<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED October 31, 1999
OR
[] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD OF _________ TO
_________.
COMMISSION FILE NUMBER: 0-15859
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RICH COAST INC.
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(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
NEVADA 91-1835978
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10200 FORD ROAD, DEARBORN, MICHIGAN 48126
(Address of principal executive offices)
313-582-8866
(Issuer's telephone number)
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the 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 [ ]
The number of shares outstanding of the issuer's classes of common equity, as of
October 31, 1999 is 6,614,889 shares of Common Stock.
Transitional Small Business Disclosure Format (check one): Yes[ ] No [X]
<PAGE>
PART I-FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RICH COAST, INC.
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1999
(UNAUDITED-SEE NOTICE TO READER)
RICH COAST, INC.
CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1999
(UNAUDITED - PREPARED BY MANAGEMENT)
(UNITED STATES DOLLARS)
INDEX
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS 1
Consolidated Statements of Operations 2
Consolidated Statements of Cash Flows 3
Notes to Consolidated Financial Statements 4
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<TABLE>
<CAPTION>
Rich Coast Inc.
Consolidated Balance Sheets
(Unaudited- Prepared by Management)
(United States Dollars)
- --------------------------------------------------------------------------------
October 31 April 30
1999 1999
- --------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current
Cash $ 28,538 $ 0
Accounts Receivable,net 662,753 491,418
Prepaid expenses 1,200 0
- --------------------------------------------------------------------------------
692,491 491,418
Distillation Unit 2,024,706 2,024,706
Property and Equipment, net 3,165,879 3,354,493
Patent and Technology, net 20,031 21,914
Deferred Finance Charges and Deposits 185,089 226,320
- --------------------------------------------------------------------------------
$ 6,088,196 $ 6,118,851
================================================================================
Liabilities
Current
Bank Overdraft $ 0 $ 5,682
Accounts payable and accrued liabilities 1,470,936 849,960
Accrued oil and waste treatment costs 246,031 257,635
Current portion of long-term debt 150,585 100,733
- --------------------------------------------------------------------------------
1,867,552 1,214,010
Long-Term Debt 3,571,273 3,670,339
- --------------------------------------------------------------------------------
5,438,825 4,884,349
Stockholders' Equity
Common stock, $0.001 par value;
100,000,000 shares authorized,
6,614,889 and 6,066,318 shares issued
and outstanding at October 31, 1999
and April 30, 1999 respectively
17,414 16,865
Additional paid-in capital 24,152,122 24,043,106
Accumulated deficit (23,520,165) (22,825,469)
- --------------------------------------------------------------------------------
649,371 1,234,502
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$ 6,088,196 $ 6,118,851
================================================================================
</TABLE>
See notes to consolidated financial statements
1
<PAGE>
RICH COAST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED - PREPARED BY MANAGEMENT)
(UNITED STATES DOLLARS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Three Months Six Months
Ended October 31, Ended October 31,
1999 1998 1999 1998
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<S> <C> <C> <C> <C>
Sales $ 715,371 $ 534,537 $ 1,319,020 $ 1,140,028
Cost of Sales
(exclusive of
depreciation) 335,931 315,341 603,891 627,921
- --------------------------------------------------------------------------------
Gross Profit 379,440 219,196 715,129 512,107
Expenses
Interest-beneficial
conversion feature 0 77,654 0 655,307
Salaries and wages 245,699 234,236 526,587 471,251
Interest 81,899 88,612 136,589 193,304
Lawsuit Settlement 100,000 0 150,000 0
Office and General 31,278 20,957 31,411 55,658
Consulting and
financing fee 20,380 20,258 35,413 164,228
Audit,accounting
and legal 21,264 63,829 64,731 114,523
Travel 12,077 39,319 32,939 91,537
Pipeline Staking fee 0 0 16,905 0
Property Taxes 26,250 19,137 95,677 61,100
Insurance 15,826 18,035 28,818 48,663
Utilities 19,374 19,026 46,114 37,669
Telephone and
facsimile 7,961 18,979 20,007 28,727
Advertising and
shareholder relations 1,538 92,378 1,538 97,147
Bad Debts 8,756 0 9,941 0
Depreciation 113,834 68,487 213,155 137,465
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706,136 780,907 1,409,825 2,156,579
- --------------------------------------------------------------------------------
Loss Before
Other Items (326,696) (561,711) (694,696) (1,644,472)
Other Items
Gain on fire 0 89,343 0 89,343
Accrued oil and
waste treatment cost
reversal 0 285,588 0 285,588
- --------------------------------------------------------------------------------
0 374,931 0 374,931
- --------------------------------------------------------------------------------
Loss for Period $ (326,696) $ (186,780) $ (694,696) $(1,269,541)
================================================================================
Loss Per share before
Other Items $ (0.05) $ (0.11) $ (0.11) $ (0.34)
Gain Per Share on
Other Items (0.00) 0.07 (0.00) 0.07
- --------------------------------------------------------------------------------
Loss Per Share $ (0.05) $ (0.04) $ (0.11) $ (0.27)
================================================================================
Weighted Average
Number of Shares
Outstanding 6,442,886 4,891,791 6,337,482 4,792,112
================================================================================
See notes to consolidated financial statements
</TABLE>
2
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RICH COAST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED - PREPARED BY MANAGEMENT)
(UNITED STATES DOLLARS)
<TABLE>
<CAPTION>
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Six Months
Ended October 31,
1999 1998
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<S> <C> <C>
Net Cash Provided by (used in)
Operating Activities $ 28,048 $ (396,705)
Investing Activities
Capital asset additions (22,656) (744,324)
Deferred finance charge (26,237) (184,629)
- --------------------------------------------------------------------------------
(48,893) (928,953)
Financing Activities
Issue of Capital Stock for
Suit settlement 50,000 0
Issue of Capital stock for cash 0 156,729
Proceeds from Convertible
Debenture 0 1,500,000
Repayment of long-term debt (54,500) (83,332)
Issue of Capital Stock for
Convertible Debenture 59,565 0
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55,065 1,573,397
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Increase (Decrease) in Cash 34,220 247,739
Cash, (Bank Overdraft)
Beginning of Period (5,682) 53,043
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Cash, End of Period $ 28,538 $ 300,782
================================================================================
</TABLE>
See notes to consolidated financial statements
3
<PAGE>
RICH COAST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1999 AND APRIL 30, 1999
(UNAUDITED - PREPARED BY MANAGEMENT)
(UNITED STATES DOLLARS)
- --------------------------------------------------------------------------------
1. BASIS OF PRESENTATION
These unaudited consolidated financial statements have been prepared in
accordance with generally accepted accounting principles in the United
States for interim financial information. These financial statements
are condensed and do not include all disclosures required for annual
financial statements. 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 audited consolidated financial
statements filed as part of the Company's April 30, 1999 Form 10-KSB.
In the opinion of the Company's management, these financial statements
reflect all adjustments necessary to present fairly the Company's
consolidated financial position at October 31, 1999 and April 30, 1999
and the consolidated results of operations and the consolidated
statement of cash flows for the six months ended October 31, 1999 and
October 31, 1998.
2. CAPITAL STOCK
(a) Authorized 100,000,000 common shares of $0.001 par value
(b) Issued during the period:
<TABLE>
<CAPTION>
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NUMBER PRICE PER
OF SHARES SHARE($) AMOUNT
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<S> <C> <C> <C>
Six months ended OCTOBER 31, 1998
Shares issued
For cash - options 167,750 $ 0.86 $144,755
Interest on notes 33,349 $ 1.27 42,176
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201,099 $186,931
======================================================================
Six months ended October 31,1999
Shares issued
Lawsuit settlement 250,000 $ 0.20 $ 50,000
Convertible Debenture 298,571 $ 0.1995 59,565
(principal and
accrued interest)
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548,571 109,565
======================================================================
</TABLE>
4
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following information should be read in conjunction with unaudited
consolidated financial statements included herein which are prepared in
accordance with generally accepted accounting principles ("GAAP") in the United
States for interim financial information.
Results of Operation
Revenues for Rich Coast's second quarter are $715,371 compared to the first
quarter revenues $603,649. Previous second quarter revenues were $534,537.
Improving profit margins on recycling services and a reduction in costs of
transportation offset a $100,000 non-recurring final settlement of a suit with
Mobil Oil Corporation and provided for a reduction in second quarter losses to
$326,696 from first quarter losses of $368,000. Further operating cost
reductions will be realized when the Company's Ford Road facility is sold and
operations are consolidated at Rich Coast's Wyoming Avenue terminal site. An
offer to purchase the Ford Road facility was accepted on September 9, 1999 with
180 days allowed for environmental studies necessary to financing and completion
of the sales.
Rich Coast's plan to redirect its efforts toward installation of its proprietary
waste treatment systems at slaughterhouse and pulp-paper companies is proceeding
as planned. The Company's installation at Murco, Inc., a slaughterhouse
operation in Plainwell, Michigan that is owned by Packerland Packing in Green
Bay, Wisconsin has been operated successfully and is now temporarily shut down
awaiting Rich Coast initiated improvements in upstream processing equipment
which must be completed for full production operations to resume. Revenues from
the installation are expected in Rich Coast's third quarter beginning November
1, 1999. Most important is the fact that Packerland executives are pleased with
results and have authorized Rich Coast engineers to propose waste treatment and
waste recovery systems at two other locations.
In the pulp-paper industry contract negotiations are still in progress on an
installation that has been proposed at a large plant located in Michigan.
Two additional industries that Rich Coast has explored are the chemical and
textile industries. Both industries have serious environmental and cost
problems in treatment of waste streams that can be significantly minimized using
Rich Coast's proprietary systems. Demonstrations are now being planned
utilizing laboratory techniques that have been extremely effective.
Changes in Financial Condition
The Company's business focus continues its shift toward waste treatment
operations at the waste generator's plant. The company believes this transition
will occur over the next two years. The increased revenues from traditional
operations continue to increase due to market demand. Also, the Company's cost
of sales for the six month period totaled $603,891, compared to $627,921 for the
same six month period last year. This represents a 4% decrease in cost of sales,
while revenues for the comparable periods increased 15%.
Part II Other Information
Item 1. Legal proceedings
On or about December 29, 1997 the Company was served with a complaint filed
Michigan by Mobil Oil Corporation. The complaint alleges breach of contract by
the Company in connection with a Terminating Agreement dated May 18, 1995
relating to through-put fees at Mobil's Woodhaven, Michigan facility. The
dispute under the Terminalling Agreement will not affect the Company's purchase
of the Mobil terminal, which occurred January 15, 1996, and should not be
confused with the Mobil terminal. The complaint was settled on October 1, 1999
by a Rich Coast payment to Mobil Oil Corporation of $100,000.
<PAGE>
On December 30, 1997 an unrelated complaint was filed against the Company and
two of its directors personally in US District Court for the Eastern District of
Michigan by Comer Holdings Ltd., an Irish corporation ("Comer"), in which Comer
claims, among other things, breach of contract relating to alleged loan made to
the Company in 1994. The Company settled the suit by granting Comer 250,000
shares of common stock an committing to a $3,125 payment on December 1, 1999
with five additional payments of $9,375 at three month intervals commencing
March 1, 2000.
Item 2. Changes in Securities
Rich Coast completed a private placement on November 8, 1999 for aggregate gross
proceeds of $350,000 to Frippoma, S.A., a Swiss entity and an accredited
investor, in a transaction exempt under Regulation S and Rule 506 of Regulation
D of the Securities Act of 1933. Frippoma, S.A. received 1,750,000 shares of
the Company's common stock at $0.20 per share. No commissions were paid on the
transaction.
Forward-Looking Statements
The following cautionary statements are made pursuant to the Private Securities
Litigation Reform Act of 1995 in order for Rich Coast to avail itself of the
"safe harbor" provisions of that Act. Discussions and information in this
document, which are not historical facts, should be considered forward-looking
statements. With regard to forward-looking statements, including those regarding
the potential revenues from the commercialization of Rich Coast proprietary
systems, the expected installations at slaughterhouses, the expected increase in
revenue, and the business prospects or any other aspect of Rich Coast, be
advised that actual results and business performance may differ materially from
that projected or estimated in such forward-looking statements. Rich Coast has
attempted to identify in this document certain of the factors that it currently
believes may cause actual future experience and results to differ from its
current expectations. Differences may be caused by a variety of factors,
including but not limited to, adverse economic conditions, entry of new and
stronger competitors, inadequate capital and the inability to obtain funding
from third parties.
<PAGE>
PART II-OTHER INFORMATION
ITEM 6 EXHIBITS
(a) Exhibit 3(i)- Articles of Incorporation. 1
Exhibit 3(ii)-Bylaws. 1
Exhibit 27.1-Financial Data Schedule. Filed herewith.
(b) No reports on Form 8-K were filed during the quarter ended 10/31/99.
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1 Incorporated by reference from Registrant Statement on Form S-3, File No.
333-63289, filed with the SEC on September 11, 1998.
<PAGE>
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 thereunto duly authorized.
RICH COAST INC.
Date: December 17, 1999 by: /s/ James P. Fagan
-------------------------------
James P. Fagan, President
Date: December 17, 1999 by: /s/ Michael M. Grujicich
-------------------------------
Michael M. Grujicich,
Chief Financial and Accounting
Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-2000
<PERIOD-START> MAY-01-1999
<PERIOD-END> OCT-31-1999
<CASH> 28,538
<SECURITIES> 0
<RECEIVABLES> 662,753
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 692,491
<PP&E> 6,821,010
<DEPRECIATION> (1,630,425)
<TOTAL-ASSETS> 6,088,196
<CURRENT-LIABILITIES> 1,867,552
<BONDS> 3,571,273
0
0
<COMMON> 24,169,536
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 6,088,196
<SALES> 0
<TOTAL-REVENUES> 1,319,020
<CGS> 0
<TOTAL-COSTS> 603,891
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 136,589
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (694,696)
<EPS-BASIC> (.11)
<EPS-DILUTED> (.11)
</TABLE>
