<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 DECEMBER 31, 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.
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(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
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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.
As of February 1, 1999 the number of shares outstanding of the company's $.01
par value common stock was 6,332,116 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 - December 31, 1998 and June 30, 1998 1
Statements of Operations for the Quarters and Half Years
ending December 31, 1998 & 1997 and from the beginning of
Development Stage on July 1,1992 to December 31, 1998 3
Statements of Cash Flows for the Half Years ending
December 31, 1998 & 1997 and from the beginning of Development
Stage on July 1, 1992 to December 31, 1998 4
Notes to Financial Statements 6
Item 2: Management's Discussion and Analysis of Financial Condition
and Results of Operations. 7
PART II: OTHER INFORMATION 8
Item 2: Changes in Securities 9
SIGNATURE
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AMERALIA INC
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31 June 30
1998 1998
----------- ----------
<S> <C> <C>
ASSETS
Current Assets:
Cash at bank $1,101,018 $ 707,199
Prepaid expenses 78,150 --
Related party receivables 20,560 17,674
---------- ----------
Total Current Assets: $1,199,728 $ 724,873
Non Current Assets:
Lease exploration & development costs 2,903,287 2,768,287
Rural Investment Trust 389,351 --
Loans to employees 25,000 --
Property & equipment 14,565 6,983
---------- ----------
Total Assets: $4,531,931 $3,500,143
---------- ----------
---------- ----------
</TABLE>
(Continued over page)
1
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AMERALIA INC
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31 June 30
1998 1998
------------- ----------
<S> <C> <C>
LIABILITIES & SHAREHOLDERS' FUNDS
Current liabilities:
Accounts payable $ 142,383 $ 163,910
Royalties payable 241,667 204,167
Due to related parties 58,326 35,354
Notes payable - current portion 195,610 415,594
Interest payable 860 430
----------- ------------
Total Liabilities $ 638,846 $ 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 @ Dec 31, 1998: 6,332,116 and @ June 30, 1998: 5,317,551: 63,321 53,176
Additional paid in capital 13,941,482 12,151,930
Accumulated deficit (10,111,867) (9,524,545)
------------ ------------
Total Shareholders' Funds: $ 3,893,085 $ 2,680,688
------------ ------------
Total Liabilities & Shareholders' Equity: $ 4,531,931 $ 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 Half yr Half yr Stage on
ending ending ending ending Jul 1, 1992 to
Dec 31 Dec 31 Dec 31 Dec 31 Dec 31
1998 1997 1998 1997 1998
---------- ---------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C>
REVENUES $ -- $ -- $ -- $ -- $ --
EXPENSES
General & administrative 294,870 206,309 454,554 310,467 4,609,874
Depreciation & amortization 1,089 2,155 3,246 4,309 64,160
---------- ---------- ---------- --------- ------------
Total Expenses: $295,959 $208,464 $457,800 $314,776 4,674,034
---------- ---------- ---------- --------- ------------
(LOSS) FROM OPERATIONS ($295,959) ($208,464) ($457,800) ($314,776) ($4,674,034)
---------- ---------- ---------- --------- ------------
OTHER INCOME (EXPENSE)
Other income -- -- -- -- 29
Investment income -- -- -- -- 89,760
Interest income 1,133 -- 8,107 -- 250,871
Interest expense (4,666) (9,818) (13,268) (21,785) (631,797)
Foreign currency gain (loss) 10,192 -- 10,204 33 (53,382)
---------- ---------- ---------- --------- ------------
Total other income (expense) 6,659 (9,818) 5,043 (21,752) (344,519)
---------- ---------- ---------- --------- ------------
NET LOSS BEFORE
INCOME TAX EXPENSE ($289,300) ($218,282) ($452,757) ($336,528) ($5,018,553)
---------- ---------- ---------- --------- ------------
Income tax expense -- -- -- -- --
---------- ---------- ---------- --------- ------------
NET LOSS ($289,300) ($218,282) ($452,757) ($336,528) ($5,018,553)
---------- ---------- ---------- --------- ------------
BASIC NET LOSS PER SHARE ($0.049) ($0.057) ($0.078) ($0.089)
DILUTED NET LOSS PER SHARE ($0.034) ($0.034) ($0.057) ($0.052)
WEIGHTED AVERAGE
SHARES OUTSTANDING ('000) 5,947 3,822 5,825 3,800
FULLY DILUTED AVERAGE
SHARES OUTSTANDING ('000) 8,580 6,443 7,970 6,443
</TABLE>
3
<PAGE>
AMERALIA INC
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
From the
Beginning of
Development
Half yr Half yr Stage on
ending ending Jul 1, 1992 to
Dec 31 Dec 31 Dec 31
1998 1997 1998
---------- ---------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss ($452,757) ($336,528) ($5,018,553)
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 (10,204) -- (178,746)
Depreciation 3,246 4,309 73,738
(Increase) decrease in:
Accounts & interest receivable -- (5,000) 665
Notes receivable -- -- 1,300,497
Related parties receivables (2,886) (1,421) (20,560)
Prepaid expenses (78,150) -- (60,150)
Increase (decrease) in:
Bank overdraft -- -- 4,586
Accounts payable (21,527) (5,593) 76,713
Royalties payable 37,500 37,500 241,667
Due to related parties 22,972 118,134 (13,643)
Interest payable 430 12,945 (118,206)
--------- --------- -----------
Net cash used in operating activities (501,376) (175,654) (3,022,194)
CASH FLOWS FROM INVESTING ACTIVITIES
Lease exploration & development expenditure (135,000) (7,254) (2,057,890)
Purchase of property & equipment (10,828) -- (76,096)
Cash received from notes receivable -- -- (144,853)
--------- --------- -----------
Cash flows from investing activities (145,828) (7,254) (2,278,839)
</TABLE>
4
<PAGE>
AMERALIA INC
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
From the
Beginning of
Development
Half yr Half yr Stage on
ending ending Jul 1, 1992 to
Dec 31 Dec 31 Dec 31
1998 1997 1998
---------- ---------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Cash received from issuance of stock $1,068,216 $240,000 $5,785,812
Additional capital contributed -- -- 307,372
Cash received from notes -- 6,838 559,005
Payments on notes (2,193) -- (225,376)
Loans to employees (25,000) -- (25,000)
---------- -------- ----------
Cash flows from financing activities 1,041,023 246,838 6,401,813
NET INCREASE (DECREASE) IN CASH 393,819 63,930 1,100,780
Cash and cash equivalents at beginning of period 707,199 2,088 238
---------- -------- ----------
Cash and cash equivalents at end of period $1,101,018 $ 66,018 $1,101,018
---------- -------- ----------
---------- -------- ----------
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
Income taxes $ -- $ -- $ --
Interest $ 12,838 $ 8,840 $ 274,552
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 $ 134,565 $193,421 $1,070,163
</TABLE>
5
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AMERALIA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
As at December 31 and June 30, 1998 and
for the Periods ended December 31, 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 AmerAlia's June 30,
1998 Annual Report on Form 10-K. The results of operations for the periods
ended December 31, 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 AmerAlia's management,
necessary for a fair presentation of the results of the interim periods
covered by this report.
6
<PAGE>
AMERALIA, INC.
(A DEVELOPMENT STAGE COMPANY)
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 $2.7 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 borrowed $180,000 from an Australian
bank, in conjunction with the receipt of the Rural Investment Trust units in
exchange for a stock subscription (see Item 2. below). It accrued $22,972 in
additional liabilities to related parties for unpaid compensation. Funds were
applied to meeting the operating loss for the quarter, $135,000 was paid to
an engineering contractor for design of the company's proposed processing
plant, $78,150 was used for prepayments and $10,828 to acquire new computers
and software. A further $25,000 was advanced to an employee in connection
with his employment. Cash and cash equivalents at the end of the period were
approximately $1,101,000.
7
<PAGE>
RESULTS OF OPERATIONS
The Company's net loss for the quarter was $289,300 compared with
$218,282 for the same period of the previous year. For the half year the
loss was $452,757 compared with $336,528 for the prior period. The increase
is due to higher staffing costs which 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. During the
quarter the company 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 $10,192 during the 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 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 December 31, 1998 71,165 shares of common stock were issued in lieu
of $71,165 of dividends on Series E Preferred Stock.
The THG Partnership, an affiliate, exercised an option on October 18,
1998 to exchange 1,059,459 units in The Rural Investment Trust valued at
$381,405 for 450 shares of Series E Preferred Stock. A description of the
option and the terms of the statement of preferences defining the Series E
Preferred Stock and including the terms of conversion are set out in the
company's filing on Form 10-K.
On December 30, 1998 the Jacqueline Badger Mars Trust, an affiliate,
subscribed $1,050,000 for 140 units which consist 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 price
increases to a maximum of $6.00 per share over the exercise period which
expires April 1, 2001.
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.
8
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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 thereunto duly authorized.
AMERALIA, INC.
February 11, 1999 By: /s/ Robert van Mourik
-----------------------
Robert van Mourik
Executive Vice President, Chief
Financial Officer and principal
financial and accounting officer.
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 1,101,018
<SECURITIES> 0
<RECEIVABLES> 98,710
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,199,728
<PP&E> 77,869
<DEPRECIATION> 63,304
<TOTAL-ASSETS> 4,531,931
<CURRENT-LIABILITIES> 638,846
<BONDS> 0
63,321
149
<COMMON> 0
<OTHER-SE> 3,829,615
<TOTAL-LIABILITY-AND-EQUITY> 4,531,931
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 439,489
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,268
<INCOME-PRETAX> (452,757)
<INCOME-TAX> 0
<INCOME-CONTINUING> (452,757)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (452,757)
<EPS-PRIMARY> (0.078)
<EPS-DILUTED> (0.057)
</TABLE>
