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| LKAI.OB > SEC Filings for LKAI.OB > Form 10-Q on 14-Aug-2009 | All Recent SEC Filings |
14-Aug-2009
Quarterly Report
Forward-looking Statements
Statements made in this Quarterly Report which are not purely historical are forward-looking statements with respect to the goals, plan objectives, intentions, expectations, financial condition, results of operations, future performance and our business, including, without limitation, (i) our ability to raise capital, and (ii) statements preceded by, followed by or that include the words "may," "would," "could," "should," "expects," "projects," "anticipates," "believes," "estimates," "plans," "intends," "targets" or similar expressions.
Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond our control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following, general economic or industry conditions, nationally and/or in the communities in which we may conduct business, changes in the interest rate environment, legislation or regulatory requirements, conditions of the securities markets, our ability to raise capital, changes in accounting principles, policies or guidelines, financial or political instability, acts of war or terrorism, other economic, competitive, governmental, regulatory and technical factors affecting our current or potential business and related matters.
Accordingly, results actually achieved may differ materially from expected results in these statements. Forward-looking statements speak only as of the date they are made. We do not undertake, and specifically disclaim, any obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements.
Results of Operations
For The Three Months Ended June 30, 2009 Compared to The Three Months Ended June 30, 2008.
On May 27, 2009, we formally engaged Underground Specialty Co., LLC, a Colorado limited liability company ("USC"), to provide contract mining services at our Golden Wonder mine. During the quarterly period ended June 30, 2009, we received $236,757 from ore sales to Teck- Metals, Ltd. During the June 30, 2008, quarter, we conducted no mining operations and received no revenues.
Operating expenses increased from $200,911 for the three months ended June 30, 2008, to $580,411 in the three months ended June 30, 2009. This increase was mainly due to increased costs associated with exploration, mine development and bulk sampling activities as well as infrastructure expenditures. Exploration, development and related costs increased to $175,229 in the three months ended June 30, 2009, from $76,883 in the year-ago quarter. Professional fees increased from $48,971 for the three months ended June 30, 2008, to $315,049 in the three months ended June 30, 2009. The current period expense includes $160,000 from stock issuances and $140,898 from warrant grants. None of these types of non-cash expenses were incurred in the prior period. General and administrative expenses increased to $41,386 from $36,326 in the three months ended 2009 and 2008. We had a royalty expense of $11,247 in the three months ended June 30, 2009, with no royalty expense in the three months ended June 30, 2008. We incurred a bad debt expense of $1,231 in the three months ended June 30, 2008, as compared to no bad debt expense in the three months ended June 30, 2009. Officer salaries and bonus remained $37,500 in both of these three month periods. We realized an operating loss of $343,654 during the quarter ended June 30, 2009, as compared to operating loss of $200,911 in the comparable period in 2008.
Interest income decreased to $1 in the three months ended June 30, 2009, from $2,467 in the three months ended June 30, 2008. Interest expense totaled $2,541 and $8,137 in the three months ended 2009 and 2008, respectively. We realized a gain on securities in the three months ended June 30, 2008 of $4,863, as compared to $3 loss in the 2009 period. Unrealized gains on securities were $11 and $175,826 for the three months ended June 30, 2009 and 2008. We received $692 in other investment income in 2009, versus $10,533 in 2008.
Net loss totaled $345,494, or $0.03 per share, and $15,359, or $0.00 per share in the three months ended June 30, 2009 and 2008.
For The Six Months Ended June 30, 2009 Compared to The Six Months Ended June 30, 2008.
During the six months ended June 30, 2009, we received $236,757 in precious metals ore sales as a result of resumed mining operations. In the comparable period ended June 30, 2008, we received no revenues.
Interest income decreased to $48 in the six months ended June 30, 2009, from $4,969 in the six months ended June 30, 2008. Interest expense totaled $4,596 and $16,627 in 2009 and 2008, respectively. We realized a gain on securities in the six months ended June 30, 2009 of $1,055, as compared to a gain of $4,863 in the 2008 period. Unrealized gain on securities were $4,038 and $191,077 for the six months ended June 30, 2009 and 2008. We received $4,401 in other investment income in 2009, versus $31,510 in 2008.
Net loss totaled $508,467, or $0.04 per share, and $159,032, or $0.01 per share in the six months ended June 30, 2009 and 2008.
Liquidity
On June 11, 2009, we sold 700,000 "unregistered" and "restricted" shares of our common stock for gross proceeds of $175,000.
Current assets at June 30, 2009, totaled $203,827. As of that date, we had $193,456 in cash, as compared to $182,984 at December 31, 2008.
During the six months ended June 30, 2009, our operating activities used net cash of $58,186. In 2008, by contrast, operating activities used net cash of $3,942. There was $106,342 cash used by investing activities associated with LKA's placement in service of a crushing plant in April, 2009, and its continued payment for construction of a water diversion and improvement project. Cash provided by financing activities totaled $175,000 in the six months ended June 30, 2009, with no cash provided by investing activities or financing activities during the six months ended June 30, 2008.
At June 30, 2009, the Company had working capital deficit of $4,798, as compared to working capital of $120,761 at December 31, 2008.
Effective as of July 2, 2009, which is subsequent to the end of the period covered by this Report, the Company executed a Promissory Note in the principal amount of $545,090. See Part II, Item 5 of this Quarterly Report.
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