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: March 31, 1999
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 March 31, 1999, was 56,666,000 shares.
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS.
The unaudited financial statements for the three month period ended March
31, 1999, 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 three
month period ended March 31, 1999, and the Company is considered a development
stage company.
The Company was primarily engaged in the metals mining business and owned
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 fiscal year ended December
31, 1998, and elected to cease maintaining its mining properties and
reconsidered the business plan of the Company.
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 three
months ended March 31, 1999, the Timber Partnership only engaged in
administrative activities.
The Company has considered altering 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.
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,
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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 is expected to operate at a loss for the remainder of the
fiscal year until either (i) the Company successfully merges with a
nonaffiliated entity; or (ii) 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 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 fund the Mongolian Project. In order to satisfy the Company's
capital requirements to fund the Mongolian Project, it will be necessary for the
Company to obtain additional financing in the minimum estimated amount of $2.5
million. Management of the Company is continuing to seek prospective lenders to
fund the Mongolian Project. As of the date of this report, management is
negotiating with prospective lenders to finance the Mongolian Project. However,
in the event the Company is unable to 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
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<PAGE>
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 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
4
<PAGE>
(b) Reports on Form 8-K
None
5
<PAGE>
<TABLE>
YAAK RIVER RESOURCES, INC.
(A Development Stage Company)
Unaudited
Balance Sheet
<CAPTION>
Unaudited Audited
March 31, December 31,
1999 1998
--------- -----------
<S> <C> <C>
ASSETS
Current Assets
Cash $ 185 $ 215
--------- -----------
Total Current Assets 185 215
Other Assets
Investment-Mining Properties 182,910 182,910
--------- -----------
Total Other Assets 182,910 182,910
--------- -----------
TOTAL ASSETS $ 183,095 $ 183,125
========= ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Current Liabilities
Accounts Payable 110,116 106,772
Advance from (YRML) Purchase,
1.5 Units 20,000 20,000
Shareholder Loans - Note Payable 29,406 29,406
Current Portion-Long Term Debt 0 0
--------- -----------
Total Current Liabilities 159,522 156,178
Long-Term Liabilities
Long Term Debt 0 0
--------- -----------
Total Long-Term Liabilities 0 0
--------- -----------
Total Liabilities $ 159,522 $ 156,178
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
Series B Common Stock, Par Value
$.0001 Per Share; 250,000,000 Shares
Authorized; Issued and Outstanding -
None 0 0
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<CAPTION>
Unaudited Audited
March 31, December 31,
1999 1998
--------- -----------
<S> <C> <C>
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 (286,756) (283,382)
--------- -----------
Total Shareholders' Equity $ 23,573 $ 26,947
--------- -----------
TOTAL LIABILITIES
AND SHAREHOLDERS' EQUITY $ 183,095 $ 183,125
========= ===========
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)
Unaudited
Statement of Operations
<CAPTION>
For the For the June 10, 1988
Three Months Three Months (Inception)
Ended Ended Thru
March 31, March 31, March 31,
1999 1998 1999
------------ ------------ -----------------
<S> <C> <C> <C>
Income $ 0 $ 0 $ 0
Expenses
Amortization 0 0 1,500
Bank Charges 30 0 509
Legal and Accounting 495 1,699 53,837
Director Fees 0 0 800
Office Expense 19 0 7,480
Stock Fees and Other Costs 0 0 10,007
Administration/Consulting 2,797 0 118,648
Mining Assessments and Fees 0 0 75,479
Bad Debt 0 0 6,250
Rent/Telephone 33 0 12,246
------------ ------------ -----------------
Total Expenses 3,374 1,699 286,756
Net (Loss) Accumulated During
the Development Stage $ (3,374) (1,699) (286,756)
============ ============ =================
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.
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)
Unaudited
Cash Flow Statement
<CAPTION>
For the For the June 10, 1988
Three Months Three Months (Inception)
Ended Ended Thru
March 31, March 31, March 31,
1999 1998 1999
------------ ------------ --------------
<S> <C> <C> <C>
Cash Flows From
Operating Activities:
Net (Loss) Accumulated
During Development Stage $ (3,374) $ (1,699) $ (286,756)
Amortization and Depreciation 0 0 1,500
Organization Costs 0 0 (1,500)
(Decrease) Increase in
Accounts Payable 3,344 1,699 110,116
Decrease (Increase) in
Accounts Receivable 0 0 0
Decrease (Increase) in
Loans to Shareholder 0 0 29,406
------------ ----------- -------------
Net Cash Flows Used
By Operating Activities (30) 0 (147,234)
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:
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 0 309,029
------------ ----------- --------------
Net Cash Flows Provided
By Financing Activities 0 0 451,529
------------ ----------- --------------
Net Increase (Decrease) in Cash (30) 0 185
------------ ----------- -------------
Cash at Beginning of Period 215 1,022 0
------------ ----------- -------------
Cash at End of Period $ 185 $ 1,022 $ 185
============ =========== =============
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
March 31, 1998
(Unaudited)
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.
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.
Some of these mineral and mining properties were returned to the Roy Grush
Estate in lieu of the note outstanding.
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<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. 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.
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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: August 4, 1999
By: s/Wm. Ernest Simmons
-----------------------------------
Wm. Ernest Simmons
President
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YAAK RIVER RESOURCES, INC.
EXHIBIT INDEX TO QUARTERLY REPORT ON FORM 10-QSB
FOR THE QUARTER ENDED MARCH 31, 1999
EXHIBITS Page No.
EX-27 Financial Data Schedule..............................................14
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED FINANCIAL STATEMENTS FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1999,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 185
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 185
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 183,095
<CURRENT-LIABILITIES> 159,522
<BONDS> 0
0
0
<COMMON> 5,666
<OTHER-SE> 17,907
<TOTAL-LIABILITY-AND-EQUITY> 183,095
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,374
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,374)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,374)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,374)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
