**SECURITIES AND EXCHANGECOMMISSION**

 

**Washington, D. C. 20549**

 

 

**FORM 10-QSB**

 

 

| ý                             | **Quarterly Report under Section 13  or 15(d) of the Securities Exchange Act of 1934 for the Quarterly Period  ended March 31, 2002 or**                                                                                                                                                                                 |
|------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                               |                                                                                                                                                                                                                                                                                                                     |   |   |   |   |
| o                                  | **Transition Report Pursuant to Section  13 or 15(d) of the Securities Exchange Act of 1934 for the Transition Period  from                   to                ** |
|                               |
| **Commission  File Number 1-3753** |

 

 

**UNITED PARK CITY MINES COMPANY**

(exact name ofsmall business issuer as specified in its charter)

 

 

| **Delaware**                                                     |   | **87-0219807**                        |
|------------------------------------------------------------------|--------|---------------------------------------|
| (State or other  jurisdiction of incorporation or organization.) |   | (I.R.S. Employer  Identification No.) |
|                                                             |   |                                  |
| **P. O.  Box 1450, Park City, Utah**                             |   | **84060**                             |
|  (Address of principal executive offices)                   |   | (Zip Code)                            |
|                                                             |   |                                  |
| **(435)  649-8011**                                              |
| (Issuer’s telephone  number)                                |

 

 

 

 

 

Check whether the issuer(1) filed all reports required to be filed by Section 13 or 15(d) of theExchange Act during the past 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days. Yes  ý     No o

 

(APPLICABLE ONLYTO CORPORATE ISSUERS)

 

State the number ofshares outstanding of each of the issuer’s classes of common equity, as of thelatest practicable date: As of May 4, 2002: 3,249,411 shares

 

Transitional SmallBusiness Disclosure Format (check one): Yes  o     No ý

 

 

 

 

 

 

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## **PART I – FINANCIALINFORMATION**

 

**UNITEDPARK CITY MINES COMPANY AND SUBSIDIARIES**

**CONSOLIDATEDBALANCE SHEET**

(*Unaudited*)

*** ***
|                                           |   | **March 31,** |       |
|------------------------------------------------|--------|---------------|------------|
|                                           |   | **2002**      |       |
| ***ASSETS:***                                  |   |          |       |
| Cash  and cash equivalents                     |   | $             | 115,688    |   |
| Accounts  receivable                           |   | 168,975       |       |
| Prepaid expenses                               |   | 294,806       |       |
| Inventories                                    |   | 19,147        |       |
| Other                                          |   | 55,206        |       |
|                                           |   | 653,822       |       |
| Real Estate:                                   |   |          |       |
| Hidden Meadows  development                    |   | 157,660       |       |
| Deer Crest  development                        |   | 316,916       |       |
| Keetley  development                           |   | 1,153,879     |       |
| Deferred  development costs — other       |   | 10,212,358    |       |
|                                           |   | 11,840,813    |       |
| Property and  Equipment:                       |   |          |       |
| Mine shaft,  buildings and equipment           |   | 3,148,429     |       |
| Construction-in-progress                       |   | 303,354       |       |
| Resort  facilities                             |   | 58,077        |       |
| Less accumulated  depreciation                 |   | (2,898,703    | )          |
|                                           |   | 611,157       |       |
| Land less  accumulated depletion of $1,062,190 |   | 13,553,738    |       |
| Water  rights                                  |   | 400,000       |       |
|                                           |   | 14,564,895    |       |
|                                           |   |          |       |
| Total assets                                   |   | $             | 27,059,530 |   |

 

The accompanyingnotes are an integral part of the consolidated financial statements.

 

2

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**UNITEDPARK CITY MINES COMPANY AND SUBSIDIARIES**

**CONSOLIDATEDBALANCE SHEET**

(*Unaudited*)

 
|                                              |   | **March 31,** |             |
|---------------------------------------------------|--------|---------------|------------------|
|                                              |   | **2002**      |             |
| ***LIABILITIES AND STOCKHOLDERS’ EQUITY:***  |   |          |             |
| Liabilities:                                      |   |          |             |
| Accounts  payable                                 |   | $             |  1,081,992  |   |
| Accrued  liabilities                              |   | 218,459       |             |
| Stockholder  advances                             |   | 225,000       |             |
| Bank notes  payable                               |   | 1,780,467     |             |
| Accrued  development costs                        |   | 2,316,541     |             |
| Joint venture  termination reimbursement accrual  |   | 2,632,943     |             |
| Accrued  remediation costs                        |   | 222,725       |             |
|                                              |   |          |             |
| Total  liabilities                                |   | 8,478,127     |             |
|                                              |   |          |             |
|                                              |   |          |             |
| Commitments and  contingencies (Notes 3, 4 and 6) |   |          |             |
|                                              |   |          |             |
|                                              |   |          |             |
| Stockholders’  equity:                       |   |          |             |
| Capital stock,  $.01 par value:                   |   |          |             |
| Authorized:  3,750,000 shares                |   |          |             |
| Issued:  3,249,411 shares                    |   | 32,494        |             |
| Capital in  excess of par value                   |   | 41,982,640    |             |
| Accumulated  deficit                              |   | (23,249,947   | )                |
|                                              |   | 18,765,187    |             |
| Less cost of  treasury stock — 1,294 shares  |   | (183,784      | )                |
|                                              |   |          |             |
| Total  stockholders’ equity                  |   | 18,581,403    |             |
|                                              |   |          |             |
|                                              |   |          |             |
| Total  liabilities and stockholders’ equity  |   | $             |  27,059,530 |   |

 

The accompanyingnotes are an integral part of the consolidated financial statements.

 

3

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**UNITEDPARK CITY MINES COMPANY AND SUBSIDIARIES**

**CONSOLIDATEDSTATEMENT OF OPERATIONS**

(*Unaudited*)

 
|                                                             |   | **For Three  Months Ended** |     |
|------------------------------------------------------------------|--------|-----------------------------|----------|
|                                                             |   | **March 31,**               |     | **March 31,** |   |
|                                                             |   | **2002**                    |     | **2001** |   |
| Revenues:                                                        |   |                        |     |   |   |
| Lot sales                                                        |   | $                           | 200,000  |   | $ | — |   |
| Interest                                                         |   | 193                         |     | 7,504 |   |
| Royalties and  rentals                                           |   | 136,400                     |     | 157,488 |   |
| Other                                                            |   | 26,888                      |     | 33,586 |   |
|                                                             |   | 363,481                     |     | 198,578 |   |
| Expenses:                                                        |   |                        |     |   |   |
| Cost of lot sales  and selling expenses                          |   | 149,003                     |     | 28,558 |   |
| General and  administrative costs                                |   | 397,295                     |     | 344,025 |   |
| Mine maintenance  and administrative costs                       |   | 395,055                     |     | 559,830 |   |
| Depreciation                                                     |   | 10,257                      |     | 10,202 |   |
| Interest                                                         |   | 23,220                      |     | 2,357 |   |
|                                                             |   | 974,830                     |     | 944,972 |   |
|                                                             |   |                        |     |   |   |
| Loss before  income taxes                                        |   | (611,349                    | )        | (746,394 | ) |
|                                                             |   |                        |     |   |   |
| Income tax  benefit                                              |   | —                      |     | — |   |
|                                                             |   |                        |     |   |   |
| Loss                                                             |   | $                           | (611,349 | ) | $ | (746,394 | ) |
|                                                             |   |                        |     |   |   |
| Basic and  diluted net loss per share                            |   | $                           | (.19     | ) | $ | (.23 | ) |
|                                                             |   |                        |     |   |   |
| Basic  and diluted weighted average number of shares outstanding |   | 3,249,411                   |     | 3,249,411 |   |

 

The accompanying notesare an integral part of the consolidated financial statements.

 

4

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**UNITEDPARK CITY MINES COMPANY AND SUBSIDIARIES**

**CONSOLIDATEDSTATEMENT OF CASH FLOWS**

(*Unaudited*)

 
|                                                                         |   | **For Three  Months Ended** |     |
|------------------------------------------------------------------------------|--------|-----------------------------|----------|
|                                                                         |   | **March 31,**               |     | **March 31,** |   |
|                                                                         |   | **2002**                    |     | **2001** |   |
| Cash flows from  operating activities:                                       |   |                        |     |   |   |
| Loss                                                                         |   | $                           | (611,349 | ) | $ | (746,394 | ) |
| Adjustments to  reconcile net loss to net cash used by operating activities: |   |                        |     |   |   |
| Depreciation                                                                 |   | 10,257                      |     | 10,202 |   |
| Increase  (decrease) from changes in:                                        |   |                        |     |   |   |
| Accounts  receivable                                                         |   | (93,938                     | )        | (97,306 | ) |
| Prepaid  expenses, inventories and other assets                              |   | (162,241                    | )        | 13,535 |   |
| Deferred real  estate development costs                                      |   | (605,786                    | )        | (323,021 | ) |
| Accounts payable  and accrued liabilities                                    |   | 355,353                     |     | 64,677 |   |
| Other                                                                        |   | —                      |     | 33,855 |   |
| Accrued  development costs                                                   |   | (148,954                    | )        | — |   |
| Joint  venture termination reimbursement accrual                             |   | 28,636                      |     | 42,268 |   |
| Accrued  remediation costs                                                   |   | (51,952                     | )        | (30,106 | ) |
| Total  adjustments                                                           |   | (668,625                    | )        | (285,896 | ) |
| Net cash used by  operating activities                                       |   | (1,279,974                  | )        | (1,032,290 | ) |
|                                                                         |   |                        |     |   |   |
| Cash flows from  investing activities:                                       |   |                        |     |   |   |
| Construction-in-progress                                                     |   | (32,237                     | )        | (4,447 | ) |
| Capital  expenditures                                                        |   | (11,345                     | )        | (19,122 | ) |
| Net cash used by  investing activities                                       |   | (43,582                     | )        | (23,569 | ) |
|                                                                         |   |                        |     |   |   |
| Cash flows from  financing activities:                                       |   |                        |     |   |   |
| Proceeds from  bank notes                                                    |   | 1,197,931                   |     | — |   |
| Principal  payments on bank notes                                            |   | (5,833                      | )        | — |   |
| Stockholder  advances                                                        |   | 225,000                     |     | — |   |
| Net cash  provided by financing activities                                   |   | 1,417,098                   |     | — |   |
|                                                                         |   |                        |     |   |   |
| Net increase  (decrease) in cash and cash equivalents                        |   | 93,542                      |     | (1,055,859 | ) |
| Cash and cash  equivalents-beginning of period                               |   | 22,146                      |     | 1,141,868 |   |
|                                                                         |   |                        |     |   |   |
| Cash and cash  equivalents-end of period                                     |   | $                           | 115,688  |   | $ | 86,009 |   |

 

The accompanyingnotes are an integral part of the consolidated financial statements.

 

5

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***UNITED PARK CITY MINES COMPANY ANDSUBSIDIARIES***

***SELECTED NOTES TO CONSOLIDATED FINANCIALSTATEMENTS (UNAUDITED)***

** **

**NOTE 1 – CONDENSED FINANCIAL STATEMENTS**

 

*A.  Disclosure*

 

Certaininformation and footnote disclosures normally included in financial statementsprepared in accordance with accounting principles generally accepted in theUnited States of America have been condensed or omitted.  It is suggested that these financialstatements be read in conjunction with the Annual Report to Stockholders ofUnited Park City Mines Company (hereinafter “United Park” or “the Company” or“the Registrant”) for the year ended December 31, 2001.

 

*B.  Management’sRepresentation*

 

The consolidated balance sheet as of March 31, 2002 and theconsolidated statements of operations and cash flows for the three-monthperiods ended March 31, 2002 and March 31, 2001 have been prepared by theRegistrant, without audit.  In theopinion of management, all adjustments necessary to present fairly thefinancial position, results of operations, and cash flows at March 31, 2002 andfor all periods presented, have been made.

 

**NOTE 2 – INDUSTRY SEGMENTS**

 

TheCompany’s reportable segments are strategic business units that offer differentproducts and services.  They are managedseparately because each business requires different technology and marketingstrategies.  The Company is organizedinto the following industry segments, and management accounts for revenues andexpenses from these activities separately and evaluates each of the followingsegments based upon performance: Mine Maintenance and Real Estate.  The segment data here presented do notinclude intersegment revenues or charges for corporate overhead costs.

 
|                                                                    |   | **Mine Maint.** |       | **Real Estate** |       | **Other** |       | **Total**  |       |
|-------------------------------------------------------------------------|--------|-----------------|------------|-----------------|------------|-----------|------------|------------|------------|
| **March 31, 2002:**                                                     |   |            | ** ** |            | ** ** |      | ** ** |       | ** ** |
| Revenue                                                                 |   | $               | 26,761     |            | $          | 336,400   |       | $          | 320        |   | $ | 363,481 |   |
| Operating income (loss)(1)                                              |   | (414,023        | )          | 138,452         |       | (335,778  | )          | (611,349   | )          |
| Identifiable assets                                                     |   | 538,016         |       | 25,489,122      |       | 1,032,392 |       | 27,059,530 |       |
| Depreciation                                                            |   | 5,599           |       | 803             |       | 3,855     |       | 10,257     |       |
| Capital expenditures, including deferred real estate  development costs |   | —          |       | 686,272         |       | 36,154    |       | 722,426    |       |
|                                                                    |   |            |       |            |       |      |       |       |       |
|                                                                    |   | **Mine Maint.** |       | **Real Estate** |       | **Other** |       | **Total**  | ** ** |
| **March 31, 2001:**                                                     |   |            |       |            |       |      |       |       |       |
| Revenue                                                                 |   | $               | 33,208     |            | $          | 159,709   |       | $          | 5,661      |   | $ | 198,578 |   |
| Operating income (loss)(1)                                              |   | (553,539        | )          | 44,792          |       | (237,647  | )          | (746,394   | )          |
| Identifiable assets                                                     |   | 544,055         |       | 20,673,640      |       | 811,008   |       | 22,028,703 |       |
| Depreciation                                                            |   | 5,822           |       | 1,010           |       | 3,370     |       | 10,202     |       |
| Capital expenditures, including deferred real estate  development costs |   | —          |       | 903             |       | 345,687   |       | 346,590    |       |

 

----

(1)  Earnings (loss) before taxes

 

6

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**NOTE 3 —BANK FINANCING**

 

In May 2000, the Company received afinancing commitment from a local bank totaling $725,000, for the purpose ofinstalling improvements to four lots in the Deer Crest development.  Interest on the outstanding borrowings ispaid monthly at 1⁄2 percent above the bank’s prime lending rate (prime rate was4.75% at March 31, 2002).  DuringOctober 2000 two of the lots collateralizing the note were sold.  Upon sale of the lots the outstandingbalance was paid and the commitment was reduced to $250,000.  The collateral was reduced from four to twoDeer Crest lots with related improvements. The Company renewed the loan during 2001 with a termination date ofAugust 1, 2002.  The Company had notdrawn any funds against the $250,000 loan commitment at March 31, 2002.

 

During October 2000 the Companysecured a $1,000,000 revolving line-of-credit. Upon renewal in 2001 the line was increased to $2,000,000.  The purpose of this financing is tosupplement cash flow needs of the Company. Borrowings are collateralized by approximately 16 acres of land known asthe Spiro Tunnel.  Interest on theoutstanding borrowings is paid monthly at 1⁄2 percent above the bank’s primelending rate (prime rate was 4.75% at March 31, 2002).  The maturity date is October 1, 2002.  The Company had drawn $1,712,381 against theloan at March 31, 2002.

 

During December 2001, the Companyobtained a financing commitment from a local bank totaling $365,000, for thepurpose of installing improvements to a single residential lot known as7.2b.  Interest on the outstanding borrowingsis paid monthly at the bank’s prime lending rate (prime rate was 4.75% at March31, 2002).  The initial loan term endsDecember 1, 2002.  The Company had drawn$4,835 against the loan at March 31, 2002.

 

The Company financed the purchase ofequipment in October of 2001 for $32,695 and additional equipment in Decemberof 2001 for $37,297.  Each installmentcontract has 36 equal monthly payments at 0% interest rate.  The monthly installment total is$1,944.  The March 31, 2002 outstandingbalance for the contracts was $63,251.

 

**NOTE 4**—**JOINT VENTURE TERMINATIONREIMBURSEMENT ACCRUAL**

 

InJuly 1999, the Company signed a Letter of Understanding with Arizona-based DMBAssociates, Inc. (“DMB”) to pursue a joint venture partnership to developFlagstaff Mountain and Bonanza Mountain Resorts.  The joint venture was formed on June 15, 2000.  Under the terms of the joint venture’soperating agreement, the Company was entitled to terminate the joint ventureprior to September 30, 2000, if it did not approve a business plan or budgetprovided by DMB for the development of subject properties.  The parties to the joint venture agreementwere unable to agree upon or approve the business plan by September 30, 2000,and mutually agreed to extend the date by which such approval would be requiredto January 17, 2001.  The joint venturewas terminated by the terms of the operating agreement at the expiration of theextension period.  The Company, asrequired by the operating agreement, will reimburse joint venture developmentcosts of $2,445,030 and accrued interest to DMB in January of 2004.  Interest is accrued at the lower of theprime rate (prime rate was 4.75% at March 31, 2002) or 10% compounded yearly.  The total 2002 accrued interest of $28,636at March 31, 2002 was capitalized into deferred development costs-other.

 

## **NOTE 5 — RELATED PARTY TRANSACTION**

 

LoebInvestors Co. XL, a major stockholder, advanced to the Company $225,000 for thepurpose of purchasing directors and officers liability insurance.

 

7

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## **NOTE 6 — CONTINGENCIES**

 

*Litigation and Settlement Agreement*

 

In May 1986, the Company filed alawsuit against Greater Park City Company (“GPCC”), Royal Street Land Company,Royal Street of Utah, and Deer Valley Resort Company related to agreementswhich resulted in the restructuring of Greater Park City Company in 1975 andlater performance under these agreements. The defendants filed counterclaims against the Company.

 

On November 13, 1995, an Order ofDismissal With Prejudice of all of the Company’s remaining claims and all ofGPCC’s claims was signed by the Court and also filed, thereby finally disposingof all of the remaining aspects of this litigation.

 

On November 6, 1992, the Companyentered into a Settlement Agreement and Release (“Settlement Agreement”) withRoyal Street Land Company, Deer Valley Resort Company, Royal Street of Utah,Royal Street Development Company (collectively “Deer Valley”), and Wells FargoBank, N.A.  In this SettlementAgreement, the Company, Deer Valley, and Wells Fargo agreed, among otherthings, to dismiss with prejudice the claims and counterclaims.

 

The Settlement Agreement provides theCompany the opportunity to develop, without the encumbrance of the Deer ValleySki Lease, certain parcels of land, which are currently subject to the DeerValley Ski Lease.  The SettlementAgreement further provides Deer Valley the opportunity to acquire the Company’sinterest in the surface estate to the balance of the land within the DeerValley Ski Lease.  Both the Company’sand Deer Valley’s opportunities concerning those parcels of land covered underthe Deer Valley Ski Lease are contingent upon master plan approval by theappropriate government agencies and acceptance of the master plan by theCompany.

 

If the appropriate governmentagencies do not approve the master plan or if the Company does not accept themaster plan, the land within the Deer Valley Ski Lease will remain encumberedby the Deer Valley Ski Lease.  If masterplan approval is obtained and accepted, the Deer Valley Ski Lease will beterminated.  The Company could thenproceed to develop those certain parcels of land which were formerly encumberedby the Deer Valley Ski Lease and would convey the balance of the surface estateof the land formerly encumbered by the Deer Valley Ski Lease to DeerValley.  Additionally, if and when themaster plan is accepted by both the Company and the appropriate governmentagencies, the exchange of the surface rights to the land by the Company for thetermination of the Deer Valley Ski Lease and the right to develop the landpreviously encumbered by the lease will represent an exchange of similarproductive assets.  Accordingly, theCompany will transfer its basis in the surface rights to the land to the basisin the land to be developed that was previously encumbered by the Deer ValleySki Lease, with no gain or loss recognized.

 

*Richardson Flat*

* *

A portion of United Park’s miningproperty, known as “Richardson Flat Tailings,” was proposed by the United StatesEnvironmental Protection Agency (“EPA”) on June 24, 1988, by notice publishedin the Federal Register, to be added to the EPA’s National Priorities List(“NPL”), the EPA’s listing of national priority hazardous waste sites.  United Park submitted written commentsopposing the listing of the Richardson Flat Tailings site on a number ofprocedural and substantive grounds. In response to the comments submitted byUnited Park, the EPA determined not to list the site on the NPL in a final rulepublished February 11, 1991, in the Federal Register.

 

On February 7, 1992, by noticepublished in the Federal Register, the EPA again proposed that the RichardsonFlat Tailings site be added to the NPL. In April 1992, the Company submitted written 

 

8

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comments opposing the listing on anumber of procedural and substantive grounds. As of this date, the EPA has neither responded to United Park’s commentsnor finalized its proposal to list the site on the NPL.

 

The NPL has been established by theEPA under the Comprehensive Environmental Response, Compensation, and LiabilityAct (“CERCLA”) to identify, inventory, and prioritize sites which warrantfurther investigation to assess the nature and extent of any public health andenvironmental risks associated  with thesite and to determine what remedial action, if any, may be appropriate.

 

Inclusion of a site on the NPL doesnot establish that the EPA will necessarily require remedial action for thesite.  Listing on the NPL does notestablish that any remedial action by the EPA or any private party is necessarynor does listing determine any liability for the cost of any remediation at thesite.  On September 27, 2000, UnitedPark executed an Administrative Order on Consent with the EPA to perform avoluntary focused remedial investigation and feasibility study (“FocusedRI/FS”) to determine if any remedial action may be warranted at RichardsonFlat.

 

Numerous mining properties throughoutthe United States owned by other entities are currently proposed for listing orare listed on the NPL.  As a result ofthe EPA’s evaluation of the Richardson Flat Tailings site, United Park may beadvised to continue its current environmental monitoring and practices at thesite under its Utah Pollutant Discharge Elimination System (“UPDES”) permit, orthe Company may be required to undertake additional stabilization orremediation activities on this portion of its mining property to comply withthe standards for disposal of mining wastes under CERCLA.  In 1983, United Park began a containmentprogram, which is now substantially complete, to cover the Richardson FlatTailings area with topsoil and seed the site for vegetation.  Management is not now able to accuratelypredict whether the Richardson Flat Tailings site will be listed on the NPLand, if it is listed, whether further remedial actions will be required.  On September 27, 2000, United Park executedan Administrative Order on Consent with the EPA to perform a voluntary Focusedremedial investigation and feasibility study (“Focused RI/FS”) to determine ifany remedial action may be warranted at Richardson Flat.  The Company accrued $630,000 in 1999 as itsbest estimate of costs to complete the Focused RI/FS at Richardson Flat whichwas expected to be incurred over the following three years.  The accrued balance as of December 31, 2001was $274,677.  The Company cannotestimate the potential costs, if any, that may be required beyond the FocusedRI/FS.  On December 4, 2001 the EPAissued a letter to all potentially responsible parties, including United Parkand three other mining companies, demanding that it be reimbursed  $562,231, plus interest from the date of theletter, for past response costs under CERCLA (the “December Letter”).  In addition, the EPA stated in its DecemberLetter that it anticipates additional funds may be expended at Richardson Flatfor which United Park may be liable. Although the liability of the Company is joint and several, EPA iscurrently negotiating with the Company and the other responsible partiesregarding the demand.  A demand of thisnature is typical at this type of site, and United Park anticipates that asignificant amount of the demand will be paid by the other potentiallyresponsible parties.  Management is, atthis time, unable to estimate the amount or range of the potential responsecost to the Company beyond what was accrued in 1999.  The Company has engaged in the study and evaluation of thedevelopment of a recreation complex in the area of Richardson Flat.  Management believes, if the development ofthe recreation complex takes place, any remedial issues which might beidentified during the study or the development related to the Richardson FlatTailings site could be resolved. However, should substantial remediation be required at the site beyondthe scope of any development and should United Park be designated as apotentially responsible party and it is later determined that United Park is aresponsible party liable for remediation, those costs could be substantial tothe Company.

 

As United Park has currentlyconducted its mine maintenance operations and under current reclamationstatutes and regulations, in management’s opinion, United Park is not liablefor reclamation costs 

 

9

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associated with its miningproperties.  However, if United Parkever elects to cease its mine maintenance operations, the Company may choose topermanently restrict access to its mines. If management chooses to perform certain elective reclamation of itssurface areas disturbed by past mining operations, management believes thatsuch reclamation and access restriction costs would be minimal.

 

*Other*

 

The Company is participating in theUpper Silver Creek Watershed Group (“USCWSG”). The USCWSG was formed to conduct a complete review of the Silver CreekWatershed to determine sources of contamination to Silver Creek and to preparea practical remediation plan.  To datethe USCWSG has completed its sampling efforts and published findings but hasnot reached any conclusions nor presented any remediation plans.  Management is, at this time, unable toestimate the amount or range of additional work required in connection with theUSCWSG study.

 

The Company’s Empire Canyon propertyhas been listed on the Comprehensive Environmental Response, Compensation, andLiability Information System (“CERCLIS”) database.  CERCLIS is EPA’s comprehensive database and management systemthat inventories and tracks releases addressed, or needing to be addressed, bythe CERCLA program.  However, inclusionof a site or area in the CERCLIS database does not represent a determination ofa party’s liability, nor does it represent a finding that any response action iswarranted.  For example, EPA may decidea site does not warrant further action and discontinue any further siteinvestigation.  In such a case, EPAdesignates the site under the category “No Further Response Action Planned”(“NFRAP”) in CERCLIS.  A NFRAPdesignation means no additional federal steps under CERCLA will be taken unlessfuture information warrants such action. In a recent (undated) letter to the Company, EPA states that it does notpresently consider the Flagstaff properties to be part of the Empire CanyonCERCLIS site.  In addition, in the sameletter, EPA states it has determined that conditions of parcels C-1 through C-7do not warrant federal superfund involvement. The Company is currently negotiating an Administrative Order on Consent withEPA to perform an environmental evaluation/cost analysis to determine if anyaction is warranted in Empire Canyon. At this time, United Park is unable to determine, if any, the effectthis will have on its results of operations or financial position.

 

## **NOTE 7 — SUBSEQUENT EVENTS**

 

During April 2002 the Company secureda $1,000,000 revolving line-of-credit. The purpose of this financing is to supplement cash flow needs of theCompany.

 

10

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***MANAGEMENT'S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS***

 

This Form 10-QSB may contain trend information and forward-lookingstatements that involve risks and uncertainties.  The actual results of operations of the Company could differmaterially from the Company’s historical results of operations and thosediscussed in such forward-looking statements as a result of certain factors setforth in this section and elsewhere in this Form 10-QSB, including informationincorporated by reference.

 

***Liquidity and Capital Resources***

 

Cash Flow Analysis

 

The Company’s cash balance increased $93,542 during the first threemonths of 2002, improving thecash balance to $115,688 as of March 31, 2002. The Company will use a portion of the March 31, 2002 cash balance; aportion of the anticipated proceeds from future real estate sales by Blue LedgeCorporation (hereinafter “Blue Ledge”)andbank financing to fund its future operations. During November 2001, the Company obtained a $2,000,000 line of creditwith a local bank to provide for its additional cash flow needs.  The Company used $1,196,751 of thisavailable line-of-credit during the quarter ending March 31, 2002. During April 2002 the company secured an additional $1,000,000line-of-credit to supplement the Company’s cash flow needs.

 

Real Estate

 

TheCompany’s wholly owned subsidiary, Blue Ledge sold one lot in the HiddenMeadows subdivision during the three-month period ended March 31, 2002.  Blue Ledge as of March 31, 2002 has two DeerCrest Lots, a Hidden Meadows lot, the Commerce Park at Keetley and a ski-inski-out lot available for sale.

 

In June 2000, the Companyformed a joint venture partnership with DMB to pursue development of FlagstaffMountain and Bonanza Mountain Resorts. The joint venture was terminated in January 2001.  The Company, as required by the jointventure operating agreement, will reimburse joint venture development costs of$2,445,030 and accrued interest to DMB in January of 2004.

 

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***Results of Operations***

 

#### 2002Compared with 2001

 

Blue Ledge sold one Hidden Meadows lot for a profit of $126,942 or 63%of the gross sales price during the three-month period ended March 31,2002.  During the same period in 2001,Blue Ledge did not have any lot sales.

 

TheCompany’s interest income decreased $7,311 or 97% during the first three monthsof 2002 as compared to the same period in 2001 because of lower cash balancesavailable for investment.

 

Royalty and rental revenues decreased $21,088 or 13% during the threemonths ended March 31, 2002 when compared to the same period in 2001. While the ski lease revenue remained unchanged, the primary reasons forthe decrease are a reduction of the building rental and reduced land userentals.

 

Other revenues decreased $6,698 or 20% during the first three months of2002 when compared to the sameperiod in 2001.  The decrease is the result of a decrease infees collected for receiving clean landfill.

 

Cost of real estate sales and selling expense increased $120,445 forthe first quarter of 2002 whencompared to the same period in 2001.  The increase is primarily due to the sale ofone Hidden Meadows lot in 2002 and increased carrying charges on lots availablefor sale.

 

General and administrative costsincreased $53,270 or 15% during the first quarter of 2001.  The increase over 2001 includes a 6%increase due to banking fees, a 10% increase in promotion expenses and a netdecrease of 1% due to various increases and decreases in other costs.

 

Minemaintenance and administrative costs decreased $164,775 or 29% during thethree-month period ended March 31, 2002, when compared with the same period in2001.  The primary causes for thedecrease include a reduction of payroll expenses and a reduction of utility costs.  The sale of Star Harbour lots in 2001resulted in a reduction of utility costs.

 

Interest expense increased $20,863 during the first three months of 2002 over the same period in 2001. The increase is the result of higher usage of the line-of-credit in2002.

 

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**PART II. – OTHER INFORMATION**

 

ITEM5.      OTHER INFORMATION.

 

A portion ofUnited Park’s mining property, known as “Richardson Flat Tailings,” which theCompany monitors under its UPDES permit, has been subject to testing andevaluation by the EPA under the National Contingency Plan pursuant to theComprehensive Environmental Response, Compensation, and Liability Act(“CERCLA”).  On June 24, 1988, the EPAproposed that the Richardson Flat Tailings site be added to the EPA’s NationalPriorities List (“NPL”), the EPA’s listing of national priority hazardous wastesites.  In response to the commentssubmitted by United Park, the EPA determined not to list the site on the NPL ina final rule published February 11, 1991, in the Federal Register.  On February 7, 1992, the EPA again proposedthe listing of the Richardson Flat Tailings site to the NPL.  In April 1992, the Company again submittedwritten comments opposing the EPA’s listing on a number of substantive andprocedural grounds.  The EPA has neitherresponded to United Park’s comments nor finalized its proposal to list thesite. United Park has completed negotiations with the EPA regarding performinga voluntary focused remedial investigation and feasibility study (“FocusedRI/FS”) to determine if any remedial action may be warranted at RichardsonFlat.  The Company signed theAdministrative Order on Consent for Remedial Investigation/Feasibility study onSeptember 27, 2000.  The Company didaccrue at December 31,1999 its best estimate of costs to complete the FocusedRI/FS at Richardson Flat.  Since thestudy has not been completed, the Company cannot estimate the potential costs,if any, that may be required beyond the Focused RI/FS.  On December 4, 2001 the EPA issued a letterto all potentially responsible parties (“PRPs”), including United Park andthree other mining companies, demanding that it be reimbursed for past andpotential future Richardson Flat response costs under CERCLA.  Although the liability of the Company isjoint and several, EPA is currently negotiating with the Company and the otherPRPs regarding the demand for past costs. A demand of this nature is typical at this type of site, and United Parkanticipates that a significant amount of the demand will be paid by the otherPRPs.  Management is, at this time,unable to estimate the amount or range of the potential response cost to theCompany beyond what was accrued in 1999.

 

ITEM 6.      EXHIBITS AND REPORTS ON FORM 8-K

 

(a)  Exhibits filed with this Form 10-QSB:

 

No exhibits are filed with this Form 10-QSB.

 

(b)  Reports on Form 8-K filed during the periodcovered by this Form 10-QSB:

 

On February 22, 2002, United Park filed a report on Form8-K relating to its execution of a stock purchase agreement with Capital GrowthPartners, LLC and several of United Park’s largest shareholders.  Under the agreement, the buyer agreed toacquire approximately 56% of United Park’s outstanding shares from thoseshareholders and agreed, subject to the consummation of that purchase, to initiatean unconditional tender offer for the purchase of United Park’s otheroutstanding shares.  The closing of thepurchase agreement is conditioned on, among other matters, the buyersatisfactorily completing its due diligence review of United Park and itsproperties.

 

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SIGNATURES

 

In accordance with the requirements of the Exchange Act, the Registrantcaused this report to be signed on its behalf by the undersigned, thereuntoduly authorized.

 

| United Park City Mines  Company |
|---------------------------------|
| (Registrant)                    |

| /s/ Hank Rothwell       |         | /s/ Michael R. Salmond  |
|-------------------------|--------------|-------------------------|
| Hank Rothwell           |         | Michael R. Salmond      |
| President,              |         | Chief Financial Officer |
| Chief Executive Officer |         |                    |
| and Director            |         |                    |
|                    |         |                    |
|                    |         |                    |
|                    |         |                    |
| Date:                   | May 15, 2002 |                    |
|                         |              |                         |  |  |

 

 

 

 

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