UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
( x ) Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 1997
OR
( ) Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Transition period from ___ to ___
Commission file number 0-17874
XPLORER, S.A.
(Exact name of registrant as specified in its charter)
Nevada 88-0199674
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification Number)
4750 Kelso Creek Road, Weldon, California 93238
(Address of principal executive offices) (Zip Code)
Phone: (619) 378-3936 Fax: (619) 378-1066
(Registrant's telephone number, including area code)
Gerant Industries, Inc.- March 31, 1997
(Former name, former address and former fiscal year,
if changed since last report)
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 [_]
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 subsequent to the distribution of securities under a plan confirmed
by a court. Yes [X] No [_]
As of March 31, 1997, there were 18,782,447 shares of common stock ($0.001 par
value) issued and outstanding.
Total sequentially numbered pages in this document: 16
1
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Xplorer, S.A.
(A Development Stage Enterprise)
Consolidated Balance Sheet
As of March 31
Assets 1997 1996
-------------------------
(Unaudited) (Unaudited)
Current Assets:
Cash $95,544 Not Available
Note receivable (Note 5) 16,000 For Prior
Marketable securities (Note 4) 223,693 Period
Prepaid commissions 286,320 See Note 15
-------------------------
Total Current Assets 621,557
Property, plant & equipment - net
(Notes 6, 8, 7 12) 3,489,384
Other investments (Notes 7 and 11) 1,019,000
-------------------------
Total Assets $5,129,941
=========================
THE NOTES TO THE FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS STATEMENT
2
<PAGE>
Xplorer, S.A.
(A Development Stage Enterprise)
Consolidated Balance Sheet
As of March 31
Liabilities and Shareholder Equity
Liabilities:
Current Liabilities:
Gold contracts ( Note 12) 250,399
Zero-coupon bonds - Current 890,000
Related party payable (Note 13) 208,017
Note payable (Notes 5 and 11) 450,000
Payroll obligations 11,752
Other accrued expenses 21,738
-------------------------
Total Current Liabilities 1,831,906
Accrued legal fees (Note 10) 97,000
Long-term zero coupon bonds 620,418
Minority interest in consolidated
subsidiary (Note 8) 852,000
-------------------------
3,401,324
-------------------------
Commitments and contingencies
(Notes 2, 9, 11, & 12)
Shareholders' Equity (Note 7):
Preferred Stock, par value $0.001,
authorized 1,250,600 shares; convertible
beginning in 2006; 1,250,600 shares issued
and outstanding. 1,300
Common Stock, $0.001 par value,
authorized sixty million (60,000,000)
shares; 18,782,447 shares issued and 18,600
outstanding.
Additional paid in capital 2,694,055
Deficit accumulated during the development
stage (985,338)
-------------------------
Total Shareholders' Equity 1,728,617
-------------------------
Total Liabilities and Shareholders' Equity $5,129,941
=========================
THE NOTES TO THE FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS STATEMENT
3
<PAGE>
Xplorer, S.A (A Development Stage Enterprise)
Unaudited Statement of Operations
For The Three Month Period Ended March 31
1997 1996
-----------------------------------------------
Quarter Year To Quarter Year To
Date Date
-----------------------------------------------
Income: Not Available For Prior
Period
Revenues (Note 1) $0 $0 See Note 15 For Details
Other income (expense) $55,020 55,020
-----------------------------------------------
Total Income 55,020 55,020
-----------------------------------------------
Cost of Sales:
0 0
-----------------------------------------------
Total Cost of sales 0 0
-----------------------------------------------
Gross margin (Loss) 55,020 55,020
-----------------------------------------------
Operating Expenses:
Compensation 43,766 43,766
Professional fees 73,368 73,368
Commissions 0 0
Interest 7,500 7,500
Administrative 11,724 11,724
Depreciation 0 0
-----------------------------------------------
Total Operating expenses 136,358 136,358
-----------------------------------------------
Net Profit (Loss) ($81,338) ($81,338)
===============================================
Earnings (Loss) per
Share of Common
Stock & Equivalents ($0.004) ($0.004)
===============================================
Common Stock
outstanding 18,782,447 18,782,447
===============================================
THE NOTES TO THE FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS STATEMENT
4
<PAGE>
Xplorer, S.A. (A Development Stage Enterprise)
UNAUDITED STATEMENT OF CASH FLOWS
For the Three Month Period Ended March 31
CASH FLOWS FROM OPERATING ACTIVITIES 1997 1996
---------------------------
---------------------------
Net (Loss) ($81,338) Not Available
Adjustments to Reconcile Net Income to For Prior
Net Cash Used in Operating Activities: Period
Eliminate Non Cash Items See Note 15
(Depreciation and Amortization)
(Increase) Decrease in:
Receivables
Marketable securities 2,707
Prepaid commissions (76,320)
Increase (Decrease) in:
Gold contracts (22,601)
Zero coupon bonds (25,000)
Related party payable 59,017
Accrued expenses and payroll obligations (7,710)
Accrued legal fees (50,000)
Long term zero coupon bonds 67,718
NET CASH PROVIDED BY (USED IN) ---------------------------
OPERATING ACTIVITIES (133,527)
---------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Increase (Decrease) in:
Costs added to property, plant & equipment (84,984)
Notes payable
Stock issued for equity conversion:
Common stock
Paid in capital 148,055
---------------------------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 63,071
---------------------------
NET INCREASE (DECREASE) IN CASH (70,456)
CASH, at Beginning of Period 166,000
---------------------------
CASH, at End of Period $95,544
===========================
THE NOTES TO THE FINANCIAL STATEMENTS ARE AN INTEGRAL PART
OF THIS STATEMENT
5
<PAGE>
Xplorer, S.A. (A Development Stage Enterprise)
UNAUDITED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Note 8)
For the Three Month Period Ended March 31, 1997
<TABLE>
<CAPTION>
Common Stock Preferred Stock Additional
------------------------------------------- Paid In Retained
Shares Amount Shares Amount Capital Earnings Total
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance per audit, December 31, 1996 18,782,447 $18,782 1,280,550 $1,300 $2,546,000 ($904,000) $1,662,082
Entries For Quarter Ending March 31, 1997
Required adjustment for quarter 148,055 $148,055
Profit or (Loss) for period (81,338) ($81,338)
------------------------------------------------- -------------------------------
BALANCE, March 31, 1997 18,782,447 $18,782 1,280,550 $1,300 $2,694,055 ($985,338) $1,728,799
------------------------------------------------- -------------------------------
</TABLE>
THE NOTES TO THE FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS STATEMENT
6
<PAGE>
XPLORER, S. A. (A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three Month Period Ended March 31, 1997
Note 1 Organization and Presentation:
Xplorer, S. A., the "Company" (successor to Gerant Industries, Inc.)
was organized by adoption of amended and restated Articles of
Incorporation dated July 5, 1996 which were filed with the office of
the Secretary of State of Nevada on August 15, 1996.
Gerant Industries, Inc. ("Gerant") filed a petition for reorganization
under Chapter 11 of the United States Bankruptcy Court ("the Court")
for the Central District of California on March 1, 1994. On July 24,
1996 the Court confirmed Gerant's Third Amended Plan of Reorganization
(the "Plan"). The Plan approved the amendment of the of the Articles of
Incorporation and By-Laws, change of corporate name, authorization of
common and preferred shares of stock, payment of claims and issuance of
stock by the successors to this debtor- in-possession, Xplorer, S. A.
The Company was to issue 16,500,000 shares of common stock and
1,043,000 shares of preferred stock which were valued in aggregate at
$53 Million by the Court. The historical determinable value in
accordance with generally accepted accounting principles was $2,011,200
and the Company accounted for the transaction as a
quasi-reorganization.
The Company is a development stage enterprise and has not achieved its
intended operations or related revenue as of this date.
The Company, a development stage enterprise, anticipates obtaining
sufficient cash resources in 1997 from the sale of investment
contracts, warrant exercise, operations, or private placement of equity
securities. Such proceeds are necessary to assure the funding of
anticipated operating costs and satisfaction of any negative working
capital as of the current period.
PRESENTATION
The Company intends to engage in the development of natural resource
properties. As of March 31, 1997 the Company does not have any
operating properties and is a development stage enterprise owning 59%
of Atlantic Pacific Trust, L.L.C. and its wholly-owned subsidiary
Atlantic-Pacific Finanzprodukte, GmbH as of March 31, 1997. The
accounts of this entity, which has made loans to its parent are
included in these financial statements and all significant
inter-company transactions have been eliminated. The loans have been
converted to common stock or units of the Company (Note 8).
Gerant, the predecessor Company, had net assets of approximately
$52,000 (Note 3) and insignificant operations from January 1, 1994 to
August 15, 1996. The quasi-reorganization of this entity resulted in
retained earnings of $0 as of January 1, 1996.
Note 2 Summary of Significant Accounting Policies:
Mining Properties:
7
<PAGE>
Notes To Xplorer, S.A. Financial Statements (Continued)
Mining properties are reflected in property, plant, and equipment at
cost of acquisition and development. Costs include efforts to remove
ore and waste, exploration, development of new ore bodies and defining
further mineralization in existing ore bodies. These costs are deferred
and will be charged to operation costs utilizing the unit-of
-production method in the period in which commercial production occurs.
When a property is identified as having development potential, the
costs of engineering, contract labor, financing, and professional fees
related to development are capitalized as they are incurred. If a
project is determined not to be economically feasible, unrecoverable
costs are expensed in the year in which the determination is made.
Mining properties are reflected at net realizable value based on the
Company's ability to generate future value.
Revenue Recognition:
Revenue is recognized when title to delivered gold or other precious
metals passes to the buyer.
Reporting Currency:
While the Company has significant financing transactions denominated in
German currency, its operations are located in the U.S. Accordingly,
all financial information regarding these transactions is translated
into U.S. dollars and no material transaction effect exists at March
31, 1997.
Loss Per Share:
The loss per share is calculated using the weighted average number of
shares outstanding. Warrants outstanding are anti-dilutive and are not
included.
Property, Plant & Equipment and Depreciation:
All property, plant & equipment is stated at cost and depreciated on a
straight-line basis over individual useful lives - three years
(computers), five years (mining equipment), and units-of-production
once mining property is at the operational level.
Financial Uncertainties:
The Company is in the development stage and has experienced a net loss
of $81,338. The loss is principally due to commissions and interest
associated with the 1996 German financing. There is no assurance that
commercial quantities of mineral resources can be developed and sold in
a profitable market. Also, mining production could be delayed and
uninsurable risks could be incurred (see Note 9).
The Company's profitability is subject to change in gold prices and
exchange rates. To reduce the impact of such changes, the Company locks
in the future value of certain of these items through hedging
transactions. These transactions are accomplished through the use of
financial instruments, the value of which is derived from movements in
the underlying gold prices, the Company's actual production, or
exchange rates.
8
<PAGE>
Notes To Xplorer, S.A. Financial Statements (Continued)
The Company intends to engage in financial instruments to reduce the
financial impact caused by fluctuations in the exchange rate of U.S.
dollars to German Duetsch Mark liabilities.
The carrying values of investment contracts involving gold settlement
are re-measured using the market value of gold at the balance sheet
date ($369 per troy ounce). The price of gold fluctuates daily, thus
the values used herein may fluctuate subsequent to the date hereof.
Income Taxes:
Xplorer, S.A. and its predecessor company have a substantial net
operating loss of an uncertain amount as of the date of this report.
Prior years tax returns are now in the process of being prepared.
Common Stock Issuance:
Shares issued to Gerant special creditors, employees, consultants, and
preferred shareholder of the Company are valued at the nominal value of
$0.10 per share. Common stock Units include one share of stock and a
warrant to acquire an additional share at 70% of market value.
Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Note 3 Quasi-Reorganization:
Gerant changed its corporate name to Xplorer, S.A. pursuant to an
exchange of stock and the provisions outlined in the Plan.
The Gerant's balance sheet prior to the execution of the Plan and
reorganization with newly-formed Xplorer S.A. was as stated in the
Company's 10 KSB as of December 31, 1996.
Under the Plan, the Company would realize the assets of Gerant and
assume the liabilities at Gerant basis, and issue common and preferred
stock in exchange for 1,005,000 units of Atlantic equity held by the
Company. Such units had a nominal book value of $1.50. These
transactions created a valuation for the Company's new common and
preferred stock issuance of $2,011,200.
Note 4 Marketable Securities:
The Company maintains an interest in marketable equity securities as
part of its hedge program. These securities are reflected appropriately
in the marketable securities section of the balance sheet. The realized
gains or losses are reflected in the Statement of Operations under
other income and expense.
9
<PAGE>
Notes To Xplorer, S.A. Financial Statements (Continued)
The Company does not use derivatives financial instruments for
speculative purposes. The Company enters into gold equity investments
to manage exposure to changes in a rising gold price and the Company's
undelivered commitments. Note 5 Note Receivable:
Sym-Tek filed Chapter 11 bankruptcy proceedings with Gerant as a
creditor. The amount of $16,000 was received in January 23, 1997 and
used to pay legal obligations of Gerant's bankruptcy proceeding.
Note 6 Property, Plant and Equipment:
The values reflected in the 10 KSB of December 31, 1996 are carried
forward here and are adjusted by any additions or deletions as of the
current period. These values are at the defined cost of $3,586,300,
with accumulated depreciation of $181,900, with the net reflected on
the balance sheet.
The Company's majority-owned subsidiary (Note 8) owns eight claims
known as the Evening Star Mine located in Piute Mountain, Kern County,
California. Most of the development costs for Evening Star Mines are
from related parties (Note 13).
Note 7 Other Investments:
The Company holds a $500,000 full recourse promissory note at 8%
interest per annum, payable monthly and principal due August 18, 1997.
This note is secured by 500,000 Class C Units of United Reality Group
Limited Partnership redeemable by issuer at $1.00 per unit in August
1997 and 75% tenant in common interest in the net proceeds from the
Southwood Plaza Shopping Center in Charlotte, North Carolina. The
property presently generates positive cash flow. However, the Company
has elected not to reflect a $400,000 non-recourse promissory note
secured only by 400,000 units of United Reality Group Partnership.
Interest on the $500,000 note of $3,333 has been received on a monthly
basis continuously.
Atlantic owns 100% of the common stock of a company that has two
investments in commercial property located in Bakersfield, California.
The net realizable value of this investment is $500,000 as of the
current date.
Atlantic owns 406,000 shares of Xplorer S.A. This investment is 59%
eliminated in consolidated financial statements and reflected at a
nominal value of $0.10 per share of $19,000.
Note 8 Atlantic Pacific Trust, L.L.C.:
Atlantic Pacific Trust, L.L.C. ("Atlantic"), a Nevada limited liability
company, is a natural resource company owned by Xplorer and three of
the Company's shareholders (the "Minority Interest"). Such corporation
is the successor to Atlantic Pacific Trust ("APT") and is the legal
owner of certain mining properties located in Kern County, California.
10
<PAGE>
Notes To Xplorer, S.A. Financial Statements (Continued)
These mining properties (approximately 117 mining claims) were held by
a trust controlled by William M. Moreland ("Moreland"), and transferred
to a new entity, North Star Industries ("North"). North was 30% owned
by Moreland, 30% owned by Gardner, and 40% owned by Compania Comerciale
Atlantis, S.A., a Costa Rican entity ("CCA"). The claims were
eventually divided into four separate trusts. One of these trusts,
Nevada Trust, which owned eight claims known as the "Evening Star
Mine", was acquired at cost by APT.
APT was funded by sale of investment contracts, precious metal forward
contracts, and equity units ("LLC"). The Company owns 1,254,960 LLC
units as of the current date (59%).
APT made a loan to the Company for $355,000 that was converted to
Company special units (one share of common stock and one B warrant and
C warrant each exercisable within five years at $2.00 and $3.00 per
share, respectively and paid a Gerant creditor $110,000 in exchange for
111, 667 shares of the Company's common stock. These funds were used by
the Company to pay Gerant creditors according to the Plan. At the
current date the value of 275,334 shares (59% of 466,667) has been
eliminated upon consolidation.
The Plan provided that Compania Comerciale Atlantis, S.A. would
exchange 500,000 of its LLC units for 1,250,000 preferred shares of the
Company. However, only 417,200 units were exchanged for 1,043,000
preferred shares under this Plan. In December 1996, CCA did exchange
189,960 units for an additional 237,550 shares of preferred stock. The
preferred stock is partially convertible to ten shares of common stock
at the end of six years and has a dividend of 1.00% per month payable
in common stock at time of conversion. In December 1996, the preferred
stockholder agreed to waive all present and future preferred dividend
rights for the immediate issuance of 1,000,000 common shares of the
Company.
The Plan also provided that 585,560 LLC units held by Atlantic
beneficiaries Be exchanged for Debtor Notes and converted to 14,639,000
shares of common stock. In addition, the former Gerant shareholders had
a reverse split to 400,000 common stock Units. All of these Units have
not as yet been issued.
Note 9 Fair Market Information:
Atlantic Pacific Trust internal financial statements reflect a fair
market value of $110,000,000 that was accepted by the U.S. Bankruptcy
Court in the Plan. The result of these transactions with Gerant is that
the Company is controlled by beneficial holders of Atlantic.
Each year, Atlantic management estimates ore reserve and prepares a
comprehensive mining plan for the then- anticipated remaining life of
the mining property. The gold prices used in estimating the Company's
ore reserves is currently $369 per ounce. Other metals could also be
present in the ore reserves.
11
<PAGE>
Notes To Xplorer, S.A. Financial Statements (Continued)
Significant changes to the Company's plans could occur as a result of
mining experience, new ore discoveries, changes in mining process, new
investment in equipment and technology. Also, permits may not be
renewable under the same terms and conditions as originally granted,
exploration could not result in recoverable metals, and the anticipated
pilot refinery could not be completed and other factors.
The Company's management provides no assurance as to the outcome of any
of these matters and resulting adjustments could be material to the
Company's financial condition and operations.
Given the above uncertainties, Atlantic utilizes the values for its
gold resources based upon the updated report of Christopher L. Pratt,
Geologist, dated December 31, 1996, as to proven reserves summarized as
follows:
Reserves in ounces of Gold (1.5 average ounces per ton) 435,000
Less: 10% projected loss factor (43,500)
--------
Projected recoverable ounces 391,500
Estimated market price of gold (per ounce) x $369
------
Projected Gross Revenue $144,463,000
Less: projected extraction cost of $210 per ton,
times 290,000 tons $ 60,900,000
------------
Net Projected Value $ 83,563,000
------------
The Company's Projected Share @ 59% $ 49,302,000
------------
The Company's management in compliance with applicable reporting
guidelines has downgraded the proven reserves (measured reserves) to
Probable Reserves (indicated reserves) until completion of the pilot
ore refinery, further mineralization studies, additional drilling and
sampling, and geological feasibility analysis.
Note 10 Accrued Legal Fees:
Per the Plan, Atlantic agreed to purchase an estimated $257,000 legal
fee administrative claim of the law firm, Robinson, Diamant, Brill, &
Klausner (the "Firm"). Upon purchase, Atlantic intends to exchange the
claim for 257,000 Xplorer common stock special units. This transaction
is still in progress and is anticipated to be completed during the
calendar year 1997.
Note 11 Note Payable:
In September, 1996 the Company borrowed $450,000 from Gardner
Investments. The terms of the note are 10.00% per annum payable
monthly. The principal is due and payable on September 25, 1997 and is
12
<PAGE>
Notes For Xplorer, S.A. Financial Statements (Continued)
secured by 500,000 Class C Units of United Realty Group, L.P. The note
is convertible, at the option of the holder, at any time for 150,000
shares of common stock of the Company.
Note 12 Investment Contracts Payable:
Atlantic has issued investment contracts under German securities laws.
Such contracts are four types:
a) Contract of $9,645 per kilo received in U.S. dollars for purchase
of undelivered kilos (32.15 troy ounces) of gold bullion. All
contracts have a one year maturity. As of December 31, 1996, the
balance is $273,000. The Company has covered it's gold risk on
outstanding contracts up to $369 per ounce.
b) Zero-coupon contract of $12,500 payable in U.S. dollars and
bearing interest at 9.00% per annum. Such contracts are repayable
with related interest in one to five years. As of March 31, 1997
the balance is and interest expense of $28,100 has been accreted.
c) Zero-coupon contract payable in 5,000 German Duetsch Marks ("DM")
units and bearing interest at 9.00% per annum. Such contracts are
repayable with related interest in DM in one to five years. The
balance as of March 31, 1997 is $1,129,500 and interest expense
of has been accreted.
d) Zero-coupon contract payable in DM or gold at the rate of 600 DM
principal per 1 troy ounce of gold did not result in funding to
the Company until January 1997. This is the only type of contract
that will be offered in the future.
All bonds are secured by the Company's interest in the Evening Star
mining claims per assignment to a bond trustee.
The Company paid commissions of approximately 33% and raised $1,375,000
in net funds during 1996.
Investment contracts are due as follows:
1997 $1,140,399
1998 267,000
1999 150,000
2000 45,000
2001 86,700
2002 71,718
----------
Total $1,760,817
----------
13
<PAGE>
Notes For Xplorer, S.A. Financial Statements (Continued)
Note 13 Related Party Payable:
In 1995, Atlantic entered into agreements with Sequoia Trust, a related
party, to lease surface and mineral rights related to 57 acres of land
adjacent to Evening Star Mine and certain improved real property known
as the Weldon Research Center for total cost of $6,000 per month. These
lease are renewable after a five year term and require a future minimum
annual payment of $72,000 to Sequoia Trust. Total charges capitalized
to development during 1996 were $104,000.
These properties provide the Company with the opportunity to develop
three patented mining claims with probable commercial grade ore (12%
royalty due to Sequoia Trust), construct a primary ore processing
refinery, and utilize 13,000 square feet at the Weldon Research Center
for its mineralization analyzes and other testing procedures.
Atlantic also has a cancellable contract with EMTEC, Inc., a related
party, for development of the eleven mining claims and the future
operation of the mine and refinery. The contract requires the Company
to pat EMTEC bi-monthly at invoiced cost plus 18% overhead. Total
charges capitalized to development to date are $548,318.
As of March 31, 1997 the Company owes these entities $147,000 for past
services and such amount is accrued into development costs for evening
Star Mine (See Note 6).
Note 14 New Accounting Pronouncements:
Statement of Financial Accounting Standards No. 121, "Accounting for
the Impairment of Long-Lived Assets to be Disposed Of" (SFAS 121)
requires that long-lived assets be reviewed for impairment whenever
changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. The adoption of this statement as of March 31,
1997 had no material effect on the consolidated financial statements.
Statement of Financial Accounting Standards Nos. 123. "Accounting for
Stock-Based Compensation" (SFAS 123) establishes financial accounting
and reporting standards for stock-based employee compensation plans as
well as transactions in which an entity issues it's equity instruments
to acquire goods or services from non-employees. However, it also
allows an entity to continue to measure compensation cost based on APB
Opinion No. 25, "Accounting for Stock Issued to Employees". The Company
has determined that the fair value of stock transactions is similar to
the issue price at the time of granting and accordingly, has elected to
continue to apply the intrinsic value based method.
In June, 1996, Statement of Financial Accounting Standards No. 125,
"Accounting for Transfers and Servicing of Financial Assets and
14
<PAGE>
Extinguishment of Liabilities" (SFAS No. 125), which provides
accounting and reporting standards for transfers and servicing of
financial assets and extinguishment of liabilities occurring after
December 31, 1996 was issued. The adopting of SFAS No. 125 is not
expected to have any impact on the financial statements of the Company.
Note 15 Comparative Financial Statements
Comparative financial data for similar periods in 1996 are not
available. The predecessor Company, Gerant, was in a Chapter 11
Proceedings, which was confirmed as indicated above, and during this
process had little or no operations. Any presentation of the numbers
during that period would cause the reader to have a distorted view from
a comparative standpoint. This will continue until the fourth quarter
of this year, when Comparative Balance Sheets will commence.
ITEM 2. MANAGEMENT' S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
For the three months ended March 31, 1997:
Financial Condition:
The Company's working capital resources during the period ended March
31, 1997 were provided by convertible loans (See Notes to Financial Statements),
and stock placements and Revenue bonds and investments. The formal business
activity of mining did not begin this quarter since the activity is just in the
process of being funded. Sufficient funds have been made available by related
parties for the working capital requirements not filled by other sources. This
will continue until the commencement of operations.
Management believes that the Company's working capital resources and
anticipated cash flow from mining activities will not be sufficient to support
operations during the year ending December 31, 1997, therefore Management has
arranged sufficient financing to fund these activities and to fulfill its budget
requirements. Although Management can offer no assurance that the commitments
for the financing for these activities will be fulfilled.
Results of Operations:
There has not been sufficient time since the emergence from Chapter 11
Proceedings to begin operations. These operation activities are not scheduled to
begin until the third quarter of 1997.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
N/A
15
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
XPLORER, S.A.
(Registrant)
Date: May 31, 1997 /s/ Steven Mortensen
--------------------
Steven Mortensen,
Chairman and Secretary
/s/ Jon W. Bice
--------------------
Jon W. Bice (CFO)
16
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 95,544
<SECURITIES> 223,693
<RECEIVABLES> 16,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 621,557
<PP&E> 3,778,200
<DEPRECIATION> (181,900)
<TOTAL-ASSETS> 5,129,941
<CURRENT-LIABILITIES> 1,831,906
<BONDS> 0
0
1,300
<COMMON> 18,782
<OTHER-SE> 1,708,535
<TOTAL-LIABILITY-AND-EQUITY> 5,129,941
<SALES> 0
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