UNITED STATES
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, 1995
OR
[ } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number: 01-17520
Equity AU, Inc.
(exact name of registrant as specified in its charter)
Delaware 33-20582 75-2276137
(State of Incorporation) ('33 Act SEC file no.) (IRS E Id No.)
119 Gold Lane, Mena, Arkansas 75252
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: 407-647-3952
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by section 13 or 15(d) of the
Securities Act of 1934 during the past 12 months and (2) has been
subject to such filing requirements for the past 90 days.
YES X NO
Shares of common stock outstanding at March 31, 1995:
66,580,540
<PAGE>
Item 1. Financial Statements.
Item 2. Management's discussion and Analysis of Financial
Condition and Results of Operations.
(1) Liquidity. December 31, 1994 represented the sixth year
end of Registrant. The Registrant has funded its operations over
time from fees received from limited partnerships and their limited
partners, loans from officers, directors, and Affiliates, through
paid-in equity capital, and debt. During the first quarter of 1995
the Registrant has continued to fund its operations through paid-in
equity capital and an increasing amount of loans. That situation is
likely to continue until such time as the Registrant acquires third
party verification regarding the commercial viability of its
mineral holdings, or establishes regular and consistent production
on its own, sufficient to acquire additional loans or joint venture
capital to expand operations. During the quarter, $100,000 in
contributed capital was received by the Registrant, for which
equity shares of any class have yet to be issued.
As of March 31, 1995 the Registrant's cash and cash
equivalents totalled $12,870, representing a decrease of $30,184
from December 31, 1994.
(2) Capital Resources.
(i) Registrant has no firm commitments for capital
resources at this time, however, it anticipates that it will
secure operating capital through additional debt, or through
paid-in equity, provided that its common stock resumes public
trading in the future. Registrant anticipates that it will be
likely to increase its debt and use various assets to secure
loans for working capital and equipment. The delisting of the
Registrant's common stock in June of 1994 has created
difficulty in financing operations.
(ii) It is not likely that the officers and directors of
Registrant can fund the Registrant to any increased extent
than they have already provided, should working capital
resources prove inadequate.
(iii) Registrant has no lines of credit.
(3) Results of Operations. Registrant has had no production
mining operations through the date of filing of this report;
however, testing and evaluation has continued at the milling
facility under the direction of Vice President Natvar Patel.
In 1991 and 1992, the Registrant significantly expanded its
activity at its milling site near Mena, Arkansas. The Registrant
believed, due to statements from its operations managers and other
third parties, that they had developed a reliable process to
extract precious metals from the ore taken from properties owned or
administered by the Registrant. The Registrant entered into
agreements with AT&T Nassau Metals to be its refiner, and agreed to
deliver certain quantities of gold bearing mineral concentrates in
several forms to AT&T Nassau. After selling an initial shipment to
its refiner, the Registrant's technical staff was not able to
continue deliveries, citing interference with other platinum group
metals locked in complex molecular clusters.
In early 1993, upon the investigation and advise of its
technical staff, the Registrant believed that electron beam
technology, using gasification at high temperature in a vacuum, was
required to fracture the molecular clusters, thereby permitting the
gold and other precious metal recovery. In April, the Registrant
purchased and commenced installation of electron beam equipment,
completing work and obtaining an operating permit from the Arkansas
Department of Pollution Control and Ecology in September. Initial
testing of the equipment provided variable results, with no
guaranteed results for the continued infusion of capital for
production modifications.
Shortly thereafter, the Registrant accepted a letter of
resignation from its technical manager, and then hired an
experienced metallurgist directed to implement mining production,
under any method, as quickly as possible.
After considerable testing and evaluation by the new
metallurgist, it was determined that it was likely that the subject
ores could be processed commercially without required use of the
electron beam equipment. The Registrant has yet to fully
investigate the potential of this equipment to enhance mineral
values extracted through more conventional means, and while feeling
that it may hold promise, has decided not to invest an additional
$40,000 to $50,000 in the electron beam equipment at this time, for
modifications which would be required for proper evaluations.
Instead, management has made the decision to pursue two
directions more focused on earning production revenue, and adding
value to the assets. Since the second half of 1994, the Registrant
has sought to develop repeatable and consistent (low standard
deviation) pilot production of gold values through extraction
methods which have proved reasonably reliable through extensive
testing, supported by numerous third party independent assays. At
the same time, the Registrant has employed a consultant from a
University mining school of the highest reputation, to investigate
and deliver to the Registrant a "flowchart", which will be a system
designed to be the most effective extraction method for gold
values, at the most reasonable cost, providing the most consistent
results. The Registrant has tested numerous pilot batches
beginning in July of 1994, based on internal research, and has been
working toward reducing the standard deviation in variance of test
results to acceptable levels for certification of a flowchart
design by its consultant.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
The Registrant is not a party to, or aware of any suits or
legal proceedings which might be considered to be outside of the
course of everyday business operations, or materially affect
operations.
Item 2. Changes in Securities.
Registrant has made no changes in its securities.
Item 3. Defaults Upon Senior Securities.
Registrant has no senior securities and accordingly no
defaults on same. However, the Registrant has several classes
of "preferred" stock, which, although they hold no seniority,
priority or privilege regarding assets, do hold the right to
receive dividend or interest payments. As of March 31, 1995,
such securities have accrued such payments in the amount of
$75,729.
Item 4. Submission of Matters to a Vote of Security Holders.
Registrant submitted no matters to a vote of security holders.
Item 5. Other Information.
On February 9, 1995, the Registrant's President and acting
Secretary, Kingman L. Hitz, resigned his position. The
Registrant's Chairman, James Arch, had previously been conducting
negotiations to obtain a loan for the Registrant, with a party who
desired management control over operations. Chairman Arch
consented, and following Mr. Hitz's departure on February 24, 1995,
the Dallas office of the Registrant was closed, and all assets and
operations consolidated to Mena, Arkansas.
No actions had been taken by March 31, 1995 to appoint a new
President or Secretary.
The Registrant has filed this Form 10Q report later than the
required filing date, at the same time, and along with other
reports which encompass a period of time extending through the
report on Form 10Q for the quarter ended June 30, 1996. This
report should be read in conjunction with those following reports.
Item 6. Exhibits and Reports on Form 8-K.
The Registrant filed one report on Form 8-K for the quarter
ended March 31, 1995, dated February 24, 1995, announcing an
Item 5., Other Event.
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.
EQUITY AU, INC
(Registrant)
BY: James Arch
James Arch, Chairman
DATE: August 12, 1996
