Attached files
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
(Mark
One)
☒
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly
period ended August 31,
2016
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 1-7602
Excalibur Industries
(Exact name of
registrant as specified in its charter)
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Utah
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87-0292122
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(State or other
jurisdiction of
incorporation or
organization)
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(I.R.S.
Employer
Identification
No.)
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Post Office Box
650, Hibbing, Minnesota
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55746
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(Address or
principal executive offices)
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(Zip
Code)
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218-262-6127
(Registrant’s
telephone number, including area code)
(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
☒ NO ☐
Indicate by check
mark whether the registrant has submitted electronically and posted
on its corporate Website, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was
required to submit and post such files).
YES
☐
NO ☒
Indicate by
checkmark whether the registrant is a large accelerated filer, an
accelerated files, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated
filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange
Act.
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Large accelerated
filer ☐
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Accelerated filer
☐
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Non-accelerated
filer ☐ (Do not check if a smaller reporting
company)
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Smaller reporting
company ☒
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Indicate by check
mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act). YES ☐ NO ☒
Number of shares of
issuer’s common stock outstanding at August 31,
2016: 6,029,897
PART
I—FINANCIAL INFORMATION
Item
1. Financial Statements.
CONSOLIDATED BALANCE SHEET
(Audited)
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For the Period
Ended:
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CURRENT
ASSETS
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Aug. 31,
2016
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May 31,
2016
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Cash
and Cash Equivalents
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$494,083
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$276,094
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Marketable
Securities
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16,692
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13,663
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Total
Prepaid Insurance
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6,699
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13,397
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Prepaid
Taxes
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68,500
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63,500
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Accounts
Receivable
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173,333
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171,147
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Total Current
Assets
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$759,307
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$537,801
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Fixed
Assets
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Interest
in Mining Properties
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63,536
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66,752
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Deferred
Taxes
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238,900
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238,900
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Deposits
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60
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60
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TOTAL
ASSETS
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$1,061,803
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$843,513
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LIABILITIES &
SHAREHOLDERS’ EQUITY
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Accounts
Payable
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$50,200
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$64,730
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TOTAL
LIABILITIES
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$50,200
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$64,730
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STOCKHOLDERS’
EQUITY
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Common
Stock $.01 Par Value, Authorized 10,000,000 Shares
6,029,897 Shares
issued including shares in Treasury
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60,299
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60,124
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Paid-In
Capital in excess of Par
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121,875
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121,875
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Retained
Earnings
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821,714
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589,069
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Accumulated
Other Comprehensive Income
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7,820
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7,820
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Treasury
Stock
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(105)
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(105)
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TOTAL
SHAREHOLDERS’EQUITY
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$1,011,603
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$778,783
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TOTAL
LIABILITIES & SHAREHOLDERS’ EQUITY
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$1,061,803
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$843,513
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See
accompanying Notes.
2
CONSOLIDATED SATEMENTS OF INCOME, EXPENSE
AND RETAINED EARNINGS
FOR THE FISCAL QUARTERS ENDED
(Audited)
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INCOME
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Aug. 31,
2016
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Aug. 31,
2015
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Royalty
Income
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$297,082
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$348,816
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TOTAL
INCOME
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$297,082
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$348,816
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OPERATING
EXPENSES
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General
and Administrative
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$41,040
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$54,104
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Professional
Services
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23,966
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33,422
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Property,
Payroll and Other Taxes
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0
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0
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TOTAL
OPERATING EXPENSES
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$65,006
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$87,526
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OTHER
INCOME/(EXPENSE)
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Interest
Expense
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$0
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$0
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Interest
and Dividend Income
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569
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456
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Gain/(Loss)
on Sale of Marketable Securities
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0
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0
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TOTAL
OTHER INCOME
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$569
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$456
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NET
INCOME/(LOSS)
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$232,645
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$261,746
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Retained
Earnings Beginning of Period
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589,069
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(398,743)
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Retained
Earnings End of Period
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821,714
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(136,997)
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Average
Shares Outstanding During Period
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6,029,897
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6,012,361
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NET GAIN/(LOSS) PER
SHARE
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$0.03858
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$0.04353
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3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Summary of Significant Accounting Policies
Consolidation
The
consolidated financial statements presented herein include the
accounts of Excalibur Industries (“Excalibur”) and its
wholly owned subsidiary, Mountain West Mines, Inc. (“Mountain
West”), a Nevada corporation, qualified to do business in the
state of Wyoming. All significant intercompany transactions have
been eliminated from these statements.
Note 2 - Mining Properties and Interests
Excalibur
and its subsidiary, Mountain West Mines, Inc., hold various mineral
rights interests that are carried at a gross reporting value of
$100,000 and depletion of $36,464 for a net mineral rights value of
$63,536.
Note 3 - Operating Funds
Excalibur
entered in to a Management Services Agreement with Meriden
Engineering LLC (“Meriden”) in 2012 to perform certain
management and consulting services with respect to mine performance
and progress and royalty payment determinations, among others.
Meriden’s management fee is 5% of the gross royalty revenue
received by the Company. Extraordinary events or issues beyond the
scope of the budget will be negotiated between Meriden and the
Company as additional compensation. In addition, as an incentive,
5% of actual gross increase in the Company’s consolidated
revenues during each calendar year from all sources other than
royalties shall be paid to Meriden. In the event the Company is
sold, a one-time termination fee in the amount of $250,000 will be
paid to Meriden.
4
Item 2. Management’s Discussion and
Analysis of Financial Condition and Results of
Operations.
Forward-Looking Statements
This
Quarterly Report on Form 10-Q contains forward-looking statements
that involve risks, uncertainties and assumptions. All statements
other than statements of historical fact are statements that could
be deemed forward-looking statements, including but not limited to,
statements regarding estimation of uranium production and pricing,
which are based on information from the uranium producers who are
planning to produce uranium from lands in which the Company holds a
royalty interest. Actual results and future developments
could differ materially from the results or developments expressed
in or implied by these forward-looking statements. These
risks and uncertainties include, but are not limited to, volatility
of uranium prices, market supply and demand, competition,
environmental hazards, health and safety conditions, regulation or
government action, litigation and uncertainties about estimates of
reserves. For a discussion of the factors, including without
limitation, those that could materially and adversely affect
Excalibur’s actual results and performance, see “Risk
Factors” set forth on page 3 of Excalibur’s Annual
Report on Form 10-K for the fiscal year ended May 31,
2016. Excalibur undertakes no obligation, other than that
imposed by law, to make any revisions to the forward-looking
statements contained in this filing or to update them to reflect
circumstances occurring after the date of this filing.
This
discussion should be read in conjunction with the condensed
financial statements and notes presented in this Quarterly Report
on Form 10-Q and the financial statements and notes in the
last filed Annual Report on Form 10-K filed for the period
ended May 31, 2016 for a full understanding of the
Company’s financial position.
Background
Excalibur
Industries (“Excalibur”) is a Utah corporation formed
by the consolidation of Tower Enterprises (formerly Moab Uranium
Company) and The Thrifty Helper on June 1, 1971. In January 1972,
Excalibur purchased all of the issued and outstanding shares of
capital stock of Mountain West Mines, Inc. (“Mountain
West”), a Nevada corporation, which is now a wholly owned
subsidiary of Excalibur. Excalibur and Mountain West are
hereinafter collectively referred to as Excalibur or
Company.
Excalibur
is a natural resource business enterprise focused on uranium, an
industry that has languished for decades following the 1979 Three
Mile Island power station incident, and, more recently, the 2011
earthquake and tsunami that severely damaged Japan’s
Fukushima Daiichi power station. However, most industry pundits are
cautiously forecasting a positive future for the industry,
including an increase in pricing of yellowcake, in the long
term.
Current Activity
Excalibur’s
uranium position in the Powder River Basin is maintained by royalty
agreements held by Excalibur with two uranium producers, Energy
Fuels, Inc., which acquired Uranerz Energy Corporation in June 2015
(“Energy Fuels”) and Cameco Corporation
(“Cameco”).
With
the acquisition of Uranerz Energy Corporation, Energy Fuels now
operates the uranium processing facility at the Nichols Ranch
property, in which Excalibur holds a royalty interest (6% or 8%
depending on the spot price of uranium). The Nichols Ranch facility
was commissioned in April 2014, and uranium production began in
June 2014. Energy Fuels/Uranerz produced a total of 103,164.0
pounds of uranium concentrate (“yellowcake”) from the
Nichols Ranch in the second calendar quarter of 2016, resulting in
a royalty payment of $172,572.74. Production from the Nichols Ranch
is difficult to estimate for the remainder of 2016 due to poor
market conditions. The timing and amount of production by Uranez
are subject to change and beyond the control of
Excalibur.
Cameco
continues uranium production from its facility at the North Butte
property, in which Excalibur holds a 4% royalty interest. The
royalty to be paid to Excalibur is based on Cameco’s
quarterly average realized uranium price as reported in
Cameco’s filings with the Securities and Exchange Commission.
Cameco produced 71,288.8 pounds of uranium concentrate from the
North Butte in the second calendar quarter of 2016, resulting in a
royalty payment of $122,322.34. In April 2016, Cameco announced
that it would be curtailing production at its U.S. uranium
operations in response to market conditions. Future production is
difficult to estimate. Again, the timing and amount of production
reported by Cameco are subject to change and are beyond the control
of Excalibur.
5
The
final installment of $50,000 owed to Cliffs Natural Resources from
production royalty on North Butte and Ruby Ranch properties under
the 2009 Settlement Agreement is scheduled to be paid in December
2016.
Executive Compensation. For calendar
year 2016, Jay R. Mackie, Excalibur’s President and CEO, is
compensated at the rate of $8,000 per month plus restrictive stock
with a total aggregate market value of approximately $40,000
annually, paid quarterly, and Michael P. Johnson, Excalibur’s
Secretary and Treasurer, is compensated at the rate of $1,250 per
month. For calendar year 2016, all Board members will be
compensated $3,625 annually, paid quarterly, plus restrictive stock
with a total aggregate fair market value of approximately $375,
which was issued June 30, 2016.
Item
3. Quantitative and Qualitative Disclosures About Market
Risk.
Not
applicable.
Item
4. Controls and Procedures.
During
the most recently completed fiscal quarter ended August 31, 2016,
there were no changes in the Company’s internal control over
financial reporting that have materially affected, or are
reasonably likely to affect, the Company’s internal control
over financial reporting.
PART
II—OTHER INFORMATION
Item
1. Legal Proceedings.
The
Company currently is not a party to any material legal proceedings
and, to management’s knowledge, no such proceedings are
threatened or contemplated.
Item
2. Unregistered Sale of Equity Securities and Use of
Proceeds.
None.
Item
3. Defaults Upon Senior Securities.
Not
applicable.
Item
4. Mine Safety Disclosures.
Not
applicable.
Item
5. Other Information.
None.
Item
6. Exhibits.
The
following exhibits are attached to this Quarterly Report on Form
10-Q:
Exhibit
Number
Description
31.1
Certifications of Chief Executive Officer and Chief Financial
Officer pursuant to Rule 13a-14(a) of the Exchange Act
31.2
Certifications of Chief Executive Officer and Chief Financial
Officer pursuant to Rule 13a-14(a) of the Exchange Act
32.1
Certifications of Chief Executive Officer and Chief Financial
Officer pursuant to Rule 13a-14(a) of the Exchange Act
32.2
Certifications of Chief Executive Officer and Chief Financial
Officer pursuant to Rule 13a-14(a) of the Exchange Act
6
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.
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Excalibur
Industries
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Date: October 11,
2016
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By:
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/s/ Jay R.
Mackie
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Jay R.
Mackie
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President, Chief
Executive Officer (Principal Executive Officer)
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Date: October 11,
2016
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By:
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/s/ Michael P.
Johnson
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Michael P.
Johnson
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Secretary and
Treasurer (Principal Financial Officer)
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7