ITEM 1. BUSINESS
Results of Operations.
Earnings and Cash Flows from Operating Activities. For the fiscal year endingJune 30, 1999, Gold Hill Corporation ("the Company") realized a net loss which is detailed in the financial section of this report. The decrease in earnings and cash flows reported for the period was due, in part, to drilling and carrying costs of the Nevada gold project.
Summary of Business: 1998-99.
Nevada Gold. Due to the low price of gold, currently near $250/oz., and due to the failure to discover economic gold at depths under 1,000 feet, the company decided to abandon all of its mining claims and leases in the Elko, Nevada area. During the late fall of 1998, Gold Hill drilled 4 holes on a large sedimentary structure but failed to encounter sufficient encouragement to drill any deeper. All of the holes were drilled below 1200 feet, one below 1500 feet. At current gold prices, there is very little interest in the industry to explore for gold at these depths. The cost of drilling below 1500 feet becomes very expensive and is practically beyond the depth limits of reverse circulation-type drilling.
Considerable time and effort during 1999 was devoted to surface exploration of other areas in Nevada where large gold potential might be found at depths much less than 1,000 feet. It is the intent of the company to pursue specific targets beginning in early spring of 2000 assuming the price of gold does not sink much lower.
Oil and Gas Prospects. During the current year, the company began a leasing program on a relatively large oil and gas prospect located in east-central Oklahoma and will commence drilling as soon as the leasing has been completed. The prospect has the potential of several millions of barrels at a depth of under 5,000 feet.
Other oil and gas prospects are currently being studied elsewhere in Oklahoma.
General Operations. Gold Hill will continue its conservative policy of avoiding debt and maintaining very low overhead costs. No salaries will be paid or allowed to accrue at this time, nor will Gold Hill be charged for the use of office space currently provided by its principals.
Private Placement. Gold Hill is continuing to make a private Placement of its common stock in order to finance a portion of the costs of the projects described above.
Competition and Risks. The U.S. oil and gas industry has suffered an economic decline that has resulted in reduced activity and widespread business failures. The business environment is very competitive, and there are a number of significant risks associated with oil and gas exploration and production, including operational as well as exploration.
Gold Hill Corporation intends to seek high-risk, high-potential prospects as well as lower-risk, lower-potential development ones. However, the major effort will be towards wildcat prospects with potential of 1,000,000 bbls or greater.
Regulation. The domestic exploration for mineral, including oil and gas, reserves is subject to various state and federal environmental laws, rules, and regulations.
Operators in the industry are subject to the Clean Water Act and damages which could arise out of environmental pollution.
Corporate History. Gold Hill Corporation is an exploration company focused on large wildcat major oil, gas, and gold prospects, which if successful will significantly impact upon the value of the Company's stock. In addition to the Nevada Gold prospect, Gold Hill is active in oil and gas exploration.
Although Gold Hill is a public company, it is considered to be a startup company and its stock does not presently trade. Management's policy is to withhold stock trading until an important discovery is made.
Gold Hill's management is comprised of experienced and successful explorationists who are qualified to carry forth the goals and aspirations of the company. The primary goal of the company is to discover a major deposit while avoiding debt. At the same time, the company is focusing on retaining a large interest in each prospect so that a discovery will have a dramatic impact on stock value to the benefit of the shareholders.
Gold Hill's executive and operations offices are located in Oklahoma At 2233 West Lindsey, Suite 117, Norman, Oklahoma 73069 (telephone 405-329-0930). Unless the context otherwise requires, the term "Gold Hill" as used herein refers to Gold Hill Corporation.
ITEM 2.
ITEM 2. PROPERTIES
Oil and Gas Properties. Geological investigations are continuing on several prospects, and oil and gas lease acquisition has been initiated.
Mining Properties. Gold Hill is continuing to evaluate gold Prospects in Nevada.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
There are no pending legal proceedings, to which Gold Hill is a party or of which any of its property is the subject.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual shareholders meeting for the fiscal year ending June 30, 1999 will be held in the month of December 1999. At that time, the 1999 directors' meeting will be held, and officer elections will take place. Until then, the officers elected during the 1997 meeting will continue to serve. The following was discussed and agreed upon at the directors' meeting held at Norman, Oklahoma:
Earl W. Smith was nominated and elected Chairman of the Board of Directors for the year ending June 30, 1998.
The following executive officers were elected for the year ending June 30, 1998:
Earl W. Smith (1) 72 President and Director
T. J. Simek (2) 57 Vice-President and Director
Paul W. Smith (3) 39 Director
Susan Nash, Ph.D. (4) 41 Secretary-Treasurer
Earl W. Smith, President and Director: Mr. Smith has been actively involved in geological exploration and development since 1954, after receiving B.S. and M.S. degrees in Geology from the University of Oklahoma. He served as regional exploration geologist for Samedan Oil Corporation from 1954-1961. In addition to exploration geology in both mining and the oil industries, Mr. Smith possesses corporate management experience, serving as the president of Siskon Corporation, a public company engaged in mining exploration, from 1970-1981. Since 1981, he has been a successful independent geologist.
T.J. Simek, Vice President and Director: Mr. Simek has been engaged in the oil and gas industry since 1959, gaining expertise in virtually every aspect of drilling and completion operations. In addition to field operations management, Mr. Simek is actively involved in land acquisition and leasing. Since 1978, Mr. Simek has served as the president of Simek Oil Properties, Inc., a private company engaged in oil drilling, completing, and producing.
Paul W. Smith, Director: Mr. Smith has developed and supervised geological and geophysical field investigations for oil and gas, as well as gold exploration and development. Further, he has developed computer-modeling programs that result in more accurate processing of gravity and magnetic data. While his degrees are in Geology (B.S. Oklahoma, 1982, M.S. Oklahoma, 1992), he has obtained additional Training geophysics, as well as valuable field experience, especially in the Nevada Basin and Range Province. In addition, he has managed oil and gas exploration and development programs, including the acquisition of existing production.
Susan Nash, Ph.D. Secretary-Treasurer: Dr. Nash's academic credentials include a B.S. in Geology, an M.A. in English, and extensive graduate work in economics. She holds a Ph.D. in English from the University of Oklahoma. In addition to ten years experience in exploration geology, Nash possesses well-rounded expertise in international research, marketing, and sales. Her areas of expertise include high-technology training programs via Internet, oil and gas industry technical sales, and industrial products, including machinery and raw materials. She has led trade missions to South America, and has organized commercial, cultural, and educational events many international groups from countries such as Uzbekistan, Kazakhstan, Turkmenistan, Venezuela, Guatemala, Mexico, and Paraguay with the goal of developing new markets in the United States. Nash is currently Director of Engineering and Geosciences for the University of Oklahoma College of Continuing Education.
PART II ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Markets for Common Stock. The market for Gold Hill's Common Stock is inactive at the present time, but the Company will be seeking an Over-the-Counter or lesser market depending upon its asset growth.
Private Placement. The company is seeking to place 450,000 shares of its restricted common stock at $1.00 per share. These units may only be offered and sold to those who meet the suitability standards for investment as expressed in an offering circular that accompanies the private placement memorandum. During the past fiscal year, the company made no sales of stock.
Dividends. Gold Hill paid no cash dividends during the fiscal year ended June 30, 1999. No dividends will be paid in the immediate future. All profits and proceeds are to be reinvested in the company. There is no open market for Gold Hill stock at this time, and none will be developed until conditions change to the satisfaction of management.
At June 30, 1999, 4,682,322 shares of common stock were outstanding.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Gold Hill can be considered a start-up company, and management plans to obtain operating capital through joint ventures, geological consulting services, and private placements of restricted stock. The proceeds of private placements will be used to fund the acquisition of favorable oil and gas prospects and testing of its Nevada gold prospects.
Private Placement. Further efforts will continue to make a private placement of restricted stock at $1.00 per share. The shares are restricted, and the price is $1.00 per share.
The company plans to maintain a minimum price for the private Placement restricted stock at $1.00 per share for an additional six months, and that the effort would be extended for that time. In the event of drilling successes, Gold Hill may continue to market restricted stock in a private placement at a higher price per share, depending upon market conditions. In line with its conservative policies, the management of Gold Hill will not market more stock than its immediate capital needs in order to keep the number of shares outstanding at a minimum.
Oil and Gas Leases. Gold Hill is looking at additional oil and gas prospects to lease in the forthcoming year.
Salaries and Operations Overhead. It was agreed that Gold Hill will continue its policy of paying no salaries to its officers and directors, and that it will continue to use the offices of its directors
rent-free.
Stock Options. It was agreed that no stock options will be offered at this time.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements, together with the report Thereon of Ron Kirkpatrick, C.P.A., are contained within this report.
The accompanying unaudited consolidated financial statements have Been prepared in accordance with the instructions to Form 10-K as Prescribed by the Securities and Exchange Commission. All material Adjustments which, in the opinion of Management, were necessary for a fair presentation of the results for the interim periods have been reflected.
Gold Hill Corporation Balance Sheet June 30, 1999
Current Assets BANK OF OKLAHOMA $ 62,020.18 BANK OF OKLAHOMA 12,179.80 BANK OF OKLAHOMA 165,456.00 A/R - Stockholders 22,562.63 Drilling Advance -- N. Paden 10,000.00 Total Current Assets 272,218.61
Fixed Assets FURNITURE AND FIXTURES $ 138.46 TANGIBLE EQUIPMENT 31,952.75 ACCUMULATED DEPRECIATION (25,539.92) Total Fixed Assets 6,554.29
Other Assets Total Assets $ 278,769.90
Current Liabilities ----------------none------------- Equity
COMMON STOCK $ 597,400.00 RETAINED EARNINGS (487,121.15) PAID-IN CAPITAL 247,904.00 Current Income (Loss) (79,412.95)
Total Equity $ 278,769.90
Total Liabilities and Equity $ 278,769.90
Gold Hill Corporation Income Statement For the Period Ended June 30, 1999
3 Months Ended 12 Months ended June 30, 1999 Pct June 30, 1999 Pct Revenue INTEREST INCOME $ 15,867.03 3.01 $ 19,595.46 13.18 OIL AND GAS REV 0 42.93 - ------------------------ TOTAL REV 19,618.39 100.00
Cost of Sales ABN WELL EXP $ 0.00 $8,491.71 NEVADA GOLD PRJ 0.00 69,169.14 NEVADA PRJ - LEASE 0.00 16,398.68
Total Cost of Sales $ 15,867.03 92,059.53 - -------------------------------------------- Gross Profit $ (15,867.03) $ (72,441.14)
Operating Expenses DEPRECIATION $2,819.00 2,819.00 DUES & SUBSCRIPTS 540.0 825.00 FILING FEES 0.00 316.00 LEGAL AND ACCTG 150.00 750.00 OFFICE EXPENSE 00.00 425.30 TRANSFER FEES 428.00 1,836.50
TOTAL EXPENSES 3,937.00 6,971.81 Net Income (Loss) $ 11,930.03 $(79,412.95)
ITEM 9.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
There were no salaries or other compensation paid to executives during the fiscal year ending June 30, 1999. The Company resolved to not pay salaries or compensation to executives during the upcoming year.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Not applicable.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Oil Creek Production, a privately-held corporation owned by Simek and Smith has sold certain oil and gas leases to Gold Hill at cost since Gold Hill has limited capital and personnel, but Oil Creek retained an overriding royalty interest equal to the difference between 80 percent net revenue interest and the base lease net revenue interest. Mr. Smith will retain a small royalty in the Nevada Gold property.
Management stock. Part of Gold Hill's restricted stock is owned directly or indirectly by present management as follows:
Direct Indirect
T. J. Simek Director 810,235
Paul W. Smith Director 540,157 Earl W. Smith Director 1,080,394
Susan Smith Nash Secretary- 110,000 50,000 Treasurer ______________________________________ Total Direct & Indirect shares 110,000 2,480,786
Stock owned by management, acquired in the open market:
Susan Smith Nash Secretary- 1,000
Earl W. Smith Director 89,470
Stock Options. The Company does not have a plan to grant any stock options to any of its officers or directors.
SIGNATURES
Pursuant to the requirements of Sections 13 and 14 (D) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf of Undersigned, there unto duly authorized. GOLD HILL CORPORATION