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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, 2002
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)
2480 North Tolemac Way
Prescott, Arizona 86305
(Address of principal executive offices) (Zip Code)
(928) 778-1450
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, 2002: $427,060.
Class Outstanding at October 31, 2002
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 natural resource
properties. The Registrant has no proven mineral or petroleum reserves.
Since the beginning of the 2002 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 2002 the Registrant did not acquire, develop, or
operate any mineral or oil and gas properties. During 2002 the Registrant
actively pursued the evaluation of oil and gas prospects in both the Western
U.S. and Australia. The Registrant sold eleven patented mining claims,
together with the dumps and tailings, in the Rochester Mining District during
2002 and is actively pursuing the sale of its remaining property located in
Madison County, Montana (see Item 1 (c)(1)(i) Mineral Exploration).
(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.
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.
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.
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.
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.
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 previous 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, the Registrant has not operated the
mill facility since 1984. In May 2002 the Registrant sold all its interest
in the eleven patented claims, together with the dump and tailings material
and equipment that it purchased from Rochester Enterprises, Ltd.
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, previously 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 for its own account, although if additional financing can
be obtained it may engage in seismic acquisition and well drilling depending
upon the terms of any future farm out, joint venture or similar arrangements,
which may be entered into.
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 acquisition of both 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
oil and gas, may escalate the cost of acquiring properties from others beyond
the range of prices the Registrant can afford. If valuable oil and gas
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 oil and gas.
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 oil and gas leases, others who may drill and operate such properties will
face possible environmental regulations, which could affect the Registrant's
liabilities.
As of October 31, 2002, 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
In 1980 and 1981 the Registrant acquired a total of 31-patented lode-
mining claims, comprising approximately 470 acres, in Madison County,
Montana, including areas adjacent to and in the vicinity of the property
purchased from Rochester Enterprises, Ltd., which included the Watseca Mine.
There are no proven reserves on any of these properties. 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. In addition to the 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 State of Montana.
The Registrant does not currently hold any unpatented mining claims. In 2002
the Registrant sold its interest in and to the eleven mining claims purchased
from Rochester in 1981.
Claims. The following table sets forth the names and dates of
acquisition of the Registrant's remaining claims in the Rochester Mining
district.
PATENTED CLAIMS
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 Picard (2)............ August 21, 1980
Dead Beat (2)....... August 21, 1980 Gold Bug (2).......... August 21, 1980
Black Rock (2)...... August 21, 1980 Gold Bug Annex(2)..... August 21, 1980
Virginia (2)........ August 21, 1980 Leona (2). . . . . . . August 21, 1980
Carrie B. (2)....... August 21, 1980 Silver Note (2)....... August 21, 1980
Caulsa (2).......... August 21, 1980 Watseca Gold Hill (2). August 21, 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 293.59 gross acres.
Since fiscal year 2000 the Registrant has actively pursued the sale of
all of its patented mining claims in the Rochester Mining District. During
fiscal year 2002 the Registrant sold the eleven patented mining claims,
together with all dump and tailings material, originally acquired in 1981
from Rochester Enterprises, Ltd.
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
11/01/00 - 01/31/01 $.007 $.005
02/01/01 - 04/30/01 $.007 $.005
05/01/01 - 07/31/01 $.005 $.003
08/01/01 - 10/31/01 $.005 $.003
11/01/01 - 01/31/02 $.005 $.003
02/01/02 - 04/30/02 $.005 $.002
05/01/02 - 07/31/02 $.003 $.001
08/01/02 - 10/31/02 $.005 $.003
*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, 2002 was approximately 3,720.
(c) Preferred Stock
The Company has authorized the issue of 50,000,000 shares of preferred
stock of which the relative rights with respect to 44,000,000 of such
preferred stock ("Preferred Stock") have been established.
44,000,000 shares of Preferred Stock were offered and 30,000,000 shares
of Preferred Stock were sold in 1981 pursuant to a Registration Statement on
Form S-3, registration number 2-70876.
The designation, relative rights and preferences of such preferred
stock are as follows:
Designation. The 44,000,000 million shares of Preferred Stock are designated
as $0.015 of Cumulative Convertible Preferred Stock, $0.05 Par Value
("Preferred Stock")
Dividends. The $.015 Cumulative Convertible Preferred Stock, bears dividends
at the rate of $.015 per share per annum, to accrue from September 21, 1981.
Such dividends shall have full priority over any dividends that may be
declared upon the common stock of the Registrant. Dividends shall be
cumulative and are payable annually in cash, in shares of the Registrant's
common stock or in kind, at the election of the Board of Directors by
resolution duly adopted, if and when declared by such Board of Directors
pursuant to Wyoming law, but only from unrestricted and unreserved earned
surplus.
Any dividends declared may be payable in shares of the Corporation's
common stock (but only from unrestricted and unreserved surplus), or may be
paid in gold bullion, but only to the extent that the Registrant has gold
bullion.
The number of shares of common stock of the Registrant to be issued
as dividends with respect to the Preferred Stock shall be determined with
reference to the average bid price of the common stock.
Redemption. The Preferred Stock is redeemable at the option of the
Registrant in amounts of at least $100,000 at any time subsequent to
September 21, 1983, at a redemption price of $.15 per such share, together
with accrued or unpaid dividends, payable either in cash, shares of common
stock, or one-quarter ounce increments of gold bullion (based on the gold
price). If the Registrant does not have gold bullion, such redemption price
shall be paid in cash or shares of common stock, at the election of the
Board of Directors.
The holders of Preferred Stock called for redemption by the
Registrant shall have no rights with respect to their shares except
the right to receive the redemption price without interest, and the
shares so called shall no longer be deemed outstanding shares of the
Registrant's capital stock.
Liquidation. In the event of any liquidation, dissolution or winding-up of
the Registrant, the holders of the Preferred Stock shall be entitled to
receive an amount equal to $.10 per such share plus accrued dividends, prior
to any distributions of assets to be made to holders of common stock.
Conversion Right. Holders of the Preferred Stock shall be entitled at any
time after September 21, 1981 (except in the case of such shares called for
redemption by the Registrant) to convert each share of Preferred Stock into
four-tenths (.4) of one (1) share of common stock, subject to adjustment.
Assessment. All shares of common stock issued upon conversion, upon
redemption and in payment of dividends with respect to the Preferred Stock,
shall be issued fully paid and nonassessable.
Adjustment upon Conversion. The number of shares of common stock to be
issued upon conversion of shares of Preferred Stock shall be increased if the
Corporation should issue to an officer, director or other affiliate of the
Corporation any additional common stock after September 21, 1981, for
consideration per such share of common stock less than the then current
market price of such common stock. However, that no increase shall be made
upon the issuance of common stock in connection with the payment of dividends
on or the redemption of Preferred Stock, or in connection with the
acquisition of property or assets other than cash (except cash acquired as
part of a going concern) or other than property or assets acquired from a
principal shareholder of the Registrant or an affiliate of such principal
shareholder, or in connection with the issuance of up to 1,000,000 shares
of common stock if issued pursuant to the Corporation's existing stock
option plan, or in connection with the conversion of shares of Preferred
Stock.
No increase in the number of shares of common stock to be issued upon
conversion of shares of Preferred Stock shall be made unless and until such
increase as provided in the foregoing resolutions shall equal at least one-
tenth (.1) share of common stock, for each of the then outstanding shares of
Preferred Stock if then converted.
Rights and Preferences of Authorized but Unissued Preferred. The
remaining 6,000,000 shares of authorized but unissued preferred stock
shall have such relative rights and preferences as shall be established
by the Board of Directors pursuant to Wyoming law.
(d) 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, subject to the
terms of issue (see (c) above), has the right to dividends at a rate of $.015
per share per annum (an annual aggregate of $373,627 as of
October 31, 2002) and has full priority over dividends on the common stock.
These dividends, if declared, 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 2002. The
Registrant has not declared payment of these dividends ($7,846,163) and will
not do so until such time as profitability permits payment thereof. It is
uncertain when, if ever, the Registrant will attain sufficient profitability,
which will enable it to begin to declare and pay the dividends in respect to
the Preferred Stock.
Item 6. Selected Financial Data (1)
Years Ended October 31,
1998 1999 2000 2001 2002
Operating revenues $88 11 14 6 -
Interest expense - - - - -
Net income (loss) 36 (30) (34) (91) (123)
Net income (loss) per share (*) (*) (*) (*) (*)
Total assets 794 771 729 647 519
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 (rights of conversion of Convertible Preferred
Stock) outstanding during each year: (85,712,000 in 1998, 85,712,000 in
1999, 85,712,000 in 2000 and 85,712,000 in 2001, and 85,712,000 in 2002).
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.
Critical Accounting Policies
The Company has identified the accounting policies described below as
critical to its business operations and the understanding of the Company's
results of operations. The impact and any associated risks related to these
policies on the Company's business operations is discussed throughout this
section where such policies affect the Company's reported and expected
financial results. The preparation of this Annual Report requires the
Company to make estimates and assumptions that affect the reported amount of
assets and liabilities of the Company, revenues and expenses of the Company
during the reporting period and contingent assets and liabilities as of the
date of the Company's financial statements. There can be no assurance that
the actual results will not differ from those estimates.
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 to be recognized as gain to the extent of
the excess.
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.
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 and oil and gas
exploration both at Rochester and elsewhere in North America and Australia.
Despite detailed geologic investigations at Rochester by the Company and by
leading gold mining companies, there was insufficient encouragement from
exploration results to warrant further investigations or activity at
Rochester. In May 2002 the Registrant sold eleven patented mining claims in
the Rochester Mining district for $75,000 and is pursuing the sale of the
additional 20 claims in the district. The Registrant anticipates receiving
approximately $425,000 from the remaining property.
The Registrant has been 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 2002
as compared to fiscal year 2001 primarily due to the Registrant's higher
level of activity in evaluating various business opportunities during
2002.
The Registrant plans to resume oil and gas exploration 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 has established a representative office in Melbourne,
Australia and in Prescott, Arizona.
Liquidity and Capital Resources
The following table reflects the Registrant's working capital positions
at October 2002 and 2001:
October 31, 2002 October 31, 2001
Current assets $ 519 $ 647
Current liabilities 4 9
Working capital 515 638
Current ratio 129.8 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 remaining
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 opportunities. Plans for additional funding of these
activities include seeking 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: Ernest Geoffrey Albers AGE: 58
POSITION, TENURE AND BUSINESS EXPERIENCE:
Chairman and Director of the Registrant since April 1988, Mr.
Albers has over 30 years experience as a director and administrator in
corporate law, petroleum exploration and resource sector investment.
He is a law graduate of the University of Melbourne, having practiced
commercial and corporate law in Victoria, Australia.
In 1978 Mr. Albers first became involved in oil activities
exploration. Subsequently companies associated with him applied for and
were awarded exploration permits in the offshore Bass Basin. Explorations
in one of these permits, T14P, lead directly to the discovery of the Yolla
Gas Condensate Field.
In the early 1980's Mr. Albers became increasingly involved in oil
and gas exploration in New Zealand, in 1981 forming Cue Energy Resources
N.L. ("Cue Energy") of which he remains a Director. That company
subsequently took a significant interest in the drilling of a number of
offshore wells in New Zealand including the presently uneconomic oil
discovery well Moki-1, and in Australia where Cue Energy participated in
the discovery of the Yolla Gas Condensate Field. Cue Energy retained a 14%
interest in the Yolla Retention License until 2001 when it sold the
interest. More recently Cue has focused its attention on Papua New
Guinea, where it holds an interest in the unitized S E Gobe Oil Field
Development. In 2001 Cue made the Oyong oil and gas discovery in offshore
Indonesia and, in November 2002, Cue made the Bilip oil discovery.
In 1983, Mr. Albers co-sponsored the formation of Southern Petroleum
NL (Southern Petroleum) in New Zealand. Southern Petroleum subsequently
participated in the drilling of two offshore wells in deep water in the Great
South Basin off the South Island, and in a number of wells in the offshore
Taranaki Basin region. Southern Petroleum subsequently farmed into the
onshore Taranaki Basin and made the Tariki, Ahuroa and Waihapa oil and gas
discoveries in the area. Following these discoveries Mr. Albers withdrew
from the board of Southern Petroleum after instigating a beneficial merger of
Southern Petroleum (as the master company) with Payzone Exploration Limited,
a petroleum explorer sponsored by companies associated with Brierley
Investments Limited who held similar interests. Southern Petroleum became a
successful producing company as a result of these discoveries, reaching a
peak sharemarket valuation in excess of NZ$250 million before being
ultimately being taken over by the Fletcher Challenge group.
In the late 1980's Mr. Albers incorporated Octanex NL and in the
early 1990's he acquired and reconstructed the company now known as Strata
Resources NL. These two companies came together to form Timor Sea Petroleum
as a joint venture company in 1994. This company sought and was ultimately
awarded oil exploration permits NT/P47 and NT/P48 in the Timor Sea in 1996.
TSP entered into farm out and joint venture arrangements with Shell
Development Australia Pty Ltd. 13,000 line kilometers of seismic were shot
and two wells were drilled before mid 1998 by Shell as part of the farmout
arrangement. One of the wells, Evans Shoal 2, proved up an indicated gas
resource of approximately 14 TCF of gas. Shell's expenditure on the two
permits was in the order of $60 million. Shell earned an 85% interest in the
permits.
In 2000 Timor Sea Petroleum NL instituted a demerger scheme of
arrangement whereby it distributed to its 2,500 shareholders the whole of the
issued capital of the wholly owned subsidiary, Natural Gas Australia Ltd,
which hold the oil and gas interests..
Following the distribution of shares, NGA became listed on the ASX.
In early 2001, NGA increased its interest in the Evans Shoal gasfield by 25%
from 15% to 40% by a $50 million purchase from Shell. Simultaneously, NGA
announced a merger with Santos Ltd, being significantly beneficial to the
shareholders of NGA.
Meanwhile, Timor Sea Petroleum changed its name to Methanol Australia
Limited and has since pursued the development of a $2 billion gas processing
proposal on a man-made island adjacent to the Evans Shoal gasfield, 300 kms
north west of Darwin. The project has been granted "Major Project
Facilitation Status" by the Australian government and has completed a
detailed Environmental Impact Statement for which has received approval.
In 1998 Bass Strait Oil Company Ltd ("BSOC") a company sponsored by
Mr. Albers, sought and was awarded Vic/P42 a petroleum exploration permit in
the offshore Gippsland Basin. BSOC farmed out an interest in Vic/P42 to
Inpex Corporation of Japan in a $22 million farmout transaction.
Subsequently the Melville-1 well was drilled at a cost of (US)$11 million and
a 420 square kms 3D seismic survey at a cost of $4 million was shot.
A further well is due in mid 2003. In 2002 BSOC farmed into Vic/P41, a large
exploration block in the North Gippsland Basin. BSOC has shot a 200 kms
seismic survey in this new tenement.
In 2002 Mr. Albers established the National Gas Consortium which
sought and been granted three contiguous exploration tenements in the Timor
Sea, north west of Darwin, Australia.
In mid 2002 the newly formed Batavia/Hawkestone Group sponsored by
Mr. Albers were awarded two adjacent tenements in the oil prospective Browse
Basin on the North West Shelf of Western Australia.
Octanex NL and Strata Resources NL in the same year acquired
significant project areas in the Dampier Sub-basin and Exmouth Sub-basin,
further south on the North West Shelf. The project areas are in close
proximity to producing oil and gas fields, including the North Rankin
gas/condensate field.
In October 2002, Mr. Albers sponsored the formation of National Gas
Group Ltd., a company seeking a PDF license in order to carry out niche
investment in upstream natural gas and gas processing. Investments in gas
programs in the Timor Sea and Browse Basin are contemplated.
NAME: William Ray Hill AGE: 51
POSITION, TENURE AND BUSINESS EXPERIENCE:
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.
NAME: Peter Sterling AGE: 55
POSITION, TENURE AND BUSINESS EXPERIENCE:
Director of the Registrant since December 2002, Mr. Sterling has extensive
Internet financial and operational management experience with technology and
telecommunications companies. Mr. Sterling began his career as an engineer
with New Zealand Telecom and was the owner of Sterling Electronics, which
manufactured and distributed metal detectors for airport security and mining
operations. Mr. Sterling's company Kaomin NL discovered a $200 million
dollar kaolin ore body near Ballarat, Victoria Australia and subsequently
built a multi-million dollar computer controlled kaolin-processing plant.
Mr. Sterling has experience in the oil and gas industry in both Western
Australia and the United States.
NAME: John B. Rubel AGE: 51
POSITION, TENURE AND BUSINESS EXPERIENCE:
Director of the Registrant since December 2002, Mr. Rubel has extensive
operational and management experience in ranching, farming and heavy
equipment and trucking operations in Arizona. Mr. Rubel was a principal and
chief operational officer with Zonia Landfill, Inc. from 1991 to 1998 and was
responsible for its solid waste transfer station and waste collection
operations. Mr. Rubel was employed by Waste Management of Northern Arizona
from 1998 to 2000 and coordinated special projects and environmental and
safety programs for the company. Since 2000 Mr. Rubel has been employed by
Hanson Aggregates of Arizona, which operates concrete processing facilities
and rock quarries.
(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, 2002 was as follows:
Name of
individual or number Capacities in Cash
of persons in group which served compensation
All executive Officers and/or 2002 $45,150
officers as a group directors 2001 $22,900
(two persons) 2000 $18,000
(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, 2002:
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 10,593,400 (2) 11.07%
value common "Great Missenden"
stock Albers Road
Tallarook 3659
Victoria, Australia
$.001 par Peter John Sterling --- --
value common 615 N. Formosa Ave
stock Los Angeles, CA 90036
$.001 par John Rubel --- --
value common 519 Mesa Drive
stock Prescott, AZ 86303
$.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 (3) 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 Albers shares of common stock are owned indirectly by Mr.
Albers through companies he is affiliated with.
3) Includes Mr. Hill's 2,118,890 shares of Preferred Stock, which is
convertible at the election of the holder into 847,556 shares of Common
Stock.
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 at the election of the holder 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.
5) The beneficial owners exercise sole investment power.
6) 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., an
Australian corporation ("Quillium") for the sale of 33,333,000 shares of the
Company's common stock for $1,000,000 ($.03 per share). These shares and
options were held by Quillium for the benefit of a number of Australian
investors. 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., an
Australian 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 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 underlying, beneficial holders of 50% of such shares. In connection
with the Stock Purchase Agreement, Quillium acted for a number of investors,
including Great Missenden Group Pty., Ltd., an investment company located in
Victoria, Australia, 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.
(b) Certain Business Relationships
In June 1990 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 the Registrant
represented net cash advances to Zonia of $198,000. Zonia Landfill, Inc. was
engaged in the solid waste management business and operated a
transfer/recycle facility and garbage collection business. Zonia Landfill,
Inc. sold its operations to Sanifill, Inc ("Sanifill") in return for shares
in Sanifill. Later Sanifill merged with USA Waste Systems, Inc. ("USA
Waste") and the Registrant received 8,097 shares of USA Waste Common Stock
for its interest. USA Waste Services was 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, 2002 and 2001 F-2
Statement of Operations - Years Ended
October 31, 2000, 2001 and 2002 and F-3
Cumulative Amounts from Inception
(May 19, 1978) to October 31, 2002
Statements of Stockholders' Equity - F-5
For the Period from Inception
(May 19, 1978) to October 31, 2002.
Statement of Cash Flows -
Years ended October 31, 2000, 2001 and 2002 F-10
and Cumulative Amounts from Inception
(May 19, 1978) to October 31, 2002.
Notes to Financial Statements F-12
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
FOR THE YEARS ENDED OCTOBER 31, 2000, 2001 AND 2002
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, 2002 and 2001, and the related statements of
operations, stockholders' equity and cash flows for each of the three
years in the period ended October 31, 2002. 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, 2002 and 2001, and the results of its
operations and its cash flows for each of the three years in the period
ended October 31, 2002, in conformity with accounting principles generally
accepted in the United States of America.
Denver, Colorado
January 23, 2003 CAUSEY DEMGEN & MOORE INC.
F-1
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
BALANCE SHEET
October 31, 2001 and 2002
ASSETS
(Dollar amounts in thousands)
2001 2002
---- ----
Current assets:
Cash and cash equivalents $139 $ 94
Assets held for sale - net (Note 2) 500 425
Prepaid expenses and deposits 8 -
---- ----
Total current assets $647 519
==== ====
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 9 $ 4
Commitments and contingencies (Notes 5, 8 and 9)
Stockholders' equity (Notes 2, 4 and 5):
Preferred stock, $.05 par value, 50,000,000; authorized;
44,000,000 designated as $.015 cumulative convertible;
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 (5,066) (5,189)
----- -----
Total stockholders' equity 638 515
----- -----
$ 647 $ 519
====== ======
See accompanying notes.
F-2
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the years ended October 31, 2000, 2001 and 2002 and Cumulative Amounts from Inception (May 19, 1978) to October 31, 2002
(Dollar amounts in thousands)
Cumulative amounts
For the year ended October 31, from inception
2000 2001 2002 (May 19, 1978)
---- ---- ---- ------------------
(Unaudited)
Revenues:
Interest $ 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
--- --- --- -----
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 48 97 123 2,569
Abandonment of non-producing mineral interests - - - 76
Depreciation, depletion and amortization - - - 286
Interest - - - 804
--- --- --- -----
48 97 123 6,962
--- --- --- -----
Loss before extraordinary item (34) (91) (123) (6,091)
(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, 2000, 2001 and 2002 and Cumulative Amounts from Inception (May 19, 1978) to October 31, 2002
(Continued from preceding page)
(Dollar amounts in thousands)
Cumulative amounts
For the year ended October 31, from inception
2000 2001 2002 (May 19, 1978)
---- ---- ---- ------------------
(Unaudited)
Extraordinary gain on extinguishment of debt - - - 902
--- --- --- -----
Net loss (Note 6) $(34) $(91) (123) $(5,189)
==== ==== ==== =======
Basic loss per common share (Note 7):
Loss before extraordinary item $ (*) $ (*) $ (*) $ (0.09)
Extraordinary gain on extinguishment of debt - - - 0.01
---- ---- ---- -------
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, 2002
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, 2002
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, 2002
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, 2002
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, 2002
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)
---------- ------ ---------- --- ------ --------
Balance, October 31, 2001 24,908,450 1,245 85,712,039 86 4,373 (5,066)
Net loss for the year ended October 31, 2002 - - - - - (123)
---------- ------ ---------- --- ------ --------
Balance, October 31, 2002 $24,908,450 $1,245 85,712,039 $86 $4,373 $(5,189)
=========== ====== ========== === ====== ========
See accompanying notes.
F-9
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the years ended October 31, 2000, 2001 and 2002 and Cumulative Amounts from Inception (May 19, 1978)
to October 31, 2002
(Dollar amounts in thousands)
Cumulative
amounts from
inception
2000 2001 2002 (May 19, 1978)
---- ---- ---- --------------
(unaudited)
Cash flows from operating activities:
Net loss $(34) $ (91) $(123) $(5,189)
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 (8) 9 (5) 4
--- --- --- -----
Total adjustments (8) 1 3 3,374
--- --- --- -----
Net cash used in operating activities (42) (90) (120) (1,815)
(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, 2000, 2001 and 2002 and Cumulative Amounts from Inception (May 19, 1978)
to October 31, 2002
(Continued from preceding page)
(Dollar amounts in thousands)
Cumulative
amounts from
inception
2000 2001 2002 (May 19, 1978)
---- ---- ---- --------------
(unaudited)
Cash flows from investing activities:
Maturity (purchase) of certificates of deposit 200 - - -
Proceeds from sale of assets held for sale,
mineral interests, oil and gas properties and equipment - - 75 313
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 - 75 (3,379)
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 158 (90) (45) 94
Cash and cash equivalents at beginning of period 71 229 139 -
--- ---- --- ------
Cash and cash equivalents at end of period $229 $139 $ 94 $ 94
==== ==== ==== ======
See accompanying notes.
F-11
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
October 31, 2000, 2001 and 2002
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 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, 2000, 2001 and 2002
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, 2002.
F-13
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
October 31, 2000, 2001 and 2002
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 that 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.
During 2002 the Registrant sold all its interest in the eleven patented claims,
together with the dump and tailings material and equipment, that it purchased
from Rochester Enterprises, Ltd. for $75,000.
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, 2000, 2001 and 2002
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, which may be paid in cash, common stock or gold, are
payable annually, if and when declared by the Board f Directors only from
earned surplus. Cumulative dividends in arrears as of October 31, 2002 amount
to $7,846,163 ($.32 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, either in cash, in common stock or gold.
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, 2002.
6. Income taxes
At October 31, 2002, the Company had net operating loss carryforwards for tax
purposes of approximately $1,384,000. If not used to offset future taxable
income, the carryforwards will expire as follows:
Fiscal Year of expiration Amount
------------------------- ------
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
2023 125,000
F-15
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
October 31, 2000, 2001 and 2002
6. Income taxes (continued)
At October 31, 2001 and 2002, total deferred tax assets and valuation
allowances are as follows:
Deferred tax assets resulting 2001 2002
---- ----
Net operating loss $ 610,000 $484,000
Write-down of assets held 612,000 612,000
----------- -----------
Total 1,222,000 1,096,000
Less valuation allowance (1,222,000) (1,096,000)
----------- -----------
$ - $ -
=========== ===========
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 2000, 2001
and 2002 and 60,884,000 shares for the period from May 19, 1978 through October
31, 2002.
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, 2002 were
$2,700 in 2000, $5,400 in 2001, and $24,000 in 2002.
F-16
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 27, 2003
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 27, 2003 BY: /s/ W. Ray Hill
W. Ray Hill, Treasurer and Director
(Principal Executive, Financial and
Accounting Officer)
DATED: January 27, 2003 BY: /s/ E. Geoffrey Albers
E. Geoffrey Albers, Director
DATED: January 27, 2003 BY: /s/ Peter J. Sterling
Peter J. Sterling, Director
DATED: January 27, 2003 BY: /s/ John B. Rubel
John B. Rubel, Director
CERTIFICATION PURSUANT TO
SECURITIES EXCHANGE ACT OF 1934: RULES 13a-14, 13a-15, 15d-14, and 15d-15
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, W. Ray Hill, certify that:
1. I have reviewed this annual report on Form 10-K of Rocky Mountain
Minerals, Inc.
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered
by this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;
4. I am responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
c) presented in this annual report my conclusions about the effectiveness
of the disclosure controls and procedures based on my evaluation as of the
Evaluation Date;
5. I have disclosed, based on my most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of directors (or
persons performing the equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and
6. I have indicated in this annual report whether there were significant
changes in internal controls or in other factors that could significantly
affect internal controls subsequent to the date of my most recent evaluation,
including any corrective actions with regard to significant deficiencies and
material weaknesses.
Dated: January 27, 2003 ___/s/ W. Ray Hill_________
W. Ray Hill
Chief Executive Officer and
Chief Financial Officer
Exhibit 99.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Rocky Mountain Minerals, Inc. (the
"Company") on Form 10-K for the year ended October 31, 2002 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"),
I, W. Ray Hill, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant
to 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a)
or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.
Dated: January 27, 2003 _ W. Ray Hill____________
W. Ray Hill
Chief Executive Officer and
Chief Financial Officer