consolidated Statement of Operations
For The Periods Indicated
<TABLE>
<CAPTION>
Quarter Quarter
Ended Ended
03/31/98 3/31/97
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<S> <C> <C>
Sales 0 87,543
Cost of Sales 0 1,561
Gross Profit 0 85,982
General and administrative 253,333 225,560
Income from operations -253,333 -139,578
Other income (expense):
Royalty income 49,723 68,573
Interest and dividend income 54,493 7,870
Interest expense 0 -97
Total other income(expense) 104,215 76,346
Income (loss) before minority interest and
provision for income taxes -149,118 -63,232
Minority interest in net income of subsidiaries 0 0
Income (loss) before provision for income taxes -149,118 -63,232
Income tax (provision) benefit 0 0
Income (loss) from continuing operations -149,118 -63,232
Net income ( loss) -149,118 -63,232
Weighted Average Shares
Outstanding 2,522,808 2,522,808
Earnings (loss) per share -0.059 -0.0250
</TABLE>
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Utah Resources International, Inc.
Consolidated Statement of Cash Flows
For The Dates Indicated
<TABLE>
<CAPTION>
Quarter Quarter
Ended Ended
03/31/98 3/31/97
<S> <C> <C>
Cash flows from operating activities
Net Income ( loss) -149,118 -63,232
Adjustments to reconcile net income (loss)
to net cash (used in) operating activities:
Depreciation and amortization 2,503 1,476
Minority interest in net (income)
of subsidiaries
(Increase) decrease in:
Accounts receivable -67,548 -53,162
Real estate held for resale -10,732 -72,969
(Decrease) increase in:
Accounts Payable 274,189 247,520
Accrued expenses -122,154 -221,367
Net cash used in continuing operations -72,860 -161,734
NET CASH (USED IN) OPERATING ACTIVITIES -72,860 -161,734
Cash flows from investing activities:
Purchase of Property and equipment 12,011 -399
Payments on notes receivable -29,569 -21,485
Increase (decrease) in minority interest
Decrease (increase) in other assets 12,561 33,730
NET CASH(USED IN) INVESTING ACTIVITIES -4,996 11,846
Cash flows from financing activities:
Proceeds from notes payable
Payments on notes payable 42,119 -1,829
NET CASH(USED IN) FINANCING ACTIVITIES 42,119 -1,829
Increase in cash -35,738 -151,717
Cash and cash equivalents, beginning of year(period) 163,230 517,858
Cash and cash equivalents, end of year(period) 127,492 366,141
</TABLE>
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Item 2. Management's Discussion and Analysis or Plan of Operation.
RESULTS OF OPERATIONS
The Company had no land sales in the quarter ended March 31, 1998, as
compared with land sales of $87,543 in the quarter ended March 31, 1997. The
Company had interest income in the amount of $54,493 during the first quarter 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 $7,870 for the same period in 1997. Income on royalties
from production under oil and gas and mineral leases amounted to $49,723 for
the first quarter of 1998, which was down from the $68,573 figure for the same
period in 1997.
There was no cost of land sold in the first quarter of 1998 as compared
to $1,561 for the same period in 1997.
LIQUIDITY AND CAPITAL RESOURCES
Cash requirements of the Company are met by funds provided from cash
reserves and 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 March 31, 1998,
was approximately 1.15 to 1. The Company's assets as of March 31, 1998 were
valued at $1,745,057, as against liabilities of $1,519,402.
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 were $253,333 for the first three
months in 1998 which is an increase over $225,560 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.
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.
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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
first quarter of 1998, $4,145 was expended toward this clean-up operation and
approximately $320,000 has been expended by the Company 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 upon completion of
platting of vacant land which is currently pending approval by the city of St.
George, Utah.
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. 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.
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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, 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 has moved for summary dismissal of the complaint on the
grounds that the issues complained of are moot and without factual or legal
basis.
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.
The Company's response to the complaint is due May 21, 1998.
Item 2. Changes in Securities.
None
Item 3. Defaults Upon Senior Securities.
None
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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.
(a) Exhibit 27, Financial Data Schedule
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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.
/s/
Date: 5/14/98 -------------------------------
----------- John Fife, President and CEO
/s/
Date: 5/14/98 -------------------------------
----------- 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. MARCH 31, 1998 FINANCIAL STATEMENTS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 127,492
<SECURITIES> 0
<RECEIVABLES> 705,620
<ALLOWANCES> 0
<INVENTORY> 865,739
<CURRENT-ASSETS> 0
<PP&E> 57,815
<DEPRECIATION> 53,980
<TOTAL-ASSETS> 1,745,057
<CURRENT-LIABILITIES> 0
<BONDS> 1,609,201
0
0
<COMMON> 252,281
<OTHER-SE> (116,425)
<TOTAL-LIABILITY-AND-EQUITY> 1,745,057
<SALES> 0
<TOTAL-REVENUES> 104,215
<CGS> 0
<TOTAL-COSTS> 253,330
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (149,118)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> (.06)
<EPS-DILUTED> (.06)
</TABLE>
