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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 AND EXCHANGE ACT OF 1934 For
the Fiscal Years Ended September 30, 1997.
[ ] TRANSITION REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 \
For the transition period from _______ to __________
Commission File Number: 0-19061
SANTA MARIA RESOURCES, INC.
(Name Of Small Business Issuer In Its Charter)
Nevada 87-0403330
(State Or Other Jurisdiction Of Incorporation (IRS Employer Ident. No.)
or Organization)
3535 E. Pacific Coast Highway, #11 Corona del Mar, CA 92625
(Address Of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number: (714) 549-5666
Securities registered pursuant to Section 12 (b)of the Act: None
Title of each class Name of Exchange on which registered
Common 6,000,583 Shares Outstanding as of the date of this Report
(Title Of Class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12
months (or such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes ___ No_X__
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation SB 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]
State the issuer's revenues for its most recent fiscal year. $-0-
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked price of such stock, as of a specified date within the past 60
days. As of February 18, 2000, the value of such stock was: $80,023.
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FORM 10-KSB
SANTA MARIA RESOURCES, INC.
SEPTEMBER 30, 1999
PART I
INTRODUCTORY STATEMENT.
The Company was originally incorporated as The Movie Greats Network, Inc. on May
22, 1989 under the laws of the State of Nevada. Effective August 4, 1992, the
Company changed its name to Program Entertainment Group, Inc.
The Company commenced its operations in 1989 as a syndicator of motion pictures
and television programming for its "network" of television stations across the
United States. In 1994 the Company ceased operations and consequently wrote off
all of its assets, which consisted mainly of motion picture rights and prints
and liabilities, consisting of various accounts payable. The write off of assets
and liabilities resulted in a net loss in fiscal year 1994-1995 of $132,261.
See, "FINANCIAL STATEMENTS - Note 1."
In 1995 the Company terminated all business operations and remained inactive
until 1997 when certain shareholders of the Company restructured the Company as
a mining company, acquired the mineral properties discussed herein and engaged
current management. Effective August 5, 1997 the Company again changed its name
to Santa Maria Resources, Inc. Since 1997, the Company commenced acquiring
mining claims and paying the incidental expenses of the Company's limited
operations. The discussion below does not address the prior activities of the
Company prior to 1997.
This Annual Report on Form 10-KSB is being filed for the three years ended
September 30, 1997, 1998 and 1999. Throughout this period management has been
acquiring mining claims and conducting preparatory activities to the
commencement of mining operations on its claims. Audited financial statements
for the foregoing three-year period are included herein. No financial
information is available from the Company's operations prior to the
restructuring of its business operations and change of management in 1997.
However, in as much as the Company was dormant for several years prior thereto,
and its current business operations (mining) are completely different from its
prior activities (network programming) management believes that such prior
information is unnecessary to a proper understanding of the Company or its
current operations.
ITEM 1. BUSINESS
General.
SANTA MARIA RESOURCES, INC., (the Company), is a Nevada corporation which owns
141 lode mining claims, called the Santa Maria Mine, in Yavapai County, Arizona,
near the city of Bagdad. With over 10,000 feet of core drillings and
corresponding assays of these claims,
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reserves of gold, silver, molybdenum, mercury, and uranium as well as other
industrial metals and rare earths have already been identified. The Company
has developed an operating plan for a two-phase development of the property
and is in the process of obtaining certified assays of proven ore reserves
in order to secure financing for the commencement of mining.
The primary purpose of the Company is to acquire mineral properties, or the
rights to explore, develop and mine and extract mineral properties, initially in
the U.S. The Company expects that its initial operations, consisting of mining
and milling primarily for gold and silver on its Santa Maria Mine claims, will
begin during calendar year 2000, provided that adequate financing can be secured
to meet the expenses thereof. As of the date of this Report, the Company has
acquired 141 lode mining claims for mineral properties in west central Arizona.
The Santa Maria Mine has expected minimum reserves of 2.75 million ounces of
gold in addition to mineable quantities of other rare earths and industrial
metals. This reserve amount is based on prior studies of a portion of the
property, which alone has proven reserves of 655,000 ounces of gold. However,
commercial mining activities have not been undertaken by the Company as of the
date of this filing. The Company has prepared and submitted an initial mining
plan for approval by the Bureau of Land Management. Approval is expected by
mid-year 2000.
In 1978 the Bureau of Mines created the "heap leaching" method of extracting
minute amounts of "invisible gold" cost effectively. In 1980 the U.S. was hardly
producing any gold at all, now it ranks second after South Africa in gold
production. Nevada, which has seen the greatest increase in gold production in
the U.S., and produced 10% of the world's gold in 1996, ranked third after South
Africa and the rest of the U.S. According to an article in The Arizona Republic
(July 23, 1997), The National Mining Association ranks Arizona number one in the
nation in overall mining output. (In 1995 Arizona produced a total of $4.98
billion worth of metals mined.) Arizona was rated number six in mining jobs in
the U.S., according to the article, with 12,600 employed in the industry. Using
advanced leaching methods as well as biotechnology, "invisible gold," is being
extracted from what appears to the naked eye as just dirt and rocks. Many of the
country's southwest mines are operating with little or no overburden.
Consequently, billions are being made from "dirt and rocks," fueling the fourth
major rush to gold in the history of this country. (USA TODAY July 21, 1997,
page 2A and need reference [date and page] for The New Gold Rush article in USA
Today)
The Santa Maria Mine.
The Company's properties are located in the Eureka Mining District, some of
which are between the historical Sultan and Hayes mines. The Company has named
its properties the "Santa Maria Mine." Certain claims are located between
previously producing mines on Jasper Peak with gold carrying mineralization in
the Jasperoid. The Santa Maria Mine is within five miles of the Cypress Bagdad
open pit mining operation, which is currently processing over 100,000 tons a day
of ores containing copper, silver, molybdenum, gold, zinc, nickel and lead. Of
course, there is no assurance that the Santa Maria Mine will produce similar
yields in the future, assuming that mining operations are commenced as planned
by the Company.
As of the date of this Report, the Company has conducted limited exploratory
work on these claims, with more extensive work having been conducted on certain
of the claims believed by
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management to be the most promising. This work, in some instances, has been
limited to geological mapping, and sampling of minerals uncovered by prior
operations; in other instances, it has involved percussion and rotary drilling
programs which have led to new discoveries and the confirmation of previously
reported minerals. A number of geological, geophysical and geochemical studies
have been conducted as well. Annual assessment work, together with pre-existing
surveys and test reports, in the opinion of management, has confirmed the
existence of commercially exploitable minerals and metals on this property. As
of the date of this Report, almost a half million dollars have been invested in
preparation for the mining of these properties.
Geologist's Report.
In 1987 Nicholas H. Carouso, president of Geo-Processing, Inc., and a consulting
geologist, prepared an Economic Evaluation of the claims comprising the Santa
Maria Mine. Mr. Carouso, as president of Geo-Processing, Inc., and a consulting
geologist, was originally retained to prepare an Economic Evaluation of the
claims using NASA maps, Very Low Frequency electro-magnetic studies, and 800
samples from 10,000 feet of core drillings. In his report, Mr. Carouso estimated
the property had probable ore resources of approximately $900,000,000 down to
one hundred feet, through his analysis and study of the mining claims.
Historically the area was mined down to 400 feet using traditional mining
methods available in the early part of this century. Today, in this area,
producing mines are mining to a depth of 2,000 feet.
This report also identifies significant amounts of rare earths and industrial
metals, as indicated by the table below:
Assay Summary Table
<TABLE>
<CAPTION>
<S> <C>
Mineral Per Ton of Ore
Gold 0.14 Ounces
Silver 0.695 Ounces
Copper .40%
Molybdenum .222%
Manganese .04%
Mercury .05%
Lithium .02%
Beryllium .04%
Cobalt .02%
Chromium .02%
Tellurium .04%
Tungsten .09%
Vanadium .015%
Titanium .80%
Magnesium 15%
Uranium 1%
Rhenium .00015%.
</TABLE>
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The Assay amounts which appear above are averages based on over 10,000 feet of
core drillings and over 800 samples. In the discussion that follows, the dollar
values are base prices for the respective minerals as of the first quarter 1999,
and do not reflect a 20% to 35% refining cost. The production amounts for each
mineral are based on processing 5,000 tons of ore per day. If the Company is
able to fully implement its operating plan, of which there can be no assurance,
production amounts are projected to increase annually and to reach 40,000 tons
per day by the fourth year of operations. The dollar and production amounts
referred to appear in the discussion that follows.
Analysis of Assay Summary.
The following analysis of the foregoing assay summary discusses the various
elements, apart from gold and silver to provide the reader a better
understanding of minerals located in the Santa Maria Mine.
Beryllium (Be): The Santa Maria Mine Assay shows .04% per ton of ore, or 0.8
pounds per ton of ore. Based upon a production rate of 5,000 tons per day, this
equals 4,000 pounds per day. Today, Be is traded mainly in 5% Beryllium-Copper
alloy. It is strong, light and resists corrosion. It is used to strengthen
everything from springs and electronic contacts to boat propellers. There is no
free market for this mineral, so typically producers set the price.
Cobalt (Co): The Santa Maria Mine Assay shows .02% per ton of ore, or 0.4 pounds
per ton. Based upon a production rate of 5,000 tons per day, this equals 2,000
pounds produced per day. Cobalt has a current market price of $20 per pound.
Cobalt is a vital metal in armaments, and indispensable in jet aircraft engines
as well as many other uses in aircraft industries. It is part of the alloy used
in creating heat shields for reentry vehicles such as the space shuttle. South
Africa and Russia are major producers of Co. It is also a component of vitamin
B-12.
Chromium (Cr): The Santa Maria Mine Assay shows .02% per ton of ore, or 0.4
pounds per ton. Based upon a production rate of 5,000 tons per day, this equals
2,000 pounds produced per day. Chromium has a current market price of $4 per
pound. Cr is essential in stainless steel manufacture as well as other specialty
steels. It is used to plate items, primarily in the automobile industry.
Manganese (Mn): The Santa Maria Mine Assay shows .04% per ton of ore, or 0.8
pounds per ton. Based upon a production rate of 5,000 tons per day, this equals
4,000 pounds produced per day. Manganese has a current market price of $0.0925
per pound. Mn is used in batteries, dyes and in glass and ceramics. Its most
critical use is in making steel and iron.
Mercury (Hg): The Santa Maria Mine Assay: .05% per ton or 1 pound per ton. Based
upon a production rate of 5,000 tons per day, this equals 1,000 pounds produced
per day. Mercury has a current market price of $4 per pound. Hg is used
extensively in batteries, mercury vapor lights and scientific instruments,
especially thermometers and barometers.
Lithium (Li): The Santa Maria Mine Assay shows .02% per ton of ore, or 0.4
pounds per ton. Based upon a production rate of 5,000 tons per day, this equals
2,000 pounds produced per day.
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Lithium has a current market price of $10 per pound. Li is the lightest alkali
metal. There are very sophisticated high-tech uses for this mineral in the
aircraft industry. It increases tensile strength and resistance to corrosion in
metals it is alloyed with. Li is also used in various medications.
Molybdenum (Mo): The Santa Maria Mine Assay shows .222% per ton of ore, or 4.44
pounds per ton. Based upon a production rate of 5,000 tons per day, this
equals 22,200 pounds produced per day. Molybdenum has a current market price of
$4.50 per pound. Mo is indispensable in the construction of oil pipelines and
has many applications in aerospace industry. It is used to strengthen and harden
steel.
Rhenium (Rh): The Santa Maria Mine Assay shows .00015% per ton of ore, or 0.0003
lbs per ton. Based upon a production rate of 5,000 tons per day, this equals 15
pounds (or 6.8 kilograms) produced per day. Rhenium has a current market price
of $10,000 per kilogram. Rh, a by-product of Molybdenum (in the form MoS2), is
used primarily as a catalyst in the oil industry in refining gasoline and motor
oil. Oil companies are increasingly using Rh as a substitute for platinum due to
its superior qualities.
Tellurium (Te): The Santa Maria Mine Assay shows .04% per ton of ore, or 0.8
pounds per ton. Based upon a production rate of 5,000 tons per day, this equals
4,000 pounds produced per day. Tellurium has a current market price of $5 per
pound. Te is a by-product of copper and is used as an alloy with copper and
steel. It is also used as a coloring agent to give glass a blue or brown color.
Tungsten (Wo): The Santa Maria Mine Assay shows .09% per ton of ore, or 1.8
pounds per ton. Based upon a production rate of 5,000 tons per day, this equals
9,000 pounds produced per day. Wo has the second highest melting point after
platinum and is used for steel making, armor plating, tanks, shells for
munitions, electrical products and drill tips. China and Russia are the major
producers.
Vanadium (V): The Santa Maria Mine Assay shows .015% per ton of ore, or 0.3
pounds per ton. Based upon a production rate of 5,000 tons per day, this equals
1,500 pounds produced per day. Vanadium has a current market price of $2.50 per
pound. V is one of the most important metals used in an alloy in the
manufacturing of structural steel and oil pipeline.
Titanium (Ti): The Santa Maria Mine Assay shows .8% per ton of ore, or 16 pounds
per ton. Based upon a production rate of 5,000 tons per day, this equals 80,000
pounds produced per day. Titanium has a current market price of $2.25 per pound.
Ti is used in defense and civilian aircraft, submarines and missiles, golf
clubs, as well as specialty vehicles (such as Rolls Royce titanium frames). It
is also being used in buildings, and new applications are regularly being added
to the list.
Magnesium (Mg): The Santa Maria Mine Assay shows 15% per ton of ore, or 300
pounds per ton. Based upon a production rate of 5,000 tons per day, this equals
75,000 pounds produced per day. Mangnesium has a current market price of $2 per
pound. Mg is used in the production of
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automobiles, for machine parts and many consumer products. It is the worlds
lightest structural metal.
Uranium (U): The Santa Maria Mine Assay shows 1% (U238) per ton of ore, or 20
pounds per ton. Based upon a production rate of 5,000 tons per day, this equals
100,000 pounds produced per day. U238 has a current market price of $15 per
pound. U238 is used to produce plutonium and U235 is used in nuclear power
plants.
Phase I Mining Plan.
Based upon Mr. Carouso's report and economic study, which recommended
continuation of exploration and development of the property preparatory to
production, the Company's Phase I Mining Plan calls for completion of
pre-production exploration and commencement of commercial-scale mining
operations as soon as is financially feasible. Although no assurances can be
given, Phase I is expected to be completed within calendar year 2000.
Water, power and full access roads sufficient to commence operations are already
in place. Pre-production exploration and preliminary analysis will be followed
up with an extensive surface and below ground sampling and mapping program. All
information gained will be transferred to overlay maps, to be used in
conjunction with geological and geophysical maps, which will assist with the
design of the mining program.
The Phase I exploration program will supplement the previous exploration effort
with additional geological, geophysical, and geochemical surveys, drilling,
excavations, and road building, primarily in the mill site area. Phase I of the
Mining Plan is designed to identify the total gold reserves in the company's
property. This will furnish pertinent data in order to determine the best
location for the initial on-site benefication test plant, during Phase I, so the
ore can be handled and processed most efficiently. Then the Company plans to
develop and construct a full-scale benefication plant when supplemental
exploration efforts, geological surveys, drilling and testing to prove and
qualify ore reserves have been successfully completed, during Phase II. The mill
site location will be selected based on water availability, nearness to ore
reserves, ease of site preparation, environmental impact, in an area that is
lowest in mineralization, and various other considerations.
Water is essential in all phases of mineral property exploration and
development. It is therefore particularly significant that the company has
access to water rights of the Santa Maria River, which abuts the property, and
which supplies an adequate amount of water for the Company's purposes on a
year-round basis.
Mining during Phase I will incorporate several aspects of the Phase II
full-scale operation. Initial bench preparation is key in this phase. Due to the
nature of the rock already observed (assay reports showing the gold and silver
mixed with the oxidized iron minerals), it is expected that the precious metals
can be effectively recovered by existing benefication methods. Conventional
drilling and blasting techniques will be used to break up the ore bearing rock
which will then be loaded on large capacity trucks and moved to a processing
area. Bulk benching of the
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mineralized zones will furnish material for the benefication plant, and will be
stockpiled for feed when the production plant begins full operations during
Phase II of the Mining Plan.
Subject to the results of benefication studies to be performed, management will
identify the most effective method for recovering the precious metals. Existing
mining operations have experienced gold recovery rates in excess of 75% with
production costs of $120 to $200 per ounce.
The Phase I geological survey will concentrate on mapping and detailed study of
lithology and alteration patterns of the area. The resulting data will then be
correlated with the geophysical survey to assist in the design of future
drilling programs. This survey will consist primarily of the sampling of all the
geophysical data stations, and the assaying of the samples for gold, silver, and
whatever pathfinder metals which seem appropriate. Along with the sampling, a
geochemical field testing by cold extraction method will be used to determine
the extent of base metals present at the sample sites.
Phase II Mining Plan.
The Phase II geophysical survey will be primarily a detailed grid Very Low
Frequency electromagnetic geophysical survey. This will produce data which can
be filtered to eliminate unwanted "noise" (representing those parts of the rock
without economic value) and will also be used to prepare an overlay contour map
of the electromagnetic responses. This overlay contour map will then be placed
over the alteration map, with both maps of the same scale; from the correlation
of the two maps, a 3-D digitalized picture of the property can be created and an
efficient drilling program can be designed. Once the Company has established the
true scope of commercially exploitable ore on its properties, Phase II will
commence full-scale mining activities to extract, process and sell gold, silver,
uranium, rare earths, and industrial metals.
Continued core drilling will be directed to specific target areas determined by
surveys and studies. The drill cores will be studied mineralogically, and will
be assayed for gold, silver and possible other metals. The portion of the core
that is assayed will also be used in benefication studies. The benefication
studies will determine the most effective reagent system and method of precious
metal extraction from the mineralized material.
ITEM 2. PROPERTIES.
The Company currently maintains an address at the offices of two shareholders
located at 5015 Sahara Ave., 125-209, Las Vegas, Nevada, 89102 and 3535 E.
Pacific Coast Highway, #11, Corona del Mar, California 92625. In addition, the
Company has rented approximately 400 square feet of office space from an
independent third party which is utilized as its executive offices at 14605 N.
Airport Drive, suite 308, Scottsdale AZ 85260.
Additionally mining and processing facilities are planned to be located at the
site of the Santa Maria Mine. However, at present, management is in negotiations
with a potential joint venture partner for the development of its mining
properties. If this venture should be concluded, of which there can be
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no assurance, it is likely that the Company will utilize mining and processing
facilities owned by that party in the vicinity of the Santa Maria Mine.
The Company believes it's present facilities will be adequate for its purposes
until commencement of mining operations at which time management expects to
relocate all of its executive and operating offices to the Scottsdale Arizona
area.
ITEM 3. LEGAL PROCEEDINGS.
Neither the Company nor any affiliate of the Company is a party to legal
proceedings requiring disclosure pursuant to the instructions to this item. None
of the Company's officers or directors are involved in any litigation in their
capacities as such officers or directors.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None during the year ended September 30, 1999.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The principal market on which the Company's securities are traded is the
over-the-counter market. Since December 20, 1993 the Company's securities have
been trading on the "Bulletin Board" electronic quotation system. The Company,
originally traded under the symbol "PREG," currently trades under the symbol
"SMRR."
The following table sets forth for the periods indicated the range of high and
low closing bid quotations for the Company's Common Stock during the past three
fiscal years. All figures in the following table have been adjusted to reflect a
1-for-10 reverse split of the Company's Shares in November 1997:
<TABLE>
<CAPTION>
PERIOD HIGH LOW
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<S> <C> <C>
Quarter ended March 30, 1997 $0.01 $0.01
Quarter ended June 30, 1997 $0.01 $0.01
Quarter ended September 30, 1997 $0.20 $0.04
Quarter ended December 31, 1997 $0.6875 $0.25
Quarter ended March 31, 1998 $0.33 $0.125
Quarter ended June 30, 1998 $0.125 $0.125
Quarter ended September 30, 1998 $0.16 $0.125
Quarter ended December 31, 1998 $0.1563 $0.0313
Quarter ended March 31, 1999 $0.17 $0.0313
Quarter ended June 30, 1999 $0.16 $0.10
Quarter ended September 30, 1999 $0.28 $0.0313
Quarter ended December 31, 1999 $0.04 $0.0313
</TABLE>
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On February 18, 1999 the reported closing price (and most recent sale price) for
the Company's Common Stock was $0.04 per share; there were 195 record holders of
the Company's Shares; and there were five (5) market makers for the Company's
securities.
The Company has not paid any dividends and there are presently no plans to pay
any such dividends in the foreseeable future. The declaration and payment of
dividends in the future will be determined by the Board of Directors in light of
conditions then existing, including earning, financial condition, capital
requirements and other factors. There are no contractual restrictions on the
Company's present or future ability to pay dividends. Further, there are no
restrictions on any of the Company's subsidiaries which would, in the future,
adversely affect the Company's ability to pay dividends to its shareholders.
ITEM 6. SELECTED FINANCIAL DATA:
<TABLE>
<CAPTION>
Summary Balance Sheet Data: Year Ended September 30
--------------------------------------------------
1999 1998 1997
-------------------------------------------
(Audited) (Audited) (Audited)
<S> <C> <C> <C>
Total Assets $643,186 $641,237 $600,000
Total Current Assets 43,186 41,237 -
Total Liabilities 41,237 41,237 -
Stockholders Equity 601,949 600,000 600,000
Accumulated Deficit 1,393,920 1,367,215 1,308,547
Summary Earnings Data: Year Ended Septmber 30
---------------------------------------------------
1999 1998 1997
---------------------------------------------------
Total Revenues $ -0- $ -0- $ -0-
Operating Expenses 28,654 58,668 90,131
Net (Loss) From Operations 28,654 58,668 90,131
Interest Income 1,949 - -
Net (Loss) 26,654
Earnings per Share nil ($0.01) ($0.02)
</TABLE>
- -------------------------------------------------------
The Company's fiscal year ends September 30 of each year.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General.
The Company is a "development stage" company. To date, the Company's operations
have been centered around the acquisition and maintenance of mining leases
designated as the Santa Maria Mine (see "BUSINESS OF THE COMPANY" above). The
Company has not yet commenced commercial mining operations on its property. The
annual operating costs incurred to date have been primarily for the maintenance
of the leases and the accumulation of data in anticipation of mining operations.
Although the Company's management has experience in mining as well as oil and
gas production, there is no guarantee or assurance that this management team
will be capable of duplicating any prior success or that the Company will ever
achieve commercially viable mining operations. The ability to commence such
operations is contingent upon the Company securing adequate funding to meet the
cost of such operations.
The Company expects to incur normal operating expenses during the next year. The
amount of net losses and the time required for the Company to reach
profitability, if at all, are uncertain. The likelihood of the Company's success
must be considered in light of the problems, expenses, difficulties, and delays
frequently encountered in connection with a new business, including, but not
limited to uncertainty as to development and the time required for the Company's
plans to be fully implemented, governmental regulatory responses to the
Company's plans as well as the price of gold and other mineral commodities.
There can be no assurance that the Company will ever generate mining revenue or
achieve profitability at all or on any substantial basis.
The Company will need substantial funds to support its long-term mining
development and marketing programs. The Company has no established bank
financing arrangement and no assurance that any such bank financing arrangement
will ever be established.
To the extent that the Company's capital resources, are insufficient to meet
current or planned operating requirements, the Company will seek additional
funds through equity or debt financing, collaborative or other arrangements with
corporate partners, licensees or others, and from other sources, which may have
the effect of diluting the holdings of existing shareholders. The Company has no
current arrangements with respect to, or sources of, such additional financing.
Although in the past the Company's principal shareholders have provided loans to
cover certain operating costs in order to preserve its properties, the Company
has no assurance that existing shareholders will continue to provide any portion
of the Company's future financing requirements.
No assurance can be given that additional financing will be available when
needed or that such financing will be available on terms acceptable to the
Company. If adequate funds are not available, the Company may be required to
delay or terminate expenditures for certain of its programs that the Company
would otherwise seek to develop and commercialize. This would have a material
adverse effect on the Company in that it could result in the loss of certain, or
all, of the Company's mining properties.
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Discussion of Financial Condition
On a consolidated basis, as of September 30, 1999 the Company had total assets
of $643,186 with total liabilities of $41,237 (compared with $641,237 and
$41,237 respectively for September 30, 1998 and $600,000 and $-0- for September
30, 1997). Of the Company's assets at September 30, 1999, cash and cash
equivalent accounted for $43,186, compared to $41,237 at September 30, 1998 and
$-0- at September 30, 1997. The balance of the Company's assets consist of its
mining claims which are carried at $600,000. The Company's liabilities consist
of a note payable to one of the Company's shareholders in the amount of $41,237.
This note was for a 24-month period and is due September 30, 2000, together with
interest thereon at the rate of 6% simple interest.
The Company must undertake certain expenditures in connection with its
preservation of the leases it holds in order to maintain its mining rights.
Management projects that such costs will approximate $14,100 during fiscal 2000.
In addition, the Company will require significant additional funds in order to
complete its pre-mining operations, which are estimated to be $125,000 during
fiscal 2000. Following such expenditures, when the Company is ready to begin
actual mining operations substantial additional funding will be required. At
present, the Company has not identified any source for such funding. Management
projects that the Company will require approximately $350,000 in order to
complete Phase I of its proposed mining plan and commence commercial operations
in the Santa Maria Mine. At present, management has not identified any funding
source able or willing to assist the Company in meeting these costs.
Based upon available cash on hand, management is of the opinion that it will
have adequate funds available to meet its maintenance obligations for the
current fiscal year but not to implement any aspect of its Phase I Mining
Program. Therefore, unless a funding source is identified and appropriate
funding agreements reached, of which there can be no assurance, it is unlikely
that the Company will be able to commence mining operations in the Santa Maria
Mine or to otherwise establish commercially viable operations in the near
future.
Inflation.
During the past few years inflation worldwide has been relatively stable which,
coupled with the relative strength of the economic conditions in the United
States and abroad, is expected to have a beneficial effect upon the Company's
planned operations. In management's opinion, these conditions are expected to
continue for the foreseeable future and management does not anticipate that
inflation will have an adverse impact upon its operations in the foreseeable
future. However, even if inflation were to resume an upward trend, as has been
the result in the past, it is likely that the price of gold and related precious
metals would rise - a situation that would increase revenues and profits from
the Company's planned mining operations.
VII. Forward Looking Statements.
Certain statements made in this report on Form 10-KSB are "forward looking"
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Such statements involve known and unknown risks, uncertainties, and other
factors that may cause actual results, performance, or
12
<PAGE>
achievements of the Company to be materially different from any future results
implied by such forward looking statements. Although the Company believes that
the expectations reflected in such forward looking statements are based upon
reasonable assumptions, the Company's actual results could differ materially
from those set in the forward looking statements.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
Financial Statements: Reference:
- --------------------- ----------
<S> <C>
Independent Auditor's Report F-1
Consolidated Statement of Financial Condition F-2 - F-3
Consolidated Statement of Operations F-4
Statement of Changes in Stockholders' Equity F-5 - F-9
Consolidated Statements of Cash Flows F-10
Notes to Financial Statements F-11 - F-15
</TABLE>
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
13
<PAGE>
SANTA MARIA RESOURCES, INC.
(Formerly Program Entertainment Group, Inc.)
(A Development Stage Company)
FINANCIAL STATEMENTS
SEPTEMBER 30, 1999, 1998, AND 1997
(With independent auditor's report thereon)
14
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To The Board of Directors and Stockholders
Santa Maria Resources, Inc.
I have audited the accompanying balance sheets of Santa Maria Resources, Inc.
(formerly Program Entertainment Group, Inc. a Development Stage Company) at
September 30, 1999, 1998, 1997 and the related statements of income,
stockholders' equity and cash flows for the years then ended. These financial
statements are the responsibility of the company's management. My responsibility
is to express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I 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.
I believe my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material aspects, the financial position of Santa Maria Resources, Inc. for the
dates indicated above and the results of its operations, stockholders' equity
and cash flows for the years then ended, in conformity with generally accepted
accounting principles.
Henry Schiffer
Certified Public Accountant
February 2, 1999
F-1
15
<PAGE>
SANTA MARIA RESOURCES, INC.
(formerly Program Entertainment Group, Inc.)
(A Development Stage Company)
BALANCE SHEETS
ASSETS
------
<TABLE>
<CAPTION>
September 30
----------------------------------------------------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Current Assets:
Cash and Equivalents 43,186 41,237 -
-------- -------- -------
Total current assets 43,186 41,237 -
-------- -------- -------
Other Assets-Mining
claims (Note 3) 600,000 600,000 600,000
------- ------- -------
Total Assets 643,186 641,000 600,000
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
16
<PAGE>
SANTA MARIA RESOURCES, INC.
(formerly Program Entertainment Group, Inc.)
(A Development Stage Company)
BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
September 30
----------------------------------------------------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Other Liabilities:
Note payable to
shareholder (Note 7) 41,237 41,237 -
------- ------- --------
Total Liabilities 41,237 41,237 -
------- ------- --------
Stockholders' Equity:
Common stock-100,000,000 shares
authorized; issued and
outstanding 6,000,583 shares
at September 30, 1999, 1998
and 1997 @ $.01 Par
Value 6,001 6,001 6,001
Paid in capital 1,989,868 1,961,214 1,902,546
Deficit accumulated during
development stage (1,393,920) (1,367,215) (1,308,547)
----------- ----------- -----------
Total Shareholders' Equity 601,949 600,000 600,000
----------- ----------- ----------
Total Liabilities and
Stockholders' Equity 643,186 641,237 600,000
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
17
<PAGE>
SANTA MARIA RESOURCES, INC.
(formerly Program Entertainment Group, Inc.)
(A Development Stage Company)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED SEPTEMBER 30, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
September 30
----------------------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Revenue: -- -- --
- --------------------------------------------------------------------------------
Auto and truck -- 530 1,116
Consultants 5,825 6,380 44,022
Dues and Subscriptions -- 900 135
Postage and delivery -- 499 680
Geology 1,760 9,443 10,137
Legal -- 6,640 1,115
Accounting -- 2,000 2,350
Miscellaneous -- 314 765
Office expenses 482 3,694 2,998
Outside services 4,963 1,235 4,972
Printing -- 1,361 5,035
Rent 14,820 14,560 8,124
Repairs and maintenance -- 5,850 127
Taxes and license 490 235 851
Telephone -- 968 2,097
Travel 314 4,059 5,607
---------- ---------- ----------
Total operating expenses 28,654 58,668 90,131
---------- ---------- ----------
Net (loss) from operations (28,654) (58,668) (90,131)
========== ========== ==========
Other Income:
Interest Income 1,949
Net (loss) (26,705)
Weighted number of shares
Outstanding 6,000,583 6,000,583 6,000,583
========== ========== ==========
Net (loss) per share $ nil $ (.01) $ (.02)
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
18
<PAGE>
SANTA MARIA RESOURCES, INC.
(formerly Program Entertainment Group, Inc.)
(A Development Stage Company)
STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD FROM INCEPTION (MAY 22, 1989) TO SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
Unearned Total
Common Shares Paid In Compensation Retained Stockholders
----------------------
Shares Amount Capital Stock Earnings Equity
------------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance, April 1, 1989 (373,000) (373,000)
Equity of Axiom as of
June 6, 1989 4,470,000 5,000 16,000 (3,000) 18,000
Issuance of Shares 10,200,000 10,000 1,030,000 1,040,000
Stock issued 2,500,000 2,000 123,000 (63,000) 62,000
Amortization of unearned
Compensation 4,000 4,000
Net Income 1990 -- -- -- -- 955,000 955,000
----------- ----------- ----------- ----------- ----------- -----------
Balance March 31, 1990 17,170,000 17,000 1,169,000 (59,000) 579,000 1,706,000
Amortization of Unearned
compensation 14,000 14,000
Net Income 1991 -- -- -- -- 1,094,000 1,094,000
----------- ----------- ----------- ----------- ----------- -----------
Balance March, 1991 17,170,000 17,000 1,169,000 (45,000) 1,673,000 2,814,000
</TABLE>
The accompanying notes are an integral part of these financial statements
F-5
19
<PAGE>
SANTA MARIA RESOURCES, INC.
(formerly Program Entertainment Group, Inc.)
(A Development Stage Company)
STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD FROM INCEPTION (MAY 22, 1989) TO SEPTEMBER 30, 1999
(Continued)
<TABLE>
<CAPTION>
Unearned Total
Common Shares Paid In Compensation Retained Stockholders
Shares Amount Capital Stock Earnings Equity
------ ------ ------- ----- -------- ------
<S> <C> <C> <C> <C> <C> <C>
Balance March 31, 1991 17,170,000 17,000 1,169,000 (45,000) 1,673,000 2,814,000
Issuance of Shares 150,000 30,000 30,000
Amortization of Unearned
Compensation 14,000< 14,000<
Net Income 1992 -- -- -- -- 452,000 452,000
---------- ---------- ---------- ---------- ---------- ----------
Balance March 31, 1992 17,320,000 17,000 1,199,009 (31,000) 2,125,000 3,310,000
Amortization of Unearned
Compensation 31,000< 31,000<
Net rounding Adjustments 335 2,081 2,416<
Net Loss 1993 -- -- -- -- (3,147,767) (3,147,767)
---------- ---------- ---------- ---------- ---------- ----------
Balance September 30,
1993 17,320,000 17,335 1,201,081 -- (1,022,767) 195,649
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
20
<PAGE>
SANTA MARIA RESOURCES, INC.
(formerly Program Entertainment Group, Inc.)
(A Development Stage Company)
STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD FROM INCEPTION (MAY 22, 1989) TO SEPTEMBER 30, 1999
(Continued)
<TABLE>
<CAPTION>
Unearned Total
Common Shares Paid In Compensation Retained Stockholders
------------------
Shares Amount Capital Stock Earnings Equity
------ ------ ------- ----- -------- ------
<S> <C> <C> <C> <C> <C> <C>
Balance September
30, 1993 17,320,000 17,335 1,201,08 (1,022,767) 195,649
Net Loss 1994 -- -- -- 63,388) (63,388)
Balance September
30, 1994 17,320,000 17,335 1,201,081 (1,086,155) 132,261
Net Loss Year 1995
(Write off all assets
and liabilities, net moss) -- -- -- (132,261) (132,261)
Balance September
30, 1995 17,320,000 17,335 1,201,081 (1,218,416) --
Net Income 1996 -- -- -- -- --
Balance September
30, 1996 17,320,000 17,335 1,201,081 (1,218,416) --
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-7
21
<PAGE>
SANTA MARIA RESOURCES, INC.
(formerly Program Entertainment Group, Inc.)
(A Development Stage Company)
STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD FROM INCEPTION (MAY 22, 1989) TO SEPTEMBER 30, 1999
(Continued)
<TABLE>
<CAPTION>
Unearned Total
Common Shares Paid In Compensation Retained Stockholders
------------------
Shares Amount Capital Stock Earnings Equity
------ ------ ------- ----- -------- ------
<S> <C> <C> <C> <C> <C> <C>
Balance September 30, 1996 17,320,000 17,335 1,201,081 (1,218,416) --
1 for 10 stock reversal
and adjustment (15,616,982) (15,632) 15,632 -- --
Stock issued for mining
claims (Note 3) 3,000,000 3,000 597,000
600,000
Stock issued for cash
advances in 1997 1,000,000 1,000 59,374
60,374
Stock issued for consulting
Services 297,565 298 29,459
29,757
Net (Loss) 1997 -- -- -- (90,131) (90,131)
Balance September 30,
1997 6,000,583 6,001 1,902,546 (1,308,547) 600,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-8
22
<PAGE>
SANTA MARIA RESOURCES, INC.
(formerly Program Entertainment Group, Inc.)
(A Development Stage Company)
STATEMENT OF SHAREHOLDERS= EQUITY (DEFICIT)
FOR THE PERIOD FROM INCEPTION (MAY 22, 1989) TO DECEMBER 31, 1999
(Continued)
<TABLE>
<CAPTION>
Unearned Total
Common Shares Paid In Compensation Retained Stockholders
-------------------
Shares Amount Capital Stock Earnings Equity
------ ------ ------- ----- -------- ------
<S> <C> <C> <C> <C> <C> <C>
Contributed capital 58,668 58,668
Net (Loss) 1998 -- -- -- (58,668) (58,668)
--------- --------- --------- --------- ---------
Balance September
30, 1998 6,000,583 6,001 1,961,214 (1,367,215) 600,000
========= ========= ========= ========= =========
Contributed capital 28,654 28,654
Net (Loss) 1999 -- -- -- (26,705) (26,705)
--------- --------- --------- --------- ---------
Balance September
30, 1999 6,000,583 6,001 1,989,868 1,393,920 601,949
========= ========= ========= ========= =========
Contributed capital 10,501 10,501
Net (Loss) 3 months
ending December 31,
1999 -- -- -- (9,940) (9,940)
--------- --------- --------- --------- ---------
Balance December 31,
1999 6,000,583 6,001 2,000,369 1,403,860 602,510
========= ========= ========= ========= =========
The accompanying notes are an integral part of these financial statements.
F-9
23
<PAGE>
SANTA MARIA RESOURCES, INC.
(formerly Program Entertainment Group, Inc.)
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1999 AND
YEARS ENDED SEPTEMBER 30, 1999, 1998 AND 1997
Years Ended September 30,
-----------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net (Loss) (26,705) (58,668) (90,131)
Adjustments to reconcile net (loss) to net
cash (used) by operating activities -- -- --
------- ------- -------
NET CASH (USED) BY
OPERATING ACTIVITIES (26,705) (58,668) (90,131)
------- ------- -------
CASH FLOWS FROM
INVESTING ACTIVITIES -- -- --
CASH PROVIDED FROM
FINANCING ACTIVITIES
Shares issued for services rendered -- -- 29,757
Shares issued for cash advances -- -- 60,374
Paid in capital from shareholders 28,654 58,668 --
Proceeds of loan from shareholder -- 41,237 --
------- ------- -------
NET CASH PROVIDED FROM
FINANCING ACTIVITIES 28,654 99,905 90,131
NET INCREASE (DECREASE)
IN CASH 1,949 41,237 --
CASH BALANCE BEGINNING
OF PERIOD 41,239 -- --
------- ------- -------
CASH BALANCE END OF PERIOD 43,186 41,237 --
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-10
24
<PAGE>
SANTA MARIA RESOURCES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999, 1998 AND 1997
Note 1 Summary of Significant Accounting Policies:
This summary of significant accounting policies of Santa Maria
Resources, Inc. is presented to assist in understanding the
Company's financial statements. The financial statements and
notes are representations of the Company's management, which
is responsible for their integrity and objectivity. These
accounting policies conform to generally accepted accounting
principles and have been consistently applied in the
preparation of the financial statements.
(a) Organization and Business Activities:
The Company was incorporated as The Movie Greats
Network, Inc., on May 22, 1989 under the laws of the state of
Nevada. Effective August 4, 1992 the Company changed its name
to Program Entertainment Group, Inc. and effective August 5,
1997 the Company changed its name to Santa Maria Resources,
Inc.
The Company commenced operations in 1989 as a syndicator
of motion pictures and television programming and provided a
two-hour motion picture package to its "network" of over 100
television stations across the United States.
In 1994 the Company ceased operations and consequently
wrote off all its assets, which consisted mainly of motion
pictures' rights and prints, and accounts payable and certain
notes payable. The write off of all the assets and liabilities
of the Company resulted in a net loss in the fiscal year
1994-1995 of $132,261.
The Company had been inactive from 1994 to August 1997,
except for some maintenance expenses paid by officers and
shareholders. Thereafter, management has commenced acquiring
mining claims and paying incidental expenses of the Company.
(b) Fiscal Year:
In 1997 the Company changed its fiscal year from March
31 to September 30 at the request of the auditing firm. Short
period audits and tax returns were filed.
(c) Basis of Operation:
The Company prepares its financial statements and
federal income taxes on the accrual basis of accounting.
F-11
25
<PAGE>
SANTA MARIA RESOURCES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999, 1998 AND 1997
Note 2 Mergers and Acquisitions:
The Movie Greats Network was a division of Acama Films, Inc.
("Acama"), a corporation organized under the laws of the State
of California. In June, 1989, Acama sold all the assets of the
division (approximate book value of $1.5 million) to Axiom
Technology, Inc. ("Axiom"), a Utah corporation, in exchange
for the assumption by Axiom of the liabilities of the Division
(except $1 million payable to Acama) and 10,000,000 shares of
voting common stock of Axiom.
Following the transaction, Axiom organized The Movie Greats
Network, Inc., a Nevada corporation, as a wholly owned
subsidiary, and effectively changed its domicile by merging
itself into the Company.
The combination was accounted for as a reverse acquisition by
the Company, since the stockholders of Acama received the
majority of the stock (68%) in the combined entity, and
management of Acama became the management of the combined
entity. Accordingly, the financial statements previously
reflected the historical cost basis of the Division's assets,
liabilities and operations and insignificant operations of
Axiom for the period April 1, 1989 to the merger date.
In 1994 the Company ceased operations and consequently wrote
off all its assets, which consisted mainly of motion pictures'
rights and prints, accounts payable and notes payable. The
write-off of all the assets and liabilities of the Company
resulted in a net loss in the fiscal year 1994-1995 of
$132,261.
Note 3 Mining Claims Acquired and Purchased-Appraised Values:
The Company owns 141 unpatented contiguous mining claims
totaling over 2,960 acres in Township 13, Yavapai County,
Arizona. These claims have a history of mining activity from
the middle of the 19th century to the beginning of World War
II. Gold, silver, copper and other minerals were recovered in
important quantities. The previous owners started acquisition
of this claim group in the early 1940's and by 1978 the group
totaled 134 claims. Exploration, drilling and assessment work
was done and several geological reports were completed
indicating the presence of economically viable deposits of
precious metals and complex ores. The Company's objective was
to regain the initial position held by the previous owners in
order to duplicate the original maps, all of the exploration,
assessment and geology that had been completed for the mining
plan of operations which was based on the original 134 claims.
The Company located, staked and filed 37 claims of the
original group that had reverted to the BLM for non-payment of
maintenance fees, plus an additional 7 claims, for a total of
44 claims, with the BLM in September 1997. A Company
shareholder purchased the remaining 97 claims of the original
group from the prior owner and quit claimed them to the
Company in 1998. The Company issued 3 million shares of Rule
144 restricted common stock in September 1997 to entities
which were responsible for the Company obtaining title to
these mining claims.
F-12
26
<PAGE>
SANTA MARIA RESOURCES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999, 1998 AND 1997
Note 3 Mining Claims-Appraisal (continued):
Appraisal and Valuation
Mr. N. H. Carouso, President of Geo-Processing, Inc., was
retained in 1985 by the prior owners of these claims to
prepare an Economic Evaluation of the 134 claims group. Mr.
Carouso earned a Bachelor of Arts and a Master of Science
degree from the University of California, College of
Engineering, Department of Mineral Technology and Mining. This
report was for the recovery of gold and silver only.
The following is a statement from Mr. Carouso's report:
"The mining claims project area offers excellent economic
potential. With the gold and silver mineralization cropping
out at the surface and the favorable topography for surface
mining techniques, it is felt that an early cash flow can be
expected. The gross dollar potential of the areas evaluated,
which the writer (Mr. Carouso) feels represents only about 30%
of the potential of the entire group of claims, if combined,
could be $280,836,000.00. Even if one then takes a 50%
confidence factor as to the grade of ore, the gross dollar
potential would be $115,418,000., and with an expected 70%
recovery of precious metals, the adjusted gross dollar
potential would be $80,792,600.00 based on a spot price of
$325/oz, for gold and $6.00/oz. for silver, and mining to a
depth of 100 feet."
On October 7, 1997 a letter from Rich Rhodes, Director of
Operations of Golden West Mining Services listed several
minerals available from these mines as reported from the
United States Geological Survey conducted in 1940. Of the
minerals listed, one of the most notable was a content of
Uranium Ore, U308 (Yellow Cake) which has a content ranging
from 0.43% to 1.77% by volume.
On April 22, 1998 the Company obtained an upgrade report
prepared by California Core Drilling, signed by R. W. Jones,
Senior Geologist. This report covered a reserve area of 3,000
ft. by 200 ft. deep. This area was based on just two of the
mining claims, approximately 40 acres, and discussed the
potential availability of mining U308 Uranium Ore found from
the processing of the approximate 28,800,000 tons of Ore
Reserves.
The additional minerals available from the mines have been
ignored until recently due to the expenses of mining what is
referred to as "Complex Ores". Management is currently
obtaining bids from gas plasma process recovery firms to
determine the viability of economical recovery of these
Complex Ores.
All the ores from test samples show approximately a valuation
based on yields of slightly over $1,100 per ton.
F-13
27
<PAGE>
SANTA MARIA RESOURCES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999, 1998 AND 1997
Note 3 Mining Claims-Appraisal (continued):
The Company filed a renewal of the Mining Plan of Operations
that was initially approved by the United States Department of
Interior on July 27, 1987 (Decision EA-AZ-026-87-41
MPO-87-K-06) during the 4th quarter of calendar 1998. The
Company has received a response from the Department of
Interior requesting additional detail regarding the placement
of specific exploratory drill holes and written review by a
Mining Engineer and Geologist.
Note 4 Capital Structure:
The Company's original Articles of Incorporation provided for
capital stock authorized of 100,000,000 shares of $.001 par
value common stock. In an amendment filed with the Secretary
of State of Nevada, effective October 8, 1997 the Company
maintained its total capitalization at 100,000,000 authorized
common shares and changed the par value to $.01.
In fiscal 1997 the Company's Board of Directors approved a 1
for 10 reverse stock split.
In 1997 cash advances were made on behalf of the Company by
certain shareholders. In consideration of those advances the
Company issued 1,000,000 shares of restricted Rule 144 stock
to these shareholders in exchange for those advances.
Note 5 Income Taxes:
At September 30, 1999, the Company has a federal operating
loss carryforward of $1,393,920 for financial accounting and
federal income tax purposes. Utilization of the net operating
loss in any taxable year during the carryforward period may be
subject to an annual limitation due to the ownership change
limitations imposed by the tax law.
The net operating losses will expire at various dates
commencing in the year 2003 through 2014.
The deferred tax asset consists of the future benefit of net
operating loss carryforwards. A valuation allowance limits the
recognition of the benefit of deferred tax assets until
realization is reasonably assured by future profitability.
The following is a summary of the deferred taxes:
<TABLE>
<S> <C>
Deferred asset $491,558
Valuation allowance (491,558)
--------
0
========
</TABLE>
Note 5 Options & Warrants:
The Company has not adopted a stock option plan. There are no
warrants issued or outstanding.
F-14
28
<PAGE>
SANTA MARIA RESOURCES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999, 1998 AND 1997
Note 6 Commitments:
The Company has been provided office space at a nominal charge
on a month to month basis by a shareholder.
Note 7 Related Party Transactions:
The following shareholder has loaned money to the Company:
Robert Sturges $41,237 24 months 6% simple interest
from date of loan, 9/30/98.
These monies were deposited in an interest bearing account
which totaled $43,185.45 as of 9/30/99.
F-15
29
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) and (b) Identification of directors and executive officers.
The following identification of officers and directors, including biographies,
set forth the present officers and directors:
<TABLE>
<CAPTION>
Name Age Position Held
---
<S> <C> <C>
Hubert Stroud 60 President, CEO and Director
Carl W. O'Baugh 66 Vice President and Director
Ekkehard "Hardy" Sieck 57 Secretary, Chief Financial Officer and Director
Larry Dietz 45 Chief Operations Officer and Director
</TABLE>
Directors hold office until the next annual shareholders meeting or until their
death, resignation, retirement, removal, disqualification, or until a successor
has been elected and qualified. Vacancies in the Board are filled by majority
vote of the remaining Directors. Officers of the Company serve at the will of
the Board of Directors.
(c) Identification of significant employees. None
(d) Family relationships.
There are no family relationships among the Officers or Directors. There are no
arrangements or understandings pursuant to which any person was elected as an
officer of the Company. All officers hold office for one year or until their
successors are elected and qualified, unless otherwise specified by the Board of
Directors; provided, however, that any officer is subject to removal with or
without cause, at any time, by a vote of the Board of Directors.
(e) 1. Business Experience.
Principal occupations of directors and officers are as follows:
Hubert W. Stroud is President and Director of the Company. He graduated from
Universal Technical College in Miami, Florida with a degree in Marketing. He
attended the University of Houston majoring in Marketing and Social Studies. He
has been the President and CEO of Consolidated Minerals, Inc. which develops oil
and gas properties since 1987. He is a past President of Day and Night
Petroleum; Inc. (1992 to 1995). He has been the President of the Louisiana
Country Music Association and on the
30
<PAGE>
Board of Directors of the Country Music Association of America since 1990.
He is also a Member of Country Music of America Hall of Fame and the Alabama
Country Music Hall of Fame, Country Music Association of America since 1992.
Ekkehard "Hardy" Sieck is Vice President, Chief Financial Officer and Director
of the Company. He graduated from Volkshochshule Stuttgart, Germany, with a
degree in Business and later attended Centenary College of Louisiana, majoring
in Geology and Petroleum. From 1980 to 1984, he served as President and CEO of
Blue Creek Exploration, Inc. and was responsible for overseeing the drilling and
completion of over thirty (30) drilling programs. Mr. Ekkehard formed Tysco Oil
and Gas Corporation, an independent oil and gas company which he serves as its
President and CEO, in 1984 and began the exploration and operation of oil and
gas properties. Mr. Sieck has drilled and completed approximately 70 properties
and has experienced a completion success rate of approximately 88%. Sieck is as
a sought after consultant regarding of drilling, work over, fracking, log
interpretations, pipeline locations and maintenance in East Texas and North
Louisiana.
Larry Dietz is Vice President and Chief Operating Officer in charge of Land
Management and Development, and a Director of the Company. Mr. Dietz brings to
the Company a seasoned expertise in the field of mining, as well as an extensive
knowledge of the entire mining industry in the western United States and
especially in the State of Arizona. He is responsible for managing the
properties owned or under the control of the Company as well as identifying
additional properties for the Company to acquire and/or lease for the purpose of
developing their mineral resources. While in the U.S. Navy he had a Top
Secret/Crypto security clearance. He attended the University of Nebraska School
of Technology and Agriculture where he earned a degree in Drafting, Surveying
and Soil Science. He has been a consultant to the mining industry since 1982 as
President of Dietz and Associates. He authored and released the updated,
corrected and expanded versions of the Arizona Mineral Industry Location System
(MILS) which is a database system for use on micro computers identifying all
known mineral occurrences in Arizona. Mr. Dietz also developed and released
Mineral Databases from the U.S. Bureau of Mines for the western U.S., as well as
a program called DLG1-2 which consists of the Digital Line Graph (DLG) data at a
scale of 1:250,000 for the entire U.S. providing graphic displays of the mineral
data for use on micro computers. Mr. Dietz is approved by the U.S. Department of
Justice to provide title evidence and abstracts for both surface and mineral
rights to lands located in the State of Arizona, and his Land Status Reports are
recognized by the Vancouver Stock Exchange. He is registered as an Expert
Witness with the Technical Advisory Services for Attorneys. He is currently an
associate member of the Society of Mining Engineers of the American Institute of
Mining, Metallurgical and Petroleum Engineers. Mr. Dietz is also proficient in
the use of computers, database, word-processing, CAD, graphics and
communications software.
Carl W. O'Baugh is Secretary and Director of the Company. He is responsible for
supervising the drilling, exploration and testing conducted on the properties
under development by the Company, including all aspects of quality control. He
has been President of Golconda Gems, Inc., from 1973 to the present, a wholesale
gem cutting, importing and distribution company which has had operations in the
United States and Mexico. Mr. O'Baugh is a past President of American Metals and
Minerals, Inc., (1995 to 1997) a Nevada corporation owning mining claims in
central Arizona.
31
<PAGE>
2. Directorships.
None, other than listed above.
(f) Other Involvement in Certain Legal Proceedings.
There have been no events under any bankruptcy act, no criminal proceedings and
no judgements or injunctions material to the evaluation of the ability and
integrity of any director or executive officer during the past five years.
ITEM 11. EXECUTIVE COMPENSATION
At present, none of the Company's officers or directors devotes their full time
to the affairs of the Company and none receive any compensation for their
services. Each of the Company's present officers received their shares of the
Company's common stock in consideration of their agreement to serve without
compensation until the Company achieves commercial operations and generates
revenues or is able to otherwise secure adequate funding in order to pay such
salaries (see, "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.") The Company has agreed that employment agreements will be
negotiated with each officer at such time as the Company is able to pay
compensation from operating revenues or other funding.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security ownership of certain beneficial owners.
<TABLE>
<CAPTION>
Name Relationship Number of Shares Percentage(1)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Spencer Eubank Shareholder 527,000 8.8%
Robert Dultz Shareholder 608,499* 10.1%
Robert Sturges Shareholder 970,000 16.2%
Totals: 1,470,000 35.1%
</TABLE>
*350,000 shares are in the name of a Trust controlled by Mr. Dultz and 163,499
shares are in the name of a limited liability company of which Mr. Dultz is the
managing member.
32
<PAGE>
(b) Security ownership of management.
<TABLE>
<CAPTION>
Name Relationship Number of Shares Percentage(1)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Hubert Stroud President, CEO 1,020,000 17%
and Director
Carl W. O'Baugh Secretary and 60,000 1%
Director
Ekkehard "Hardy" Sieck Vice President, 500,000 8.3%
Chief Financial
Officer and
Director
Larry Dietz Chief 50,000 .8%
Operations
Officer and
Director
Officers & Directors as
a group (4 persons) 1,630,000 27.1%
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Based upon a total of 6,000,583 shares of Common Stock issued and
outstanding as of the date of this Report.
(c) Changes in Control.
None.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
1. The Company issued 3 million shares of restricted common stock in September
1997 to Robert Sturges in consideration for Mr. Sturges' transfer to the
Company of title to the original 44 mining claims that comprise the Santa
Maria Mine. Another Company shareholder, Spencer Eubank, purchased the
remaining 97 claims of the original group from the prior owner and
quitclaimed them to the Company in 1998 in exchange for 500,000 shares of the
Company's common stock.
2. In 1998 Robert Sturges loaned $41,237 to the Company for a period of 24
months, at 6% simple interest from date of loan, 9/30/98. These moneys were
deposited in an interest bearing account that totaled $43,185.45 as of
9/30/99. These funds remain available for use by the Company in meeting its
annual expenses in connection with its maintenance of the Company's mining
claims. Mr. Sturges has deferred repayment of this loan until such time as
the Company commences commercial operations.
33
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, there unto duly authorized.
SANTA MARIA RESOURCES, INC.
Date: February 28, 2000 By: /s/Hubert Stroud
________________________
Hubert Stroud, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Dated: February 28, 2000 /s/ Hubert Stroud
Hubert Stroud, President ----------------------------------
Chief Executive Officer
& Director
Dated: February 28, 2000 /s/ Carl W. O'Baugh
Carl W. O'Baugh, Vice ---------------------------------
President and Director
Dated: February 28, 2000
Ekkehard Sieck /s/ Ekkehard Sieck
Secretary, Chief Financial Officer ---------------------------------
& Director
Dated: February 28, 2000 /s/ Larry Dietz
Larry Dietz, Chief Operations ---------------------------------
Officer & Director
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> SEP-30-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 600,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 600,000
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 6,001
0
0
<OTHER-SE> 1,902,546
<TOTAL-LIABILITY-AND-EQUITY> 600,000
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 90,131
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (90,131)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (90,131)
<EPS-BASIC> (.02)
<EPS-DILUTED> (.02)
</TABLE>
