U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Annual Report Under
the Securities Exchange Act of 1934
For The Quarter Ended: March 31, 2002
Foothills Resources, Inc.
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(Exact name of small business issuer as specified in its charter)
Nevada
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(State or other jurisdiction of incorporation or organization)
98-0339-560
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(IRS Employer Identification No.)
9 Langton Close Woking, Surrey, England
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(Address of principal executive offices)
None
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(Former name or former address, if changed since last report)
None
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(Zip Code)
(011) 44 1483 850 329
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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 Securities Exchange Act of 1934 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 ____.
The number of shares of the registrant's only class of common stock issued and
outstanding, as of December 31, 2001 was 250,000 common shares.
PART I
ITEM 1. FINANCIAL STATEMENTS.
The un-audited financial statements for the three-month period ended March
31, 2002 are attached hereto.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with our audited
financial statements and notes thereto included herein. In connection with, and
because we desire to take advantage of, the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995, we caution readers regarding
certain forward looking statements in the following discussion and elsewhere in
this report and in any other statement made by, or on our behalf, whether or not
in future filings with the Securities and Exchange Commission. Forward looking
statements are statements not based on historical information and which relate
to future operations, strategies, financial results or other developments.
Forward looking statements are necessarily based upon estimates and assumptions
that are inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond our control and many
of which, with respect to future business decisions, are subject to change.
These uncertainties and contingencies can affect actual results and could cause
actual results to differ materially from those expressed in any forward looking
statements made by, or our behalf. We disclaim any obligation to update forward
looking statements.
History And Organization
Foothills Resources, Inc. (the "Company") was recently incorporated under the
laws of the state of Nevada on November 17, 2000. We have not commenced business
operations and we are considered an exploration stage enterprise. To date, our
activities have been limited to organizational matters, obtaining a mining
engineer's report and the preparation and filing of the registration statement
of which this prospectus is a part. In connection with the organization of our
company, the founding shareholder of our company contributed an aggregate of
$25,000 cash in exchange for 250,000 shares of common stock. We have no
significant assets, and we are totally dependent upon the successful completion
of our public offering and receipt of the proceeds there from, of which there is
no assurance, for the ability to commence our proposed business operations.
Proposed Business
In a letter agreement of November 30, 2000, Foothills acquired a 20 year mining
lease from the owner of five unpatented lode mineral claims (the "claims") in an
area known as the Nevada Mining District approximately 400 miles east of Reno
Nevada. An unpatented mining claim requires further exploration before all
mineral rights can be owned. The letter was subsequently memorialized as a
written lease on March 1, 2001 with Herb Duerr and George J. Eliopulos. Mr.
Duerr is the owner of the claims and the underlying fee simple to the property.
The lease grants the exclusive right to explore, develop and mine the claims for
gold, silver and other valuable materials. We are presently in the
pre-exploration stage and there is no assurance that a commercially viable
mineral deposit exists in our property until exploration is done and a
comprehensive evaluation concludes that further exploration is warranted.
The lease is for a term of 20 years and may be renewed for an additional 20
years provided that all conditions of the lease have been met by us. Foothills
is obligated to pay an annual percentage royalty on production of three percent
and a minimum annual royalty as follows, of which the first payment of $5,000
has already been made:
Anniversary Date Amount
March 1,2001 $ 5,000.00
March 1,2002 $ 7,500.00
March 1,2003 $10,000.00
March 1,2004 $20,000.00
March 1,2005 &thereafter $50,000.00
Foothills may also buy out the leasehold interest for $5,000,000 from which
annual royalty payments, made up to the day of buyout, may be subtracted. If a
buyout occurs, however, Foothills will be obligated to pay a perpetual one half
of one percent annual royalty on production.
If Foothills fails to make the lease payments, the landlord must give written a
default notice. After receipt of a default notice Foothills has 15 days to cure
the default or the lease can be terminated. In addition, if Foothills fails to
make federal, state, and county maintenance payments or filing fees at least 15
days prior to due date, the landlord may notify Foothills of a possible default.
After 10 days, if this default is not cured the landlord may make the payments
and Foothills must reimburse the landlord within 30 days plus a 20% penalty or
the lease can be terminated.
Foothills may terminate the lease at any time but must give written notice 30
days prior to relinquishing the leased property. In the event Foothills desires
to terminate the agreement after June 1 of any year, we remain responsible for
all filing fees for the next assessment year regarding the leased property. In
addition, Foothills must quitclaim any claim located or acquired within one mile
of the leased area to the landlord.
Annual maintenance fees are due on the claims by August 31. Federal fees are
$100 per claim per year payable to the Department of the Interior, Bureau of
Land management. State fees are $5.50 per year per claim payable to the White
Pine County Recorder in Ely, Nevada.
Our business activities to date have been restricted to obtaining a report from
our registered professional mining engineer, Edward P. Jucevic, obtaining a
mining lease and preparing our public offering. Mr. Jucevic has no direct or
indirect interest in any of the mining claims leased to Foothills and will not
be offered any interest in the future. According to Mr. Jucevic's report, the
area hosts significant gold and silver values as defined in underground sampling
and past production.
Mr. Jucevic's report details the geological and mining history of the claims
leased by Foothills, including the land status, climate, geology and
mineralization. Mr. Jucevic believes that based upon previous mining activity in
the area, sufficient evidence exists to warrant further exploration on the
leased property which could then lead to actual mining operations.
The earliest known mining activity in the area was conducted in 1869 when gold,
silver and lead was discovered. The Nevada Mining District where our claims are
located was formed and production of precious metals occurred in 1869 and
1873-1875. A shoot of high grade gold-silver-lead ore was mined in the late 19th
century. Exploration for manganese started during World War I and continued into
the cold war years. At least 14 diamond drill holes tested the mines. The holes
were assayed for manganese, lead, zinc and silica, but were not assayed for
gold. Sporadic manganese production occurred between 1910 and 1951 when
manganese prices escalated. More than 25,000 tons of manganese were mined during
this period.
Mr. Jucevic's report concludes and recommends that the Nevada Mining District
hosts significant gold and silver values as defined in underground sampling and
past production. Exploration efforts have indicated mine-able grades and
thickness near the surface, but have failed to delineate a significant ore body
to date. Other surveys have identified untested exploration opportunities to the
north of any known drilling. One survey has also identified significant fault
zones coincident with the known mineralization that continue to the north. These
fault extensions have not been explored by drilling. With the high grades
present, an exploration program should be undertaken toward these mineralized
faults.
The exploration program proposed by Foothills is designed to determine whether
mining operations would be economically feasible. It is uncertain at this time
the precise level of mineralization that would justify actual mining operations.
Some of the factors that would be used by Foothills to determine whether to
proceed with mining operations would be the data generated by the proposed
exploration program. This data will be evaluated to confirm that a mineral
deposit is sufficiently defined on three or more sides. Another factor would be
investigation into whether a buyer or a market exists for the minerals and the
prevailing market price for the minerals.
The recommended exploration program is designed to find gold and silver bearing
zones. The recommended exploration program for Foothills is in two phases as
follows:
PHASE 1
1. Acquisition by staking of open ground in portions of sections 2, 3, 10 and
11, Township 15 North, Range 64 East surrounding the claims.
2. Compile all drilling and geochemical data. Reinterpret and combine
results of geophysical surveys. Rank anomalous areas.
3. Detailed mapping of the stratigraphy within the property boundaries,
reconnaissance sampling and comparison with previous drilling. Soil sample areas
of potential interest along strike of known mineralization and fill in any areas
of interest in the main district.
4. Drilling of 8 angle holes 300 feet (91 m) long across the interpreted feeder
faults. Samples to be assayed for gold, silver, arsenic, mercury, lead, zinc and
thallium on 10 feet (3m) intervals.
5. Reclamation.
PHASE 2
1. Drilling of 30 angle holes averaging 500 feet long across the mineralized
feeder faults to determine extent, depth and dip of mineralization. Several of
these holes will be targeted for the lower Pilot Shale horizon to test for
disseminated mineralization as well.
2. Reclamation
Approximate costs of the recommended program are listed below.
PHASE 1
RECOMMENDATION COST
Claim Staking $ 4,000
Filing Fees $ 6,000
Reinterpretation of Geophysics $ 3,000
Compilation $ 5,000
Soil and Rock Sampling $ 10,000
Permitting Geologist and Expenses $ 14,000
Drilling and assaying $ 52,000
Reclamation $ 6,000
TOTAL COST PHASE I: $100,000
Phase 1 should take about three months to complete.
PHASE 2
RECOMMENDATION COST
Drilling and assaying $150,000
Geologist and Expenses $ 15,000
Drill Site Construction $ 10,000
Permitting and Reclamation $ 25,000
TOTAL COST PHASE II $200,000
Phase 2 would take six months to complete. The proceeds of our public offering
will be insufficient to complete Phase II.
Location and Access
The project is located in eastern Nevada approximately 400 miles east of Reno.
The property is located within sections 10 and 11 of Township 15 North, Range 64
East.
Access to the property from Ely, Nevada, is via highway US 50, US 93 and US 6
south for a distance of 8.2 miles to the CCC Ranch road. Turn east on an
easterly trending, well maintained gravel road for 4.3 miles to the property.
Topographic coverage is provided by the USGS Comins Lake Quadrangle 1:24000
sheet.
Land Status
According to U. S. Bureau of Land Management (USBLM) records in Reno, Nevada,
there are a total of 5 valid unpatented lode mining claims within the above
mentioned sections. The TC 36 - 40 claims with USBLM serial numbers NMC 709646 -
709650. These are the unpatented claims that have been leased by Foothills. The
property totals approximately 100 acres. The owner of record is Herb Duerr.
Rental fees assessed by the USBLM and County assessment fees have been paid
through August 31, 2001. Federal fees are $100 annually per claim and state fees
are $5.50 annually per claim.
The surrounding lands are owned by the USBLM and open for staking. Mr. Jucevic
has recommended that an additional 15 claims be located to cover the strike and
provide an adequate buffer on either side of the mineralized zone.
Climate and local resources.
The property is located at elevations ranging from 6900 to 7050 feet in gently
rolling hills covered with sagebrush and Pinon pines. The climate is temperate
with moderate snow cover from December to March. No perennial streams exist on
the property, however groundwater is plentiful. Power lines are located about
three miles west of the property. The closest population center is Ely, Nevada
located about 10 miles northwest.
Geology
The area has been affected by numerous geological events. Uplift and erosion
have taken place at least twice in the region. High angle structures provided a
path for intrusive dikes and later a plumbing system for hydrothermal fluids.
The main trend of mineralization, north-northeast, parallels the range and is
considered a part of one or more of the uplift events. A second set of northwest
trending structures appear to be related to cleavage and perpendicular to one or
more folding events along the range front. This folding event has developed an
elevation characterized by series of shallow shafts in the center of the
district. A third series of faults are hypothesized from the geophysical
surveys. These faults appear to be nearly easterly trending. They appear to
contain significant mineralization based upon previous sampling.
Faulting provides the plumbing system for hydrothermal fluids to permeate the
host rock and develop mineral deposits. The Nevada Mining Districts are
developed along major fault systems in the same formations. Geological
structures may point to a possible gold system at depth. Ore grade gold and
silver on surface and in underground workings have been found in the area.
Because geological structure appear to control all of the known metal
occurrences in the area, the most important function of further exploration will
be to determine the location and strength of feeder structures and the depth of
these structures.
Alteration and Mineralization
A composite of all rock, soil and drill results for gold indicates at least
three separate mineralized areas. Air track holes on the east side of the
property indicate a shallow block of mineralization up to 40 feet thick. No
deeper drilling is known in this area.
The workings include underground sampling and two drill holes that indicate high
grade gold associated with a fault zone to 10 feet wide hosted in limestone.
This mineralization is projected into the underlying shale limestone which hosts
disseminated mineralization.
Surveys
A survey completed by Echo Bay defined several anomalous areas of low
resistivity below 100 feet or more that could contain mineralization. These
anomalous zones are on the north end of the property and have yet to be tested.
We do not intend to interest other companies in the property if we find
mineralized materials. We intend to try to develop the reserves ourselves.
Competitive Factors
The mineral mining industry is fragmented. We compete with other exploration
companies looking for a variety of mineral reserves. We may be one of the
smallest exploration companies in existence. Although we will be competing with
other exploration companies, there is no competition for the exploration or
removal of minerals from our property. Readily available markets exist in North
America and around the world for the sale of minerals. Therefore, we intend to
develop mining claims to the production decision, point, and an advanced stage
in which major mining production companies would seriously consider pursuing the
property as a valuable and significant acquisition.
Regulations
General exploration work including surveying, geophysical and geochemical
programs that do minimal surface disturbance do not require county, state or
federal permits. The initial reverse circulation drill program will only require
minimal permits as the surface and minerals are privately owned. Expansion in to
Phase II will likely need approval and bonding.
We anticipate no discharge of water into active stream, creek, river, lake or
any other body of water regulated by environmental law or regulation. No
endangered species will be disturbed. Restoration of the disturbed land will be
completed according to law. All holes, pits and shafts will be sealed upon
abandonment of the property. It is difficult to estimate the cost of compliance
with the environmental law since the full nature and extent of our proposed
activities cannot be determined until we start our operations and know what that
will involve from an environmental standpoint.
We are in compliance with the all laws and will continue to comply with the laws
in the future. We believe that compliance with the laws will not adversely
affect our business operations. Foothills anticipates that it will be required
to post bonds in the event the expanded work programs involve extensive surface
disturbance.
Employees
Initially, we intend to use the services of subcontractors for manual labor
exploration work on our properties. Foothills will consider hiring technical
consultants as funds from our public offering and additional offerings or
revenues from operations in the future permit. At present, our only employee is
Mr. J. Earl Terris.
Employees and Employment Agreements
At present, we have no employees, other than Mr. Terris, our president and sole
director who has received no compensation for his services. Mr. Terris does not
have an employment agreement with us. We presently do not have pension, health,
annuity, insurance, stock options, profit sharing or similar benefit plans;
however, we may adopt plans in the future. There are presently no personal
benefits available to any employees.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
We are a start-up, exploration stage company and have not yet generated or
realized any revenues from our business operations.
Our auditors have issued a going concern opinion. This means that our auditors
believe there is doubt that we can continue as an on-going business for the next
twelve months unless we obtain additional capital to pay our bills. This is
because we have not generated any revenues and no revenues are anticipated until
we begin removing and selling minerals. Accordingly, we must raise cash from
sources other than the sale of minerals found on our property. That cash must be
raised from other sources. Our only other source for cash at this time is
investments by others in our company. We must raise cash to implement our
project and stay in business.
To meet our need for cash we are attempting to raise money from our public
offering. There is no assurance that we will be able to raise enough money
through our public offering to stay in business. Whatever money we do raise will
be applied first to exploration and then to development, if development is
warranted. If we do not raise all of the money we need from our public offering,
we will have to find alternative sources, like a second public offering, a
private placement of securities, or loans from our officers or others. time. At
the present time, we have not made any arrangements to raise additional cash,
other than through our public offering. If we need additional cash and cannot
raise it, we will either have to suspend operations until we do raise the cash,
or cease operations entirely.
We will be conducting research in connection with the exploration of our
property. We are not going to buy or sell any plant or significant equipment. We
do not expect a change in our number of employees.
Limited Operating History; Need for Additional Capital
There is no historical financial information about Foothills upon which to base
an evaluation of our performance. We are an exploration stage company and have
not generated any revenues from operations. We cannot guarantee we will be
successful in our business operations. Our business is subject to risks inherent
in the establishment of a new business enterprise, including limited capital
resources, possible delays in the exploration of our properties, and possible
cost overruns due to price and cost increases in services.
To become profitable and competitive, we conduct research and exploration of our
leased claims. We are seeking equity financing to provide for the capital
required to implement our research and exploration phases.
We have no assurance that future financing will be available to us on acceptable
terms. If financing is not available on satisfactory terms, we may be unable to
continue, develop or expand our operations. Equity financing could result in
additional dilution to existing shareholders.
Results of Operations
From Inception on November 17, 2000
We just recently acquired our first unpatented lode mineral claims. At this time
we have not yet commenced the research and/or exploration stage of our mining
operations on that property. We have paid $5,000 for a mining lease. As December
31, 2000 we have experienced operating losses of $4,927.
Plan of Operations
Since inception, we have used our common stock to raise money for our property
acquisition, for corporate expenses and to repay outstanding indebtedness. Net
cash provided by financing activities from inception on November 17, 2000 to
December 31, 2000 was $10,968 as a result of proceeds received from our
president and sole director. Our business activities to date have been
restricted to obtaining a mining engineer's report, a mining lease and preparing
our public offering. We will be unable to undertake Phase I and conduct any
exploration activities unless at least 25% of our public offering is sold.
Foothills's plan of operations for the next twelve months is to at a minimum
undertake Phase I of the drilling and exploration program which will cost
$100,000.00. We cannot complete Phase I, however, unless at least 70% of the
offering is sold. The total cost of Phase II is estimated to be $200,000.00 and
therefore cannot be completed unless this entire offering is sold and additional
capital is raised by Foothills. We have no plan to engage in any alternative
business if Foothills ceases or suspends operations as a result of not having
enough money to complete any phase of the exploration program.
We intend to follow the recommendations of our expert mining engineer, Edward P.
Jucevic, who has prepared a technical report on the leased claims. Mr. Jucevic
has recommended conducting an exploration program in two distinct phases. Phase
I will involve staking of open ground surrounding the leased claims area and
compiling all available drilling and geochemical data for the claims area for
analysis. We then intend to perform detailed mapping within the leased property
boundaries and take some reconnaissance sampling to compare with previous
drilling results. With this information in hand, we intend to drill eight angled
holes 300 feet deep along mineralized fault lines. Samples will be extracted and
assayed for gold, silver, arsenic, mercury, lead, zinc and thallium.
We anticipate that we will incur total expenses of $100,000 during Phase I.
These expenses will include $4,000 for claim staking, $6,000 for filing fees,
$3,000 of analyzing existing data and $5,000 for data compilation. In addition,
we will incur expenses of $10,000 for soil and rock sampling, $14,000 for
permitting and geologist fees, $52,000 for drilling and assaying and $6,000 for
reclamation.
Upon completion of Phase I, we will determine the cost effectiveness of
proceeding to Phase II. In making this determination, we will undertake to have
our data from Phase I independently verified for accuracy by an independent
registered engineer to confirm the existence of mineral deposits. In addition,
we will make investigations into whether a buyer or a market exists for our
mineral products and analyze whether the minerals can be extracted by us for a
profit.
Liquidity and Capital Resources
As of the date of the registration statement, we have yet to generate any
revenues from our business operations. Since our inception, Mr. Terris has paid
$25,000 in cash in exchange for 250,000 shares of common stock. This money has
been utilized for organizational and start-up costs and as operating capital.
We will be required to sell at least 25% of our public offering before
commencing Phase I of our planned exploration program. In addition, unless more
than 75% of the offering is sold, we will not be able to complete Phase I.
Assuming sufficient funds are raised in our public offering to complete Phase I,
we will be able evaluate within the next 12 months whether to proceed with Phase
II. Should we decide to proceed with Phase II, we will be required to raise
approximately $150,000.00 in additional capital to fully implement our business
plan.
According to the terms or our mineral lease, we are obligated by March 1, 2002
to pay a minimum royalty of $7,500, a minimum royalty of $10,000 by March 1,
2003, a minimum royalty of $20,000 by March 1, 2004 and a minimum royalty of
$50,000 by March 1, 2005 and $50,000 annually thereafter for the balance of the
20 year lease term. In addition, we must pay a perpetual royalty of 0.5% to the
landlord. We also have the right to buy out the landlord's interest at any time
for $5,000,000 less any royalties already paid. We will be required to
renegotiate the terms of the mineral lease in the event we are unable to raise
sufficient funds in time to meet these obligations.
As of September 30, 2002, we had incurred losses of $75,140. As at September 30,
2002, the Company had received $53,100 as subscriptions for 1,062,000 common
shares at $0.05 per share pursuant to a prospectus and registration statement
filed on Form SB-2. The prospectus was for the sale and issue of up to 4,000,000
shares at a price of $0.05 per share. Subsequent to September 30, 2002, the
Company received further share subscriptions totalling $2,700 for 54,000 common
shares and issued 1,116,000 common shares at $0.05 per share pursuant to the
above noted SB-2.
ITEM 3. CONTROLS AND PROCEDURES
As required by Rule 13a-15 under the Exchange Act, the Company carried out an
evaluation of the effectiveness of the design and operation of the Company's
disclosure controls and procedures within the 90 days prior to the filing date
of this report. This evaluation was carried out under the supervision and with
the participation of the Company's management, including the Company's Chief
Executive Officer and Company's Chief Financial Officer. Based upon that
evaluation, the Company's Chief Executive Officer and Chief Financial Officer
concluded that the Company's disclosure controls and procedures are effective.
There have been no significant changes in the Company's internal controls or in
other factors, which could significantly affect internal controls subsequent to
the date the Company carried out its evaluation.
Disclosure controls and procedures are controls and other procedures that are
designed to ensure that information required to be disclosed in Company reports
filed or submitted under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Securities and Exchange
Commission's rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed in Company reports filed under the Exchange Act is
accumulated and communicated to management, including the Company's Chief
Executive Officer and Chief Financial Officer, to allow timely decisions
regarding required disclosure.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material legal proceedings to which we (or any of our officers
and directors in their capacities as such) is a party or to which our property
is subject and no such material proceedings is known by our management to be
contemplated.
ITEM 2. CHANGES IN SECURITIES - 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 -
(a) Exhibits - 99.1
(b) Reports on Form 8-K - NONE
SIGNATURE
In accordance with the requirements of the Securities and Exchange Act of 1934,
as amended, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: November 15, 2002 /s/ J. Earl Terris
J. Earl Terris
President
CERTIFICATIONS*
I, J. Earl Terris, certify that;
1. I have reviewed this quarterly report on Form10-KSB of Foothills
Resources, Inc.;
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;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
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 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 registrant's board of directors (or persons performing the
equivalent functions):
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
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 or in other facts that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date:
/s/ J. Earl Terris
J. Earl Terris
Chief Executive Officer
*Provide a separate certification for each principal executive officer and
principal financial officer of the registrant. See Rules 13a-14 and 15d-14. The
required certification must be in the exact form set forth above.
Exhibit 99.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
AND CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, J. Earl Terris, Chief Executive Officer and Chief Financial Officer, certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-QSB of
Foothills Resources, Inc., Inc. for the quarterly period ended September 30,
2002 fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 and that the information contained in the
Quarterly Report on Form 10-QSB fairly presents in all material respects the
financial condition and results of operations of Bream Ventures, Inc. By:
/s/J. Earl Terris
J. Earl Terris
Chief Executive Officer &
Chief Financial Officer
Date: November 15, 2002
FOOTHILLS RESOURCES, INC.
(A Pre-exploration Stage Company)
BALANCE SHEETS
March 31, 2002 and December 31, 2001
(Stated in US Dollars)
(Unaudited)
March 31, December 31,
ASSETS 2002 2001
------ ---- ----
Current
Cash $ 379 $ 4,962
Prepaid expenses 1,100 200
$ 1,479 $ 5,162
LIABILITIES
Current
Accounts payable $ 7,750 $ 19,393
Due to related parties - Note 3 4,939 4,939
12,689 24,332
STOCKHOLDERS' EQUITY (DEFICIENCY)
Preferred stock, $0.001 par value
1,000,000 shares authorized, none outstanding
Common stock, $0.001 par value
100,000,000 shares authorized
250,000 (2001: 250,000) shares outstanding 250 250
Paid-in capital 24,750 24,750
Subscriptions received - Note 8 21,350 5,000
Deficit accumulated during the pre-exploration stage ( 57,560) ( 49,170)
( 11,210) ( 19,170)
$ 1,479 $ 5,162
FOOTHILLS RESOURCES, INC.
(A Pre-exploration Stage Company)
STATEMENTS OF OPERATIONS
for the three months ended March 31, 2002 and 2001
and for the period November 17, 2000 (Date of Incorporation) to March 31, 2002
(Stated in US Dollars)
(Unaudited)
---------
November 17, 2000
Three months Three months (Date of
ended ended Incorporation)
March 31, March 31, To March 31,
2002 2001 2002
---- ---- ----
Revenue
Interest income $ 3 $ 65 $ 129
Expenses
Bank charges 106 75 424
Management fees 3,000 4,000 9,500
Office and miscellaneous 100 - 325
Professional fees 3,273 11,640 37,740
Resource property costs 1,500 5,000 7,422
Transfer agent fees 414 588 2,278
8,393 21,303 57,689
Net loss for the period $ 8,390 $ 21,238 $ 57,560
Basic loss per share $ 0.03 $ 0.11
Weighted average number of shares outstanding 250,000 196,500
FOOTHILLS RESOURCES, INC.
(A Pre-exploration Stage Company)
STATEMENTS OF CASH FLOWS
for the three months ended March 31, 2002 and 2001
and for the period November 17, 2000 (Date of Incorporation) to March 31, 2002
(Stated in US Dollars)
(Unaudited)
---------
November 17, 2000
Three months Three months (Date of
ended ended Incorporation)
March 31, March 31, To March 31,
2002 2001 2002
---- ---- ----
Cash Flows from Operating Activities
Net loss for the period $ ( 8,390) $ ( 21,238) $ ( 57,560)
Changes in non-cash working capital balances
related to operations
Prepaid expenses ( 900) ( 1,200) ( 1,100)
Accounts payable ( 11,643) 895 7,750
( 20,933) ( 21,543) ( 50,910)
Cash Flows from Financing Activities
Capital stock issued - - 25,000
Due to related parties - 189 4,939
Subscriptions received 16,350 10,700 21,350
16,350 10,889 51,289
Decrease in cash during the period ( 4,583) ( 10,654) ( 10,654)
Cash, beginning of the period 4,962 10,968 -
Cash, end of the period $ 379 $ 314 $ 379
Supplemental disclosure of cash flow information Cash paid for:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
FOOTHILLS RESOURCES, INC.
(A Pre-exploration Stage Company)
STATEMENT OF STOCKHOLDERS'
DEFICIENCY for the period November 17, 2000 (Date
of Incorporation) to March 31, 2002
(Stated in US Dollars)
(Unaudited)
---------
Deficit
Accumulated
Additional During the
Common Shares Paid-in Subscriptions Exploration
-------------
# Par Value Capital Received Stage Total
----------- --------- ------- -------- ----- -----
Capital stock issued
pursuant to an offering
memorandum for cash
- at $0.10 143,000 $ 143 $ 14,157 $ - $ - $ 14,300
Net loss for the period - - - - ( 4,927) ( 4,927)
Balance, December 31, 2000 143,000 143 14,157 - ( 4,927) 9,373
Capital stock issued
pursuant to an offering
memorandum for cash
- at $0.10 107,000 107 10,593 - - 10,700
Net loss for the three months - - - - ( 21,238) ( 21,238)
Ended March 31, 2001
Balance, March 31, 2001 250,000 $ 250 $ 24,750 - $ ( 26,165) $ ( 1,165)
FOOTHILLS RESOURCES, INC.
(A Pre-exploration Stage Company)
STATEMENT OF STOCKHOLDERS'
DEFICIENCY for the period November 17, 2000 (Date
of Incorporation) to March 31, 2002
(Stated in US Dollars)
(Unaudited)
---------
Deficit
Accumulated
Additional During the
Common Shares Paid-in Subscriptions Exploration
-------------
# Par Value Capital Received Stage Total
----------- --------- ------- -------- ----- -----
Balance, March 31, 2001 250,000 $ 250 $ 24,750 - $ ( 26,165) $ ( 1,165)
Net loss for the nine months
Ended March 31, 2001 - - - - ( 23,005) (23,005)
Subscriptions received - - - 5,000 - 5,000
Balance, December 31, 2001 250,000 $ 250 $ 24,750 $ 5,000 $ ( 49,170) $ ( 19,170)
Subscriptions received - - - 16,350 - 16,350
Net loss for the three months - - - - ( 8,390) ( 8,390)
Ended March 31, 2002
Balance, March 31, 2002 250,000 $ 250 $ 24,750 $ 21,350 $ ( 57,560) $ ( 11,210)
FOOTHILLS RESOURCES, INC.
(A Pre-exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2002
(Stated in US Dollars)
(Unaudited)
---------
Note 1 Interim Reporting
While the information presented in the accompanying interim three
months financial statements is unaudited, it includes all
adjustments which are, in the opinion of management, necessary to
present fairly the financial position, results of operations and
cash flows for the interim period presented. All adjustments are
of a normal recurring nature. It is suggested that these financial
statements be read in conjunction with the company's December 31,
2001 annual financial statements.
Note 2 Commitment
By a letter lease agreement effective March 1, 2001 the Company
was granted the exclusive right to explore and mine the Golden
Cross resource property located in White Pine County of the State
of Nevada. The term of this lease is for 20 years renewable for an
additional 20 years so long as the conditions of the lease are
met. Minimum payments and performance commitments are as follows:
Minimum Advance Royalty Payments:
The owner shall be paid a royalty of 3% of the net smelter returns
from all production. In respect to this royalty, the Company is
required to pay minimum advance royalty payments of the following:
- - $5,000 upon execution (paid); - $1,500 on March 1, 2002 (paid); - $6,000 on
August 1, 2002; - $10,000 on March 1, 2003 - $20,000 on March 1, 2004 - $50,000
on March 1, 2005 and thereafter
The Company can reduce the net smelter return royalty to 0.5% by
payment of a buy-out price of $5,000,000. Advance royalty payments
made to the date of the buy-out will be applied to reduce the
buy-out price.
Performance Commitment:
In the event that the Company terminates the lease after June 1 of
any year, it is required to pay all federal and state mining claim
maintenance fees for the next assessment year. The Company is
required to perform reclamation work on the property as required
by federal, state and local law for disturbances resulting from
the Company's activities on the property.
Note 3 Common Stock
Commitments:
As at March 31, 2002, the Company had received $21,350 as
subscriptions for 427,000 common shares at $0.05 per share
pursuant to a prospectus and registration statement filed on Form
SB-2 which is subject to regulatory approval. The prospectus is
for the sale and issue of up to 4,000,000 shares at a price of
$0.05 per share.
Subsequent to March 31, 2002, the Company received further share
subscriptions totalling $1,500 for 30,000 common shares at $0.05
per share pursuant to the above noted SB-2.