Page UNITED STATES
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 ACTO OF 1934 [FEE REQUIRED]
For the fiscal year ended May 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ________ to __________
Commission File Number: 0-9015
YELLOW GOLD OF CRIPPLE CREEK, INC.
(Exact name of Registrant as specified in charter)
Colorado 84-0768695
State or other jurisdiction of I.R.S. Employer I.D. No.
incorporation or organization
57 West 200 South, Suite 310, Salt Lake City, Utah 84101
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (801) 359-9309
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None N/A
Securities registered pursuant to Section 12(g) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, None
Par Value $.001
Check whether the Issuer (1) has 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 fling
requirements for the past 90 days. (1) Yes [X] No [ ] (2)
Yes [X] No [ ]
Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will
be contained, to the best of 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 issuer's revenues for its most recent fiscal year: $-0-
State the aggregate market value of the voting stock held by
non-affiliates of the Registrant computed by reference to the price
at which the stock was sold, or the average bid and asked prices of
such stock, as of a specified date within the past 60 days: The
aggregate market value of the voting stock held by non-affiliates of
the Registrant computed by using the closing sale price has been
indeterminable within the past 60 days as there has been no market
for the stock.
State the number of shares outstanding of each of the Issuer's
classes of common equity as of the latest practicable date: At
August 31, 1998 there were 2,705,500 shares of the Registrant's
Common Stock outstanding.
Documents Incorporated by Reference: None
PART I
ITEM 1. DESCRIPTION OF BUSINESS
History and Organization
The Company was incorporated under the laws of the State of
Colorado on August 24, 1936, as Dooley Leasing Company to engage in
the mining industry. The Company changed its name to Yellow Gold of
Cripple Creek, Inc. on April 17, 1978. The Company discontinued its
mining operations in 1993 and is considered a development stage
company.
In January 1994 all of the officers and directors of the
Company resigned. In December 1996 a new director was elected by
the shareholders and new officers were appointed.
On March 2, 1994, the Company's charter was suspended by the
State of Colorado for failure to maintain a registered agent. The
Company was reinstated in December 1996.
On October 21, 1996, Milagro Holdings, Inc., a corporation
controlled by Howard M. Oveson, the president and a director of the
Company since December 6, 1996, purchased 11,102,500 pre-reverse
split shares of common stock from Charles A. Dager for $30,000.
Said shares represented approximately 56.36% of the outstanding
common stock of the Company. As a result of such purchase, Mr.
Dager also forgave any debt owed by the Company to him and to filed
a satisfaction of a judgement obtained by him against the Company.
On October 6, 1997, the shareholders approved a one-for-forty
reverse split of the outstanding shares of common stock of the
Company. The shareholders also approved an increase in the number
of authorized shares of common stock of the Company from 20,000,000
to 50,000,000 and a decrease in the par value from $.0025 to $.001.
On December 11, 1997, the Board of Directors adopted the 1997
Non-Qualified Stock Option Plan authorizing the board to grant
options to purchase up to 500,000 shares of the common stock of the
Company.
On December 15, 1997, the Company filed a registration
statement on Form S-8 to register options to be granted and shares
to be issued under the Company's 1997 Non-Qualified Stock Option
Plan. On February 11, 1998, the Company approved the issuance of
options to purchase up to 200,000 shares of the Company's common
stock at $.05 per share. The options were exercised in March 1998.
On March 30,1998, the Company issued 2,015,500 post-reverse
split shares of common stock of the Company to Kip Eardley, an
officer and a director of the Company, for money owed by the Company
for funds advanced for operating expenses. Such shares represent
approximately 74% of the outstanding common stock.
Milagro Holdings, Inc. and Mr. Eardley have entered into
arrangements with 1st Zamora Corp., a corporation owned by Laura
Madsen, to sell the shares owned by such persons for approximately
$140,000. See "Certain Relationships and Related Transactions."
Proposed Operations
The Company is currently seeking potential business
acquisitions or opportunities to enter into in an effort to commence
business operations. The Company does not propose to restrict its
search for a business opportunity to any particular industry or
geographical area and may, therefore, engage in essentially any
business in any industry. The Company has unrestricted discretion
in seeking and participating in a business opportunity, subject to
the availability of such opportunities, economic conditions, and
other factors. It is anticipated that any such potential business
opportunity will be subject to the approval of 1st Zamora Corp.
The selection of a business opportunity in which to
participate is complex and risky. Additionally, as the Company has
only limited resources, it may be difficult to find good
opportunities. There can be no assurance that the Company will be
able to identify and acquire any business opportunity based on
management's business judgement.
The activities of the Company are subject to several
significant risks which arise primarily as a result of the fact that
the Company has no specific business and may acquire or participate
in a business opportunity based on the decision of management which
potentially could act without the consent, vote, or approval of the
Company's shareholders. The risks faced by the Company are further
increased as a result of its lack of resources and its inability to
provide a prospective business opportunity with significant capital.
ITEM 2. DESCRIPTION OF PROPERTY
Since December 1996, the Company's administrative offices
have been located at 57 West 200 South, Suite 310, Salt Lake City,
Utah 84101, which are the offices of Howard M. Oveson, the president
and a director of the Company. Mr. Oveson has allowed the Company
to use this office space without charge.
ITEM 3. LEGAL PROCEEDINGS
No legal proceedings are reportable pursuant to this item.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
No matters were submitted to a vote of shareholders of the
Company during the fourth quarter of the fiscal year ended May 31,
1998.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock is quoted on the Electronic
Bulletin Board under the symbol "YGCC." There is presently no
established public trading market for the common stock of the
Company, and there has been no significant trading volume since the
Company ceased its principal business activities. At August 31,
1998, the bid price for the Company's common stock was $.01.
The table below sets forth for the periods indicated the high
and low bid quotations as reported on the Internet. These
quotations reflect inter-dealer prices, without retail mark-up,
mark-down, or commissions and may not necessarily represent actual
transactions. The first bid quotation was reported by a market
maker in November 1996.
Quarter High Low
Fiscal Year Ended May 31, 1997 First -- --
Second $.001 $.001
Third $.01 $.001
Fourth $.01 $.01
Fiscal Year Ended May 31, 1998 First $.01 $.01
Second $.01 $.01
Third $.01 $.01
Fourth $.01 $.01
Fiscal Year Ending May 31, 1999 First $.01 $.01
Since its inception the Company has not paid any dividends on
its common stock and the Company does not anticipate that it will
pay dividends in the foreseeable future.
At September 4, 1998, the Company had approximately 1,036
shareholders of record as reported by the Company's transfer agent.
The transfer agent for the Company is OTC Stock Transfer, Inc., 231
East 2100 South, Salt Lake City, Utah 84115, with a mailing address
of P.O. Box 65665, Salt Lake City, Utah 84165; telephone number
(801) 485-5555.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Overview
Since discontinuing operations in 1993, the Company has had
no operations. The Company was organized for the purpose of
engaging in mining activities; however, the Company does not have
any cash or other material assets, nor does it have an established
source of revenues sufficient to cover operating costs and to allow
it to continue as a going concern. The Company intends to take
advantage of any reasonable business proposal presented which
management believes will provide the Company and its stockholders
with a viable business opportunity. The board of directors will
make the final approval in determining whether to complete any
acquisition, and, unless required by applicable law, the articles of
incorporation, or the bylaws, or by contract, stockholders' approval
will not be sought.
The investigation of specific business opportunities and the
negotiation, drafting, and execution of relevant agreements,
disclosure documents, and other instruments will require substantial
management time and attention and will require the Company to incur
costs for payment of accountants, attorneys, and others. If a
decision is made not to participate in or complete the acquisition
of a specific business opportunity, the costs incurred in a related
investigation will not be recoverable. Further, even if an
agreement is reached for the participation in a specific business
opportunity by way of investment or otherwise, the failure to
consummate the particular transaction may result in a the loss to
the Company of all related costs incurred.
Currently, management is not able to determine the time or
resources that will be necessary to locate and acquire or merge with
a business prospect. There is no assurance that the Company will be
able to acquire an interest in any such prospects, products, or
opportunities that may exist or that any activity of the Company,
regardless of the completion of any transaction, will be profitable.
If and when the Company locates a business opportunity, management
of the Company will give consideration to the dollar amount of that
entity's profitable operations and the adequacy of its working
capital in determining the terms and conditions under which the
Company would consummate such an acquisition. Potential business
opportunities, no matter which form they may take, will most likely
result in substantial dilution for the Company's shareholders due to
the possible issuance of stock to acquire such an opportunity.
Liquidity and Capital Resources
As of May 31, 1998, the Company had no assets and no
liabilities, and had no revenues or losses therefrom. For the
period during the development stage of the Company, from August 1953
through May 31, 1998, the Company had an accumulated loss of
$543,917. Since discontinuing operations in 1993, the Company has
not generated revenue and it is unlikely that any revenue will be
generated until the Company locates a business opportunity with
which to acquire or merge. Management of the Company will be
investigating various business opportunities. These efforts may
cost the Company not only out-of-pocket expenses for its management,
but also expenses associated with legal and accounting costs. To
date such expenses have been advanced by officers of the Company,
but there is no arrangement or assurance that the officers will
continue to advance such costs on behalf of the Company. There can
also be no guarantees that the Company will receive any benefits
from the efforts of management to locate such business
opportunities. During the year ended May 31, 1998, the Company
settled most of its outstanding debts for shares of common stock of
the Company.
The Company has had no employees since discontinuing its
operations and does not intend to employ anyone in the future,
unless its present business operations were to change. The
president of the Company is providing the Company with a location
for its offices on a "rent free" basis. The Company is not paying
salaries or other forms of compensation to any officers or the
directors of the Company for their time and effort. Unless
otherwise agreed to by the Company, the Company does intend to
reimburse its officers and directors for out-of-pocket expenses.
Results of Operations
The Company has not had any operations during the fiscal year
ended May 31, 1998, and has not had any operations since
discontinuing operations in 1993. Since that time, the Company's
only operations have involved the negotiation of settlement of the
Company's outstanding liabilities, primarily to its former president
and director, Mr. Charles A. Dager.
ITEM 7. FINANCIAL STATEMENTS
The financial statements of the Company are set forth
immediately following the signature page of this annual report.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
In December 1996, the Company engaged Orton & Company,
Certified Public Accountants as independent auditors of the Company.
Because of the change of control of the Company and the location of
new management to the State of Utah, the board of directors decided
not to retain H. Hassel Taylor, C.P.A., the prior independent
auditor, to audit the financial statements of the Company for the
fiscal year covered by this report. The decision not to re-engage
Mr. Taylor did not involve a dispute with the Company over
accounting policies or practices. The report of Mr. Taylor on the
Company's financial statements for the years ended May 31, 1994 and
1993 contained an explanatory paragraph as the Company's ability to
"continue development stage operations." Except for such "going
concern" limitation, the report of Mr. Taylor did not contain an
adverse opinion or disclaimer of opinion, nor was it modified as to
uncertainty, audit scope, or accounting principals. In connection
with the audits of the Company's financial statements for each of
the three years ended May 31, 1994, there were no disagreements with
Mr. Taylor on any matters of accounting principles and practices,
financial statement disclosure, or auditing scope and procedures
which, if not resolved to the satisfaction of Mr. Taylor would have
caused such firm to make reference to the matter in his report.
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND
CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
General
The following table sets forth as of August 31, 1998, the
name, age, and positions of the executive officers and directors of
the Company and the term of office of such directors:
NAME AGE POSITION(S) DIRECTOR SINCE
Howard M. Oveson 64 Director, President December 1996
and Treasurer
Kip Eardley 39 Director and Secretary October 1997
Ken Edwards 47 Director and Vice-
President October 1997
Each of the directors is elected to hold office until the
next annual meeting of the shareholders or until removed. Annual
meetings of the shareholders are to be held on the third Tuesday of
September.
Set forth below is certain biographical information regarding
the Company's current executive officers and directors:
HOWARD M. OVESON has been self-employed since 1980 as a
business consultant to private and public companies. Mr. Oveson has
also been a director and the secretary/treasurer of Apex Minerals
Corporation, a Delaware corporation, since July 1995, which company
is a reporting company with the Securities and Exchange Commission.
On March 17, 1992, Howard M. Oveson, an officer and a director of
the Company, filed a petition under the federal bankruptcy laws in
the U.S. Bankruptcy Court, District of Utah (Salt Lake), Petition
No. 92-21860. The case was originally filed under Chapter 11 of the
U.S. Bankruptcy Code, and was converted to Chapter 7 on November 12,
1992. The final decree in the case was issued on January 10, 1996.
KIP EARDLEY has been the owner and operator of Capital
Consulting, a corporate consulting company, since 1989. From 1996
to 1997 he was the owner and manager of Sierra West Mortgage, a
mortgage brokerage firm.
KEN EDWARDS has been the president and CEO of NeKco
Enterprises, a corporate consulting firm, since 1995. He was
employed by Wasatch Investments from 1991 to 1995.
Compliance with Section 16(a) of the Exchange Act
The Company's common stock is registered pursuant to Section
12(g) of the Securities Act of 1934, as amended (the "Exchange
Act"), and in connection therewith, directors, officers, and
beneficial owners of more than 10% of the Company's outstanding
common stock are required to file on a timely basis certain reports
under Section 16 of the Exchange Act as to their beneficial
ownership of the Company's common stock. Ken Edwards, a director of
the Company has failed to file either a Form 3 or a Form 5 to report
his position as a director of the Company. He is believed not to
own beneficially any shares of common stock of the Company.
ITEM 10. EXECUTIVE COMPENSATION
There was no compensation awarded to, earned by, or paid to
any of the executive officers of the Company during the fiscal years
ended May 31, 1996, 1997, or 1998.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information furnished
by current management concerning the ownership of common stock of
the Company as of August 31, 1998, of (i) each person who is known
to the Company to be the beneficial owner of more than 5 percent of
the Common Stock; (ii) all directors and executive officers; and
(iii) directors and executive officers of the Company as a group:
Amount and Nature
Name and Address of Beneficial
of Beneficial Owner Ownership(1) Percent of Class
Howard M. Oveson 277,563(2) 10.26%
57 West 200 South
Suite 310
Salt Lake City, Utah 84101
Kip Eardley 2,015,500 74.5%
4970 South 900 East
Suite F-104
Salt Lake City, UT 84117
Ken Edwards -0-
4484 Taylor Ave.
Ogden, UT 84403
1st Zamora Corp. 2,293,063(3) 84.76%
9025 Oakwood Place
West Jordan, UT 84088
Executive Officers and
Directors as a Group
(3 Person) 2,293,063 84.76%
(1) Unless otherwise indicated, this column reflects amounts
as to which the beneficial owner has sole voting power and sole
investment power.
(2) Of theses shares, 262,500 are held directly of record by
Milagro Holdings, Inc., a Delaware corporation controlled by Mr.
Oveson, and 15,063 are held in the name of Charles A. Dager.
(3) 1st Zamora Corp. has entered into an arrangement with Mr.
Oveson and Mr. Eardley to purchase all of the shares of common stock
owned by them. Such transaction may be completed within 60 days.
1st Zamora Corp. is owned and controlled by Laura Madsen. See
"Certain Relationships and Related Transactions."
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Subsequent to the fiscal year ended May 31, 1998, Milagro
Holdings, Inc. ("Milagro"), a corporation controlled by Howard M.
Oveson, an officer and a director of the Company, entered into an
arrangement with 1st Zamora Corp. ("1st Zamora"), a corporation
owned and controlled by Laura Madsen, to sell 277,563 shares of
common stock owned by Milagro for $130,928. During the fiscal year
ended May 31, 1998, Milagro had granted options to 1st Zamora to
purchase such shares, for which 1st Zamora had paid Milagro an
aggregate of $60,000. 1st Zamora failed to exercise such options
and the options have expired. In connection with the current
arrangement, Mr. Oveson has agreed to resign as an officer and a
director of the Company if 1st Zamora purchases the shares from
Milagro.
During the fiscal year ended May 31, 1998, Mr. Kip Eardley,
an officer and a director of the Company, acquired 2,015,500 shares
of the Company in settlement of $9,072 owed by the Company. Such
funds were advanced by Milagro and the obligation owed by the
Company to Milagro was assigned by Milagro to Mr. Eardley. Mr.
Eardley has entered into an arrangement to sell such shares to 1st
Zamora for $9,072. Mr. Eardley has agreed to resign as an officer
and a director of the Company if 1st Zamora purchases the shares.
Mr. Howard M. Oveson, an officer, director, and controlling
shareholder of the Company, continues to advance funds to the
Company for expenses of the Company and to provide office space for
the Company at no cost.
Mr. Howard M. Oveson, an officer and a director of the
Company, is also an officer and director of another reporting
company. The other reporting company is also seeking business
opportunities, and it is possible that conflicts between such entity
and the Company for such business opportunities may arise. There is
no agreement between such two entities concerning such conflict.
ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K
(a)(1) Financial Statements. The following financial
statements are included in this report:
Independent Auditors' Report dated August 29, 1998
Balance Sheet as of May 31, 1998
Statements of Operations for the fiscal years ended May 31, 1998 and
1997, and for the period during development stage from August 1953
through May 31, 1998
Statements of Stockholders' Equity from August 1953 through May 31,
1998
Statements of Cash Flows for the fiscal years ended May 31, 1998 and
1997, and for the period during development stage from August 1953
through May 31, 1998
Notes to Financial Statements
(a)(2) Exhibits. The following exhibits are included as part of this
report:
Exhibit No. Description of Exhibit Location
3.1 Articles of Incorporation, as amended *
3.2 By-Laws of the Company currently in effect *
4.1 Form of certificate evidencing shares of Common Stock *
16.1 Letter on change in certifying accountant **
23.1 Consent of Orton & Company, independent auditor Attached
*Incorporated by reference from the Company's registration
statement on Form 10 filed with the Securities and Exchange
Commission, file no. 0-9015.
**Incorporated by reference from the Company's annual report
on Form 10-KSB for the year ended May 31, 1995, file no. 0-9015.
(b) Reports on Form 8-K: No reports on Form 8-K were filed
during the forth quarter of the fiscal year ended May 31, 1998.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act,
the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Yellow Gold of Cripple Creek, Inc.
Date: September 4, 1998 By /s/ Howard M. Oveson, President
In accordance with the Exchange Act, this report has been
signed below by the following persons on behalf of the registrant
and in the capacitates and on the dates indicated.
Date: September 4, 1998 /s/ Howard M. Oveson, Director and
Principal Financial and Accounting
Officer
Date: September 4, 1998 /s/ Kip Eardley
<PAGE>
Independent Auditors' Report
To the Board of Directors and Stockholders of Yellow Gold of Cripple Creek,
Inc.:
We have audited the accompanying balance sheet of Yellow Gold of Cripple
Creek, Inc., (a development stage company) as of May 31, 1998 and the related
statements of operations, stockholders' equity and cash flows for the years
ended May 31, 1998 and 1997 and for the time period from June 1, 1994 to May
31, 1998. 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. The financial statements for the periods
August 1953 (inception) to May 31, 1994 were audited by other auditors who
expressed unqualified opinions on them. The accumulated totals are the
responsibility of the auditors of the respective periods.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Yellow Gold of Cripple Creek,
Inc. as of May 31, 1998 and the results of its operations and cash flows for
the years ended May 31, 1998 and 1997 and for the time period from June 1,
1994 to May 31, 1998 in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has no operating capital and has no
operations. These factors raise substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters
are also described in the Note 2. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Orton & Company
Certified Public Accountants
Salt Lake City, Utah
August 29, 1998
<PAGE>
Yellow Gold of Cripple Creek, Inc.
(A Development Stage Company)
Balance Sheet
ASSETS
May 31,
1998
Total Assets $ -
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 18,546
Accounts payable-related party (Note 4) 145
18,691
Stockholders' Equity
Common stock $.001 par value, 50,000,000 shares
authorized, 2,705,500 shares issued and
outstanding 2,705
Capital in excess of par 522,521
Retained (deficit) accumulated since the development stage (543,917)
Total (18,691)
Total Liabilities and Stockholders' Equity $ -
<PAGE>
Yellow Gold of Cripple Creek, Inc.
(A Development Stage Company)
Statements of Operations
For the
Period During
the Development
Stage from
August 1953
For the Year Ended Through
May 31, May 31,
1998 1997 1998
Revenues:
Sale of minerals and
tailings $ - $ - $ 92,556
Expenses:
Mine development costs - - 134,730
Salaries and related
expenses - - 559,009
Professional services 31,084 6,679 163,897
Other general and
administrative - - 180,065
Depreciation - - 158,699
Net Income from
Operations $(31,084) $ (6,679) $ (1,103,844)
Other income (expenses)
Interest income - - 59,438
Interest expense - - (299,859)
Gain (loss) on sale
of assets - - 237,573
Gain on relief of
indebtedness - - 732,885
Loss on abandonment
of subsidiaries - - (181,900)
Other - - 11,790
Net (loss) income
before taxes $ (31,084) $ (6,679) $ (543,917)
Taxes (Note 1) - - -
Net income (loss) $ (31,084) $ (6,679) $ (543,917)
Net income (loss)
per common share $ (.03) $ (.01) $ (1.29)
Average weighted
shares
outstanding 1,228,500 490,000 420,403
<PAGE>
Yellow Gold of Cripple Creek, Inc.
(A Development Stage Company)
Statements of Stockholders' Equity
Deficit
Accumulated
Additional During the
Common Stock Paid-in Development Treasury
Shares Amount Capital Stage Stock
August 1953:
Issued for
cash,
$.03/share 250,000 $ 250 $ 7,250 $ - $ -
Issued for
cash,
$1.60/share 12,500 12 19,988 - -
Net loss,
inception
to 5/31/78 - - - (8,383) -
August 1978:
Issued for
cash, $4
per share
net of
issue
costs of
$68,596 125,000 125 431,279 - -
Sale of
warrants,
500,000
shares - - 50 - -
Net loss
FYE 5/31/79 - - - (61,759) -
June 1979:
Purchase
100,000
shares of
treasury
stock - - - - (4,000)
January 1980,
issued for
cash at
option
price of
$1.60 per
share 2,500 3 3,997 - -
March 1980,
issued for
cash at
option
price of
$1.60 per
share 2,500 2 3,998 - -
Net loss
FYE 5/31/80 - - - (99,561) -
Net loss
FYE 5/31/81,
82, 83 - - - (217,641) -
Capital
contributed
through the
Rittenhouse
Project - - 23,200 - -
Net loss
FYE 5/31/84,
85, 86 - - - (234,569) -
Net income
FYE 5/31/87 - - - 89,534 -
Continued
Yellow Gold of Cripple Creek, Inc.
(A Development Stage Company)
Statement of Stockholders' Equity
(Continued)
Deficit
Accumulated
Additional During the
Common Stock Paid-in Development Treasury
Shares Amount Capital Stage Stock
Net loss
FYE 5/31/88 - - - (70,767) -
July 1988,
stock issued
in exchange
for note due at
$.20/share 100,000 100 19,900 - -
Net loss
FYE 5/31/89 - - - (61,242) -
Net loss
FYE 5/31/90 - - - (56,726) -
Net loss
FYE 5/31/91 - - - (65,708) -
Net loss
FYE 5/31/92 - - - (55,621) -
Net loss
FYE 5/31/93 - - - (52,962) -
Net loss,
FYE 5/31/94 - - - (69,581) -
Net income
FYE 5/31/95 458,832
Net loss
FYE 5/31/96 - - - - -
Cancellation
of treasury
stock (2,500) (2) (3,998) - 4,000
Net loss
FYE 5/31/97 - - - (6,679) -
Issued for
debt relief,
2,015,500
shares at
$.0045/share
(Note 4) 2,015,500 2,015 7,057 - -
Issued
pursuant
to stock
option plan
at $.05/share
(Note 6) 200,000 200 9,800 - -
Net loss
FYE 5/31/98 - - - (31,084) -
2,705,500 $ 2,705 $522,521 $ (543,917) $ -
<PAGE>
Yellow Gold of Cripple Creek, Inc.
(A Development Stage Company)
Statements of Cash Flows
For the
Period
During the
Development
Stage from
August
For the year ended 1953 Through
May 31, May 31,
1998 1997 1998
Cash Flow from Operating
Activities:
Net (loss) income $ (31,084) $ (6,679) $ (543,917)
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation 158,699
Gain/loss on sale of
assets/subsidiaries - - (450,659)
Increase (decrease) in
accounts payable and
accrued expenses 12,012 6,679 38,260
Stock for services & debt 19,072 - 19,072
Net cash used by operating
activities - (778,545)
Cash Flow from Investing Activities:
Proceeds from sale of equipment - - 44,838
Capital expenditures - - (196,037)
Acquisition of mineral properties - - (71,887)
Investment in subsidiaries - - (181,900)
Net Cash (Used) Provided by
Investing Activities - - (404,986)
Cash Flow from Financing Activities:
Net borrowing from
stockholder/director and others - - 677,377
Net proceeds, sales of common
stock - - 510,154
Purchase of treasury stock (4,000)
Net Cash (Used)/Provided
by Financing Activities - - 1,183,531
Net Cash Provided (Used) - - -
Cash at Beginning of the Year - - -
Net Cash at the End of the Year $ - $ - $ -
<PAGE>
Yellow Gold of Cripple Creek, Inc.
(A Development Stage Company)
Notes to Financial Statements
May 31, 1998
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
a. Organization
The Company was incorporated under the laws of the State of Colorado on
August 24, 1936 . The Company was involved in various mining activities over
the years, none of which proved successful. During the year 1953, the Company
discontinued all operations and has had no significant revenues from any
activity since that time and is classified as a development stage company per
SFAS #7.
b. Income Taxes
The Company adopted Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes" in the fiscal year ended May 31, 1995 and has
applied the provisions of the statement on a retroactive basis to the previous
fiscal year which resulted in no significant adjustment.
Statement on Financial Accounting Standards No. 109 "Accounting for
Income Taxes" requires an asset and liability approach for financial
accounting and reporting for income tax purposes. This statement recognizes
(a) the amount of taxes payable or refundable for the current year and (b)
deferred tax liabilities and assets for future tax consequences of events that
have been recognized in the financial statements or tax returns.
Deferred income taxes result from temporary differences in the
recognition of accounting transactions for tax and financial reporting
purposes. There were no temporary differences at May 31, 1998 and earlier
years; accordingly, no deferred tax liabilities have been recognized for all
years.
The Company has cumulative net operating loss carryforwards of
approximately $186,000 at May 31, 1998 and $155,000 at May 31, 1997. No
effect has been shown in the financial statements for the net operating loss
carryforwards as the likelihood of future tax benefit from such net operating
loss carryforwards is not presently determinable. Accordingly, the potential
tax benefits of the net operating loss carryforwards, estimated based upon
current tax rates of $63,000 at May 31, 1998 and $50,000 1997 have been offset
by valuation reserves of the same amount. The net change in deferred tax
asset and offsetting valuation reserve amounted to $13,000 for 1997 and $0 for
1997.
The Company has available $186,000 in federal income tax carryforwards
that will begin to expire in the year 2004.
c. Loss Per Share
The computation of loss per share of common stock is based on the weighted
average number of shares outstanding during the period less shares held in
treasury.
d. Cash and Cash Equivalent
For the purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments with maturity of three months or less to be
cash equivalents.
<PAGE>
Yellow Gold of Cripple Creek, Inc.
(A Development Stage Company)
Notes to Financial Statements
May 31, 1998
NOTE 2 - 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. However, the Company does not have significant cash or other
material assets, nor does it have an established source of revenues sufficient
to cover its operating costs and to allow it to continue as a going concern.
It is the intent of the Company to seek a merger with an existing, operating
company.
NOTE 3 -SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for: From August
1953
to May 31,
1998 1997 1998
Interest $ - $ - $ 146,325
Taxes - - -
Non cash Flow
Information:
Stock issued
for services $ 10,000 $ - $ 10,000
Stock issued
for debt $ 9,072 $ - $ 9,072
NOTE 4 -RELATED PARTY TRANSACTION
During 1998, an officer advanced $9,217 for working capital to pay for
ongoing professional fees to keep the Company current in its annual and
quarterly filings. Of the $9,217, $9,072 of the debt was assigned to another
officer/director, who exchanged the debt for 2,015,500 shares of stock.
NOTE 5 -REVERSE STOCK SPLIT
During the year, the shareholders of the Company approved a reverse stock
split of one or forty shares. The financial statements have been adjusted to
reflect the reverse stock split.
NOTE 6 - NON-QUALIFIED STOCK OPTION PLAN
During the year, the company adopted a Non-Qualifying Stock Option Plan
to provide the Company with ongoing legal and professional expertise in its
regulatory filing requirements and ongoing negotiations for viable business
and merger opportunities. The Company set aside 500,000 shares for such a
plan. The price of the options are to be determined by the board of directors
and are set to expire in five years.
During the year, 200,000 shares were optioned and exercised at $.05 per
share for services rendered.
NOTE 7 -USE OF ESTIMATES IN FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect reported amounts of assets and liabilities, disclosure
of contingent assets and liabilities at the date of the financial statements
and revenues and expenses during the reporting period. In these financial
statements, assets, liabilities and earnings involve extensive reliance on
management's estimates. Actual results could differ from those estimates.
ACCOUNTANTS' CONSENT
We hereby consent to the use of our audit report of Yellow Gold of Cripple
Creek, Inc. dated August 29, 1998 for the year ended May 31, 1998 in the Form
10-KSB Annual Report for Yellow Gold of Cripple Creek, Inc. and in the
registration statement on S-8 of Yellow Gold of Cripple Creek, Inc.
/s/ Orton & Company
September 1, 1998
Salt Lake City, Utah
[ARTICLE] 5
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] MAY-31-1998
[PERIOD-END] MAY-31-1998
[CASH] 0
[SECURITIES] 0
[RECEIVABLES] 0
[ALLOWANCES] 0
[INVENTORY] 0
[CURRENT-ASSETS] 0
[PP&E] 0
[DEPRECIATION] 0
[TOTAL-ASSETS] 0
[CURRENT-LIABILITIES] 0
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 2,705
[OTHER-SE] 0
[TOTAL-LIABILITY-AND-EQUITY] 0
[SALES] 0
[TOTAL-REVENUES] 0
[CGS] 0
[TOTAL-COSTS] 31,084
[OTHER-EXPENSES] 0
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 0
[INCOME-PRETAX] (31,084)
[INCOME-TAX] (31,084)
[INCOME-CONTINUING] 0
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 0
[EPS-PRIMARY] 0
[EPS-DILUTED] 0
</TABLE>
