U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-QSB
Quarterly Report Under
the Securities Exchange Act of 1934
For Quarter Ended: September 30, 1998
Commission File Number: 33-28106
YAAK RIVER RESOURCES, INC.
(Exact name of small business issuer as specified in its
charter)
Colorado
(State or other jurisdiction of incorporation or organization)
84-1097796
(IRS Employer Identification No.)
830 S. Kline Way
Lakewood, Colorado
(Address of principal executive offices)
80226
(Zip Code)
(303) 985-3972
(Issuer's Telephone Number)
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 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 .
- ----- ----
The number of shares of the registrant's only class of common
stock issued and outstanding, as of September 30, 1998, was
56,666,000 shares.
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS.
The unaudited financial statements for the nine month period
ended September 30, 1998, are attached hereto.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with
the Financial Statements and notes thereto included herein.
The Company generated no revenues from its operations during
the nine month period ended September 30, 1998, and the Company
is considered a development stage company.
The Company was primarily engaged in the metals mining
business and owns certain mining properties, held under patent,
as well as lode and placer mineral rights and its plan of
operation generally involved 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.
However, the Company did not engage in any material operations
during the nine month period ended September 30, 1998, with
respect to its mining properties, primarily due to a lack of
available funds with which to develop its properties and an
extended moratorium by the Federal Government on disallowing the
taking of claims to patent.
The Company is also a General Partner of the Yaak River
Resources, Timber Division, L.P., a Colorado limited partnership
(the "Timber Partnership") which intends to harvest timber and
develop certain mineral resources on claims presently owned or
controlled by the Company and on properties presently owned by
the United States government to be patented by the Company.
During the nine months ended September 30, 1998, the Timber
Partnership only engaged in administrative activities.
Because of the lack of funding and the moratorium placed on
the patenting of claims by the United States government, during
the fiscal year ended December 31, 1997, and the nine month
period ended September 30, 1998, the Company has considered
expanding its business plan to that of either (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, while continuing to seek
interested parties to join with the Company either as limited
partners and/or joint venture partners for the purpose of mining
its present properties.
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<PAGE>
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 has negotiated a long term
commitment to an agricultural development project located in
Mongolia with the "Bornuur" Company, a Mongolian corporation, to
acquire a 43.8% interest in approximately 24,710 acres of farm
land located approximately 65 miles north of Ulaanbaatar,
Mongolia (the "Mongolian Project"). This farm land has been in
production for over 100 years. 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 consummation of an
agreement with the Bornuur Company is contingent upon the Company
securing funding to finance the Mongolian Project. 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.
The Company had approximately $35,000 in expenses during the
nine month period ended September 30, 1998, for consulting fees
and travel expenses primarily related to the Mongolian Project
and legal and accounting fees. The Company is expected to
operate at a loss for the remainder of the fiscal year until
either (i) earnings, if any, are received from the harvesting of
the its present metal and non-metal resources known to exist
within the boundaries of the Company's properties; (ii) the
Company successfully merges with a nonaffiliated entity; or (iii)
the Company is successful in funding the Mongolian Project.
The Company expects to continue without any cash revenues
for at least the present fiscal year and will satisfy its cash
requirements by loans and advances from the Timber Partnership
and/or officers and directors of the Company, provided that the
Company does not commence mining activities or successfully
finances the Mongolian Project, or the Company successfully
engages in another business opportunity, either by merger or
acquisition of assets. At present, the Company's financial
resources are not sufficient to commence mining activities or
fund the Mongolian Project. In order to satisfy the Company's
capital requirements for additional drilling and to develop a
mining feasibility program and/or fund the Mongolian Project, it
will be necessary for the Company to obtain additional financing
in the minimum estimated amount of $3.25 million. Management of
the Company is continuing to seek possible interested partners to
join with the Company in developing its mining claims or
soliciting joint venture partners to expand its mining
3
<PAGE>
activities, based upon the valuation of the Company's claims and
properties as reported in an independent engineering valuation
report and is seeking prospective lenders to fund the Mongolian
Project. As of the date of this report, management is unaware of
any third parties who are interested in joining with the Company
in expanding its mining activities and is presently negotiating
with prospective lenders to finance the Mongolian Project.
However, in the event the Company is unable to either solicit
joint venture partners or otherwise obtain the capital deemed
necessary in order to commence mining operations and/or finance
the Mongolian Project, management will seek out other viable
business opportunities by way of merger or acquisition in order
to provide the Company's shareholders with liquidity.
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.
Forward Looking Statements
This report contains certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") concerning the Company's operations,
economic performance and financial conditions, including, in
particular, the likelihood of the Company's ability to acquire
another existing business or assets. These statements are based
upon a number of assumptions and estimates which are inherently
subject to significant uncertainties and contingencies, many of
which are beyond the control of the Company and reflect future
business decisions which are subject to change. Some of these
assumptions inevitably will not materialize and unanticipated
events will occur which will affect the Company's results.
Consequently, actual results will vary from the statements
contained herein and such variance may be material. Prospective
investors should not place undue reliance on this information.
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 has nominal assets, including 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.
However, it is possible that this issue may have an impact on the
Company after the Company successfully consummates a merger or
4
<PAGE>
acquisition. Management intends to address this potential
problem with any prospective merger or acquisition candidate.
There can be no assurances that new management of the Company
will be able to avoid a problem in this regard after a merger or
acquisition is so consummated.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS - None
ITEM 2. CHANGES IN SECURITIES - NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES - NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS -
NONE.
ITEM 5. OTHER INFORMATION - NONE.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K -
(a) Exhibits
EX-27 Financial Data Schedule
(b) Reports on Form 8-K
None
5
<PAGE>
<TABLE>
YAAK RIVER RESOURCES, INC.
(A Development Stage Company)
Unaudited
Balance Sheet
<CAPTION>
Unaudited Audited
September 30, December 31,
1998 1997
_________ ___________
<S> <C> <C>
ASSETS
Current Assets
Cash $ 0 $ 1,022
Accounts Receivable-O'Hara Resources 2,200 2,200
Investment-Mining Properties 305,410 305,410
_________ ___________
Total Current Assets 307,610 308,632
Other Assets
Organizational Costs-
Net of Amortization 0 0
_________ ___________
Total Other Assets 0 0
_________ ___________
TOTAL ASSETS $ 307,610 $ 308,632
========= ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Current Liabilities
Accounts Payable 45,043 40,456
Advance from (YRML) Purchase,
1.5 Units 20,000 20,000
Shareholder Loans 50,017 20,017
Current Portion-Long Term Debt 7,500 7,500
_________ ___________
Total Current Liabilities 122,560 87,973
Long-Term Liabilities
Long Term Debt 115,000 115,000
_________ ___________
Total Long-Term Liabilities 115,000 115,000
_________ ___________
Total Liabilities $ 237,560 $ 202,973
Shareholder's 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
6
<PAGE>
<CAPTION>
Unaudited Audited
September 30, December 31,
1998 1997
_________ ___________
<S> <C> <C>
Series B Common Stock, Par Value
$.0001 Per Share; 250,000,000 Shares
Authorized; Issued and Outstanding -
None 0 0
Preferred Stock, Par Value $.0001 Per
Share; 50,000,000 Shares Authorized;
Issued and Outstanding - None 0 0
Capital Paid in Excess of Par Value 304,663 304,663
Deficit Accumulated During
the Development Stage (240,279) (204,670)
_________ ___________
Total Shareholders' Equity $ 70,050 $ 105,659
_________ ___________
TOTAL LIABILITIES
AND SHAREHOLDERS' EQUITY $ 307,610 $ 308,632
========= ===========
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
7
<PAGE>
<TABLE>
YAAK RIVER RESOURCES, INC.
(A Development Stage Company)
Unaudited
Statement of Operations
<CAPTION>
For the For the September 10, 1988
Nine Months Nine Months (Inception)
Ended Year Ended Thru
September 30, September 30, September 30,
1998 1997 1998
____________ ____________ _________________
<S> <C> <C> <C>
Income $ 0 $ 0 $ 0
Expenses
Amortization 0 0 1,500
Bank Charges 0 0 399
Legal and Accounting 5,294 0 51,850
Director Fees 0 0 800
Office 30,078 0 37,017
Stock Fees and Other Costs 0 0 9,982
Administration/Consulting 0 0 46,987
Finance Charges 211 0 211
Licenses and Permits 25 25
Mining Assessments and Fees 0 0 75,295
Bad Debt 0 0 4,000
Rent/Telephone 0 0 12,213
____________ ____________ _________________
Total Expenses 35,608 0 240,279
Net (Loss) Accumulated During
the Development Stage $ (35,608) 0 (240,279)
============ ============ =================
Weighted Average Number of
Shares Outstanding 56,666,000 56,666,000 56,666,000
Net Loss Per Share $ (*) $ (*) $ (*)
*Less than $0.004 Per Share.
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
8
<PAGE>
<TABLE>
YAAK RIVER RESOURCES, INC.
(A Development Stage Company)
Unaudited
Cash Flow Statement
<CAPTION>
For the For the September 10, 1988
Nine Months Nine Months (Inception)
Ended Ended Thru
September 30, September 30, September 30,
1998 1997 1998
____________ ____________ ______________
<S> <C> <C> <C>
Cash Flows From
Operating Activities:
Net (Loss) Accumulated
During Development Stage $ (35,608) $ 0 $ (240,279)
Amortization and Depreciation 0 0 1,500
Organization Costs 0 0 (1,500)
(Decrease) Increase in
Accounts Payable 34,586 0 75,043
Decrease (Increase) in
Accounts Receivable 0 0 (2,200)
Decrease (Increase) in
Loans to Shareholder 0 0 20,017
____________ ___________ _____________
Net Cash Flows Used
By Operating Activities (1,022) 0 (147,419)
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
Loans from LP Investors 0 0 20,000
Proceeds From Long-Term Debt 0 0 167,500
Payment of Long-Term Debt 0 0 (45,000)
Proceeds From Sale of Stock 0 0 308,529
____________ ___________ ______________
Net Cash Flows Provided
By Financing Activities 0 0 452,829
____________ ___________ ______________
Net Increase (Decrease) in Cash (1,022) 0 0
____________ ___________ _____________
Cash at Beginning of Period 1,022 911 0
____________ ___________ _____________
Cash at End of Period $ 0 $ 911 $ 0
============ =========== =============
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
9
<PAGE>
<TABLE>
YAAK RIVER RESOURCES, INC.
(A Development Stage)
Unaudited
Statement of Shareholders' Equity
<CAPTION>
Deficit
Accumulated
Number of Additional During the
Shares Common Paid In Development
Common Stock Stock Capital Stage Total
____________ ______ __________ ___________ ________
<S> <C> <C> <C> <C> <C>
Balance at
September 10, 1988 0 $ 0 $ 0 $ 0 $ 0
Stock issued for services
January 6, 1989 10,000,000 1,000 500 0 1,500
Stock issued for cash
January 6, 1989 5,000,000 500 0 0 500
Public offering
November 27, 1989 2,666,000 266 12,353 0 12,619
Net Loss for year ended
December 31, 1989 (3,765) (3,765)
Net Loss for year ended
December 31, 1990 (10,129) (10,129)
Net Loss for year ended
December 31, 1991 (300) (300)
Stock issued for assets
(YRML) January 10,
1992 30,000,000 3,000 134,910 0 137,910
Net Loss for year ended
December 31, 1992 (47,589) (47,589)
Stock issued for cash
September 30, 1993 6,000,000 600 149,400 0 150,000
Stock issued for services
September 30, 1993 3,000,000 300 0 0 300
Net Loss for year ended
December 31, 1993 (54,951) (54,951)
Net Loss for year ended
December 31, 1994 (26,293) (26,293)
Net Loss for year ended
December 31, 1995 (17,764) (17,764)
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<PAGE>
<CAPTION>
Deficit
Accumulated
Number of Additional During the
Shares Common Paid In Development
Common Stock Stock Capital Stage Total
____________ ______ __________ ___________ ________
<S> <C> <C> <C> <C> <C>
Net Loss for year ended
December 31, 1996 7,500 (19,842) (12,342)
Net Loss for year ended
December 31, 1997 (24,037) (24,037)
Net Loss for period ended
September 30, 1998 (35,609) (35,609)
____________ ______ __________ ___________ ________
Balance at
September 30, 1998 56,666,000 $5,666 $ 304,663 $ (240,279) $ 70,050
============ ====== ========== =========== ========
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
11
<PAGE>
YAAK RIVER RESOURCES, INC.
(A Development Stage Company)
Notes to Financial Statements
September 30, 1998
(Unaudited)
Note 1 - Organization and Summary of Significant Accounting Policies:
-----------------------------------------------------------
Organization:
- ------------
On September 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.
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.
12
<PAGE>
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 September 30, 1993, the Company sold six million (6,000,000) shares of
its $.0001 par value Series A 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 September 30, 1998:
1998 $ 7,500
1999 7,500
2000 7,500
2001 7,500
2002 7,500
________
37,500
Remaining 77,500
________
$115,000
13
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities
and Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto
duly authorized.
YAAK RIVER RESOURCES, INC.
(Registrant)
Dated: November 19, 1998
By: s/Wm. Ernest Simmons
--------------------------------
Wm. Ernest Simmons
President
14
<PAGE>
YAAK RIVER RESOURCES, INC.
Exhibit Index to Quarterly Report on Form 10-QSB
For the Quarter Ended September 30, 1998
EXHIBITS Page No.
EX-27 Financial Data Schedule . . . . . . . . . . . . 16
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED FINANCIAL STATEMENTS FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30,
1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 2,200
<ALLOWANCES> 0
<INVENTORY> 305,410
<CURRENT-ASSETS> 307,610
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 307,610
<CURRENT-LIABILITIES> 122,560
<BONDS> 0
0
0
<COMMON> 5,666
<OTHER-SE> 64,384
<TOTAL-LIABILITY-AND-EQUITY> 307,610
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 35,608
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (35,608)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (35,608)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
