<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly Report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
FOR THE QUARTER ENDED SEPTEMBER 30, 1998
OR
[ ] Transition Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
Commission File No. 0-15474
AMERALIA, INC.
- ------------------------------------------------------------------------------
(Exact name of Company as specified in its charter)
A Utah Corporation
I.R.S. Employer Identification No. 87-0403973
311 RALEIGH ROAD, KENILWORTH, IL 60043
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(Address of Principal Executive Offices)
(847) 256 9021
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(Company's telephone number, including area code)
1155 KELLY JOHNSON BLVD., #111, COLORADO SPRINGS, CO 80920
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(former address, if changed from last report)
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 the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past
90 days.
The number of shares outstanding of the Company's $.01 par value common stock
as of November 1, 1998 was 5,560,951. Shares of preference stock, $0.05 par
value, outstanding as of November 1, 1998 was 2,536.
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AMERALIA, INC.
(A DEVELOPMENT STAGE COMPANY)
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
Page
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<S> <C>
PART I: FINANCIAL INFORMATION
Item 1: Financial Statements
Balance Sheets - September 30, 1998
and June 30, 1998 1
Statements of Operations for the Quarters
ending September 30, 1998 & 1997 and from
the Beginning of Development Stage on
July 1, 1992 to September 30, 1998 3
Statements of Cash Flows for the Quarters
ending September 30, 1998 & 1997 and from
the Beginning of Development Stage on
July 1, 1992 to September 30, 1998 4
Note to Consolidated Financial Statements 6
Item 2: Management's Discussion and Analysis of
Financial Condition and Results
of Operations. 7
PART II: OTHER INFORMATION
Item 2: Changes in Securities 8
SIGNATURE 8
</TABLE>
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AMERALIA INC
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
<TABLE>
<CAPTION>
Sept 30 June 30
1998 1998
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<S> <C> <C>
ASSETS
Current Assets:
Cash at bank $ 371,683 $ 707,199
Prepaid expenses 42,000 -
Related party receivables - 17,674
---------- ----------
Total Current Assets: 413,683 724,873
Non Current Assets:
Lease exploration & development costs 2,768,287 2,768,287
Property & equipment 4,826 6,983
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Total Assets: $3,186,796 $3,500,143
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</TABLE>
(Continued over page)
1
<PAGE>
AMERALIA INC
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
<TABLE>
<CAPTION>
Sept 30 June 30
1998 1998
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<S> <C> <C>
LIABILITIES & SHAREHOLDERS' FUNDS
Current liabilities:
Accounts payable $ 150,884 $ 163,910
Royalties payable 222,917 204,167
Due to related parties 47,430 35,354
Notes payable - current portion 13,939 415,594
Interest payable 645 430
----------- ----------
Total Liabilities: $ 435,815 $ 819,455
Commitments and contingent liabilities - -
SHAREHOLDERS' EQUITY
Preferred stock, $0.05 par value;
1,000,000 authorized; 2,536 issued
at September 30, 1998 and
at June 30, 1998 127 127
Common stock, $.01 par value;
100,000,000 shares authorised;
Issued at September 30, 1998: 5,560,951;
Issued at June 30, 1998: 5,317,551: 55,610 53,176
Additional paid in capital 12,446,646 12,151,930
Accumulated deficit (9,751,402) (9,524,545)
Total Shareholders' Funds: $ 2,750,981 $2,680,688
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Total Liabilities & Shareholders' Equity: $ 3,186,796 $3,500,143
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</TABLE>
2
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AMERALIA INC
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
From the
Beginning of
Qtr Qtr Development
ending ending Stage on
Sept 30 Sept 30 July 1, 1992
1998 1997 to Sept 30,
1998
--------- --------- ------------
<S> <C> <C> <C>
REVENUES $ - $ - $ -
EXPENSES
General & administrative 159,684 104,158 4,315,004
Depreciation & amortization 2,157 2,154 63,071
--------- --------- ------------
Total Expenses: 161,841 106,312 4,378,075
--------- --------- ------------
LOSS FROM OPERATIONS (161,841) (106,312) (4,378,075)
--------- --------- ------------
OTHER INCOME (EXPENSE)
Other income - - 29
Investment income - - 89,760
Interest income 6,974 - 249,738
Interest expense (8,602) (11,967) (627,131)
Foreign currency gain(loss) 12 - (63,574)
--------- --------- ------------
Total Other Income (Expense) (1,616) (11,967) (351,178)
--------- --------- ------------
NET LOSS BEFORE INCOME TAX EXPENSE (163,457) (118,279) (4,729,253)
Income tax expense - - -
--------- --------- ------------
NET LOSS (163,457) (118,279) (4,729,253)
--------- --------- ------------
BASIC NET LOSS PER SHARE $ (0.030) $ (0.036)
DILUTED NET LOSS PER SHARE $ (0.016) $ (0.016)
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING ('000) 5,439 3,309
FULLY DILUTED AVERAGE NUMBER OF
SHARES OUTSTANDING ('000) 10,307 7,588
</TABLE>
3
<PAGE>
AMERALIA INC
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
From the
Beginning of
Qtr Qtr Development
ending ending Stage on
Sept 30 Sept 30 July 1, 1992
1998 1997 to Sept 30,
1998
--------- --------- ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss (163,457) ($118,279) (4,729,253)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Bad debt 624,798
Stock issued for services rendered 65,000
Depreciation 2,157 2,154 72,649
Exchange (gain) loss (12) (168,554)
(Increase) decrease in:
Accounts and interest receivable - - 665
Notes receivable - 1,300,497
Related parties receivables 17,674 3,690 -
Prepaid expenses (42,000) - (24,000)
Increase (decrease) in:
Bank overdraft - 4,640 4,586
Accounts payable (13,026) 12,310 85,214
Royalties payable 18,750 18,750 222,917
Notes payable - short-term (177,893) 13,203 (177,893)
Due to related parties 12,076 57,077 (24,539)
Interest payable 215 8,900 (118,421)
--------- --------- ------------
Net Cash (Used) in operating activities (345,516) 2,445 (2,866,334)
--------- --------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Lease exploration & development expenditure - (95) (1,922,890)
Purchase of property & equipment - - (65,268)
Cash received from notes receivable - - (144,853)
--------- --------- ------------
Net Cash (Used) in investing activities - (95) (2,133,011)
--------- --------- ------------
</TABLE>
4
<PAGE>
AMERALIA INC
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS (CONTINUED)
<TABLE>
<CAPTION>
From the
Beginning of
Qtr Qtr Development
ending ending Stage on
Sept 30 Sept 30 Jul 1, 1992
1998 1997 to Sept 30,
1998
--------- --------- ------------
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Cash received from issuance of stock 10,000 240,000 4,727,596
Additional capital contributed - - 307,372
Cash received from notes - - 559,005
Cash payments on notes payable - (1,378) (223,183)
--------- --------- ------------
Cash flows from financing activities 10,000 238,622 5,370,790
--------- --------- ------------
NET INCREASE (DECREASE) IN CASH (335,516) 240,972 371,445
Cash and cash equivalents at beginning of period 707,199 2,088 238
--------- --------- ------------
Cash and cash equivalents at end of period $ 371,683 $ 243,060 $ 371,683
--------- --------- ------------
--------- --------- ------------
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
Income taxes $ - $ - $ -
Interest $ 95 $ - $ 261,809
NON CASH FINANCING ACTIVITIES
Common stock issued for payment
of obligations $ 223,750 $ - $ 616,781
Common stock issued for services rendered $ - $ - $ 65,000
Payment of preferred stock dividends
through the issuance of additional
common and preferred stock $ 63,400 $ 51,204 $ 998,998
</TABLE>
5
<PAGE>
AMERALIA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTE TO FINANCIAL STATEMENTS
As at September 30, 1998 and June 30, 1998
and for the Periods ended September 30, 1998 and 1997
NOTE 1. MANAGEMENT ADJUSTMENTS
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested that
these financial statements be read in conjunction with the Registrant's June
30, 1998 Annual Report on Form 10-K. The results of operations for the
periods ended September 30, 1998 and 1997 are not necessarily indicative of
operating results for the full years.
The Financial Statements and other information furnished herein reflect
all adjustments which are, in the opinion of management of the Registrant,
necessary for a fair presentation of the results of the interim periods
covered by this report.
6
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AMERALIA, INC.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The future conduct of AmerAlia is dependent upon a number of factors and
there is no assurance that AmerAlia will be able to conduct its operations as
contemplated in this report. Certain statements contained in this report
using the terms "may", "expects to", and other terms denoting future
possibilities, are forward-looking statements. The accuracy of these
statements cannot be guaranteed as they are subject to a variety of risks
which are beyond AmerAlia's ability to predict or control. These risks can
cause actual results to differ materially from the projections or estimates
contained in this report. These risks include, but are not limited to, the
possibility that the described operations, reserves, or exploration or
production activities will not be completed on economic terms, if at all. The
exploration, development and mining of mineral properties is an enterprise
attendant with high risk. Many of these risks are described in this report
and it is important that each person reviewing this report understands the
significant risks which accompany the establishment of AmerAlia's proposed
operations.
LIQUIDITY AND CAPITAL RESOURCES
AmerAlia does not generate any operating income and, therefore,
continues to be reliant on raising capital from its existing shareholders and
from private offerings of its securities. During the 1998 fiscal year and
subsequently, AmerAlia raised approximately $1.3 million in different
offerings for the sale of its common stock, preferred stock and warrants to
accredited and non-United States investors. The outstanding warrants, if
exercised in whole or part, would result in additional capital for AmerAlia,
however, this would require that the market price of the company's common
stock exceed the exercise price of the warrants at the time of exercise.
There are other conditions precedent to the exercise of the warrants
including the availability of an exemption for the exercise.
AmerAlia has historically derived its liquidity from raising new equity
investment or by issuing notes payable. AmerAlia's ability to ensure its
long term survival continues to be dependent upon AmerAlia obtaining all
permits necessary for the proposed plant and financing for its construction,
estimated to be in excess of $30 million. AmerAlia is engaged in discussions
with prospective investors and financiers to achieve this objective, and
based upon consultations with its advisors, AmerAlia believes significant
financing will be available from unaffiliated parties provided that certain
conditions are met. Management is directing its efforts to enabling the
fulfilment of these conditions, although there can be no assurance that the
company will be able to complete this financing.
During the quarter, AmerAlia received $6,974 in interest earned from
funds on deposit. The company used its funds for its operating loss for the
quarter and to reduce its outstanding liabilities, including the payment of
$185,600 to settle a debt due to a contractor. The company expended $42,000
for the purchase of liability insurance and reduced its accounts payable by a
net of $13,026. Additional funding was received by accruing liabilities for
royalites payable and to related parties, and another stock subscription
raised $10,000. Additional notes payable of $233,750 due to non-United States
investors were satisfied through the issuance of stock and warrants. Cash and
cash equivalents at the end of the period was approximately $372,000.
RESULTS OF OPERATIONS
The Company's net loss for the quarter was $163,457 compared with
$118,279 for the same period of the previous year. The increase is due to
higher staffing costs and these higher costs can be expected to continue as
the company increases its efforts to fund its operating facilities as
discussed above. However, the reduction in debt carried by the company has
significantly reduced interest expense over prior periods.
7
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IMPACT OF INFLATION
The Company believes that its activities are not materially affected by
inflation.
PART II: OTHER INFORMATION
Item 2: Changes in Securities
During the quarter, 63,400 shares of common stock were issued in lieu of
$63,400 of dividends on Series E Preferred Stock. A further 180,000 shares
and warrants were issued to non-United States investors for cash and
satisfaction of notes payable.
SIGNATURE
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 duly authorized representative.
AMERALIA, INC.
November 18, 1998 By: /s/ Robert van Mourik
---------------------
Robert van Mourik
Executive Vice President, Chief Financial Officer
and principal financial and accounting officer.
8
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