<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 MARCH 31, 1999
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., Colorado Springs, CO 80920
----------------------------------------------------
(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.
As of April 30, 1999 the number of shares outstanding of the company's $.01
par value common stock was 7,659,766 and the number of shares of $.05 par
value preference stock was 2,986.
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AMERALIA, INC.
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I: FINANCIAL INFORMATION
Item 1: Financial Statements
Balance Sheets - March 31, 1999 and June 30, 1998 1
Statements of Operations for the Quarters and Nine Months
ending March 31, 1999 & 1998 and from the beginning of
Development Stage on July 1,1992 to March 31, 1999 3
Statements of Cash Flows for the Nine Months ending
March 31, 1999 & 1998 and from the beginning of Development
Stage on July 1, 1992 to March 31, 1999 4
Notes to Financial Statements 6
Item 2: Management's Discussion and Analysis of Financial Condition
and Results of Operations. 6
PART II: OTHER INFORMATION
Item 2: Changes in Securities 8
SIGNATURE 8
</TABLE>
2
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AMERALIA INC
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31 June 30
1999 1998
------------ ------------
<S> <C> <C>
ASSETS
Current Assets:
Cash at bank $ 2,743,873 $ 707,199
Prepaid expenses 41,400 -
Related party receivables 193,670 17,674
------------ ------------
Total Current Assets: $ 2,978,943 $ 724,873
Non Current Assets:
Lease exploration & development costs 2,903,287 2,768,287
Development fees 255,000 -
Rural Investment Trust 401,111 -
Loans to employees 25,000 -
Property & equipment 19,756 6,983
------------ ------------
Total Assets: $ 6,583,097 $ 3,500,143
------------ ------------
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</TABLE>
(Continued over page)
1
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AMERALIA INC
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31 June 30
1999 1998
------------ ------------
<S> <C> <C>
LIABILITIES & SHAREHOLDERS' FUNDS
Current liabilities:
Accounts payable $ 170,383 $ 163,910
Royalties payable 260,417 204,167
Due to related parties 3.626 35,354
Notes payable - current portion 200,083 415,594
Interest payable 860 430
------------ ------------
Total Liabilities $ 635,369 $ 819,455
Commitments and contingent liabilities - -
SHAREHOLDERS' EQUITY
Preferred stock, $0.05 par value;
1,000,000 authorized; 2,986 and
2,536 issued at December 31 and
June 30, 1998: 149 127
Common stock, $.01 par value;
100,000,000 shares authorized;
Issued @ Mar 31, 1999: 7,659,766
and @ June 30, 1998: 5,317,551: 76,598 53,176
Additional paid in capital 16,498,855 12,151,930
Accumulated deficit (10,627,874) (9,524,545)
------------ ------------
Total Shareholders' Funds: $ 5,947,728 $ 2,680,688
------------ ------------
Total Liabilities & Shareholders' Equity: $ 6,583,097 $ 3,500,143
------------ ------------
------------ ------------
</TABLE>
2
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AMERALIA INC
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
From the
Beginning of
Development
Qtr Qtr Nine mths Nine mths Stage on
ending ending ending ending Jul 1, 1992 to
Mar 31 Mar 31 Mar 31 Mar 31 Mar 31
1999 1998 1999 1998 1999
---------- ---------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C>
REVENUES $ - $ - $ - $ - $ -
EXPENSES
General & administrative 421,913 121,352 904,258 431,819 5,059,578
Depreciation & amortization 1,129 2,154 4,375 6,463 65,289
---------- ---------- ---------- ---------- ------------
Total Expenses: $ 423,042 $ 123,506 $ 908,633 $ 438,282 5,124,867
---------- ---------- ---------- ---------- ------------
(LOSS) FROM OPERATIONS ($ 423,042) ($ 123,506) ($ 908,633) ($ 438,282) ($ 5,124,867)
---------- ---------- ---------- ---------- ------------
OTHER INCOME (EXPENSE)
Other income - - - - 29
Investment income - - - - 89,760
Interest income 7,464 - 15,572 - 258,336
Interest expense (4,199) (9,634) (17,467) (31,419) (635,996)
Foreign currency gain (loss) 6,210 (2) 16,414 31 (47,172)
---------- ---------- ---------- ---------- ------------
Total other income (expense) 9,475 (9,636) 14,519 (31,388) (335,043)
---------- ---------- ---------- ---------- ------------
NET LOSS BEFORE
INCOME TAX EXPENSE ($ 413,567) ($ 133,142) ($ 894,114) ($ 469,670) ($ 5,459,910)
---------- ---------- ---------- ---------- ------------
Income tax expense - - - - -
---------- ---------- ---------- ---------- ------------
NET LOSS ($ 413,567) ($ 133,142) ($ 894,114) ($ 469,670) ($ 5,459,910)
---------- ---------- ---------- ---------- ------------
BASIC NET LOSS PER SHARE ($0.06) ($0.03) ($0.14) ($0.12)
DILUTED NET LOSS PER SHARE ($0.04) ($0.02) ($0.10) ($0.07)
WEIGHTED AVERAGE
SHARES OUTSTANDING ('000) 6,996 4,364 6,489 3,874
FULLY DILUTED AVERAGE
SHARES OUTSTANDING ('000) 9,982 6,807 9,250 6,713
</TABLE>
3
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AMERALIA INC
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
From the
Beginning of
Development
Nine mths Nine mths Stage on
ending ending Jul 1, 1992 to
Mar 31 Mar 31 Mar 31
1999 1998 1999
----------- ---------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss ($894,114) ($469,670) ($5,459,910)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Bad debt - - 624,798
Stock issued for services rendered - - 65,000
Exchange (gain) loss (16,414) - (184,956)
Depreciation 4,375 6,463 74,867
(Increase) decrease in:
Accounts & interest receivable - - 665
Notes receivable - - 1,300,497
Related parties receivables (175,996) (125) (193,670)
Prepaid expenses (41,400) - (23,400)
Increase (decrease) in:
Bank overdraft - 4775 4,586
Accounts payable 6,473 11,829 104,713
Royalties payable 56,250 62,500 260,417
Due to related parties (31,728) 112,259 (68,343)
Interest payable 430 22,264 (118,206)
---------- ----------- -----------
Net cash used in operating activities (1,092,124) (249,705) (3,612,942)
CASH FLOWS FROM INVESTING ACTIVITIES
Lease exploration & development expenditure (390,000) (8,071) (2,312,890)
Purchase of property & equipment (17,148) - (82,416)
Cash received from notes receivable - - (144,853)
---------- ----------- -----------
Cash flows from investing activities (407,148) (8,071) (2,540,159)
</TABLE>
4
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AMERALIA INC
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
From the
Beginning of
Development
Nine mths Nine mths Stage on
ending ending Jul 1, 1992 to
Mar 31 Mar 31 Mar 31
1999 1998 1999
------------- ------------- -------------
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Cash received from issuance of stock $ 3,570,224 $ 290,000 $ 8,287,820
Additional capital contributed - - 307,372
Cash received from notes - - 559,005
Payments on notes (9,278) - (232,461)
Loans to employees (25,000) (4,515) (25,000)
------------- ------------- -------------
Cash flows from financing activities 3,535,946 285,485 8,896,736
NET INCREASE (DECREASE) IN CASH 2,036,674 27,710 2,743,635
Cash and cash equivalents at beginning of period 707,199 2,088 238
------------- ------------- -------------
Cash and cash equivalents at end of period $ 2,743,873 $ 29,798 $ 2,743,873
------------- ------------- -------------
------------- ------------- -------------
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
Income taxes $ - $ - $ -
Interest $ 17,037 $ 8,840 $ 278,751
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 $ 209,215 $ 193,421 $ 1,144,813
</TABLE>
5
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AMERALIA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
As at March 31, 1999 and June 30, 1998 and
for the Periods ended March 31, 1999 and 1998
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 AmerAlia's June 30,
1998 Annual Report on Form 10-K. The results of operations for the periods
ended March 31, 1999 and 1998 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 AmerAlia's management,
necessary for a fair presentation of the results of the interim periods
covered by this report.
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 rely on raising capital from its existing shareholders and from
private offerings of its securities. During the 1998 fiscal year and
subsequently, AmerAlia raised approximately $2.7 million in different
offerings for the sale of its common stock, preferred stock and warrants to
accredited and non-United States investors. Warrants were exercised in March
1999 raising a further $2.5 million. 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.
6
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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.
On May 17, 1999 AmerAlia announced that it has entered into a
Design/Build Agreement with USFilter's HPD Products group of Naperville,
Illinois for the complete design, engineering, procurement and construction
of AmerAlia's sodium bicarbonate mine and processing plant. USFilter has
commenced engineering and design of the 75,000 tons per year (tpy) plant.
Construction is expected to begin in the second half of 1999 with anticipated
plant start up by late 2000. The contract contains certain performance
guarantees regarding production quality and quantity. As part of the
Design/Build Agreement, USFilter has guaranteed the cost of the total
facility and infrastructure will not exceed $32 million. AmerAlia must
provide $6.4 million of equity and a definitive commitment for long-term
financing acceptable to USFilter by no later than August 15, 1999. Although
AmerAlia is optimistic it will be able to do so, there can be no assurance
that it will be able to raise the necessary equity financing or obtain an
acceptable long-term financing commitment.
During the quarter ended March 31, 1999, AmerAlia raised $2.5
million through the exercise of warrants as described above. Funds were
applied to meeting the operating loss for the quarter, $255,000 was paid as
an interim fee to USFilter for the company's proposed processing plant,
$193,670 was invested in a short term note receivable from a related party,
$37,000 was used for prepayments and $6,320 to acquire additional office
equipment and a computer. Cash and cash equivalents at the end of the period
were approximately $2,744,000. In May, 1999, AmerAlia liquidated its
investment in the Rural Investment Trust and repaid its debt to the ANZ Bank.
RESULTS OF OPERATIONS
The Company's net loss for the quarter was $413,567 compared with
$133,142 for the same period of the previous year. For the nine month period
to March 31, 1999 the loss was $894,114 compared with $469,670 for the prior
period. The increase is due to higher staffing costs and consulting fees
which can be expected to continue to increase 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. During the nine month period ended March 31, 1999
AmerAlia acquired an Australian investment and borrowed funds in Australian
dollars. Consequently, movements in the Australian dollar relative to the
United States dollar result in foreign currency gains and losses which are
brought to account through the Operations Statement. There was a foreign
currency gain of $16,414 during the nine month period.
YEAR 2000 COMPLIANCE
Although there can be no assurance, AmerAlia does not anticipate it
will suffer any adverse impact as a result of Year 2000 (Y2K) computer
software or hardware issues, either as a result of third-party non-compliance
or as a result of internal matters. AmerAlia's computers and software systems
are relatively new systems which are Y2K compliant. Of course, AmerAlia is
dependent upon facilities outside its control such as electrical power
supplies, banking facilities, transportation facilities (e.g. airlines) and
communications
7
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facilities. While AmerAlia, in relying on public reports, believes these
facilities are or will be Y2K compliant, it has no basis for determining
their compliance.
IMPACT OF INFLATION
The Company believes that its activities are not materially affected
by inflation.
PART II: OTHER INFORMATION
Item 2: Changes in Securities
On March 31, 1999, 74,650 shares of common stock were issued in lieu
of $74,650 of dividends on Series E Preferred Stock.
As previously reported in the December quarter Form 10Q, the
Jacqueline Badger Mars Trust, an affiliate, subscribed $1,050,000 on December
30, 1998 for 140 units which consisted of 5,000 shares of common stock and
common stock purchase warrants to acquire 5,000 shares of restricted common
stock for prices commencing at $2.00 per share. The Trust subsequently
exercised the warrants on March 26, 1999 and paid $1.4 million for the issue
of 700,000 shares of common stock. On March 31, other accredited investors
exercised warrants for 553,000 shares at $2.00 per share raising $1,106,000
in additional equity.
There were no underwriters to these issues, the investors were
accredited investors only and an exemption from registration is claimed under
Section 4(6) and Regulation D of the Securities Act of 1933.
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.
AMERALIA, INC.
May 18, 1999 By: /S/ ROBERT VAN MOURIK
-----------------------
Robert van Mourik
Executive Vice President, Chief Financial
Officer and principal financial and
accounting officer.
8
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 2,743,873
<SECURITIES> 0
<RECEIVABLES> 235,070
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,978,943
<PP&E> 84,189
<DEPRECIATION> (64,438)
<TOTAL-ASSETS> 6,583,097
<CURRENT-LIABILITIES> 635,369
<BONDS> 0
149
0
<COMMON> 76,598
<OTHER-SE> 5,870,981
<TOTAL-LIABILITY-AND-EQUITY> 6,583,097
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (876,647)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,467
<INCOME-PRETAX> (894,114)
<INCOME-TAX> 0
<INCOME-CONTINUING> (894,114)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (894,114)
<EPS-PRIMARY> (0.14)
<EPS-DILUTED> (0.10)
</TABLE>
