U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
X : Quarterly report under section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended October
31, 1996.
__: Transition report under section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required] for the transition
period from _________ to _________.
Commission File No: 0-25798
HERITAGE MINES, LTD.
(Name of small business in its charter)
Colorado 84-1293168
(State or other (IRS Employer Id. No.)
jurisdiction of Incorporation)
660 Newport Center Drive, Suite 1030
Newport Beach, California 92660
(Address of Principal Office) Zip Code
Issuer's telephone number: (714) 760-8001
Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act during
the past 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 ____ No
____
Applicable only to issuers involved in bankruptcy proceedings
during the past five years
Check whether the issuer has filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Exchange
Act after the distribution of securities under a plan confirmed by
a court. Yes ____ No ____
Applicable only to corporate issuers
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date.
10,433,125 shares as of November 6, 1996.
Transitional Small Business Disclosure
Format (Check one):
Yes ____ No X <PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS AND EXHIBITS
(a) Consolidated financial statements for Heritage
Mines, Ltd. as and for the quarter ending October 31, 1996,
and the comparable period of the preceding fiscal year.
(b) Exhibit 27 - Financial Data Schedule
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION
The Company received its initial Ore Reserve Report in
November, 1996, indicating 157,093 ounces of proven and
probable reserves at a grade of 1 ounce per ton and 1,165,000
ounces of geologically inferred reserves. This schedule is
included in the financial statements for this quarter.
As of the end of the third quarter, the Company had not
yet generated revenue from operations. The Company plans to
have revenue during the fourth quarter. Two shipments of gold
were delivered to the refinery for sale in November, 1996, and
a third delivery is scheduled for December, 1996.
As of the end of the third quarter, the Company had
raised an additional $100,000 in debt financing, and had
received a commitment for an additional $300,000 in debt
financing. As of December 10, 1996, the additional $300,000
in debt financing had been received. In addition, during the
third quarter, $100,000 of the $226,640 in debt financing which
was outstanding at the beginning of the quarter.
As of December 10, 1996, the Company had received
subscriptions totalling $631,975 for the purchase of 293,125
shares of common stock, as part of its on-going $1,000,000
private placement offering of common stock. Management
believes that funding the balance of the private placement
offering is necessary to achieve profitable operations. There are
no assurances, however, that such funds will be raised or, if
raised, that they will be sufficient to accomplish this objective.
It is anticipated that the Company will require additional
capital in the future for further development expenses in order to
determine additional ore reserves. Management has not yet
determined whether the Company will seek to raise such addi-
tional capital during the current fiscal year.
No adjustments have been made to the accompanying
financial statements to provide for any of the foregoing uncer-
tainties.
Part II
PART 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBIT 27 - FINANCIAL DATA SCHEDULE
There have been no reports on Form 8-K for the quarter
ending October 31, 1996.
<PAGE>
Signatures
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Heritage Mines, Ltd.
__________________________________
(Registrant)
Date: December 10, 1996
/s/ James D. Stout
James D. Stout, President
<PAGE>
CONSOLIDATED FINANCIAL STATEMENTS
(A Development Stage Company)
HERITAGE MINES, LTD.
Quarter Ended October 31, 1996<PAGE>
HERITAGE MINES, LTD.
(A Development Stage Company)
Index to
Consolidated Financial Statements
Consolidated Balance Sheet
Comparative Quarters/Inception to Date
Consolidated Statement of Cash Flows
Ore Reserves and Other Mineralization
Notes to Consolidated Financial Statements
<PAGE>
HERITAGE MINES, LTD.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
AS OF AND FOR THE QUARTER ENDED
OCTOBER 31, 1996
(UNAUDITED)
_______________
<TABLE>
<CAPTION>
October 31, 1996 January 31, 1996
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents (3,808) 23,543
Other current assets 9,837 -
Subscriptions
receivable - 38,601
TOTAL CURRENT
ASSETS 6,029 62,145
PROPERTY, PLANT,
EQUIPMENT AND MINE
DEVELOPMENT COSTS,
NET 1,617,548 1,026,049
OTHER ASSETS
Other Assets 60,338 63,338
TOTAL OTHER ASSETS 60,338 63,338
TOTAL ASSETS 1,683,915 1,151,532
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
LIABILITIES
Accounts payable (1,150) -
Accrued liabilities 34,980 150,521
Notes and advances to
stockholders and
related parties - 956,677
Notes payable 226,640 86,640
Accrued interest 11,782 45,376
TOTAL CURRENT
LIABILITIES 272,253 1,239,214
STOCKHOLDERS' EQUITY
(DEFICIT)
Common Stock 908,489 221,514
Additional paid-in
capital 1,914,913 -
Deficit accumulated
during the
development stage (1,411,740) (309,196)
TOTAL STOCKHOLDERS'
EQUITY (DEFICIT) 1,411,662 (87,682)
TOTAL LIABILITIES
AND STOCKHOLDERS'
EQUITY (DEFICIT) 1,683,915 1,151,532
/TABLE
<PAGE>
HERITAGE MINES, LTD.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF OPERATIONS
AS OF AND FOR THE NINE MONTHS ENDED
OCTOBER 31, 1996
(UNAUDITED)
_______________
<TABLE>
<CAPTION>
Period
9 Months 9 Months 3 Months 3 Months from
Ended Ended Ended Ended Inception
10/31/96 10/31/95 10/31/96 10/31/95 (5/14/92)
(10/31/96
<S> <C> <C> <C> <C> <C>
REVENUES
Operating Revenue - - - - -
TOTAL REVENUES - - - - -
OPERATING COSTS
General and
Administrative 917,874 208,904 288,795 140,074 1,408,485
Depreciation 47,310 19,339 16,673 6,569 123,472
TOTAL OPERATING
COSTS 965,184 228,243 305,488 146,643 1,531,957
LOSS FROM
OPERATIONS (965,184) (228,243) (305,468) (146,643) (1,531,957)
OTHER INCOME
(EXPENSE)
Interest expense, net(12,360) (7,779) (1,804) (5,647) (21,988)
Other Income - 1,167 - 185 267,205
Other expense (125,000) - - - -(125,000)
NET LOSS (1,102,544) (234,855) (307,272) (152,105) (1,411,740)
NET LOSS
PER SHARE (0.1058) - (0.O295) - -
WEIGHTED
AVERAGE
COMMON
SHARES 10,418,125 - 10,418,125 - -
/TABLE
<PAGE>
HERITAGE MINES, LTD.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CASH FLOWS
NINE MONTHS ENDED
OCTOBER 31, 1996
(UNAUDITED)
_______________
<TABLE>
<CAPTION>
Period from
9 Months 9 Months Inception
Ended Ended (5/14/92)
10/31/96 10/31/95 thru 10/31/96
<S> <C> <C> <C>
CASH FLOWS FROM
OPERATING
ACTIVITIES
Net Loss (1,102,544) (234,855) (1,411,740)
Adjustments to
reconcile net loss
to cash used in
operating activities:
Depreciation 47,310 19,339 123,473
Stock issued - - 1,045
Changes in assets
and liabilities - - -
Other current assets 12,461 (1,000) (11,140)
Restricted cash - - (17,880)
Accounts payable 153 - 153
Accrued liabilities 135,959 10,868 286,479
Accrued interest 11,820 24,370 57,196
NET CASH AND CASH
EQUIVALENTS
PROVIDED (USED)
BY OPERATING
ACTIVITIES (894,841) (181,278) (972,414)
CASH FLOWS FROM
INVESTING
ACTIVITIES
Purchase of property
and equipment (97,015) (36,420) (184,075)
Mine development
costs (457,552) (63,438) (833,400)
Construction in
progress (84,242) (47,385) (244,177)
Deposits 3,000 - (7,458)
Mining Claims - - (20,000)
Other Investments - (7,300) -
NET CASH AND CASH
EQUIVALENTS PROVIDED
(USED) BY INVESTING
ACTIVITIES (635,808) (154,544) (1,289,109)
CASH FLOWS FROM
FINANCING
ACTIVITIES:
Issuance of common
stock for cash 686,975 3,835 799,475
Proceeds from notes
payable to related
parties 676,323 200,000 1,050,000
Proceeds from notes
payable 140,000 161,640 176,640
Advances from
related parties - - 280,000
Repayment of notes
payable (48,400)
NET CASH AND CASH
EQUIVALENTS
PROVIDED (USED)
BY FINANCING
ACTIVITIES 1,503,298 365,475 2,257,715
NET INCREASE
(DECREASE) IN
CASH AND CASH
EQUIVALENTS (27,351) 29,653 (3,808)
CASH AND CASH
EQUIVALENTS,
BEGINNING OF
YEAR 23,543 806 -
CASH AND CASH
EQUIVALENTS,
END OF YEAR (3,808) 30,459 (3,808)
</TABLE>
<PAGE>
HERITAGE MINES, LTD.
(A DEVELOPMENT STAGE COMPANY)
as of and for the Quarter ended October 31, 1996
(UNAUDITED)
ORE RESERVES AND OTHER MINERALIZATION <F1>
<TABLE>
<CAPTION>
<S>
Vein Structures Grade Ore Other
Location Oz./Ton Reserves <F2> Mineralization
<C> <C> <C> <C>
Discovery Day 1.0 157,093 oz. 355,000 oz.
Knownothing 1.0 - 330,000 oz.
Star 1.0 - 330,000 oz.
Gilta 1.0 - 150,000 oz.
TOTAL 157,093 oz. 1,165,000 oz.
<FN>
<F1> Coooksley Geophysics Report, November, 1996.
<F2> Only proven and probable reserves apply to the actual classification of ore
reserves.
<F3> Other mineralization reserves are classified as geologically inferred ore.
This classification is deferred as vein structures for which quantity and grade are
inferred beyond the extent of the consultant's sampling and sample custody based on
the following:
a. Geologic mapping and geochemical mapping executed by the consultant
and/or
b. Credible technical reports, maps and assays executed by others.
Such evidence consists for section of ore exposed in drifts, raises, stopes, ontcrops,
trenches, road cuts and soil geochemistry profiles. It also includes ore mineralization
described in credible reports.
</FN>
/TABLE
<PAGE>
HERITAGE MINES, LTD.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE QUARTER ENDED
OCTOBER 31, 1996
(UNAUDITED)
1. As of December 10, 1996, a total of $631,975 in equity was raised in
exchange for 293,125 shares of common stock through the Company's $1 million
private placement.
2. Of the $226,640 in debt outstanding as of the beginning of the third
quarter, $100,000 was converted during the quarter (on August 21, 1996) into
150,000 shares of common stock. During the quarter, an additional $100,000 of
debt financing was received together with a commitment for an additional
$300,000 of debt financing. As of December 10, 1996, the $300,000 of additional
debt financing had been received. Thus, the outstanding balance of debt
financing as of December 10, 1996, was $526,640.
3. Three directors agreed to waive the 72,000 shares due them for accrued
salaries and expenses for the benefit of the Company.
4. The Company's initial Ore Reserve Report is included for the first time
this quarter.
5. Twenty-one new mining claims were filed and six additional mining claims
are to be acquired under a royalty/lease agreement with three directors of the
Company at typical industry terms and conditions.
6. Subsequent to the close of the quarter, the first two shipments of gold
were made to the refinery. Inventory and sales information will be reported in
the fourth quarter. Management has not determined the inventory valuations as of
this report; therefore, those costs continue to be included in the development
costs.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-END> OCT-31-1996
<CASH> (3,808)
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,029
<PP&E> 1,739,354
<DEPRECIATION> 121,806
<TOTAL-ASSETS> 1,683,915
<CURRENT-LIABILITIES> 272,253
<BONDS> 0
0
0
<COMMON> 908,489
<OTHER-SE> 1,914,913
<TOTAL-LIABILITY-AND-EQUITY> 1,683,915
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,360
<INCOME-PRETAX> (1,102,544)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,102,544)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,102,544)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
