UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE PERIOD ENDED June 30, 2005
OR
[] 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 333-88480
PRIME RESOURCE, INC.
--------------------
(Exact name of registrant as specified in its charter)
Utah 04-3648721
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1245 East Brickyard Road, Suite 590
Salt Lake City, Utah 84106
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(Address of principal executive officers)
(801) 433-2000 (Registrant's
telephone number, including area code)
None
(Former name, former address and former fiscal year,
if changed since last report)
Securities registered pursuant to Section 12(b) of
the Act:
None
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant has
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. X Yes No
------ -----
Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 126-2 of the Exchange Act). Yes X No
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APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
Common Stock: 2,960,900 shares issued and 2,944,200 outstanding as of August 1,
2005, No Par Value. Authorized - 50,000,000 common voting shares.
INDEX
Prime Resource, Inc.
For The Quarter Ending June 30, 2005
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheet - June 30, 2005 (Unaudited) and
December 31, 2004.
Consolidated Statements of Operations (Unaudited) - For the
three months ended June 30, 2005, and for the three months
ended June 30, 2004; and for the comparable six month
periods ending June 30, 2005 and June 30, 2004.
Consolidated Statements of Shareholders' Equity for Jan
1, 2003 through June 30, 2005 .
Consolidated Statements of Cash Flows (Unaudited) - For the
six months ended June 30, 2005, and for the six months ended
June 30, 2004.
Notes to Condensed Financial Statements (Unaudited) - June
30, 2005
Item 2. Management's Discussion and Analysis of Financial Condition or Plan
of Operation.
Controls and Procedures
Part II. Other Information
Item 5. Other Matters
Item 6. Exhibits and Reports on Form 8-K
Signatures
Certifications
Part I - Financial Information
Item 1. Financial Statements
Prime Resource, Inc. and Subsidiaries
Consolidated Balance Sheet (Unaudited), June 30, 2005
June 30,
2005
--------------
ASSETS
Current Assets:
Cash $ 628,870
Accounts receivable 557,264
Interest receivable 23,333
Trading securities 307,663
Note receivable 250,000
--------------
Total Current Assets 1,767,130
--------------
Leasehold improvements and equipment, net of accumulated
depreciation and amortization of $225,464 172,138
Notes receivable 40,000
Deferred tax assets 37,233
Other assets 13,093
--------------
Total Assets $ 2,029,594
==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 47,208
Accrued compensation, commissions and benefits 540,900
Notes payable, current portion 42,476
Income taxes payable 9,898
Deferred tax liabilities 97,940
--------------
Total Current Liabilities 738,422
Notes payable, net of current portion 26,468
Commitments and contingencies -
--------------
STOCKHOLDERS' EQUITY
Common stock, no par value, 50,000,000 authorized
shares; 2,960,900 shares issued and 2,944,200 shares outstanding 934,677
Treasury stock (82,058)
Retained earnings 412,085
--------------
Total stockholders' equity 1,264,704
--------------
Total Liabiities and Stockholders' Equity $ 2,029,594
==============
See accompanying notes.
3
Prime Resource, Inc. and Subsidiaries
Consolidated Statements of Operations (Unaudited)
Six Months Ended June 30, Three Months Ended June 30,
2005 2004 2005 2004
-------------- -------------- -------------- --------------
Revenues
Commissions $ 3,172,566 $ 2,345,234 $ 1,721,975 $ 1,220,674
Investment and business advisory fees 337,973 324,935 188,794 173,750
Interest and dividends 21,026 7,737 15,720 3,933
-------------- -------------- -------------- --------------
3,531,565 2,677,906 1,926,489 1,398,357
Expenses
Commissions 2,311,061 1,510,789 1,243,724 794,173
Compensation and benefits 806,034 633,667 456,931 313,214
General and administrative 242,927 212,314 119,927 91,984
Occupancey expense 20,432 56,285 10,409 26,967
Depreciation expense 75,142 23,943 38,005 11,953
Interest expense 1,913 1,758 595 830
-------------- -------------- -------------- --------------
3,457,509 2,438,756 1,869,591 1,239,121
-------------- -------------- -------------- --------------
Net operating income 74,056 239,150 56,898 159,236
-------------- -------------- -------------- --------------
Gains and losses
Unrealized (loss) gains on trading securities (17,395) 862 (102,105) (1,940)
Other gains (losses) (111) - (1,162) -
-------------- -------------- -------------- --------------
Net gains (losses) (17,506) 862 (103,267) (1,940)
-------------- -------------- -------------- --------------
Net income (loss) before income taxes (benefits) 56,550 240,012 (46,369) 157,296
Income tax expense (benefit) 23,644 82,048 (15,816) 64,716
-------------- -------------- -------------- --------------
NET INCOME (LOSS) $ 32,906 $ 157,964 $ (30,553) $ (92,580)
============== ============== ============== ==============
Weighted average shares outstanding 2,933,906 2,934,000 2,934,511 2,934,000
Basic and fully diluted net income (loss)
per share $ 0.01 $ 0.05 $ (0.01) $ (0.03)
See accompanying notes.
4
Prime Resource, Inc. and Subsidiaries
Consolidated Statements of Stockholders' Equity (Unaudited)
Retained
Common Stock Treasury Earnings
Shares Amount Stock (Deficit) Total
-------------- -------------- -------------- -------------- --------------
Balance at January 1, 2003 2,800,000 $ 197,763 $ - $ (7,700) $ 190,063
Proceeds from common stock offering 150,000 709,664 - - 709,664
Treasury stock (16,000) - (77,755) - (77,755)
Net income - - - 101,851 101,851
-------------- -------------- -------------- -------------- --------------
Balance at December 31, 2003 2,934,000 907,427 (77,755) 94,151 923,823
Net income - - - 285,028 285,028
-------------- -------------- -------------- -------------- --------------
Balance at December 31, 2004 2,934,000 907,427 $ (77,755) $ 379,179 $ 1,208,851
Common stock issued for services 10,900 27,250 - - 27,250
Treasury stock (700) - (4,303) - (4,303)
Net income - period ended June 30, 2004 - - - 32,906 32,906
-------------- -------------- -------------- -------------- --------------
Balance at June 30, 2005 2,944,200 $ 934,677 $ (82,058) $ 412,085 $ 1,264,704
============== ============== ============== ============== ==============
See accompanying notes.
5
Prime Resource, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended June 30,
2005 2004
-------------- --------------
Cash Flows From Operating Activities:
Net income $ 32,906 $ 157,964
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Depreciation and amortization 75,142 23,943
Write-off of notes receivable from related parties - -
Change in deferred taxes (14,974) 31,880
Realized loss on trading securities 111 -
Unrealised (losses) on trading securities (17,395) (862)
Issuance of shares for services 27,250 -
Changes in assets and liabilities:
Accounts receivable (123,050) (50,829)
Interest receivable (12,000) (2,000)
Income tax receivable 9,770 33,354
Other assets 11 9,000
Accounts payable 6,517 25,277
Income tax payable 9,898 (15,373)
Accrued expenses 154,571 53,080
-------------- --------------
Net cash provided by operating activities 183,547 265,434
Cash Flows From Investing Activities:
Purchase of trading securities (53,876) (29,914)
Purchases of equipment (84,377) (20,121)
Treasury stock (4,303) -
Notes receivable (250,000) -
Proceeds from sales of trading securities 19,723 3,376
-------------- --------------
Net cash used in investing activities (372,833) (46,659)
Cash Flows From Financing Activities:
Payments on notes payable (9,248) (5,519)
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Net cash used in financing activities (9,248) (5,519)
-------------- --------------
Net increase (decrease in cash and cash equivalents (198,534) 213,256
Cash and cash equivalents at beginning of period 827,404 399,403
-------------- --------------
Cash and cash equivalents at end of period $ 628,870 $ 612,659
============== ==============
Supplemental Cash Flow Information:
Cash paid for interest $ 1,913 $ 928
Cash paid for taxes $ 24,000 $ 58,100
See accompanying notes.
6
Prime Resource, Inc. and Subsidiaries
Notes to Financial Statements (unaudited)
June 30, 2005
1. Presentation
The financial statements as of June 30, 2005 and 2004 and for the three and six
months ended June 30, 2005 and 2004, were prepared by the Company without audit
pursuant to the rules and regulations of the Securities and Exchange Commission
(SEC). Certain information and footnote disclosures normally included in
financial statements prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or omitted pursuant
to such rules and regulations. In the opinion of management, all necessary
adjustments, which consist primarily of normal recurring adjustments, to the
financial statements have been made to present fairly the financial position and
results of operations and cash flows. The results of operations for the
respective periods presented are not necessarily indicative of the results for
the respective complete years. The Company has previously filed with the SEC
annual reports on Form 10-KSB which included audited financial statements for
the two years previously ending December 31, 2004. It is suggested that the
financial statements contained in this filing be read in conjunction with the
statements and notes thereto contained in the Company's 10- KSB filing.
2. Net income per common share
Net income per common share is computed based on the weighted-average number of
common shares and, as appropriate, dilutive common stock equivalents outstanding
during the period. Stock options and warrants are considered to be common stock
equivalents.
Basic net income per common share is the amount of net income for the period
available to each share of common stock outstanding during the reporting period.
Diluted net income per common share is the amount of net income for the period
available to each share of common stock outstanding during the reporting period
and to each share that would have been outstanding assuming the issuance of
common shares for all dilutive potential common shares outstanding during the
period.
No changes in the computation of diluted earnings per share amounts are
presented since no potentially dilutive securities have been granted or issued.
7
Item 2. Management's Discussion and Analysis of Financial Condition or Plan of
Operation
Forward-Looking Information
Certain statements in this Section and elsewhere in this report are
forward-looking in nature and relate to trends and events that may affect the
Company's future financial position and operating results. Forward Looking
Statements are defined within the meaning of Section 27-A of the Securities Act
of 1933 and Section 21-E of the Securities Act of 1934. The terms
"expect,""anticipate,""intend," and "project" and similar words or expressions
are intended to identify forward-looking statements. These statements speak only
as of the date of this report. The statements are based on current expectations,
are inherently uncertain, are subject to risks, and should be viewed with
caution. Actual results from experience may differ materially from the
forward-looking statements as a result of many factors, including changes in
economic conditions in the markets served by the company, increasing
competition, fluctuations in prices and demand, and other unanticipated events
and conditions. It is not possible to foresee or identify all such factors. The
company makes no commitment to update any forward-looking statement or to
disclose any facts, events, or circumstances after the date hereof that may
affect the accuracy of any forward-looking statement.
Plan of Operation
Prime Resource, Inc. ("Prime") is a Utah Corporation which was organized and
filed of record on March 29, 2002 as a successor entity to Prime, LLC, (a Utah
limited liability company). Prime is an integrated business entity that conducts
all of its actual business activities through its wholly owned subsidiaries:
Belsen Getty, LLC ("Belsen Getty") and Fringe Benefit Analysts, LLC ("FBA").
Prime Retirement Services, LLC, ("Prime Retirement") has previously been
organized to potentially assume some of the core businesses or similar services
of Prime, but is not operational or integrated to date. Unless otherwise
specifically described in this report, the reference to Prime shall collectively
mean both Prime and its two current operating subsidiaries.
The principal business activity of Prime has been, and will continue to be for
the foreseeable future, providing insurance and related insurance products
principally in the health, life, dental and disability areas, as well as
implementing and managing various employee related benefit programs and plans,
such as 401(k) retirement accounts.
The insurance activities of Prime are primarily conducted through FBA. FBA is
licensed as an insurance broker. Belsen Getty supplies collateral services
related primarily to formation and funding of pension and investment management
programs, as well as retirement planning and general business and financial
consulting. Belsen Getty is a licensed investment advisory firm. Prime
Retirement is a potential start-up consulting entity which has not commenced
operations and has been closed as a business entity during the 2nd quarter of
2005.
8
The sector breakdown of revenues and profits by the two operating entities for
comparative quarters is generally summarized below:
FBA Analysts:
2nd Quarter 2005 Gross Revenues $ 1,721,975
Net Profits $ 150,058
2nd Quarter 2004 Gross Revenues $ 1,220,674
Net Profits $ 203,253
Belsen Getty:
2nd Quarter 2005 Gross Revenues $ 85,564
Net Profits $ (104,572)
2nd Quarter 2004 Gross Revenues $ 177,683
Net Profits $ (733)
Historically, management intended to attempt to grow the company primarily
through the acquisition of other insurance providers into the FBA entity and by
developing new client relationships. Concurrently, Belsen Getty attempted to
expand its financial and business consulting and pension planning services
principally by creating a more extensive investment advisory role.
During the first and second quarters of 2005, it became increasingly clear to
management that there were a paucity of suitable insurance company acquisition
opportunities that would meet the criteria of materially growing the revenue
base of the company. As a result, the management has made a conscious decision
to shift emphasis to explore potential merger or acquisition possibilities in
unrelated areas.
FBA is also currently negotiating potential marketing plans to expand its
"Advantage Program" whereby it provides plan administration services along with
selling insurance products. Further, FBA is allowing access to the Advantage
Program for competitors for a negotiated percentage of their gross revenues.
9
The company completed an initial public offering of its shares on June 16, 2003
in which it raised $750,000 in gross proceeds and $709,664 in net proceeds. Its
stated intention was to employ the majority of these funds for acquisitions to
grow its core insurance services and products as generally discussed above.
During the second quarter of 2005, Prime has determined that these funds may be
better employed enhancing current operations by upgrading programs, systems and
equipment with the balance reserved for funding a more broad based pursuit of
merger or acquisition possibilities. No proceeds of the offering are employed to
pay for costs of day-to-day operations.
To the date of this report, the company has expended approximately $ 379,072 of
offering proceeds and has approximately $330,591 remaining which is more
particularly reported under Item 5 of this report pursuant to SEC Rule 463. The
balance of the offering proceeds are yet to be employed and are being reserved
for reviewing and potentially acquiring other businesses or concepts.
The company's long term growth and potential to realize profits is substantially
dependent upon the ability of management of the company to successfully employ
the proceeds of the public offering in a manner which will generate additional
revenues and potential net income to Prime. No assurance or warranty of the
success of Prime, in this regard, can be made or implied at this time.
The company experienced a profit of $285,028 in calendar year 2004. For the
second quarter of 2005 the company realized an after tax net loss of $(30,553)
compared to $(92,580) in the comparable period of 2004.
In the current quarter we had net losses of $(30,553) on gross revenues of
$1,926,489. The comparable revenues for the second quarter of 2004 were
$1,398,357 and $(92,580) in net losses. We attribute this revenue growth
primarily to the increased marketing of our services and products to new clients
and the expanded operation of our "Advantage Program". Also, Prime has increased
its client base and commissions. After tax losses for the quarter were a result
of Prime had a substantial increase in commission expenses and employee costs.
Each person reviewing this report should understand that the company has only
had historical profits since 2003. The failure of the company to have a long
history of profits and determination to seek other business activities should be
considered as potential risk factors to any person acquiring securities of the
company in that it does not have a proven or sustained profit history.
Prime, including all subsidiaries, has 18 full-time employees, 1 part-time
employee and 49 affiliated commission based insurance or other agents.
As of June 30, 2005, the outstanding current liabilities of the company were
$695,946 which is an increase from $585,849 for the year end 2004. Liabilities
increased due to greater agent commissions. The company has an accumulated
retained earnings from its inception as a corporate entity to June 30, 2005 of
$412,085.
10
Products and Markets
As generally described above, the revenue sources to Prime are primarily divided
into two categories. The first being the sale of a broad line of insurance
products and services through FBA with a primary emphasis on group health,
disability, dental and life policies. The second being the related investment
and planning services of Belsen Getty.
The insurance activities of Prime are primarily offered within eleven western
United States. Prime acts as a general agent through FBA for various companies
in supplying the insurance policies and services. However, four companies
account, collectively, for almost all of the policies provided by Prime. These
four principal suppliers of policies to Prime are Altius Insurance, (previously
Pacific Health Care); United Health Care; Intermountain Health Care and Regence
Blue Cross. Commissions for the placement of these products range from
approximately 2-20%.
FBA currently has, as of June 30, 2005, approximately 514 customers who are
receiving ongoing insurance coverage and related services from FBA. FBA also has
what it believes to be a unique program related to its insurance activities in
which it acts as a plan developer and facilitator for various insurance programs
such as COBRA, HIPAA and State continuation plans and other insurance related
plans that require ongoing filing and consulting/management services. These
services have previously been described as the "Advantage Program". FBA believes
it has been successful in growing its business through supplying the advantage
services at no additional cost to the insurance client. The company also
believes it has been successful in maintaining a profit, while providing these
services without additional cost to the client, by obtaining discounts from
service providers who provide these ongoing management services.
Belsen Getty supplies investment advisory and pension management services to
various clients of Prime. Some, but not all, of these clients are referred by
FBA incident to completion of insurance funded products sold to various
individuals and entities which then require pension fund management. The
compensation for these valuable services are derived on a fee basis. The fees
range from 25 basis points to 125 basis points per year depending upon the size
of the portfolio or program managed. There are no commissions paid on investment
products and the assets are held by third party custodians, such as various
brokerage firms. It is anticipated that the Belsen Getty portion of the business
will grow concurrently with the growth of the FBA business, but for the
foreseeable future will generate revenues substantially less than the FBA
component of the business. As of June 30, 2005, FBA has approximately 514
customers and Belsen Getty has 481 clients.
11
Liquidity and Sources of Capital
As previously noted, the parent entity, Prime Resource, Inc., completed a public
offering as of April 16, 2003 resulting in net proceeds to the company of
$709,664. It was believed and anticipated that these proceeds would be
sufficient to implement the general growth plan of the company, as generally
described above, and which included acquisition of other insurance brokers, as
well as the recruitment and training of insurance agents with existing books of
business, clients, and established insurance markets. No warranty or assurance
of the success of this proposed plan of operation can be made, but it is
believed that there is sufficient existing capital in the company to implement
this plan from the proceeds of the offering. Prime is presently in a position
where it believes that its general revenues can sustain other business
operations, including salaries, rent, utilities and other overhead costs,
without the employment of offering proceeds for those general operating
purposes.
Since the first quarter of 2005 the company has decided to use the net proceeds
on an as needed basis only to enhance existing business equipment or procedures
and as may become necessary to pursue and analyze subsequent business
opportunities. As of June 30, 2005 there remained $330,591 of net proceeds.
The company has no present plans for any additional offering of its securities
or other capital formation activities for the foreseeable future.
Further, the company does not significantly rely on lines of credit or other
bank loans for its present operations and has total outstanding debt
obligations, as of June 30, 2005, of approximately $68,944, while maintaining a
net worth of approximately $1,264,704.
Recent Developments
During the second quarter, Prime has been involved in potential merger,
acquisition or share exchange discussions with several companies for the
purposes of obtaining a new business purpose as previously described. All of
these negotiations have been preliminary and none of them have resulted to the
date of this Report in any definitive agreement. All interested parties and each
shareholder are advised that should Prime reach a definitive reorganization
acquisition , or other similar type of agreement, it will promptly file an 8-K
report with the Securities and Exchange Commission (SEC) generally outlining the
terms of that agreement. The company would also intend to post the general terms
of such agreement on its company website and may issue a corresponding press
release. It is also anticipated that most types of reorganization proposals in a
definitive state would require shareholder approval for which your vote, as a
shareholder, would be solicited through a normal proxy solicitation process.
The form of most of these negotiations, to date, has generally revolved around
Prime discussing acquiring a new unrelated business purpose for the issuance of
additional stock with the concurrent reduction of the principal shareholders
12
presently issued stock in consideration for the spin-off to those principals of
the existing insurance and investment advisory related services of Prime. It
should be noted, however, that no assurance or warranty that any type of
reorganization can be completed is made or implied by this general discussion;
nor, should one assume that the final form of any definitive agreement would
follow the general outline of prior discussions described by this paragraph.
At present the company remains in continuing negotiations with one potential
acquisition candidate and should a definitive agreement be reached with this
potential candidate, the disclosures and filings described above would be
promptly made available to shareholders and other interested parties in public
filings as described above. The company is committed to continue actively
pursuing some type of acquisition or reorganization candidate to advance its
business purposes as a public company through a form of business enterprise
which it believes would be more profitable and more compatible with the public
nature of the company.
Risk Factors
There is a significant new risk factor to shareholders as the company
transitions from attempting to expand its core insurance/consulting services to
potential merger and acquisition efforts with unknown entities. Any such future
reorganization would most likely result in a change of management, business, and
the relative share ownership of current shareholders.
Item 3. Controls and Procedures
(a) Prime maintains controls and procedures designed to ensure that
information required to be disclosed in the reports that the Company files or
submits under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in the rules and forms
prescribed by the Securities and Exchange Commission. Based upon their
evaluation of those controls and procedures performed within 90 days of the
filing date of this report, the chief executive officer and the principal
financial officer of the Company concluded that the Company's disclosure
controls and procedures were adequate for its present activities. The Company
knows of no fraudulent activities within the Company or any material accounting
irregularities. The Company does not have an independent audit committee and
does not believe it is required to have any audit committee at this time.
(b) Changes in internal controls. The Company made no significant
changes in its internal controls since completing its public offering. The
company as of the first quarter of 2004 obtained a listing of its stock on the
National Association of Securities Dealers ("NASD") sponsored Electronic
Bulletin Board, but does not view such listing as requiring a change in its
accounting or auditing practices at the present time.
(c) The company is aware of the general standards and requirements of
the recent Sarbanes-Oxley Act of 2002 and has implemented procedures and rules
to comply, so far as applicable, such as a prohibition on company loans to
13
management and affiliates. The company does not have any audit committee as it
does not believe the act requires a separate committee for companies that are
reporting companies, but not registered under the Securities and Exchange Act of
1934 [15(d) companies] and whose shares trade only on the Electronic Bulletin
Board.
Part II - Other Information
Item 5. Other Matters
(1) Public Offering & Use of Proceeds. As generally noted above, Prime
completed its initial public offering of 150,000 shares to 17 new shareholders
as of June 16, 2003. Pursuant to SEC Rule 463, the use or employment of the
proceeds are periodically disclosed as part of this report. We have elected to
set-out such information in a tabular format:
1. Offering Effective Date
4/16/2003
2. Offering Closed $750,000 $709,664
6/16/2003 Gross Proceeds Net Proceeds
3. Costs of offering including $40,336 N/A
legal, accounting, filing fees,
consulting and miscellaneous
(No commissions were paid)
4. No direct payments were made to any 0 0
officer, director or affiliated person.
The offering was a self-underwriting
with no commissions.
14
Of the net proceeds, the following principal
expenditures have been made during this
Quarter:
(i) Software/computer upgrades $ 4,315.70
(ii) Database work & website costs $ 2,907.92
(iii) Legal-primarily NASD listing $
(iv) Working Capital $ 5,212.25
(v) Office equipment $ 5,355.84
(vi) Marketing $ 2,505.12
(vii) New Employees $
(viii) New Marketing Coordinator $
(ix) Client gifts and costs $ 3,967.81
------------
$ 24,264.81
============
Prior Offering Proceeds Expenditures $ 354,808.30
(Previously Reported)
Remaining Net Proceeds $ 330,591
(2) Auditors. Child, Sullivan and Company of Kaysville, Utah will
continue, subject to Board discretion, as the Company's new independent
auditors. The auditors were appointed in August, 2003. The company has no
differences of opinion with its prior or current auditors.
(3) Trading. The company trades on the Electronic Bulletin Board under
the symbol "PRRO". The Electronic Bulletin Board is essentially an informal
trading mechanism managed by the National Association of Securities Dealers, but
does not constitute a regular NASDAQ exchange or listing. It is, essentially, an
electronic intra-dealer quotation system for small public companies not meeting
the requirements for regular NASDAQ listing. During the second quarter of 2005
the trading range of the company's stock was as follows:
High Low
$5.5 $2.5
15
(4) Annual Meeting. The company held its annual meeting of shareholders
on the 5th of June 2004, wherein the nominated directors were re-elected and the
choice of independent auditors was ratified by majority shareholder vote. No
meeting date in 2005 has presently been set.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
99.1 Certification under Section 302 of the Sarbanes-Oxley Act of 2002
99.1 Certification under Section 906 of the Sarbanes-Oxley Act of 2002
(18 U.S.C. SECTION 1350)
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the reporting period.
(c) Other Exhibits-None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
Date: August 15, 2005 By: /s/ Terry M. Deru
-----------------------
Mr. Terry M. Deru
President, Director
Date: August 15, 2005 By: /s/ Andrew W. Limpert
-----------------------
Mr. Andrew W. Limpert
Director, Treasurer/CFO
16
CERTIFICATION-302
I, Terry M. Deru, President and Director of Prime Resource, Inc certify that:
(1) I have reviewed this quarterly report on Form 10-QSB of Prime Resource,
Inc;
(2) Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;
(3) Based on my knowledge, the financial statements, and other financial
information included in this quarterly report fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
(4) The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this quarterly report (the "Evaluation Date'); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
(5) The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified
for the registrant's auditors any material weaknesses in internal controls;
and
(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
(6) The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
DATE: August 15, 2005
/s/ Terry M. Deru
------------------------------------
Mr. Terry M. Deru
President
17
CERTIFICATION-302
I, Andrew W. Limpert, Chief Financial Officer and Director of Prime Resource,
Inc certify that:
(1) I have reviewed this quarterly report on Form 10-QSB of Prime Resource,
Inc;
(2) Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;
(3) Based on my knowledge, the financial statements, and other financial
information included in this quarterly report fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
(4) The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this quarterly report (the "Evaluation Date'); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
(5) The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified
for the registrant's auditors any material weaknesses in internal controls;
and
(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
(6) The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
DATE: August 15, 2005
/s/ Andrew W. Limpert
----------------------------------
Mr. Andrew W. Limpert
Chief Financial Officer
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 Quarterly Report of Prime Resource, Inc. (the "Company")
on Form 10- QSB for the period ending June 30, 2003, as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), we, Mr.
Terry Deru, President and Chief Executive Officer and Mr. Andrew Limpert, Chief
Financial Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the bet of
our knowledge and belief:
(1) The Report fully complies with the requirements of section 13 (a)
or 15 (d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.
Date: August 15, 2005 /s/ Terry M. Deru
Mr. Terry M. Deru
President, Director
Date: August 15, 2005 /s/ Andrew W. Limpert
Mr. Andrew W. Limpert
CFO, Director
A signed original of this written statement required by Section 906 or other
document authenticating, acknowledging, or otherwise adopting the signature that
appears in typed form with the electronic version of this written statement has
been provided to the Company and will be retained by the Company and furnished
to the Securities and Exchange Commission or its staff upon request.