For the quarterly period ended March 31, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
0-16740
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(Commission File Number)
NORTH LILY MINING COMPANY
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(Exact name of registration as specified in its charter)
Utah 87-0159350
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(State of Incorporation) (IRS Employer Identification No.)
Suite 120, 1800 Glenarm Place, Denver, Colorado 80202
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(Address of principal executive offices) (ZIP Code)
(303) 294-0427
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(Registrant's telephone number, including area code)
N/A
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(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that that
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes No X
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As of September 8, 2000 Registrant had 14,088,355 shares of common stock,
$0.10 par value.
Transitional Small Business Disclosure Format (check one):
Yes No X
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NORTH LILY MINING COMPANY
FORM 10-QSB
FOR THE QUARTER ENDED March 31, 2000
INDEX
PART I. FINANCIAL INFORMATION:
Item 1. - Condensed Consolidated Balance Sheets-
March 31, 2000 and December 31, 1999 3
- Condensed Consolidated Statements of Cash Flows
Three Months Ended March 31, 2000 and 1999 4
- Condensed Consolidated Statements of Operations -
Three Months Ended March 31, 2000 and 1999 5
- Notes to Condensed Consolidated Financial Statements 6
Item 2. - Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II. Other Information:
Item 6. - Exhibits and Reports on Form 8-K 9
Signature 10
NORTH LILY MINING COMPANY AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
DEC. 31, 1999 MARCH 31, 2000
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $26,378 $26,395
Marketable securities 6,086 6,086
Accounts and note receivable 12,500 26,473
Other 6,966 6,966
--------- ----------
Total Current Assets 51,930 65,920
PROPERTY AND EQUIPMENT, NET 30,376 29,761
LAND 1,237,652 1,037,226
RECLAMATION BOND 200,553 202,653
ADVANCE TO LOANMINING.COM - 50,000
INVESTMENT IN LOANMINING.COM - 53,207
OTHER 12,500 20,500
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$1,533,011 $1,459,267
=========== ==========
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES
Notes payable-bank $2,954 $2,947
Accounts payable 226,027 246,101
Reclamation liabilities 180,059 180,059
Convertible notes - 220,000
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Total Current Liabilities 409,040 649,107
Due to officers 136,015 28,000
Accounts payable in stock 261,835 261,835
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Total Liabilities 806,890 938,942
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MINORITY INTEREST IN LLC 362,410 161,984
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STOCKHOLDERS' EQUITY
Common stock, $0.10 par value;
authorized 30,000,000 shares;
issued and outstanding 5,002,122
shares 500,212 611,327
Additional paid-in capital 52,382,692 52,407,591
Accumulated deficit (52,519,193) (52,660,577)
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363,711 358,341
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Total Liabilities and Equity $1,533,011 $1,459,267
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<TABLE>
NORTH LILY MINING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<CAPTION>
For the three months ended
March 31, 1999 March 31, 2000
<S> <C> <C>
Revenue: $ - $ -
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Operating expense:
General and administrative expenses 74,314 106,312
Silver City Project 16,439 38,125
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Operating loss (90,753) (144,437)
Other income (expenses)
Interest income 901 2,100
Unrealized loss on marketable securities (2,430) -
Other, net 64,413 953
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Net (loss) $(27,869) $(141,384)
========== =========
Net loss per common share-basic and diluted $(0.03) $(0.02)
========== =========
Weighted average common shares outstanding- 4,902,122 6,113,271
basic and diluted ========== =========
</TABLE>
See accompanying notes to financial statements.
NORTH LILY MINING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1999 March 31, 2000
<S> <C> <C>
Cash flows from operating activities
Net (loss) $(27,869) $(141,384)
Adjustments to reconcile net loss
to net cash provided from (used for)
operating activities
Depreciation 704 615
Unrealized loss on marketable
securities 2,430 -
Minority Interest 10,463 -
Changes in assets and liabilities
(Increase) in notes and
advances receivable - (13,959)
Increase in prepaid assets (5,000) -
Increase in accounts payable and
accrued liabilities 11,096 20,059
(Decrease) increase in due to
officers - 28,000
(Decrease) in reclamation
liabilities, net (14,953) (2,100)
Other items 81,087 -
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Net cash provided (used) operating
activities 57,958 (108,769)
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Cash flows from investing activities
Advance to Loanmining.com (50,000)
Investments in subsidiary - (53,207)
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Net cash (used) in Investing
activities - (103,207)
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Cash flows from financing activities
Repayment of short-term borrows (11,050) (7)
Proceeds from sale of convertible
notes - 220,000
Deferred financing costs - (8,000)
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Net cash provided by financing
activities (11,050) 211,993
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Net increase in cash (46,908) 17
Cash, beginning of periods 23,495 26,378
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Cash and cash equivalents, end of year $ 70,403 $ 26,395
=========== ==========
</TABLE>
See accompanying notes to financial statements.
NORTH LILY MINING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Going Concern
During 1999 the Company incurred a net loss of $180,176 and at December 31,
1999 had a working capital deficiency of $357,110.
The Company has experienced substantial losses and has continually sold
non-essential company assets to fund ongoing operations and property
commitments. Management, in its efforts to ensure maximum fund availability,
has reduced Company operating costs and has deferred payment of fees for
their services. The Company believes it held properties with the greatest
value. The Company's current focus on the businesses related to its recent
acquisition of Loanmining.com, Inc. also requires financing for website
developement and advertising. There is no assurance that the Company will
timely receive adequate financing to compete in the highly competitive mortgage
and related Internet areas.
The Company requires funds for its future operations. Funding is traditionally
provided to corporations by way of funds from ongoing company operations, funds
from the issuance of company debt intstruments, funds from company equity
issues, and funds from the sale of company assets.
Dropping the Tuina mine, and continuing reclamation work at the Silver City
Tintic Project, the Company does not have ongoing operations from which funds
can be accumulated. With the Company's present asset base, the Company is not
able to generate funds from operations within the next two years at the minimum,
except to the extent that a new project and financing may be acquired with
Company stock or the sale of its Tintic, Utah land holdings, or profitability
from its recently acquired Loanmining.com, Inc. operations.
Disclosures
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions for Rule 10-01 of Item
310(b) of Regulation S-B. Accordingly, they do not include all the information
and footnotes required by generally accepted accounting principles for complete
financial statements. The unaudited financial statements reflect all
adjustments, which are, in the preparation of interim period results, for the
three-month period ended March 31, 2000, of a normal recurring nature. The
operating results for the three-month period ended March 31, 2000 are not
necessarily indicative of the results that maybe expected for the year ended
December 31, 2000. For further information, refer to the consolidated
financial statements for the year ended December 31, 1999.
Due to Officers
During 2000, the Company accrued officers' salaries of $10,000 per month for
each of its two officers. Through the date hereof, one officer received year
2000 advances pursuant to the Company's employment agreement with the officer,
aggregating $41,500, which were deducted from his year 2000 salary accruals.
The other officer received advances in 1999 aggregating $68,641 which adavances
were secured by 137,282 shares of the Company's common stock, owned by the
officer. Those 1999 advances were deducted from that officers year 2000 salary
accruals. Through the date hereof, that officer also received year 2000
advances pursuant to the Company's employment agreement with the officer
aggregating $46,700, resulting in that officer owing the Company a net amount
of $25,341, which is to be repaid in cash or by forfeiture of two company shares
per dollar owed by the officer at year end.
PART I. FINANCIAL INFORMATION
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company incurred a loss of $141,384 for the three-month period ended March
31, 2000, compared to a loss of $27,869 for the same period in 1999. There was
no revenue and no cost of sales for the three-month period ending March 31,
2000. The Company does not anticipate any revenue over the next year from
current operations except for the sale of Utah properties, and operations of
Loanmining.com, Inc. acquired April 2000.
During the three-month period ended March 31, 2000, the Company incurred
$106,312 in general and administration expenses, compared to $74,314 for the
comparable period in 1999 due to reductions in officers' salaries in 1999.
At March 31, 2000, the Company had a working capital defiency of $583,187, an
increase of $226,077 from its working capital deficiency of $357,110 at December
31, 1999.
On April 7, 2000, the Company completed performance of closing requirments
for its acquisition of privately held Loanmining.com ("LMC") by issuing 5.83
million shares (the "Shares") of the Company's restricted common stock. The
Shares are restricted securities pursuant to Rule 144, and the resale of the
Shares is to be included in a Registration Statement by the Company after it
updates its audits and reports to the Securities and Exchange Commission,
subject to monthly sale restrictions for holdings by individual selling
shareholders in excess of 200,000 shares. The recipients of the Shares were
the stockholders of LMC, including its majority stockholder (Regina Mitchell),
who received over 4 million of the Shares.
In consideration for the Shares, the Company acquired rights to the names
Loanmining.Com and HomeLoan.com; rights to a team of mortgage brokers;
telemarketers, processing and closing staff represented to be capable of
equaling and then increasing the $1.4 million annual revenue rate produced at
LMC in 1999 prior to establishing a preliminary Internet and the business model
implementation plan for LMC as both a traditional "brick and mortar" operation
as well as a highly automated Internet mortgage banker focused on the sub-prime
mortgage niche. Substantial funding will be required to compete for mortgage
lending business on the Internet, which already is populated by competitors of
several types, some of whom already have substantial financing and market
penetration.
In conjunction with this acquistion, the Company has closed on private
placement financing of $245,000 in exchange for 7% Convertible Notes and
Warrants. All but $25,000 of these financing proceeds were received in the
first quarter of 2000. The Notes are due in periods of six to nine months
from date of issuance and are repayable or convertible into Common Stock of
the Company at $0.20 per share (except for $25,000 at $0.50 per share).
Warrants for the purchase of an aggregate 1,400,000 shares were issued as
part of the sale of the Notes and are exercisable at $5 and $7.50 during
years one and two, respectively, and expire at various dates from February
2002 to April 2002. The Company utilitzed $63,000 of the proceeds to finance
stock redemption and releases from dissident stock-holders of Loanmining.com.
In April 2000, the Company acquired ownership of Mortgage Partners Home Funding
for LMC in condsideration of 170,000 Company shares and $25,000 in promissory
notes. The notes are past due and the Company has been in discussions
concerning the extension of the notes or the conversion of the notes into common
stock. On May 1, 2000, the Company did a private placement of 130,000 common
shares of the Company's stock for $40,000. The shares are restricted Securities
pursuant to Rule 144 and are to be included in a Registration Statement by the
Company. In June 2000, the Company issued one million shares of stock in
consideration for a joint venture providing commercial lending business and
facilitation arrangements for LMC and $125,000 in capital; the transaction was
not consummated and the Company expects return of the shares.
On July 25, 2000, the Company entered into a letter of intent to be aquired by
Captain's Management for ten shares of Captains for every 14.5 shares of NLMC
when Captains is registered and trading on a stock exchange. Captains agreed
to provide $360,000. The Company agreed to pledge a portion of its Utah
properties to secure related financing to be obtained by Captain's. In
addition, Captain's is to provide website development and marketing for LMC
at Captain's expense. Captain's is engaged in developing vertical market
applications, virtual inventory systems, and a public interactive dynamic
display network (in airports, music stores, movie theatres, shopping centres,
and other high public traffic locations) with its affiliate Touchvision for
building and managing interactive systems.
In August and September 2000, $40,000 of the Convertible Notes was redeemed by
an investor for 200,000 shares of the Company's common stock pursuant to the
conversion rights provided in the Note described above. In August 2000, the
Company's land holding company, Xeres Tintic, LLC, sold a parcel (approximately
250 acres) of land in Juab County, Utah for $56,000 which netted the Company
$48,144.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
In March 2000, the Utah division of Oil, Gas and mining (DOGM) and Department
of Water Quality (DWQ) each sent Notices to the Company addressing similar
issues. The Notices alleged failure to timely comply with Utah environmental
laws and regulations, violations of notices and orders thereunder, and violation
of the Company's Groundwater Discharge Permit, all in relation to the Company's
reclamation/closure obligations for it's small former heapleach tailing recovery
project in Silver City, Utah (the Tintic Project). The Company timely
responded, contested the allegations, submitted requested submissions, undertook
certain reclamation actions, and requested a hearing. By Stipulation and
Consent Order dated July 25, 2000 DOGM dismissed their charges against the
Company, and the Company agreed to perform ongoing reclamation/closure
activities. DWQ concurred with the reclamation/closure schedule and terms in
the Stipulation, but has not finally resolved its Notice (including its right
to seek substantial daily civil penalties for violations). The Company's
reclamation bond for the Tintic Project was recently increased by agreement with
DOGM and concurrence by DWQ to over $190,000. The Company is confident that
the bond (if forfeited as a result of non-performance under the Stipulation)
would cover the remaining reclamation and closure costs (including civil penalty
if any) of the Tintic Project.
In late 1998, a complaint was filed against the Company in the Fourth District
Court, Juab County, State of Utah,, alleging breach of a special warranty deed,
breach of a terminated mining lease, and most recently attacking validity of the
Company's royalty and land development interests retained in properties acquired
by plaintiffs. The Company eliminated the primary basis for the alleged breach
of warranty during 1999, and believes the plaintiffs are not entitled to assert
claims under the deed and mining lease to which they are not parties. The
Company and its counsel believe the claims are without merit, will continue to
defend vigorously, and do not believe there is any likelihood of a material
loss.
Item 2. Changes in Securities
During the quarter ended March 31, 2000, the Company's two officers
become entitled to 1,111,149 shares of common stock of the Company
in lieu of cash compensation pursuant to employment agreements. The
shares were issued in June, 2000.
Item 5. Other Information
On December 31, 1998 the Company transferred Tintic, Utah properties
to its land holding company, Xeres Tintic LLC. Effective January 31,
2000, the Company increased its ownership in the LLC to 91.5%. The
Company manages the LLC and is entitled to a total of 95 to 96.5% of
LLC proceeds.
Item 6. Exhibits and Reports on Form 8-k
(a) The following exhibits are filed with this report.
Regulation
S-K Number Exhibit
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27.1 Financial Data Schedule
(b) Reports on Form 8-K: none
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.
North Lily Mining Company
By: /s/ W. Gene Webb
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W. Gene Webb, Executive Vice President
October 10, 2000
