SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 1O-QSB
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended April 30, 1998 Commission File Number 0-18616
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ST. GEORGE METALS, INC.
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(Exact name of registrant as specified In its charter)
Nevada 88-0227915
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(State or other jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or organization)
125 NationsBank Plaza, 1111 E. Main St., Richmond, Virginia 23219
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (804) 644-3434
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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 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.
Yes X No
As of April 30, 1998, the number of shares of Common Stock outstanding
was 14,487,159.
NOTE: The information presented in this Form 10-QSB is unaudited, but in the
opinion of management reflects all adjustments (which include only
normal recurring adjustments) necessary to fairly present such
information.
<PAGE>
ST. GEORGE METALS, INC.
FORM 10-QSB
QUARTER ENDED APRIL 30, 1998
INDEX
PAGE
PART I - FINANCIAL INFORMATION
Interim Consolidated Balance Sheets.................................. 3
Interim Consolidated Statement of Income and Deficit................. 4
Interim Consolidated Statement of Cash Flows......................... 5
Notes to the Interim Consolidated Financial Statements............... 6
Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................ 7
PART II - OTHER INFORMATION
Items 1 - 6.......................................................... 8-9
Signatures........................................................... 10
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<PAGE>
ST. GEORGE METALS, INC.
(A DEVELOPMENT STAGE COMPANY)
INTERIM CONSOLIDATED BALANCE SHEETS
AS OF APRIL 30, 1998 AND JANUARY 31, 1998
(EXPRESSED IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
APRIL 30, JANUARY 31,
1998 1998
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<S> <C>
ASSETS
CURRENT
Cash $ 2 $ 4
OTHER - Reclamation Deposit 120 120
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$ 122 $ 124
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LIABILITIES
CURRENT
Accounts payable $ 182 $ 199
Advances from shareholder 491 320
Accrued interest payable 2,794 2,600
Accrued mineral interests reclamation costs 120 100
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3,587 3,219
LONG TERM-DEBT
Other 1,888 1,888
Related parties 5,111 5,111
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TOTAL LIABILITIES 10,586 10,218
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SHAREHOLDERS' DEFICIT
SHARE CAPITAL
Authorized
10,000,000 Preferred shares -
Par value $.01 per share
30,000,000 Common shares -
Par value $.01 per share
Issued and paid in capital
1,450 Series A Preferred shares 1,450 1,450
166,417 Series B Preferred shares 499 499
14,487,159 Common shares 9,285 9,285
Deficit accumulated during development stage (21,698) (21,328)
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(10,464) (10,094)
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TOTAL $ 122 $ 124
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</TABLE>
PREPARED BY MANAGEMENT
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<PAGE>
ST. GEORGE METALS, INC.
(A DEVELOPMENT STAGE COMPANY)
INTERIM CONSOLIDATED STATEMENT OF INCOME AND DEFICIT
FOR THE THREE MONTHS ENDED APRIL 30, 1998 AND 1997
(EXPRESSED IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED APR. 30
1998 1997
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<S> <C>
REVENUE
Mineral interest costs recovery in excess of expenses $ - $ -
ADMINISTRATION COSTS
General and administrative 3 3
Interest 194 148
Professional fees 10 7
Reclamation and other costs 164 -
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TOTAL ADMINISTRATIVE COSTS 371 158
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NET LOSS BEFORE INTEREST INCOME 371 158
INTEREST INCOME 1 -
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NET LOSS 370 158
DEFICIT BEGINNING OF PERIOD 21,328 20,435
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DEFICIT END OF PERIOD 21,698 20,593
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BASIC LOSS PER SHARE IN U.S. DOLLARS $ .03 $ .01
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WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 14,487,159 14,487,159
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</TABLE>
PREPARED BY MANAGEMENT
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<PAGE>
ST. GEORGE METALS, INC.
(A DEVELOPMENT STAGE COMPANY)
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED APRIL 30, 1998 AND 1997
(EXPRESSED IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED APRIL 30,
1998 1997
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<S> <C>
FUNDS PROVIDED (USED) BY OPERATING
ACTIVITIES
Net loss $ (370) $ (158)
CHANGES IN OTHER
WORKING CAPITAL ITEMS 368 152
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TOTAL (2) (6)
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NET INCREASE (DECREASE) IN CASH (2) (6)
CASH BALANCE BEGINNING OF PERIOD 4 20
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CASH BALANCE END OF PERIOD $ 2 $ 14
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</TABLE>
PREPARED BY MANAGEMENT
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<PAGE>
ST. GEORGE METALS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 1998
(EXPRESSED IN THOUSANDS OF U.S. DOLLARS)
1. ACCOUNTING POLICIES
These interim consolidated financial statements have been prepared in
accordance with accounting principles and practices that are generally
accepted in the United States. The notes to the Company's (unaudited)
consolidated financial statements as of January 31, 1998, substantially
apply to the interim financial statements at April 30, 1998, and are
not repeated here.
2. INTERIM ADJUSTMENTS
The unaudited interim financial information reflects all adjustments
which are, in the opinion of management, necessary to a fair statement
of the results for the interim period presented. These adjustments are
of a normal recurring nature.
3. STATUS OF BUSINESS
The Company is not engaged in any active business. There was no change
during the quarter ending April 30, 1998, with respect to the Company's
continued its efforts to reach an out-of-court accord with its trade
creditors. See Item 5, Other Information, of Part II of this Form
10-QSB.
PREPARED BY MANAGEMENT
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<PAGE>
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations - Financial
Revenues. For the three months ended April 30, 1998, the Company had
no revenues. The Company had no revenues during the comparable period ended
April 30, 1997.
Costs and Expenses. Total administrative costs, including accrued
interest expense, were $371,000 for the three months ended April 30, 1998,
compared to $158,000 for the same period in 1997, an increase of $213,000.
Accrued interest expense on the Company's term debt was $194,000 for the
quarter, compared to $148,000 for the period ended September 30, 1997. The
increase in interest expense was primarily attributable to market adjustments to
the Company's gold contracts due to increases in the price of gold. The
remaining increase in administrative costs was primarily attributable to
consulting fees and other costs of $164,000 incurred during the quarter relating
to the Company's continuing reclamation work at the Company's former Dean Mine
leasehold interest.
Net Recovery in Excess of Costs for Period. For the three months ending
April 30, 1998, the Company had a net loss of $370,000 ($.03 per share),
compared with a net loss of $158,000 ($.01 per share) for the same period in
1997. The Company's cumulative net loss at April 30, 1998 was $21,698,000,
compared to $20,593,000 at the end of the same period in 1997.
Analysis of Financial Condition
Liquidity and Capital Resources. At April 30, the Company's cash
position had decreased from January 31 ($2,000 at April 30 versus $4,000 at
January 31). The Company's outstanding trade debt at April 30 ($673,000,
including approximately $491,000 representing advances from one shareholder for
operating expenses) significantly exceeded the Company's current assets
(excluding reclamation deposit) at that date. The Company continues to seek a
resolution of its outstanding trade debt other than through a court-supervised
process, which would entail significant administrative expenses. The Company's
reclamation deposit of $120,000 at April 30 was reduced after the period end to
$104,000 as funds were released by the Nevada Department of Environmental
Protection to cover certain expenses incurred in connection with the reclamation
of the Company's former Dean Mine property. The Company believes it has
substantially completed the NDEP mandated reclamation work. Monitoring on the
Dean Mine property is required for a period of years, however.
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<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal proceedings.
(a) See Item 5 below.
Item 2. Changes in securities.
(a) None
(b) None
Item 3. Defaults upon senior securities.
Under the Company's Phase I and II Loan Commitments,
non-payment of interest constitutes an event of default;
however, a note holder must advise the Company in writing that
he declares his debt to be in default. As previously reported,
two note holders, one a former related party of the Company,
advised the Company in January, 1994, that the Company was in
default with respect to the Company's debt obligations to
them. The Company advised such holders that it did not agree
with their position.
Item 4. Submission of matters to a vote of security holders.
None
Item 5. Other information.
General. The Company's financial resources have been
substantially exhausted and management does not know of any
additional financing available to the Company. The Company has
no continuing on-going business operations at this time. The
Company has been seeking, since early 1995, to satisfy its
trade debt other than through a court supervised process,
which would entail significant administrative expenses. The
Company has been able to satisfy a substantial portion of its
trade debt, but in light of its financial position, it is
unlikely any payments will be made on its other indebtedness,
which has been voluntary subordinated to the Company's trade
creditors.
SEC Reporting Obligations. Because of the Company's financial
condition and its consequent difficulty paying the attendant
legal and accounting expenses, its ability to continue to meet
its reporting obligations under the Securities Exchange Act of
1934 remains questionable. The financial statements included
with its Form 10-KSB for the year ended January 31, 1998, were
not audited by an independent certified accountant, because
the Company could not afford the cost of an audit. The Company
sought and obtained administrative relief from the staff of
the Securities and Exchange Commission from the requirement
that it obtain an audited financial statement for its Form
10-KSB filing.
Inability to Pay Indebtedness. Management does not presently
anticipate that any of its outstanding obligations under its
Operations Advances, Gold Delivery Contracts and term debt, a
substantial portion of which outstanding obligations are held
by members of the Company's board of directors, can be
satisfied. Accordingly, management does not believe, as a
practical matter, that there is any remaining value to be
ascribed to the Company's outstanding preferred stock or
common stock.
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<PAGE>
Status of Properties. During the quarter ending April 30,
1998, Cameco (U.S.) Inc. gave notice to the Company that it
had decided not to commit itself to a 1998 expenditure on its
Hancock Canyon Project. Accordingly, Cameco has given
notice of its termination of the Hancock Option Agreement
dated November 21, 1996, on the Hancock Canyon property.
Based on this development, the Company contemplates
allowing its interest in the claims known as the Hancock
Canyon property to lapse. Cameco (U.S.) Inc. continues to
hold a portion of the Company's Draco/AMAX claims under
option pursuant to a separate agreement dated February 21,
1996.
The Company continues with its efforts to work out a
satisfactory arrangement for a lease to a third-party of its
leasehold interest in a group of claims identified as Whiskey
Canyon, Red Cap and North Cap. The Company is also in
discussions with the same party regarding a leasehold interest
in its Trenton Canyon claims and in the remaining portion of
its Draco/AMAX property not under separate option to Cameco
(U.S.) Inc. These properties are described in greater detail
in the Company's Form 10-KSB for the year ended January 31,
1998. There is no assurance any such discussions will result
in a definitive agreement.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits: Exhibit 27 Financial Data Schedule, filed herewith
(b) Reports on Form 8-K: None
-9-
<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.
St. George Metals. Inc.
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(Registrant)
June 12, 1998 By: /s/ C. B. Robertson, III
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C. B. Robertson, III - Chairman and
Principal Executive Officer
June 12, 1998 /s/ Harrison Nesbit, II
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Harrison Nesbit, II - Treasurer and
Chief Financial and Accounting
Officer
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
UNAUDITED FINANCIAL STATEMENTS OF ST. GEORGE METALS, INC. (A DEVELOPMENT
STAGE COMPANY) INCLUDED IN ITS FORM 10-Q FOR THE QUARTER ENDED
APRIL 30, 1998.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-END> JAN-31-1998
<CASH> 2
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 122
<CURRENT-LIABILITIES> 3,587
<BONDS> 6,999
0
1,949
<COMMON> 9,285
<OTHER-SE> (21,698)
<TOTAL-LIABILITY-AND-EQUITY> 122
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 371
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 194
<INCOME-PRETAX> (370)
<INCOME-TAX> 0
<INCOME-CONTINUING> (370)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (370)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
