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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, 2000
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
--------------------------------
(Company's telephone number, including area code)
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, 2000 was 11,857,290. Shares of preference stock, $0.05 par value,
outstanding as of November 1, 2000 was 82.
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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, 2000
and June 30, 2000 1
Statements of Operations for the Quarters
ending September 30, 2000 & 1999 and from
the Beginning of Development Stage on
July 1, 1992 to September 30, 2000 3
Statements of Cash Flows for the Quarters
ending September 30, 2000 & 1999 and from
the Beginning of Development Stage on
July 1, 1992 to September 30, 2000 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 9
SIGNATURE 9
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AMERALIA INC
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
<TABLE>
<CAPTION>
Sept 30 June 30
2000 2000
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<S> <C> <C>
CURRENT ASSETS
Cash $ 297,332 $ 4,980
Related party receivables 59,122 57,071
Prepaid expenses 104,167 30,152
Interest receivable 2,713 2,713
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Total Current Assets 463,334 94,916
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FIXED ASSETS 24,684 24,524
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OTHER ASSETS
Lease acquisition and exploration costs 3,565,267 3,565,267
Plant construction in progress 7,644,642 6,994,642
Deferred financing costs 871,523 392,020
Note receivable - related party 20,000 20,000
Deposits 650 650
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Total Other Assets 12,102,082 10,972,579
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TOTAL ASSETS $12,590,100 $11,092,019
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</TABLE>
(Continued over page)
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AMERALIA INC
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
<TABLE>
<CAPTION>
Sept 30 June 30
2000 2000
------------ ------------
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 433,094 $ 727,812
Royalties payable 372,917 354,167
Bank overdraft -- 38,356
Guarantee fees payable 1,098,900 520,000
Accrued expenses 161,632 91,862
Due to related parties 83,812 131,762
Notes payable 7,625,583 5,504,000
Interest payable 15,962 110,815
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Total Current Liabilities 9,791,900 7,478,774
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COMMITMENTS AND CONTINGENCIES -- --
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STOCKHOLDERS' EQUITY
Preferred stock, $.05 par value; 1,000,000 authorised;
2,986 and 2,986 issued and outstanding; respectively 149 149
Common stock, $.01 par value; 100,000,000 shares
authorised; 8,765,699 and 8,765,699 issued and
outstanding respectively 87,657 87,657
Additional paid in capital 19,068,338 19,068,338
Prepaid construction costs (1,300,000) (1,300,000)
Accumulated deficit (15,057,943) (14,242,899)
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Total Stockholders' Equity 2,798,200 3,613,245
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 12,590,100 $ 11,092,019
============ ============
</TABLE>
2
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AMERALIA INC
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
From the
Beginning of
Development Stage
on July 1, 1992
Quarter ending Quarter ending to Sept 30,
Sept 30, 2000 Sept 30, 1999 2000
--------------- --------------- ---------------
<S> <C> <C> <C>
REVENUES $ -- $ -- $ --
EXPENSES
General & administrative 583,621 585,973 8,173,450
Depreciation & amortisation 3,500 2,663 84,695
--------------- --------------- ---------------
Total Expenses 587,121 588,636 8,258,145
--------------- --------------- ---------------
LOSS FROM OPERATIONS (587,121) (588,636) (8,258,145)
OTHER INCOME (EXPENSE)
Other income -- -- 29
Investment income -- -- 89,760
Other financing costs -- -- (435,502)
Gain on settlement of debt -- -- 53,800
Interest income 4,823 14,803 324,230
Interest expense (158,099) (14,698) (1,152,628)
Foreign currency gain (loss) -- -- (63,572)
--------------- --------------- ---------------
Total Other Income (Expense) (153,276) 105 (1,183,937)
--------------- --------------- ---------------
NET LOSS BEFORE INCOME TAX EXPENSE (740,397) (588,531) (9,442,082)
--------------- --------------- ---------------
Income tax expense -- -- --
NET LOSS $ (740,397) $ (588,531) $ (9,442,082)
--------------- --------------- ---------------
BASIC NET LOSS PER SHARE $ (0.084) $ (0.073)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING (`000) 8,766 8,047
</TABLE>
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AMERALIA INC
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
From the
Beginning of
Development Stage
on July 1, 1992
Quarter ending Quarter ending to Sept 30,
Sept 30, 2000 Sept 30, 1999 2000
--------------- --------------- ---------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (740,397) $ (588,531) $ (9,442,082)
Adjustments to reconcile net loss to net cash
(Used) in operating activities:
Bad debt -- -- 624,798
Stock issued for services rendered -- -- 65,000
Depreciation 3,500 2,663 94,273
Exchange (gain) loss -- -- (168,556)
(Increase) decrease in:
Restricted cash -- (3,223,388) --
Accounts and interest receivable -- (437) (2,048)
Deposits -- -- (650)
Notes receivable -- -- 1,300,497
Related parties receivables (2,051) (42,500) (59,122)
Prepaid expenses (74,015) (49,250) (86,167)
Other assets (479,503) (60,500) (811,523)
Increase (decrease) in:
Bank overdraft (38,356) (5,702) --
Accounts and royalties payable (275,968) 54,948 743,407
Accrued expenses (4,878) (7,078) 18,601
Due to related parties (47,950) 13,604 2,510
Interest payable (94,853) 14,652 (103,104)
Guarantee fees payable 578,900 -- 1,098,900
--------------- --------------- ---------------
Net Cash (Used) in Operating Activities (1,175,571) (3,891,519) (6,725,266)
--------------- --------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES
Lease exploration & development expenditure -- -- (2,719,870)
Plant construction in progress (650,000) (988,686) (7,644,642)
Purchase of property & equipment (3,660) (2,861) (106,736)
Liquidation of RIT investment -- -- 418,346
Cash paid on note receivable related -- -- (25,000)
Cash received from noted receivable -- -- (139,853)
--------------- --------------- ---------------
Net Cash (Used) in Investing Activities (653,660) (991,547) (10,217,755)
--------------- --------------- ---------------
</TABLE>
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AMERALIA INC
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS (CONTINUED)
<TABLE>
<CAPTION>
From the
Beginning of
Development Stage
on July 1, 1992
Quarter ending Quarter ending to Sept 30,
Sept 30, 2000 Sept 30, 1999 2000
--------------- --------------- ----------------
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Cash received from issuance of stock -- 625,000 9,166,596
Additional capital contributed -- -- 307,372
Cash received from notes 2,121,583 4,200,000 8,378,805
Cash payments on notes payable -- -- (612,658)
--------------- --------------- ---------------
Net Cash provided from Financing Activities 2,121,583 4,825,000 17,240,115
--------------- --------------- ---------------
NET INCREASE (DECREASE) IN CASH 292,352 (58,066) 297,094
Cash and cash equivalents at beginning of period 4,980 312,104 238
--------------- --------------- ---------------
Cash and cash equivalents at end of period $ 297,332 $ 254,038 $ 297,332
--------------- --------------- ---------------
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
Income taxes $ -- $ -- $ --
Interest $ -- $ -- $ 279,373
NON CASH FINANCING ACTIVITIES
Common stock issued for payment of obligations $ -- $ -- $ 668,781
Common stock issued for services rendered $ -- $ -- $ 65,000
Payment of preferred stock dividends through
the issuance of additional common and
preferred stock $ -- $ -- $ 1,443,413
Common stock issued as prepaid construction costs $ -- $ -- $ 1,300,000
</TABLE>
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AMERALIA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTE TO FINANCIAL STATEMENTS
As at September 30, 1999 and June 30, 1999
and for the Periods ended September 30, 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 the Registrant's June 30, 2000 Annual Report on Form
10-K. The results of operations for the periods ended September 30, 2000 and
1999 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 Company, necessary
for a fair presentation of the results of the interim periods covered by this
report.
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AMERALIA, INC.
(A DEVELOPMENT STAGE COMPANY)
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
AmerAlia's future conduct depends on a number of factors beyond our
control, so we cannot offer any assurance we will be able to conduct AmerAlia's
operations as we contemplate in this report. This report contains various
statements using the terms "may", "expects to", and other terms denoting future
possibilities. They are forward-looking statements. We cannot guarantee the
accuracy of these statements as they are subject to a variety of risks beyond
AmerAlia's ability to predict or control. These risks may 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 the described
operations, reserves, exploration or production activities will not be completed
on economic terms. Undertaking exploration, development and mining of mineral
properties, significant construction projects, and the manufacture and marketing
of chemical products is risky. Many of these risks are described in the
Company's filing on Form 10-K for the fiscal year ended June 30, 2000 and it is
important that each person reviewing this report understands the significant
risks accompanying 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 to finance its operations. During the September
quarter, AmerAlia borrowed a further $2,121,583 from a commercial bank,
increasing the total borrowing from this bank to $7,321,583. This loan is
guaranteed by AmerAlia's principal shareholder as explained in our current
filing on Form 10K at Item 13(a) - "Certain Relationships and Related Party
Transactions". In September, as set forth in the Form 10-K, we renegotiated and
extended the term of the total borrowing with the bank and a new guarantee fee
payable to the Mars Trust. The total guarantee fee payable has now increased to
$1,098,900 and will be met through the issue of a number of shares to be
determined by future events. A full discussion of the nature of this fee and the
provision for its payment is set forth in our Annual Report on Form 10-K as
referenced above.
We used the funds to reduce net accounts and royalties payable by $275,968
and to fund further investment of $650,000 on plant and facilities preparatory
to commencing on site construction. We repaid the bank overdraft of $38,836 and
reduced liabilities to related parties by $47,950. We reduced net outstanding
interest payable to the bank by $94,853 and we applied $82,000 to prepayments.
We also funded the cash operating loss for the period.
Subsequent to September 30, we have continued to use our cash to operate
the company and advance its objectives to secure funding. We are engaged in
negotiations to secure additional funding, yet have not finalised further
funding at the time. We have nearly depleted our cash and have significant aged
accounts payable. In October, 1999 we borrowed $300,000 from a shareholder as
reported in our Form 10-K. This unsecured note, due October 29, 2000, has not
been repaid as of the date of this report.
7
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Our cash flow estimates indicate that more than $2.5 million will be
required to meet our obligations through the balance of the current calendar
year, and significantly more financing would be required for AmerAlia to
commence any further activities on its Rock School lease. 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 constructing the proposed plant and
securing financing for its construction, estimated to be up to $50 million.
AmerAlia reached an agreement with US Filter to provide construction financing,
but US Filter's agreement remains subject to numerous conditions and US Filter
has not yet advanced any funds pursuant to that agreement. We have complied with
our obligation to provide $6.4 million to initiate the design and construction
activities. We are negotiating with prospective investors and financiers to
achieve this financing objective, although there can be no assurance we will be
able to complete this financing.
AmerAlia does not favor issuing its equity at the current low price of its
common stock, but may be required to do so. Any equity issued at current prices
of less than $1.00 per share will significantly dilute our existing
shareholders. Until AmerAlia obtains permanent financing for its plant
construction, it is not likely that AmerAlia will be able to obtain any debt
financing without one or more of its shareholders agreeing to be personally
responsible for AmerAlia's obligations, as has been the case with the Mars
Trust's guaranty of AmerAlia's existing obligations to the Bank of America in an
approximate amount of $7,300,000. Although AmerAlia is discussing further
financing along similar lines to enable AmerAlia to meet its near-term
obligations and anticipated operational expenses through the end of the current
calendar year, there can be no assurance that AmerAlia will be able to obtain
any such financing.
We will be unable to advance the construction of the Rock School Project
much further without adequate long-term financing. In the meantime, it is our
goal to maintain the Rock School Project in a "ready" status. Until the Rock
School Project has been constructed and has commenced operations, we will not
have any product for sale and will not receive operating revenues and we will
continue to be dependent on equity placements to accredited investors and
short-term debt financing as in the past. We will continue to engage in
appropriate cash management techniques.
A potential source of equity capital is through the exercise of our
outstanding common stock purchase warrants and options. A total of 1,727,000
options is currently outstanding. The outstanding options, if exercised in whole
or part, would result in additional capital for AmerAlia. The option exercise
prices range from $1.00 to $6.00.
Results of Operations
Since AmerAlia does not receive revenues from operations, any income it
receives is generally derived from interest earned on funds on deposit resulting
from stock subscriptions. Interest income during the September quarter was
$4,823 (September 1999: $14,803).
General and administrative expenditures were higher this quarter ($583,621)
to last year ($585,973). Interest expense for the quarter was considerably
higher ($158,099; September 1999: $14,698) due to the increased debt.
Consequently, the September quarter's net loss of $740,397 exceeded that of the
same period last year ($588,531). As discussed above, the company has incurred a
liability for guarantee fees paid to establish debt facilities. Whilst these
guarantee fees
8
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will be satisfied through the issue of shares in the future, the cost of these
fees is amortised over the period of the debt. This non-cash amortisation
expense in the September quarter was $144,400. Depreciation expense was $3,500,
last year $2,663.
Until AmerAlia achieves its objective of establishing a plant for the
recovery and production of sodium bicarbonate, it will not be able to generate
operating revenues. Whilst we are progressing negotiations with various
prospective investors and financiers, we have not reached any definitive
agreements to enable us to build our proposed facilities. We estimate more than
$50 million will be required to fund construction and the associated working
capital requirements until profitable operations are established. There is no
assurance that AmerAlia can obtain this financing and, in the meantime, we must
fund our operating losses from our own resources as discussed above.
Impact of Inflation
We believe the Company's activities are not materially affected by
inflation.
PART II: OTHER INFORMATION
Item 2: Changes in Securities
There were no changes in securities during the quarter ended September 30,
2000. Subsequently, 149,300 shares of common stock were issued in lieu of
dividends payable on the Series E Preferred Stock. Under the statement of
preferences governing the Series E Preferred Stock, the rights of the preferred
stockholders to convert their shares into common stock expired October 31, 2000.
Holders of 2,904 shares of preferred stock exercised their conversion rights
during October; 82 shares of preferred stock remain. During October, 22,291
shares of common stock were issued in satisfaction of fees payable of $45,000 in
connection with the Company's financing efforts and 16,000 shares of common
stock were granted to an officer of the company as a stock bonus. As
foreshadowed in the Company's annual report on Form 10-K, officers and directors
accepted offers of options during October to acquire 400,000 shares of common
stock at $1.09 per share until April 30, 2005.
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 13, 2000 By: /s/ Robert van Mourik
---------------------
Robert van Mourik
Executive Vice President, Chief
Financial Officer and principal
financial and accounting officer.
9
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<S> <C>
27 Financial Data Schedule
</TABLE>
