**SECURITIESAND EXCHANGE COMMISSION**

 

**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, 2003**                                            |
|                                                                                                                                                                                                                                                                                                                                                   |                                                                                          |
| **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 of small business issuer as specified inits 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 theissuer (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 ONLY TO CORPORATE ISSUERS)

 

State the numberof shares outstanding of each of the issuer’s classes of common equity, as ofthe latest practicable date:    As ofMay 5, 2003: 3,249,411 shares

 

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

 

 

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Form 10-QSB

United Park City Mines Company

March 31, 2003

## **PARTI - FINANCIAL INFORMATION**

 

##### ***ITEM 1. FINANCIAL STATEMENTS***

 

**UNITEDPARK CITY MINES COMPANY AND SUBSIDIARIESCONSOLIDATED BALANCE SHEET**(*Unaudited*)

 
|                                                                |   | **March 31,  2003** |       |
|---------------------------------------------------------------------|--------|---------------------|------------|
| ***ASSETS:***                                                       |   |                |       |
| Cash and cash equivalents                                           |   | $                   | 77,467     |   |
| Accounts  receivable                                                |   | 211,983             |       |
| Notes  receivable                                                   |   | 501,356             |       |
| Prepaid  expenses                                                   |   | 140,636             |       |
| Restricted  cash                                                    |   | 589,256             |       |
| Other                                                               |   | 56,100              |       |
|                                                                |   | 1,576,798           |       |
|                                                                |   |                |       |
| Real  Estate:                                                       |   |                |       |
| Deferred  development costs                                         |   | 22,130,130          |       |
|                                                                |   |                |       |
| Property  and Equipment:                                            |   |                |       |
| Mine  shaft, buildings and equipment                                |   | 749,586             |       |
| Construction-in-progress                                            |   | 83,365              |       |
| Resort  facilities                                                  |   | 58,077              |       |
| Less  accumulated depreciation                                      |   | (531,647            | )          |
|                                                                |   | 359,381             |       |
|                                                                |   |                |       |
| Land  less accumulated depletion of $1,062,190                      |   | 12,258,439          |       |
| Deferred financing costs less accumulated  amortization of $116,291 |   | 112,808             |       |
|                                                                |   | 12,730,628          |       |
|                                                                |   |                |       |
| Total assets                                                        |   | $                   | 36,437,556 |   |

 

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

 

2

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**UNITEDPARK CITY MINES COMPANY AND SUBSIDIARIESCONSOLIDATED BALANCE SHEET**(*Unaudited*)

 
|                                                                |   | **March 31,  2003** |          |
|---------------------------------------------------------------------|--------|---------------------|---------------|
| ***LIABILITIES AND STOCKHOLDERS’ EQUITY:***                    |   |                |          |
| Liabilities:                                                        |   |                |          |
| Accounts payable                                                    |   | $                   |  727,614 |   |
| Accrued  liabilities                                                |   | 445,246             |          |
| Stockholder  advances                                               |   | 975,172             |          |
| Bank  notes payable                                                 |   | 4,225,224           |          |
| Accrued  development costs                                          |   | 2,145,110           |          |
| Joint  venture termination reimbursement accrual                    |   | 2,746,950           |          |
| Accrued  remediation costs                                          |   | 1,636,232           |          |
|                                                                |   |                |          |
| Total  liabilities                                                  |   | 12,901,548          |          |
|                                                                |   |                |          |
| Commitments  and contingencies (Notes 5, 6 and 8)                   |   |                |          |
|                                                                |   |                |          |
| Stockholders’  equity:                                         |   |                |          |
| Capital  stock, $.01 par value:                                     |   | 32,494              |          |
| Authorized:  3,750,000 shares   Issued:  3,249,411 shares |   |                |          |
| Capital  in excess of par value                                     |   | 41,982,640          |          |
| Accumulated  deficit                                                |   | (18,295,342         | )             |
|                                                                |   | 23,719,792          |          |
|                                                                |   |                |          |
| Less  cost of treasury stock - 1,294 shares                         |   | (183,784            | )             |
|                                                                |   |                |          |
| Total  stockholders’ equity                                    |   | 23,536,008          |          |
|                                                                |   |                |          |
| Total  liabilities and stockholders’ equity                    |   | $                   | 36,437,556    |   |

 

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

 

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**UNITEDPARK CITY MINES COMPANY AND SUBSIDIARIESCONSOLIDATED STATEMENT OF OPERATIONS**(*Unaudited*)

 
|                                                             |   | **For Three  Months Ended** |     |
|------------------------------------------------------------------|--------|-----------------------------|----------|
|                                                             |   | **March 31,  2003**         |     | **March 31,  2002** |   |
| Revenues:                                                        |   |                        |     |   |   |
| Real  estate sales                                               |   | $                           | —   |   | $ | 200,000 |   |
| Interest                                                         |   | 13,463                      |     | 193 |   |
| Royalties  and rentals                                           |   | 115,600                     |     | 136,400 |   |
| Other                                                            |   | 19                          |     | 26,888 |   |
|                                                             |   | 129,082                     |     | 363,481 |   |
| Expenses:                                                        |   |                        |     |   |   |
| Cost  of lot sales and selling expenses                          |   | —                      |     | 91,039 |   |
| Other  real estate costs                                         |   | 55,547                      |     | 57,964 |   |
| General  and administrative costs                                |   | 354,562                     |     | 357,165 |   |
| Mine  maintenance and administrative costs                       |   | 149,206                     |     | 435,185 |   |
| Depreciation                                                     |   | 10,559                      |     | 10,257 |   |
| Interest                                                         |   | —                      |     | 23,220 |   |
|                                                             |   | 569,874                     |     | 974,830 |   |
|                                                             |   |                        |     |   |   |
| Loss  before income taxes                                        |   | (440,792                    | )        | (611,349 | ) |
|                                                             |   |                        |     |   |   |
| Income  tax benefit                                              |   | —                      |     | — |   |
|                                                             |   |                        |     |   |   |
| Net  Loss                                                        |   | $                           | (440,792 | ) | $ | (611,349 | ) |
|                                                             |   |                        |     |   |   |
| Basic  and diluted net loss per share                            |   | $                           | (.14     | ) | $ | (.19 | ) |
|                                                             |   |                        |     |   |   |
| Basic and diluted weighted average number of shares  outstanding |   | 3,249,411                   |     | 3,249,411 |   |

 

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

 

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**UNITEDPARK CITY MINES COMPANY AND SUBSIDIARIESCONSOLIDATED STATEMENT OF CASH FLOWS**(*Unaudited*)

 
|                                                                         |   | **For Three  Months Ended** |     |
|------------------------------------------------------------------------------|--------|-----------------------------|----------|
|                                                                         |   | **March 31,  2003**         |     | **March 31,  2002** |   |
| Cash  flows from operating activities:                                       |   |                        |     |   |   |
| Net Loss                                                                     |   | $                           | (440,792 | ) | $ | (611,349 | ) |
| Adjustments  to reconcile net loss to net cash used by operating activities: |   |                        |     |   |   |
| Depreciation                                                                 |   | 10,559                      |     | 10,257 |   |
| Increase  (decrease) from changes in:                                        |   |                        |     |   |   |
| Restricted  cash                                                             |   | (589,256                    | )        | — |   |
| Accounts  receivable                                                         |   | (104,729                    | )        | (93,938 | ) |
| Notes  receivable                                                            |   | 1,001,726                   |     | — |   |
| Prepaid  expenses, inventory and other assets                                |   | 11,424                      |     | (162,241 | ) |
| Deferred  real estate development costs                                      |   | (782,007                    | )        | (605,786 | ) |
| Deferred  financing costs                                                    |   | 38,677                      |     | — |   |
| Accounts  payable and accrued liabilities                                    |   | 3,643                       |     | 355,353 |   |
| Accrued  development costs                                                   |   | (6,891                      | )        | (148,954 | ) |
| Joint  venture termination reimbursement accrual                             |   | 19,071                      |     | 28,636 |   |
| Accrued  remediation costs                                                   |   | (57,508                     | )        | (51,952 | ) |
| Total  adjustments                                                           |   | (455,291                    | )        | (668,625 | ) |
| Net  cash used by operating activities                                       |   | (896,083                    | )        | (1,279,974 | ) |
|                                                                         |   |                        |     |   |   |
| Cash  flows from investing activities:                                       |   |                        |     |   |   |
| Construction-in-progress                                                     |   | —                      |     | (32,237 | ) |
| Capital  expenditures                                                        |   | (2,145                      | )        | (11,345 | ) |
| Net  cash used by investing activities                                       |   | (2,145                      | )        | (43,582 | ) |
|                                                                         |   |                        |     |   |   |
| Cash  flows from financing activities:                                       |   |                        |     |   |   |
| Proceeds  from bank notes                                                    |   | 284,051                     |     | 1,197,931 |   |
| Principal  payments on bank notes                                            |   | (4,796                      | )        | (5,833 | ) |
| Stockholder  advances                                                        |   | 546,191                     |     | 225,000 |   |
| Net  cash provided by financing activities                                   |   | 825,446                     |     | 1,417,098 |   |
|                                                                         |   |                        |     |   |   |
| Net  increase (decrease) in cash and cash equivalents                        |   | (72,782                     | )        | 93,542 |   |
| Cash  and cash equivalents-beginning of period                               |   | 150,249                     |     | 22,146 |   |
|                                                                         |   |                        |     |   |   |
| Cash  and cash equivalents-end of period                                     |   | $                           | 77,467   |   | $ | 115,688 |   |

 

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

 

5

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***ITEM 2. UNITED PARKCITY MINES COMPANY AND SUBSIDIARIES 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, 2002.

 

*B.  Management’sRepresentation*

 

The Registrant, withoutaudit, has prepared the consolidated balance sheet as of March 31, 2003 and theconsolidated statements of operations and cash flows for the three-monthperiods ended March 31, 2003 and March 31, 2002.  In the opinion of management, all adjustments necessary topresent fairly the financial position, results of operations, and cash flows atMarch 31, 2003 and for all periods presented, have been made.

 

*C.  Liquidity*

 

TheCompany believes that cash and cash equivalents at March 31. 2003, plus cashflows from the sale of real estate and proceeds from bank financing will besufficient to fund its ongoing operations in 2003.  If sufficient real estate sales do not occur as anticipated, theCompany has various parcels of real estate that management believes could beused as collateral for borrowings to provide the cash flows necessary to fundits on going operations in 2003.  TheCompany is currently negotiating with a local bank to establish an additionaldebt funding source.  As discussed inNotes 7 and 9, the majority stockholder has been providing advances to theCompany to supplement working capital requirements.

 

Asdiscussed in Form 10-KSB as of December 31, 2002, the Company has $2.7 millionof debt obligations that are due in 2003. The Company is dependent on future real estate sales; additional debtfinancing or other sources to fund its ongoing operations and debt servicerequirements in 2003.  There can be noassurance that the Company will be able to achieve sufficient real estate sales,obtain additional debt financing or funding from other sources in 2003 to fundits cash requirements.

 

**NOTE 2 - ACCOUNTING FOR STOCK BASED COMPENSATION**

 

The Company accounts foremployee stock options in accordance with Accounting Principles Board OpinionNo. 25 (“APB 25”), “Accounting for Stock issued to Employees.”  Under APB 25, the Company recognizes nocompensation expense related to employee stock options, as no options aregranted at a price below the market price on the day of grant.

 

In 1996, Statement of Financial Accounting StandardsNo. 123 (“SFAS 123”), “Accounting for Stock-Based Compensation,” becameeffective for the Company.  SFAS 123, asamended by SFAS No. 148, which prescribes the recognition of compensationexpense based on fair market value of options on the grant date, allowscompanies to continue applying APB 25 if certain pro forma disclosures are madeassuming hypothetical fair value method application.  No stock options were granted in either 2002 or 2003.  Had compensation cost for the Company’sstock options been determined based on the fair market method prescribed inSFAS 123, the Company’s pro forma net income and net income per share would nothave changed from the amounts reported in the accompanying financialstatements.

 

**NOTE 3 - 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 

 

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accountsfor revenues and expenses from these activities separately and evaluates eachof the following segments based upon performance: Mine Maintenance and RealEstate.  The segment data here presenteddo not include intersegment revenues or charges for corporate overhead costs.

 
| **March 31, 2003:**                                                     |   | **Mine Maint.** |   | **Real Estate** |   | **Other** |   | **Total**  |   |
|-------------------------------------------------------------------------|--------|-----------------|--------|-----------------|--------|-----------|--------|------------|--------|
| Revenue                                                                 |   | $               | — |            | $      | 128,942   |   | $          | 140    |   | $ | 129,082 |   |
| Operating income (loss)(1)                                              |   | (154,243        | )      | 27,141          |   | (313,690  | )      | (440,792   | )      |
| Identifiable assets                                                     |   | 271,881         |   | 35,679,712      |   | 485,963   |   | 36,437,556 |   |
| Depreciation                                                            |   | 5,037           |   | 2,648           |   | 2,874     |   | 10,559     |   |
| Capital expenditures, including deferred real estate  development costs |   | 2,145           |   | 1,564,014       |   | —    |   | 1,566,159  |   |
|                                                                         |        |                 |        |                 |        |           |        |            |        |  |  |  |  |

 
| **March 31, 2002:**                                                     |   | **Mine Maint.** |   | **Real Estate** |   | **Other** |   | **Total**  |   |
|-------------------------------------------------------------------------|--------|-----------------|--------|-----------------|--------|-----------|--------|------------|--------|
| 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    |   |
|                                                                         |        |                 |        |                 |        |           |        |            |        |  |  |  |  |

 

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(1)               Earnings (loss)before taxes

 

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**NOTE 4 – NOTES RECEIVABLE**

 

During October 2002, the Company completed the sale of atownhouse site for $6,000,000 from the first phase of the Flagstaff MountainResort.  The proceeds from the sale ofthat site included a $1,500,000 note receivable due in nine months.  Interest payments are scheduled to be paidmonthly with the interest rate escalating each month of the term.  During February 2003, the Company received a$1,000,000 payment in addition to the monthly interest payment.

 

**NOTE 5 – BANK FINANCING**

 

The Company has a financing commitment from a local banktotaling $250,000.  Interest on theoutstanding borrowings is accrued monthly at 1⁄2 percent above the bank’s primelending rate (prime rate was 4.25% at March 31, 2003).  The loan has two Deer Crest lots withrelated improvements as collateral.  TheCompany renewed the loan during 2002 with a termination date of August 1,2003.  The Company had drawn $255,562against the loan at March 31, 2003.

 

The Company has a $2,000,000 revolving line-of-credit.  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 4.25% at March 31, 2003).  The maturity date is October 1, 2003.  The Company had drawn $2,000,000 against theloan at March 31, 2003.  The Companyincurred loan costs and fees of $20,035 which have been capitalized in deferredfinancing costs and are being amortized over the life of the loan.  As of March 31, 2003, $9,346 of the loancosts have been amortized and capitalized to deferred development costs.

 

The Company has a financing commitment from a local banktotaling $365,000, for the purpose of installing improvements to a singleresidential lot known as 7.2b.  Intereston the outstanding borrowings is paid monthly at the bank’s prime lending rate(prime rate was 4.25% at March 31, 2003). The intial loan term ended January 1, 2003.  The Company had drawn $22,797 against the loan at March 31,2003.  The Company signed a loanmodification and extension agreement April 29, 2003 with a maturity date ofJuly 1, 2004.

 

During June 2002, the Company obtained a $17,300,000 loancommitment for the purpose of installing improvements to the Flagstaff MountainResort Phase 1 development.  Borrowingsare collateralized by approximately 32 acres of land known as FlagstaffMountain Resort Phase 1 in Summit County and approximately 10 acres of land knownas the Jordanelle Commerce Park in Wasatch County.  Interest on the outstanding borrowings is paid monthly at 3%above the bank’s 30-day LIBOR rate (30-day LIBOR was 1.3000% at March 31,2003).  The maturity date is January 1,2004, subject to the Company’s right to extend, as per the terms of the note,the maturity date to July 1, 2004.  Theloan agreement provisions define the required payments prior to release ofcollateral and provide for the reduction of the loan commitment in the amountof any collateral release payments the Company makes to the bank.  The collateral release payments aredeposited into a restricted cash account. Development disbursements are made first from the restricted cashaccount and then from loan proceeds. During 2002 and 2003, $9,813,397 of collateral release payments andinterest was deposited and $9,224,141 was disbursed from the restricted cashaccount on project costs.  As of March31, 2003, the commitment balance was $7,486,603 and the Company had drawn$1,906,944 against the commitment.  TheCompany incurred loan costs and fees of $209,064 which have been capitalized indeferred financing costs and are being amortized over the life of theloan.  As of March 31, 2003, $106,946 ofthe loan costs have been amortized and capitalized to deferred developmentcosts.

 

8

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The Company financed the purchase of one vehicle in Octoberof 2001 for $32,695 and another vehicle in December of 2001 for $37,297.  Each installment contract has 36 equalmonthly payments.  The monthlyinstallment total is $1,944.  The March31, 2003 outstanding balance for the contracts is $39,921.

 

During the quarters ended March 31, 2003 and 2002, theCompany incurred interest costs of $105,679 and $23,220, respectively.  In 2003 and 2002, $105,679 and $-0-,respectively, of interest costs were capitalized to deferred development costs.

 

**NOTE 6 – JOINT VENTURE TERMINATION REIMBURSEMENT 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 4.25% at March 31, 2003) or 10% compoundedyearly.  The total 2003 accrued interestof $19,071 at March 31, 2003 has been capitalized into deferred developmentcosts-other.  The balance includingaccrued interest at March 31, 2003, is $2,746,950.

 

## **NOTE 7 –RELATED PARTY TRANSACTION**

 

During 2002 and 2003, the Company’s majority stockholderadvanced to the Company $954,000 to supplement the Company’s workingcapital.  During the quarter ended March31, 2003, $7,191 interest was accrued at 1⁄2 percent above the bank’s primelending rate (prime rate was 4.25% at March 31, 2003), for a total outstandingbalance of $975,172 which is unsecured and due on demand.

 

## **NOTE 8 – CONTINGENCIES**

 

*Litigation and Settlement Agreement*

 

In May 1986, the Company filed a lawsuit against Greater ParkCity Company (“GPCC”), Royal Street Land Company, Royal Street of Utah, andDeer Valley Resort Company related to agreements which resulted in therestructuring of Greater Park City Company in 1975 and later performance underthese agreements.  The defendants filedcounterclaims against the Company.

 

On November 13, 1995, an Order of Dismissal With Prejudice ofall of the Company’s remaining claims and all of GPCC’s claims was signed bythe Court and also filed, thereby finally disposing of all of the remainingaspects of this litigation.

 

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

 

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The Settlement Agreement provides the Company the opportunityto develop, without the encumbrance of the Deer Valley Ski Lease, certainparcels of land, which are currently subject to the Deer Valley Ski Lease.  The Settlement Agreement further providesDeer Valley the opportunity to acquire the Company’s interest in the surfaceestate to the balance of the land within the Deer Valley Ski Lease.  Both the Company’s and Deer Valley’sopportunities concerning those parcels of land covered under the Deer ValleySki Lease are contingent upon master plan approval by the appropriategovernment agencies and acceptance of the master plan by the Company.  If the appropriate government agencies donot approve the master plan or if the Company does not accept the master plan,the land within the Deer Valley Ski Lease will remain encumbered by the DeerValley Ski Lease.  If master planapproval 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 UnitedPark’s mining property, known as “Richardson Flat Tailings,” was proposed bythe United States Environmental Protection Agency (“EPA”) on June 24, 1988, bynotice published in the Federal Register, to be added to the EPA’s NationalPriorities List (“NPL”), the EPA’s listing of national priority hazardous wastesites.  United Park submitted writtencomments opposing the listing of the Richardson Flat Tailings site on a numberof procedural 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, bynotice published in the Federal Register, the EPA again proposed that theRichardson Flat Tailings site be added to the NPL.  In April 1992, the Company submitted written comments opposingthe listing on a number of procedural and substantive grounds.  As of this date, the EPA has neither respondedto United Park’s comments nor finalized its proposal to list the site on theNPL.

 

The NPL has beenestablished by the EPA under the Comprehensive Environmental Response,Compensation, and Liability Act (“CERCLA”) to identify, inventory, and prioritizesites which warrant further investigation to assess the nature and extent ofany public health and environmental risks associated with the site and todetermine what remedial action, if any, may be appropriate.  Inclusion of a site on the NPL does not establishthat the EPA will necessarily require remedial action for the site.  Listing on the NPL does not establish thatany remedial action by the EPA or any private party is necessary nor doeslisting determine any liability for the cost of any remediation at the site

 

Numerousmining properties throughout the United States owned by other entities arecurrently proposed for listing or are listed on the NPL.  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 its 

 

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bestestimate of costs to complete the Focused RI/FS at Richardson Flat that wasexpected to be incurred over the following three years.  The Company accrued an additional $418,980during 2002.  The accrued balance as ofMarch 31, 2003 was $472,350.  TheCompany cannot estimate the potential costs, if any, that may be requiredbeyond the Focused RI/FS.  On December4, 2001, the EPA issued a letter to all potentially responsible parties,including United Park and three other mining companies, demanding that it bereimbursed $562,231, plus interest from the date of the letter, for pastresponse costs under CERCLA (the “December Letter”).  In addition, the EPA stated in its December Letter that itanticipates additional funds may be expended at Richardson Flat for whichUnited Park may be liable.  During 2002,the Company received an additional demand for response costs of $110,318 forthe period of October 1, 2001 through September 30, 2002.  Although the liability of the Company isjoint and several, EPA is currently negotiating with the Company and the otherresponsible parties regarding the demands. A demand of this nature is typical at this type of site, and United Parkanticipates that the other potentially responsible parties will pay asignificant amount of the demands. Management is, at this time, unable to estimate the amount or range ofthe potential response cost to the Company beyond what was accrued in2002.  The Company has engaged in thestudy and evaluation of the development of a recreation complex in the area ofRichardson Flat.  Management believes,if the development of the recreation complex takes place, any remedial issues thatmight be identified during the study or the development related to theRichardson Flat Tailings site could be resolved.  However, should substantial remediation be required at the sitebeyond the 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.

 

*Other*

 

The Company is participating in the Upper SilverCreek Watershed Group (“USCWSG”).  TheUSCWSG was formed to conduct a complete review of the Silver Creek Watershed todetermine sources of contamination to Silver Creek and to prepare a practicalremediation plan.  To date, the USCWSGhas completed its sampling efforts and published findings but has not reachedany conclusions nor presented any remediation plans.  Management is, at this time, unable to estimate the amount orrange of additional work required in connection with the USCWSG study.

 

The Company’s Empire Canyon property has been listedon the Comprehensive Environmental Response, Compensation, and LiabilityInformation System (“CERCLIS”) database. CERCLIS is EPA’s comprehensive database and management system thatinventories and tracks releases addressed, or needing to be addressed, by theCERCLA program.  However, inclusion of asite or area in the CERCLIS database does not represent a determination of aparty’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 an (undated) letterto the Company received in March 2002, EPA stated that it does not presently consider the Flagstaff properties tobe part of the Empire Canyon CERCLIS site. In addition, in the same letter, EPA stated it has determined thatconditions of certain parcels of Empire Canyon within the Company’s Flagstaffproject do not warrant federal superfund involvement.  A draft EE/CA has been completed and delivered to the agenciesfor their consideration, but the decision regarding when and if any removal orremediation may be required has not been made. The Company estimated $1,174,753 as its best estimate of future costs tobe spent on Empire Canyon over multiple years. The Company has accrued this liability as of December 31, 2002, with acorresponding increase in deferred development costs.  As of March 31, 2003, the Company has made expenditure thatreduced the liability to the balance of $1,163,882.  At this time, United Park is unable to determine the effect, ifany, this will have, beyond the amount recognized during 2002, on its resultsof operations or financial position.

 

SinceUnited Park has conducted its mine maintenance operations in materialcompliance with current reclamation statutes and regulations, in management’sopinion, United Park is not liable for reclamation costs associated with itsmining properties.  However, if UnitedPark ever elects to cease its mine 

 

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maintenanceoperations, the Company may choose to permanently restrict access to itsmines.  If management chooses to performcertain elective reclamation of its surface areas disturbed by past miningoperations, management believes that such reclamation and access restrictioncosts would be minimal.

 

## **NOTE 9 –SUBSEQUENT EVENTS**

 

FromApril 1, 2003, to May 7, 2003, the Company has received advances of $209,146from the major stockholder.

 

 

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This Form 10-QSB maycontain trend information and forward-looking statements that involve risks anduncertainties.  The actual results ofoperations of the Company could differ materially from the Company’s historicalresults of operations and those discussed in such forward-looking statements asa result of certain factors set forth in this section and elsewhere in thisForm 10-QSB, including information incorporated by reference.

 

***Liquidity and Capital Resources***

 

Cash Flow Analysis

 

The Company’s cashbalance decreased $72,782 during the first three months of 2003, providing a balance of $77,467 asof March 31, 2003.  The Company will use a portion of the March31, 2003 cash balance; a portionof the anticipated cash flows from real estate sales by Blue Ledge Corporation(hereinafter “Blue Ledge”),bankfinancing and other sources to fund its future operations.  During the first three months of 2003, theCompany’s operating and investing activities were funded primarily by the cashbalance reduction of $72,782, the receipt of a $1,000,000 note receivablepayment, net proceeds from bank financing of $284,051 and $546,191 fromstockholder advances.

 

TheCompany believes that cash and cash equivalents at March 31. 2003, plus cashflows from the sale of real estate and proceeds from bank financing will besufficient to fund its ongoing operations in 2003.  If sufficient real estate sales do not occur as anticipated, theCompany has various parcels of real estate that management believes could beused as collateral for borrowings to provide the cash flows necessary to fundits on going operations in 2003.  TheCompany is currently negotiating with a local bank to establish an additionaldebt funding source.  As discussed inNotes 7 and 9, the majority stockholder has been providing advances to theCompany to supplement working capital requirements.

 

Asdiscussed in Form 10-KSB as of December 31, 2002, the Company has $2.7 millionof debt obligations that are due in 2003. The Company is dependent on future real estate sales; additional debtfinancing or other sources to fund its ongoing operations and debt servicerequirements in 2003.  There can be noassurance that the Company will be able to achieve sufficient real estatesales, obtain additional debt financing or funding from other sources in 2003to fund its cash requirements.

 

Real Estate

 

TheCompany’s wholly owned subsidiary, Blue Ledge did not sell any of the Company’savailable properties during the three months ended March 31, 2003, whichinclude the Flagstaff Phase I properties, the two Deer Crest Lots, the HiddenMeadows lot, the Commerce Park at Keetley and the 55 acre ski-in ski-out lot.

 

TheCompany has one property under contract to close at the end of May for a grosssales price of $575,000.

 

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***Results of Operations***

 

#### 2003 Compared with 2002

 

Blue Ledge did not haveany lot sales during the three-month period ended March 31, 2003.  During the same period in 2002, Blue Ledgesold one Hidden Meadows lot for a profit of $126,942 or 63% of the gross salesprice.

 

TheCompany’s interest income increased $13,270 to $13,463 during the first threemonths of 2003 as compared to the same period in 2002 due primarily to the NoteReceivable from the sale of the townhouse site in Flagstaff Phase I in October2002.

 

Royalty and rentalrevenues decreased $20,800 or 15% during the three months ended March 31, 2003 when compared to the same periodin 2002.  While the ski lease revenue remainedunchanged, the primary reason for the decrease is a reduction of the buildingrental income.

 

Other revenues decreased$26,869 or approximately 100% during the first three months of 2003 when compared to the same periodin 2002.  The decrease is the result of decreased feescollected for receiving clean landfill of $11,461 and a reduction of waterrevenue due to the sale of water rights to Jordanelle Special Service Districtin August of 2002.

 

Cost of real estate salesand selling expenses decreased $91,039 for the first quarter of 2003 when compared to the same periodin 2002.  The decrease is due to Blue Ledge not havingany lot sales in 2003.

 

Generaland administrative costs decreased $2,603 or 1% during the first quarter of2003 when compared to the same period in 2002. The major fluctuations in costs when compared to 2002 include anincreased use of professionals of 8%, an increase of 7% in accounting fees, anincrease of insurance expense of 5% and partially offset by a decrease insecurities expense of 11%.  Theremaining net 10% decrease is due to various other increases and decreases over2002.

 

Minemaintenance and administrative costs decreased $285,979 or 66% during thethree-month period ended March 31, 2003, when compared with the same period in2002.  The primary cause for thedecrease was the non-cash transaction with Jordanelle Special Service Districtin August of 2002 under which the Company exchanged certain real property andwater rights for a release of treatment obligations, including costs associatedwith the operation and maintenance of the water treatment facility.  This exchange relieved the Company of itsobligations under the Utah Pollutant Discharge Elimination System (“UPDES”)permit as well as substantially all costs associated with maintaining theunderground mine workings (which management estimated to be in excess of$900,000 annually).

 

The interest expense waseliminated for the first quarter of 2003 due to the large development projectssubject to capitalization of holding costs. Interest of $105,679 wascapitalized during the quarter ending March 31, 2003.  No interest was capitalized as holding costs in the first quarterof 2002.

 

***ITEM3. CONTROLS AND PROCEDURES***

 

Within 90 days prior tothe date of this report, United Park carried out an evaluation, under thesupervision and with the participation of its chief executive officer and chieffinancial officer, of the effectiveness of the design and operation of theCompany’s disclosure controls and procedures. Based on that evaluation, the Company’s chief executive officer andchief financial officer have concluded that, subject to the limitations notedbelow, the Company’s disclosure controls and procedures are effective in 

 

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timely alerting them tomaterial information required to be included in United Park’s periodicSecurities and Exchange Commission reports.

 

In evaluating theCompany’s controls and procedures, our management has recognized that controlsystems can provide only reasonable, but not absolute, assurance that theobjectives of the control system are met, assurance that the design of theCompany’s control system must reflect that United Park is subject to a numberof resource constraints, and that the benefits of the Company’s control systemmust be considered relative to its cost.

 

Because of the inherentlimitations in all control systems, the Company’s management also believes thatno evaluation can provide absolute assurance that all control issues andinstances of fraud, if any, within United Park have been detected, or will bedetected in the future.  These inherentlimitations include limitations relating to decision-making functions,breakdowns that can occur because of simple error or mistake and otheractivities that do not rise to the level of fraud.  Controls can also be circumvented by individual acts of somepersons, by collusions of people, by management override of the controls andprocedures that the Company has put into place, or because the degree of compliancewith the policies and procedures may deteriorate.

 

In evaluating theCompany’s controls and procedures, management has identified certainnon-material changes to its existing controls and procedures which managementbelieves will make United Park’s control system more effective.  The Company’s management believes that thosechanges, if implemented, would not constitute a significant change in theCompany’s internal controls.

 

Since the date of thelast evaluation of the United Park’s control system, the Company has not madeany significant changes in its internal controls or other factors that wouldsignificantly affect those controls subsequent to the date of that evaluation.

 

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**PART II.- OTHER INFORMATION**

 

ITEM 5.               OTHER INFORMATION.

 

Aportion of United Park’s mining property, known as “Richardson Flat Tailings,”which the Company monitors under its UPDES permit, has been subject to testingand evaluation 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 amounts at December 31,1999 and December 31, 2002 as its best estimateof costs to complete the Focused RI/FS at Richardson Flat.  Since the study has not been completed, theCompany cannot estimate the potential costs, if any, that may be requiredbeyond the Focused RI/FS.

 

ITEM6.               EXHIBITS ANDREPORTS ON FORM 8-K

 

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

 

No exhibits are filedwith this Form 10-QSB.

 

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

 

No reports on Form 8-Kwere filed during the period covered by this Form 10-QSB.

 

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SIGNATURES

 

In accordance with therequirements of the Exchange Act, the Registrant caused this report to besigned on its behalf by the undersigned, thereunto duly authorized.

 

 
|                                                             | United Park City  Mines Company |                                         |
|------------------------------------------------------------------|---------------------------------|----------------------------------------------|
|                                                             | (Registrant)                    |                                         |
|                                                             |
|                                                             |
| /s/ Hank  Rothwell                                               |                            | /s/ Michael R.  Salmond                      |
| Hank Rothwell  President,  Chief Executive Officer  and Director |                            | Michael R.  Salmond  Chief Financial Officer |
|                                                             |                            |                                         |
|                                                             |                            |                                         |
| Date: May 15, 2003                                               |                            |                                         |
|                                                                  |                                 |                                              |  |  |

 

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**CERTIFICATION BY PRINCIPAL EXECUTIVE OFFICERPURSUANT TO 18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

 

Inconnection with the Quarterly Report of United Park City Mines Company (the“Company”) on Form 10-QSB for the period ended March 31, 2003 as filed with theSecurities and Exchange Commission on the date hereof (the “Report”), I, HankRothwell, Chief Executive Officer of the Company, certify, pursuant to 18U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-OxleyAct of 2002, that:

 

(1)          I havereviewed this quarterly report on Form 10-QSB of the Company;

 

(2)          Based on myknowledge, this quarterly report does not contain any untrue statement of amaterial fact or omit to state a material fact necessary to make the statementsmade, in light of the circumstances under which such statements were made, notmisleading with respect to the period covered in this quarterly report;

 

(3)          Based on myknowledge, the financial statements and other financial information included inthis quarterly report, fairly present in all material respects the financialcondition, results of operations of the registrant as of, and for, the periodspresented in this quarterly report;

 

(4)          Theregistrant’s other certifying officer and I are responsible for establishingand maintaining internal disclosure controls and procedures (as defined inExchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

 

a)              designedsuch disclosure controls and procedures to ensure that material informationrelating to the registrant, including its consolidated subsidiaries is madeknown to us by others within those entities, particularly during the period inwhich this quarterly report is being prepared;

 

b)             evaluatedthe effectiveness of the registrant’s internal disclosure controls andprocedures as of a date within 90 days prior to the filing date of thisquarterly report (the “Evaluation Date”); and

 

c)              presented inthis quarterly report our conclusions about the effectiveness of our internaldisclosure controls and procedures based on our evaluation as of the EvaluationDate;

 

(5)          Theregistrant’s other certifying officer and I have disclosed to the registrant’sauditors and the audit committee of the registrant’s board of directors (orpersons performing the equivalent function):

 

a)              allsignificant deficiencies in the design or operation of internal controls whichcould adversely affect the registrant’s ability to record, process, summarizeand report financial data and have identified for the registrant’s auditors anymaterial weakness in internal controls; and

 

b)             any fraud,whether or not material, that involves management or other employees who have asignificant role in the registrant’s internal controls; and

 

(6)          Theregistrant’s other certifying officer and I have indicated in this quarterlyreport whether or not there were significant changes in internal controls or inother factors that could significantly affect internal controls subsequent tothe date of our most recent evaluation, including any corrective actions withregard to significant deficiencies and material weakness.

 
| /s/ Hank Rothwell                                    |   |
|------------------------------------------------------|--------|
| Hank Rothwell  Chief Executive Officer  May 15, 2003 |

 

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**CERTIFICATION BY PRINCIPAL EXECUTIVE OFFICERPURSUANT TO 18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

 

Inconnection with the Quarterly Report of United Park City Mines Company (the“Company”) on Form 10-QSB for the period ended March 31, 2003 as filed with theSecurities and Exchange Commission on the date hereof (the “Report”), I,Michael R. Salmond, Chief Financial Officer of the Company, certify, pursuantto 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of theSarbanes-Oxley Act of 2002, that:

 

(1)          I havereviewed this quarterly report on Form 10-QSB of the Company;

 

(2)          Based on myknowledge, this quarterly report does not contain any untrue statement of amaterial fact or omit to state a material fact necessary to make the statementsmade, in light of the circumstances under which such statements were made, notmisleading with respect to the period covered in this quarterly report;

 

(3)          Based on myknowledge, the financial statements and other financial information included inthis quarterly report, fairly present in all material respects the financialcondition, results of operations of the registrant as of, and for, the periodspresented in this quarterly report;

 

(4)          Theregistrant’s other certifying officer and I are responsible for establishingand maintaining internal disclosure controls and procedures (as defined inExchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

 

a)              designedsuch disclosure controls and procedures to ensure that material informationrelating to the registrant, including its consolidated subsidiaries is madeknown to us by others within those entities, particularly during the period inwhich this quarterly report is being prepared;

 

b)             evaluatedthe effectiveness of the registrant’s internal disclosure controls andprocedures as of a date within 90 days prior to the filing date of thisquarterly report (the “Evaluation Date”); and

 

c)              presented inthis quarterly report our conclusions about the effectiveness of our internaldisclosure controls and procedures based on our evaluation as of the EvaluationDate;

 

(5)          Theregistrant’s other certifying officer and I have disclosed to the registrant’sauditors and the audit committee of the registrant’s board of directors (orpersons performing the equivalent function):

 

a)              allsignificant deficiencies in the design or operation of internal controls whichcould adversely affect the registrant’s ability to record, process, summarizeand report financial data and have identified for the registrant’s auditors anymaterial weakness in internal controls; and

 

b)             any fraud,whether or not material, that involves management or other employees who have asignificant role in the registrant’s internal controls; and

 

(6)          Theregistrant’s other certifying officer and I have indicated in this quarterlyreport whether or not there were significant changes in internal controls or inother factors that could significantly affect internal controls subsequent tothe date of our most recent evaluation, including any corrective actions withregard to significant deficiencies and material weakness.

 
| /s/ Michael R. Salmond                                    |   |
|-----------------------------------------------------------|--------|
| Michael R. Salmond  Chief Financial Officer  May 15, 2003 |

 

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**CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

 

In connection with the QuarterlyReport of United Park City Mines Company (the “Company”) on Form 10-QSB for theperiod ending March 31, 2003 as filed with the Securities and ExchangeCommission on the date hereof (the “Report”), I, Hank Rothwell, Chief ExecutiveOfficer of the Company, certify, to the best of my knowledge, pursuant to 18U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

 

(1)The Report fully complies with the requirements of section 13(a) or 15(d) ofthe Securities Exchange Act of 1934; and

 

(2)The information contained in the Report fairly presents, in all materialrespects, the financial condition and result of operations of the Company.

 

 
| /s/ Hank Rothwell                                    |   |
|------------------------------------------------------|--------|
|                                                 |
|                                                 |
| Hank Rothwell  Chief Executive Officer  May 15, 2003 |

 

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**CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

 

In connection with the QuarterlyReport of United Park City Mines Company (the “Company”) on Form 10-QSB for theperiod ending March 31, 2003 as filed with the Securities and ExchangeCommission on the date hereof (the “Report”), I, Michael R. Salmond, ChiefFinancial Officer of the Company, certify, to the best of my knowledge,pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of theSarbanes-Oxley Act of 2002, that:

 

(1) The Report fully complies withthe requirements of section 13(a) or 15(d) of the Securities Exchange Act of1934; and

 

(2) The information contained in theReport fairly presents, in all material respects, the financial condition andresult of operations of the Company.

 

 
| /s/ Michael R. Salmond                                    |   |
|-----------------------------------------------------------|--------|
|                                                      |
|                                                      |
| Michael R. Salmond  Chief Financial Officer  May 15, 2003 |

 

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