10-K 1 ed10k01.txt CALIFORNIA-ENGELS MINING COMPANY 10-K - 12/31/2001 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, 2001 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: 759,315.94 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 March 4, 2001, 759,315.94 capital shares were outstanding, and the aggregate market value of the common shares of California- Engels Mining Company held by nonaffiliates was approximately $195,977. Documents Incorporated by Reference: NONE Filing Contains 32 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. 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 ~~2000~~2001 Market Price $.50 $ .~~125~~25 ~~1999~~2000 Market Price $.~~71875~~50 $ .125

(b) Approximate number of holders of capital stock. The approximate number of holders of record of Registrant's Capital Stock as of March 4, 2002, 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 2001 2000 1999 1998 1997 ~~1996~~ ----------------------- ----~~---~~ ----~~---~~ ------ ------ ----~~---~~ Operating Revenues 635,903 45,358 257,502 43,314 39,212 ~~14,463~~ Net Income (Loss) 760 78,900 28,936 22,228 (5,101) ~~7,538~~ Income (loss) from continuing operations per capital share .001 .104 .038 .029 (.007) ~~.001~~ Total Assets 615,213 632,120 562,585 350,531 347,884 ~~347,033~~ Working Capital 50,814 39,462 1671,~~807~~295 10,128 24,896 ~~33,394~~ Shareholder's Equity 457,819 456,738 377,914 347,259 344,684 ~~346,983~~

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 2001 2000 1999 1998 1997 ~~1996~~ ------------- ----~~---~~ ----~~----~~ ----~~----~~ ----~~---~~ ----~~---~~ Working Capital ($) 50,814 39,462 1671,~~807~~295 10,128 24,896 ~~33,394~~ Total Assets 615,213 632,120 562,585 350,531 347,884 ~~347,033~~ Shareholders Equity 457,819 456,738 377,914 347,259 344,684 ~~346,983~~

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 (6465) & Director Executive Greenville, CA Thomas J. Reardon Vice President 1975 Retired (7980) & Director Daly City, CA James E. Brousseau Secretary- 1987 Mining (6970) Treasurer & Executive Director Vallejo, CA Richard C. Poulton Director 1993 Consultant (5758) San Mateo, CA M. Blair Ogden Director 2000 Attorney at Law (6869) 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 65 President James E. Brousseau 70 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 2001 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 2001 or prior years. ITEM 11. Executive Compensation (a) Cash Compensation.
Name of Officer Age Office Held --------------- ---- ----------- Norman A. Lamb 64 President James E. Brousseau 69 Secretary-Treasurer
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 March 4, 2002, 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 179,147 shares 23.6% Par Value 270 Peppercorn Ct. owned of record and $0.25/share Vallejo, CA beneficially * 94591 Norman A. Lamb 271,742 shares 35.78% P.O. Box 778 owned of record and Greenville, CA beneficially ** 95947 M. Blair Ogden 178,147 shares 23.45% 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 ~~Thomas~~Reardon J.Family ~~Reardon~~Trust 8144,~~620~~366 shares 105.78% 162 EEast Market St owned of ~~record~~ Daly City, CA ~~and~~record beneficially**** 94403
* Includes 93,045 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 85,000 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 93,045 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 85,000 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 93,045 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 85,000 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 March 4, 2002 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 179,147 shares owned 23.6% Par Value of record and $0.25 per share beneficially * Norman A. Lamb 271,742 shares owned 35.78% of record and beneficially ** M. Blair Ogden 178,147 shares owned 23.45% beneficially *** Richard C. Poulton 50,253 shares owned 6.6% beneficially **** Thomas J. Reardon 8144,~~620~~366 shares owned 105.78% ~~of record and~~ beneficially ***** All directors and ~~403~~367,~~065~~361 shares 5348.14% officers as a group (five persons)
* Includes 93,045 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 85,000 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 93,045 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 85,000 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 93,045 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 85,000 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, 2001 2-3 and December 31, 2000. Statements of Operations for the Years Ended December 31, 2001, December 31, 2000, and December 31, 1999. 4-5 Statements of Accumulated Deficit and Accumulated Other Comprehensive Income (Loss) for the Years Ended December 31, 2001, December 31, 2000, and December 31, 1999. 6 Statements of Cash Flows for the years ended December 31, 2001, December 31, 2000, and December 31, 1999. 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 2001. 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: March 19, 2002 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 March 19, 2002 By Thomas J. Reardon Thomas J. Reardon Vice-President and Director March 19, 2002 By James E. Brousseau James E. Brousseau Secretary-Treasurer Chief Financial and Accounting Officer, March 19, 2002 By Richard C. Poulton Richard C. Poulton Director, March 19, 2002 By M. Blair Ogden M. Blair Ogden Director, March 19, 2002 CALIFORNIA-ENGELS MINING COMPANY (A California Corporation) FINANCIAL STATEMENTS December 31, 2001 page 1 CALIFORNIA-ENGELS MINING COMPANY BALANCE SHEETS DECEMBER 31, 2001 AND 2000 (Unaudited) ASSETS
2001 2000 ~~1999~~ --------- --------- CURRENT ASSETS Cash $ 3950,~~462~~814 $ 7139,~~295~~462 Deeds of Trust - current portion $ 11,~~842~~281 $ 511,~~317~~842 Prepaid taxes $ 51,~~874~~487 $ -5,874 Total Current Assets $ 5763,~~178~~582 $ 7657,~~612~~178 PROPERTY AND EQUIPMENT, net $ ~~397~~342,~~995~~211 $ ~~450~~397,~~804~~995 OTHER ASSETS Investments available for sale $ 1262,~~011~~861 $ 112,~~549~~011 Investments held to maturity $ 21,~~472~~877 $ 2,~~790~~472 Deeds of trust - net of current portion $ ~~162~~144,~~464~~682 $ 30162,~~830~~464 TOTAL OTHER ASSETS $ ~~176~~209,~~947~~420 $ 35176,~~169~~947 TOTAL ASSETS $ ~~632~~615,~~120~~213 $ ~~562~~632,~~585~~120
The accompanying notes are an integral part of these financial statements. page 2 CALIFORNIA-ENGELS MINING COMPANY BALANCE SHEETS DECEMBER 31, 2001 AND 2000 (Unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY
2001 2000 ~~1999~~ ---------- -------- LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities ~~Income~~Deferred income taxes ~~payable~~ $ ~~- $ 4~~17,~~697~~582 ~~Deferred income taxes~~ $ 19,843 ~~$ 50~~ Accrued expenses $ 4033,~~976~~263 $ 4840,~~614~~976 Notes payable, current portion $ 8,~~014~~766 $ 68,~~444~~014 Total Current Liabilities $ 6859,~~833~~611 $ 5968,~~805~~833 Long-term Liabilities Notes payable, net of current portion $ ~~106~~97,~~549~~783 $ ~~124~~106,~~866~~549 Total Liabilities $ ~~175~~157,~~382~~394 $ ~~184~~175,~~671~~382 STOCKHOLDERS' EQUITY Capital stock, par value $.25: California-Engels Mining Company, 4,000,000 shares authorized ~~760~~759,~~815~~315.94 shares issued and outstanding in ~~2000~~2001 and 760,~~954~~915.3494 shares issued and outstanding in ~~1999~~2000 $ ~~190~~189,~~206~~829 $ 190,~~238~~206 Accumulated other comprehensive income (loss) $ ~~308~~1,754 $ ~~288~~308 Reduction surplus $2,800,~~856~~108 $2,800,~~920~~856 Accumulated deficit (2,~~534~~533,~~632~~872) (2,~~613~~534,~~532~~632) Total Stockholders' Equity $ ~~456~~457,~~738~~819 $ ~~377~~456,~~914~~738 Total Liabilities and Stockholders' Equity $ ~~632~~615,~~120~~213 $ ~~562~~632,~~585~~120
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, 2001, 2000 AND 1999 (Unaudited)
2001 2000 1999 ~~1998~~ -----~~-----~~ -----~~-----~~ -----~~-----~~ REVENUE Timber and rock revenue $ 594,648 $ 2,215 $ 248,928 ~~$ 33,258~~ Dividend income 2,606 1,769 1,580 ~~2,155~~ Interest income 16,424 10,504 6,994 ~~7,901~~ Office rent 6,475 12,470 - - Professional services 15,750 18,400 - - Total revenue $635,903 45,358 $ 257,502 ~~$ 43,314~~ OPERATING AND GENERAL EXPENSES Depreciation $9,679 1,751 $ 5,510 ~~1,775~~ Director fees 500 2,000 2,000 - Rock expense - 616 - - Insurance 1,~~900~~860 1,900 1,900 Miscellaneous 861 694 748 ~~1,006~~ Office and storage rents 1210,510 312,510 3,510 Office expenses 2,664 3,763 1,815 ~~1,887~~ Payroll expense 10,891 12,344 - - Professional fees 5,020 5,245 2,026 ~~1,793~~ Reclamation plan expense 240 12,738 - - Repairs and maintenance 1,396 2,131 4,787 ~~4,800~~ Taxes and licenses 17,483 5,102 5,894 ~~3,793~~ Travel and per diem 405 963 999 ~~537~~ Vehicle expense 5,007 972 973 ~~1,186~~ Total operating and general expenses $ 66,516 $ 62,729 $ 30,162 ~~$ 22,187~~ Net income (loss) from operations $ 569,387 $ (17,371) $ 227,340 ~~$ 21,127~~
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, 2001, 2000 AND 1999 (Unaudited)
2001 2000 1999 ~~1998~~ -----~~-----~~ -----~~-----~~ -----~~-----~~ OTHER INCOME/(~~EXPENSES~~EXPENSE) Depletion $ (54,014) $ - $ (15,202) $Timber expense $(1499,~~293~~651) ~~Gain~~$ (~~loss~~11,659) ~~on sale of securities - - 20~~$(168,~~733~~818) Gain on sale of land $ - $ 143,226 $ - ~~1,000~~ Gain on sale of assets $ - 3,500 - - Interest ~~(16,161)~~$ (513,~~687~~038) -$ ~~Timber management expense~~ (1116,~~659~~161) ~~(168,818)~~$ (155,~~358~~687) Total other income and (expense) $(566,703) $ 118,906 $ (189,707) ~~$ 5,082~~ Income Before Taxes $ 2,684 $ 101,535 $ 37,633 ~~$ 26,209~~ Provision for income taxes $ (221,~~635~~924) $ (822,~~697~~635) $ (38,~~981~~697) Net Income $ 760 $ 78,900 $ 28,936 ~~$ 22,228~~ Earnings Per Share $ 0.~~104~~001 $ 0.~~038~~104 $ 0.~~029~~038
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, 2001, 2000 AND 1999 (Unaudited)
2001 2000 1999 ~~1998~~ -----~~------~~ -----~~------~~ -----~~------~~ ACCUMULATED DEFICIT, Beginning of year $(2,~~613~~534,~~532~~632) $(2,~~642~~613,~~468~~532) $(2,~~664~~642,~~696~~468) Net Income $ 760 $ 78,900 $ 28,936 ~~$ 22,228~~ ACCUMULATED DEFICIT, End of year $(2,~~534~~533,~~632~~872) $(2,~~613~~534,~~532~~632) $(2,~~642~~613,~~468~~532) ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS), Beginning of year $ 308 $ 288 $ (1,721) ~~$ 17,856~~ Other Comprehensive Income (Loss) $ 1,446 $ 20 $ 2,009 ~~$ (19,577)~~ ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS), End of year $ ~~308~~1,754 $ ~~288~~308 $ ~~(1,721)~~288
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, 2001, 2000 AND 1999 (Unaudited)
2001 2000 1999 ~~1998~~ ------~~---~~ -------- -----~~---~~ CASH FLOWS FROM OPERATING ACTIVITIES Net Income $ 760 $ 78,900 $ 28,936 ~~$ 22,228~~ Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation and depletion 63,693 1,751 20,712 ~~3,068~~ Amortization of GNMA discount (~~221~~216) (~~423~~221) (~~564~~423) (Gain) on sale of ~~securities~~land - - (~~20,733) (Gain) on sale of land (~~143,226) - ~~(1,000) (~~Gain) on sale of assets - (3,500) - -Change ~~(Increase) decrease~~ in operating assets and liabilities Prepaid taxes 4,387 (5,874) - - Deposits - ~~563~~- (563) ~~Increase (decrease) in liabilities~~ Taxes payable - (4,697) 1,425 ~~3,272~~ Accrued expenses (7,713) (7,638) 48,614 50 Deferred income taxes (2,156) 19,789 - - Net Cash Provided (Used) by Operating Activities $ 58,395 $(64,716) $ 99,827 ~~$ 5,658~~ CASH FLOWS FROM INVESTING ACTIVITIES Payments received on notes receivable $~~(138~~ 18,~~159)~~343 $ 5,069 $ 41,331 $Issuance of notes receivable - (25143,~~508~~228) - Purchases of securities and investments (49,149) (10,437) (36) ~~(20~~Proceeds from vehicle disposition 15,~~845)~~604 3,500 - Proceeds from sale of securities ~~3,500~~- - 20,824 ~~47,094~~ Proceeds from sale of land - 195,045 - ~~34,000~~ Return of principal GNMA 811 539 1,205 ~~1,391~~ Capital expenditures (23,513) (762) (233,004) ~~(56,483)~~ Net Cash Provided (Used) by Investing Activities $(37,904) 49,726 $(169,680) ~~$(20,351)~~
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)
2001 2000 1999 ~~1998~~ -------- -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Purchase and retirement of treasury shares $(1,125) (96) $ (290) $Proceeds ~~(75)~~from ~~Notes~~notes payable - - 148,000 ~~39,600~~ Payments on notes payable (168,~~747~~014) (16,~~690~~747) (3916,~~600~~690) Net Cash Provided (Used) by Financing Activities $(9,139) (16,843) 131,020 ~~(75)~~ Net Increase (Decrease) in Cash and Cash Equivalents $ 11,352 $(31,833) $ 61,167 ~~$(14,768)~~ CASH AND CASH EQUIVALENTS, Beginning of Year $ 39,462 $ 71,295 $ 10,128 ~~$ 24,896~~ CASH AND CASH EQUIVALENTS, End of Year $ 50,814 $ 39,462 $ 71,295 ~~$ 10,128~~ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the year: for Income taxes $ 53 $ 10,917 $ 2,650 ~~$ 800~~ Interest 13,038 16,161 5,687 - SUPPLEMENTAL DISCLOSURE OF NON CASH INVESTING ACTIVITIES Unrealized holding gains (losses) arising during period $ 241,701 $ ~~2,363~~24 $ (2,~~299)~~363
The accompanying notes are an integral part of these financial statements. page 8 CALIFORNIA-ENGELS MINING COMPANY NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 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, 2001 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: ~~1999~~2001 ~~1998~~2000 ------~~-----~~ ------~~---~~ Furniture and equipment $ 3424,~~538~~612 $ 3734,~~511~~538 Land 239,702 ~~291~~239,~~522~~702 Less: Accumulated depreciation (2214,~~226~~070) (2422,~~210~~226) $ ~~252~~250,~~014~~244 $ ~~304~~252,~~823~~014 Timber management development $ 164,078 $ 164,078 Less: Accumulated depletion (1872,~~097~~111) (18,097) $ ~~145~~91,~~981~~967 $ 145,981 ~~Total~~ Property and Equipment, net $ ~~397~~342,~~995~~211 $ ~~450~~397,~~804~~995
page 10 CALIFORNIA-ENGELS MINING COMPANY NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 NOTE 3 - MINING CLAIMS AND FEE LAND OWNED At December 31, 2001, 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, 2001, 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, 2001 NOTE 5 - DEEDS OF TRUST Trust deed notes receivable at December 31,
2001 2000 ~~1999~~ --------------------------------- ------ Due within Due after one year one year Total Total ---------- ---------- -------- -------- Douglas R. Friedrich 9% Note secured by Plumas County, California real property $ 3,~~599~~968 $ 2421,~~706~~602 $ 2825,~~305~~570 $ 3128,~~595~~305 Less unamortized discount (~~654~~619) (~~837~~151) (~~1,491~~770) (21,~~167~~491) --------- --------- --------- --------- Total $ 23,~~945~~349 $ 2321,~~869~~451 $ 2624,~~814~~800 $ 2926,~~428~~814 John and Tina Tucker 9% Note secured by Plumas County, California real property $ 21,~~957~~021 $ - $ 1,~~307~~021 $ 4,264 ~~$ 6,719~~ Monte C. Wolford 8% Note secured by Plumas County, California real property $ 2,~~274~~740 $ 2216,831 $ 2519,~~105~~571 $ -25,105 Jack P. McLaughlin, Jr. 10% Note secured by Plumas County, California Real Property $ ~~846~~935 $ 47,137 $ 48,072 $ 48,918 ~~$ -~~ David J. Estrella 8% Note secured by Plumas County, California real property $ 23,~~820~~236 $ 6659,~~385~~263 $ 6962,~~205~~499 $ -69,205 -------- -------- -------- --------- Total $ 11,~~842~~281 $~~162~~144,~~464~~682 $~~174~~155,~~306~~963 $ 36174,~~147~~306
page 12 CALIFORNIA-ENGELS MINING COMPANY NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 NOTE 6 - INVESTMENT SECURITIES At December 31, 2001 and 2000, the investment securities portfolio is comprised of items classified as available-for-sale and held-to-maturity. 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 following reflect the estimated fair values of investment securities and amortized cost of debt securities held at December 31, 2001, 2000, and 1999. Fair values are based on management's estimate.
~~2000~~2001 --------------------------------------- Gross Gross Estimated Unrealized Unrealized Fair Cost Gain Loss Value ------ -- -------- ---------- -------- Equity Securities available-for-sale $ 1160,~~650~~799 $ ~~361~~2,063 $ - $ 1262,~~011~~862 Mortgage-backed securities held to maturity $ 21,~~472~~877 $ - $ - $ 21,~~472~~877 -------- -------- --------- -------- Totals $ 1462,~~122~~676 $ ~~361~~2,063 $ - $ 1464,~~483~~739
page 13 CALIFORNIA-ENGELS MINING COMPANY NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 NOTE 6 - INVESTMENT SECURITIES, continued
~~1999~~2000 --------------------------------------- Gross Gross Estimated Unrealized Unrealized Fair Cost Gain Loss Value ------ ---------- ---------- -------- Equity Securities available-for-sale $ 111,~~212~~650 $ ~~337~~361 $ - $ 112,~~549~~011 Mortgage-backed securities held to maturity $ 2,~~790~~472 $ - $ - $ 2,~~790~~472 -------- --------- -------- -------- Totals $ 414,~~002~~122 $ ~~337~~361 $ - $ 414,~~339~~483 ~~1998~~1999 ---------------------------------------- Gross Gross Estimated Unrealized Unrealized Fair Cost Gain Loss Value ------ -- -------- ---------- -------- Equity Securities available-for-sale $ 221,~~000~~212 $ 48337 $ ~~(2,074)~~- $ 191,~~974~~549 Mortgage-backed securities held to maturity $ 32,~~572~~790 $ - $ - $ 32,~~572~~790 -------- --------- -------- --------- Totals $ 254,~~572~~002 $ 48337 $ ~~(2,074)~~- $ 234,~~546~~339
No equity securities were sold in 2001 or 2000. In 1999, equity securities were sold at cost and resulted in no gains or losses. NOTE 7 - CAPITAL STOCK The Company acquired and subsequently retired odd lots from estates totaling 1,510 shares of capital stock for $1,125 in 2001 and 128.40 shares for $96 in 2000. page 14 CALIFORNIA-ENGELS MINING COMPANY NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 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:
2001 2000 1999 ~~1998~~ ------~~---~~ ------~~---~~ -------- Net Income $ 760 $ 78,900 $ 28,936 ~~$ 22,228~~ Other Comprehensive Income, ~~(Loss)~~ net of tax: Unrealized gains on securities: Unrealized holding gains ~~(losses)~~ arising during period $ 1,446 $ 20 $ 2,009 ~~$ (1,954)~~ Less: reclassification adjustment for (gains) losses included in net income $ - $ - $~~(17,623)~~ - Total Other Comprehensive Income (Loss) $ 1,446 $ 20 $ 2,009 ~~$(19,577)~~ Comprehensive Income ~~(Loss)~~$ 2,206 $ 78,920 $ 30,945 ~~$ 2,651~~
page 15 CALIFORNIA-ENGELS MINING COMPANY NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 The following shows the tax effect of each component of comprehensive income as of December 31:
Calculation of Holding Gains ~~(Losses)~~2001 2000 1999 ~~1998~~ ------~~---~~ -------- -------- Holding gains ~~(losses)~~ recognized in other comprehensive income $ 241,701 $ ~~2,363~~24 $ (2,~~299)~~363 Tax (expense (255) ~~benefit~~ (4) (354) ~~345~~ Total gain ~~(loss)~~, net of tax $ 201,446 $ ~~2,009~~20 $ (12,~~954)~~009

Reclassification Adjustments 2001 2000 1999 ~~1998~~ -------- -------- ------~~---~~ Net income: (Gain) loss on sale of securities $ - $ - $ ~~(20,733)~~- Income tax (expense) benefit - - ~~3,110~~- Net gain (loss) realized in net income $ - $ - $ ~~(17,623)~~-
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, 2001 NOTE 10 - LONG-TERM DEBT
2001 2000 ~~1999~~ ----------------------------- -----~~---~~ 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 $ 5,~~252~~745 $ 66,344 $ 72,089 $ 77,341 ~~$ 86,853~~ Note payable to Volcanic Gold, Inc. in monthly installments of $500 including interest at 9% per annum 2$ 3,~~762~~021 31,439 34,460 $ 37,222 ~~44,456~~ Total $ 8,~~014~~766 $ 97,793 $106,549 $114,563 ~~$131,309~~
The following table represents future principle payments for the years ended December 31: 2002 $ 8,776 2003 9,589 2004 10,489 2005 11,472 2006 12,549 Thereafter 53,685 TOTAL $106,549
page 17 CALIFORNIA-ENGELS MINING COMPANY NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 NOTE 11 - INCOME TAXES
The provision for income taxes consisted of the following for the years ended December 31: 2001 2000 1999 ~~1998~~ ------- ------- ------- Federal income tax - current $ 1,~~472~~747 $ 51,~~106~~472 $ 15,~~959~~106 State income tax - current 1,592 1,374 3,591 ~~2,022~~ Federal income tax - deferred (482) 12,451 - - State income tax - deferred (993) 7,338 - - Total provision $ 1,924 $22,635 $ 8,697 ~~$ 3,981~~

Deferred income taxes ~~were:~~consisted As of the following at December 31: 2001 2000 ~~1999~~ ------- ------- Deferred tax ~~assets: $ - $ - Deferred tax~~ liabilities: Federal Unrealized gain on securities 54$ 50309 $ 54 Installment sale gain $10,868 $12,451 - State Unrealized gain on securities $ - $ - Installment sale gain $ 6,405 $ 7,338 - Total deferred tax liabilities $1917,~~843~~582 $ 5019,843
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