SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 2, 2001 (May 25, 2001)
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RUBY MINING COMPANY
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Colorado 0-7501 81-0214117
- ----------------------------- ----------------------- -------------------
(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation) Identification No.)
3399 Peachtree Road, NE, Suite 810, Atlanta, Georgia 30326
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(Address of principal executive offices)
404-231-8500
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(Registrant's telephone number, including area code)
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(Former name or former address, if changed since last report)
1
ITEM 5. OTHER EVENTS.
This Form 8-K/A is filed as an amendment to the form 8-K which was filed on
June 11, 2001 announcing the May 25, 2001, closing of the Plan and Agreement of
Share Exchange (the "Share Exchange Agreement") by and among Registrant,
Admiralty Corporation ("Admiralty"), and U.S. Energy Corp.
DESCRIPTION OF THE COMPANY.
Pursuant to the Share Exchange Agreement, the shareholders of Admiralty
became the principal shareholders of Registrant. Registrant now conducts its
business through, and its business is now that of, Admiralty, a wholly-owned
subsidiary of Registrant.
Admiralty was formed in 1988 for the purpose of engaging in the business of
exploration and salvage of historic shipwrecks, primarily those from the 16th
and 17th centuries.
The company has focused its efforts to date in three main areas:
1. Developing a new, proprietary technology to detect gold, silver and
other precious metals in a salt water environment, through layers of
sand and coral;
2. Conducting historical research on wrecks; and
3. Analyzing significant issues related to the legalities associated with
search and recovery operations and negotiating agreements with
countries for permits to search in their territorial waters.
Admiralty has created a detection technology, called ATLISTM, designed to
locate and differentiate among precious metals in a marine environment.
Admiralty has also contracted with Sandia National Laboratories and NASA to
advise Admiralty with respect to remote-sensing technologies. To assist in
enhancing the functionality of its technology, Admiralty has an association with
a university-affiliated scientific expert in the field of remote-sensing.
Admiralty has tested its technology and is commencing to build field units to be
used in operations. Admiralty has filed for domestic patent protection for the
ATLIS(TM) technology and plans to timely file for international patent
protection.
Admiralty holds a permit from the Government of Jamaica to conduct search
and recovery operations on the Pedro Bank in Jamaica's territorial waters. This
area is believed to be one of the richest areas for wrecks of ships from the
Spanish flotillas carrying gold and silver bullion, coins and artifacts from the
Caribbean to the Old World. Furthermore, Admiralty has negotiated the key terms
and conditions of an exploration and excavation permit from Mexico, which
Admiralty believes will be issued upon completion of certain archeological work
now underway. Admiralty has also engaged in preliminary discussions regarding
permits and licenses from other governments.
Because of the extensive ecological damage often done to barrier reefs
during traditional search and salvage operations, the issuance of such permits
is rare. However, Admiralty's ATLISTM technology is designed to substantially
mitigate damage to the reefs by allowing Admiralty to
2
pinpoint the location of precious materials and focus recovery efforts.
Traditional methods often require wide-spread excavation because the metal parts
of the wrecked vessel can be scattered over a large area.
In addition to its efforts to acquire the necessary permits, Admiralty has
identified numerous potential search sites through its research into historical
records which document the existence of wrecks in the target search areas.
Admiralty has also developed strategic alliances with academic experts in
the field of marine archaeology, such as the Center for Maritime & Underwater
Resource Management (CMURM), a non-profit corporation initially established as a
department of Michigan State University. The corporation is currently assisting
Admiralty in the preparation of Admiralty's archaeological recovery plan for
Jamaica and in a preliminary study of wreck sites in Mexican waters.
Admiralty recently further enhanced its marine search capabilities through
the ability to acquire fly-over remote-sensing analysis in permitted areas to
detect anomalies which may indicate the presence of historical shipwrecks. The
use of fly-over surveys could reduce the time required to locate metal-bearing
anomalies in the search area. The ATLISTM units will then be deployed to further
search in detail those anomalies which correlate with Admiralty's historic
research and determine whether recovery is warranted.
Admiralty's mission is to use its proprietary technology to become the
world leader in the location and recovery of treasure-bearing historic
shipwrecks. Its immediate goal is to transform the pursuit of marine treasure
from today's largely unpredictable and frequently environmentally-destructive
operation into a profitable, predictable and environmentally acceptable
business.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. Page No.
--------
(a) Financial Statements of Business Acquired.
Report of Independent Certified Public Accountants' 5
Balance Sheet - December 31, 2000 6
Statements of Operations - Since inception and
for the years ended December 31, 2000 and 1999 7
Statements of Cash Flows - Since inception and
for the years ended December 31, 2000 and 1999 8
Statements of Changes in Stockholders' Deficit -
Since inception and for the years ended
December 31, 2000 and 1999 9
Notes to Financial Statements - December 31, 2000 10
Condensed Balance Sheet - Three Months ended
March 31, 2001 and 2000 17
3
Condensed Statements of Cash Flows - Since Inception and
Three Months Ended March 31, 2001 and 2000 18
Condensed Statements of Operations - Since Inception and
Three Months Ended March 31, 2001 and 2000 19
(b) Pro Forma Financial Information.
Proforma Condensed Consolidated Statement of Operations -
Twelve Months Ended December 31, 2000 21
Proforma Condensed Consolidated Balance Sheet - Three
Months Ended March 31, 2001 22
Proforma Condensed Consolidated Statement of Operations -
Three Months Ended March 31, 2001 24
4
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS'
Admiralty Corporation
Atlanta, Georgia
We have audited the accompanying balance sheet of Admiralty Corporation (A
Development Stage Enterprise) as of December 31, 2000, and the statements of
operations, changes in stockholders' deficit and cash flows for the years ended
December 31, 2000 and 1999, and the inception period from January 1, 1998 to
December 31, 2000. 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 audit. The period from inception to December
31, 1997 was audited by other auditors who expressed an unqualified opinion on
that presentation period.
We conducted our audit in accordance with auditing principles generally accepted
in the United States of America. 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 statement presentation. We believe that our audit provides 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 Admiralty Corporation as of
December 31, 2000, and the results of its operations and its cash flows for the
years ended December 31, 2000 and 1999, and for the inception period from
January 1, 1998 to December 31, 2000, in conformity with accounting principles
generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company will require substantial additional funds to
sustain research and development and commence and continue operating activities
until such time as the Company can generate positive cash flows from operations.
This condition raises substantial doubt about the Company's ability to continue
as a going concern. Management's plans to raise additional funds and begin
operations are also described in Note 1. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/ Cherry, Bekaert & Holland, L.L.P.
Atlanta, Georgia
July 16, 2001
5
ADMIRALTY CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEET
December 31, 2000
Assets
Current Assets
Cash in bank $ 736
Employee expense advances 168,352
Other current assets 9,368
-----------
TOTAL CURRENT ASSETS 178,456
Furniture, fixtures, computer equipment and leasehold
improvements, less accumulated depreciation of $103,008 46,169
Other assets 48,214
-----------
TOTAL ASSETS $ 272,839
===========
Liabilities and Stockholders' Deficit
LIABILITIES
Current liabilities
Accounts payable $ 484,045
Accrued compensation and consulting fees 449,124
TOTAL CURRENT LIABILITIES 933,169
Nonconvertible debentures, net of unamortized discount of $2,383,871 2,616,129
Interest payable 1,255,557
-----------
TOTAL LIABILITIES 4,804,855
Stockholders' Deficit
Common stock; $.01 par value, 50,000,000 shares
authorized; 17,710,315 shares issued
and outstanding at December 31, 2000 177,103
Additional paid-in capital 5,244,447
Treasury stock (at cost) (280,000)
Development stage deficit (9,673,566)
-----------
Total stockholders' deficit (4,532,016)
-----------
Total liabilities and stockholders' deficit $ 272,839
===========
The accompanying notes are an integral part of these financial statements.
6
ADMIRALTY CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS
Since inception and for the years ended December 31, 2000 and 1999
Inception to
2000 2000 1999
------------ ----------- -----------
Operating expenses
Compensation and employee benefits $ 2,412,070 $ 230,500 $ 330,550
Research and development 1,430,423 -- 21,964
General and administrative 2,231,612 261,555 325,236
Depreciation and amortization 104,227 26,857 23,266
Professional fees 1,830,142 159,874 282,095
----------- ----------- -----------
Operating loss 8,008,474 678,786 983,111
Other (income) expenses (484,420) (8,354) (1,959)
Interest expense 2,149,512 630,508 579,225
----------- ----------- -----------
Net loss $ 9,673,566 $ 1,300,940 $ 1,560,377
=========== =========== ===========
Loss per share $ 0.07 $ 0.09
=========== ===========
The accompanying notes are an integral part of these financial statements.
7
ADMIRALTY CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
Since inception and for the years ended December 31, 2000 and 1999
Inception to
2000 2000 1999
------------ ----------- -----------
Operating activities
Net loss $(9,673,566) $(1,300,940) $(1,560,377)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization 103,008 26,856 23,265
Discount Amortization 711,987 262,840 236,433
(Increase) decrease in other assets (92,116) (50,488) (15,101)
(Increase) decrease in employee
expense advances (133,818) (900) --
Increase (decrease) in accounts payable 484,045 42,213 225,262
Increase (decrease)in accrued
compensation and consulting fees 449,124 172,500 229,474
Increase in interest payable 1,255,557 364,806 342,221
----------- ----------- -----------
NET CASH USED IN OPERATING ACTIVITIES (6,895,779) (483,113) (518,823)
----------- ----------- -----------
Investing activities
Advances under notes receivable (67,941) (4,147) (3,894)
Purchases of furniture, fixtures and computer
equipment (149,177) -- (1,655)
----------- ----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (217,118) (4,147) (5,549)
----------- ----------- -----------
Financing activities
Issuance of common stock 5,489,491 452,655 545,800
Purchase of treasury stock (280,000) -- --
Issuance of non-convertible debentures 1,904,142 -- --
----------- ----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 7,113,633 452,655 545,800
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 736 (34,605) 21,428
CASH AND CASH EQUIVALENTS AT THE BEGINNING
OF PERIOD -- 35,341 13,913
----------- ----------- -----------
CASH AND CASH EQUIVALENTS AT THE END OF PERIOD $ 736 $ 736 $ 35,341
=========== =========== ===========
The accompanying notes are an integral part of these financial statements.
8
ADMIRALTY CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
Since Inception and for the years ended
December 31, 2000 and 1999
Common Stock Development Total
------------------------- Paid-in Treasury Stage Stockholders'
Shares Amount Capital Stock Deficit Deficit
---------- ----------- ----------- ----------- ----------- -------------
Balance at April 15, 1988 -- $ -- $ -- $ -- $ -- $ --
Issuance of common stock 17,074,652 170,747 4,320,289 -- -- 4,491,036
Stock repurchased -- -- -- (280,000) -- (280,000)
Net loss -- -- -- -- (6,812,249) (6,812,249)
Stock record adjustment (3,800) (38) 38 -- -- --
Capital adjustment -- -- (67,941) -- -- (67,941)
Balance as of December 31, 1998 17,070,852 170,709 4,252,386 (280,000) (6,812,249) (2,669,154)
Issuance of common stock 310,428 3,104 542,696 -- -- 545,800
Net loss -- -- -- -- (1,560,377) (1,560,377)
Balance as of December 31, 1999 17,381,280 173,813 4,795,082 (280,000) (8,372,626) (3,683,731)
Issuance of common stock 329,035 3,290 449,365 -- -- 452,655
Net loss -- -- -- -- (1,300,940) (1,300,940)
Balance as of December 31, 2000 17,710,315 $ 177,103 $ 5,244,447 $ (280,000) $(9,673,566) $(4,532,016)
========== =========== =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements.
9
ADMIRALTY CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Financial Statements
December 31, 2000
NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
Admiralty Corporation (the "Company") was incorporated in the State of
Georgia in 1988. The Company's primary offices are located in Atlanta,
Georgia. Since inception, the Company has undertaken to fund and
conduct research to develop a remote sensing nonferrous metal detection
device referred to by the Company as ATLIS(TM). Upon completion of
research, development and testing, the Company intends to use the
device to locate, identify, and quantify gold and silver bullion,
coins, and artifacts located on and beneath the ocean floor. The
Company believes that much of these artifacts are located in waters
governed by foreign countries. Accordingly, the Company is developing
relationships with these countries to permit the Company to seek
historical shipwreck sites in these waters.
The Company is a development stage enterprise and is primarily funding
and conducting research to develop ATLIS. As of the Company's current
year end, the Company does not have sufficient funds to complete
development of the ATLIS technology, fund administrative expenses and
conduct initial explorations which may result in revenues. Management
believes that sufficient capital to continue research, development and
operating activities can be obtained through private and public
placements of equity and debt securities. Management recognizes that
additional capital will be needed to continue research, development and
operations and is working with various financial advisors to facilitate
private placements and a public offering of the Company's common stock
in 2001 and beyond. The success of the Company is dependent upon
management's ability to implement this plan. In April 2001, the Company
effected a merger with a public shell company. The merger will be
accounted for as a reverse acquisition with the stockholders' of
Admiralty having a controlling interest in the resulting entity. The
public shell company will continue as the legal entity, with Admiralty
continuing as the accounting entity. The merger has been structured as
a tax-free reorganization.
10
ADMIRALTY CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Financial Statements - continued
December 31, 2000
NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
-CONTINUED
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
METHOD OF ACCOUNTING
The accompanying financial statements have been prepared on the accrual
basis of accounting. Under the accrual method, revenues are recognized
when earned and expenses are recognized when the related goods or
services are received.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual
results may differ from those estimates, and such differences may be
material to the financial statements.
CASH IN BANK
Cash in bank consists of demand deposits and cash equivalents. The
Company considers all highly liquid investments with maturities of
three months or less when purchased to be cash equivalents.
FURNITURE, FIXTURES AND COMPUTER EQUIPMENT
Furniture, fixtures, computer equipment, and telephone equipment are
recorded at cost and depreciated using the straight-line method over
the estimated useful lives of the assets, which range from five to
seven years. Leasehold improvements are amortized over the lessor of
the estimated useful life of the asset or the lease term.
INCOME TAXES
The Company accounts for income taxes using the asset and liability
approach in accordance with Statement of Financial Accounting Standard
No. 109. Under the asset and liability approach deferred tax assets and
liabilities are recognized for the future tax benefit and expense which
is expected to arise from differences between asset and liability
amounts reported for financial statement and tax purposes.
11
ADMIRALTY CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Financial Statements - continued
December 31, 2000
NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES-CONTINUED
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INCOME TAXES - CONTINUED
Tax assets are also recognized for net operating loss and tax credit
carryforwards, however, recognition of such assets is subject to
limitations based on the probability that the carryforwards will be
utilized. Deferred tax assets are reduced by a valuation allowance
when, in the opinion of management, it is more likely than not that
some portion or all of the deferred tax assets will not be realized.
RESEARCH AND DEVELOPMENT
The Company's research and development expenses represent payments and
amounts due to Larsen Laboratory for development of the ATLIS
nonferrous metal detection device. Larsen Laboratory is solely owned by
a stockholder and director of the Company. At December 31, 2000,
amounts payable to Larsen Laboratory for these services were $85,000.
The Company expenses research and development costs, including the cost
of materials used in preoperating prototypes, when incurred.
FINANCIAL INSTRUMENTS
Financial instruments include cash in bank, accounts payable, accrued
compensation and consulting fees, non-convertible debentures and
interest payable. These amounts are recorded at historical cost basis,
which approximates fair value.
NOTE 2 - NONCONVERTIBLE DEBENTURES
In 1996, the Company issued a senior nonconvertible 6% debenture to an
Austrian bank in the amount of $2,000,000 and a substantially identical
junior nonconvertible 6% debenture in the amount of $500,000 to the
financial organization which identified the Austrian Bank as a
potential investor in the Company. In 1997, the Company issued
identical senior and junior debentures. Total net proceeds from the
issuance of the debentures was $1,760,000. The excess of the $5,000,000
aggregate value of the debentures over the $1,760,000 of proceeds
represents a discount on the debenture and fees charged by the parties
for the investment. This discount and the related fees are being
amortized over the life of the debentures. At December 31, 2000 the
unamortized discount and fees were $2,383,871.
12
ADMIRALTY CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Financial Statements - continued
December 31, 2000
NOTE 2 - NONCONVERTIBLE DEBENTURES - CONTINUED
The approximate effective interest rate of the debentures is 12%.
The debentures and interest are due and payable on September 30, 2006
and August 22, 2007, with $2.5 million plus accrued interest due on
each date to the extent payment has not been made by the Company
previously. The lender of the senior subordinated debenture is entitled
to receive 1% of the Company's reported net income, payable quarterly,
at such time net income is reported, for each $100,000 of principal
amount of the debt which is outstanding. In addition, 50% of the
outstanding principal amount is required to be repaid in the event the
Company completes an initial public offering. In the event and to the
extent that prepayments occur as required by the agreements, the
unamortized discount will be recalculated using the interest method and
a pro rata portion of the discount will be expensed at the time of the
prepayment.
NOTE 3 - STOCK OPTIONS AND WARRANTS
The Company may issue stock options to the Company's officers,
directors and key employees to purchase the Company's common stock.
Options are granted to purchase common shares at a price not less than
the fair market value of the stock at the date of grant as established
by the Board of Directors. Options expire not later than 5 years after
the grant date, and have a 3 year vesting term.
The Company has made available 1,048,700 shares available for issuance
of stock options. The Board of Directors of the Company establishes to
whom options should be granted and determines exercise prices, vesting
requirements and the number of shares covered by each option. The
Financial Accounting Standards Board issued Statement of Financial
Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based
Compensation," in October 1995. The Company has adopted SFAS 123 and as
permitted by SFAS 123, has elected to account for the stock options in
accordance with Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees." Based on the Minimum Value method, the
related compensation expense for options issued in 2000 and 1999 was $0
for both periods.
13
ADMIRALTY CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Financial Statements - continued
December 31, 2000
NOTE 3 - STOCK OPTIONS AND WARRANTS - CONTINUED
Presentation of proforma information regarding net income is required
by SFAS No. 123 as if the Company had accounted for the options in
accordance with the expensing provisions of SFAS No. 123. The Company
utilized the Minimum Value method. As the compensation expense of the
options was $ 0 for 2000 and 1999, the proforma net loss and loss per
share for 2000 and 1999 is consistent with the actual reported net loss
and loss per share.
The following table summarizes stock option activity over the past two
years for authorized options issued:
Weighted-
Number of Average
Shares Exercise Price
Options outstanding at January 1, 1999 600,700 $ 1.72
Granted 10,000 2.00
Exercised - -
Canceled or Expired - -
Options outstanding at December 31, 1999 610,700 1.72
Granted 37,500 3.00
Exercised - -
Canceled or Expired - -
Options outstanding at December 31, 2000 648,200 1.80
Options exercisable at December 31, 1999 575,700 1.69
Options exercisable at December 31, 2000 643,200 1.79
14
ADMIRALTY CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Financial Statements - continued
December 31, 2000
NOTE 3 - STOCK OPTIONS AND WARRANTS - CONTINUED
For options outstanding and exercisable at December 31, 2000, the
exercise price ranges and average remaining lives were:
Options Outstanding Options Exercisable
Weighted-
Average
Range of Number Remaining Weighted- Number Weighted-
Exercise outstanding Life in Average Exercisable Average
Prices at 12/31/00 Years Exercise Price at 12/31/00 Exercise Price
$ 0.15 to 0.50 200,000 2.00 $ 0.50 200,000 $ 0.50
$ 2.00 to 3.00 448,200 1.46 $ 2.37 443,200 $ 2.37
648,200 1.62 $ 1.80 643,200 $ 1.79
On February 8, 1996, the Company granted a warrant to purchase 400,000
shares of common stock at a price of $20 per share to an investment
bank in exchange for financial services. The warrants expire on
February 8, 2001. The Company recognized expense of $20,000 at the time
the warrant was issued. The amount represents the fair value of the
warrant as determined with a fair value option pricing model. At
December 31, 2000, the Company also had 343,964 outstanding warrants to
purchase common stock outstanding at prices ranging $1.50 per share to
$7.00 per share. The warrants were issued in connection with the
Company obtaining short term notes payable and equity investments.
NOTE 4 - LOSS PER SHARE
The computation of basic and diluted earnings (loss) per share is based
on the weighted average number of shares outstanding during the period
presented, plus, when their effect is dilutive, additional shares
assuming the exercise of certain vested stock options and warrants, in
accordance with Statement of Financial Accounting Standards No. 128,
"Earnings Per Share." Diluted per share amounts have not been presented
in the accompanying statements of operations as their effect is
anti-dilutive. The Company's loss from operations as presented on the
Statement of Operations was used in the loss per share calculation. The
weighted average number of shares outstanding for 2000 was 17,496,097,
and for 1999 was 17,126,066.
15
ADMIRALTY CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Financial Statements - continued
December 31, 2000
NOTE 5 - INCOME TAXES
The Company has available unused operating loss carryforwards of
approximately $9.5 million resulting in a deferred tax-benefit of
approximately $1.9 million which may be applied against future taxable
income and which expire in various years from 2003 to 2015. 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 amount
of the recognized benefit for the loss carryforwards and, therefore, no
deferred tax asset has been recognized for the loss carryforwards.
NOTE 6 - LEASES
In July 1997, the Company modified and extended the existing operating
lease for its current office facility through June 30, 2002. Future
minimum lease payment obligations as of December 31, 2000 are as
follows:
2001 $ 97,426
2002 48,713
-------------
Total $ 146,139
=============
16
ADMIRALTY CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED BALANCE SHEET
March 31, 2001 and 2000
(Unaudited)
Assets
March 31,2001 March 31, 2000
Current Assets
Cash in bank $ 13,272 $ 3,838
Employee expense advances 180,952 140,863
Other current assets 9,368 9,368
----------- -----------
TOTAL CURRENT ASSETS 203,592 154,069
Furniture, fixtures, computer equipment and leasehold
improvements, less accumulated depreciation and
amortization of $108,285 and $87,306 at March, 31 2001
and March 31, 2000, respectively 40,892 61,871
Other assets 23,214 23,214
----------- -----------
TOTAL ASSETS $ 267,698 $ 239,154
=========== ===========
Liabilities and Stockholders' Deficit
Liabilities
Current liabilities
Accounts payable $ 543,835 $ 433,839
Accrued compensation and consulting fees 485,125 343,125
----------- -----------
TOTAL CURRENT LIABILITIES 1,028,960 776,964
----------- -----------
Nonconvertible debentures, net of unamortized discount
at March 31, 2001 and March 31, 2000 of $2,313,697
and 2,581,001, respectively 2,686,303 2,418,999
Interest payable 1,349,436 981,584
----------- -----------
TOTAL LIABILITIES 5,064,699 4,177,547
----------- -----------
Stockholders' deficit
Common stock; $.01 par value, 50,000,000 shares authorized; 17,800,675 and
17,460,782 shares issued and outstanding at March 31, 2001 and
March 31,2000, respectively 178,006 174,607
Additional paid-in capital 5,287,571 4,922,330
Treasury stock (at cost) (280,000) (280,000)
Development stage deficit (9,982,578) (8,755,330)
----------- -----------
TOTAL STOCKHOLDERS' DEFICIT (4,797,001) (3,938,393)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 267,698 $ 239,154
=========== ===========
17
ADMIRALTY CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED STATEMENTS OF CASH FLOWS Since
Inception and for the three months ended March 31, 2001 and 2000
(Unaudited)
Inception to March 31, March 31,
March 31, 2001 2001 2000
-------------- ------------ ------------
Operating activities
Net loss $(9,982,578) $ (309,012) $ (382,703)
Adjustments to reconcile net loss
to net cash used in operating activities
Depreciation and amortization 108,285 5,277 11,155
Discount amortization 782,161 70,174 65,710
(Increase) decrease in other assets (79,716) 12,400 1,998
(Increase) decrease in employee
expense advances (133,818) -- (900)
Increase (decrease) in accounts
payable 543,835 59,791 (7,991)
Increase (decrease) in accrued
compensation and consulting fees 485,125 36,000 66,500
Increase in interest payable 1,349,436 93,879 90,833
----------- ----------- -----------
NET CASH USED IN OPERATION ACTIVITIES (6,927,270) (31,491) (155,398)
----------- ----------- -----------
Investing activities
Advances under notes receivable (69,045) (1,104) (1,037)
Purchases of furniture, fixtures and computer
equipment (149,177) -- --
----------- ----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (218,222) (1,104) (1,037)
----------- ----------- -----------
Financing activities
Issuance of common stock 5,534,622 45,131 124,932
Purchase of treasury stock (280,000) -- --
Issuance of non-convertible debentures 1,904,142 -- --
----------- ----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 7,158,764 45,131 124,932
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 13,272 12,536 (31,503)
CASH AND CASH EQUIVALENTS AT THE BEGINNING
OF PERIOD -- 736 35,341
----------- ----------- -----------
CASH AND CASH EQUIVALENTS AT THE END OF PERIOD $ 13,272 $ 13,272 $ 3,838
=========== =========== ===========
18
ADMIRALTY CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED STATEMENTS OF OPERATIONS Since
Inception and for the three months ended March 31, 2001 and 2000
(Unaudited)
Inception to March 31, March 31,
March 31, 2001 2001 2000
-------------- ------------ ------------
Operating expenses
Compensation and employee benefits $ 2,454,584 $ 42,514 $ 73,169
Research and development 1,429,258 -- --
General and administrative 2,309,643 76,866 86,888
Depreciation and amortization 109,504 5,277 11,155
Professional fees 1,850,370 20,228 55,986
----------- ---------- ----------
Operating loss 8,153,359 144,885 227,198
Other (income) expenses (485,524) (1,104) (1,037)
Interest expense 2,314,743 165,231 156,542
----------- ---------- ----------
Net loss $ 9,982,578 $ 309,012 $ 382,703
=========== =========== ===========
Loss per share $ 0.02 $ 0.02
=========== ===========
19
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated financial statements
give effect to the Ruby Mining Company merger. The Ruby Mining Company merger
was accounted for under the purchase method of accounting in accordance with APB
Opinion No. 16. Under the purchase method of accounting, the purchase price is
allocated to the assets acquired and liabilities assumed based on the estimated
fair values of those assets and liabilities.
The unaudited pro forma condensed consolidated balance sheet as of March 31,
2001 has been prepared to reflect the Ruby Mining Co. merger as if it occurred
on January 1, 2001. The unaudited pro forma condensed consolidated statements of
operations for the three months ended March 31, 2001 and the year ended December
31, 2000, reflect the operations of Ruby Mining Company and Admiralty
Corporation consolidated. In presenting the effects of the merger, as the legal
acquired company (Ruby Mining Company) had minimal tangible assets, a fair value
adjustment under APB No. 16 was not required.
The unaudited pro forma condensed consolidated financial statements are
presented for illustrative purposes only and are not necessarily indicative of
the consolidated condensed financial position or the results of operations in
future periods or the results that actually would have been realized had
Admiralty Corporation and Ruby Mining Company been a combined company during the
specified periods. The unaudited pro forma condensed consolidated financial
statements are qualified in their entirety by reference to, and should be read
in conjunction with, the historical financial statements of Admiralty
Corporation and Ruby Mining Company.
20
RUBY MINING COMPANY AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
Proforma Condensed Consolidated Statement of Operations
For the twelve months ended December 31, 2000
(Unaudited)
Admiralty Ruby Mining Eliminations
Corporation Company and Adjustments Consolidated
------------ ------------ --------------- ------------
Revenues $ -- $ -- $ -- $ --
Compensation and employee
benefits 230,500 -- -- 230,500
Research and development -- -- -- --
General and administrative 261,555 88,905 (a) 325,000 675,460
Depreciation and amortization 26,857 -- -- 5,277
Professional fees 159,874 -- -- 20,228
----------- ----------- ------------- -----------
OPERATING LOSS 678,786 88,905 931,465
Other (income) expense (8,354) 24,202 15,848
Interest expense 630,508 -- 630,508
----------- ----------- -----------
NET LOSS $ 1,300,940 $ 113,107 $ 1,577,821
=========== =========== ===========
LOSS PER SHARE $ 0.07 $ 0.03 $ 0.05
=========== =========== ===========
<FN>
(a) $325,000 represents the exchange fee to be paid U.S. Energy Corp. by Admiralty Corporation.
</FN>
21
RUBY MINING COMPANY AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
Unaudited Proforma Condensed Consolidated Balance Sheet
March 31, 2001
Assets
Admiralty Ruby Mining Adjustment &
Corporation Company Elimination Consolidated
------------ ------------ ------------- --------------
Cash in bank $ 13,272 $ 1,580 $ - $ 14,852
Other current assets 180,952 - - 180,952
Other assets 73,474 45,670 (a) (45,670) 73,474
------------ ----------- --------------
TOTAL ASSETS $ 267,698 $ 47,250 $ 269,278
=========== ============= ==============
Liabilities and Stockholders' Deficit
Current liabilities $ 1,028,960 $ 10,442 (g) $ 325,000 $ 1,364,402
Nonconvertible debt 2,686,303 - - 2,686,303
Interest liability 1,349,436 - - 1,349,436
------------ ----------- --------------
TOTAL LIABILITIES 5,064,699 10,442 5,400,141
Stock 178,006 3,994 (f) (178,006)
(e) (1,684)
(b) 17,710 20,020
Paid in Capital 5,287,571 728,747 (b) (17,710)
(e) 1,684
(a) (45,670)
(c) (33,218)
(d) (662,715)
(f) 178,006
(h) (280,000) 5,156,695
Treasury stock 280,000 (h) (280,000) -
Development stage deficit 9,982,578 662,715 (d) (662,715)
(g) 325,000 10,307,578
Investment allowance - 33,218 (c) (33,218) -
------------ ------------- --------------
TOTAL LIABILITIES
AND STOCKHOLDERS' DEFICIT $ 267,698 $ 47,250 $ 269,278
=========== ============= ==============
22
Adjustments & Elimination Ledger
(A) To write-off the investment held by Ruby Mining Company to the realized
value.
(B) 17,710,315 shares of Ruby Mining stock issued to stockholders of Admiralty
Corporation in the exchange transaction.
(C) To write-off the investment allowance account.
(D) To eliminate the accumulated deficit of the accounting acquiree.
(E) Cancellation of 1,684,027 shares of Ruby Mining stock held by U.S. Energy
Corp.
(F) To eliminate the outstanding common stock of the legal acquiree.
(G) To record the exchange fee payable from Admiralty Corporation to U.S.
Energy Corp. as the exchange fee for the transaction.
(H) To eliminate the treasury stock of the legal acquiree.
23
RUBY MINING COMPANY AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
Proforma Condensed Consolidated Statement of Operations
For the three months ended March 31, 2001
(Unaudited)
Admiralty Ruby Mining Eliminations
Corporation Company and Adjustments Consolidated
------------ ------------ --------------- ------------
Revenues $ - $ - $ - $ -
Compensation and employee
benefits 42,514 - - 42,514
Research and development - - - -
General and administrative 76,866 38,438 (a) 325,000 440,304
Depreciation and amortization 5,277 - - 5,277
Professional fees 20,228 - - 20,228
OPERATING LOSS 144,885 38,438 508,323
Other (income) expense (1,104) (376) (1,480)
Interest expense 165,231 - 165,231
NET LOSS $ 309,012 $ 38,062 $ 672,074
LOSS PER SHARE $ 0.03
<FN>
(a) $325,000 represents the exchange fee to be paid U.S. Energy Corp. by Admiralty Corporation.
</FN>
24
(c) Exhibits. Page No.
--------
2.1 Plan and Agreement of Share Exchange dated as of
March 2, 2001, by and among Admiralty Corporation,
Ruby Mining Company, and U.S. Energy Corp. *
2.2 First Amendment to Plan and Agreement of Share Exchange. *
2.3 Second Amendment to Plan and Agreement of Share Exchange. *
2.4 Third Amendment to Plan and Agreement of Share Exchange. *
* Incorporated by reference to the like-number exhibit filed with the
Registrant's Form 8-K dated June 8, 2001.
25
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 hereto duly authorized.
RUBY MINING COMPANY
(Registrant)
Dated: August 2, 2001 By /s/ Herbert C. Leeming
-------------------------------
Herbert C. Leeming
Chairman and CEO
26