Attached files
| file | filename |
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| EX-32.1 - CERTIFICATION - EXCALIBUR INDUSTRIES | exc_ex321.htm |
| EX-31.1 - CERTIFICATION - EXCALIBUR INDUSTRIES | exc_ex311.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| (Mark One) |
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 2015
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
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Excalibur Industries
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(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
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(I.R.S. Employer
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incorporation or organization
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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
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(Registrant’s telephone number, including area code)
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(Former name, former address and former fiscal year, if changed since last report)
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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 x
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 x
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.
Large accelerated filer ¨ Accelerated filer ¨
Non-accelerated filer ¨(Do not check if a smaller reporting company) Smaller reporting company x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES ¨ NO x
Number of shares of issuer’s common stock outstanding at February 28, 2015: 6,012,361
EXCALIBUR INDUSTRIES
Form 10-Q
August 31, 2015
Page 2
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
CONSOLIDATED BALANCE SHEET
(Unaudited)
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For the Period Ended:
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CURRENT ASSETS
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Aug. 31, 2015
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May 31, 2015
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Cash and Cash Equivalents
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$ | 359,571 | $ | 288,880 | ||||
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Marketable Securities
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16,986 | 22,263 | ||||||
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Total Prepaid Insurance
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6,699 | 13,398 | ||||||
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Total Current Assets
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383,256 | 324,541 | ||||||
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Fixed Assets
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Interest in Mining Properties
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100,000 | 100,000 | ||||||
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Deposits
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60 | 60 | ||||||
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TOTAL ASSETS
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$ | 483,316 | $ | 424,601 | ||||
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LIABILITIES & SHAREHOLDERS’ EQUITY
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Accounts Payable
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$ | 189,038 | $ | 302,288 | ||||
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TOTAL LIABILITIES
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$ | 189,038 | $ | 302,288 | ||||
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STOCKHOLDERS’ EQUITY
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Common Stock $.01 Par Value, Authorized 10,000,000 Shares
6,012,361 Shares issued including shares in Treasury
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60,124 | 60,124 | ||||||
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Paid-In Capital in excess of Par
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83,810 | 83,810 | ||||||
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Retained Earnings
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134,029 | (37,936 | ) | |||||
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Accumulated Other Comprehensive Income
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16,420 | 16,420 | ||||||
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Treasury Stock
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(105 | ) | (105 | ) | ||||
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TOTAL SHAREHOLDERS’EQUITY
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$ | 294,278 | $ | 122,313 | ||||
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TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY
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$ | 483,316 | $ | 424,601 | ||||
See accompanying Notes.
EXCALIBUR INDUSTRIES
Form 10-Q
August 31, 2015
Page 3
CONSOLIDATED SATEMENTS OF INCOME, EXPENSE
AND RETAINED EARNINGS
FOR THE FISCAL QUARTERS ENDED
(Unaudited)
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INCOME
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Aug. 31, 2015
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Aug. 31, 2014
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Royalty Income
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$ | 326,688 | $ | 0 | ||||
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TOTAL INCOME
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$ | 326,688 | $ | 0 | ||||
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OPERATING EXPENSES
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General and Administrative
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$ | 132,263 | $ | 67,123 | ||||
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Professional Services
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22,916 | 3,847 | ||||||
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Property, Payroll and Other Taxes
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0 | 100 | ||||||
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TOTAL OPERATING EXPENSES
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$ | 155,179 | $ | 71,070 | ||||
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OTHER INCOME/(EXPENSE)
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Interest Expense
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$ | 0 | $ | 0 | ||||
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Interest and Dividend Income
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456 | 1,108 | ||||||
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Gain/(Loss) on Sale of Marketable Securities
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0 | 5,710 | ||||||
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TOTAL OTHER INCOME
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$ | 456 | $ | 6,818 | ||||
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NET INCOME/(LOSS)
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$ | 171,965 | (64,252 | ) | ||||
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Retained Earnings Beginning of Period
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(37,936 | ) | (311,625 | ) | ||||
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Retained Earnings End of Period
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134,029 | (375,877 | ) | |||||
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Average Shares Outstanding During Period
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6,012,361 | 6,012,361 | ||||||
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NET GAIN/(LOSS) PER SHARE
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$ | 0.02860 | $ | (0.01069 | ) | |||
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 reporting value of $100,000 for financial statement purposes.
Note 3 - Operating Funds
For the past several years, administrative costs have been defrayed under a plan developed by management to insure that Excalibur would continue to meet its obligations until the anticipated royalty income stream was realized. As part of that plan, 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 has agreed to defer payments under this agreement until such a time that Excalibur has adequate funds. As of August 31, 2015, Meriden was owed $91,037.82. With the onset of the royalty income stream in the first quarter of 2015, Excalibur now expects to liquidate the accumulated debt owed to Meriden by February 2016, and Meriden’s management fee will be 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,
EXCALIBUR INDUSTRIES
Form 10-Q
August 31, 2015
Page 4
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, all deferred compensation will be paid in full, and in addition, a one-time termination fee in the amount of $250,000 will be paid to Meriden.
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 pages 4 and 5 of Excalibur’s Annual Report on Form 10-K for the fiscal year ended May 31, 2015. 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, 2015 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 seen a long period of volatility in production and pricing following the 1979 incident at the Three Mile Island power station and 2011 earthquake and tsunami that struck Japan, crippling the Fukushima-Daiichi atomic power plant, and leading to the shutdown of nearly all reactors in the country. However, most industry analysts continue to forecast a positive future for the industry, including a major 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 58,073 pounds of uranium concentrate (“yellowcake”) from the Nichols Ranch in the second calendar quarter of 2015, resulting in a royalty payment of $128,225.18. Production from the Nichols Ranch is expected to be about 377,000 pounds in 2015. 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 106,540.2 pounds of uranium concentrate
EXCALIBUR INDUSTRIES
Form 10-Q
August 31, 2015
Page 5
from the North Butte in the second calendar quarter of 2015, resulting in a royalty payment of $198,463.08. Cameco is expected to produce about 329,000 pounds of uranium concentrate from the North Butte in 2015. Again, the timing and amount of production reported by Cameco are subject to change and are beyond the control of Excalibur.
Excalibur owes $100,000.00 to Cliffs Natural Resources under a 2009 Settlement Agreement and Release. This obligation will be repaid in two annual installments of $50,000.00 beginning in December 2015.
Executive Compensation. Jay R. Mackie, Excalibur’s President and CEO, is compensated at the rate of $11,000.00 per month, and Michael P. Johnson, Excalibur’s Secretary and Treasurer, is compensated at the rate of $1,250.00 per month. All 2015 executive compensation is deferred until December 15, 2015. As of August 31, 2015, $88,000.00 was owed to Mr. Mackie and $10,000 .00 was owed to Mr. Johnson for 2015 compensation.
Severance Pay. Severance payments of $300,000.00 to Excalibur’s former president, Joseph P. Hubert, and $100,000.00 to Excalibur’s former secretary/treasurer, Marguerite Emanuel, were approved by the Board of Directors in 2013. These severance payments are deferred until the Company’s financial position allows payment. As of August 31, 2015, $250,000.00 is owed to Mr. Hubert and $85,000.00 was owed to Ms. Emanuel. This obligation is expected to be satisfied by February 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, 2015, 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.
EXCALIBUR INDUSTRIES
Form 10-Q
August 31, 2015
Page 6
Item 5. Other Information.
None.
Item 6. Exhibits.
The following exhibits are attached to this Quarterly Report on Form 10-Q:
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Exhibit
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Description
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Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act
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Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act
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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.
| Registrant | Excalibur Industries | |||
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October 6, 2015
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By:
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/s/ Jay R.Mackie | ||
| Date | Jay R. Mackie | |||
| President, Chief Executive Officer (Principal Executive Officer) | ||||
| October 6, 2015 | By: | /s/ Michael P. Johnson | ||
| Date | Michael P. Johnson | |||
| Secretary and Treasurer (Principal Financial Officer) | ||||