U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: DECEMBER 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 33-28106
YAAK RIVER RESOURCES, INC.
----------------------------------------------
(Name of small business issuer in its charter)
COLORADO 84-1097796
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2501 EAST THIRD STREET, CASPER, WYOMING 82609
-----------------------------------------------------------
(Address of principal executive offices, including zip code)
(307) 235-0012
---------------------------
(Issuer's telephone number)
Securities registered under Section 12(b) of the Exchange Act: NONE
Securities registered under Section 12(g) of the Exchange 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
Check if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will
be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-KSB or any amendment to this Form 10-KSB.
The issuer's revenues for its most recent fiscal year were $ 0 .
The aggregate market value of the voting stock held by
non-affiliates, computed by reference to the average bid and asked
prices of such stock as of April 11, 2000, was approximately $705,000.
As of December 31, 1999, 56,666,000 shares of common stock, par
value $0.0001 per share, were outstanding.
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DOCUMENTS INCORPORATED BY REFERENCE
Registration Statement 33-28106, as amended, is incorporated into
Parts I and IV of this Report.
Annual Report of Form 10-KSB for the fiscal year ended December 31,
1992, is incorporated into Part IV of this Report
Transitional Small Business Disclosure Format: Yes___ NO
X
This Form 10-KSB consists of 23, including F-1 through F-8, plus three
additional pages as exhibits. Exhibits are indexed at page 13.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
GENERAL
Yaak River Resources, Inc. (the "Registrant" or the
"Company"), was incorporated under the laws of the State of Colorado
under the name Andraplex Corporation on June 10, 1988, for the
primary purpose of seeking out acquisitions of properties,
businesses, or merger candidates, without limitation as to the
nature of the business operations or geographic area of the
acquisition candidate. From inception through the date of
completion of its initial public offering of securities, the
Company's activities were directed toward the acquisition of
operating capital.
The Company completed its initial public offering in November
of 1989. After completion of the offering, the Company began the
process of identification and evaluation of prospective acquisition
candidates and other business opportunities.
HISTORICAL BUSINESS PLAN AND BUSINESS OPERATIONS
From 1993 through 1998, the Company was a development-stage
enterprise that sought to engage in the mining of gold and other
precious and base metals. Toward that objective, the Company
acquired a number of mining properties located in or near the Yaak
Mining District in Lincoln County, Montana.
Together with its other activities, the Company sought to
obtain financing for development and operating purposes. Those
efforts, however, failed to raise adequate working capital from
outside sources. An insufficiency of capital, combined with
regulatory impediments (see "Management's Re-evaluation of the
Company's Historical Plan," below), prevented commencement of
significant mining operations.
Management investigated other business properties and
prospects, both domestic and international. Those investigations
did not succeed in identifying a business opportunity that, on
balance, appeared to management to be feasible for the Company to
pursue.
MANAGEMENT'S RE-EVALUATION OF THE COMPANY'S HISTORICAL PLAN
Two powerful forces combined to frustrate achievement of the
Company's historical objectives.
First, the world-wide markets for the metals that were the
targets of the Company's historical plan have been weak for a number
of years. Depressed prices in those markets are thought by
reputable economists to be likely to prevail for an indefinite
period of time.
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Second, both historical and rapidly evolving regulatory
impediments either prevented commencement of the Company's intended
operations, or increased the Company's projected expenses enough to
render the Company's business plan impracticable.
Maintenance expenses and taxes associated with the Company's
mining properties represented an ongoing source of negative cash
flow for the Company. That rendered it impracticable for the
Company to continue to hold the properties merely to preserve the
distant prospect of favorable future circumstances.
Owing to the perceived impracticability of continuing to
pursue the Company's historical business plan, management determined
it to be in the best interests of the Company and its shareholders
that the plan be abandoned, and that the Company dispose of its
mining properties. In place of the historical plan, management has
adopted the new plan summarized under "New Plan of Operations," "New
Properties," and "Summary Description of Possible Plan of Operations
for the New Properties," below.
DISPOSITION OF HISTORICAL PROPERTIES
As a result of management's determination to abandon the
Company's historical business plan, the Company's board of directors
resolved to sell its Montana mining properties. The sale was
consummated on July 1, 1999. The buyer was Wm. Ernest Simmons, a
long-time officer and director of the Company. The purchase price
consisted of the forgiveness by Mr. Simmons of the entirety of the
Company's indebtedness to him. That indebtedness was in the total
amount of $100,000.
Because of the circumstances outlined above, the Company's
board of directors determined that the Company's mining properties
had a fair value no greater than the amount of the Company's debt to
Mr. Simmons. On this basis, the board concluded that the terms of
the sale of the mining properties to Mr. Simmons were fair to the
Company and its shareholders.
NEW PLAN OF OPERATIONS
Following disposition of the Company's historical properties,
management adopted a new plan of operations. The new plan has two
aspects. Management intends to pursue both of those aspects on a
concurrent basis until such time as it appears that the Company has
a strong prospect of carrying one of the aspects to a successful
conclusion.
First, management intends to seek out and pursue a business
combination with one or more existing private business enterprises
that may wish to take advantage of the Company's status as a public
corporation. At this time, management does not intend to target any
particular industry but, rather, intends to judge any opportunity on
its individual merits.
Second, management intends to seek opportunities to develop
certain real estate holdings that have been acquired by the Company.
See "New Properties," below. Both the risks and the potential
rewards of this real-estate-development possibility are substantial.
See "Summary Description of Possible Plan of Operations for the New
Properties," below.
Management is unable at this time to predict which of the two
aspects of its current business plan will prove to be the more
attractive one as events unfold. A full assessment of the needs and
the potentials of the real-estate-development possibility, in
particular, has not yet been made. Management intends to begin to
make such an assessment in the near future.
NEW PROPERTIES
In 1999, a real-estate development business opportunity in
Teller County, Colorado, was brought to management's attention. The
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nucleus of the opportunity consisted of the availability of 91
unimproved lots zoned for residential development. The lots
comprise a total of approximately 4.7 acres of land. They are
located in the scenic Pike's Peak region approximately six miles by
road from the historic mining town of Cripple Creek, Colorado, and
approximately 40 miles by highway from the Colorado Springs
metropolitan area.
The Company acquired the lots on September 25, 1999, from
Donald J. Smith of Casper, Wyoming. Mr. Smith was elected to be a
Director of the Company at the Company's 1999 Annual Meeting of
Shareholders held on December 18, and was then appointed by the
Board of Directors to serve as President of the Company. See the
biographical information about Mr. Smith presented in Item 9.,
below. In connection with the purchase, the Company's board of
directors deemed the lots to have a total value of $162,000. The
purchase price was paid in the form of approximately 23,000,000
treasury shares of the Company's common stock.
SUMMARY DESCRIPTION OF POSSIBLE PLAN OF OPERATIONS FOR THE NEW
PROPERTIES
A. Economic Concept.
The economic theory that underlies the
real-estate-development aspect of the Company's new business plan
has three bases.
The primary basis of the plan is found in the local economy
of Cripple Creek, Colorado. In 1991, limited-stakes gaming became
legal in three historical mining communities in Colorado. Cripple
Creek is one of the three. Since limited-stakes gaming became
legalized, Cripple Creek has developed an active casino business.
This activity has created a growing demand for residential housing,
particularly among casino workers but also among service workers in
businesses, such as the food and beverage businesses, that are
supported by the casino trade. Management believes that the supply
of existing housing to meet this demand is very limited.
Two additional economic bases for the real-estate-development
aspect of the Company's new business plan are of lesser
significance, but deserve nevertheless to be identified. The first
of these lies in the ongoing geographical expansion of the Colorado
Springs residential base.
The second additional basis lies in the local, regional,
national, and worldwide demand for second homes and vacation homes
in areas having attractive natural or historical settings.
Management believes that the sources of this demand include (i) the
strength of the U.S. economy, (ii) new concentrations of wealth
created by the success of the U.S. stock markets in general, and by
the phenomenon of tech-company stock options and the like, (iii)
substantial inter-generational wealth transfers to the so-called
baby-boomer generation, (iv) low interest rates, and (v)
availability of the mortgage-interest deduction. Management
believes that the historical and natural attractions of the Pike's
Peak region, together with reasonable proximity to the business and
transportation hub of Colorado Springs, form a base from which this
demand can be exploited.
B. Change in Company Management
The business experience and ambitions of the Company's
historical management team have been directed primarily toward the
mining industry. This management team was replaced at the 1999
Annual Meeting of Shareholders.
The slate of Directors elected at the Annual Meeting, on the
other hand, includes individuals whose primary business experience
and ambitions lie in the field of real-estate management and
development. See the biographical information about Messrs.
Sandison and Smith presented in Item 9., below. In addition, Mr.
Smith was the source of the Company's new properties. See "New
Properties," above. This profile of capability is not a mere
coincidence; it is, rather, part and parcel of the Company's new
business plan.
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C. Alternative Approaches to Development of the New
Properties
Management is in the early stages of evaluating the tack it
intends to take to exploit the new properties. Critical issues as
to financing, staffing, identification of development partners or
builders, and the like, have not advanced beyond the discussion
stage. As a result, management's intentions with respect to the new
properties can be described only in outline form. It is more likely
than not that those intentions will undergo considerable change in
the near term.
Subject to those limitations, management currently believes
that possible business strategies include the following:
1. The Company could contract with, or enter into a joint
venture with, a development firm to develop the entire
package of lots.
2. The Company could market the lots directly to consumers
through local, regional, or national promotions.
3. The Company could "gin up" to be its own prime contractor.
4. Instead of trying to develop the property as a whole,
the Company could act as a custom builder or a spec.
builder for individual lots, one by one.
Development might consist of stand-alone residences,
multi-unit housing, or mobile-home parks.
D. Financial Requirements of the Alternatives Listed in C,
above
The Company's new properties are in an unimproved state. The
greatest initial cost associated with any of the options listed
above, therefore, would be that of installing streets and utilities.
Management estimates that the cost of such basic improvements would
be in the range of $4 million to $5 million. The Company's new
properties lie many miles by mountain highway from the nearest
sources of building materials and equipment. As a result, the cost
of transportation would be a significant component of the overall
cost of basic improvements. Management believes that this cost is
among the factors that have inhibited other developers from
attempting to satisfy the sizeable, unmet demand for housing that
became obvious in Cripple Creek beginning in 1991.
Aside from capital required to meet the costs of basic
improvements, substantial capital would be required to implement
most of the alternatives listed in C, above. The Company does not
currently have sources for such capital, and there is no certainty
that such sources will become available in the future.
Management has held preliminary discussions with possible
conventional and venture-capital lenders. In those discussions, the
lenders have expressed a preference to offer financing only with
respect to the most desirable of the lots contained in the new
properties, and have insisted that the Company subordinate its
interest in the properties in favor of project financing. In such
circumstances, a failure of the project would result in foreclosure
on the project financing, and a consequent loss by the Company of
its interest in the properties. Management does not believe a risk
of this magnitude to be appropriate for a public corporation and,
therefore, determined not to consider such subordination. The
Company's unwillingness to subordinate its interest in the
properties to providers of project financing will limit the
Company's ability to obtain capital to develop the properties.
E. Other Special Business Risks Associated with the New Plan
In addition to the financial risks described in D, above, the
real-estate-development aspect of the new business plan outlined in
this section entails a high degree of business risk. Among the risk
factors are:
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1. Interest rate increases, which are likely to have a
negative impact upon:
a. the availability of purchase financing to
potential buyers of improved or unimproved
properties of the Company; and
b. the availability of project financing to the
Company or its contractors.
2. Changes in tax laws that might result, for example, in
a loss or diminution of the mortgage-interest deduction.
3. A downturn in the local or general U.S. economies, thus
depressing demand for developed or unimproved properties.
4. Competition from other development projects, both local
and regional. See "Competition," below.
COMPETITION
The Company is and will remain an insignificant participant
among the firms that engage in mergers with and acquisitions of
privately financed entities. Many established venture-capital and
financial concerns have significantly greater financial and
personnel resources and technical expertise than the Company.
Similarly, the Company is and will remain an insignificant
participant among the firms that engage in real estate development.
In this line of business, too, many established concerns have
greater financial and personnel resources and technical expertise
than the Company.
In view of the Company's limited financial resources and
limited management availability, the Company will continue to be at
a significant disadvantage compared to the Company's competitors.
EMPLOYEES
The Company has no full time employees. Its officers devote
as much time as they deem necessary to conduct the Company's
business. See "Item 10. EXECUTIVE COMPENSATION."
ITEM 2. DESCRIPTION OF PROPERTY
See "Item 1. DESCRIPTION OF BUSINESS -- New Properties."
The Company has been provided office space in the offices of
its President, for which it pays no rent.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any threatened or pending legal
proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
An annual meeting of the shareholders of the Company was held
on December 18, 1999. At the meeting, each of Donald J. Smith,
James K. Sandison, and Frank J. Ruberto was elected to be a Director
of the Company.
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In addition, the transaction by which the Company disposed of
its historical mining properties on July 1, 1999, was submitted to
the shareholders for ratification. See "Item 1. DESCRIPTION OF
BUSINESS -- Disposition of Historical Properties."
Of the 56,666,000 shares eligible to vote on the matters
described above, a total of 54,431,656 shares were represented at
the meeting, in person or by proxy. With respect to each of those
matters, the number of votes cast for, against, or withheld, as well
as the number of absentions and broker non-votes, were as set forth
in the table presented below.
<TABLE>
<S> <C> <C> <C>
Matter Votes
Cast For Votes Abstentions
Cast and
Against Broker Non-Votes
or Withheld
------------------- ---------- ----------- ----------------
Election of 53,656,456 0 775,200
Donald J.
Smith as a Director
Election of 53,656,456 0 775,200
James K.
Sandison as a Director
Election of 53,656,456 0 775,200
Frank J.
Ruberto as a Director
Ratification 53,656,456 0 775,200
of Disposition
of Mining Assets
</TABLE>
Subsequent to the meeting, however, Mr. Ruberto chose to
resign as a director. To fill the vacancy created by his
resignation, Messrs. Smith and Sandison took action on
December 21, 1999, to appoint Robert Pike to serve as the
third director. See "ITEM 9. DIRECTORS, EXECUTIVE OFFICERS,
PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a)
OF THE EXCHANGE ACT."
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PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
MARKET INFORMATION
The Company's Units, (consisting 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 "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. The reported high and low bid
prices for the Company's Units for the previous two fiscal
years are set forth below. 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, 1998 $.012 $.0005
June 30, 1998 $.012 $.0005
September 30, 1998 $.012 $.0005
December 31, 1998 $.012 $.0005
March 31, 1999 $.02 $.01
June 30, 1999 $.02 $.01
September 30, 1999 $.02 $.02
December 31, 1999 $.095 $.02
As of April 10, 2000, the Company had six market makers
for its securities.
The Company's securities are classified as "designated
securities," which classification places significant
restrictions upon broker-dealers desiring to make a market in
such securities. As a result, it may be difficult for
management to continue to interest market makers in the
Company's securities. These difficulties may continue until
such time as the Company is able to meet the criteria to
qualify as a non-designated security, so that market makers
may trade without complying with the stringent requirements
applicable to designated securities.
The Class A Warrant included in the Company's Units is
exercisable at a price of $.05 per share until July 6, 2001,
unless otherwise extended by the Board of Directors. The
Class B Warrant is exercisable at a price of $.10 per share
until July 6, 2001, unless otherwise extended by the Board of
Directors. The respective exercise prices of the Warrants may
be lowered but not increased at the discretion of the
Company's Board of Directors.
HOLDERS
At December 31, 1999, the Company had 41 shareholders of
record. This does not include shareholders who hold stock in
their accounts at broker/dealers.
DIVIDENDS
The Company has never paid a cash dividend on its common
stock and does not expect to pay a cash dividend in the
foreseeable future.
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UNREGISTERED SALES OF EQUITY SECURITIES
During the fiscal year ended December 31, 1999, the
Company sold 23,168,000 shares of Common Stock that were held
in the treasury of the Company. For information as to this
transaction, see "Item 1. DESCRIPTION OF BUSINESS -- New
Properties."
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATIONS.
See "Item 1. DESCRIPTION OF BUSINESS -- New Plan of
Operations," "Item 1. DESCRIPTION OF BUSINESS -- New
Properties," and "Item 1. DESCRIPTION OF BUSINESS -- Summary
Description of Possible Plan of Operations for the New
Properties."
ITEM 7. FINANCIAL STATEMENTS
Please see pages F-1 through F-8.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
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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, and
their respective ages, positions held in the Company, and
duration as such, are as follows:
Name Age Positions Held and Tenure
----------------- ---- -------------------------
Donald J. Smith 53 President and a Director
since December 18, 1999
Robert Pike 70 Vice President and a Director
since December 21, 1999
James K. Sandison 62 Secretary, Treasurer, and
a Director since December
18, 1999
BUSINESS EXPERIENCE
Set forth below is a brief account of the education and
business experience during at least the past five years of
each of the Company's directors and executive officers,
indicating the principal occupation and employment during that
period, and the name and principal business of the
organization in which such occupation and employment were
carried out.
BIOGRAPHICAL INFORMATION
DONALD J. SMITH. Mr. Smith has been President and a
Director of the Company since December 18, 1999. He has owned
and managed Smith and Associates, a real estate brokerage firm
located in Casper, Wyoming, since 1981, and he is a
Wyoming-licensed real estate broker. Mr. Smith is an
entrepreneur and has served as a Board Member on the boards of
several companies focused on real estate investments
and development. From approximately May of 1995 until July of
1998, he was a director of Sigma-7 Products, Inc., a currently
inactive public corporation having its headquarters in
Findley, Minnesota.
ROBERT PIKE. Mr. Pike has been Vice President and a
Director of the Company since December 21, 1999. Mr. Pike is
a retired banker. For more than the past five years, he has
been an investor. Also for more than the past five years, Mr.
Pike has been President and sole owner of Bob Pike Associates,
Inc., a real estate consulting and inspection firm, based in
Englewood, Colorado, that serves financial institutions.
JAMES K. SANDISON. Mr. Sandison has been Secretary,
Treasurer, and a Director of the Company since December 18,
1999. He has been employed as manager of The Hilltop Shopping
Center, a family owned business in Casper, Wyoming, since
1973. He has served on numerous boards and was elected to
public office serving as Casper's Mayor and as a City Council
Member. Mr. Sandison also served as Chairman of the Natrona
County Commissioners from 1991 to 1993. He is a Director of
Hilltop National Bank. Mr. Sandison earned a Bachelor of
Science in Business Administration Degree from the University
of Wyoming in 1963.
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ITEM 10. EXECUTIVE COMPENSATION
CASH COMPENSATION
During the fiscal year ended December 31, 1999, no
executive officer of the Company received cash compensation
other than reimbursement of expenses incurred on behalf of the
Company. See "Item 12. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS."
COMPENSATION PURSUANT TO PLANS
None.
OTHER COMPENSATION
None.
COMPENSATION OF DIRECTORS
None.
TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENTS
None.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
As of December 31, 1999, the persons listed in the table
set forth below were known by the Company to own or control
beneficially more than five percent of its outstanding common
stock, par value $0.0001 per share, its only class of
outstanding securities. The table also sets forth the total
number of shares of these securities owned by the officers and
directors of the Company as a group.
Name and Address of Number of Shares Percentage
Beneficial Owner Owned Beneficially of Class
------------------- ------------------ ----------
Donald J. Smith 27,519,120(1) 48.6%
2501 E. Third St.
Casper, WY 82609
Yaak River Resources, 6,000,000 10.6%
Timber Division, L.P.
830 S. Kline Way
Lakewood, CO 80226
Eric J. Sundsvold 4,349,605(2) 7.7%
5121 S. Ironton Way
Englewood, CO 80111
All officers and directors 27,519,120 48.6%
as a group (three persons)
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(1) The figure shown includes 10,000 shares held in the name
of Suvo Corp. Mr. Smith is the owner of Suvo Corp.
(2) The figure shown includes 47,500 shares held in the name
of Mr. Sundsvold as custodian for Shawn N. Sundsvold
pursuant to a transaction effected under the Uniform
Gifts to Minors Act. Shawn N. Sundsvold is the son of
Mr. Sundsvold. Mr. Sundsvold disclaims beneficial
ownership of these shares. The figure shown also
includes 949,000 shares held in Mr. Sundsvold's
Individual Retirement Account.
CHANGES IN CONTROL
The Company knows of no arrangement or understanding,
the operation of which may at a subsequent date result in a
change of control of the Company.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the fiscal year ended December 31, 1999, the
Company engaged in two substantial related-party transactions.
On July 1, 1999, the Company sold its Montana mining
properties for $100,000 to Wm. Ernest Simmons, who was then
President and a Director of the Company. For information as
to this transaction, see "Item 1. DESCRIPTION OF BUSINESS --
Disposition of Historical Properties."
On September 25, 1999, the Company purchased 91
unimproved lots in Teller County, Colorado, for 23,168,000
treasury shares of the Company's Common Stock from Donald J.
Smith who succeeded Mr. Simmons as President and Director of
the Company. For information as to this transaction, see
"Item 1. DESCRIPTION OF BUSINESS -- New Properties."
Except as described above, there were no transactions,
or series of transactions, for the fiscal year ended December
31, 1999, nor are there any currently proposed transactions,
or series of the same, to which the Company is a party, in
which the amount involved exceeds $60,000 and in which to the
knowledge of the Company any director, executive officer,
nominee, five-percent shareholder or any member of the
immediate family of the foregoing persons have or will have a
direct or indirect material interest.
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PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
Exhibit No. Description Location
----------- ------------------------- -------------------------------
3.1 Articles of Incorporation Incorporated by reference to
Exhibit 3.1 to the Registrant's
Registration Statement on Form
S-18, Registration No. 33-28106,
effective July 21, 1989
3.2 Bylaws Incorporated by reference to
Exhibit 3.2 to the Registrant's
Registration Statement on Form
S-18, Registration No. 33-28106,
effective July 21, 1989
3.3 Amendment to Articles of Incorporated by reference to the
Incorporation Company's Annual Report on From
10-KSB for the fiscal year ended
December 31, 1992
4.1 Rights of Stockholders Included in Exhibits 3.1, 3.2, and
3.3, above.
10.1 Bill of Sale for Montana Page 24 of this Report
mining properties, in the
form of a letter from
Wm. Ernest Simmons dated
April 10, 2000
10.2 Quitclaim Deed executed Page 25 of this Report
by Donald J. Smith on
September 25, 1999, with
respect to Teller County,
Colorado, properties
REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the fourth
quarter of the Company's fiscal year ended December 31, 1999.
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PART II FINANCIAL INFORMATION
ITEM 7. FINANCIAL STATEMENTS
(a) The audited financial statements of registrant for the
year ended December 31, 1999, follow. The financial statements
reflect all adjustments which are, in the opinion of management,
necessary to a fair statement of the results for the period
presented.
YAAK RIVER RESOURCES, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
December 31, 1999
To the Board of Directors
Yaak River Resources, Inc.
We have examined the accompanying balance sheets of Yaak River Resources,
Inc. (A Development Stage Company) as of December 31, 1999 and 1998, and
the related statements of operations, cash flows, and changes in
stockholders' equity for the period June 10, 1988 (inception), through
December 31, 1999, and the years ended December 31, 1999 and 1998. 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 statements 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, 1999 and 1998, and the results of its
operations and its cash flows for the period June 10, 1988 (inception),
through December 31, 1999, and the fiscal years ended December 31,
1999 and 1998, in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As described in
Note 1 to the financial statements, the Company is in the development
stage, conditions exist which raise substantial doubt about the
Company's ability to continue as a going concern unless it is able
to generate sufficient cash flows to meet its obligations and sustain
its operations. As of December 31, 1999, the Company has lost
$298,586 from operations. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Denver, Colorado
March 6, 2000
F-1
<PAGE>
Yaak River Resources, Inc.
(A Development Stage Company)
BALANCE SHEET
<TABLE>
<S> <C> <C>
December 31, December 31,
1999 1998
------------ ------------
ASSETS
CURRENT ASSETS:
Cash $ - $ 215
Investment - Properties 35,743 182,910
--------- ---------
Total current assets 35,743 183,125
--------- ---------
OTHER ASSETS
Organizational Costs - Net of Amortization - -
--------- ---------
Total Other Assets - -
--------- ---------
TOTAL ASSETS $ 35,743 183,125
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts Payable $ 2,000 $ 106,772
Advance from (YRML) Purchase, 1.5 Units - 20,000
Shareholder Loans 22,000 29,406
-------- --------
Total current liabilities 24,000 156,178
STOCKHOLDERS' EQUITY
Series A Common Stock, par value $.0001 per share;
250,000,000 Shares, Issued and outstanding -
56,666,000 5,666 5,666
Series B Common Stock, par value $.0001 per share;
Authorized 250,000,000 Shares, Issued
and outstanding, None - -
Capital paid in excess of par value 304,663 304,663
Deficit accumulated
during the development stage (298,586) (283,382)
---------- --------
TOTAL STOCKHOLDERS' EQUITY 11,743 26,947
--------- --------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 35,743 $ 183,125
========= ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-2
<PAGE>
Yaak River Resources, Inc.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
<TABLE>
<S> <C> <C> <C>
For the For the June 10, 1988
Year Ended Year Ended (Inception)
December 31, December 31, thru December
1999 1998 31, 1999
------------ ------------ ------------
REVENUES $ - $ - $ -
EXPENSES
Amortization - - 1,500
Bank Charge 56 80 535
Legal & Accounting 5,562 6,786 58,904
Director Fees - - 800
Office Expense 382 523 7,843
Stock Fees & Other Costs 65 25 10,072
Administration/Consulting 9,139 68,864 124,990
Mining Assessments & Fees - 184 75,479
Bad Debt - 2,250 6,250
Rent/Telephone - - 12,213
-------- -------- ---------
Total Expenses 15,204 78,712 298,586
NET LOSS ACCUMULATED DURING
THE DEVELOPMENT STAGE $ (15,204) $ (78,712) $ (298,586)
======== ======== =========
NET LOSS PER COMMON SHARE
IS LESS THAN $.002 $ * $ * $ *
======== ======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
Yaak River Resources, Inc.
(A Development Stage Company)
Statement of Stockholders' Equity
<TABLE>
<S> <C> <C> <C> <C> <C>
Deficit
Capital Paid Accum. During
Common In Excess of the Development
# of Shares Stock Par Value Stage Totals
----------- ------ ------------ --------------- ------
June 10, 1988
(Inception) - $ - $ - $ - $ -
Issuance of common
Stock: January 6,
1989 (for services) 10,000,000 1,000 500 - 1,500
January 6, 1989)
(for cash) 5,000,000 500 - - 500
November 27, 1989
(Public offering) 2,266,000 266 12,353 - 12,619
Net Loss for the year
Ended December 31,
1989 - - - (3,765) (3,765)
Net Loss for the year
Ended December 31,
1990 - - - (10,129)(10,129)
Net Loss for the year
Ended December 31,
1991 - - - (300) (300)
Issuance of common
Stock: January 10,
1992 (for assets
YRML) 30,000,000 3,000 134,910 - 137,910
Net Loss for the year
Ended December 31,
1992 - - - (47,589)(47,589)
Issuance of common
Stock:
June 30, 1993
(for cash) 6,000,000 600 149,400 - 150,000
June 30, 1993
(for services) 3,000,000 300 - - 300
Net Loss for the year
Ended December 31,
1993 - - - (54,951)(54,951)
Net Loss for the year
Ended December 31,
1994 - - - (26,293)(26,293)
Net Loss for the year
Ended December 31,
1995 - - - (17,764)(17,764)
Net Loss for the year
Ended December 31,
1996 - - 7,500 (19,842)(12,342)
Net Loss for the year
Ended December 31,
1997 - - - (24,037)(24,037)
Net Loss for the year
Ended December 31,
1998 - - - (78,712)(78,712)
Net Loss for the year
Ended December 31,
1999 - - - (15,204)(15,204)
------- ------ ---------- -------- ------
Balance - December 31,
1999 56,666,000 $5,666 $ 304,663 $(298,586)$11,743
========== ====== ======== ======== ======
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE>
Yaak River Resources, Inc.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
<TABLE>
<S> <C> <C> <C>
For the For the June 10, 1988
Year Ended Year Ended (Inception) to
December 31, December 31, December 31,
1999 1998 1999
------------ ---------- -------------
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net Loss Accumulated During
The Development Stage $ (15,204) $ (78,712) $ (298,586)
Adjustments to reconcile
net loss to net cash used
in operating activities:
Amortization and Depreciation - - 1,500
Organization Costs - - (1,500)
(Decrease) Increase in
Accounts Payable (104,772) 66,316 2,000
Decrease(Increase) in
Accounts Receivable - 2,200 -
(Decrease) Increase in
Loans to Shareholder (7,406) 9,389 22,000
------- -------- -------
Net cash flows used in
operating activities (127,382) (807) (274,586)
CASH FLOWS FROM
INVESTING ACTIVITIES
Exchange of properties - net 147,167 - 147,167
Investment Purchase - - (305,410)
------- ------- ---------
Net cash used in
investing activities 147,167 - (158,243)
CASH FLOWS FROM
FINANCING ACTIVITIES
Issuance of common stock - - 1,800
Loan from LP Investors (20,000) - -
Proceeds from Long-Term Debt - - 167,500
Payment of Long-Term Debt - - (45,000)
Proceeds from Sale of Stock - - 308,529
--------- -------- ---------
Net cash flows provided by
financing activities (20,000) - 432,829
--------- -------- ---------
Net Increase (Decrease)
in cash (215) (807) -
Cash at beginning of period 215 1,022 -
-------------- ------------- -------------
Cash at end of period $ - $ 215 $ -
=========== ============ =============
Supplemental Disclosure of
Cash Flow Information:
Cash paid during the period
For interest $ - $ - $ -
========== ========== ===========
Cash paid during the period
For income taxes $ - $ - $ -
========== ========== ===========
</TABLE>
Noncash Investing and financing activities:
In 1999, the Company exchanged properties with a book value of $182,910 to a
related party in payment of liabilities of $147,167 and land with book value
of $35,743.
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
YAAK RIVER RESOURCES, INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 1999
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.
Basis of Accounting:
The accompanying financial statements have been prepared on the accrual
basis of accounting in accordance with generally accepted accounting
principles.
Development Stage Company
The Company has not earned significant revenue from planned principal
operations. Accordingly, the Company's activities have been accounted
for as those of a "Development Stage Enterprise" as set forth in
Financial Accounting Standards Board Statement No. 7 ("SFAS 7").
Among the disclosures required by SFAS 7 are that the Company's financial
statements be identified as those of a development stage company, and
that the statements of operation, stockholders' equity (deficit) and
cash flows disclose activity since the date of the Company's inception.
The Company's fiscal year end is December 31.
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.
Cash and 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.
F-6
<PAGE>
Note 2 - Purchase of 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.
On November 20, 1999, the Company voted to close the Con Tolman Memorial
Trust and exchange 23,168,000 shares for 92 building lots in Victor,
Colorado. The remaining 832,000 shares were transferred to Yaak River
Resources, Nevada in lieu of payment of shareholder loans.
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 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 June 30, 1993, the Company sold Six Million (6,000,000) shares of its
$0.0001 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.
On November 20, 1999, the Company voted to terminate the Partnership
and asset interests be distributed prorata to each partner.
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.
F-7
<PAGE>
The Financial Accounting Standards Board (FASB) has issued Statement of
Financial Accounting Standards Number 109 ("SFAS 109"), "Accounting for
Income Taxes", which requires a change from the deferred method to the
asset and liability method of accounting for income taxes. Under the
asset and liability method, deferred income taxes are recognized for
the tax consequences of "temporary differences" by applying enacted
statutory tax rates applicable to future years to differences between
the financial statement carrying amounts and the tax basis of existing
assets and liabilities.
At December 31, 1999, the Company had net operating loss
carryforwards of approximately $298,586 for federal income tax purposes.
These carryforwards, if not utilized to offset taxable income will expire
at the end of the indicated years:
2008 $ 14,194
2009 47,589
2009 54,951
2008 26,293
2009 17,764
2010 19,842
2011 24,037
2012 78,712
2013 15,204
------
$298,586
=======
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 - Going Concern:
As of December 31, 1999, the Company has incurred net losses of
$298,586. In view of these matters, the future success of the Company
is likely to be dependent on its ability to obtain additional capital
and its ability to attain future profitable operations. There can be no
assurance that the Company will be successful in obtaining such
financing, or that it will attain positive cash flow from operations.
F-8
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Registrant has duly
caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: April 13, 2000 YAAK RIVER RESOURCES, INC.
By: /s/ Donald J. Smith
-------------------------
Donald J. Smith, President
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following person on behalf of the Registrant and in the
capacities and on the dates indicated.
Name Title Date
- ------------------- ------------------------ -----------------
/s/Donald J. Smith President and a Director April 13, 2000
- ------------------ (Principal Executive Officer)
Donald J. Smith
/s/James K. Sandison Secretary, Treasurer, and a Director April 13, 2000
- -------------------- (Principal Financial Officer and
James K. Sandison Principal Accounting Officer)
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Registrant has duly
caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: April 13, 2000 YAAK RIVER RESOURCES, INC.
By:__________________________
Donald J. Smith, President
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following person on behalf of the Registrant and in the
capacities and on the dates indicated.
Name Title Date
- ------------------- ------------------------ -----------------
/s/Donald J. Smith President and a Director April 13, 2000
- ------------------ (Principal Executive Officer)
Donald J. Smith
/s/James K. Sandison Secretary, Treasurer, and a Director April 13, 2000
- -------------------- (Principal Financial Officer and
James K. Sandison Principal Accounting Officer)
[ARTICLE] 2
Wm. Ernest Simmons
============================================================================
830 So. Kline Way Phone (303)-985-3972
Lakewood, CO 80226-7506 Fax (303)-985-3972
April l0, 2000
I, Wm. Ernest Simmons and Associates received as payment for services and loans
To Yaak River Resources, Inc, the title to three claims in Lincoln County,
Montana. There are no debts owing to the above mentioned persons by YRRI.
The properties: axe free and clear of all liens and are not encumbered in any
manner. The quit claims are for the surface, mineral and all other rights that
clear title would convey to any undisputed owner.
Property description:
Myrtle-Quartz Lode Claim 34N/33W/09
Keystone Quartz Lode #MS4968 34N/33W/16
Gold Flint Lode #MS5050 34N/33W/16
Received the titles to above properties for all accounts receivable up to and
including the 31st day of December 1999.
/s/ Wm. Ernest Simmons 4/10/2000
- ---------------------- ---------
Win. Ernest' Simmon Date
<PAGE>
[ARTICLE] 2
QUITCLAIM DEED
THIS QUITCLAIM DEED, Executed this 25th day of SEPTEMBER
by first party, Grantor,
DONALD J SMITH
whose post office address is,
2501 E 3rd,
Casper, Wyoming 82609
to second party, Grantee,
YAAK RIVER RESOURCES, INC. __CO
whose post office address is,
830 SO. KLINE WAY
LAKEWOOD, COLORADO 80226-7506
WITNESSETH, That the said first party, for good consideration and for
the sum of ONE HUNDRED & Sixty two thousand Dollars ($162,000 ) paid by the
said second party, the receipt whereof is hereby acknowledged, does hereby
remise, release and quitclaim unto the said second party forever, all the
right, title, interest and claim which the said first party has in and to the
following described parcel of land, and improvements and appurtenances there-
to in the County of TELLER ,State of COLORADO to wit:
PARCEL #10) 03.314-19-002-0 LOTS 1-10, BLOCK1 LAWRENCE 0.340 a
PARCEL #1O) 03.314-18-001-0 LOTS 1-16, BLOCK2 LAWRENCE 0.740 a
PARCEL #10) 03.323-26-001-0 LOTS 1-16, BLOCK3 LAWRENCE 0.950 a
PARCEL #10) 03.314-14-004-0 LOTS 7-16, BLOCK18 LAWRENCE 0.700
PARCEL #10) 03.323-09-001-0 LOTS 1-39, BLOCKM SUNNYSIDE TRACT 1.970 a
<PAGE>
IN WITNESS WHEREOF, The said first party has signed and sealed these
Presents the day and year first above written. Signed, sealed and delivered
in presence of:
- --------------------------- -------------------------------
Signature of Witness Signature of First Party
- --------------------------- -------------------------------
Print Name of Witness Print Name of First Party
- --------------------------- -------------------------------
Signature of Witness Signature of First Party
- --------------------------- -------------------------------
Print Name of Witness Print Name of First Party
State of Wyoming
County of Natrona
On September 29, 1999 before me, Cheryl Marker
appeared Donald J. Smith
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name(s) is subscribed to the within instrument and
acknowledged to me that he executed the same in his authorized capacity(ies),
and that by his signature(s) on the instrument the person(s), or the entity
upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
/s/ Cheryl Marker
- ---------------------------
Signature of Notary
Affiant____Known____Produced ID
my commission expires; November 22, 2001 Type of ID_____________________
(Seal)
State of }
County of
On before me,
appeared
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name(s) is/are subscribed to the within instrument
and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument
WITNESS my hand and official seal.
- ---------------------------
Signature of Notary
Affiant____Known____Produced ID
my commission expires; November 22, 2001 Type of ID_____________________
(Seal)
---------------------
Signature of Preparer
----------------------
Print Name of Preparer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET AND STATEMENTS OF LOSS AND ACCUMULATED DEFICIT AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 10KSB FOR THE YEAR
ENDED DECEMBER 31, 1999.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 35743
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 35743
<CURRENT-LIABILITIES> 22000
<BONDS> 0
0
0
<COMMON> 5666
<OTHER-SE> 6077
<TOTAL-LIABILITY-AND-EQUITY> 35743
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 15204
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (15204)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (15204)
<EPS-BASIC> (0.00)
<EPS-DILUTED> (0.00)
</TABLE>
