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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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, 2001
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)
836 Monroe Street
Denver, Colorado 80206
(Address of principal executive offices) (Zip Code)
(303) 831-7373
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, 2001: $424,881.
Class Outstanding at October 31, 2001
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 2001 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 2001 the Registrant did not acquire, develop, or
operate on any mineral properties. During 2001 the Company was actively
pursuing the evaluation of various business opportunities as well as the sale
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 sold, 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.
Farm out: 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 or possessory title to which is
maintained by payment of a $100 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, 2001 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.
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
farm out, joint venture or similar arrangements which may be entered into.
The Registrant with respect to any of its oil and gas leases has entered into
no drilling commitments.
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 and oil and gas 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 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 back grading, 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, 2001, 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 lode-mining claims, comprising
approximately 660 acres, 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 reserves 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.
In addition to the Registrant's patented mining claims, the
Registrant has in the past held possessory title to unpatented lode-mining
claims under the mining laws of the United States and the laws of the state
in which the claims are located. The Registrant incurred costs of $24,603
plus 1981 acquisition costs in association with the various unpatented lode-
mining claims in Madison County, Montana. During fiscal year 2000 the
Registrant elected not to continue the annual maintenance and required
assessment work commitment of $6,600 required to maintain the sixty-six (66)
unpatented claims, and hence the Registrant reduced it's mineral holdings in
the Rochester Mining District by approximately 1,300 acres.
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 (3),(4) November 30, 198l
Dead Beat (2)....... August 21, 1980 Paucippa (3)........ November 30, 198l
Black Rock (2)...... August 21, 1980 Julia Holmes (3).... November 30, 198l
Virginia (2)........ August 21, 1980 Vienna (3).......... November 30, 198l
Leona (2)........... August 21, 1980 Climax (3).......... November 30, 198l
Carrie B. (2)....... August 21, 1980 Carlton (3)......... November 30, 198l
Caulsa (2).......... August 21, 1980 May Queen (3)....... November 30, 198l
Watseca Gold Hill(2) August 21, 1980 Concentrator (3),(5) November 30, 198l
Silver Note (2)..... August 21, 1980 Cleopatra (3),(6)... November 30, 198l
(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.
(3) 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.
(4) Approximately 63,000 tons of dumps and 28,000 tons of tailings are
located on the Watseca Trio Claim.
(5) Approximately 27,000 tons of tailings are located on the Concentrator
claim.
(6) Approximately 32,000 tons of dumps are located on the Cleopatra claim.
Since fiscal year 2000 the Registrant has actively pursued the sale of
all 31 patented mining claims comprising all of the Registrant's mining
properties.
Titles
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.
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.
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
11/01/99 - 01/31/00 $.063 $.010
02/01/00 - 04/30/00 $.220 $.063
05/01/00 - 07/31/00 $.100 $.007
08/01/00 - 10/31/00 $.010 $.007
11/01/00 - 01/31/01 $.010 $.007
02/01/01 - 04/30/01 $.010 $.007
05/01/01 - 07/31/01 $.100 $.007
08/01/01 - 10/31/01 $.010 $.007
*The above bid and ask prices are estimated by the Registrant
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, 2001 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, 2001) 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 2001. The Registrant
has deferred payment of these dividends ($7,472,536) 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,
1997 1998 1999 2000 2001
Operating revenues $ 57 88 11 14 6
Interest expense - - - - -
Net income (loss) (1,745) 36 (30) (34) (91)
Net income (loss) per share (.02) (*) (*) (*) (*)
Total assets 828 794 771 729 647
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: (85,712,000 in 1997, 85,712,000 in 1998, 85,712,000 in 1999,
85,712,000 in 2000 and 85,712,000 in 2001).
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Forward Looking Information
Statements of the Company's or management's intentions, beliefs,
anticipations, expectations and similar expressions concerning future events
contained in this document constitute forward looking statements as defined
in the Private Securities Litigation Reform Act of 1995. As with any future
event, there can be no assurance that the events described in the forward
looking statements made in this report will occur or that the results of
future events will not vary materially from those described in the forward
looking statements in this document.
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. In 1984 the Company ceased gold extraction operations at its
Rochester, Montana mining property. During 1988, with the receipt of funding
from a stock purchase agreement, it resumed mineral exploration both at
Rochester and elsewhere in North America and Australia. Despite detailed
geologic investigations by the Company and by leading gold mining companies,
there was insufficient encouragement from exploration results to warrant
further investigations or activity at Rochester.
The Registrant later became involved in waste management activities.
Subsequent to October 31, 1991, and following the sale of the waste
management interests in 1996, the Registrant has been inactive and has had
limited receipts and expenditures.
General and administrative expenses increased during fiscal year 2001
as compared to fiscal year 2000 primarily due to the Registrant's higher
level of activity in evaluating various business opportunities during
2001.
The Registrant plans to resume oil and gas exploration and production
activities. In particular, the Company plans to seek out oil and gas
properties in the rocky Mountain region of the U.S. and also in Australia.
To advance these plans, the Company will establish a representative office in
Melbourne, Australia and Denver, Colorado.
Liquidity and Capital Resources
The following table reflects the Registrant's working capital positions
at October 2001 and 2000:
October 31, 2001 October 31, 2000
Current assets $ 647 $ 729
Current liabilities 9 -
Working capital 638 729
Current ratio 71.9 -
Since ceasing milling operations at its Rochester, Montana property in
1984, the Registrant has evaluated this property and other mineral
properties, as well as having pursued waste management activities. The waste
management assets have been sold and the Registrant has placed its Rochester
property on the market for sale.
Management plans to use the funds from the sale of the waste management
assets and the Rochester property to fund the Company's evaluation of oil and
gas exploration and production opportunities. Plans for additional funding
of these activities include attempting to obtain external funding either
through the sale of the Company's common or preferred stock.
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 58 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. Since 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 1978, Mr. Albers first
became involved in oil exploration
activities. Subsequently, companies
associated with him were directly
involved in the discovery of the Olla Gas
Condensate field in Bass Strait. In
1981, Mr. Albers formed Cue Energy
Resources, NL (of which he remains a
director) and through this company took a
significant interest in the drilling of a
number of offshore wells in New Zealand
including the oil discovery well Moki-1,
which is now part of the proposed Mari
Oil Field development. Cue Energy has
been involved with development of the S E
Gobi oil project and, more recently, made
the Young oil and gas discovery in
offshore Indonesia. In 1983, Mr. Albers
co-sponsored the formation of Southern
Petroleum NL in New Zealand. This
company participated in the drilling of a
number of wells in the offshore Teriyaki
Basin. Southern Petroleum subsequently
farmed into the onshore Teriyaki Basin
and made the Tarkio, Aurora and Wahiawa
oil and gas discoveries. Southern
Petroleum became a successful producing
company and was acquired by the Fletcher
Challenge Group. In 1995, Mr. Albers
formed Timor Sea Petroleum NL and in
1998, with Shell Oil, successfully
drilled the Evans Shoal 2 gas discovery
well in the Timor Sea.
William Ray Hill 50 President, Treasurer and Director since
August 2001. Mr. Hill founded Rocky
Mountain Minerals, Inc. in 1978 and was
President and director from 1978 to 1995.
Mr. Hill is President and Director of The
Zonia Company, an Arizona real estate
development company. Mr. Hill is the
founder and President of Geowest
Corporation, which is involved in the
development of a solid waste construction
and demolition landfill. In 1988 Mr.
Hill founded Citizens Recycle &
Collection, a solid waste hauling and
Transfer Company, which was acquired by
Waste Management, Inc. in 1996.
Richard Douglas Fraser 51 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.
(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 each of the three fiscal years in the period
ended October 31, 2001 was as follows:
Name of
individual or number Capacities in Cash
of persons in group which served compensation
All executive Officers and/or 2001 $22,900
officers as a group directors 2000 $18,000
(two persons) 1999 $12,000
(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
Not applicable.
(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, 2001:
Amount and
Nature of percent
Title of Name and address beneficial of
class of beneficial owner ownership (1) class (5)
$.001 par Ernest Geoffrey Albers 10,593,400 (2) 11.07%
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
$.001 par William Ray Hill 5,797,556 (4) 6.10%
value common 2480 North Tolemac
stock Prescott, AZ 86305
Officers and directors 16,440,956 17.22%
as a group (three persons)
1) Unless indicated otherwise, the beneficial owners exercise sole voting
and investment power.
2) Mr. Geoffrey Alber's shares of common stock are 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) Includes Mr. Hill's 2,118,890 shares of Preferred Stock, which is
convertible into 847,556 shares of Common Stock.
5) 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.
6) The beneficial owners exercise sole investment power.
7) 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. Ernest Geoffrey
Albers wholly owns Nominees Pty., Ltd., a company incorporated in Victoria,
Australia. 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 Mr. Albers owns.
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 officers/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 that operates a transfer/recycle facility and
garbage collection business. Zonia Landfill, Inc. sold its operations to USA
Waste Systems, Inc. and the Registrant received 8,097 shares of USA
Waste Common Stock for its 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
Report of Independent Certified Public Accountants F-1
Balance Sheet - October 31, 2001 and 2000 F-2
Statement of Operations - Years Ended
October 31, 1999, 2000 and 2001 and F-3
Cumulative Amounts from Inception
(May 19, 1978) to October 31, 2001
Statements of Stockholders' Equity - F-5
For the Period from Inception
(May 19, 1978) to October 31, 2001.
Statement of Cash Flows -
Years ended October 31, 1999, 2000 and 2001 F-10
and Cumulative Amounts from Inception
(May 19, 1978) to October 31, 2001.
Notes to Financial Statements F-12
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
FOR THE YEARS ENDED OCTOBER 31, 1999, 2000 AND 2001
WITH
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
of Rocky Mountain Minerals, Inc.
We have audited the accompanying balance sheet of Rocky Mountain Minerals,
Inc. as of October 31, 2001 and 2000, and the related statements of
operations, stockholders' equity and cash flows for each of the three
years in the period ended October 31, 2001. These financial statements
are the responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Rocky Mountain
Minerals, Inc. as of October 31, 2001 and 2000, and the results of its
operations and its cash flows for each of the three years in the period
ended October 31, 2001, in conformity with accounting principles generally
accepted in the United States of America.
Denver, Colorado
January 2, 2002 CAUSEY DEMGEN & MOORE INC.
F-1
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
BALANCE SHEET
October 31, 2000 and 2001
ASSETS
(Dollar amounts in thousands)
2000 2001
---- ----
Current assets:
Cash and cash equivalents $229 $139
Assets held for sale - net (Note 2) 500 500
Prepaid expenses and deposits - 8
---- ----
Total current assets $729 $647
==== ====
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ - $ 9
Commitments and contingencies (Notes 5, 8 and 9)
Stockholders' equity (Notes 2, 4 and 5):
Preferred stock, $.05 par value, $.015 cumulative
dividends, convertible; 44,000,000 shares authorized,
24,908,450 shares issued and outstanding (aggregate
liquidating preference - $9,963) 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 (4,975) (5,066)
----- -----
Total stockholders' equity 729 638
----- -----
$ 729 $ 647
====== ======
See accompanying notes.
F-2
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the years ended October 31, 1999, 2000 and 2001 and Cumulative Amounts from Inception (May 19, 1978) to October 31, 2001
(Dollar amounts in thousands)
Cumulative amounts
For the year ended October 31, from inception
1999 2000 2001 (May 19, 1978)
---- ---- ---- ------------------
(Unaudited)
Revenues:
Interest $11 $ 14 $ 6 $ 281
Royalty and lease bonus - - - 211
Gain on sale of machinery and equipment - - - 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) - - - 137
--- --- --- -----
11 14 6 871
Costs and expenses:
Write-down of mill and mineral interests (Note 2) - - - 2,933
Loss on disposal of equipment and assets held for sale
(Note 2) - - - 34
Cost of milling - - - 260
General and administrative 41 48 97 2,446
Abandonment of non-producing mineral interests - - - 76
Depreciation, depletion and amortization - - - 286
Interest - - - 804
--- --- --- -----
41 48 97 6,839
--- --- --- -----
Loss before extraordinary item (30) (34) (91) (5,968)
(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, 1999, 2000 and 2001 and Cumulative Amounts from Inception (May 19, 1978) to October 31, 2001
(Continued from preceding page)
(Dollar amounts in thousands)
Cumulative amounts
For the year ended October 31, from inception
1999 2000 2001 (May 19, 1978)
---- ---- ---- ------------------
(Unaudited)
Extraordinary gain on extinguishment of debt - - - 902
--- --- --- -----
Net loss (Note 6) $(30) $(34) $(91) $(5,066)
==== ==== ==== =======
Basic loss per common share (Note 7):
Loss before extraordinary item $ (*) $ (*) $ (*) $ (0.10)
Extraordinary gain on extinguishment of debt - - - 0.02
---- ---- ---- -------
Basic net loss per common share $ (*) $ (*) $( *) $ (0.08)
==== ==== ==== =======
*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 19, 1978) to October 31, 2001
Information pertaining to the period from Inception (May 19, 1978) to October 31, 1998 is unaudited
(Dollar amounts in thousands)
Deficit
accumulated
Capital in during the
Preferred stock Common stock excess of development
Shares Amount Shares Amount par value stage
------ ------ ------ ------ ---------- -----------
Unaudited
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 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 19, 1978) to October 31, 2001
Information pertaining to the period from Inception (May 19, 1978) to October 31, 1998 is unaudited
(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
------ ------ ------ ------ ---------- -----------
(Unaudited)
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
$514,000 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 19, 1978) to October 31, 2001
Information pertaining to the period from Inception (May 19, 1978) to October 31, 1998 is unaudited
(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
------ ------ ------ ------ ---------- -----------
(Unaudited)
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 (Note 2) - - 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 19, 1978) to October 31, 2001
Information pertaining to the period from Inception (May 19, 1978) to October 31, 1998 is unaudited
(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
------ ------ ------ ------ ---------- -----------
(Unaudited)
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 (Note 2) - - 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
in 1989 (20,000) (1) 8,000 - 1 -
Conversion of preferred stock into common stock
in 1990 (256,025) (13) 102,410 - 13 -
(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 19, 1978) to October 31, 2001
Information pertaining to the period from Inception (May 19, 1978) to October 31, 1998 is unaudited
(Continued from preceding page)
(Dollar amounts in the thousands)
Deficit
accumulated
Capital in during the
Preferred stock Common stock excess of development
Shares Amount Shares Amount par value stage
------ ------ ------ ------ ---------- ----------
(Unaudited)
Conversion of preferred stock into common
stock in 1991 (635,000) (32) 254,000 - 32 -
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, 1998 - - - - - (4,911)
---------- ------ ---------- --- ------ --------
Balance, October 31, 1998(unaudited) 24,908,450 1,245 85,712,039 86 4,373 (4,911)
Net loss for the year ended October 31, 1999 - - - - - (30)
---------- ------ ---------- --- ------ --------
Balance, October 31, 1999 24,908,450 1,245 85,712,039 86 4,373 (4,941)
Net loss for the year ended October 31, 2000 - - - - - (34)
---------- ------ ---------- --- ------ --------
Balance, October 31, 2000 24,908,450 1,245 85,712,039 86 4,373 (4,975)
Net loss for the year ended October 31, 2001 - - - - - (91)
---------- ------ ---------- --- ------ --------
$24,908,450 $1,245 85,712,039 $86 $4,373 $ (5,066)
Balance, October 31, 2001 ========== ====== ========== === ====== =========
See accompanying notes.
F-9
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the years ended October 31, 1999, 2000 and 2001 and Cumulative Amounts from Inception (May 19, 1978) to October 31,
2001
(Dollar amounts in thousands)
Cumulative
amounts from
inception
1999 2000 2001 (May 19, 1978)
---- ---- ---- --------------
(unaudited)
Cash flows from operating activities:
Net loss $(30) $(34) $ (91) $(5,066)
Adjustments to reconcile net loss to net cash
used in operating activities:
Loss from subsidiary - - - 96
Depreciation, depletion and amortization - - - 286
Write-down of mill and mineral interests - - - 2,933
Abandonment of non-producing mineral interests - - - 76
Gain on sale of mineral interests and oil and gas
properties - - - (57)
Gain on disposal of machinery and equipment - - - (73)
Amortization of deferred revenue - - - (24)
Advance royalties - - - 28
Issuance of common stock for services - - - 105
Change in assets and liabilities:
Increase in prepaid expenses and deposits - - (8) (8)
Increase (decrease) in accounts payable 7 (8) 9 9
--- --- --- -----
Total adjustments 7 (8) 1 3,371
--- --- --- -----
Net cash used in operating activities (23) (42) (90) (1,695)
(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, 1999, 2000 and 2001 and Cumulative Amounts from Inception (May 19, 1978) to October 31,
2001
(Continued from preceding page)
(Dollar amounts in thousands)
Cumulative
amounts from
inception
1999 2000 2001 (May 19, 1978)
---- ---- ---- --------------
(unaudited)
Cash flows from investing activities:
Maturity (purchase) of certificates of deposit (200) 200 - -
Proceeds from sale of mineral interests, oil and gas
properties and equipment - - - 238
Decrease in advances and investment in affiliates - - - 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 (200) 200 - (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 financing activities - - - 5,288
--- ---- --- -----
Increase (decrease) in cash (223) 158 (90) 139
Cash and cash equivalents at beginning of period 294 71 229 -
--- ---- ---- -----
Cash and cash equivalents at end of period $ 71 $ 229 $139 $ 139
==== ==== ==== =====
See accompanying notes.
F-11
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
October 31, 1999, 2000 and 2001
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 as 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.
Use of estimates:
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the amounts
reported in the financial statements and footnotes thereto. Significant
items subject to such estimates and assumptions include the carrying value
of assets held for sale and of long-lived assets. Actual results could
differ from those estimates.
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.
F-12
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
October 31, 1999, 2000 and 2001
1. Organization and summary of significant accounting policies (continued)
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 to be 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.
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. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets. The Company
annually reviews the amount of recorded long-lived assets for impairment. If
the carrying amount of a long-lived asset is not recoverable from its
undiscounted cash flows, 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.
Unaudited financial statements:
In the opinion of management, the accompanying unaudited financial statements
contain all adjustments necessary for a fair presentation of the results of
operations and cash flows for the period from inception (May 19, 1978) to
October 31, 2001.
F-13
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
October 31, 1999, 2000 and 2001
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.
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 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.
During 1987 and 1988, the Company 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).
During 1997, 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.
3. Investment in affiliated companies
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.
F-14
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
October 31, 1999, 2000 and 2001
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, 2001 amount to $7,472,536 ($.30 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.
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, 2001.
6. Income taxes
At October 31, 2001, the Company had net operating loss carryforwards for tax
purposes of approximately $1,743,000. If not used to offset future taxable
income, the carryforwards will expire as follows:
Fiscal Year of expiration Amount
------------------------- ------
2002 $ 484,000
2003 226,000
2004 215,000
2005 194,000
2006 78,000
2007 98,000
2008 33,000
2010 109,000
2011 25,000
2012 126,000
2020 30,000
2021 34,000
2022 91,000
F-15
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
October 31, 1999, 2000 and 2001
6. Income taxes (continued)
At October 31, 2000 and 2001, total deferred tax assets and valuation
allowances are as follows:
Deferred tax assets resulting 2000 2001
---- ----
Net operating loss $ 747,000 $ 610,000
Write-down of assets held 612,000 612,000
----------- -----------
Total 1,359,000 1,222,000
Less valuation allowance (1,359,000) (1,222,000)
----------- -----------
$ - $ -
=========== ===========
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.
7. Basic loss per common share
Basic 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 1999, 2000
and 2001 and 59,827,000 shares for the period from May 19, 1978 through
October 31, 2001.
F-16
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
October 31, 1999, 2000 and 2001
8. Commitments and contingencies
Insurance:
The Company is, to a significant degree, without insurance pertaining to
various potential risks with respect to its properties, including general
liability, 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.
9. Related party transactions
In 1994, the Company entered into an agreement to reimburse its President
for office space and overhead. Total amounts paid and payable to the
President for office usage during the three years ended October 31,
2001 were $2,700 in 1999 and 2000 and $5,400 in 2001.
F-17
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/ W. Ray Hill
W. Ray Hill, President
DATED: January 11, 2002
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: January 11, 2002 BY: /s/ W. Ray Hill
W. Ray Hill, Treasurer and Director
(Principal Executive, Financial and
Accounting Officer)
DATED: January 11, 2002 BY: /s/ E. Geoffrey Albers
E. Geoffrey Albers, Director
DATED: January 11, 2002 BY: /s/ Richard Fraser
Richard Fraser, Director