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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[CAPTION]
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended October 31, 1999
OR
TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the Transition period from to
Commission file number: 0-9060
ROCKY MOUNTAIN MINERALS, INC.
(Exact name of Registrant as specified in its charter)
Wyoming 83-022110
(State or other jurisdiction of (IRS Employer Identification
incorporation or organization) Number)
5801 Lumberdale, #243
Houston, Texas 77092
(Address of principal executive offices) (Zip Code)
(713) 683-0939
Registrant's telephone number
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 Par Value
(Title of class)
$.015 Cumulative Convertible Preferred Stock, $.05 Par Value
(Title of class)
Indicate by check mark whether the Registrant (1) has 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 for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days: Yes X . No .
Aggregate market value of the voting stock held by nonaffiliates of the
Registrant (based upon the average of the bid and asked prices of these
shares on the over-the-counter market) as of October 31, 1999: $410,440.
Class Outstanding at October 31, 1999
Common stock, $.001 par value 85,712,039 shares
ROCKY MOUNTAIN MINERALS, INC.
FORM 10-K
PART I
Item 1. Business
(a) General Development of Business
Rocky Mountain Minerals, Inc. (the "Registrant") was incorporated under
the laws of the State of Wyoming on February 21, 1974, and commenced
operations on May 19, 1978. The Registrant has been engaged primarily in the
acquisition, development, exploration and operation of mineral properties
through the location, lease, or purchase of patented and unpatented lode
mining and placer mining claims. The Registrant has no proven mineral
reserves. In prior years and to a lesser extent, the Registrant was engaged
in the acquisition, development and sale of oil and gas properties. However,
during the year ended October 31, 1982, the Registrant disposed of the
majority of its oil and gas properties.
Since the beginning of the 1999 fiscal year, the Registrant was not
involved in any bankruptcy, receivership or similar proceedings, nor did it
engage in any material reclassification, merger or consolidation, nor did it
acquire or dispose of any material amount of assets otherwise than in the
ordinary course of business, except as set forth below.
During fiscal year 1999 the Registrant did not acquire, develope,
operate or explore for or on any mineral properties. The Company's was
inactive during fiscal 1999 and for the past several years the Company's
only active participation in the mineral industry was through it's mineral
lease Agreement, dated February, 1993 for the development of the Registrant's
Rochester property located in Madison County, Montana (see Item 1 (c)(1)(i)
Mineral Exploration). There is no assurance this mineral property will be
developed or produce gold or silver.
(a)(2) Not applicable.
(b) Financial Information About Industry Segments
Not applicable.
(c) Narrative Description of Business
Glossary of Terms
Carried Working Interest: A working interest which is not required to
pay its share of costs of operations when incurred, but which does not
participate in production until its share of the costs advanced by another
party has been recovered by such party out of the carried party's share,
subject to its proportionate burden of royalties.
Cyanide Process or Circuit: A process utilized to remove certain metals
(such as gold and silver) from metal-bearing material by dissolving the gold
in a cyanide solution then removing the free metals from the solution by
electrolysis.
Dump: A pile of rock that has been extracted from a mine which was not
considered to be commercial when mined and which has not been subjected to
the milling process.
Farmout: An agreement whereby the owner of a working interest agrees to
assign his interest while retaining some interest (such as an overriding
royalty interest or production payment) subject to the performance of
specified work on the property. The owner substantially reduces his interest
in the property unless he pays some of the costs of exploration.
Gross Acre: A gross acre is an acre in which a working interest is
owned. The number of gross acres is the total number of acres in which a
working interest is owned.
Joint Venture: A business activity entered into and carried on by two
or more parties who participate and share in costs and profits on a
negotiated basis.
Lode Mining Claim: Deposits subject to lode claims include classic
veins or lodes having well-defined boundaries, rock in place bearing valuable
minerals and broad zones of mineralized rock.
Mill: A mineral treatment plant in which crushing, wet grinding and
further treatment of mineralized material is conducted to concentrate the
minerals.
Mineralization. The overall ore genesis process resulting from the
deposit of mineral traces within a rock or other geological structure.
Mineralization may be an indication of a commercial ore body but generally is
not economically viable unless such an ore body is found.
Mineralized (or Metal-Bearing) Material: Rock containing gold, silver,
copper, lead and/or other metals. If the rock contains enough metal to have
commercial value, it is referred to as ore.
Net Acre: A net acre is deemed to exist when the sum of the fractional
ownership of working interests in gross acres equals one. The number of net
acres is the sum of the fractional working interests owned in gross acres,
expressed as whole numbers and fractions thereof.
Non-Ferrous: Metals other than iron and its alloys in steel.
Ore Body: An ore body is an economically recoverable deposit of
minerals, the extent of which has been defined through extensive sampling by
drilling or otherwise.
Ore Concentrate: The valuable mineral extracted from the host rock
which has been subjected to one or more metallurgical processes to cause the
ores to separate from the worthless host rock.
Overriding Royalty: An interest in the gross production from a property
allocable to the working interest which is paid out of such production. An
override does not bear expenses of operation, development or maintenance and
is a burden on the working interest in addition to the landowner's royalty.
Patented Mining Claim: A claim, lode or placer, for which the federal
government has given deed or passed its title to the claimant. No assessment
work is required on patented claims. It is not necessary to have a patent to
mine and remove minerals from a valid mining claim, but a patent will give
claimant exclusive title to the locatable minerals and, in most cases, the
use of the surface and all other resources.
Placer Mining Claim: Deposits subject to placer claims are all those
not subject to lode claims. These include the "true" placer deposits of sand
and gravel containing free gold (such as those which have accumulated in the
unconsolidated sediment of a stream bed) and also include many nonmetallic
bedded deposits.
Proven Reserves: Proven reserves represent those reserves that, under
presently anticipated conditions, will be commercially recoverable from known
mineral deposits with a high degree of certainty.
Royalty: The landowner's or mineral owner's share of production, free
of any costs of development or operation, reserved in connection with the
creation or transfer of a mineral interest.
Tailings or Tailing Ponds: Waste materials which remain from earlier
milling processing which, after milling, were not considered to be of
commercial value at the time of milling and were discharged into holding
ponds.
Unpatented Mining Claim: A claim, possessory title to which is
maintained by payment of $200 fee for assessment labor on each claim by
August 31 of each year.
Working Interest: An interest in a claim (or oil and gas lease) which
entitles its holder to conduct exploratory and mining (or drilling)
operations; to bear the costs of such operations, including its proportionate
share of the burden of royalties; and to share any production to the extent
of the interest.
(c)(1)(i) Mining Operations Segment
Contract with Rochester Enterprises - Madison County, Montana
On April 16, 1980, the Registrant entered into an agreement to acquire
from the partners of Rochester Enterprises, Ltd. ("Rochester"), an
unaffiliated Montana limited partnership, 11 patented mining claims in
Madison County, Montana, together with dumps and tailings, an ore mill
located thereon and heavy mining equipment. The property was burdened by an
aggregate of 10.5% net smelter return royalty and 10.5% net profits interest
in the 11 claims and the mill, respectively, in which certain persons,
including past and present officers and/or directors of the Registrant,
participate. On November 30, 1981 the Registrant consummated the purchase of
the Rochester properties. During the year ended October 31, 1988, the
Registrant purchased an aggregate of 7.125% of the net smelter return royalty
and net profits interests referred to above, for cash of $47,500 and the
issuance of 2,425,000 shares of the Registrant's common stock. (See Note 2
to the Financial Statements.)
The Registrant's principal business activities in its mining operations
segment have been the construction and operation of an ore mill facility on
mining property acquired from Rochester. The Registrant has produced both
gold and silver which were sold by the Registrant to a refiner for "spot"
market gold and silver prices. However, during the fiscal years 1984 through
October 31, 1999 the Company has not operated its ore mill facility.
Future activities will require substantial additional financing
through arrangements with industry partners or through the formation of
limited partnerships of which the Registrant would be general partner. The
Registrant has no such arrangements at the present time. The total annual
assessment obligation for all of the Registrant's mining claims for the year
ended October 31, 1999 was $6,600 and this assessment obligation has been
paid by the Registrant.
Mineral Exploration
On September 2, 1983, the Registrant entered into an Exploration
Agreement with Option to Lease and Lease Agreement with Searle Brothers
Construction, Inc., of Rock Springs, Wyoming, on the Registrant's Continental
Gold Prospect located in Fremont County, Wyoming. This agreement gave Searle
Brothers Construction, Inc., the right to explore on the Registrant's
property, consisting of nearly 10,000 acres, for a period of up to ten
months. Searle Brothers declined the option to lease this property on April
8, 1984. They processed 97 samples from 97 test sites.
On March 7, 1985, the Registrant entered into a Mining Lease and
Agreement with Hecla Mining Company of Wallace, Idaho, on the Registrant's
Continental Gold Prospect. The Agreement calls for Hecla to spend $50,000,
$75,000, $100,000, $125,000, $150,000, $175,000 and $200,000 annually
commencing in 1986 and running through 1992, respectively. During the term of
the lease, the Company retains a 5% net profits interest in production from
the property, which increases to a 20% net profits interest after Hecla has
recouped certain costs. In April 1988, Hecla returned a portion of the
claims to the Registrant. The Registrant carried out an exploration program
on this portion of the property for fiscal 1989. Hecla carried out an
exploration program on the remaining portion of this property for fiscal 1989
in accordance with the Mining Lease and Agreement. On June 5, 1990, under
the terms of the 1985 Mining Lease and Agreement, Hecla returned the
remaining mining claims to the Registrant. The Registrant carried out an
exploration program on these mining claims for fiscal 1991. The property was
dropped by the Registrant in 1992.
On January 9, 1990, the Registrant entered into a Mineral Lease
Agreement with FMC Minerals Corporation of Reno, Nevada, on the Registrant's
Rochester Gold Project. The Agreement calls for FMC to spend $100,000,
$125,000, $150,000, $250,000 and $375,000 annually commencing in 1990 and
running through 1995, respectively. FMC is obligated to pay the Registrant
minimum annual advance royalties of $20,000, $25,000, $35,000, $35,000 and
$40,000 commencing in 1990 and running through 1994. Advance royalties of
$50,000 per year will be paid annually thereafter. During the term of the
lease, the Registrant retains a 3% production royalty of operating profits,
which increases to a 20% production royalty after FMC has recouped certain
allowed costs. FMC has the right to terminate the Mineral Lease Agreement at
any time by giving the Registrant thirty days prior written notice. The
Mineral Lease Agreement was terminated May. 1992 and the property returned to
the Registrant.
On February 19, 1993, the Registrant entered into a Mineral Lease
Agreement with Rouetel, Inc. of Spokane, Washington on the Rochester Gold
Project. The Agreement calls for Rouetel, Inc. to spend a minimum of $50,000
per year in direct exploration and development work, or in mining or milling
operations and also maintain the unpatented mining claims by the expenditure
of $6,600 annually. Rouetel, Inc. is required to pay the Registrant minimum
advance royalties of $20,000 in 1993 and $25,000 annually thereafter. During
the Agreement, the Registrant shall retain a five percent (5%) net smelter
return. Rouetel, Inc. has the right to terminate this Agreement at any time
by giving the Registrant thirty (30) days prior written notice. Rouetel
terminated the mineral lease during the summer of 1996.
See Item 2 - "Properties" of this report for more information concerning
the Registrant's mining claims.
Oil and Gas Operations Segment
The Registrant, on a limited basis, has acquired oil and gas leases on
acreage with no known deposits of oil or gas. The Registrant also owns
various overriding royalty interests in oil and gas properties in Campbell
County, Wyoming. See Item 2 - "Properties" of this report.
The Registrant does not intend to engage in any exploratory oil or gas
drilling on acreage with no known deposits of oil or gas for its own account,
although if additional financing can be obtained it may engage in some
development drilling to a limited extent depending upon the terms of future
farmout, joint venture or similar arrangements which may be entered into. No
drilling commitments have been entered into by the Registrant with respect to
any of its oil and gas leases.
The Registrant holds no patents, trademarks, licenses, franchises or
concessions and does not consider such to be important to either of its
business segments.
The Registrant's mining operations may be considered to be seasonal to
the extent properties are operated in areas where climatic conditions in the
winter prevent access.
The acquisition of mineral interests, particularly in the Rocky Mountain
region, is extremely competitive. The Registrant anticipates that it will
continue to encounter strong competition from many established companies with
greater financial, personnel and informational resources. Competition from
such companies, together with rising prices of some minerals, may escalate
the cost of acquiring claims from others beyond the range of prices the
Registrant can afford. If valuable mineral deposits are discovered on the
Registrant's mining properties, their marketability will depend on numerous
factors, including available equipment for which there is strong demand and
other supplies of minerals.
The Registrant has made no expenditures on, nor has it been connected
with, either company-sponsored or customer-sponsored research and
development.
Since the Registrant is engaged in the natural resources industry,
environmental regulation may have a significant impact upon the Registrant's
operations and may necessitate significant capital outlays which, in turn,
may materially affect the earning power of the Registrant. Certain
operations in the exploratory and production phase of mining and oil and gas
exploration are potentially hazardous to the environment. The clearance of
trails and exploratory drilling and mining in natural areas, as well as
full-scale mining, are sources of environmental regulation; and reclamation
requirements, including backgrading, reseeding and fertilizing, must be
satisfied. Groundwater pollution is also a potential problem. Further, if
any secondary recovery methods are utilized which involve the construction of
a plant or similar hardware to implement the recovery system, the
environmental impact of such a system must be disclosed in an Environmental
Impact Statement under the National Environmental Policy Act; and compliance
with such Act could adversely affect future operations and revenues.
Although the Registrant does not anticipate that it will be the operator on
any of its oil and gas leases, others who may drill and operate such
properties will face possible environmental regulations which could affect
the Registrant's revenues.
With respect to the Registrant's idle milling operation in the Rochester
Mining District, no permits are required by the State of Montana; however,
letters of notification are required to be sent to various Montana regulatory
agencies. As in any area of business subject to environmental regulation
there is, however, no assurance the Registrant's operations will not become
subject to future regulatory or enforcement proceedings. An Environmental
Inspection Statement on patented mining claims is required to be prepared and
filed with the State of Montana for any mining and processing of new
mineralized material in excess of 36,500 tons per year.
As of October 31, 1999, the Registrant employed one person, on a part
time, as needed basis.
(d) Financial Information About Foreign and Domestic Operations and
Export Sales.
The Registrant has no foreign operations.
Item 2. Properties
Mining Properties
Madison County, Montana
The Registrant has acquired 31 patented and 66 unpatented lode mining
claims, comprising approximately 660 and 1,320 acres, respectively, in
Madison County, Montana, adjacent to and in the vicinity of the 11 claims
purchased from Rochester, which includes the Watseca Mine. There are no
proven reverses on any of these properties. Gross acreage does not allow for
overlapping or conflicting claims. The claims are located in the Rochester
Mining district, which is accessible by a county highway one and a half miles
from Twin Bridges, Montana, and ten miles by a county-maintained road. The
Rochester Mining District and the Watseca Mine have been the subject of
reports and maps prepared by government agencies and others and the
Registrant has acquired the original assay records and underground maps
pertaining to the past production history of the Watseca Mine from
approximately 1898-1904.
The Watseca Mine was the most important in the Rochester Mining District
for gold production. The Watseca lode was discovered in the late 1860's and
production began in 1868, reaching full production in 1898. Assay and
production records indicate the mine produced more than 89,873 ounces of gold
until it was closed in 1904. From 1898-1904, the mine was continuously
operated by the Watseca Gold Mining Company, with a reported average recovery
of gold estimated at approximately 1.75 ounces per ton of ore. It should be
noted that these production and recovery figures are based upon old records;
the Registrant cannot ascertain the completeness or accuracy of these
records. There is no assurance any underground mining which the Registrant
may at some later date conduct in this mine will yield any valuable
mineralized material. Most of the ore mined before 1902 was treated by
amalgamation, gravity concentration and primitive cyanidation in a nearby
mill. During the latter part of 1902, a new and larger mill was constructed
near the mine, but the mine was closed in late 1904 because an inefficient
coal-fired pumping system was unable to keep the mine clear of water. Both
of these old mills have been removed from the property.
Claims. The following table sets forth the names and dates of
acquisition of the Registrant's claims in the Rochester Mining district.
PATENTED CLAIMS
Date of Date of
Name Acquisition Name Acquisition
Agnes (1).............. May 15, 1980 Independence (2)...... August 21, 1980
Beacon Light (1)....... May 15, 1980 Big Rock (2).......... August 2l, 1980
Anoka (1).............. May 15, 1980 Paymaster (2)......... August 2l, 1980
Taft (1)............... May 15, 1980 Idler (2)............. August 2l, 1980
Dixie Queen (2)..... August 21, 1980 Watseca Trio (4),(5) November 30, 198l
Dead Beat (2)....... August 21, 1980 Paucippa (4)........ November 30, 198l
Black Rock (2)...... August 21, 1980 Julia Holmes (4).... November 30, 198l
Virginia (2)........ August 21, 1980 Vienna (4).......... November 30, 198l
Leona (2)........... August 21, 1980 Climax (4).......... November 30, 198l
Carrie B. (2)....... August 21, 1980 Carlton (4)......... November 30, 198l
Caulsa (2).......... August 21, 1980 May Queen (4)....... November 30, 198l
Watseca Gold Hill(2) August 21, 1980 Concentrator (4),(6) November 30, 198l
Silver Note (2)..... August 21, 1980 Cleopatra (4),(7)... November 30, 198l
UNPATENTED CLAIMS
Date of Date of
Name Acquisition Name Acquisition
Gold Bug (2)........ August 21, 1980 Celesta (4)......... November 30, 198l
Gold Bug Annex(2)... August 21, 1980 Cumberland (4)...... November 30, 198l
Picard.............. November 30, 198l
Alice (2)........... August 25, 1980
Emma (2), (3)....... August 25, 1980
Emma Extension (2).. August 25, 1980
Galena 2)........... August 25, 1980
R. Rand (2)......... August 25, 1980 Sunbeam................. July 21, 1980
Montrose (2)........ August 25, 1980 Sunbeam 1............... July 21, 1980
Montrose 2 (2)...... August 25, 1980 Sunbeam 2............... July 21, 1980
Montrose 3 (2)...... August 25, 1980 Sunbeam 3............... July 21, 1980
Carl Carlson (2).... August 25, 1980 Germania................ June 22, 1980
Jeannie L. (2)...... August 25, 1980 Germania 1 through 9.... June 22, 1980
Alicia A (2)........ August 25, 1980 Germania South.......... June 22, 1980
Klondike (2)........ August 25, 1980 Germania South #l....... June 22, 1980
AAl - AA7.............. July 7, 1980 Bluebird 1-5............. May 19, 1980
Camar (2)........... August 25, 1980 Silverbird 1-2........... May 19, 1980
Camearl (2)......... August 25, 1980 Eli 1-3.................. May 19, 1980
Easton (2).......... August 25, 1980
Nephi (2)........... August 25, 1980
Phyllis (2)......... August 25, 1980 Full House.............. June 30, 1980
CC 1 through CC 28..... June 9, 1980 Full House 1-7.......... June 30, 1980
ID 1 through ID 8...... June 9, 1980
(1) Purchased from an unaffiliated person for $12,500 (62.49 gross and net
acres).
(2) Purchased from an unaffiliated person for $30,000. The patented claims
comprise 263.97 gross (248.94 net) acres; the unpatented claims comprise 340
gross (330 net) acres.
(3) Approximately 9,000 tons of dumps and 6,000 tons of tailings are located
on the Emma claim. See "Business - Dumps and Tailings."
(4) Purchased from Rochester Enterprises, Ltd. for $3,000,000 and 2,500,000
shares of restricted common Stock. The patented claims comprise 122 net
acres, and include a 250 ton per day gravity flotation milling facility. The
property is burdened by an aggregate 3.375% royalty and 3.375% net profits
interests in the 11 claims and the mill, respectively, in which certain
persons, including a former officer and director of the Company participate.
(5) Approximately 63,000 tons of dumps and 28,000 tons of tailings are
located on the Watseca Trio Claim.
(6) Approximately 27,000 tons of tailings are located on the Concentrator
claim.
(7) Approximately 32,000 tons of dumps are located on the Cleopatra claim.
The Registrant incurred costs of $24,603 plus 1981 acquisition costs in
the staking of the unpatented claims. Each unpatented mining claim requires
the payment of a $100 fee, payable to the Bureau of Land Management prior to
August 31 of each year. The Registrant is required to pay $6,600 each year to
hold it's 66 unpatented mining claims and the Registrant is current with all
fees. The Registrant may reduce it's mineral holdings by not spending the
required funds to maintain this property.
ASSESSMENT WORK TABLE*
1999 Amount Required*
Number Royalty assessment to be spent
Name of of or other to be as of
claims Location claims burden performed by August 31, 1999
Various Rochester Mining 66 0% Registrant 6,600
(See page 8 District, Madison
for list of County, Montana __________
Claims) $ 6,600
* Registrant is presently, and will continue to, actively attempt to "farm
out" its properties. It is anticipated that any such farm out agreement
would hold lessee or purchaser of a property liable for performing annual
assessments.
Titles
The Registrant's interest in all of its mining claims, except for 31
patended lode mining claims in Madison County, Montana, which it owns are
held under unpatented lode mining claims. Unpatented mining claims are
created under the mining laws of the United States and the laws of the state
in which the lands are situated. The validity of the titles to such claims
depends upon the legal availability of the land for exploration, the validity
of the mineral discovery within the boundaries of the claim, compliance with
applicable laws relating to location procedures, the good faith of the
original locators and performance of the necessary assessment work. Since
several of these factors involve fact determination, the validity of title to
any given claim cannot be determined by an examination of public records.
To maintain ownership of the possessory title created by an unpatented
mining claim against possible subsequent locators, the locator must pay
$100.00 per claim for assessment labor on each unpatented mining claim by
August 31 of each year. Statements as to the assessment work performed must
be filed with the Bureau of Land Management and with the appropriate county
clerk's office. In the opinion of the Registrant, the Registrant has
performed assessment work on all of its claims as required prior to August 31,
1999.
To the best knowledge of Registrant's management, claims held by the
Registrant are valid claims. It should be recognized, however, that there is
some degree of uncertainty with respect to the validity of unpatented claims.
The Registrant has not obtained attorney's title opinions or title insurance
on any of its oil and gas leases or mining claims, except that an attorney's
opinion has been prepared for the Registrant with respect to title to the 11
patented lode mining claims which the Registrant has purchased from
Rochester, which opinion indicated that Rochester had good title, subject to
the satisfaction of an outstanding mortgage lien which was paid by Rochester
at the closing and to the satisfaction of other minor matters prior to
closing as suggested by such counsel. The Registrant has reviewed the land
status of its unpatented mining claims in the Bureau of Land Management's
office and searched the records of the various county clerks' offices in the
counties in which its claims are located.
The Registrant has the right to enter on and to use the surface of all
properties in which it holds exploration and mining rights subject to the
claims of the surface owners for any damages caused by or resulting from
exploration or mining operations. None of the Registrant's mining claims are
within a designated wilderness area.
As stated in the above-referenced Assessment Work Table the cost of
annual assessment work for the year ending August 31, 1999 required on
unpatented mining claims held by the Registrant was $6,600, and this amount
was paid by the Registrant.
Oil and Gas Properties
Campbell County, Wyoming. The Registrant owns minor overriding royalty
interests in three oil and gas properties located in the Powder River Basin
of Campbell County, Wyoming. The Registrant owns a .0160% overriding royalty
in the Muddy "B" area (4,626.48 acres) of the Sandbar Unit, a .0261%
overriding royalty in the Muddy Sand Unit (8,100.13 acres) and a one percent
overriding royalty in 160 acres in the Kitty Field. The Registrant has
received nominal royalties from these properties which are principally
nonproducing.
McCone County, Montana. On June 3, 1982, the Registrant sold its 320
acre exploratory fee lease in McCone County, Montana, for $24,000. The
Registrant retained a four percent overriding royalty interest in the lease.
To date, to the Registrant's knowledge, this lease was not drilled and the
lease has expired.
Kit Carson County, Colorado. On August 27, 1982, the Registrant sold
1,826.536 net acres of its exploratory fee oil and gas leases in Kit Carson
County, Colorado, for an aggregate of $36,531. The Registrant retained
overriding royalty interests ranging from 1.875% to 9.375% on the various
leases sold. To date, to the Registrant's knowledge, this lease was not
drilled and the lease has expired.
Item 3. Legal Proceedings - None.
Item 4. Submission of Matters to a Vote of Security Holders.
During the fourth quarter of the fiscal year covered by this report, no
matters were submitted to a vote of security holders of the Registrant.
PART II
Item 5. Market Price of and Dividends on the Registrant's Common Equity and
Related Stockholder Matters
(a) Market Information
The principal market on which the Registrant's Common Stock is traded is
the OTC Bulletin Board (OTCBB). The stock was initially listed on the
National Association of Securities Dealers Automated Quotation System.
These over-the-counter market quotations reflect inter- dealer prices
without retail markup, markdown or commissions and may not necessarily
represent actual transactions.
*High bid *Low bid
11/01/97 - 01/31/98 $.010 $.001
02/01/98 - 04/30/98 $.010 $.001
05/01/98 - 07/31/98 $.010 $.001
08/01/98 - 10/31/98 $.010 $.001
11/01/98 - 01/31/99 $.010 $.001
02/01/99 - 04/30/99 $.010 $.001
05/01/99 - 07/31/99 $.063 $.001
08/01/99 - 10/31/99 $.063 $.001
*The above bid and ask prices are estimated by the Registant
based on the limited trading of the Company's securities.
(b) Holders
The number of record holders of the Registrant's common stock on October
31, 1999 was approximately 3,720.
(c) Dividends
The Registrant has paid no dividends with respect to its common stock.
There are no contractual restrictions on the Registrant's present or future
ability to pay dividends. The Registrant's Preferred Stock bears dividends
at a rate of $.015 per share per annum (an annual aggregate of $373,627 as of
October 31, 1999) and has full priority over dividends on the common stock.
These dividends are cumulative and payable annually in cash, in shares of
common stock or in kind, at the Registrant's option. Dividends of $.0l5 on
the Preferred Stock were due on July 1, 1982, through 1999. The Registrant
has deferred payment of these dividends ($6,725,282) until such time as
revenues permit payment thereof. It is uncertain when, if ever, the
Registrant will receive sufficient revenues which will enable it to begin to
pay the dividends on the Preferred Stock.
Item 6. Selected Financial Data (1)
Years Ended October 31,
1995 1996 1997 1998 1999
Operating revenues $ 25 0 57 80 11
Interest expense - - - - -
Net loss before
extraordinary
items)Income (Loss)(211) - 33 36 (1,808)
Extraordinary gain on
extinguishment of
debt 0 0 0 0 0
Extraordinary credit-
benefit of net
operating loss
carryforwards 0 0 0 0 0
Net income (loss) (186) - 33 36 (1,808)
Net loss per
share (2)
Before extraordinary
items (*) (*) (*) (*) (.02)
Extraordinary gain on
extinguishment of
debt (*) (*) (*) (*) (*)
Extraordinary credit-
benefit of net operating
loss carryforward (*) (*) (*) (*) (*)
Net income (loss) (*) (*) (*) (*) (.02)
Total assets 2,803 2,617 2,606 2,667 771
Long-term debt - - - - -
* Less than $.01 per share.
(1) The selected financial data should be read in conjunction with the
related financial statements and notes thereto included under Items 8,
14(a)(1) and (2), and 14(d).
(2) Loss per share is based on the weighted average number of shares of
common stock and equivalents (Convertible Preferred Stock) outstanding
during each year; (95,475,000 in 1995, 95,475,000 in 1996, 85,712,000 in 1997
and 85,712,000 in 1998 and 85,712,000 in 1999).
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
The Registrant began operations on May 19, 1978 and is considered to be
a mining company in the exploratory stage and has had no significant
revenues. During the 1988 fiscal year the Registrant consummated a stock
purchase agreement and resumed mineral exploration as well as waste management
activities. Subsequent to October 31, 1991, the registrant has been inactive
and has had limited receipts and expenditures.
General and administrative expenses remained approximately the same
during the fiscal year 1999, as compared to the previous fiscal year.
In January of 1984, the Registrant suspended milling operations at
its Rochester property. During 1990, the Registrant recorded a charge to
expense of $1,037,669 representing the excess of net book value over the
estimated recoverable value of the Rochester Mill (the Mill). In December
of 1990, the Registrant decided to sell certain assets at the Mill, and the
net assets were reclassified to net assets held for sale and stated at their
net realizable value. In 1991 and 1993, pursuant to property appraisals,
the Registrant recorded additional charges to expense totaling $200,000,
representing excess net book value over the estimated recoverable value of
the Mill. In 1999, a tax deed was issued by the Madison County, Montana
Treasurer for the Mill and related property, and the Registrant wrote off
the property and recorded a loss of approximately $27,000.
During 1999, the Registrant decided to sell the remaining undeveloped
mineral interests and developed mine dumps and tailings. The assets have
been reclassified to net assets held for sale and stated at their net
realizable value resulting in a loss of $1,749,000.
Liquidity and Capital Resources
The following table reflects the Registrant's working capital positions
at October 1999 and 1998:
October 31, 1999 October 31, 1998
Current assets $ 771 $446
Current liabilities 8 96
Working capital 763 320
Current ratio 96.4 4.3
The Registrant will continue the evaluation of it's present mineral
properties and other additional mineral properties in Western U.S. and
Australia, as well as pursue other non-mineral business opportunities.
The Registrant has used a significant portion of the proceeds from the
April 27, 1988 sale of stock to Quillium to maintain it's mineral property
inventory and conduct additional geologic studies. In addition, the
Registrant conducted exploratory programs and geologic studies on other
precious and base mineral properties both in the western U.S. and Australia.
During 1992 the Registrant acquired a 38% equity interest in Zonia Landfill,
Inc., a company engaged in the waste management business. Zonia Landfill,
Inc. sold it's operation in 1997 to USA Waste Services, Inc.. The Registrant
received 8,097 shares of Common Stock in USA Waste, a NYSE listed Company.
In December of 1990, the Company decided to sell certain personal property
assets at the Rochester Mill, with the exception of the developed mine dumps
and tailings. At October 31, 1992 a portion of the net assets had been sold
while the remainder are expected to be sold in the future. The remaining net
assets have been reclassified to net assets held for sale and are stated at
their net realizable value.
Management's plans for funding continued operations include attempting to
obtain additional outside funding either through the sale of common stock,
debt, and/or possible sales of undeveloped properties at the Rochester
property.
Item 8. Financial Statements and Supplementary Data
Financial statements and supporting schedules reporting supplementary
financial information are listed in the Index to Financial Statements filed
as a part of this Form 10-K.
Item 9. Disagreements on Accounting and Financial Disclosure
Not applicable.
PART III
Item 10. Directors, Executive Officers, Promoters and Control Persons of the
Registrant
(a, b, e) Identification of Directors and Executive Officers and Their
Business Experience
Name Age Position, Tenure and Business Experience
Ernest Geoffrey Albers 57 Chairman and Director of the Registrant
since April 1988, Mr. Albers is a 1968
graduate of the University of Melbourne,
Victoria, Australia with a Bachelor of
Law degree. He commenced practice in
1969 as the principal of his own firm
immediately upon admission as a barrister
and solicitor of the Supreme Court of
Victoria. In 1972 he ceased full time
practice to pursue his private investment
activities, his master investment company
now being Great Missenden Group Pty.,
Ltd. He formed Cue Energy Resources N.L.
in New Zealand in 1981 and is its major
shareholder. In Australia he is chairman
of Bass Strait Group N.L. which he formed
in 1978 and Estates Holdings Ltd. which
he formed in 1971. In New Zealand he is
also on the board of Southern Petroleum
N.L. He is a member of the Petroleum
Exploration Society of Australia and is a
member of the Australian Institute of
Directors.
Richard Douglas Fraser 50 Director of the Registrant since April
1988, Mr. Fraser obtained an
Associateship in Mining Engineering from
the Western Australian School of Mines in
1974. He has had extensive practical
experience in mine operations prior to
obtaining a Western Australian First
Class Mine Manager's Certificate of
Competency in 1979 as a manager of a
below ground mine for New South Wales in
1981. Between 1975 and 1980 he was
employed by the WA Department of Mines as
a mining engineer - special inspector of
mines. Prior to establishing his own
consultancy he was employed for two years
by Newmont Holdings including a period as
certified quarry manager and assistant to
the manager at the Telfer Mine. In 1982
he established his consultancy, Fraser
Mining and Construction Pty. Ltd., which
has carried out consulting projects in
all states of Australia and has been
instrumental in establishing new mines in
the Solomon Islands and Ghana. In 1986
he formed the Federation Resources Group
which plans to develop new mines at
Rushworth and Costerfield in Victoria.
Mr. Fraser is an associate member of the
Australian Institute of Mining and
Metallurgy.
Richard H. Bain 57 President, Treasurer, Mr. Bain has a B.A.
from Rice University in Commerce and
Business and a graduate degree from the
University of Houston in Fine Arts.
Since 1970, Mr. Bain has been active in
fields of research, education, political
science, geo-physics and global economics
with emphasis on financial markets. Mr.
Bain currently teaches social and
political science in the Houston
Community College and public school
system.
Donald C. Knaute, Jr. 55 Mr. Knaute is a gradute of Michigan State
University with a B.S. degree in
Marketing/Marketing Research. Since
1973, after 5 years service in the U.S.
Navy Supply Corps, Mr. Knaute has been
involved in computer distribution,
application programming, consulting,
hardware design and systems
implementation. Mr. Knaute is currently
president of Civilized Systems, Inc., a
computer solutions firm in Houston.
(c) Identification of Certain Significant Employees
None
(d) Family Relationships
None
(f) Involvement in Certain Legal Proceedings
None
(g) Promoters and Control Persons
Not applicable.
Item 11. Executive Compensation
(a)(1) Cash Compensation
Cash compensation for the fiscal year ended October 31, 1998 was as
follows:
Name of
individual or number Capacities in Cash
of persons in group which served compensation
All executive Officers and/or $-12,000 -
officers as a group directors
(two persons)
(a)(2) Bonuses and Deferred Compensation
None
(b)(1) Compensation Pursuant to Plans
The registrant has no annuity, pension, retirement or profit sharing
plan in effect and none is presently contemplated.
(b)(2) Pension Table
Not applicable.
(b)(3) Alternative Pension Plan Disclosure
Not applicable.
(b)(4) Stock Option and Stock Appreciation Right Plans
The Registrant has adopted a 1987 Stock Option Plan (the "Plan")
reserving an aggregate of 25,000,000 shares of the Registrant's common stock
for issuance pursuant to the exercise of stock options (the "Options") which
may be granted to officers, directors and employees (either full-time or
part-time) of the Registrant or any subsidiary. The Plan is for a ten year
term. The Plan is designed to provide additional incentive for such persons
to promote the success of the Registrant, and to encourage the ownership of
the common stock of the Registrant by such persons. No options have been
granted to any person under the Plan.
The Plan is administered by the Board, or at their discretion by a stock
option committee (the "Committee") consisting of not less than three
directors. Members of the Committee are eligible to participate in the Plan.
In addition to determining who will be granted options, the Board has the
authority and discretion to determine when options will be granted and the
number of options to be granted. The Committee may determine which options
may be options intended to qualify for special treatment under the Internal
Revenue Code of 1986 ("Incentive Stock Options") or non-qualified options
("Non-Qualified Stock Options") which are not intended to so qualify. The
Board also may determine the time or times when each option becomes
exercisable, the duration of the exercise period for Options and the form or
forms of the instruments evidencing Options granted under the Plan. No
options can have a term of more than ten years. Incentive Stock Options may
not be granted to directors who are not also employees.
The Committee has broad discretion to determine the number of shares
with respect to which Options may be granted to participants. The maximum
aggregate fair market value (determined as of the date of grant) of the
shares as to which Incentive Stock Options become exercisable for the first
time during any calendar year may not exceed $100,000.
The Plan provides that the purchase price per share for each Option on
the date of grant may not be less than 100%, in the case of Incentive Stock
Options, and 80%, in the case of Non-Qualified Stock Options, of its fair
market value which is defined for this purpose to be the average of the bid
and asked prices of the Registrant's Common Stock on the date of exercise as
reported by the National Quotation Bureau, Inc.'s "Pink Sheets." In the
absence of a reported price on the date of exercise, the Board, at its
discretion, may select any reasonable method for the valuation of the shares.
Options granted under the plan will be nontransferable during the life
of the optionee and terminate within three months upon the cessation of the
optionee's employment, unless employment is terminated for cause, in which
case the option terminates immediately.
(c) Other Compensation
None.
(d) Compensation of Directors
None.
(e) Termination of Employment and Change of Control Arrangement
None.
Item l2. Security Ownership of Certain Beneficial Owners and Management
(a), (b) Security Ownership of Certain Beneficial Owners and Management
The following table shows the security ownership of those persons known
by the Registrant to be the beneficial owners of more than five percent of
the Registrant's common stock and of the directors, and the officers and
directors as a group as of October 31, 1999:
Amount and
Nature of percent
Title of Name and address beneficial of
class of beneficial owner ownership (1) class (4)
$.001 par Ernest Geoffrey Albers 32,083,000 (2) 33.53%
value common P. O. Box 46
stock Nagambie 3608
Victoria, Australia
$.00l par Richard Douglas Fraser 50,000 (3) .05%
value common 80 O'Shanassy Street
stock Sunbury 3429
Victoria, Australia
$.001 par Richard Bain 6,260,334 6.54%
value common 5801 Lumberdale #243
stock Houston, Texas 77092
$.001 par Don Knaute 6,360,000 6.66%
value common 19505 FM #149
stock Houston, Texas 77070
Officers and directors 44,753,334 46.78%
as a group (three persons)
(1) Unless indicated otherwise, the beneficial owners exercise sole voting
and investment power.
(2) Includes 2,000,000 shares of common stock owned directly by Mr. Albers
and 30,083,000 owned indirectly by Mr. Albers through companies he is
affiliated with.
(3) Mr. Richard Fraser's shares of common stock are owned indirectly through
a company which he is affiliated with.
(4) Percent of class is computed by dividing the sum of the shares of common
stock actually owned and the shares of common stock issuable upon
conversion of the Convertible Preferred Stock by the sum of the number
of shares of common stock actually outstanding and the number of shares
of common stock issuable upon conversion.
(1) The beneficial owners exercise sole investment power.
(2) The Convertible Preferred Stock is convertible into shares of common
stock at the rate of .40 share of common stock for each share of
Convertible Preferred Stock.
(c) Changes in Control
On July 17, 1987 the Company entered into a stock purchase agreement
(the "Stock Purchase Agreement") with Quillium Nominees Pty., Ltd., a
Victorian corporation ("Quillium") for the sale of 33,333,000 shares of the
Company's common stock for $1,000,000 ($.03 per share). The sale of common
stock was consummated on April 22, 1988 with shareholder approval. The
Company also agreed to grant Quillium an option (the "Quillium Option") to
acquire 33,333,000 shares of its common stock, which option expired on
January 31, 1991.
Item 13. Certain Relationships and Related Transactions
(a) Transactions with Management and Others
On July 17, 1987 the Registrant entered into a stock purchase agreement
(the "Stock Purchase Agreement") with Quillium Nominees Pty., Ltd., a
Victorian corporation ("Quillium ") for the sale of 33,333,000 shares of the
Registrant's common stock for $1,000,000 ($.03 per share). The Registrant
also agreed to grant Quillium an option ("Quillium Option") to acquire
33,333,000 shares of its common stock at a price of $.05 per share, which
option expired on January 31, 1991. Under the Stock Purchase Agreement the
Registrant has agreed to register the 33,333,000 shares issued to Quillium
upon the request of the then holders of 50% of such shares. Quillium
Nominees Pty., Ltd., a company incorporated in Victoria, Australia, is wholly
owned by Ernest Geoffrey Albers. The company has from time to time acted as
custodian and trustee for Mr. Albers' investment interests. In connection
with the Stock Purchase Agreement, Quillium acted on behalf of Great
Missenden Group Pty., Ltd., an investment company located in Victoria,
Australia, and which is owned by Mr. Albers.
On April 22, 1988 the Stock Purchase Agreement was consummated with
Quillium Nominees Pty., Ltd., with shareholder approval. Mr. Albers, David
Bruce Hill and Richard Douglas Fraser were elected to the Registrant's Board
of Directors. (See "Item 10").
(b) Certain Business Relationships
The Registrant acquired a 38% equity interest in Zonia Landfill, Inc.,
a company affiliated with certain of its officiers/directors and significant
shareholders. The equity interest acquired by this Company represented net
cash advances to Zonia of $198,000. Zonia Landfill, Inc. is engaged in the
solid waste management business which operates a transfer/recycle facility
and garbage collection business. Zonia Landfill, Inc. sold it's operations
to USA Waste Systems, Inc. and the Registrant received 8,097 shares of USA
Waste Common Stock for it's interest. USA Waste Services is a NYSE listed
company. The Company sold its shares of USA Waste during 1997 and 1998 for
an aggregate of $368,000.
(c) Indebtedness of Management
None
(d) Transactions with Promoters
Not applicable.
PART IV
Item l4. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) The following documents are filed as a part of this Report
immediately following the signature page.
Page
Number
1. Financial Statements
Balance Sheet - October 31, 1999 and 1998 F-1
Statement of Operations - Years Ended
October 31, 1997, 1998 and 1999 and F-3
Cumulative Amounts from Inception
(May 19, 1978) to October 31, 1999
Statements of Stockholders' Equity - F-5
For the Period from Inception
(May 19, 1978) to October 31, 1999.
Statement of Cash Flows -
Years ended October 31, 1997, 1998 and 1999 F-10
and Cumulative Amounts from Inception
(May 19, 1978) to October 31, 1999.
Notes to Financial Statements F-12
ROCKY MOUNTAIN MINERALS, INC.
The following unaudited balance sheet of Rocky Mountain Minerals, Inc.
as of October 31, 1999, and related statement of operations, stockholder's
equity and changes in financial position for the year ended October 31, 1999,
and supporting schedules and financial statements were prepared by the
Company and have not been reviewed by independent certified public
accountants. The Company's management believes the following unaudited
financial statements fairly present the financial position of the Company for
the year ended October 31, 1999.
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
BALANCE SHEET
October 31, 1998 and 1999
ASSETS
(Dollar amounts in thousands)
1998 1999
---- ----
Current assets:
Cash and cash equivalents $ 294 $ 271
Assets held for sale - net (Note 12) 122 500
------ ------
Total current assets 416 771
Property and equipment, at cost:
Equipment (Notes 2 and 12) 32 -
Undeveloped mineral interest (Notes 2, 9 and 12) 402 -
Developed mine dumps and tailings (Notes 2 and 12) 1,882 -
Producing oil and gas properties 2 -
------ ------
2,318 -
Less accumulated depreciation and depletion 67 -
------ ------
Net property and equipment 2,251 -
------ ------
$2,667 $ 771
====== ======
See accompanying notes.
F-1
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
BALANCE SHEET
October 31, 1998 and 1999
LIABILITIES AND STOCKHOLDERS' EQUITY
(Dollar amounts in thousands)
1998 1999
---- ----
Current liabilities:
Accounts payable $ 1 $ 8
Accrued property taxes 95 -
------ ------
Total current liabilities 96 8
Commitments and contingencies (Notes 5, 9 and 12)
Stockholders' equity (Notes 2, 4, 5 and 6):
Preferred stock, $.05 par value, $.015 cumulative
dividends, convertible; 44,000,000 shares authorized,
24,908,450 shares issued and outstanding (aggregate
liquidating preference - $9,216) 1,245 1,245
Common stock, $.001 par value; 250,000,000 shares
Authorized, 85,712,039 shares issued and outstanding 86 86
Capital in excess of par value 4,373 4,373
Deficit accumulated during the development stage (3,133) (4,941)
------ ------
Total stockholders' equity 2,571 763
------ ------
$2,667 $ 771
====== ======
See accompanying notes.
F-2
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the years ended October 31, 1997, 1998 and 1999 and
Cumulative Amounts from Inception (May 19, 1978) to October 31, 1999
(Dollar amounts in thousands)
Cumulative amounts
For the year ended October 31, from inception
1997 1998 1999 (May 19, 1978)
---- ---- ---- ------------------
Revenues:
Interest $ - $ 8 $ 11 $ 261
Royalty and lease bonus - - - 211
Gain on sale of machinery and equipmen - - - 100
Gain on sale of mining claims - - - 12
Gain on sale of undeveloped oil and gas properties - - - 35
Milling-custom - - - 14
Gold and silver sales - - - 177
Equity in subsidiary earnings (losses) (Note 3) - - - (96)
Gain on sale of securities (Note 3) 57 80 - 137
--- --- ------ ---
57 88 11 851
Costs and expenses:
Write-down of mill and mineral interests (Note 12) - - 1,749 2,933
Loss of disposal of equipment and assets held for sale (Note 12) - - 27 34
Cost of milling - - - 260
General and administrative 24 52 41 2,301
Abandonment of non-producing mineral interests - - 2 76
Depreciation, depletion and amortization - - - 286
Interest - - - 804
--- --- ------ -------
24 52 1,819 6,694
--- --- ------ -------
Income (loss) before extraordinary item 33 36 (1,808) (5,843)
(Continued on following page)
See accompanying notes.
F-3
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the years ended October 31, 1997, 1998 and 1999 and
Cumulative Amounts from Inception (May 19, 1978) to October 31, 1999
(Continued from preceding page)
(Dollar amounts in thousands
Cumulative amounts
For the year ended October 31, from inception
1997 1998 1999 (May 19, 1978)
---- ---- ---- ------------------
Extraordinary gain on extinguishment of debt - - - 902
--- --- ------ -------
Net income (loss) (Note 7) $33 $36 $(1,808) $(4,941)
=== === ====== =======
Basic income (loss) per common share (Note 8):
Loss before extraordinary item $ * $ * $(0.02) $ (0.10)
Extraordinary gain on extinguishment of debt - - - (0.01)
--- --- ------ -------
Basic net income (loss) per common share $ * $ * $(0.02) $ (0.09)
=== === ======= =======
*Less than $.01 per share
See accompanying notes.
F-4
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
For the period from Inception (May 9, 1978) to October 31, 1999
(Dollar amounts in thousands)
Deficit
accumulated
Capital in during the
Preferred stock Common stock excess of development
Shares Amount Shares Amount par value stage
------ ------ ------ ------ ---------- -----------
Issuance of common stock:
For undeveloped mineral interest at $.10 per
share in 1978 - $ - 45,000 $ - $ 4 $ -
For undeveloped mineral interest and services
at $.10 per share in 1978 - - 20,000 - 2 -
To a director for cash and royalty interest
in oil lease at $.0125 per share in 1978 - - 1,000,000 1 12 -
For cash:
at $.025 per share, pursuant to private
placement memorandum in 1978 and 1979 - - 3,467,000 3 83 -
at $.0125 per share in 1978 - - 800,000 1 9 -
To officers and directors for cash and use of
library at $.003 per share in 1979 - - 4,500,000 5 9 -
For undeveloped mineral and oil and gas
interests at $.12 per share in 1979 - - 80,000 - 10 -
For cash at $.10 per share, pursuant to public
offering, less $187,696 issue costs in 1979 - - 12,000,000 12 1,000 -
Sale of stock purchase warrants in 1979 - - - - - -
Sale of common stock at $.28225 per share
pursuant to private placement memorandum
in 1980 (Note 2) - - 1,400,000 1 394 -
(Continued on following page)
See accompanying notes.
F-5
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
For the period from Inception (May 9, 1978) to October 31, 1999
(Continued from preceding page)
(Dollar amount in thousands)
Deficit
accumulated
Capital in during the
Preferred stock Common stock excess of development
Shares Amount Shares Amount par value stage
------ ------ ------ ------ -------- -----------
Issuance of common stock:
For cash and services at $.1925 per share
in 1981 - $ - 200,000 $ - 38 -
For extended option at $.125 per share in
1981 - - 100,000 - 12 -
Issuance of preferred stock for cash at $.10
per share pursuant to a public offering,
less $513,526 issue costs in 1982
(Note 4) 30,000,000 1,500 - - 986 -
Issuance of common stock:
Partial consideration for mining property
at $.10 per share in 1982 (Note 2) - - 2,500,000 3 248 -
For extended purchase option at $.1875 per
share in 1982 (Note 2) - - 30,000 - 6 -
To an officer for debt settlement at $.04
per share in 1982 - - 250,000 - 10 -
For cash at $.01 per share in 1982 - - 250,000 - 2 -
For services at $.10 per share in 1983 - - 30,000 - 3 -
For services at $.03 per share in 1983 - - 250,000 - 7 -
Conversion of preferred stock into common
stock in 1983 (1,974,700) (99) 789,880 1 98 -
(Continued on following page)
See accompanying notes.
F-6
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
For the period from Inception (May 9, 1978) to October 31, 1999
(Continued from preceding page)
(Dollar amounts in thousands)
Deficit
accumulated
Capital in during the
Preferred stock Common stock excess of development
Shares Amount Shares Amount par value stage
------ ------ ------- ------ ---------- -----------
Issuance of common stock for cash at $.075
per share, in a private placement in 1984 - - 1,000,000 2 74 -
Conversion of preferred stock into common
stock in 1984 (5,500) - 2,200 - - -
Issuance of common stock:
To an officer and director for services
valued at $.01 per share in 1986 - - 3,000,000 3 27 -
For settlement of debt at $.015 per share
in 1987 - - 200,000 - 3 -
For cash at $.0167 per share, pursuant to
private placement in 1987 - - 10,975,000 11 172 -
To an officer and director for royalty
interest at $.01 per share in 1987 - - 500,000 1 4 -
To an officer and director and shareholder
for past services at $.01 per share in
1987 - - 2,900,000 3 26 -
For settlement of debt in 1987:
at $.015 per share - - 1,933,334 2 27 -
at $.03 per share - - 400,000 - 12 -
at $.02 per share - - 97,085 - 2 -
Conversion of preferred stock into common
stock in 1987 (250,000) (12) 100,000 - 12 -
(Continued on following page)
See accompanying notes.
F-7
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
For the period from Inception (May 9, 1978) to October 31, 1999
(Continued from preceding page)
(Dollar amounts in thousands)
Deficit
accumulated
Capital in during the
Preferred stock Common stock excess of development
Shares Amount Shares Amount par value stage
------ ------ ------ ------ ---------- -----------
Capital contribution of equipment by an officer
and director in 1987 - - - - 1 -
Issuance of common stock:
To an officer and director for past services
valued at $.03 per share in 1988 - - 500,000 1 14 -
For cash at $.03 per share, pursuant to stock
purchase agreement, net of offering costs of
$60,797 in 1988 (Note 5) - - 33,333,000 33 906 -
To officers, directors and other individuals
for royalty interests at $.01 per share
in 1988 - - 1,925,000 2 17 -
Conversion of preferred stock into common
stock in 1988 (1,253,325) (63) 501,330 1 62 -
Cancellation of common stock in 1989 - - (10,000) - - -
Conversion of preferred stock into common stock (20,000) (1) 8,000 - 1 -
in 1989
Conversion of preferred stock into common stock
in 1990 (256,025) (13) 102,410 - 13 -
Conversion of preferred stock into common
stock in 1991 (635,000) (32) 254,000 - 32 -
(Continued on following page)
See accompanying notes.
F-8
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
For the period from Inception (May 9, 1978) to October 31, 1999
(Continued from preceding page)
(Dollar amounts in thousands)
Deficit
accumulated
Capital in during the
Preferred stock Common stock excess of development
Shares Amount Shares Amount par value stage
------ ------ ------ ------ ---------- -----------
Conversion of preferred stock into common
stock in 1992 (697,000) (35) 278,800 - 35 -
Net loss for the period from inception to
October 31, 1996 - - - - - (3,202)
---------- ------ ---------- --- ------ -------
Balance, October 31, 1996 24,908,450 1,245 85,712,039 86 4,373 (3,202)
Net income for the year ended October 31,
1997 - - - - - 33
---------- ------ ---------- --- ------ -------
Balance, October 31, 1997 24,908,450 1,245 85,712,039 86 4,373 (3,169)
Net income for the year ended October 31,
1998 - - - - - 36
---------- ------ ---------- --- ------ -------
Balance, October 31, 1998 24,908,450 1,245 85,712,039 86 4,373 (3,133)
Net loss for the year ended October 31, 1999 - - - - - (1,808)
---------- ------ ---------- --- ------ -------
Balance, October 31, 1999 24,908,450 $1,245 85,712,039 $86 $4,373 $(4,941)
========== ====== ========== === ====== =======
See accompanying notes.
F-9
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the years ended October 31, 1997, 1998 and 1999 and
Cumulative Amounts from Inception (May 19, 1978) to October 31, 1999
(Dollar amounts in thousands)
Cumulative
amounts from
1997 1998 1999 inception
---- ---- ---- ------------
Cash flows from operating activities:
Net income (loss) $33 $36 $(1,808) $(4,941)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Loss from subsidiary - - - 96
Depreciation, depletion and amortization - - - 286
Write-down of mill and mineral interests - - 1,749 2,933
Abandonment of non-producing mineral interests - - 2 76
Gain on sale of mineral interests and oil and gas
properties - - - (57)
Loss (gain) on disposal of machinery and equipment - - 27 (73)
Amortization of deferred revenue - - - (24)
Advance royalties - - - 28
Issuance of common stock for services - - - 105
Change in assets and liabilitites:
Decrease in accounts receivable - 29 - -
Increase (decrease) in accounts payable - (4) 7 8
Increase (decrease) in accrued expenses (4) - - -
--- --- ------- -------
Total adjustments (4) 25 1,785 3,378
--- --- ------- -------
Net cash provided by (used in) operating activities 29 61 (23) (1,563)
(Continued on following page)
See accompanying notes.
F-10
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the years ended October 31, 1997, 1998 and 1999 and
Cumulative Amounts from Inception (May 19, 1978) to October 31, 1999
(Continued from preceding page)
(Dollar amounts in thousands)
Cumulative
amounts from
1997 1998 1999 inception
---- ---- ---- ------------
Cash flows from investing activities:
Proceeds from sale of mineral interests, oil and gas
properties and equipment - - - 238
(Increase) decrease in advances and investment in
affiliates (19) 199 - 175
Acquisition of:
Mineral interests and oil and gas properties - - - (3,414)
Mill and equipment - - - (395)
Other - - - (58)
--- ---- ---- ------
Net cash provided by (used in) investing activities (19) 199 - (3,454)
Cash flows from financing activities: Proceeds from the sale of:
Common stock - net - - - 2,802
Preferred stock - net - - - 2,486
--- ---- ---- ------
Net cash provided by (used in) financing activities - - - 5,288
--- ---- ---- ------
Increase (decrease) in cash 10 260 (23) 271
Cash and cash equivalents at beginning of period 24 34 294 -
--- ---- ---- ------
Cash and cash equivalents at end of period $34 $294 $271 $ 271
=== ==== ==== ======
See accompanying notes.
F-11
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
October 31, 1997, 1998 and 1999
1. Organization and summary of significant accounting policies
Organization:
Rocky Mountain Minerals, Inc. (the Company) was incorporated on February 21,
1974, and began operations on May 19, 1978 (inception) and is considered to
be a mining company in the exploratory stage and a development stage company
as defined by SFAS No. 7, and since inception, has been engaged in the
acquisition of mineral interests, oil and gas properties and leases,
financing activities, and initiated milling of the Company's mine tailings in
1983. During the year ended October 31, 1982, the Company disposed of the
majority of its oil and gas properties. In January 1984, the Company
discontinued milling. Subsequent to October 31, 1991, the Company has been
inactive and has had limited receipts and expenditures.
A summary of the significant accounting policies is as follows:
Depreciation, depletion and amortization:
Depreciation was provided by the Company on the straight-line and declining
balance methods.
Depletion of developed mineral interests (mine dumps and tailings) was
computed by the unit-of-production method based on estimated recoverable
quantities of gold and silver.
Undeveloped mineral interests and oil and gas properties:
The Company utilized the "successful efforts" method of accounting for
undeveloped mineral interests and oil and gas properties. Capitalized costs
were charged to operations at the time the Company determined that no
economic reserves existed.
Costs of carrying and retaining undeveloped properties were charged to
expense when incurred.
Proceeds from the sale of undeveloped properties were treated as a recovery
of cost. Proceeds in excess of the capitalized cost realized in the sale of
any such properties, if any, were recognized as gain to the extent of the
excess.
Income taxes:
The Company provides for income taxes utilizing the liability approach under
which deferred income taxes are provided based upon enacted tax laws and
rates applicable to the periods in which the taxes became payable.
F-12
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
October 31, 1997, 1998 and 1999
1. Organization and summary of significant accounting policies (continued)
Cash equivalents:
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments purchased with a maturity of three months or less to
be cash equivalents.
Impairment of long-lived assets:
The Company evaluates the potential impairment of long-lived assets in
accordance with Statement of Financial Accounting Standards No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed of. The Company annually reviews the amount of recorded
long-lived assets for impairment. If the sum of the expected cash flows from
these assets is less than the carrying amount, the Company will recognize an
impairment loss in such period.
Concentrations of credit risk:
Financial instruments which potentially subject the Company to concentrations
of credit risk consist principally of cash and cash equivalents. The Company
places its cash with high quality financial institutions. At October 31, 1999
and at times during the years, the balance at one financial institution
exceeded FDIC limits.
2. Purchase of Rochester mining properties
In October 1980, the Company entered into an agreement with certain
individuals, including officers and directors of the Company, whereby the
Company sold each of them a certain number of shares of its common stock
(1,400,000 in the aggregate); a percentage of the net profits, if any, on an
accumulated basis (10.5% in the aggregate) from the operations of the mill
being acquired from Rochester; and a perpetual non-participating royalty
interest in the patented mining claims being acquired from Rochester (10.5%
aggregate). The Company valued the shares issued under the agreements at
$.28225 per share which represented approximately 60% of the quoted market
"bid" price on October 28, 1980. The balance of the amount received from the
"private placement" ($348,400) was deferred until closing of the agreement
with Rochester, at which time, the amount deferred was credited to the total
purchase price of the properties. During 1987 and 1988, the Company had
repurchased 7.125% (aggregate) of both of the net profits and royalty
interests for a total of $47,500 in cash and the issuance of 2,425,000 shares
of its common stock ($.01 per share.).
F-13
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
October 31, 1997, 1998 and 1999
2. Purchase of Rochester mining properties (continued)
On November 30, 1981, the Company closed the agreement with Rochester
Enterprises, a Montana limited partnership, acquiring 11 patented lode mining
claims, certain improvements, buildings and machinery, and certain mill
tailings and mine dumps located in Montana (see Note 12) for a purchase price
totaling $3,029,765 and 2,530,000 shares of the Company's common stock.
Pursuant to the agreement, the Company agreed, on a one-time basis only, to
prepare and file a registration statement under the Securities Act of 1933,
as amended, or a notification of exemption pursuant to Regulation A, if
available, from such act at its expense to sell or otherwise dispose of any
of the shares issued to Rochester under the agreement, upon the request of
any one or more of the partners of Rochester.
3. Investment in affiliated companies
On June 28, 1988, the Company acquired a 50% interest in American Horizon
Resources, Inc. (American Horizon) for cash consideration of $15,000.
American Horizon, a privately owned Colorado corporation, was considered to
be a mining company in the development stage. A principal shareholder of the
Company owned the remaining 50% interest in American Horizon. In July of
1989, the Company agreed to fund 50% of American Horizon's subsequent
budgeted mining exploration expenditures in Tasmania, which funding
commitment terminated on June 30, 1991. At October 31, 1991, $35,410 had been
advanced by affiliates to American Horizon on behalf of the Company, for this
purpose. In 1995, American Horizon was determined to be worthless and the
Company wrote off its investment and advances.
During 1992, the Company acquired a 38% interest in Zonia Landfill, a waste
management company which owned and operated a solid waste transfer and
recycle facility and a solid waste and collection company. The equity
interest acquired by the Company represented net cash advances to Zonia of
$198,000. Significant shareholders, officers and directors of the Company
were affiliated with Zonia. Zonia sold its operations in 1996 for common
stock in USA Waste Services, Inc. The Company sold its shares of USA Waste
Services, Inc. during 1997 and 1998 for an aggregate of $368,000.
4. Preferred stock
During fiscal 1981, the stockholders voted to amend the Articles of
Incorporation to authorize the issuance of preferred stock having a par value
of $.05. The Board of Directors designated 44,000,000 shares of the preferred
stock as $.015 cumulative convertible preferred stock (hereinafter referred
to as "preferred stock"). The holders of the preferred stock are entitled to
receive $.015 per share annual dividends, and $.10 per share, plus accrued
but unpaid dividends, upon liquidation, dissolution or winding up of the
Company. The dividends are payable annually if and when declared by the Board
of Directors only from earned surplus. Cumulative dividends in arrears as of
October 31, 1999 amount to $6,725,282 ($.27 per share). Each share of the
preferred stock is convertible by the holder, at his option, into .4 shares
of common stock. The preferred stock may be called for redemption at $.15 per
share, plus accrued but unpaid dividends.
F-14
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
October 31, 1997, 1998 and 1999
5. Common stock
In connection with a stock purchase agreement consummated on April 22, 1988,
with Quillium Nominees Pty., Ltd. (Quillium) pursuant to which 33,333,000
shares of the Company's restricted common stock were issued, the Company
agreed to prepare and file a registration statement under the Securities Act
of 1933, as amended, for the 33,333,000 shares issued under the agreement.
This has not been performed as of October 31, 1999.
6. Stock options
Effective December 4, 1987, 25,000,000 shares of the Company's common stock
were reserved for issue to officers, directors and employees of the Company,
pursuant to the terms of the Stock Option Plan adopted on that date. As of
October 31, 1999, no options have been granted and no charges to income have
been made in connection with the above noted stock options.
7. Income taxes
At October 31, 1999, the Company had net operating loss carryforwards for tax
purposes of approximately $2,781,000, of which $484,000 is limited as to the
amount which may be used in one year. If not used to offset future taxable
income, the carryforwards will expire as follows:
Fiscal Year of Amount
expiration
2000 $325,000
2001 159,000
2003 226,000
2004 215,000
2005 194,000
2006 78,000
2007 119,000
2008 21,000
2009 85,000
2010 130,000
2011 23,000
2018 1,148,000
2019 58,000
F-15
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
October 31, 1997, 1998 and 1999
7. Income taxes (continued)
At October 31, 1999, total deferred tax assets and valuation allowances are
as follows:
Deferred tax assets resulting from:
Net operating loss carryforwards $973,000
Write-down of assets held for sale 612,000
-----------
Total 1,585,000
Less valuation allowance (1,585,000)
-----------
$ -
===========
A 100% valuation allowance has been established against the deferred tax
assets, as utilization of the loss carryforwards and realization of other
deferred tax assets cannot be reasonably assured.
8. Basic income (loss) per common share
Basic income (loss) per common share is based on the weighted average number
of shares of common stock outstanding during each year, 85,712,000 shares in
1997, 1998 and 1999 and 57,420,000 shares for the period from May 19,1978
through October 31, 1999.
9. Commitments and contingencies
Unpatented lode mining claims:
In connection with unpatented lode mining claims, the Company was obligated
to perform, or cause to be performed, approximately $6,600 of assessment
work, or work by August 31, 1999, in order to retain possessory title for
the ensuing year (see Note 12).
Insurance:
The Company is, to a significant degree, without insurance pertaining to
various potential risks with respect to its mining properties and equipment,
including general liability and fire, because it is presently not able to
obtain insurance for such risks at rates and on terms which it considers
reasonable. The financial position of the Company in future periods could be
adversely affected if uninsured losses were to be incurred.
F-16
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
October 31, 1997, 1998 and 1999
10. Mineral lease agreement
On February 19, 1993, the Company entered into a Mineral Lease Agreement
with Rouetel, Inc. of Spokane, Washington on the Rochester Gold Project.
The Agreement called for Rouetel to spend a minimum of $50,000 per year in
direct exploration and development work, or in mining or milling
operations. Rouetel, Inc. was required to pay the Company minimum advance
royalties of $20,000 in 1993 and $25,000 annually thereafter. During the
Agreement, the Company retained a five percent net smelter return. Rouetel,
Inc. had the right to terminate this Agreement at any time by giving the
Registrant thirty (30) days prior written notice. This Agreement was
terminated during 1996.
11. Related party transactions
Notes receivable - officers:
On September 1, 1988, the Board of Directors authorized a loan by the
Company to its President, as evidenced by a promissory note as of that
date, in the amount of $40,000. Interest at 12% was payable quarterly and
the principal was due September 1, 1992. During the year ended October 21,
1992, the note plus accrued interest was forgiven as a result of past
services.
On March 1, 1997, the Board of Directors authorized a loan by the Company
to its President, as evidenced by a promissory note as of that date, in the
amount of $29,500. Interest at 8% was payable quarterly with the principal
being due on or before January 1, 1998. During fiscal year 1998, the note
plus accrued interest of $1,740 was forgiven as a result of past services
for the years 1994 through 1997.
Office usage agreement:
In 1994, the Company entered into an agreement to reimburse its President
$675 per quarter for office space and overhead. Total amounts paid and
payable to the President for office usage during the three years ended
October 31, 1999 were $2,700 per year in 1997, 1998 and 1999.
12. Assets held for sale
In January of 1984, the Company suspended milling operations at its
Rochester property. During 1990, the Company recorded a charge to expense
of $1,037,669 representing the excess of net book value over the estimated
recoverable value of the Rochester Mill (the Mill). In December of 1990,
the Company decided to sell certain assets at the Mill, and the net assets
were reclassified to net assets held for sale and stated at their net
realizable value. In 1991 and 1993, pursuant to property appraisals, the
Company recorded additional charges to expense totaling $200,000,
representing excess net book value over the estimated recoverable value of
the Mill. In 1999, a tax deed was issued by the Madison County, Montana
Treasurer for the Mill and related property, and the Company wrote off the
property and recorded a loss of approximately $27,000.
F-17
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
October 31, 1997, 1998 and 1999
12. Assets held for sale (continued)
During 1999, the Company decided to sell the remaining undeveloped mineral
interests and developed mine dumps and tailings. The assets have been
reclassified to net assets held for sale and stated at their net realizable
value resulting in a loss of $1,749,000.
F-18
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 of the undersigned, thereunto duly authorized.
ROCKY MOUNTAIN MINERALS, INC.
BY: /s/ Richard Bain
Richard Bain, President
DATED: 2/14/00
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 date indicated.
DATED: 2/14/00 BY: /s/ Richard Bain
Richard Bain, Treasurer and Director
(Principal Executive, Financial and
Accounting Officer)
DATED: 2/14/00 BY: /s/ E. Geoffrey Albers
E. Geoffrey Albers, Director
DATED: 2/14/00 BY: /s/ Richard Fraser
Richard Fraser, Director
DATED: 2/14/00 BY: /s/ Don Knaute
Don Knaute, Director