SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[ X ] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange act of 1934 for the transition period from to .
-------- -----------
For the fiscal year ended March 31, 1997
Commission File Number: 0-6334
AURIC METALS CORPORATION
(Exact name of Registrant as specified in its Charter)
NEVADA 87-0281240
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1475 Terminal Way, Suite E
Reno, Nevada 89502
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number including Area Code: (318) 343-4448
(Not applicable)
Former name, former address and former fiscal year, if changed since last
report.
Securities Registered Pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on which Registered
None None
Securities Registered Pursuant to Section 12(g) of the Act:
None
(Title of Class)
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 [ ]
The aggregate market value of the Registrant's voting stock held by
non-affiliates computed with reference to the bid prices in the over-the-counter
market on June 25, 1997, was approximately $470,000.
As of June 25, 1997, the Registrant had outstanding 1,000,000 shares of
its common stock, par value $.01, including a total of 15,511 shares held in the
Registrant's treasury.
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and
the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document
is incorporated: (1) any annual report to security holders; (2) any proxy or
information statement; and (3) any prospectus filed pursuant to Rule 424(b) or
(c) under the Securities Act of 1933. None.
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TABLE OF CONTENTS
Page
Item Number and Caption Number
PART I
1. Business 3
2. Properties 8
3. Legal Proceedings 8
4. Submission of Matters to a Vote of Security
Holders 8
PART II
5. Market for Registrant's Common Equity and
Related Stockholder Matters 9
6. Selected Financial Data 10
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
8. Financial Statements and Supplementary Data 11
9. Changes in and Disagreements on Accounting and
Financial Disclosure 11
PART III
10. Directors and Executive Officers of the Registrant 12
11. Executive Compensation 13
12. Security Ownership of Certain Beneficial Owners
and Management 14
13. Certain Relationships and Related Transactions 15
PART IV
14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 16
15. Signatures 17
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PART I
ITEM 1. BUSINESS
GENERAL/HISTORY
Auric Metals Corporation (the "Company") is a Nevada Corporation which
holds interests in several natural resource properties, and a minority interest
in a hotel operation in New Mexico. Over the past several years, the Company has
principally been engaged in the acquisition, exploration and development of
interests in various natural resource properties, primarily through
participation with other parties in natural resource joint ventures or other
arrangements. The Company's involvement in natural resource projects over the
past few years has decreased, and the Company does not currently have any active
natural resource projects.
The Company was originally organized under the laws of the state of Utah.
In 1985, the Company became a Nevada corporation by merging with a wholly-owned
Nevada corporation created solely for the purpose of changing the Company's
state of domicile. The Company has one wholly-owned subsidiary, Auric Minerals
Corporation.
The Company was organized in 1969 for the purpose of engaging in mineral
exploration (principally silver, copper, gold, lead and zinc) on a mining
property located in Beaver County, Utah. In February 1970, the Company completed
a public offering under Regulation A of the Securities Act of 1933, as amended,
from which it raised approximately $350,327 in net proceeds for its proposed
exploration. In 1979, the Company's exploration activities on its Beaver County
mining claims were terminated, following the determination by the Company that
further exploration would be unproductive.
Since the termination of exploration activities in Beaver County, Utah, in
1979, the Company has participated in a number of natural resource joint
ventures, and has performed limited exploration and assessment work on other
natural resource properties, with a view towards evaluating such properties for
future exploration and development.
The Company holds interests in a number of natural resource properties in
Utah, Nevada, Oklahoma, and California. The Company presently holds a working
interest in one oil and gas well near Oklahoma City, Oklahoma, which has
provided the Company with nominal revenue over the past few years. The Company
also holds a working interest in various patented and unpatented mining claims
in the Tintic Mining District of Utah. The Company subleases forty-five (45)
mining claims to USX, formerly United States Steel Corporation. These claims
have, in turn, been assigned to other parties which have conducted limited
exploration on these claims.
In the fiscal year ended March 31, 1994, Auric Minerals Corporation, the
Company's wholly-owned subsidiary, acquired from an unrelated third party, a 50%
interest in 7 patented mining claims and 11 unpatented claims in the Tintic
mining area west of the Company's Rex claims. The 7 patented mining claims were
terminated during the fiscal year ended March 31, 1995, due to title problems.
The Company has maintained its interest in the 11 unpatented claims. Over the
past several years, the Company has additionally held a 19% interest in a
limited partnership which holds certain sulfur and gold property in Inyo County,
California. Mining operations on this property were abandoned during the fiscal
year due primarily to a loss in demand for sulfur products. (See "BUSINESS,"
under this caption).
During the fiscal year ended March 31, 1991, the Company purchased, in a
private transaction, a total of 89,600 shares of restricted common stock of
Dynamic Oil Limited, at an average price of $1.98 per share. Dynamic Oil Limited
is a publicly-held British Colombia corporation which is engaged in oil and gas
exploration. The Company has now held such securities in excess of two years,
and is, therefore, able to dispose of this investment subject to compliance with
the requirements of Rule 144 of the Securities Act of 1933, as amended. As of
March 31, 1997, the market value of these securities was approximately $92,010.
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In addition to its natural resource investments, described above, the
Company is a principal shareholder in Corporacion de La Fonda, Inc., a
corporation which owns the La Fonda Hotel in Santa Fe, New Mexico. This
investment has generated dividend revenues to the Company for the past several
years. Dividend revenue from this investment of $12,600 during the past fiscal
year, represents a slight increase in dividend revenue from $12,000 in dividend
revenue for the 1996 fiscal year, and a decrease from dividend revenue in the
1995 and 1994 fiscal years of of $15,000, and $27,000, respectively.
BUSINESS
During the fiscal year, the Company limited its activities to required
maintenance of its unpatented mining claims in the Tintic Mining District near
Eureka, Utah. The Company conducted no exploration activities during the fiscal
year, and has realized no income from its mineral exploration activities to
date. The Company has realized most of its income from its interests in
properties developed and explored by other firms, and from lease payments and
dividend payments on the Company's equity holdings. The following is a general
description of the Company's holdings and business activities during the fiscal
year.
Hillcrest Claims
Since 1981, the Company has subleased forty-five (45) unpatented mining
claims covering approximately 600 acres north west of Elko, Nevada, to USX,
formerly United States Steel Corporation. The Company acquired this lease from
Hillcrest Mining Company ("Hillcrest") in 1981. The Company obtained the lease
for an initial term of three years, ending August 31, 1984, in consideration of
the agreement to do all the assessment work on the lease during its term at a
cost of $100 per claim per year, and to actively market the property during such
term. The lease grants to the Company the option to extend the lease year by
year for an additional twenty years by making advance royalty payments of $6,000
to Hillcrest. The lease further provides that the Company will pay to Hillcrest
a royalty equal to 50% of the Company's earnings from the property, after
deducting all direct costs incurred by the Company in the development of the
property, exclusive of the Company's overhead.
USX acquired the claims from the Company for a primary term of two years,
expiring December 31, 1983, for which the Company received $9,000, $4,500 of
which was paid to Hillcrest. USX has the right to renew the options for twenty
additional one year terms by paying an advance royalty of $25,000 in 1984 and
1985 and $50,000 per year thereafter for the term of the lease or as long as
there is production. USX has paid the advance royalty for each year to and
including fiscal year ended March 31, 1992, and has paid for all assessment work
required during the term of the sublease. Pursuant to the terms of a
modification of the lease between Auric and Hillcrest, resulting in an equal
interest between Auric and Hillcrest, the Company and Hillcrest each now receive
a 1% royalty interest for gold, calculated on the basis of net smelter returns,
and a 3% royalty interest on other metals, calculated on the same basis.
Since January 1987, Cornucopia Resources, Ltd. ("Cornucopia"), a Canadian
corporation listed on the Vancouver Stock Exchange and the Toronto Stock
Exchange, has held all of the leasehold interest of USX in the Hillcrest Claims,
subject to its obligation to comply with the terms of USX's sublease. Cornucopia
subsequently entered into a joint venture with Galactic Resources, Ltd.
("Galactic"), providing for the mining and exploration of the Hillcrest claims
and adjacent properties. Under the terms of the joint venture, Galactic earned a
50% interest in the project by providing a feasibility study and by funding an
initial phase of mining on the project.
In 1992, Newmont Mining Company ("Newmont") acquired the leasehold
interest held by the Company in its Ivanho property near Elko, Nevada, covering
85,000 acres. In the past three years, a deep drilling program with drillsites
on the Ivanho property, has been conducted. In 1995, Newmont and Cornucopia
entered into a joint venture arrangement providing for the joint development of
the Ivanho property. Newmont has recently advised its joint venture partner that
it is withdrawing from the Ivanho property, and Cornucopia is presently seeking
a new joint venture partner. If Cornucopia is unsuccessful in finding a new
partner, the leasehold interest may be reclaimed. Accordingly, the Company does
not know when the Company's leased acreage will be developed, or the extent of
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such development.
In past years, a substantial amount of capital was expended for initial
mining and exploration activities on the Ivanho property, of which the Company's
property is a part. A 1992 report from Galactic and Cornucopia indicates that in
1991 the joint venture produced 60,000 ounces of gold from the USX pit located
on a portion of the Ivanho property. The Company has been further advised that
gold and other minerals have been extracted by the joint venture parties and
their operator, Touchstone, on claims adjoining the Company's claims. In August,
1994, a high-grade vein was drilled near the western margin of the Clementine
prospects of the Ivanho property. In a 1994 letter, Cornucopia to its
shareholders that preliminary analysis of the drilling encompassing the
Clementine, Velvet and Butte prospects has developed a geologic resource of
9,106,000 tons grading 0.035 ounces of gold per ton, or 320,000 ounces of gold.
To the Company's knowledge, there was no significant activity on these
claims during the fiscal year ended March 31, 1997. As indicated, the Company
cannot predict at this time what further exploration and development, if any,
will be undertaken on these properties.
Tintic Claims
The Company holds a 52% working interest in eighteen (18) unpatented
mining claims located in the Tintic Mining District, near Eureka, Utah. The
Company will retain its interest in the claims as long as it makes required
annual payments on such claims, which the Company has paid through the fiscal
year ended March 31, 1996. Applicable government regulations increased the
annual fee for assessment and related work to $200 per claim during the fiscal
year ended March 31, 1993. These claims, acquired in 1984, have been held since
1965 by directors and shareholders of the Company.
During the 1997 fiscal year, the Company paid the required lease payment
to the Bureau of Land Management of $100 per claim, as required in lieu of
exploration by drilling. The Company has reduced the number of its claims from
43 to 18, to reduce its annual fees associated with these claims.
The Company's claims are located on the south side of a caldera, or
ancient volcano. Sunshine Mining Company operates the Bergen Mine on the north
side of the caldera, which is located approximately twelve miles from the
Company's claims. The Company has been advised that Cornucopia Resources has
conducted exploration west of the Company's claims. The Company has also been
advised that Centurion Mines Corporation has staked adjoining claims. The
Company is aware of exploration activity in the area, there is no such activity
close to the Company's claims.
In October, 1993, Auric Minerals Corporation, the Company's wholly-owned
subsidiary, acquired by lease from unrelated third parties, a 50% working
interest in 7 patented mining claims, and a 50% interest in 11 additional
unpatented mining claims located in the Tintic Mining District approximately 15
miles west of the Company's Rex claims. The Company's interest in the 7 patented
mining claims terminated in the fiscal year ended March 31, 1995, due to certain
title and related problems. The Company has maintained its interest in the 11
unpatented mining claims, by payment of the required annual fee to the BLM of
$100 per claim. Any profits on the claims are to be shared equally between the
Company and the lease holder.
During the fiscal year ended March 31, 1997, there was no signficant
activity on these claims.
Inyo Claims
For the past several years, the Company has held an interest in the Crater
Limited Partnership, a California limited partnership (the "Partnership".)
During the fiscal year ended March 31, 1989, the Company paid an additional
$12,000 to increase its interest in the Partnership from 14% to 19%. The
Partnership owns a sulfur and gold property in Inyo County, Nevada, located
northwest of Death Valley.
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Subsequent to its organization, the Partnership subleased the property to
an independent third party for extraction of sulfur for agricultural use. During
the 1993 and 1994 fiscal years, the Company earned a nominal profit from its
interest in the Partnership. However, during 1993, the government has prohibited
the use of sulfur as a fertilizer for grapes. Additionally, during the 1994
fiscal year, an access road to the property was closed to protect a wilderness
area, which has resulted in a loss of the market for sulfur products in Nevada.
Moreover, during the fiscal year ended March 31, 1995, the Company lost its
contractor on the property, resulting in no profit to the Partnership. Flooding
in California in 1995 has also resulted in a major loss of market demand for
sulfur in 1995. As a result of these developments, continuation of sulfur
extraction on the property was considered no longer viable, and these mining
efforts were abandoned in the fiscal year ended March 31, 1996.
Investment in Dynamic Oil Limited
During the fiscal year ended March 31, 1991, the Company purchased, in two
private transactions, a total of 89,600 shares of restricted common stock of
Dynamic Oil Limited, an unaffiliated publicly traded British Columbia
corporation ("Dynamic"), at a total purchase price of $175,880, or an average
cost of $1.98 per share. The Company's holdings in Dynamic represented, at the
time of purchase, approximately 1% of the outstanding common stock of Dynamic.
The stock was purchased at a price of 15% below the market value of Dynamic
common stock on the respective dates of purchase. In connection with these
transactions, Auric was granted a warrant with each share of Dynamic purchased,
which warrants have expired.
Dynamic is a publicly held corporation incorporated in British Columbia,
which is engaged in oil and gas exploration. Auric has been advised that Dynamic
is a party to a joint venture agreement with Conoco Oil and British Columbia
Gas, providing for the development of a source of gas for Vancouver, Canada. In
1994 and 1995, Dynamic reported that it participated in drilling three
successful horizontal oil wells in S.E. Saskatchewan, a new gas well in N.W.
Alberta, and doubled its landholdings in the Boundary Bay prospect area of S.W.
British Columbia. Dynamic has additionally reported that it has conducted an
extensive geochemistry program and successfully obtained permission from the
British Columbia government to drill two new Fraser Delta gas exploration wells
in 1995. In 1994, Dynamic reported that it purchased an additional 20% interest
in its St. Albert 01-30 gas project near Edmonton, Alberta, increasing its
interest in the project to 70%. More recently, Dynamic reported the drilling of
a dry hole on its Frazier Valley leases, which caused, in large part, a sharp
drop in the price of Dynamic's stock over the past few months.
During the fiscal year ended March 31, 1996, the Company sold a total of
10,000 shares of Dynamic, at a price of $14,608, or a loss of approximately
$5,021. The Company continues to own 79,600 shares of Dynamic. The common stock
of Dynamic is quoted on NASDAQ under the symbol "DYOLF." As of June 20, 1997,
the market value of the common stock of Dynamic held by the Company, was
approximately $109,000, based on the bid prices of Dynamic's stock.
Acquisition of Interest in Robbie Claims
In September, 1995, the Company entered in a partnership agreement with
Hi-Tech Exploration, Ltd. ("Hi- Tech"), Hillcrest Mining Company ("Hillcrest"),
and James Fouts ("Fouts"), the Company's President, pursuant to which the
Company, Hillcrest and Fouts each purchased from Hi-Tech a 25% interest in 107
unpatented lode mining claims, known as the "Robbie Claims," for the sum of
$3,566.67 each. The Robbie claims are located within one-half mile of the
Company's Ivanho claims near Elko, Nevada, on Bureau of Land Management land.
These claims are believed to be deep gold prospects. The partnership agreement
requires the parties to maintain the mining claims, and make required annual
payments to the BLM, for a minimum period of 20 years. The interest held by each
of the parties cannot be assigned without approval by the other partners, and
any such assignment shall carry with it the obligation to share in the annual
maintenance of the claims. Each party is required to notify the other parties on
or before June 15 of each year, as to whether such party will pay his or its
share of the required annual fee to the BLM for the following year. Failure to
notify the other parties will result in a default of such failing party's
interest in the claims.
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The partners are presently evaluating the Robbie claims, and do not have
any present intention to explore or develop the claims. There was no activity on
these claims during the fiscal year ended March 31, 1997.
La Fonda Investment
For the past several years, the Company has owned a total of 12,000 shares
of restricted common stock, or approximately 12% of the presently outstanding
stock, of Corporation de La Fonda, Inc. ("La Fonda"), a New Mexico corporation
which owns and operates the historic La Fonda Hotel in Santa Fe, New Mexico.
The operations of La Fonda have been profitable for the past several
years. La Fonda reported net earnings, after taxes, of $1,177,393, $1,022,451,
$990,261 and $1,180,000 for its fiscal years ended October 31, 1996, 1995, 1994
and 1993, respectively, as compared to net earnings, after taxes, of $841,695
for its fiscal year ended October 31, 1992. The majority of the profits of La
Fonda have been reinvested in improvements to the hotel. Over the past three
years, La Fonda has undertaken substantial renovations and improvements to the
hotel, including a major addition to the hotel, the installation of security,
fire sprinkler and heating and cooling systems, at a cost of several million
dollars. In 1991, La Fonda expended approximately $3,000,000 for the
construction of a large banquet hall, which has received a considerable amount
of recognition and national attention. Similarly, in 1987 and 1988, La Fonda
expended in excess of $560,000 to complete a renovation of its hotel rooms. La
Fonda has reported that these improvements have contributed to the continued
operating success of La Fonda. In the past several months, La Fonda has
commenced construction on an addition of new suites over the hotel's parking
garage, and a roof-top dining room, which construction is expected to be
completed in the fall of 1998 at a total cost of approximately $5,000,000.
During the fiscal years ended March 31, 1997, 1996, 1995, 1994, 1993,
1992, 1991 and 1990, the Company earned dividend income from its investment in
La Fonda of $12,600, $12,000, $15,000, $27,000, $30,000, $6,000, $38,400 and
$36,600, respectively. Dividends during the 1997, 1996, and 1995 fiscal years
decreased earlier years as a result of La Fonda's reinvestment of profits into
improvements in the hotel, and its decision to reduce improvements loans before
undertaking a future expansion planned for the hotel.
James Fouts, president, is a director and holder of 705 shares of La
Fonda. In addition, Elizabeth B. Fouts has recently been elected a director of
La Fonda. In October, 1989, the Company and the other shareholders holding a
total of approximately 45% of the outstanding common stock of La Fonda, entered
into a Voting Trust Agreement with Samuel Ballen, James Fouts and James Russell,
trustees, under the terms of which all of the voting rights of La Fonda held by
such shareholders were assigned to the trustees until December 31, 1999. The
purpose of the Voting Trust is to protect the assets of La Fonda and to reduce
the likelihood of an unfriendly takeover attempt.
OTHER ACTIVITIES
In the past several years, all of the Company's oil and gas exploration,
development and production has been conducted through various joint ventures in
which the Company is a participant. During the fiscal year ended March 31, 1997,
the Company did not conduct any exploration activities, did not participate in
any exploration activities, and did not incur any expenditures in connection
with oil and gas exploration activities.
During the year ended March 31, 1996, the Company's interest in a joint
venture in Oklahoma was written off the Company's books. During the fiscal year
ended March 31, 1989, the Company formed Auric Minerals Corporation, a
wholly-owned Nevada subsidiary, to hold the Company's interest in the Hugoton
Joint Venture, a joint venture organized to acquire oil and gas lease options in
western Oklahoma. In 1989, Petroleum Consultants Energy Corporation ("Petroleum
Consultants"), a joint venture partner located in Northfield, Illinois, assumed
control of the joint venture under an arrangement whereby it agreed to assume
all future expenditures of the project in exchange for an interest in the
project equal to its pro rata share of the entire investment in the project
since inception. The Company's interest in the joint venture, as well as the
interest of other parties, was reduced as Petroleum Consultants expended sums on
behalf of the joint venture. The Company held a net revenue interest of
approximately 10% in the joint venture. In 1996, the Company completely reduced
the remaining value of its interest in the joint venture to zero, to reflect its
assessment that there is no realistic recoverable value in such interest.
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EMPLOYEES
The Company has no regularly paid employees. The Company paid The Fremont
Corp., a corporation of which James Fouts is president and a principal, a total
of $12,000 during the fiscal year for secretarial services, office space and
clerical services. In addition, the Company has reimbursed James F. Fouts for
his expenses incurred on behalf of the Company. In the past, the Company has
also engaged the part-time services of others in connection with exploration
work conducted on its mining claims.
ITEM 2. PROPERTIES
NATURAL RESOURCE PROPERTIES
As discussed in "ITEM 1 - BUSINESS", the Company holds interests in
various natural resource properties in Utah, Nevada, California and Oklahoma.
For a more detailed discussion of the Company's interest in these properties and
exploration and development activities relating to such properties, reference is
made to "ITEM 1 BUSINESS: Business Activities During Fiscal Year".
SHARES OF LA FONDA
The Company is the holder of 12,000 shares or approximately 12% of the
outstanding common stock of Corporacion de La Fonda, Inc., a corporation which
owns the La Fonda Hotel in Santa Fe, New Mexico. (See "ITEM 1 - BUSINESS".)
OKLAHOMA OIL AND GAS INTERESTS
The Company currently has a working interest in one producing oil and gas
well located near Oklahoma City, Oklahoma. This oil well has negligible reserves
and, therefore, no estimates of proved oil and gas reserves is available or
material. Production from the well has declined to a nominal amount over the
past five years. All other oil and gas wells in which the Company has had a
working interest are no longer productive.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any material pending legal proceedings, and
to the best of its knowledge, no such proceedings by or against the Company have
been threatened.
ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS
No matter was submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of the fiscal
year covered by this report.
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PART II
ITEM 5.
MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
The common stock of the Company is traded in the over-the-counter market.
There is currently a very limited trading market for the Company's common stock.
The Company's shares of common stock are eligible for quotation on the NASD
Electronic Bulletin Board under the symbol "AMLS." The following sets forth, for
the respective periods indicated, the high and low bid prices of the Company's
common stock in the over-the-counter market, based on inter-dealer bid prices,
without retail markup, markdown, commissions or adjustments (which do not
represent actual transactions), as reported by the National Quotation Bureau's
"Pink Sheets".
Quarter Ended High Bid Low Bid
1993 Fiscal Year:
June 30, 1992 $.25 .25
September 30, 1992 .25 .25
December 31, 1992 .25 .25
March 31, 1993 .25 .25
1994 Fiscal Year:
June 30, 1993 $.25 .25
September 30, 1993 .25 .25
December 31, 1993 .25 .25
March 31, 1994 .25 .50
1995 Fiscal Year:
June 30, 1994 $.625 .50
September 30, 1994 .625 .625
December 31, 1994 .625 .625
March 31, 1995 .75 .625
1996 Fiscal Year:
June 30, 1995 $.875 .625
September 30, 1995 .875 .625
December 31, 1995 .875 .625
March 31, 1996 .875 .625
1997 Fiscal Year:
June 30, 1996 $.750 .750
September 30, 1996 .750 .750
December 31, 1996 .750 .750
March 31, 1997 .750 .750
On June 25, 1997, the high and low bid prices quoted by broker-dealer
firms effecting transactions in the Company's common stock, were $.75.
Since inception, no dividends have been paid on the Company's common
stock, and the Company does not anticipate paying dividends in the foreseeable
future.
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At June 25, 1997, there were approximately 721 holders of record of the
Company's common stock.
ITEM 6.
SELECTED FINANCIAL DATA
The following selected financial data of the Company is covered by an
opinion of a certified public accountant and should be read in conjunction with
the financial statements and related notes thereto.
INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED MARCH 31
1997 1996 1995 1994 1993
Total Revenue $38,161 $37,481 $40,851 $52,507 $56,320
Revenues from
natural resource
investments $25,492 25,402 25,786 $25,507 25,698
Net Income (loss) (3,607) (37,662) (12,868) (12,995) 13,183
Net Income (loss)
per common share (.0037) (.0387) (.0131) ($.0132) $ 0.013
BALANCE SHEET INFORMATION
AS OF MARCH 31
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Total Assets $272,862 $229,309 $314,694 $351,071 $407,474
Long-term
debt 0 0 0 0 0
Cash dividends
declared per
common share 0 0 0 0 0
</TABLE>
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ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Company's current assets as of March 31, 1997 of $26,103 represents a small
decrease in current assets of $3,158 from current assets of $29,261 one year
earlier. Total assets at March 31, 1997, of $272,862, represents an increase in
total assets of $43,553 from total assets of $229,309 one year earlier, which is
attributable to an increase in value of the Company's ownership interest in
shares of Dynamic Oil Ltd. Similarly, stockholders' equity of $272,213 at March
31, 1997, represents an increase in stockholders' equity of $43,418 from
stockholders' equity of $228,705 at March 31, 1996. As indicated, this increase
is attributable to an increase in value of marketable securities.
The Company does not have sufficient liquidity or capital resources to finance
any major developments by the Company. Should ongoing exploration produce
favorable results, any adequate exploration or development would require
substantial additional financing or the participation of a larger,
better-financed company.
RESULTS OF OPERATIONS
During the fiscal year ended March 31, 1997, the Company had total revenue of
$38,161, and expenses of $41,768, resulting in a net pre-tax loss of $3,607, as
compared to a net pre-tax loss of $37,662 for the fiscal year ended March 31,
1996. The Company's decrease over in revenue over the past two years, is a
result of a reduction in dividends received on shares of stock of Corporacion De
La Fonda held by the Company over the past two years. While total revenue during
the fiscal year ended March 31, 1997, was only $680 more than total revenue in
the fiscal year ended March 31, 1996, expenses during the fiscal year ended
March 31, 1997 were $33,375 less than the fiscal year ended March 31, 1996.
During the fiscal years ended March 31, 1997, 1996, 1995 and 1994, operating
revenues from the Company's interest in oil wells in Oklahoma was nominal. The
Company received a $25,000 advance royalty payment during the fiscal year on its
leased mining claims in Nevada. Dividend income of $12,600 from the Company's
investment in La Fonda during the year represents a a small increase over
dividend income of $12,000 for the year ended March 31, 1996, and a decrease in
dividend income from prior years.
Management does not believe that the Company's operations have been more
adversely impacted by inflation than other similar businesses, although
increased expenses have affected the cost of minerals exploration.
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data are included beginning at page
F-1.
ITEM 9.
CHANGES IN AND DISAGREEMENTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
During the fiscal year ended March 31, 1997, there has been no disagreement
with accountants on any matter of accounting principles or practices or
financial statement disclosure as provided in Regulation S-K, Item 304.
11
<PAGE>
PART III
ITEM 10.
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
LIST AND TERMS OF OFFICE
The table below sets forth the name, age, and position of each executive
officer and director of the Company.
Officer or
Name Age Position Director Since(1)(2)
James F. Fouts 78 Director, President 1969
and Chief Executive
Officer
Dan Ligino 73 Director and Vice President 1974
Elizabeth F. White 47 Director 1985(3)
Elizabeth B. Fouts 69 Secretary/Treasurer and 1975(3)
Principal Financial
Officer
- -------------------
(1) All directors and executive officers serve for a term of one year or until
their successors are chosen and qualified.
(2) During the fiscal year, George Wortley, who served as a director of the
Company since 1974, died at the age of 86.
(3) James F. Fouts is the father of Elizabeth F. White and the husband of
Elizabeth B. Fouts. There are no other family relationships among any of the
above-named directors, executive officers, or nominees.
- -------------------
James F. Fouts. Mr. Fouts has been president of the Company since 1975.
From 1969 to 1975, he served as secretary/treasurer of the Company and has
served as director of the Company since its incorporation in 1969. Since 1967 he
has also been employed as president of Fremont Corporation, a private
corporation and an affiliate of the Company engaged in holding and managing
investments (chiefly real estate), with its principal office and place of
business in Louisiana. Mr. Fouts graduated from Texas A&M University in 1940
with a bachelor's degree in chemical engineering. From 1940 to 1959, he was
employed as division superintendent for Bariod Division of the National Lead
Company, supervising oil well logging operations in the western United States
and Canada, with headquarters in Casper, Wyoming. From 1940 through 1966, he was
engaged in the business of technical reproduction and oil well log distribution
in Canada and the United States. He is a member of the American Association of
Petroleum Geologists; Intermountain Association of Petroleum Geologists; and a
past vice president of the Wyoming Geological Association. He was formerly a
director of the Rocky Mountain Oil & Gas Association. He is presently a director
of Corporation de La Fonda, an affiliate of the Company engaged in the hotel
business. Mr. Fouts and his wife also own 3,000 shares of the common stock of La
Fonda. Mr. Fouts is also a director of High Plains Natural Gas Company, a
pipeline company serving five counties in the Texas Panhandle.
12
<PAGE>
Dan Ligino. Mr. Ligino has served as vice president and a director of the
Company since 1974. He is and has been for approximately the past sixteen years
a director of State Bank of East Moline, Illinois, and is a director of the
Colona Avenue State Bank in East Moline. He is a retired businessman. Prior to
his retirement, he had 23 years of experience in the Dairy Queen business; 20
years of experience, including serving as president of Hub City Implement
Company, as a John Deere equipment distributor; and over 25 years of experience
in real estate.
Elizabeth F. White. Mrs. White as been a director of the Company since
1985. She graduated from Newcomb College of Tulane University, New Orleans,
Louisiana, in 1971. She was employed by Traveler's Insurance Company for five
years, where she was resident agent at Houma, Louisiana specializing in
investigations in oil exploration and offshore drilling accidents. In 1977, she
moved with her family to California and presently resides in Monte Sereno,
California with her husband and two children. She has founded, owned and
operated a successful business importing and selling European chocolate candy.
Since 1981, she has been a computer consultant for children's education and has
had several children's programs authored by her published. She has consulted for
Apple Computer and has served on the Apple Computer Grant Committee. Mrs. White
was a director of a science and computer school located in San Jose, California.
Mrs. White was a partner in Empower-Net, a business consulting firm. Presently,
Mrs. White is an instructor in AVATAR, a business program.
Elizabeth B. Fouts. Mrs. Fouts has served as secretary/treasurer of the
Company since 1975. She is a graduate of Newcomb College of Tulane University,
New Orleans, Louisiana. She obtained a master of science degree in psychology
from Northeast Louisiana University of Monroe, Louisiana. For a period of
fifteen years until July, 1987, when she retired, she was employed as a
psychology consultant by the County School System of Ouachita Parish to July
1987. In December, 1993, Mrs. Fouts was elected a director of La Fonda. Mrs.
Fouts is also secretary/treasurer for Fremont Corporation, an affiliate of the
Company, and has held similar positions in other companies.
ITEM 11.
EXECUTIVE COMPENSATION
REMUNERATION DURING FISCAL YEAR
During the fiscal year ended March 31, 1997, no officer or director received
compensation exceeding $60,000.
The following table sets forth the compensation paid by the Company during the
fiscal year to all officers and directors as a group:
Name/Position Cash Compensation*
All officers and directors as
a group (5 persons) $14,396*
* Consists of $12,000 paid to Fremont Corporation, a corporation of which
James Fouts is an officer and principal shareholder, for office use and
bookkeeping, secretarial and clerical services; and $2,396 paid in
directors' fees.
The directors are compensated $500 per year for board membership, and are paid
$100 per meeting attended, plus expenses. The Company has held only one formal
board meeting per year for the past several years.
13
<PAGE>
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table shows, as of June 25, 1997, the number of shares of common
stock, par value $.01, of the Company owned of record or beneficially by each
person who owned of record, or was known by the Company to own beneficially,
more than 5% of the Company's common stock, and the name and shareholdings of
each officer and director, and all officers and directors of the Company as a
group:
Amount and Nature of Ownership(1)
Sole Voting Shared
and Voting and Percent
Name of Person Investment Investment of
or Group Power Power Class(1)
Principal Shareholders:
Alan E. Fouts(2)(4) 113,355 11.51
4002 Bon Aire Drive
Monroe, Louisiana 71203 12,800(2) 1.30
Donovan B. Fouts(2)(4) 96,250 9.78
4002 Bon Aire Drive
Monroe, Louisiana 71203 0 0.00
James F. Fouts(2)(4) 33,500 3.40
4002 Bon Aire Drive
Monroe, Louisiana 71203 76,250(3) 7.75
Elizabeth B. Fouts(2)(4) 950 0.10
4002 Bon Aire Drive
Monroe, Louisiana 71203 76,250(3) 7.75
Dan Ligino 104,175 10.58
1407 19th Street
East Moline, IL 61244 43,500(5) 4.42
Elizabeth F. White(2)(4) 122,400 12.43
243 Via la Posada
Los Gatos, CA 95030 0 0.00
Officers and Directors:
James F. Fouts ---------------See Above---------------
Elizabeth B. Fouts ---------------See Above---------------
Dan Ligino ---------------See Above---------------
Elizabeth F. White ---------------See Above---------------
All officers and directors 261,025 26.51
as a group (5 persons)(3)(4)(5) 119,750(3) 12.16
14
<PAGE>
(1) The percentages are calculated based on the number of outstanding shares
(1,000,000) of the Company as of the Record Date, after deducting a total
of 15,511 shares held by the Company in treasury.
(2) Alan E. Fouts, Donovan B. Fouts and Elizabeth F. White are the sons an
daughter, respectively, of James F. Fouts and Elizabeth Fouts, husband and
wife. With respect to Alan E. Fouts, of the shares reflected under "Shared
Voting and Investment Power", 12,800 shares are held in a family trust.
(3) Consists of 76,250 shares owned directly by James F. Fouts and Elizabeth B.
Fouts, his wife, in joint tenancy.
(4) In addition to the beneficial stock ownership of Mr. Fouts and his
immediate family, described above, other relatives of Mr. Fouts own the
following interests: 12,800 shares owned by a brother; 800 shares owned by
a sister; 38,325 shares owned by a brother-in-law; and 1,800 owned by a
sister-in-law. No agreement or understanding exists with respect to the
voting of these shares; however, it is anticipated that they will be voted
as Mr. Fouts recommends or that Mr. Fouts will be designated as proxy with
respect to the shares.
(5) These shares are held in joint tenancy by Mr. Ligino and his brother.
There are no arrangements known to the Company the operation of which may at a
subsequent date result in a change of control of the Company.
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In the past, the Company has employed officers and principal shareholders
in the performance of exploration work on its mineral claims and in evaluating
new properties. Compensation paid in connection with these services has been
determined by the Company to compare favorably with amounts which could be
expected to be paid to third parties. No amounts were paid during the last
fiscal year.
No director, officer, nominee for director, or any associate of such
director, officer or nominee, has been indebted to the Company at any time
during the past several fiscal years.
The Company owns 12,000 shares or approximately 12% of the outstanding
common stock of Corporation de La Fonda. James F. Fouts, President, is also a
shareholder and director of Corporation de La Fonda. Because of these
relationships, any transaction between the Company and this entity cannot be
deemed to be at arm's length.
In August, 1993, the Company authorized the grant of options to purchase a
total of 12,000 shares of common stock to each of the Company's officers and
directors. These options were exercisable at a price of $.60 per share at any
time on or before August 14, 1996, at which time the options expired. Although
the exercise price of the optioned shares was higher than the bid price of the
Company's common stock as of the date of grant, and as of the present date, this
transaction cannot be considered the result of arms' length negotiations. During
the fiscal year ended March 31, 1995, options to purchase a total of 12,000
shares of the Company's common stock were exercised by Elizabeth B. Fouts, a
director and wife of the Company's president.
On October 1, 1986, the Company loaned the sum of $100,000 in cash to Suite
Simpatica, Ltd. ("Debtor"), a New Mexico corporation, under the terms of a
Promissory Note (the "Note") of such date. The Note was payable on or before
October 1, 1989. Although the original terms of the Note provide for interest at
the rate of 8.1% per annum from October 1, 1986, the Company subsequently
15
<PAGE>
verbally agreed to forego interest on the Note. The Note was subordinated to all
other indebtedness of the Debtor, including secured and unsecured debt. In the
end of 1990, the Company agreed to accept a discounted note in the amount of
$75,000. As a result of this transaction, a $25,000 loss to the Company was
recognized. In 1994, the discounted note had been paid in full. The Company
determined that it would discount the note because of the poor financial
condition of the Debtor. A majority of the equity of the Debtor is owned by
management of La Fonda, an affiliate of the Company. In addition, James Fouts,
President and a director of the Company, and a director of La Fonda, is also a
shareholder of approximately 5% of the Debtor, and the president of La Fonda
holds in excess of 50% of the Debtor. Therefore, the terms of the loan
transactions between the Company and the Debtor cannot be considered to be the
result of arm's length negotiations.
During the fiscal year ended March 31, 1996, the Company entered into a
partnership agreement whereby the Company acquired a 25% interest in the "Robbie
Claims," 107 unpatented mineral claim owned by Hi-Tech Exploration, at a cost of
$3,567. James F. Fouts, the Company's President, also acquired a 25% interest in
such mining claims in the same transaction, at the same cost. Therefore, this
transaction cannot be considered the result of arms' length negotiations.
During the fiscal year ended March 31, 1997, the Company's President, James
F. Fouts, loaned to the Company the sum of $13,000. This loan was repaid,
without interest, prior to the end of the fiscal year.
PART IV
ITEM 14.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K
A. INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
The index (table of contents) to the financial statements and schedules
appears at page 18.
B. EXHIBITS:
None.
C. REPORTS ON FORM 8-K
During the fiscal year ended March 31, 1997, the Company did not file any
reports on Form 8-K.
16
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, the Registrant has caused this report to be signed on
its behalf by the undersigned, hereunto duly authorized.
REGISTRANT:
AURIC METALS CORPORATION
By
James F. Fouts, President
Date: June , 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
Director and President Date: June , 1997
James F. Fouts (Principal Executive Officer)
Secretary-Treasurer Date: June , 1997
Elizabeth B. Fouts (Principal Financial Officer)
Vice President and Director Date: June , 1997
Dan Ligino
Vice President and Director Date: June , 1997
Elizabeth F. White
17
<PAGE>
AURIC METALS CORPORATION AND SUBSIDIARY
TABLE OF CONTENTS
Report of Independent Accountants. 1
Consolidated Balance Sheets for the years
ended March 31, 1997 and 1996 2
Statements of Consolidated Income for the years
ended March 31, 1997, 1996 and 1995 3
Statement of Consolidated Stockholders' Equity for
the years ended March 31, 1997, 1996 and 1995. 5
Notes to Financial Statements. 6 - 9
18
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Shareholders and
Board of Directors
Auric Metals Corporation
We have audited the accompanying balance sheets of Auric Metals Corporation
as of March 31, 1997 and 1996, and the related statements of income,
stockholders' equity, and cash flows for the years ended March 31, 1997, 1996,
and 1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as will as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Auric Metals
Corporation as of March 31, 1997 and 1996, and the results of its operations and
its cash flows for the years ended March 31, 1997, 1996 and 1995, in conformity
with generally accepted accounting principles.
Salt Lake City, Utah
May 27, 1997
<PAGE>
AURIC METALS CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1997 AND 1996
1997 1996
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 26,103 $ 29,261
---------- ----------
Total Current Assets 26,103 29,261
---------- ----------
INVESTMENTS:
Marketable equity securities (Notes 3) 92,010 44,985
Other investments (Note 3) 154,356 154,356
---------- ----------
246,366 199,341
---------- ----------
PROPERTY AND EQUIPMENT AT COST
Equipment 1,573 1,573
---------- ----------
1,573 1,573
Accumulated depreciation ( 1,180) ( 866)
---------- ----------
393 707
---------- ----------
$272,862 $229,309
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accrued liabilities $ 649 $ 514
---------- ----------
Total current liabilities 649 514
---------- ----------
STOCKHOLDERS' EQUITY:
Common stock, $0.01 par value;
Authorized: 25,000,000 shares
Issued: 1,000,000 shares
(including treasury stock) 10,000 10,000
Additional paid-in capital 342,847 342,847
Unrealized loss on securities
available for sale (Note 3) (64,241) (111,266)
Accumulated (deficit) ( 6,418) ( 2,811)
Common stock in treasury at cost
15,511 shares ( 9,975) ( 9,975)
---------- ----------
272,213 228,795
---------- ----------
$272,862 $229,309
========== ==========
The accompanying notes are an integral part of these
consolidated financial statements
2
<PAGE>
AURIC METALS CORPORATION AND SUBSIDIARY
STATEMENTS OF CONSOLIDATED INCOME (LOSS)
YEARS ENDED MARCH 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
REVENUES:
<S> <C> <C> <C>
Oil and gas sales $ 492 $ 402 $ 786
Mineral royalty 25,000 25,000 25,000
Interest income 69 79 65
Dividends 12,600 12,000 15,000
---------- ---------- ----------
38,161 37,481 40,851
---------- ---------- ----------
EXPENSES:
Oil and gas production expenses - - 82
Loss (income) sulfur mine interest - 15,750 5,614
Mineral exploration 3,614 - 2,611
Mineral claims leasing 2,900 2,900 6,150
Valuation allowance, unproved property - 19,443 5,215
Depreciation 314 315 315
Legal and accounting 5,978 5,234 5,275
Travel and lodging 7,124 4,382 5,754
Directors' fees 2,396 2,396 1,996
Office expense (Note 5) 12,000 12,000 12,000
General and administrative 7,442 7,702 8,707
Loss on sale of investment securities - 5,021 -
---------- ---------- ---------
41,768 75,143 53,719
---------- ---------- ----------
(LOSS) BEFORE INCOME TAX ( 3,607) ( 37,662) ( 12,868)
Provision for taxes on income - - -
---------- ---------- ----------
NET (LOSS) $( 3,607) $( 37,662) $( 12,868)
========== ========== ==========
NET (LOSS) PER COMMON SHARE $( .0037) $( .0387) $( .0131)
========== ========== ==========
Weighted average number of shares
outstanding (excluding treasury stock) 984,489 972,668 981,217
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements
3
<PAGE>
AURIC METALS CORPORATION AND SUBSIDIARY
STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY
YEARS ENDED MARCH 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
Net Unrealized
Gain (Loss) on
Accumulated Securities
tock Stock Paid-in Earnings Treasury Tresury Available
Shares Amount Capital (Deficit) Shares Amount For Sale
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE MARCH 31, 1994 1,000,000 $ 10,000 $ 343,327 $ 47,719 17,711 $(10,726) $(39,680)
Net loss year ended March 31, 1995 -- -- -- (12,868) -- -- --
Net change in unrealized loss on
securities available for sale -- -- -- -- -- -- (25,992)
Purchase of treasury stock -- -- -- -- 7,300 (5,179) --
Sales of treasury stock -- -- ( 480) -- (12,000) 7,680 --
--------- -------- ---------- -------- ------- -------- --------
BALANCE MARCH 31, 1995 1,000,000 10,000 342,847 34,851 13,011 ( 8,225) (65,672)
Net loss year ended March 31, 1996 -- -- -- (37,662) -- -- --
Net change in unrealized loss on
securities available for sale -- -- -- -- -- -- (45,594)
Purchase of treasury stock -- -- -- -- 2,500 (1,750) --
--------- -------- ---------- -------- ------- -------- --------
BALANCE MARCH 31, 1996 1,000,000 10,000 342,847 ( 2,811) 15,511 ( 9,975) (111,266)
Net loss year ended March 31, 1997 -- -- -- ( 3,607) -- -- --
Net change in unrealized gain (loss)
on securities available for sale -- -- -- -- -- -- 47,025
--------- -------- ---------- -------- ------- -------- --------
BALANCE MARCH 31, 1997 1,000,000 $ 10,000 $ 342,847 $( 6,418) 15,511 $( 9,975) $( 64,241)
========= ======== ========== ======== ======= ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements
4
<PAGE>
AURIC METALS CORPORATION AND SUBSIDIARY
STATEMENT OF CONSOLIDATED CASH FLOWS
YEARS ENDED MARCH 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net loss $(3,607) $(37,662) $(12,868)
--------- --------- ---------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion, amortization
and valuation allowance 314 19,758 5,530
Equity in partnership (income) loss - 12,183 5,614
(Gain) loss on disposal of property - 5,021 -
Increase (decrease) in accrued liabilities 135 ( 379) 462
--------- --------- ---------
Total adjustments 449 36,583 11,606
--------- --------- ---------
Net cash (used) by operating activities ( 3,158) (1,079) ( 1,262)
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cost recovery - undeveloped property - - 5,000
--------- --------- ---------
Net cash provided by investing activities - - 5,000
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock - (1,750) ( 5,179)
Sale of treasury stock - - 7,200
Sale of investment stock - 14,608 -
Short-term borrowings 13,000 - 32,000
Short-term loan payments (13,000) - (32,000)
--------- --------- ---------
Net cash provided by financing activities - 12,858 2,021
--------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS ( 3,158) 11,779 5,759
Cash and equivalents, beginning of period 29,261 17,482 11,723
--------- --------- ---------
Cash and equivalents, end of period $26,103 $29,261 $ 17,482
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements
5
<PAGE>
AURIC METALS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 1997, 1996 AND 1995
(1) Operations:
Auric Metals Corporation (the "Company") was incorporated in Utah in May of 1969
to engage in mineral exploration. In 1985, the Company became a Nevada
corporation by merging with a wholly-owned Nevada corporation created solely for
the purpose of changing the Company's state of domicile. In subsequent years,
the Company has also engaged in oil and gas exploration, development and
production activities. The Company holds working interests in various patented
and unpatented mining claims in the Tintic Mining District of Utah. The Company
leases mining claims near Elko, Nevada from Hillcrest Mining Company of Denver
and has subleased the claims to United States Steel Corporation. The Company
presently holds a working interest in one oil and gas well near Oklahoma City,
Oklahoma which provides nominal revenue.
(2) Significant Accounting Policies:
Cash Equivalents:
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments purchased with a maturity of three months to be cash
equivalents.
Principles of consolidation:
The consolidated financial statements include the accounts of Auric Minerals
Corporation. Intercompany accounts and transactions have been eliminated in
consolidation.
Investment securities
Management determines the appropriate classification of investment securities at
the time they are acquired and evaluates the appropriateness of such
classification at each balance sheet date. Available-for-sale securities consist
of marketable equity securities not classified as trading securities.
Available-for-sale securities are stated at fair value, and unrealized holding
gains and losses, net of the related deferred tax effect, are reported as a
separate component of stockholders; equity.
Investment in unconsolidated affiliates:
Investments in affiliated companies in which ownership is 20% or more are
carried at the Company's original cost plus equity in earnings since date of
acquisition.
Investments in less than 20% owned affiliates are carried at cost or estimated
net realizable amounts, whichever is lower.
6
<PAGE>
AURIC METALS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 1997, 1996 AND 1995 (Continued)
(2) Significant Accounting Policies - continued:
Mining:
Exploration and development expenditures are generally charged to expenses as
incurred until a decision is made to develop a mineral reserve. Expenditures to
bring new properties into production and major expenditures of a nonrecurring
nature are deferred and amortized ratable over production benefitted.
Expenditures for continuing development required to maintain production are
charged to expenses as incurred.
Depreciation:
Equipment is recorded at cost and depreciated on a straight-line method over a
five year estimated useful life.
(3) Investments consist of the following at March 31, 1997 and
1996:
Crater investment
The Company has a 19% limited partnership interest in the Crater Limited
Partnership. Crater engaged in sulfur mining in Inyo County, California. The
Company carried this investment at cost or estimated net realizable value,
whichever was lower. During the fiscal year ended March 31, 1996, Crater
abandoned its mining operations, therefore, the Company reduced the value of
this investment to zero.
Robbie claims investment
The Company acquired a 25% interest in the "Robbie" gold prospect claims owned
by Hi-Tech Exploration at a cost of $3,567. The Company's President, Mr. James
F. Fouts is also an owner of a 25% interest in these claims.
LaFonda investment
The Company owned, as of March 31, 1997, 12,000 shares of the common stock of
Corporacion De La Fonda, Inc., or approximately 12% of that company's
outstanding shares. De La Fonda, Inc. is a New Mexico hotel operation. Prior to
1984, the Company owned more than 20% of De La Fonda and accounted for its
investment by the equity method. Since 1983, the Company's investment has been
less than 20% and the cost method of accounting has been used. The carrying
value of the investment includes $123,177 of cumulative undistributed earnings
of La Fonda added to the investment under the equity method. Income taxes have
7
<PAGE>
AURIC METALS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 1997, 1996 AND 1995 (Continued)
(3) Investments - continued:
been recognized under the assumption that undistributed earnings would
eventually be distributed as dividends, thereby qualifying for
dividends-received deductions. If the undistributed earnings are eventually
received in taxable transactions other than as dividends, an unrecognized tax of
approximately $41,880 under current rates could result. The Company's equity in
the underlying net assets of La Fonda exceeds the carrying value of the
investment. Since the Company's President, Mr. James F. Fouts, has positions,
interests or shareholdings, in La Fonda, any transaction between the Company and
this entity cannot be deemed to be at arm's length.
1997 1996
Robbie claims investment $ 3,567 $ 3,567
LaFonda investment 150,789 150,789
------- -------
Other investments $154,356 $154,356
======= =======
Dynamic Oil Ltd.
Effective April 1, 1994, the Company adopted SFAS No. 115 on accounting for
certain investments in debt and equity securities. This new standard requires
that available-for- sale investments in securities that have readily
determinable fair values be measured at fair value in the balance sheet and that
unrealized holding gains and losses for these investments be reported in a
separate component of stockholders' equity until realized. At March 31, 1997 and
1996 marketable investments classified as available for sale included the
following:
1997 1996
Dynamic Oil Ltd. shares at cost $156,251 $156,251
Gross unrealized holding loss 64,241 111,266
-------- --------
Dynamic Oil Ltd. at fair value $ 92,010 $ 44,985
======== ========
(4) Stock options:
During the 1994 fiscal year, the Company granted stock options to each officer
and director for 12,000 shares of the Company's common stock at $.60 per share.
Options expired on August 14, 1996. Prior to expiration, 12,000 of these options
were exercised.
8
<PAGE>
AURIC METALS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 1997, 1996 AND 1995 (Continued)
(5) Related party transactions:
The amounts paid to officers and directors have not been, in any sense,
negotiated at arm's length. Payments of $12,000 were made during the current
fiscal year to The Fremont Corp., a corporation in which the Company's president
is principal shareholder. These payments are for office use, bookkeeping and
clerical services. Refer to Note (3) for additional related party transactions
related to the Robbie claims investment and the LaFonda investment. During the
current fiscal year, the Company borrowed $13,000 from its President, Mr. James
F. Fouts. The loan was repaid during the same year.
(6) Federal and state income tax:
Effective April 1, 1993, the Company adopted Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes. The cumulative effect of the
change in accounting principle is immaterial. At March 31, 1997, the Company
had, for federal tax reporting purposes, an operating loss carryforward of
approximately $262,000. This carryforward begins to expire in 2004. The Company
has a capital loss carryforward of approximately $5,000 which expires in 2001.
No benefit has been reported in the financial statements, however, because the
Company believes there is at least a 50% chance that the carryforward will
expire unused. Accordingly, the tax benefit of the loss carryforward has been
offset by a valuation allowance of the same amount.
(7) Commitments and contingencies:
The Company is required to pay the Bureau of Land Management $100 annually on 29
leased mining claims for $2,900. Rates are subject to change and failure to pay
results in loss of mining rights. The payments to BLM are in lieu of assessment
work which was required previously. The leases are cancelable annually upon
notice to lessor.
(8) Fair values of financial instruments: The Company estimates that the fair
value of all financial instruments at March 31, 1997 and 1996 does not differ
materially from the aggregate carrying values of its financial instruments
recorded in the accompanying balance sheets.
9
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