U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended: December 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 0-30489
YAAK RIVER RESOURCES, INC.
(Name of small business issuer in its charter)
Colorado 84-1097796
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2501 East Third Street, Casper, Wyoming 82609
(Address of principal executive offices, including zip code)
(307) 235-0012
(Issuer's telephone number)
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act: Common
Stock, par value $0.0001 per share
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
Check if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. X
The issuer's revenues for its most recent fiscal year were $ 0 .
The aggregate market value of the voting stock held by non-affiliates,
computed by reference to the average bid and asked prices of such stock
as of March 14, 2002, was approximately $495,000.
As of March 14, 2002, 66,308,857 shares of Series A Common Stock, par
value $0.0001 per share, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Registration Statement 33-28106, as amended, is incorporated into Parts I
and IV of this Report.
Annual Report on Form 10-KSB for the fiscal year ended December 31, 1992, is
incorporated into Part IV of this Report
Transitional Small Business Disclosure Format: Yes___ No X
This Form 10-KSB consists of 25 pages. Exhibits are indexed at page 14.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
General
Yaak River Resources, Inc. (the "Registrant" or the "Company"),
was incorporated under the laws of the State of Colorado under the name
Andraplex Corporation on June 10, 1988, for the primary purpose of seeking
out acquisitions of properties, businesses, or merger candidates, without
limitation as to the nature of the business operations or geographic area
of the acquisition candidate. From inception through the date of completion
of its initial public offering of securities, the Company's activities were
directed toward the acquisition of operating capital.
The Company completed its initial public offering in 1989. After
completion of the offering, the Company began the process of identification
and evaluation of prospective acquisition candidates and other business
opportunities.
Subsequent Business Plans and Business Operations
From 1993 through 1998, the Company was a development-stage enterprise
that sought to engage in the mining of gold and other precious and base
metals. Toward that objective, the Company acquired a number of mining
properties located in or near the Yaak Mining District in Lincoln County,
Montana.
Together with its other activities, the Company sought to obtain
financing for development and operating purposes. Those efforts, however,
failed to raise adequate working capital from outside sources. An
insufficiency of capital, combined with regulatory impediments, prevented
commencement of significant mining operations.
Owing to the perceived impracticability of continuing to pursue the
Company's historical business plan, management determined it to be in the
best interests of the Company and its shareholders that the plan be
abandoned, and that the Company dispose of its mining properties. The
sale of the mining properties was consummated in July of 1999.
In September of 1999, the Company acquired 91 unimproved lots located
in Teller County, Colorado. The lots are zoned for residential development,
and comprise a total of approximately 4.7 acres of land. They are located
in the Pike's Peak region approximately six miles by road from the historic
mining town of Cripple Creek, Colorado, and approximately 40 miles by
highway from the Colorado Springs metropolitan area. The lots shall be
referred to in this Report as the "Company Real Estate."
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The Company acquired the Company Real Estate from Donald J. Smith,
who is currently President and a Director of the Company. In connection
with the purchase, the Company's board of directors deemed the Company
Real Estate to have a total value of $162,000. The purchase price was
paid in the form of approximately 23,000,000 treasury shares of the
Company's Series A Common Stock.
In the fourth quarter of the year ended December 31, 2000,
management reached a determination that it would not be feasible for
the Company to develop the Company Real Estate. Upon reaching that
determination, management adopted the new business plan summarized
under "Plan of Operations," below
Plan of Operations
Management intends to seek out and pursue a business combination with
one or more existing private business enterprises that might have a desire
to take advantage of the Company's status as a public corporation.
Management does not intend to target any particular industry but, rather,
intends to judge any opportunity on its individual merits.
In addition, management intends either to sell the Company Real
Estate as an undeveloped package or to spin off the Company Real Estate
into a private subsidiary corporation that has yet to be formed.
Competition
The Company is and will remain an insignificant participant among the
firms that engage in mergers with and acquisitions of privately financed
entities. Many established venture-capital and financial concerns have
significantly greater financial and personnel resources and technical
expertise than the Company.
In view of the Company's limited financial resources and limited
management availability, the Company will continue to be at a significant
disadvantage compared to the Company's competitors. See "Risk Factors --
Competition."
Employees
The Company has no full time employees. Its officers devote as much
time as they deem necessary to conduct the Company's business. See "Item 10.
Executive Compensation." See also "Risk Factors -- Dependence upon
Management" and "Risk Factors -- Limited Participation of Management."
Risk Factors
An investment in the securities of the Company involves extreme risks
and the possibility of the loss of a shareholder's entire investment. A
prospective investor should evaluate all information discussed in this
Report and the risk factors discussed below in relation to his financial
circumstances before investing in any securities of the Company.
1. No Currently Relevant Operating History. The Company has no
currently relevant operating history, revenues from operations, or assets
other than the Company Real Estate and cash from private sales of stock.
The Company faces all of the risks of a new business and those risks
specifically inherent in the investigation, acquisition, or involvement
in a new business opportunity. Purchase of any securities of the Company
must be regarded as placing funds at a high risk in a new or "start-up"
venture with all of the unforeseen costs, expenses, problems, and
difficulties to which such ventures are subject.
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2. No Assurance of Success or Profitability. There is no assurance
that the Company will acquire a favorable business opportunity. In addition,
even if the Company becomes involved in a business opportunity, there is no
assurance that it will generate revenues or profits, or that the market price
of the Company's Common Stock will be increased thereby.
3. Possible Business - Not Identified and Highly Risky. The Company
has not identified and has no commitments to enter into or acquire a specific
business opportunity and therefore can disclose the risks and hazards of
a business or opportunity that it may enter into in only a general manner,
and cannot disclose the risks and hazards of any specific business or
opportunity that it may enter into. An investor can expect a potential
business opportunity to be quite risky. The Company's acquisition of or
participation in a business opportunity will likely be highly illiquid and
could result in a total loss to the Company and its stockholders if the
business or opportunity is unsuccessful.
4. Type of Business Acquired. The type of business to be acquired
may be one that desires to avoid effecting a public offering and the
accompanying expense, delays, and federal and state requirements which
purport to protect investors. Because of the Company's limited capital,
it is more likely than not that any acquisition by the Company will
involve other parties whose primary interest is the acquisition of a
publicly traded company. Moreover, any business opportunity acquired may
be currently unprofitable or present other negative factors.
5. Impracticability of Exhaustive Investigation. The Company's
limited funds and the lack of full-time management will likely make it
impracticable to conduct a complete and exhaustive investigation and
analysis of a business opportunity before the Company commits its capital
or other resources thereto. Management decisions, therefore, will likely
be made without detailed feasibility studies, independent analysis, market
surveys, and the like which, if the Company had more funds available to it,
would be desirable. The Company will be particularly dependent in making
decisions upon information provided by the promoter, owner, sponsor, or
others associated with the business opportunity seeking the Company's
participation.
6. Lack of Diversification. Because of the limited financial
resources of the Company, it is unlikely that the Company will be able to
diversify its acquisitions or operations. The Company's probable inability
to diversify its activities into more than one area will subject the Company
to economic fluctuations within a particular business or industry and
therefore increase the risks associated with the Company's operations.
7. Possible Reliance upon Unaudited Financial Statements. The Company
generally will require audited financial statements from companies that the
Company proposes to acquire. No assurance can be given, however, that
audited financials will be available to the Company. In cases where audited
financials are unavailable, the Company will have to rely upon unaudited
information received from target companies' management that has not been
verified by outside auditors. The Company is subject, moreover, to the
reporting provisions of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and thus will be required to furnish certain information
about significant acquisitions, including certified financial statements for
any business that the Company shall acquire. Consequently, acquisition
prospects that do not have or are unable to obtain the required certified
statements may not be appropriate for acquisition so long as the reporting
requirements of the Exchange Act are applicable.
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8. Investment Company Regulation. The Company does not intend to
become classified as an "investment company" under the Investment Company
Act of 1940 (the "Investment Act"). The Company believes that it will not
become subject to regulation under the Investment Act because (i) the Company
will not be engaged in the business of investing or trading in securities,
(ii) any merger or acquisition undertaken by the Company will result in the
Company's obtaining a majority interest in any such merger or acquisition
candidate, and (iii) the Company intends to discontinue any investment in a
prospective merger or acquisition candidate in which a majority interest
cannot be obtained. Should the Company be required to register as an
investment company, it shall incur significant registration and compliance
costs. The Company has obtained no formal determination from the Securities
and Exchange Commission (the "Commission") as to the status of the Company
under the Investment Act. Any violation of the Investment Act will subject
the Company to materially adverse consequences. Should the Commission find
that the Company is subject to the Investment Act, and order the Company to
register under such Act, the Company would vigorously resist such finding
and order. Irrespective of whether the Commission or the Company were to
prevail in such dispute, however, the Company would be damaged by the costs
and delays involved. Because the Company will not register under the
Investment Act, investors in the Company will not have the benefit of the
various protective provisions imposed on investment companies by such Act,
including requirements for independent directors.
9. Other Regulation. An acquisition made by the Company may be of
a business that is subject to regulation or licensing by federal, state, or
local authorities. Compliance with such regulations and licensing can be
expected to be a time-consuming, expensive process and may limit other
investment opportunities of the Company.
10. Dependence upon Management. The Company will be heavily dependent
upon the skills, talents, and abilities of its management to implement its
business plan. The Company's executive officers and directors may devote
as little as two hours per month to the affairs of the Company, which for a
company such as this that is heavily dependent upon management, may be
inadequate for Company business, and may delay the acquisition of any
opportunity considered. Furthermore, management has little or no significant
experience in seeking, investigating, and acquiring businesses and will
depend upon its limited business knowledge in making decisions regarding the
Company's operations. See "Item 9. Directors, Executive Officers, Promoters
and Control Persons; Compliance with Section 16(a) of the Exchange Act."
Because investors will not be able to evaluate the merits of possible business
acquisitions by the Company, they should critically assess the information
concerning the Company's management.
11. Lack of Continuity in Management. The Company does not have
employment agreements with its management, and there is no assurance that
the persons named herein will manage the Company in the future. In
connection with acquisition of a business opportunity, the current management
of the Company probably will resign and appoint successors. This may occur
without the vote or consent of the shareholders of the Company.
12. Conflicts of Interest. Certain conflicts of interest exist
between the Company and its executive officers and directors. Each of them
has other business interests to which they devote their primary attention,
and they may be expected to continue to do so although management time should
be devoted to the business of the Company. As a result, conflicts of
interest may arise that can be resolved only through their exercise of such
judgment as is consistent with their fiduciary duties to the Company.
13. Indemnification of Officers and Directors. The Company's Articles
of Incorporation provide for the indemnification of its directors, officers,
employees, and agents, under certain circumstances, against attorney's fees
and other expenses incurred by them in any litigation to which they become a
party arising from their association with or activities on behalf of the
Company. The Company may also bear the expenses of such litigation for any
of its directors, officers, employees, or agents, upon such person's promise
to repay the Company therefor if it is ultimately determined that any such
person shall not have been entitled to indemnification. This indemnification
policy could result in substantial expenditures by the Company which it will
be unable to recoup.
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14. Director's Liability Limited. The Company's Articles of
Incorporation exclude personal liability of its directors to the Company and
its stockholders for monetary damages for breach of fiduciary duty except
in certain specified circumstances. Accordingly, the Company will have a
much more limited right of action against its directors than otherwise would
be the case. This provision does not affect the liability of any director
under federal or applicable state securities laws.
15. Dependence upon Outside Advisors. To supplement the business
experience of management, the Company may be required to employ accountants,
technical experts, appraisers, attorneys, or other consultants or advisors.
The selection of any such advisors will be made by management without any
input from shareholders. Furthermore, it is anticipated that such persons
may be engaged on an "as needed" basis without a continuing fiduciary or
other obligation to the Company.
16. Need for Additional Financing. The Company's funds will not be
adequate to take advantage of any available business opportunities. Even if
the Company were to obtain sufficient funds to acquire an interest in a
business opportunity, it may not have sufficient capital to exploit the
opportunity. The ultimate success of the Company will depend upon its
ability to raise additional capital. The Company has not investigated the
availability, source, or terms that might govern the acquisition of
additional capital and will not do so until it evaluates its needs for
additional financing. When additional capital is needed, there is no
assurance that funds will be available from any source or, if available,
that they can be obtained on terms acceptable to the Company. If not
available, the Company's operations will be limited to those that can be
financed with its modest capital.
17. Leveraged Transactions. There is a possibility that any
acquisition of a business opportunity by the Company may be leveraged, i.e.,
the Company may finance the acquisition of the business opportunity by
borrowing against the assets of the business opportunity to be acquired,
or against the projected future revenues or profits of the business
opportunity. This could increase the Company's exposure to larger losses.
A business opportunity acquired through a leveraged transaction is profitable
only if it generates enough revenues to cover the related debt and
expenses. Failure to make payments on the debt incurred to purchase the
business opportunity could result in the loss of a portion or all of the
assets acquired. There is no assurance that any business opportunity
acquired through a leveraged transaction will generate sufficient revenues
to cover the related debt and expenses.
18. Competition. The search for potentially profitable business
opportunities is intensely competitive. The Company expects to be at a
disadvantage when competing with many firms that have substantially greater
financial and management resources and capabilities than the Company. These
competitive conditions will exist in any industry in which the Company may
become interested.
19. No Foreseeable Dividends. The Company has not paid dividends on
its Common Stock and does not anticipate paying such dividends in the
foreseeable future.
20. Loss of Control by Present Management and Shareholders. The
Company may consider an acquisition in which the Company would issue as
consideration for the business opportunity to be acquired an amount of the
Company's authorized but unissued Common Stock that would, upon issuance,
constitute as much as 95% of the voting power and equity of the Company.
The result of such an acquisition would be that the acquired company's
stockholders and management would control the Company, and the Company's
management could be replaced by persons unknown at this time. Such a merger
could leave investors in the securities of the Company with a greatly
reduced percentage of ownership of the Company. Management could sell its
control block of stock at a premium price to the acquired company's
stockholders, although management has no plans to do so.
21. Dilutive Effects of Issuing Additional Common Stock. The majority
of the Company's authorized but unissued Common Stock remains unissued. The
board of directors of the Company has authority to issue such unissued shares
without the consent or vote of the shareholders of the Company. The issuance
of these shares may further dilute the interests of investors in the
securities of the Company and will reduce their proportionate ownership
and voting power in the Company. See "Series B Common Shares Authorized,"
below.
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22. Thinly-traded Public Market. There currently is only a thinly
traded or virtually inactive public market for the securities of the Company,
and no assurance can be given that a more active market will develop or that
an investor will be able to liquidate his investment without considerable
delay, if at all. If a more active market should develop, the price may be
highly volatile. Factors such as those discussed in this "Risk Factors"
section may have a significant impact upon the market price of the securities
of the Company. Owing to what may be expected to be the low price of the
securities, many brokerage firms may not be willing to effect transactions
in the securities. Even if an investor finds a broker willing to effect a
transaction in these securities, the combination of brokerage commissions,
state transfer taxes, if any, and any other selling costs may exceed the
selling price. Further, many lending institutions will not permit the use
of such securities as collateral for any loans.
23. Broker-Dealer Sales of Company's Registered Securities. The
Company's registered securities are covered by a Securities and Exchange
Commission rule that imposes additional sales practice requirements on broker-
dealers who sell such securities to persons other than established customers
and accredited investors. For purposes of the rule, the phrase "accredited
investors" means, in general terms, institutions with assets in excess of
$5,000,000, or individuals having a net worth in excess of $1,000,000 or
having an annual income that exceeds $200,000 (or that, when combined with
a spouse's income, exceeds $300,000). For transactions covered by the rule,
the broker-dealer must make a special suitability determination for the
purchaser and receive the purchaser's written agreement to the transaction
prior to the sale. Consequently, the rule may affect the ability of broker-
dealers to sell the Company's securities and also may affect the ability of
investors in securities of the Company to sell their securities in any market
that might develop therefor.
24. Preferred Shares Authorized. The Articles of Incorporation of
the Company authorize issuance of a maximum of 50,000,000 nonvoting shares
of Preferred Stock, par value $0.0001 per share. No shares of Preferred
Stock have been issued or are outstanding on the date of this Report, and
there is no plan to issue any in the foreseeable future. Should a series of
Preferred Stock be issued, however, the terms of such series could operate
to the significant disadvantage of the holders of outstanding Series A
Common Stock or other securities of the Company. Such terms could include,
among others, preferences as to dividends and distributions on liquidation.
25. Series B Common Shares Authorized. The Articles of Incorporation
of the Company authorize issuance of a maximum of 250,000,000 nonvoting
shares of Series B Common Stock, par value $0.0001 per share. No shares of
Series B Common Stock have been issued or are outstanding on the date of this
Report and there is no plan to issue any in the foreseeable future. Should
Series B Common Stock be issued, however, such Stock could have a substantial,
dilutive effect upon the interests of the holders of outstanding Series A
Common Stock or other securities of the Company, and would reduce the
proportionate ownership of such holders in the Company.
26. Possible Rule 144 Sales. The majority of the outstanding shares
of Common Stock held by present shareholders are "restricted securities"
within the meaning of Rule 144 under the Securities Act of 1933, as amended.
As restricted shares, these shares may be resold only pursuant to an
effective registration statement or under the requirements of Rule 144 or
other applicable exemption from registration under the Act and as required
under applicable state securities laws. Rule 144 provides in essence that a
person who has held restricted securities for a period of one year may, under
certain conditions, sell every three months, in brokerage transactions, a
number of shares that does not exceed the greater of 1.0% of a company's
outstanding common stock or the average weekly trading volume during the four
calendar weeks prior to the sale. There is no limit on the amount of
restricted securities that may be sold by a nonaffiliate after the restricted
securities have been held by the owner for a period of two years. A
sale under Rule 144 or under any other exemption from the Act, if available,
or pursuant to subsequent registrations of shares of Common Stock of present
stockholders, may have a depressive effect upon the
price of the Common Stock in any market that may develop. A total of
32,841,977 shares of Series A Common Stock (49.5% of the total number of
issued and outstanding shares) held by present shareholders of the Company
are available for sale under Rule 144, all of which will be subject to
applicable volume restrictions under the Rule.
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Special Note Regarding Forward-Looking Statements
Some of the statements under "Description of Business," "Risk Factors,"
"Management's Discussion and Analysis or Plan of Operation," and elsewhere in
this Report and in the Company's periodic filings with the Securities
and Exchange Commission constitute forward-looking statements. These
statements involve known and unknown risks, significant uncertainties and
other factors what may cause actual results, levels of activity, performance
or achievements to be materially different from any future results, levels
of activity, performance or achievements expressed or implied by such forward-
looking statements. Such factors include, among other things, those listed
under "Risk Factors" and elsewhere in this Report.
In some cases, you can identify forward-looking statements by
terminology such as "may," "will," "should," "could," "intends," "expects,"
"plans," "anticipates," "believes," "estimates," "predicts," "potential" or
"continue" or the negative of such terms or other comparable terminology.
The forward-looking statements herein are based on current expectations
that involve a number of risks and uncertainties. Such forward-looking
statements are based on assumptions that the Company will obtain or have
access to adequate financing for each successive phase of its growth, that
there will be no material adverse competitive or technological change in
condition of the Company's business, that the Company's President and other
significant employees will remain employed as such by the Company, and that
there will be no material adverse change in the Company's operations,
business or governmental regulation affecting the Company. The foregoing
ssumptions are based on judgments with respect to, among other things,
further economic, competitive and market conditions, and future business
decisions, all of which are difficult or impossible to predict accurately
and many of which are beyond the Company's control.
Although management believes that the expectations reflected in
the forward-looking statements are reasonable, management cannot guarantee
future results, levels of activity, performance or achievements. Moreover,
neither management nor any other persons assumes responsibility for the
accuracy and completeness of such statements.
ITEM 2. DESCRIPTION OF PROPERTY
See "Item 1. Description of Business -- Subsequent Business Plans
and Business Operations"
The Company has been provided office space in the offices of its
President, for which it pays no rent.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any threatened or pending legal
proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's shareholders during
the fiscal year ended December 31, 2001.
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PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Market Information
The Company's Series A Common Stock is traded on the over-the-counter
market on the "Electronic Bulletin Board" operated by the National
Association of Securities Dealers, Inc., under the symbol YAAKA. The
Company's securities began trading during the first quarter of the Company's
fiscal year 1992. The reported high and low bid prices for the Company's
Common Stock for the previous two fiscal years are set forth below. The bid
prices shown reflect quotations between dealers, without adjustment for
markups, markdowns or commissions, and may not represent actual transactions
in the Company's securities.
Series A Common Stock:
Bid Price
Date High Low
March 31, 2000 $.025 $.015
June 30, 2000 $.03 $.02
September 30, 2000 $.025 $.01
December 31, 2000 $.035 $.01
March 31, 2001 $.03 $.01
June 30, 2001 $.05 $.02
September 30, 2001 $.03 $.01
December 31, 2001 $.01 $.01
As of March 14, 2002, the Company had nine market makers for its
securities.
The Company's securities are classified as "designated securities,"
which classification places significant restrictions upon broker-dealers
desiring to make a market in such securities. As a result, it may be
difficult for management to continue to interest market makers in the
Company's securities. These difficulties may continue until such time as
the Company is able to meet the criteria to qualify as a non-designated
security, so that market makers may trade without complying with the
stringent requirements applicable to designated securities.
Holders
At December 28, 2001, the Company had 59 shareholders of record. This
does not include shareholders who hold stock in their accounts at
broker/dealers.
Dividends
The Company has never paid a cash dividend on its common stock and
does not expect to pay a cash dividend in the foreseeable future.
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Unregistered Sales of Equity Securities
During the fiscal year ended December 31, 2001, the Company sold an
aggregate of 1,500,000 shares of Series A Common Stock for total cash
consideration of $10,500 in the series transactions summarized in
the table set forth below.
Name of Number of
Purchaser Date of Purchase Shares Aggregate Consideration
Robert Neece August 13, 2001 500,000 $ 3,500 in cash
Donald J. Smith August 13, 2001 500,000 $ 3,500 in cash
Eric J. Sundsvold August 7, 2001 500,000 $ 3,500 in cash
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
See "Item 1. Description of Business -- Plan of Operations."
ITEM 7. FINANCIAL STATEMENTS
Please see pages F-1 through F-7.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
Not applicable.
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PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The directors and executive officers of the Company, and their
respective ages, positions held in the Company, and duration as such, are
as follows:
Name Age Positions Held and Tenure
Donald J. Smith 55 President and a Director
since December 18, 1999
Robert Pike 72 Vice President and a Director
since December 21, 1999
James K. Sandison 64 Secretary, Treasurer, and
a Director since December
18, 1999
Business Experience
Set forth below is a brief account of the education and business
experience during at least the past five years of each of the Company's
directors and executive officers, indicating the principal occupation and
employment during that period, and the name and principal business of the
organization in which such occupation and employment were carried out.
Biographical Information
DONALD J. SMITH. Mr. Smith has been President and a Director
of the Company since December 18, 1999. He has owned and managed Smith and
Associates, a real estate brokerage firm located in Casper, Wyoming,
since 1981, and he is a Wyoming-licensed real estate broker. Mr. Smith
is an entrepreneur and has served as a Board Member on the boards of
several public companies focused on real estate investments and
development. From approximately May of 1995 until July of 1998, he was
a director of Sigma-7 Products, Inc., a currently inactive public
corporation having its headquarters in Findley, Minnesota.
ROBERT PIKE. Mr. Pike has been Vice President and a Director of
the Company since December 21, 1999. Mr. Pike is a retired banker. For
more than the past five years, he has been an investor. Also for more than
the past five years, Mr. Pike has been President and sole owner of Bob Pike
Associates, Inc., a real estate consulting and inspection firm, based in
Englewood, Colorado, that serves financial institutions.
JAMES K. SANDISON. Mr. Sandison has been Secretary, Treasurer, and
a Director of the Company since December 18, 1999. He has been employed
as manager of The Hilltop Shopping Center, a family owned business in
Casper, Wyoming, since 1973. He has served on numerous boards and was
elected to public office serving as Casper's Mayor and as a City Council
Member. Mr. Sandison also served as Chairman of the Natrona County
Commissioners from 1991 to 1993. He is a Director of Hilltop National
Bank. Mr. Sandison earned a Bachelor of Science in Business
Administration Degree from the University of Wyoming in 1963.
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ITEM 10. EXECUTIVE COMPENSATION
Cash Compensation
During the fiscal year ended December 31, 2001, no executive officer
of the Company received cash compensation other than reimbursement of
expenses incurred on behalf of the Company.
Compensation Pursuant to Plans
None.
Other Compensation
None.
Compensation of Directors
None.
Termination of Employment and Change of Control Arrangements
None.
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ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of December 28, 2001, the persons listed in the table set forth below
were known by the Company to own or control beneficially more than five
percent of its outstanding common stock, par value $0.0001 per share, its
only class of outstanding securities. The table also sets forth the total
number of shares of these securities owned by the officers and directors of
the Company as a group.
Name and Address of Number of Shares Percentage
Beneficial Owner Owned Beneficially of Class
Donald J. Smith 31,161,977(1) 47.0%
2501 E. Third St.
Casper, WY 82609
Eric J. Sundsvold 6,342,105 9.6%
5121 S. Ironton Way
Englewood, CO 80111
Darrell Benjamin 4,325,000 6.5%
6658 S. Starlight Rd.
Morrison, CO 80465
All officers and directors 32,341,977 48.8%
as a group (three persons)
(1) The figure shown includes 10,000 shares held in the name of Suvo
Corp. Mr. Smith is the owner of Suvo Corp.
Changes in Control
The Company knows of no arrangement or understanding, the operation of
which may at a subsequent date result in a change of control of the Company.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the fiscal year ended December 31, 2001, the Company did not
engage in any related-party transactions other than certain sales of shares.
See "Item 5. Market for the Company's Common Equity and Related Stockholder
Matters -- Unregistered Sales of Equity Securities."
There were no transactions, or series of transactions, for the fiscal
year ended December 31, 2001, nor are there any currently proposed
transactions, or series of the same, to which the Company is a party, in
which the amount involved exceeds $60,000 and in which to the knowledge
of the Company any director, executive officer, nominee, five-percent
shareholder or any member of the immediate family of the foregoing persons
have or will have a direct or indirect material interest.
-13-
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits
Exhibit No. Description Location
3.1 Articles of Incorporation Incorporated by reference
to Exhibit 3.1 to the
Registrant's Registration
Statement on Form S-18,
Registration No. 33-28106,
effective July 21, 1989
3.2 Bylaws Incorporated by reference to
to Exhibit 3.2 to the
Registrant's Registration
Statement on Form S-18,
Registration No. 33-28106,
effective July 21, 1989
3.3 Amendment to Articles of Incorporated by reference
Incorporation to the Company's Annual
Report on Form 10-KSB for
the fiscal year ended
December 31, 1992
4.1 Rights of Stockholders Included in Exhibits 3.1,
3.2, and 3.3, above.
Reports on Form 8-K
No reports on Form 8-K were filed during the fourth quarter of the
Company's fiscal year ended December 31, 2001.
-14-
PART II FINANCIAL INFORMATION
ITEM 7. FINANCIAL STATEMENTS
(a) The audited financial statements of registrant for the
year ended December 31, 2001, follow. The financial statements
reflect all adjustments which are, in the opinion of management,
necessary to a fair statement of the results for the period
presented.
YAAK RIVER RESOURCES, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
Years Ended December 31, 2001 and 2000
To the Board of Directors
Yaak River Resources, Inc.
Casper, Wyoming
We have audited the accompanying balance sheets of Yaak River Resources,
Inc. (A Development Stage Company) as of December 31, 2001 and 2000, and the
related statements of operations, cash flows, and changes in stockholders'
equity for years ended December 31, 2001 and 2000 and for the period June
10, 1988 (inception) to December 31, 2001. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit 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 statements 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 Yaak River Resources,
Inc. at December 31, 2001 and 2000, and the results of its operations and
its cash flows for the years ended December 31, 2001 and 2000 and for the
period June 10, 1988 (inception) to December 31, 2001 in conformity with
accounting principles generally accepted in the United States.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As described in Note 1 to the
financial statements, the Company is in the development stage, conditions
exist which raise substantial doubt about the Company's ability to continue
as a going concern unless it is able to generate sufficient cash flows to
meet its obligations and sustain its operations. Management's plans in
regard to these matters are described in Note 6. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
/s/Michael Johnson & Co. LLC
Denver, Colorado
March 4, 2002
F-1
Yaak River Resources, Inc.
(A Development Stage Company)
BALANCE SHEETS
December 31,
2001 2000
------------ ------------
ASSETS
Current Assets:
Cash $ 3,749 $ 8,270
Investment - Properties 35,743 35,743
--------- ---------
Total Current Assets 39,492 44,013
--------- ---------
Other Assets
Organizational Costs - Net of Amortization - -
--------- ---------
Total Other Assets - -
--------- ---------
TOTAL ASSETS $ 39,492 44,013
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 1,329 $ -
Shareholder Loans - -
-------- --------
Total Current Liabilities 1,329 -
STOCKHOLDERS' EQUITY
Preferred Stock, par value $.0001 per share,
50,000,000 shares authorized, issued and
outstanding - none - -
Series A Common Stock, par value $.0001 per share;
250,000,000 shares, Issued and outstanding -
66,308,857 and 64,808,857 shares in 2001
and 2000, respectively 6,630 6,480
Series B Common Stock, par value $.0001 per share;
250,000,000 shares authorized, issued
and outstanding, None - -
Capital paid in excess of par value 371,199 360,849
Deficit accumulated
during the development stage (339,666) (323,316)
---------- --------
TOTAL STOCKHOLDERS' EQUITY 38,163 44,013
--------- --------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 39,492 $ 44,013
========= ========
The accompanying notes are an integral part of these financial statements.
F-2
Yaak River Resources, Inc.
(A Development Stage Company)
Statements of Operations
Year Ended June 10, 1988
December 31, (Inception)
--------------------------- to December
2001 2000 31, 2001
------------ ------------ ------------
Revenue $ - $ - $ -
Expenses:
Amortization - - 1,500
Bank Charge 16 10 561
Legal & Accounting 15,307 16,203 97,414
Director Fees - - 800
Office Expense - 147 7,990
Stock Fees & Other Costs 60 252 10,384
Administration/Consulting 967 8,118 127,075
Mining Assessments & Fees - - 75,479
Bad Debt - - 6,250
Rent/Telephone - - 12,213
-------- -------- ---------
Total Expenses 16,350 24,730 339,666
Net Loss Accumulated During
The Development Stage $ (16,350) $ (24,730) $ (339,666)
======== ======== =========
Net Loss per common share
is less than $.002 $ * $ *
========== ==========
Weighted average number of
common shares outstanding 65,183,857 61,737,419
========== ==========
The accompanying notes are an integral part of these financial statements.
F-3
Yaak River Resources, Inc.
(A Development Stage Company)
Statements of Stockholders' Equity
Deficit
Capital Paid Accum. During
Common In Excess of the Development
# of Shares Stock Par Value Stage Totals
----------- ------ ------------ --------------- ------
June 10, 1988
(Inception) - $ - $ - $ - -
Issuance of common
Stock: January 6,
1989 (for services) 10,000,000 1,000 500 - 1,500
January 6, 1989)
(for cash) 5,000,000 500 - - 500
November 27, 1989
(Public offering) 2,666,000 266 12,353 - 12,619
Net Loss - - - (3,765) (3,765)
---------- ----- ------ ------- ------
Balance - December
31, 1989 17,666,000 1,766 12,853 (3,765) 10,854
Net Loss - - - (10,129) (10,129)
---------- ----- ------ ------- ------
Balance - December
31, 1990 17,666,000 1,766 12,853 (13,894) 725
Net Loss - - - (300) (300)
---------- ----- ------ ------- ------
Balance - December
31, 1991 17,666,000 1,766 12,853 (14,194) 425
Issuance of common
Stock: January 10,
1992 (for assets
YRML) 30,000,000 3,000 134,910 - 137,910
Net Loss for the year
Ended December 31,
1992 - - - (47,589) (47,589)
---------- ----- ------ ------- ------
Balance - December
31, 1992 47,666,000 4,766 12,853 (61,783) 90,746
Issuance of common
Stock:
June 30, 1993
(for cash) 6,000,000 600 149,400 - 150,000
June 30, 1993
(for services) 3,000,000 300 - - 300
Net Loss - - - (54,951) (54,951)
---------- ----- ------ ------- ------
Balance - December
31, 1993 56,666,000 5,666 297,163 (116,734) 186,095
Net Loss - - - (26,293) (26,293)
---------- ----- ------ ------- ------
Balance - December
31, 1994 56,666,000 5,666 297,163 (143,027) 159,802
Net Loss - - - (17,764) (17,764)
---------- ----- ------ ------- ------
Balance - December
31, 1995 56,666,000 5,666 297,153 (160,791) 142,038
Net Loss - - 7,500 (19,842) (12,342)
---------- ----- ------ ------- ------
Balance - December
31, 1996 56,666,000 5,666 304,663 (180,633) 129,696
Net Loss - - - (24,037) (24,037)
---------- ----- ------ ------- ------
Balance - December
31, 1997 56,666,000 5,666 304,663 (204,670) 105,659
Net Loss - - - (78,712) (78,712)
---------- ----- ------ ------- ------
Balance - December
31, 1998 56,666,000 5,666 304,663 (283,382) 26,947
Net Loss - - - (15,204) (15,204)
---------- ----- ------ ------- ------
Balance - December
31, 1999 56,666,000 5,666 304,663 (298,586) 11,743
Issuance of stock
for cash - 3,000,000 300 20,700 - 21,000
Issuance of stock
for cash - 1,000,000 100 6,900 - 6,900
Issuance of stock
for services 1,000,000 100 6,900 - 6,900
Issuance of stock
for debt - 3,142,857 314 21,686 - 22,000
Net Loss for year - - - (24,730) (24,730)
---------- ----- ------ ------- ------
Balance - December
31, 2000 64,808,857 6,480 360,849 (323,316) 44,013
Issuance of stock
for cash - 1,500,000 150 10,350 - 10,500
Net Loss for year - - - (16,350) (16,350)
---------- ----- ------ ------- ------
Balance - December
31, 2001 66,308,857 $6,630 $371,199 $(339,666) $38,163
========== ====== ======== ======== ======
The accompanying notes are an integral part of these financial statements.
F-4
Yaak River Resources, Inc.
(A Development Stage Company)
Statements of Cash Flows
Year Ended June 10, 1988
December 31, (Inception) to
------------------------- December 31,
2001 2000 2001
------------ ---------- -------------
Cash Flows From
Operating Activities:
Net Loss Accumulated During
the Development Stage $ (16,350) $ (24,730) $ (339,666)
Adjustments to reconcile
net loss to net cash used
in operating activities
Amortization and Depreciation - - 1,500
Organization Costs - - (1,500)
Stock issued for services - 7,000 8,800
(Decrease) Increase in
Accounts Payable 1,329 (2,000) 1,329
------- -------- -------
Net cash flows used in
operating activities (15,021) (19,730) (329,537)
Cash Flows From
Investing Activities:
Exchange of properties - net - - 147,167
Investment Purchase - - (305,410)
------- -------- ---------
Net Cash Flow Used In
Investing Activities - - (158,243)
Cash Flows From
Financing Activities:
Loan from LP Investors - - -
Proceeds from Long-Term Debt - - 189,500
Payment of Long-Term Debt - - (45,000)
Proceeds from Sale of Stock 10,500 28,000 347,029
--------- -------- ---------
Net Cash Flows Provided by
Financing Activities 10,500 28,000 491,529
--------- -------- ---------
Net Increase (Decrease)
in Cash (4,521) 8,270 3,749
Cash at beginning of period 8,270 - -
-------------- ------------- -------------
Cash at end of period $ 3,749 $ 8,270 $ 3,749
=========== ============ =============
Supplemental Disclosure of
Cash Flow Information:
Cash paid during the period
for interest $ - $ - $ -
========== ========== ===========
Cash paid during the period
for income taxes $ - $ - $ -
========== ========== ===========
Noncash Investing and financing activities:
In 1999, the Company exchanged properties with a book value of $182,910 to a
related party in payment of liabilities of $147,167 and land with book value
of $35,743.
In 2000, the company issued 3,124,857 shares of common stock in payment of
notes payable of $22,000.
The accompanying notes are an integral part of these financial statements.
F-5
YAAK RIVER RESOURCES, INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2001
Note 1 - Summary of Significant Accounting Policies:
The Company:
On June 10, 1988, Yaak River Resources, Inc. (the Company) was incorporated
under the laws of Colorado under the name of Andraplex Corporation. The name
was changed at the annual shareholder's meeting on January 10, 1992. The
Company's primary purpose is to engage in selected acquisitions and
development of mineral and mining properties.
The Company's fiscal year end is December 31.
Development Stage Company
The Company has not earned significant revenue from planned principal
operations. Accordingly, the Company's activities have been accounted for
as those of a "Development Stage Enterprise" as set forth in Financial
Accounting Standards Board Statement No. 7 ("SFAS 7"). Among the disclosures
required by SFAS 7 are that the Company's financial statements be identified
as those of a development stage company, and that the statements of
operation, stockholders' equity (deficit) and cash flows disclose activity
since the date of the Company's inception.
Basis of Accounting:
The accompanying financial statements have been prepared on the accrual basis
of accounting in accordance with accounting principles generally accepted in
the United States.
Cash and Cash Equivalents:
For purposes of the statement of cash flows, the Corporation considers all
cash and other highly liquid investments with initial maturities of three
months or less to be cash equivalents.
Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
Income Taxes
The Company accounts for income taxes under SFAS No. 109, which requires
the asset and liability approach to accounting for income taxes. Under this
method, deferred tax assets and liabilities are measured based on differences
between financial reporting and tax bases of assets and liabilities measured
using enacted tax rates and laws that are expected to be in effect when
differences are expected to reverse.
F-6
YAAK RIVER RESOURCES, INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2001
Note 1 - Summary of Significant Accounting Policies: (Continued)
Net (Loss) Per Common Share:
The net (loss) per common share of the Series A Common Stock is computed
based on the weighted average number of shares outstanding.
Other Comprehensive Income
The Company has no material components of other comprehensive income (loss)
and accordingly, net loss is equal to comprehensive loss in all periods.
Note 2 - Purchase of Properties:
On January 10, 1992, at the Annual Meeting of Shareholders, the shareholders
voted unanimously to purchase certain mineral and mining properties (the
Properties) located in the State of Montana, including leases, drawings,
engineering studies and other tangible and intangible assets associated with
the Properties. The seller of the Properties was Yaak River Mines, Ltd.
They received 30,000,000 shares of Series A Common Stock. The issuance of
the 30,000,000 shares of Series A Common Stock was exempt from registration
under the exemption provided in Section 4(2) of the Securities Act of 1933,
as amended.
The Company is the beneficiary of 16,000,000 of the above shares which are
being held in the Con Tolman Memorial Trust C. 8,000,000 additional shares
of the Company were placed in the trust as part of the original purchase of
the Company.
On November 20, 1999, the Company voted to close the Con Tolman Memorial
Trust and exchange of 23,168,000 shares for 92 building lots in Victor,
Colorado. The remaining 832,000 shares were transferred to Yaak River
Resources, Nevada in lieu of payment of shareholder loans.
Note 3 - Capital Stock Transactions
Initial Public Offering:
In the Company's initial public offering, which was closed on November 27,
1989, the Company sold 2,580,000 units (the Units). 86,000 additional shares
were issued to the underwriters. Each Unit consisted of one (1) share of
Series A Common Stock, one (1) A Warrant exercisable at $.05, one (1) B
Warrant exercisable at $.10. Costs, consisting of $9,444 and 86,000 shares
of Series A Common Stock, incurred to complete the registration were offset
against the gross proceeds.
Other Transactions
In 2000, the Company issued 4,000,000 shares for $28,000 in cash, 1,000,000
shares for services estimated at $7,000, and 3,142,857 for cancellation of
debt in the amount of $22,000.
In 2001, the Company issued 1,500,000 shares for $10,500 in cash.
F-7
YAAK RIVER RESOURCES, INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2001
Note 4 - Yaak River Resources Timber Division, Limited Partnership:
On August 14, 1992, the Company formed a limited partnership, Yaak River
Resources Timber Division L.P. (the Partnership), a Colorado limited
partnership, with subscriptions for 40 Units at $5,000 per Unit for an
aggregate price of $200,000. Each Unit contains 1/40th interest in the
Partnership and 150,000 shares of Series A Common Stock of the Company.
The Company is the general Partner of the Partnership. As a part of the
formation of the Partnership, the Company agreed to reserve 6,000,000 shares
of its Series A Common Stock for the Partnership. Said 6,000,000 shares of
Series A Common Stock represents the shares offered in the Units issued by
the Partnership. The Partnership was formed for the purpose of developing
certain available natural resources on properties under the management of
the Company.
On June 30, 1993, the Company sold Six Million (6,000,000) shares of its
$0.0001 par value Series Common Stock for the issuance to the purchasers of
the Limited Partnership interests in the Yaak River Resources, Timber
Division L.P., for $150,000.
On November 20, 1999, the Company voted to terminate the Partnership and
asset interests be distributed prorata.
Note 5 - Income Taxes
There has been no provision for U.S. federal, state, or foreign income
taxes for any period because the Company has incurred losses in all periods
and for all jurisdictions.
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes.
Significant components of deferred tax assets are as follows:
Deferred tax assets
Net operating loss carryforwards $339,666
Valuation allowance for deferred tax assets (339,666)
Net deferred tax assets $ -
Realization of deferred tax assets is dependent upon future earnings,
if any, the timing and amount of which are uncertain. Accordingly, the net
deferred tax assets have been fully offset by a valuation allowance. As of
December 31, 2001, the Company had net operating loss carryforwards of
approximately $339,666 for federal and state income tax purposes. These
carryforwards, if not utilized to offset taxable income begin to expire in
2002. Utilization of the net operating loss may be subject to substantial
annual limitation due to the ownership change limitations provided by the
Internal Revenue Code and similar state provisions. The annual limitation
could result in the expiration of the net operating loss before utilization.
F-8
YAAK RIVER RESOURCES, INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2001
Note 6 - Going Concern:
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplates continuation of
the Company as a going concern. The Company's operations generated no income
during the current year and the Company's deficit is $339,666.
The future success of the Company is likely dependent on its ability to
attain additional capital to develop its proposed products and ultimately,
upon its ability to attain future profitable operations. There can be no
assurance that the Company will be successful in obtaining such financing, or
that it will attain positive cash flow from operations.
F-9
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 by the undersigned, thereunto duly authorized.
Date: March 28, 2002 YAAK RIVER RESOURCES, INC.
By: /s/ Donald J. Smith
Donald J. Smith, President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following person on behalf of the
Registrant and in the capacities and on the dates indicated.
Name Title Date
/s/ Donald J. Smith President and a Director March 28, 2002
Donald J. Smith (Principal Executive Officer)
/s/ James K. Sandison Secretary, Treasurer, March 28, 2002
and a Director
James K. Sandison (Principal Financial Officer and
Principal Accounting Officer)