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: September 30, 2001
Commission File Number: 001-04026
PRINCETON MINING COMPANY
(Exact name of small business issuer as specified in its charter)
Idaho 82-6008727
(State of Incorporation) (IRS Employer ID No)
1111 South Main, Suite 127, Grapevine, TX 76051
(Address of principal executive office)
817-410-5762
(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 September 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 - September 30, 2001 3
Consolidated Statements of Operations - 4
Three and Nine Months Ended September 30, 2001 and 2000
Consolidated Statement of Stockholders' Equity - 5
Nine Months Ended September 30, 2001
Consolidated Statements of Cash Flows - 6
Nine Months Ended September 30, 2001 and 2000
Notes to Consolidated Financial Statements - 7-10
Nine Months Ended September 30, 2001 and 2000
Item 2.Managements Discussion and Analysis or Plan of Operation 11-13
Part II. Other Information 14
2
Princeton Mining Company and Subsidiary
Consolidated Balance Sheet
September 30, 2001
(Unaudited)
Assets
Current assets
Cash and cash equivalents $ 13,787
-------------------------
Total current assets 13,787
Mineral property 2,000
Real estate, net 45,551
-------------------------
Total assets $ 61,338
=========================
Liabilities and Stockholder's Equity
Current liabilities
Note payable $ 35,225
Due to related party 1,482
-------------------------
Total current liabilities 36,707
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) (7,619)
-------------------------
Total stockholder's equity 24,631
-------------------------
$ 61,338
=========================
See accompanying notes to financial statements.
3
Princeton Mining Company and Subsidiary
Consolidated Statements of Operations
Three and nine months ended September 30, 2001 and 2000
(Unaudited)
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2001 2000 2001 2000
Sales and revenues $ 1,789 $ - $ 3,004 $ -
Cost of operations 1,459 - 4,432 -
---------------- ------------------------ -------------------- ---------------------
Gross profit 330 - (1,428) -
Other expense
General and administrative expense 4,302 - 4,360 -
Interest expense 1,047 - 1,831 -
----------------- ------------------------ -------------------- ---------------------
5,349 - 6,191 -
----------------- ------------------------ -------------------- ---------------------
Loss before income taxes (5,019) - (7,619) -
Income taxes - - - -
----------------- ------------------------ -------------------- ---------------------
Net loss (5,019) - (7,619) -
================= ======================== ==================== =====================
Net loss per share, basic and diluted $ (0.00) $ - $ (0.00) $ -
================= ======================== ==================== =====================
Weighted Average Shares Outstanding 27,677,140 18,000,000 23,614,752 18,000,000
================= ======================== ==================== =====================
See accompanying notes to financial statements.
4
Princeton Mining Company and Subsidiary
Consolidated Statement of Stockholder's Equity
Nine months ended September 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 loss - - - (7,619) (7,619)
----------------- --------------------- -------------------- ----------------- ---------------
Balance, September 30, 2001 27,677,140 $ 2,767,714 $(2,735,464) $ (7,619) $ 24,631
================= ===================== ==================== ================= ===============
See accompanying notes to financial statements.
5
Princeton Mining Company and Subsidiary
Consolidated Statements of Cash Flows
Nine months ended September 30, 2001 and 2000
(Unaudited)
Nine Months Nine Months
Ended Ended
September 30, September 30,
2001 2000
Cash flows used in operating activities
Net loss $ (7,619) $ -
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation 843 -
---------------------- ----------------------
Net cash used in operating activities (6,776) -
---------------------- ----------------------
Cash flows provided by financing activities
Common stock issued for cash 20,250 -
Loans from related party 1,482 -
Repayment of note payable (1,169) -
---------------------- ----------------------
Net cash provided by financing activities 20,563 -
---------------------- ----------------------
Net increase in cash and cash equivalents 13,787 -
Cash and cash equivalents, beginning of period - -
---------------------- ----------------------
Cash and cash equivalents, end of period $ 13,787 $ -
====================== ======================
Supplemental Cash Flow Information
Cash paid for interest and income taxes are as follows:
Interest $ 1,831 $ -
Income taxes $ - $ -
See accompanying notes to consolidated financial statements.
6
Princeton Mining Company and Subsidiary
Notes to Consolidated Financial Statements
Nine months ended September 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.
7
(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 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.
(8) RECENT ACCOUNTING PRONOUNCEMENTS - In June 2001, the Financial
Accounting Standards Board issued Statement of Financial
Accounting Standards No. 141 (SFAS No. 141), "Business
Combinations," and Statement of Financial Accounting
Standards No. 142 (SFAS No. 142), "Goodwill and Other
Intangible Assets." 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 Preacquisition
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 or for which the date of acquisition is July 1,
2001, or later. The Company will adopted this Statement on
January 1, 2002 and does not expect any effect on the results of
operations or financial position.
SFAS No. 142 addresses financial accounting and reporting for
acquired goodwill and other intangible assets and supercedes 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.
This Statement also addresses how goodwill and other intangible
assets should be accounted for after they have been initially
recognized in the financial statements. The provisions of this
Statement are required to be applied starting with fiscal years
8
beginning after December 15, 2001. Early application is permitted
for entities with fiscal years beginning after March 15, 2001,
provided that the first interim financial statements have not
previously been issued. This Statement is required to be applied
at the beginning of an entity's fiscal year and to be applied to
all goodwill and other intangible assets recognized in its
financial statements at that date. Impairment losses for goodwill
and indefinite-lived intangible assets that arise due to the
initial application of this Statement (resulting from a
transitional impairment test) are to be reported as resulting from
a change in accounting principle. The Company will adopted this
Statement on January 1, 2002 and does not expect any effect on the
results of operations or financial position.
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
9
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)
------------
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
-----------
Balance on acquisition $ 954,914
===========
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 September 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.
10
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 may not provide adequate cash flow to meet current
obligations; accordingly, the Company may be required to attempt to
raise additional capital through sale of common stock
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
11
filed all reports required under the Exchange Act). The Company was
late filing its Form 8-K regarding the audited financial statements of
Brittany Enterprises, Inc. and was also late filing its Form 10-QSB for
the quarter ended June 30, 2001, accordingly, these registration
methods are not currently available to the Company.
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;
(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.
12
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.
13
PART II - OTHER INFORMATION
Item 1 through 5 of Part II have been omitted as not required, not
significant, or because the information has been previously reported.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - Not applicable
(b) Reports on Form 8-K - Not applicable
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: November 7, 2001 By: /s/ Randy Howell
---------------------------
Randy Howell, President and
Principal Accounting Officer