SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-KSB
|X| ANNUAL REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended June 30, 1992
|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ____
Commission File Number 2-85601-D
MAMMOTH RESOURCES, INC
----------------------
(Name of small business issuer in its charter)
UTAH 87-0378892
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
639 5th Ave. S.W. Suite 820, Calgary Alberta, Canada T2P OM9
- ---------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (403) 262-6000
Securities registered under Section 12(b) of the Exchange Act: None
Title of each class: None
Securities registered under Section 12(g) of the Act: Common Stock
Title of each class: Common Stock
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 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. |_|
The issuer's revenues for its most recent fiscal year: $ 0.
The aggregate market value of the voting stock held by non-affiliates of the
Registrant was approximately $168,305 as at February 3, 2000, based on the
closing sale price of $.10.
The number of shares of Common Stock outstanding as at February 4, 2000, was
16,278,357.
Transitional Small Business Disclosure Format (check one): |X| No |_|
DOCUMENTS INCORPORATED BY REFERENCE: See Item 13, Exhibits and Reports herein
for items incorporated by reference into this Annual Report of Form 10-KSB.
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
General
Our Company, Mammoth Resources, Inc., was originally organized in January 15,
1982 (the "Company"). It is a corporation organized under the laws of Utah, and
is in good standing with the State. We have a Board of Directors, officers and
over 1,000 shareholders of record.
The Company is currently seeking one or more business opportunities, including
acquisitions of other businesses, with the preference of acquiring revenue
generating concerns. The Company is seeking business opportunities, which are
acceptable to the Board. No agreement exists as to any one or more opportunity.
The Company has no revenues, and minimal expenses.
We are seeking qualified business opportunities which may satisfy certain
criteria, to be modified from time to time as determined by Management, but will
generally include the following considerations: the experience or ability of
persons who may be added to Management, or the members of the management of the
acquisition; the financial history of the business or acquisition; the status of
the opportunity with respect to any revenues, profits, or assets, and the
opportunity of the business or acquisition to generate significant future
revenues and profits in its business area or areas; the ability of the business
or acquisition to satisfy the cash needs of an operating public company; and the
ability to be competitive in the market place and also expand business
operations in the future.
Background
The Company was initially incorporated with the intentions of engaging in the
acquisition, exploration, and development of natural resource properties and
related activities. In the early 1980's, such business pursuits were popular
among start up and development stage companies. Rising industrial and consumer
demand, along with rising fuel prices, created an industry focused on finding
underground natural fuels and resources. The Company embarked on a mission to
participate in this pursuit by seeking to own, operate, lease or develop such
properties. While not achieving any significant success, or profitability, we
did start and/or acquire such opportunities and interests.
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Eventually, in the early 1990's, namely up to December, 1991, the Company
restructured its Board of Directors, and officers bringing in additional persons
to help manage business pursuits, and undertook more diverse transactions and
pursuits. The result, however, were disagreements between certain members of
Management, and costly endeavors which did not do much to help the Company in
its business goals of achieving revenues, profits, and viable growth. By the end
of 1991, the Company divested itself of these pursuits, the new people resigned
early thereafter, and the Management substantially reverted to the then Chairman
of the Board, Mr. Leonard Rice, who has been Chairman of the Company since the
1980's.
Since approximately the middle of 1991, the Company has not undertaken any
material revenue generating operations, and actually has little or no revenues
or expenditures to report, while Management has operated the business with a
view towards seeking a more qualified pursuit or pursuits. Recently, it has
become necessary for a company to be fully reporting, as to the filing of U.S.
Securities and Exchange Commission ("SEC") Reports, such as Forms 10-QSB and
Forms 10-KSB for the financial quarters and fiscal years of the Company. As an
example, in order to meet certain requirements of the National Association of
Securities Dealers, whereby, in summary, companies that wish to remain trading
on the Bulletin Board of the NASD, must be registered with the SEC to file the
Reports, and must be current in such filings. Therefore, starting towards the
end of 1999, the Company has intensified its administrative activities by
engaging accountants and lawyers to advise and assist the Company to accomplish
this project.
Personnel
While the Company has various Directors and officers, the Company currently has
one actual employee, its President, who serves without compensation. There are
no collective bargaining agreements or unions, of any type. Management believes
its relationship with its employees has been good. No binding employment
agreements exist.
Business Strategy
The current strategy is to keep costs at a minimum while pursuing viable
business opportunities. The Company will not restrict its search to any specific
business, industry or geographical location, and it may participate in a
business venture of virtually any kind or nature. Management of the Company will
not consult with the Company's shareholders with respect to identifying,
researching, analyzing and acquiring a business opportunity for the Company,
except to the extent otherwise mandated by law.
The Company anticipates that the selection of a business opportunity will be
complex and will entail a high degree of risk. Business opportunities exist in
many different industries and at various stages of development, all of which
will make the task of locating and researching these business opportunities
difficult. The Company has virtually no capital with which to provide the owners
of business opportunities with cash
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or other assets. The owners of business opportunities will probably incur
significant merger, or similar costs. The Company will also incur costs in
connection with the acquisition of a business opportunity.
The analysis of business opportunities will be undertaken by the Management of
the Company (not a professional business analyst), but it is anticipated that
third party professionals, including accountants, lawyers and other independent
contractor consultants shall assist. Any business opportunity in which the
Company participates will present risks. Many risks cannot be adequately
identified prior to selection of the specific opportunity.
In implementing its participation in a particular business opportunity, the
Company will follow certain pre-determined guidelines, which Management has
developed and which it intends to focus the current operations of the Company
on, as follows (a summary, subject to change without notice):
a. seek, consult, negotiate with one or more business brokers, entrepreneurs,
and professionals as to available opportunities, for introduction to the
Company, and consideration by Management;
b. execute agreements or confirm arrangements which such third parties as to the
mutual duties, obligations and expectations as to the opportunity, with
compensation to include performance based incentives payable upon the
consummation of a business opportunity (for example, the Company may pay a
consulting, finder or similar fee for locating and/or helping as to a merger or
acquisition candidate);
c. negotiate and execute a confidentiality agreement with the principals and
professionals relating to the business opportunity; and
d. to the extent the Company may become a party to a merger, consolidation,
reorganization, joint venture or licensing agreement with another corporation or
entity or other opportunity, first complete a plan of structuring the
transaction, negotiate and execute an agreement and obtain the advice of legal
and other counsel.
The Company is an insignificant participant among the firms that engage in the
acquisition of business opportunities. There are many established venture
capital and financial concerns which have significantly greater financial and
personnel resources and technical expertise than the Company.
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Forward Statements
Certain statements herein constitute forward-looking statements. These
statements involve known and unknown risks, uncertainties and other factors that
may cause actual results, levels of activity, performance, or achievements to be
materially different from any future results, levels of activity, performance,
or achievements expressed or implied by such forward-looking statements. In some
cases, you can identify forward-looking statements by terminology such as "may,"
"will," "should," "could," "expects," "plans," "anticipates," "believes,"
"estimates," "predicts," "potential," or "continue" or the negative of such
terms or other comparable terminology. Although expectations reflected in the
forward-looking statements are believed to be reasonable, there is no guarantee
of future results, levels of activity, performance, or achievements. Moreover,
neither we nor any other person assumes responsibility for the accuracy and
completeness of such statements. The Company does not undertake to update any of
the forward-looking statements herein.
ITEM 2. DESCRIPTION OF PROPERTY
The Company does not maintain any formal business office, and has relied upon
facilities in Canada supplied by its Management, at no cost, and without
agreement.
ITEM 3. LEGAL PROCEEDINGS
Management knows of no litigation by or against the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock is traded on the National Association of Securities
Dealers (NASD) Bulletin Board market (trading-symbol: MMMR) as reported on the
NASD Bulletin Board Market The following sets forth, as reported by the NASD,
for the
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periods (calendar quarters) indicated, high and low bid prices of the Company's
Common Stock:
QUARTER HIGH/ LOW-------CALENDAR 1997
H L
-- --
First Quarter (Jan.-March) $0 $0
Second Quarter (April-June) $0 $0
Third Quarter (July-Sept.) $0 $0
Fourth Quarter (Oct.-Dec.) $0 $0
QUARTER HIGH/ LOW-------CALENDAR 1998
H L
-- --
First Quarter (Jan.-March) $0 $0
Second Quarter (April-June) $0 $0
Third Quarter (July-Sept.) $0 $0
Fourth Quarter (Oct.-Dec.) $0 $0
QUARTER HIGH/ LOW-------CALENDAR 1999
H L
-- --
First Quarter (Jan.-March) $0 $0
Second Quarter (April-June) $0 $0
Third Quarter (July-Sept.) $0 $0
Fourth Quarter (Oct.-Dec.) $0 $0
The quotations reflect inter-dealer prices, without retail mark-ups, markdowns
or commissions and may not represent actual transactions. The Company has very
limited sporadic trading and quotation of such trades, with the most recent
price being approximately $.10 per share. There were 1,135 shareholders of
record of Common Stock at February 4, 2000. To date, the Company has not paid
any dividends on its Common Stock and does not expect to pay any dividends in
the foreseeable future. Instead, the Company intends to retain all earnings to
finance the growth and development of the Company's businesses.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion should be read in conjunction with the Financial
Statements and Notes thereto contained elsewhere herein. Please note that no
assurance exists as to the actual future outcome of Management's plans,
assumptions or estimates. Currently, Management is seeking to maintain costs at
a minimum while seeking
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business acquisition opportunities. The Company has experienced significant
losses from operations. Management anticipates that losses should relatively
decrease as time passes and one or more other businesses are acquired.
Plan of Operation
While some records are lost for the period, the Company, effective in late 1991,
moved to divest itself of the unprofitable pursuits involving oil and gas
interests, the previously disclosed video store interests, and non performing
obligations and rights. In summary, the Company deemed certain note receivables
as uncollectable (mar notes), and exchanged its oil and gas interests and
pursuits for the cancellation of certain debts and other considerations. Also,
the video store pursuits were effectively liquidated without any net to the
Company. This effectively placed our Company in a position to seek new pursuits
or a new plan of operation.
The Company's current plan of operation for the next twelve-month period is to
focus upon the pursuit of business opportunities, including acquisition and/or
establishment of a revenue generating businesses. The Company believes it can
satisfy cash requirements through the end of 2000 by relying on its management
for short-term loans and advances to meet operating expenses. Management
believes the ability of the Company to achieve profitability is conditioned upon
several variables, but primarily the successful pursuit of an acquisition,
including the establishment of a new operating business.
The Company plans to follow certain pre-determined guidelines, which Management
has developed and which it intends to focus the current operations of the
Company on, as follows (a summary, subject to change without notice):
a. seek, consult, negotiate with one or more business brokers, entrepreneurs,
and professionals as to available opportunities, for introduction to the
Company, and consideration by Management;
b. execute agreements or confirm arrangements which such third parties as to the
mutual duties, obligations and expectations as to the opportunity, with
compensation to include performance based incentives payable upon the
consummation of a business opportunity (for example, the Company may pay a
consulting, finder or similar fee for locating and/or helping as to a merger or
acquisition candidate);
c. negotiate and execute a confidentiality agreement with the principals and
professionals relating to the business opportunity; and
d. to the extent the Company may become a party to a merger, consolidation,
reorganization, joint venture or licensing agreement with another corporation or
entity or other opportunity, first complete a plan of structuring the
transaction, negotiate and execute an agreement and obtain the advice of legal
and other counsel.
The Company is an insignificant participant among the firms that engage in the
acquisition of business opportunities. There are many established venture
capital and financial concerns which have significantly greater financial and
personnel resources and technical expertise than the Company.
Research and development, asset purchases and changes in employees in future
periods will be dependent upon any acquisition.
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ITEM 7. FINANCIAL STATEMENTS
Financial Statements of the Company in response to this Item are attached.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANT ON ACCOUNTING AND FINANCIAL
DISCLOUSURES
The Company's Board of Directors determined, effective February 2, 2000, to
engage the firm of Dohan and Company, Certified Public Accountants, Miami,
Florida ("Dohan & Co."), to audit the financial statements attached hereto.
Dohan & Co. replaced the Company's prior independent auditor, Warren Yee,
C.P.A., Phoenix, Arizona ("Warren Yee, C.P.A."). Warren Yee, C.P.A.'s prior
report on the financial statements of the Company did not contain and adverse
opinion or disclaimer of opinion or any modification as to uncertainty, audit
scope or accounting principles. The Company had no disagreements with Warren
Yee, C.P.A. Warren Yee, C.P.A. did not resign, did not decline to stand for
re-election and was not dismissed. The Company has been unable, after diligent
effort, for over two years, to contact him or locate him, and has reason to
believe he is retired, or deceased.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT
The information below sets forth the name, age and certain information as to the
Directors and executive officers of the Company, including term of office.
NAME: AGE: POSITION:
Leonard D. Rice 70 Chairman, President, and Secretary
Michael Rice 32 Director and Vice President
Holly R. Rice 68 Director
Leonard D. Rice
Mr. Leonard Rice has been a Director of the Company since 1985, and has been
Chairman since the 1980's, and President and Secretary since March, 1992, and
acts as interim principal financial officer. He has served in various officer
capacities since that time. He became President, and Secretary besides being the
Chairman, in March of 1992. He
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is currently President, Chairman of the Board, and Secretary. He has a Bachelors
of Science Degree in Civil Engineering. He is the President and Chairman of
Phoenix Oil & Gas, Inc., Dallas TX, from 1982, and President and C.E.O. of
Emerald Bay Energy, Inc., Calgary, Canada, both of these companies being
involved in oil and gas industry pursuits.
Michael Rice
Mr. Michael Rice is a Director and a Vice-President of the Company since
November 1999. He has been a Manager at the Salt Lake City, Utah, location of a
national restaurant chain from 1991 to 1998, while he completed his
undergraduate schooling, and assisted his father, Mr. Leonard Rice, with the
affairs of the Company. He has a Bachelors of Science Degree in Consumer Studies
and Economics, University of Utah, 1998.
Holly R. Rice
Mrs. Rice has been a Director since 1999. She is the wife of Leonard Rice and
mother of Michael Rice and has been Mr. Rice's assistant for the past five
years.
ITEM 10. EXECUTIVE COMPENSATION
Employee Salaries
The current President of the Company serves without compensation at this time,
and has received no compensation. The Directors of the Company do not
currently receive any compensation for services as Directors. No employment
agreement exists with any officers of the Company. There are no stock options,
or warrants, or bonus or profit sharing plans, with respect to the officers of
the Company. No salary, stock, stock related rights, or other compensation is
due to any officer or Director. No loan payable is due from the Company to any
of them.
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ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(A) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS. The following table sets
forth known beneficial ownership of common stock of the Company as of
February 4, 2000 by each person (except Management) owning 5% or more of
the Common Stock of the Company (also see table below).
NAME AND ADDRESS(1) AMOUNT AND NATURE PERCENT OF OWNERSHIP(2)
- ------------------- ----------------- -----------------------
Phoenix Oil & Gas Co. 14,225,702 88%
639 5th Ave. S.W.
Suite 820, Calgary Alberta
Canada T2P OM9
(1) Information is supplied based upon identity as a shareholder of record
without any verification of beneficial ownership, which may apply as to the
identified party. Mr. Leonard Rice, as officer and Director of the Company, is
the President and an owner of said shareholder.
(2) Rounded to nearest whole number.
(B) SECURITY OWNERSHIP OF MANAGEMENT.
NAME/ADDRESS (1) AMOUNT AND NATURE(2) PERCENT OF OWNERSHIP(3)
- ---------------- -------------------- -----------------------
Leonard Rice 0 0
639 5th Ave. S.W.
Suite 820, Calgary Alberta
Canada T2P OM9
Michael Rice 0 0
639 5th Ave. S.W.
Suite 820, Calgary Alberta
Canada T2P OM9
Holly Rice 18,000 1%
639 5th Ave. S.W.
Suite 820, Calgary Alberta
Canada T2P OM9
All officers and Directors 18,000 1%
as a Group
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(1) Information is supplied based upon identity as a shareholder of record
without any verification of beneficial ownership, which may apply as to the
identified party.
(2) Does not reflect the 14, 225, 702 shares held of record of Phoenix Oil & Gas
Co. Leonard Rice is the spouse of Holly Rice, and Leonard and Holly Rice are the
parents of Michael Rice. Leonard Rice is the owner of Phoenix Oil & Gas Co.,
which is an affiliate of the Company and owns a total of 14,225,702 shares.
(3) Rounded to nearest whole number.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Leonard Rice is the spouse of Holly Rice, and Leonard and Holly Rice are the
parents of Michael Rice, all officers and or Directors of the Company. Leonard
Rice is the owner of Phoenix Oil & Gas Co., which is an affiliate of the Company
and owns a total of 14,225,702 shares. Mr. Leonard Rice has effectively control
of the Board of Directors, at least from the point of becoming President and
sole Director in March of 1992, until December, 1999 when Mr. Michael Rice and
Holly Rice was added and has made most of the decisions for the Company
pertaining to the resolution of issues between the Company and Phoenix Oil & Gas
Co. ("Phoenix") as described in the accompanying financial statements and notes,
certain promissory notes transferred to the Company by Phoenix (mar notes) were,
effectively in October 1991, considered uncollectable by the Company. Further,
an outstanding prior obligation of $320,000 to Phoenix by the Company was
cancelled, effective October, 1991, in exchange, to Phoenix, of 5,307,702 shares
of company common stock (to be issued to Phoenix in a private placement and
subject to the standard rule 144 restrictions) and the transfer to Phoenix of
interests in oil properties, leases, and partnerships, with the agreement that
Phoenix became liable for any and all liabilities pertaining to such transferred
items.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits Index - Form 10-KSB
Item # and Name, Per Item 601 of Regulation S-B/ Location
3(i) Articles of Incorporation, including amendments/Incorporated by reference
to the Company Form S-18 Registration Statement, and any amended reports, on
file with the Commission.
3(ii) Bylaws, including amendments/Incorporated by reference to the Company Form
S-18 Registration Statement, and any amended reports, on file with the
Commission.
(11) Statement of Computation of Per Share Earning (can be determined from the
included financial statements)
(16) Letter Regarding Change in Certifying Accountant (incorporated by reference
to the Company Form 8-K Report dated February 1, 2000, on file with the
Commission).
(27) Financial Data Schedule (attached)
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b. Reports on Form 8-K.
No Reports were filed for the last quarter of the fiscal year covered by this
report
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.
MAMMOTH RESOURCES, INC.
By: /S/ LEONARD RICE
--------------------------------------
Leonard Rice, President
(principal executive officer)
Date: 02/07/2000
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.
By: /S/ LEONARD RICE
--------------------------------------
Leonard Rice, President (principal
executive officer) and as Secretary
(principal financial and accounting
officer)
Date: 02/07/2000
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MAMMOTH RESOURCES, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
JUNE 30, 1992 AND 1991
<PAGE>
C O N T E N T S
Page
----
INDEPENDENT AUDITOR'S REPORT F-1
FINANCIAL STATEMENTS
Balance Sheets F-2
Statements of Operations F-3
Statements of Cash Flows F-4
Statement of Changes in Stockholders' Equity (Deficit) F-5
Notes to Financial Statements F-6 to F9
F-0
<PAGE>
Dohan and Company 7700 North Kendall Drive #204
Certified Public Accountants Miami, Florida 33156-7578
A Professional Association Telephone: 305-274-1366
Facsimile: 305-274-1368
Independent Auditor's Report
Stockholders and Board of Directors
Mammoth Resources, Inc.
Calgary, Canada
We were engaged to audit the accompanying balance sheet of Mammoth Resources,
Inc., (a Development Stage Company) as of June 30, 1992, and the related
statements of operations and accumulated deficit during the development stage,
cash flows, and changes in stockholders' equity (deficiency in assets) for the
year then ended. 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 audit. The financial statements of Mammoth
Resources, Inc. as of June 30, 1991, and for the year then ended were audited by
other auditors whose report dated September 16, 1991, expressed an unqualified
opinion on those statements.
Except as discussed in the following paragraph, we conducted our audit 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
audit provides a reasonable basis for our opinion.
The Company did not engage us as auditors until February 1, 2000, and financial
records such as bank statements and ledgers supporting revenues, expenses and
cash flows for the year ended June 30, 1992, were no longer available. We have
not satisfied ourselves by means of other procedures concerning revenues,
expenses, and cash flows for that year. The amount of cash receipts and
disbursements for the year ended June 30, 1992, enters materially into the
determination of the results of statements of operations and accumulated deficit
during the development stage, cash flows, and deficiency in assets for the year
ended June 30, 1992. Since the Company could not locate the financial records
referred to above and we were not able to apply other auditing procedures to
satisfy ourselves as to cash receipts and disbursements, the scope of our work
was not sufficient to enable us to express, and we do not express, an opinion on
the accompanying statements of operations and accumulated deficit during the
development stage, cash flows, and deficiency in assets for the year ended June
30, 1992.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Mammoth Resources, Inc. (a
Development Stage Company) at June 30, 1992, 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 3 to the
financial statements, the Company has suffered recurring losses from operations
and other transactions, has a working capital deficiency and has a deficiency in
assets that raise substantial doubt about its ability to continue as a going
concern. Management's plans concerning 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.
/s/ Dohan and Company, PA
Certified Public Accountants
February 5, 2000
Miami, Florida
Member:
Florida Institute of Certified Public Accountants
American Institute of Certified Public Accountants Private Companies and
SEC Practice Sections
SC International-Offices in Principal Cities Worldwide
<PAGE>
The report that appears below is a copy of the report issued by the Company's
previous independent auditor, Warren Yee, C.P.A. We believe that his firm has
discontinued performing auditing and accounting services.
The Shareholders and Board of Directors of
Mammoth Resources, Inc.
1550 East Missouri, Suite 300
Phoenix, Arizona 85014
I have audited the balance sheet of Mammoth Resources, Inc. as of June 30, 1991
and the related statements of income, retained earnings, and cash flows for the
year then ended, These financial statements are the responsibility of the
company's management. My responsibility is to express an opinion on these
financial statements based on my audit. The financial statements of Mammoth
Resources, Inc. as of June 30, 1990 and 1989, were audited by other auditors
whose report dated January 16, 1991, expressed an unqualified opinion on those
statements.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I 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.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the 1991 financial statements referred to above present fairly,
in all material respects, the financial position of Mammoth Resources, Inc. as
of June 30, 1991, and the results of operations and its cash flows for the year
then ended in conformity with generally accepted accounting principles.
/s/ Warren Yee
Certified Public Accountant
Phoenix, Arizona
September 16, 1991
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MAMMOTH RESOURCES, INC.
(A Development Stage Company)
BALANCE SHEETS
JUNE 30, JUNE 30,
1992 1991
------------ ------------
ASSETS
CURRENT ASSETS
Cash in banks $ -- $ 152,309
Notes receivable -- 56,630
------------ ------------
TOTAL CURRENT ASSETS -- 208,939
PROPERTY AND EQUIPMENT
Oil leases -- 295,000
Development property -- 6,468,202
Furniture & fixtures (net of depreciation) -- 67,045
------------ ------------
NET PROPERTY & EQUIPMENT -- 6,830,247
OTHER ASSETS
Long-term notes receivable -- 7,438,000
Deposits -- 22,996
------------ ------------
TOTAL OTHER ASSETS -- 7,460,996
------------ ------------
TOTAL ASSETS $ -- $ 14,500,182
============ ============
LIABILITIES AND DEFICIENCY IN ASSETS
CURRENT LIABILITIES
Accounts payable $ -- $ 5,542
Other accrued payables 16,231 380,574
Current portion, Long-term debt -- 200,000
Notes payable -- 491,139
------------ ------------
TOTAL CURRENT LIABILITIES 16,231 1,077,255
------------ ------------
OTHER LIABILITIES
Long-term debt -- 600,000
Investment in partnerships -- 14,737
------------ ------------
TOTAL OTHER LIABILITIES -- 614,737
------------ ------------
DEFICIENCY IN ASSETS
Common stock; $.001 par value, 50,000,000
shares authorized; 16,278,357 and
14,896,655 shares issued and outstanding 16,278 14,895
Paid-in-capital 9,076,264 14,444,748
Deficit accumulated:
During the development stage (16,231) --
Other (9,073,507) (1,632,418)
Treasury Stock, 43,500 shares (19,035) (19,035)
------------ ------------
TOTAL DEFICIENCY IN ASSETS (16,231) 12,808,190
------------ ------------
TOTAL LIABILITIES AND DEFICIENCY IN ASSETS $ -- $ 14,500,182
============ ============
See accompanying notes.
F-2
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MAMMOTH RESOURCES, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Cumulative
For the Year Since Inception
Ended June 30, Inception of
---------------------------- Development Stage
1992 1991 October 1, 1991
------------ ------------ ----------------
<S> <C> <C> <C>
COSTS AND EXPENSES
Professional fees ($ 16,231) $ -- ($ 16,231)
------------ ------------ ----------------
LOSS FROM CONTINUING OPERATIONS (16,231) -- (16,231)
INCOME (LOSS) FROM DISCONTINUED OPERATIONS,
LESS INCOME TAXES OF $10,708
AND $165,734 (7,451,797) 662,937 --
INCOME TAX BENEFITS 10,708 165,734 --
------------ ------------ ----------------
NET (LOSS) INCOME ($ 7,457,320) $ 828,671 ($ 16,231)
============ ============ ================
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING (PRIMARY AND
FULLY DILUTED) 14,929,679 14,795,655
============ ============
NET INCOME (LOSS) PER SHARE
(PRIMARY AND FULLY DILUTED)
BEFORE DISCONTINUED OPERATIONS ($ 0.50) --
============ ============
NET (LOSS) INCOME ($ 0.50) $ .06
============ ============
</TABLE>
See accompanying notes.
F-3
<PAGE>
MAMMOTH RESOURCES, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Cumulative
Since Inception
of Development
Stage
For the year ended June 30, 1992 1991 October 1, 1991
----------- ----------- ---------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) ($7,457,320) $ 828,671 ($ 16,231)
Adjustments to reconcile net income to net
cash provided by operating activities:
Changes in assets and liabilities:
Decrease in notes receivable 56,630 17,530 --
Decrease (increase) in deposits 22,996 (20,496) --
Decrease in accounts payable (5,542) (17,393) --
Increase (decrease) in other
accrued payables (380,574) 364,860 --
Increase (decrease) in notes payable (491,139) 365,209 --
Decrease in long-term debt (800,000) -- --
Decrease in investment in partnerships (14,737) (34,125) --
Decrease (increase) in long-term notes
receivable 7,438,000 (2,125,000) --
Additional capital contributed 34,429 2,122,874 --
Additional capital returned (5,402,913) -- --
Increase in accrued professional fees 16,231 -- 16,231
----------- ----------- ---------------
NET CASH USED BY OPERATING ACTIVITIES (153,692) 1,502,130 --
----------- ----------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES
Common stock issuance 5,308 2,125 --
Common stock cancellation (3,925) -- --
----------- ----------- ---------------
NET CASH PROVIDED (USED) BY
FINANCING ACTIVITIES 1,383 2,125 --
----------- ----------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES -- -- --
----------- ----------- ---------------
(Acquisition) disposition of property
& equipment -- (1,374,976) --
----------- ----------- ---------------
NET CASH USED BY INVESTING ACTIVITIES -- (1,374,976) --
----------- ----------- ---------------
NET INCREASE (DECREASE) IN CASH (152,309) 129,279 --
CASH, beginning of period 152,309 23,030 --
----------- ----------- ---------------
CASH, end of period $ -- $ 152,309 $ --
=========== =========== ===============
SUPPLEMENTAL DISCLOSURES
Interest received $ -- $ -- $ --
Interest paid $ -- $ -- $ --
Income taxes paid $ -- $ -- $ --
</TABLE>
See accompanying notes
F-4
<PAGE>
MAMMOTH RESOURCES, INC.
(A Development Stage Company)
Statement of Changes in Stockholders' Equity (Deficiency in Assets)
For the Years Ended June 30, 1992 and 1991
<TABLE>
<CAPTION>
Deficit Accumulated During Total
Common stock Additional --------------------------- stockholders'
--------------------------- Paid- Development Treasury equity
Shares Amount in-Capital Stage Other Stock (Deficit)
------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at June 30, 1990 12,770,655 $ 12,770 $ 12,321,873 $ -- ($ 2,461,089) ($ 19,035) $ 9,854,519
Common stock issued in
exchange for notes
receivable 2,125,000 2,125 2,122,875 -- -- -- 2,125,000
Net income -- -- -- -- 828,671 -- 828,671
------------ ------------ ------------ ------------ ------------ ------------ ------------
Balance at June 30, 1991 14,895,655 14,895 14,444,748 -- (1,632,418) (19,035) 12,808,190
Common stock issued in
satisfaction of notes
payable 5,307,702 5,308 34,429 -- -- -- 39,737
Common stock cancelled
resulting from a reversal
of an acquisition (3,925,000) (3,925) (5,402,913) -- -- -- (5,406,838)
Net loss -- -- -- (16,231) (7,441,089) -- (7,457,320)
------------ ------------ ------------ ------------ ------------ ------------ ------------
Balance at June 30, 1992 16,278,357 $ 16,278 $ 9,076,264 ($ 16,231) ($ 9,073,507) ($ 19,035) ($ 16,231)
============ ============ ============ ============ ============ ============ ============
</TABLE>
See accompanying notes.
F-5
<PAGE>
MAMMOTH RESOURCES, INC.
(A Development Stage Company)
Notes to Financial Statements
June 30, 1992 and 1991
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS HISTORY OF DEVELOPMENT STAGE COMPANY Mammoth Resources, Inc. (the
"Company") was incorporated under the laws of the State of Utah on January 15,
1982, for the purpose of seeking, investigating and if warranted, acquiring an
interest in business opportunities presented to it by persons or firms that wish
to obtain the perceived advantages of becoming a publicly-held corporation. From
inception until January 1984, the Company was in the development stage as more
fully defined in Statement No. 7 of the Financial Accounting Standards Board
because the Company's principal operations had not yet commenced.
On January 29, 1985, the Company completed an arrangement with Phoenix Oil and
Gas, Inc., issuing 8,000,000 restricted common shares to Phoenix Oil and Gas in
exchange for oil and gas assets. A further 6,800,000 shares of restricted common
stock was issued to Phoenix Oil and Gas, Inc. in January 1986 in exchange for 3
producing oil and gas wells. The wells were valued at $340,000 at acquisition
date.
On June 27, 1990 and June 28, 1990 the Company issued 5,313,000 shares of common
stock to Phoenix Oil and Gas, Inc. in exchange for negotiable instruments (a
series of notes payable) and 3,452,500 shares of common stock to American
Investment Retirement Corporation and 472,500 shares to Curtis Patterson in
exchange for real estate. On July 7, 1990, the Company issued 2,125,000 shares
of common stock to Phoenix Oil and Gas, Inc. in exchange for negotiable
instruments. The actual assignment by Phoenix Oil and Gas of the negotiable
instruments (M.A.R. notes) took place on June 28, 1990 and July 7, 1990. Titles
to the real estate property were never actually transferred and the board
subsequently cancelled the shares issued to American Investment Retirement Inc.
and Curtis Patterson.
During 1990 and 1991, the management of the Company was turned over to Curtis
Patterson as CEO. In November 1991, Leonard Rice resumed effective management of
the Company. In March 1992, the Board of Directors of the Company requested and
accepted the resignations of Curtis Patterson, Paul Patterson, and Monte Waldron
and attempted to collect all financial and other records of the company. It was
discovered at that time that Mammoth Video had been sold with no financial
consideration to the Company and that the M.A.R. notes had become uncollectable.
As well, the oil and gas properties, due to neglect and the expiry of the leases
were mostly worthless. No bank records could be found, nor any accounting of the
cash flows or activities of the company. There was no sign of furniture or
office equipment of any kind.
On July 18, 1991, 708,750 shares were issued to Wright, Patterson Real Estate
and 6,378,750 issued to American Investment Retirement Inc. On September 3,
1991, 1,733,202 shares were issued to American Retirement Investment
Corporation. The Board of Directors never ratified these actions and the shares
have been cancelled.
F-6
<PAGE>
MAMMOTH RESOURCES, INC.
(A Development Stage Company)
Notes to Financial Statements
June 30, 1992 and 1991
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
In March 1992, the Company's original officers, directors resigned, new
officers, and directors were appointed. Leonard Rice was then Chairman,
President, Secretary, and the sole director.
CASH AND CASH EQUIVALENTS For purposes of the statement of cash flows, cash and
cash equivalents would consist of money market funds and demand deposits in
banks. The Company has no such items at June 30, 1992 or 1991.
PROPERTY AND EQUIPMENT Property and equipment is recorded at cost. Expenditures
for major betterments and additions are charged to the property accounts while
replacements, maintenance and repairs that do not improve or extend the lives of
the respective assets are charged to expense currently.
USE OF ESTIMATES The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates
NET INCOME (LOSS) PER COMMON SHARE Basic per share information is computed by
dividing income (loss) available to common stockholders by the weighted average
number of common shares outstanding. No warrants or options were outstanding
DEVELOPMENT STAGE COMPANY Since disposing of its operating activities after
October 1, 1991, The Company has been devoting its efforts to raising capital,
establishing sources of supply, and developing markets for its planned
operations. Since the Company has had no revenues, it is considered a
development stage company.
INCOME TAXES Income taxes are computed under the provisions of the Financial
Accounting Standards Board (FASB) Statement No. 109 (SFAS 109), Accounting for
Income Taxes. SFAS 109 is an asset and liability approach that requires the
recognition of deferred tax assets and liabilities for the expected future tax
consequences of the difference in events that have been recognized in the
Company's financial statements compared to the tax returns.
FAIR VALUE OF FINANCIAL INSTRUMENTS Financial instruments are carried at
amounts, which reasonably approximate their fair value due to the short-term
nature of these amounts or due to variable rates of interest, which are
consistent with market rates.
RECLASSIFICATIONS AND RESTATEMENTS Certain amounts in the prior year financial
statements have been reclassified for comparative purposes to conform to the
presentation of the current year financial statements.
F-7
<PAGE>
MAMMOTH RESOURCES, INC.
(A Development Stage Company)
Notes to Financial Statements
June 30, 1992 and 1991
2. INCOME TAXES
The Company has accumulated net operating losses, which can be used to offset
future earnings. Accordingly, no provision for income taxes is recorded in the
financial statements. A deferred tax asset of approximately $3,000,000 for the
future benefits of net operating losses is offset by a 100% valuation allowance,
or approximately $3,000,000, due to the uncertainty of the Company's ability to
utilize the losses. As of June 30, 1992, the Company has net operating loss
carryforwards available as follows:
Year
Year End Amount Expires
1992 $7,457,320 2007
1989 86,724 2004
1988 111,925 2003
1987 304,116 2002
1986 102,109 2001
1985 1,384,570 2000
1984 67,821 (A) 1999
----------
$9,514,585
==========
(A) This net operating loss subsequently expired without benefit to the company.
3. GOING CONCERN AND MANAGEMENT'S PLANS
The Company has minima1 capital resources presently available to meet
obligations, which normally can be expected to be incurred by similar companies,
and has an accumulated deficit of $9,089,738 at June 30, 1992. These factors
raise substantial doubt about the Company's ability to continue as a going
concern. In order to begin any significant operations after its period of
inactivity, the Company will have to pursue other sources of capital, such as
additional equity financing or debt financing. There is no assurance that the
Company will be able to obtain such financing. The financial statements, herein,
do not include any adjustments that might result from the outcome of this
uncertainty.
4. ACCRUED LIABILITIES
Auditing fees and filling charges have been accrued on an ongoing basis. There
are no other accounts payable outstanding.
F-8
<PAGE>
MAMMOTH RESOURCES, INC.
(A Development Stage Company)
Notes to Financial Statements
June 30, 1992 and 1991
5. COMMON STOCK
By resolution of the Board of Directors, the following shares are to be
cancelled:
Certificate # Name on Certificate # of shares Issue date
6520 American Investment 500,000 9/3/91
6521 Retirement Corporation 1,233,202 9/3/91
6362 American Investment 3,452,500 10/25/90
6501 Retirement Inc. 6,378,750 7/18/91
6363 Curtis Patterson 472,500 10/25/90
6502 Wright Patterson 708,750 07/18/91
Real Estate
By resolution of the Board of Directors, Phoenix Oil and Gas is to be issued
5,307,702 shares and the return of oil and gas assets with a net carrying value
of $280,263, in consideration for the cancellation of the note payable in the
amount of $320,000.
6. Notes Payable
The Company's notes payable have all been cancelled as follows:
a) The note payable in the amount of $13,000 was a shareholder's loan.
The shareholder has signed an agreement that he will make no claim
on this note and will ask for no consideration in return for that
agreement.
b) The note payable of $158,139 at a stated interest rate of 12% as
well as the note payable of $800,000 at a stated interest rate of
10%, both due to an investment group, was in conjunction with a real
estate holding owned by Curtis Patterson et.al. Mammoth Resources,
Inc. has no obligations regarding this note payable.
c) The note payable of $320,000 at no stated interest rate was owed to
Phoenix Oil and Gas, which is owned by the President of the Company,
and was secured by certain oil and gas assets. Phoenix Oil and Gas
agreed to the cancellation of the note in exchange for common stock
and the return of the oil and gas assets to Phoenix Oil and Gas.
7. Discontinued Operations
On October 1, 1991, the Company adopted a plan to discontinue its operations in
the oil and gas industry and the land development industry. As part of this
immediate plan the Company, as more fully described in Note 1, satisfied
liabilities to Phoenix Oil and Gas, Inc. by exchanging certain assets for those
obligations. Additionally, notes receivable in the amount of approximately
$7,494,630 were considered to be worthless and were written off.
The loss on the disposal of discontinued operations of the company for the year
ended June 30, 1992 was $7,451,797 and is reflected on the statements of
operations under Discontinued Operations.
8. Subsequent Events
In December 1999, Michael Rice was appointed director and Vice- President and
Holly Ruth Rice was appointed director.
Because of the lack of funds as further described in Note 2, herein, the Company
became inactive in approximately October 1991, and conducted no activities until
November 1999, when it began to perform limited administrative activities.
F-9
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> JUN-30-1992 JUN-30-1991
<PERIOD-START> JUL-01-1991 JUL-01-1990
<PERIOD-END> JUN-30-1992 JUN-30-1991
<CASH> 0 152,309
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 0 208,939
<PP&E> 0 6,830,247
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 0 0
<CURRENT-LIABILITIES> 16,231 1,077,255
<BONDS> 0 0
0 0
0 0
<COMMON> 16,278 14,895
<OTHER-SE> (32,509) 12,793,295
<TOTAL-LIABILITY-AND-EQUITY> 0 14,500,182
<SALES> 00 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 16,231 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 0 0
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (16,231) 0
<DISCONTINUED> (7,441,089) 828,671
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (7,457,320) 828,671
<EPS-BASIC> (0.50) (0.06)
<EPS-DILUTED> (0.50) (0.06)
</TABLE>
