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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, 2004
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.
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(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, AZ 86305
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(Address of principal executive offices and Zip Code)
(928) 778-1450 www.rockymountainminerals.com
----------------------------- -----------------------------
(Registrant's telephone number) (Internet Website)
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 31,2004: $2,014,241.
Class Outstanding at October 31, 2004
Common stock, $.001 par value 100,712,039 shares
1
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 2004 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 2003 the Registrant acquired a 25% farm in interest in
two oil and gas leases in the NW Shelf, offshore Australia. During 2004 the
Registrant actively pursued the evaluation of oil and gas prospects in both the
Western U.S. and Australia, and sold one of the Australian oil and gas leases.
The Registrant sold thirteen patented mining claims, together with the dumps and
tailings, in the Rochester Mining District during 2002 and 2003. The Registrant
is actively pursuing the sale of its remaining property located in Madison
County, Montana (see Item 1 (c)(1)(i) Mining Operations Segment).
(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 in: An agreement whereby a third party agrees to provide a certain
level of funding for the exploration or development of an oil and gas property
and in return receives or earns a working interest in the property from the
owner(s)of the property.
2
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) Oil and Gas Operations Segment
In 2003 the Registrant acquired a 25% interest in two offshore oil and gas
leases offshore Western Australia. 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 has no plans to engage in any exploratory oil or gas
drilling on acreage for its own account. However, if additional financing can be
obtained, it may engage in well drilling, depending upon the cost of the well
drilling, the terms of any participation, future farm out, joint venture or
similar arrangements, which may be entered into.
The acquisition of oil and gas interests, is 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
3
on numerous factors, including available equipment for which there is strong
demand and other supplies of oil and gas.
Mining Operations Segment
The Registrant's previous business activities in its mining operations
segment have been the construction and operation of an ore mill facility in
Madison County, Montana. 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 2002 and 2003 the Registrant sold all its interest in the thirteen patented
mining claims, together with the dump and tailings material and equipment that
it purchased from Rochester Enterprises, Ltd., and is pursuing the sale of the
additional eighteen patented claims in the district.
See Item 2 - "Properties" of this report for more information concerning
the Registrant's mining claims.
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.
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 has made no expenditures on, nor has it been connected with,
either company-sponsored or customer-sponsored research and development.
As of October 31, 2004, the Registrant employed two persons, each on a part
time, as needed basis.
(d) Financial Information About Foreign and Domestic Operations and Export
Sales.
4
The Registrant is a participant in the Exmouth Joint Venture, (see Item 2-
Properties, Oil and Gas Properties).
Item 2. Properties
Oil and Gas Properties
North West Shelf, Western Australia. In 2003 the Registrant acquired a 25%
interest in two petroleum exploration permits, WA-322-P and WA-329-P, in the
North West Shelf area of the Carnarvon Basin, offshore Western Australia. The
area represents approximately 356,000 acres, and the project is known as the
Exmouth Joint Venture Project. The Registrant issued 19,091,550 shares of
Restricted $.015 Cumulative Convertible Preferred Stock and 15,000,000 shares of
Restricted Common Stock to earn a 25% interest and to meet a $969,550 funding
requirement associated with the interest. Subsequent costs above $969,550
relating to the Joint Venture shall be shared by the participants in accordance
with their interests in the project. In addition, the Company recorded an
estimate of $40,000 for the costs to register the restricted stock. In May 2004
the Exmouth Joint Venture sold WA-322-P to BHP Billiton Petroleum Limited
("BHP"). In return BHP agreed to acquire and process 3D seismic for the
adjoining exploration permit WA-329-P, as well as an initial cash payment of
$600,000, a deferred cash payment of $1,100,000 contingent upon BHP drilling a
well in WA-322-P, and the grant of an overriding royalty interest ranging from
2.75% to 3.75% should there be future production from WA-322-P. In July 2004 the
Registrant's 25% share of the initial cash proceeds from the BHP sale, $150,000,
were offset against existing Year 2 seismic acquisition obligations pursuant to
the Farmin Agreement. As a term of this arrangement the Registrant entered into
an agreement to reacquire 10,000,000 shares of its Common Stock previously
issued to Octanex NL and Strata Resources NL, the Company's Joint Venture
partners, for no further outlay. At October 31, 2004, the 10,000,000 shares had
not yet been reconveyed and are expected to be reconveyed in the second quarter
of fiscal 2005. At that time, the investment in joint venture will be reduced
with a corresponding reduction in common stock and capital in excess of par
value.
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. In the past, the Registrant has received nominal
royalties from these properties, which are now principally nonproducing.
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 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 and 2003 the Registrant sold its interest in and to the thirteen mining
claims purchased from Rochester in 1981.
5
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 and 2003 the Registrant sold the thirteen patented mining claims,
together with all dump and tailings material, and is pursuing the sale of the
remaining eighteen patented claims in the District.
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.
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
11/01/02 - 01/31/03 $.010 $.007
02/01/03 - 04/30/03 $.032 $.007
05/01/03 - 07/31/03 $.020 $.010
08/01/03 - 10/31/03 $.043 $.010
11/01/03 - 01/31/03 $.070 $.005
02/01/04 - 04/30/04 $.070 $.045
05/01/04 - 07/31/04 $.045 $.020
08/01/04 - 10/31/04 $.050 $.020
* 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, 2004 was approximately 3,720.
6
(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. In 2003 19,091,550 restricted shares of
Preferred Stock were issued as partial consideration for a 25% interest in two
oil and gas leases in the North West Shelf area, offshore Western Australia.
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.
7
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 (if declared) at a rate of
$.015 per share per annum (an annual aggregate of $660,000 as of October 31,
2004) 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 2004. The Registrant has not
declared payment of these dividends ($9,166,163) 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.
8
Item 6. Selected Financial Data (1)
Years Ended October 31,
2000 2001 2002 2003 2004
Operating revenues $ 14 6 -- -- --
Interest expense -- -- -- -- --
Net income (loss) (34) (91) (123) (366) (53)
Net income (loss) per share (*) (*) (*) (*) (*)
Total assets 729 647 519 512 510
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 (stockholders rights of conversion of Convertible
Preferred Stock) outstanding during each year: (85,712,000 in 2000, 2001 and
2002 and 100,712,000 in 2003 and 2004).
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
9
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.
Investment in joint venture
The Company's investment in joint venture reflects its 25% interest in two
petroleum exploration permits, offshore Western Australia. The capitalized cost
includes the preferred and common stock at the market price at the date of stock
issuance. In addition, the Company recorded an estimate of $40,000 for the costs
to register the restricted stock.
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 Rochester, Montana. 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
both 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 2002 and 2003 the Registrant sold thirteen patented
mining claims in the Rochester Mining district for $82,192 and is pursuing the
sale of the additional eighteen claims in the district. The Registrant
anticipates receiving approximately $150,000 from the remaining property and
recorded an impairment loss in the carrying amount of Assets held for sale of
$268,000 during the third quarter of 2003.
In 2003 the Registrant acquired a 25% interest in two petroleum exploration
permits in the North West Shelf area of the Carnarvon Basin, offshore Western
Australia. The interest was acquired from two public companies, Octanex NL and
Strata Resources NL, of which Mr. E.G. Albers, a member of the Registrant's
board, is a major shareholder and director. The Registrant acquired the 25%
interest by issuing a total of 15,000,000 shares of Restricted Common Stock and
19,091,550 shares of Restricted $.015 Cumulative Convertible Preferred Stock to
meet a $969,550 funding requirement associated with the interest. The initial
exploration program has consisted of acquiring and interpreting existing
open-file seismic data including 2D and 3D seismic data sets and the shooting of
2,250 kilometers of new 2D seismic surveying. All costs above $969,550 to be
expended on the Exmouth Joint Venture Project
10
shall be shared by the participants in accordance with their interests. The
Registrant has received approval from the Western Australia Offshore Petroleum
Authority for the Farm In interest in the petroleum exploration permits, WA-
322-P and WA-329-P, which comprise the Exmouth Joint Venture Project.
In May 2004 the Exmouth Joint Venturers entered into and subsequently
settled an agreement with a subsidiary of BHP Billiton Petroleum Limited ("BHP")
for the sale of Exploration Permit WA-322-P to BHP. In return BHP agreed to the
acquisition and processing of 3D seismic in the Joint Venture's adjacent
exploration permit, WA-329-P, as well as a $600,000 initial cash payment, a
deferred cash payment of $1,100,000 contingent upon BHP drilling a well in
WA-322-P, and the granting of an overriding royalty interest ranging from 2.75
to 3.75 percent.
The Exmouth Joint Venture has acquired an extensive body of existing
geological data available in relation to WA-329-P, including a large amount of
seismic data, together with pertinent existing reports and basic data collected
by previous operators in the area. In addition, BHP will, at their cost, acquire
and process new seismic on behalf of the Joint Venture in WA-329-P as part of
the terms of their acquisition of WA-322-P.
In July 2004 the Registrant's 25% share of the initial cash proceeds from
the BHP sale, $150,000, were offset against existing Year 2 seismic acquisition
obligations pursuant to the Farmin Agreement. As a term of this arrangement the
Registrant entered into an agreement to reacquire 10,000,000 shares of its
Common Stock previously issued to Octanex NL and Strata Resources NL, the
Company's Joint Venture partners, for no further outlay. At October 31, 2004,
the 10,000,000 shares had not been reconveyed and are expected to be reconveyed
in the second quarter of fiscal 2005. At that time, the investment in joint
venture will be reduced with a corresponding reduction in common stock and
capital in excess of par value. All subsequent seismic commitment costs in
WA-329-P are to be shared pro rata between the Exmouth Joint Venture Parties.
General and administrative expenses decreased during fiscal year 2004 as
compared to fiscal year 2003 primarily due to the Registrant's lower level of
activity in evaluating various opportunities during 2004.
The Registrant plans to continue its oil and gas exploration activities. 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 2004 and 2003:
October 31, 2004 October 31, 2003
Current assets $ 152 $ 154
Current liabilities 74 45
Working capital 78 109
Current ratio 2.05 3.42
11
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 believes it is reasonably likely that it will be able to
generate cash to support its operations during the next twelve months through
the sale of the Rochester property or its interest in the Australian permits or
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.
12
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: 60
POSITION, TENURE AND BUSINESS EXPERIENCE:
Mr. Albers is a company director with over 30 years experience as a lawyer and
administrator in corporate law, petroleum exploration and resource sector
investment. During this period Mr Albers has sponsored the formation of
companies that have made the original Maari (Moki) oilfield discovery in New
Zealand, the Yolla Gas/Condensate discovery in Bass Strait, the Evans Shoal
gasfield discovery/appraisal in the Timor Sea and the SE Gobe oilfield
development in Papua New Guinea.
Mr. Albers is Chairman of Methanol Australia Limited, Octanex NL, Strata
Resources NL and various other private and unlisted public companies. He is a
member of the Petroleum Exploration Society of Australia and a member of the
APPEA Exploration Committee.
NAME: William Ray Hill AGE: 53
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: John B. Rubel AGE: 53
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.
13
NAME: David Bruce Hill AGE: 62
Mr. DB Hill was appointed a director of the Registrant in October 2003 and is a
Chartered Accountant and holds office as director or company secretary in a
number of public companies.
(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, 2004 was as follows:
Name of
individual or number Capacities in Cash
of persons in group which served compensation
- ------------------- --------------- --------------
All executive Officers and/or 2004 $18,000
officers as a group directors 2003 $52,750
(two persons) 2002 $45,150
(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.
14
(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, 2004:
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 33,230,020 (2) 28.01%
value common "Great Missenden"
stock Albers Road
Tallarook 3659
Victoria, Australia
$.001 par David Bruce Hill ---- ---
value common 500 Collins Street
stock Melbourne, Australia
$.001 par John Rubel ---- ---
value common 519 Mesa Drive
stock Prescott, AZ 86303
$.001 par Richard Bain 6,260,334 5.30%
value common 5801 Lumberdale #243
stock Houston, Texas 77092
$.001 par Don Knaute 6,360,000 5.38%
value common 19505 FM #149
stock Houston, Texas 77070
$.001 par William Ray Hill 5,797,556 (3) 4.90%
value common 2480 North Tolemac
stock Prescott, AZ 86305
Officers and directors 39,027,576 38.7%
(four persons)
15
1) Unless indicated otherwise, the beneficial owners exercise sole voting and
investment power.
2) Mr. Geoffrey Albers shares of common and preferred stock are owned
indirectly by Mr. Albers through companies he is affiliated with, and
includes 19,091,500 shares of preferred stock, which is convertible at the
election of the holder into 7,636,620 shares of common stock.
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 su 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. 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
Not Applicable
Item 13. Certain Relationships and Related Transactions
(a) Transactions with Management and Others
In 2003 the Registrant entered into a Farm in Agreement with Octanex N. L.
and Strata Resources N.L. whereby the Registrant acquired a 25% interest in two
petroleum exploration permits by agreeing to meet certain seismic acquisition
costs and by the issuance of 15,000,000 shares of Restricted Common Stock and
19,091,550 shares of Restricted $.015 Cumulative Convertible Preferred Stock.
The issuance of the stock meets a $969,550 funding requirement associated with
the exploration permits. Mr. Albers is a shareholder and director of both
Octanex and Strata.
(b) Certain Business Relationships
None other than disclosed in Item 13(a)
(c) Indebtedness of Management
None
(d) Transactions with Promoters
Not applicable.
16
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 Registered Accounting Firm F-1
Balance Sheet - October 31, 2003 and 2004 F-2
Statement of Operations - Years Ended
October 31, 2002, 2003 and 2004 and F-3
Cumulative Amounts from Inception
(May 19, 1978) to October 31, 2004
Statements of Stockholders' Equity - F-5
For the Period from Inception
(May 19, 1978) to October 31, 2004.
Statement of Cash Flows -
Years ended October 31, 2002, 2003 and 2004 F-11
and Cumulative Amounts from Inception
(May 19, 1978) to October 31, 2004.
Notes to Financial Statements F-14
17
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
FOR THE YEARS ENDED OCTOBER 31, 2002, 2003 AND 2004
WITH
REPORT OF INDEPENDENT REGISTERED ACCOUNTING FIRM
18
REPORT OF INDEPENDENT REGISTERED ACCOUNTING FIRM
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, 2004 and 2003, and the related statements of operations,
stockholders' equity and cash flows for each of the three years in the period
ended October 31, 2004. 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 the standards of the Public Company
Accounting Oversight Board (United States). 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, 2004 and 2003, and the results of its operations and its cash
flows for each of the three years in the period ended October 31, 2004, in
conformity with accounting principles generally accepted in the United States of
America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has suffered recurring losses. These
conditions raise substantial doubt about its ability to continue as a going
concern. Management's plans in regard to these matters are also described in
Note 1. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Denver, Colorado
January 27, 2005 CAUSEY DEMGEN & MOORE INC.
F-1
19
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
BALANCE SHEET
October 31, 2003 and 2004
ASSETS
(Dollar amounts in thousands)
2003 2004
------- -------
Current assets:
Cash and cash equivalents $ 4 2
Assets held for sale - net (Note 2) 150 150
------- -------
Total current assets $ 154 152
Investment in joint venture (Note 3) 358 358
------- -------
Total Assets $ 512 $ 510
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5 $ 34
Registration costs 40 40
------- -------
Total current liabilities 45 74
Long term liabilities:
Note payable-related party (Note 5) -- 22
------- -------
Total long term liabilities -- 22
Commitments and contingencies (Notes 7, 10 and 11)
Stockholders' equity (Notes 2, 6 and 7):
Preferred stock, $.05 par value, 50,000,000 authorized;
44,000,000 designated as $.015 cumulative convertible;
and 44,000,000 (2003 and 2004) shares issued and
outstanding (aggregate liquidating preference
$12,906 (2003) and $13,566 (2004) 2,200 2,200
Common stock, $.001 par value; 250,000,000 shares
authorized, 100,712,039 (2003 and 2004) issued
and outstanding 101 101
Capital in excess of par value 3,721 3,721
Deficit accumulated during the development stage (5,555) (5,608)
------- -------
Total stockholders' equity 467 414
------- -------
$ 512 $ 510
======= =======
See accompanying notes.
F-2
20
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the years ended October 31, 2002, 2003 and 2004 and
Cumulative Amounts from Inception (May 19, 1978) to October 31, 2004
(Dollar amounts in thousands)
Cumulative amounts
For the year ended October 31, from inception
2002 2003 2004 (May 19, 1978)
------- -------- -------- --------------
(Unaudited)
Revenues:
Interest $ -- $ -- $ -- $ 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 4) -- -- -- (96)
Gain on sale of securities (Note 4) -- -- -- 137
------- ------- ------- -------
-- -- -- 871
Costs and expenses:
Write-down of mill and mineral interests (Note 2) -- 268 -- 3,201
Loss on disposal of equipment and assets held for sale
(Note 2) -- -- -- 34
Cost of milling -- -- -- 260
General and administrative 123 98 53 2,720
Abandonment of non-producing mineral interests -- -- -- 76
Depreciation, depletion and amortization -- -- -- 286
Interest -- -- -- 804
------- ------- ------- -------
123 366 53 7,381
------- ------- ------- -------
Loss before extraordinary item (123) (366) (53) (6,510)
(Continued on following page)
See accompanying notes.
F-3
21
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the years ended October 31, 2002, 2003 and 2004 and
Cumulative Amounts from Inception (May 19, 1978) to October 31, 2004
(Continued from preceding page)
(Dollar amounts in thousands)
Cumulative amounts
For the year ended October 31, from inception
2002 2003 2004 (May 19, 1978)
------- -------- -------- --------------
(Unaudited)
Extraordinary gain on extinguishment of debt -- -- -- 902
------- -------- -------- -----------
Net loss (Note 8) $ (123) $ (366) $ (53) (5,608)
======= ======== ======== ===========
Basic loss per common share (Note 9):
Loss before extraordinary item $ (*) $ (*) $ (*) $ (0.10)
Extraordinary gain on extinguishment of debt -- -- -- 0.01
------- -------- -------- ----------
Basic net loss per common share $ (*) $ (*) $ (*) $ (0.09)
======= ======== ======== ===========
*Less than $.01 per share
See accompanying notes.
F-4
22
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
For the period from Inception
(May 19, 1978) to October 31, 2004
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
23
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
For the period from Inception (May 19, 1978) to October 31, 2004
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 6) 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
24
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
For the period from Inception (May 19, 1978) to October 31, 2004
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
25
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
For the period from Inception (May 19, 1978) to October 31, 2004
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 7) -- -- 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
26
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
For the period from Inception (May 19, 1978) to October 31, 2004
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
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)
(Continued on the following page)
See accompanying notes.
F-9
27
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
For the period from Inception (May 19, 1978) to October 31, 2004
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
Capital in during the
Preferred stock Common stock excess of development
Shares Amount Shares Amount par value stage
------ ------ ------ ------ ---------- ----------
(Unaudited)
Issuance of stock for the investment 19,091,550 955 15,000,000 15 (652)
in joint venture (Note 3)
Net loss for the year ended October 31, 2003 (366)
---------- ------ ----------- ----- ----- ---------
Balance, October 31, 2003 44,000,000 2,200 100,712,039 101 3,721 (5,555)
Net loss for the year ended October 31, 2004 (53)
---------- ------ ----------- ----- ----- ---------
Balance, October 31, 2004 44,000,000 $2,200 100,712,039 $101 $3,721 (5,608)
========== ====== =========== ===== ====== =========
See accompanying notes.
F-10
28
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the years ended October 31, 2002, 2003 and 2004 and
Cumulative Amounts from Inception (May 19, 1978) to October 31, 2004
(Dollar amounts in thousands)
Cumulative
amounts from
inception
2002 2003 2004 (May 19, 1978)
---- ---- ---- --------------
(unaudited)
Cash flows from operating activities:
Net loss $(123) $(366) $ (53) $(5,608)
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 -- 268 -- 3,201
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 -- -- --
Increase (decrease) in accounts payable (5) 1 29 34
----- ----- ----- ------
Total adjustments 3 269 29 3,672
----- ----- ----- ------
Net cash used in operating activities (120) (97) (24) (1,936)
(Continued on following page)
See accompanying notes.
F-11
29
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the years ended October 31, 2002, 2003 and 2004 and
Cumulative Amounts from Inception (May 19, 1978) to October 31, 2004
(Continued from preceding page)
(Dollar amounts in thousands)
Cumulative
amounts from
inception
2002 2003 2004 (May 19, 1978)
---- ---- ---- --------------
(unaudited)
Cash flows from investing activities:
Proceeds from sale of assets held for sale,
mineral interests, oil and gas properties and equipment 75 7 -- 320
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 75 7 -- (3,372)
Cash flows from financing activities:
Proceeds from the sale of:
Common stock - net -- -- -- 2,802
Preferred stock - net -- -- -- 2,486
Borrowing from related party -- -- 22 22
----- ----- ----- ------
Net cash provided by financing activities -- -- 22 5,310
----- ----- ----- ------
Increase (decrease) in cash (45) (90) (2) 2
Cash and cash equivalents at beginning of period 139 94 4 --
----- ----- ----- ------
Cash and cash equivalents at end of period $ 94 $ 4 $ 2 $ 2
===== ===== ===== ======
(Continued on following page)
See accompanying notes.
F-12
30
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the years ended October 31, 2002, 2003 and 2004 and
Cumulative Amounts from Inception (May 19, 1978) to October 31, 2004
(Continued from preceding page)
(Dollar amounts in thousands)
Cumulative
amounts from
inception
2002 2003 2004 (May 19, 1978)
---- ---- ---- --------------
(unaudited)
Supplemental disclosure of non-cash investing
and financing activities (Note 3):
During 2003, the Company acquired a 25% interest in
two Australian petroleum exploration permits ($358)
by issuing Restricted common stock and Restricted
$.015 Cumulative convertible preferred stock
(Totaling $318), and recognized an estimated
liability for stock registration of $40.
See accompanying notes.
F-13
31
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
October 31, 2002, 2003 and 2004
1. Organization and summary of significant accounting policies
Organization:
Rocky Mountain Minerals, Inc. (the Company) was incorporated on February
21,1974, and began operations on May 19, 1978 (inception) and is considered to
be a mining company in the exploratory stage and a development stage company as
defined by SFAS No. 7, and since inception, has been engaged in the acquisition
of mineral interests, oil and gas properties and leases, financing activities,
and initiated milling of the Company's mine tailings in 1983. During the year
ended October 31, 1982, the Company disposed of the majority of its then oil and
gas properties. In January 1984, the Company discontinued milling. Subsequent to
October 31, 1991, the Company was inactive and had limited receipts and
expenditures until 2003 when the Company issued stock for an investment in a
joint venture.
Basis of presentation:
The financial statements have been prepared on a going concern basis which
contemplates the realization of assets and liquidation of liabilities in the
ordinary course of business. As shown in the accompanying financial statements,
the Company has incurred significant losses and at October 31, 2004 had minimal
cash. As a development stage company, the Company relies on infusions of cash
through the sale of assets held for sale, the performance of its investment in
joint venture and the issuance of equity capital. As a result, substantial doubt
exists about the Company's ability to continue to fund future operations using
its existing resources.
Management plans to use the funds from the sale of the Rochester property to
fund the Company's evaluation of oil and gas exploration opportunities. Plans
for additional funding of these activities include the sale of its interest in
the Australian permits or the sale of the Company's common or preferred stock.
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.
F-14
32
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
October 31, 2002, 2003 and 2004
1. Organization and summary of significant accounting policies (continued)
Depletion of developed mineral interests (mine dumps and tailings) was computed
by the unit-of-production method based on estimated recoverable quantities of
gold and silver.
Undeveloped mineral interests and oil and gas properties:
The Company utilized the "successful efforts" method of accounting for
undeveloped mineral interests and oil and gas properties. Capitalized costs were
charged to operations at the time the Company determined that no economic
reserves existed.
Costs of carrying and retaining undeveloped properties were charged to expense
when incurred.
Proceeds from the sale of undeveloped properties were treated as a recovery of
cost. Proceeds in excess of the capitalized cost realized in the sale of any
such properties, if any, were 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.
F-15
33
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
October 31, 2002, 2003 and 2004
1. Organization and summary of significant accounting policies (continued)
Investment in joint venture:
The Company's investment in joint venture reflects its 25% interest in two
petroleum exploration permits, offshore Western Australia. The capitalized cost
includes the preferred and common stock at the market price at the date of stock
issuance. In addition, the Company recorded an estimate of $40,000 for the costs
to register the restricted stock.
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, 2004.
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,
F-16
34
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
October 31, 2002, 2003 and 2004
2. Purchase of Rochester mining properties (continued)
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 its remaining undeveloped mineral
interests at Rochester Montana including the 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 and 2003 the Company sold all its interest in the thirteen patented
claims, together with the dump and tailings material and equipment, that it
purchased from Rochester Enterprises, Ltd. for a total of $82,000. The Company
is pursuing the sale of the additional eighteen claims in the district and
anticipates receiving approximately $150,000 from the remaining property.
3. Investment in joint venture
In April 2003 the Registrant acquired a 25% interest in two petroleum
exploration permits, WA-329-P and WA-322-P, in the North West Shelf area of the
Carnarvon Basin, offshore Western Australia, from two unlisted public companies.
Mr. E.G. Albers, a member of the Registrant's board, is a shareholder and
director of these two public companies. The area represented by the permits is
approximately 356,000 acres, and the project is known as the Exmouth Joint
Venture Project. In agreeing to earn a 25% interest in the project, the
Registrant issued 5,000,000 shares of Restricted Common Stock and 19,091,550
shares of Restricted $0.015 Cumulative Convertible Preferred Stock. The Company
estimates registration costs to be $40,000. In October 2003, the Registrant
issued an additional 10,000,000 shares of Restricted Common Stock, when taken
with the previous issue aforesaid, to meet a $969,550 funding requirement
associated with the interest.
In May 2004 the Exmouth Joint Venture sold exploration permit WA-322-P to BHP
Billiton Petroleum Limited ("BHP"). In return BHP agreed to the acquistion and
processing of 3D seismic in the Joint Venture's adjacent exploration permit, WA-
329-P, as well as a $600,000 initial cash payment, a deferred cash payment of
$1,100,000 contingent upon BHP drilling a well in WA-322-P, and granting an
overriding royalty interest ranging from 2.75 to 3.75 percent on WA-322-P.
In July 2004 the Registrant's 25% share of the initial cash proceeds from the
BHP sale, $150,000, were offset against existing Year 2 seismic acquisition
obligations pursuant to the Farmin Agreement. As a term of this arrangement the
Registrant entered into an agreement to reacquire 10,000,000 shares of its
Common Stock previously issued to Octanex NL and Strata Resources NL, the
Company's Joint Venture partners, for no further outlay. At October 31, 2004,
the 10,000,000 shares had not yet been reconveyed and are expected to be
reconveyed in the second quarter of fiscal 2005. At that time, the investment in
joint venture will be reduced with a corresponding reduction in common stock and
capital in excess of par value.
F-17
35
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
October 31, 2002, 2003 and 2004
All subsequent seismic commitment costs in WA-329-P are to be shared pro rata
between the Exmouth Joint Venture Parties.
4. 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.
5. Note payable-related party
In May 2004, the Company signed a Promissory Note Agreement with Great Missenden
Holdings, a shareholder, whereby the Company borrowed $22,000 from Great
Missenden Holdings. The note bears interest of 10% per annum and is payable on
or before May 1, 2007. The note is convertible into shares of the Company's
Common Stock at any time after 18 months on the basis of 5,000 shares of Common
Stock for every $1,000. The Company has the right to repay in full at any time
during the first 18 months.
6. 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, subject to
declaration, 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 of
Directors only from earned surplus. Cumulative dividends in arrears as of
October 31, 2004 amount to $9,166,163 ($.21 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. As no profit has been achieved and as no dividends have been declared, no
provision has been made for unpaid dividends.
7. 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, 2004.
F-18
36
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
October 31, 2002, 2003 and 2004
8. Income taxes
At October 31, 2004, the Company had net operating loss carryforwards for tax
purposes of approximately $ 1,315,000. If not used to offset future taxable
income, the carryforwards will expire as follows:
Fiscal Year of expiration Amount
------------------------- ---------
2004 $ 215,000
2005 194,000
2006 78,000
2007 98,000
2008 33,000
2010 108,000
2011 25,000
2017 125,000
2019 29,000
2020 35,000
2021 89,000
2022 135,000
2023 98,000
2024 53,000
At October 31, 2003 and 2004, total deferred tax assets and valuation allowances
are as follows:
Deferred tax assets resulting 2003 2004
---- ----
Net operating loss $ 615,000 $ 460,000
Write-down of assets held 612,000 612,000
----------- -----------
Total 1,227,000 1,072,000
Less valuation allowance (1,227,000) (1,072,000)
----------- -----------
$ -- $ --
=========== ===========
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.
9. 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 2002, 88,212,000
in 2003, 100,712,000 in 2004 and 63,512,000 shares for the period from May 19,
1978 through October 31, 2004.
F-19
37
ROCKY MOUNTAIN MINERALS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
October 31, 2002, 2003 and 2004
10. 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.
11. 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, 2004 were $24,000 in 2002,
2003 and 2004.
F-20
38
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 28, 2005
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 28, 2005 BY: /s/ W. Ray Hill
-----------------------------------
W. Ray Hill, Treasurer and Director
(Principal Executive, Financial and
Accounting Officer)
DATED: January 28, 2005 BY: /s/ E. Geoffrey Albers
----------------------------
E. Geoffrey Albers, Director
DATED: January 28, 2005 BY: /s/ David B. Hill
-----------------------
David B. Hill, Director
DATED: January 28, 2005 BY: /s/ John B. Rubel
-----------------------
John B. Rubel, Director
39