-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VYewiFMztTMJClVm5tcN+nuudZKNFyV7KsAQIS7YwFc32bOzfOi1cIqzYi3pqOvt uI4gogDh5pjnUw9Ke1jL3A== 0000016317-03-000001.txt : 20030219 0000016317-03-000001.hdr.sgml : 20030219 20030218200043 ACCESSION NUMBER: 0000016317-03-000001 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20021231 FILED AS OF DATE: 20030219 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CALIFORNIA ENGELS MINING CO CENTRAL INDEX KEY: 0000016317 STANDARD INDUSTRIAL CLASSIFICATION: FORESTRY [0800] IRS NUMBER: 940357560 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-04819 FILM NUMBER: 03571667 BUSINESS ADDRESS: STREET 1: 117 CRESCENT ST STREET 2: P O BOX 778 CITY: GREENVILLE STATE: CA ZIP: 95947 BUSINESS PHONE: 5302846191 MAIL ADDRESS: STREET 1: 117 CRESCENT ST STREET 2: P O BOX 778 CITY: GREENVILLE STATE: CA ZIP: 95947 10-K 1 ed10k02.txt CALIFORNIA-ENGELS MINING COMPANY 10-K 12/31/2002 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 Form 10-K Annual Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 for the Fiscal Year Ended December 31, 2002 Commission File No. 1-3871 CALIFORNIA-ENGELS MINING COMPANY Incorporated in the State of California IRS Employer I.D. No. 94-0357560 117 Crescent Street P. O. Box 778 Greenville, California 95947-0778 Telephone Number (530) 284-6191 SECURITIES REGISTERED PURSUANT TO SECTION 12 (b) OF THE ACT Title of Each Class - Capital Stock, par value, $0.25 per share. Number of Shares outstanding: 758,915.94 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes: X No: As of February 3, 2003, 758,915.94 capital shares were outstanding, and the aggregate market value of the common shares of California- Engels Mining Company held by nonaffiliates was approximately $287,299. Documents Incorporated by Reference: NONE Filing Contains 34 Pages PART 1 ITEM 1. BUSINESS Registrant was incorporated under the laws of the State of California on July 12, 1922, under the name of California Copper Corporation, as a holding company for the shares of its operating company Engels Copper Mining Company which was incorporated under the laws of the State of California on June 19, 1901. Engels Copper Mining Company was merged into California Copper Corporation on March 3, 1936, and the name of the merged company was changed to California-Engels Mining Company. Exploration and development commenced at the Engels Mine, Lights Creek Mining District, Plumas County, California, upon organization of Engels Copper Mining Company; but it was not until 1914 that milling facilities were available and actual production of copper started. From 1914 until operations were suspended due to the low price of copper in July, 1930, approximately 4,700,000 tons of ore were mined from the Engels and Superior mines and milled producing 160,170,000 pounds of copper and substantial values in gold and silver. Out of profits of this operation, the Registrant retired a bond issue of $500,000 and paid out more than $1,285,000 in dividends. During the 1930's the mining and milling plant, Engelmine townsite and the Indian Valley Railroad subsidiary were dismantled and sold. Registrant's mining properties were continuously leased from September, 1947, to March, 1951; from March, 1951, to December, 1959; from November, 1960, to October, 1979; from August, 1980, to August, 1990; and from November, 1990, to April 1993. The lessee from 1964 to 1993 was Placer Dome U.S. Inc., the U.S. Subsidiary of Placer Dome Inc., Vancouver, B.C., Canada. The Mining Lease With Option to Purchase, between the Registrant (Lessor) and Placer Dome U.S. Inc. (Lessee) was terminated by Placer Dome U.S. Inc. effective April 20, 1993. Registrant has received a substantial amount of technical data on its mining properties and maintains a library on the Plumas Copper Belt. Thousands of feet of drill core from the Superior Mine, Sulphide Ridge and the Engels Mine are stored at Crescent Mills, California. Registrant's mineral deposits and prospects are not deemed economically attractive under current conditions for the mining industry in California and the United States, nor are they likely to be so in the foreseeable future. The Non-Industrial Timber Management Plan on Registrant's mining properties was approved by the California Department of Forestry and became effective July 2, 1999. The permitting process for this project began in August, 1994 with the start of the archaeological survey and the February, 1995 agreement with Shasta Land Management Consultants to prepare the Plan. The Non-Industrial Timber Management Plan is an assessment of the timber inventory, conditions and potential of the entire property broken down into units with similar growing conditions within each unit. Its intent is to demonstrate a long-term commitment to appropriately manage the resource. It functions as a coordinated collection of individual Timber Harvest Plans and its advantage is that, once approved, the paperwork necessary to initiate individual timber harvests is minimal. Under the Plan the Registrant is restricted in management options to those silvicultural systems that produce uneven-aged stands of timber. Uneven-aged management means the management of a specific forest with the goal of establishing a well-stocked stand of various age classes of trees scattered over the forest. It will permit the periodic harvest of all size classes as individual or small groups to realize yield. Over the long term, forest growth and yield will be balanced. The Registrant will also have the advantage of being able to time harvests for favorable market conditions. It will take a number of years to fully implement the Plan. After the effective date of the Non-Industrial Timber Management Plan the Registrant filed a Notice of Timber Operations for a helicopter harvest on its Green Ledge and Austrian Syndicate parcels on Ward Creek pursuant to the Plan. The project harvested 377,520 board feet of timber and was completed on October 28, 1999. Registrant made application to the California Tree Farm Committee of the American Tree Farm System for approval of its Engelmine Forest timber lands on Lights Creek as a tree farm. Its Engelmine Forest was accepted as California Tree Farm No. 2611 on June 17, 1999. Registrant received approval on July 28, 2000 for a 103 acre hand thinning project from the California Department of Forestry pursuant to their California Forest Improvement Program. The Department will reimburse 75% of the $48,670 cost to the Registrant over the three year life of the agreement. Other hand thinning projects funded by the Registrant are ongoing on other overstocked areas of its property. Registrant filed a Notice of Timber Operations pursuant to its Non-Industrial Timber Management Plan on September 7th and December 15, 2000, for mechanical thinning and chipping/biomass projects on its Engels and Smith parcels. A Timber Harvest Plan was filed for its Henry parcel on November 27, 2000. Thinning began on December 11, 2000 by Pew Forest Products, Crescent Mills, California using two Timbco feller buncher machines, a stroke delimber, shovel loader, chipper, logging trucks and other equipment. The thinning and timber harvest completed on July 13, 2001, products 1,432,000 board feet of small logs generating sufficient funds to pay for the projects. The purpose of the thinning harvest was to reduce fire danger, improve the timber stand, provide wildlife protection, remove hazard timber and improve aesthetics. The U.S.D.A. Forest Service is preparing a draft Environmental Impact Statement for the Herger-Feinstein Quincy Library Group (HFQLG) Administrative Study on the Plumas National Forest. If the HFQLG is eventually implemented it will result in surface ladder fuels thinning to reduce the extent and severity of wildland fires in the National Forest surrounding Registrant's property. Registrant is subject to a State of California General Industrial Activities Storm Water Permit. During the year, pursuant to the Registrant's Storm Water Pollution Prevention Plan, catch and evaporation basins and monthly water sampling records were maintained. ITEM 2. PROPERTIES (a) Registrant is the fee owner of 36 patented lode mining claims totaling 736 acres, plus 245.28 acres of other patented lands at Engelmine, Lights Creek Mining District, Plumas County, California. None of the claims or patented lands are subject to any encumbrance. (b) Registrant is the fee owner of five patented lode mining claims totaling 100 acres in the Genesee Mining District, Plumas County, California. None of the claims are subject to any encumbrance. ITEM 3. LEGAL PROCEEDINGS None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 5. MARKET FOR THE REGISTRANT'S CAPITAL STOCK AND RELATED SHAREHOLDER MATTERS (a) Principal Markets. Registrant's shares of Capital Stock are quoted on the Over- the-Counter Market in the "pink sheets" which are published daily by the Pink Sheets LLC under the symbol "CAEN". The following table shows the high and low bid prices of Registrant's Capital Shares in the Over-the-Counter Market for the past two years:
High Bid Low Bid 2002 Market Price $.75 $ .26 2001 Market Price $.76 $ .40
(b) Approximate number of holders of capital stock. The approximate number of holders of record of Registrant's Capital Stock as of February 3, 2003, is 904. (c) The Registrant has never paid a dividend on its Capital Stock because it has had an accumulated deficit since the merger in 1936. The Board of Directors of the Registrant is endeavoring to earn income from the sale of timber, sale of land, sale of sand and rock and its bookkeeping business so funds are available for the maintenance of its mining properties and the implementation of its Timber Management Plan. It is not the intention of the Registrant to pay dividends in the foreseeable future. ITEM 6. SELECTED FINANCIAL DATA Year Ended December 31
Selected Financial Data 2002 2001 2000 1999 1998 - ----------------------- ---- ---- ---- ---- ---- Operating Revenues 36,614 635,903 45,358 257,502 43,314 Net Income (Loss) (7,448) 760 78,900 28,936 22,228 Income (loss) from continuing operations per capital share (.010) .001 .104 .038 .029 Total Assets 545,840 615,213 632,120 562,585 350,531 Working Capital 79,248 50,814 39,462 71,295 10,128 Shareholder's Equity 447,277 457,819 456,738 377,914 347,259
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (a) Financial condition, changes in financial condition and results of operations. During the 30 years its mining properties were leased, the Board of Directors of the Registrant endeavored to increase working capital, total assets and shareholder's equity in the event that its lessee, Placer Dome U.S. Inc., terminated its Mining Lease With Option to Purchase agreement and return the mining properties to the Registrant. This event occurred effective April 20, 1993. Thus funds were available to begin preparation of the Non-Industrial Timber Management Plan. Because timber and land sale revenues are infrequent, in order to provide regular monthly income the President of the Registrant, on January 1, 2000, transferred his bookkeeping business to the Registrant. Changes in working capital, total assets and shareholder's equity for the past five years are summarized as follows:
Changes 2002 2001 2000 1999 1998 - ------------- ---- ---- ---- ---- ---- Working Capital ($) 79,248 50,814 39,462 71,295 10,128 Total Assets 545,840 615,213 632,120 562,585 350,531 Shareholders Equity 447,277 457,819 456,738 377,914 347,259
The objective of the Board of Directors of the Registrant is to earn income from the sale of timber, sale of land, sale of sand and rock and its bookkeeping business so that funds are available for the maintenance of its mining properties and the implementation of its Non-Industrial Timber Management Plan. (b) Results of operations. Registrant's principal sources of income are from the sale of timber, sale of land, sale of sand and rock, bookkeeping business, interest and dividends. There is no assurance that any of the sources of income will continue at current rates into the future. The termination of the Mining Lease With Option to Purchase agreement substantially increased Registrant's property maintenance expenses. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Financial statements relying on Rule 3-11 of Regulation S-X which allows the filing of unaudited statements of inactive registrants are listed in the index to financial statements and schedules, and are included under PART IV, Item 14, of this report. ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURES There were no disagreements on accounting and financial disclosure matters required to be disclosed in this item. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (a) Identification of Directors.
Director' Name Positions Year First Principal and Age and Offices Elected Occupation - ------------- ----------- ---------- --------- Norman A. Lamb President 1978 Mining (66) & Director Executive Greenville, CA Thomas J. Reardon Vice President 1975 Retired (81) & Director Daly City, CA James E. Brousseau Secretary- 1987 Mining (71) Treasurer & Executive Director Vallejo, CA Richard C. Poulton Director 1993 Consultant (59) San Mateo, CA M. Blair Ogden Director 2000 Attorney at Law (70) San Francisco, CA
There are no arrangements or understandings between any of the foregoing persons and any other person or persons pursuant to which any of the foregoing persons were named as directors. (b) Identification of Executive Officers.
Name of Officer Age Office Held - --------------- ---- ----------- Norman A. Lamb 66 President James E. Brousseau 71 Secretary-Treasurer
There are no arrangements or understandings between any of the foregoing persons and any other person or persons pursuant to which any of the foregoing persons were named as executive officers. (c) Identification of certain significant employees. None (d) No family relationships exist between any of the above named directors and executive officers of the Registrant. (e) Business experience. (1) Norman A. Lamb is a Mining Executive and an officer and director of several public mineral companies. He serves the Registrant as President, was Secretary-Treasurer until November 16, 1987, and has been a Director since 1978. (2) Thomas J. Reardon is retired and formerly was a Department Manager for Foremost Dairies. He serves the Registrant as Vice-president and has been a Director since 1975. (3) James E. Brousseau is a Mining Executive and an officer and director of several public mineral companies. He was elected Secretary-Treasurer and a Director on November 16, 1987. (4) Richard C. Poulton is a Consultant. He was elected a Director of the Registrant on March 27, 1993. (5) M. Blair Ogden is a practicing attorney in San Francisco and an officer and director of several public mineral companies. He was elected a Director of the Registrant on May 21, 2000. (f) Involvement in certain legal proceedings. There have been no events under any bankruptcy act, no criminal proceedings and no judgments or injunctions material to the evaluation of the ability and integrity of any director or executive officer during the past five years. (g) Compliance with Section 16(a) of the Exchange Act Registrant is not aware of any person who at any time during the year 2002 was a director, officer or beneficial owner of more than 10 percent of Registrant's capital stock who failed to file on a timely basis reports required by Section 16(a) during 2002 or prior years. ITEM 11. Executive Compensation (a) Cash Compensation.
Name of Individual or Capacity Cash Compensation Number in Group - --------------------- --------- ------------------- Norman A. Lamb President $0.00 Officers and Directors as a group - Five persons including those named above. $2,500.00
(b) Compensation pursuant to plans. During the fiscal year, Norman A. Lamb was reimbursed for out- of-pocket expenses. (c) Other compensation. None (d) Compensation of directors. During the fiscal year, directors received a fee of $500.00 each for their services as directors. (e) Termination of employment and change of control arrangement. None ITEM 12. Security Ownership of Certain Beneficial Owners and Management (a) Security ownership of certain beneficial owners. The following table shows, as of February 3, 2003, the number of shares of Capital Stock held by every person owning of record or known by the Registrant as owning beneficially more than five percent of the outstanding stock:
Security Ownership of Certain Beneficial Owners Title of Class Name and Address Amount and Nature Percent of Owner of Ownership of Class - -------------- --------------- ----------------- ------- Capital Stock James E. Brousseau 184,789 shares 24.3% Par Value 270 Peppercorn Ct. owned of record and $0.25/share Vallejo, CA beneficially * 94591 Norman A. Lamb 280,231.5 shares 36.9% P.O. Box 778 owned of record and Greenville, CA beneficially ** 95947 M. Blair Ogden 183,789 shares 24.2% 33 New Montgomery St owned San Francisco, CA beneficially *** 94108 Poulton Trust 50,253 shares 6.6% 551 West 30th Ave owned of record San Mateo, CA 94403 Reardon Family Trust 44,366 shares 5.8% 162 East Market St owned of Daly City, CA record 94403
* Includes 97,789 shares owned by Nevex Corporation, a Nevada corporation and wholly owned subsidiary of Jenex Gold Corporation, a Washington Corporation, of which Mr. Brousseau is Secretary-Treasurer, a Director and substantial shareholder. Includes 86,000 shares owned by The Flowery Gold Mines Company of Nevada, a Nevada corporation, of which Mr. Brousseau is Secretary-Treasurer, a Director and major shareholder. ** Includes 97,789 shares owned by Nevex Corporation, a Nevada corporation and wholly owned subsidiary of Jenex Gold Corporation, a Washington Corporation, of which Mr. Lamb is President, a Director and major shareholder. Includes 86,000 shares owned by The Flowery Gold Mines Company of Nevada, a Nevada corporation of which Mr. Lamb is President, a Director and major shareholder. *** Includes 97,789 shares owned by Nevex Corporation, a Nevada corporation and wholly owned subsidiary of Jenex Gold Corporation, a Washington corporation, of which Mr. Ogden is Vice-President and a Director. Includes 86,000 shares owned by The Flowery Gold Mines Company of Nevada, a Nevada corporation, of which Mr. Ogden is Vice-President, a Director and substantial shareholder. (b) Security ownership of management. The following table shows as of February 3, 2003 all shares of Capital Stock beneficially owned by all directors and all directors and officers of Registrant as a group:
Capital Stock Beneficially Owned Title of Class Name of Beneficial Amount and Nature of Percent Owner Beneficial Ownership of Class - -------------- ------------------ -------------------- -------- Capital Stock James E. Brousseau 184,789 shares owned 24.3% Par Value of record and $0.25 per share beneficially * Norman A. Lamb 280,231.5 shares owned 36.9% of record and beneficially ** M. Blair Ogden 183,789 shares owned 24.2% beneficially *** Richard C. Poulton 50,253 shares owned 6.6% beneficially **** Thomas J. Reardon 44,366 shares owned 5.8% beneficially ***** All directors and 375,850.5 shares 49.5% officers as a group (five persons)
* Includes 97,789 shares owned by Nevex Corporation, a Nevada corporation and wholly owned subsidiary of Jenex Gold Corporation, a Washington corporation, of which Mr. Brousseau is Secretary- Treasurer, a Director and substantial shareholder. Includes 86,000 shares owned by The Flowery Gold Mines Company of Nevada, a Nevada corporation, of which Mr. Brousseau is Secretary-Treasurer, a Director and major shareholder. Mr. Brousseau may be deemed to have shared voting and investment power with respect to such shares. ** Includes 97,789 shares owned by Nevex Corporation, a Nevada corporation and wholly owned subsidiary of Jenex Gold Corporation, a Washington corporation, of which Mr. Lamb is President, a Director and major shareholder. Includes 86,000 shares owned by The Flowery Gold Mines Company of Nevada, a Nevada corporation, of which Mr. Lamb is President, a Director and major shareholder. Mr. Lamb may be deemed to have shared voting and investment power with respect to such shares. *** Includes 97,789 shares owned by Nevex Corporation, a Nevada corporation and wholly owned subsidiary of Jenex Gold Corporation, a Washington corporation, of which Mr. Ogden is Vice-President and a Director. Includes 86,000 shares owned by The Flowery Gold Mines Company of Nevada, a Nevada corporation, of which Mr. Ogden is Vice-President, a Director and substantial shareholder. Mr. Ogden may be deemed to have shared voting and investment power with respect to such shares. **** Includes 50,253 shares owned by the Poulton Trust, of which Mr. Poulton is co-trustee. Mr. Poulton may be deemed to have shared voting and investment power with respect to such shares. ***** Includes 44,366 shares owned by the Reardon Family Trust of which Mr. Reardon is co-trustee. Mr. Reardon may be deemed to have shared voting and investment power with respect to such shares. (c) Changes in control. Mr. Lamb may be deemed the "parent" or a "control person" of Registrant, as those terms are defined under the Securities Exchange Act of 1934, as amended. There are no arrangements known to Registrant the operation of which may at a subsequent date result in a change of control of Registrant. ITEM 13. Certain Relationships and Related Transactions None PART IV ITEM 14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K (a) Financial Statements: Page Balance Sheets as of December 31, 2002 2-3 and December 31, 2001. Statements of Income for the Years Ended December 31, 2002, December 31, 2001, and December 31, 2000. 4-5 Statements of Accumulated Deficit and Accumulated Other Comprehensive Income (Loss) for the Years Ended December 31, 2002, December 31, 2001, and December 31, 2000. 6 Statements of Cash Flows for the years ended December 31, 2002, December 31, 2001, and December 31, 2000. 7-8 (b) Notes to Financial Statements 9-18 (c) Exhibits None (d) No reports on Form 8-K were filed during the last quarter of 2002. SIGNATURES Pursuant to the requirements of section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CALIFORNIA-ENGELS MINING COMPANY Registrant By Norman A. Lamb Norman A. Lamb, President and Chief Executive Officer Date: February 18, 2003 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. By Norman A. Lamb Norman A. Lamb President and Director February 18, 2003 By Thomas J. Reardon Thomas J. Reardon Vice-President and Director February 18, 2003 By James E. Brousseau James E. Brousseau Secretary-Treasurer Chief Financial and Accounting Officer February 18, 2003 By Richard C. Poulton Richard C. Poulton Director, February 18, 2003 By M. Blair Ogden M. Blair Ogden Director February 18, 2003 CALIFORNIA-ENGELS MINING COMPANY FORM 10-K FOR THE PERIOD ENDED December 31, 2002 CERTIFICATIONS I, Norman A. Lamb, certify that: 1. I have reviewed this report on Form 10-K of California-Engels Mining Company; 2. Based on my knowledge, this 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 report; 3. Based on my knowledge, the financial statements, and other financial information included in this 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 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 is made known to us particularly during the period in which this 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 report (the "Evaluation Date"); and (c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 1. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to 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 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 1. The registrant's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors 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: Februrary 18, 2003 /s/ Norman A. Lamb Norman A. Lamb, President and Chief Executive Officer CALIFORNIA-ENGELS MINING COMPANY FORM 10-K FOR THE PERIOD ENDED December 31, 2002 CERTIFICATION I, James E. Brousseau, certify that: 1. I have reviewed this report on Form 10-K of California-Engels Mining Company; 2. Based on my knowledge, this 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 report; 3. Based on my knowledge, the financial statements, and other financial information included in this 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 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 is made known to us particularly during the period in which this 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 report (the "Evaluation Date"); and (c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 1. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation to the 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 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 1. The registrant's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors 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: February 18, 2003 /s/ James E. Brousseau James E. Brousseau Secretary-Treasurer and Chief Financial Officer CALIFORNIA-ENGELS MINING COMPANY (A California Corporation) FINANCIAL STATEMENTS December 31, 2002 page 1 CALIFORNIA-ENGELS MINING COMPANY BALANCE SHEETS DECEMBER 31, 2002 AND 2001 (Unaudited) ASSETS
2002 2001 --------- --------- CURRENT ASSETS Cash $ 79,249 $ 50,814 Accounts receivable $ 69 $ - Deeds of Trust - current portion $ 7,766 $ 11,281 Prepaid taxes $ 849 $ 1,487 Total Current Assets $ 87,932 $ 63,582 PROPERTY AND EQUIPMENT, net $ 338,199 $ 342,211 OTHER ASSETS Investments available for sale $ - $ 62,861 Investments held to maturity $ 1,281 $ 1,877 Deeds of trust - net of current portion $ 118,428 $ 144,682 TOTAL OTHER ASSETS $ 119,709 $ 209,420 TOTAL ASSETS $ 545,840 $ 615,213
The accompanying notes are an integral part of these financial statements. page 2 CALIFORNIA-ENGELS MINING COMPANY BALANCE SHEETS DECEMBER 31, 2002 AND 2001 (Unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY
2002 2001 --------- -------- LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Deferred income taxes $ 12,115 $ 17,582 Accrued expenses $ 26,648 $ 33,263 Notes payable, current portion $ 6,992 $ 8,766 Total Current Liabilities $ 45,755 $ 59,611 Long-term Liabilities Notes payable, net of current portion $ 51,808 $ 97,783 Total Liabilities $ 97,563 $ 157,394 STOCKHOLDERS' EQUITY Capital stock, par value $.25: California-Engels Mining Company, 4,000,000 shares authorized 758,915.94 shares issued and outstanding in 2002 and 759,315.94 shares issued and outstanding in 2001 $ 189,729 $ 189,829 Accumulated other comprehensive income (loss) $ - $ 1,754 Reduction surplus $2,799,908 $2,800,108 Accumulated deficit (2,541,360) (2,533,872) Total Stockholders' Equity $ 448,277 $ 457,819 Total Liabilities and Stockholders' Equity $ 545,840 $ 615,213
The accompanying notes are an integral part of these financial statements. page 3 CALIFORNIA-ENGELS MINING COMPANY STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000 (Unaudited)
2002 2001 2000 ----- ----- ----- REVENUE Timber and rock revenue $ 2,678 $ 594,648 $ 2,215 Dividend income 3,295 2,606 1,769 Interest income 12,641 16,424 10,504 Office rent - 6,475 12,470 Professional services 18,000 15,750 18,400 Total revenue 36,614 635,903 45,358 OPERATING AND GENERAL EXPENSES Depreciation 4,012 9,679 1,751 Director fees - 500 2,000 Rock expense - - 616 Insurance 1,874 1,860 1,900 Miscellaneous 1,478 861 694 Office and storage rents 6,510 10,510 12,510 Office expenses 3,611 2,664 3,763 Payroll expense 10,418 10,891 12,344 Professional fees 1,985 5,020 5,245 Reclamation plan expense - 240 12,738 Repairs and maintenance 1,327 1,396 2,131 Taxes and licenses 5,425 17,483 5,102 Travel and per diem 790 405 963 Vehicle expense 962 5,007 972 Total operating and general expenses $ 38,392 $ 66,516 $ 62,729 Net income (loss) from operations $ (1,778) $ 569,387 $ (17,371)
The accompanying notes are an integral part of these financial statements. page 4 CALIFORNIA-ENGELS MINING COMPANY STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000 (Unaudited)
2002 2001 2000 ----- ----- ----- OTHER INCOME/(EXPENSE) Depletion $ - $ (54,014) $ - Timber expense $ (9,250) $ (499,651) $ (11,659) Gain on sale of land $ - $ - $ 143,226 Gain on sale of assets $ 10,517 - 3,500 Interest $ (9,624) $ (13,038) $ (16,161) Total other income and (expense) $ (8,357) $ (566,703) $ 118,906 Income Before Taxes $ (10,135) $ 2,684 $ 101,535 Provision for income taxes $ 2,647 $ (1,924) $ (22,635) Net Income (Loss) $ (7,488) $ 760 $ 78,900 Earnings Per Share $ (0.010) $ 0.001 $ 0.104
The accompanying notes are an integral part of these financial statements. page 5 CALIFORNIA-ENGELS MINING COMPANY STATEMENTS OF ACCUMULATED DEFICIT AND ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000 (Unaudited)
2002 2001 2000 ----- ----- ----- ACCUMULATED DEFICIT, Beginning of year $(2,533,872) $(2,534,632) $(2,613,532) Net Income $ (7,488) $ 760 $ 78,900 ACCUMULATED DEFICIT, End of year $(2,541,360) $(2,534,632) $(2,534,632) ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS), Beginning of year $ 1,754 $ 308 $ 288 Other Comprehensive Income (Loss) $ (1,754) $ 1,446 $ 20 ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS), End of year $ - $ 1,754 $ 308
The accompanying notes are an integral part of these financial statements. page 6 CALIFORNIA-ENGELS MINING COMPANY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000 (Unaudited)
2002 2001 2000 ------ ------ ----- CASH FLOWS FROM OPERATING ACTIVITIES Net Income $ (7,488) $ 760 $ 78,900 Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation and depletion 4,012 63,693 1,751 Amortization of GNMA discount (150) (216) (221) Gain on sale of land - - (143,226) Gain on sale of assets (10,517) - (3,500) Change in operating assets and liabilities Accounts receivable (69) - - Prepaid taxes 638 4,387 (5,874) Taxes payable - - (4,697) Accrued expenses (6,615) (7,713) (7,638) Deferred income taxes (5,158) (2,156) 19,789 Net Cash Provided (Used) by Operating Activities $ (25,347) $ 58,395 $(64,716) CASH FLOWS FROM INVESTING ACTIVITIES Payments received on notes receivable $ 29,769 $ 18,343 $ 5,069 Issuance of notes receivable - - (143,228) Purchases of securities and investments - (49,149) (10,437) Proceeds from vehicle disposition - 15,604 3,500 Proceeds from sale of securities 71,315 - - Proceeds from sale of land - - 195,045 Return of principal GNMA 746 811 539 Capital expenditures - (23,513) (762) Net Cash Provided (Used) by Investing Activities $101,830 $ (37,904) $ 49,726
The accompanying notes are an integral part of these financial statements. page 7 CALIFORNIA-ENGELS MINING COMPANY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999 (Unaudited)
2002 2001 2000 ------ ------ ------ CASH FLOWS FROM FINANCING ACTIVITIES Purchase and retirement of treasury shares (300) (1,125) (96) Proceeds from notes payable - - - Payments on notes payable (47,749) (8,014) (16,747) Net Cash Provided (Used) by Financing Activities $(48,049) $ (9,139) $(16,843) Net Increase (Decrease) in Cash and Cash Equivalents $ 28,434 $ 11,352 $(31,833) CASH AND CASH EQUIVALENTS, Beginning of Year $ 50,814 $ 39,462 $ 71,295 CASH AND CASH EQUIVALENTS, End of Year $ 79,248 $ 50,814 $ 39,462 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the year for Income taxes $ 1,873 $ 53 $ 10,917 Interest $ 9,624 $ 13,038 $ 16,161 SUPPLEMENTAL DISCLOSURE OF NON CASH INVESTING ACTIVITIES Unrealized holding gains (losses) arising during period $ 7,185 $ 1,446 $ 2,995
The accompanying notes are an integral part of these financial statements. page 8 CALIFORNIA-ENGELS MINING COMPANY NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2002 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This summary of significant accounting policies of California- Engels Mining Company (the Company) is presented to assist in understanding the Company's financial statements. The financial statements and notes are representations of the Company's management who is responsible for their integrity and objectivity. These accounting policies conform to Generally Accepted Accounting Principles and have been consistently applied in the preparation of the financial statements. Nature of Activity The Company's principal line of business is development of mineral and timber properties. The principal revenue sources currently consist of timber, land and rock sales, bookkeeping business, and investment income. The Company's properties are located in the western United States. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from these estimates. Basis of Accounting The Company's books are maintained on the accrual method of accounting. Cash and Cash Equivalents For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments with a purchased maturity of three months of less to be cash equivalents. Concentration of Credit Risk The Company places its temporary cash investments with financial institutions and limits the amount of credit exposure to any one financial institution. page 9 CALIFORNIA-ENGELS MINING COMPANY NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2002 Mineral and Timber Lands Mineral and timber lands and depreciable property are stated at book value less accumulated depletion and depreciation. Depreciation is calculated using the declining balance method over five to seven year lives. Timber depletion is calculated based on units of production. Comprehensive Income Pursuant to Financial Accounting Standards Board ("FASB") Statement No. 130, Reporting Comprehensive Income, the Company reports any material components of comprehensive income in its financial statements. Reclassification Certain amounts in the prior year financial statements have been reclassified to conform to the current years financial statement presentation. Such reclassification had no effect on net equity or net income. NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment consisted of the following at December 31: 2002 2001 ------ ------ Furniture and equipment $ 24,613 $ 24,613 Land 239,702 239,702 Less: Accumulated depreciation (18,083) (14,071) $ 246,232 $ 250,244 Timber management development $ 164,078 $ 164,078 Less: Accumulated depletion (72,111) (72,111) $ 91,967 $ 91,967 Property and Equipment, net $ 338,199 $ 342,211
page 10 CALIFORNIA-ENGELS MINING COMPANY NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2002 NOTE 3 - MINING CLAIMS AND FEE LAND OWNED At December 31, 2002, the Company was the owner of 36 patented lode mining claims totaling 736 acres comprising the Engels and Superior Mines and 245.28 acres of patented land at Engelmine, Lights Creek Mining District, Plumas County, California. At December 31, 2002, the Company was the owner of five patented lode mining claims totaling 100 acres on Ward Creek in the Genesee Mining District, Plumas County, California. NOTE 4 - VALUATION OF MINERAL LANDS - DEFERRED INCOME TAXES The Mineral lands carried on the books at a value of $10,000 less depletion have a historical cost basis from June 19, 1901 of $1,000,000. Beginning in 1913, different valuations were placed on these lands by the Commissioner of Internal Revenue. Under instructions of the Commissioner, the values of the land were written up on the books to a high of $4,500,000 on February 23, 1928. In 1934, because of depressed conditions, the mineral lands were written down to $10,000 without any tax benefit. In the event of a sale of these lands the recognized gain for tax purposes will be substantially reduced or eliminated. Consequently a deferred tax asset of approximately $340,000 has been offset by a corresponding valuation allowance of approximately $340,000 due to the unlikelihood of the sale of the property in the near future. It is estimated that the current market value of the properties meets or exceeds the $1,000,000 historical cost basis; however, due to the length of time the Company has reported the land values at the written down value of $10,000, a change to the cost method has not been deemed appropriate for reporting purposes. page 11 CALIFORNIA-ENGELS MINING COMPANY NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2002 NOTE 5 - DEEDS OF TRUST Trust deed notes receivable at December 31,
2002 2001 --------------------------------- ------ Due within Due after one year one year Total Total ---------- ---------- -------- ------- Douglas R. Friedrich 9% Note secured by Plumas County, California real property $ 3,509 $ 19,683 $ 23,192 $ 24,800 John and Tina Tucker 9% Note secured by Plumas County, California real property $ - - $ - $ 1,021 Monte C. Wolford 8% Note secured by Plumas County, California real property $ - $ - $ - $ 19,571 Jack P. McLaughlin, Jr. 10% Note secured by Plumas County, California Real Property $ 1,033 $ 46,104 $ 47,137 $ 48,072 David J. Estrella 8% Note secured by Plumas County, California real property $ 3,224 $ 52,641 $ 55,865 $ 62,499 -------- -------- -------- --------- Total $ 7,766 $118,428 $126,194 $ 155,963
page 12 CALIFORNIA-ENGELS MINING COMPANY NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 NOTE 6 - INVESTMENT SECURITIES In accordance with the provisions of SFAS No. 115, the available- for-sale securities are reported as an asset at their fair market value with the unrealized gain or loss excluded from earnings and reported as a component of comprehensive income. The held-to-maturity securities are stated at amortized cost, adjusted for amortization of premiums and accretion of discounts to maturity. Realized gains and losses are determined using specific identification of securities sold. The investment securities portfolio was comprised of items held-to- maturity at December 31, 2002 and items classified as available-for-sale and held-to- maturity at December 31, 2001. The following reflect the estimated fair values of investment securities and amortized cost of debt securities held at December 31, 2002, 2001, and 2000. Fair values are based on management's estimate.
2002 ------------------------------------- Gross Gross Estimated Unrealized Unrealized Fair Cost Gain Loss Value ------ ---------- ---------- -------- Equity Securities available-for-sale $ - $ - $ - $ - Mortgage-backed securities held to maturity $ 1,281 $ - $ - $ 1,281 -------- -------- --------- -------- Totals $ 1,281 $ - $ - $ 1,281
page 13 CALIFORNIA-ENGELS MINING COMPANY NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2002 NOTE 6 - INVESTMENT SECURITIES, continued
2001 --------------------------------------- Gross Gross Estimated Unrealized Unrealized Fair Cost Gain Loss Value ------ ---------- ---------- -------- Equity Securities available-for-sale $ 60,799 $ 2,063 $ - $ 62,862 Mortgage-backed securities held to maturity $ 1,877 $ - $ - $ 1,877 -------- --------- -------- -------- Totals $ 62,676 $ 2,063 $ - $ 64,739 2000 ---------------------------------------- Gross Gross Estimated Unrealized Unrealized Fair Cost Gain Loss Value ------ ---------- ---------- -------- Equity Securities available-for-sale $ 11,650 $ 361 $ - $ 12,011 Mortgage-backed securities held to maturity $ 2,472 $ - $ - $ 2,472 -------- --------- -------- --------- Totals $ 14,122 $ 361 $ - $ 14,483
There were proceeds from sale of equity securities in 2002 in the amount of $71,315. No equity securities were sold in 2001 or 2000. NOTE 7 - CAPITAL STOCK The Company acquired and subsequently retired odd lots from estates totaling 400 shares of capital stock for $300 in 2002 and 1510 shares for $1,125 in 2001. page 14 CALIFORNIA-ENGELS MINING COMPANY NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2002 NOTE 8 - CONTINGENT LIABILITIES The Company is not a defendant in any legal proceeding nor is there any litigation in progress, pending or threatened against the Company. NOTE 9 - COMPREHENSIVE INCOME The components of comprehensive income, net of tax, are as follows for the years ended December 31:
2002 2001 2000 ------ ------ ------ Net Income $ (7,488) $ 760 $ 78,900 Other Comprehensive Income, net of tax: Unrealized gains on securities Unrealized holding gains arising during period $ 7,185 $ 1,446 $ 2,995 Less: reclassification adjustment for (gains) losses included in net income $ (8,939) $ - $ (2,975) Total Other Comprehensive Income (Loss) $ (1,754) $ 1,446 $ 20 Comprehensive Income $ (9,242) $ 2,206 $ 78,920
page 15 CALIFORNIA-ENGELS MINING COMPANY NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2002 The following shows the tax effect of each component of comprehensive income as of December 31:
Calculation of Holding Gains 2002 2001 2000 ------ ------ ------ Holding gains recognized in other comprehensive income $ 8,453 $ 1,701 $ 3,524 Income Tax expense (1,268) (255) (529) Total unrealized gain, net of tax $ 7,185 $ 1,446 $ 2,995
Reclassification Adjustments 2002 2001 2000 ------ ------ ------ Net income: (Gain) loss on sale of securities $ (10,517) $ - $ (3,500) Income tax (expense) benefit 1,578 - 525 Net gain (loss) realized in net income $ (8,939) $ - $ (2,975)
Accumulated other comprehensive income is comprised of only unrealized gains (losses) on investment securities. page 16 CALIFORNIA-ENGELS MINING COMPANY NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2002 NOTE 10 - NOTES PAYABLE
2002 2001 --------------------------- ----- Due within Due after one year one year Total Total Note payable to Jenex Gold Corporation in monthly installments of $1,000 including interest at 9% per annum $ 6,992 $ 51,808 $ 58,800 $ 72,089 Note payable to Volcanic Gold, Inc. in monthly installments of $500 including interest at 9% per annum $ - - - $ 34,460 Total $ 6,992 $ 51,808 $ 58,800 $106,549
The following table represents future principle payments for the years ended December 31: 2003 6,992 2004 7,468 2005 8,365 2006 9,150 2007 10,008 Thereafter 16,637 -------- $ 58,800
page 17 CALIFORNIA-ENGELS MINING COMPANY NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2002 NOTE 11 - INCOME TAXES
The provision for income taxes consisted of the following for the years ended December 31: 2002 2001 2000 ----- ----- ----- Federal income tax - current $ 1,586 $ 1,747 $ 1,472 State income tax - current 925 1,592 1,374 Federal income tax - deferred (3,245) (482) 12,451 State income tax - deferred (1,913) (933) 7,338 Total (benefit) provision $(2,647) $ 1,924 $22,635
Deferred income taxes consisted of the following at December 31: 2002 2001 ------ ------ Deferred tax liabilities: Federal Unrealized gain on securities $ - $ 309 Installment sale gain $ 7,623 $10,868 State Installment sale gain $ 4,492 $ 6,405 Total deferred tax liabilities $12,115 $17,582
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