U. S. Securities and Exchange Commission
Washington D. C. 20549
FORM 10-KSB
Annual Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1997
Commission File No. 33-28106
YAAK RIVER RESOURCES, INC.
--------------------------
(Name of small business issuer)
Colorado 84-1097796
-------- ----------
(State or other jurisdiction of (I.R.S. Employer Identifi-
incorporation or organization) cation No.)
830 S. Kline Way, Lakewood, Colorado 80226-7506
- ------------------------------------ ----------
(Address of principal executive office) (Zip Code)
Issuer's telephone number: (303) 985-3972
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
None
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 .
----- -----
State issuer's revenues for its most current fiscal year: $0
The aggregate market value of voting stock held by
non-affiliates based upon the closing sale price as quoted on the
OTC Bulletin Board on April 13, 1998, was $45,489.
At April 13, 1998, 56,666,000 shares of the registrant's
Series A Common Stock were outstanding.
Documents incorporated by reference: None
This Form 10-KSB consists of Twenty-Six pages.
Exhibit Index is Located at Page Twenty-Five.
<PAGE>
. TABLE OF CONTENTS
FORM 10-KSB ANNUAL REPORT
YAAK RIVER RESOURCES, INC.
PAGE
----
Facing Page
Index
PART I
Item 1. Description of Business..................... 3
Item 2. Description of Property..................... 6
Item 3. Legal Proceedings........................... 6
Item 4. Submission of Matters to a Vote of
Security Holders........................ 6
PART II
Item 5. Market for the Registrant's Common Equity
and Related Stockholder Matters......... 7
Item 6. Management's Discussion and Analysis of
Financial Condition and Results of
Operations.............................. 8
Item 7 Financial Statements........................ 10
Item 8. Changes in and Disagreements on Accounting
and Financial Disclosure................ 19
PART III
Item 9. Directors, Executive Officers, Promoters
and Control Persons, Compliance with
Section 16(a) of the Exchange Act....... 19
Item 10. Executive Compensation...................... 21
Item 11. Security Ownership of Certain Beneficial
Owners and Management................... 22
Item 12. Certain Relationships and Related
Transactions............................ 22
PART IV
Item 13. Exhibits and Reports of Form 8-K............ 23
SIGNATURES............................................. 24
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PART I
Item 1. Description of Business
The Company was organized under the laws of the State of
Colorado on June 10, 1988, under the name Andraplex Corporation,
for the primary purpose of creating a vehicle to obtain capital to
take advantage of business opportunities which may have the
potential for profit. From inception until December 12, 1991 the
primary activity of the Company was directed to organizational
efforts, obtaining initial financing, completion of its public
offering on November 27, 1989 and identification of a business
opportunity.
As of the date of this report, the Company is principally
engaged in the metals mining business. The Company owns certain
mining properties, held under patent, as well as lode and placer
mineral rights according to the Mineral Entry Law. During the
fiscal year ended December 31, 1997, the Company did not engage in
any material business due primarily to a lack of available funds
with which to develop its properties. The Company owns those
certain mining properties discussed hereinbelow, but has not
commenced development of these properties, except as described
herein. The Company's mining properties include the following:
a. Three patented mining claims and 22 lode and placer
claims, all located in the Yaak Mining District, Lincoln County,
Montana, adjoining the Company's properties discussed hereinbelow.
These properties were acquired from Rio Bravo Resources, Ltd. by
quit claim deed in November 1993 and although the title to these
properties was unclear, on August 30, 1995, all title problems to
these properties were resolved to the Company's satisfaction, as
the United States Bureau of Land Management issued clear,
undivided, uncontested title to these properties.
Included on each of the aforesaid properties is the Morning
Glory gold vein, which has a long and prosperous mining production
history dating back to the late 1800's, producing both gold and
silver. It was mined intermittently from 1893 to 1937, with
production out of a known short section producing 53,000 tons with
indicated recovered grades of approximately 0.28 OPT Au and 1.0 OPT
Ag. Noranda Mines, Ltd., Toronto Canada drilled the property
during the 1970's and reported drill indicated reserves of in
excess of 542,000 tons of 0.140 OPT Au. and 1.44 OPT Ag. within
2,000 feet of the Morning Glory Mine. The structure remained open
in all directions. Wm. Ernest Simmons, President and a director of
the Company, was employed as U.S. Manager of mine development for
Mining Corp., Inc., a wholly owned subsidiary of Noranda, during
the period of time when this drilling activity took place.
b. Twenty-eight additional lode claims located south of the
claims mentioned in (a) above, strategically selected to cover the
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surface area of the Morning Glory structure and all located in the
Yaak River Valley in northwestern Montana, approximately 15 miles
northwest of Troy, Montana.
c. A lease-option to purchase the mining and mineral rights
for 6 lode and millsite claims and 1 claim held by patent. The
properties together cover an area of approximately 1,000 acres.
The lease-option requires annual payments of $7,500 and are payable
to an unaffiliated party. The Company has not paid the advance
lease payment due and payable on October 1, 1997. All payments due
under (a) and (b) to keep the property in good standing with the
county and Bureau of Land Management have been paid. The option to
bring the lease payments to a current status within 1 year is open,
subject to acceptance by the applicable lessors.
Because of the significant financial difficulties which the
Company is presently experiencing, the Company dropped 71 claims
above the Morning Glory structure, as a cost cutting measure. The
Company has not begun mining on its Montana properties and is
currently seeking interested parties to join with the Company,
either as limited partners and/or joint venture partners, for the
purpose of mining its properties. There are no assurances that the
Company will locate and reach agreement with any other independent
party to provide the funding for commencement of mining operations.
Further, the Company does not have sufficient funds available to
commence mining operations on these properties for its own account,
nor is such funding expected to become available to the Company in
the future. Additionally, if such mining operations are commenced,
there can be no assurances that the Company will recover any gold
or silver under positive economic circumstances, or at all.
During the prior two fiscal years, the Company has incurred
approximately $20,000 in costs relating to research and development
activities. These costs have been advanced by members of
management, including $5,800 in 1997 and $12,100 in 1996.
As a result of the Company's considerable cash flow problems,
management has reviewed the business plan of the Company in order
to ascertain a direction for the Company during fiscal 1998. The
Company's financial condition is also negatively affected because
of a moratorium placed on the patenting of claims by the US federal
government. Among the matters presently being discussed by
management concerning the Company's future are (i) locating and
merging with another company who is seeking to merge with an entity
whose securities are presently trading; or (ii) changing the
principal business of the Company. Relevant to (i), a number of
potential merger candidates have been presented to management;
however, none of these candidates has been acceptable to the
Company.
Relevant to (ii), the Company is presently evaluating the
possibility of a long term commitment to an agricultural
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development project located in Mongolia. Specifically, the Company
is engaged in discussions with the "Bornuur" Company, a Mongolian
corporation, to acquire an interest in approximately 24,710 acres
of farm land located approximately 65 miles north of Ulaanbaarar,
Mongolia. This farm land has been in production for over 100
years. Current production includes cabbage, carrots, beets,
turnips, wheat, onions, garlic, hay, potatoes, tomatoes and
cucumbers, plus 4,000 head of livestock, including cows, horses,
sheep and goats. In July 1997 the Mongolian government adopted new
legislation privatizing farm land, which management believes
presents certain opportunities which the Company may be able to
take advantage. The Company is presently negotiating with the
Mongolian government for a minimum of a 60 year lease and
privatization of the project district and anticipates that such an
agreement, if any, will be established by the end of May 1998.
However, there can be no assurances that this will occur within the
time parameter cited herein, or at all. If successfully
negotiated, it is estimated that the project will require a cash
infusion of approximately $2.5 million to implement the operating
schedule and achieve profitable operations. As of the date of this
report, the Company has had negotiations with prospective lenders
in this regard, but no definitive commitment has been provided and
no assurances can be provided that such an agreement will be
reached in the future.
Other Business Activities
In addition, the Company is General Partner of the Yaak River
Resources, Timber Division, L.P., a Colorado limited partnership
(the "Partnership"), which intends to harvest timber located on
properties presently owned by the United States government and to
be patented (and subsequently owned) by the Company. The
Partnership intends to harvest timber and develop certain mineral
resources located on defined mining claims and patented claims
presently owned or controlled by the Company. During the fiscal
years ended December 31, 1996 and 1997, the Partnership only
engaged in administrative activities.
Competition
The Company is a small mining company which has not commenced
mining activities as of the dates of this report. The Company is
not competitive with other larger and better financed mining
companies.
Government Regulations
The Company's operation is subject to numerous federal and
state governmental regulations, including environmental laws, as
they relate to mining activities, compliance to which will require
considerable capital expenditures, the aggregate amount of which
have not been calculated at the date of this report. Management of
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the Company believes that the Company is in compliance with all
applicable governmental regulations as of the date of this report.
Employees
The Company's employees consist of Wm. Ernest Simmons, its
President, who performs his services to the Company without
compensation. See "Item 10, Executive Compensation" below. The
Company does not have any other employees at the date of this
report. The officers operate the Company under the direction of
the Board of Directors. The Company does not contemplate retaining
any employees until mining activities are commenced.
Item 2. Description of Property
The Company's principal place of business is located at 830 S.
Kline Way, Lakewood, Colorado 80226, which is the home of Mr.
Simmons, President and a director of the Company. This property is
provided to the Company on a rent free basis, except that the
Company is obligated to pay for clerical functions, including
copies, facsimile transmissions, telephone and other general and
administrative matters, estimated by management not to exceed $200
per month. These premises include one office of approximately 280
square feet. Management of the Company believes that this space
will be sufficient to meet the Company's needs during the next 12
months.
The Company manages a group of 54 contiguous mining claims on
properties located in the State of Montana. The Company's mining
properties are located in Lincoln County, approximately 25 miles
northwest of Troy, Montana, in Sections 8, 9, 16, 17, T28N, R33W,
MPM, northwest of the deserted town of Sylvanite on the east side
of Friday Hill, an offshoot of Keystone Mountain. Elevations of
the properties are from approximately 2,500 to 4,800 feet above sea
level. The properties are accessed by state and county roads and
are heavily forested with larch, white fir, douglas fir and
lodgepole pine. See "Item 1, Description of Business" for a more
detailed description of the Company's mining properties.
Item 3. Legal Proceedings.
There are no material pending legal proceedings to which the
Company (or any of its officers and directors in their capacities
as such) is a party or to which the property of the Company is
subject and no such material proceeding is known by management of
the Company to be contemplated as of the date of this report.
Item 4. Submission of Matters to a Vote of Security Holders.
In November 1997 the Company held an annual meeting of its
shareholders. At this meeting management presented the
opportunities with the Boornuur Company, more fully disclosed in
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<PAGE>
Item 1, above, as well as electing directors. There were no other
matters submitted to a vote of the security holders during the
fourth quarter of the fiscal year ended December 31, 1997.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
The Company's Units, (comprised of one share of Series A
Common Stock, one Class A Common Stock Purchase Warrant and one
Class B Common Stock Purchase Warrant), and the Company's Series A
Common Stock are traded on the over-the-counter market on the OTC
"Electronic Bulletin Board" operated by the National Association of
Securities Dealers, Inc. under the symbols YAAKU and YAAKA,
respectively. The Company's securities began trading during the
first quarter of the Company's fiscal year 1992. Prior, there was
no trading market for the Company's securities. Below are the
reported high and low bid prices for the Company's Units for each
quarter since March 1996. The bid prices shown reflect quotations
between dealers, without adjustment for markups, markdowns or
commissions, and may not represent actual transactions in the
Company's securities.
Units:
Bid Price
Date High Low
---- --------------
March 31, 1997 $.015 $.0005
June 30, 1997 $.015 $.0005
September 30, 1997 $.015 $.0005
December 31, 1997 $.015 $.0005
March 31, 1996 $.015 $.0005
June 30, 1996 $.015 $.0001
September 30, 1996 $.015 $.0005
December 31, 1996 $.0015 $.0005
The Company's market maker for its securities is Paragon
Capital. As of the date of this report, the Company had 42
shareholders, not including those persons holding their securities
in "street name."
The Company's securities are presently classified as
"designated securities", which classification places significant
restrictions upon broker-dealers desiring to make a market in such
securities. As a result, it has been difficult for management to
interest additional market makers in the Company's securities and
it is anticipated that these difficulties will continue until such
time as the Company is able to meet the criteria to qualify as a
non-designated security to allow additional market makers to trade
without complying with these stringent requirements.
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<PAGE>
The Class A Warrant included in the Company's Units is
exercisable at an exercise price of $.05 per share until July 6,
1999, unless otherwise extended by the Board of Directors. The
Class B Warrant is exercisable at an exercise price of $.10 per
share until July 6, 1999, unless otherwise extended by the Board of
Directors. The exercise price of the Warrants may be lowered but
not increased at the discretion of the Company's Board of
Directors.
Dividends
The Company has not declared or paid any dividends on its
Class A Common Stock to date. Management anticipates that future
earnings, if any, will be retained as working capital and used for
business purposes. Accordingly, it is unlikely that the Company
will declare or pay any dividends in the foreseeable future.
Item 6. Management's Discussion and Analysis of Financial
Condition
The following discussion should be read in conjunction with
the Company's audited financial statements and notes thereto
included herein. In connection with, and because it desires to
take advantage of, the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, the Company cautions
readers regarding certain forward looking statements in the
following discussion and elsewhere in this report and in any other
statement made by, or on the behalf of the Company, whether or not
in future filings with the Securities and Exchange Commission.
Forward looking statements are statements not based on historical
information and which relate to future operations, strategies,
financial results or other developments. Forward looking
statements are necessarily based upon estimates and assumptions
that are inherently subject to significant business, economic and
competitive uncertainties and contingencies, many of which are
beyond the Company's control and many of which, with respect to
future business decisions, are subject to change. These
uncertainties and contingencies can affect actual results and could
cause actual results to differ materially from those expressed in
any forward looking statements made by, or on behalf of, the
Company. The Company disclaims any obligation to update forward
looking statements.
Plan of Operation
In the fiscal year ended December 31, 1997, the Company did
not generate any revenues from its operations and the Company is
considered a development stage company. The plan of operation of
the Company during the fiscal year ending December 31, 1997
generally involves the acquisition of additional mineral claims and
the taking to patent of a number of the claims acquired and to be
acquired by the Company in the future. This was the same plan
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which the Company's Board of Directors had established for the
Company for the fiscal year ended December 31, 1996 and 1995, but
was unable to implement due to lack of available funds necessary to
undertake the same.
The Company incurred an operating loss during fiscal year 1997
of $(24,037). The operations of the Company during the fiscal year
1997 were financed primarily by loans from affiliates. See "Item
12 - Certain Relationships and Related Transactions." The Company
is expected to continue to operate at a loss until earnings, if
any, are received from the harvesting of the metal and non-metal
resources known to exist within the boundaries of the Company's
properties.
As a result of the Company's considerable cash flow problems,
management has reviewed the business plan of the Company in order
to ascertain a direction for the Company during fiscal 1998. The
Company's financial condition is also negatively affected because
of a moratorium placed on the patenting of claims by the US federal
government. Among the matters presently being discussed by
management concerning the Company's future are (i) locating and
merging with another company who is seeking to merge with an entity
whose securities are presently trading; or (ii) changing the
principal business of the Company. Relevant to (i), a number of
potential merger candidates have been presented to management;
however, none of these candidates has been acceptable to the
Company.
Relevant to (ii), the Company is presently evaluating the
possibility of a long term commitment to an agricultural
development project located in Mongolia. Specifically, the Company
is engaged in discussions with the "Bornuur" Company, a Mongolian
corporation, to acquire an interest in approximately 24,710 acres
of farm land located approximately 65 miles north of Ulaanbaarar,
Mongolia. This farm land has been in production for over 100
years. Current production includes cabbage, carrots, beets,
turnips, wheat, onions, garlic, hay, potatoes, tomatoes and
cucumbers, plus 4,000 head of livestock, including cows, horses,
sheep and goats. In July 1997 the Mongolian government adopted new
legislation privatizing farm land, which management believes
presents certain opportunities which the Company may be able to
take advantage. The Company is presently negotiating with the
Mongolian government for a minimum of a 60 year lease and
privatization of the project district and anticipates that such an
agreement, if any, will be established by the end of May 1998.
However, there can be no assurances that this will occur within the
time parameter cited herein, or at all. If successfully
negotiated, it is estimated that the project will require a cash
infusion of approximately $2.5 million to implement the operating
schedule and achieve profitable operations. As of the date of this
report, the Company has had negotiations with prospective lenders
in this regard, but no definitive commitment has been provided and
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no assurances can be provided that such an agreement will be
reached in the future.
The Company currently has no employees and relies upon the
unpaid services of its officers for the operation of the Company.
The contracted services of individuals will continue until it is
justifiable to employ a full time employee.
Year 2000 Disclosure
Many existing computer programs use only two digits to
identify a year in the date field. These programs were designed
and developed without considering the impact of the upcoming change
in the century. If not corrected, many computer applications could
fail or create erroneous results by or at the Year 2000. As a
result, many companies will be required to undertake major projects
to address the Year 2000 issue. Because the Company owns no
personal property such as computers, it is not anticipated that the
Company will incur any negative impact as a result of this
potential problem.
Item 7. Financial Statements.
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YAAK RIVER RESOURCES, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
December 31, 1997
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Michael B. Johnson & Co., P.C.
(A Professional Corporation)
Certified Public Accountants
9175 East Kenyon Ave., Suite 100
Denver, Colorado 80237
Michael B. Johnson C.P.A. Telephone: (303) 796-0099
Member: A.I.C.P.A. Fax: (303) 796-0137
Board of Directors
Yaak River Resources, Inc.
We have examined the accompanying balance sheet of Yaak River Resources, Inc.
(A Development Stage Company) as of December 31, 1997 and December 31, 1996, and
the related statements of operations, cash flows, and changes in stockholders'
equity for the period June 10, 1988 (inception), through December 31, 1997, and
the fiscal years ended December 31, 1997 and 1996. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Yaak River Resources, Inc. at
December 31, 1997 and December 31, 1996, and the results of its operations and
its cash flows for the period June 10, 1988 (inception), through December 31,
1997, and the fiscal years ended December 31, 1997 and 1996, in conformity with
generally accepted accounting principles.
s/Michael B. Johnson & Co., P.C.
Denver, Colorado
March 28, 1998
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<TABLE>
YAAK RIVER RESOURCES, INC.
(A Development Stage Company)
Balance Sheet
<CAPTION>
December 31 December 31
1997 1996
_________ ___________
<S> <C> <C>
ASSETS:
Current Assets:
Cash $ 1,022 $ 911
Accounts Receivable-O'Hara Resources 2,200 2,200
Investment-Mining Properties 305,410 305,410
--------- -----------
Total Current Assets 308,632 308,521
Other Assets:
Organizational Costs-
Net of Amortization 0 0
--------- -----------
Total Other Assets 0 0
--------- -----------
TOTAL ASSETS $ 308,632 $ 308,521
========= ===========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current Liabilities:
Accounts Payable 40,456 24,225
Advance from (YRML) Purchase, 1.5 Units 20,000 20,000
Shareholder Loans 20,017 12,100
Current Portion-Long Term Debt 7,500 7,500
--------- -----------
Total Current Liabilities 87,973 63,825
Long-Term Liabilities:
Long Term Debt 115,000 115,000
--------- -----------
Total Long-Term Liabilities 115,000 115,000
--------- -----------
TOTAL LIABILITIES $ 202,973 $ 178,825
Stockholders' Equity:
Series A Common Stock, par value
$.0001 per share; 250,000,000 Shares
Authorized; Issued and outstanding
56,666,000 Shares 5,666 5,666
Series B Common Stock, par value
$.0001 per Share; Authorized 250,000,000
Shares. Issued and outstanding,
None 0 0
Capital paid in excess of par value 304,663 304,663
Deficit accumulated during
the development stage (204,670) (180,633)
--------- -----------
TOTAL SHAREHOLDERS' EQUITY $ 105,659 $ 129,696
_________ ___________
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 308,632 $ 308,521
========= ===========
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
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<TABLE>
YAAK RIVER RESOURCES, INC.
(A Development Stage Company)
Statement of Operations
<CAPTION>
10-Jun-88
For the For the (Inception)
Year Ended Year Ended thru
December 31, December 31, December 31,
1997 1996 1997
____________ ____________ _________________
<S> <C> <C> <C>
Revenue $ 0 $ 0 $ 0
Expenses:
Amortization 0 0 1,500
Bank Charges 78 51 399
Legal and Accounting 5,563 6,360 46,556
Director Fees 0 0 800
Office 40 0 6,938
Stock Fees and Other Costs 0 950 9,982
Administration/Consulting 12,876 0 46,987
Mining Assessments and Fees 5,480 12,481 75,295
Bad Debt 0 0 4,000
Rent/Telephone 0 0 12,213
------------ ------------ -----------------
Total Expenses 24,037 19,842 204,670
Net (Loss) Accumulated During
the Development Stage $ (24,037) $ (19,842) $ (204,670)
============ ============ =================
Net Loss per Common Share is
less than $.002 $ * $ * $ *
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
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<TABLE>
YAAK RIVER RESOURCES, INC.
(A Development Stage Company)
Statement of Cash Flows
<CAPTION>
10-Jun-88
For the For the (Inception)
Year Ended Year Ended thru
December 31, December 31, December 31,
1997 1996 1997
____________ ____________ ______________
<S> <C> <C> <C>
Cash Flows From
Operating Activities:
Net (Loss) Accumulated
During Development Stage $ (24,037) $ (19,842) $ (204,670)
Amortization and Depreciation 0 0 1,500
Organization Costs 0 0 (1,500)
Decrease (Increase) in
Accounts Payable 16,231 6,360 40,456
Decrease (Increase) in
Accounts Receivable 0 0 (2,200)
Decrease (Increase) in
Loans to Shareholder 7,917 12,100 20,017
------------ ----------- -------------
Net Cash Flows Used
By Operating Activities 111 (1,382) (146,397)
Cash Flows From
Investing Activities:
Investment Purchase 0 0 (305,410)
------------ ----------- -------------
Net Cash Flows Used
By Investing Activities 0 0 (305,410)
Cash Flows From
Financing Activities:
Issuance of Common Stock 0 0 1,800
Loan from LP Investors 0 0 20,000
Proceeds From Long-Term Debt 0 0 167,500
Payment of Long-Term Debt 0 (7,500) (45,000)
Proceeds From Sale of Stock 0 7,500 308,529
------------ ----------- -------------
Net Cash Flows Provided
By Financing Activities 0 0 452,829
Net Increase (Decrease) in Cash 111 (1,382) 1,022
Cash at Beginning of Period 911 2,293 0
------------ ----------- -------------
Cash at End of Period $ 1,022 $ 911 $ 1,022
============ =========== =============
Interest paid $ 0 $ 0 $ 0
============ =========== =============
Taxes paid $ 0 $ 0 $ 0
============ =========== =============
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
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<TABLE>
YAAK RIVER RESOURCES, INC.
(A Development Stage)
Statement of Stockholders' Equity
<CAPTION>
Deficit
Accumulated
Capital Paid During the
Common in Excess of Development
# of Shares Stock Par Value Stage Totals
___________ ______ __________ ___________ ________
<S> <C> <C> <C> <C> <C>
ISSUANCE OF
COMMON STOCK:
January 6, 1989
(for services) 10,000,000 1,000 500 0 1,500
January 6, 1989
(for cash) 5,000,000 500 0 0 500
November 27, 1989
(Public offering) 2,666,000 266 12,353 0 12,619
Net Loss for the year
ended 12/31/1989 (3,765) (3,765)
Net Loss for the year
ended 12/31/1990 (10,129) (10,129)
Net Loss for the year
ended 12/31/1991 (300) (300)
Issuance of common
stock:
January 10, 1992
(for assets YRML) 30,000,000 3,000 134,910 0 137,910
Net Loss for the year
ended 12/31/1992 (47,589) (47,589)
Issuance of common
stock:
June 30, 1993
(for cash) 6,000,000 600 149,400 0 150,000
June 30, 1993
(for services) 3,000,000 300 0 0 300
Net Loss for the year
ended 12/31/1993 (54,951) (54,951)
Net Loss for the year
ended 12/31/1994 (26,293) (26,293)
Net Loss for the year
ended 12/31/1995 (17,764) (17,764)
Net Loss for the year
ended 12/31/1996 7,500 (19,842) (12,342)
Net los for the year
ended 12/31/1997 (24,037) (24,037)
----------- ------ ---------- ----------- --------
Balance -
December 31, 1997 56,666,000 $5,666 $ 304,663 $ (204,670) $105,659
=========== ====== ========== =========== ========
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
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YAAK RIVER RESOURCES, INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 1997
Note 1 - Organization and Summary of Significant Accounting Policies:
Organization:
On June 10, 1988, Yaak River Resources, Inc. (the Company) was incorporated
under the laws of Colorado under the name of Andraplex Corporation. The name
was changed at the annual shareholder's meeting on January 10, 1992. The
Company's primary purpose is to engage in selected acquisitions and development
of mineral and mining properties.
Initial Public Offering:
In the Company's initial public offering, which was closed on November 27,
1989, the Company sold 2,580,000 units (the Units). 86,000 additional shares
were issued to the underwriters. Each Unit consisted of one (1) share of Series
A Common Stock, one (1) A Warrant exercisable at $.05, one (1) B Warrant
exercisable at $.10.
Costs, consisting of $9,444 and 86,000 shares of Series A Common Stock,
incurred to complete the registration were offset against the gross proceeds.
The Company's fiscal year end is December 31.
Cash Equivalents:
For purposes of the statement of cash flows, the Corporation considers all
cash and other highly liquid investments with initial maturities of three months
or less to be cash equivalents.
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.
Note 2 - Purchase of Mineral Properties:
On January 10, 1992, at the Annual Meeting of Shareholders, the
shareholders voted unanimously to purchase certain mineral and mining properties
(the Properties) located in the State of Montana, including leases, drawings,
engineering studies and other tangible and intangible assets associated with the
Properties. The seller of the Properties was Yaak River Mines, Ltd. They
received 30,000,000 shares of Series A Common Stock. The issuance of the
30,000,000 shares of Series A Common Stock was exempt from registration under
the exemption provided in Section 4(2) of the Securities Act of 1933, as
amended.
The Company is the beneficiary of 16,000,000 of the above shares which are
being held in the Con Tolman Memorial Trust C. 8,000,000 additional shares of
the Company were placed in the trust as part of the original purchase of the
Company. These 24,000,000 shares are expected to be used to acquire additional
mining properties.
-17-
<PAGE>
YAAK RIVER RESOURCES, INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 1996
Note 3 - Yaak River Resources Timber Division, Limited Partnership:
On August 14, 1992, the Company formed a limited partnership, Yaak River
Resources Timber Division L.P. (the Partnership), a Colorado limited
partnership, with subscriptions for 40 Units at $5,000.00 per Unit for an
aggregate price of $200,000.00. Each Unit contains 1/40th interest in the
Partnership and 150,000 shares of Series A Common Stock of the Company. The
Company is the general Partner of the Partnership. As a part of the formation
of the Partnership, the Company agreed to reserve 6,000,000 shares of its Series
A Common Stock for the Partnership. Said 6,000,000 shares of Series A Common
Stock represents the shares offered in the Units issued by the Partnership. The
Partnership was formed for the purpose of developing certain available natural
resources on properties under the management of the Company.
On June 30, 1993, the Company sold Six Million (6,000,000) shares of its
$.0001 par value Series Common Stock for the issuance to the purchasers of the
Limited Partnership interests in the Yaak River Resources, Timber Division L.P.,
for $150,000.
Note 4 - Income Taxes:
The Company has made no provision for income taxes because there have been
no operations to date causing income for financial statement or tax purposes.
Note 5 - Net (Loss) Per Common Share
The net (loss) per common share of the Series A Common Stock is computed
based on the weighted average number of shares outstanding.
Note 6 - Long-Term Debt
Note Payable to the Roy Grush Estate in annual installments of $7,500, 0%,
due September 2014, secured by the Properties, (Note 2). The Company has agreed
to pay the minimum annual assessment costs of maintenance and improvements on
claims in lieu of interest.
Following is a summary of long-term debt at December 31, 1997:
1998 $ 7,500
1999 7,500
2000 7,500
2001 7,500
2002 7,500
________
37,500
After 2002 77,500
________
$115,000
-18-
<PAGE>
Item 8. Changes and Disagreements With Accountants on Accounting
and Financial Disclosures.
None.
PART III
Item 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the Exchange Act.
The Directors and Executive Officers of the Company are as
follows:
Name Age Title
- ---- --- -----
Wm. Ernest Simmons 59 President and Director
Thomas K. Tolman 43 Secretary and Director
Harry G. Titcombe, Jr. 67 Vice President, Treasurer
and Director
The above listed officers and directors will serve until the
next annual meeting of the shareholders or until their death,
resignation, retirement, removal, or disqualification, or until
their successors have been duly elected and qualified. Vacancies
in the existing Board of Directors are filled by majority vote of
the remaining Directors. Officers of the Company serve at the will
of the Board of Directors.
Resumes
Wm. Ernest Simmons currently is, and has been since December
12, 1991, the President and a Director of the Company. He is also
the President, a director and a controlling shareholder of the
Genesis Companies Group, Inc., a "blank check" public reporting
company. In addition to his service to the Company, Mr. Simmons is
also currently a consultant for the ER-SHI-JU Company, Ltd.,
Mongolia and the "Bornuur" Company, both of which have common
interests in a large agricultural project in north central
Mongolia. Mr. Simmons is also a consultant to Itec, a Canadian
firm, a Canadian firm employing advanced technology to purge mined
sites and waste disposal areas of their contaminants. From January
1995 through May 1998, Mr. Simmons was Director-General of the
"Bumbat" Company Ltd., Zaamar Sum, Mongolia, a Mongolian-Canadian
joint venture mining operation where his responsibilities included
acquisitions and mobilization of all equipment and supplies,
preparation and construction of mill sites and mining site
operations and other managerial matters associated with the
exploration and development of hard rock gold mines. From February
1991 through July 1994, Mr. Simmons was a life and health insurance
agent in Denver, Colorado with New York Life Insurance Company.
-19-
<PAGE>
From 1978 to 1990, Mr. Simmons served as Manager of U.S. Operations
for Mining Corporation, Inc., of Lakewood, Colorado. From February
1987 through December 1989 Mr. Simmons was president and a director
of Bluestone Capital, Inc., a publicly held "blind pool" Colorado
corporation. From March, 1986 through July, 1994, Mr. Simmons was
president and a director of Yaak River Mines, Ltd., a Colorado
corporation also defined as a public "shell" company. Mr. Simmons
received a Bachelor's of Science Degree in Business Administration
from Regis University, Denver, Colorado in 1987 and received the
Degree of Mining Technologist from Haileybury School of Mines in
1973. Mr. Simmons devotes approximately 20 hours per month to the
business of the Company. It is anticipated that the time devoted
to the business of the Company by Mr. Simmons will increase if and
when the Company commences mining operations.
Thomas K. Tolman was elected as a director and Secretary of
the Company in November, 1997. In addition to his activities with
the Company, Mr. Tolman is presently Manager of Public Safety and
Radio Systems Research for the University of Denver, Denver
Research Institute, positions he has held since January 1997.
Prior, from December 1987 through December 1996, Mr. Tolman was
Technical Support Manager for all communication centers for the
Adams County Communications Center, Colorado. Mr. Tolman received
a Bachelor of Science degree from the University of Phoenix in
February 1998. He devotes only such time as necessary to the
business of the Company
Harry G. Titcombe, Jr. has been a director of the Company
since September 1995, when he was appointed by the remaining Board
to replace Bruce McMillen, who had past away. In November, 1997,
Mr. Titcombe was appointed as Vice President and Treasurer of the
Company. Since 1984, Mr. Titcombe has engaged in the practice of
law as a sole practitioner in Denver, Colorado. Prior to that, Mr.
Titcombe was a partner and associate at the Denver law firm of
Burnett, Horan & Hilgers and was a Deputy District Attorney in the
offices of the Denver County District Attorney. Mr. Titcombe is
also an officer and director of Genesis Companies Group, Inc., a
public "shell" company which is a reporting company under the
Securities Exchange Act of 1934, as amended. Mr. Titcombe received
a degree of L.L.B. in 1960 from the University of Denver College of
Law. Mr. Titcombe devotes only such time as necessary to the
business of the Company.
The Company does not have any of its securities registered
pursuant to Section 12 of the Securities Exchange Act of 1934 and
as such, shareholders and management of the Company are not
required to file any reports pursuant to Section 16(a) of the
aforesaid Act.
-20-
<PAGE>
Item 10. Executive Compensation.
Remuneration
The following table reflects all forms of compensation for
services to the Company for the fiscal years ended December 31,
1996 and 19975 of the chief executive officer of the Company.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term Compensation
____________________________
Annual Compensation Awards Payouts
_____________________ ____________________ _______
Securities
Other Under- All
Name Annual Restricted lying Other
and Compen- Stock Options/ LTIP Compen-
Principal Salary Bonus sation Award(s) SARs Payouts sation
Position Year ($) ($) ($) ($) (#) ($) ($)
__________ ____ ______ _____ ______ ________ _______ _______ ______
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Wm. Ernest
Simmons, (1)(2)
President & 1996 $ 0 $ 0 $ 0 $ 0 0 $ 0 $ 0
Director 1976 $ 0 $ 0 $ 0 $ 0 0 $ 0 $ 0
_________________________
<F1>
(1) Mr. Simmons did not receive any salary during the fiscal
years ended December 31, 1996 and 1997 from the Company.
<F2>
(2) It is not anticipated that any executive officer of the
Company will receive compensation exceeding $100,000 during 1998.
</TABLE>
In addition to the cash compensation set forth above, the
Company reimburses each executive officer for expenses incurred on
behalf of the Company on an out-of-pocket basis. The Company
cannot determine, without undue expense, the exact amount of such
expense reimbursement. However, the Company believes that such
reimbursements did not exceed, in the aggregate, $1,000 during
fiscal year 1997.
No executive officer or director of the Company holds any
option to purchase any of the Company's securities.
The Company has not adopted any pension or stock options
plans.
-21-
<PAGE>
Item 11. Security Ownership of Certain Beneficial Owners and
Management.
The following tables set forth information, as of December 31,
1997, with respect to the beneficial ownership of the Company's
Series A Common Stock by (a) each person known by the Company to be
the beneficial owner of five percent or more of the Company's
Series A Common Stock, and (b) the stock ownership of each officer
and director individually and all directors and officers of the
Company as a group of the Company's Series A Common Stock. Unless
otherwise indicated, the shareholders listed possess sole voting
and investment power with respect to the shares shown.
Name and Amount and
Address of Nature of
Title Beneficial Beneficial Percent
of Class Owner Owner of Class
- ------------------------------------------------------------------
Series A Wm. Ernest Simmons 6,966,120 12.3%
Common Stock 830 S. Kline Way
Lakewood, CO 80226
Series A Tom Tolman(1) 4,031,040 7.1%
Common Stock 11231 W. 66th Place
Arvada, CO 80004
Series A Harry G. Titcombe, Jr. 180,000 0.3%
Common Stock 3003 E. 3rd Ave., Ste. 201
Denver, CO 80206
Series A All Officers 11,177,160 19.7%
Common Stock and Directors
as a Group
(3 persons)
_________________
(1) Mr. Tolman's shares are held under the Helen L. Tolman
Trust, to which Mr. Tolman is beneficiary.
Item 12. Certain Relationships and Related Transactions.
Wm. Ernest Simmons, an officer, director and principal
shareholder of the Company, has loaned the Company the principal
sum of $20,017, which does not accrue interest and is due upon
demand. These funds have been utilized by the Company to meet a
portion of its general and administrative obligations during the
past two years.
During the fiscal year ended December 31, 1995, the Company
received a loan in the aggregate of $20,000 from the Yaak River
Resources, Inc., Timber Division, L.P., a Colorado limited
partnership to which the Company is General Partner. This loan is
due upon demand and does not accrue interest and was issued
-22-
<PAGE>
pursuant to the terms of the applicable Limited Partnership
Agreement. These loans were approved by a majority vote of the
limited partners of the Partnership.
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits
EX-27 Financial Data Schedule
The following exhibits are incorporated by reference to the
Company's Registration Statement on Form S-18, SEC file no. 33-
28106, effective July 21, 1989:
3.1 Articles of Incorporation and Certificate
3.2 Bylaws
The following exhibit is incorporated by reference to the
Company's Form 10-KSB annual report for the fiscal year ended
December 31, 1992:
3.3 Amendment to Articles of Incorporation and
Certificate
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the
fiscal year ended December 31, 1997, or subsequent thereto through
the date of this report.
-23-
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, on
April 14, 1998.
YAAK RIVER RESOURCES, INC.
(Registrant)
By: /s/ Wm. Ernest Simmons
--------------------------------
Wm. Ernest Simmons, President
By: /s/ Harry G. Titcombe, Jr.
--------------------------------
Harry G. Titcombe, Jr., Treasurer
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 indicated on April 14, 1998.
/s/ William Ernest Simmons
- --------------------------------
William Ernest Simmons, Director
/s/ Thomas K. Tolman
- --------------------------------
Thomas K. Tolman, Director
/s/ Harry G. Titcombe, Jr.
- --------------------------------
Harry G. Titcombe, Jr., Director
-24-
<PAGE>
EXHIBIT INDEX
Page Exhibit
No. No. Description
- -----------------------------------------------------------------
- 3.1* Articles of Incorporation
- 3.2* Bylaws
- 3.3** Amendment to Articles of Incorporation
and Certificate
26 EX-27 Financial Data Schedule
* Incorporated by reference to the Company's Registration
Statement on Form S-18, SEC File No. 33-28106, effective July 21,
1989.
** Incorporated by reference to the Company's Form 10-KSB for the
fiscal year ended December 31, 1992.
-25-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITED
FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1997
<CASH> 1,022
<SECURITIES> 0
<RECEIVABLES> 2,200
<ALLOWANCES> 0
<INVENTORY> 305,410
<CURRENT-ASSETS> 308,632
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 308,632
<CURRENT-LIABILITIES> 87,973
<BONDS> 0
0
0
<COMMON> 5,666
<OTHER-SE> 99,993
<TOTAL-LIABILITY-AND-EQUITY> 308,632
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 24,037
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (24,037)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (24,037)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
