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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[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
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[ ]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 0-27019
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Uintah Mountain Copper Company
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(Exact name of registrant as specified in charter)
Utah 87-0369205
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State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization
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, including area code (801)530-1045
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Securities registered pursuant to section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None N/A
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Securities registered pursuant to section 12(g) of the Act:
Common Stock, par value $0.10 per share
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(Title of class)
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.
(1) Yes [X] No [ ] (2) Yes[X] No [ ]
Check if disclosure of delinquent filers in response 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. [X]
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State issuer's revenues for its most recent fiscal year: $-0-
State the aggregate market value of the voting stock held by nonaffiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days: The Company does not have an active trading market and it is,
therefore, difficult, if not impossible, to determine the market value of the
stock. Based on the bid price for the Company's Common Stock at April 7,
2000, of $0.281 per share, the market value of shares held by nonaffiliates
would be $2,099,436.
As of April 7, 2000, the Registrant had 12,075,985 shares of common stock
issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and
the part of the form 10-KSB (e.g., part I, part II, etc.) into which the
document is incorporated: (1) Any annual report to security holders; (2) Any
proxy or other information statement; and (3) Any prospectus filed pursuant to
rule 424(b) or (c) under the Securities Act of 1933: NONE
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
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This periodic report contains certain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995 with
respect to the financial condition, results of operations, business
strategies, operating efficiencies or synergies, competitive positions, growth
opportunities for existing products, plans and objectives of management.
Statements in this periodic report that are not historical facts are hereby
identified as "forward-looking statements" for the purpose of the safe harbor
provided by Section 21E of the Exchange Act and Section 27A of the Securities
Act.
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 claims,
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
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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
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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
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 provide 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
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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 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.
A larger test pit is planned for the last phase in this development
program. 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 2000. 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 costs of the EA.
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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 area 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 2000.
The Company has continuously maintained the 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
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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
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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
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
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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 has hired Jacob's Engineering, Mining Corporation, (Denver,
Colorado office) to perform pigment plant and feasibility study engineering
services for its' Sunshine Q Vartel Hematite. Jacob's has extensive
experience with mining and construction management. Once this study is
complete, the Company will be able, in the summer of 2,000, begin plant
construction subject to financing.
The Company has also reached an agreement with the State of Utah School
and Institutional Trust Lands Administration on a two (2) acre pigment plant
site to be locates south of Price, Utah at its new industrial park. The site
provides the Company with a modern facility, access to transportation and
utilities and space for long term growth.
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
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 be 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
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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
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
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continue to work with the Forest Service to assure no regulatory problems.
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
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.
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ITEM 2. DESCRIPTION OF PROPERTIES
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
daily operation and safety tailboard meetings, refuge from frequent storms,
reliable temporary personnel housing facilities, and safe temporary materials
and equipment storage location.
Ore Reserves
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Drilling, geologic and assay programs provide a detailed characterization
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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 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. 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
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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 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
No matters were submitted to a vote of shareholders of the Company during
the fourth quarter of the fiscal year ended December 31, 1999.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is quoted on the National Association of
Securities Dealers Electronic Bulletin Board under the symbol ""UTMC." Set
forth below are the high and low bid prices for the Company's Common Stock for
the last three quarters. Although the Company's Common Stock is quoted on the
Electronic Bulletin Board it has traded sporadically with no real volume.
Consequently, the information provided below may not be indicative of the
Company's Common Stock price under different conditions. Additionally, the
Company's securities were not trading until the last months of 1999.
Quarter Ended High Bid Low Bid
- ------------- -------- -------
December 1999 $0.09 $0.50
At April 9, 2000, the bid and asked price for the Company's Common Stock
was $0.188 and $0.218 respectively. All prices listed herein reflect
inter-dealer prices, without retail mark-up, mark-down or commissions and may
not represent actual transactions. Since its inception, the Company has not
paid any dividends on its Common Stock, and the Company does not anticipate
that it will pay dividends in the foreseeable future. At April 9, 2000, the
Company had approximately 235 shareholders.
<PAGE> 14
ITEM 6. 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
- -----------------
The Company intends to continue to perform development work, marketing
activities and claim support operations through the summer of 2000, and
pending funding commence construction on a mill. The Company does not
anticipate extensive mining operations in 2000 and likely will not have any
revenue unless funding is received.
Once the EA is complete in 2000, 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 late fall 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> 15
Liquidity and Capital Resources
- -------------------------------
As of December 31, 1999, the Company had negative working capital
of $801,897. Current Assets were only $124.00 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 December
31,1999, were $802,021, which primarily consist of accrued salaries to the
officers of the Company of $516,300 and interest on related parties notes and
accrued interest of $240,776.
The Company's financial position has remained negative. On December 31,
1998, the Company had a working capital deficit of $698,685. The difference
in working capital from December 31, 1998, and December 31,1999, is the result
of additional accrued salaries, interest and an increase in accounts payable.
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, 1999, the Company owed a total of
$242,891 to the estate of Mike Kandaris, $164,970 to Peter Kandaris and
$285,060 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 $42,538 in current liabilities to third
parties which the Company does not have the ability to pay. 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
needs. 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 year ended December 31, 1999, the Company incurred $85,117 in general
and administrative expense and had an operating loss of $85,929 with a net
loss of $144,227. These amounts are similar to those incurred for the prior
year ended, except general and administrative expenses decreased from $120,321
<PAGE> 16
to $85,117. 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 $120,321 and interest expenses of $51,743. The
Company anticipates that expenses will remain relatively the same for future
years until mining operations can be commenced.
ITEM 7. FINANCIAL STATEMENTS
The financial statements of the Company are set forth immediately
following the signature page to this Form 10-KSB.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
The Company has had no disagreements with its certified public
accountants with respect to accounting practices or procedures or financial
disclosure.
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The following table sets forth as of January 12, 2000, the name, age, and
position of each executive officer and director and the term of office of each
director of the Company.
Name Age Position Director of Officer Since
---- --- -------- -------------------------
Peter M. Kandaris 41 President, Director 1987
Richard M. Kelly 70 Vice President, Director 1999
Keith Robinson 72 Treasurer, Director 1987
Thomas A. Ronayne, II 39 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
<PAGE> 17
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, 39, 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
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, 70 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.
Except as indicated below, to the knowledge of management, during the
past five years, no present or former director, or executive officer of the
Company:
(1) filed a petition under the federal bankruptcy laws or any state
insolvency law, nor had a receiver, fiscal agent or similar officer appointed
by a court for the business or property of such person, or any partnership in
which he was a general partner at or within two years before the time of such
filing, or any corporation or business association of which he was an
executive officer at or within two years before the time of such filing;
(2) was convicted in a criminal proceeding or named subject of a pending
criminal proceeding (excluding traffic violations and other minor offenses);
(3) was the subject of any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining him from or otherwise limiting, the
following activities:
<PAGE> 18
(i) acting as a futures commission merchant, introducing broker,
commodity trading advisor, commodity pool operator, floor broker, leverage
transaction merchant, associated person of any of the foregoing, or as an
investment advisor, underwriter, broker or dealer in securities, or as an
affiliate person, director or employee of any investment company, or engaging
in or continuing any conduct or practice in connection with such activity;
(ii) engaging in any type of business practice; or
(iii)engaging in any activity in connection with the purchase or sale
of any security or commodity or in connection with any violation of federal or
state securities laws or federal commodities laws;
(4) was the subject of any order, judgment, or decree, not subsequently
reversed, suspended, or vacated, of any federal or state authority barring,
suspending, or otherwise limiting for more than 60 days the right of such
person to engage in any activity described above under this Item, or to be
associated with persons engaged in any such activity;
(5) was found by a court of competent jurisdiction in a civil action or
by the Securities and Exchange Commission to have violated any federal or
state securities law, and the judgment in such civil action or finding by the
Securities and Exchange Commission has not been subsequently reversed,
suspended, or vacated.
(6) was found by a court of competent jurisdiction in a civil action or
by the Commodity Futures Trading Commission to have violated any federal
commodities law, and the judgment in such civil action or finding by the
Commodity Futures Trading Commission has not been subsequently reversed,
suspended or vacated.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The Company's officers and directors have all filed a form 3. No other
filings were required during the year ended December 31, 1999.
ITEM 10. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
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 $100,000 during such period (as determined at December 31, 1999, the
end of the Company's last completed fiscal year):
<TABLE>
<CAPTION>
Long Term Compensation
----------------------
Annual Compensation Awards Payouts
Other Restricted
Name and Annual Stock Options LTIP All other
Principal Position Year Salary Bonus($) Compensation Awards /SARs Payout Compensation
- ------------------ ---- ------ -------- ------------ ------ ------- ------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Peter Kandaris 1999 24,000 -0- -0- -0- -0- -0- -0-
President and CEO 1998 24,000 -0- -0- -0- -0- -0- -0-
1997 15,000 -0- -0- -0- -0- -0- -0-
</TABLE>
<PAGE>
<PAGE> 19
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, 1999, Mr. Kandaris was owed
$164,670 in back salary including interest.
Cash Compensation
No cash compensation was paid during 1999 although Peter Kandaris and Pam
Kandaris Cha are to receive a salary.
Bonuses and Deferred Compensation
None.
Compensation Pursuant to Plans.
None.
Pension Table
None.
Other Compensation
None.
Compensation of Directors.
None.
Termination of Employment and Change of Control Arrangement
There are no compensatory plans or arrangements, including payments to be
received from the Company, with respect to any person named in Cash
Compensation set out above which would in any way result in payments to any
such person because of his resignation, retirement, or other termination of
such person's employment with the Company or its subsidiaries, or any change
in control of the Company, or a change in the person's responsibilities
following a changing in control of the Company.
ITEM 11. 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 April 7, 2000, 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%
<PAGE> 20
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-----------
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%
(1) Indirect and Direct ownership are referenced by an "I" or "D",
respectively. All shares owned directly are owned beneficially and of record
and such shareholder has sole voting, investment, and dispositive power,
unless otherwise noted.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH MANAGEMENT AND OTHERS.
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, 1999.
The loans are at an interest rate of 7% and are due and payable on demand.
CERTAIN BUSINESS RELATIONSHIPS
During the fiscal year ended December 31, 1999, there were no material
transactions between the Company and its management of principal shareholders
except as set forth above.
INDEBTEDNESS OF MANAGEMENT
Except as set forth above, there were no material transactions, or series
of similar transactions, since the beginning of the Company's last fiscal
year, or any currently proposed transactions, or series of similar
transactions, to which the Company was or is to be a party, in which the
<PAGE> 21
amount involved exceeds $60,000 and in which any director or executive
officer, or any security holder who is known to the Company to own of record
or beneficially more than 5% of any class of the Company's common stock, or
any member of the immediate family of any of the foregoing persons, has an
interest.
TRANSACTIONS WITH PROMOTERS
The Company has not engaged in any transactions with promoters.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a)(1)FINANCIAL STATEMENTS. The following financial statements are included
in this report:
Title of Document Page
- ----------------- ----
Report of Wisan, Smith Racker & Prescott, LLP,
Certified Public Accountants 12
Balance Sheets as of December 31, 1999, and 1998 13
Statements of Operations for the fiscal years ended December
31, 1999, and 1998 14
Statements of Stockholders' Equity for the years ended
December 31, 1999, and 1998, and from inception 15
Statements of Cash Flows for the fiscal years ended
December 31, 1999, and 1998 17
Notes to Financial Statements 18
(a)(2)FINANCIAL STATEMENT SCHEDULES. The following financial statement
schedules are included as part of this report:
None.
(a)(3)EXHIBITS. The following exhibits are included as part of this report:
SEC
Exhibit Reference
Number Number Title of Document Location
- ------- --------- ----------------- -------------
Item 3 Articles of Incorporation and Bylaws
3.01 3 Articles of Incorporated Incorporation
by reference*
3.02 3 Bylaws Incorporated
by reference*
Item 4 Instruments Defining the Rights of Security Holders
- ------- ---------------------------------------------------
4.01 4 Specimen Stock Certificate Incorporated
by reference*
* Incorporated by reference from the Company's registration statement on form
10-SB filed with the Commission, SEC file no.0-27019.
<PAGE> 22
SIGNATURES
------------
In accordance with Section 13 or 15(d)of the Securities Exchange Act of
1934, the Registrant caused this report 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 the Securities Exchange Act of 1934, this report has
been signed by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/Peter M. Kandaris President, Director April 12, 2000
/s/Richard M. Kelly Vice President, Director April 12, 2000
/s/Keith Robinson Treasurer, Director April 12, 2000
<PAGE>
<PAGE> 23
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, 1999 and 1998, and
the related statements of operations, stockholders' equity (deficit), and cash
flows for the years ended December 31, 1999, 1998 and 1997 and for the period
from January 28, 1946 (inception) to December 31, 1999. 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 audits 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, 1999 and 1998, and results of its operations and
its cash flows for the years ended December 31, 1999, 1998 and 1997 and from
January 28, 1946 (inception),to December 31, 1999, 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.
Salt Lake City, Utah
February 29, 2000
<PAGE>
<PAGE> 24
UINTAH MOUNTAIN COPPER COMPANY
(A DEVELOPMENT STAGE COMPANY)
Balance Sheets
December 31, 1999 and 1998
1999 1998
------------- ------------
ASSETS
CURRENT ASSETS
Cash $ 124 $ 112
---------- ----------
TOTAL CURRENT ASSETS 124 112
PROPERTY AND EQUIPMENT 232 1,044
OTHER ASSETS
Mine development 80,846 78,159
---------- ---------
TOTAL ASSETS $ 81,202 $ 79,315
========== =========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts payable $ 42,538 $ 25,486
Bank overdraft - 6,430
Accrued salaries 516,300 481,300
Income taxes payable 100 100
Notes payable - related entities 2,307 2,584
Accrued interest 240,776 182,897
---------- ----------
TOTAL CURRENT LIABILITIES 802,021 698,797
NOTES PAYABLE - RELATED ENTITIES 256,649 213,659
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, par value $.10
Authorized 30,000,000 shares
12,075,985 shares issued and
outstanding $1,207,598 $1,207,598
Additional paid-in-capital 257,518 257,518
Deficit accumulated in the development
stage (2,442,584) (2,298,257)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (977,468) (833,141)
---------- ----------
TOTAL LIABILITIES AND EQUITY $ 81,202 $ 79,315
========== ==========
The accompanying notes are an integral part of the financial statements.
<PAGE> 25
UINTAH MOUNTAIN COPPER COMPANY
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
From Inception
For the years ended on January 28,
December 31 1946 through
--------------------------------------------- December, 31,
1999 1997 1998 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
REVENUE
Sales $ - $ - $ - $ -
Cost of sales - - - -
------------- ------------- ------------- -------------
GROSS PROFIT - - - -
EXPENSES
General and administrative 85,117 120,321 152,365 2,192,879
Depreciation 812 1,532 1,532 8,288
------------- ------------- ------------- -------------
OPERATING LOSS (85,929) (121,853) (153,897) (2,201,167)
------------- ------------- ------------- -------------
OTHER INCOME (EXPENSES)
Interest income 2 16 47 580
Interest expense (58,300) (51,743) (46,222) (241,197)
------------- ------------- ------------- -------------
(58,298) (51,727) (46,175) (240,617)
Loss before income taxes (144,227) (173,580) (200,072) (2,441,784)
Income taxes 100 100 100 800
------------- ------------- ------------- -------------
NET LOSS $ (144,327) $ (173,680) $ (200,172) $ (2,442,584)
============= ============= ============= =============
Net Loss Per Share:
Basic $ (0.01) $ (0.01) $ (0.02)
============= ============= =============
Diluted $ (0.01) $ (0.01) $ (0.02)
============= ============= =============
Weighted average number of
shares outstanding:
Basic 12,075,985 12,037,671 11,719,591
============= ============= =============
Diluted 12.075,985 12,037,671 11,719,591
============= ============= =============
</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 December 31, 1999
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional in the
----------------------------- Paid-in Development
Shares Amount Capitol 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, 1996 - - - (1,924,405)
------------ ------------- ------------- -------------
Balance December 31, 1996 11,685,265 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 year ended
December 31, 1999 - - - (144,327)
------------ ------------- ------------- -------------
Balance December 31, 1999 12,075,985 $ 1,207,598 $ 257,518 $ (2,442,584)
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 27
UINTAH MOUNTAIN COPPER COMPANY
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
From Inception
on January 28,
Years ended December 1946 through
--------------------------------------- December 31,
1999 1998 1997 1999
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(144,327) $ (173,680) $ (200,172) $(2,442,584)
Adjustments to reconcile net
earnings to net cash flows
from operating activities:
Depreciation 812 1,532 1,532 8,288
Changes in operating assets
and liabilities:
(Increase) decrease in prepaid expenses - 2,500 (1,000) -
Increase in deferred charges (2,687) (11,500) (66,659) (80,846)
Increase in accounts payable 17,052 7,899 17,587 42,538
Increase in income taxes payable - - 100 100
Increase in accrued salaries 35,000 45,200 46,200 516,300
Increase in accrued interest 57,879 50,111 46,082 240,776
---------- ---------- ---------- ----------
Net cash used by operating
activities (36,271) (77,938) (156,330) (1,715,428)
---------- ---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment - - - (8,520)
---------- ---------- ---------- -----------
Net cash used by investing
activities - - - (8,520)
---------- ---------- ---------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES
Common stock issued for cash - 56,000 51,500 1,387,756
Proceeds from (payments on) notes
payable-related entities 42,713 15,094 104,892 336,316
Payment on bank overdraft (6,430) - - (6,430)
Proceeds from bank overdraft - 6,430 - 6,430
---------- ---------- --------- ----------
Net cash flows from financing
activities 36,283 77,524 156,392 1,724,072
---------- ---------- ---------- ----------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 12 (414) 62 124
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 112 526 464 -
---------- ---------- ----------- ----------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 124 $ 112 $ 526 $ 124
========== ========== =========== ==========
SUPPLEMENTAL SCHEDULE OF NON-CASH
FINANCING ACTIVITIES:
Issuances of common stock
for debt $ - $ 13,860 $ 40,000 $ 77,360
========== ========= ========== ==========
Cash paid for:
Interest $ - $ - $ - $ -
========== ========= ========== ==========
Income taxes $ 100 $ 100 $ 100 $ 800
========== ========= ========== ==========
</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, 1999 and 1998
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES CONTINUED
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 it's 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 has been developing these claims with
the intent on marketing the unique ore to the 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.
During 1999, the Company signed an engineering services agreement with an
engineering firm to perform plant design and feasibility study engineering
services for a natural pigment production facility. The feasibility study
will encompass the entire project work performed through December 31, 1999.
The results of the study were not available as of the issuance of the December
31, 1999 financial statements. The US Forest Service has completed
environmental field studies on the hematite claims and analysis is underway.
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
- ----------------------
Property and equipment are recorded at cost. 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 for the accounts and gain or loss on
disposition is reflected in net income in the period of disposition.
<PAGE>
<PAGE> 29
UINTAH MOUNTAIN COPPER COMPANY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999 and 1998
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
Estimates
- ---------
The preparation of 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 financial statements and
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
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, 1999, 1998 and 1997, the Company incurred advertising costs of $324, $0,
and $900, 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 have been 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.
Reclassifications
- -----------------
Certain amounts in 1998 and 1997 have been reclassified to conform with the
1999 financial statement presentation.
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
<PAGE> 30
UNITAH MOUNTAIN COPPER COMPANY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999 and 1998
NOTE 2 - GOING CONCERN CONTINUED
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. The Company anticipates beginning operations at the end
of 2000 or beginning of 2001.
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment as of December 31, 1999 and 1998 is detailed
in the following summary:
1999 1998
------------ ------------
Cost:
Furniture and fixtures $ 4,460 $ 4,460
Vehicles 2,900 2,900
Leasehold improvements 1,160 1,160
----------- ------------
8,520 8,520
Less accumulated depreciation (8,288) (7,476)
----------- ------------
Net book value $ 232 $ 1,044
=========== ============
NOTE 4 - OTHER ASSETS
1999 1998
------------ ------------
Other assets consist of the following:
Mine Development $ 80,846 $ 78,159
Accumulated amortization - -
------------ ------------
$ 80,846 $ 78,159
============ ============
NOTE 5 - INCOME TAXES
The components of income tax expense related to continuing operations
are as follows:
1999 1998
------------ ------------
Current $ 100 $ 100
Deferred - -
------------ ------------
$ 100 $ 100
============ ============
<PAGE> 31
UNITAH MOUNTAIN COPPER COMPANY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999 and 1998
NOTE 5 - INCOME TAXES CONTINUED
- -------------------------------
At December 31, 1999, the Company has net operating loss carryforwards of
approximately $1,345,000 available to reduce future taxable income. These
carryforwards will expire beginning in 2007.
No tax benefit has been reported on the loss carryforwards in the financial
statements because the Company believes there is a 50% or greater chance the
carryforwards will expire unused. Accordingly, the potential tax benefits of
the loss carryforwards have been offset by a valuation allowance of the same
amount.
NOTE 6 - NOTES PAYABLE - RELATED ENTITIES
- -----------------------------------------
Certain officers and shareholders of the Company have provided the Company
with funding to continue the exploration of it's mining claims. Interest on
the 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 7 - 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 operations 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 have been renegotiated between the interested parties and
the Company will make payments as revenues sufficient to do so are generated
or as funds become available.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
- --------------------------------------
The Company leases certain facilities under month-to-month rental agreements.
Rental expense under the operating lease agreements totaled $5,795 and $6,132
for the years ended December 31, 1999 and 1998, respectively.
NOTE 9 - STOCK OPTION PLAN
- --------------------------
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 marked price of the
underlying common stock on the grant date. Such costs are expensed over the
vesting period of the stock options.
SFAS No. 123, "Accounting for Stock-Based Compensation", requires the Company
to provide pro-forma information regarding net income as if compensation cost
<PAGE> 32
UNITAH MOUNTAIN COPPER COMPANY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999 and 1998
NOTE 9 - STOCK OPTION PLAN CONTINUED
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.
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 had granted 249,320 options to certain shareholders at an
exercise price of $.25 or $.50 per share. As of December 31,1999 all of the
stock options expired without being exercised.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 124
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 124
<PP&E> 8,520
<DEPRECIATION> (8,288)
<TOTAL-ASSETS> 81,202
<CURRENT-LIABILITIES> 802,021
<BONDS> 0
0
0
<COMMON> 1,465,116
<OTHER-SE> (2,442,584)
<TOTAL-LIABILITY-AND-EQUITY> 81,202
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 85,929
<OTHER-EXPENSES> 58,298
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 58,300
<INCOME-PRETAX> (144,227)
<INCOME-TAX> 100
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (144,327)
<EPS-BASIC> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
