U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB/A
(Mark One)
X : Quarterly report under section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended July 31, 1997.
__: 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)
1199 Main Avenue, Ste. 221
Durango, Colorado
81301
(Address of Principal Office) Zip Code
Issuer's telephone number: (970) 385-0374
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 _X__ 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. 6,487,172.
Transitional Small Business Disclosure
Format (Check one):
Yes ____ No X <PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS AND EXHIBITS
(b) Financial statements for Heritage Mines, Ltd. as of July
31, 1997, and for the six month and nine month periods ended July
31, 1997, and for the period from inception (May 14, 1992) through
July 31, 1997.
FINANCIAL STATEMENTS
(A Development Stage Company)
HERITAGE MINES, LTD.
Quarter ended July 31, 1997<PAGE>
HERITAGE MINES, LTD.
(A Development Stage Company)
Condensed Consolidated Balance Sheet
Condensed Consolidated Statement of Operations
Condensed Consolidated Statement of Cash Flows
Notes to Condensed Consolidated Financial Statements
<PAGE>
HERITAGE MINES, LTD.
(A Development Stage Company)
CONDENSED CONSOLIDATED BALANCE SHEET
as of July 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
July 31,
1997
<S> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents 155,392
Other current assets 26,403
Total Current Assets 181,795
PROPERTY, PLANT,
EQUIPMENT AND MINE
DEVELOPMENT COSTS,
NET OF ACCUMULATED
DEPRECIATION 2,064,635
OTHER ASSETS
Other Assets 62,549
Total other assets 62,549
Total Assets 2,308,979
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable 247,446
Accrued expenses and other
liabilities 291,623
Notes payable 730,326
Total current liabilities 1,269,395
Convertible debentures payable
(including $40,000 to
related parties) 210,000
Total liabilities 1,479,395
STOCKHOLDERS' EQUITY
Preferred stock, no par value:
authorized 10,000,000 shares,
no shares issued and
outstanding -
Common stock, $.0025 stated
value: authorized 200,000,000
shares, issued and outstanding
6,487,172 shares 16,218
Additional paid-in
capital 2,973,169
Deficit accumulated
during the
development stage (2,159,803)
TOTAL STOCKHOLDERS'
EQUITY 829,584
TOTAL LIABILITIES
AND STOCKHOLDERS'
EQUITY 2,308,979
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
HERITAGE MINES, LTD.
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
July 31 July 31
1997 1996
<S> <C> <C>
OPERATING REVENUE - -
OPERATING COSTS
General and
Administrative 203,916 326,009
Depreciation 13,097 18,602
Total operating
costs 217,013 344,611
Loss from
Operations (217,013) (344,611)
OTHER INCOME (EXPENSE)
Interest expense, net (18,075) (2,005)
Other Expense - -
Total Other Income
(Expense) (18,075) (2,005)
NET LOSS (235,088) (346,616)
NET LOSS
PER SHARE (0.03) (0.03)
WEIGHTED
AVERAGE
COMMON
SHARES
OUTSTANDING 7,830,792 10,195,417
</TABLE>
See accompanying notes to condensed consolidated financial statements.<PAGE>
HERITAGE MINES, LTD.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Period
from Inception
Six Months Six Months (May 14, 1992)
Ended Ended through
July 31 July 31 July 31
1997 1996 1997
<S> <C> <C> <C>
Operating Revenues 3,536 - 56,806
OPERATING COSTS
General and
Administrative 409,282 629,079 2,199,809
Depreciation 30,424 30,638 182,092
Total operating
costs 439,706 659,717 2,381,901
Loss from
Operations (436,170) (659,717) (2,325,095)
OTHER INCOME (EXPENSE)
Other Income - - 237,210
Interest expense, net (35,520) (10,555) (71,918)
Other Expense - (125,000) -
Total Other Income
(Expense) (35,520) (135,555) 165,292
NET LOSS (471,690) (795,272) (2,159,803)
NET LOSS
PER SHARE (0.05) (0.08) (.64)
WEIGHTED
AVERAGE
COMMON SHARES
OUTSTANDING 9,158,996 10,265,000 3,343,799
</TABLE>
See accompanying notes to condensed consolidated financial statements.<PAGE>
HERITAGE MINES, LTD.
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Period
from Inception
Six Months Six Months (May 14, 1992)
Ended Ended through
July 31 July 31 July 31
1997 1996 1997
<S> <C> <C> <C>
CASH FLOWS FROM
OPERATING
ACTIVITIES:
Net Loss (471,690) (795,272) (2,159,803)
Adjustments to reconcile net loss to cash used
in operating activities:
Depreciation 30,424 30,638 182,092
Stock issued
for services - - 25,045
Stockholders' compensation
contributed to
capital - - 131,600
Changes in assets and liabilities
Other current assets (18,149) 11,135 (26,404)
Other assets (2,210) - (20,090)
Accounts payable and
accrued liabilities 231,988 135,076 641,367
Net cash and cash equivalents provided (used) by
operating activities (229,637) (618,423) (1,226,193)
CASH FLOWS FROM
INVESTING
ACTIVITIES:
Purchase of property
and equipment - (88,701) (194,798)
Mine development
costs (24,486) (317,061) (1,247,860)
Construction in
progress (9,034) (46,376) (293,006)
Deposits - 3,000 (7,458)
Mining Claims - - (20,000)
Net cash and cash equivalents provided (used) by
investing activities (33,520) (449,138) (1,763,122)
CASH FLOWS FROM
FINANCING
ACTIVITIES:
Issuance of common
stock for cash 125,000 550,125 869,475
Proceeds from notes
payable to related
parties 34,700 676,323 1,124,700
Proceeds from notes
payable 85,000 - 746,640
Advances from
related parties - - 294,500
Repayment of notes
payable and advances (2,229) - (65,608)
Proceeds from convertible
debentures payable (includes
related parties of
$20,000) 175,000 - 175,000
Net cash and cash equivalents provided (used) by
financing activities 417,471 1,226,448 3,144,707
NET INCREASE
(DECREASE) IN
CASH AND CASH
EQUIVALENTS 154,314 158,887 155,392
CASH AND CASH
EQUIVALENTS,
BEGINNING OF
PERIOD 1,078 23,543 -
CASH AND CASH
EQUIVALENTS,
END OF PERIOD 155,392 182,430 155,392
/TABLE
<PAGE>
HERITAGE MINES, LTD.
(A Development Stage Company)
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES
<TABLE>
<CAPTION>
Period
from Inception
Six Months Six Months (May 14, 1992)
Ended Ended through
July 31 July 31 July 31
1997 1996 1997
<S> <C> <C> <C>
Stock issued for services - 24,000 25,045
Stockholders' compensation
contributed to capital - - 131,600
Equipment exchanged for
mining claims - - 15,000
Note payable issued to
related party for property
and equipment - - 327,000
Note payable issued for
plant and equipment - 31,694 106,094
Notes payable converted
to common stock - - 141,885
Stock issued for
subscriptions
receivable - - 127,500
Stock issued for
equipment - - 92,969
Issuance of common stock
in connection with
reorganization - 1,713,413 1,713,413
Notes and accounts payable
exchanged for convertible
debentures 35,000 35,000
Common stock exchanged for
conditional notes payable - - -
</TABLE>
See accompanying notes to condensed consolidated financial statements.<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS:
(July 31, 1997 - Unaudited)
1. BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements have
been prepared in accordance with Securities and Exchange
Commission requirements for interim financial statements. Therefore,
they do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements. The accompanying financial statements should be read in
conjunction with the company's Form 10-KSB for the year ended
January 31, 1997.
The results of operations for the interim periods shown in this report
are not necessarily indicative of the results to be expected for the full
year. In the opinion of management, the information contained herein
reflects all adjustments necessary to make the results of operations for
the interim periods a fair statement of such operations. All such
adjustments are of a normal recurring nature.
DEVELOPMENT STAGE
From its inception (considered to be May 14, 1992 for the purpose of
these condensed consolidated financial statements), to July 31, 1997,
the Company has been in the development stage. The Company has
concentrated its activities to acquire, explore, claim and permit
mineral properties, acquire, repair, retrofit and bring mining
equipment to its intended use, develop the mineral properties to get
them ready for operations and to raise capital to finance the activities
described above. From inception through July 31, 1997, there have
been no active mining operations, although small test runs generated
minimal revenues at the end of the 1997 fiscal year.
GOING CONCERN
The Company has incurred operating losses from inception through
July 31, 1997, has an accumulated deficit of $2,159,803, and negative
working capital of $1,087,600. During the six months ended July 31,
1997, the Company's operations used $229,637 of cash, and the
Company used $33,520 of cash in investing activities. The Compa-
ny's cash was provided from the issuance of 50,000 shares of
common stock and issuance of notes and convertible debentures
payable to related parties and others. Management expects that the
Company's cash expenditures for the fiscal year ended January 31,
1998, will not be less than $1,000,000. Larger expenditures may be
incurred based on the Company's development project opportunities,
and available cash resources from operating cash flow and/or from
additional financing.
The Company is in the process of raising between $500,000 and
$1,000,000 through a private placement of convertible debt securities,
and as of July 31, 1997, total subscriptions of $540,000 had been
received of which $210,000 had been funded. Management believes
that these funds raised may allow the Company to start revenue
generating operations during the current fiscal year. However, there
can be no assurance additional funds will be raised or will be
sufficient to support profitable operations and additional financing will
be necessary. No adjustments have been made to the accompanying
financial statements to provide for this uncertainty.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS
AND PLAN OF OPERATION
PLAN OF OPERATIONS. The long-term goal of the Company is to
become a self-sustaining medium sized precious metals exploration
and mining Company with a solid foundation of credible reserves
which can be developed and produced at costs which are in the lowest
quartile of industry averages. In order to work toward this goal, the
plan of operations of the Company for the next twelve months in-
cludes hiring additional experienced management personnel, comple-
tion of the sale of the balance of its convertible debenture offering,
acquisition of interests in one or more additional mining properties,
completion of a secondary financing of between $5,000,000 and
$10,000,000 to provide funds needed for exploration and development
of its properties, and reaching a sustaining level of cash flow from
limited production on one or more of its properties. There is no
assurance that the Company will be able to complete any of the
elements of its plan.
Effective May 1, 1997, the Company hired Timothy M. Sadler as its
Vice President of Operations. Mr. Sadler is a Registered Professional
Mining Engineer, as well as a graduate geologist. He has twenty five
years of progressive experience in the mining industry, with particular
focus on mineral project evaluation and development. In the capacity
of Vice President Operations, he will be primarily responsible for
exploration, feasibility determination, and operation of the Company's
mineral properties.
MANAGEMENT DISCUSSION AND ANALYSIS.
As of April 28, 1997 the Company commenced a private placement
offering of 15% convertible debentures intended to raise between
$500,000 and $1,000,000 of bridge financing. As of July 31, the
Company had subscriptions of $540,000 of which $210,000 had been
received and the Company was in the process of completing necessary
documentation in order to obtain the release of the offering proceeds
from escrow. Although there is no assurance as to when or whether
the Company will sell the remaining balance of its debenture offering,
it is currently anticipated that a substantial portion of the remaining
balance will be sold during the third quarter to fully subscribe the
offering. The proceeds of this offering have been allocated to pay-
ment of outstanding trade payables, providing cash resources
necessary to enable the Company to proceed with acquisition of
certain additional properties, and working capital needed to enable the
Company to hire additional key personnel, relocate its corporate
office, establish needed business systems, and generally prepare itself
for a secondary offering or other financing arrangements intended to
provide the funds needed to explore and develop the Bowerman
Project and any additional properties it may acquire. Notwithstanding
the completion of the minimum level of its debenture offering, the
Company will be required to raise additional funds in the next twelve
months, and failure to complete additional financing as planned would
raise substantial doubt about the Company's ability to continue as a
going concern.
On or about May 31, 1997, the Company completed the repurchase of
a total of 4,034,896 shares of its common stock from a group of its
founding shareholders, thereby reducing the number of issued and
outstanding shares from 10,522,068 to 6,487,172. The repurchase
was completed in exchange for issuance of conditional promissory
notes. The notes are convertible at any time, at the option of the
Company into newly issued shares of common stock. To the extent
not converted by the Company, the notes are payable at the rate of
$2.00 per share purchased for each 500,000 ounces of prov-
en/probable gold reserves discovered on the Bowerman Project within
a period of 5 years. No payments are due under the notes unless a
minimum of 500,000 ounces of proven/probable gold reserves are
discovered on the Bowerman Project within 5 years from the date of
repurchase of the shares. No financial value was recorded on this
stock repurchase because of the uncertainty as to the amount, if any,
of payments that ultimately might be due on the conditional notes
payable.
The purpose of the share roll-back plan was to reduce the number of
currently issued and outstanding common shares of the Company in
order to enhance the value of shares acquired by new investors in the
Company.
The Company previously signed a letter of intent concerning acquisi-
tion of an interest in a property known as the Lelan-Dividend Project
located in Yavapai County, Arizona. The Company was not able to
complete its debenture offering in time to meet initial funding require-
ments for acquisition of a joint venture interest in this Project prior to
expiration of the letter of intent. Now that minimum subscription of
the debenture offering has been reached, the Company is preparing to
go forward with its plans to acquire interests in the Lelan-Dividend
Project as well as two other properties which it believes exhibit
similar geologic potential. As of September 15, 1997, the Company
has executed no letters of intent or taken other formal action with
respect to such potential acquisitions.
While developing and effecting its redirection and recapitalization
plans, the Company suspended operations at its Bowerman Gold
Project located in Siskiyou County, California. Planning and analysis
is now underway to investigate the potential for metallurgical circuit-
modifications in the plant and development of a pilot stoping area in
the mine which will allow for restarting production by the fourth
quarter of this year.
Completion of at least a portion of the contemplated equity or
additional debt financing will be required to effect plans for
acquisition of interests in additional projects and to restart production
at the Bowerman Project. Preliminary discussions have been held
with several investment banking groups to assist with the planned
financing. Management has targeted completion of this financing, as
well as achievement of listing on additional exchange(s) by year end
1997 in its discussion with the investment banking houses.
This report contains various forward-looking statements that are based
on the Company's beliefs as well as assumptions made by and infor-
mation currently available to the Company. When used in this report,
the words "believe," "expect," "anticipate," estimate and similar
expressions are intended to identify forward-looking statements. Such
statements may include statements regarding reserves, resources,
mineralized material or deposits, mining methods, political and related
matters, planned levels of exploration, and the like, and are subject to
certain risks, uncertainties and assumptions which could cause actual
results to differ materially from projections or estimates contained
herein. Factors which could cause actual results to differ materially
include, among others, unanticipated grade, geological, metallurgical,
processing or other problems, conclusions of feasibility studies,
changes in project parameters as plans continue to be refined, the
timing of receipt of governmental permits, results of current or
planned exploration activities, environmental costs and risks, changes
in the gold price, and the like. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those anticipated,
estimated or projected. The Company cautions against placing undue
reliance on forward-looking statements all of which speak only as of
the date made.
ITEM 6 (a) - Exhibit 27: Financial Data Schedule
(b) - There have been no reports on Form 8-K for the quarter
ending July 31, 1997.<PAGE>
Signatures
In accordance with the requirements of the Exchange Act, the regis-
trant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Heritage Mines, Ltd.
(Registrant)
By:/s/ ____________________________________
Gregory B. Sparks
President, CEO and Director
Date: December 18, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-END> JUL-31-1997
<CASH> 155,392
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 181,795
<PP&E> 2,245,060
<DEPRECIATION> 180,425
<TOTAL-ASSETS> 2,308,979
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 16,218
<OTHER-SE> 813,366
<TOTAL-LIABILITY-AND-EQUITY> 2,308,979
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 217,013
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18,075
<INCOME-PRETAX> (217,013)
<INCOME-TAX> 0
<INCOME-CONTINUING> (217,013)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (217,013)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> 0
</TABLE>
