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SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
_____________________________
FORM 10-KSB
_____________________________
(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of The
Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1999
[ ] Transition Report Pursuant to Section 13 or 15(d) of The
Securities Exchange Act of 1934
Commission File Number 0-27197
SILVER KEY MINING CO., INC.
-----------------------------
(Name of Small Business Issuer in its charter)
Idaho 82-0513245
--------------------- ---------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
802 Pine St.
ClarkFork, Idaho 83811
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(Address of principal executive offices) (Zip code)
(208) 266-1464
---------------
Issuer's telephone number
Securities registered pursuant to Section 12(b) of the Exchange Act: None
Securities registered pursuant to Section 12(g) of the Exchange Act: Common
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
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of the Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-
KSB or any amendment to this Form 10-KSB. [ ]
State the issuer's revenues for its most recent fiscal year.
$ -0-
State the aggregate market value of the voting stock held by non-
affiliates computed by reference to the price at which the stock was sold, or
the average bid and ask prices of such stock as of a specified date within 60
days. $ 0
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
Class Outstanding as of December 31, 1999
Common Stock, $.05 Par Value 5,126,010
DOCUMENTS INCORPORATED BY REFERENCE
NONE
Transitional Small Business Disclosure Format. Yes No [X]
<PAGE>
TABLE OF CONTENTS
Page
PART I
Item 1. Description of Business . . . . . . . . . . . . . . . 4
Item 2. Description of Property. . . . . . . . . . . . . . . . 8
Item 3. Legal Proceedings. . . . . . . . . . . . . . . . . . . 9
Item 4. Submission of Matter to a Vote of Security
Holders. . . . . . . . . . . . . . . . . . . . . . . . 9
PART II
Item 5. Market for Common Equity and Related
Stockholder Matters. . . . . . . . . . . . . . . . . . 9
Item 6. Management's Discussion and Analysis or
Plan of Operation. . . . . . . . . . . . . . . . . . . 11
Item 7. Financial Statements . . . . . . . . . . . . . . . . . 12
Item 8. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure . . . . . . . . 12
PART III
Item 9. Directors, Executive Officers, Promoters and
Control persons; Compliance with
Section 16(a) of the Exchange Act. . . . . . . . . . . 12
Item 10. Executive Compensation . . . . . . . . . . . . . . . . 14
Item 11. Security Ownership of Certain Beneficial
Owners and Management. . . . . . . . . . . . . . . . . 14
Item 12. Certain Relationships and Related
Transactions . . . . . . . . . . . . . . . . . . . . . 15
Item 13. Exhibits and Reports on Form 8-K . . . . . . . . . . . 15
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . 16
<PAGE>
PART I
Item 1. Description of Business
Business Developement
Silver Key Mining Co., Inc. (the "Company") was incorporated on June 25,
1971 under the laws of the State of Idaho, under the name Silver Key Mining
Company, Inc. for the purpose of taking ownership of the mineral rights in, on
and under about 63 acres of patented land in the Greater Coeur d'Alene Mining
Region, Idaho. During 1976, a core hole was drilled with no significant
results, and no operations have ensued since then. On August 3, 1992, the
Company issued 3,5000,000 shares of its common stock to Dale F. Miller in
consideration of all of his right, title and interest in six mining claims known
as the Antlelope Mountain Silver Group. On January 19, 1993 Mr. Miller
transferred his shares to Ms. Damara Bertges and Guenther Spachtolz who intended
to use the Company to engage in similar activities as currently proposed herein.
On June 12, 1996, a Utah court entered judgment in favor of Dale F. Miller in
his suit against Bertges and Spachotolz for breach of contract and on June 15,
1996, Bertges and Spacholtolz returned the 3,500,000 shares of common stock of
the Company to Mr. Miller. Since 1976, the Company has been inactive and has
undertaken no business operations to date. Since the Company abandoned its
claims and has no other assets, the Company can be defined as a "shell" company,
whose sole purpose at this time is to locate and consummate a merger or
acquisition with a private entity. Recently, the Company amended its Articles
of Incorporation to permit the Company to engage in any and all legal
activities
Under the Securities Exchange Act of 1934, as amended ("Exchange Act"), the
Company is obligated to file with the Securities and Exchange Commission (the
"Commission") certain interim and periodic reports including an annual report
containing audited financial statements. The Company intends to continue to
voluntarily file its periodic reports under the Exchange Act in the event its
obligation to file such reports is suspended under applicable provisions of the
Exchange Act. The Company files its reports with the Commission
electronically. The Commission maintains an Internet site that contains
reports, proxy and information statements, and other information regarding
issuers that file electronically. The address of that site is
(http://www.sec.gov.). The e-mail address of the Company is
([email protected]).
<PAGE>
Any target acquisition or merger candidate of the Company will become
subject to the same reporting requirements as the Company upon consummation of
any merger or acquisition. Thus, in the event the Company successfully
completes the acquisition of or merger with an operating business opportunity,
that business opportunity must provide audited financial statements for at
least the two most recent fiscal years or, in the event the business
opportunity has been in business for less than two years, audited financial
statements will be required from the period of inception. This could limit
the Company's potential target business opportunities due to the fact that
many private business opportunities either do not have audited financial
statements or are unable to produce audited statements without undo time and
expense.
The Company has been in the developmental stage since 1976 and has had no
operations since 1976. The proposed business activities described herein
classify the Company as a "blank check" company. Many states have enacted
statutes, rules and regulations limiting the sale of securities of "blank
check" companies in their respective jurisdictions. Management has no current
plans to undertake any efforts to cause a market to develop in the Company's
securities or undertake any offering of the Company's securities in the
immediate future, either debt or equity, until such time as the Company has
successfully implemented its business plan.
The Board of Directors of the Company has elected to commence
implementation of the Company's principal business purpose, described herein.
Business of Issuer
The Company has no recent operating history and no representation is made,
nor is any intended, that the Company will be able to carry on future business
activities successfully. Further, there can be no assurance that the Company
will have the ability to acquire or merge with an operating business, business
opportunity or property that will be of material value to the Company.
Management plans to investigate, research and, if justified, potentially
acquire or merge with one or more businesses or business opportunities. The
Company currently has no commitment or arrangement, written or oral, to
participate in any business opportunity and management cannot predict the
nature of any potential business opportunity it may ultimately consider.
Management will have broad discretion in its search for and negotiations with
any potential business or business opportunity.
Sources of Business Opportunities
Management of the Company intends to use various resources in the search
for potential business opportunities including, but not limited to, the
Company's officers and directors, consultants, special advisors, securities
broker-dealers, venture capitalists, members of the financial community and
others who may present management with unsolicited proposals. Because of the
Company's lack of capital, it may not be able to retain on a fee basis
professional firms specializing in business acquisitions and reorganizations.
Rather, the Company will most likely have to rely on outside sources, not
otherwise associated with the Company, that will accept their compensation
only after the Company has finalized a successful acquisition or merger. To
date, the Company has not engaged or entered into any discussion, agreement or
understanding with a particular consultant regarding the Company's search for
business opportunities.
<PAGE>
If the Company elects to engage an independent consultant, it will look
only to consultants that have experience in working with small companies in
search of an appropriate business opportunity. Also, the consultant must have
experience in locating viable merger and/or acquisition candidates and have a
proven track record of finalizing such business consolidations. Further, the
Company would like to engage a consultant that will provide services for only
nominal up-front consideration and is willing to be fully compensated only at
the close of a business consolidation.
The Company does not intend to limit its search to any specific kind of
industry or business. The Company may investigate and ultimately acquire a
venture that is in its preliminary or development stage, is already in
operation, or in various stages of its corporate existence and development.
Management cannot predict at this time the status or nature of any venture in
which the Company may participate. A potential venture might need additional
capital or merely desire to have its shares publicly traded. The most likely
scenario for a possible business arrangement would involve the acquisition of
or merger with an operating business that does not need additional capital,
but which merely desires to establish a public trading market for its shares.
Management believes that the Company could provide a potential public vehicle
for a private entity interested in becoming a publicly held corporation
without the time and expense typically associated with an initial public
offering.
Evaluation
Once the Company has identified a particular entity as a potential
acquisition or merger candidate, management will seek to determine whether
acquisition or merger is warranted or whether further investigation is
necessary. Such determination will generally be based on management's
knowledge and experience, or with the assistance of outside advisors and
consultants evaluating the preliminary information available to them.
Management may elect to engage outside independent consultants to perform
preliminary analysis of potential business opportunities. However, because of
the Company's lack of capital it may not have the necessary funds for a
complete and exhaustive investigation of any particular opportunity.
In evaluating such potential business opportunities, the Company will
consider, to the extent relevant to the specific opportunity, several factors
including potential benefits to the Company and its shareholders; working
capital, financial requirements and availability of additional financing;
history of operation, if any; nature of present and expected competition;
quality and experience of management; need for further research, development
or exploration; potential for growth and expansion; potential for profits; and
other factors deemed relevant to the specific opportunity.
Because the Company has not located or identified any specific business
opportunity as of the date hereof, there are certain unidentified risks that
cannot be adequately expressed prior to the identification of a specific
business opportunity. There can be no assurance following consummation of any
acquisition or merger that the business venture will develop into a going
concern or, if the business is already operating, that it will continue to
operate successfully. Many of the potential business opportunities available
to the Company may involve new and untested products, processes or market
strategies which may not ultimately prove successful.
<PAGE>
Form of Potential Acquisition or Merger
Presently, the Company cannot predict the manner in which it might
participate in a prospective business opportunity. Each separate potential
opportunity will be reviewed and, upon the basis of that review, a suitable
legal structure or method of participation will be chosen. The particular
manner in which the Company participates in a specific business opportunity
will depend upon the nature of that opportunity, the respective needs and
desires of the Company and management of the opportunity, and the relative
negotiating strength of the parties involved. Actual participation in a
business venture may take the form of an asset purchase, lease, joint venture,
license, partnership, stock purchase, reorganization, merger or consolidation.
The Company may act directly or indirectly through an interest in a
partnership, corporation, or other form of organization, however, the Company
does not intend to participate in opportunities through the purchase of
minority stock positions.
Because of the Company's current situation, having no assets and no recent
operating history, in the event the Company does successfully acquire or merge
with an operating business opportunity, it is likely that the Company's
present shareholders will experience substantial dilution and there will be a
probable change in control of the Company. Most likely, the owners of the
business opportunity which the Company acquires or mergers with will acquire
control of the Company following such transaction. Management has not
established any guidelines as to the amount of control it will offer to
prospective business opportunities, rather management will attempt to
negotiate the best possible agreement for the benefit of the Company's
shareholders.
Management does not presently intend to borrow funds to compensate any
persons, consultants, promoters or affiliates in relation to the consummation
of a potential merger or acquisition. However, if the Company engages outside
advisors or consultants in its search for business opportunities, it may be
necessary for the Company to attempt to raise additional funds. As of the
date hereof, the Company has not made any arrangements or definitive
agreements to use outside advisors or consultants or to raise any capital. In
the event the Company does need to raise capital, most likely the only method
available to the Company would be the private sale of its securities. These
possible private sales would most likely have to be to persons known by the
directors of the Company or to venture capitalists that would be willing to
accept the risks associated with investing in a company with no current
operation. Because of the nature of the Company as a development stage
company, it is unlikely that it could make a public sale of securities or be
able to borrow any significant sum from either a commercial or private lender.
Management will attempt to acquire funds on the best available terms for the
Company. However, there can be no assurance that the Company will be able to
obtain additional funding when and if needed, or that such funding, if
available, can be obtained on terms reasonable or acceptable to the Company.
Although not presently anticipated, there is a remote possibility that the
Company could sell securities to its management or affiliates.
In the case of a future acquisition or merger, there exists a possibility
that a condition of such transaction might include the sale of shares
presently held by officers and/or directors of the Company to parties
affiliated with or designated by the potential business opportunity.
Presently, management has no plans to seek or actively negotiate such terms.
However, if this situation does arise, management is obligated to follow the
Company's Articles of Incorporation and all applicable corporate laws in
negotiating such an arrangement. Under this scenario of a possible sale by
officers and directors, it is unlikely that similar terms and conditions would
be offered to all other shareholders of the Company or that the shareholders
would be given the opportunity to approve such a transaction.
<PAGE>
In the event of a successful acquisition or merger, a finder's fee, in the
form of cash or securities, may be paid to persons instrumental in
facilitating the transaction. The Company has not established any criteria or
limits for the determination of a finder's fee, although it is likely that an
appropriate fee will be based upon negotiations by the Company and the
appropriate business opportunity and the finder. Management cannot at this
time make an estimate as to the type or amount of a potential finder's fee
that might be paid. It is unlikely that a finder's fee will be paid to an
affiliate of the Company because of the potential conflict of interest that
might result. If such a fee was paid to an affiliate, it would have to be in
such a manner so as not to compromise an affiliate's possible fiduciary duty
to the Company or to violate the doctrine of corporate opportunity. Further,
in the unlikely event a finder's fee was to be paid to an affiliate, the
Company would have such an arrangement ratified by the shareholders in an
appropriate manner.
Presently, it is highly unlikely that the Company will acquire or merge
with a business opportunity in which the Company's management, affiliates or
promoters have an ownership interest. Any possible related party transaction
of this type would have to be ratified by a disinterested Board of Directors
and by the shareholders. Management does not anticipate that the Company will
acquire or merge with any related entity. Further, as of the date hereof,
none of the Company's officers, directors, or affiliates or associates have
had any preliminary contact or discussions with any specific business
opportunity, nor are there any present plans, proposals, arrangements or
understandings regarding the possibility of an acquisition or merger with any
specific business opportunity.
Rights of Shareholders
It is presently anticipated by management that prior to consummating a
possible acquisition, merger, or other business combination the Company, if
required by relevant state laws and regulations, will seek to have the
transaction ratified by shareholders in the appropriate manner. However, the
Board of Directors will have the discretion to consummate a business
combination without shareholder approval if permissible under the laws of the
State of Idaho and the laws of the state in which the other entity resides.
Regardless of whether an action is ratified by the Board or by the
shareholders, the Board will provide to its shareholders complete disclosure
documentation concerning a potential target business opportunity including the
appropriate audited financial statements of the target. This information will
be disseminated by proxy statement in the event a shareholders' meeting is
held, or by subsequent report to the shareholders if the action is taken by
the Board.
Competition
<PAGE>
Because the Company has not identified any potential acquisition or merger
candidate, it is unable to evaluate the type and extent of its likely
competition. The Company is aware that there are several other public
companies with only nominal assets that are also searching for operating
businesses and other business opportunities as potential acquisition or merger
candidates. The Company will be in direct competition with these other public
companies in its search for business opportunities and, due to the Company's
lack of funds, it may be difficult to successfully compete with these other
companies.
Employees
As of the date hereof, the Company does not have any employees and has no
plans for retaining employees until such time as the Company's business
warrants the expense, or until the Company successfully acquires or merges
with an operating business. The Company may find it necessary to periodically
hire part-time clerical help on an as-needed basis.
Facilities
The Company is currently using as its principal place of business the
personal residence of its Secretary located in Sandpoint, Idaho. Although the
Company has no written agreement and pays no rent for the use of this
facility, it is contemplated that at such future time as the Company acquires
or merges with an operating business, the Company will secure commercial
office space from which it will conduct its business. The Company has no
current plans to secure such commercial office space.
Industry Segments
No information is presented regarding industry segments. The Company is
presently a development stage company seeking a potential acquisition of or
merger with a yet to be identified business opportunity. Reference is made to
the statements of income included herein in response to Item 7 of this Form
10-KSB for a report of the Company's operating history for the past two fiscal
years.
Item 2. Description of Property
The Company is currently using as its principal place of business the
personal residence of its Secretary located in Sandpoint, Idaho. Although the
Company has no written agreement and pays no rent for the use of this
facility, it is contemplated that at such future time as the Company acquires
or merges with an operating business, the Company will secure commercial
office space from which it will conduct its business. However, until such
time as the Company completes an acquisition or merger, the type of business
in which the Company will be engaged and the type of office and other
facilities that will be required is unknown. The Company has no current plans
to secure such commercial office space.
Item 3. Legal Proceedings
The Company is not a party to any material pending legal proceedings and
no such action by, or to the best of its knowledge, against the Company has
been threatened.
Item 4. Submission of Matters to a Vote of Security Holders
<PAGE>
No matters were submitted to a vote of the Company's Securities Holders
during the fourth quarter of the Company's fiscal year ending December 31,
1999.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
The Company is not aware of any established trading market for its common stock
and does not expect its shares to be traded actively in the public market until
such time as a merger or acquisition can be consummated. Also, secondary
trading of the Company's shares may be subject to certain state imposed
restrictions regarding shares of shell companies. Except for the application
to the OTC Bulletin Board, there are no plans, proposals, arrangements or
understandings with any person concerning the development of a trading
market in any of the Company's securities. Because no current trading
market has been established for the Company's securities, no trading
history is presented herein.
As of December 31, 1999 the Company had issued and outstanding 5,126,010
shares of Common Stock and there were 47 shareholders of record
The ability of an individual shareholder to trade their shares in a
particular state may be subject to various rules and regulations of that
state. A number of states require that an issuer's securities be registered
in their state or appropriately exempted from registration before the
securities are permitted to trade in that state. Presently, the Company has
no plans to register its securities in any particular state. Further, most
likely the Company's shares will be subject to the provisions of Section
15(g) and Rule 15g-9 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), commonly referred to as the "penny stock" rule. Section
15(g) sets forth certain requirements for transactions in penny stocks and
Rule 15g-9(d)(1) incorporates the definition of penny stock as that used in
Rule 3a51-1 of the Exchange Act.
The Commission generally defines penny stock to be any equity security
that has a market price less than $5.00 per share, subject to certain
exceptions. Rule 3a51-1 provides that any equity security is considered to be
a penny stock unless that security is: registered and traded on a national
securities exchange meeting specified criteria set by the Commission;
authorized for quotation on The NASDAQ Stock Market; issued by a registered
investment company; excluded from the definition on the basis of price (at
least $5.00 per share) or the issuer's net tangible assets; or exempted from
the definition by the Commission. If the Company's shares are deemed to be a
penny stock, trading in the shares will be subject to additional sales
practice requirements on broker-dealers who sell penny stocks to persons other
than established customers and accredited investors, generally persons with
assets in excess of $1,000,000 or annual income exceeding $200,000, or
$300,000 together with their spouse.
<PAGE>
For transactions covered by these rules, broker-dealers must make a
special suitability determination for the purchase of such securities and must
have received the purchaser's written consent to the transaction prior to the
purchase. Additionally, for any transaction involving a penny stock, unless
exempt, the rules require the delivery, prior to the first transaction, of a
risk disclosure document relating to the penny stock market. A broker-dealer
also must disclose the commissions payable to both the broker-dealer and the
registered representative, and current quotations for the securities.
Finally, monthly statements must be sent disclosing recent price information
for the penny stocks held in the account and information on the limited market
in penny stocks. Consequently, these rules may restrict the ability of
broker-dealers to trade and/or maintain a market in the Company's Common Stock
and may affect the ability of shareholders to sell their shares.
Recent Sales of Unregistered Securities
None.
Common equity subject to outstanding options or warrants to purchase, or
securities convertible into, common equity of the registrant.
None.
Dividend Policy
The Company has not declared or paid cash dividends or made distributions
in the past, and the Company does not anticipate that it will pay cash
dividends or make distributions in the foreseeable future. The Company
currently intends to retain and reinvest future earnings to finance its
operations.
Item 6. Management's Discussion and Analysis or Plan of Operation
The following information should be read in conjunction with the
consolidated financial statements and notes thereto appearing elsewhere in
this Form 10-KSB.
The Company is considered a development stage company with no assets or
capital and with no significant operations or income since approximately 1976.
The costs and expenses associated with the preparation and filing of the
Company's registration statement in 1999 were paid for by a shareholder of the
Company. It is anticipated that the Company will require only nominal capital
to maintain the corporate viability of the Company and necessary funds will
most likely be provided by the Company's officers and directors in the
immediate future. However, unless the Company is able to facilitate an
acquisition of or merger with an operating business or is able to obtain
significant outside financing, there is substantial doubt about its ability to
continue as a going concern.
In the opinion of management, inflation has not and will not have a
material effect on the operations of the Company until such time as the
Company successfully completes an acquisition or merger. At that time,
management will evaluate the possible effects of inflation on the Company
related to it business and operations following a successful acquisition or
merger.
<PAGE>
Plan of Operation
During the next 12 months, the Company will actively seek out and
investigate possible business opportunities with the intent to acquire or
merge with one or more business ventures. In its search for business
opportunities, management will follow the procedures outlined in Item 1 above.
Because the Company lacks funds, it may be necessary for the officers and
directors to either advance funds to the Company or to accrue expenses until
such time as a successful business consolidation can be made. Management
intends to hold expenses to a minimum and to obtain services on a contingency
basis when possible. Further, the Company's directors will defer any
compensation until such time as an acquisition or merger can be accomplished
and will strive to have the business opportunity provide their remuneration.
However, if the Company engages outside advisors or consultants in its search
for business opportunities, it may be necessary for the Company to attempt to
raise additional funds. As of the date hereof, the Company has not made any
arrangements or definitive agreements to use outside advisors or consultants
or to raise any capital. In the event the Company does need to raise capital,
most likely the only method available to the Company would be the private sale
of its securities. Because of the nature of the Company as a development
stage company, it is unlikely that it could make a public sale of securities
or be able to borrow any significant sum from either a commercial or private
lender. There can be no assurance that the Company will be able to obtain
additional funding when and if needed, or that such funding, if available, can
be obtained on terms acceptable to the Company.
The Company does not intend to use any employees, with the possible
exception of part-time clerical assistance on an as-needed basis. Outside
advisors or consultants will be used only if they can be obtained for minimal
cost or on a deferred payment basis. Management is confident that it will be
able to operate in this manner and to continue its search for business
opportunities during the next twelve months.
Risk Factors and Cautionary Statements
Forward-looking statements in this report are made pursuant to the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995.
The Company wishes to advise readers that actual results may differ
substantially from such forward-looking statements. Forward-looking
statements involve risks and uncertainties that could cause actual results to
differ materially from those expressed in or implied by the statements,
including, but not limited to, the following: the ability of the Company to
search for appropriate business opportunities and subsequently acquire or
merge with such entity, to meet its cash and working capital needs, the
ability of the Company to maintain its existence as a viable entity, and other
risks detailed in the Company's periodic report filings with the Securities
and Exchange Commission.
Recent Accounting Pronouncements
In June 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities" which requires
companies to record derivatives as assets or liabilities, measured
at fair market value. Gains or losses resulting from changes in
the values of those derivatives would be accounted for depending on
the use of the derivative and whether it qualifies for hedge
accounting. The key criterion for hedge accounting is that the
hedging relationship must be highly effective in achieving
offsetting changes in fair value or cash flows. SFAS No. 133 is
effective for all fiscal quarters of fiscal years beginning after
June 15, 1999. Management believes the adoption of this statement
will have no material impact on the Company's financial statements.
<PAGE>
Item 7. Financial Statements
The Company's financial statements as of and for the fiscal years ended
December 31, 1999 and 1998 have all been examined to the extent indicated in
their report by H J & Associates, LLC, independent certified accountants,
and have been prepared in accordance with generally accepted accounting
principles and pursuant to Regulation S-B as promulgated by the Securities and
Exchange Commission. The aforementioned financial statements are included
herein in response to Item 7 of this Form 10-KSB.
SILVER KEY MINING COMPANY
(A Development Stage Company)
FINANCIAL STATEMENTS
December 31, 1999
C O N T E N T S
Independent Auditors' Report 3
Balance Sheets 4
Statements of Operations 5
Statements of Stockholders' Equity (Deficit) 6
Statements of Cash Flows 8
Notes to the Financial Statements 10
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Silver Key Mining Company
Clark Fork, Idaho
We have audited the accompanying balance sheets of Silver Key Mining Company
(a development stage company) as of December 31, 1999 and the related
statements of operations, stockholders' equity (deficit) and cash flows for
the years ended December 31, 1999 and 1998 and from inception on June 25,
1971 through December 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
<PAGE>
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Silver Key Mining Company (a
development stage company) as of December 31, 1999, and the results of its
operations and its cash flows for the years ended December 31, 1999 and 1998
and from inception on June 25, 1971 through December 31, 1999 in conformity
with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 3 to the financial
statements, the Company has not established revenues sufficient to cover its
operating costs which raises substantial doubt about its ability to continue
as a going concern. Management's plans in regard to these matters are also
described in Note 3. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
HJ & Associates
Salt Lake City, Utah
May 15, 2000
SILVER KEY MINING COMPANY
(A Development Stage Company)
Balance Sheets
<TABLE>
ASSETS
December 31,
1999
CURRENT ASSETS
<S> <C>
Cash $ -
-----------
Total Current Assets -
-----------
OTHER ASSETS
Mining claims (Note 1) -
-----------
TOTAL ASSETS $ -
===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
LIABILITIES
Accounts payable $ 1,500
-----------
Total Current Liabilities 1,500
-----------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock; $0.05 par value; authorized 10,000,000
shares; 5,126,010 issued and outstanding 256,300
Additional paid-in capital (deficit) (172,086)
Deficit accumulated during the development stage (85,714)
-----------
Total Stockholders' Equity (Deficit) (1,500)
-----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ -
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
SILVER KEY MINING COMPANY
(A Development Stage Company)
Statements of Operations
<TABLE>
From
Inception on
For the June 25,
Years Ended 1971 Through
December 31, December 31,
1999 1998 1999
----------- ----------- -----------
<S> <C> <C> <C>
REVENUES $ - $ - $ -
EXPENSES (3,127) (999) (85,714)
----------- ----------- -----------
NET LOSS $ (3,127) $ (999) $ (85,714)
=========== =========== ===========
BASIC NET LOSS PER SHARE $ (0.00) $ (0.00)
=========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 5,126,010 5,088,858
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
SILVER KEY MINING COMPANY
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
From Inception on June 25, 1971 through December 31, 1999
<TABLE>
Deficit
Accumulated
Additional During the
Common Stock Paid-in Development
Shares Amount Capital Stage
--------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at inception on June 25, 1971 - $ - $ - $ -
1972 - shares issued for mining rights
at $0.05 per share 1,000,000 50,000 - -
1976 - shares issued for cash at
$0.05 per share 25,000 1,250 - -
1976 - shares issued for drilling
services at $0.05 per share 125,000 6,250 - -
1977 - shares issued for drilling
services at $0.05 per share 130,860 6,543 - -
1977 - shares issued for cash at
$0.05 per share 29,240 1,462 - -
1981 - shares issued for geological
services at $0.05 per share 18,460 923 - -
1983 - shares issued for geological,
legal and administrative services
at $0.05 per share 257,800 12,890 - -
1992 - shares issued for mining rights
at predecessor cost (Note 4) 3,500,000 175,000 (175,000) -
Contributed capital for expenses - - 287 -
Net loss from inception on June 25,
1971 through December 31, 1995 - - - (81,558)
----------- ----------- ----------- ---------
Balance, December 31, 1995 5,086,360 254,318 (174,713) (81,558)
Net loss for the year ended
December 31, 1996 - - - -
----------- ----------- ----------- ---------
Balance, December 31, 1996 5,086,360 $ 254,318 $ (174,713) $ (81,558)
----------- ----------- ----------- ---------
</TABLE>
<PAGE>
SILVER KEY MINING COMPANY
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit) (Continued)
From Inception on June 25, 1971 through December 31, 1999
<TABLE>
Deficit
Accumulated
Additional During the
Common Stock Paid-in Development
Shares Amount Capital Stage
--------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, December 31, 1996 5,086,360 $ 254,318 $ (174,713) $ (81,558)
Net loss for the year ended
December 31, 1997 - - - (30)
----------- ----------- ----------- ---------
Balance, December 31, 1997 5,086,360 254,318 (174,713) (81,588)
Common stock issued for services
at $0.05 per share 39,650 1,982 - -
Net loss for the year ended
December 31, 1998 - - - (999)
----------- ----------- ----------- ---------
Balance, December 31, 1998 5,126,010 256,300 (174,713) (82,587)
Capital contributed for expense - - 2,627 -
Net loss for the year ended
December 31, 1999 - - - (3,127)
----------- ----------- ----------- ---------
Balance, December 31, 1999 5,126,010 $ 256,300 $ (172,086) $ (85,714)
=========== =========== =========== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
SILVER KEY MINING COMPANY
(A Development Stage Company)
Statements of Cash Flows
<TABLE>
From
Inception on
For the June 25,
Years Ended 1971 Through
December 31, December 31,
1999 1998 1999
--------------------------------------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
<S> <C> <C> <C>
Net (loss) $ (3,127) $ (999) $ (85,714)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Disposal of assets for services - - 71,818
Stock issued for services - 1,982 9,482
(Decrease) in accounts payable 500 (983) 1,500
----------- ----------- -----------
Net Cash Provided by Operating Activities (2,627) - (2,914)
----------- ----------- -----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Cash used for drilling costs - - (2,712)
----------- ----------- -----------
Net Cash (Used) by Investing Activities - - (2,712)
----------- ----------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Issuance of common stock for cash - - 2,712
Contributed capital 2,627 - 2,914
----------- ----------- -----------
Net Cash Provided by
Financing Activities 2,627 - 5,626
----------- ----------- -----------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS - - -
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD - - -
----------- ----------- -----------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ - $ - $ -
=========== =========== ===========
Cash Paid For:
Interest $ - $ - $ -
Taxes $ - $ - $ -
NON CASH FINANCING ACTIVITIES
Common stock issued for mining
rights at predecessor cost $ - $ - $ -
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
SILVER KEY MINING COMPANY
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Silver Key Mining Company (the Company) was incorporated in the State
of Idaho on June 25, 1971. The Company was incorporated for the
purpose of taking ownership of the mineral rights in, on and under
about 63 acres of patented land in the Greater Coeur d'Alene Mining
Region, Idaho. During 1976, a core hole was drilled with no
significant results, and no operations have ensued since then. In
1992, the property was returned to the incorporators for services
rendered and new mining claims were acquired in Bonner County, Idaho.
The Company has not yet begun any significant operations and is
considered a development stage company.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The Company's financial statements are prepared using the accrual
method of accounting. The Company has adopted a calendar year end.
b. Basic Loss Per Share
The computation of basic loss per share of common stock is based on
the weighted average number of shares outstanding at the date of the
financial statements.
c. Provision for Taxes
The Company has a net operating loss carryover of approximately
$85,000 as of December 31, 1999 which expires in 2014. The potential
tax benefit has been offset by a valuation allowance for the same
amount.
d. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
<PAGE>
e. Mining Claims
The Company's mining claims are inactive. The claims are recorded at
the predecessor cost to the shareholder who transferred them to the
Company of $-0-.
NOTE 3 - GOING CONCERN
The Company's financial statements are prepared using generally
accepted accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of liabilities
in the normal course of business. The Company has not established
revenues sufficient to cover its operating costs and allow it to
continue as a going concern. Management intends to seek a merger
with an existing, operating company. In the interim, it has
committed to meeting the Company's minimal operating expenses.
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act
The executive officers and directors of the Company are as follows:
Name Age Position
Dale F. Miller 65 President, CEO, Director
Roger D. Miller 44 Vice President, Director
Jeanne B. Miller 62 Secretary/Treasurer, Director
The above listed officers and directors will serve until the next annual
meeting of the shareholders or until their death, resignation, retirement,
removal, or disqualification, or until their successors have been duly elected
and qualified. Vacancies in the existing Board of Directors are filled by
majority vote of the remaining Directors. Officers of the Company serve at
the will of the Board of Directors.
All of the Company's present directors have other full-time employment and
will routinely devote only such time to the Company necessary to maintain its
viability. The directors will, when the situation requires, review potential
business opportunities or actively participate in negotiations for a potential
merger or acquisition on an as-needed-basis.
<PAGE>
The Company does not presently intend to issue any additional stock to
management or promoters or their affiliates or associates in exchange for
their services or for any other consideration. However, if a business
opportunity is found which meet the criteria for the Company, incentive stock
options may be considered for management only by the Board of Directors, but
only under a strict set of criteria based upon the performance of the Company.
There are no agreements or understanding for any officer or director to resign
at the understanding of any other person and none of the officers or directors
are acting on behalf or will act at the direction of any other person.
Only the participation of the named officers and directors will be
material to the operations of the Company and no promoters exist who will act
on behalf of the Company.
Resumes
Dale F. Miller, President and Director. Mr. Miller has been engaged in
the creation of jewelry which he sells at the family owned gift store in
Murray, Idaho. Mr. Miller has no formal education but has spent considerable
time in the local entertainment business as a singer-songwriter. He has also
engaged on a limited basis in the prospecting and exploration of gold and
other minerals in the local area. Mr. Miller is married to Jeanne Miller and
is David Miller's father.
Roger D. Miller, Vice President and Director. Mr. Miller has worked as a
Surveyor in his own business in Clark Fork, Idaho area for approximately twenty
years. He has also been involved in the local mining, logging and building
businesses in recent years.
Jeanne B. Miller, Secretary, Treasurer and Director. Ms. Miller has been
engaged in the local area as a singer-songwriter. Ms. Miller also operates
her own antique business. Along with her husband, Ms. Miller has also engaged
in the local mining business.
Prior "Blank Check" Experience
Companies that Dale Miller has served as an officer and director:
1. Hall Mountain Silver Mines, Inc.
2. Kaniksu American Mining Company, Inc.
3. Alpine Silver, Inc.
4. Antelope Resources, Inc.
5. Kelly Mining, Inc.
6. Idaho Technical, Inc.
7. Plume Creek, Inc.
Companies that Jeanne Miller has served as an officer and director:
1. Kaniksu American Mining Company, Inc.
2. Alpine Silver, Inc.
3. Antelope Resources, Inc.
4. Kelly Mining, Inc.
5. Idaho Technical, Inc.
6. Plume Creek, Inc.
Companies that Roger Miller has served as an officer and director:
Roger Miller has not served as an officer or director of any blank-check
companies.
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Each of the Company's officers and directors are required to file a Form
3, Statement of Beneficial Ownership. These reports have not filed on a
timely basis and will be submitted to the Securities and Exchange Commission.
Item 10. Executive Compensation
The Company's officers and/or directors have received no compensation for their
respective services rendered unto the Company. They all have agreed to act
without compensation until authorized by the Board of Directors, which is not
expected to occur until the Company has generated revenues from operations
after consummation of a merger or acquisition. As of the date of this Annual
Report, the Company has no funds available to pay directors. Further, none of
the directors are accruing any compensation pursuant to any agreement with the
Company and the Company does not intend to issue any securities to its officers
and/or directors in consideration for their services.
Item 11. Security Ownership of Certain Beneficial Owners and Management
The table below lists the beneficial ownership of the Company's voting
securities by each person known by the Company to be the beneficial owner of
more than 5% of such securities, as well as the securities of the Company
beneficially owned by all directors and officers of the Company. Unless
otherwise indicated, the shareholders listed possess sole voting and
investment power with respect to the shares shown.
Name and Amount and
Address of Nature of
Beneficial Beneficial Percent of
Title of Class Owner Owner Class(1)
Common Dale F. Miller(2) 3,500,000 68.2%
P.O. Box 142
Clark Fork
Idaho 83811
Common Edward Cowle 367,365 0.071%
201 E. 87th Street
Apartment 6C
New York, NY 10128
Common Ronald Rasmussen 266,807 0.052%
P.O. Box 396
Murray, Idaho 83874
Common Rockwell Smith 290,557 0.056%
P.O. Box 3303
Park City, UT 84060
Common Deworth H. Williams 491,336 0.095%
56 W. 400 South
Salt Lake City, UT 84101
<PAGE>
Common All Officers and
Directors as a
Group (3 persons) 3,500,000 68.2%
(1) Based on 5,126,010 shares outstanding.
(2) Officer and Director of the Company.
The balance of the Company's securities are held by forty two
persons.
Item 12. Certain Relationships and Related Transactions.
There have been no related party transactions, or any other transactions or
relationships required to be disclosed pursuant to Item 404 of Regulation S-B.
Item 13. Exhibit Index and Report on Form 8-K
No. Sequential
Page No.
(a) Certificate of Incorporation and Bylaws
* Certificate of Incorporation and
Amendments Thereto as Exhibit to
Form 10-SB.
* Bylaws filed as Exhibit to Form 10-SB.
27.1 Financial Data Schedule 16
* Exhibits so marked have heretofore been filed with the
Securities and Exchange Commission as part of the filing
indicated and are incorporated herein by reference.
(b) Reports filed on Form 8-K
None
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
SILVER KEY MINING CO., INC.
(Registrant)
Date: March 17, 2000
/s/Dale F. Miller
------------------------------
Dale F. Miller, President
<PAGE>
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the Registrant and in the capacities and on
the dates indicated.
Signature Title Date
/s/ Dale F. Miller President and Director March 17, 2000
Dale F. Miller
/s/ Jeanne B. Miller Secretary/Treasurer, March 17, 2000
Jeanne B. Miller Director
