U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 2002
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: 0-30489
YAAK RIVER RESOURCES, INC.
---------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
COLORADO 84-1097796
- ------------------------------- --------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
2501 East Third Street, Casper, Wyoming 82609
---------------------------------------------
(Address of principal executive offices)
(307) 235-0012
-------------------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 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 _X_ No ___
As of June 30, 2002, 66,308,857 shares of common stock, par value
$0.0001 per share, were outstanding.
Transitional Small Business Disclosure Format: Yes___ No _X_
This Form 10-QSB consists of 15 pages. Exhibits are indexed at page 8.
-1-
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Please see pages F-1 through F-6.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATIONS.
PLAN OF OPERATIONS
Management intends to seek out and pursue a business combination with
one or more existing private business enterprises that might have a desire
to take advantage of the Company's status as a public corporation.
Management does not intend to target any particular industry but, rather,
intends to judge any opportunity on its individual merits.
In addition, management intends either to sell the Company Real
Estate as an undeveloped package or to spin off the Company Real Estate
into a private subsidiary corporation that has yet to be formed.
Competition
The Company is and will remain an insignificant participant among the
firms that engage in mergers with and acquisitions of privately financed
entities. Many established venture-capital and financial concerns have
significantly greater financial and personnel resources and technical
expertise than the Company.
In view of the Company's limited financial resources and limited
management availability, the Company will continue to be at a significant
disadvantage compared to the Company's competitors. See "Risk Factors --
Competition."
Employees
-2-
The Company has no full time employees. Its officers devote as much
time as they deem necessary to conduct the Company's business. See "Risk
Factors -- Dependence upon Management" and "Risk Factors -- Limited
Participation of Management."
Risk Factors
An investment in the securities of the Company involves extreme risks
and the possibility of the loss of a shareholder's entire investment. A
prospective investor should evaluate all information discussed in this
Report and the risk factors discussed below in relation to his financial
circumstances before investing in any securities of the Company.
1. No Currently Relevant Operating History. The Company has no
currently relevant operating history, revenues from operations, or assets
other than the Company Real Estate and cash from private sales of stock.
The Company faces all of the risks of a new business and those risks
specifically inherent in the investigation, acquisition, or involvement
in a new business opportunity. Purchase of any securities of the Company
must be regarded as placing funds at a high risk in a new or "start-up"
venture with all of the unforeseen costs, expenses, problems, and
difficulties to which such ventures are subject.
-3-
2. No Assurance of Success or Profitability. There is no assurance
that the Company will acquire a favorable business opportunity. In addition,
even if the Company becomes involved in a business opportunity, there is no
assurance that it will generate revenues or profits, or that the market price
of the Company's Common Stock will be increased thereby.
3. Possible Business - Not Identified and Highly Risky. The Company
has not identified and has no commitments to enter into or acquire a specific
business opportunity and therefore can disclose the risks and hazards of
a business or opportunity that it may enter into in only a general manner,
and cannot disclose the risks and hazards of any specific business or
opportunity that it may enter into. An investor can expect a potential
business opportunity to be quite risky. The Company's acquisition of or
participation in a business opportunity will likely be highly illiquid and
could result in a total loss to the Company and its stockholders if the
business or opportunity is unsuccessful.
4. Type of Business Acquired. The type of business to be acquired
may be one that desires to avoid effecting a public offering and the
accompanying expense, delays, and federal and state requirements which
purport to protect investors. Because of the Company's limited capital,
it is more likely than not that any acquisition by the Company will
involve other parties whose primary interest is the acquisition of a
publicly traded company. Moreover, any business opportunity acquired may
be currently unprofitable or present other negative factors.
5. Impracticability of Exhaustive Investigation. The Company's
limited funds and the lack of full-time management will likely make it
impracticable to conduct a complete and exhaustive investigation and
analysis of a business opportunity before the Company commits its capital
or other resources thereto. Management decisions, therefore, will likely
be made without detailed feasibility studies, independent analysis, market
surveys, and the like which, if the Company had more funds available to it,
would be desirable. The Company will be particularly dependent in making
decisions upon information provided by the promoter, owner, sponsor, or
others associated with the business opportunity seeking the Company's
participation.
6. Lack of Diversification. Because of the limited financial
resources of the Company, it is unlikely that the Company will be able to
diversify its acquisitions or operations. The Company's probable inability
to diversify its activities into more than one area will subject the Company
to economic fluctuations within a particular business or industry and
therefore increase the risks associated with the Company's operations.
7. Possible Reliance upon Unaudited Financial Statements. The Company
generally will require audited financial statements from companies that the
Company proposes to acquire. No assurance can be given, however, that
audited financials will be available to the Company. In cases where audited
financials are unavailable, the Company will have to rely upon unaudited
information received from target companies' management that has not been
verified by outside auditors. The Company is subject, moreover, to the
reporting provisions of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and thus will be required to furnish certain information
about significant acquisitions, including certified financial statements for
any business that the Company shall acquire. Consequently, acquisition
prospects that do not have or are unable to obtain the required certified
statements may not be appropriate for acquisition so long as the reporting
requirements of the Exchange Act are applicable.
-4-
8. Investment Company Regulation. The Company does not intend to
become classified as an "investment company" under the Investment Company
Act of 1940 (the "Investment Act"). The Company believes that it will not
become subject to regulation under the Investment Act because (i) the Company
will not be engaged in the business of investing or trading in securities,
(ii) any merger or acquisition undertaken by the Company will result in the
Company's obtaining a majority interest in any such merger or acquisition
candidate, and (iii) the Company intends to discontinue any investment in a
prospective merger or acquisition candidate in which a majority interest
cannot be obtained. Should the Company be required to register as an
investment company, it shall incur significant registration and compliance
costs. The Company has obtained no formal determination from the Securities
and Exchange Commission (the "Commission") as to the status of the Company
under the Investment Act. Any violation of the Investment Act will subject
the Company to materially adverse consequences. Should the Commission find
that the Company is subject to the Investment Act, and order the Company to
register under such Act, the Company would vigorously resist such finding
and order. Irrespective of whether the Commission or the Company were to
prevail in such dispute, however, the Company would be damaged by the costs
and delays involved. Because the Company will not register under the
Investment Act, investors in the Company will not have the benefit of the
various protective provisions imposed on investment companies by such Act,
including requirements for independent directors.
9. Other Regulation. An acquisition made by the Company may be of
a business that is subject to regulation or licensing by federal, state, or
local authorities. Compliance with such regulations and licensing can be
expected to be a time-consuming, expensive process and may limit other
investment opportunities of the Company.
10. Dependence upon Management. The Company will be heavily dependent
upon the skills, talents, and abilities of its management to implement its
business plan. The Company's executive officers and directors may devote
as little as two hours per month to the affairs of the Company, which for a
company such as this that is heavily dependent upon management, may be
inadequate for Company business, and may delay the acquisition of any
opportunity considered. Furthermore, management has little or no significant
experience in seeking, investigating, and acquiring businesses and will
depend upon its limited business knowledge in making decisions regarding the
Company's operations. Because investors will not be able to evaluate the
merits of possible business acquisitions by the Company, they should
critically assess the information concerning the Company's management.
11. Lack of Continuity in Management. The Company does not have
employment agreements with its management, and there is no assurance that
the persons named herein will manage the Company in the future. In
connection with acquisition of a business opportunity, the current management
of the Company probably will resign and appoint successors. This may occur
without the vote or consent of the shareholders of the Company.
12. Conflicts of Interest. Certain conflicts of interest exist
between the Company and its executive officers and directors. Each of them
has other business interests to which they devote their primary attention,
and they may be expected to continue to do so although management time should
be devoted to the business of the Company. As a result, conflicts of
interest may arise that can be resolved only through their exercise of such
judgment as is consistent with their fiduciary duties to the Company.
13. Indemnification of Officers and Directors. The Company's Articles
of Incorporation provide for the indemnification of its directors, officers,
employees, and agents, under certain circumstances, against attorney's fees
and other expenses incurred by them in any litigation to which they become a
party arising from their association with or activities on behalf of the
Company. The Company may also bear the expenses of such litigation for any
of its directors, officers, employees, or agents, upon such person's promise
to repay the Company therefor if it is ultimately determined that any such
person shall not have been entitled to indemnification. This indemnification
policy could result in substantial expenditures by the Company which it will
be unable to recoup.
-5-
14. Director's Liability Limited. The Company's Articles of
Incorporation exclude personal liability of its directors to the Company and
its stockholders for monetary damages for breach of fiduciary duty except
in certain specified circumstances. Accordingly, the Company will have a
much more limited right of action against its directors than otherwise would
be the case. This provision does not affect the liability of any director
under federal or applicable state securities laws.
15. Dependence upon Outside Advisors. To supplement the business
experience of management, the Company may be required to employ accountants,
technical experts, appraisers, attorneys, or other consultants or advisors.
The selection of any such advisors will be made by management without any
input from shareholders. Furthermore, it is anticipated that such persons
may be engaged on an "as needed" basis without a continuing fiduciary or
other obligation to the Company.
16. Need for Additional Financing. The Company's funds will not be
adequate to take advantage of any available business opportunities. Even if
the Company were to obtain sufficient funds to acquire an interest in a
business opportunity, it may not have sufficient capital to exploit the
opportunity. The ultimate success of the Company will depend upon its
ability to raise additional capital. The Company has not investigated the
availability, source, or terms that might govern the acquisition of
additional capital and will not do so until it evaluates its needs for
additional financing. When additional capital is needed, there is no
assurance that funds will be available from any source or, if available,
that they can be obtained on terms acceptable to the Company. If not
available, the Company's operations will be limited to those that can be
financed with its modest capital.
17. Leveraged Transactions. There is a possibility that any
acquisition of a business opportunity by the Company may be leveraged, i.e.,
the Company may finance the acquisition of the business opportunity by
borrowing against the assets of the business opportunity to be acquired,
or against the projected future revenues or profits of the business
opportunity. This could increase the Company's exposure to larger losses.
A business opportunity acquired through a leveraged transaction is profitable
only if it generates enough revenues to cover the related debt and
expenses. Failure to make payments on the debt incurred to purchase the
business opportunity could result in the loss of a portion or all of the
assets acquired. There is no assurance that any business opportunity
acquired through a leveraged transaction will generate sufficient revenues
to cover the related debt and expenses.
18. Competition. The search for potentially profitable business
opportunities is intensely competitive. The Company expects to be at a
disadvantage when competing with many firms that have substantially greater
financial and management resources and capabilities than the Company. These
competitive conditions will exist in any industry in which the Company may
become interested.
19. No Foreseeable Dividends. The Company has not paid dividends on
its Common Stock and does not anticipate paying such dividends in the
foreseeable future.
20. Loss of Control by Present Management and Shareholders. The
Company may consider an acquisition in which the Company would issue as
consideration for the business opportunity to be acquired an amount of the
Company's authorized but unissued Common Stock that would, upon issuance,
constitute as much as 95% of the voting power and equity of the Company.
The result of such an acquisition would be that the acquired company's
stockholders and management would control the Company, and the Company's
management could be replaced by persons unknown at this time. Such a merger
could leave investors in the securities of the Company with a greatly
reduced percentage of ownership of the Company. Management could sell its
control block of stock at a premium price to the acquired company's
stockholders, although management has no plans to do so.
21. Dilutive Effects of Issuing Additional Common Stock. The majority
of the Company's authorized but unissued Common Stock remains unissued. The
board of directors of the Company has authority to issue such unissued shares
without the consent or vote of the shareholders of the Company. The issuance
of these shares may further dilute the interests of investors in the
securities of the Company and will reduce their proportionate ownership
and voting power in the Company. See "Series B Common Shares Authorized,"
below.
-6-
22. Thinly-traded Public Market. There currently is only a thinly
traded or virtually inactive public market for the securities of the Company,
and no assurance can be given that a more active market will develop or that
an investor will be able to liquidate his investment without considerable
delay, if at all. If a more active market should develop, the price may be
highly volatile. Factors such as those discussed in this "Risk Factors"
section may have a significant impact upon the market price of the securities
of the Company. Owing to what may be expected to be the low price of the
securities, many brokerage firms may not be willing to effect transactions
in the securities. Even if an investor finds a broker willing to effect a
transaction in these securities, the combination of brokerage commissions,
state transfer taxes, if any, and any other selling costs may exceed the
selling price. Further, many lending institutions will not permit the use
of such securities as collateral for any loans.
23. Broker-Dealer Sales of Company's Registered Securities. The
Company's registered securities are covered by a Securities and Exchange
Commission rule that imposes additional sales practice requirements on broker-
dealers who sell such securities to persons other than established customers
and accredited investors. For purposes of the rule, the phrase "accredited
investors" means, in general terms, institutions with assets in excess of
$5,000,000, or individuals having a net worth in excess of $1,000,000 or
having an annual income that exceeds $200,000 (or that, when combined with
a spouse's income, exceeds $300,000). For transactions covered by the rule,
the broker-dealer must make a special suitability determination for the
purchaser and receive the purchaser's written agreement to the transaction
prior to the sale. Consequently, the rule may affect the ability of broker-
dealers to sell the Company's securities and also may affect the ability of
investors in securities of the Company to sell their securities in any market
that might develop therefor.
24. Preferred Shares Authorized. The Articles of Incorporation of
the Company authorize issuance of a maximum of 50,000,000 nonvoting shares
of Preferred Stock, par value $0.0001 per share. No shares of Preferred
Stock have been issued or are outstanding on the date of this Report, and
there is no plan to issue any in the foreseeable future. Should a series of
Preferred Stock be issued, however, the terms of such series could operate
to the significant disadvantage of the holders of outstanding Series A
Common Stock or other securities of the Company. Such terms could include,
among others, preferences as to dividends and distributions on liquidation.
25. Series B Common Shares Authorized. The Articles of Incorporation
of the Company authorize issuance of a maximum of 250,000,000 nonvoting
shares of Series B Common Stock, par value $0.0001 per share. No shares of
Series B Common Stock have been issued or are outstanding on the date of this
Report and there is no plan to issue any in the foreseeable future. Should
Series B Common Stock be issued, however, such Stock could have a substantial,
dilutive effect upon the interests of the holders of outstanding Series A
Common Stock or other securities of the Company, and would reduce the
proportionate ownership of such holders in the Company.
26. Possible Rule 144 Sales. The majority of the outstanding shares
of Common Stock held by present shareholders are "restricted securities"
within the meaning of Rule 144 under the Securities Act of 1933, as amended.
As restricted shares, these shares may be resold only pursuant to an
effective registration statement or under the requirements of Rule 144 or
other applicable exemption from registration under the Act and as required
under applicable state securities laws. Rule 144 provides in essence that a
person who has held restricted securities for a period of one year may, under
certain conditions, sell every three months, in brokerage transactions, a
number of shares that does not exceed the greater of 1.0% of a company's
outstanding common stock or the average weekly trading volume during the four
calendar weeks prior to the sale. There is no limit on the amount of
restricted securities that may be sold by a nonaffiliate after the restricted
securities have been held by the owner for a period of two years. A
sale under Rule 144 or under any other exemption from the Act, if available,
or pursuant to subsequent registrations of shares of Common Stock of present
stockholders, may have a depressive effect upon the
price of the Common Stock in any market that may develop. A total of
32,841,977 shares of Series A Common Stock (49.5% of the total number of
issued and outstanding shares) held by present shareholders of the Company
are available for sale under Rule 144, all of which will be subject to
applicable volume restrictions under the Rule.
-7-
Special Note Regarding Forward-Looking Statements
Some of the statements under "Description of Business," "Risk Factors,"
"Management's Discussion and Analysis or Plan of Operation," and elsewhere in
this Report and in the Company's periodic filings with the Securities
and Exchange Commission constitute forward-looking statements. These
statements involve known and unknown risks, significant uncertainties and
other factors what may cause actual results, levels of activity, performance
or achievements to be materially different from any future results, levels
of activity, performance or achievements expressed or implied by such forward-
looking statements. Such factors include, among other things, those listed
under "Risk Factors" and elsewhere in this Report.
In some cases, you can identify forward-looking statements by
terminology such as "may," "will," "should," "could," "intends," "expects,"
"plans," "anticipates," "believes," "estimates," "predicts," "potential" or
"continue" or the negative of such terms or other comparable terminology.
The forward-looking statements herein are based on current expectations
that involve a number of risks and uncertainties. Such forward-looking
statements are based on assumptions that the Company will obtain or have
access to adequate financing for each successive phase of its growth, that
there will be no material adverse competitive or technological change in
condition of the Company's business, that the Company's President and other
significant employees will remain employed as such by the Company, and that
there will be no material adverse change in the Company's operations,
business or governmental regulation affecting the Company. The foregoing
ssumptions are based on judgments with respect to, among other things,
further economic, competitive and market conditions, and future business
decisions, all of which are difficult or impossible to predict accurately
and many of which are beyond the Company's control.
Although management believes that the expectations reflected in
the forward-looking statements are reasonable, management cannot guarantee
future results, levels of activity, performance or achievements. Moreover,
neither management nor any other persons assumes responsibility for the
accuracy and completeness of such statements.
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
99.1 Certification of Chief Executive Officer and
President of the Company, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
99.2 Certification of Chief Executive Officer and
President of the Company, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K
None
-8-
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this Report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Date: August 15, 2002 YAAK RIVER RESOURCES, INC.
By: /s/ Donald J. Smith
Donald J. Smith, President
(Principal Executive Officer)
By: /s/ James K. Sandison
James K. Sandison, Secretary
and Treasurer (Principal
Financial Officer and
Principal Accounting Officer)
Exhibit 99.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Yaak River Resources, Inc.
(the "Company") on Form 10-QSB for the period ending June 30, 2002 as
filed with the Securities and Exchange Commission on August 15, 2002
(the "Report"), I, Donald J. Smith, President of the Company, certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, that:
1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
2) The information contained in the Report fairly presents, in all
material respects, the Company's financial position and results of
operations.
-----------------------
President
August 15, 2002
Exhibit 99.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Yaak River Resources, Inc.
(the "Company") on Form 10-Q for the period ending June 30, 2002 as filed
with the Securities and Exchange Commission on August 15, 2002
(the "Report"), I, James K. Sandison, Secretary and Treasurer of the Company,
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, that:
1) The Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
2) The information contained in the Report fairly presents, in all material
respects, the Company's financial position and results of operations.
--------------------
Secretary and Treasurer
August 15, 2002
-9-
YAAK RIVER RESOURCES, INC.
Financial Statements
For the Period Ended June 30, 2002
(Unaudited)
MICHAEL JOHNSON & CO., LLC
LETTERHEAD
REPORT ON REVIEW BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
To the Board of Directors
Yaak River Resources, Inc.
Casper, Wyoming
We have reviewed the accompanying balance sheet of Yaak River Resources, Inc.
as of June 30, 2002 and the related statements of operations for the three
months and six month periods ended June 30, 2002 and 2001, and the related cash
flows for the six months ended June 30, 2002 and 2001, and June 18, 1988 to
June 30, 2002, included in the accompanying Securities and Exchange Commission
Form 10-QSB for the period ended June 30, 2002. These financial statements
are the responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with auditing standards generally accepted in the
United States, the objective of which is the expression of an opinion
regarding the financial statements as a whole. Accordingly, we do not
express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying financial statements for them to be in
conformity with accounting principles generally accepted in the United States.
We have previously audited, in accordance with auditing standards generally
accepted in the United States, the balance sheet as of December 31, 2001, and
the related statements of operations, stockholders' equity and cash flows for
the year then ended (not presented herein). In our report dated
March 4, 2002, we expressed an unqualified opinion on those financial
statements. In our opinion, the information set forth in the accompanying
balance sheet as of June 30, 2002 is fairly stated in all material respects
in relation to the balance sheet from which it has been derived.
/s/ Michael Johnson & Co. LLC
Michael Johnson & Co., LLC.
Denver, Colorado
August 8, 2002
F-1
YAAK RIVER RESOURCES, INC.
(A Development Stage Company)
Balance Sheets
(Unaudited)
June 30, December 31,
2002 2001
------------ ------------
ASSETS
Current Assets:
Cash $ 1,368 $ 3,749
Investment - Properties 35,743 35,743
--------- ---------
Total current assets 37,111 39,492
--------- ---------
Other Assets
Organizational Costs - Net of Amortization - -
--------- ---------
Total Other Assets - -
--------- ---------
TOTAL ASSETS $ 37,111 39,492
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 4,827 $ 1,329
Advances from shareholders' - -
-------- --------
Total Current Liabilities 4,827 1,329
-------- --------
STOCKHOLDERS' EQUITY
Preferred Stock, $.0001 par value, 50,000,000
Shares authorized, issued and outstanding - none - -
Series A Common stock, $.0001 par value;
250,000,000 shares authorized; issued
and outstanding - 66,308,857 shares 6,630 6,630
Series B Common stock, $.0001 par value;
250,000,000 shares authorized; issued
and outstanding - none - -
Capital paid in excess of par value 371,199 371,199
Deficit accumulated
during the development stage (345,545) (339,666)
---------- --------
TOTAL STOCKHOLDERS' EQUITY 32,284 38,163
--------- --------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 37,111 $ 39,492
========= ========
See accountant's review report.
F-2
Yaak River Resources, Inc.
(A Development Stage Company)
Statements of Operations
(Unaudited)
June 10, 1988
Three Months Six Months (Inception)
Ended June 30, Ended June 30, to June
2002 2001 2002 2001 30, 2002
--------- --------- --------- -------- ------------
REVENUE $ - $ - $ - $ - $ -
EXPENSES
Amortization - - - - 1,500
Bank Charges 6 7 6 7 567
Legal & Accounting 3,347 5,572 5,459 7,060 102,873
Director Fees - - - - 800
Office Expense - - - - 7,990
Stock Fees & Other Costs - - 414 - 10,798
Administration/Consulting - - - 967 127,075
Mining Assessments & Fees - - - - 75,479
Bad Debt - - - - 6,250
Rent/Telephone - - - - 12,213
-------- -------- -------- -------- ---------
Total Operating
Expenses 3,353 5,579 5,879 8,034 345,545
-------- -------- -------- -------- ---------
Net Loss from
Operations (3,353) (5,579) (5,879) (8,034) (345,545)
-------- -------- -------- -------- ---------
Other Income and expenses:
Interest income - - - - -
Interest expense - - - - -
Other - - - - -
-------- -------- -------- -------- ---------
- - - - -
-------- -------- -------- -------- ---------
NET LOSS $ (3,353) $ (5,579) $ (5,879) $(8,034) $(345,545)
======== ======== ======== ======== =========
Weighted average number
of shares
outstanding 66,308,857 64,808,857 66,308,857 64,808,857
========== ========== ========== ==========
Basic and diluted net
loss per share $ * $ * $ * $ *
======== ======== ======== ========
* Less than $.01
See accountant's review report.
F-3
Yaak River Resources, Inc.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited)
Deficit
Capital Paid Accum. During
Common In Excess of the Development
# of Shares Stock Par Value Stage Totals
---------- ------ ------------ --------------- ------
June 10, 1988
(Inception) - $ - $ - $ - $ -
Issuance of common
Stock: January 6,
1989 (for services) 10,000,000 1,000 500 - 1,500
January 6, 1989)
(for cash) 5,000,000 500 - - 500
November 27, 1989
(Public offering) 2,266,000 266 12,353 - 12,619
Net Loss - - - (3,765) (3,765)
---------- ----- ------- -------- ------
Balance-
December 31, 1989 17,666,000 1,766 12,853 (3,765) 10,854
Net Loss - - - (10,129)(10,129)
---------- ----- ------- -------- ------
Balance-
December 31, 1990 17,666,000 1,766 12,853 (13,894) 725
Net Loss - - - (300) (300)
---------- ----- ------- -------- ------
Balance-
December 31, 1991 17,666,000 1,766 12,853 (14,194) 425
Issuance of common
Stock: January 10,
1992 (for assets
YRML) 30,000,000 3,000 134,910 - 137,910
Net Loss - - - (47,589)(47,589)
---------- ----- ------- -------- ------
Balance-
December 31, 1992 47,666,000 4,766 147,763 (61,783) 90,746
Issuance of common
Stock:
June 30, 1993
(for cash) 6,000,000 600 149,400 - 150,000
June 30, 1993
(for services) 3,000,000 300 - - 300
Net Loss - - - (54,951)(54,951)
---------- ----- ------- -------- ------
Balance-
December 31, 1993 56,666,000 5,666 297,163 (116,734) 186,095
Net Loss - - - (26,293) (26,293)
---------- ----- ------- -------- ------
Balance-
December 31, 1994 56,666,000 5,666 297,163 (143,027) 159,802
Net Loss - - - (17,764) (17,764)
---------- ----- ------- -------- ------
Balance-
December 31, 1995 56,666,000 5,666 297,163 (160,791) 142,038
Net Loss - - 7,500 (19,842) (12,342)
---------- ----- ------- -------- ------
Balance-
December 31, 1996 56,666,000 5,666 304,663 (180,633) 129,696
Net Loss - - - (24,037) (24,037)
---------- ----- ------- -------- ------
Balance-
December 31, 1997 56,666,000 5,666 304,663 (204,670) 105,659
Net Loss - - - (78,712) (78,712)
---------- ----- ------- -------- ------
Balance-
December 31, 1998 56,666,000 5,666 304,663 (283,382) 26,947
Net Loss - - - (15,204) (15,204)
---------- ------ ---------- -------- ------
Balance - December 31,
1999 56,666,000 5,666 304,663 (298,586) 11,743)
---------- ------ ---------- -------- ------
Issuance of common
stock for cash 3,000,000 300 20,700 - 21,000
Issuance of common
stock for cash 1,000,000 100 6,900 - 7,000
Issuance of common
stock for cash 1,000,000 100 6,900 - 7,000
Issuance of common
stock for services 1,000,000 100 6,900 - 7,000
Issuance of common
stock for debt 3,142,857 314 21,686 - 22,000
Net loss for year (24,730) (24,730)
---------- ------ ---------- -------- ------
Balance - December 31,
2000 64,808,857 6,480 360,849 (323,316) 44,013
---------- ------ ---------- -------- ------
Issuance of common
stock for cash 1,500,000 150 10,350 - 10,500
Net loss for year (16,350) (16,350)
---------- ------ ---------- -------- ------
Balance - December 31,
2001 66,308,857 6,630 371,199 (339,666) 38,163
---------- ------ ---------- -------- ------
Net Loss for period - - - (5,879) (5,879)
---------- ------ ---------- -------- ------
Balance - June 30,
2002 66,308,857 $6,630 $371,199 $(345,545) $32,284
========== ====== ======== ======== ======
See accountant's review report.
F-4
Yaak River Resources, Inc.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
June 10, 1988
Six Months Ended (Inception) to
June 30, June 30,
2002 2001 2002
------------ ---------- -------------
Cash Flows From
Operating Activities:
Net (Loss) $ (5,879) $ (8,034) $ (345,545)
Adjustments to reconcile
net loss to net cash used
in operating activities
Amortization and Depreciation - - 1,500
Organization Costs - - (1,500)
Stock issued for services - - 8,800
Changes in assets and liabilities:
Increase in accounts payable
and accrued expenses 3,498 - 4,827
------- -------- -------
Total adjustments 3,498 - 13,627
------- -------- -------
Net Cash Flows From
Operating Activities (2,381) (8,034) (331,918)
Cash Flows From
Investing Activities:
Exchange of properties - net - - 147,167
Investment Purchase - - (305,410)
------- ------- ---------
Net Cash Flows From
Investing Activities - - (158,243)
------- ------- ---------
Cash Flows From
Financing Activities:
Proceeds from long-term debt - - 189,500
Payment of long-term debt - - (45,000)
Issuance of Common Stock - 347,029
--------- -------- ---------
Net Cash Flows From
Financing Activities - - 491,529
--------- -------- ---------
Net Increase (Decrease)
in Cash (2,381) (8,034) 1,368
Cash and Cash Equivalents -
Beginning of period 3,749 8,270 -
---------- --------- ---------
Cash and Cash Equivalents -
End of period $ 1,368 $ 236 $ 1,368
=========== =========== ============
Supplemental Cash Flow Information:
Interest paid $ - $ - $ -
========== ========== ===========
Taxes paid $ - $ - $ -
========== ========== ===========
Noncash Investing and financing activities:
In 1999, the Company exchanged properties with a book value of $182,910 to a
related party in lieu of payment of liabilities of $147,167 and land with
book value of $35,743.
========== ========== ===========
$ - $ - $ 182,910
========== ========== ===========
See accountant's review report.
F-5
YAAK RIVER RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS
1. Presentation of Interim Information
In the opinion of the management of Yaak River Resources, Inc., the
accompanying unaudited financial statements include all normal
adjustments considered necessary to present fairly the financial
position as of June 30, 2002, and the results of operations for
the three months and six months ended June 30, 2002 and 2001, and
cash flows for the six months ended June 30, 2002 and 2001.
Interim results are not necessarily indicative of results for a full
year.
The financial statements and notes are presented as permitted by
Form 10-QSB, and do not contain certain information included in
the Company's audited financial statements and notes for the fiscal
year ended December 31, 2001.
2. Going Concern
The accompanying financial statements have been prepared in conformity
with accounting principles generally accepted in the United States,
which contemplates continuation of the Company as a going concern.
The Company's operations generated no income during the current period
ended and the Company's deficit is $345,545.
The future success of the Company is likely dependent on its ability
to attain additional capital to develop its proposed products and
ultimately, upon its ability to attain future profitable operations.
There can be no assurance that the Company will be successful in
obtaining such financing, or that it will attain positive cash flow
from operations.
F-6
