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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
(Mark one)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2000 or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR l5(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________
Commission File Number 0-16097
BAY RESOURCES LTD
FORMERLY
BAYOU INTERNATIONAL, LTD.
(Exact name of Registrant as specified in its charter)
Delaware 98-0079697
------------------------------------ --------------------
(State or other jurisdiction of (IRS Employer
incorporation or organisation) Identification No.)
210 Kings Way South Melbourne, Victoria, 3205 Australia
--------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 0ll (613) 9234 - 1100
Securities registered pursuant to Section 12(b) of the Act :
Title of each class Name of each exchange
on which registered
N/A N/A
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.0001 per share
(Title of Class)
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 the past 90 days. Yes [X] No [_]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the restraint has filed all documents and reports
required to be filed by Section 12,13 or 15(d) of the Securities Exchange Act of
1934 subsequent to the distribution of securities under a plan confirmed by a
court. Yes [_] No [_]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. There were 6,347,089
outstanding shares of Common Stock as of December 31, 2000.
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PART 1
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTRODUCTION TO INTERIM FINANCIAL STATEMENTS.
The interim financial statements included here in have been prepared by
Bay Resources Ltd. (the "Company") without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission (The "Commission").
Certain information and footnote disclosure normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations, although
the Company believes that the disclosures are adequate to make the information
presented not misleading. These interim financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the year ended June 30 2000.
Effective October 17, 2000 the Company changed its name to Bay Resources
Ltd.
In the opinion of management, all adjustments, consisting of normal
recurring adjustments and consolidating entries, necessary to present fairly the
consolidated financial position of the Company and subsidiaries as of December
31, 2000 and December 31, 1999, the results of its consolidated operations for
the three and six month periods ended December 31, 2000 and December 31, 1999,
and the changes in its consolidated cash flows for the three and six month
periods ended December 31, 2000 and December 31, 1999, have been included. The
results of consolidated operations for the interim periods are not necessarily
indicative of the results for the full year.
UNLESS OTHERWISE INDICATED, ALL FINANCIAL INFORMATION PRESENTED IS IN
AUSTRALIAN DOLLARS.
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BAY RESOURCES LTD. AND SUBSIDIARY
Consolidated Balance Sheets
December 31, 2000 and June 30, 2000
and December 31, 1999
(Unaudited)
ASSETS
A $000's A $000's A $000's
Dec 31 June 30 Dec 31
2000 2000 1999
-------- -------- --------
Current Assets:
Cash $ 8 $ 2 $ 1
------------------------------------------
Total Current Assets 8 2 1
------------------------------------------
Other Assets:
Investments 49 49 661
Organisational Costs, net -- -- 1
------------------------------------------
Total Other Assets 49 49 662
------------------------------------------
Total Assets $ 57 $ 51 $ 663
==========================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable and Accrued Expenses $ 239 $ 285 $ 385
------------------------------------------
Total Current Liabilities 239 285 385
------------------------------------------
Long-Term Debt 586 214 7
------------------------------------------
Total Liabilities 825 499 392
------------------------------------------
Stockholders' Equity (Deficit):
Common Stock: $.0001 par value
25,000,000 shares authorised,
6,347,089 issued and outstanding 1 1 1
less Treasury Stock at Cost, 50,000 shares (20) (20) (20)
Additional Paid-in-Capital 25,175 25,175 25,055
Accumulated other Comprehensive Loss (6,456) (6,456) (5,844)
Retained Deficits (19,468) (19,148) (18,921)
------------------------------------------
Total Stockholders' Equity (Deficit) (768) (448) 271
------------------------------------------
Total Liabilities and
Stockholders' Equity $ 57 $ 51 $ 663
==========================================
The accompanying notes are an integral part of these
consolidated financial statements.
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BAY RESOURCES LTD. AND SUBSIDIARY
Consolidated Statements of Operations
Three Months Ended December 31 2000 and 1999
and six months ended December 31, 2000 and 1999
(Unaudited)
A$000's A$000's A$000's A$000's
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
Dec 31 Dec 31 Dec 31 Dec 31
2000 1999 2000 1999
------- ------- ------- -------
Revenues: $ -- $ -- $ -- $ --
----------------------------------------------------------------------
Other Income: -- -- -- --
----------------------------------------------------------------------
Costs and Expenses:
Interest Expense: 15 7 29 65
Legal, Accounting & 2 7 11 11
Professional
Administrative 128 60 280 90
----------------------------------------------------------------------
145 74 320 166
----------------------------------------------------------------------
Loss from Operations: (145) (74) (320) (166)
Foreign Currency Exchange Gain (Loss) -- -- -- --
----------------------------------------------------------------------
-- --
Income (Loss) before Income Tax (145) (74) (320) (166)
Provision for Income Tax -- -- -- --
----------------------------------------------------------------------
Net Income (Loss) $ (145) $ (74) $ (320) $ (166)
======================================================================
Earnings Per Common Equivalent
Share From (.02) (.01) (.05) (.04)
======================================================================
Weighted Number of Common
Equivalent Shares Outstanding
000's 6,347 6,347 6,347 4,347
======================================================================
The accompanying notes are an integral part of these
consolidated financial statements.
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BAY RESOURCES LTD. AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity
December 31, 2000 and June 30, 2000
and December 31, 1999
(Unaudited)
Accumulated
Common Treasury Paid in Other
Stock Stock at Capital Retained Comprehensive
Shares Amount Cost (Deficit) Earnings Loss
-------- -------- -------- --------- ---------- -------------
000's A$000's A$000's A$000's A$000's A$000's
Balance June 30, 1998 46,942 $ 9,388 $(20) $11,592 $(18,267) $(1,989)
Net Income six months ending
12-31-98 -- -- -- -- (250) --
---------------------------------------------------------------------------------------------
Balance December 31, 1998 46,942 9,388 (20) 11,592 (18,517) (1,989)
Net income six months ending
6-30-99 -- -- -- -- (238) --
Net unrealised loss on
marketable securities -- -- -- -- -- (3,855)
---------------------------------------------------------------------------------------------
Balance June 30, 1999 46,942 9,388 (20) 11,592 (18,755) (5,844)
20 for 1 Reverse Stock Split (44,595) (9,387) -- 9,387 -- --
Issuance of 4,000,000 shares
in lieu of debt repayment 4,000 -- -- 4,076 -- --
Net Income six months ending
12-31-99 -- -- -- -- (166) --
---------------------------------------------------------------------------------------------
Balance December 31, 1999 6,347 1 (20) 25,055 (18,921) (5,844)
Sale of 8,000,000 options to -- -- -- 120 -- --
purchase common stock
Net unrealised loss on -- -- -- -- -- (612)
marketable securities
Net Income six months ending
6-30-00 -- -- -- -- (227) --
---------------------------------------------------------------------------------------------
Balance June 30, 2000 6,347 1 (20) 25,175 (19,148) (6,456)
Net Income six months ending
12-31-00 -- -- -- -- (320) --
---------------------------------------------------------------------------------------------
Balance December 31, 2000 6,347 $ 1 $(20) $25,175 $ 19,468 $(6,456)
=============================================================================================
The accompanying notes are an integral part of these
consolidated financial statements.
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BAY RESOURCES LTD. AND SUBSIDIARY
Consolidated Statements of Cash Flows
Six Months Ended December 31, 2000 and 1999
and Year Ended June 30, 2000
(Unaudited)
A $000's A $000's A $000's
Six Months Year Six Months
Ended Ended Ended
Dec 31 June 30 Dec 31
2000 2000 1999
---- ---- -----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $(320) $ (393) $ (166)
Adjustments:
Foreign Currency Translation -- -- --
Depreciation and Amortisation -- -- --
Loss on Disposition of Assets -- -- --
Accounts Receivable -- -- --
Organisation Cost -- 1 --
A/P and Accrued Liabilities (46) (11) 89
--------------------------------------------------
Net Cash Provided (Used) in Continuing Operations (366) (403) (77)
--------------------------------------------------
CASH FLOW FROM INVESTING ACTIVITIES:
Investment in Treasury Stock -- -- --
Investment in Subsidiary -- -- --
--------------------------------------------------
Net Cash Provided (Used) in Investing Activities -- -- --
--------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Borrowing under Credit Line Arrangements -- -- --
Net Borrowing from Affiliates 372 284 77
Sale of Options -- 120 --
Net Borrowings -- -- --
--------------------------------------------------
Net Cash Provided by Financing Activities 372 404 (251)
--------------------------------------------------
Net Increase (Decrease) in Cash 6 1 --
Cash at Beginning of Year 2 1 1
--------------------------------------------------
Cash at End of Year $ 8 $ 2 $ 1
==================================================
SUPPLEMENTAL DISCLOSURES:
Common Stock Issued in Lieu of
Debt Repayment -- 4,076 4,076
Interest Paid (Net Capitalised) 29 80 7
Income Tax Paid -- -- --
The accompanying notes are an integral part of these
consolidated financial statements
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BAY RESOURCES LTD. AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 2000, June 30, 2000 and
December 31, 1999
(1) ORGANISATION
Bay Resources Ltd. (Bay Resources) is incorporated in the State of Delaware. The
principal shareholder of Bay Resources is Edensor Nominees Proprietary Limited
(Edensor), an Australian corporation. Edensor owned 78.8% of Bay Resources as of
December 31, 2000.
Bay Resources acquired a controlling interest on September 3, 1987 in former
subsidiary, Solmecs Corporation N.V. ("Solmecs") and 100% ownership on January
2, 1992. Bay Resources sold its interest in Solmecs effective June 5, 1998.
During fiscal 1998, Bay Resources incorporated a further subsidiary, Baynex.com
Pty Ltd (formerly Bayou Australia Pty Ltd), under the laws of Australia.
Baynex.com Pty Ltd has not traded since incorporation.
On October 17, 2000 the Company changed its name to Bay Resources Ltd. The
change in name is based on the direction the Company wishes to proceed in the
future, being a business focused on opportunities in the mining and exploration
area.
(2) INVESTMENT SECURITIES
The following is a summary of Investment Securities at December 31, 2000, June
30, 2000 and December 31, 1999:
A$000's A$000's A$000's
Dec 31 June 30 Dec 31
2000 2000 1999
------- ------- -------
Investment Cost Method $ 4,516 $ 4,516 $ 4,516
Trading Securities:
Marketable Equity
Securities, at cost -- -- --
Gross Unrealised Gains -- -- --
Gross Unrealised Losses (4,467) (4,467) (3,855)
-----------------------------------------------
Marketable Equity Securities,
at fair value 49 49 661
=================================================
The investment using this cost method is carried at cost. Dividends received
from the investment carried at cost are included in other income. Dividends
received in excess of the Company's proportionate share of accumulated earnings
("return of capital dividends") are applied as a reduction of the cost of the
investment. No securities were sold during 2000 and 1999 and all securities were
treated as available for sale for 2000 and 1999. The net unrealised loss of
A$612 and A$5,855 shown in the statement of Stockholders Equity for 2000 and
1999 consist entirely of the change in holding loss for those periods.
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BAY RESOURCES LTD. AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 2000, June 30, 2000 and
December 31, 1999
(3) SHORT TERM AND LONG TERM DEBT
The following is a summary of Bay Resources' borrowing arrangements as of
December 31, 2000, June 30, 2000 and December 31, 1999.
A$000's A$000's A$000's
Dec 31 June 30 Dec 31
Long-Term 2000 2000 1999
---- ---- -----
Loan from corporations affiliated with the
President of Bay Resources. Interest accrues at
the ANZ Banking Group Limited rate
+ 1% for overdrafts over $100,000
Repayment of loan not required
before June 30, 2000. (1)(2) $586 $214 $7
-------------------------------------
Total Long-Term $586 $214 $7
=====================================
(1) Repaid on October 7, 1999 through the issuance of 4,000,000 post split
shares. Balance at the date of the stock issuance was approximately
$4,076,000. An amount of $7000 was repaid on January 20, 2000 partly
through the issuance of 8,000,000 options to purchase shares of the
Company. Both issuances were to a company affiliated with the President of
Bay Resources.
(4) AFFILIATE TRANSACTIONS
Bay Resources advances to and receives advances from various affiliates. All
advances between consolidated affiliates are eliminated on consolidation. At
December 31, 2000, Bay Resources had no outstanding advances to or from
unconsolidated affiliated companies. $225,000, $245,000 and $344,000 of accounts
payable for the years shown is due to an affiliated management company.
(5) GOING CONCERN
The accompanying consolidated financial statements have been prepared in
conformity with generally accepted accounting principles, which contemplates
continuation of Bay Resources and Solmecs as a going concern. However, Bay
Resources has sustained recurring losses. In addition, Bay Resources has no net
working capital, which raises substantial doubts as to its ability to continue
as going concerns.
Bay Resources anticipates that it will be able to defer repayment of certain of
its short term loan commitments until it has sufficient liquidity to enable
these loans to be repaid or other arrangements to be put in place.
In addition Bay Resources has historically relied on loans and advances from
corporations affiliated with the President of Bay Resources. Based on
discussions with these affiliate companies and the President. Bay Resources
believes this source of funding will continue to be available.
Other than the arrangements noted above, Bay Resources has not confirmed any
other arrangements for ongoing funding. As a result Bay Resources may be
required to raise funds by additional debt or equity offerings in order to meet
its cash flow requirements during the forthcoming year.
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BAY RESOURCES LTD. AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 2000, June 30, 2000 and
December 31, 1999
(6) SALE OF SOLMECS
Pursuant to a stock purchase agreement dated as of June 5, 1998, the Company
acquired 499,701 shares in SCNV Acquisition Corp ("SCNV"), representing
approximately 24% of the issued and outstanding share capital of SCNV, in return
for the whole of the share capital of Solmecs Corporation N.V., a Netherlands
Antilles company which prior to the exchange was formerly a wholly owned
subsidiary of the Company. The 499,701 shares has been valued at US$2,800,000 or
A$4,516,000 and will be accounted for using the cost method because the Company
does not exercise significant influences over SCNV's operating and financial
activities (see note 4). The sale resulted in a gain of $5,899,000 which is
included in other income.
SCNV is a Delaware corporation established May 1997 to select, develop and
commercially exploit proprietary technologies, in various stages of development,
invented primary by scientists who immigrated to Israel from and by scientists
and institutions in Russia and other countries that formerly comprised the
Soviet Union. Simultaneously with the SCNV stock acquisition by the Company,
SCNV completed an initial public offering of common stock and warrants which
resulted in gross proceeds of approximately US$5,900,000.
The Company has been granted certain demand and "piggyback" registration rights
with respect to the SCNV shares. Notwithstanding the foregoing, the Company has
agreed not to sell, grant options for sale or assign or transfer any of the SCNV
shares, for a period of 24 months from the closing of the ("Lock-up") agreement,
which expired in June 2000. Bay Resources has requested SCNV to take the
necessary steps to register Bay Resources shareholding in SCNV.
(7) INCOME TAXES
Bay Resources files its income tax returns on an accrual basis. Bay Resources
has carry forward losses of approximately US$14 million as of June 30, 1999
which expire in the years 1999 through 2012. Due to the uncertainty as to
realisation of these losses, a valuation allowance of US$4.7 million has been
recorded to off set the tax benefit of the carry forward losses.
(8) NEW BUSINESS OPPORTUNITY
On May 23, 2000 the Company announced their intention to join with Primus
Telecom, an International Data, Internet and Telecommunications company, to
develop a global electronic trading community ("Portal") to date, no financial
commitments have been agreed to.
On September 27, 2000 the Company announced their intention to acquire a
strategic investment in St Andrew Goldfields Ltd, ("St Andrew") subject to the
completion of due diligence. The Company will issue, if completed, 1 million
shares to St Andrew who, in exchange, will issue 16 millions shares to the
Company and 16 million common share purchase warrants with an exercise period of
36 months. The Company will hold an approximate 36% interest in St Andrew. The
agreement also requires St Andrew to refinance existing debt and raise further
working capital, on a best endeavours basis. On January 30, 2001 by mutual
agreement, the parties terminated the agreement between the Company and St
Andrew.
On January 30, 2001, the Company tendered its notice to withdraw from this
transaction.
(9) CHANGES IN STOCKHOLDERS' EQUITY
During the year ended June 30, 2000 the Company completed the following
transactions:
(a) On June 29, 1999 the Company undertook a reverse stock split on a 1:20
basis and changed its par value from US$0.15 to US$0.0001 per share.
(b) On October 7,1999 the Company issued 4,000,000 post split shares, to a
Company affiliated with the President of Bay Resources, in lieu of payment
of $4,076,000 in borrowings.
(c) On January 20, 2000 the Company issued 8,000,000 options to purchase
previously unissued stock to a company affiliated with the President of
Bay Resources. Total consideration totalled $120,000 and included both
cash and partial debt repayment.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
NEW BUSINESS OPPORTUNITY
The Company is investigating internet opportunities in the area of medical
research and mining and exploration.
FUND COSTS CONVERSION
The consolidated statements of income and other financial and operating data
contained elsewhere here in and the consolidated balance sheets and financial
results have been reflected in Australian dollars unless otherwise stated.
The following table shows the average rate of exchange of the Australian dollar
as compared to the US dollar during the periods indicated:
6 months ended December 31, 1999 A$1.00 = U.S. $.6531
6 months ended December 31, 2000 A$1.00 = U.S. $.5548
RESULTS OF OPERATION
SIX MONTHS ENDED DECEMBER 31, 2000 VS. SIX MONTHS ENDED DECEMBER 31 1999.
Costs and expenses increased from A$166,000 in the six months ended December 31,
1999 to A$320,000 in the six months ended December 31, 2000. The increase is a
net result of:
a) a decrease in interest expense from A$65,000 for the six months ended
December 31, 1999 to A$29,000 for the six months ended December 31, 2000
as a result of the reduction in long term debt of the Company through the
issuance of shares in lieu of payment.
b) the increase in administrative costs including salaries from A$90,000 in
the six months ended December 31, 1999 to A$280,000 in the six months
ended December 31, 2000 due to the substantial amount of costs incurred in
the due diligence on St Andrew which included consultants and travel &
accommodation.
As a result of the foregoing, the loss from operations increased from A$166,000
for the six months ended December 31, 1999 to A$320,000 for the six months ended
December 31, 2000.
The net loss was A$320,000 for the six months ended December 31, 2000 compared
to a net loss of A$166,0000 for the six months ended December 31, 1999.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 2000 the Company had short-term obligations of A$239,000
comprising accounts payable and accrued expenses.
The Company anticipates that it will be able to defer repayment of certain of
its short term loan commitments until it has sufficient liquidity to enable
these loans to be repaid which there can be no assurance. In addition the
Company has historically relied upon loans and advances from affiliates to meet
a significant portion of the Company's cash flow requirements which the Company
believes based on discussions with such affiliates will continue to be available
during fiscal 2000 and 2001.
On October 7, 1999 Bay Resources authorised the issuance effective December 31,
1999 of 4,000,000 shares of its previously unissued stock to a company of which
the President of Bay Resources is a director and shareholder, in lieu of
repayment of the debt described in note (3). Balance due at the stock issuance
was approximately A$4,076,000.
On January 20, 2000 the Board of Directors authorised the issuance of 8,000,000
options to purchase previously unissued shares, to a company of which the
President of Bay Resources is a director and shareholder, partly in lieu of
repayment of the debt in note (3). Balance at the date of issuance of options
was approximately $8000. Options are exercisable after two years for a period of
three years at US$1.00 per share.
Other than the arrangements above the Company has not confirmed any further
arrangements for ongoing funding. As a result the Company may be required to
raise funds from additional debt or equity offerings and/or increase the
revenues from operations in order to meet its cash flow requirements during the
forthcoming year.
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CAUTIONARY SAFE HARBOR STATEMENT UNDER THE UNITED STATES PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995.
Certain information contained in this Form 10-Q is forward looking information
within the meaning of the Private Securities Litigation Act of 1995 (the "Act")
which became law in December 1995. In order to obtain the benefits of the "safe
harbor" provisions of the act for any such forwarding looking statements, the
Company wishes to caution investors and prospective investors about significant
factors which among others have affected the Company's actual results and are in
the future likely to affect the Company's actual results and cause them to
differ materially from those expressed in any such forward looking statements.
This Form 10-Q report contains forward looking statements relating to future
financial results. Actual results may differ as a result of factors over which
the Company has no control including the strength of the domestic and foreign
economies, slower than anticipated completion of research and development
projects and movements in the foreign exchange rate. Additional information
which could affect the Company's financial results is included in the Company's
Form 10-K on file with the Securities and Exchange Commission.
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PART II
Item 1. LEGAL
Not Applicable
Item 5. OTHER INFORMATION
Not Applicable
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Reports
The Company did not file any Report on Form 8-K during the
three months ended December 31, 2000.
(b) Exhibits
Not Applicable
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(FORM 10-Q)
-
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 thereinto duly authorised.
BAY RESOURCES LTD.
By: /s/ Joseph I. Gutnick
Joseph I. Gutnick
Chairman of the Board, President and
Chief Executive Officer
(Principal Executive Officer)
Dated: February 14, 2001 By: /s/ Peter Lee
Peter Lee
Peter Lee, Director, Secretary and
Chief Financial Officer
(Principal Financial Officer)
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