UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C.
FORM 10Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1996 Commission File
Number: 0-9736
HORN SILVER MINES, INC.
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Exact Name of Registrant.
UTAH 87-0299832
- --------------------------------- -------------------
(State or other jurisdiction IRS Identification
of incorporation or organization) Number
700 Clift Building, 10 West Broadway
Salt Lake City, Utah 84119
- ---------------------------------------- ------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including Area Code (801) 322-5193
---------------
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Sections 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for 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
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Indicate the number of shares outstanding of each of the issuer's
classes of common stock, net of treasury stock, as of the close
of the period covered by this report.
Class A Common Stock, no par value 117,279,316
- ---------------------------------- ------------------
Title of Class Number of Shares
Outstanding as of
March 31, 1996
<PAGE>
HORN SILVER MINES, INC.
BALANCE SHEETS
March 31, 1996
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current Assets:
Cash $ 16,932
Property and equipment
Mining Properties and
Purchase options --
Buildings and Equipment,
Less Depreciation 548
Other Assets 1,571
----------
$ 19,051
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C>
Current Liabilities
Officers & Directors Payable $ 34,236
Accounts Payable 22,422
Accrued Expenses 612
----------
$ 57,270
Stockholders' Equity
Common Stock, no par value, authorized
200,000,000 shares; Issued & outstanding
117,279,316 $1,627,573
Deficit accumulated (1,665,742)
----------
$ (38,219)
----------
$ 19,051
</TABLE>
<PAGE>
HORN SILVER MINES, INC.
STATEMENTS OF OPERATIONS
AND CHANGES IN STOCKHOLDERS' EQUITY
[CAPTION]
For the Three Months Ended, March 31, 1996
[S] [C]
Revenues
Mining Lease Income $ 2,000
Oil and Gas Royalties 154
Interest and Other Income 109
---------
$ 2,263
Expenses
Salaries and Wages $ 2,100
General and Administrative 1,638
Legal and Accounting --
Exploration Expenses --
Taxes and Licenses 167
Directors' and Officer Fees 5,631
Depreciation 89
---------
$ 9,625
---------
NET GAIN (LOSS) $ (7,362)
BALANCE, STOCKHOLDERS' EQUITY,
December 31, 1995 $ (30,857)
---------
BALANCE, STOCKHOLDERS' EQUITY,
March 31, 1996 $ (38,219)
[/TABLE]
<PAGE>
HORN SILVER MINES, INC.
<TABLE>
STATEMENT OF CASH FLOWS
<CAPTION>
For the Three Month Period Ended, March 31, 1996
<S> <C> <C>
CASH FLOWS FOR OPERATING ACTIVITIES:
Net Loss $(7,362)
Adjustments
Depreciation $ 89
Increase in Accrued Taxes (62)
Increase in liability for
Services to Directors and
Officers 5,630 5,657
------ -------
CASH FLOWS FROM INVESTING ACTIVITIES:
None --
CASH FLOWS FROM FINANCING ACTIVITIES:
None --
-------
Net Decrease in Cash and Cash Equivalents (1,705)
Cash and Cash Equivalents at Beginning of Year $18,637
-------
Cash and Cash Equivalents at End of Period $16,932
</TABLE>
<PAGE>
HORN SILVER MINES, INC.
Notes to Financial Statements
March 31, 1996
(1) Summary of Significant Accounting Policies
- ------------------------------------------------
Organization
The Company was incorporated in 1971 under the laws of the
State of Utah. The Company is a "junior" natural resource
Company whose activities are primarily acquisition, exploration
and development of natural resources.
Cash and Cash Equivalents
For financial statement purposes, the Company considers all
instruments with a maturity of less than three months to be cash
equivalents.
Property, Equipment and Mining Costs
Expenditures for exploration of mineral properties are
charged against income as incurred. Property acquisition costs
and mine development costs incurred to expand capacity of
operating mines, develop new ore bodies or develop new areas
substantially in advance of current production are capitalized
and charged to operations on the units-of-production method.
Capitalized costs of abandoned projects or impaired properties
are charged to operations in the year of abandonment.
Corporate property and equipment are stated at cost.
Acquisitions having a useful life in excess of one year are
capitalized. Maintenance and repairs are expensed in the year
incurred. Capitalized assets are depreciated by the straight-
line method over estimated useful lives of the related assets,
ranging from three to ten years.
Income Taxes
Deferred income taxes are provided in amounts sufficient to
give effect to temporary differences between financial and tax
reporting, principally related to accounting for mining
properties.
Effective January 1, 1994, the Company adopted the
provision of SFAS 109 "Accounting for Income Taxes." The
adoption of SFAS 109 changes the Company's method of accounting
for income taxes from the deferred method (APB 11) to an asset
and liability method. The asset and liability method requires
the recognition of deferred tax liabilities and assets for the
expected future tax consequences of temporary differences between
tax bases and financial reporting bases of other assets and
liabilities.
<PAGE>
HORN SILVER MINES, INC.
Notes to Financial Statements - Continued
(1) Summary of Significant Accounting Policies - Continued
- ------------------------------------------------------------
Income Taxes - Continued
Under the provisions of SFAS 109, the Company elected not
to restate prior years' consolidated financial statements since
there was no cumulative effect of the initial adoption on prior
years' retained earnings. Additionally, there was no effect of
the adoption of SFAS 109 upon income before taxes for fiscal year
1995.
(Loss) Per Common Share
Losses per common share are calculated based on the
weighted average number of shares of common stock outstanding
during the period.
(2) Mineral Properties
- ------------------------
No amounts have been recorded for mineral properties in the
financial statements since management has not been able to obtain
sufficient information to support the ultimate recovery of these
costs. The following is a brief summary of the significant
mineral properties in which the Company has an interest as of
March 31, 1996.
The Company currently owns approximately 244 patented
mining claims and approximately 20 unpatented mining claims
covering approximately 6,000 acres located in Beaver County,
Utah. The claims comprise most of the San Francisco Mining
District. The two principal mines on the properties, which were
productive in the past, are the Horn Silver and Cactus Mines.
the Horn Silver Mine, which represents a very small part of the
overall acreage, shipped silver, gold, copper and lead until
about 1930. The Cactus Mine, with a production history dating
from 1910, shipped significant amounts of copper, gold and silver
until about 1913. The Company also owns a one-half interest in
the Imperial Mine, a once productive mine, and adjacent patented
mining claims located in the San Francisco Mining District.
<PAGE>
HORN SILVER MINES, INC.
Notes to Financial Statements - Continued
(3) Commitments
- -----------------
The Company has entered into various cancelable mining
leases and royalty agreements as a lessee and lessor. Future
minimum lease and royalty payments received and paid under the
Company's current agreements are minimal. In addition to the
lease payments required above, certain leases also require
minimum work requirements of approximately $100 per claim.
Certain leases also have provisions allowing the Company to
purchase all rights to the properties thereby reducing future
commitments for royalty payments. The leases are cancelable at
the Company's option at any time which would terminate any
further lease payments or work commitments. The lease agreements
also provide that the lease will remain in effect as long as
exploration or development is being conducted with reasonable
diligence or production continues in commercial quantities.
The Company leases its office facilities under an operating
lease which requires payments of approximately $7,800 per year
through January, 1995. The Company has reduced the lease to
$3,000 per year by eliminating space.
(4) Related Party Transactions
- --------------------------------
The Company has paid legal fees and related costs to a law
firm in which one of its directors is a shareholder approximately
$4,190 for the year ended December 31, 1994. There were no legal
fees paid to the firm during fiscal 1995 although the firm
rendered legal services for the Company during that period.
(5) Income Taxes
- ------------------
At December 31, 1994, the Company had net operating loss
carryforwards available for both financial reporting and income
tax purposes. No amounts have been recognized in the financial
statements for the benefit of these losses due to the uncertainty
as to whether they will ultimately be realized. The amount of
and utilization of the net operating losses for income tax
purposes is dependent in part upon the tax laws in effect at the
time of the utilization and changes in ownership of the Company
which may reduce the amount loss allowable. The net operating
loss carryforward available for tax purposes is approximately
$1,405,900 which begins to expire in the year 2000. A valuation
allowance has been provided for the entire net operating loss and
no other deferred tax assets or liabilities existed at March 31,
1996.
<PAGE>
HORN SILVER MINES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULT OF OPERATIONS
Liquidity and Capital Resources
- -------------------------------
Working capital decreased by $7,362 for a total deficit of
$38,219 at March 31, 1996
Results of Operations
- ---------------------
Revenues increased by $736 in the first quarter of 1996 ($2,263)
as compared to the first quarter of 1995 ($1,527). The increase
was due mainly to an increase in mining lease payments received.
Expenses decreased in the first quarter of 1996 by $1,698
($9,625) as compared to the first quarter of 1995 (11,323). This
decrease was mainly the result of reduced general and
administrative expenses.
<PAGE>
HORN SILVER MINES, INC.
(An Exploratory Stage Company)
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
-----------------
Horn Silver Mines, Inc. is unaware of any threatened
or pending litigation.
ITEM 2. Change 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
--------------------------------
There are no exhibits and the Company has not filed
any report on Form 8-K during the quarter for which
this report is filed.
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.
Date:
Page P. Blakemore, Sr.
President and Treasurer
(Principal Executive and
Financial Officer)
