U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 2002
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
-------------- ---------------
Commission File No. 333-75297
R & R RANCHING, INC.
--------------------
(Name of Small Business Issuer in its Charter)
NEVADA 87-0616524
------ ----------
(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
1065 West 1150 South
Provo, Utah 84601
-----------------------
(Address of Principal Executive Offices)
Issuer's Telephone Number: (801) 377-1758
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Sections 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.
(1) Yes X No (2) Yes X No
--- --- --- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Not applicable.
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the
Registrant's classes of common stock, as of the latest
practicable date:
September 12, 2002 11,100,000 common shares
R & R RANCHING, INC.
[A Development Stage Company]
CONTENTS
PAGE
Unaudited Condensed Balance Sheets,
July 31, 2002 2
Unaudited Condensed Statements of Operations,
for the three and nine months ended July 31, 2002
and 2001 and from inception on August 3, 1998
through July 31, 2002 3
Unaudited Condensed Statements of Cash Flows, for the nine
months ended July 31, 2002 and from inception on
August 3, 1998 through July 31, 2002 4 - 5
Notes to Unaudited Condensed Financial Statements 6 - 10
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
The Financial Statements of the Registrant required to be
filed with this 10-QSB Quarterly Report were prepared by management,
and commence on the following page, together with Related Notes.
In the opinion of management, the Financial Statements fairly
present the financial condition of the Registrant.
R & R RANCHING, INC.
[A Development Stage Company]
UNAUDITED CONDENSED BALANCE SHEETS
ASSETS
July 31, October 31,
2002 2001
_________ _________
CURRENT ASSETS:
Cash in bank $ - $ 12,801
_________ _________
Total Current Assets $ - $ 12,801
PROPERTY - BISON, net 88,705 90,219
DEPOSITS 10,002 10,000
_________ _________
$98,707 $ 113,020
_________ _________
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Bank Overdraft 2 -
Accounts payable $ 2,205 $ 7,297
Accounts payable - related party 2,510 5,900
_________ _________
Total Current Liabilities 4,717 13,197
_________ _________
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value
10,000,000 shares authorized,
no shares issued and outstanding - -
Common stock, $.001 par value,
50,000,000 shares authorized,
11,100,000 shares issued and
outstanding, 11,100 11,100
Capital in excess of par value 136,570 136,570
Deficit accumulated during the
development stage ( 53,680) (47,847)
_________ _________
Total Stockholders' Equity 93,990 99,823
_________ _________
$ 98,707 $ 113,020
_________ _________
Note: The balance sheet at October 31, 2001 was taken from
the audited financial statements at the date and condensed.
The accompanying notes are an integral part of this unaudited
financial statements.
R & R RANCHING, INC.
[A Development Stage Company]
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
For the Three From Inception
Months Ended on August 3, 1998
July 31, Through July 31
2002 2001 2002
Revenue: $ - $ - $ 14,450
Expenses:
Bison Operating Expenses 342 520 23,988
General & Administrative 942 1,278 36,412
------ ------ -------
Total Expenses 1,284 1,798 60,400
------ ------ -------
(1,284) (1,798) (60,400)
Other Expense:
Interest Expense - - 7,730
------ ------ --------
Loss Before Income Taxes (1,284) (1,798) (45,950)
Current Tax Expense - - -
Deferred Tax Expense - - -
------ ------- --------
Net Loss $ (1,284)$ (1,798) $(53,680)
Loss Per Common Share $ (.00) $ (.00) $ (.02)
The accompany notes are an integral part of
these unaudited condensed financial statements.
R & R RANCHING, INC.
[A Development Stage Company]
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
For the Nine From Inception
Months Ended on August 3, 1998
July 31 Through July 31
2002 2001 2002
Revenue: $ - $ - $ 14,450
Expenses:
Bison Operating Expenses 1,515 5,441 23,988
General & Administrative 4,318 11,861 36,412
------ ------ -------
Total Expenses 5,833 17,302 60,400
------ ------ -------
(5,833) (17,302) (45,950)
Other Expense:
Interest Expense - - 7,730
------ ------ --------
Loss Before Income Taxes (5,833) (17,302) (53,680)
Current Tax Expense - - -
Deferred Tax Expense - - -
------ ------- --------
Net Loss $ (5,833) $(17,302) $(53,680)
Loss Per Common Share $ (.00) $ (.01) $ (.02)
The accompany notes are an integral part of these
unaudited condensed financial statements.
R & R RANCHING, INC.
[A Development Stage Company]
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
For the Nine From Inception
Months Ended on August 3,
July 31, 1998 Through
________________ July 31,
2002 2001 2002
_______ _______ ____________
Cash Flows from Operating Activities:
Net loss $ (5,833) $(17,302) $ (53,680)
Adjustments to reconcile net loss to net
cash used in operating activities:
Write-off of organization costs - - 475
Depreciation and amortization - - 186
Changes in assets and liabilities:
Increase decrease in bison calves 1,515 (1,323) (4,866)
(Increase) in accounts payable (5,093) 3,378 2,205
(Increase) in accounts payable
- related party (3,390) 1,765 2,510
_______ _______ ____________
Net Cash (Used) by Operating Activities (12,801) (13,482) (53,170)
_______ _______ ____________
Cash Flows from Investing Activities:
Payment of organization costs - - (500)
Purchase of bison - - (84,000)
(Increase) decrease in Deposits (2) (10,000) (10,002)
_______ _______ ____________
Net Cash (Used) in Investing Activities (2) (10,000) (94,502)
_______ _______ ____________
Cash Flows from Financing Activities:
Increase in bank overdraft 2 - 2
Proceeds from of note payable -
related party - - 70,000
Payment on note payable - - (70,000)
Proceeds from common stock issuance - 10,000 160,000
Payment of stock offering costs - - (12,330)
_______ _______ ____________
Net Cash Provided by Financing Activities 2 10,000 147,672
_______ _______ ____________
Net Increase in Cash and Cash Equivalents (12,801) (13,482) -
Cash at Beginning of Period 12,801 26,283 -
______ _______ ____________
Cash at End of Period $ - $12,801 $ -
________ _______ ____________
R & R RANCHING, INC.
[A Development Stage Company]
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
For the Nine From Inception
Months Ended on August 3,
July 31, 1998 Through
_______________ July 31,
2002 2001 2002
_______ _______ ____________
Supplemental Disclosures of Cash Flow
information:
Cash paid during the period for:
Interest $ - $ - $ 7,730
Income taxes $ - $ - $ -
Supplemental schedule of Noncash Investing
and Financing Activities:
For the period ended July 31, 2002:
None
For the period ended July 31, 2001:
None
The accompanying notes are an integral part of these
condensed financial statements.
R & R RANCHING, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - R & R Ranching, Inc. (the Company) was organized
under the laws of the State of Nevada on August 3, 1998. The
Company is considered a development stage company as defined in
Statement of Financial Accounting Standards (SFAS) No. 7. The
Company is engaged in the business of breeding and raising bison.
The Company at the present time, has not paid any dividends and
any dividends that may be paid in the future will depend upon the
financial requirements of the Company and other relevant factors.
Property - Bison - Inventory consists of bison which are being held
for breeding purposes. The bison are recorded at the lower of cost
or market value [See Note 2].
Organization Costs - Organization costs of $500, which reflect
amounts expended to organize the Company, were expensed during
1999 in accordance with Statement of Position 98-5.
Loss Per Share - The Company accounts for loss per share in
accordance with Statement of Financial Accounting Standards
(SFAS) No. 128 "Earnings Per Share". This statement requires the
Company to present basic earnings per share and dilutive earnings
per share when the effect is dilutive [See Note 6].
Income Taxes - The Company accounts for income taxes in accordance
with Statement of Financial Accounting Standards No. 109 "Accounting
for Income Taxes". This statement requires an asset and liability
approach for accounting for income taxes [See Note 7].
Recently Enacted Accounting Standards - Statement of Financial
Accounting Standards ("SFAS") No. 141, "Business Combinations",
SFAS No. 142, "Goodwill and Other Intangible Assets",
SFAS No. 143, "Accounting for Asset Retirement Obligations",
and SFAS No. 144, "Accounting for The Impairment or Disposal
of Long-Lived Assets", SFAS No. 145, "Recission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement
No. 13, and Technical Corrections", and SFAS No. 146
"Accounting for Costs Associated with Exit or Disposal
Activities" were recently issued. SFAS No. 141,142, 143,
144, 145 and 146 have no current applicability to the company
or their effect on the financial statements would not have been
significant.
Cash and Cash Equivalents - For purposes of the statement of cash
flows, the Company considers all highly liquid debt investments
purchased with a maturity of three months or less to be cash
equivalents.
Accounting Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that effect the reported
amounts of assets and liabilities, the disclosures of contingent
assets and liabilities at the date of the financial statements,
and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimated by
management.
R & R RANCHING, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Continued]
Condensed Financial Statements - The accompanying financial
statements have been prepared by the Company without audit. In
the opinion of management, all adjustments (which include only
normal recurring adjustments) necessary to present fairly the
financial position, results of operations and cash flows at July 31,
2002 and 2001 and for the periods then ended have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is
suggested that these condensed financial statements be read in
conjunction with the financial statements and notes thereto
included in the Company's October 31, 2001 audited financial
statements. The results of operations for the periods ended
July 31, 2002 and 2001 are not necessarily indicative of the
operating results for the full year.
NOTE 2 - BISON
Bison that are purchased for breeding are recorded at cost and
depreciated over their useful lives (15 years), using the
straight-line method. If a bison dies or is sold the full remaining
amount is expensed.
Bison that are internally developed are recorded by capitalizing
one year's depreciation of the mother and all direct development
costs until the bison have reached maturity and have been selected
for breeding or other productive purposes. At the point of maturity,
the bison are depreciated over their estimated useful lives of 15
years. If the bison are sold, the costs are charged to costs of
goods sold.
During the three months ended April 2002, the company transferred
seven calves valued at $1,174 to Blue Sky Bison Ranch, Ltd. In
accordance with a bison care and management agreement. The Company
further capitalized $7,043 for the estimated twenty-eight calves
born as of July 31, 2002, less the estimated seven calves valued at
$820 to be transferred in accordance with the bison care and
management agreement.
The following is a summary of bison as of July 31, 2002:
Accumulated
Quantity Cost Additions Depreciation Net
________________________________________________________
Breeding Stock 30 $100,886 $ - $ (25,213) $ 75,673
Calves 42 6,808 6,224 - 13,032
Total Bison 72 $107,694 $ 6,224 $ (25,213 $ 88,705
R & R RANCHING, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 3 - RELATED PARTY TRANSACTIONS
Bison Care and Management Agreement - During December, 1998 the
Company entered into an agreement with Blue Sky Bison Ranch, Ltd.,
of Carvel, Alberta, Canada ("Blue Sky") under which Blue Sky would
house, feed, manage and market the Company's bison for a period of
one year commencing January 1, 1999. The agreement provides for the
Company to pay a monthly management fee of $500 (Canadian) which is
approximately $335 US and 25% of the proceed from the sale of
calves. During the first quarter of 2002, the agreement was
amended such that Blue Sky will receive 25% of the calves in
lieu of the monthly management fee. Blue Sky's president,
director and controlling shareholder is the father of a
shareholder of the Company. At July 31, 2002 the Company
owned management fees of $2,400.
Management Compensation - The Company has not paid any compensation
to its officers and directors.
Office Space - The Company has not had a need to rent office space.
An officer/shareholder of the Company is allowing the Company to use
his office as a mailing address, as needed, at no expense to the
Company.
NOTE 4 - CAPITAL STOCK
Preferred Stock - The Company has authorized 10,000,000 shares of
preferred stock, $.001 par value, with such rights, preferences
and designations and to be issued in such series as determined by
the Board of Directors. No shares are issued and outstanding at
July 31, 2002.
Common Stock - During the period ended October 31, 1998, the Company
issued 1,000,000 shares of its previously authorized, but unissued
common stock for cash of $20,804 and a stock subscription receivable
of $4,196. The stock subscription receivable was paid in full
during November, 1998.
On June 1, 2001, the Company issued 10,000,000 shares of common
stock for $10,000 or $.001 per share and effectively changed control
of the Company. In connection with the changes of control, the
directors and officers of the Company resigned after designating
Fred L. Hall as the sole officer and director of the Company.
During the six months ended July 31, 2000, the Company completed
a public stock offering and issued 100,000 shares of its previously
authorized, but unissued common stock and related A and B warrants
for cash of $125,000, net of $12,330 in deferred offering costs. The
Company filed a registration statement with the United States
Securities and Exchange Commission on Form SB-2 under the Securities
Act of 1933. The offering consisted of 100,000 units consisting of
a total of 100,000 shares of common stock, 100,000 A warrants and
100,000 B warrants. Each A warrant allows the holder to purchase
one share of common stock at a price of $2.50. Each B warrant allows
the holder to purchase one share of common stock at a price of $5.00.
The warrants are subject to adjustment in certain events and are
exercisable for a period of five years from the date of the offering.
The Company may call the warrants at their exercise price on 30 days
notice at any time after issuance and prior to the expiration date
R & R RANCHING, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
of the warrants. The warrants may only be exercised or redeemed if
a current prospectus is in effect. As of July 31, 2002, no warrants
have been exercised.
Stock Option Plan - On August 10, 1998, the Board of Directors
of the Company adopted and the stockholders at that time approved,
the 1998 Stock Option Plan. The plan provides for the granting of
awards of up to 1,000,000 shares of common stock to sales
representatives, officers, directors, consultants and employees.
The awards can consist of stock options, restricted stock awards,
deferred stock awards, stock appreciation rights and other
stock-based awards as described in the plan. Awards under the
plan will be granted as determined by the board of directors.
As of July 31, 2002, no awards have been granted under the plan.
NOTE 5 - GOING CONCERN
The accompanying financial statements have been prepared in
conformity with generally accepted accounting principles which
contemplate continuation of the Company as a going concern.
However, the Company has incurred losses since inception was
only recently formed and has not yet been successful in
establishing profitable operations. These factors raise substantial
doubt about the ability of the Company to continue as a going concern.
In this regard, management is proposing to raise additional funds
through sales of bison, which funds will be used to assist in
establishing on-going operations. There is no assurance that the
Company will be successful in raising funds through bison sales or
achieving profitable operations. The financial statements do not
include any adjustments that might result from the outcome of
these uncertainties.
NOTE 6 - LOSS PER SHARE
The following data show the amounts used in computing loss per share
and the effect on income and the weighted average number of shares
for the periods ended
For the Three For the Nine From Inception
Months Ended Months Ended on August 3,
July 31, July 31, 1998 Through
________________ ______________ July 31,
2002 2001 2001 2002 2002
________ ______ ______ ______ ________________
C>
(Loss) from contin-
uing operations
applicable to
common stock
(numerator) $(1,284) $(1,798) $(5,833) $(17,302) $(53,680)
________ ________ ______ __________ _________
Weighted average
number of common
shares outstanding
used in (loss) per
share during the
period
(denominator) 11,100,000 7,693,407 11,100,000 3,297,802 3,750,263
R & R RANCHING, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 7 - INCOME TAXES
The Company accounts for income taxes in accordance with Statement
of Financial Accounting Standards No. 109 "Accounting for Income
Taxes". FASB 109 requires the Company to provide a net deferred
tax asset/liability equal to the expected future tax benefit/expense
of temporary reporting differences between book and tax accounting
methods and any available operating loss or tax credit carryforwards.
At July 31, 2002, the Company has available unused operating loss
carryforwards of approximately $53,000, which may be applied
against future taxable income and which expire in various years
through 2022.
The amount of and ultimate realization of the benefits from the
operating loss carryforwards for income tax purposes is dependent,
in part, upon the tax laws in effect, the future earnings of the
Company, and other future events, the effects of which cannot be
determined. Because of the uncertainty surrounding the realization
of the loss carryforwards the Company has established a valuation
allowance equal to the tax effect of the loss carryforwards and,
therefore, no deferred tax asset has been recognized for the loss
carryforwards. The net deferred tax assets are approximately
$8,000 as of July 31, 2002, with an offsetting valuation
allowance of the same amount resulting in a change in the
valuation allowance of approximately $8,000 during the three
month period ended July 31, 2002.
Item 2: Management's Discussion and Analysis or Plan of Operation.
- --------------------------------------------------------------------
Plan of Operation.
- ------------------
R & R Ranching's plan of operation for the next 12 months
is to continue with its bison operation under the management
agreement with Blue Sky Bison. As of the date of this Report, R & R
Ranching had 30 cows and 42 calves. R & R Ranching currently is
actively seeking buyers in the bison breeding or bison meat markets.
As of the date of this Report, several buyers have
expressed an interest in purchasing R & R Ranching's calves. R & R
anticipates Blue Sky Bison will complete and market R & R Ranching's
calves. However, current negotiations have not yielded a satisfying
sales contract for the calves. Because all of R & R Ranching's cows
are young (about three to six years old), management hopes that it
will not have to use many of its heifer calves to replace cows. This
would allow R & R Ranching to sell almost all of its heifer calves
while its cows are in their breeding prime. Currently, all of the
cows and heifers owned are less than 6 years old. However, many
factors, including illness and death of its existing cows, could
force R & R Ranching to keep some of its annual heifer calf crop;
this would have a negative effect on revenues because the replacement
heifers would not be made available for sale.
Most bison operations breed bulls at the rate of about one
bull to 10 cows. Because the cows that it received under the
Purchase Agreement were already pregnant, breeding bulls were
not used until the 1999 fall breeding season. The management
agreement provides for Blue Sky to supply bulls for breeding,
so R & R Ranching will not require breeding bulls of its own
until it moves its operations to its own location as discussed
below. Once this occurs, R & R Ranching will keep about one
bull for every 10 cows, to be bred for two years. R & R
Ranching will have to keep replacement bulls from its own
herd (or purchase them, on a regular basis) in order to ensure
genetic diversity and avoid inbreeding. Bison ranchers commonly
keep bulls and cows together and let nature dictate the
breeding season. Most breeding occurs in July and August, with a
275 day gestation period. R & R Ranching will breed its 30 cows
during each cow's normal cycle during the months of July and
August. Management's current plan is to use Blue Sky Bison's
bulls for the 2002 breeding season.
During the first quarter of 2002, R & R Ranching and Blue Sky
Bison Ranch, Ltd. of Carvel, Alberta, Canada amended their bison
care and management agreement such that Blue Sky will receive 25%
of the calves in lieu of the monthly management fee. In exchange,
Blue Sky will provide grazing of the herd, winter feeding, veterinary
care, handling, identification tagging and records maintenance, and
provision of breeding bulls (at the rate of one bull per 20 cows).
With additional feed expenses and reimbursement of out-of-pocket
expenses of its directors and officers, R & R Ranching expects
annual costs of operation in 2002 to equal approximately $12,000.
Management estimates that it will cost approximately $500 to
raise a calf to the point where it is weaned and ready for sale.
This figure includes the payment of 25% of the calves to Blue Sky
as discussed above.
During the next 12 months, management expects to continue
its breeding operations in Melstone, Montana. During the next 12
months, R & R Ranching will be able to meet its current operating
expenses from anticipated bison sales.
Results of Operations.
- ----------------------
During the three-month period ended July 31, 2002, the
Registrant received total revenues of $0 and sustained a net loss
of ($1,284) compared to total revenues of $0 and a sustained net
loss of ($1,798) for the three-month period ended July 31, 2001.
During the nine-month period ended July 31, 2002, the Registrant
received total revenues of $0 and sustained a net loss of ($5,883)
compared to total revenues of $0 and a sustained net loss of ($17,302)
for the nine-month period ended July 31, 2001.
Liquidity.
- ----------
During the three-month period ended July 31, 2002, the
Registrant had total expenses of ($1,284), while receiving
$0 in revenues. At July 31, 2002 the Registrant had total assets
of $98,707. During the three-month period ended July 31, 2001,
the Registrant had total expenses of ($1,798), while receiving $0
in revenues and had total assets of $113,020.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
- ----------------------------
None; not applicable.
Item 2. Changes in Securities.
- --------------------------------
None; not applicable.
Item 3. Defaults Upon Senior Securities.
- ------------------------------------------
None; not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
- --------------------------------------------------------------
None; not applicable.
Item 5. Other Information.
- ----------------------------
None; not applicable.
Item 6. Exhibits and Reports on Form 8-K.
- -------------------------------------------
(a) Exhibits.
None; not applicable.
(b) Reports on Form 8-K.
None; not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned thereunto duly authorized.
R & R RANCHING, INC.
Date: 09/12/02 By:/s/Fred L. Hall
-------------- -----------------------------
Fred L. Hall, President and Director
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 Quarterly Report of R & R Ranching, Inc.
(the "Company") on Form 10-QSB for the period ending July 31, 2002,
as filed with the Securities and Exchange Commission on the date
hereof (the "Report"), I, Fred L. Hall, Chief Executive Officer,
President and Treasurer of the Company, certify, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
(1) The Report fully complies with the requirements of Section
13 (a) or 15(d) of the Securities and 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