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U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
ANNUAL REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended August 31, 1999
Commission file number 001-05970
Silver Butte Mining Company
(Name of small business issuer in its charter)
Idaho 82-0263301
(State or other jurisdiction of (IRS Employer Identification
incorporation or organization) Number)
520 Cedar Street, Sandpoint, ID 83864
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (208) 263-5154
Securities registered under Section 12(b) of the Exchange Act:
Title of each class: Name of each exchange on which registered
Common stock, $.05 per share None *
* The shares of the issuer are quoted by the Spokane Quotation Bureau.
Securities registered under section 12(g) of the Exchange Act:
None
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities 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 requirement for the past 90 days.
Yes _X_ No ___
Check if there is no disclosure of delinquent files in response to Item 405
of Regulation S-B contained in this form, and no disclosure will be contained,
to the best or 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. __
State issuer's revenues for its most recent fiscal year: $4,112
The aggregate market value of voting stock held by nonaffiliates computed
by reference to the average bid and asked prices as of October 31, 1999, was
$313,150.
The number of shares of Common Stock, $.05 par value,
outstanding as of October 31, 1999, was 7,828,748.
DOCUMENTS INCORPORATED BY REFERENCE: None
Submission total: 19 pages. Table of Contents: page 2.
<PAGE>
SILVER BUTTE MINING COMPANY
FORM 10-KSB ANNUAL REPORT
August 31, 1999
TABLE OF CONTENTS
<TABLE>
Page No.
<S> <C>
PART I
Item 1. Description of Business . . . . . . . . . . . . . 3
Item 2. Description of Property . . . . . . . . . . . . . 4
Item 3. Legal Proceedings . . . . . . . . . . . . . 4
Item 4. Submission of Matters to a Vote of Security Holders . . . 4
PART II
Item 5. Market for Common Equity and
Related Stockholders Matters . . . . . . . . . . . . . 4
Item 6. Management's Discussion and Analysis or
Plan of Operations . . . . . . . . . . . . . 5
Item 7. Financial Statements . . . . . . . . . . . . . 6
Item 8. Changes In and Disagreements With Accountants on
Accounting and Financial Disclosure . . . . . . . . . . . . 7
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons,
Compliance With Section 16(a) of the Exchange Act . . . . . 7
Item 10 Executive Compensation . . . . . . . . . . . . 8
Item 11 Security Ownership of Certain Beneficial Owners and
Management . . . . . . . . . . . . 9
Item 12 Certain Relationships and Related Transactions . . . . . . 9
Item 13 Exhibits and Reports on Form 8-K . . . . . . . . . . . . 9
Signature Page . . . . . . . . . . . . 10
Financial Statements . . . . . . . . . . . F1-F8
</TABLE>
Submission page 2 of 19
<PAGE>
SILVER BUTTE MINING COMPANY
FORM 10-KSB ANNUAL REPORT
August 31, 1999
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
(a) The issuer was incorporated under the laws of the State of Idaho on January
19, 1965, and was a mining company in the exploration stage from its inception
until it decided to abandon its status as a development stage enterprise by
ceasing all exploration activities in 1994. The issuer was previously engaged
in exploring for non-ferrous and precious metals, principally silver and lead.
However, the issuer was unable to develop any commercial ore deposits, following
many years of extensive exploration through geologic sampling and mapping, core
drilling, and tunneling. The properties of the issuer are located in Bonner
County, Idaho. See Item 2 of this report for a further description of the
issuer's properties.
The issuer's meager financial resources severely limit its ability to carry
out the type of exploration activity that it performed in past years, and
management considers it unlikely that the company will obtain additional funding
with which to undertake such exploration.
(b) (1) The issuer does not produce any significant product, nor does it
provide any significant service.
(2) There are no distribution requirements, because there are no
products or services.
(3) There have been no publicly announced new products or services.
(4) There is no competition to the issuer in maintenance of its
properties.
(5) The issuer does not make significant use of raw materials.
(6) The issuer does not have any significant customers.
(7) The issuer does not have any patents, trademarks, licenses,
franchises, concessions, or labor contracts. The issuer has a
mineral lease with the State of Idaho that requires minimum
royalty prepayments of $500 per year, and production royalties
of 5% of net smelter returns on metalliferous minerals, and $.50
per cubic yard of waste rock.
(8) The issuer would need government approval to reactivate any
future exploration programs, however the issuer has no plans of
engaging in future exploration.
(9) Government regulations have not had a significant effect on the
issuer's business.
(10) The issuer has not engaged in research and development
activities in the past two fiscal years.
Submission page 3 of 19
<PAGE>
SILVER BUTTE MINING COMPANY
FORM 10-KSB ANNUAL REPORT
August 31, 1999
(11) There have been no material effects on or costs to the issuer's
business as a result of complying with government regulations
protecting the environment. The issuer has a $5,000 certificate
of deposit in favor of the State of Idaho that serves as
a bond to assure that the leased property will be returned
to the State in satisfactory condition.
(12) The issuer had three employees during the year who worked
part time.
ITEM 2. DESCRIPTION OF PROPERTY.
The registrant holds the following mining properties.
1. Mineral rights only of 11 patented mining claims covering approximately 165
acres situated in Sections 1, Township 55 North, Range 2 West Boise Meridian,
and Sections 5, 6 and 8, Township 55 North, Range 1 West Boise Meridian, Bonner
County, Idaho.
2. One acre of deeded land encompassing the "Stidwell Adit" adjacent to Mirror
Lake in Section 31, Township 56 North, Range 1 West Boise Meridian, Bonner
County, Idaho.
3. Mineral lease number 4004 with the State of Idaho dated January 1, 1998, on
the East 1650 feet of Section 36, Township 56 North, Range 1 West Boise
Meridian, Bonner County, Idaho, comprises about 200 acres. This lease provides
for annual minimum rent of $200 per year, and minimum prepaid royalties of $500
per year during the first five years, and $1,000 during the next five years.
Production royalties rates are 5% of net smelter returns on the value of
metalliferous ore produced, and $.50 per cubic yard of waste rock removed. The
lease expires on December 31, 2007, is renewable, and may be surrendered at the
Company's option.
There are no known commercial ore deposits on any of the properties.
ITEM 3. LEGAL PROCEEDINGS.
There are no legal proceedings pending.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
(a) Market information. There is no established market for the issuer's
Common Stock. The following bid prices are compiled by the Spokane Quotation
Service. These over-the-counter bid prices reflect inter-dealer prices without
retail mark-up, mark-down or commission, and may not necessarily represent
actual transactions.
Submission page 4 of 19
<PAGE>
SILVER BUTTE MINING COMPANY
FORM 10-KSB ANNUAL REPORT
August 31, 1999
<TABLE>
Fiscal Year End 8/31/99 Fiscal Year End 8/31/98
High Low High Low
----- ----- ----- -----
<C> <S> <S> <S> <S>
First Quarter Ended 11/30 $.01 $.01 $.01 $.01
Second Quarter Ended 2/28 $.01 $.01 $.01 $.01
Third Quarter Ended 5/31 $.03 $.01 $.01 $.01
Fourth Quarter Ended 8/31 $.03 $.02 $.01 $.01
</TABLE>
(b) As of August 31, 1999, there were approximately 1,590 holders of
record of the issuer's Common Stock.
(c) The issuer has never paid cash dividends, and has no plans of paying
dividends in the foreseeable future. There are no restrictions on the issuer's
ability to pay dividends.
The issuer has sold no securities within the last three years.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
(a) Does not apply.
(b) Managements Discussion and Analysis of Financial Condition
and Results of Operations:
Revenues
The issuer has no material revenue from operations. The most significant
sources of revenue of the issuer are interest from funds deposited in interest
bearing accounts, dividends from equity securities, and waste rock sales. In
1999 the issuer's interest earned decreased to $306 from $1,103 in 1998. The
decrease resulted from a lower level of funds in interest bearing accounts in
1999 as a result of the issuer investing a significant portion of cash in equity
money market accounts. This also resulted in an increase in dividend income
during 1999 to $3,185 from $2,836 in 1998. The issuer's interest and dividend
income are determined by market interest rates and the types of interest bearing
accounts or instruments in which the funds are invested. The issuer expects
that its income will decrease in future years because there will be a decreasing
level of funds invested in interest or dividend bearing accounts.
Expenses
The registrant's expenses are incurred for the maintenance and reclamation
of the issuer's mining properties, including leased property, and for
administrative expenses of the registrant. The registrant's expenses decreased
to $8,244 in 1999 compared to $12,559 in 1998. The primary reasons for the
decrease were lower compensation of the registrant's employees, lower taxes and
insurance related to compensation, and reduced professional services used.
Submission page 5 of 19
<PAGE>
SILVER BUTTE MINING COMPANY
FORM 10-KSB ANNUAL REPORT
August 31, 1999
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
(Continued)
Financial Position
Cash and cash equivalents increased from $480 on August 31, 1998 to $1,893
at August 31, 1999. This was primarily caused by management's decision to
maintain a higher balance in its bank account. The registrant does not have any
commitments or plans for capital expenditures that will require significant
amounts of cash. Inflation does not have a material impact on the issuer's
financial results.
Cash Flows
In 1999 the registrant used more cash for operating activities than it
received from revenues by $4,402. This was the result of the registrant
continuing to incur more expenses than it generated in revenues. The registrant
expects that its future cash required by operating activities will continue to
exceed the cash that the registrant receives from revenues.
ITEM 7. FINANCIAL STATEMENTS
The registrant meets the requirements of an "Inactive Registrant" according
to 210.3-11 of Regulation S-X. Those requirements, which describe the
registrant for the fiscal year ended August 31, 1999, are as follows:
(a) Gross receipts from all sources for the fiscal year are not in
excess of $100,000;
(b) The registrant has not purchased or sold any of its own stock,
granted options therefor, or levied assessments upon outstanding
stock;
(c) Expenditures for all purposes for the fiscal year are not in
excess of $100,000;
(d) No material change in the business has occurred during the fiscal
year, including any bankruptcy, reorganization, readjustment or
succession or any material acquisition or disposition of plants,
mines, mining equipment, mine rights, or leases; and
(e) No exchange upon which the shares are listed, or governmental
authority having jurisdiction, requires the furnishing to it or
the publication of audited financial statements.
The registrant's financial statements have been prepared by the
registrant's management in accordance with generally accepted accounting
principles, and they are unaudited.
The financial statements are appended as pages F1 through F8 following page 11.
Submission page 6 of 19
<PAGE>
SILVER BUTTE MINING COMPANY
FORM 10-KSB ANNUAL REPORT
August 31, 1999
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
The registrant's last audit of financial statements was performed for the
fiscal year ended August 31, 1990. The registrant terminated audits of its
financial statements following that year because the costs of the annual audits
were seriously impairing the registrant's limited financial resources.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
(a) Identification of Directors and Officers:
<TABLE>
Name and Years Terms Background Shares of Common
Positions Held Age Served Expire Past 5 Years Stock Owned
- ------------------ --- ------ -------- -------------- ----------------
<C> <S> <S> <S> <S> <S>
R. Richard Rice 55 Accountant 29,000
President 10 5/1/2000
and Director 18 5/1/2000
Robert J. Evans 75 Retired miner 8,000
Secretary/Treasurer 10 5/1/2000
and Director 18 5/1/2000
Joseph Zinger 60 Asst. superintendent 1,000
Director 7 5/1/2000
Terry McConnaughey 64 Retired law enforcement 56,457
Director 3 5/1/2000
Wayne Hohman 60 Retired educator 20,000
Director 3 5/1/2000
</TABLE>
(b) There are no other significant employees of the issuer.
(c) There are no family relationships among the directors.
(d) There has been no involvement by the directors in any legal
proceedings during the past 5 years involving:
(1) Bankruptcy;
(2) Conviction in a criminal proceedings;
(3) An order, judgment, or decree, limiting his involvement in
any type of business, securities or commodities law;
(4) Violation of a federal or state securities or commodities
law.
Submission page 7 of 19
<PAGE>
SILVER BUTTE MINING COMPANY
FORM 10-KSB ANNUAL REPORT
August 31, 1999
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT. (Continued)
Compliance with Section 16(a) of the Exchange Act.
Officers, Directors, and beneficial owners of 10% or more of the issuer's
Common Stock that failed to file on a timely basis the reports required by
section 16(a) of the Exchange Act based on a review of Forms 3, 4, and 5:
None
ITEM 10. EXECUTIVE COMPENSATION.
The following table sets forth, for the fiscal years ended August 31, 1999,
1998, and 1997, compensation paid by the registrant to the President, and
Secretary/Treasurer and paid by Iron Mask Mining Company to the
Secretary/Treasurer for work performed for the benefit of the registrant. The
registrant reimbursed Iron Mask Mining Company for its payments on the
registrant's behalf in 1997. These are the only officers that received
compensation in any of these years. The registrant has provided no stock
options, warrants, or stock appreciation rights. There are no other employment
contracts or incentive pay agreements with the officers, who are paid on an
hourly basis for work performed according to the terms and rates approved by the
Board of Directors.
<TABLE>
Long Term
Annual Compensation Compensation
Name and ------------------- --------------------- All Other
Principal Position Year Salary Bonus Awards Compensation
- ------------------ ------ ---------- ---------- -------- -------------
<C> <S> <S> <S> <S> <S>
R. Richard Rice 1999 $ 715 0 0 0
President 1998 4,970 0 0 0
1997 2,210 0 0 0
Robert J. Evans 1999 1,940 0 0 0
Secretary/ 1998 825 0 0 0
Treasurer 1997 1,350 0 0 0
</TABLE>
Compensation of Directors: Each director receives $30 for each Board of
Directors or committee meeting that the director attends.
Submission page 8 of 19
<PAGE>
SILVER BUTTE MINING COMPANY
FORM 10-KSB ANNUAL REPORT
August 31, 1999
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
(a) Security ownership of certain beneficial owners: No person of
record is known to own more than 5% of the registrant's Common
Stock.
(b) Security ownership of management:
<TABLE>
Name and address Amount and Nature Percent
Title of Class of Beneficial Owner of Beneficial Ownership of Class
- ----------------- ---------------------- ------------------------- ---------
<C> <S> <S> <S>
Common Stock R. Richard Rice 29,000 0.37%
1314 J Street, Apt. B
Eureka, CA 95501
Common Stock Robert J. Evans 8,000 0.10%
P.O. Box 178
Ponderay, ID 83852
Common Stock Directors and 114,457 1.46%
Executive Officers
as a Group
</TABLE>
(c) There are no contractual arrangements known to registrant that may
result in a change in control of registrant.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits and index of exhibits:
None
(b) No reports on Form 8-K were filed during the last quarter of the
fiscal year ended August 31, 1999.
Submission page 9 of 19
<PAGE>
SILVER BUTTE MINING COMPANY
FORM 10-KSB ANNUAL REPORT
August 31, 1999
*******************************************************************************
SIGNATURES
*******************************************************************************
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
SILVER BUTTE MINING COMPANY
(Registrant)
By: /s/ R. Richard Rice Date: November 26, 1999
- --------------------------------- ---------------------------
R. Richard Rice
Title: President
In accordance with the 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.
Signature Title Date
- ----------------------- --------------------------------- ----------------
/s/ R. Richard Rice President (Principal Executive November 26, 1999
R. Richard Rice and Accounting Officer)
and Director
/s/Robert J. Evans Secretary/Treasurer (Principal November 26, 1999
Robert J. Evans Financial Officer)
and Director
/s/Joseph Zinger Director November 26, 1999
Joseph Zinger
/s/Wayne Hohman Director November 26, 1999
Wayne Hohman
Submission page 10 of 19
<PAGE>
SILVER BUTTE MINING COMPANY
FORM 10-KSB ANNUAL REPORT
August 31, 1999
INDEX TO FINANCIAL STATEMENTS
<TABLE>
Page
Number
------
<C> <S>
Balance Sheets, August 31, 1999, and 1998 . . . . . . . . . . . . . . F2
Income Statements for the years ended August 31, 1999, and 1998 . . . F3
Cash Flow Statements for the years ended August 31, 1999, and 1998 . F4
Statements of Changes in Stockholders' Equity for the years ended
August 31, 1999, and 1998 . . . . . . . . . . . . . . . . . . . F5
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . F6 - F8
</TABLE>
F1
Document page 11 of 19
<PAGE>
SILVER BUTTE MINING COMPANY
BALANCE SHEETS
August 31, 1999, and 1998
<TABLE>
1999 1998
----------- ------------
<C> <S> <S>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,893 $ 480
Certificate of deposit for State lease 5,000 5,000
Marketable securities 64,521 70,336
Accounts receivable 829 1,091
Prepaid expenses 667 512
------------ -----------
TOTAL CURRENT ASSETS 72,910 77,419
PROPERTY, PLANT & EQUIPMENT
Properties 3,000 3,000
Equipment and machinery 19,704 19,704
Accumulated depreciation (19,704) (19,704)
----------- ------------
3,000 3,000
----------- ------------
TOTAL ASSETS $ 75,910 $ 80,419
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 2,284 $ 2,660
----------- -----------
TOTAL CURRENT LIABILITIES 2,284 2,660
SHAREHOLDERS' EQUITY
Capital stock, $.05 par value
per share, authorized 10,000,000
shares, issued and outstanding
7,828,748 shares 391,437 391,437
Additional paid-in capital 392,953 392,953
Accumulated deficit (710,763) (706,631)
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 73,627 77,759
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 75,910 $ 80,419
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F2
Document page 12 of 19
<PAGE>
SILVER BUTTE MINING COMPANY
INCOME STATEMENTS
For the Years Ended August 31, 1999, and 1998
<TABLE>
1999 1998
----------- ------------
<C> <S> <S>
REVENUES
Dividend income $ 3,185 $ 2,836
Interest income 306 1,103
Sale of rock 504 900
Miscellaneous other income 114 --
----------- -----------
Total revenue 4,112 4,839
----------- -----------
EXPENSES
Wages and other compensation 3,810 6,335
Professional services 1,598 2,860
Taxes and insurance 1,054 1,500
Rent 646 723
Office expense 287 644
Miscellaneous 849 497
----------- -----------
Total expenses 8,244 12,559
----------- -----------
LOSS BEFORE INCOME TAXES (4,132) (7,720)
INCOME TAXES -- --
----------- -----------
NET INCOME (LOSS) $ (4,132) $ (7,720)
=========== ===========
Income (Loss) per Share of Common Stock
Outstanding $ (0.0005) $ (0.0010)
=========== ===========
Weighted Average Number of Common Shares
Outstanding 7,828,748 7,828,748
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F3
Document page 13 of 19
<PAGE>
SILVER BUTTE MINING COMPANY
STATEMENT OF CASH FLOWS
For the Years Ended August 31, 1999, and 1998
<TABLE>
1999 1998
----------- ------------
<C> <S> <S>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (4,132) $ (7,720)
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Increase (decrease) in payables (376) (5,250)
Decrease (increase) in prepaid expenses (155) (512)
Decrease (increase) in receivables 261 1
----------- ------------
Net cash used in
operating activities (4,402) (13,481)
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash invested in marketable securities -- (75,000)
Dividends received and reinvested in
marketable securities (3,185) (2,836)
Marketable securities redeemed 9,000 7,500
----------- ------------
Net cash provided by (used in)
investing activities 5,815 (70,336)
----------- ------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 1,413 (83,817)
Cash and Cash Equivalents at Beginning of Year 480 84,297
----------- ------------
Cash and Cash Equivalents at End of Year $ 1,893 $ 480
=========== ============
</TABLE>
Interest expense paid $ -- $ --
=========== ============
Income taxes paid $ -- $ --
=========== ============
The accompanying notes are an integral part of these financial statements.
F4
Document page 14 of 19
<PAGE>
SILVER BUTTE MINING COMPANY
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the Years Ended August 31, 19998, and 1998
<TABLE>
Common Stock
------------------------ Additional Accum-
Number Par Paid-in ulated
Of Shares Value Capital Deficit Total
----------- ----------- ----------- ----------- -----------
<C> <S> <S> <S> <S> <S>
Balances,
August 31, 1997 7,828,748 391,437 392,953 (698,911) 85,479
Net Loss -- -- -- (7,720) (7,720)
----------- ----------- ----------- ----------- -----------
Balances,
August 31, 1998 7,828,748 391,437 392,953 (706,631) 77,759
Net loss -- -- -- (4,132) (4,132)
----------- ----------- ----------- ----------- -----------
Balances,
August 31, 1999 7,828,748 $ 391,437 $ 392,953 $ (710,763) $ 73,627
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F5
Document page 15 of 19
<PAGE>
SILVER BUTTE MINING COMPANY
NOTES TO FINANCIAL STATEMENTS
August 31, 1999, and 1998
Note 1. COMPANY BUSINESS
The Company was incorporated under the laws of the State of Idaho on
January 19, 1965, and was in the exploratory mining stage from its inception
until it decided to abandon its status as a development stage enterprise by
ceasing all exploration activities in 1994. The Company's exploration efforts
developed no commercial ore deposits, and all capitalized mining costs were
written off. The Company continues to search for business opportunities in the
mining industry, and will also investigate opportunities in other industries.
The Company's meager financial resources severely limit its ability to carry out
the type of exploration activity that it performed in past years, and the
Company's management considers it unlikely that the Company will obtain
additional funding with which to undertake such exploration.
Note 2. ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Company's management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the dates of
the financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results may differ from those estimates.
The significant accounting principles and practices of the Company are as
follow:
a. The financial statements are prepared on the accrual basis of
accounting.
b. Properties, equipment, and machinery are stated at cost.
c. Depreciation of machinery and equipment was computed using
straight line and accelerated methods of depreciation.
d. The Company considers cash equivalents to be highly liquid
investments with an original maturity of three months or less.
e. Accounting for income taxes is discussed in Note 5.
f. Earnings per share are computed using the weighted average number
of shares outstanding.
Note 3. MARKETABLE SECURITIES
The Company has invested in certain money market fund equity securities
which it considers as available for sale according to Statement of Financial
Accounting Standards (SFAS) 115. Unrealized holdings gains and losses on such
securities are not expected, but will be excluded from earnings and reported as
a separate component of shareholders' equity, if gains or losses occur. The
cost of these marketable equity securities, when sold, will be determined by the
specific identification method.
The fair value of these securities, in accordance with SFAS 107, is
considered to be the same as their cost, based on quoted market prices.
F6
Submission page 16 of 19
<PAGE>
SILVER BUTTE MINING COMPANY
NOTES TO FINANCIAL STATEMENTS
August 31, 1999, and 1998
Note 4. PROPERTIES
The Company owns mining properties consisting of the mineral rights to
eleven patented mining claims covering approximately 165 acres and one acre of
deeded land near Mirror Lake in Bonner County, Idaho. The Company is also
the lessee of a parcel of State of Idaho land which is more fully described in
Note 5.
On July 31, 1996, the Company sold the approximately seven acre Roof Tunnel
Claim for $61,500 and recorded a gain of $39,372.
The book values of the Company's properties owned are:
Mineral rights to eleven patented mining claims $1,100
One acre of deeded land near Mirror Lake 1,900
------
Total book value $3,000
======
Note 5. MINERAL LEASE
The Company holds a mineral lease from the State of Idaho on approximately
200 acres of land in Bonner County, Idaho. The lease is dated January 1,1998,
has a 10 year life that expires on December 31, 2007, and is renewable at the
Company's option for another 10 years. The Company may surrender the lease by
providing the Idaho Department of Lands a written notice 30 days prior to its
intended surrender date. The minimum annual rent is $200 per year. The Company
is also required to prepay a minimum royalty of $500 per year for the first five
years of the lease, and $1,000 per year for the second five years of the lease.
The total minimum rent commitment over the next five years is $3,500 if the
Company does not surrender the lease prior to the fifth year. The lease's
production royalty rates are 5% of net smelter returns for metalliferous
minerals, and $.50 per cubic yard of waste rock. Production from the lease has
been limited to small amounts of waste rock. The Company has provided a $5,000
certificate of deposit in favor of the State of Idaho in lieu of a conditional
bond to assure the Company's compliance to the terms of the lease.
Note 6. INCOME TAXES
The Company had at August 31, 1999, $300,073 of net operating loss
carryovers for Federal income tax purposes that expire on August 31 of the years
shown below:
<TABLE>
<C> <S> <S> <S>
2001 2,299 2008 $269,988
2002 3,786 2009 2,989
2003 2,922 2012 3,646
2006 1,892 2013 7,657
2007 762 2014 4,132
--------
Totals $300,073
========
</TABLE>
F7
Submission page 17 of 19
<PAGE>
SILVER BUTTE MINING COMPANY
NOTES TO FINANCIAL STATEMENTS
August 31, 1999, and 1998
The Company accounts for income taxes in accordance with FAS No. 109. This
statement establishes the criteria to be used for recognizing deferred tax
assets and deferred tax liabilities. These assets and liabilities result from
temporary differences between tax expense or benefit calculated for tax
reporting purposes and the tax expense or benefit calculated for financial
reporting purposes. The Company has no deferred tax liabilities. A deferred
tax asset for the remaining net operating loss carryovers is fully reserved
because management does not believe that it is more likely than not that the
carryovers will be utilized, and because it is uncertain if the Company will
realize any future taxable income.
Note 7. COMMITMENTS AND CONTINGENCIES
The Company sold a seven acre parcel of land in the fiscal year ended
August 31, 1996, that contained mine waste rock and mill tailings. The Company
believes there is a remote possibility that this property may require some
cleanup, and an even more remote possibility that the Company may be required to
participate in the cost of such a cleanup, which the Company estimates would be
less than $10,000.
F8
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
the issuer's financial statements at August 31, 1999, (Unaudited) and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1999
<PERIOD-END> AUG-31-1999
<CASH> 1,893
<SECURITIES> 64,521
<RECEIVABLES> 829
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 72,910
<PP&E> 22,704
<DEPRECIATION> 19,704
<TOTAL-ASSETS> 75,910
<CURRENT-LIABILITIES> 2,284
<BONDS> 0
0
0
<COMMON> 391,437
<OTHER-SE> (317,810)
<TOTAL-LIABILITY-AND-EQUITY> 73,627
<SALES> 0
<TOTAL-REVENUES> 4,112
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 8,244
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (4,132)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,132)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,132)
<EPS-BASIC> (0.001)
<EPS-DILUTED> (0.001)
</TABLE>
