U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB/A
x Quarterly Report Under Section 13 or 15(d) of the Securities Exchange
- --- Act of 1934
For the quarterly period ended March 31, 2003
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.
RUBY MINING COMPANY.
--------------------
(Exact name of small business issuer as specified in its charter)
Colorado 83-0214117
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(State or other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
3490 Piedmont Rd., Suite 304, Atlanta, Georgia 30305
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(Address of Principal Executive Offices)
Issuers Telephone Number (404) 231-8500
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3399 Peachtree Rd. NE, Suite 810, Atlanta, Georgia 30326
- --------------------------------------------------------------------------------
(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
----- -----
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 March 31, 2003
----- -----------------------------
Common Stock, $.001 Par Value 30,820,169 shares
Transitional Small Business Disclosure Format: YES NO X
----- -----
RUBY MINING COMPANY AND SUBSIDIARY
Form 10-QSB/A
Index
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of March 31, 2003
and December 31, 2002 1
Condensed Consolidated Statements of Operations for the Three
Months Ended March 31, 2003 and 2002, and for the period
from inception through March 31, 2003 2
Condensed Consolidated Statements of Cash Flows for the Three
Months Ended March 31, 2003 and 2002, and for the period
from inception through March 31, 2003 3
Notes to Condensed Consolidated Financial Statements 4-5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 6-7
Item 3. Controls and Procedures 8
PART II OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 2. Changes in Securities and Use of Proceeds 9
Item 3. Defaults Upon Senior Securities 9
Item 4. Submission of Matter to a Vote of Security Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 9
Exhibit Index 10
Signatures 11
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RUBY MINING COMPANY AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 2003 AND DECEMBER 31, 2002
(UNAUDITED)
MARCH 31, DECEMBER 31,
2003 2002
ASSETS
CURRENT ASSETS
Cash in bank $ 1,576 $ 1,606
Expense and employee receivable 99,135 98,091
Other 10,368 10,368
------------ ------------
TOTAL CURRENT ASSETS 111,079 110,065
Fixed assets, net of accumulated depreciation 9,072 11,962
Other assets 40,788 40,579
------------ ------------
TOTAL ASSETS $ 160,939 $ 162,606
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
LIABILITIES
Current liabilities
Accounts payable $ 856,483 $ 842,934
Accrued compensation and consulting fees 737,625 698,124
Shares to be issued for converted debt -- 20,000
Short-term advances 256,900 206,900
------------ ------------
TOTAL CURRENT LIABILITIES 1,851,008 1,767,958
Long-term debt, net of discount 3,319,891 3,233,165
Interest payable 2,180,902 2,070,968
------------ ------------
TOTAL LIABILITIES 7,351,801 7,072,091
------------ ------------
Stockholders' deficit
Common stock 30,820 29,820
Paid-in capital 7,022,840 6,988,839
Subscribed shares 105,000 90,000
Receivable for exercised options (307,170) (302,896)
Development stage deficit (14,042,352) (13,715,248)
------------ ------------
Total stockholders' deficit (7,190,862) (6,909,485)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
DEFICIT $ 160,939 $ 162,606
============ ============
See notes to condensed consolidated financial statements.
1
RUBY MINING COMPANY AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
From Inception March 31,
through ----------------------------
March 31, 2003 2003 2002
-------------- ------------ ------------
Revenues $ 199,927 $ -- $ 27,778
-------------- ------------ ------------
Operating expenses
Compensation and employee benefits 2,863,351 47,470 53,933
Research and development 1,440,423 -- --
General and administrative 3,307,900 55,627 61,762
Depreciation and amortization 141,323 2,890 4,219
Professional fees 3,137,998 25,105 331,534
-------------- ------------ ------------
Operating (loss) (10,691,068) (131,092) (423,670)
Other (income) expense (512,084) (5,529) (2,689)
Interest expense 3,863,368 201,541 182,562
-------------- ------------ ------------
Net (loss) $ (14,042,352) $ (327,104) $ (603,543)
============== ============ ============
Net (loss) per common share:
Basic and diluted $ (0.01) $ (0.03)
============ ============
See notes to condensed consolidated financial statements.
2
RUBY MINING COMPANY AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
From Inception
Three Months Ended Through
March 31, March 31, 2003
------------------------------- --------------
2003 2002
------------- -------------
Operating activities
Net loss $ (327,104) $ (603,543) $ (14,042,352)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 2,890 4,219 140,105
Discount amortization 86,726 78,013 1,415,749
Equity-based professional services -- 270,000 878,960
Increase in accounts payable 13,549 17,334 899,520
Increase in interest payable 109,934 103,549 2,180,902
Expense receivable reduction -- -- 134,818
Other, net 35,018 105,992 515,928
------------ ------------ -------------
Net cash used in operating activities (78,987) (24,436) (7,876,370)
------------ ------------ -------------
Investing activities
Advances under expense receivable (1,044) 11,683 (140,905)
Purchase of fixed assets -- -- (149,177)
------------ ------------ -------------
Net cash used in investing activities (1,044) 11,683 (290,082)
------------ ------------ -------------
Financing activities
Issuance of common stock and warrants 15,001 18,000 5,826,986
Short-term advances 50,000 -- 331,900
Stock subscription 15,000 -- 105,000
Issuance of debentures -- -- 1,904,142
------------ ------------ -------------
Net cash provided by financing activities 80,001 18,000 8,168,028
------------ ------------ -------------
Net increase (decrease) in cash (30) 5,247 1,576
Cash at beginning of period 1,606 728 --
------------ ------------ -------------
Cash at end of period $ 1,576 $ 5,975 $ 1,576
============ ============ =============
See notes to condensed consolidated financial statements.
3
RUBY MINING COMPANY AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2003
(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 March 31, 2003 and for the three months ended
March 31, 2003 and 2002 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 accounting principles generally accepted in the
United States 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 had only
minimal revenues. The consolidated development stage deficit of the entities is
$14,042,352. These matters indicate substantial doubt about the ability of the
Company to continue as a going concern. 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 - STOCK BASED COMPENSATION
The Company accounts for stock-based compensation utilizing the intrinsic value
method. Presented below is certain financial information of the Company with
comparative proforma information determined as if the Company had accounted for
the stock-based compensation utilizing the fair-value method
March 31, 2003 March 31, 2002
-------------- --------------
Net Loss as reported $ (327,104) $ (603,543)
Basic and diluted loss per share
As reported $ (0.01) $ (0.03)
Stock-based employee compensation
cost included in net loss as reported $ - $ -
Stock based employee compensation
cost based on fair-value method $ - $ -
Proforma net loss including stock-based
compensation cost based on fair-value method $ (327,104) $ (603,543)
Proforma basic and diluted loss per share
including stock-based compensation
cost based on fair-value method $ (0.01) $ (0.03)
4
RUBY MINING COMPANY AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTE 3 - 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 separate from basic earnings per share
has not been presented in the accompanying statements of operations. At March
31, 2003 the Company had outstanding 2,961,340 warrants and 768,200 options on
common stock, each convertible to one share of the Company's common stock. The
options exercised to common stock and shown as a reduction of equity have been
presented in the outstanding shares presentation and in the earnings per share
presentation. The following presents the calculation of basic earnings per
share:
For the Three Months Ended March 31, 2003
-------------------------------------------------------
Weighted
Average Shares Per-Share
(Numerator) (Denominator) Amount
--------------- ---------------- ----------------
BASIC EPS
Income (loss) available to common
shareholders' $ (327,104) $ 30,286,836 $ (0.01)
============== ================ ================
5
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 had only
minimal revenues from operations. The consolidated Company satisfied liquidity
and capital requirements during the three months ended March 31, 2003 through
the issuance of common stock and through short-term borrowings. 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
an additional capital investment to satisfy existing liabilities and to fund
future operations. During the three months ended March 31, 2003, the Company
satisfied liquidity needs through short term borrowing and the sale of equity
instruments.
RESULTS OF OPERATIONS
The Company had no revenue from operations during the three months ended March
31, 2003.
For the three months ended March 31, 2003, the Company incurred a net loss of
$327,104, compared to a net loss of $603,543 for the three months ended March
31, 2002. 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.
For the three months ended March 31, 2003, compensation costs and depreciation
and amortization, have remained comparable to these costs for the three months
ended March 31, 2002. General and administrative costs for the three months
ended March 31, 2003 have also remained consistent with these costs for the
three months ended March 31, 2002. Professional fees were $25,105 for the three
months ended March 31, 2003. A decrease of $306,429 from $331,534 for the three
months ended March 31, 2002. The Company issued stock of the Company as
compensation for consulting professional services in 2002, which is expensed at
the estimated market value of the company's stock. This decrease in the expense
from 2002 to 2003 is primarily the result of the significant decrease in the
professional services contracted by the Company.
6
RUBY MINING COMPANY AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
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.
7
RUBY MINING COMPANY AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
ITEM 3. CONTROLS AND PROCEDURES
(A) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. Within 90 days before
filing this report, the Company evaluated the effectiveness of the design and
operation of its disclosure controls and procedures. The Company's disclosure
controls and procedures are the controls and other procedures that the Company
has designed to ensure that it records, processes, summarizes and reports in a
timely manner the information the Company must disclose in its reports filed
under the Securities Exchange Act. Herbert C. Leeming, Chief Executive Officer
and Murray D. Bradley, Chief Financial Officer, reviewed and participated in
this evaluation. Base on this evaluation, Messrs. Leeming and Bradley concluded
that, as of the date of their evaluation, the Company's disclosure controls and
procedures were effective.
(B) INTERNAL CONTROLS. Since the date of the evaluation described above,
there have not been any significant changes in the Company's internal controls
or in other factors that could significantly affect those controls, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
8
RUBY MINING COMPANY AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
A Complaint for Turnover was filed in the United States Bankruptcy Court
Northern District of Georgia Atlanta Division against Admiralty Corporation by
Dale R. F. Goodman, Trustee for the Bankruptcy Estate of Ralph Franklin Ketchum,
Jr. and Patsy Sue Ketchum on April 19, 2002. The Complaint alleges that Debtor
Ralph Franklin Ketchum, Jr. is owed back salary from Admiralty Corporation for
years 1999 and 2000 in the amount of $66,000.
A Complaint was filed in the State Court of Fulton County Georgia against
Admiralty Corporation by Kritzer & Levick, P.C. on October 2, 2002. The
Complaint alleges that Kritzer & Levick, P.C. is owed monies from Admiralty
Corporation for legal services rendered in the amount of $50,000, which has been
accrued by the Company.
The Company previously occupied office space pursuant to a Lease Agreement upon
which it defaulted. The landlord under that lease was granted a Consent Judgment
on March 1, 2002 for past due rent, expenses and interest in the aggregate
amount of approximately $108,000. To date, approximately $14,000 has been
applied to the judgment amount, leaving an unsatisfied balance of $94,000. The
Company vacated the leased premises and the balance of the Judgment remains
outstanding and has been accrued by the Company
The Company is engaged in various other litigation matters from time to time in
the ordinary course of business. The Company will vigorously defend its position
and believes the outcome of any litigation will not have a material effect on
the Company.
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K.
The Company filed no reports on Form 8-K during the third quarter ended March
31, 2003.
9
RUBY MINING COMPANY AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
Exhibits
99.1 Certification by Herbert C. Leeming, Chief Executive Officer of the
Company, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
99.2 Certification by Murray D. Bradley, Chief Financial Officer of the
Company, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
10
RUBY MINING COMPANY AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
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 on June 18, 2003.
Ruby Mining Co.,
a Colorado corporation
By: /s/ Herbert C. Leeming
-----------------------------------
Name: Herbert C. Leeming
Title: Chief Executive Officer
By: /s/ Murray D. Bradley
-----------------------------------
Name: Murray D. Bradley
Title: Chief Financial and Accounting
Officer
11
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-QSB/A of Ruby Mining Co.
for the period ending March 31, 2003 as filed with the Securities and Exchange
Commission on the date hereof, I, Herbert C. Leeming, Chief Executive Officer of
registrant, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss.
302 of the Sarbanes-Oxley Act of 2002, that:
(1) I have reviewed this quarterly report on Form 10-QSB/A of Ruby Mining
Co.;
(2) Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report; and
(3) Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in al material
respects the financial condition, results of operations and cash flows of
registrant as of, and for, the periods presented in this quarterly report; and
(4) The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
(5) The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing the
equivalent function):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified
for the registrant's auditors any material weaknesses in internal controls;
and
(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
12
(6) The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Dated: June 18, 2003 By: /s/ Herbert C. Leeming
------------------------------------
Herbert C. Leeming
Chief Executive Officer
This certification accompanies this Quarterly Report on Form 10-QSB/A pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002 and shall not, except to the
extent required by such Act, be deemed filed by registrant for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended.
13
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-QSB/A of Ruby Mining
Co., for the period ending March 31, 2003 as filed with the Securities and
Exchange Commission on the date hereof, I, Murray D. Bradley, Chief Financial
Officer of registrant, certify, pursuant to 18 U.S.C. ss. 1350, as adopted
pursuant to ss. 302 of the Sarbanes-Oxley Act of 2002, that:
(1) I have reviewed this quarterly report on Form 10-QSB/A of Ruby Mining
Co.;
(2) Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report; and
(3) Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in al material
respects the financial condition, results of operations and cash flows of
registrant as of, and for, the periods presented in this quarterly report; and
(4) The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
(5) The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing the
equivalent function):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified
for the registrant's auditors any material weaknesses in internal controls;
and
(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
14
(6) The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Dated: June 18, 2003 By: /s/ Murray D. Bradley
------------------------------------
Murray D. Bradley
Chief Financial Officer
This certification accompanies this Quarterly Report on Form 10-QSB/A
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and shall not, except
to the extent required by such Act, be deemed filed by registrant for purposes
of Section 18 of the Securities Exchange Act of 1934, as amended.
15