SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended March 31, 1999.
BRUSH CREEK MINING AND DEVELOPMENT CO., INC.
---------------------------------------------------
(Exact Name of Company as specified in its charter)
NEVADA 000-12761 88-0180496
- ------------------------ --------------------- -------------
(State of Incorporation) (Commission file No.) (IRS Employer
ID Number)
970 E. MAIN STREET, SUITE 200, GRASS VALLEY, CA 95945
-----------------------------------------------------
(Address of Principal Offices)
Company's telephone number: (407) 829-4433
Indicate by check mark whether the registration (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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 [ ] No [X]
The number of shares outstanding of the registrant's Common Stock as of
March 31, 1999, is approximately 10,000,000.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM I - FINANCIAL STATEMENTS
BRUSH CREEK MINING & DEVELOPMENT CO., INC.
CONSOLIDATED BALANCE SHEETS
June 30, 1998 and March 31, 1999
<TABLE>
<CAPTION>
MARCH 31, 1999 JUNE 30, 1998
-------------- -------------
<S> <C> <C>
ASSETS
Current Assets
Cash $ (1,311) $ 417,415
Inventory 39,735
Advances receivables 500 500
------------ ------------
Total current assets (811) 457,650
Office furniture and equipment, net 42,074 42,074
Mineral properties and mining equipment, net 4,473,041 4,657,421
Deposits 272,095 272,095
------------ ------------
TOTAL ASSETS $ 4,786,399 $ 5,429,240
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 1,370,152 $ 1,479,583
Current portion of long term debt 362,000 362,000
Other 3,700 3,700
------------ ------------
Total current liabilities 1,735,852 1,845,283
------------ ------------
Shareholder's Equity
Common Stock, $.0001 par value; authorized
100,000,000 shares; issued and outstanding
5,554,179 and 4,162,948 shares as of March 31,
1999 and June 30, 1998, respectively 53,743,325 53,743,325
Accumulated deficit (50,692,778) (50,059,368)
------------ ------------
Total shareholders' equity 3,050,547 3,583,957
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 4,786,399 5,429,240
============ ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BRUSH CREEK MINING & DEVELOPMENT CO., INC.
CONSOLIDATED STATEMENTS OF INCOME AND OPERATIONS
FOR THE THREE MONTHS FOR THE THREE MONTHS
ENDED MARCH 31, ENDED MARCH 31,
1999 1998
-------------------- --------------------
<S> <C> <C>
Revenues
Sale of Joint Venture $ 0 $ 0
Other income 0 0
Interest income 2,212 2,626
------------ ------------
Total revenues 2,212 2,626
------------ ------------
Expenses
General and administrative expense 131 474,115
Impairment loss 0 0
General mining and exploration 0 593,232
Loss on lease abandonments 0 0
Depreciation and amortization 61,460 59,581
Loss (gain) on sales of mining equipment 0 0
Interest expense 0 4,827
Litigation settlement 535 0
------------ ------------
Total expenses 62,126 1,131,755
------------ ------------
Net loss before change in accounting
principal (59,914) (1,129,129)
------------ ------------
Extraordinary item - net loss from
debt extinguishment 0 0
============ ============
Net loss $ (59,914) $ (1,129,129)
============ ============
Loss per common share before
extraordinary item $ (0.01) $ (0.02)
Net loss per common share $ (0.01) $ (0.02)
Weighted average common shares
outstanding 7,554,213 48,625,043
============ ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PERIOD FROM
FOR THE NINE MONTHS FOR THE NINE MONTHS JULY 1, 1989
ENDED MARCH 31, ENDED MARCH 31, THROUGH
1999 1998 MARCH 31, 1999
------------------- ------------------- --------------
<S> <C> <C> <C>
Revenues
Sale of Joint Venture $ 0 $ 0 $ 4,232,000
Other income 5,237 0 166,382
Interest income 6,178 8,392 204,646
------------ ------------ ------------
Total revenues 11,415 8,392 4,603,028
------------ ------------ ------------
Expenses
General and administrative expense 181,077 1,553,668 17,892,209
Impairment loss 0 0 5,393,115
General mining and exploration 278,833 1,740,292 13,820,105
Loss on lease abandonments 0 0 392,317
Depreciation and amortization 184,380 191,331 1,871,073
Loss (gain) on sales of mining equipment 0 0 171,174
Interest expense 0 5,674 498,494
Litigation settlement 535 573,959 4,141,567
------------ ------------ ------------
Total expenses 644,825 4,064,924 44,180,054
------------ ------------ ------------
Net loss before change in accounting
principal (633,410) (4,056,532) (39,577,026)
Extraordinary item - net loss from
debt extinguishment 0 0 144,462
------------
Net loss $ (633,410) $ (4,056,532) $(39,432,564)
============ ============ ============
Loss per common share before
extraordinary item $ (0.10) $ (0.10)
============ ============
Net loss per common share $ (0.10) $ (0.10)
============ ============
Weighted average common shares outstanding 6,031,177 40,541,669
============ ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BRUSH CREEK MINING & DEVELOPMENT CO., INC.
STATEMENT OF CASH FLOWS
PERIOD FROM
FOR THE NINE MONTHS FOR THE NINE MONTHS JULY 1, 1989
ENDED MARCH 31, ENDED MARCH 31, THROUGH
1999 1998 MARCH 31, 1999
------------------- ------------------- --------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income(loss) (633,410) (4,056,532) (39,432,564)
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities:
Impairment of development costs 0 0 5,393,115
Gain on debt restructuring 0 0 (144,462)
Depreciation and amortization 184,380 191,331 1,871,073
Loss on lease abandonments 0 0 444,359
Loss on litigation settlement 0 573,959 4,111,032
Loss (gain) on sale of mining
equipment 0 0 49,164
Other 0 0 43,576
Shareholder payment of services 0 0 105,055
Stock and debt for services 0 423,573 879,652
Change in inventory 39,735 (39,115) 2,290
Change in note receivable 0 0 47,462
Change in prepaid expenses 0 0 501,736
Change in deposits and other current
assets 0 0 (116,461)
Change in deposits 0 0 (29,065)
Change in accounts payable and
accrued liabilities (109,431) (63,005) 3,922,609
----------- ----------- -----------
Total adjustment 114,684 1,086,743 17,081,135
----------- ----------- -----------
Net cash provided by (used in) operating
activities (518,726) (2,969,789) (22,351,429)
----------- ----------- -----------
Cash flows from investing activities:
Acquisition of mineral properties
equipment, and deferred developments 0 (64,217) (5,164,817)
Acquisition of office equipment 0 (18,548) (278,987)
Proceeds from sale of equipment 0 0 384,356
Proceeds from acquisition of Trans-
Russian 0 0 20,060
----------- ----------- -----------
Net cash provided by (used in) investing
activities 0 (82,765) (5,039,388)
----------- ----------- -----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PERIOD FROM
FOR THE NINE MONTHS FOR THE NINE MONTHS JULY 1, 1989
ENDED MARCH 31, ENDED MARCH 31, THROUGH
1999 1998 MARCH 31, 1999
------------------- ------------------- --------------
<S> <C> <C> <C>
Cash flows from financing activities:
Advances from (to) affiliates 0 1,350,000 2,009,127
Payment made to affiliates 0 0 (343,798)
Proceeds from issuance of common stock 100,000 3,202,600 26,436,515
Proceeds from warrant extensions 0 0 207,750
Proceeds from issuance of notes payable 0 0 870,043
Payments on long-term debt 0 (672,000) (2,093,979)
Proceeds from convertible debenture 0 0 300,000
------------ ------------ ------------
Net cash provided by financing activities 100,000 3,880,600 27,385,658
------------ ------------ ------------
Net increase (decrease) in cash (418,726) 828,046 (5,159)
Cash at beginning of period 417,415 111,059 3,848
------------ ------------ ------------
Cash at end of period $(1,311) $ 939,105 $(1,311)
============ ============ ============
Cash paid during the period for interest
(net of amounts capitalized) $ 0 $ 5,674 $ 0
============ ============ ============
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - CONSOLIDATED FINANCIAL STATEMENTS
The consolidated balance sheet as of March 31, 1999, and the consolidated
statements of operations and cash flows for the nine months ended March 31, 1999
and 1998, have been prepared by the Brush Creek Mining and Development Co., Inc.
(the "Company") without audit. In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to present fairly
the financial position, results of operations and cash flows at March 31, 1999,
and for all periods presented have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these consolidated
statements be read in conjunction with the financial statements and notes
thereto included in the Company's June 30, 1998 Form 10-KSB. The results of
operations for the periods ended March 31, 1999 and 1998 are not necessarily
indicative of the operating results for the full year.
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries, B. Creek Acquisition Corp., and Alpha Hardware.
NOTE 2 - OPERATIONS AND BASIS OF PRESENTATION
The Company was incorporated in 1982 and operated as a mining and mineral
development company until April 17, 1989, at which time its mining operations,
all of which had been conducted through the Brush Creek Joint Venture (BCJV)
(40% owned) were terminated. Shortly thereafter, the Company became actively
engaged in acquiring additional mineral properties, raising capital, and
preparing properties for resumed production. The Company did not have any
significant operations or activities from April 17, 1989 through June 30, 1989
and suspended all mining operations and reduced its activities to a care and
maintenance level. Accordingly, the Company is deemed to have re-entered the
development stage effective July 1, 1989.
In February 1992, the Company began limited production at the Ruby Mine under a
permit that limited mill capacity to 225 tons per day. Production was terminated
due to adverse weather conditions in December 1992. The Company resumed limited
production at the Ruby Mine in July 1993 and gradually increased production
until October 1996 when production was suspended. In early 1997, the Company
began preparing the lower Brush Creek Mine for limited production. In June 1997,
the Company received interim approval from the United States Forest Service to
transport thirty tons of ore per day from the lower Brush Creek Mine to the Ruby
mill site. The Company has not commenced economic production and is therefore
still considered to be in the development stage.
The Company's consolidated financial statements have been presented on the basis
that it is a going concern, which contemplates the realization of the mineral
properties and other assets and the satisfaction of liabilities in the normal
course of business. There is no assurance that the Company will be successful in
establishing probable or proven ore reserves, or determining
<PAGE>
if the mineral properties can be mined economically. These consolidated
financial statements do not include any adjustments that might result from the
outcome of these uncertainties.
Management of the Company periodically reviews the recoverability of the
capitalized mineral properties and mining equipment. Management takes into
consideration various information including, but not limited to, historical
production records from previous mine operations, results of exploration
activities conducted to date, estimated future metal prices, and reports and
opinions of internal and external geologists, mine engineers and consultants.
Accordingly, in management's opinion, based on such information, the capitalized
costs in mineral properties and mining equipment do not exceed their estimated
net realizable value.
During 1997, the Securities and Exchange Commission (SEC) staff reconsidered
existing accounting practices for mineral expenditures by United States junior
mining companies. They now interpret generally accepted accounting policy for
junior mining companies to permit capitalization of acquisition, exploration and
development costs only after persuasive engineering evidence is obtained to
support recoverability of these costs (ideally upon determination of proven
and/or probable reserves based upon dense drilling samples and feasibility
studies by a recognized independent engineer). Although the Company has
performed drilling samples, and an independent engineer has deemed the gold
properties contain profitable reserves in excess of property and equipment costs
incurred through June 30, 1997, management has chosen to follow the more
conservative method of accounting by expending the previously capitalized gold
mineral costs, for which there is no feasibility study, as a cumulative effect
of a change in accounting principle in the consolidated statement of operations.
NOTE 3 - STOCKHOLDERS' EQUITY
In July 1997, the Company issued 150,000 shares of its Common Stock for certain
consulting services. The shares were registered with the Securities and Exchange
Commission on Form S-8. The shares are valued at $0.375, the average of the bid
and asked price for the Company's Common Stock on July 8, 1997.
Also in July 1997, the Company sold 600,000 shares of its Common Stock pursuant
to a Private Placement at a price of $0.125 per share. The shares were sold
pursuant to Regulation D and Section 4(2). The Company received a net amount of
$75,000 from the sale.
Also in July 1997, the Company sold 1,933,332 shares of its Common Stock
pursuant to a Private Placement at a price of $0.15 per share. The shares were
sold pursuant to Regulation D and Section 4(2). The Company received a net
amount of $290,000 from the sale. The Company also approved a 10% commission for
a finder's fee in connection with the Private Placement.
In August and September 1997, the Company sold 3,050,000 shares of its Common
Stock pursuant to a Private Placement at a price of $0.10 per share. The shares
were sold pursuant to Regulation D and Section 4(2). The Company received a net
amount of $305,000 from the sale. The Company also approved a 10% commission for
a finder's fee in connection with the Private Placement.
<PAGE>
Also in August 1997, the Company issued 125,668 shares to pay for certain
consulting fees. The shares were registered with the Securities and Exchange
Commission on Form S-8. The shares are valued at $0.40625, the average of the
bid and asked price for the Company's Common Stock on August 25, 1997.
In September 1997, the Company sold 4,300,000 shares of its Common Stock
pursuant to a Private Placement at a price of $0.07 per share. The shares were
sold pursuant to Regulation D and Section 4(2). The Company received a net
amount of $301,000 from the sale.
Also in September 1997, the Company issued 100,000 shares to pay for certain
consulting fees. The shares were registered with the Securities and Exchange
Commission on Form S-8. The shares are valued at $0.313, the average of the bid
and asked price for the Company's Common Stock on September 26, 1997.
NOTE 4 - SUBSEQUENT EVENTS
Change in Management
On November 16, 1998, Brush Creek Mining and Development Inc., received the
resignation of its president and chief executive officer, James Chapin. In
November, 1998, Brush Creek accepted the proposal submitted by Mr. Larry
Stockett, President of U.S. Cement Company, and the Board appointed him as the
new President and C.E.O. Mr. Stockett accepted these positions without
compensation until the Company would reach its first quarterly after tax profit.
Upon resolution of Brush Creek's current legal and financial problems, Mr.
Stockett agreed to transfer his 51% ownership in U.S. Cement Company to Brush
Creek. In return, Mr. Stockett would receive restricted shares of stock of Brush
Creek at a price of $5 per share for the audited book value of U.S. Cement. In
addition, Mr. Stockett would receive one million shares of Brush Creek
restricted stock if the BCMDE shares achieve a $5 per share closing price for 10
consecutive days. In March, 1999, Mr. Stockett resigned as CEO and President of
the Company.
On March 1, 1999, the Company issued to Jefferson A. Bootes 3,730,861 shares of
common stock. Mr. Bootes was also appointed to the Company's Board of directors
and elected President of the Company.
On April 13, 1999, the Company effected a 1-for-12 reverse stock split,
resulting in a reduction in the outstanding shares of common stock to 833,334
shares.
On April 14, 1999, the Company merged with J.A.B. International Trading, Inc., a
Florida corporation, with the Company as the surviving corporation. In
connection with the merger, the Company changed its name to J.A.B.
International, Inc. The shareholders of J.A.B. International, Inc., received
3,580,000 shares of the Company's common stock as consideration for the merger.
Following the merger, Mr. Bootes owned approximately 71% of the outstanding
shares of common stock of the Company.
<PAGE>
NOTE 5 - YEAR 2000
The Company has reviewed its current computer software and hardware systems and
is currently working to resolve the potential problems associated with the Year
2000 and the processing of date sensitive information by such systems. Based on
preliminary information, the Company believes that it will be able to implement
successfully the systems and programming changes necessary to address the Year
2000 issues, and does not expect the cost of such changes to have a material
impact of the Company's financial position, results of operations or cash f lows
in future projects.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
INTRODUCTION
The following discussion should be read in conjunction with the Financial
Information and Notes thereto included in this report and is qualified in its
entirety by the foregoing.
This report contains certain forward-looking statements and information relating
to the Company that are based on the beliefs and assumptions made by the
Company's management as well as information currently available to the
management. When used in this document, the words "anticipate", "believe",
"estimate", and "expect" and similar expressions, are intended to identify
forward-looking statements. Such statements reflect the current views of the
Company with respect to future events and are subject to certain risks,
uncertainties and assumptions. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those described herein as anticipated,
believed, estimated or expected. The Company has no obligation to publicly
release the result of any revisions which may be made to any forward-looking
statements to reflect anticipated or unanticipated events or circumstances
occurring after the date of such statements.
RESULTS OF OPERATIONS
The Company had total revenues of $11,415 during the nine months ended March 31,
1999, compared to total revenues of $8,392 (from interest only) during the nine
months ended March 31, 1999. The Company had a $633,410 net loss for the nine
months ended March 31, 1999, compared to a net loss of $4,056,532 for the
comparable fiscal 1998 period. This change in net loss is primarily due to the
cessation of the Company's operations, leading to a reduction in general mining
and exploration costs, and a decrease in general and administrative expenses.
General and administrative expenses decreased $1,372,591 and general mining and
exploration costs decreased $1,461,459 from the same nine-month period in the
prior fiscal year.
The price of gold has a material effect on the Company's financial operations.
Following deregulation, the market price for gold has been volatile. Since the
end of 1987 the price of gold has declined from a high of approximately $500 per
troy ounce to approximately $280 per troy ounce at March 31, 1999. Instability
in the price of gold may affect the profitability of the Company's operations if
and when the Company realizes economic production.
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.
Reference is made to the Company's Form 10-KSB for fiscal year ended June 30,
1998 and the financial statements included therein and in particular to Part I,
Item 3 and Note 13 to the consolidated financial statements, the full contents
of which are incorporated by reference herein in accordance with Rule 12b-23 of
the General Rules and Regulations under the Securities Exchange Act of 1934.
There have been no material changes in legal proceedings during the quarter
ended March 31, 1999.
Item 2. DEFAULTS UPON SENIOR SECURITIES.
None.
Item 3. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.
None.
Item 4. OTHER INFORMATION.
None.
Item 5. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
There are no exhibits applicable to this Form 10-QSB.
(b) Reports on Form 8-K.
Listed below are reports on Form 8-K filed during the fiscal quarter ended
March 31, 1999.
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this Report to be signed on its behalf by the undersigned thereunto duly
authorized.
BRUSH CREEK MINING AND DEVELOPMENT CO., INC.
(Registrant)
By: /s/ JEFFERSON A. BOOTES
--------------------------------
Jefferson A. Bootes, President,
Principal Financial Officer and
Principal Accounting Officer
Dated: June 14, 1999
<PAGE>
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
- ------- -----------
27 FINANCIAL DATA SCHEDULE
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> (1,311)
<SECURITIES> 0
<RECEIVABLES> 500
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> (811)
<PP&E> 45,151,115
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,786,399
<CURRENT-LIABILITIES> 1,735,852
<BONDS> 0
0
0
<COMMON> 53,743,325
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 4,786,399
<SALES> 0
<TOTAL-REVENUES> 2,212
<CGS> 0
<TOTAL-COSTS> 62,126
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (59,914)
<EPS-BASIC> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
