PACIFIC SUMMA ENVIRONMENTAL CORP.
CONSOLIDATED BALANCE SHEET
September 30, 1998
(Unaudited - See Notice to Reader)
ASSETS 1998 1997
Current
Cash $ 169 $ 13,557
Accounts receivable 6,826 2,882
Loan receivable - 27,640
Inventory 1 14,125
Prepaid expenses and deposits 438 21,346
7,434 79,550
Deferred foreign exchange loss - 9,763
Development costs - 194,086
Capital assets 2 70,912
$ 7,436 $ 354,311
LIABILITIES
Current
Accounts payable $ 1,209,135 $ 990,177
Loans payable 484,896 148,291
Due to related parties 272,961 467,898
Current portion of long-term debt 1,047,724 -
3,014,716 1,606,366
Long-term debt - 945,634
3,014,716 2,552,000
SHAREHOLDERS' DEFICIENCY
Share Capital - Notes 2 and 6 9,221,537 9,009,857
Deficit ( 12,228,817) ( 11,207,546)
( 3,007,280) ( 2,197,689)
$ 7,436 $ 354,311
PACIFIC SUMMA ENVIRONMENTAL CORP.
CONSOLIDATED STATEMENT OF DEFICIT
for the nine months ended September 30, 1998
(Unaudited - See Notice to Reader)
1998 1997
Deficit, beginning of period
As previously reported $ 11,707,236 $ 10,405,001
Prior period error correction - Note 5 157,841 78,660
11,865,077 10,483,661
Net loss for the period 363,740 723,885
Deficit, end of period $ 12,228,817 $ 11,207,546
PACIFIC SUMMA ENVIRONMENTAL CORP.
CONSOLIDATED STATEMENT OF LOSS
for the nine months ended September 30, 1998
(Unaudited - See Notice to Reader)
1998 1997
Sales $ - $ 17,656
Cost of sales - 31,219
Gross profit (loss) - ( 13,563)
Administrative Expenses
Accounting and auditing 58,516 29,333
Amortization of capital assets - 12,876
Bad debts - 3,537
Bank charges and interest 82,496 28,035
Consulting fees 3,750 1,721
Corporate communications 12,500 41,776
Equipment lease 3,417 7,074
Filing fees 1,863 4,163
Insurance - 2,469
Legal 750 19,990
Management fees and salaries 22,500 84,442
Office and mail costs 3,684 21,260
Office fees and salaries - 105,244
Rent and utilities 79,634 108,015
Telephone 4,035 27,602
Transfer agent fees 2,817 6,078
Travel and accommodation - 38,551
275,962 542,166
Loss before other items 275,962 555,729
Other items
Loss from discontinued operations - Schedule 1 25,464 -
Amortization of development costs - 114,411
Write-off of capital assets - 17,219
Foreign exchange loss 119,412 19,953
Amortization of deferred foreign exchange loss 26,999 16,573
Gain on settlement of accounts payable ( 84,097) -
87,778 168,156
Net loss for the period $ 363,740 $ 723,885
Loss per share $ 0.01 $ 0.02
PACIFIC SUMMA ENVIRONMENTAL CORP.
CONSOLIDATED STATEMENT OF CASH FLOWS
for the nine months ended September 30,1998
(Unaudited - See Notice to Reader)
1998 1997
Operating Activities
Cash flow from continuing operations - Note 3 $ ( 395,374) $ ( 562,806)
Change in continuing operations non-cash working capital
balances - Note 3
342,916
( 1,153,116)
Cash flow from discontinued operations - Note 3 ( 25,464) -
Change in discontinued operations non-cash working capital
balances - Note 3
25,464
1,903
( 52,458) ( 1,714,019)
Financing Activities
Increase in long-term debt 50,772 -
Proceeds from issuance of share capital - 1,739,915
50,772 1,739,915
Investing Activities
Acquisition of capital assets - ( 5,408)
Development costs - ( 10,205)
- ( 15,613)
Increase (decrease) in cash during the period (1,686) 10,283
Cash, beginning of the period 1,855 3,274
Cash, end of the period $ 169 $ 13,557
PACIFIC SUMMA ENVIRONMENTAL CORP.
CONSOLIDATED STATEMENT OF LOSS FROM
DISCONTINUED OPERATIONS - ROGUE RIVER MINERALS INC. DIVISION
AND NORTHWEST BASIC INDUSTRIES INC.
for the nine months ended September 30, 1998
(Unaudited - See Notice to Reader)
1998 1997
Operating Expenses
Bank changes and interest $ 7,597 $ -
Foreign exchange loss 17,877 -
25,464 -
Loss from discontinued operations $ 25,464 $ -
Loss per share from discontinued operations $ - $ -
PACIFIC SUMMA ENVIRONMENTAL CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1998
(Unaudited - See Notice to Reader)
Note 1 Interim Reporting
While the information presented in the accompanying nine months to September 30, 1998 consolidated financial statements is unaudited, it includes all adjustments which are in the opinion of management, necessary to present fairly the financial position, results of operations, and changes in financial position for the interim periods presented.
Note 2 Share Capital - Note 6
a) Authorized:
100,000,000 common shares without par value
1998 1997
b) Issued # $ # $
Balance, beginning of the period 32,555,009 9,221,537 27,262,800 7,269,942
For cash:
Share purchase options
- at $0.23 - - 593,500 136,505
- at $0.46 - - 94,000 43,240
Private placement - at $0.18 - - 1,122,222 202,000
Pursuant to a shares for debt
settlement - at $0.39
-
-
3,482,487
1,358,170
Balance, end of the period 32,555,009 9,221,537 32,555,009 9,009,857
c) Escrow:
At September 30, 1998, 376,000 shares are held in escrow by the company's transfer agent. The release of these shares is subject to the direction or determination of the relevant regulatory authorities.
Note 2 Share Capital - Note 6 (cont'd)
d) Commitments:
Share Purchase Warrants
At September 30, 1998, there are 1,717,874 share purchase warrants outstanding. Each warrant entitles the holders thereof the right to purchase one share for each warrant held as follows:
Number of
Warrants' Price
Per Share
Expiry Date
1,122,222 $0.21 September 10, 1999
595,652 $0.27 December 9, 1998
1,717,874
Note 3 Statement of Changes in Financial Position - Note 4
a) Cash flow from continuing operations consists of: 1998 1997
Net loss for the period $ ( 338,276) $ ( 723,885)
Items not involving cash:
Amortization of capital assets - 12,876
Amortization of development costs - 114,411
Amortization of deferred foreign exchange loss 26,999 16,573
Write-off of capital assets - 17,219
Gain on settlement of accounts payable ( 84,097) -
$ ( 395,374) $ ( 562,806)
Note 3 Statement of Changes in Financial Position - Note 4 - (cont'd)
b) Change in continuing operations non-cash working capital balances consists of:
1998 1997
Accounts receivable $ ( 2,883) $ 4,663
Loan receivable - ( 13,820)
Inventory - ( 3,351)
Prepaid expenses and deposits 6,494 ( 13,825)
Accounts payable 198,703 59,948
Loans payable 341,568 1,083
Due to related parties ( 200,966) ( 1,187,814)
$ 342,916 $ ( 1,153,116)
c) Cash flow from discontinued operations consists of:
Net loss for the period $ ( 25,464) $ -
d) Change in discontinued operations non-cash working capital balances consists of:
Accounts payable $ 25,464 $ 1,903
Note 4 Discontinued Operations
In June 1996, management of the Company adopted a plan to dispose by way of sale of Rogue River Minerals Inc. division and Northwest Basic Industries Inc. ("NWBI") (subject to the approval of the shareholders of Northwest Basic Industries Inc.) and discontinued their operations at that time. Losses related to the companies, including a write-down of its assets to an estimated net recoverable value, have been reclassified for both the period ended September 30, 1998 and 1997 as losses from discontinued operations (Schedule 1). The carrying value of the remaining assets and liabilities of Rogue River Minerals Inc. and Northwest Basic Industries Inc. are as follows:
Note 4 Discontinued Operations - (cont'd)
1998 1997
Current assets $ - $ 13
Capital assets - 1
$ - $ 14
Current liabilities $ ( 274,312) $ ( 291,571)
Due to related companies ( 1,914,863) ( 1,988,290)
$ ( 2,189,175) $ ( 2,279,861)
On June 9, 1997, the company's 57.17% interest in NWBI was seized by a creditor of the company and as a result the company recorded a disposal of NWBI on that date.
Note 5 Prior Period Correction
The previous periods figures have been restated to reflect unrecorded interest, rent and utilities for the years ended December 31, 1997 and 1996. Consequently, the following have been increased for the nine months ended September 30, 1997:
Deficit, as at December 31, 1996 $ 78,660
Bank charges and interest $ 15,739
Rent and utilities $ 43,647
Accounts payable $ 138,046
Deficit, as at December 31, 1997 $ 157,841
Note 6 Subsequent Event
Subsequent to September 30, 1998, the company received shareholder approval for the consolidation of its share capital on a one common share for thirty common share basis. This consolidation is subject to regulatory approval.
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