<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 JULY 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.
---------------
(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
July 31, 1999 is 6,316,318 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
JULY 31, 1999
(UNAUDITED-SEE NOTICE TO READER)
RICH COAST, INC.
CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 1999
(UNAUDITED - PREPARED BY MANAGEMENT)
(UNITED STATES DOLLARS)
INDEX
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CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS 1
Consolidated Statements of Operations 2
Consolidated Statements of Cash Flows 3
Notes to Consolidated Financial Statements 4
<PAGE>
RICH COAST, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED - PREPARED BY MANAGEMENT)
(UNITED STATES DOLLARS)
<TABLE>
<CAPTION>
======================================================================================================================
JULY 31 APRIL 30
1999 1999
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT
Accounts receivable $539,482 $491,418
Prepaid expenses 1,400 0
- ----------------------------------------------------------------------------------------------------------------------
540,882 491,418
DISTILLATION UNIT 2,024,706 2,024,706
PROPERTY AND EQUIPMENT, net 3,257,634 3,354,493
PATENT AND TECHNOLOGY, net 20,972 21,914
DEFERRED FINANCE CHARGES AND DEPOSITS 200,943 226,320
- ----------------------------------------------------------------------------------------------------------------------
$6,045,137 $6,118,851
======================================================================================================================
LIABILITIES
CURRENT
Bank overdraft $3,362 $5,682
Accounts payable and accrued liabilities 1,089,709 849,960
Accrued oil and waste treatment costs 264,492 257,635
Current portion of long-term debt 100,733 100,733
- ----------------------------------------------------------------------------------------------------------------------
1,458,296 1,214,010
LONG-TERM DEBT 3,670,339 3,670,339
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5,128,635 4,884,349
- ----------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value;
100,000,000 shares authorized, 6,316,318 and 6,066,318 17,115 16,865
shares issued and outstanding at July 31, 1999
and April 30, 1999, respectively
Additional paid-in capital 24,092,856 24,043,106
Accumulated deficit (23,193,469) (22,825,469)
- ----------------------------------------------------------------------------------------------------------------------
916,502 1,234,502
- ----------------------------------------------------------------------------------------------------------------------
$6,045,137 $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
ENDED JULY 31,
1999 1998
<S> <C> <C>
SALES $ 603,649 $ 605,491
COST OF SALES (exclusive of depreciation) 267,960 312,580
GROSS PROFIT 335,689 292,911
EXPENSES
Salaries and wages 280,888 237,015
Property taxes 69,427 41,963
Interest 54,690 104,692
Lawsuit settlement 50,000 0
Audit, accounting and legal 43,467 50,694
Utilities 26,740 18,643
Travel 20,862 52,218
Pipeline staking fees 16,905 0
Consulting and financing fees 15,033 143,970
Insurance 12,992 30,628
Telephone and facsimile 12,046 9,748
Bad debts 1,185 0
Office and general 133 32,013
Repairs and maintenance 0 4,765
Shareholder relations 0 2,692
Depreciation 99,321 68,978
- --------------------------------------------------------------------------------
703,689 798,019
- --------------------------------------------------------------------------------
LOSS FOR PERIOD $ (368,000) $ (505,108)
================================================================================
LOSS PER SHARE $ (0.06) $ (0.11)
================================================================================
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 6,300,734 4,749,788
================================================================================
</TABLE>
See notes to consolidated financial statements
2
<PAGE>
RICH COAST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED - PREPARED BY MANAGEMENT)
(UNITED STATES DOLLARS)
<TABLE>
<CAPTION>
================================================================================
THREE MONTHS
ENDED JULY 31,
1999 1998
<S> <C> <C>
NET CASH USED IN OPERATING ACTIVITIES $ (33,031) $ (340,985)
INVESTING ACTIVITIES
Capital asset additions (14,649) (272,518)
Deferred finance charge 0 (207,568)
(14,649) (480,086)
FINANCING ACTIVITIES
Issue of capital stock for suit settlement 50,000 0
Issue of capital stock for cash 0 137,555
Proceeds from convertible debenture 0 1,500,000
Repayment of long-term debt 0 (71,054)
50,000 1,566,501
INCREASE IN CASH 2,320 745,430
CASH, (BANK OVERDRAFT) BEGINNING OF PERIOD (5,682) 53,043
CASH, (BANK OVERDRAFT) END OF PERIOD $ (3,362) $ 798,473
================================================================================
</TABLE>
See notes to consolidated financial statements
3
<PAGE>
RICH COAST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 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 July 31, 1999 and April 30, 1999 and
the consolidated results of operations and the consolidated statement
of changes in financial position for the three months ended July 31,
1999 and July 31, 1998. The results of operations for the three months
ended July 31, 1999 are not necessarily indicative of the results to be
expected for the entire fiscal year.
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
----------------------------------------------------------------------
<S> <C> <C> <C>
QUARTER JULY 31, 1998
Shares issued
For cash - options 157,750 $ 0.87 $137,555
Interest on notes 8,098 $ 2.09 16,925
165,848 $154,480
QUARTER JULY 31, 1999
Shares issued
Lawsuit settlement 250,000 $ 0.20 $ 50,000
======================================================================
</TABLE>
See notes to consolidated financial statements
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 first quarter are $603,649 compared to $562,236 for
the previous quarter. As expected the Company incurred a loss of $368,000 for
the first quarter compared to a loss of $621,399 for the previous quarter.
Losses were reduced as a result of cost reductions implemented in anticipation
of closing down the Company's Ford Road facility and consolidating operations at
Rich Coast's seventeen acre terminal site on Wyoming avenue in Dearborn,
Michigan. In view of a previous offer received to purchase the Ford Road
facility which was delayed due to financing problems, the property was placed
back on the market and a new offer to purchase has been received and is now
being negotiated with expectations of reaching an agreement prior to October 1,
1999. As previously reported, Rich Coast has revised its business strategy to
concentrate on installation of proprietary Rich Coast waste treatment systems at
slaughterhouse and pulp-paper company locations. A production installation has
been completed and successfully tested at Murco, Inc., a slaughterhouse
operation in Plainwell, Michigan that is owned by Packerland Packing, Green Bay,
Wisconsin. Some minor revisions to improve operations are now underway with
full-scale production expected to start by October 1, 1999.
A pulp-paper demonstration has also been completed successfully with the result
that an engineering contract for a production system has been received and
fulfilled. A production contract is now being negotiated for the pulp-paper
plant which includes a substantial down payment to expedite installation and
operation of an over 500,000 gallon per day system by calendar year end.
The foregoing two successful and unique waste treatment systems in two very
environmentally troubled industries are expected to develop a large backlog of
business for Rich Coast in the near term.
Changes in Financial Condition
Shareholder's equity at the close of the previous quarter was $1,234,502
compared to $916,502 at the close of this period ending July 31, 1999. The
reduction is attributable to losses incurred.
In anticipation of near term earnings from off site installations described
earlier, which should improve the Company's share price, combined with
refinancing plans, Rich Coast has requested that NASDAQ review its February 1999
decision to de-list Rich Coast.
<PAGE>
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 it
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 1 EXHIBITS
(a) Exhibit 3(i)- Articles of Incorporation. 1
Exhibit 3(ii)-Bylaws. 1
Exhibit 27.1-Financial Data Schedule. Filed herewith.
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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: September 17, 1999 by: /s/ James P. Fagan
-------------------------------
James P. Fagan, President
Date: September 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> 3-MOS
<FISCAL-YEAR-END> APR-30-2000
<PERIOD-END> JUL-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 539,482
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 540,882
<PP&E> 6,799,873
<DEPRECIATION> (1,517,533)
<TOTAL-ASSETS> 6,045,137
<CURRENT-LIABILITIES> 1,458,296
<BONDS> 3,670,339
0
0
<COMMON> 24,109,971
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 6,045,137
<SALES> 0
<TOTAL-REVENUES> 603,649
<CGS> 0
<TOTAL-COSTS> 267,960
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 54,690
<INCOME-PRETAX> (368,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (368,000)
<EPS-BASIC> (.06)
<EPS-DILUTED> (.06)
</TABLE>
