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, 1996
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, 1996:
99,900,000
<PAGE>
Item 1. Financial Statements.
(see following pages)
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
(1) Liquidity. December 31, 1995 represented the seventh
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 second
quarter of 1995 the Registrant ceased its exploration and
development operations in Mena, Arkansas, and subsequently the
Registrant's liquidity has become virtually non-existent.
As of March 31, 1996 the Registrant's cash and cash
equivalents totalled $1, representing a decrease of $1,671 since
December 31, 1995.
(2) Capital Resources.
(i) Registrant has no commitments for capital resources
at this time, and none appears likely to occur.
(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.
(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, and
all exploration and development activities in Mena, Arkansas have
been halted in June of 1995.
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 1993, 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 1993. 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 Mr. Natvar
Patel, 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 yet 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 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 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. That goal
has not been accomplished, due in large part, to the inability of
the Registrant to fund the expenses involved. The Registrant had
tested numerous pilot batches beginning in July of 1994, based on
internal research, and had continued working toward reducing the
standard deviation in variance of test results down to acceptable
levels for eventual certification of the reliable flowchart.
Although the test results varied greatly, management considered
that it would be satisfied if even the lower results could be
relied upon in a large scale operation.
Sizable variability in the test results continued in 1995, and
all research activity and development work in Arkansas was
suspended in mid June of 1995. The Registrant has been inactive
since that time, and is not yet able to determine when, or if, it
may be able to re-start these operations.
<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, 1996,
such securities have accrued said payments in the amount of
$110,806.
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.
The Registrant has filed this Form 10Q report later than the
required filing date, and at the same time as other reports
encompassing a period of time extending from the Form 10Q report
for the quarter ended March 31, 1995, through the Form 10Q report
for the quarter ended June 30, 1996. This report should be read in
conjunction with those prior and following reports.
Item 6. Exhibits and Reports on Form 8-K.
None for the quarter ended March 31, 1996.
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
