SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1996 Commission File
Number: 0-9736
HORN SILVER MINES, INC.
-------------------------------------------------------
(Exact name of registrant as specified in this charter)
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
--------- ---------
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the close of the period
covered by this report: 121,779,316 Shares of Common Stock,
no par value.
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HORN SILVER MINES, INC.
BALANCE SHEETS
June 30, 1996
ASSETS
------
<TABLE>
<CAPTION>
Current Assets:
<S> <C>
Cash $ 17,268
----------
Property and equipment:
Leasehold Improvements 5,634
Structures and Equipment 8,441
---------
14,075
Less Accumulated Depreciation 13,616
---------
Net Property and Equipment 459
Other Assets 1,571
---------
Total Assets $ 19,298
=========
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
<CAPTION>
Current Liabilities:
<S> <C>
Accounts Payable $ 22,422
Accrued Liabilities Due to Related Parties 17,343
Accrued Expenses 369
----------
Total Current Liabilities $ 40,137
----------
<CAPTION>
Stockholders' Deficit:
<S> <C>
Common Stock, no par value. 200,000,000
Shares Authorized, 121,779,316 Shares
Issued and Outstanding $ 1,650,098
Accumulated Deficit (1,664,934)
-----------
Total Stockholders' Deficit (20,836)
-----------
Total Liabilities and
Stockholders' Deficit $ 19,298
===========
</TABLE>
Unaudited
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<PAGE>
HORN SILVER MINES, INC.
STATEMENTS OF OPERATIONS
AND CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Six Period Ended
June 30
-----------------
<S> <C> <C>
1996 1995
---- ----
REVENUES:
Mining Royalties $ 11,500 $10,700
Interest 180 270
Other Income 427 360
-------- -------
Total Revenues $ 12,107 $11,336
EXPENSES:
Salaries and Wages 3,450 3,734
General and Administrative 3,575 5,027
Legal and Accounting 5,747 750
Taxes and Licenses 398 766
Directors and Officer
Compensation 11,263 11,263
Depreciation 178 178
------- -------
24,611 21,718
------- -------
NET LOSS (12,504) (10,382)
Stock Issued to Directors/Officer 22,525 22,525
Balance, Stockholders' Equity,
December 31 (30,857) (18,935)
-------- --------
Balance, Stockholders' Equity,
June 30 $(20,836) $(6,792)
</TABLE>
Unaudited
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<PAGE>
HORN SILVER MINES, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Second Quarter
<S> <C> <C>
1996 1995
---- ----
REVENUES:
Mineral Royalties $ 9,500 $ 9,500
Interest 71 136
Other Income 273 173
------- -------
Total Revenues 9,844 9,809
EXPENSES:
Salaries and Wages 1,350 2,100
General and Administrative 1,937 2,240
Legal and Accounting 5,747 300
Taxes and Licenses 231 500
Directors and Officer Compensation 5,631 5,631
Depreciation 89 89
------- -------
Total Expenses 14,985 10,860
NET LOSS $(5,141) $(1,051)
</TABLE>
Unaudited
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<PAGE>
HORN SILVER MINES, INC.
STATEMENT OF CASH FLOWS
For the Six Month Period Ended, June 30, 1996
<TABLE>
<CAPTION>
CASH FLOWS FOR OPERATING ACTIVITIES:
<S> <C> <C>
Net Loss $(12,504)
Adjustments
Depreciation $ 178
Decrease in Accrued Taxes (304)
Decrease in Officer/Director
Payable (11,263)
Stock Issued for Services to
Directors and Officers 22,525 11,136
-------- -------
$ (1,368)
CASH FLOWS FROM INVESTING ACTIVITIES:
None --
CASH FLOWS FROM FINANCING ACTIVITIES:
None --
-------
Net Decrease in Cash and Cash Equivalents (1,368)
Cash and Cash Equivalents at Beginning of Year $18,636
-------
Cash and Cash Equivalents at End of Period $17,268
</TABLE>
Unaudited
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<PAGE>
HORN SILVER MINES, INC.
Notes to Financial Statements
June 30, 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.
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<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
June 30, 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.
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<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 $3,000 per year.
(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 of 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. The
Company paid $850 in legal fees and related costs to the law firm
in the second quarter of 1996.
(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
$1,620,000 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 June 30,
1996.
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<PAGE>
HORN SILVER MINES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULT OF OPERATIONS
Liquidity and Capital Resources
- -------------------------------
Working capital increased by approximately $10,900 for the six
months ended June 30, 1996 for a total deficit of $20,836 at June
30, 1996.
Results of Operations
- ---------------------
Revenues increased by $661 as of the six month period ended June
30, 1996 compared to the same period of time in the year 1995.
The increase was primarily due to the additional annual lease
payment of $7,500 from Dotson Exploration on the Beaver Lake
Mining claims.
Expenses increased by $2,893 for the six month period ended June
30, 1996 compared to the same period in 1995. This increase was
primarily due to the payment of the past due legal and auditing
fees during this period.
Results of Operations--Second Quarter
- -------------------------------------
Revenues were approximately identical for the second quarter of
1996 as compared to the same period of time in 1995.
Expenses increased by approximately $4,125 in the second quarter
of 1996 as compared to the same period in 1995. This increase
was primarily due to the payment of the past due legal and
auditing fees during this period.
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<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: October 7, 1996
Page P. Blakemore, Sr.
President and Treasurer
(Principal Executive and
Financial Officer)
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<PAGE>
10QS-EDG.HSM
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED BALANCE SHEET OF HORN SILVER MINES, INC. FOR THE SIX MONTHS
ENDED JUNE 30, 1996, AND THE RELATED STATEMENTS OF OPERATIONS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 17,268
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 17,268
<PP&E> 14,075
<DEPRECIATION> 13,616
<TOTAL-ASSETS> 19,298
<CURRENT-LIABILITIES> 40,137
<BONDS> 0
0
0
<COMMON> 1,650,098
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 19,298
<SALES> 0
<TOTAL-REVENUES> 12,107
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 24,611
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (12,504)
<INCOME-TAX> 0
<INCOME-CONTINUING> (12,504)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12,504)
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
