**SECURITIES AND 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 JUNE  30, 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  ýNo  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 July29, 2002: 3,249,411 shares

 

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

 

 

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Form 10-QSB

United Park City MinesCompany

June 30, 2002

 

PART I - FINANCIALINFORMATION

UNITED PARK CITYMINES COMPANY AND SUBSIDIARIES

CONSOLIDATEDBALANCE SHEET

(Unaudited)

*** ***
|                                           |   | **June 30,  2002** |       |
|------------------------------------------------|--------|--------------------|------------|
| ***ASSETS:***                                  |   |               |       |
| Cash and cash  equivalents                     |   | $                  | 20,384     |   |
| Accounts  receivable                           |   | 226,324            |       |
| Prepaid expenses                               |   | 220,483            |       |
| Inventories                                    |   | 22,439             |       |
| Other                                          |   | 76,206             |       |
|                                           |   | 565,836            |       |
| Real Estate:                                   |   |               |       |
| Subdivision  development costs                 |   | 1,669,200          |       |
| Deferred  development costs - other            |   | 12,098,782         |       |
|                                           |   | 13,767,982         |       |
| Property and  Equipment:                       |   |               |       |
| Mine shaft,  buildings, and equipment          |   | 3,177,866          |       |
| Construction-in-progress                       |   | 339,702            |       |
| Resort  facilities                             |   | 58,077             |       |
| Less accumulated  depreciation                 |   | (2,922,808         | )          |
|                                           |   | 652,837            |       |
|                                           |   |               |       |
| Land less  accumulated depletion of $1,062,190 |   | 13,603,225         |       |
| Water rights                                   |   | 400,000            |       |
|                                           |   | 14,656,062         |       |
|                                           |   |               |       |
| Total assets                                   |   | $                  | 28,989,880 |   |

 

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

 

2

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UNITED PARK CITYMINES COMPANY AND SUBSIDIARIES

CONSOLIDATEDBALANCE SHEET

(Unaudited)

 
|                                                               |   | **June 30,  2002** |       |   |
|--------------------------------------------------------------------|--------|--------------------|------------|--------|
| ***LIABILITIES AND STOCKHOLDERS’ EQUITY:***                   |   |               |       |   |
| Liabilities:                                                       |   |               |       |   |
| Accounts payable                                                   |   | $                  | 1,509,531  |   |   |
| Accrued  liabilities                                               |   | 369,199            |       |   |
| Stockholder  advances                                              |   | 225,000            |       |   |
| Bank notes  payable                                                |   | 3,279,092          |       |   |
| Accrued  development costs                                         |   | 2,782,641          |       |   |
| Joint venture  termination reimbursement accrual                   |   | 2,665,398          |       |   |
| Accrued  remediation costs                                         |   | 161,979            |       |   |
|                                                               |   |               |       |   |
| Total  liabilities                                                 |   | 10,992,840         |       |   |
|                                                               |   |               |       |   |
| 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                                               |   | (23,834,310        | )          |   |
|                                                               |   | 18,180,824         |       |   |
|                                                               |   |               |       |   |
| Less cost of  treasury stock - 1,294 shares                        |   | (183,784           | )          |   |
|                                                               |   |               |       |   |
| Total  stockholders’ equity                                   |   | 17,997,040         |       |   |
|                                                               |   |               |       |   |
| Total  liabilities and stockholders’ equity                   |   | $                  | 28,989,880 |   |

 

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

 

3

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UNITED PARK CITYMINES COMPANY AND SUBSIDIARIES

CONSOLIDATEDSTATEMENT OF OPERATIONS

(Unaudited)

 
|                                                             |   | **For Three  Months Ended** |     | **For Six  Months Ended** |   |
|------------------------------------------------------------------|--------|-----------------------------|----------|---------------------------|--------|
|                                                             |   | **June 30,  2002**          |     | **June 30,  2001**        |   | **June 30,  2002** |   | **June 30,  2001** |   |
| Revenues:                                                        |   |                        |     |                      |   |   |   |   |   |
| Lot sales                                                        |   | $                           | —   |                      | $      | — |   | $ | 200,000 |   | $ | — |   |
| Contract  services                                               |   | 12,121                      |     | —                    |   | 12,121 |   | — |   |
| Interest                                                         |   | 272                         |     | 823                       |   | 465 |   | 8,327 |   |
| Royalties and  rentals                                           |   | 18,588                      |     | 78,960                    |   | 154,988 |   | 236,448 |   |
| Other                                                            |   | 15,350                      |     | 21,410                    |   | 42,238 |   | 54,996 |   |
|                                                             |   | 46,331                      |     | 101,193                   |   | 409,812 |   | 299,771 |   |
| Expenses:                                                        |   |                        |     |                      |   |   |   |   |   |
| Cost of lot  sales and selling expense                           |   | —                      |     | —                    |   | 91,039 |   | — |   |
| Other real  estate costs                                         |   | 1,509                       |     | 31,279                    |   | 59,473 |   | 59,837 |   |
| General and  administrative costs                                |   | 416,796                     |     | 300,925                   |   | 814,091 |   | 676,840 |   |
| Mine maintenance  and administrative costs                       |   | 198,301                     |     | 376,212                   |   | 598,045 |   | 904,152 |   |
| Contract  services costs                                         |   | 13,203                      |     | —                    |   | 8,514 |   | — |   |
| Depreciation                                                     |   | 24,105                      |     | 9,787                     |   | 34,362 |   | 19,989 |   |
| Interest                                                         |   | (23,220                     | )        | 10,754                    |   | — |   | 13,111 |   |
|                                                             |   | 630,694                     |     | 728,957                   |   | 1,605,524 |   | 1,673,929 |   |
|                                                             |   |                        |     |                      |   |   |   |   |   |
| Loss before  income taxes                                        |   | (584,363                    | )        | (627,764                  | )      | (1,195,712 | ) | (1,374,158 | ) |
| Income tax  benefit                                              |   | —                      |     | —                    |   | — |   | — |   |
|                                                             |   |                        |     |                      |   |   |   |   |   |
| Net loss                                                         |   | $                           | (584,363 | )                         | $      | (627,764 | ) | $ | (1,195,712 | ) | $ | (1,374,158 | ) |
|                                                             |   |                        |     |                      |   |   |   |   |   |
| Basic and  diluted net loss per share                            |   | $                           | (.18     | )                         | $      | (.19 | ) | $ | (.37 | ) | $ | (.42 | ) |
|                                                             |   |                        |     |                      |   |   |   |   |   |
| Basic and  diluted weighted average number of shares outstanding |   | 3,249,411                   |     | 3,249,411                 |   | 3,249,411 |   | 3,249,411 |   |

 

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

 

4

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UNITED PARK CITYMINES COMPANY AND SUBSIDIARIES

CONSOLIDATEDSTATEMENT OF CASH FLOWS

(Unaudited)

 
|                                                                         |   | **For Six  Months Ended** |       |
|------------------------------------------------------------------------------|--------|---------------------------|------------|
|                                                                         |   | **June 30,  2002**        |       | **June 30,  2001** |   |
| Cash flows from  operating activities:                                       |   |                      |       |   |   |
| Net loss                                                                     |   | $                         | (1,195,712 | ) | $ | (1,374,158 | ) |
| Adjustments to  reconcile net loss to net cash used by operating activities: |   |                      |       |   |   |
| Depreciation                                                                 |   | 34,362                    |       | 19,989 |   |
| Increase  (decrease) from changes in:                                        |   |                      |       |   |   |
| Accounts receivable                                                          |   | (151,287                  | )          | (121,923 | ) |
| Prepaid  expenses, inventories and other assets                              |   | (91,210                   | )          | 54,127 |   |
| Deferred real  estate development costs                                      |   | (2,532,955                | )          | (1,857,760 | ) |
| Accounts payable  and accrued liabilities                                    |   | 933,632                   |       | 786,700 |   |
| Other                                                                        |   | (20,999                   | )          | (8,197 | ) |
| Accrued  development costs                                                   |   | 317,146                   |       | — |   |
| Joint venture  termination reimbursement accrual                             |   | 61,091                    |       | 86,998 |   |
| Accrued  remediation costs                                                   |   | (112,698                  | )          | (115,535 | ) |
| Total  adjustments                                                           |   | (1,562,918                | )          | (1,155,601 | ) |
| Net cash used by  operating activities                                       |   | (2,758,630                | )          | (2,529,759 | ) |
|                                                                         |   |                      |       |   |   |
| Cash flows from  investing activities:                                       |   |                      |       |   |   |
| Construction-in-progress                                                     |   | (68,585                   | )          | (4,596 | ) |
| Capital  expenditures                                                        |   | (33,355                   | )          | (13,213 | ) |
| Land remediation  costs                                                      |   | (56,915                   | )          | (97,093 | ) |
| Net cash used by  investing activities                                       |   | (158,855                  | )          | (114,902 | ) |
|                                                                         |   |                      |       |   |   |
| Cash flows from  financing activities:                                       |   |                      |       |   |   |
| Proceeds from  bank notes payable                                            |   | 3,392,388                 |       | 1,613,880 |   |
| Principal  payments on bank notes payable                                    |   | (701,665                  | )          | — |   |
| Stockholder  advances                                                        |   | 225,000                   |       | — |   |
| Net cash  provided by financing activities                                   |   | 2,915,723                 |       | 1,613,880 |   |
|                                                                         |   |                      |       |   |   |
| Net decrease in  cash and cash equivalents                                   |   | (1,762                    | )          | (1,030,781 | ) |
| Cash and cash  equivalents-beginning of period                               |   | 22,146                    |       | 1,141,868 |   |
|                                                                         |   |                      |       |   |   |
| Cash and cash  equivalents-end of period                                     |   | $                         | 20,384     |   | $ | 111,087 |   |

 

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

 

5

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**UNITED PARK CITY MINES COMPANY ANDSUBSIDIARIESSELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

 

**NOTE 1 – CONDENSED FINANCIALSTATEMENTS**

 

*A.  Disclosure*

 

Certain information and footnote disclosures normally included infinancial statements prepared in accordance with accounting principlesgenerally accepted in the United States of America have been condensed or omitted.  It is suggested that these financialstatements should be read in conjunction with the 2001 Annual Report toStockholders of United Park City Mines Company (hereinafter “United Park” or“the Company” or “the Registrant”) and the Form 10-QSB for the period endedMarch 31, 2002.

 

*B.  Management’sRepresentation*

 

The consolidated balance sheet as of June 30, 2002 and the consolidatedstatement of operations for the three-month and six-month periods ended June30, 2002 and June 30, 2001 and the statement of cash flows for the six-monthperiods ended June 30, 2002 and 2001 have been prepared by the Registrant,without audit.  In the opinion ofmanagement, all adjustments necessary to present fairly the financial position,results of operations, and cash flows at June 30, 2002 and for all periodspresented, have been made.

 

## **NOTE 2 – INDUSTRYSEGMENTS**

 

The Company’s reportable segments are strategic business units thatoffer different products and services. They are managed separately because each business requires differenttechnology and marketing strategies. The Company is organized into the following industry segments, andmanagement accounts for revenues and expenses from these activities separatelyand evaluates each of the following segments based upon performance: MineMaintenance and Real Estate.  Thesegment data here presented does not include intersegment revenues or chargesfor corporate overhead costs.

 
| **June 30, 2002:**                                                      |   | **Mine  Maintenance** |   | **Real Estate** |   | **Other** |   | **Total**  |   |
|-------------------------------------------------------------------------|--------|-----------------------|--------|-----------------|--------|-----------|--------|------------|--------|
| Revenue                                                                 |   | $                     | 54,182 |            | $      | 355,038   |   | $          | 592    |   | $ | 409,812 |   |
| Operating income  (loss) from continuing operations (1)                 |   | (643,121              | )      | 111,661         |   | (664,252  | )      | (1,195,712 | )      |
| Identifiable  assets                                                    |   | 595,932               |   | 27,447,193      |   | 946,755   |   | 28,989,880 |   |
| Depreciation                                                            |   | 16,438                |   | 8,657           |   | 9,267     |   | 34,362     |   |
| Capital expenditures,  including deferred real estate development costs |   | 29,115                |   | 2,663,250       |   | 72,503    |   | 2,764,868  |   |
|                                                                         |        |                       |        |                 |        |           |        |            |        |  |  |  |  |

 
| **June 30, 2001:**                                                      |   | **Mine  Maintenance** |   | **Real Estate** |   | **Other** |   | **Total**  |   |
|-------------------------------------------------------------------------|--------|-----------------------|--------|-----------------|--------|-----------|--------|------------|--------|
| Revenue                                                                 |   | $                     | 54,368 |            | $      | 238,668   |   | $          | 6,735  |   | $ | 299,771 |   |
| Operating income  (loss) from continuing operations (1)                 |   | (934,341              | )      | 15,445          |   | (455,262  | )      | (1,374,158 | )      |
| Identifiable  assets                                                    |   | 540,385               |   | 22,281,242      |   | 874,516   |   | 23,696,143 |   |
| Depreciation                                                            |   | 11,394                |   | 1,758           |   | 6,837     |   | 19,989     |   |
| Capital  expenditures, including deferred real estate development costs |   | 2,007                 |   | 1,861,264       |   | 109,391   |   | 1,972,662  |   |
|                                                                         |        |                       |        |                 |        |           |        |            |        |  |  |  |  |

 

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(1) Earnings before taxes

 

6

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**NOTE 3 – BANK FINANCING**

 

*Local Bank Funding*

 

In May 2000, the Company received a financing commitment totaling$725,000, for the purpose of installing improvements to four lots in the DeerCrest development.  Interest on theoutstanding borrowings is paid monthly at 1⁄2 percent above the bank’s primelending rate (prime rate was 4.75% at June 30, 2002).  During October 2000, two of the lots collateralizing the notewere sold.  Upon sale of the lots theoutstanding balance 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 drawn$250,000 against the loan at June 30, 2002. The Company is in the process of renewing this loan.

 

During October 2000, the Company secured a $1,000,000 revolvingline-of-credit.  Upon renewal in 2001the line was increased to $2,000,000. The purpose of this financing is to supplement cash flow needs of theCompany.  Borrowings are collateralizedby approximately 16 acres of land known as the Spiro Tunnel.  Interest on the outstanding borrowings ispaid monthly at 1⁄2 percent above the bank’s prime lending rate (prime rate was4.75% at June 30, 2002).  The maturitydate is October 1, 2002.  The Company haddrawn $1,815,000 against the loan at June 30, 2002.

 

During December 2001, the Company obtained a financing commitmenttotaling $365,000, for the purpose of installing improvements to a singleresidential lot known as 7.2b. Borrowings are collateralized by lot 7.2b of approximately 55 acres.  Interest on the outstanding borrowings ispaid monthly at the bank’s prime lending rate (prime rate was 4.75% at June 30,2002).  The initial loan term endsDecember 1, 2002.  The Company had drawn$4,893 against the loan at June 30, 2002.

 

During April 2002, the Company secured a $1,000,000 revolvingline-of-credit.  The purpose of thisfinancing is to provide short-term funds for the Flagstaff Mountain Resortdevelopment until the Company obtains a construction loan for Phase I of theproject.  Borrowings are collateralizedby approximately 10 acres of land known as the Jordanelle Commerce Park inWasatch County.  Interest on theoutstanding borrowings is paid monthly at the bank’s prime lending rate (primerate was 4.75% at June 30, 2002).  Thematurity date is September 1, 2002.  TheCompany had drawn $1,000,000 against the loan at June 30, 2002.  The loan was paid in full out of collateralrelease amounts received from the August sale of two lots collateralizing the$17,300,000 loan (see next paragraph).

 

The Company obtained a $17,300,000 loan commitment for the purpose ofinstalling improvements to Phase I of the Flagstaff Mountain Resortdevelopment.  The availability of fundsis restricted to $750,000 until at least eight single family lot sale contractswith nonrefundable earnest money deposits have been received.  The restriction is then raised to $3,000,000until at least eight single family lot sales have been completed with definedrelease amounts received by the bank at which time the full loan commitment isavailable.  Borrowings arecollateralized by approximately 32 acres of land known as Phase I of theFlagstaff Mountain Resort in Summit County and approximately 10 acres of landknown as the Jordanelle Commerce Park in Wasatch County.  Interest on the outstanding borrowings ispaid monthly at 3% above the bank’s 30-day LIBOR rate (30-day LIBOR was1.83875% at June 30, 2002).  Thematurity date is January 1, 2004 or the date may be extended to July 1,2004.  As of June 30, 2002, the loanbalance was $151,780.

 

*Other Funding Sources*

 

The Company financed the purchase of equipment in October of 2001 for$32,695 and additional equipment in December of 2001 for $37,297.  Each installment contract has 36 equalmonthly payments at 0% interest rate. The monthly installment total is $1,944.  The June 30, 2002 outstanding balance for the contracts was$57,419.

 

7

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**NOTE 4 –JOINT VENTURE TERMINATION REIMBURSEMENT ACCRUAL**

 

In July 1999, the Company signed a Letter of Understanding withArizona-based DMB Associates, Inc. (“DMB”) to pursue a joint venturepartnership to develop the Flagstaff Mountain and Bonanza MountainResorts.  The joint venture was formedon June 15, 2000.  Under the terms ofthe joint venture’s operating agreement, the Company was entitled to terminatethe joint venture prior to September 30, 2000, if it did not approve a businessplan or budget provided by DMB for the development of the subjectproperties.  The parties to the jointventure agreement were unable to agree upon or approve the business plan bySeptember 30, 2000, and mutually agreed to extend the date by which suchapproval would be required to January 17, 2001.  The joint venture was terminated by the terms of the operatingagreement at the expiration of the extension period.  The Company, as required by the operating agreement, willreimburse joint venture development costs of $2,445,030 and accrued interest toDMB in January of 2004.  Interest isaccrued at the lower of the prime rate (prime rate was 4.75% at June 30, 2002)or 10% compounded yearly.  The 2002accrued interest is $61,091 for the six months ended June 30, 2002.

 

**NOTE 5 – RELATED PARTY TRANSACTION**

 

During March 2002, Loeb Investors Co. XL (“Loeb”), a major stockholder,advanced to the Company $225,000 for the purpose of purchasing directors andofficers liability insurance.  Loebadvanced to the Company $190,000 during the month of July 2002 to supplementthe Company’s working capital.

 

**NOTE 6 – CONTINGENCIES**

 

*Litigation and Settlement Agreement*

 

In May 1986, the Company filed a lawsuit against Greater Park CityCompany (“GPCC”), Royal Street Land Company, Royal Street of Utah, and DeerValley 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 of all ofthe Company’s remaining claims and all of GPCC’s claims was signed by the Courtand also filed, thereby finally disposing of all of the remaining aspects ofthis litigation.

 

On November 6, 1992, the Company entered into a Settlement Agreementand Release (“Settlement Agreement”) with Royal Street Land Company, DeerValley 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.

 

The Settlement Agreement provides the Company the opportunity todevelop, without the encumbrance of the Deer Valley Ski Lease, certain parcelsof 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 Park City’s approval and acceptance of the planby the Company.

 

8

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If Park City does not grant plan approval or if the Company does notaccept the plan, the land within the Deer Valley Ski Lease will remainencumbered by the Deer Valley Ski Lease. If master plan approval is obtained and accepted, the Deer Valley SkiLease will be terminated.  The Companycould then proceed to develop those certain parcels of land, which wereformerly encumbered by the Deer Valley Ski Lease, and would convey the balanceof the surface estate of the land formerly encumbered by the Deer Valley SkiLease to Deer Valley.  Additionally, ifand when, the plan is accepted by both the Company and Park City, the exchangeof the surface rights to the land by the Company for the termination of theDeer Valley Ski Lease and the right to develop the land previously encumberedby the lease will represent an exchange of similar productive assets.  Accordingly, the Company will transfer itsbasis in the surface rights to the land to the basis in the land to bedeveloped that was previously encumbered by the Deer Valley Ski Lease, with nogain or loss recognized.

 

*Richardson Flat*

 

A portion of United Park’s mining property, known as “Richardson FlatTailings,” was proposed by the United States Environmental Protection Agency(“EPA”) on June 24, 1988, by notice published in the Federal Register, to beadded to the EPA’s National Priorities List (“NPL”), the EPA’s listing ofnational priority hazardous waste sites. United Park submitted written comments opposing the listing of theRichardson Flat Tailings site on a number of procedural and substantive grounds.In response to the comments submitted by United Park, the EPA determined not tolist the site on the NPL in a final rule published February 11, 1991, in theFederal Register.

 

On February 7, 1992, by notice published in the Federal Register, theEPA again proposed that the Richardson Flat Tailings site be added to theNPL.  In April 1992, the Companysubmitted written comments opposing the listing on a number of procedural andsubstantive grounds.  As of this date, theEPA has neither responded to United Park’s comments nor finalized its proposalto list the site on the NPL.

 

The NPL has been established by the EPA under the ComprehensiveEnvironmental Response, Compensation, and Liability Act (“CERCLA”) to identify,inventory, and prioritize sites which warrant further investigation to assess thenature and extent of any public health and environmental risks associated  with the site and to determine what remedialaction, if any, may be appropriate. Inclusion of a site on the NPL does not establish that the EPA willnecessarily require remedial action for the site.

 

Numerous mining properties throughout the United States owned by otherentities are currently proposed for listing or are listed on the NPL.  As a result of the EPA’s evaluation of theRichardson Flat Tailings site, United Park may be advised to continue itscurrent environmental monitoring and practices at the site under its UtahPollutant Discharge Elimination System (“UPDES”) permit, or the Company may berequired to undertake additional stabilization or remediation activities on thisportion of its mining property to comply with the standards for disposal ofmining wastes under CERCLA.  In 1983,United Park began a containment program, which is now substantially complete,to cover the Richardson Flat Tailings area with topsoil and seed the site forvegetation.  Management is not now ableto accurately predict whether the Richardson Flat Tailings site will be listedon the NPL and, if it is listed, whether further remedial actions will be required.

 

On September 27, 2000, United Park executed an Administrative Order onConsent with the EPA to perform a voluntary Focused remedial investigation andfeasibility study (“Focused RI/FS”) to determine if any remedial action may bewarranted at Richardson Flat.  TheCompany accrued $630,000 in 1999 as its best estimate of costs to complete theFocused RI/FS at Richardson Flat.  Thecosts were expected to be incurred over the following three years.  The accrued balance as of June 30, 2002 was$161,979.  The Company cannot estimatethe potential costs, if any, that may be required beyond the Focused RI/FS.

 

9

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On December 4, 2001, the EPA issued a letter to all potentiallyresponsible parties, including United Park and three other mining companies,demanding that it be reimbursed $562,231, plus interest from the date of the letter, for past responsecosts under CERCLA (the “December Letter”). In addition, the EPA stated in its December Letter that it anticipatesadditional funds may be expended at Richardson Flat for which United Park maybe liable.  Although the liability ofthe Company is joint and several, EPA is currently negotiating with the Companyand the other responsible parties regarding the demand.  A demand of this nature is typical at thistype of site.  United Park anticipatesthat the other potentially responsible parties will pay a significant portionof the demand amount.  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.

 

*Other*

 

The Company is participating in the Upper Silver Creek Watershed Group(“USCWSG”).  The USCWSG was formed toconduct a complete review of the Silver Creek Watershed to determine sources ofcontamination to Silver Creek and to prepare a practical remediation plan.  To date the USCWSG has completed itssampling efforts and published findings but has not reached any conclusions norpresented any remediation plans. Management is, at this time, unable to estimate the amount or range ofadditional work required in connection with the USCWSG study.

 

The Company’s Empire Canyon property has been listed on theComprehensive Environmental Response, Compensation, and Liability InformationSystem (“CERCLIS”) database.  CERCLIS isEPA’s comprehensive database and management system that inventories and tracksreleases addressed, or needing to be addressed, by the CERCLA program.  However, inclusion of a site or area in theCERCLIS database does not represent a determination of a party’s liability, nordoes it represent a finding that any response action is warranted.  For example, EPA may decide a site does notwarrant further action and discontinue any further site investigation.  In such a case, EPA designates the siteunder the category “No Further Response Action Planned” (“NFRAP”) inCERCLIS.  A NFRAP designation means no additionalfederal steps under CERCLA will be taken unless future information warrantssuch action.  In a recent (undated)letter to the Company, EPA states that it does not presently consider theFlagstaff Mountain Resort properties to be part of the Empire Canyon CERCLISsite.  In addition, in the same letter,EPA states it has determined that conditions of parcels C-1 through C-7 do notwarrant federal superfund involvement. The Company is currently negotiating an Administrative Order on Consentwith EPA to perform an environmental evaluation/cost analysis to determine ifany action 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.

 

As United Park has currently conducted its mine maintenance operationsin a manner consistent with current reclamation statutes and regulations, inmanagement’s opinion, United Park is not liable for reclamation costsassociated with its mining properties. If United Park, however, ever elects to cease its mine 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 mining operations,management believes that such reclamation and access restriction costs would beminimal.

 

 

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**NOTE 7 – SUBSEQUENT EVENTS**

 

During the first part of August 2002 the Company completed the sale oftwo lots from the first phase of the Flagstaff Mountain resort.  The cash provided to the Company from thelots sold amounted to $2,950,000 with $2,187,437 used to pay collateral releaseamounts as provided by the terms of the $17,300,000 loan obtained in June2002.  A portion of the collateralrelease amounts received by the bank were used to pay in full the $1,000,000revolving line-of-credit obtained in April 2002.

 

**NOTE 8 –FINANCIAL STATEMENT PRESENTATION**

 

Certain amounts in the 2001 financial statements have been reclassifiedto conform to the 2002 financial statement presentation.  These reclassifications have no effect onnet income, total assets, total liabilities or stockholders’ equity.

 

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**MANAGEMENT'S DISCUSSION AND ANALYSISOF FINANCIAL 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 differ materiallyfrom the Company’s historical results of operations and those discussed in suchforward-looking statements as a result of certain factors set forth in thissection and elsewhere in this Form 10-QSB, including information incorporatedby reference.

 

***Liquidity and Capital Resources***

 

Cash Flow Analysis

 

The Company’s cash balance decreased $1,762 during the first six monthsof 2002, leaving a cash balance of $20,384 as of June 30, 2002.  The Company will use a portion of the June30, 2002 cash balance along with a portion of the anticipated proceeds fromfuture real estate sales by the Company’s wholly owned subsidiary, Blue LedgeCorporation (hereinafter “Blue Ledge”), to fund its future operations.  During the first six months of 2002 theCompany’s operating and investing needs were funded by $2,690,723 from theCompany’s various bank loans and $225,000 from a stockholder advance.

 

Real Estate

 

During the first six months of 2002, Blue Ledge sold one lot in theHidden Meadows subdivision.  As of June 30,2002, Blue Ledge has available for sale one lot in the Hidden Meadowssubdivision, two lots in the Deer Crest development project, five commercialbuilding sites in the Commerce Park at Keetley and a ski-in ski-out lotadjacent to Park City Mountain Resort.

 

During the first part of July 2002, the Company made available for saleten lots of Phase I of the Flagstaff Mountain Resort.  Two of these lots were sold during the first part of August for agross sales price of $2,950,000.

 

In June 2000, the Company formed a joint venture partnership with DMBto pursue development of Flagstaff Mountain and Bonanza Mountain Resorts.  The joint venture was terminated in January2001.  The Company, as required by thejoint venture operating agreement, will reimburse joint venture developmentcosts of $2,445,030 and accrued interest to DMB in January of 2004.

 

***Results of Operations***

 

2002 Compared with 2001

 

Blue Ledge did not have any lot sales for the three-month period endedJune 30, 2002.  Blue Ledge sold oneHidden Meadows lot for a profit of $108,961 or 54% of the gross sales priceduring the six-month period ended June 30, 2002.  Blue Ledge did not have any lot sales during the same periods of2001.

 

There were $12,121 in contract services revenues during the three-monthand six-month periods ended June 30, 2002 as compared to no contract servicesrevenues for the same periods in 2001. Contract services are performed infrequently to assist owners of variousmine workings in the area due to the unique expertise of the Company’spersonnel.

 

The Company’s interest income decreased 67% during the second quarterand 94% for the first six months of 2002. The decrease when compared to 2001 isthe result of lower 2002 available funds for investment and reduced investmentinterest rates.

 

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Royalty and rental revenues decreased 76% and 34% during thethree-month and six-month periods ended June 30, 2002 when compared to the sameperiod in 2001.  The primary reason forthe decrease is due to a reduction of ski lease income based on lessee revenuesfor the 2002 periods.

 

Other revenues decreased 28% and 23% for the three-month and six-monthperiods ending June 30, 2002 when compared to the same periods in 2001. Thedecreases are the result of reduced fees collected for receiving clean landfillin 2002.

 

Cost of lot sales and selling expense increased for the six-monthperiod ended June 30, 2002 due to the sale of a Hidden Meadows lot during thefirst quarter of 2002 as compared to no lot sales for the same six-month periodin 2001.

 

Other real estate costs decreased 95% or $29,770 for the three-monthperiod ending June 30, 2002 when compared to the same period in 2001.  The decrease was due to capitalization ofholding costs during the second quarter of 2002.

 

General and administrative costs increased 39% and 20% for thethree-month and six-month periods ending June 30, 2002 when compared to thesame periods in 2001.  The increase over2001 is primarily caused by increased insurance costs.  In addition, the three-month increase wascaused in part by printing and audit timing differences between 2002 and 2001.

 

Mine maintenance and administrative costs decreased 47% and 34% duringthe three-month and six-month periods ended June 30, 2002, when compared withthe same period in 2001.  Thethree-month net change is due to a reduction of payroll and related costs of$50,031, a reduction of utility costs of $30,901, a remediation reduction of$37,655 and other changes with a net reduction of $59,324.  The six-month decrease is due to a reductionof payroll and related costs of $116,628, a reduction of utility costs of$75,241, a remediation reduction of $47,099 and other changes with a netreduction of $67,139.

 

Contract services costs of $13,203 and $8,514 were expended as part ofthe services provided during the three-month and six-month periods ended June30, 2002 as compared to no contract services costs for the same periods in2001.  Contract services costs areexpended when services are provided.

 

The increase in depreciation expense of 146% and 72% for thethree-month and six-month periods presented is the result of purchasing twovehicles and a piece of equipment.

 

Interest expense decreased $33,974 and $13,111 duringthe three-month and six-month periods presented over the same periods in2001.  The decrease is the result ofcapitalization of interest to the Company’s various development projects.

 

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PART II.

OTHER INFORMATION

 

ITEM 4.           SUBMISSIONOF MATTERS TO A VOTE OF SECURITY HOLDERS.

 

The 2002 Annual Meeting of Shareholders of the Company was held on June4, 2002. Represented at the meeting, in person or by proxy, were 2,670,946shares, or approximately 82% of the issued and outstanding shares entitled tovote.  The following business wastransacted:

 

Election of Directors.  Over 99%of the votes cast for directors were voted for the election of the followingdirectors. The number of votes for and withheld with respect to each directorwas as follows:

 
|                                    |   | **Votes For** |   | **Votes  Withheld** |   |
|-----------------------------------------|--------|---------------|--------|---------------------|--------|
| Peter S. Duncan                         |   | 2,666,515     |   | 4,431               |   |
| Alan L. Gordon                          |   | 2,666,226     |   | 4,720               |   |
| Joseph S. Lesser                        |   | 2,666,068     |   | 4,878               |   |
| Ronald S.  Krolick                      |   | 2,666,515     |   | 4,431               |   |
| Mark Mashburn                           |   | 2,666,515     |   | 4,431               |   |
| William H. (“Hank”)  Rothwell |   | 2,666,311     |   | 4,635               |   |

 

Ratification of the appointment of Independent Certified PublicAccountants.  2,666,556 shares,approximately 99.8% of the shares voting, voted to ratify the appointment ofPricewaterhouseCoopers LLP as independent certified public accountants for theCompany.  2,369 shares, less than 1% ofthe shares voting, voted against, and 2,021 shares, less than 1% of the sharesvoting, abstained from the ratification of the Company’s auditors.

 

ITEM 5.           OTHER INFORMATION.

 

A portion of UnitedPark’s mining property, known as “Richardson Flat Tailings,” which the Companymonitors under its UPDES permit, has been subject to testing and evaluation bythe EPA under the National Contingency Plan pursuant to the ComprehensiveEnvironmental Response, Compensation, and Liability Act (“CERCLA”).  On June 24, 1988, the EPA proposed that theRichardson Flat Tailings site be added to the EPA’s National Priorities List(“NPL”), the EPA’s listing of national priority hazardous waste sites.  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, the EPA again proposed the listing of theRichardson Flat Tailings site to the NPL. In April 1992, the Company again submitted written comments opposing theEPA’s listing on a number of substantive and procedural grounds.  The EPA has neither responded to UnitedPark’s comments nor finalized its proposal to list the site. United Park hascompleted negotiations with the EPA regarding performing a voluntary focusedremedial investigation and feasibility study (“Focused RI/FS”) to determine ifany remedial action may be warranted at Richardson Flat.  The Company signed the Administrative Orderon Consent for Remedial Investigation/Feasibility study on September 27,2000.  The Company did accrue atDecember 31,1999 its best estimate of costs to complete the Focused RI/FS atRichardson Flat.  Since the study hasnot been completed, the Company cannot estimate the potential costs, if any,that may be required beyond the Focused RI/FS.

 

ITEM 6.           EXHIBITS AND REPORTS ONFORM 8-K

 

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

 

No exhibits are filed with this Form 10-QSB.

 

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

 

On June 21, 2002, the registrant signed an amendment to the StockPurchase Agreement dated February 21, 2002 (the “Amendment”) by and among theregistrant, owners of a majority of the registrant’s stock and Capital GrowthPartners, LLC (“CGP”) for the sale of shares of the registrant’s common stockowned by the Selling Stockholder to CGP.

 

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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  President,  Chief Executive Officer  and Director |            | Michael R. Salmond  Chief Financial Officer |
|                                                             |            |                                        |
| Date:                                                            | August 14, 2002 |                                        |   |
|                                                                  |                 |                                             |  |  |  |  |

 

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

 

In connection with the Quarterly Report of United Park City MinesCompany (the “Company”) on Form 10-QSB for the period ending June 30, 2002 asfiled with the Securities and Exchange Commission on the date hereof (the“Report”), I, Hank Rothwell, Chief Executive Officer of the Company, certify,to the best of my knowledge, pursuant to 18 U.S.C. § 1350, as adopted pursuantto § 906 of the Sarbanes-Oxley Act of 2002, that:

 

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

 

(2) The information contained in the Report fairlypresents, in all material respects, the financial condition and result ofoperations of the Company.

 

 
| /s/ Hank Rothwell                      |   |
|----------------------------------------|--------|
|                                   |
| Hank Rothwell  Chief Executive Officer |
| August 14, 2002                        |

 

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

 

In connection with the Quarterly Report of United Park City MinesCompany (the “Company”) on Form 10-QSB for the period ending June 30, 2002 asfiled with the Securities and Exchange Commission on the date hereof (the“Report”), I, Michael R. Salmond, Chief Financial Officer of the Company,certify, to the best of my knowledge, pursuant to 18 U.S.C. § 1350, as adoptedpursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

 

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

 

(2) The information contained in the Report fairlypresents, in all material respects, the financial condition and result ofoperations of the Company.

 

 
| /s/ Michael R. Salmond                      |   |
|---------------------------------------------|--------|
|                                        |
| Michael R. Salmond  Chief Financial Officer |
| August 14, 2002                             |

 

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