UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended November 30, 1997 [ ] 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: 0-9015 YELLOW GOLD OF CRIPPLE CREEK, INC. (Exact name of Registrant as specified in charter) Colorado 84-0768695 State or other jurisdiction of I.R.S. Employer I.D. No. incorporation or organization 57 West 200 South, Suite 310, Salt Lake City, Utah 84101 (Address of principal executive offices) (Zip Code) Issuer's telephone number, including area code: (801) 359-9309 Indicate by check whether the Issuer (1) has 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 fling requirements for the past 90 days. (1) Yes [X ] No [ ] (2) Yes [X] No [ ] Indicate the number of shares outstanding of each of the Issuer's classes of common equity as of the latest practicable date: At December 18, 1997 there were 490,000 shares of the Registrant's Common Stock outstanding. PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS The financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles nave been condensed or omitted. However, in the opinion of management, all adjustments (which include only normal recurring accruals) necessary to present fairly the financial position and results of operations for the periods presented have been made. These financial statements should be read in conjunction with the accompanying notes, and with the historical financial information of the Company. Yellow Gold of Cripple Creek, Inc. (A Development Stage Company) Balance Sheets ASSETS November 30, May 31, 1997 1997 (unaudited) (audited) Total Assets $ - $ - STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $ 11,000 $ 6,679 Accounts payable - Related party 9,027 - 20,027 6,679 Stockholders' Equity Common stock $.001 par value, 50,000,000 shares authorized, 490,000 shares issued and outstanding 490 490 Capital in excess of par 505,664 505,664 Retained (deficit) accumulated since the development stage (526,181) (512,833) Total (20,027) (6,679) Total Liabilities and Stockholders' Equity $ - $ - YELLOW GOLD OF CRIPPLE CREEK, INC. (A Development Stage Company) Statements of Operations (Unaudited) For the Period During the Development Stage from For the Three Months For the Six Months August 1953 Ended November 30, Ended November 30, Through November 30, 1997 1996 1997 1996 1997 Revenues: Sale of minerals and tailings $ - $ - $ - $ - $ 92,556 Expenses: Mine development costs - - - - 134,730 Salaries and related expenses - - - - 559,009 Professional services 12,339 - 13,348 - 146,161 Other general and administrative - - - - 180,065 Depreciation - - - - 158,699 Net Income from Operations $(12,339) $ - $(13,348) $ - $ (1,086,108) Other income (expenses) Interest income - - - - 59,438 Interest expense - - - - (299,859) Gain (loss) on sale of assets - - - - 237,573 Gain on relief of indebtedness 732,885 Loss on abandonment of subsidiaries (181,900) Other - - - - 11,790 Net (loss) before income taxes (12,339) - (13,348) - (526,181) Taxes - - - - - Net income (loss) $(12,339) $ - $(13,348) $ - $ (526,181) Net income (loss) per share $ (.02) $ - $ (.02) $ - $ (1.27) Average weighted shares outstanding 490,000 490,000 490,000 490,000 411,232 Yellow Gold of Cripple Creek, Inc. (A Development Stage Company) Statements of Stockholders' Equity Deficit Accumulated Additional During the Common Stock Paid-in Development Treasury Shares Amount Capital Stage Stock August 1953: Issued for cash, $.003/share 250,000 $ 250 $ 7,250 $ - $ - Issued for cash, $1.60/share 12,500 12 19,988 - - Net loss, inception to 5/31/78 - - - (8,383) - August 1978: Issued for cash, $4 per share net of issue costs of $68,596 125,000 125 431,279 - - Sale of warrants, 500,000 shares - - 50 - - Net loss FYE 5/31/79 - - - (61,759) - June 1979: Purchase 100,000 shares of treasury stock - - - - (4,000) January 1980, issued for cash at option price of $1.60 per share 2,500 3 3,997 - - March 1980, issued for cash at option price of $1.60 per share 2,500 2 3,998 - - Net loss FYE 5/31/80 - - - (99,561) - Net loss FYE 5/31/81,82,83 (217,641) Capital contributed through the Rittenhouse Project 23,200 Net loss FYE 5/31/84,85,86 (234,569) Net income FYE 5/31/87 89,534 Continued Yellow Gold of Cripple Creek, Inc. (A Development Stage Company) Statement of Stockholders' Equity (Continued) Deficit Accumulated Additional During the Common Stock Paid-in Development Treasury Shares Amount Capital Stage Stock Net loss FYE 5/31/88 - - - (70,767) - July 1988, stock issued in exchange for note due 100,000 100 19,900 - - Net loss FYE 5/31/89 - - - (61,242) - Net loss FYE 5/31/90 - - - (56,726) - Net loss FYE 5/31/91 - - - (65,708) - Net loss FYE 5/31/92 - - - (55,621) - Net loss FYE 5/31/93 - - - (52,962) - Net loss FYE 5/31/94 - - - (69,581) - Net income FYE 5/31/95 458,832 Net loss FYE 5/31/96 - - - - - Cancellation of treasury stock (2,500) (2) (3,998) - 4,000 Net loss FYE 5/31/97 - - - (6,679) - Balance 5/31/97 490,000 490 505,664 (512,833) $ - Net loss for the Period ended November 30, 1997 - - - (13,348) - Balance 11/30/97 490,000 $ 490 $ 505,664 $ (526,181) $ - Yellow Gold of Cripple Creek, Inc. (A Development Stage Company) Statements of Cash Flows For the Period During the Development Stage from August For the Six months ended 1953 Through November 30, November 30, 1997 1996 1997 Cash Flow from Operating Activities: Net (loss) income $ (13,348) $ - $ (526,181) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 158,699 Gain/loss on sale of assets/subsidiaries - - (450,659) Increase (decrease) in accounts payable and accrued expenses 13,348 - 39,596 Net cash used by operating activities - - (778,545) Cash Flow from Investing Activities: Proceeds from sale of equipment - - 44,838 Capital expenditures - - (196,037) Acquisition of mineral properties - - (71,887) Investment in subsidiaries - - (181,900) Net Cash (Used) Provided by Investing Activities - - (404,986) Cash Flow from Financing Activities: Net borrowing from stockholder/director and others - - 677,377 Net proceeds, sales of common stock - - 510,154 Purchase of treasury stock - - (4,000) Net Cash (Used)/Provided by Financing Activities - - 1,183,531 Net Cash Provided (Used) - - - Cash at Beginning of the Year - - - Net Cash at the End of the Year $ - $ - $ - Yellow Gold of Cripple Creek, Inc. (A Development Stage Company) Notes to Financial Statements November 30, 1997 NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES a. Organization The Company was incorporated under the laws of the State of Colorado on August 24, 1936 . The Company was involved in various mining activities over the years, none of which proved successful. During the year 1953, the Company discontinued all operations and has had no significant revenues from any activity since that time and is classified as a development stage company per SFAS #7. b. Income Taxes The Company adopted Statement of Financial Accounting Standards No. 109 "Accounting for Income Taxes" in the fiscal year ended May 31, 1995 and has applied the provisions of the statement on a retroactive basis to the previous fiscal year which resulted in no significant adjustment. Statement on Financial Accounting Standards No. 109 "Accounting for Income Taxes" requires an asset and liability approach for financial accounting and reporting for income tax purposes. This statement recognizes (a) the amount of taxes payable or refundable for the current year and (b) deferred tax liabilities and assets for future tax consequences of events that have been recognized in the financial statements or tax returns. Deferred income taxes result from temporary differences in the recognition of accounting transactions for tax and financial reporting purposes. There were no temporary differences at May 31, 1997 and earlier years; accordingly, no deferred tax liabilities have been recognized for all years. The Company has cumulative net operating loss carryforwards of approximately $148,000 at May 31, 1997 and 1996 and 1995 and $607,000 at May 31, 1994. No effect has been shown in the financial statements for the net operating loss carryforwards as the likelihood of future tax benefit from such net operating loss carryforwards is not presently determinable. Accordingly, the potential tax benefits of the net operating loss carryforwards, estimated based upon current tax rates of $0 at May 31, 1996 and 1997 and $50,000 at May 31, 1995 have been offset by valuation reserves of the same amount. The net change in deferred tax asset and offsetting valuation reserve amounted to $0 for 1996 and 1997 and $(156,000) for 1995. The Company has available $148,000 in federal income tax carryforwards that will begin to expire in the year 2004. c. Loss Per Share The computation of loss per share of common stock is based on the weighted average number of shares outstanding during the period less shares held in treasury. d. Cash and Cash Equivalent For the purposes of the statement of cash flows, the Company considers all highly liquid debt instruments with maturity of three months or less to be cash equivalents. Yellow Gold of Cripple Creek, Inc. (A Development Stage Company) Notes to Financial Statements November 30, 1997 NOTE 2 - GOING CONCERN The Company's financial statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company does not have significant cash or other material assets, nor does it have an established source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern. It is the intent of the Company to seek a merger with an existing, operating company. NOTE 3 - SUPPLEMENTAL CASH FLOW INFORMATION Cash paid for: From August 1953 to November 30, 1997 1996 1997 Interest $ - $ - $ 146,325 Taxes - - - NOTE 4 - SHAREHOLDERS' ACTIONS On October 6, 1997, by vote of the shareholders of the company, the articles of incorporation were amended to change the capital structure of the company to 50,000,000 shares authorized and $.001 par value from 20,000,000 shares authorized and $.0025 par value. The shareholders also voted to effect a 1 for 40 reverse split on the common stock of the company. These changes have been made retroactive to August 1953 in these financial statements. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview Since discontinuing regular business activities in 1993, the Company has had no operations. The Company was organized for the purpose of engaging in mining activities; however, the Company does not have any cash or other material assets, nor does it have an established source of revenues sufficient to cover operating costs and to allow it to continue as a going concern. The Company intends to take advantage of any reasonable business proposal presented which management believes will provide the Company and its stockholders with a viable business opportunity. The board of directors will make the final approval in determining whether to complete any acquisition, and, unless required by applicable law, the articles of incorporation, or the bylaws, or by contract, stockholders' approval will not be sought. The investigation of specific business opportunities and the negotiation, drafting, and execution of relevant agreements, disclosure documents, and other instruments will require substantial management time and attention and will require the Company to incur costs for payment of accountants, attorneys, and others. If a decision is made not to participate in or complete the acquisition of a specific business opportunity, the costs incurred in a related investigation will not be recoverable. Further, even if an agreement is reached for the participation in a specific business opportunity by way of investment or otherwise, the failure to consummate the particular transaction may result in a the loss to the Company of all related costs incurred. Currently, management is not able to determine the time or resources that will be necessary to locate and acquire or merge with a business prospect. There is no assurance that the Company will be able to acquire an interest in any such prospects, products, or opportunities that may exist or that any activity of the Company, regardless of the completion of any transaction, will be profitable. If and when the Company locates a business opportunity, management of the Company will give consideration to the dollar amount of that entity's profitable operations and the adequacy of its working capital in determining the terms and conditions under which the Company would consummate such an acquisition. Potential business opportunities, no matter which form they may take, will most likely result in substantial dilution for the Company's shareholders due to the possible reverse split of the outstanding shares of common stock, or the increase in the number of authorized shares of common stock, and the issuance of stock to acquire such an opportunity. On October 6, 1997, by vote of the shareholders of the company, the articles of incorporation were amended to change the capital structure of the company to 50,000,000 shares authorized and $.001 par value from 20,000,000 shares authorized and $.0025 par value. The shareholders also voted to effect a 1 for 40 reverse split on the common stock of the company. Liquidity and Capital Resources As of November 30, 1997, the Company had no assets and $20,027 in accounts payable. For the period during the development stage of the Company, from August 1953 through November 30, 1997, the Company had an accumulated loss of $526,181. Since discontinuing day to day business activities in 1993, the Company has not generated revenue and it is unlikely that any revenue will be generated until the Company locates a business opportunity with which to acquire or merge. Management of the Company will be ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) investigating various business opportunities. These efforts may cost the Company not only out-of-pocket expenses for its management, but also expenses associated with legal and accounting costs. To date such expenses ($9,027) have been advanced by the president of the Company, but there is no arrangement or assurance that the president will continue to advance such costs on behalf of the Company. The company also has $11,000 in outstanding accounts payable for professional services. There can also be no guarantees that the Company will receive any benefits from the efforts of management to locate such business opportunities. The Company has had no employees since discontinuing its operations and does not intend to employ anyone in the future, unless its present business operations were to change. The president of the Company is providing the Company will a location for its offices on a "rent free" basis. The Company is not paying salaries or other forms of compensation to any officers or the sole director of the Company for their time and effort. Unless otherwise agreed to by the Company, the Company does intend to reimburse its officers and director for out-of-pocket expenses. Results of Operations The Company had no operations during the six months ended November 30, 1997, and has not had any significant operations since discontinuing day to day operations in 1993. PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None ITEM 2. CHANGES IN SECURITIES None ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On October 6, 1997, the Company held a special meeting of shareholders to consider and vote upon the following proposals: 1. To reverse split the outstanding shares of common stock of the Company at the rate of one share for each forty shares outstanding. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (continued) 2. To amend Article IV of the Articles of Incorporation of the Company to increase the authorized number of shares of common stock of the Company from 20,000,000 to 50,000,000 and to change the par value of the common stock of the Company from $0.0025 per share to $0.001 per share. Each of the proposals was approved by the shareholders. Of the total shares outstanding (19,600,000), 10,501,000 voted for the proposals, and no shares voted against the proposals or abstained from voting. In addition, there were no broker non-votes. The reverse split was effective at the close of business on October 6, 1997. Management has prepared and filed articles of amendment to effect the change in capitalization approved by the shareholders. ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits. None (b) Reports on Form 8-K: None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Yellow Gold of Cripple Creek, Inc. Date: December 19, 1997 By /s/ Howard M. Oveson Howard M. Oveson, President and Principal Financial Officer