SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________
FORM 10-Q
[ X ] Quarterly report pursuant Section 13 or 15 (d) of the Securities
Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1997
-----------------
OR
[ ] Transition report pursuant section 13 or 15 (d) of the Securities
Exchange Act of 1934
[ X ]
COMMISSION FILE NUMBER 0-14136
CASMYN CORP.
(Exact name of registrant as specified in Charter)
COLORADO
(State or other jurisdiction of incorporation)
84-0987840
(IRS Employer Identification No.)
1335 GREG STREET, UNIT #104
SPARKS, NEVADA 89431
(702) 331-5524
(Address and Telephone Number of Principal Executive Offices)
Check whether the issuer (1) filed all reports required to be filed by
section 13 or 15 (d) of the Securities 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. Yes [ X ] No [ ].
As of February 10 , 1998, 30,507,354 shares of the issuer's common stock were
outstanding.
This report contains 15 pages.
<PAGE>
CASMYN CORP.
FORM 10-Q
INDEX
Page
PART I. FINANCIAL INFORMATION: No.
---
Item 1. Financial Statements
Condensed Consolidated Balance Sheets - December 31, 1997
and September 30, 1997 3
Condensed Consolidated Statements of Operations - Three Months
ended December 31, 1997 and 1996 4
Condensed Consolidated Statements of Cash Flows - Three Months
ended December 31, 1997 and 1996 5
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II. OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 15
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CASMYN CORP.
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
<S> <C> <C>
DECEMBER 31, SEPTEMBER 30,
1997 1997
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 12,487,174 $ 18,185,515
Restricted cash 5,089,192 5,074,659
Marketable securities 2,053,343 2,096,704
Accounts receivable 933,250 511,135
Inventories 885,228 751,299
Prepaid expenses and other assets 22,192 247,560
-------------- ----------------
Total current assets 21,470,379 26,866,872
INVESTMENT IN AND ADVANCES TO AFFILIATES 4,574,368 4,574,368
PROPERTY AND EQUIPMENT, NET 17,665,128 16,676,347
OTHER ASSETS 135,955 155,792
-------------- ----------------
TOTAL ASSETS $ 43,845,830 $ 48,273,379
============== ================
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 1,004,892 $ 1,108,944
Line of credit 4,910,056 4,966,160
Accrued taxes from acquisition 792,801 792,801
Accrued liabilities 84,636 2,156,704
Current portion of long-term debt - 58,418
-------------- ----------------
Total current liabilities 6,792,385 9,083,027
-------------- ----------------
DIVIDEND PAYABLE 4,574,368 4,574,368
-------------- ----------------
Total Liabilities 11,366,753 13,657,395
-------------- ----------------
MINORITY INTEREST 104,077 144,220
-------------- ----------------
STOCKHOLDERS' EQUITY:
Preferred stock, $.10 par value;
20,000,000 shares authorized;
1,387,394 and 1,406,962 shares
issued and outstanding, liquidation
preference $40,679,119 138,739 140,697
Common stock, $.04 par value; 300,000,000
shares authorized; 13,950,370 and 13,376,714
shares issued and outstanding 558,015 535,069
Additional paid-in capital 69,321,854 66,486,227
Accumulated deficit (31,575,508) ( 28,453,840)
Foreign currency translation adjustment ( 3,123,508) ( 3,328,954)
Treasury stock at cost, 583,937 and
181,437 shares ( 2,944,592) ( 907,435)
-------------- --------------
Total stockholders' equity 32,375,000 34,471,764
-------------- --------------
LIABILITIES AND STOCKHOLDERS' EQUITY $ 43,845,830 $ 48,273,379
============== ==============
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
CASMYN CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
<S> <C> <C>
1997 1996
-------------- ------------
REVENUES:
Precious metals $977,030 $622,506
-------------- ------------
COSTS AND EXPENSES:
Mineral operations 649,186 816,846
General and administrative expenses 536,339 567,971
Compensatory stock option expense - 74,042
Professional services 36,401 -
Depreciation, depletion and amortization 157,275 113,573
Mineral exploration expense 83,118 418,975
Mergers and acquisitions 46,547 113,822
-------------- ------------
1,508,866 2,105,229
-------------- ------------
LOSS FROM OPERATIONS ( 531,836) (1,482,723)
-------------- ------------
OTHER INCOME (EXPENSE):
Equity in net loss of affiliate - (277,068)
Minority interest in net loss of
consolidated subsidiary 40,143 -
Foreign exchange loss ( 76,626) -
Interest income, net 301,669 27,256
Gain on sale of investment - 126,000
-------------- ------------
Other income (expense), net 265,186 (123,812)
-------------- ------------
NET LOSS $(266,650) $(1,606,535)
============== ============
BASIC LOSS PER COMMON SHARE
Net loss $(266,650) $(1,606,535)
Less: dividends on convertible
preferred stock ( 686,425) -
Less: amortization of discount
on convertible preferred stock ( 2,168,593) -
-------------- ------------
NET LOSS APPLICABLE TO COMMON SHARES $( 3,121,668) $(1,606,535)
============== ============
BASIC LOSS PER SHARE $(0.23) $(0.13)
============== ============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 13,552,060 12,624,508
============== ============
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
CASMYN CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
<S> <C> <C>
1997 1996
-------------- ------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (266,650) $ (1,606,535)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation, depletion and amortization 157,275 113,573
Equity in net loss of affiliate - 277,068
Minority interest in net loss of
consolidated subsidiary (40,143) -
Compensatory stock option expense - 74,042
Amortization of debt issue costs - 15,000
Gain on sale of investment - (126,000)
Other non-cash expense - 56,640
Increase in accounts receivable (422,115) (352,750)
Increase in inventories (133,929) (159,409)
Decrease (increase) in prepaid
expenses and other assets 245,205 (23,641)
Increase in accounts payable (104,052) 67,950
Increase (decrease) in accrued
liabilities (18,726) (243,225)
(Increase) decrease in amounts
due from related parties 22,388
--------------- ----------------
Net cash used in operating
activities (583,135) (1,884,899)
--------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in marketable securities (2,053,343) -
Proceeds from sale of assets - 900,000
Decrease in long-term deposits - 4,958
Investment in and advances to affiliates - (708,379)
Purchase of property and equipment (988,781) (2,685,732)
--------------- ----------------
Net cash used in investing
activities (3,042,124) (2,489,153)
--------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock - 1,410,500
Issuance of common stock for
exercise of stock options 198,340
Borrowings under line of credit -
Increase in restricted cash (14,533) -
Purchase of treasury stock (2,037,157) -
Repayments of long-term debt (2,314) (29,750)
-------------- ----------------
Net cash provided by financing
activities (2,054,004) 1,579,090
-------------- ----------------
EFFECT OF EXCHANGE RATE CHANGES ON
CASH AND CASH EQUIVALENTS (19,078) (451,689)
-------------- ----------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (5,698,341) (3,246,651)
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 18,185,515 4,046,194
--------------- -----------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 12,487,174 $ 799,543
=============== =================
</TABLE>
(CONTINUED)
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
CASMYN CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1997 AND 1996
(CONTINUED)
<TABLE>
<CAPTION>
<S> <C> <C>
1997 1996
------------ -------------
CASH PAID FOR INTEREST $ 107,752 $ 22,528
============ =============
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Issuance of common stock for services $ - $ 226,561
Conversion of common stock to preferred stock 21,349 -
Issuance of preferred shares for payment of
dividend 686,425 -
Amortization of discount on convertible
preferred stock 2,168,593 -
Receipt of investment for sale of asset - 1,000
Reduction of payable to joint venture and
investment in joint venture - 623,000
</TABLE>
<PAGE>
CASMYN CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
The accompanying condensed consolidated financial statements are unaudited;
however, in the opinion of management, such statements include all adjustments
(which are of a normal, recurring nature) necessary for a fair presentation
of the results for the interim periods. The financial statements included herein
have been prepared by Casmyn Corp. (the "Company") pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed
or omitted pursuant to such rules and regulations, although the Company
believes that the disclosures included herein are adequate to make the
information not misleading.
The organization and business of the Company, accounting policies followed by
the Company and other information are contained in the notes to the Company's
consolidated financial statements filed as part of the Company's September 30,
1997 Form 10-K. The Form 10-K should be read in conjunction with this
quarterly report.
INCOME (LOSS) PER SHARE
The Company adopted the provisions of Statement of Financial Accounting
Standards No. 128 ("SFAS 128") in the quarter ended December 31, 1997 and has
calculated the basic loss per share information as prescribed by SFAS 128.
The calculation of the diluted loss per share has been omitted as the
assumed conversion, exercise or contingent issuance of securities would have
an antidilutive effect on loss per share.
RECENTLY ISSUED ACCOUNTING STANDARDS
The Financial Accounting Standards Board recently issued Statement of
Financial Accounting Standards No. 130 ("SFAS 130"), Reporting Comprehensive
Income, which is effective for fiscal years beginning after December 15, 1997.
SFAS 130 establishes standards for reporting and displaying comprehensive
income and its components in a full set of general-purpose financial
statements. The Company will adopt the new statement for its fiscal year
beginning October 1, 1998, and does not anticipate that adoption will
have a significant impact on its consolidated financial statements. Under
the new statement the Company will report the change in the foreign
currency translation adjustment as a component of comprehensive income.
The FASB recently issued Statement of Financial Accounting Standard No. 131
("SFAS 131"), Disclosure About Segments of an Enterprise and Related
Information, which is also effective for fiscal years beginning after December
15, 1997. SFAS 131 establishes standards for segment reporting in the
financial statements. It also establishes standards for related disclosures
about products and services, geographic areas and major customers. The
Company will adopt the new statement for its fiscal year beginning October 1,
1998 and does not anticipate that providing required disclosures will result
in significantly different information from that which is currently being
disclosed.
<PAGE>
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
FOREIGN CURRENCY TRANSLATION
Prior to September 30, 1997, the functional currency of the Company's Zimbabwe
operations had been the Zimbabwean dollar. Accordingly, balance sheet
accounts were translated to US dollars using current exchange rates in effect
at the balance sheet date while revenue and expense accounts were translated
using the weighted average exchange rate during the reported period. The gains
or losses resulting from such translation were recorded in the foreign currency
translation adjustment account included as part of stockholders' equity.
During the period ended December 31, 1997, the Zimbabwean currency experienced
devaluation in excess of 44%. This level of devaluation is expected to have
significant impacts on Zimbabwe's annual rate of inflation such that the
country may be classified as highly inflationary. As a result, US dollar was
adopted as the functional currency for the Company's Zimbabwe operations,
effective October 1, 1997. Existing non-monetary assets and liabilities are
measured using exchange rates in effect as at October 31, 1997 and any gains
or losses from holding monetary assets and liabilities are reflected in the
statement of operations for the period. Revenue and expense accounts are
continued to be translated using the weighted average exchange rate during the
period.
<PAGE>
2. SUMMARY OF STOCKHOLDERS' EQUITY TRANSACTIONS
During the three months ended December 31, 1997, the Company has recorded the
following activity in its stockholders' equity accounts:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Number of Common Stock Number of
Common Shares Preferred
Shares
Description
Balances September 30, 1997 13,376,714 $ 535,069 1,406,962
Exercise of stock options 39,923 1,597 -
Preferred stock dividend - - 27,457
Conversion of preferred shares 533,733 21,349 (47,025)
Conversion discount on
convertible preferred stock - - -
Purchase of treasury stock - - -
Foreign currency
translation adjustment - - -
Net loss - - -
-------------- ------------- ------------
Balances at December 31, 1997 13,950,370 $ 558,015 1,387,394
============== ============= ============
Preferred Foreign Currency Treasury
Stock Translation Stock
Adjustment
Description
Balances September 30, 1997 $ 140,697 $ (3,328,954) $ ( 907,435)
Exercise of stock options - - -
Preferred stock dividend 2,746 - -
Conversion of preferred shares (4,704) - -
Conversion discount on
convertible preferred stock - - -
Purchase of treasury stock - - ( 2,037,157)
Foreign currency
translation adjustment - 205,446 -
Net loss - -
------------ ------------ -----------
Balances at December 31, 1997 $ 138,739 $ (3,123,508) $(2,944,592)
============ ============ ===========
Accumulated Additional Total
Deficit Paid-in Stockholders'
Capital Equity
Description
Balances September 30, 1997 $(28,453,840) $ 66,486,227 $34,471,764
Exercise of stock options - - 1,597
Preferred stock dividend (686,425) 683,679 -
Conversion of preferred shares - ( 16,645) -
Conversion discount on
convertible preferred stock (2,168,593) 2,168,593 -
Purchase of treasury stock - - (2,037,157)
Foreign currency
translation adjustment - - 205,446
Net loss (266,650) - (266,650)
------------ ------------ -----------
Balances at December 31, 1997 $(31,575,508) $ 69,321,854 $32,375,000
============ ============ ===========
</TABLE>
The Convertible Preferred stock is convertible at a discount to the Common
Stock ranging from 8.5% to 39% depending upon the date on which such shares
are converted. The discount is considered to be an additional preferred stock
dividend. At December 31, 1997, the Company recorded a charge to retained
earnings and a corresponding increase to additional paid-in capital of
$2,168,593 ($0.16 per common share) which represents the discount amount for
the period October 1, 1997 to December 31, 1997. This amount has been
recognized as a return to the preferred shareholders and as a reduction of
income available to common shareholders. The Company issued a total of 27,457
shares of Convertible Preferred stock as payment of the 8% dividend due on the
Convertible Preferred stock on December 31, 1997.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSISOF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Certain statements and information contained in this Report constitute
"forward looking statements" within the meaning of the United States Federal
securities laws. Such statements involve risks and uncertainties which may
cause actual results, performance, or achievements of the Company to be
materially different from results, performance, or achievements implied by
such forward looking statements. Factors which could affect the Company's
financial results are described below and in the Company's latest Annual
Report on Form 10-K filed with the Securities and Exchange Commission for the
year ended September 30, 1997. Readers are cautioned not to place undue
reliance on these forward looking statements, which speak only as of the date
hereof. The Company undertakes no obligation to release the result of any
revisions to these forward looking statements that may be made to reflect
events or circumstances after the date hereof or to reflect the occurrences of
unanticipated events.
OVERVIEW
The business activities of the Company center around mineral resource
development. The primary focus to date has been the acquisition and
exploration of precious mineral resource properties in Zimbabwe, Zambia and
South Africa. The Company has acquired a prospecting license in Zambia and is
presently conducting mining operations at the Zimbabwe mining properties.
SUBSEQUENT EVENTS
As of February 10, 1998, the Company had issued an aggregate of 17,158,682
shares of Common Stock upon conversion of 186,352 shares of Convertible
Preferred Stock.
As of January 29, 1998, the Company had suspended the use of the prospectus
covering the resale of the Common Shares underlying the Convertible Preferred
Stock.
As of January 30, 1998, the trading in the Company's Common Stock had been
halted pending submission of certain information requested by Nasdaq. As of
February 10, 1998, trading of the Company's Common Stock had not resumed.
RESULTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 1997 COMPARED TO THE THREE MONTHS ENDED
DECEMBER 31, 1996
Revenues for the three months ended December 31, 1997 were $977,030 compared
to $622,506 for the three months ended December 31, 1996. The increase of
$354,524 was due to the sale of approximately 3,357 ounces of gold in the
three months ended December 31, 1997 compared to approximately 1,713 ounces
sold in the three months ended December 31, 1996. The average selling price
of gold for the three months ended December 31, 1997 was approximately $291
per ounce compared to an average price of approximately $363 per ounce in the
three month period ended December 31, 1996. Fixed and variable mineral
operations expenses related to gold production were $649,186 for the three
months ended December 31, 1997. As a result, revenues exceeded direct costs
of production by $327,844 for the three months ended December 31, 1997. This
reflects the Company settling its gold sales in US dollars while mineral
operation costs are paid in local Zimbabwe currency which declined in value in
excess of 45% over the three month period ended December 31, 1997. For the
three months ended December 31, 1996, fixed and variable mineral operations
expenses of $816,846 exceeded revenues from gold sales by $194,340. Expenses
exceeded revenues in the three month period ended December 31, 1996 due to low
production levels caused by the Company completing the commissioning process
of its new "state of the art" production circuits so as to provide sustainable
production capacities.
Total costs and expenses excluding the expenditure related to gold production
were $859,680 for the three months ended December 31, 1997, compared to
$1,288,333 for the three months ended December 31, 1996, a decrease of
$428,653.
General and administrative expenses were $536,339 for the three months ended
December 31, 1997 compared to $567,971 for the three months ended December 31,
1996, a decrease of $31,632. Compensation and benefits decreased $90,533 due
to a reduction in personnel costs in the Company's headquarters as well as the
<PAGE>
Zimbabwe operations. Travel expenses decreased $20,337 in the three months
ended December 31, 1997 compared to the three months ended December 31, 1996
due mainly to expenses incurred by the Company in the three months ended
December 31, 1996 related to a tour of its Zimbabwe mining operations for a
group of twelve mining analysts. These costs were not repeated in the three
months ended December 31, 1997. These decreases were partially offset by an
increase in rent expense of $31,351 in the three months ended December 31,
1997 compared to 1996 from the Company's Canadian offices and the offices of
Casmyn International Inc. in the Commonwealth of Independent States. Other
general and administrative expenses increased $79,519 for the three months
ended December 31, 1997 compared to the three months ended December 31, 1996
due to expansion of the Company's worldwide operations, primarily in Zimbabwe.
Compensatory stock option expense decreased $74,042 for the three months ended
December 31, 1997 compared to the three months ended December 31, 1996 since
there were no compensatory options outstanding in the three months ended
December 31, 1997.
Mineral exploration expenses were $83,118 for the three months ended December
31, 1997 compared to $418,975 for the three months ended December 31, 1996, a
decrease of $335,857. This decrease is due to the lower expenses in the
current period related to the Company's mineral exploration program at the
Luswishi Property located in the Zambian Copperbelt.
Merger and acquisition related expenses decreased $67,275 in the three months
ended December 31, 1997 to $46,547 due to the Company's higher level of
activity in developing new business opportunities around the world in 1996 as
compared to 1997.
Total other income was $265,186 for the three months ended December 31, 1997,
compared to a total loss of $123,812 for the three months ended December 31,
1996, an increase of $388,998. This increase was due to a reduction in the
equity in the net loss of WPUR of $277,068 caused by the Company no longer
having an equity interest in WPUR, an increase in investment income of
$274,413 and $40,143 in income related to the 45% minority interest in the net
loss for the period of Casmyn International Inc. These increases were offset
by a foreign exchange loss of $76,626 due to recent currency devaluation in
Zimbabwe.
OUTLOOK
The Company anticipates that revenues from the sale of gold from the Zimbabwe
mines will exceed expenditures from operation of the mines commencing in the
fiscal quarter ended March 31, 1998, based upon the current gold price and the
continued ability of the Company to deliver and process ore at its mills. It
is also anticipated that a portion of the capital improvement budget will be
postponed until improvement in gold prices is experienced. The Company
intends to produce gold from the tailings dumps and the surface materials and
delay higher cost underground production until gold prices increase.
Additionally, the Company anticipates that expense levels experienced in the
three months ended December 31, 1997 relating to active exploration programs
will continue. The Company charges to expense all mineral resource
exploration and development costs until the mineral property to which they
relate is determined to have resources for which recovery is economically
feasible. Costs are then capitalized until the mineral property to which they
relate is placed into production, sold, abandoned or written down where there
is an impairment in value. Capitalized costs are to be charged to future
operations on a unit-of-production basis. The Company estimates the total
proven and probable gold reserves at the Zimbabwe Properties at 502,499
ounces. Independent engineering studies are currently underway which may
cause this estimate to change. Should gold prices continue to change, the
proven and probable gold reserves will also change. In addition, the
continued exploration program being undertaken by the Company along with gold
production will result in adjustments to the Company's proven and probable
reserves. The gold occurs in sulfides, oxides and old mill tailings.
<PAGE>
LOSS PER COMMON SHARE
The net loss per common share for the year ended December 31, 1997 was $(0.23)
per share. This loss per share is comprised of the following:
<TABLE>
<CAPTION>
<S> <C>
Net Income $( 0.02)
Dividend on Convertible Preferred Stock ( 0.05)
Amortization of discount on Convertible Preferred
Stock (0.16)
Net Loss Per Common Share $ (0.23)
</TABLE>
The amortization of the discount on the convertible preferred stock is
recognized as a return to the preferred shareholders and as a reduction of
income available to common shareholders (see Note 1 to the Notes to the
Condensed Consolidated Financial Statements).
CAPITAL RESOURCES AND LIQUIDITY
At December 31, 1997, the Company had working capital of $14,608,168 (or
$9,518,976 excluding restricted cash), including $12,487,174 in cash and cash
equivalents. Management anticipates that the net use of cash by operations
will decrease compared to amounts used in the three month period ended
December 31, 1997 due to the profitability of the Zimbabwe mining operation,
reduced mineral exploration expenditures and decreased costs related to
corporate staff activities. In addition, the Company used $2,037,157 in
cash during the three month period ended December 31, 1997 to purchase its
common stock. The Company does not anticipate similar purchases in the near
term. The Company expects to spend approximately $2,000,000 during the
remainder of the fiscal year ending September 30, 1998 on capital expenditures
related to refurbishment and construction as well as on projects related to
power supply, water supply and housing. The Company will use current cash and
cash equivalents to fund the on-going projects in the short term and
anticipates that it will be able to secure additional debt and/or equity
financing to fund longer term projects although there can be no assurance that
any such financing will be secured or the amounts thereof.
On April 14, 1997, the Company completed the initial placement of 751,200 shares
of Convertible Preferred stock for cash proceeds of approximately $16,759,000
(after cash fees to the placement agent and the Company's financial advisor
and estimated transaction expenses); an additional 83,467 preferred shares
were issued to Societe Generale in exchange for $2,086,675 principal amount
(less $84,000 unamortized debt issue costs) of pre-existing convertible
debentures. Societe Generale also converted the remaining $2,913,325
principal balance (less unamortized debt issue costs of $116,000) of its
convertible debenture in exchange for 594,856 common shares. The Company also
issued 3,637 preferred shares for interest accrued on the convertible
debenture through the date of conversion. In addition, on September 2, 1997,
the Company completed an additional placement of 533,885 shares of Convertible
Preferred stock for cash proceeds of approximately $12,423,000 including
accrued interest at 8% per annum from April 14, 1997 to the date of closing
and after cash fees to the placement agents and estimated transaction
expenses. The subscription price for the placements was $25 per share. The
preferred shares carry an 8% dividend to be paid in additional shares of
preferred stock and convert into common stock over a five year period at an
increasing discount to the market price of the common stock at the time of
conversion, subject to certain adjustments. The Company has the ability to
force mandatory conversion if the common stock exceeds certain trading price
and volume targets. The number of shares that can be converted by a holder
over a ten month period beginning in July, 1997 is limited to 10% per month,
<PAGE>
cumulative. The underlying common stock is also restricted for sale subject
to daily volume limitations. The placement agents received warrants
exercisable for a period of five years to purchase 172,725 shares of the
Convertible Preferred stock at $25 per share.
During February 1997, the Company negotiated a $5,000,000 credit facility with
Barclays Bank of Zimbabwe. At September 30, 1997, the Company had borrowed
$4,966,160 against this facility. Also during the year ended September 30,
1997, the Company negotiated a $40,000,000 project finance agreement with
Barclays Bank, London which has since expired due to the Company's strategy of
minimizing debt at the present low gold prices. At September 30, 1997, the
Company had not financed any projects under that agreement.
In addition to the above, on November 8, 1996, the Company completed a private
placement of 155,000 units for total net proceeds of $1,410,500. Each unit
consisted of one common share plus one warrant; two warrants plus $10 will
entitle the holder to purchase one share of the Company's common stock.
During the fiscal year ended September 30, 1995, the Company completed
placement of a $5,000,000, 2.5%, unsecured, convertible debenture for net
proceeds of $4,700,000. This debenture was converted to a combination of
common and preferred stock in the year ended September 30, 1997 as discussed
above. Additionally, in the year ended September 30, 1996 the Company
received $12,975,683, net of commissions and other expenses related to the
transactions, through issuance of 1,159,091 units, consisting of warrants and
shares of restricted common stock in exempt private transactions.
Net Cash Used in Operating Activities. Net cash used in operating activities
was $583,135 for the three months ended December 31, 1997 due to net cash used
in operations of $556,044 from increases in accounts receivable and inventory
offset by net cash provided by operations of $122,427 due to increases in
accounts payable and accrued liabilities and a decrease in prepaid expenses
and other assets. Depreciation and minority interest in the net loss of
Casmyn International Inc. accounted for the remainder of the net cash used in
operating activities. Net cash used in operating activities was $1,884,899
for the three months ended December 31, 1996 due to net loss (before
depreciation and other non-cash items) of $1,196,212; net cash used in
operations of $779,025 from increases in accounts receivable, inventory,
prepaid expenses and other assets, and decreases in accrued liabilities; and
net cash provided by operating activities of $90,338 due to increases in
accounts payable and decreases in amounts due to related parties.
Net Cash Used in Investing Activities. Net cash used in investing activities
was $3,042,124 for the three months ended December 31, 1997 due to the
investments in marketable securities of $2,053,343 and purchase of property
and equipment of $988,781 primarily at the Zimbabwe mining properties. Net
cash used in investing activities was $2,489,153 for the three months ended
December 31, 1996 due to investments in and advances to affiliates of
$708,379, purchases of property and equipment of $2,685,732, and net cash
provided of $900,000 from the sale of assets of $900,000 and $4,958 due to
decreases in long-term deposits.
Net Cash Used in Financing Activities. Net cash used in financing
activities was $2,054,004 for the three months ended December 31, 1997 due to
the Company purchasing $2,037,157 of the Company's common stock in the open
market, an increase in restricted cash of $14,533 and repayment of long-term
debt of $2,314. Net cash provided by financing activities was $1,579,090 for
the three months ended December 31, 1996 due to the receipt of $1,410,500 from
the issuance of common stock, and $198,340 from the exercise of common stock
options offset by repayment of long-term debt of $29,750.
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
Exhibit 27 -- FINANCIAL DATA SCHEDULE (EDGAR filing only)
B. Forms 8-K
1. The Company filed Form 8-K on October 10, 1997, reporting that
effective September 30, 1997, it restructured its interest in
WaterPur International, Inc. ("WPUR") by converting its debt and
equity holding in WPUR into 7,900,004 shares of convertible preferred
stock. In addition, the Company received warrants to purchase up to
3,300,000 WPUR common shares, exercisable for a three year period.
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 hereunto duly authorized.
Casmyn Corp.
/s/ Al-Karim Haji
February 11, 1998 By _____________________________
Al-Karim Haji, Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000772320
<NAME> CASMYN CORP.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 17576
<SECURITIES> 2053
<RECEIVABLES> 933
<ALLOWANCES> 0
<INVENTORY> 885
<CURRENT-ASSETS> 21470
<PP&E> 18519
<DEPRECIATION> 854
<TOTAL-ASSETS> 43846
<CURRENT-LIABILITIES> 6792
<BONDS> 0
0
139
<COMMON> 558
<OTHER-SE> 32375
<TOTAL-LIABILITY-AND-EQUITY> 43846
<SALES> 977
<TOTAL-REVENUES> 977
<CGS> 649
<TOTAL-COSTS> 649
<OTHER-EXPENSES> 860
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 302
<INCOME-PRETAX> (267)
<INCOME-TAX> 0
<INCOME-CONTINUING> (267)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (267)
<EPS-PRIMARY> (.23)
<EPS-DILUTED> (.23)
</TABLE>
