FORM 10-QSB
U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended: June 30, 2001
Commission File Number: 001-04026
PRINCETON MINING COMPANY
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(Exact name of small business issuer as specified in its charter)
Idaho 82-6008727
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(State of Incorporation) (IRS Employer ID No)
1111 South Main, Suite 127, Grapevine, TX 76051
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(Address of principal executive office)
817-410-5762
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(Issuer's telephone number)
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 ____ No__X__.
The number of shares outstanding of registrant's common stock, par value $.10
per share, as of June 30, 2001 was 27,677,140 shares.
Transitional Small Business Disclosure Format (Check one): Yes ___ No _X_
1
Princeton Mining Company and Subsidiary
INDEX
Page
No.
Part I. Financial Information (unaudited)
Item 1. Consolidated Balance Sheet - June 30, 2001 3
Consolidated Statement of Operations - 4
Three and Six Months Ended June 30, 2001 and 2000
Consolidated Statement of Stockholders' Equity - 5
Six Months Ended June 30, 2001
Consolidated Statements of Cash Flows - 6
Six Months Ended June 30, 2001 and 2000
Notes to Consolidated Financial Statements - 7-9
Six Months Ended June 30, 2001 and 2000
Item 2. Managements Discussion and Analysis or Plan of Operation 10-11
Part II. Other Information 12
2
Princeton Mining Company and Subsidiary
Consolidated Balance Sheet
June 30, 2001
(Unaudited)
Assets
Current assets
Cash and cash equivalents $ 19,148
------------------
Total current assets 19,148
Mineral property 2,000
Real estate, net 45,972
------------------
Total assets $ 67,120
==================
Liabilities and Stockholder's Equity
Current liabilities
Note payable $ 35,988
Due to related party 1,482
------------------
Total current liabilities 37,470
Stockholder's equity
Preferred stock, $.10 par value. Authorized 1,000,000 shares; -
no shares issued and outstanding.
Common stock, $.10 par value. Authorized 29,000,000 shares; 2,767,714
issued and outstanding 27,677,140 shares
Common stock discount (2,735,464)
Retained earnings (deficit) (2,600)
------------------
Total stockholder's equity 29,650
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$ 67,120
==================
See accompanying notes to financial statements.
3
Princeton Mining Company and Subsidiary Consolidated Statement of Operations
Three and six months ended June 30, 2001 and 2000 (Unaudited)
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2001 2000 2001 2000
Sales and revenues $ 1,215 $ - $ 1,215 $ -
Cost of operations 2,973 - 2,973 -
----------------- ------------------ ---------------- ----------------
Gross profit (1,758) - (1,758) -
Other expense
General and administrative expense 58 - 58 -
Interest expense 784 - 784 -
----------------- ------------------ ---------------- ----------------
842 - 842 -
----------------- ------------------ ---------------- ----------------
Earnings (loss) before income taxes (2,600) - (2,600) -
Income taxes - - - -
----------------- ------------------ ---------------- ----------------
Net earnings (loss) (2,600) - (2,600) -
================= ================== ================ ================
Net earnings (loss) per share $ (0) $ - $ (0) $ -
================= ================== ================ ================
Weighted Average Shares Outstanding 25,105,609 18,000,000 21,565,140 18,000,000
================= ================== ================ ================
See accompanying notes to financial statements.
4
Princeton Mining Company and Subsidiary
Consolidated Statement of Stockholder's Equity
Six months ended June 30, 2001
(Unaudited)
Retained
Common Stock Common stock Earnings
Shares Par Value Discount (Deficit) Total
------ --------- -------- ------- -----
Inception, March 30, 2001 18,000,000 $1,800,000 $(1,790,000) $ - $ 10,000
Acquire Princeton Mining 9,569,140 956,914 (954,914) 2,000
Company
Issue common stock for cash 108,000 10,800 9,450 20,250
Net income (loss) (2,600) (2,600)
--------------- ------------------ ------------------- ------------------ -----------------
Balance, June 30, 2001 27,677,140 $2,767,714 $(2,735,464) $ (2,600) $ 29,650
=============== ================== =================== ================== =================
See accompanying notes to financial statements.
5
Princeton Mining Company and Subsidiary
Consolidated Statement of Cash Flows Six months ended June 30, 2001 and 2000
(Unaudited)
Six Months Six Months
Ended Ended
June 30, June 30,
2001 2000
Cash flows from operating activities
Net earnings (loss) $ (2,600) $ -
Adjustments to reconcile net earnings (loss) to net
cash provided by (used in) operating activities:
Depreciation 422 -
--------------- ---------------
Net cash provided by (used in) operating activities (2,178) -
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Cash flows provided by (used in) investing activities
- -
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Net cash provided by (used in) investing activities - -
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Cash flows provided by (used in) financing activities
Common stock issued for cash 20,250
Loans from related party 1,482
Repayment of note payable (406)
- -
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Net cash provided by (used in) financing activities 21,326 -
--------------- ---------------
Net increase (decrease) in cash and cash equivalents 19,148 -
Cash and cash equivalents, beginning of period - -
--------------- ---------------
Cash and cash equivalents, end of period $ 19,148 $ -
=============== ===============
Supplemental Cash Flow Information
Cash paid for interest and income taxes are as follows:
Interest $ 784 $ -
Income taxes $ - $ -
See accompanying notes to consolidated financial statements.
6
Princeton Mining Company and Subsidiary
Notes to Consolidated Financial Statements
Six months ended June 30, 2001 and 2000
(Unaudited)
A. Summary of Significant Accounting Policies
(1)Principles of Consolidation - The consolidated financial statements
include the accounts of Princeton Mining Company ("Princeton") and its
wholly owned subsidiary, Brittany Enterprises, Inc. ("Brittany")
(collectively the "Company"). All material intercompany accounts and
transactions have been eliminated.
(2)Organization - Princeton was organized in September 1950, under the
laws of the State of Idaho. On April 24, 2001, Princeton acquired
Brittany, a Nevada corporation organized on October 29, 1998. For
accounting purposes, the acquisition has been treated as the
acquisition of Brittany by Princeton with Brittany as the purchaser
(reverse acquisition). The historical financial statements prior to
April 24, 2001 are those of Brittany. Brittany did not have operations
until March 30, 2001, when it acquired two condominium units that it is
leasing.
(3)Nature of Business - Princeton is the owner of an interest in two
unpatented mining claims situated east of the village of Mullan in the
Coeur d'Alene Mining District, Shoshone County, Idaho. To the knowledge
of the Company, no commercial ore deposit has been found as the result
of any exploration work done to date on the Company's property.
Consequently, there has been no production of ore from the property and
the Company makes no claim to the existence of ore reserves in the
property.
Brittany is the owner of two condominium units that are located in
Dallas, Texas which are currently under lease.
(4)Use of Estimates - The preparation of the financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
(5)Cash and Cash Equivalents - For purposes of the statement of cash
flows, the Company considers all highly liquid investments purchased
with an original maturity of three months or less to be cash
equivalents.
(6)Property and Equipment - Real estate is stated at cost and depreciated
using the straight-line method over the estimated useful life of 27.5
years.
(7)General - The financial statements included in this report have been
prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission for interim reporting and include
all adjustments (consisting only of normal recurring adjustments) that
are, in the opinion of management, necessary for a fair presentation.
These financial statements have not been audited.
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 for interim reporting. The Company
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believes that the disclosures contained herein are adequate to make the
information presented not misleading. However, these financial statements
should be read in conjunction with the financial statements and notes
thereto included in the Company's Annual Report for the period ended
December 31, 2000, which is included in the Company's Form 10-KSB.
B.Acquisition
On April 24, 2001, the Company issued 18,000,000 shares of its $.10 par value
common stock to acquire Brittany Enterprises, Inc. The transaction was
accounted for using the purchase method of accounting and has been treated
as the acquisition of Brittany by Princeton with Brittany as the purchaser
(reverse acquisition). The assets acquired, liabilities assumed and
consideration to the seller is as follows:
Real estate $ 46,394
Liabilities assumed (36,394)
--------
Common stock issued $ 10,000
========
C.Note payable
The Company assumed a note payable as a part of the acquisition of Brittany,
which is due on demand with monthly installments of $595, including interest
at 10%.
D.Stockholder's Equity
The Company has 1,000,000 shares of its $.10 par value preferred stock
authorized and no shares issued or outstanding. The Company has 29,000,000
shares of its $.10 par value common stock authorized and currently has
27,677,140 shares issued and outstanding.
Prior to December 31, 1998, the Company issued restricted common stock in
exchange for services provided and the extinguishments of advances due
related parties. The issue of these shares at its market value
resulted in the shares being issued at less than their par value.
Accordingly, the Company recorded a discount on common stock of
$280,681, representing the aggregate difference between the par value
of the common stock issued and the market value of services provided
and debt extinguished. During 1999 and 2000, a consultant to the
Company paid $1,046 in expenses on behalf of the Company and
relinquished the opportunity for reimbursement. These amounts were
treated as additional paid-in capital and recorded to reduce the
common stock discount. In addition, during 2000, the Company issued
warrants to purchase 1,200,000 shares of its common stock at $.01 per
share to a consultant as compensation for services. The services were
valued at $2,000 and this amount was also treated as additional
paid-in capital and recorded to reduce the common stock discount. This
warrant was cancelled on April 24, 2001 as a part of the acquisition
transaction. The following schedule summarizes the activity in the
discount on common stock account prior to the acquisition of Brittany
by Princeton.
Discount on common stock prior to December 31, 1998 $ 280,681
Contribution to capital during 1999 and 2000 (1,046)
Warrant issued (2,000)
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Balance before transaction on April 24, 2001 277,635
Advances from related party, reimbursement relinquished (61,500)
Deficit in retained earnings recapitalized due to reverse acquisition 738,779
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Balance on acquisition $ 954,914
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8
On April 24, 2001, the Company issued 18,000,000 shares of its common stock to
acquire 100% of Brittany. For accounting purposes, the acquisition has been
treated as the acquisition of Brittany by Princeton with Brittany as the
purchaser (reverse acquisition). The value of the net assets of Brittany was
$10,000, accordingly, the issue of 18,000,000 shares for $10,000 resulted in
recording $1,800,000 in par value of common stock and $1,790,000 in common stock
discount.
During May 2001, the Company sold 108,000 common stock and warrant units at a
price of $.1875 each. Each unit consisted of one share of common stock and one
Class "A" Warrant and one Class "B" Warrant. The Class "A" Warrant grants the
holder the right to purchase said number of common shares for $1.00 per share
and the Class "B" Warrant grants the holder the right to purchase said number of
common shares for $1.75 per share. Both classes of warrants expire on May 3,
2004. The Company recorded $10,800 in par value of common stock and $9,450 as
additional paid-in capital by reducing the common stock discount.
At June 30, 2001, 108,000 Class "A" Warrants and 108,000 Class "B" Warrants are
outstanding and exercisable at $1.00 and $1.75 per share, respectively.
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
--------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS OR PLAN OF OPERATION
--------------------------------------------------------
The following information and other sections of this quarterly report
contain forward-looking statements that are based on current expectations,
estimates, and projections about the markets and industries in which the
Company operates, management's beliefs, and assumptions made by management.
These forward-looking statements are made pursuant to the Safe Harbor
Provisions of the Private Securities Litigation Reform Act of 1995. These
statements are not guarantees of future performance and involve certain
risks, uncertainties and assumptions ("future factors") that are difficult
to predict. Therefore, actual outcomes and results may differ materially
from what is expressed or forecasted in such forward-looking statements.
The Company undertakes no obligation to update publicly any forward-looking
statements, whether as a result of new information, future events or
otherwise.
Future factors include risks associated with newly acquired businesses;
increasing price and product/service competition by competitors; rapid
technological developments and changes; the ability to introduce
competitive new products and services on a timely, cost effective basis;
the mix of products/services; the achievement of lower costs and expenses;
reliance on large customers; technological, implementation and
cost/financial risks in use of large, multi-year contracts; the cyclical
nature of the markets served; the availability of financing, financial
instruments and financial resources in the amount, at the times and on the
terms required to support the Company's business. These are representative
of the future factors that could affect the outcome of forward-looking
statements. In addition, such statements could be affected by general
industry and market conditions and growth rates, general domestic and
international conditions including interest rates, rates of inflation and
currency exchange rate fluctuations and other future factors.
On April 24, 2001, Princeton had a change in control and acquired a new
subsidiary, Brittany Enterprises, Inc. The Company now owns two condominium
units in Dallas, Texas, which are currently under lease. Projected revenues
from the properties together with existing cash reserves should provide
adequate cash flow to meet current obligations.
The Company files with the Securities and Exchange Commission periodic and
episodic reports under Rule 13(a) of the Exchange Act, including quarterly
reports on Form 10-QSB and annual reports on Form 10-KSB. As a reporting
company under the Exchange Act, the Company may register additional
securities on Form S-8 (provided that it is then in compliance with the
reporting requirements of the Exchange Act) and on Form S-3 (provided that
it has during the prior 12 month period timely filed all reports required
under the Exchange Act).
The Company is actively seeking to engage in a merger with or acquisition
of an unidentified foreign or domestic private company that desires to
become a reporting company whose securities have been registered under the
Exchange Act.
Management believes that there are perceived benefits to being a reporting
company which may be attractive to foreign and domestic private companies.
These benefits are commonly thought to include:
(1) the ability to use securities to make acquisition of assets or
businesses;
(2) increased visibility in the financial community;
(3) the facilitation of borrowing from financial institutions;
(4) improved trading efficiency;
(5) the potential for shareholder liquidity;
10
(6) greater ease in subsequently raising capital;
(7) compensation of key employees through options for stock for which
there may be a public market;
(8) enhanced corporate image; and
(9) a presence in the United States capital market.
A private company which may be interested in a business combination with
the Company may include:
(1) a company for which a primary purpose of becoming a reporting company
is the use of its securities for the acquisition of assets or
businesses;
(2) a company which is unable to find an underwriter of its securities
or is unable to find an underwriter of securities on terms
acceptable to it;
(3) a company which wishes to become a reporting company with less
dilution of its common stock than would occur normally upon an
underwriting;
(4) a company which believes that it will be able to obtain investment
capital on more favorable terms after it has become a reporting
company;
(5) a foreign company which may wish an initial entry into the United
States securities market;
(6) a special situation company, such as a company seeking to satisfy
redemption requirements under a qualified Employee Stock Option
Plan; and
(7) a company seeking one or more of the other benefits believed to
attach to a reporting company.
Management is actively engaged in seeking a qualified private company as a
candidate for a business combination. The Company is authorized to enter into a
definitive agreement with a wide variety of private businesses without
limitation as to their industry or revenues. It is not possible at this time to
predict with which private company, if any, the Company will enter into a
definitive agreement or what will be the industry, operating history, revenues,
future prospects or other characteristics of that company.
As of the date hereof, management has not made any final decision concerning or
entered into any agreements for a business combination. When any such agreement
is reached or other material fact occurs, the Company will file notice of such
agreement or fact with the Securities and Exchange Commission on Form 8-K.
Persons reading this Form 10-QSB are advised to see if the Company has
subsequently filed a Form 8-K.
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PART II - OTHER INFORMATION
Item 1 and Items 3 through 5 of Part II have been omitted as not
required, not significant, or because the information has been
previously reported.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
The Company sold unregistered securities as follows:
1)During May 2001, the Company sold 108,000 common stock and
warrant units at a price of $.1875 each. Each unit consisted
of one share of common stock and one Class "A" Warrant and one
Class "B" Warrant. The Class "A" Warrant grants the holder the
right to purchase said number of common shares for $1.00 per
share and the Class "B" Warrant grants the holder the right to
purchase said number of common shares for $1.75 per share.
Both classes of warrants expire on May 3, 2004.
2)The shares were sold directly to sophisticated investors
pursuant to subscription agreements. No commissions or
discounts were paid.
3)The shares were sold pursuant to an exemption from
registration under Section 4(2) promulgated under the
Securities Act of 1933, as amended.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits - Not applicable
b) Reports on Form 8-K - Form 8-K dated April 24, 2001 and filed
May 10, 2001 which reported a change in control of the Company
and the acquisition of Brittany Enterprises, Inc. Financial
statements were not included (Items 1,2,5 and 6 were
reported); Form 8-K/A dated April 24, 2001 and filed September
6, 2001 which included the audited financial statements of
Brittany Enterprises, Inc. and a pro forma balance sheet as of
March 31, 2001 and pro forma statements of operations for the
year ended December 31, 2000 and the three months ended March
31, 2001 (Items 2 and 7 were reported).
SIGNATURE
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 thereunto duly authorized.
PRINCETON MINING COMPANY
Date: September 11, 2001 By: /s/ Randy Howell
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Randy Howell, President and
Principal Accounting Officer
12