<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
FOR THE THREE MONTHS ENDED DECEMBER 31, 1999
COMMISSION FILE NUMBER: 0-19061
SANTA MARIA RESOURCES, INC.
(Name Of Small Business Issuer In Its Charter)
Nevada 87-0403330
(State Or Other Jurisdiction Of Incorporation (IRS Employer Ident. No.)
or Organization)
3535 E. Pacific Coast Highway, #11 Corona del Mar, CA 92625
(Address Of Principal Executive Offices) (Zip Code)
Issuer's Telephone Number: (702) 877-5804
Check whether the issuer (1) 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 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 the number of Shares outstanding of each of the Issuer's classes of
common stock, as of the latest practicable date. As of February 18, 2000, there
were outstanding 6,000,583 shares of Common Stock.
<PAGE>
INDEX
PART I. FINANCIAL INFORMATION
<TABLE>
<S> <C>
Item 1. Condensed consolidated financial statements:
Balance sheet as of June 30, 1999 and
December 31, 1998 3
Consolidated Statement of Operations for the six
months ended June 30, 1999 and 1998 4
Consolidated Statement of cash flows for the six months
ended March 31, 1999 and 1998 5
Statements Of Cash Flows 6
Notes to consolidated condensed financial statements 7
Item 2. Management's discussion and analysis of financial
Condition 11
PART II. OTHER INFORMATION
Signatures 19
</TABLE>
2
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SANTA MARIA RESOURCES, INC.
(formerly Program Entertainment Group, Inc.)
(A Development Stage Company)
BALANCE SHEET
DECEMBER 31, 1999 AND SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
3 Months ended September 30,
December 31, 1999 1999
----------------- -------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and equivalents $ 43,747 $ 43,186
Other Assets
Mining claims 600,000 600,000
------- -------
Total Assets 643,747 643,186
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities: -0- -0-
Other Liabilities
Note Payable to shareholder 41,237 41,237
------- ------
Total Liabilities 41,237 41,237
Shareholders' Equity:
Common Stock - 100,000,000 shares
authorized; issued and outstanding
6,000,583 shares at December 31,
1999 and 1998 @ .01 Par Value 6,001 6,001
Paid in capital 2,000,369 1,989,868
Accumulated deficit (1,403,860) (1,393,920)
--------- ----------
Total Shareholders' Equity 602,510 601,949
--------- -------
Total Liabilities and Shareholders' Equity 643,747 643,186
======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
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SANTA MARIA RESOURCES, INC.
(formerly Program Entertainment Group, Inc.)
(A Development Stage Company)
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
--------------------------
<S> <C> <C>
Revenues: -0- -0-
Expenses:
Consultants 2,997 2,784
Legal 1,500 -0-
Office expense 509 -0-
Outside services 2,395 1,500
Rent 1,000 -0-
Tax and licenses 100 100
Travel 1,000 -0-
Research and development 1,000 -0-
------ ------
Total Expenses 10,501 (4,384)
Net (Loss) from Operations (10,501) (4,384)
Other Income
Interest earned 561 513
------- ------
Net (Loss) (9,940) (3,871)
======= ======
Earnings (Loss) per Share $ nil $ nil
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
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SANTA MARIA RESOURCES, INC.
(formerly Program Entertainment Group, Inc.)
(A Development Stage Company)
STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD FROM INCEPTION (MAY 22, 1989) TO DECEMBER 31, 1999
(Continued)
<TABLE>
<CAPTION>
Common Shares Total
------------------- Paid In Retained Stockholders'
Shares Amount Capital Earnings Equity
------ ---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance September
30, 1999 6,000,583 6,001 1,989,868 1,393,920 601,949
========= ===== ========= ========= =======
Contributed capital 10,501 10,501
Net (Loss) 3 months
ending December 31,
1999
(9,940) (9,940)
--------- ----- --------- --------- -------
Balance December 31,
1999 6,000,583 6,001 2,000,369 1,403,860 602,510
========= ===== ========= ========= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
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SANTA MARIA RESOURCES, INC.
(formerly Program Entertainment Group, Inc.)
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
3 Months ended December 31
--------------------------
1999 1998
-----------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net (Loss) (9,940) (3,871)
Adjustments to reconcile net (loss) to net
cash (used) by operating activities - -
NET CASH (USED) BY
OPERATING ACTIVITIES (9,940) (3,871)
------- -------
CASH FLOWS FROM
INVESTING ACTIVITIES
CASH PROVIDED FROM
FINANCING ACTIVITIES
Shares issued for services rendered - -
Shares issued for cash advances - -
Paid in capital from shareholders 10,501 4,384
------- -------
Proceeds of loan from shareholder - -
NET CASH PROVIDED FROM
FINANCING ACTIVITIES 10,501 4,384
------- -------
NET INCREASE (DECREASE) IN CASH 561 513
CASH BALANCE BEGINNING OF PERIOD 43,186 41,237
------- -------
CASH BALANCE END OF PERIOD 43,747 41,750
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
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SANTA MARIA RESOURCES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
This summary of significant accounting policies of Santa Maria Resources, Inc.
is presented to assist in understanding the Company's financial statements. The
financial statements and notes are representations of the Company's management,
which is responsible for their integrity and objectivity. These accounting
policies conform to generally accepted accounting principles and have been
consistently applied in the preparation of the financial statements.
(a) Organization and Business Activities:
The Company was incorporated as The Movie Greats Network, Inc., on May 22, 1989
under the laws of the state of Nevada. Effective August 4, 1992 the Company
changed its name to Program Entertainment Group, Inc. and effective August 5,
1997 the Company changed its name to Santa Maria Resources, Inc.
The Company commenced operations in 1989 as a syndicator of motion pictures and
television programming and provided a two-hour motion picture package to its
"network" of over 100 television stations across the United States.
In 1994 the Company ceased operations and consequently wrote off all its assets,
which consisted mainly of motion pictures' rights and prints, and accounts
payable and certain notes payable. The write off of all the assets and
liabilities of the Company resulted in a net loss in the fiscal year 1994-1995
of $132,261.
The Company had been inactive from 1994 to August 1997, except for some
maintenance expenses paid by officers and shareholders. Thereafter, management
has commenced acquiring mining claims and paying incidental expenses of the
Company.
(b) Fiscal Year:
In 1997 the Company changed its fiscal year from March 31 to September 30 at the
request of the auditing firm. Short period audits and tax returns were filed.
(c) Basis of Operation:
The Company prepares its financial statements and federal income taxes on the
accrual basis of accounting.
NOTE 2 MERGERS AND ACQUISITIONS:
The Movie Greats Network was a division of Acama Films, Inc. ("Acama"), a
corporation organized under the laws of the State of California. In June, 1989,
Acama sold all the assets of the division (approximate book value of $1.5
million) to Axiom Technology, Inc. ("Axiom"), a Utah corporation, in exchange
for the assumption by Axiom of the liabilities of the Division (except $1
million payable to Acama) and 10,000,000 shares of voting common stock of Axiom.
7
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SANTA MARIA RESOURCES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
Following the transaction, Axiom organized The Movie Greats Network, Inc., a
Nevada corporation, as a wholly owned subsidiary, and effectively changed its
domicile by merging itself into the Company.
The combination was accounted for as a reverse acquisition by the Company, since
the stockholders of Acama received the majority of the stock (68%) in the
combined entity, and management of Acama became the management of the combined
entity. Accordingly, the financial statements previously reflected the
historical cost basis of the Division's assets, liabilities and operations and
insignificant operations of Axiom for the period April 1, 1989 to the merger
date.
In 1994 the Company ceased operations and consequently wrote off all its assets,
which consisted mainly of motion pictures' rights and prints, accounts payable
and notes payable. The write-off of all the assets and liabilities of the
Company resulted in a net loss in the fiscal year 1994-1995 of $132,261.
NOTE 3 MINING CLAIMS ACQUIRED AND PURCHASED-APPRAISED VALUES:
The Company owns 141 unpatented contiguous mining claims totaling over 2,960
acres in Township 13, Yavapai County, Arizona. These claims have a history of
mining activity from the middle of the 19th century to the beginning of World
War II. Gold, silver, copper and other minerals were recovered in important
quantities. The previous owners started acquisition of this claim group in the
early 1940's and by 1978 the group totaled 134 claims. Exploration, drilling and
assessment work was done and several geological reports were completed
indicating the presence of economically viable deposits of precious metals and
complex ores. The Company's objective was to regain the initial position held by
the previous owners in order to duplicate the original maps, all of the
exploration, assessment and geology that had been completed for the mining plan
of operations which was based on the original 134 claims.
The Company located, staked and filed 37 claims of the original group that had
reverted to the BLM for non-payment of maintenance fees, plus an additional 7
claims, for a total of 44 claims, with the BLM in September 1997. A Company
shareholder purchased the remaining 97 claims of the original group from the
prior owner and quit claimed them to the Company in 1998. The Company issued 3
million shares of Rule 144 restricted common stock in September 1997 to entities
which were responsible for the Company obtaining title to these mining claims.
Appraisal and Valuation
Mr. N. H. Carouso, President of Geo-Processing, Inc., was retained in 1985 by
the prior owners of these claims to prepare an Economic Evaluation of the 134
claims group. Mr. Carouso earned a Bachelor of Arts and a Master of Science
degree from the University of California, College of Engineering, Department of
Mineral Technology and Mining. This report was for the recovery of gold and
silver only.
8
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SANTA MARIA RESOURCES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 3 MINING CLAIMS - CONTINUED
The following is a statement from Mr. Carouso's report:
"The mining claims project area offers excellent economic potential. With the
gold and silver mineralization cropping out at the surface and the favorable
topography for surface mining techniques, it is felt that an early cash flow can
be expected. The gross dollar potential of the areas evaluated, which the writer
(Mr. Carouso) feels represents only about 30% of the potential of the entire
group of claims, if combined, could be $280,836,000.00. Even if one then takes a
50% confidence factor as to the grade of ore, the gross dollar potential would
be $115,418,000., and with an expected 70% recovery of precious metals, the
adjusted gross dollar potential would be $80,792,600.00 based on a spot price of
$325/oz, for gold and $6.00/oz. for silver, and mining to a depth of 100 feet."
On October 7, 1997 a letter from Rich Rhodes, Director of Operations of Golden
West Mining Services listed several minerals available from these mines as
reported from the United States Geological Survey conducted in 1940. Of the
minerals listed, one of the most notable was a content of Uranium Ore, U308
(Yellow Cake) which has a content ranging from .43% to 1.77% by volume.
On April 22, 1998 the Company obtained an upgrade report prepared by California
Core Drilling, signed by R. W. Jones, Senior Geologist. This report covered a
reserve area of 3,000 ft. by 200 ft. deep. This area was based on just two of
the mining claims, approximately 40 acres, and discussed the potential
availability of mining U308 Uranium Ore found from the processing of the
approximate 28,800,000 tons of Ore Reserves.
The additional minerals available from the mines have been ignored until
recently due to the expenses of mining what is referred to as "Complex Ores".
Management is currently obtaining bids from gas plasma process recovery firms to
determine the viability of economical recovery of these Complex Ores.
All the ores from test samples show approximately a valuation based on yields of
slightly over $1,100 per ton.
The Company filed a renewal of the Mining Plan of Operations that was initially
approved by the United States Department of Interior on July 27, 1987 (Decision
EA-AZ-026-87-41 MPO-87-K-06) during the 4th quarter of calendar 1998. The
Company has received a response from the Department of Interior requesting
additional detail regarding the placement of specific exploratory drill holes
and written review by a Mining Engineer and Geologist.
9
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SANTA MARIA RESOURCES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 4 CAPITAL STRUCTURE:
The Company's original Articles of Incorporation provided for capital stock
authorized of 100,000,000 shares of $.001 par value common stock. In an
amendment filed with the Secretary of State of Nevada, effective October 8, 1997
the Company maintained its total capitalization at 100,000,000 authorized common
shares and changed the par value to $.01. In fiscal 1997 the Company's Board of
Directors approved a 1 for 10 reverse stock split.
In 1997 cash advances were made on behalf of the Company by certain
shareholders. In consideration of those advances the Company issued 1,000,000
shares of restricted Rule 144 stock to these shareholders in exchange for those
advances.
NOTE 5 INCOME TAXES:
At December 31, 1999, the Company has a federal operating loss carryforward of
$1,397,791 for financial accounting and federal income tax purposes. Utilization
of the net operating loss in any taxable year during the carryforward period may
be subject to an annual limitation due to the ownership change limitations
imposed by the tax law.
The net operating losses will expire at various dates commencing in the year
2003 through 2014.
The deferred tax asset consists of the future benefit of net operating loss
carryforwards. A valuation allowance limits the recognition of the benefit of
deferred tax assets until realization is reasonably assured by future
profitability.
The following is a summary of the deferred taxes:
Deferred asset $492,139
Valuation allowance (492,139)
--------
0
========
NOTE 5 OPTIONS & WARRANTS:
The Company has not adopted a stock option plan. There are no warrants issued or
outstanding.
NOTE 6 COMMITMENTS:
The Company has been provided office space at a nominal charge on a month to
month basis by a shareholder.
10
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SANTA MARIA RESOURCES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 7 RELATED PARTY TRANSACTIONS:
The following shareholder has loaned money to the Company:
Robert Sturges $41,237 24 months
6% simple interest from date of loan, 9/30/98.
These moneys were deposited in an interest bearing account which totaled
$43,185.45 as of 9/30/99.
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD LOOKING STATEMENTS.
Certain statements made in this report on form 10Q are "forward looking'
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Such statements involve known and unknown risks, uncertainties, and other
factors that may cause actual results, performance, or achievements of the
Company to be materially different from any future results implied by such
forward looking statements. Although the Company believes that the expectations
reflected in such forward looking statements are based upon reasonable
assumptions, the Company's actual results could differ materially from those set
in the forward-looking statements. Certain factors that might cause such a
difference might include the following: the inability of the Company to meet the
maintenance costs of its mining properties, the ability of the Company to secure
significant additional financing to meet the Company's financial needs to
implement mining operations on a commercial scale, the inability of management
to control operating costs once mining operations commence and the effects of
inflation.
For a more complete understanding of the Company and its properties, please
refer to the Company Annual Report on Form 10-KSB for the year ended September
30, 1999.
GENERAL.
The Company is a "development stage" company. To date, the Company's operations
have been centered around the acquisition and maintenance of mining leases
designated as the Santa Maria Mine. The Company has not yet commenced commercial
mining operations on its property. The annual operating costs incurred to date
have been primarily for the maintenance of the leases and the accumulation of
data in anticipation of mining operations. Although the Company's management has
experience in mining as well as oil and gas production, there is no guarantee or
assurance that this management team will be capable of duplicating any prior
success or that the Company will ever achieve commercially viable mining
operations. The ability to commence such operations is contingent upon the
Company securing adequate funding to meet the cost of such operations.
The Company expects to incur normal operating expenses during the next year. The
amount of net losses and the time required for the Company to reach
profitability, if at all, are uncertain at this time. The likelihood of the
Company's success must be considered in light of the problems, expenses,
difficulties, and delays frequently encountered in connection with a new
business, including, but not limited to uncertainty as to development and the
time required for the Company's plans to be fully implemented, governmental
regulatory responses to the Company's plans as well as the price of gold and
other mineral commodities. There can be no assurance that the Company will ever
generate mining revenue or achieve profitability at all or on any substantial
basis.
The Company will need substantial funds to support its long-term mining
development and marketing programs. The Company has no established bank
financing arrangement and no assurance that any such bank financing arrangement
will ever be established. The Company believes that it has adequate funds on
hand to meet the routine maintenance requirements for its
12
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mining properties at least for the foreseeable future, provided that no
unexpected costs arise. However, such funds were derived from a loan made to the
Company from one of its shareholders. There can be no assurance that such funds
will be adequate absent substantial additional funding. Further, there can be no
assurance that that shareholder, or any other shareholder, will be willing to
extend any further loans to the Company.
To the extent that the Company's capital resources, are insufficient to meet
current or planned operating requirements, the Company will seek additional
funds through equity or debt financing, collaborative or other arrangements with
corporate partners, licensees or others, and from other sources, which may have
the effect of diluting the holdings of existing shareholders. The Company has no
current arrangements with respect to, or sources of, such additional financing.
No assurance can be given that additional financing will be available when
needed or that such financing will be available on terms acceptable to the
Company. If adequate funds are not available, the Company may be required to
delay or terminate expenditures for certain of its programs that the Company
would otherwise seek to develop and commercialize. This would have a material
adverse effect on the Company in that it could result in the loss of certain, or
all, of the Company's mining properties.
DISCUSSION OF FINANCIAL CONDITION
On a consolidated basis, as of December 31, 1999 the Company had total assets of
$643,747 with total liabilities of $41,237 (compared with $643,747 and $41,237
respectively for September 30, 1999). Of the Company's assets at December 31,
1999, cash and cash equivalent accounted for $43,747, compared to $41,750 at
September 30, 1999. The balance of the Company's assets consists of its mining
claims that are carried at $600,000. As stated earlier, the Company's
liabilities consist of a note payable to one of the Company's shareholders in
the amount of $41,237. This note was for a 24-month period and is due September
30, 2000, together with interest thereon at the rate of 6% simple interest.
The Company must undertake certain expenditures in connection with its
preservation of the leases it holds in order to maintain its mining rights.
Management projects that such costs will approximate $14,100 during fiscal 2000.
In addition, the Company will require significant additional funds in order to
complete its pre-mining operations, which are estimated to be $125,000 during
fiscal 2000. Following such expenditures, when the Company is ready to begin
actual mining operations substantial additional funding will be required. At
present, the Company has not identified any source for such funding. Management
projects that the Company will require approximately $350,000 in order to
complete Phase I of its proposed mining plan and commence commercial operations
in the Santa Maria Mine. At present, management has not identified any funding
source able or willing to assist the Company in meeting these costs.
Based upon available cash on hand, management is of the opinion that it will
have adequate funds available to meet its maintenance obligations for the
current fiscal year but not to implement any aspect of its Phase I Mining
Program. Therefore, unless a funding source is identified and appropriate
funding agreements reached, of which there can be no assurance, it is unlikely
that the Company will be able to commence mining operations in the Santa Maria
Mine or to otherwise establish commercially viable operations in the near
future.
13
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INFLATION.
During the past few years inflation worldwide has been relatively stable which,
coupled with the relative strength of the economic conditions in the United
States and abroad, is expected to have a beneficial effect upon the Company's
planned operations. In management's opinion, these conditions are expected to
continue for the foreseeable future and management does not anticipate that
inflation will have an adverse impact upon its operations in the foreseeable
future. However, even if inflation were to resume an upward trend, as has been
the result in the past, it is likely that the price of gold and related precious
metals would rise -- a situation that would increase revenues and profits from
the Company's planned mining operations.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
None during this period.
14
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: February 28, 2000
SANTA MARIA RESOURCES, INC.
BY:__/s/Hubert Stroud_________
President
15
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-START> OCT-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 43,747
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 43,747
<PP&E> 600,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 643,747
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 6,001
0
0
<OTHER-SE> 2,000,369
<TOTAL-LIABILITY-AND-EQUITY> 643,747
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 10,501
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (9,940)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,940)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
