U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-QSB
Quarterly Report Under
the Securities Exchange Act of 1934
For Quarter Ended: June 30, 1998
Commission File Number: 33-28106
YAAK RIVER RESOURCES, INC.
(Exact name of small business issuer as specified in its charter)
Colorado
(State or other jurisdiction of incorporation or organization)
84-1097796
(IRS Employer Identification No.)
830 S. Kline Way
Lakewood, Colorado
(Address of principal executive offices)
80226
(Zip Code)
(303) 985-3972
(Issuer's Telephone Number)
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 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 ____.
The number of shares of the registrant's only class of common stock issued
and outstanding, as of June 30, 1998, was 56,666,000 shares.
PART I
ITEM 1. FINANCIAL STATEMENTS.
The unaudited financial statements for the six month period ended June
30, 1998, are attached hereto.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
Financial Statements and notes thereto included herein.
The Company generated no revenues from its operations during the six
month period ended June 30, 1998, and the Company is considered a development
stage company.
The Company was primarily engaged in the metals mining business and owns
certain mining properties, held under patent, as well as lode and placer
mineral rights and its plan of operation generally involved the acquisition
of additional mineral claims and the taking to patent of a number of the
claims acquired and to be acquired by the Company in the future. However,
the Company did not engage in any material operations during the six month
period ended June 30, 1998, with respect to its mining properties, primarily
due to a lack of available funds with which to develop its properties and an
extended moratorium by the Federal Government on disallowing the taking of
claims to patent.
The Company is also a General Partner of the Yaak River Resources,
Timber Division, L.P., a Colorado limited partnership (the "Timber
Partnership") which intends to harvest timber and develop certain mineral
resources on claims presently owned or controlled by the Company and on
properties presently owned by the United States government to be patented by
the Company. During the six months ended June 30, 1998, the Timber
Partnership only engaged in administrative activities.
Because of the lack of funding and the moratorium placed on the
patenting of claims by the United States government, during the fiscal year
ended December 31, 1997, and the six month period ended June 30, 1998, the
Company has considered expanding its business plan to that of either (i)
locating and merging with another company who is seeking to merge with an
entity whose securities are presently trading, or (ii) changing the principal
business of the Company, while continuing to seek interested parties to join
with the Company either as limited partners and/or joint venture partners for
the purpose of mining its present properties.
Relevant to (i), a number of potential merger candidates have been
presented to management; however, none of these candidates has been
acceptable to the Company.
2
Relevant to (ii), the Company has negotiated a long term commitment to
an agricultural development project located in Mongolia with the "Bornuur"
Company, a Mongolian corporation, to acquire a 43.8% interest in
approximately 24,710 acres of farm land located approximately 65 miles north
of Ulaanbaatar, Mongolia (the "Mongolian Project"). This farm land has been
in production for over 100 years. In July 1997 the Mongolian government
adopted new legislation privatizing farm land, which management believes
presents certain opportunities which the Company may be able to take
advantage. The consummation of an agreement with the Bornuur Company is
contingent upon the Company securing funding to finance the Mongolian
Project. It is estimated that the project will require a cash infusion of
approximately $2.5 million to implement the operating schedule and achieve
profitable operations. As of the date of this report, the Company has had
negotiations with prospective lenders in this regard, but no definitive
commitment has been provided and no assurances can be provided that such an
agreement will be reached in the future.
The Company had approximately $35,000 in expenses during the six month
period ended June 30, 1998, for consulting fees and travel expenses primarily
related to the Mongolian Project and legal and accounting fees. The Company
is expected to operate at a loss for the remainder of the fiscal year until
either (i) earnings, if any, are received from the harvesting of the its
present metal and non-metal resources known to exist within the boundaries of
the Company's properties; (ii) the Company successfully merges with a
nonaffiliated entity; or (iii) the Company is successful in funding the
Mongolian Project.
The Company expects to continue without any cash revenues for at least
the present fiscal year and will satisfy its cash requirements by loans and
advances from the Timber Partnership and/or officers and directors of the
Company, provided that the Company does not commence mining activities or
successfully finances the Mongolian Project, or the Company successfully
engages in another business opportunity, either by merger or acquisition of
assets. At present, the Company's financial resources are not sufficient to
commence mining activities or fund the Mongolian Project. In order to
satisfy the Company's capital requirements for additional drilling and to
develop a mining feasibility program and/or fund the Mongolian Project, it
will be necessary for the Company to obtain additional financing in the
minimum estimated amount of $3.25 million. Management of the Company is
continuing to seek possible interested partners to join with the Company in
developing its mining claims or soliciting joint venture partners to expand
its mining activities, based upon the valuation of the Company's claims and
properties as reported in an independent engineering valuation report and is
seeking prospective lenders to fund the Mongolian Project. As of the date of
this report, management is unaware of any third parties who are interested in
joining with the Company in expanding its mining activities and is presently
negotiating with prospective lenders to finance the Mongolian Project.
However, in the event the Company is unable to either solicit joint venture
partners or otherwise obtain the capital deemed necessary in order to
commence mining operations and/or finance the Mongolian Project, management
will seek out other viable business opportunities by way of merger or
acquisition in order to provide the Company's shareholders with liquidity.
3
The Company currently has no employees and relies upon the unpaid
services of its officers for the operation of the Company. The contracted
services of individuals will continue until it is justifiable to employ a
full time employee.
Forward Looking Statements
This report contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") concerning
the Company's operations, economic performance and financial conditions,
including, in particular, the likelihood of the Company's ability to acquire
another existing business or assets. These statements are based upon a
number of assumptions and estimates which are inherently subject to
significant uncertainties and contingencies, many of which are beyond the
control of the Company and reflect future business decisions which are
subject to change. Some of these assumptions inevitably will not materialize
and unanticipated events will occur which will affect the Company's results.
Consequently, actual results will vary from the statements contained herein
and such variance may be material. Prospective investors should not place
undue reliance on this information.
Year 2000 Disclosure
Many existing computer programs use only two digits to identify a year
in the date field. These programs were designed and developed without
considering the impact of the upcoming change in the century. If not
corrected, many computer applications could fail or create erroneous results
by or at the Year 2000. As a result, many companies will be required to
undertake major projects to address the Year 2000 issue. Because the Company
has nominal assets, including no personal property such as computers, it is
not anticipated that the Company will incur any negative impact as a result
of this potential problem. However, it is possible that this issue may have
an impact on the Company after the Company successfully consummates a merger
or acquisition. Management intends to address this potential problem with
any prospective merger or acquisition candidate. There can be no assurances
that new management of the Company will be able to avoid a problem in this
regard after a merger or acquisition is so consummated.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS - None
ITEM 2. CHANGES IN SECURITIES - NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES - NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - NONE.
ITEM 5. OTHER INFORMATION - NONE.
4
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K -
(a) Exhibits
EX-27 Financial Data Schedule
(b) Reports on Form 8-K
None
5
YAAK RIVER RESOURCES, INC.
(A Development Stage Company)
Unaudited
Balance Sheet
Unaudited Audited
June 30, December 31
1998 1997
_________ ___________
ASSETS
Current Assets
Cash $ 1,022 $ 1,022
Accounts Receivable-O'Hara Resources 2,200 2,200
Investment-Mining Properties 305,410 305,410
_________ ___________
Total Current Assets 308,632 308,632
Other Assets
Organizational Costs-
Net of Amortization 0 0
_________ ___________
Total Other Assets 0 0
_________ ___________
TOTAL ASSETS $ 308,632 $ 308,632
========= ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Current Liabilities
Accounts Payable 44,671 40,456
Advance from (YRML) Purchase,
1.5 Units 20,000 20,000
Shareholder Loans 50,017 20,017
Current Portion-Long Term Debt 7,500 7,500
_________ ___________
Total Current Liabilities 122,188 87,973
Long-Term Liabilities
Long Term Debt 115,000 115,000
_________ ___________
Total Long-Term Liabilities 115,000 115,000
_________ ___________
Total Liabilities $ 237,188 $ 202,973
Shareholder's Equity
Series A Common Stock, Par Value
$.0001 Per Share; 250,000,000 Shares
Authorized; Issued and Outstanding -
56,666,000 Shares 5,666 5,666
6
Unaudited Audited
June 30, December 31
1998 1997
_________ ___________
Series B Common Stock, Par Value
$.0001 Per Share; 250,000,000 Shares
Authorized; Issued and Outstanding -
None 0 0
Preferred Stock, Par Value $.0001 Per
Share; 50,000,000 Shares Authorized;
Issued and Outstanding - None 0 0
Capital Paid in Excess of Par Value 304,663 304,663
Deficit Accumulated During
the Development Stage (238,885) (204,670)
_________ ___________
Total Shareholders' Equity $ 71,444 $ 105,659
_________ ___________
TOTAL LIABILITIES
AND SHAREHOLDERS' EQUITY $ 308,632 $ 308,632
========= ===========
The accompanying notes are an integral part of these financial statements.
7
YAAK RIVER RESOURCES, INC.
(A Development Stage Company)
Unaudited
Statement of Operations
For the June 10, 1988
Six Months For the (Inception)
Ended Year Ended Thru
June 30, December 31, June 30,
1998 1997 1998
____________ ____________ _________________
Income $ 0 $ 0 $ 0
Expenses
Amortization 0 0 1,500
Bank Charges 0 78 399
Legal and Accounting 4,215 5,563 50,771
Director Fees 0 0 800
Office 30,000 40 36,938
Stock Fees and Other Costs 0 0 9,982
Administration/Consulting 0 12,876 46,987
Mining Assessments and Fees 0 5,480 75,295
Bad Debt 0 0 4,000
Rent/Telephone 0 0 12,213
____________ ____________ _________________
Total Expenses 34,215 24,037 238,885
Net (Loss) Accumulated During
the Development Stage $ (34,215) (24,037) (238,885)
============ ============ =================
Weighted Average Number of
Shares Outstanding 56,666,000 56,666,000 56,666,000
Net Loss Per Share $ (*) $ (*) $ (*)
*Less than $0.004 Per Share.
The accompanying notes are an integral part of these financial statements.
8
YAAK RIVER RESOURCES, INC.
(A Development Stage Company)
Unaudited
Cash Flow Statement
For the June 10, 1988
Six Months For the (Inception)
Ended Year Ended Thru
June 30, December 31, June 30,
1998 1997 1998
____________ ____________ ______________
Cash Flows From
Operating Activities:
Net (Loss) Accumulated
During Development Stage $ (34,215) $ (24,037) $ (238,885)
Amortization and Depreciation 0 0 1,500
Organization Costs 0 0 (1,500)
(Decrease) Increase in
Accounts Payable 34,215 16,231 74,671
Decrease (Increase) in
Accounts Receivable 0 0 (2,200)
Decrease (Increase) in
Loans to Shareholder 0 7,917 20,017
____________ ___________ _____________
Net Cash Flows Used
By Operating Activities 0 111 (146,397)
Cash Flows From
Investing Activities:
Investment Purchase 0 0 (305,410)
____________ ___________ _____________
Net Cash Flows Used
By Investing Activities 0 0 (305,410)
Cash Flows From
Financing Activities:
Issuance of Common Stock 0 0 1,800
Loans from LP Investors 0 0 20,000
Proceeds From Long-Term Debt 0 0 167,500
Payment of Long-Term Debt 0 0 (45,000)
Proceeds From Sale of Stock 0 0 308,529
____________ ___________ ______________
Net Cash Flows Provided
By Financing Activities 0 0 452,829
____________ ___________ ______________
Net Increase (Decrease) in Cash 0 111 1,022
____________ ___________ _____________
Cash at Beginning of Period 1,022 911 0
____________ ___________ _____________
Cash at End of Period $ 1,022 $ 1,022 $ 1,022
============ =========== =============
The accompanying notes are an integral part of these financial statements.
9
YAAK RIVER RESOURCES, INC.
(A Development Stage)
Unaudited
Statement of Shareholders' Equity
Deficit
Accumulated
Number of Additional During the
Shares Common Paid In Development
Common Stock Stock Capital Stage Total
____________ ______ __________ ___________ ________
Balance at
June 10, 1988 0 $ 0 $ 0 $ 0 $ 0
Stock issued for services
January 6, 1989 10,000,000 1,000 500 0 1,500
Stock issued for cash
January 6, 1989 5,000,000 500 0 0 500
Public offering
November 27, 1989 2,666,000 266 12,353 0 12,619
Net Loss for year ended
December 31, 1989 (3,765) (3,765)
Net Loss for year ended
December 31, 1990 (10,129) (10,129)
Net Loss for year ended
December 31, 1991 (300) (300)
Stock issued for assets
(YRML) January 10,
1992 30,000,000 3,000 134,910 0 137,910
Net Loss for year ended
December 31, 1992 (47,589) (47,589)
Stock issued for cash
June 30, 1993 6,000,000 600 149,400 0 150,000
Stock issued for services
June 30, 1993 3,000,000 300 0 0 300
Net Loss for year ended
December 31, 1993 (54,951) (54,951)
Net Loss for year ended
December 31, 1994 (26,293) (26,293)
Net Loss for year ended
December 31, 1995 (17,764) (17,764)
10
Deficit
Accumulated
Number of Additional During the
Shares Common Paid In Development
Common Stock Stock Capital Stage Total
____________ ______ __________ ___________ ________
Net Loss for year ended
December 31, 1996 7,500 (19,842) (12,342)
Net Loss for year ended
December 31, 1997 (24,037) (24,037)
Net Loss for period
ended June 30, 1998 (34,215) (34,215)
____________ ______ __________ ___________ ________
Balance at
June 30, 1998 56,666,000 $5,666 $ 304,663 $ (238,885) $ 71,444
============ ====== ========== =========== ========
The accompanying notes are an integral part of these financial statements.
11
YAAK RIVER RESOURCES, INC.
(A Development Stage Company)
Notes to Financial Statements
June 30, 1998
(Unaudited)
Note 1 - Organization and Summary of Significant Accounting Policies:
-----------------------------------------------------------
Organization:
- ------------
On June 10, 1988, Yaak River Resources, Inc. (the Company) was incorporated
under the laws of Colorado under the name of Andraplex Corporation. The name
was changed at the Annual Shareholder's Meeting on January 10, 1992. The
Company's primary purpose is to engage in selected acquisitions and
development of mineral and mining properties.
Initial Public Offering:
- -----------------------
In the Company's initial public offering, which was closed on November 27,
1989, the Company sold 2,580,000 units (the Units). 86,000 additional shares
were issued to the underwriters. Each Unit consisted of one (1) share of
Series A Common Stock, one (1) A Warrant exercisable at $.05, one (1) B
Warrant exercisable at $.10.
Costs, consisting of $9,444 and 86,000 shares of Series A Common Stock,
incurred to complete the registration were offset against the gross proceeds.
The Company's fiscal year end is December 31.
Note 2 - Purchase of Mineral Properties:
------------------------------
On January 10, 1992, at the Annual Meeting of Shareholders, the shareholders
voted unanimously to purchase certain mineral and mining properties (the
Properties) located in the State of Montana, including leases, drawings,
engineering studies and other tangible and intangible assets associated with
the Properties. The seller of the Properties was Yaak River Mines, Ltd.
They received 30,000,000 shares of Series A Common Stock. The issuance of
the 30,000,000 shares of Series A Common Stock was exempt from registration
under the exemption provided in Section 4(2) of the Securities Act of 1933,
as amended.
The Company is the beneficiary of 16,000,000 of the above shares which are
being held in the Con Tolman Memorial Trust C. 8,000,000 additional shares
of the Company were placed in the trust as part of the original purchase of
the Company. These 24,000,000 shares are expected to be used to acquire
additional mining properties.
12
Note 3 - Yaak River Resources Timber Division, Limited Partnership:
---------------------------------------------------------
On August 14, 1992, the Company formed a limited partnership, Yaak River
Resources Timber Division L.P. (the Partnership), a Colorado limited
partnership, with subscriptions for 40 Units at $5,000.00 per Unit for an
aggregate price of $200,000.00. Each Unit contains 1/40th interest in the
Partnership and 150,000 shares of Series A Common Stock of the Company. The
Company is the general partner of the Partnership. As a part of the
formation of the Partnership, the Company agreed to reserve 6,000,000 shares
of its Series A Common Stock for the Partnership. Said 6,000,000 shares of
Series A Common Stock represents the shares offered in the Units issued by
the Partnership. The Partnership was formed for the purpose of developing
certain available natural resources on properties under the management of the
Company.
On June 30, 1993, the Company sold six million (6,000,000) shares of its
$.0001 par value Series A Common Stock for the issuance to the purchasers of
the Limited Partnership interests in the Yaak River Resources, Timber
Division L.P., for $150,000.
Note 4 - Income Taxes:
------------
The Company has made no provision for income taxes because there have been no
operations to date causing income for financial statement or tax purposes.
Note 5 - Net (Loss) Per Common Share
---------------------------
The net (loss) per common share of the Series A Common Stock is computed
based on the weighted average number of shares outstanding.
Note 6 - Long-Term Debt
--------------
Note Payable to the Roy Grush Estate in annual installments of $7,500, 0%,
due September 2014, secured by the Properties (Note 2). The Company has
agreed to pay the minimum annual assessment costs of maintenance and
improvements on claims in lieu of interest.
Following is a summary of long-term debt at June 30, 1998:
1998 $ 7,500
1999 7,500
2000 7,500
2001 7,500
2002 7,500
________
37,500
Remaining 77,500
________
$115,000
13
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
YAAK RIVER RESOURCES, INC.
(Registrant)
Dated: August 14, 1998
By: s/Wm. Ernest Simmons
-------------------------------------
Wm. Ernest Simmons
President
14
YAAK RIVER RESOURCES, INC.
Exhibit Index to Quarterly Report on Form 10-QSB
For the Quarter Ended June 30, 1998
EXHIBITS Page No.
EX-27 Financial Data Schedule . . . . . . . . . . . . . . . . 16
15
5
6-MOS
DEC-31-1998
JUN-30-1998
1,022
0
2,200
0
305,410
308,632
0
0
308,632
122,188
0
0
0
5,666
65,778
308,632
0
0
0
0
34,215
0
0
(34,215)
0
0
0
0
0
(34,215)
0
0
