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As filed with the Securities and Exchange Commission on October 27, 1999
Registration No. 0-27019
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB/A
AMENDMENT NO. 2
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
Uintah Mountain Copper Company
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(Name of Small Business Issuer in its Charter)
Utah 87-0369205
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
341 South Main Street, Suite 401, Salt Lake City, Utah 84111
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (801) 530-1045
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Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
N/A N/A
---- ---
Securities to be registered under Section 12(g) of the Act:
Common Stock, par value $0.10 per share
----------------------------------------
(Title of Class)
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Uintah Mountain Copper Company
FORM 10-SB
TABLE OF CONTENTS
PART I.
Item 1. Description of Business ..................................... 3
Item 2. Management's Discussion and Analysis or Plan of Operation ... 10
Item 3. Description of Property...................................... 12
Item 4. Security Ownership of Certain Beneficial Owners
and Management.............................................. 14
Item 5. Directors, Executive Officers, Promoters
and Control Persons......................................... 15
Item 6. Executive Compensation....................................... 16
Item 7. Certain Relationships and Related Transactions............... 17
Item 8. Description of Securities.................................... 17
PART II
Item 1. Market Price of and Dividends on the Registrant's
Common Equity and Other Shareholder Matters................. 18
Item 2. Legal Proceedings............................................ 18
Item 3. Changes in and Disagreements with Accountants................ 18
Item 4. Recent Sales of Unregistered Securities...................... 18
Item 5. Indemnification of Directors and Officers.................... 19
PART F/S
Financial Statements......................................... 21
PART III
Item 1. Index to Exhibits............................................ 33
Signatures................................................... 34
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PART I
Item 1. Description of Business
Corporate History
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Uintah Mountain Copper Company, a Utah corporation, (the "Company") was
formed on January 30, 1946. The Company has been developing mining claim,
known as, the Sunshine Quartz/Hematite Claims located in the Ashley National
Forest of Duchesne County, Utah. The mining claims consist of 30 unpatented
load claims. Principal ore found on the 30 unpatented load claims is a
high-grade hematite (iron oxide) ore. The Company has been developing these
claims with the intent of marketing the unique ore in the specialty natural
pigments market.
The first five claims, namely the Sunshine Quartz Mine Nos. 1-5 were
located in 1936 and placed in the Company's ownership when the Company was
incorporated. Thirty-one additional claims, namely Hematite Nos. 1-31 were
located in 1977. In 1989, all claims were reclaimed by the Company. Eight
claims (Hematite 10, 11, 12, 13, 14, 25 & 26) were dropped in 1993 due to new
federal filing requirements and a geologic re-evaluation of the properties.
In 1995, Hematite Nos. 25 and 26 were re-filed. All claims have been legally
filed with Duchesne County, State of Utah, and the Bureau of Land Management.
Net profit royalties of 10% are due to Mid American Minerals, Inc., a Utah
corporation. (See certain transaction).
Through the end of 1997, the Company held special use permits for a
5-acre mill and mining camp site and a 6.5-mile access road to, and on, the
claims. As of 1998, the use of these facilities has been made part of the
Company's approved continuing Plan of Operation on file with U.S. Forest
Service, ("Forest Service") so that annual permitting will no longer be
required. The present Plan of Operation for development activities at this
site has been on file with the Forest Service since 1996 and is currently
active.
CLAIMS DEVELOPMENT
------------------
Uintah Mountain Copper Company is currently developing 30 unpatented lode
mining claims in the Ashley National Forest of northeastern Utah. The
Sunshine Quartz/Hematite Claims project is located about 25 miles northwest of
Duchesne, Utah, in Township 2 North and Range 6 West, Sections 10, 14, 15 and
16, and is directly west of Moon Lake in the Slate Creek Canyon region. A 6.5
mile unimproved graded access road designed by the Forest Service and built
by the Company nearly 20 years ago extends directly from the company's 5-acre
camp site to the ore body. The original mine diggings are at the 10,200 to
10,400-foot elevation, with surface outcrops of high-grade hematite ore
(ferric iron oxide) observable intermittently along 600 feet of exposures
adjacent to the access road, and over an additional 1500 feet of hillside.
Approvals necessary for continued development have been obtained.
Portions of the original five Sunshine Quartz claims have been
periodically mined for hematite pigment since they were originally located in
1936. Until 1994, mineral and geologic evaluations had been performed based
upon examination of surface outcrops and limited, widely spaced bore holes.
During 1994 and 1995, an intensive exploratory drilling program was initiated
to begin proving the extent of mineable hematite ore reserves within the
claims. The goal was to identify enough high grade ore to justify continued
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exploration work and establish methods for future mine development.
In 1994, the Company contracted for a specialty drilling firm to carry
out a nearly $200,000 exploratory drilling program on 3 of the Company's 30
claims. From August through September 1994, core samples were obtained from
23 drill holes, with 963 linear feet of drilling directly on or into the
hematite ore body via a highly mobile portable rig system. This work was
performed along a limited 600-foot exposed ore outcrop. In August and
September 1995, 13 additional core holes were drilled to provided infill data
for the 1994 program, to extend the known quantity of hematite ore for an
additional 100 feet of exposure, and to begin the preliminary evaluation of
other outcrops. All borings were logged by an independent registered
professional geologist, with hole elevations, angles and locations surveyed.
Cores from drilling were photographed, boxed, and sampled.
This exploratory work extended the knowledge of the hematite deposit by
(a) identifying an additional 1500 feet of surface exposure for future
exploratory drilling, and (b) providing data to locate the ore body perimeter
and the depth of ore-bearing strata (which varies from 7 to 20 feet thick) for
accurate ore deposit calculations.
Development work at the claims site has progressed from the exploratory
prospecting phase to small-scale prototype mining projects. In January 1996,
the Company submitted a multi-year, multi-phase test pit and reclamation
development plan to the Forest Services for evaluation and inclusion as part
of the Company's continuing Plan of Operation for the Sunshine Quartz/Hematite
Claims project.
The phased development plan is intended as a series of small-scale
projects to provide an abundance of economic and environmental data while
being environmentally independent of future mining activities. Test pit work
also creates the necessary raw material for initiating pilot plant refining
operations. Continuous reclamation is an important component of test pit
development work, where all disturbed areas are reclaimed in conjunction with
ore removal activities. No spoils or tailings are created by this unique
process and total disturbed surface areas are minimized. The goal is to
develop methods that diminish long-term reclamation needs and natural resource
impacts. Information from this program is required to allow a thorough
evaluation of the full mining potential and impacts of the project.
The first phase of the three-phase plan was approved and a small
exploratory test pit was excavated and reclaimed during the Summers of 1996
and 1997. Approximately 107 tons of various grades of hematite ore were
excavated from a 60 square yard area, with 46 tons of medium to high-grade ore
hauled from the site to the Company's consultant laboratory facilities in
Lehi, Utah. Ore tonnage and quality in the pit were carefully measured and
recorded during this work, with the results comparing favorably with the
drill-predicated estimates. Reclamation activities commenced immediately upon
completion of test pit excavation and the entire test area was re-seeded prior
to snowfall in 1997. A 23-page engineering analysis report has been prepared
by the Company to detail the work and results. This report has been made part
of the Company Plan of Operation on file with the Forest Service.
The Company received approval from the Forest Service for a modified 1998
Phase II development plan that include the following activities:
- - 7 tons of medium to high-grade ore and 55 tons of medium to low-grade ore
left on site from Phase 1 test pit work were excavated and stockpiled with
local rock and soil materials used for additional pit reclamation
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to compensate for these ore removal activities.
- - 50 to 75 tons of sample ore were excavated from an outcrop adjacent to
the road and stockpiled.
- - 1997 reclamation measures were evaluated.
Because of safety concerns from an early onset of winter weather, ore
stockpiles were left on-site for hauling in the summer of 1999.
A larger test pit is planned for the last phase in this development
program. This modified plan (now scheduled for 1999-2000) incorporates parts
of the original Phase II and Phase III work areas and will extract about 1500
tons of sample ore and reclaim a 250 square yard area over a 40-day work
period. Revisions are based upon comments from Forest Service technical
personnel and new engineering calculations have been submitted for approval.
This final work phase will also include the following activities:
- - Test ore handling methods (such as conveyor systems) that reduce future
mining costs and lessen natural resource impacts.
- - Expand exploration activities on the undeveloped areas of the claims.
This work will not require construction of new access on to the claims.
Drilling by portable rigs and geophysical surveys may be included as part of
the work scope.
Test pits are designed to simulate mining and reclamation activities in a
controlled location and manner while verifying the deposit geologic structure
model developed from the drilling programs. Details of all phases of the
proposed test work have been prepared and submitted to the Forest Service, and
are available for review.
Since the final phase of development is of larger scope, the Forest
Service has determined that they will require a more detailed environmental
evaluation. Consequently, the Company and the Forest Service have committed
to performing an Environmental Assessment ("EA") for future phases of project
development. The EA was initiated in the fall of 1998 by the Forest Service
with field studies and scoping documents planned for completion in 1999. The
EA is scheduled for completion prior to final Phase III test pit work in the
summer of 2000. The Forest Service will pay for all cost of the EA.
In the fall of 1998, EA field studies were expanded with Forest Service
concurrence to include broader areas of the claims. This was done to
facilitate future Environmental Impact Statement field work (EIS). The EIS
field studies for the 10-year mining area will be done simultaneously with the
EA since the total are for the final development phase and anticipated future
mining includes only about two-thirds of an acre. This expansion of the field
work will give the Forest Service a better idea of the cumulative effects of
probable future operations.
In prior years, all development work was annually bonded by the Company
to guarantee the completion of necessary reclamation. The Forest Service has
never needed to utilize reclamation bonds and has always returned these
securities to the Company after completion of annual work. For 1998 and
beyond, the Forest Service has decided that the Company's project should have
both long-term and annual bonding to provide more continuity from
year-to-year. Both parties are committed (in writing) to having full
development work bonding in place prior in 1999.
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The Company has continuously maintained access road and campsite permits with
the Forest Service since the early 1950's. The current 5-acre camp site
and 6.5-mile access road have been utilized by the Company via annual special
use permits since 1978. As of 1998, the use of these facilities has been made
part of the continuing Plan of Operation so that annual permitting will no
longer be required. Approval to use these facilities is tied to mining and
development activities, extending their use through the life of the project.
ORE PROCESSING
---------------------
The Company began formal evaluation of ore processing and refining over
three years ago. To date, the Company has spent over $100,000 in development
of processes to upgrade and expand the market potential of their already
high-grade hematite pigment product.
The need for an improved ore milling process was identified during core
drilling and sampling activities in 1994-95. Along with known high-grade ore
deposits resided tens of thousands of tons of medium to low-grade ores of
lesser market potential. Instead of wasting this possible resource, the
Company resolved to embark on a program to separate all grades of iron oxide
from host minerals. In-place refining technologies such as heap leaching were
not considered feasible because of the deposit's location in a national
forest. It was decided that the Company should develop a proprietary process
that would allow all marketable ore to be hauled off-site to a company-owned
mill for concentrating. The refining process needed to be self-contained and
incorporate state-of-the-practice recycling technologies.
Initial bench tests on the Company's refining concepts were performed in
1995. This work identified simple acid reduction and floatation of fine
pigment residue as the most probable method to significantly upgrade raw
hematite ore. A series of grinding and floatation bench tests were done, with
the pigment residue from all grades of raw hematite ore improved to more than
90% pure iron oxide. A larger sample of 76% iron oxide raw ore treated by the
same processes (including washed sieving of fines) upgraded to 97.5% pure iron
oxide. Initial measurement indicated a high recovery rate of approximately
80% of available hematite ore.
Results of the small scale bench tests were then utilized to define
probable production equipment needs and develop preliminary processes for
pilot testing. In late 1996, engineers were hired to assess these initial
tests and develop a plan for piloting the refining process. Prototype
schematic plans of a possible plant and process were advanced, with the
consultant recommending pilot work be done by a full-service metallurgical
firm with in-house equipment and expertise in minerals process piloting.
The Company hired a contract research and development organization
specializing in metallurgical and mineral processing test work and consultant
services in 1997. Because of the consultant's minerals experience and their 4
acres of extensive laboratory and pilot plant facilities, a phased contract
for large-scale bench testing and pilot process work was agreed upon and the
most intensive ore mill testing to date commenced.
After 2 years of laboratory testing, a 1/2-ton pilot run was initiated to
identify equipment parameters, define product quality and provide sample
product. A report was issued in the spring of 1999 and sample products were
made available to the Company soon after. The pilot program report noted that
the application of identified separation techniques resulted in final pigment
qualities that matched or exceeded the quality of other natural iron oxide
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pigment grade currently on the market. Use of attrition scrubbing, sieve
sizing and magnetic separation were effective in upgrading the iron oxide
content. Items requiring further investigation included silica floatation,
foam control during carbonate digestion, acid consumption, and trace metal
content reduction.
Additional product characterization work has been performed in 1999 by
the University of Missouri-Rolla Coatings Institute. This work remains on-
going.
Operations
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The Company's business objectives are to mine and mill high grade
hematite (iron oxide) ore for use in the specialty natural pigment market. The
Company's primary focus has been on the development of its mine site, taking
initial mineral samples and designing its milling and mining operation. The
Company completed an extensive $200,000 exploratory drilling program in 1994
and 1995. This drilling program identified 54,000 tons of proven iron oxide
ore deposit within 3 claims. A summary geologic report prepared from the
drill data and all other sources of information also identifies 73,000 tons of
probable iron oxide deposit and upwards of 750,000 tons of estimated ore
deposits.
Upon completion of drilling, a multi-year, multi-phased test pit
reclamation and development plan was commenced in 1996. Initial phases of the
plan have resulted in excavation of over 100 tons of raw ore and hauling of 46
tons of medium to high-grade ore from the site to the Company's consultant
laboratory facilities. Further development work will continued in 1999 to
remove additional ore for refining and analysis. The first part of a
small-scale on-site reclamation project was also completed in 1997 at the site
and will continue to be monitored so that environmentally sound reclamation
techniques can be fully developed.
Market evaluations indicate that up to 500 tons of final product can be
absorbed by identified market segments. To more precisely define plant size
and initial production needs, the Company embarked on a preliminary marketing
campaign in the late spring of 1999, soliciting interest from companies
worldwide. Product brochures and samples developed from the pilot plant work
have been distributed to specialty users who value the hues and
characteristics of natural pigments. A number of small to large pigment users
are presently evaluating the Company's products for their applications.
The Company is nearing the point that it will have the necessary
approvals to commence mining operations. Prior to this time, however, the
Company will have to begin construction of a mill. The Company has completed
the preliminary design of its mill but needs additional financing prior to
preparation of final plans and commencing construction.
The Company is now hopeful, with positive feedback from potential buyers,
that it will be able to obtain the necessary financing to complete its mill
site and commence mining operations. The Company intends to pursue
traditional debt financing, if possible, and to this end, has contacted
several local and regional banks about providing loans for its mill. The
Company anticipates that it will cost approximately $1,500,000 to complete the
mill site and commence mining operations. If traditional debt financing is
not available, the Company will potentially pursue the sale of securities to
raise the necessary funds. There can be no assurance that the Company will be
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able to obtain the necessary funds to commence mining and milling operations.
Competition and Markets
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The Company's products are iron oxide ore pigments. The pigments are used
in cosmetics, artist paints, electronics, magnetic storage products and
multiple other uses including steel coating materials. The Company hopes to
establish itself in a niche specialty market linked to growing consumer trends
for natural color pigments, where higher than average values for products
could be achieved and where competition is limited. To this end, the Company
began to focus on markets that would desire its product for its natural
characteristics and uniqueness of color. The Company is marketing its iron
oxide pigments under the product name Uintah Red(tm). Laboratory and pilot
plant studies indicate that Uintah Red(tm) will result in at least one pigment
that will equal to or exceed current products in terms of purity and meet the
standards of the paint and cosmetic industries. Upon successful completion of
development work, the Company plans to produce up to 500 tons of finished
pigment annually. The Company has also established and internet site to
provide greater visibility to its products (www.uintahred.com).
Prices for natural pigments, particularly red iron oxides, vary
significantly based upon quality, color characteristics, marketing and market
desire. The specialty artist and craft paint market provides an example of
the prices commanded by natural pigments. Retail prices from specialty
market end suppliers throughout the United States show natural red iron oxides
range from $4.50 to $17.48 per pound, with a numerical average of $9.56 per
pound. The Company is hopeful, based upon these prices, to obtain between
$2.00 and $10.00 per pound for its various Uintah Red(tm) products.
In addition to the specialty pigment market, the Company is investigating
the use of other minerals and by products from the mine in other applications.
Specular hematite (micaceous iron oxide) and silica are the primary residual
materials after separation of Uintah Red(tm) pigment. This specular hematite
has been used for over a century as a long-term corrosion protection coating
for structural steel. This is an expanding market as new environmental laws
limit the use of some synthetically based protection products.
The Company use of continuous reclamation techniques, mining methods that
produce no tailings and zero-waste refining methods are also part of the
marketing strategy. A number of potential customers in the natural pigments
market (natural cosmetics manufacturers, in particular) place special value on
companies that utilize these environmentally-sound production methods.
The Company hopes that the quality of its Uintah Red(tm) will allow it to
enter into the specialty niche market were there is currently enough demand,
which is increasing, to cover the competing products. The competition in the
natural pigment market is based on quality of the product. The Company feels
its product Uintah Red(tm) is of equal or superior quality to that of any
other natural pigment on the marketplace; however, until the Company starts
mining and refining its products, there will continue to be uncertainty around
the quality of the products produced from the Company's claims.
Government Regulation
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The Company is subject to numerous regulations on mining and refining its
products. The Company must comply with Forest Service regulations on mining
<PAGE> 9
and reclamation. The Company must submit all plans for its mining operation,
development and exploratory work to the Forest Service which must review and
approve all mining operations prior to work commencing. Since future phases
of development on the mining location are of a larger scope, the Forest
Service has determined that they will require a more detailed environmental
evaluation. Consequently, the Forest Service will perform an environmental
assessment for future phases of project development. Based on commitments by
the Forest Service, the Company intends on having this assessment completed in
time for planned development activities in 2000.
In prior years all development work was annually bonded by the Company to
guarantee the completion of necessary reclamation. The Forest Service has
never needed to utilize reclamation bonds and has always returned these
securities to the Company after completion of the annual work. For 1998 and
beyond, the Forest Service is requiring the Company to maintain long-term and
annual bonding to provide more continuity from year to year. The Company has
continuously maintained access road and campsite permits with the Forest
Service since the early 1950's. The current 5-acre camp site and 6.5 mile
access road have been utilized by the Company via annual special use permits
since 1978. As of 1998, the use of these facilities has been made part of the
continuing Plan of Operation with the Forest Service so that annual permitting
will no longer be required. Approval to use these facilities will now be tied
to mining and development activities, extending their use through the life of
the project. Presently, the Company has complied with all requirements for
its claims and mining operations and considers these requirements highly
important to the success of their marketing strategy. Management of the
Company does not anticipate any problems with further regulations and will
continue to work with the Forest Service to assure no regulatory problems.
Year 2000 Computer Problem
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The Year 2000, or Y2K problem concerns potential failure of certain
computer software to correctly process information because of the software's
inability to calculate dates. The Company, presently is not shipping or
producing product, but is still completing its mining and milling operations
in preproduction stage. Accordingly, it is not dependent on computer systems
and the relevant information on computers is principally scientific
information which should not be affected by the Y2K problem. Additionally,
the Company has all of its computer information stored on alternative media
from that of the PC's hard drives in case of a computer problem. Its web site
is maintained by a Y2K compliant host and is also backed up on a Y2K compliant
PC computer hard drive.
Employees
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The Company has no employees other than its president, Peter Kandaris and
chief financial officer, Pam Kandaris-Cha. (See "Directors and Executive
Officers.")
Offices
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The Company's principal executive offices are located at 341 South Main
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Street, Suite 401, Salt Lake City, Utah 84111. These offices are rented
pursuant to a month to month lease. The monthly lease amount is $ 508.30. The
Company believes that the above facilities are adequate for the foreseeable
needs of the Company.
Item 2. Management's Discussion and Analysis or Plan of Operation
Overview
- --------
The Company's prior activity has been focused on the development and
exploration of its mining claims, as well as, the testing of the ore samples
and refinement of the samples into potential products. This activity has been
time consuming particularly since the Company's mine is located in a region of
Utah that is not accessible, at this time, during the winter months. This
allows the Company only a limited operating window after the snow melts and
before the first snow falls.
The Company has completed its initial exploratory drilling and laboratory
testing programs on its claims and is ready, pending financing, to commence
the mining and milling of ore. The Company still needs financing to complete
the mill and provide initial working capital to fund mining operations until
revenue is produced from the mined ore. The Company estimates that it will
need $1,500,000 to complete the mill and provide initial working capital.
Plan of Operation
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The Company intends to continue to perform development work, marketing
activities and claim support operations through the summer of 1999, and
pending funding commence construction on a mill. The Company does not
anticipate extensive mining operations in 1999 and likely will not have any
revenue.
Once the EA is complete in 1999, the Company will be able to begin more
extensive development operations in 2000.
The Company has relied on its officers and directors to perform work and
testing on the mine. When needed, the officers and directors have provided
funds to offset the cost of exploratory drilling and laboratory testing. The
Company has also relied on the limited sale of its securities to fund
operations. It is anticipated that the officers and directors of the Company
will continue to provide the work and funding support to continue with claim
maintenance and exploratory drilling. The officers and directors do not have
the funds to provide the $1,500,000 needed to construct a mill and commence
full scale mining operations. The Company intends to seek, initially,
traditional banking arrangements to fund the mill construction. If the
Company is unable to obtain debt financing, the Company will investigate
selling its securities to raise the capital needed to fund the mill and mining
operations.
The Company is hopeful that it will be able to have the mill completed by
the summer of 2000 and commence development/mining operations. If the Company
is unable to keep to this time schedule, it is possible that revenues could
not be received by the end of 2000. The Company has sent out samples of its
potential product to multiple users of high quality pigments and received
positive responses from potential buyers. The buyers can not make any
definitive commitments, at this time, until the Company has the funds to
complete the mill and can provide a time table for the delivery of product.
<PAGE> 11
Liquidity and Capital Resources
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As of June 30, 1999, the Company had a negative working capital deficit
of $734,752. Current Assets were only $7,627 requiring the officers and
directors of the Company to continue to use their own funds to keep the
Company operating. The current liabilities of the Company at June 30, 1999,
were $742,379, which primarily consist of accrued salaries to the officers of
the Company of $498,800 and interest on related parties notes of $211,936.
The Company's financial position has not changed significantly from prior
quarters. On December 31, 1998, the Company had a working capital deficit of
$698,685. The difference in working capital from December 31, 1998, and June
30, 1999, is the result of additional accrued salaries and interest.
All of the officers and directors have agreed to allow the Company to
continue to accrue their salaries until sufficient revenue is produced to pay
ongoing salaries, as well as, back salaries. Additionally, the notes payable
are to the same officers and directors who have agreed to delay the payment of
the notes and related interest until sufficient revenue is produced to allow
for such payments. As of December 31, 1998, the Company owed a total of
$228,535 to the estate of Mike Kandaris, 138,897 to Peter Kandaris and
$185,196 to Pam Kandaris-Cha. Even with these understandings among the
officers and directors, the Company still does not have enough funds to pay
existing obligations and in addition to those amounts owed related parties,
the Company must pay approximately $25,596 in current liabilities to third
parties. The Company's financial statements, reflecting the Company's current
financial dilemma, contain a going concern qualification.
The Company's management believes the Company will be able to continue in
business but will not be able to generate revenue until it is able to raise
additional capital to fund the mill construction and initial working capital
need. Management estimates that it will require $1,500,000 in additional
capital to move the Company into a position to generate revenue. The Company
will initially seek capital from traditional debt financing. If debt
financing is unavailable, the Company will probably try to sell its securities
in private transactions to generate the required funds. If the Company has to
sell its securities, current shareholders would probably suffer substantial
dilution, given the Company's current financial conditions. There also can be
no assurance that the Company will be able to obtain the needed capital and
will not generate any future revenue.
Results of Operations
- ---------------------
The Company has not generated any revenue since its inception in 1946.
All activities have been focused on the obtaining of claims, developing the
claims and in preparing the claims to commence mining operations. The Company
funding constraints have slowed progress on developing the mining operations
and significant efforts did not commence until 1994. The Company is hopeful
that with a capital infusion, it will be able to commence mining operations.
The Company continues to incur expenses to keep the mining site open,
comply with environmental regulations and complete studies on the iron ore.
For the six months ended June 30, 1999, the Company incurred $28,924 in
general and administrative expense and had an operating loss of $29,330 with a
net loss of $58,369. These amounts are similar to those incurred for the six
months ended June 30, 1998, except interest expenses increased to $29,039 as
<PAGE> 12
the Company was forced to borrow funds to pay for the cost of completing field
work and studies on the claims.
For the year ended December 31, 1998, the Company had a net loss of
$173,680. The loss was the result of no revenue and general and
administrative expenses of $120,320 and interest expenses of $51,728. The
Company anticipates that expenses will remain relatively the same for future
years until mining operations can be commenced.
Item 3. Description of Property
Uintah Mountain Copper Company is currently developing 30 unpatented lode
mining claims known as the Sunshine Quartz/Hematite Claims project in the
Ashley National Forest of northeastern Utah. (See: Item 1, Description of
Business: "Claims Development" and "Exploratory Work").
Facilities needed to support the claims development work include the 6.5
mile access road and camp site. Beginning in 1978 and through the end of this
year, the Company has maintained and paid for continuous use of these
facilities via annual special use permits. Beginning in 1998, support
facilities to be used by the Company in the Ashley National Forest should be
made part of the active Operating Plan filed with the Forest Service and no
special use permits will be required for future continued use.
In 1978, the Company exchanged grandfathered permits (originally
established in the early 1950's) on a camp site near Moon Lake, Utah and a
well-established access road (heavily used by recreationists for entry to the
High Uinta's Wilderness Area in Utah) for the present camp and road locations.
These new support facilities locations were selected by the Company
specifically for use by the Company in their development of the
Sunshine/Hematite Claims. A new road route was engineered by the Forest
Service to the claims site and the road was paid for and constructed by the
Company in 1979-80. The Company has paid for all road and camp maintenance.
The Forest Service conducts periodic reviews to determine the condition and
maintenance of both facilities. The most recent reviews by the Forest Service
indicate that both facilities are in compliance with reliant resolutions.
The road is approximately 6.5 miles in length and varies from 15 to 30
feet in width within a 30 foot right-of-way. Even though the road is part of
the Forest Service system, maintenance continues to be paid for and performed
by the Company and will continue as long as an active permit or written
authorization for use on claims development is in force. The Company's annual
activities on the road occur from June through October, depending upon spring
snowmelt/runoff and winter snowfall. The road is of adequate size and grade
for travel by heavy equipment trailer trucks and 10 wheel dumps needed to
support the proposed development activities. No substantial road improvements
are anticipated for future activities by the Company.
The mine camp site is 5 acres and is adjacent to the access road.
Distribution telephone and electric lines cross through the site. The camp is
occupied only during times of claim development activity, with portable tent
and self-contained trailers used to house personnel. Domestic water is
brought to the site as needed in small portable tanks or 5-gallon containers.
Sewage is generally controlled in portable trailer stands as needed. The camp
provides a location for proposed sample ore transfer from short-haul dumps to
long-haul trailers, with clean and quiet power available for operation of
future portable conveyor systems. Safety of the development operations is
enhanced by the telephone line at the site (cellular phones are operable in
only a few locations of the canyon). The camp also provides a safe place for
<PAGE> 13
daily operation and safety tailboard meetings, refuge from frequent storm,
reliable temporary personnel housing facilities, and safe temporary materials
and equipment storage location.
Ore Reserves
- ------------
Drilling, geologic and assay programs provide a detailed characterization
of a portion of the Sunshine Quartz/Hematite Claims ore body and establish
proven deposits. The small-scale test pit program provides an abundance of
economic and environmental data to give a thorough evaluation of the mining
and reclamation potential of the project. The exploration and development work
along with preliminary marketing of products are used in concert to develop
ore reserve estimates (that part of the mineral deposit which can be
economically and legally extracted). When used herein the term "reserve" means
that part of a mineral deposit which could be economically and legally
extracted or produced at the time of the reserve determination. The term
"proven reserves" herein refers to reserves for which (a) quantity is computed
from dimensions revealed in outcrops, trenches, workings or drill holes; grade
and/or quality are computed from the results of detailed sampling and (b) the
sites for inspection, sampling and measurement are spaced so closely and the
geologic character is so well defined that size, shape, depth and mineral
content of reserves are well-established. The term "probable reserves" refers
to reserves for which quantity and grade and/or quality are computed from
information similar to that used for proven reserves, but the sites for
inspection, sampling, and measurement are farther apart or are otherwise less
adequately spaced. The degree of assurance, although lower than that for
proven reserves, is high enough to assume continuity between points of
observation.
The most recent geologic evaluation identifies 54,363 tons of drill
proven ore deposit within 3 of the Company's 30 claims. Company analysis
indicates the overburden to ore ratio in these drilled areas varies from 0 for
surface exposures up to 10 at deeper drill holes, with an average value of
2.65. To date, the on-going test pit work shows that (at a minimum) near
surface ore can be economically extracted and the surrounding area
economically reclaimed. Near-surface ore is the iron oxide-bearing rock that
can be extracted with small to intermediate track-mounted equipment to a depth
of 30 to 50 feet below ground surface. The analyses identify just under one
half of these drill-proven deposits as proven reserve, or 20,436 tons of raw
ore. This value will be upgraded as future planned phases of the test pit
project are completed.
Probable reserve estimates show an additional 52,564 tons of raw ore.
This value includes 33,927 tons of drill-proven ore deposits from non-near
surface sources and deposits determined from widely-spaced deep drill holes,
and 18,637 tons from geologic evaluations of surface exposures in adjacent
areas of the claims yet to be drilled.
Raw ore quality in proven reserves has also been evaluated and ranges
from 11% to 90% ferric iron oxide. Analysis of ore samples assayed by Kimball
Laboratories shows the mean purity at 37.67% +/- 27.78% for ungrouped samples
and 56.2% +/- 21.9% for grouped samples. Analysis of verification testing
performed on additional samples by Bondar Clegg Laboratories and showed a mean
purity of 44.38% +/- 15.6% on grouped samples. Separate analysis performed by
the Company combine these laboratory analyses with a visually estimated
hematite content index record used by consultant geologists during core
logging. Through this analysis, average deposit purity was calculated at 26%
ferric iron oxide.
<PAGE> 14
Pilot plant metallurgical balance analysis notes a 62.8% total iron oxide
mineral recovery through use of identified separation processes. Total
marketable product recovery from raw ore is 85% and is distributed between
three final products. Based on these results and previous bench-scale ore
processing work the Company estimates a product recovery rate after
benefaction of 80 to 85%. Using these values and an average deposit purity of
26% ferric iron oxide, the Company estimates that an average of one ton of
final products results from every five tons of raw ore processed, or 2,500
tons of raw ore produces 500 tons of final products.
Marketing of the three products that result from separation processes is
on-going and is needed to verify economic viability of each product. The
Company has determined that annual sales of up to 500 tons of final products
is achievable since this value incorporates less than 3% of the domestic US
consumer's market for natural red iron oxides. Present ore extraction,
benefaction and reclamation methods used in pilot work and/or tested by the
Company along with estimated company operating costs show the break-even price
of products to be approximately $1.00 per pound. Initial reviews of the mining
and processing costs of other natural iron oxide producers indicates that the
Company's costs will be higher than those seen by a number of other natural
iron oxide producers. The Company is, therefore, focusing on high priced
specialties market to compensate for the planned additional expenses. For the
most part, costs are higher because of the Company's commitment to forest
environment preservation and the development of zero-waste refining methods
that utilize all pigment and by-products. Funds derived from possible sales of
by-products could reduce future operating costs, but are not included in these
cost analyses.
Item 4. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth the number of shares of the Company's
Common Stock, par value $0.10, held by each person who is believed to be the
beneficial owner of 5% or more of the 12,075,985 shares of the Company's
common stock outstanding at July 15, 1999, based on the Company's transfer
agent's list, representations and affidavits from shareholders and beneficial
shareholder lists provided by the Depository Trust and securities broker
dealers, and the names and number of shares held by each of the Company's
officers and directors and by all officers and directors as a group.
Title of Name and Address Amount and Nature of Percent
Class Of Beneficial Owner Beneficial Ownership of Class
- -------- ------------------- --------------------- --------
Principal Shareholders
- ----------------------
Common Stephen and Pam (Kandaris)
Cha
2319 N. Hillside Drive
Wellington, Utah 84542 1,135,558 9.4%
Common Peter Kandaris
671 N. Apache Drive
Phoenix, Arizona 85224 1,437,104 11.9%
Common Keith Robinson
3010 Paddlewheel Court
St. Charles, MO 63303 680,000 5.9%
Officers, Directors and Nominees
- --------------------------------
Common Peter Kandaris ----------See Above-----------
<PAGE> 15
Common Pam Kandaris-Cha ----------See Above-----------
Common Keith Robinson ----------See Above-----------
Common Thomas A. Ronayne, II 556,720 4.6%
Common Richard Kelly 495,000 4.1%
All Officers, Directors, and
Nominees as a Group (4 Person) 4,304,382 35.6%
- --------------------------------
Item 5. Directors, Executive Officers, Promoters and Control Persons
The names of the Company's executive officers and directors and the
positions held by them are set forth below:
Name Age Position Director Since
Peter M. Kandaris 41 President, Director 1987
Richard M. Kelly 69 Vice President, Director 1999
Keith Robinson 72 Treasurer, Director 1987
Thomas A. Ronayne, II 38 Secretary --
Pamala Kandaris-Cha 42 Chief Financial Officer --
The term of office of each director is one year and until his successor
is elected at the Company's annual shareholders' meeting and is qualified,
subject to removal by the shareholders. The term of office for each officer
is for one year and until a successor is elected at the annual meeting of the
board of directors and is qualified, subject to removal by the board of
directors.
Biographical Information
- ------------------------
Set forth below is certain biographical information with respect to each
of the Company's officers and directors.
Peter M. Kandaris, 41, President and Director, is the Project Engineer,
responsible for all technical aspects of site development, permitting, milling
and marketing. Mr. Kandaris has been a practicing civil/geotechnical engineer
since 1983 for the Salt River Project in Phoenix, Arizona, and is presently
the Principal Engineer in charge of Testing Services. He served as Vice
President and a Director of the Company from 1978-1981, and has been President
and a Director of the Company since 1987. Mr. Kandaris earned a BS degree
from Arizona State University in 1981 and a Civil/Geotechnical Engineering
degree from the same institution in 1984. He is member of the International
Society of Rock Mechanics and a technical advisor to the Transmission Line
Foundation Advisory Working Group for the Electric Power Research Institute.
He has also served as a regional director and chairman for the Professional
Engineers in Government (Phoenix Branch) and has been a technical affiliate to
the Association of Drilled Shaft Contractors. Mr. Kandaris has been a
registered professional civil engineer in the State of Arizona since 1985.
Keith Robinson, 72, Treasurer and Director, has extensive experience in the
sales and marketing of products produced by the plastics industry and in
developing various new plastics and medical products. Mr. Robinson has
studied the iron oxide pigments market and has authored numerous market
reports for the Company. He currently is the Sales Manager for Drug Packaging,
Inc. of O'Fallon, Missouri. He has attended the College of Eastern Utah, the
College of the Pacific, Idaho State University and the University of New York.
Thomas A. Ronayne, II, 38, Secretary, assists the Company in coordination of
activities at the claims properties and reviews corporate actions. He has
also been employed by Utah Power and Light Company since 1981 in construction
<PAGE> 16
and collections areas, and is a part-time commercial photographer and
night-club manager in the Salt Lake City area. Mr. Ronayne graduated in 1981
with an Associate's degree in Science from the College of Eastern Utah and has
attended the University of Utah.
Pam Kandaris-Cha, 42, chief financial officer, since January 1992 was
consultant to the Company prior becoming the Company's CFO. Ms. Kandaris is
also the president of Mid America Minerals, Inc. Pam Kandaris-Cha is the
brother of Peter Kandaris, the president of the Company.
Richard M. Kelly, 69 vice president marketing, is a retired IBM engineer. Mr.
Kelly has been retired for over five years. At IBM, Mr. Kelly was manager of
program managers. Mr. Kelly received a bachelor degree in industrial
engineering form Pennsylvania State University and a masters in engineering
administration form Syracuse University.
ITEM 6. EXECUTIVE COMPENSATION
The following tables set forth certain summary information concerning the
compensation paid or accrued for each of the Company's last three completed
fiscal years to the Company's or its principal subsidiaries chief executive
officer and each of its other executive officers that received compensation in
excess of $100,000 during such period (as determined at June 30, 1998, the
end of the Company's last completed fiscal year):
SUMMARY COMPENSATION TABLE
- --------------------------
<TABLE>
<CAPTION>
Long Term Compensation
----------------------
Annual Compensation Awards Payouts
------------------- ------ --------
Other Restricted
Name and Annual Stock Options LTIP All other
Principal Position Year Salary Bonus($) Compensation Awards /SARs Payout Compensation
- ------------------ ---- ------ -------- ------------ ------ ------- ------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Peter Kandaris 1998 24,000 -0- -0- -0- -0- -0- -0-
President and CEO 1997 15,000 -0- -0- -0- -0- -0- -0-
1996 15,000 -0- -0- -0- -0- -0- -0-
</TABLE>
_________________
Peter Kandaris receives a salary of 24,000 per year which is currently not
being paid. The salary is being accrued until such time as the Company has
the funds to pay Mr. Kandaris. As of December 31, 1998, Mr. Kandaris was owed
$138,897 in back salary.
Options/SAR Grants in Last Fiscal Year
- --------------------------------------
The Company currently has 249,320 outstanding options to purchase shares
of the Company's Common Stock at $.50 per share. Peter Kandaris does not have
any options to purchase shares of common stock.
Bonuses and Deferred Compensation
- ---------------------------------
None
<PAGE> 17
Compensation Pursuant to Plans
- ------------------------------
The Company does not have any compensation or option plans.
Pension Table
- -------------
Not Applicable
Other Compensation
- ------------------
None
Compensation of Directors
- -------------------------
Currently the directors of the Company do not receive any additional
compensation except for expenses for travel for directors meetings.
Termination of Employment and Change of Control Arrangement
- -----------------------------------------------------------
There are presently nor are there anticipated any agreements regarding
change of control of the Company.
Officer and Director Remuneration
- ---------------------------------
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In January 1992, the Company entered into a contract with Mid America
Minerals, Inc. ("Mid America") to repurchase an operating agreement Mid
America held with the Company. Mid America is a related entity to the Company
through common ownership by Pam Kandaris-Cha who is the Company's chief
financial officer. Ms. Cha is also the president of Mid America. Pursuant to
the contract with Mid America, it transferred the operating agreement on the
mining claims to the Company in exchange for Mid America receiving a ten
percent net profit interest in the mining operations of the Company and the
Company agreed to assume the debt of Mid America. The debt assumed from Mid
America was a deferred compensation liability owing to Pam Kandaris-Cha in the
amount of $125,000. The Company agreed to compensate Ms. Cha $25,000 annually
for five years beginning in 1995. No payments have been made on the amounts
owed and Ms. Cha has allowed the Company to defer the payments until the
Company has the funds to pay the amounts owed. Ms. Cha is not obligated to
continue to allow the Company to defer the amounts owed but has done so only
on a voluntary basis.
The Company has received loans from Pam and Steve (Kandaris) Cha and from
Peter Kandaris in the aggregate amount of $228,535 as of December 31, 1998.
The loans are at an interest rate of 7% and are due and payable on demand.
Item 8. Description of Securities
Description of Securities
- -------------------------
General
-------
<PAGE> 18
The Company is authorized to issue thirty million shares of capital stock
par value $0.10 per share designated as Common Stock. There are 12,075,985
fully paid and non assessable shares of Common Stock currently issued and
outstanding as of July 15, 1999.
Common Stock
------------
The holders of Common Stock are entitled to one vote per share on each
matter submitted to a vote at any meeting of shareholders. Shares of Common
Stock do not carry cumulative voting rights and, therefore, a majority of the
shares of outstanding Common Stock will be able to elect the entire board of
directors and, if they do so, minority shareholders would not be able to elect
any persons to the board of directors. The Company's bylaws provide that a
majority of the issued and outstanding shares of the Company constitutes a
quorum for shareholders' meetings, except with respect to certain matters for
which a greater percentage quorum is required by statute or the bylaws.
Shareholders of the Company have no preemptive rights to acquire
additional shares of Common Stock or other securities. The Common Stock is
not subject to redemption and carries no subscription or conversion rights.
In the event of liquidation of the Company, the shares of Common Stock are
entitled to share equally in corporate assets after satisfaction of all
liabilities.
Holders of Common Stock are entitled to receive such dividends as the
board of directors may from time to time declare out of funds legally
available for the payment of dividends. The Company seeks growth and
expansion of its business through the reinvestment of profits, if any, and
does not anticipate that it will pay dividends in the foreseeable future
PART II
Item 1. Market Price of and Dividends on the Registrant's
Common Equity and Other Shareholder Matters
The Company's Common Stock is traded on the National Association of
Securities Dealers Electronic Bulletin Board ("Bulletin Board") under the
symbol "utmc." The Company's Common Stock has little to no volume and as such
the bid and ask price may not be an accurate measurement of the value of
shares of the Company's Common Stock. The bid prices represent inter-dealer
quotations, without adjustment for retail mark-ups, mark-downs or commissions
and may not necessarily represent actual transactions.
High Bid Low Bid
-------- -------
Quarter Ended December 31, 1998 $0.13 $0.093
Quarter Ended March 30, 1999 $0.32 $0.013
Quarter Ended June 30, 1999 $0.32 $0.13
Quarter Ended September 30, 1999 $0.52 $0.13
At October 22, 1999, the Company's Common Stock was quoted on the
Bulletin Board at a bid and ask price of $0.13 and $0.38, respectively.
Since its inception, the Company has not paid any dividends on its Common
<PAGE> 19
Stock, and the Company does not anticipate that it will pay dividends in the
foreseeable future.
As of July 15, 1999, the Company had 12,075,985 shares of its Common
Stock issued and outstanding held by approximately 243 shareholders.
Item 2. Legal Proceedings
The Company is not, and has not been, involved in any legal proceedings.
Item 3. Changes in and Disagreements with Accountants
The Company has not changed, nor had any disagreements with, its
independent certified accountants.
Item 4. Recent Sales of Unregistered Securities
The Company has relied on the sale of shares of its common stock to fund
operations in recent years. The Company has sold its securities pursuant to
exemptions from the Securities Act relying on Regulation D promulgated
thereunder. The Company sold the shares themselves and no commissions were
paid in connection with the sales. All sales have been to 35 of fewer
investors in a twelve month period and filings have been made with the
relevant states and with the SEC.
In 1998, the Company raised $67,860 through the sale of 135,700 shares to
14 investors all of whom were accredited. In 1997, the Company raised $91,500
through the sale of 273,000 shares to 11 investors all of whom were
accredited.
Item 5. Indemnification of Directors and Officers
The Company's articles of incorporation and bylaws provide for
indemnification of directors and officers by the Company. The articles of
incorporation of the Company limit or eliminate the personal liability of
directors for damages for breaches of their fiduciary duty, unless the
director has engaged in intentional misconduct, fraud, or a knowing violation
of law, or paid a dividend in violation of the Utah Revised Business
Corporation Act.
The bylaws of the Company provide for indemnification for directors and
officers to the full extent provided by the Utah Revised business corporation
act Section 16-10a-901 et. seq. The following is a brief summary of certain
indemnification provisions of the Company's certificate of incorporation and
the Utah Revised Business Corporation Act. This summary is qualified in its
entirety by reference to the text thereof.
Section 16-10a-901 through 909 of the Utah Revised Business Corporation
Act, as amended ("Corporation Act") permits a Utah corporation to indemnify
its directors and officers for certain of their acts. More specifically,
Section 16-10a-902 and 16-10a-907 grants authority to any corporation to
indemnify directors and officers against any judgments, fines, amounts paid in
settlement and reasonable expenses, including attorneys' fees, by reason of
his having been such a corporate director or officer. Such provision is
limited to instances where the director or officer acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests
of the corporation, or, in criminal proceedings, he had no reasonable cause to
believe his conduct was unlawful. Such section confers on the director or
officer an absolute right to indemnification for expenses, including
attorney's fees, actually and reasonably incurred by him to the extent he is
<PAGE> 20
successful on the merits or otherwise in defense of any claim, issue, or
matter. The corporation may not indemnify a director if the director is
adjudged liable to the corporation or deemed to have derived an improper
personal benefit in an action in which the director is adjudged liable.
Section 16-10a-906 of the Corporation Act expressly makes indemnification
contingent upon a determination that indemnification is proper in the
circumstances. Such determination must be made by the board of
directors acting through a quorum of disinterested directors, or by the board
of directors acting on the advice of independent legal counsel, or by the
shareholders. Further, Section 16-10a-904 of the Corporation Act permits a
corporation to pay attorneys' fees and other litigation expenses on behalf of
a director or officer in advance of the final disposition of the action upon
receipt of an undertaking by or on behalf of such director or officer to repay
such expenses to the corporation if it is ultimately determined that he is not
entitled to be indemnified by the corporation or to the extent the expenses so
advanced by the corporation exceed the indemnification to which he is
entitled. Such indemnification provisions do not exclude other indemnification
rights to which a director or officer may be entitled under the certificate of
incorporation, bylaws, an agreement, a vote of shareholders, or otherwise.
The corporation may also purchase and maintain insurance to provide
indemnification.
The foregoing discussion of indemnification merely summarizes certain
aspects of indemnification provisions and is limited by reference to the above
discussed sections of the Corporation Act.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to members of the board of directors, officers,
employees, or persons controlling the Company pursuant to the foregoing
provisions, the Company has been informed that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
<PAGE> 21
PART F/S
--------
Financial Statements and Supplementary Data:
- -------------------------------------------
CONTENTS
PAGE
_ Independent Auditors' Report 22
_ Balance Sheets, December 31, 1998 and
1997 (Audited), and June 30, 1999, 1998 (Unaudited) 23
_ Statements of Operations for the
year ended December 31, 1998, 1997, 1996 and
From January 28, 1946, (inception) to
December 31, 1998, and June 30, 1999, 1998 (Unaudited) 25
_ Statement of Stockholders' Equity, (Deficit)
from inception on January 28, 1946, through
December 31, 1998, and March 31, 1999 (Unaudited) 26
_ Statements of Cash Flows for the
year ended December 31, 1998, 1997, 1996 and
from inception on January 28, 1946, through
December 31, 1998 27
_ Notes to consolidated Financial Statements 28
<PAGE>
<PAGE> 22
WISAN, SMITH, RACKER & PRESCOTT, LLP
------------------------------------
CERTIFIED PUBLIC ACCOUNTANTS
Independent Auditors' Report
Board of Directors
Uintah Mountain Copper Company
(A Development Stage Company)
Salt Lake City, Utah
We have audited the accompanying balance sheets of Uintah Mountain Copper
Company (a development stage company) as of December 31, 1998 and 1997, and
the related statements of operations, stockholders' equity (deficit), and cash
flows for the years ended December 31, 1998, 1997 and 1996 and for the period
from January 28, 1946(inception) to December 31, 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 statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Uintah Mountain Copper
Company as of December 31, 1998 and 1997, and the results of its operations
and its cash flows for the years ended December 31, 1998, 1997 and 1996 and
from January 28, 1946 (inception), to December 31, 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 discussed in Note 2 to the
financial statements, and as shown in the financial statements, the Company is
a development stage company that has incurred net losses since its inception
and has experienced liquidity problems. Those conditions raise substantial
doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 2.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
/S/Wisan, Smith, Racker & Prescott LLP
Salt Lake City, UT
April 20, 1999
132 PIERPONT AVENUE, SUITE 250
SALT LAKE CITY, UTAH 84101
FAX (801) 328-2015
(801) 328-2011
<PAGE>
<PAGE> 23
UINTAH MOUNTAIN COPPER COMPANY
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
June 30, December 31,
1999 --------------------
(Unaudited) 1998 1997
---------- ---------- ----------
ASSETS
CURRENT ASSETS
Cash $ 7,627 $ 112 $ 526
Prepaid expenses - - 2,500
---------- ---------- ----------
TOTAL CURRENT ASSETS 7,627 112 3,026
PROPERTY AND EQUIPMENT
Furniture and fixtures 4,460 4,460 4,460
Vehicles 2,900 2,900 2,900
Leasehold improvements 1,160 1,160 1,160
---------- ---------- ----------
8,520 8,520 8,520
Accumulated depreciation 7,882 7,476 5,944
---------- ---------- ----------
638 1,044 2,576
OTHER ASSETS
Mine development 80,847 78,159 66,659
---------- ---------- ----------
TOTAL ASSETS $ 89,112 $ 79,315 $ 72,261
========== ========== ==========
The accompanying notes are an integral part of the financial statements.
<PAGE>
<PAGE> 24
UINTAH MOUNTAIN COPPER COMPANY
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS (Continued)
June 30, December 31,
1999 --------------------
(Unaudited) 1998 1997
---------- ---------- ----------
LIABILITIES AND EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 25,486 $ 25,486 $ 17,587
Accrued expenses 3,808 - -
Bank overdraft 6,430 -
Accrued salaries 498,800 481,300 436,100
Income taxes payable 100 100 100
Notes payable - related entities 2,249 2,584 -
Accrued interest 211,936 182,897 132,786
---------- ---------- ----------
TOTAL CURRENT LIABILITIES 742,379 698,797 586,573
NOTES PAYABLE - RELATED ENTITIES 238,243 213,659 215,009
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, par value $.10
Authorized 30,000,000 shares
12,075,985 and 11,936,265 shares
issued and outstanding, respectively 1,207,598 1,207,598 1,193,626
Additional paid-in capital 257,518 257,518 201,630
Deficit accumulated in the development
stage (2,356,626) (2,298,257) (2,124,577)
---------- ---------- ----------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (891,510) (833,141) (729,321)
---------- ---------- ----------
TOTAL LIABILITIES AND EQUITY (DEFICIT)$ 89,112 $ 79,315 $ 72,261
========== ========== ==========
The accompanying notes are an integral part of the financial statements.
<PAGE>
<PAGE> 25
UINTAH MOUNTAIN COPPER COMPANY
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Six months ended From Inception
June 30, For the years ended on January 28,
------------------- December 31, 1946 through
1999 1998 -------------------------------------- December 31,
(Unaudited) (Unaudited) 1998 1997 1996 1998
----------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
REVENUE
Sales $ - $ - $ - $ - $ - $ -
Cost of sales - - - - - -
----------- ------------ ------------ ------------ ------------ ------------
GROSS PROFIT - - - - - -
EXPENSES
Depreciation 406 766 1,532 1,532 1,704 7,476
General and administrative 28,924 61,970 120,320 152,365 124,917 2,107,762
----------- ------------ ------------ ------------ ------------ ------------
OPERATING INCOME (LOSS) (29,330) (62,736) (121,852) (153,897) (126,621) (2,115,238)
OTHER INCOME (EXPENSE)
Interest income - - 15 47 51 578
Interest expense (29,039) (25,055) (51,743) (46,222) (34,611) (182,897)
----------- ------------ ------------ ------------ ------------ ------------
(29,039) (25,055) (51,728) (46,175) (34,560) (182,319)
INCOME (LOSS) BEFORE INCOME
TAXES (58,369) (87,791) (173,580) (200,072) (161,181) (2,297,557)
Income taxes - - 100 100 100 700
----------- ------------ ------------ ------------ ------------ ------------
NET LOSS $ (58,369) $ (87,791) $ (173,680) $ (200,172) $ (161,281) $ (2,298,257)
=========== ============ ============ ============ ============ ============
NET LOSS PER SHARE:
Basic $ Nil $ (.01) $ (.01) $ (.02) $ (.01)
=========== ============ ============ =========== ============
Diluted $ Nil $ (.01) $ (.01) $ (.02) $ (.01)
=========== ============ ============ =========== ============
Weighted average number of
shares outstanding
Basic $12,075,985 $ 12,036,980 $ 12,037,671 $11,719,591 $ 11,658,265
=========== ============ ============ =========== ============
Diluted $12,075,985 $ 12,036,980 $ 12,037,671 $11,719,591 $ 11,658,265
=========== ============ ============ =========== ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<PAGE> 26
UINTAH MOUNTAIN COPPER COMPANY
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
From inception on January 28, 1946 through June 30, 1999
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional in the
Common Stock Paid in Development
Shares Amount Capital Stage
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Balance, January 28, 1946 - $ - $ - $ -
Common stock issued for cash, services
and debt at $.10 per share 11,658,265 1,165,826 137,930 -
Net loss for the period from inception
on January 28, 1946 through December
31, 1995 - - - (1,763,124)
------------ ------------ ------------ ------------
Balance, December 31, 1995 11,658,265 1,165,826 137,930 (1,763,124)
Net loss for the year ended December
31, 1996 - - - (161,281)
------------ ------------ ------------ ------------
Balance, December 31, 1996 11,658,265 1,165,826 137,930 (1,924,405)
Common stock issued for cash at
approximately $.44 per share 118,000 11,800 39,700 -
Common stock issued for debt at
$.25 per share 160,000 16,000 24,000 -
Net loss for the year ended December
31, 1997 - - - (200,172)
------------ ------------ ------------ ------------
Balance, December 31, 1997 11,936,265 1,193,626 201,630 (2,124,577)
Common stock issued for cash at
approximately $.50 per share 112,000 11,200 44,800 -
Common stock issued for debt at
$.50 per share 27,720 2,772 11,088 -
Net loss for the year ended December
31, 1998 - - - (173,680)
------------ ------------ ------------ ------------
Balance, December 31, 1998 12,075,985 1,207,598 257,518 (2,298,257)
Net loss for the period ended June
30, 1999 (unaudited) - - - (58,369)
------------ ------------ ------------ ------------
Balance June 30, 1999 (unaudited) 12,075,985 $ 1,207,598 $ 257,518 $ (2,356,626)
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<PAGE> 27 UINTAH MOUNTAIN COPPER COMPANY
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six months ended From Inception
June 30, For the years ended on January 28,
------------------- December 31, 1946 through
1999 1998 -------------------------------------- December 31,
(Unaudited) (Unaudited) 1998 1997 1996 1998
----------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net loss $ (58,369) $ (87,791) $ (173,680)$ (200,172) $ (161,281) $ (2,298,257)
Adjustments to reconcile net
loss to net cash used by
operating activities
Depreciation 406 766 1,532 1,532 1,704 7,476
Changes in operating assets
and liabilities:
(Increase) decrease in
prepaid expenses - - 2,500 (1,000) 5,000 -
Increase in deferred charges (2,688) (10,000) (11,500) (66,659) - (78,159)
Increase (decrease) in
accounts payable - - 7,899 17,587 - 25,486
Increase (decrease) in accrued
expenses 3,808 - - - - -
Increase (decrease) in income
taxes payable - - - 100 - 100
Increase (decrease) in accrued
salaries 17,500 22,600 45,200 46,200 47,100 481,300
Increase in accrued interest 29,039 25,055 50,111 46,082 34,547 182,897
----------- ------------ ------------ ------------ ------------ ------------
Net cash used by operating
activities (10,304) (49,370) (77,938) (156,330) (72,930) (1,679,157)
----------- ------------ ------------ ------------ ------------ -----------
- -
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of property and
equipment - - - - (1,160) (8,520)
----------- ------------ ------------ ------------ ------------ ------------
Net cash used by investing
activities - - - - (1,160) (8,520)
----------- ------------ ------------ ------------ ------------ ------------
CASH FLOWS FROM FINANCING
ACTIVITIES
Common stock issued for cash - 40,000 56,000 51,500 - 1,387,756
Proceeds from (payments on)
long-term debt-related entities 24,249 (11,960) 15,094 104,892 71,153 293,603
Payments on bank overdraft (6,430) - - - - -
Proceeds from bank overdraft - - 6,430 - - 6,430
----------- ------------ ------------ ------------ ------------ ------------
Net cash flows from financing
activities 17,819 51,960 77,524 156,392 71,153 1,687,789
----------- ------------ ------------ ------------ ------------ ------------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 7,515 2,590 (414) 62 (2,937) 112
CASH AND CASH EQUIVALENTS
AT THE BEGINNING OF PERIOD 112 526 526 464 3,401 -
----------- ------------ ------------ ------------ ------------ ------------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 7,627 $ 3,116 $ 112 $ 526 $ 464 $ 112
=========== ============ ============ ============ ============ ============
SUPPLEMENTAL SCHEDULE OF NON-
CASH FINANCING ACTIVITIES:
Issuances of common stock for
debt $ - $ 123,860 $ 13,860 $ 40,000 $ - $ 77,360
=========== ============ ============ ============ ============ ============
Cash paid for:
Interest $ - $ - $ - $ - $ - $ -
=========== ============ ============ ============ ============ ============
Income taxes $ - $ - $ 100 $ 100 $ 100 $ 700
=========== ============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 28
UINTAH MOUNTAIN COPPER COMPANY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997 and June 30, 1999
(Information subsequent to December 31, 1998 is unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
Organization and Operating History
- ----------------------------------
The Company was incorporated in the State of Utah on January 28, 1946. The
Company was organized to conduct mining operations in the State of Utah and
elsewhere. The initial capital of the Company consisted of $35,000 in cash
from incorporators for 350,000 shares of $.10 par value common stock. The
Company initially authorized 1,000,000 shares of $.10 par value common stock.
During 1989 the Company amended its articles of incorporation to have
30,000,000 authorized shares of common stock.
The principal ore found on the Company's mining claims is a high-grade
hematite (iron oxide) ore. The Company had been developing these claims with
the intent on marketing the unique ore to specialty natural pigments market.
During 1994 and 1996, the Company implemented an exploratory drilling program
on its thirty unpatented lode mining claims in its Sunshine Quartz/Hematite
project located in the Ashley National Forest, Duchesne County, Utah.
As a result of this drilling, the Company obtained a geological report, dated
January, 1996, that disclosed proven deposits of approximately 54,000 tons of
iron oxide ore. Upon approval from the U.S. Forest Service, the first phase of
the Company's multi-year, multi-phased test pit reclamation and development
plan commenced in 1996. The removal of ore for testing and the related
reclamation of the site was completed in 1997. All approvals for planned
excavation and reclamation for 1998 have been approved by the U.S. Forest
Service.
Cash and Cash Equivalents
- -------------------------
Cash equivalents are generally comprised of certain highly liquid investments
with original maturities of less than three months.
Property and Equipment
- ----------------------
Depreciation expense is computed on the straight-line method in amounts
sufficient to write off the cost of depreciable assets over their estimated
useful lives.
Normal maintenance and repair items are charged to costs and expenses as
incurred. The cost and accumulated depreciation of property and equipment sold
or otherwise retired are removed from the accounts and gain or loss on
disposition is reflected in net income in the period of disposition.
Income Taxes
- ------------
The Company accounts for income taxes using an asset and liability approach to
financial accounting and reporting for income taxes. The difference between
the financial statement and tax bases of assets and liabilities is determined
annually. Deferred income tax assets and liabilities are computed for those
differences that have future tax consequences using the currently enacted tax
laws and rates that apply to the periods in which they are expected to affect
taxable income. Valuation allowances are established, if necessary, to reduce
the deferred tax asset to the amount that will more likely than not be
realized. Income tax expense is the current tax payable or refundable for the
period plus or minus the net change in the deferred tax assets and
liabilities.
<PAGE> 29
UINTAH MOUNTAIN COPPER COMPANY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997 and June 30, 1999
(Information subsequent to December 31, 1998 is unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Estimates
- ---------
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and the expenses during the
reporting period. Actual results could differ from those estimates.
Earnings per Share
- ------------------
In 1997, the Financial Accounting Standards Board issued Statement No. 128,
"Earnings Per Share" (SFAS 128). SFAS 128 replaced the calculation of primary
and fully diluted net income per share with basic and diluted net income per
share. Basic earnings per share exclude any dilutive effects of options,
warrants, and convertible securities. Diluted earnings per share include any
dilutive effects of options, warrants and convertible securities, and
therefore, are comparable to the earnings per share the Company previously
reported as earnings per share.
Comprehensive Income
- --------------------
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income," which establishes new rules for the
reporting and display of comprehensive income and its components. Application
of SFAS No. 130 had no impact on the Company's net income or stockholders'
equity.
Advertising and Promotion
- -------------------------
All costs associated with advertising and promoting the Company's goods and
services are expensed in the year incurred. During the years ended December
31, 1998, 1997 and 1996, the Company incurred advertising costs of $0, $900,
and $778, respectively.
Mine Development
- ----------------
Exploration and pre-production mine development expenses are charged to
operations in the period in which they are incurred. Costs incurred subsequent
to the geological report issued in 1996, estimating the Company's proven
deposits of iron oxide ore, are capitalized at cost. Capitalized mining costs
will be amortized by the units of production method based on recoverable
proven iron oxide deposits, once production begins.
Stock-Based Compensation
- ------------------------
The Company applies the Accounting Principles Board ("APB") Opinion 25,
"Accounting for Stock Issued to Employees", and the related interpretation in
accounting for all stock option plans. Under APB Opinion 25, compensation cost
is only recognized for stock options issued when the exercise price of the
Company's stock options granted is less than the market price of the
underlying common stock on the grant date. Such costs are expensed over the
vesting period of the stock options.
<PAGE> 30
UINTAH MOUNTAIN COPPER COMPANY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997 and June 30, 1999
(Information subsequent to December 31, 1998 is unaudited)
NOTE 1- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
SFAS No. 123, "Accounting for Stock-Based Compensation", requires the Company
to provide pro-forma information regarding net income as if compensation cost
for the Company's stock option plans had been determined in accordance with
the fair value based method prescribed in SFAS No. 123. To provide the
required pro-forma information, the Company estimates the fair value of each
stock option at the grant date by using the Black-Scholes option-pricing
model.
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. However, the Company does not have significant cash and has not had
significant operations since its inception. Without additional financing it
would be unlikely for the Company to pursue and realize its objectives. The
Company plans to obtain such additional financing through the sale of its
common stock, business development loans, grants and end user product purchase
orders. In the interim, officers of the Company have committed to meeting its
operating expenses.
NOTE 3 - OTHER ASSETS
1998 1997
---------- ----------
Other assets consist of the following:
Mine development $ 78,159 $ 66,659
Accumulated amortization - -
---------- ----------
$ 78,159 $ 66,659
========== ==========
NOTE 4 - INCOME TAXES
The components of income tax expense related to continuing operations
are as follows:
1998 1997
---------- ----------
Current $ 100 $ 100
Deferred - -
---------- ----------
$ 100 $ 100
========== ==========
At December 31, 1998, the Company had net operating loss carryforwards of
approximately $1,310,780, that may be offset against future taxable income
through 2018.
<PAGE> 31
UINTAH MOUNTAIN COPPER COMPANY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997 and June 30, 1999
(Information subsequent to December 31, 1998 is unaudited)
NOTE 4 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
No tax benefit has been reported on the loss carryforward in the financial
statements because the Company believes there is a 50% or greater chance the
carry forwards will expire unused. Accordingly, the potential tax benefits of
the loss carry forwards have been offset by a valuation allowance of the same
amount.
NOTE 5 - NOTES PAYABLE - RELATED ENTITIES
Certain officers and shareholders of the Company have provided the Company
with funding to continue the exploration of its mining claims. Interest on
these amounts is accrued at 7% per year. The officers and shareholders have
the option to receive cash or convert their notes to common stock. The Company
plans to repay these notes in future years, when revenues sufficient to do so
are generated.
NOTE 6 - RELATED ENTITY TRANSACTIONS
In January, 1992, the Company entered into an agreement with Mid America
Minerals, Inc. (Mid America) to repurchase an operating agreement Mid America
held with the Company. Mid America is a related entity to the Company through
common ownership. In exchange for the operating agreement, Mid America will
receive a ten percent net profit interest in the mining operation of the
Company. The Company agreed to assume the debt of Mid America. The debt
assumed, from Mid America, was a deferred compensation liability owing a
shareholder of the Company in the amount of $125,000. The Company agreed to
compensate the shareholder $25,000 annually for five years beginning in 1995;
however, such terms may be renegotiated between the interested parties.
NOTE 7 - STOCK OPTION PLAN
The Company has a stock option plan under which shareholders and others may be
granted options to purchase the Company's common stock. As of December 31,
1998, the Company has granted 249,320 options to certain shareholders at an
exercise price of $.25 or $.50 per share. All of the stock options expire on
August 15, 1999.
A summary of the status of the Company's stock option plan as of December 31,
1998 and changes during the year is presented below:
Weighted
Average
Exercise Exercise Number
Price Price of Shares
------------ ------------ ------------
Balance, December 31, 1996 $ - $ - -
Granted $ 0.25 $ 0.25 97,600
Exercised $ - $ - -
Cancelled or Expired $ - $ - -
------------ ------------ ------------
Balance, December 31, 1997 $ 0.25 $ 0.25 97,600
Granted $ 0.50 $ 0.50 151,720
Exercised $ - $ - -
Cancelled or Expired $ - $ - -
------------ ------------ ------------
Balance, December 31, 1998 $ 0.25-0.50 $ 0.35 249,320
============ ============ ============
<PAGE> 32 UINTAH MOUNTAIN COPPER COMPANY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997 and June 30, 1999
(Information subsequent to December 31, 1998 is unaudited)
NOTE 7 - STOCK OPTION PLAN (Continued)
Options currently outstanding and exercisable are as follows:
Weighted Average
Number Remaining Number
Exercise Price Outstanding Contractual Life Exercisable
-------------- -------------- -------------- --------------
$ 0.25 97,600 0.62 years 97,600
$ 0.50 151,720 0.62 years 151,720
-------------- -------------- -------------- --------------
$ 0.25-0.50 249,320 0.62 years 249,320
============== ============== ============== ==============
The Company has elected to account for stock-based compensation under the
intrinsic value method prescribed by Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees," under which no compensation
cost for stock options is recognized for stock option awards granted at or
above fair market value. During 1998, the Company recognized no compensation
expense. Had compensation cost been recognized based on the estimated fair
market value of the options at the grant date, the Company's net income and
income per share would have been as follows:
1998 1997
------------- ------------
Net loss as reported $ (173,680) (200,172)
Pro-forma net loss (178,666) (202,124)
Basic EPS as reported (.01) (.02)
Pro-forma Basic EPS (.01) (.02)
Diluted EPS as reported (.01) (.02)
Pro-forma Diluted EPS (.01) (.02)
The fair value of the options were estimated using the Black-Scholes option-
pricing model based on the following weighted average assumptions:
1998 1997
------------- ------------
Risk-free interest rate 4.6% 5.7%
Expected life, in years .62 1.62
Dividend yield 0% 0%
Volatility 0% 0%
The weighted average grant date fair value of stock options granted during the
year is summarized as follows:
1998 1997
------------- ------------
Weighted average fair value $ 0.02 0.02
============= ============
<PAGE>
<PAGE> 33 PART III
--------
ITEM 1. INDEX TO EXHIBITS
- -------------------------
Copies of the following documents are included as exhibits to this Form
10-SB pursuant to item 601 of regulation S-B.
SEC
Exhibit Reference
No. No. Title of Document Location
- ------- --------- ----------------- --------
3(i) 3.01 Articles of Incorporation of the Company Original
and related Amendments Filing
3(i) 3.02 Article IV of the Articles of Incorporation Original
(See Exhibit No. 3(i)) Filing
3(ii) 3.03 Bylaws of the Company Original
Filing
4 4.01 Specimen Stock Certificate Original
Filing
99 99.01 Mining Claims Original
Filing
99 99.02 Proof of Labor Original
Filing
27 27 Financial Data Schedule This Filing
<PAGE>
<PAGE> 34
SIGNATURES
------------
In accordance with Section 12 of the Securities Exchange Act of 1934, the
Registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunder duly authorized.
Uintah Mountain Copper Company
By:/S/Peter M. Kandaris, President
By:/S/Pamela Kandaris-Cha, Chief Financial Officer
In accordance with Section 12 of the Securities Exchange Act of 1934, the
Registrant caused this registration statement to be signed on its behalf by
the undersigned in the capacities and on the dates stated.
Signature Title Date
- --------- ----- ----
/S/Peter M. Kandaris President, Director October 27, 1999
/S/Richard M. Kelly Vice President, Director October 27, 1999
/S/Keith Robinson Treasurer, Director October 27, 1999
