10-K 1 0001.txt UNITED STATES SECURITY AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES AND EXCHANGE ACT OF 1934 (Mark One) (X) ANNUAL REPORT PURSUANT TO SECTION 12 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the year ended December 31, 2000 ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the transition period Commission File Number 001-04026 PRINCETON MINING COMPANY (Exact name of registrant as specified in its charter) IDAHO 82-600872 (State of Incorporation or Organization) (IRS Employer ID Number) 413 CEDAR STREET, WALLACE, IDAHO 83873 (Address of Principal Executive Offices) (208) 752-1131 (Registrant's Telephone Number) Securities Registered Under Section 12 (b) of the Act: COMMON NON-ASSESSABLE STOCK, $.10 PAR VALUE, PREFERRED STOCK, $.10 PAR VALUE (Title of Class) Securities Registered Under Section 12 (g) of the Act: NONE (Title of Class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section `3 or `5(d) of the Securities Exchange act of 1934 during the preceding 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. (X) YES ( ) NO Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III or any amendment to this Form 10-K. (X) The aggregate market value based on the average bid and asked prices of the registrant's Common Stock held by non-affiliates of the registrant at February 26, 2001, was approximately $345,972. As of February 26, 2001, there were 9,569,140 shares of the registrant's common stock outstanding. There were no shares of the registrant's preferred stock outstanding. TABLE OF CONTENTS PAGE PART I Item 1. Business 3 Item 2. Properties 3 Item 3. Legal Proceedings 3 Item 4. Submission of Matters to a Vote of Security Members 3 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters 5 Item 6. Selected Financial Data 4-5 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 5 Item 8. Financial Statements 7-17 Item 9. Changes in and Disagreements with Accountants 5-6 PART III Item 10. Directors and Executive Officers of the Registrant 18-19 Item 11. Executive Compensation 19 Item 12. Security Ownership of Certain Beneficial Owners and Management 19 Item 13. Certain Relationships and Related Transactions 19 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 19-20 Signature Page Exhibit Index PRINCETON MINING COMPANY FORM 10-K ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2000 PART I Item 1 - BUSINESS Princeton Mining Company (the "Company") was incorporated under the laws of Idaho in September 1950. The Company 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. There are numerous Federal and State laws and regulations related to environmental protection, which have direct application to mining and milling activities. The more significant of these laws deal with mined land reclamation and wastewater discharge from mines and milling operations. The Company does not believe that these laws and regulations as presently enacted will have a direct material adverse effect on its mining claims. Item 2 - PROPERTIES The information regarding the Properties of the Company is set forth under "Item 1. Business" of this report, and is incorporated by reference in answer to this item. Item 3 - LEGAL PROCEEDINGS None Item 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no shareholders' meetings during 2000. PRINCETON MINING COMPANY FORM 10-K ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2000 PART II Item 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS (a) The market price ranges of the Company's common stock during each quarter of the years 2000 and 1999 were as follows: 2000 1999 ------------------------ ------------------------ High Low High Low ---- --- ---- --- 1st Quarter .12 .06 .01 .01 2nd Quarter .10 .07 .01 .01 3rd Quarter .50 .08 .05 .01 4th Quarter .50 .22 .08 .05 (b) Approximate Number of Equity Security Holders. --------------------------------------------------- Title Class (1) Number of Record Holders December 31, 2000 ------------ ------------------------------------------ Common stock, par value Approximately 1,350 (1) 10 cents per share (1) Included in the number of shareholders of record are shares held in "nominee" or "street" name. (c) No dividends were paid by the Company in 2000 or 1999. Item 6 - SELECTED FINANCIAL DATA The following data should be read in conjunction with the Company's financial statements and the notes thereto: Selected Income Statement Data: Year Ended December 31, ----------------------- 1996 1997 1998 1999 2000 ---------- ---------- ---------- ---------- ---------- Net Revenues $ -0- $ -0- $ -0- $ -0- $ -0- Net income (loss) (34,578) (317,839) (13,271) (27,390) (31,848) Per share (.004) (.033) (.001) (.0029) (NIL) Cash dividends per share -0- -0- -0- -0- -0- PRINCETON MINING COMPANY FORM 10-K ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2000 Item 6 - SELECTED FINANCIAL DATA (CONTINUED) The following data should be read in conjunction with the Company's financial statements and the notes thereto: Selected Balance Sheet Data: Year Ended December 31, ----------------------- 1996 1997 1998 1999 2000 ---------- ---------- ---------- ---------- ---------- Current Assets $ 108 $ 110 $ 72 $ 113 $ 155 Current Liabilities 296,386 10,372 23,605 35,473 56,880 Working Capital (296,278) (10,262) (23,533) (35,360) (56,725) Total Assets 300,796 25,110 25,022 10,113 2,155 Long-term debt -0- -0- -0- -0- -0- Stockholders' Equity 4,410 14,738 1,467 (25,360) (54,725) Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Company incurred a net loss of $31,848 in 2000 compared to a net loss of $27,390 for 1999. A large portion of the loss for 2000 was attributed to a write down of $8,000 for the impaired value of the Company's unpatented mining claims, and $3,606 for interest expense. The Company has two unpatented mining claims which have been adjusted to a value of $2,000. The only other asset is a cash balance of $155. Total current liabilities totaled $56,880 as of December 31, 2000. Thus, there is a negative working capital balance of $56,725. Item 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The company's financial statements appear following Part II of the report. Item 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS On January 3, 2001, the Board of Directors of Princeton Mining Company (the "Company") engaged DeCoria, Maichel, & Teague P.S. to serve as the Company's independent accountants for the fiscal year ending December 31, 2000. Concurrently, the Board of Directors dismissed Williams and Webster, P.S., the Company's previous independent accountants. PRINCETON MINING COMPANY FORM 10-K ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2000 Item 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS (CONTINUED) The engagement of DeCoria, Maichel, & Teague P.S. and the dismissal of Williams and Webster, P.S. were pursuant to a resolution approved and passed by the Company's Board of Directors. During the fiscal year ended December 31, 1999, and the subsequent interim periods preceding the dismissal, (i) there were no disagreements with Williams and Webster, P.S. on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements if not resolved to its satisfaction would have caused it to make reference in connection with its report to the subject matter of the disagreement, and Williams and Webster, P.S. have not advised the Company of any reportable events as defined in paragraph (*A) through (D) of Regulation S-K Item 304 (a)(1)(v). The Accountants' report of Williams and Webster, P.S. as of and for the year ended December 31, 1999, did not contain any adverse opinion or disclaimer of opinion, but was qualified as to the uncertainty of the Company's ability to continue as a going concern. PRINCETON MINING COMPANY December 31, 2000 Financial Statements REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Board of Directors Princeton Mining Company Wallace, Idaho INDEPENDENT AUDITORS' REPORT We have audited the accompanying balance sheet of Princeton Mining Company as of December 31, 2000, and the related statements of operations, stockholders' deficit, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of Princeton Mining Company as of December 31, 1999 were audited by other auditors whose report dated February 29, 2000, expressed an unqualified opinion on those statements. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Princeton Mining Company as of December 31, 2000, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company's operating losses raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /S/ DeCoria, Maichel & Teague P.S. Spokane, Washington February 1, 2001 Princeton Mining Company TABLE OF CONTENTS Page Balance Sheets, December 31, 2000 and 1999 1 Statements of Operations for the years ended December 31, 2000 and 1999 2 Statements of Changes in Stockholders' Deficit for the years ended December 31, 2000 and 1999 3 Statements of Cash Flows for the years ended December 31, 2000 and 1999 4 Notes to Financial Statements 5-8 Princeton Mining Company BALANCE SHEETS December 31, 2000 and 1999 2000 1999 --------------- --------------- ASSETS Current assets: Cash $ 155 $ 113 --------------- --------------- Total current assets 155 113 --------------- --------------- Fixed assets: Mineral properties 2,000 10,000 --------------- --------------- Total assets $ 2,155 $ 10,113 =============== =============== LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Accounts payable $ 3,774 $ 5,052 Advances payable to related party 49,500 28,400 Accrued interest on advances payable 3,606 2,021 --------------- --------------- Total current liabilities 56,880 35,473 --------------- --------------- Stockholders' deficit: Preferred stock, $0.10 par value; 1,000,000 shares authorized; no shares issued and outstanding Common stock, $0.10 par value; 29,000,000 shares authorized; 9,569,140 shares issued and outstanding 956,914 956,914 Common stock discount (277,635) (280,118) Accumulated deficit (734,004) (702,156) --------------- --------------- Total stockholders' deficit (54,725) (25,360) --------------- --------------- Total liabilities and stockholders' deficit $ 2,155 $ 10,113 =============== =============== The accompanying notes are an integral part of these financial statements. Princeton Mining Company STATEMENTS OF OPERATIONS For the years ended December 31, 2000 and 1999 2000 1999 --------------- --------------- Operating expenses: Mineral property maintenance expenses $ 750 $ 1,047 General and administrative expenses 19,492 9,322 --------------- --------------- 20,242 10,369 Other expenses: Interest expense 3,606 2,021 Write-down of mineral properties 8,000 15,000 --------------- --------------- 11,606 17,021 --------------- --------------- Net loss $ (31,848) $ (27,390) =============== =============== Net loss per share-basic $ Nil $ Nil =============== =============== Weighted average common shares outstanding-basic 9,569,140 9,569,140 =============== =============== The accompanying notes are an integral part of these financial statements. Princeton Mining Company STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT For the years ended December 31, 2000 and 1999 COMMON COMMON STOCK STOCK ACCUMULATED SHARES AMOUNT DISCOUNT DEFICIT TOTALS ----------- ----------- ----------- ----------- ----------- Balance, December 31, 1998 9,569,140 $ 956,914 $ (280,681) $ (674,766) $ 1,467 Contribution of capital 563 563 Net loss (27,390) (27,390) ----------- ----------- ----------- ----------- ----------- Balance, December 31, 1999 9,569,140 956,914 (280,118) (702,156) (25,360) Contribution of capital 483 483 Common stock warrants issued for consulting services 2,000 2,000 Net loss (31,848) (31,848) ----------- ----------- ----------- ----------- ----------- Balance, December 31, 2000 9,569,140 $ 956,914 $ (277,635) $ (734,004) $ (54,725) =========== =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements. Princeton Mining Company STATEMENTS OF CASH FLOWS For the years ended December 31, 2000 and 1999 2000 1999 --------------- --------------- Cash flows from operating activities: Net loss $ (31,848) $ (27,390) Adjustments to reconcile net loss to net cash used by operating activities: Write-down of mineral properties 8,000 15,000 Common stock warrants issued for consulting services 2,000 Change in: Accounts payable (1,278) Accrued interest on advances payable 1,585 1,268 --------------- --------------- Net cash used by operating activities (21,541) (11,122) --------------- --------------- Cash flows from financing activities: Advances from related party 21,100 10,600 Contribution of capital 483 563 --------------- --------------- Net cash provided by financing activities 21,583 11,163 --------------- --------------- Net change in cash 42 41 Cash, beginning of year 113 72 --------------- --------------- Cash, end of year $ 155 $ 113 =============== =============== Supplemental disclosure of cash flow information: Cash paid during the year for interest $ 2,021 $ 1,905 =============== =============== The accompanying notes are an integral part of these financial statements. PRINCETON MINING COMPANY NOTES TO FINANCIAL STATEMENTS 1. DESCRIPTION OF BUSINESS Princeton Mining Company (the "Company") is an Idaho Corporation that was incorporated on September 29, 1950. The Company was organized to explore for, acquire and develop mineral properties in the State of Idaho and the Inland Northwest. Unless otherwise indicated, amounts provided in these notes to the financial statements pertain to continuing operations. The Company has incurred operating losses since its inception. The Company has no recurring source of revenue and has an accumulated deficit and negative working capital. These conditions raise substantial doubt as to the Company's ability to continue as a going concern. The financial statements do not contain any adjustments, which might be necessary, if the Company is unable to continue as a going concern. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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 amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Income taxes Income taxes are recognized in accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes," whereby deferred income tax liabilities or assets at the end of each period are determined using the tax rate expected to be in effect when the taxes are actually paid or recovered. A valuation allowance is recognized on deferred tax assets when it is more likely than not that some or all of these deferred tax assets will not be realized. The Company has not recorded an income tax provision as it has no taxable income. The Company has no net operating loss carryforwards for income tax purposes and accounts for its operating expenses as capitalized deferred development costs on its income tax returns. At December 31, 2000 and 1999, the Company had no deferred tax assets or liabilities. Stock-based compensation Stock-based compensation is accounted for under Statement of Financial Accounting Standards No. 123, ("FASB 123") "Accounting for Stock-Based Compensation," which permits continued application of the intrinsic value method of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees." Under the intrinsic value method, compensation cost represents the fair value of the Company's common stock at the issue date. The Company has accounted for stock purchase warrants issued to a non-employee consultant (See Note 5) in accordance with FASB 123 and recorded compensation expense based upon the fair value of the consulting services provided, as the fair value of the services was more determinable than the fair value of the warrants issued. Reclassification Certain reclassifications of prior year balances have been made to conform to the current year presentation. These reclassifications have no effect on total assets or stockholders' deficit as reported. PRINCETON MINING COMPANY NOTES TO FINANCIAL STATEMENTS, CONTINUED: 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Net loss per share Statement of Financial Accounting Standards No. 128, "Earnings per Share," requires dual presentation of basic earnings per share ("EPS") and diluted EPS on the face of all income statements issued after December 15, 1997 for all entities with complex capital structures. Basic EPS is computed as net income divided by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock options, warrants and other convertible securities. The Company's outstanding stock warrants are antidilutive for the year ended December 31, 2000, and only basic EPS is presented. Accordingly, at December 31, 2000, outstanding warrants to purchase 1,200,000 shares of the Company's common stock were not included in the computation of EPS. Impaired asset policy The Company reviews its long-lived assets periodically to determine if any events or changes in circumstances have transpired which indicate that the carrying value of its assets may not be recoverable. The Company determines impairment by comparing the undiscounted future cash flows estimated to be generated by its assets to their respective carrying amounts. New accounting pronouncements In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities." The Statement requires the Company to recognize all derivatives on the balance sheet at fair value. The Company anticipates that the adoption of this Statement will not have a material effect on its financial statements. Fair values of financial instruments The carrying amounts of financial instruments including cash, accounts payable, and advances payable and accrued interest thereon to a related party, approximated their fair values as of December 31, 2000 and 1999. 3. MINERAL PROPERTIES At December 31, 2000, the Company's mineral properties consisted of two unpatented lode claims, the "Cabin" and the "Princess Fraction," located in the Coeur d' Alene Mining District in Shoshone County, Idaho. At present, no proven or probable reserves have been established at any of the Company's mineral properties. The Company and its properties are subject to a variety of federal and state regulations governing land use and environmental matters. The Company's management believes it is in substantial compliance with all such regulations and is unaware of any pending action or proceeding that would adversely affect the Company. In 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," effective for fiscal years PRINCETON MINING COMPANY NOTES TO FINANCIAL STATEMENTS, CONTINUED: 3. MINERAL PROPERTIES (CONTINUED) beginning after December 15, 1995. The Statement requires that long-lived assets and associated intangibles be written down to their fair values whenever an impairment review indicates that the carrying value cannot be recovered. During 1999, the Company wrote down the carrying value of its mineral properties by $15,000 in recognition of an impairment of the carrying value of the properties. The adjustment reflected management's estimated fair value of $1,000 per claim for each of the Company's ten unpatented lode claims held at December 31, 1999. During 2000, the Company abandoned eight of its ten unpatented lode claims and, as a result of the abandonment, wrote down the carrying value of its mineral properties by $8,000. 4. ADVANCES FROM RELATED PARTY During recent years, the Company has funded its operations from advances provided by H. F. Magnuson, the beneficial owner of a significant interest in the Company's common stock and a related party (See Note 6). The advances are unsecured, payable on demand and accrue interest at 9% per year. During the years ended December 31, 2000 and 1999, the Company accrued interest expense of $3,606 and $2,021 on the advances, respectively. 5. STOCKHOLDERS' DEFICIT Common stock discount Prior to December 31, 1998, the Company issued restricted common stock in exchange for services provided and the extinguishment of advances due related parties. During the issue of these shares the par value of the Company's common stock exceeded its market value. Accordingly, the Company recorded a discount on common stock of $280,681 representing the aggregate effect of the issue. During the years ended December 31, 2000 and 1999, a consultant for the Company paid $483 and $563, respectively, of corporate administrative expenses on behalf of the Company and relinquished the opportunity for repayment. The transactions were accounted for as additional paid-in capital and combined with "Common stock discount" in the stockholders' deficit section of the Company's balance sheets. Common stock warrants During 2000, the Company issued warrants to purchase 1,200,000 shares of the Company's unregistered common stock at $0.01 per share to a consultant as compensation for services associated with listing the Company's stock quotations on the Over the Counter Bulletin Board. The warrants expire in December of 2005. In connection with the issue, the Company recognized $2,000 of compensation expense based upon the fair value of the services provided. 6. RELATED PARTY TRANSACTIONS The Company occupies office space provided by H. F. Magnuson & Company, a company controlled by H. F. Magnuson (See Note 4). The Company pays no rent for the space it occupies and the value of the space is not considered material for financial reporting purposes. During the years ended December 31, 2000 and 1999, administrative and mineral property maintenance expenses totaling $8,982 and $8,078, respectively, were accrued or paid to H. F. Magnuson & Company. At December 31, 2000 and 1999, the Company had accounts payable due H. F. Magnuson & Company of $3,774 and $4,752, respectively. PRINCETON MINING COMPANY FORM 10-K ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2000 PART III Item 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Name of Executive Officers and Principle Occupation, Five-Year Directors and Positions Held Age Business History and Directorships --------------------------------- --- ---------------------------------------- H. James Magnuson, 47 Attorney at Law for more than the past President and Director five years. R. M. MacPhee, 70 Certified Public Accountant for more Director than five years. Director of Western Silver-Lead Corporation. Donald H. Grismer, 69 Employed in mining for more that the Director past five years. Dale B. Lavigne, 70 President, Osburn Drug Company, Director Vice-President and Director Western Silver-Lead Company. Dennis O'Brien, 39 Certified Public Accountant Secretary and Director Mark W. Absec, 43 Certified Public Accountant Assistant Secretary-Treasurer The bylaws of the Company provided that the Directors serve until the next annual meeting of shareholders or until their respective successors have been duly elected and qualified. The bylaws also provide that the officers serve at the discretion of the Board of Directors. PRINCETON MINING COMPANY FORM 10-K ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2000 Item 11 - EXECUTIVE COMPENSATION None Item 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The Magnuson Children's Trusts own 6,423,940 shares of common stock. Item 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS A beneficial shareholder of the Company, H.F. Magnuson, has advanced cash to the Company totaling $49,500 as of December 31, 2000. PART IV Item 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) Financial Statements - See index to Financial Statements at page 8 of this report. (b) Exhibits No additional exhibits are filed as a part of this report. SIGNATURES Pursuant to the requirements of Section 13 of the Securities and 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 ------------------------ (Registrant) /S/ H. James Magnuson /S/ Dennis O'Brien ---------------------------- -------------------------------- H. James Magnuson Dennis O'Brien President and Director Secretary and Director Date: March 14, 2001 Date: March 14, 2001 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the registrant and in the capacities and as of the date indicated. /S/ H. James Magnuson /S/ Dennis O'Brien ---------------------------- -------------------------------- H. James Magnuson Dennis O'Brien President and Director Secretary and Director Date: March 14, 2001 Date: March 14, 2001