U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
x Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act
- ----- of 1934
For the quarterly period ended June 30, 2001
Transition Report Pursuant to 13 or 15(d) of the Securities Exchange Act
- ------ of 1934
For the transition period of ____________ to ____________
Commission File Number 0-7501.
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RUBY MINING COMPANY
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(Exact name of small business issuer as specified in its charter)
Colorado 81-0214117
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(State or other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
3399 Peachtree Rd. NE, Suite 810, Atlanta, Georgia 30326
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(Address of Principal Executive Offices)
Issuers Telephone Number: (404) 231-8500
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(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Year)
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
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State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.
Class Outstanding at June 30, 2001
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Common Stock, $.001 Par Value 20,530,748 shares
Transitional Small Business Disclosure Format: YES NO X
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1
RUBY MINING COMPANY AND SUBSIDIARY
Form 10-QSB
Index
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheet as of June 30, 2001 1
Condensed Consolidated Statements of Operations for the Three
Months Ended June 30, 2001 and 2000, and for the period from
inception through June 30, 2001 2
Condensed Consolidated Statements of Operations for the Six
Months Ended June 30, 2001 and June 30, 2000 3
Condensed Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 2001 and 2000, and for the period
from inception thru June 30, 2001 4
Notes to Condensed Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 9
SIGNATURES 10
2
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RUBY MINING COMPANY AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 2001
(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash in bank $ 16,398
Expense Receivable 197,542
Other 9,368
------------
TOTAL CURRENT ASSETS 223,308
Fixed assets, net of accumulated depreciation 35,901
Other assets 34,928
------------
TOTAL ASSETS $ 294,137
============
LIABILITIES AND STOCKHOLDERS' DEFICIT
LIABILITIES
Current liabilities
Accounts payable $ 688,755
Accrued expenses 479,125
------------
TOTAL CURRENT LIABILITIES 1,167,880
------------
Long-term debt, net of discount 2,758,361
Interest payable 1,445,990
------------
TOTAL LIABILITIES 5,390,231
------------
Stockholders' deficit
Common stock 20,524
Paid-in capital 5,557,763
Development stage deficit (10,674,381)
------------
Total stockholders' deficit (5,096,094)
------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 294,137
============
See notes to condensed consolidated financial statements.
3
RUBY MINING COMPANY AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
From Inception Three Months Ended
thru June 30,
-------------- -----------------------------
June 30, 2001 2001 2000
------------ ------------
Revenues $ -- $ -- $ --
Operating expenses
Compensation and employee benefits 2,502,791 48,207 53,034
Research and development 1,430,423 -- --
General and administrative 2,733,002 424,524 53,590
Depreciation and amortization 114,495 4,991 5,234
Professional fees 1,896,675 46,305 20,475
------------ ------------ ------------
Operating loss 8,677,386 524,027 132,333
Other (income) expense (487,004) (1,480) (1,036)
Interest expense 2,483,999 169,256 156,541
------------ ------------ ------------
Net loss $ 10,674,381 $ 691,803 $ 287,838
============ ============ ============
Net loss per common share:
Basic $ (0.03) $ (0.01)
============ ============
See notes to condensed consolidated financial statements.
4
RUBY MINING COMPANY AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Six Months Ended
June 30,
---------------------------
2001 2000
----------- -----------
Revenues $ -- $ --
----------- -----------
Operating expenses
Compensation and employee benefits 90,721 126,203
Research and development -- --
General and administrative 501,390 140,878
Depreciation and amortization 10,268 16,389
Professional fees 66,533 76,461
----------- -----------
Operating loss 668,912 359,531
Other (income) expense (2,584) (2,073)
Interest expense 334,487 313,083
----------- -----------
Net loss $ 1,000,815 $ 670,541
=========== ===========
Net loss per common share:
Basic $ (0.05) $ (0.03)
=========== ===========
See notes to condensed consolidated financial statements.
5
RUBY MINING COMPANY AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
June 30, From Inception
------------------------------ Thru
2001 2000 June 30, 2001
------------- ------------- -------------
Operating activities
Net loss $ (1,000,815) $ (670,541) $(10,674,381)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 10,268 16,388 113,276
Discount amortization 142,232 131,419 854,219
Increase in accounts payable 204,710 9,805 688,755
Increase in interest payable 190,433 181,664 1,445,990
Other, net 56,999 106,023 280,189
------------ ------------ ------------
Net cash used in operating activities (396,173) (225,242) (7,291,952)
------------ ------------ ------------
Investing activities
Advances under notes receivable (24,902) -- (92,843)
Purchase of fixed assets -- -- (149,177)
------------ ------------ ------------
Net cash used in investing activities (24,902) -- (242,020)
------------ ------------ ------------
Financing activities
Issuance of common stock 436,737 195,004 5,926,228
Purchase of treasury stock -- -- (280,000)
Issuance of debentures -- -- 1,904,142
------------ ------------ ------------
Net cash provided by financing activities 436,737 195,004 7,550,370
------------ ------------ ------------
Net increase (decrease) in cash 15,662 (30,238) 16,398
Cash at beginning of period 736 35,340 --
------------ ------------ ------------
Cash at end of period $ 16,398 $ 5,102 $ 16,398
============ ============ ============
See notes to condensed consolidated financial statements.
6
RUBY MINING COMPANY AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2001
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements include the
accounts of Ruby Mining Company (the "Company") and its wholly-owned subsidiary,
Admiralty Corporation ("Admiralty"). Significant intercompany transactions and
accounts are eliminated in consolidation.
The financial statements as of June 30, 2001 and for the six months ended and
three months ended June 30, 2001 and 2000 are unaudited and have been prepared
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
have been condensed or omitted pursuant to such rules and regulations. These
condensed consolidated financial statements should be read in conjunction with
the audited financial statements and notes thereto included in the Company's
annual report.
The financial information included herein reflects all adjustments (consisting
of normal recurring adjustments) which are, in the opinion of management,
necessary to a fair presentation of the financial position and results of
operations for interim periods.
The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets, liabilities and
income and expense amounts. Actual results could differ from those estimates.
The Company and its subsidiary are a development stage company and have not had
revenues from operations. The consolidated development stage deficit of the
entities is $10,674,381. Management of the Company recognizes that additional
capital will be needed to continue operations and is seeking to establish
arrangements for capital or financing. The success of the Company is dependent
upon management's ability to implement plans for capital and financing.
NOTE 2 - EARNINGS PER SHARE
Earnings per share are calculated on the basis of the weighted average number of
shares outstanding. As the Company has granted stock options and other equity
instruments to officers and others associated with the Company, earnings per
share may be diluted by these instruments. As these equity instruments would be
anti-dilutive, diluted earnings per share has not been presented in the
accompanying statements of operations.
7
RUBY MINING COMPANY AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
The following presents the calculation of basic earnings per share:
For the Six Months Ended June 30, 2001
--------------------------------------------------
Weighted
Average Shares Per-Share
(Numerator) (Denominator) Amount
-------------- --------------- --------------
BASIC EPS
Income available to common
shareholders' $ 556,000 $ 20,25,247 $ (0.14)
============== =============== ==============
NOTE 3 - RECENT DEVELOPMENTS
In June 2001, the Financial Accounting Standards Board issued two Statements of
Financial Accounting Standards, No. 141, Business Combinations (SFAS No. 141),
and No. 142, Goodwill and Other Intangible Assets (SFAS No. 142). SFAS No. 141
addresses financial accounting and reporting for business combinations and
supersedes APB Opinion No. 16, Business Combinations, and FASB Statement No. 38,
Accounting for Reacquisition Contingencies of Purchased Enterprises. All
business combinations in the scope of SFAS No. 141 are to be accounted for using
one method, the purchase method. The provisions of SFAS No. 141 apply to all
business combinations initiated after June 30, 2001. Use of the
pooling-of-interests method for those business combinations is prohibited. The
provisions of SFAS No. 141 also apply to all business combinations accounted for
by the purchase method for which the date of acquisition is July 1, 2001, or
later.
SFAS No. 142 addresses financial accounting and reporting for acquired goodwill
and other intangible assets and supersedes APB Opinion No. 17, Intangible
Assets. It addresses how intangible assets that are acquired individually or
with a group of other assets (but not those acquired in a business combination)
should be accounted for in financial statements upon their acquisition. SFAS No.
142 also addresses how goodwill and other intangible assets should be accounted
for after they have been initially recognized in the financial statements. Under
SFAS No. 142, goodwill and intangible assets that have indefinite useful lives
will not be amortized but rather will be tested at least annually for
impairment. Intangible assets that have finite useful lives will continue to be
amortized over their useful lives, but without the constraint of the 40-year
maximum life required by SFAS No. 142. The provisions of SFAS No. 142 are
required to be applied starting with fiscal years beginning after December 15,
2001.
The Company expects to adopt the provisions of SFAS No. 142 effective January 1,
2002. The Company is in the process of determining the impact the adoption of
the provisions of SFAS No. 142 will have on financial position and results of
operations.
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RUBY MINING COMPANY AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Ruby Mining Company (the "Company") and it's wholly owned subsidiary Admiralty
Corporation ("Admiralty") are a development stage company and have not had
revenues from operations. The consolidated Company satisfied liquidity and
capital requirements during the six months ended June 30, 2001 through the
issuance of common stock. In addition, employees of the entity have partially
deferred payments of compensation to provide liquidity for the company.
PLAN OF OPERATION
As the Company has completed the reorganization of the entities, management
believes that the Company has enhanced access to investments of capital.
Management is utilizing existing relationships and business advisors to seek
opportunities for capital investments. With the Company's current cash level,
operations of the Company would be limited over the next twelve months without a
capital investment to satisfy existing liabilities and to fund future
operations.
RESULTS OF OPERATIONS
the Company had no revenue from operations during the six months ended June 30,
2001 or the six months ended June 30, 2000.
During the quarter ended June 30, 2001, the Company completed a reorganization
in which the Company acquired all the outstanding share of stock of Admiralty
Corporation in exchange for stock of the Company. The transaction is more fully
explained in a Form 8-K filed by the Company on June 11, 2001. The
reorganization was accounted for as a reverse-merger with Admiralty being the
accounting acquirer. Admiralty is now a wholly-owned subsidiary of the Company.
The primary business of Admiralty, and now that of the Company, is engaging in
the development and utilization of advanced proprietary technology for the
exploration and salvage of historic shipwrecks, primarily those from the 16th
and 17th centuries.
For the six months ended June 30, 2001, the Company incurred a net loss of
$1,000,815, compared to a net loss of $670,541 for the six months ended June 30,
2000. The Company's present activities consist of establishing and maintaining
financing and funding sources and opportunities and establishing and maintaining
relationships and arrangements that will enhance the Company's ability to pursue
the historic shipwrecks.
9
RUBY MINING COMPANY AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
For the six months ended June 30, 2001, compensation costs, depreciation and
amortization, and professional fees were comparable to the six months ended June
30, 2000. General and administrative costs for the six months ended June 30,
2001, increased $360,512 from the six months ended June 30, 2000. This increase
was primarily the result of a $325,000 share-exchange fee related to the
reorganization of the Company. This fee was incurred by Admiralty and charged to
operation expenses during the three months ended June 30, 2001.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
The Company may, from time to time, make written or oral forward-looking
statements, including statements contained in the Company's filings with the
Securities and Exchange Commission (the "Commission") and its reports to
stockholders. Such forward-looking statements are made based on management's
belief as well as assumptions made by, and information currently available to,
management pursuant to "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. The Company's actual results may differ
materially from the results anticipated in these forward-looking statements due
to a variety of factors, including governmental monetary and fiscal policies,
the ability of the Company to obtain funding or financing for operations, the
ability of the Company to establish and maintain relationships with foreign
countries, and the successful utilization of the Company's developed technology.
The Company cautions that such factors are not exclusive. The Company does not
undertake to update any forward-looking statements that may be made from time to
time by, or on behalf of, the Company.
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. None
(b) During the quarter ended June 30, 2001, the Company filed one
report on Form 8-K on June 11, 2001, reporting the execution of
the Plan and Agreement of Share Exchange between Ruby Mining
Company and Admiralty Corporation.
10
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
RUBY MINING COMPANY
By: /s/ Herbert C. Leeming August 14, 2001
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Herbert C. Leeming Date
President and Chief Executive Officer
(principal executive officer)
By: /s/ Murray D. Bradley, Jr. August 14, 2001
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Murray D. Bradley, Jr. Date
Senior Vice President, Treasurer
(principal financial and accounting officer)
11