Utah Resources International Inc – ‘10KSB’ for 12/31/98

As of:  Thursday, 4/15/99   ·   For:  12/31/98   ·   Accession #:  96313-99-74   ·   File #:  0-09791

in

this entire Filing. an “Entity” Search.

Show

Documents searched

and

each “hit”. the 1st “hit”.

↓↑Hints

Annual Report — Small Business   —   Form 10-KSB
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10KSB       Annual Report -- Small Business                       42    241K 
 2: EX-3.6      Articles of Incorporation/Organization or By-Laws      2     11K 
 3: EX-27       Financial Data Schedule (Pre-XBRL)                     1      7K 

10KSB   —   Annual Report — Small Business
Document Table of Contents

10KSB
1st Page of 42
TOC
↑Top
Previous
Next
↓Bottom
Just 1st
 
 FORM 10-KSB

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 ANNUAL REPORT

    PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]

 For the Fiscal Year Ended
 DECEMBER 31, 1998

Commission file number

UTAH RESOURCES INTERNATIONAL, INC.
(Name of small business issuer in its charter)

Utah                             87-0273519 
 (State of Incorporation) (I.R.S. Employer Identification No.)

 297 W. Hilton Drive, Suite #4
St. George, Utah 84770
 (Address of principal executive offices including zip code)

 Issuer's telephone number: (801) 628-8080

Securities registered pursuant to Section 12(b) of the Act: None

 Securities registered pursuant to Section 12(g) of the Act:

Title of Class
Common Stock
Par Value $.10 Per Share

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter  period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.      

(1)  Yes     X           No _______                           
---------                                   
(2)  Yes     X           No _______                           
--------                                    

Check if disclosure of delinquent  filers pursuant to Item 405 of Regulation S-B
is not contained in this form, and no disclosure will be contained,  to the best
of  registrant's  knowledge,  in  definitive  proxy  or  information  statements
incorporated  by reference in Part III of this Form 10-KSB or any  amendments of
this Form 10-KSB. [ ]                                                           

       Issuer's revenues for its most recent 1998 Fiscal Year were $674,016.

         The aggregate  market value of the voting stock held by  non-affiliates
computed  by  reference  to the price at which the stock was sold,  based on the
last sales transaction prior to year end 1998, which occurred December 14, 1998,
at approximately $1.00 per share, is $1,191,808.                                

         The number of shares of Common Stock,  $.10 par value,  outstanding  on
February 5, 1999 was 2,522,808 shares.                                          

10KSB
2nd Page of 42
TOC
1st
Previous
Next
↓Bottom
Just 2nd
Transitional Small Business Disclosure Format (check one):    
                                              Yes      No    X
                                                   ----     ----

 DOCUMENTS INCORPORATED BY REFERENCE

PART OF FORM 10-KSB                              DOCUMENT               

PART I                                       None             

PART II                                      None             

PART III                                                      
              Item 13 - Exhibits and                  Exhibits as specified in
            Reports on Form 8-K                     Item 13 of this Report

PART I

ITEM 1.   DESCRIPTION OF BUSINESS.                                              

(a)      Business Development.                                                  

Form and Year of Organization                                                   

         Utah Resources  International,  Inc. ("URI" or the "Company") is a Utah
corporation,  organized  in 1966 as Utah  Industrial,  Inc. It was renamed  Utah
Resources  International,  Inc. in 1969.  The  Company's  executive  offices are
located at 297 W. Hilton Drive, Suite #4, St. George, Utah 84770.               

Stock Purchase Agreement - July 3, 1996                                         

         On  April 5,  1996,  Inter-Mountain  Capital  Corporation,  a  Delaware
corporation wholly owned by John Fife ("IMCC"),  entered into a Letter of Intent
with the Company  (the "Letter of  Intent"),  whereby  IMCC  agreed,  if certain
conditions  were met,  to  purchase a 51%  interest in the Company at a purchase
price of $3.35 per share. One of the conditions for consummating the transaction
contemplated  by the  Letter of  Intent  was the  spinoff  of  Midwest  Railroad
Construction and Maintenance Corporation ("Midwest").  Pursuant to the Letter of
Intent,  IMCC  agreed  to pay 10% of the  purchase  price  at  closing  with the
remaining 90% owing to be evidenced by a five year  promissory  note. The Letter
of  Intent  also  provided  that the  Company  grant  IMCC a ten year  option to
purchase an additional  150,000 or more shares of URI's stock,  so that IMCC, at
all times would have the right to own a 51% interest in the Company.  The Letter
of Intent also provided that  subsequent to the closing and subject to financing
and other  conditions,  the Company  would cause either a: (i) 12,500 to 1 share
reverse  split of the  Company's  stock,  at $3.35 per  share,  with  fractional
shareholders given the option to round-up and maintain their shareholder status;
or (ii)  tender  offer for its  shares at $3.35 per  share  subject  to  certain
payment options.  Under the terms of the Letter of Intent, the Company agreed to
indemnify IMCC and its shareholders and directors from and against any liability
to the Company's  shareholders,  officers and/or directors arising out of IMCC's
negotiation,  execution and/or  consummation of the Letter of Intent,  the Stock
Purchase  Agreement and the  transactions  contemplated by the Letter of Intent.
Furthermore,  IMCC agreed to take all actions  necessary to cause the Company to
honor the Company's  obligations  to indemnify its officers and directors to the
fullest extent permitted by law, including,  but not limited to, the advancement
of their  legal  fees and  costs in  connection  with  all  present  and  future
litigation  involving them in their  capacities as officers and directors of the
Company.  The  Company  entered  into the Letter of Intent on April 5, 1996.  On
April 16, 1996, IMCC filed its Schedule 13D informing the Company's shareholders
of  its  intent  to  engage  in  the  two  step  transaction  consisting  of the
acquisition  of a majority  interest and  conducting a reverse  stock split or a
tender  offer.  It also  gave  notice  of  IMCC's  intent  to  cause a class  of
securities of the Company to be delisted from a national  securities exchange or
cause a class of  securities  to  cease  to be  authorized  to be  quoted  in an
inter-dealer  quotation system of a registered national securities  association,

2 

10KSB
3rd Page of 42
TOC
1st
Previous
Next
↓Bottom
Just 3rd
pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934. In order to
obtain a copy of the Letter of Intent and for a more detailed description of the
terms of the Letter of Intent,  see  Schedule  13D filed by IMCC with the SEC on
April  16,  1996.  The  Company  entered  into the  Letter  of  Intent  over the
objections of Mark Jones and Jenny Morgan, being two directors of the Company.  

         On May 17,  1996,  Mark G. Jones,  a  shareholder  and  director of the
Company  at  the  time  and   controlling   shareholder  of  Mark   Technologies
Corporation,   brought  a  shareholders   derivative   suit  captioned  as  Mark
Technologies Corp., et al. v. Utah Resources  International,  Inc. et al., which
was filed as Civil No.  96-090-3332CV  in the Third  Judicial Court of Salt Lake
County,  Utah (the "Second State Action") against the Company,  E. Jay Sheen, R.
Dee Erickson and Lyle Hurd,  directors of the Company and IMCC. The Second State
Action,  included, among other things, a request for the issuance of a temporary
restraining  order and injunction  against the transactions  contemplated in the
Letter of Intent.                                                               

         On or about June 26,  1996,  the Company  entered  into two  settlement
agreements. The first settlement agreement was by and among the Company, John H.
Morgan, Jr., Daisy R. Morgan,  IMCC, John Fife, Robinson & Sheen, L.L.C., R. Dee
Erickson,  Lyle D. Hurd, and E. Jay Sheen (the "Morgan  Settlement  Agreement"),
whereby  certain  disputes  among the parties were  resolved and settled and the
parties  agreed to use their  best  efforts  to  terminate  the 1993  Settlement
Agreement,  as defined  below.  A copy of the  Morgan  Settlement  Agreement  is
attached  as Exhibit  10.37 to the  Company's  Form  10-KSB for the fiscal  year
ending  December  31,  1995,  filed with the SEC on  January 8, 1997.  The "1993
Settlement  Agreement"  was the  result  of the  settlement  of a  shareholders'
derivative  action  captioned as Ernest Muth,  et al. v. John H. Morgan,  Jr. et
al., which was filed as Civil Number  C-87-1632 in the Third  Judicial  District
Court of Salt Lake County,  Utah (the "First State  Action"),  where  plaintiffs
therein  alleged,  among other  things,  that the officers and  directors of the
Company committed  various breaches of their fiduciary duties to the Company.  A
settlement agreement in the First State Action was entered on April 6, 1993 (the
"1993  Settlement  Agreement").  On or about July 21,  1995,  attorneys  for the
Company on behalf of the Company  filed an action  against John H. Morgan,  Jr.,
and Daisy R. Morgan,  directors of the Company,  to enforce the 1993  Settlement
Agreement in the First State Action which  resulted in certain  findings of fact
and  conclusions  of law and an order  enforcing the 1993  Settlement  Agreement
entered by Judge Michael R. Murphy on October 4, 1995 (the "Murphy Order").  The
Murphy  Order was  appealed  by John H.  Morgan,  Jr.  and Daisy R.  Morgan  and
cross-appealed by the Company.  An Order to Show Cause was subsequently filed in
the First  State  Action on behalf of the Company by  attorneys  for the Company
against John H.  Morgan,  Jr.,  Daisy R.  Morgan,  Mark G. Jones and others (the
"Order to Show  Cause").  The second  settlement  agreement was by and among the
Company,  R. Dee  Erickson,  E. Jay Sheen,  Lyle D. Hurd,  Mark G.  Jones,  Mark
Technologies  Corporation,  Anne Morgan,  Victoria  Morgan,  IMCC, John Fife and
Robinson & Sheen, L.L.C. (the "1996 Settlement Agreement),  whereby the parties,
among other  things,  agreed to dismiss the Second State Action and to use their
best efforts to terminate the 1993  Settlement  Agreement and to settle  certain
other litigation. A copy of the 1996 Settlement Agreement is attached as Exhibit
10.38 to the Company's Form 10-KSB for the fiscal year ending December 31, 1995,
filed with the SEC on January 8, 1997.  For a more detailed  description  of the
Company's legal proceedings,  see "Item 3. Legal Proceedings," and copies of the
Morgan  Settlement  Agreement  and the  1996  Settlement  Agreement  which  were
attached as Exhibits 10.37 and 10.38  respectively  to the Company's Form 10-KSB
for the fiscal year ending  December 31, 1995,  filed with the SEC on January 8,
1997. In addition,  the 1996 Settlement  Agreement amended certain provisions of
the Letter of Intent  including,  the  elimination of the option that IMCC would
cause the Company to initiate a tender offer for its shares and the reduction in
the reverse  split from 12,500  shares to 1 to 1,000 shares to 1 and an increase
in the IMCC  payment at closing  from 10% of the  purchase  price to 15%.  On or
about August 9, 1996, a Motion to Intervene was filed by  shareholders  Jenny T.
Morgan (a director of the Company at the time), Gerard E. Morgan, John C. Morgan
and Karen J. Morgan  (together the  "Objectors").  On August 22, 1996, the court
denied the Objector's  petition.  The 1996  Settlement  Agreement and the Morgan
Settlement  were  approved  by the Third  Judicial  District  Court of Salt Lake
County,  West Valley  Department of Utah, on or about August 23, 1996. The First
Federal  Action and the Second State  Action were  dismissed  with  prejudice on
August 28, 1996.  The Order to Show Cause was dismissed  with  prejudice and the
1993 Settlement Agreement was terminated on August 29, 1996.                    

         On  July 3,  1996,  pursuant  to the  Letter  of  Intent  and the  1996
Settlement  Agreement,  the  Company  and  IMCC  entered  into a Stock  Purchase
Agreement (the "Stock Purchase Agreement"),  whereby the Company issued and sold

3 

10KSB
4th Page of 42
TOC
1st
Previous
Next
↓Bottom
Just 4th
1,275,912  shares (the  "Purchased  Shares")  of its common,  $.10 par value per
share stock (the "Common Stock") to IMCC, so that IMCC owned a 50.5% interest in
the Company.  IMCC acquired the  Purchased  Shares at a price equal to $3.35 per
share for an aggregate  purchase price of $4,274,305.20  (the "Purchase Price"),
of which $641,145.78 was paid in cash by IMCC to the Company at the closing. The
remaining portion of the purchase price of $3,633,159.42 was evidenced by IMCC's
promissory  note (the  "Note").  The Note bears  interest at a rate equal to the
short-term  applicable federal rate published by the Internal Revenue Service in
effect at the time of closing,  and is adjusted on each  anniversary of the Note
to the applicable  short-term  federal rate in effect on such anniversary  date.
Interest on the Note is to be paid  currently in arrears on each  anniversary of
the Note. At the closing,  IMCC paid  $197,872.52  to the Company,  which amount
represented  the present  value first year of interest  due under the Note.  The
principal  and any unpaid  interest  accrued  under the Note is due and  payable
August 1, 2001.  The Note is secured by the  Purchased  Shares as evidenced by a
stock pledge  agreement,  dated as of July 3, 1996,  by and between IMCC and the
Company (the "Stock Pledge Agreement").  Pursuant to a separate written guaranty
agreement,  John Fife  personally  guaranteed  payment of 25% of all amounts due
under the Note from time to time.                                               

         As required by the Stock  Purchase  Agreement,  E. Jay Sheen and R. Dee
Erickson,  submitted their  resignations as directors of the Company,  effective
July 13, 1996. As further  required by the Stock Purchase  Agreement,  John Fife
was appointed a director of the Company.  David Fife,  the brother of John Fife,
was also  appointed as a director of the Company.  John Fife and David Fife were
appointed  directors  of the  Company as part of the Muth Group  pursuant to the
1993  Settlement  Agreement,  effective  July 13, 1996. As required by the Stock
Purchase Agreement,  John Fife was elected President and Chief Executive Officer
of the Company in July,  1996 pursuant to a 3-0 vote of the Board (Mark G. Jones
and Jenny  Morgan  were not  present  for the  vote).  John Fife has since  been
elected  director by a majority vote of the  shareholders  and President,  Chief
Executive  Officer and Chairman of the Board of the Company by unanimous vote of
the directors.                                                                  

         The Stock Purchase  Agreement  contemplated  that subject to applicable
state and federal  securities and state corporate law, the Company would cause a
1,000 to 1 share  reverse split of the Company's  stock to the  shareholders  of
record at $3.35 per  share,  with  fractional  shareholders  given the option to
either  purchase  additional  fractional  shares to round up to one whole  share
following  the  reverse  split or sell their  fractional  shares for cash to the
Company.  IMCC was  granted  a ten  year  option  to  purchase  150,000  or more
additional  shares of stock at a purchase  price equal to $3.35 per share and on
the same  terms and  conditions  as those  provided  under  the  Stock  Purchase
Agreement,  so that after the reverse split IMCC may maintain its 50.5% majority
interest  in the  Company.  Subsequent  to the  reverse  split  and  subject  to
applicable  state and federal  securities  and state  corporate law, any Company
shares  redeemed by the Company  pursuant  to the reverse  split (the  "Returned
Shares") may be acquired by the remaining  shareholders,  other than IMCC or its
affiliates,  in increments of 1,000 shares (the "Returned Share  Option"),  at a
purchase  price  equal to the  pre-reverse-split  price of $3.35 per share  (the
"Returned  Share Purchase  Price").  Only those shares for which the Company has
received a fully and properly executed letter of transmittal, accompanied by the
required  documents,  will  qualify as Returned  Shares for the purposes of this
Returned  Share Option.  Such Common Stock shall be purchased in blocks of 1,000
shares of Common Stock such that each  purchase of a 1,000 share block of Common
Stock  shall be  converted  into one (1) share of common  $100.00  par value per
share stock of the Company (the "New  Stock").  In the event the Returned  Share
Option is over-subscribed, then each of the exercising shareholders may purchase
the Returned  Shares on a pro-rata  basis (as determined by the number of shares
held by each of the  exercising  shareholders  as of the record  date less those
shares held by IMCC),  but in no event in less than 1,000 share  blocks.  In the
event of such  over-subscription,  each  qualified  shareholder  could  elect to
purchase that  percentage  of Returned  Shares equal to x/(y-z) where "x" equals
the number of New Stock shares  owned by the  qualified  shareholder  wishing to
purchase the Returned  Shares,  "y" equals the total number of issued  shares of
New Stock,  and "z" equals  the  number of issued  shares of New Stock  owned by
IMCC.  Twenty-five  percent (25%) of the Returned  Share Purchase Price shall be
payable in cash upon  exercise,  with the  remaining  balance of $2.51 per share
being  evidenced by a note (the  "Returned  Share  Note"),  payable in three (3)
years.  Subject to applicable Internal Revenue Service rules, the Returned Share
Note shall bear simple  interest at the short term  applicable  federal  rate as
stated in June,  1996,  which  interest  shall be payable  annually  in arrears.
Payment of the  Returned  Share Note will be secured by a pledge of the Returned
Shares purchased,  as converted into share(s) of New Stock,  pursuant to a stock
pledge  agreement  to  be  provided  by  the  Company.  Exercising  shareholders
purchasing   Returned   Shares  shall  be  required  to  apply  any   dividends,

4 

10KSB
5th Page of 42
TOC
1st
Previous
Next
↓Bottom
Just 5th
distributions  or other  payments made to the  shareholder of the Company on the
Returned Shares/New Stock to payment of the unpaid balance of the Returned Share
Note.  Returned Shares, as converted into New Stock,  purchased by an exercising
shareholder shall be fully votable in accordance with the terms of the Company's
organizational documents and other agreements binding the Company for so long as
the exercising  shareholder is not in default under the pledge  agreement or the
Returned Share Note.                                                            

         As a result of the reverse  split,  the Company is expected to become a
non-SEC-reporting  company.  A company with assets of over $10 million becomes a
"reporting  company"  when its  shareholders  number 500 or more and it complies
with applicable  state and federal  securities laws. To thereafter be allowed to
become a  "non-SEC-reporting  company" and cease reporting to the Securities and
Exchange  Commission,  the number of shareholders  must decline to less than 300
and the Company must comply with applicable  state and federal  securities laws.
Of the approximately 558 shareholders,  approximately 479 shareholders of record
own  fewer  than  1,000  shares,  leaving  approximately  79  shareholders  post
reverse-split if none of these shareholders exercise their option to round up.  

         In addition to the contractual  requirement  that a reverse stock split
occur,  as provided for in the Stock Purchase  Agreement,  the Company's  senior
management  and  its  Board  of  Directors  have  assessed  the  advantages  and
disadvantages  of the  Company's  status  as a  "reporting  company"  under  the
Exchange Act. First,  such reporting is very costly.  Furthermore,  the Board of
Directors  does not  believe  that  being a  "reporting  company"  has given the
Company any significant  advantage the Company would not otherwise have had as a
"non-SEC-reporting  company."  The Company's  registration  with the SEC has not
improved  flexibility  for current or future  financing of  corporate  expansion
through the building of a broader  equity base, nor has it made the valuation of
shares of the Common Stock  significantly  easier (since no active market exists
for the sale of stock  which  is  reflective  of the  Company's  operations  and
earnings  potential).  Finally,  such  registration  has  not  resulted  in  the
development  of an active  public  market for the Common  Stock and thus has not
provided  substantially  increased liquidity for shareholders who desire to sell
their Common Stock.                                                             

         The  Company  held its Annual  Meeting of the  Shareholders  on Monday,
March 8, 1999, at the Sheraton Four Points Hotel,  1450 South Hilton Drive,  St.
George, Utah 84770. At the Annual Meeting, the shareholders, among other things,
voted in favor of a proposal to amend the Company's Articles of Incorporation to
effect the reverse split of the Company's  issued and outstanding  common,  $.10
par value per share stock (the "Common  Stock"),  effective  Tuesday,  March 16,
1999 (the "Effective Date"), on the basis that each 1,000 shares of Common Stock
then outstanding will be converted into 1 share of common, $100.00 par value per
share stock (the "New Stock"),  with shareholders holding less than 1,000 shares
of  Common  Stock or any  increment  thereof  (after  being  given an  option to
purchase  additional  shares as needed to "round up" to the  equivalent of 1,000
shares at a purchase  price of $3.35 per share)  being paid cash in exchange for
their fractional  shares at a price of $3.35 per share of each share outstanding
immediately prior to such reverse split (the "Reverse Split").                  

Share Exchange Agreement                                                        

         On June 13,  1995,  the  Company  consummated  the  exchange of 590,000
shares of its common stock,  representing  approximately 33% of the total issued
and outstanding  shares of the Company's common stock following the transaction,
in return for  receipt of all of the  issued  and  outstanding  stock of Midwest
Railroad Construction and Maintenance Corporation ("Midwest") pursuant to a Plan
of Share Exchange and Share Exchange  Agreement,  dated February 16, 1995 by and
among the  Company,  Midwest,  Robert D. Wolff ("RD  Wolff") and Judith J. Wolff
("JJ Wolff") (the "Share Exchange Agreement").  The Share Exchange Agreement was
approved by a 3-2 vote of the Board. Directors John H. Morgan, Jr., and Daisy R.
Morgan voted against the Share  Exchange  Agreement.  All of the common stock of
Midwest was owned by RD Wolff and JJ Wolff.  The Share  Exchange  Agreement  was
accomplished as a tax free  reorganization  pursuant to Section  368(a)(1)(B) of
the  Internal   Revenue  Code  of  1986,  as  amended  (the  "Code").   Midwest,
headquartered  in Salt Lake City,  Utah,  is in the  railroad  construction  and
maintenance  business,  operating out of five regional  offices located in Utah,
Wyoming,  Colorado,  Nebraska  and New Mexico.  Midwest also  provides  railroad
engineering,  surveying,  bridge and structural maintenance,  grade crossing and
in-plant  switching  services.  Pursuant  to the  terms  of the  Share  Exchange
Agreement,  the Company agreed to: (i) indemnify Midwest and the Wolffs from any

5 

10KSB
6th Page of 42
TOC
1st
Previous
Next
↓Bottom
Just 6th
liability to the  Company's  shareholders,  its officers or  directors,  whether
brought  directly  by  the  person  or in a  derivative  capacity  arising  from
Midwest's or the Wolffs'  negotiation,  execution,  or consummation of the Share
Exchange  Agreement;  (ii) execute a three year employment  agreement between RD
Wolff and the Company,  whereby RD Wolff would act as the  President of Midwest;
(iii) apply for a listing of its stock on the NASDAQ; and (iv) lend Midwest,  in
the form of a line of credit, a sum not to exceed $250,000,  with the first draw
available  after February 15, 1995,  evidenced by a promissory  note in standard
form, bearing an interest rate of 1% over the posted prime lending rate at First
Security Bank of Utah,  N.A.,  as of February 15, 1995,  and adjusted each three
months thereafter. Prior to the closing of the Share Exchange Agreement, Midwest
borrowed a total of $100,000  against the line of credit.  Pursuant to the terms
and  conditions  of the Share  Exchange  Agreement,  the line of credit from the
Company became  subordinate to Midwest's  existing  credit line of Three Hundred
Fifty Thousand Dollars ($350,000).  The line of credit was secured by the assets
and equipment of Midwest.  The Company entered into an employment agreement with
RD Wolff, dated as of June 13, 1995 (the "Wolff Employment  Agreement"),  and an
operating agreement between Midwest and RD Wolff, dated as of June 13, 1995 (the
"Operating Agreement"). Pursuant to the Wolff Employment Agreement, RD Wolff was
to serve as CEO of the  Company  and  Midwest,  and RD Wolff was to receive  One
Hundred Twenty-Five  Thousand Dollars ($125,000) per year in compensation during
the term of the Wolff Employment Agreement.  Furthermore,  during the first five
quarters of the Wolff Employment Agreement, beginning July 1, 1995, RD Wolff was
to receive Twenty-Five Thousand Dollars ($25,000) in additional compensation per
quarter. In addition to his base salary, RD Wolff was to receive an annual bonus
computed on the after tax net earnings of Midwest, as follows:  (a) five percent
(5%) of the first Two Hundred  Thousand  Dollars  ($200,000)  in net earnings of
Midwest,  (b)  seven  percent  (7%) of the next  Two  Hundred  Thousand  Dollars
($200,000), and (c) ten percent (10%) of all amounts over the first Four Hundred
Thousand  Dollars  ($400,000)  in net  earnings  of  Midwest.  RD Wolff was also
entitled to participate in the Company's  health and benefit plans.  Pursuant to
the terms of the Operating  Agreement  and for services  performed in connection
with the  consummation  of the Share  Exchange  Agreement,  the Company  paid as
compensation  to each of R. Dee  Erickson  and E. Jay  Sheen,  both of whom were
directors  of the  Company at the time of the  execution  of the Share  Exchange
Agreement, 38,000 shares each of the Company's Common Stock and One Hundred Four
Thousand Dollars ($104,000) in cash.                                            

         On July  18,  1995,  Anne  Morgan  and  Victoria  Morgan,  at the  time
shareholders of the Company and the adult daughters of John H. Morgan,  Jr. ("JH
Morgan")  and  Daisy  R.  Morgan  ("DR  Morgan"),   both  former  directors  and
shareholders of the Company,  filed a shareholders  derivative action against R.
Dee  Erickson  ("Erickson"),  E. Jay  Sheen  ("Sheen"),  Lyle D.  Hurd  ("Hurd")
(Messrs.  Erickson,  Sheen  and Hurd  were  three of the five  directors  of the
Company at the time the suit was filed,  with JH Morgan and DR Morgan  being the
remaining two directors),  the Company,  Midwest,  RD Wolff and JJ Wolff, in the
United  States  District  Court for the Central  District  of Utah,  Case Number
2:95CV661J,  captioned  as Anne  Morgan et al. v. R. Dee  Erickson,  et al. (the
"First Federal Action").  The complainants alleged,  among other things that the
defendants had violated proxy  solicitation  rules,  violated  disclosure  rules
under the Exchange Act of 1934, breached their fiduciary duties to the Company's
shareholders,  breached professional duties,  committed fraud, wasted and looted
the Company's  assets,  converted  Company  property,  engaged in  self-dealing,
mismanaged the Company and breached their duty of loyalty. The complaint sought,
among other things, the rescission of the Share Exchange Agreement.             

         The terms of the Letter of Intent between IMCC and the Company required
that the Company rescind the Share Exchange Agreement. For the foregoing reason,
Midwest and the Company entered into a Splitoff Agreement, dated as of April 25,
1996 (the  "Splitoff  Agreement"),  whereby  the Share  Exchange  Agreement  was
rescinded.  A copy of the Splitoff Agreement is attached as Exhibit 10.36 to the
Company's Form 10-KSB for the fiscal year ending  December 31, 1995,  filed with
the SEC on January 8, 1997. Pursuant to the terms of the Splitoff Agreement, URI
transferred all of the  outstanding  shares of Midwest stock held by the Company
to the Wolffs in exchange  for the 590,000  shares of URI stock then held by the
Wolffs which transfer was  accomplished  tax free in accordance with Section 355
of the Code.  Furthermore,  the Share Exchange  Agreement,  the Wolff Employment
Agreement and the Operating  Agreement were canceled.  RD Wolff ceased to be the
President of URI. Midwest received a net intercompany  transfer of approximately
Three Hundred  Sixteen  Thousand Nine Hundred  Seventy-Four  Dollars  ($316,974)
through March 31, 1996, which Midwest retained.  Furthermore, the parties to the
Splitoff  Agreement  agreed  that in the event  intercompany  transfers  for the
period  from July 1, 1995  through  March 31,  1996  were:  (i) less than  Three
Hundred Sixteen Thousand Nine Hundred Seventy-Four Dollars ($316,974),  then URI

6 

10KSB
7th Page of 42
TOC
1st
Previous
Next
↓Bottom
Just 7th
would pay  Midwest  the  difference;  or (ii) more than  Three  Hundred  Sixteen
Thousand Nine Hundred  Seventy-Four  Dollars ($316,974),  then Midwest would pay
URI the difference.                                                             

         Pursuant to the Splitoff Agreement, URI agreed to indemnify Midwest and
the  Wolffs  and  their  respective  agents,  employees,   attorneys,  officers,
directors  and assigns from any and all claims,  causes of action,  liabilities,
damages, costs, expenses and attorneys' fees arising from or relating in any way
to URI or the Share Exchange Agreement. This indemnification provision would not
apply to acts of fraud,  gross negligence or willful misconduct by RD Wolff. The
Wolffs and Midwest agreed to indemnify URI and its respective agents, employees,
attorneys, officers, directors,  successors and assigns from any and all claims,
causes of action, liabilities and damages arising from or relating in any way to
the Splitoff  Agreement,  which  indemnification  obligation is limited to Three
Hundred  Twelve  Thousand  Dollars  ($312,000).  Within 30 days from the date of
execution of the Splitoff Agreement, the Company's accountants were to calculate
the federal,  state and local income taxes  attributable  to Midwest's  business
operations  (excluding  any impact of salary  payable or paid to RD Wolff or any
intercompany  charges  to the  Company  for rent,  overhead  and  administrative
expenses) for the period commencing June 1, 1995 and terminating on December 31,
1995.  Such  taxes  were to be  determined  on the basis as if the  Company  and
Midwest  were not filing a  consolidated  tax return for the same period or part
thereof  (whether  or not a  consolidated  return is filed).  The amount of such
taxes is to be considered  an  intercompany  receivable  between the Company and
Midwest. Pursuant to the terms of the Splitoff Agreement,  Midwest agreed to pay
such tax amount to the  Company in twelve  installments.  Simultaneous  with the
execution  of the  Splitoff  Agreement,  Midwest paid the Company the sum of Ten
Thousand  Dollars  ($10,000)  as an initial  tax  payment.  The  balance due the
Company is to be paid in eleven additional equal monthly installments, with each
such  installment  due  on  the  first  day  of  each  month  until  all  eleven
installments   have  been  paid  in  full.  The  first  of  the  eleven  monthly
installments  is due and  payable  on the first day of the month  following  the
determination  of the  taxes  owed by  Midwest  to the  Company.  The  Company's
accountants  have determined that Midwest owes the Company  Forty-Five  Thousand
Four  Hundred  Sixty-Nine  Dollars  ($45,469)  in  taxes,  of which  Thirty-Five
Thousand Four Hundred  Sixty-Nine  Dollars  ($35,469)  remains due. Midwest also
owes the  Company  the  additional  amount of  Fifty-Four  Thousand  One Hundred
Eighty-Four Dollars and 61/100  ($54,184.61)  related to Ladd Eldredge's salary,
audit and other  expenses.  Midwest  has  disputed  the  amounts  claimed by the
Company as owed by Midwest. The Company and Midwest have had ongoing discussions
regarding resolving this matter.                                                

(b)      Business of Company.                                                   

         URI is a real property  development  corporation.  The Company directly
owns  approximately  396  acres  of  undeveloped  land  in  St.  George,   Utah,
approximately  350 acres of which are  developable on which it conducts its real
property development  business,  primarily through its wholly-owned  subsidiary,
Tonaquint,  Inc.  ("Tonaquint").  Most of the  land is near the  Southgate  golf
course.                                                                         

         The  Company's  undeveloped  real  property is  adjacent to  Interstate
Highway 15, a major  traffic route from Salt Lake City to Las Vegas and Southern
California.  URI's  real  estate  development  activities  in recent  years have
concentrated   on  subdividing   and  selling   improved  lots  for  residential
construction, as the financial condition of the Company and the St. George, Utah
real estate market have  permitted.  The Company's  lands include premium priced
hillside  view lots,  as well as  lower-priced  lots.  In addition,  the Company
pursues  commercial  real estate  development  of some of its  undeveloped  real
property.                                                                       

         The Company also  receives  revenues  from its  ownership of overriding
royalty  interests in producing  oil and gas leases in Utah and Wyoming,  dating
from the  Company's  historic  business of  acquiring  and selling  oil, gas and
mineral leases.                                                                 

     The Company has invested Two Hundred Fifty Thousand  Dollars  ($250,000) in
China Peregrine Food Corporation,  a Delaware corporation traded publicly on the
NASDAQ bulletin board system ("China  Peregrine").  China Peregrine  distributes
dairy and  non-dairy  food  products  in several  major  cities in the  People's
Republic of China. The Company  acquired 88,333 shares of convertible  preferred
stock on November 13, 1998. The Company is now  converting  its preferred  stock
into common stock and selling it on the public market. The Company's  investment
in  China  Peregrine  is  substantially  less  than  ten  percent  (10%)  of the
outstanding stock of China Peregrine.                                           

7 

10KSB
8th Page of 42
TOC
1st
Previous
Next
↓Bottom
Just 8th
Real Property Development Activities                                            

         Through  year end 1998,  the  Company  had  sales in the  amount of Two
Hundred  Thirty-Four  Thousand  Seven  Hundred  Eighteen  Dollars  ($234,718) as
compared  to land  sales in the  amount of Five  Hundred  Thirty  Thousand  Five
Hundred  Fifty-Three  Dollars  ($530,553)  in 1997.                             

         In July of 1992,  Tonaquint  executed a Sale and Option  Agreement with
Kay H. Traveler (the "Sale and Option  Agreement"),  pursuant to which Tonaquint
was to sell 14  acres  to Mr.  Traveler,  for a total  purchase  price  of Three
Hundred  Fifty  Thousand  Dollars  ($350,000)   (Twenty-Five   Thousand  Dollars
($25,000) per acre, and grant Mr. Traveler an option to acquire an additional 40
acres at option exercise prices ranging from Twenty Thousand  Dollars  ($20,000)
to Fifty Thousand  Dollars  ($50,000 per acre),  exercisable over five years, so
long as minimum option exercises  occurred each year. Mr. Traveler's  inspection
of the 14 acres disclosed adverse soil conditions, resulting in the execution of
an  Addendum to the Sale and Option  Agreement  by the parties in March of 1993.
Mr.  Traveler  was  granted  an option to  acquire a total of 56 acres at prices
ranging Twenty Thousand Dollars  ($20,000) to Fifty Thousand  Dollars  ($50,000)
per acre. The Kay Traveler Sale and Option  Agreement  resulted in 1998 sales of
4.11  acres  for the  sum of Two  Hundred  Thirty-Four  Thousand  Seven  Hundred
Eighteen  ($234,718)  and 1997 sales of 6.67 acres for the sum of Three  Hundred
Seventeen Thousand Sixty-Six Dollars ($317,066) and 1996 sales of 2.11 acres for
the sum of One Hundred Six Thousand Four Hundred Thirty-Two Dollars  ($106,432).
From July 1992 through December 31, 1998, Kay Traveler  exercised his option for
a  cumulative  total of 44.79 of the 75.98 acres  available,  for the sum of One
Million Five Hundred Fifty Thousand One Hundred Fifty-Six Dollars  ($1,550,156).
As of December  31, 1998  approximately  31.2 acres  remain  under option to Mr.
Traveler at prices ranging from Twenty-Two  Thousand Dollars  ($22,000) to Fifty
Thousand Dollars ($50,000) per acre.                                            

         During the  latter  half of 1994,  the  Company  began its  development
efforts for Southgate Phase III, consisting of a total of 37 acres of land above
the Southgate golf course, suitable for view-lot residential  construction.  The
land to be developed is on the hillside  directly to the south of the  Southgate
golf course and directly to the west of Interstate 15. The sloping topography of
the land  requires  that the  Hillside  Ordinance  Committee  of the St.  George
Planning and Zoning Commission approve the Company's planned  development of the
acreage.  In 1998, The Company received approval and has commenced  construction
for the development of all 37 acres for a total of 76 lots. The approval process
took longer than originally anticipated,  due in part to the restrictions of the
hillside ordinance and the increasing political pressure to restrict real estate
development  generally  in St.  George,  which  has  resulted  in an  increasing
regulatory burden on real estate development. To finance the construction costs,
the Company secured  development  financing from the State Bank of Southern Utah
in the amount of One Hundred Sixty-Five Thousand Dollars ($165,000) during March
1999.  John Fife has  personally  guaranteed  the  repayment of such  financing.
Currently, the Company is excavating,  building roads, bringing utilities to the
property,  constructing curbs and gutters,  and selling the improved lots in the
first phase. To date, the Company has received earnest money deposits  reserving
three of the six lots in the first phase of development.                        

         In 1998, the Company  received  preliminary  approval from the Planning
and  Zoning  Commission  and the  city of St.  George  for  the  development  of
Southgate  Village,  a 67 unit,  9.6 acre  townhouse  community  located  at the
northwest of the  Southgate  golf course and adjacent to the proposed  Southgate
Valley  subdivision.  The townhomes range from approximately  1,400-1,800 square
feet. The Company is preparing construction drawings, soils reports,  excavation
plans,  and bids. In the fourth  quarter of 1998, the City of St. George granted
the Company an excavation  permit,  and in the first quarter of 1999 the Company
excavated  the entire 9.6 acres.  Currently,  the  Company is waiting to receive
final approval on its revised  construction  drawings;  after which, the Company
expects to start  construction  on the first  phase of 20 lots at the end of the
first quarter 1999.                                                             
8 

10KSB
9th Page of 42
TOC
1st
Previous
Next
↓Bottom
Just 9th
Real  Property  Development,   Industry  Overview,  Government  Regulation,  and
Competition                                                                     

         The real estate  development  industry  in general and the  residential
real estate development industry in particular is a high risk industry,  subject
to changes in general  economic  conditions,  fluctuating  interest  rates,  and
changing demand for the types of developments  being  considered.  Volatility in
local and regional land use demands,  as well as changing  supply and demand for
the  specific  uses for  which the real  property  is being  developed  are also
factors  in  assessing  the  relative  risks of the  business.  The  demand  for
residential  real  estate  development  is  particularly  sensitive  to changing
interest rates and shifting  demographics.  Both of these factors  affecting the
demand for residential housing are highly  unpredictable over both the short and
long-term.                                                                      

         Real  estate  development  is  a  government  regulated  industry.  The
regulation of real estate  development is often carried out in an  unpredictable
fashion, reflective of both political and rational considerations. Regulation is
carried on by municipal,  county, state and federal agencies,  but municipal and
county  governments  have the greatest  regulatory  impact.  St. George City, in
which URI  operates,  has been  adopting  increasingly  restrictive  regulations
associated  with  development   activities,   including  the  adoption  of  more
restrictive  building  codes  and  ordinances,  greater  emphasis  on  land  use
planning,   pressure  to  increase   the  number  of  low  density   residential
developments,  and heightened public concern aimed at limiting  development as a
means to control growth.  Development in some areas close to the Company's lands
may be limited by governmental  environmental protection activities.  Government
regulation  may  have  an  impact  on  the  viability  of  current  real  estate
development by the Company.                                                     

         The real property development  industry is highly competitive.  Several
development  companies  with  interests  in St.  George  have  longer  operating
histories,  greater financial  strength and more experience in the industry than
does  the  Company.  The  Company's  development  activities  historically  have
represented  less  than  five  percent  (5%) of total  real  estate  development
activity in the area in and around St. George,  and, in management's  view, that
percentage  is likely to decrease in the near term given the increase in overall
development  activities in the area.  The  perceived  strength of the St. George
real estate  market has recently  attracted  many more  developers  to the area,
increasing the competition for the Company.                                     

Partnerships                                                                    

         In 1998,  the  Company  dissolved  the  following  general  and limited
partnerships:  Southgate  Resort General  Partnership,  Southgate  Plaza General
Partnership,  URI-MGO Health Venture  General  Partnership,  Service  Station #2
Limited  Partnership,  Southgate  Resort Limited  Partnership,  Southgate  Plaza
Limited  Partnership,  Country  Club  Partnership,  and  Tonaquint  Indian Hills
Limited Partnership.                                                            

         In August 1998, the Company dissolved  Southgate Resort, a Utah general
partnership,  and Southgate  Plaza,  a Utah general  partnership,  pursuant to a
Partition Agreement among the partners of those partnerships (the "Parties). The
Parties included Southgate Plaza Limited  Partnership,  Southgate Resort Limited
Partnership,  Vera R. Hughes Grandchildren Trust ("Hughes Trust"), and Jacquetta
Brown  Ogden  Properties,  L.C.  ("Brown  Properties").  The  Parties  agreed to
distribute all of the assets and liabilities of the partnerships to the Parties,
and resolve any and all disputes existing among them. Specifically,  the Parties
caused  Southgate Resort to transfer the real property owned by it to the Hughes
Trust  (approximately  0.606 acres).  The Parties also caused Southgate Plaza to
transfer  its  real   properties   to  Southgate   Plaza   Limited   Partnership
(approximately   2.21  acres)  (52.5%  owned  by  the  Company),   Hughes  Trust
(approximately 2.2 acres), and Brown Properties  (approximately 2.02 acres). The
Partition  Agreement  further required that Southgate Plaza transfer to Soutgate
Plaza Limited  Partnership,  Hughes Trust,  and Brown Properties,  as tenants in
common,  approximately  .4524 acres of real  property.  The Parties also assumed
equal shares of the liabilities of the  partnerships.  Furthermore,  the Parties
agreed to pay their pro                                                         

9 

10KSB
10th Page of 42
TOC
1st
Previous
Next
↓Bottom
Just 10th
rata shares of certain special  improvement  district payments  allocated to the
transferred  properties  payable to the city of St.  George.  In  addition,  the
Parties  released all causes of action  and/or  claims each may have had against
each  other  with  respect  to  Southgate  Resort  and  Southgate  Plaza,  their
properties,  activities, and management. As a result of the Partition Agreement,
the Company  dissolved  Southgate  Resort Limited  Partnership,  which was owned
entirely by the Company.                                                        

         On December 15,  1998,  the Company,  Tonaquint,  Inc., a  wholly-owned
subsidiary  of the Company  ("Tonaquint"),  John H. Morgan,  Jr. ("JH  Morgan"),
Daisy R. Morgan ("DR Morgan"),  Morgan Gas & Oil Company ("MGO"),  the Estate of
John Morgan Sr. (the "Morgan Estate"),  and the John Morgan Sheltered Trust (the
"Morgan  Sheltered  Trust")  (collectively  the "Morgan Parties") entered into a
Partnership  Settlement Agreement ("PS Agreement") pursuant to which the Company
and related entities resolved certain disputes and  controversies  involving the
Company,  Tonaquint, JH Morgan, DR Morgan, MGO, the Morgan Estate and the Morgan
Sheltered Trust.  Pursuant to the terms of the PS Agreement,  the Morgan Parties
transferred  to the Company all of their  interests in URI-MGO  Health  Venture,
Service Station #2 Limited  Partnership,  Country Club Partnership and Tonaquint
Indian  Hills  Limited  Partnership  (collectively,   the  "Partnerships").   In
exchange, the Company (i) delivered a promissory note to MGO for Eighty Thousand
Four  Hundred  Ninety-One  Dollars  ($80,491)  bearing an interest  rate of nine
percent (9%) per annum with a maturity of two years, or upon the sale of certain
Company properties  securing the note; (ii) transferred to MGO 137,102 shares of
MGO stock representing all of the MGO stock owned by the Company; (iii) assigned
to MGO  33.3334%  of the net  proceeds  from the  future  sale of  certain  real
property owned by the Company;  (iv) delivered to the Morgan  Sheltered  Trust a
promissory  note for Twenty-Two  Thousand Six Hundred Ninety Dollars  ($22,690);
(v) assigned to the Morgan  Sheltered Trust 14.663% of the net proceeds from the
future sale of certain real property  owned by the Company;  and (vi) paid to JH
Morgan the sum of Seven  Thousand  Dollars  ($7,000).  In  addition,  the Morgan
Estate paid the Company Seven Thousand One Hundred Twenty-Four Dollars ($7,124).
The Morgan  Parties also agreed to cooperate  with the Company in winding up the
Partnerships.  The parties  also agreed to release each other from all causes of
action  and  claims  arising  from or related  to the  matters  described  in PS
Agreement.                                                                      

         Pursuant to the PS Agreement,  the Company  assumed the liabilities and
clean-up  costs  associated  with the gas  station  previously  owned by Service
Station  #2  Limited  Partnership.  In 1989,  The  Service  Station  #2  Limited
Partnership   replaced  its  gasoline   underground  storage  tanks,  which  the
partnership  was  informed  had been  leaking.  From  November  of 1992  through
December 31, 1998, the partnership spent  approximately Three Hundred Forty-Five
Thousand  Dollars  ($345,000) on efforts to remediate the soil  contamination by
gasoline  and other  hydrocarbons  which is  alleged to have  occurred  from the
operation of the service  station.  On or about April 16, 1997, the  Partnership
sold the service  station  property but retained the  obligation to complete the
remediation of the property. The Company has hired consultants and engineers and
is following their recommendations to remediate the property as required by Utah
law and regulations.                                                            

         As a result of the PS Agreement,  the Company owned one hundred percent
(100%) of the interests in the  Partnerships  with the exception of Country Club
Partnership and Tonaquint Indian Hills  Partnership,  in which the Company owned
96.64% and 85.57% of the  interests,  respectively.  Prior to December 31, 1998,
the Company  purchased the remaining 3.36% interests in Country Club Partnership
from the remaining  partners for Five Hundred Four and 59/100 Dollars ($504.59),
which  represented  the  balance of such  partners  capital  accounts.  Prior to
December 31, 1998,  Tonaquint Indian Hills Partnership  terminated in accordance
with its terms. As part of the termination,  the Company caused Tonaquint Indian
Hills Partnership to distribute its assets to its partners.                     

Overriding Royalties in Oil and Gas Leases                                      

         URI has overriding  royalty interests in oil and gas properties held by
various  other  parties.  All  revenues  from  the  Company's  interests  in the

10

10KSB
11th Page of 42
TOC
1st
Previous
Next
↓Bottom
Just 11th
properties  have been received in cash.  The Company  received  royalties in the
amount of One Hundred  Ninety-Four  Thousand Eight Hundred  Forty-Three  Dollars
($194,843) in 1998 as compared to One Hundred Seventy-Five Thousand Five Hundred
Seventy-Two  Dollars  ($176,572) in 1997. URI has not engaged in the acquisition
and sale of oil and gas leases for many years and has no  intention  of doing so
in the future,  nor does it have facilities or means to perform the exploration,
development  and  operation of oil and gas wells on  properties  in which it has
interests.  Mineral or oil and gas  exploration and development is undertaken by
third  parties.  If production is realized on any properties in which URI has an
interest,  it  receives  a share of gross  production  revenues  based  upon the
percentage overriding royalty interest it has retained.                         

China Peregrine                                                                 

         The Company has invested Two Hundred Fifty Thousand Dollars  ($250,000)
in China Peregrine Food Corporation,  a Delaware  corporation traded publicly on
the  NASDAQ   bulletin  board  system  ("China   Peregrine").   China  Peregrine
distributes  dairy and  non-dairy  food  products in several major cities in the
People's  Republic of China.  The Company  closed on the  acquisition  of 88,333
shares of convertible  preferred  stock on November 13, 1998. The Company is now
converting its preferred  stock into common stock and selling it into the public
market.                                                                         

Employees                                                                       

         In 1998,  the Company  employed two full-time  employees.  In 1997, the
Company employed three full-time employees and no part-time employees.  Pursuant
to the Stock  Purchase  Agreement,  the  Company and John Fife  entered  into an
employment  agreement,  dated as of February 27, 1998, but commencing as of July
13, 1996,  which provided for the employment of Mr. Fife as President and CEO of
the Company with an annual salary of One Hundred  Ninety-Five  Thousand  Dollars
($195,000).  In 1998,  the Board voted  unanimously  to have Mr. Fife assume the
responsibilities  of CFO.  The Company and  Tonaquint,  Inc.,  its wholly  owned
subsidiary,  currently  employ Gerry Brown on a full-time  basis,  to act as the
Vice  President  of  the  Company,  where  he  provides  real  estate  planning,
development and sales services for the Company, and Tonaquint, Inc. Mr. Brown is
currently  the  President  of  Tonaquint,  Inc.,  where he  assists  in land use
planning,  negotiating sales and financing  arrangements,  obtaining  government
approvals, arranging for construction contracts, and supervising the performance
of engineering services as have been required. During 1998, the Company replaced
Ladd Eldredge who had been acting as the Company's  Secretary,  Treasurer,  CFO,
and office manager.  Mr. Eldredge has agreed to provide  services to the Company
on an hourly  basis.  The Company  hired a part-time  bookkeeper,  and appointed
Jonathan  K.  Hansen  as  Secretary.  As  noted  above,  Mr.  Fife  assumed  the
responsibilities  of CFO.  No  employees  are party to a  collective  bargaining
agreement with the Company.                                                     

ITEM 2.   DESCRIPTION OF PROPERTY                             

St. George Properties                                                           

         The  Company  intends  to  develop  its  property,   primarily  through
subdividing and selling improved lots for residential construction.  The Company
is also engaged in selling undeveloped parcels to other developers. Furthermore,
management  believes  that  approximately  25 acres of the  Company's  lands are
suitable for commercial development.                                            

Oil & Gas Interests                                                             

         The  Company  has  overriding  royalty  interests  in oil and gas wells
producing  primarily in the Unitah  Basin,  Unitah  County,  Utah,  and Sublette
County,  Wyoming.  The Company owns overriding royalty interests of from .025 of
1% to 3% of production.                                                         

         The Company was not the  original  lessee on several of the oil and gas
property leases. The original lessees were affiliates of, or related parties to,
the Company. As to those lessees, the Company's royalty interest was obtained by
assignment from the original  lessees.  In some cases,  the assignments have not
been  recorded.  The  Company  has no  unamortized  investment  in oil  and  gas
properties at December 31, 1998.                                                

11

10KSB
12th Page of 42
TOC
1st
Previous
Next
↓Bottom
Just 12th
         Many oil, gas and hydrocarbon leases issued by the State of Utah or the
United  States are issued for definite  periods of time,  often from five to ten
years.  If, at the end of the lease period,  production has been realized and is
continuing on the property subject to the lease, the term of the lease continues
for the period of commercial  production.  Thus, the continuing  interest of the
Company in state and federal  leases is dependent  upon the ability of the third
party operators to develop  significant  production on the properties subject to
those leases. The expense of compliance with environmental  regulations on lands
in which the Company may have overriding  royalty  interests is not borne by the
Company.                                                                        

         Through its wholly-owned subsidiary, New Mercur Gold Exploration, Inc.,
the Company  holds a fifty  percent  (50%) joint  interest in ten patented  lode
mining claims  covering  approximately  137 acres in Tooele  County,  Utah.  The
claims have been leased to Barrick Mercur Gold Mines for a nominal amount. There
is presently no  production  on the  properties.  Development  of the  Company's
mineral  properties may be affected by federal and state regulation  relating to
the protection of the  environment.  Such regulation may prevent the development
of properties  owned by the Company,  or those in which it retains an overriding
royalty  interest.  The  Company  has no value for this  asset  recorded  in the
financial statements at December 31, 1998.                                      

Office Space                                                                    

         URI leases an office for its headquarters at 297 W. Hilton Drive, Suite
#4, St. George, Utah. John Fife,  President,  CEO, CFO and Chairman of the Board
of the Company,  maintains  his office at 360 E.  Randolph  Street,  Suite 2402,
Chicago,  Illinois 60601, where he carries out the business of the Company along
with the  responsibilities  of other business ventures unrelated to the Company.
To date,  the Company  does not have an  agreement  with Mr. Fife for use of the
space  and has not  reimbursed  Mr.  Fife for the cost of the  office  space and
related  administrative  costs incurred on behalf of the Company and these costs
have not been accrued by the Company.                                           

ITEM 3.   LEGAL PROCEEDINGS                                   

Case Number 98 CV 0900576.                                                      

         On or about January 20, 1998,  Mark G. Jones, a former  director of the
Company  together  with his wholly owned  corporation  Mark  Technologies  Corp.
("MTC"),  a greater than ten percent (10%) shareholder of the Company filed suit
against the Company, John Fife,  President,  CEO, CFO, Chairman of the Board and
sole shareholder of IMCC, the majority shareholder of the Company, David Fife, a
director of the Company,  Lyle D. Hurd, Jr., a director of the Company and Gerry
Brown,  Vice President of the Company,  in the Third Judicial District Court, in
Salt Lake County, Utah, in a suit captioned, Mark G. Jones and Mark Technologies
Corp. vs. Utah Resources International, Inc., et al., case number 98 CV 0900576.
Mr. Jones, on behalf of himself and MTC,  claims that the defendants  violated a
certain settlement  agreement by and among the Company, R. Dee Erickson,  E. Jay
Sheen,  Lyle D. Hurd,  Jr., Mark G. Jones,  MTC, Anne Morgan,  Victoria  Morgan,
Inter-Mountain Capital Corporation,  John Fife and Robinson & Sheen, L.L.C. (the
"1996  Settlement  Agreement").  A copy  of the  1996  Settlement  Agreement  is
attached as Exhibit 10.38 to the Company's Form 10-KSB for Fiscal Year End 1995.

         Mr. Jones  alleges  that the  defendants  breached the 1996  Settlement
Agreement by: (i) failing to execute a written employment agreement between John
Fife and the  Company;  (ii)  failing  to use their  best  efforts to unwind the
Company's  contractual  relationship  with  Morgan  Gas  &  Oil  Company;  (iii)
recognizing the Company's  issuance of stock options to Messrs.  Hurd and Brown;
(iv) failing to reimburse Mr. Jones and MTC for all of the additional, remaining
costs which Mr. Jones  claimed were not  previously  reimbursed  pursuant to the
1996  Settlement  Agreement;  and (v)  failing  to pay Mr.  Jones  for  expenses
incurred by him while acting as a director of the Company. Mr. Jones and MTC are
seeking relief in the form of specific  performance of the Settlement  Agreement
and for  attorneys'  fees and costs  incident to the suit. The Company had moved
for summary dismissal of the complaint on the grounds that the issues complained
of are moot and without  factual or legal  basis.  On June 25,  1998,  the Court
stayed the Company's motion for summary dismissal pending  discovery.  On August
5, 1998, the Company received notice that the Court denied its motion to dismiss

12

10KSB
13th Page of 42
TOC
1st
Previous
Next
↓Bottom
Just 13th
ccertain  counts of the  complaint.  On August  19,  1998,  plaintiffs  filed an
amended  complaint.  The Company has filed an answer,  affirmative  defenses and
counterclaim to the amended  complaint.  The counterclaim  seeks damages against
Mr.  Jones and MTC for their  alleged  violation  of the  Settlement  Agreement.
Plaintiffs filed their Reply to the Company's  counterclaim on October 26, 1998.
In January,  the  defendants  filed a motion for summary  judgment on all of the
claims made by Mr. Jones and MTC. That motion is pending.  On April 1, 1999, the
Court  granted Mr. Jones and MTC leave to take  limited  discovery to respond to
defendants' motion for summary judgement. Mr. Jones and MTC have been ordered by
the Court to file their  response to  defendants'  motion for  summary  judgment
within fifteen days of completing the aforementioned limited discovery.         

Case Number 98 CV 0500904.                                                      

         On or about April 17,  1998,  MTC and Mark G. Jones filed a second suit
against the Company in the Fifth Judicial  District  Court,  Washington  County,
Utah,  captioned,  Mark Technologies Corp., and Mark G. Jones vs. Utah Resources
International, Inc., et al., case number 98 CV 0500904.                         

     The defendants in the suit are the Company,  John Fife, David Fife, Lyle D.
Hurd,  Jr.,  Gerry  Brown and Ladd  Eldredge,  Secretary  and  Treasurer  of the
Company.  Mr. Jones,  on behalf of himself and MTC,  claims that the  individual
defendants have, among other things: (i) wasted corporate assets; (ii) failed to
pursue corporate opportunities; (iii) mismanaged the Company; and (iv) failed to
follow  general rules of corporate  governance.  He is seeking  appointment of a
receiver  and the judicial  dissolution  of the  Company.  On May 29, 1998,  the
Company  filed a motion to strike the  complaint  as legally  insufficient.  The
Court has denied the Company's motion to strike. The Company filed a response to
the  complaint  on or about  August  21,  1998.  Mr.  Jones  and MTC have  filed
discovery related motions which are scheduled to be heard on April 21, 1999.    

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

         There  were no  matters  submitted  to a vote of the  security  holders
during the fourth quarter of the 1998 fiscal year covering this report.         

         The  Company  held its Annual  Meeting of the  Shareholders  on Monday,
March 8, 1999, at the Sheraton Four Points Hotel,  1450 South Hilton Drive,  St.
George,  Utah 84770. At the meeting the shareholders were asked to: (i) consider
and vote upon a proposal to amend the  Company's  Articles of  Incorporation  to
effect the reverse split of the Company's  issued and outstanding  common,  $.10
par value per share stock (the "Common  Stock"),  effective  Tuesday,  March 16,
1999 (the "Effective Date"), on the basis that each 1,000 shares of Common Stock
then outstanding will be converted into 1 share of common, $100.00 par value per
share stock (the "New Stock"),  with shareholders holding less than 1,000 shares
of  Common  Stock or any  increment  thereof  (after  being  given an  option to
purchase  additional  shares as needed to "round up" to the  equivalent of 1,000
shares at a purchase  price of $3.35 per share)  being paid cash in exchange for
their fractional  shares at a price of $3.35 per share of each share outstanding
immediately prior to such reverse split (the "Reverse  Split");  (ii) elect five
directors to hold office until the next annual meeting of  shareholders or until
their successors have been elected and qualified;  and (iii) transact such other
business as may properly come before the meeting and any adjournment thereof.   

13

10KSB
14th Page of 42
TOC
1st
Previous
Next
↓Bottom
Just 14th
1.       Proposal - Effect the Reverse Split.                                   

         To consider and vote upon a proposal to amend the Company's Articles of
Incorporation   to  effect  the  reverse  split  of  the  Company's  issued  and
outstanding  common,  $.10 par value  per  share  stock  (the  "Common  Stock"),
effective Tuesday, March 16, 1999 (the "Effective Date"), on the basis that each
1,000 shares of Common Stock then  outstanding will be converted into 1 share of
common,  $100.00 par value per share stock (the "New Stock"),  with shareholders
holding less than 1,000 shares of Common Stock or any increment  thereof  (after
being given an option to purchase  additional  shares as needed to "round up" to
the  equivalent  of 1,000  shares at a purchase  price of $3.35 per share) being
paid cash in exchange for their fractional  shares at a price of $3.35 per share
of each share outstanding  immediately prior to such reverse split (the "Reverse
Split").  A majority of the votes present were voted in favor of the proposal to
amend the Articles of  Incorporation to effect the Reverse Split. The votes were
cast as follows:                                                                

FOR          %            AGAINST          %             ABSTAIN            %   
---          -            -------          -             -------            -   
1,649,852   65.3          366,529         14.5            2,167            .08  

2.       Proposal - Election of Board of Directors                              

         The  Companies  nominees  for the Board of Directors  were:  John Fife,
David Fife, Lyle D. Hurd, Jr., Stuart B. Peterson and Gregory White.  All of the
nominees were elected to serve as directors of the Company.  The votes were cast
as follows:                                                                     

NOMINEE                     FOR           %           WITHHOLD            %     
-------                     ---           -           --------            -     
John M. Fife             1,715,609      81.6           385,573           18.4   
David Fife               1,715,609      81.6           385,573           18.4   
Lyle D. Hurd, Jr.        1,715,609      81.6           385,573           18.4   
Stuart B. Peterson       1,715,609      81.6           385,573           18.4   
Gregory White            1,715,609      81.6           385,573           18.4   

                                                               PART II

    ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         The Company's  Common Stock is listed on the OTC Bulletin  Board system
through the Automated  Quotation System,  under the symbol "UTRS." The following
table  sets  forth the  quarterly  closing  bid prices for 1997 and 1998 for the
Company's  Common  Stock  during the last two fiscal  years of the  Company,  as
reported by National Quotation Bureau, Inc. The quotations reflect  inter-dealer
prices,  without retail mark-up,  mark-down or commission,  and do not represent
actual transactions and have not been adjusted for stock dividends or splits.   

                1998                          1997
                ----                          ----
---------------- --------------- ---------------- ------------- ------------    
Period              High              Low            High          Low          
---------------- --------------- ---------------- ------------- ------------    
First Quarter       $.75             $.625          $.875        $.875          
---------------- --------------- ---------------- ------------- ------------    
Second Quarter      $.625            $.625          $.875        $.875          
---------------- --------------- ---------------- ------------- ------------    
Third Quarter       $.9375           $.50           $.875        $.875          
---------------- --------------- ---------------- ------------- ------------    
Fourth Quarter      $.75             $.75           $.875        $.25           
---------------- --------------- ---------------- ------------- ------------    

         Except for certain transactions including:  (i) the Split-Off Agreement
by  and  between  MidWest  Railroad  Construction  and  Maintenance  Corporation
("Midwest")  and the Company (the  "Split-Off  Agreement"),  wherein the Company
returned its Midwest shares to Robert D. Wolff and Judith J. Wolff (together the
"Wolffs") in exchange for the 590,000 shares of the Company's  stock held by the
Wolffs,  (ii) the 1996 Settlement  Agreement,  by and among the Company,  R. Dee
Erickson,  E.  Jay  Sheen,  Lyle D.  Hurd,  Mark  G.  Jones,  Mark  Technologies
Corporation, Anne Morgan, Victoria Morgan, IMCC, John Fife and Robinson & Sheen,
L.L.C.  (the "1996 Settlement  Agreement"),  wherein the Company redeemed 22,950
shares of Anne  Morgan's  URI stock and 17,602  shares of Victoria  Morgan's URI
stock, in cash, at $3.35 per share,  and (iii) the conclusion of the exchange of
10.6 acres of land and 34,150 shares of C.E.C.  Industries Corporation stock for
103,488 shares of the Company's stock;  the Company Proxy Statement.  (See "RISK
FACTORS/IMCC   Transaction  and  Settlement   Agreements.")  IMCC  has  made  no
additional  purchases  of the  Company's  stock,  since  July 3,  1996,  when it
acquired  1,275,912 shares of the Company's stock to obtain a majority ownership
interest  in the  Company.  Since July 3, 1996,  John  Fife,  individually,  has
acquired 51,193 shares of the Company's  stock. He purchased these shares during
the third and fourth  quarters of 1998 (2,500 shares on 8/6/98,  2,500 shares on
8/18/98,  2,500  shares on 9/14/98,  4,000  shares on 9/16/98,  2,000  shares on
9/21/98,  2,100 shares on 10/7/98 and 35,593  shares on  12/11/98).  The low and
high purchase prices were $.875 and $1.00,  respectively.  The average  purchase
prices for  the  third  and  fourth   quarters  of  1998  were  $.79  and  $.78,
respectively.  The  Company  did  declare  a $.10 cash  dividend  which was paid

14

10KSB
15th Page of 42
TOC
1st
Previous
Next
↓Bottom
Just 15th
January 26, 1996, to  shareholders of record January 12, 1996. A decision to pay
dividends in the future will depend upon the Company's  profitability,  need for
liquidity  and  other  financial  considerations.  There are  approximately  558
shareholders of the 2,522,808  outstanding shares of the Company's Common Stock.
Approximately  479  shareholders  hold less than 1,000  shares of the  Company's
Common Stock.                                                                   

ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION             

RESULTS OF OPERATIONS                                                           

         The Company had sales of Two Hundred Thirty-Four Thousand Seven Hundred
Eighteen Dollars ($234,718) in 1998 as compared with land sales of Five Hundred 
Thirty Thousand Five Hundred  Fifty-Three  Dollars ($530,553) in 1997. Income on
royalties from production  under oil and gas and mineral leases amounted to) One
Hundred  Ninety-Four  Thousand Eight Hundred Forty-Three Dollars ($194, 843) and
One Hundred Seventy-Six Thousand Five Hundred Seventy-Two Dollars ($176,572) for
1998 and 1997, respectively. The increase in royalties income is due to expanded
production.                                                                     

     Cost of land sold  declined to Sixteen  Thousand  Four Hundred  Ninety-Four
Dollars ($16,494) in 1998 from Two Hundred Seven Thousand Six Hundred Ninety-One
Dollars  ($207,691)  in 1997.  General and  administrative  expenses  were Eight
Hundred  Fifty Six Thousand  Three  Hundred  Thirty-Nine  ($856,339) in 1998, as
compared  to  One  Million  Two  Hundred   Twenty-Two   Thousand  Forty  Dollars
($1,222,040)  in 1997.  The Company had a net loss of Two Hundred Three Thousand
Five Hundred Twenty-Four Dollars ($203,524) in 1998 as compared to a net loss of
Four Hundred Forty-Four Thousand and Six Hundred Twenty-Three Dollars ($444,623)
for 1997.                                                                       

LIQUIDITY AND CAPITAL RESOURCES                                                 

         Cash  requirements  of URI are met by funds  provided  from  operations
consisting  of (a) the sale of  improved  lots  and  undeveloped  property;  (b)
royalty  income;  (c) interest  income earned on money held in interest  bearing
accounts,  (d) from proceeds from the sale of its Common Stock to IMCC,  and (e)
proceeds  from  investments  made by the  Company.  Certain  investments  of the
Company  and  expenses  paid were made from  proceeds  of loans  secured  by the
Company's real estate holdings.  The Company presently  anticipates that cash on
hand,  cash from land  sales,  royalties,  and  investments  will be the primary
sources for future additional  liquidity for the Company. It is anticipated that
the Company's  need for cash which  exceeds its present  resources and operating
revenues  will be met  through  real estate  secured  borrowings.  In 1998,  the
Company  executed a One Million Dollar  ($1,000,000)  Revolving Credit Note with
Mr. Layton Ott for purposes of having a source of funds for working  capital and
financing investment opportunities. The note bears interest at the rate of 12.5%
per  annum  payable  monthly  and has a  maturity  of one year with an option to
extend the term for an additional  six months at the Company's  discretion.  The
note is  secured  by  approximately  forty  acres of the  Company's  land in the
Southgate Hills III development.                                                

     The  Company  expects to be  required  to expend  funds for the  cleanup of
gasoline  which has  apparently  leaked from tanks owned by the Service  Station
Partnership,  which have been replaced.  Engineering  estimates of total cleanup
costs are not determinable due to uncertainties with respect to state compliance
requirements  and the, as yet,  unknown  extent of the  contamination.  In 1998,
approximately   $42,400  was  expended   toward  this  clean-up   operation  and
approximately  Three Hundred  Forty-Five  Thousand  Dollars  ($345,000) has been
expended by the Company to date.                                                

         In 1998,  the Company  drew down Two  Hundred  Fifty  Thousand  Dollars
($250,000)  from  the  Revolving   Credit  Note  to  acquire  88,333  shares  of
convertible  preferred  stock in China  Peregrine Food  Corporation,  a Delaware
corporation  publicly  traded  on  the  NASDAQ  bulletin  board  system  ("China
Peregrine").  China  Peregrine  is a  distributor  of dairy and  non-dairy  food
products in several major cities in the People's  Republic of China and owns and
operates two large dairy processing  plants in China. The convertible  preferred
stock pays an 8% dividend, which accrues and is payable quarterly in the form of
additional common stock. At the Company's discretion, the preferred stock may be
sold on the open market and  converted  to common stock at a 25% discount to the
stock's 10-day trailing                                                         

15

10KSB
16th Page of 42
TOC
1st
Previous
Next
↓Bottom
Just 16th
average bid price.  Through year end 1998,  the Company sold 14,000 shares for a
realized gain of Four Thousand Three Hundred Twenty-Four  Dollars ($4,324).  The
Company  is  actively  seeking  other   investment   opportunities  to  generate
additional revenues.                                                            

         No separate  financing  commitment has been obtained for the purpose of
completing the 1,000 to 1 reverse stock split.                                  

         The Company has no plans for major capital expenditures beyond the cost
of improving portions of its real property.                                     

         The Company's  business is influenced by interest rates,  inflation and
market  demands.  Its royalty  income from oil and gas  interests is affected by
fluctuations  in the price of oil and the related  decisions  to drill new wells
and the rates at which wells are pumped. The Company has no control over the oil
and gas field operations.                                                       

         As of July 3, 1996,  the Company  holds a promissory  note from IMCC in
the original principal amount of Three Million Six Hundred Thirty-Three Thousand
One  Hundred  Fifty-Nine  Dollars  ($3,633,159)  (the  "Note").  The Note  bears
interest at a rate equal to the short-term  applicable federal rate published by
the Internal Revenue Service in effect at the time of closing the Stock Purchase
Agreement,  and is adjusted on each  anniversary  of the Note to the  applicable
short-term federal rate in effect on such anniversary date. Interest on the Note
is to be paid  currently  in arrears  on each  anniversary  of the Note.  At the
closing,  IMCC paid the Company One Hundred Ninety-Seven  Thousand Eight Hundred
Seventy-Two  and 52/100  Dollars  ($197,872.52),  which amount  represented  the
present  value first year of interest due under the Note.  The principal and any
unpaid  interest  accrued under the Note is due and payable  August 1, 2001. The
Note is secured by the  1,275,912  shares  purchased  by IMCC as  evidenced by a
stock  pledge  agreement,  dated as of July 3, 1996 between IMCC and the Company
(the  "Stock  Pledge  Agreement").  Pursuant  to  a  separate  written  guaranty
agreement,  John Fife personally guaranteed payment of twenty-five percent (25%)
of all amounts due under the Note.                                              

STOCK PURCHASE AGREEMENT - JULY 3, 1996                                         

See Part I, Item 1.                                           

YEAR 2000                                                                       

         The Year 2000 issue is the result of computer programs using two digits
rather than four to define the  applicable  year.  Computer  programs  that have
date-sensitive  software may recognize a date using "00" as the year 1900 rather
than the year 2000.  This could  result in system  failures  or  miscalculations
leading to disruptions in a company's operations.                               

         The Company is assessing the readiness of its internal computer systems
and  expects to  implement  successfully  the systems  and  programming  changes
necessary to address the year 2000 issues. The Company does not believe that the
cost of such acttions  will have a material  effect on the results of operations
or financial condition. There can be no assurance,  however, that there will not
be a delay in, or increased costs  associated with, the  implementation  of such
changes.  Failure to complete  necessary changes could have an adverse effect on
future  results  of  operations  or  financial  condition.  The  Company is also
assessing  the possible  effects of the  Company's  operations  of the year 2000
readiness of significant customers,  suppliers,  and financial institutions with
which it transacts business. Failure by these significant customers,  suppliers,
and  financial  institutions  to addres year 2000  issues  could have a material
impact on the Company's operations and financial results. However, the potential
impact and related costs are not known at this time.                            

ITEM 7.   FINANCIAL STATEMENTS                                                  

         See Index to Financial  Statements  appearing on page F-1  of this Form
10-KSB Annual Report.                                                           

ITEM 8.   CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING AND
FINANCIAL DISCLOSURE                                        

         Tanner + Co. of Salt Lake City,  Utah has been the  independent  public
         accountant  for the  Company's  December  31,  1997 and 1998  financial
statements.                                                   

         During  the  Company's  two most  recent  fiscal  years,  there were no
         disagreements  between  the  Company  and Tanner + Co. on any matter of
         accounting principles or practices,  financial statement disclosure, or
         auditing scope or procedure  that, if not resolved to the  satisfaction
         of Tanner + Co.,  would have caused Tanner + Co. to make a reference to
         the subject matter of the  disagreement  in connection with its reports
on the Company's financial statements.                        

         The Company currently engages the independent public accounting firm of
Tanner + Co.                                                                    

16

10KSB
17th Page of 42
TOC
1st
Previous
Next
↓Bottom
Just 17th
PART III

         ITEM 9. DIRECTORS,  EXECUTIVE OFFICERS,  PROMOTERS AND CENTRAL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT             

         Certain  information  regarding the  Company's  directors and executive
         officers and their  backgrounds is set out below.  The Company has been
         provided with the information  from certain of the people listed below.
         In addition to the primary  affiliations  noted below, the nominees are
         active  in  various  cultural,   charitable,   professional  and  trade
associations and organizations.                               

CURRENT DIRECTORS                                             

                  DAVID  FIFE,  36,  was  appointed  a director  of the  Company
         effective  July 13, 1996 by the Muth Group pursuant to the terms of the
         1993 Settlement Agreement. Mr. Fife is currently the President and sole
         beneficial  owner of Home Equity Lending L.L.C. a mortgage  origination
         and finance company located in Salt Lake City, Utah. Prior to 1993, Mr.
         Fife was the  President  of Property  Tax  Assessor  Records  Corp.,  a
         Chicago based real estate tax consulting  company.  David Fife and John
Fife are brothers.                                            

                  JOHN FIFE,  38, was  appointed  as a director  of the  Company
         effective  July  13,  1996,  by the  Muth  Group  pursuant  to the 1993
         Settlement  Agreement.  Mr. Fife was  appointed the President and Chief
         Executive  Officer of the Company in July,  1996. He was named Chairman
         of the Board of the  Company on October  10,  1996.  He was named Chief
         Financial Officer of the Company in 1998. He is an investor and venture
         capitalist  and has pursued this course since July,  1990.  Mr. Fife is
         the President and sole shareholder of J.F. Venture, Inc. and IMCC, both
         of which are  investment  companies.  IMCC acquired a fifty and 5/10ths
         percent (50.5%) (majority  interest) in the Company on July 3, 1996. He
         also serves as  President of Property Tax  Assessor  Records  Corp.,  a
         Chicago-based real estate tax consulting company.  Mr. Fife also serves
         as a director of Hyatt Research  Corporation,  a magazine  publisher in
         Middlebury,  Vermont.  Prior to 1993,  Mr.  Fife held the  position  of
         Assistant Vice President of Continental Equity Capital Corp.  ("CECC"),
         a subsidiary of Continental  Bank. At CECC, he  negotiated,  structured
         and financed LBO's and later stage venture  capital  investments in the
         Mortgage  Banking,  Retail,  Cable and Cellular  Telephone  industries.
         Prior to CECC, Mr. Fife worked as a financial analyst in the commercial
         real estate  department  of Trammel Crow  Company.  Mr. Fife earned his
         M.B.A.  degree  from  Harvard in 1990 and his B.S.  in  statistics  and
         computer  science from Brigham Young  University in 1986. John Fife and
David Fife are brothers.                                      

                  LYLE D. HURD,  JR.,  61, is a director  of the Company and has
         performed services as Marketing  Consultant/Assistant to the President.
         He is president of Hurd Owens Hafen Inc., a publisher of magazines  and
         periodicals  located in St. George,  Utah, since December of 1990. Hurd
         Owens  Hafen Inc.  is the  publisher  of the St.  George  Magazine  and
         various other magazines and  periodicals.  For  approximately  16 years
         prior  to  December,  1990,  Mr.  Hurd  provided  marketing  consulting
         services to magazine  publishers  through  Hurd &  Associates,  Inc., a
         privately owned  consulting  firm. Mr. Hurd has served as a director of
the Company since May, 1993.                                  

                  STUART B. PETERSON,  37, was elected a director of the Company
         on December  11, 1997.  Mr.  Peterson has served as a director for C.R.
         England,  Inc., a Two Hundred Million Dollar,  privately owned trucking
         company based in Salt Lake City,  where he sets the prices for customer
         contracts and is responsible for the profitable  execution of sales and
         operating  activities from 1995 to the present. Mr. Peterson worked for
         Powder River,  Inc.,  from 1993 through 1994,  where he directed sales,
         marketing and distributions.  Mr. Peterson's  background  includes real
         estate investment banking experience with Trammell Crow Company,  where
         he participated in the securitization and sales of extensive commercial
         real estate  properties held by Trammell Crow  partnerships  throughout
         the United  States.  After  completing  the sale of a One Hundred Sixty
         Million  Dollar   commercial  real  estate   portfolio,   Mr.  Peterson
         supervised the properties,  and issued the quarterly  financial reports
         to  investors.  Mr.  Peterson  has also  performed  the  valuation  and

17

10KSB
18th Page of 42
TOC
1st
Previous
Next
↓Bottom
Just 18th
         marketing  of a Four  Million  Dollar  manufacturing  company  based in
         California, cumulating in a leveraged acquisition in 1994. Mr. Peterson
         received his M.B.A. degree from Harvard University in 1990 and his A.B.
in government from Harvard in 1986.                           

                  GREGORY  WHITE,  35, was  elected a director of the Company on
         December 11, 1997.  Mr. White has served as a consultant  for Shorebank
         Corporation from 1995 through the present, where he provided consulting
         services  to  emerging  entrepreneurs  to  expand  their  business  and
         evaluated equity and subordinated debt deals,  structured  investments,
         performed  management due diligence,  designed and prepared  management
         reports,  and worked  intensively with portfolio  companies to maximize
         performance.  Mr.  White acted as a fixed  income  salesman for Salomon
         Brothers  from 1993  through  1995,  where he sold a  variety  of fixed
         income  securities to  institutional  clients.  From 1990 to 1993,  Mr.
         White acted as an account  officer for  Continental  Bank. From 1986 to
         1988 he acted as an associate  research  analyst for The Rouse  Company
         and from  1985 to  1986,  he was an  assistant  field  officer  for The
         Enterprise Foundation.  Mr. White earned his M.B.A. degree from Harvard
         University  in 1990 and his B.A.  with  honors at Brown  University  in
1985.                                                         

EXECUTIVE OFFICERS FOR THE PERIOD COVERED BY THIS REPORT      

JOHN FIFE, see description above.                             

         GERRY T. BROWN, 57, was appointed Vice President of the Company July 3,
         1996.  He served as President of the Company from June 19, 1993 to July
         3, 1996.  Mr. Brown has been employed by the Company or its  affiliates
         and related  parties  since March,  1985.  He has provided  real estate
         planning,  development  and sales services for the Company,  Tonaquint,
         Inc., the Company's  wholly-owned  subsidiary,  and various  affiliated
         partnerships.  Mr. Brown is currently the President of Tonaquint,  Inc.
         Mr.  Brown has  assisted in land use  planning,  negotiating  sales and
         financing arrangements,  obtaining government approvals,  arranging for
         construction contracts,  and supervising the performance of engineering
         services  as have  been  required  in  connection  with  the  Company's
property development and sales.                               

         LADD WORTH  ELDREDGE,  44, was employed by the Company from July,  1994
         through June 30, 1998.  During his tenure,  he acted as the  Secretary,
         Treasurer,  CFO and office  manager for the Company.  Mr.  Eldredge was
         appointed Treasurer of the Company in November,  1994 and Secretary and
         CFO of the Company in November,  1995.  Prior to his  employment by the
         Company, Mr. Eldredge was the Chief Accountant at the Peppermill Resort
         in Mesquite, Nevada, a position he held for two years. Mr. Eldredge has
         a  Masters  of  Accountancy   degree  from  Southern  Utah  University.
         Currently,  Mr.  Eldredge works for the Company on an hourly basis,  as
needed.                                                       

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.      

                  Section 16(a) of the Securities  Exchange Act of 1934 requires
         the Company's  directors and  executive  officers,  and persons who own
         more than ten percent of a  registered  class of the  Company's  equity
         securities, to file with the Securities and Exchange Commission initial
         reports of  ownership  and  reports of changes in  ownership  of Common
         Stock and other equity securities of the Company.  Officers,  directors
         and  greater  than  ten  percent   shareholders  are  required  by  SEC
         regulation  to furnish  the Company  with  copies of all Section  16(a)
forms they file.                                              

                  To the  Company's  knowledge,  based  solely  on review of the
         copies  of  such   reports   furnished   to  the  Company  and  written
         representations that no other reports were required,  during the fiscal
         year ended  December 31, 1998,  the Company's  officers,  directors and
         greater than ten-percent beneficial owners complied with all applicable
Section 16(a) filing requirements.                            

18

10KSB
19th Page of 42
TOC
1st
Previous
Next
↓Bottom
Just 19th
ITEM 10.  EXECUTIVE COMPENSATION                              

EXECUTIVE OFFICERS                                                              

                                                        [Enlarge/Download Table]


------------------------ ------------------------------------------------------- ------------------------
                                                                                                         
Name                     Position                                                Age                     
John Fife                Chairman of the Board, Chief Executive Officer, Chief   38                      
                         Financial Officer, President and Director                                       
------------------------ ------------------------------------------------------- ------------------------

EXECUTIVE COMPENSATION                                                          

         The following table  summarizes the  compensation  for John Fife as the
President,  CEO,  and CFO of the Company in 1998.  No other  executive  officers
received  compensation  in excess of One  Hundred  Thousand  Dollars  ($100,000)
during the Fiscal year end 1998.                                                

                                                        [Enlarge/Download Table]

                                                           SUMMARY COMPENSATION TABLE                                

------------------- ----------------- ----------------- ----------------- ----------------- -------------------------
                                                                                                                     
Name and              Fiscal Year          Salary            Bonus            Shares         All Other Compensation  
Principal Position                                                          Underlying                               
                                                                              Options                                
------------------- ----------------- ----------------- ----------------- ----------------- -------------------------
John Fife, CEO,           1998         $195,000(1)(2)          -                 -                 $1,200(3)         
CFO, and President                                                                                                   
------------------- ----------------- ----------------- ----------------- ----------------- -------------------------

         (1)      Pursuant  to the terms of the Stock  Purchase  Agreement,  the
            Company and Mr. Fife entered into an employment agreement,  dated as
            of February  27, 1998,  but  commencing  as of July 13, 1996,  which
            provided  for the  employment  of Mr.  Fife as  President  and Chief
           Executive Officer of the Company with an annual salary of $195,000.
         (2)      To date,  all of Mr. Fife's  compensation  has been applied to
         interest on the IMCC Note or has been loaned back to the Company.
         (3)      Mr. Fife received  $1,200 in directors  fees for attending six
board meetings.                                         

No options were granted by the Company during 1998.           

No SARs were outstanding in 1998.                             

DIRECTORS COMPENSATION                                                          

         Each  director  receives  Two  Hundred  Dollars  ($200) per  director's
meeting. Also, directors who travel out of town to attend the meetings are, upon
Board approval, reimbursed for their travel, lodging and meals.                 

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT        

         The  following  table sets  forth,  as of  February  5,  1999,  certain
information regarding the beneficial ownership of the Company's Common Stock by:
(1) each of the current  directors  of the  Company;  (2) each of the  Company's
current named executive  officers;  and (3) the Company's directors and officers
as a group.  The  Company  had no  executive  officers,  other than John Fife as
President,  CEO,  and CFO who  earned  compensation  in  excess  of One  Hundred
Thousand Dollars ($100,000) during 1998.                                        

19

10KSB
20th Page of 42
TOC
1st
Previous
Next
↓Bottom
Just 20th
                                                        [Enlarge/Download Table]

==================================================================================================================

                                       UTAH RESOURCES INTERNATIONAL, INC.                                         
                        COMMON STOCK OWNERSHIP BY DIRECTORS AND NAMED EXECUTIVE OFFICERS                          
                                             AS OF FEBRUARY 5, 1998                                               

==================================================================================================================
                                                   Before Stock Split                After Stock Split(1)         
---- ---------------------- --------------- --------------- ----------------- ---------------- -------------------
                                                                                                                  
     Name of Beneficial     Position          Number of      Percentage of       Number of       Percentage of    
     Owner(2)                                   Shares        Outstanding         Shares       Outstanding Shares 
                                                                 Shares                                           
---- ---------------------- --------------- --------------- ----------------- ---------------- -------------------
     John Fife,               Director,       1,331,000           53%              1,331              53%         
     individually, and as     CEO, CFO,                                                                           
     sole shareholder of    President and                                                                         
     IMCC(3)                 Chairman of                                                                          
                              the Board                                                                           
---- ---------------------- --------------- --------------- ----------------- ---------------- -------------------
     David Fife                Director           0                0%                0                 0%         
---- ---------------------- --------------- --------------- ----------------- ---------------- -------------------
     Lyle d. Hurd, Jr.         Director         2,000             .08%               2                .08%        
---- ---------------------- --------------- --------------- ----------------- ---------------- -------------------
     Stuart B. Peterson        Director           0                0%                0                 0%         
---- ---------------------- --------------- --------------- ----------------- ---------------- -------------------
     Gregory White             Director           0                0%                0                 0%         
---- ---------------------- --------------- --------------- ----------------- ---------------- -------------------
     DIRECTORS AND           Directors &      1,333,000           53%              1,333              53%         
     OFFICERS AS A GROUP       Officer                                                                            
                             (5 persons)                                                                          
---- ---------------------- --------------- --------------- ----------------- ---------------- -------------------

  (1)  Assumes No Small-Lot  Shareholder  exercises the Round Up Option,  and no
remaining shareholder elects to purchase the Returned Shares.     
  (2)  In the  event  the  proposed  reverse  split is  effected,  each of these
       individuals  will be granted an option to purchase  additional  shares of
       URI's stock pursuant to the terms of the Returned Shares  Options.  For a
       more detailed  description of this Returned  Shares  Option,  see "ITEM 1
DESCRIPTION OF BUSINESS/Stock Purchase Agreement--July 3, 1996."  
  (3)  IMCC also holds a ten year option to purchase  150,000 or more additional
shares of stock, so as to maintain its 50.5% interest in URI.     

  ==============================================================================

PRINCIPAL STOCKHOLDERS                                                          

         The  following  table sets forth  information  as of  February 5, 1999,
regarding  each person other than directors of the Company who were known by the
Company to own  beneficially  more than 5% of the  outstanding  shares of Common
Stock.  Each person named has sole voting and  investment  power with respect to
the shares beneficially owned by such person.                                   

20

10KSB
21st Page of 42
TOC
1st
Previous
Next
↓Bottom
Just 21st
                                                        [Enlarge/Download Table]

==================================================================================================================
                                       UTAH RESOURCES INTERNATIONAL, INC.                                         
                                         5% OR GREATER BENEFICIAL OWNERS                                          
                                             AS OF FEBRUARY 5, 1999                                               
-------------------------------------- ------------------------------------- -------------------------------------
                                                                                                                  
Name and Address of Beneficial Owner      Number of Shares and Nature of          Percent of Company Shares       
                                                 Beneficial Owner                        Outstanding              
-------------------------------------- ------------------------------------- -------------------------------------
Inter-Mountain Capital Corporation                  1,276,000                               50.6%                 
-------------------------------------- ------------------------------------- -------------------------------------
Mark Technologies Corporation                        326,310                                 13%                  
-------------------------------------- ------------------------------------- -------------------------------------
(1)  John  Fife,  director,  President,  CEO and  Chairman  of the  Board of the                                  
     Company, is the sole shareholder of Inter-Mountain Capital Corporation.                                      
(2)  Mark G. Jones holds 100 shares individually and an additional 326,210 shares in his capacity as the          
     controlling shareholder of Mark Technologies Corporation.                                                    
==================================================================================================================

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                        

         There were no reportable related transactions during the past two years
in which the Company  conducted  business with  individuals  holding a direct or
indirect material interest in the Company.                                      

LEGAL REPRESENTATION OF the Company                                             

         During 1998,  the law firm of Wildman  Harrold  Allen & Dixon  provided
legal  representation  to the Company.  In 1998,  Wildman  Harrold Allen & Dixon
received approximately Two Hundred Seventy-Six Thousand Five Hundred Seventy-Six
Dollars ($276,576) in legal fees.                                               

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K                                      

(a)   Exhibits - See Exhibit Index below.                     

                                                        [Enlarge/Download Table]

                                                   INCORPORATED BY REFERENCE TO EXHIBIT INDEX                         

                                                      ANNUAL REPORT ON FORM 10-KSB - 1998                             
                                                       UTAH RESOURCE INTERNATIONAL, INC.                              
                                                              SEC FILE NO. 0-9791                                     

                                                                                                                      
---------------- ------------------------------------------- ---------------------------------------------------------
Exhibit No       Exhibit Description                         Location/Incorporation by Reference                      
---------------- ------------------------------------------- ---------------------------------------------------------
2.1              Share Exchange Agreement                    Incorporated by reference to Exhibit 3 to Form 8-K as    
                                                             filed July 20, 1995                                      
---------------- ------------------------------------------- ---------------------------------------------------------
2.2              Stock Purchase Agreement as filed           Incorporated by reference to Exhibit 3 to Form 8-K as    
                 September 9, 1996                           filed July 20, 1995                                      
---------------- ------------------------------------------- ---------------------------------------------------------
3.1              Articles of Incorporation of Utah           Incorporated by reference to Exhibit 1 to 13D as filed   
                 Resources International                     June 22, 1981                                            
---------------- ------------------------------------------- ---------------------------------------------------------

21

10KSB
22nd Page of 42
TOC
1st
Previous
Next
↓Bottom
Just 22nd
                                                        [Enlarge/Download Table]
                                                                                                                      
---------------- ------------------------------------------- ---------------------------------------------------------
3.2              Bylaws of Utah Resources International,     Incorporated by reference to Exhibit 3.B to the          
                 Inc.                                        Company's Registration statement on Form 10 as filed     
                                                             June 22, 1981                                            
---------------- ------------------------------------------- ---------------------------------------------------------
3.3              Amendment of Bylaws dated November 17,      Incorporated by reference to Exhibit 3.3 to the          
                 1992                                        Company's Annual Report of Form 10-KSB for the year      
                                                             ended December 31, 1992                                  
---------------- ------------------------------------------- ---------------------------------------------------------
3.4              Amendment of Bylaws- December , 1994        Incorporated by reference to Exhibit 3.4 to the          
                                                             Company's Annual Report of Form 10-KSB for the year      
                                                             ended December 31, 1994                                  
---------------- ------------------------------------------- ---------------------------------------------------------
3.5              Amendment  of  Articles of Incorporation    Incorporated by reference to Exhibit 3.5 to the adopted  
                                                             by shareholders January 26, 1995 Company's Annual Report 
                                                             of Form 10-KSB for the year ended December 31, 1994      
---------------- ------------------------------------------- ---------------------------------------------------------
3.6              Amendment to Articles of Incorporation      Filed herein                                             
                 adopted by shareholders March 8, 1999,                                                               
                 effective March 16, 1999                                                                             
---------------- ------------------------------------------- ---------------------------------------------------------
10.1             Share Exchange Agreement                    Incorporated by reference to Exhibit 3 to Form 8-K as    
                                                             filed July 20, 1995                                      
---------------- ------------------------------------------- ---------------------------------------------------------
10.2             Stock Purchase Agreement                    Incorporated by reference to Exhibit 1 to Form 13D-A as  
                                                             filed September 9, 1996                                  
---------------- ------------------------------------------- ---------------------------------------------------------
10.3             Split Off Agreement                         Incorporated by reference to Exhibit 10.36 to the        
                                                             Company's Annual Report on Form 10-KSB for the year      
                                                             ended December 31, 1995                                  
---------------- ------------------------------------------- ---------------------------------------------------------
10.4             Morgan Settlement Agreement                 Incorporated by reference to Exhibit 10.37 to the        
                                                             Company's Annual Report on Form 10-KSB for the year      
                                                             ended December 31, 1995                                  
---------------- ------------------------------------------- ---------------------------------------------------------
10.5             1996 Settlement Agreement                   Incorporated by reference to Exhibit 10.38 to the        
                                                             Company's Annual Report on Form 10-KSB for the year      
                                                             ended December 31, 1995                                  
---------------- ------------------------------------------- ---------------------------------------------------------
21               List of Subsidiaries                        Incorporated by reference to Exhibit 21 to the           
                                                             Company's Annual Report on Form 10-KSB for the year      
                                                             ended December 31, 1992                                  
---------------- ------------------------------------------- ---------------------------------------------------------
27               Financial Data Schedule                     Filed herein                                             
---------------- ------------------------------------------- ---------------------------------------------------------

** Confidential treatment has been granted with respect to information          
contained in this exhibit.                                                      

         (b)   Reports on Form 8-K -- The  Company  did not file any  reports on
      Form 8-K during the fiscal year ended December 31, 1998.

22

10KSB
23rd Page of 42
TOC
1st
Previous
Next
↓Bottom
Just 23rd
SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.                           

                                  Utah Resources International, Inc.

Date: 4/14/99                           By: /s/ John Fife                       
      -------                           ----------------------------------------
         John Fife
                        Its director, President,
                                  Chairman of the Board, CEO and CFO

Date: 4/14/99                           By: /s/ David Fife                      
      -------                           ----------------------------------------
                    David Fife, director

Date: 4/14/99                           By: /s/ Lyle D. Hurd, Jr.               
      -------                           ----------------------------------------
                           Lyle D. Hurd, Jr., director

Date: 4/14/99                           By: /s/ Stuart B. Peterson              
      -------                           ----------------------------------------
                            Stuart B. Peterson, director

Date: 4/14/99                           By: /s/ Gregory White                   
      -------                           ----------------------------------------
                       Gregory White, director

23

10KSB
24th Page of 42
TOC
1st
Previous
Next
↓Bottom
Just 24th
                            UTAH RESOURCES INTERNATIONAL, INC., AND SUBSIDIARIES
                                               Consolidated Financial Statements
                                                                        Contents
--------------------------------------------------------------------------------

                                                                            Page

Independent Auditors' Report                                                 F-1

Consolidated balance sheet, December 31, 1998                                F-2

Consolidated statements of operations for the years                             
ended December 31, 1998 and 1997                                             F-3

Consolidated statement of stockholders' equity for the                          
years ended December 31, 1998 and 1997                                       F-4

Consolidated statement of cash flows for the years ended                        
December 31, 1998 and 1997                                                   F-5

Notes to consolidated financial statements                                   F-7

Consolidated schedule of supplementary information                              
on oil and gas operations                                                   F-17

10KSB
25th Page of 42
TOC
1st
Previous
Next
↓Bottom
Just 25th
                                                    INDEPENDENT AUDITORS' REPORT

To the Board of Directors of                                                    
Utah Resources International, Inc., and Subsidiaries                            

We have audited the  accompanying  consolidated  balance sheet of Utah Resources
International,  Inc.,  and  subsidiaries  at  December  31, 1998 and the related
consolidated  statements of operations,  stockholders' equity and cash flows for
the two years  then  ended.  These  consolidated  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.         

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable  assurance about whether the  consolidated  financial  statements are
free of material  misstatement.  An audit includes  examining,  on a test basis,
evidence  supporting the amounts and disclosures in the  consolidated  financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.                                               

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the consolidated  financial position of Utah
Resources International,  Inc., and subsidiaries as of December 31, 1998 and the
results  of their  operations  and their  cash  flows  for the two  years  ended
December 31, 1998, in conformity with generally accepted accounting principles. 

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial statements taken as a whole. The supplementary information included in
the Schedule of Supplementary Information on oil and gas operations is presented
for the purposes of additional  analysis and is not a required part of the basic
financial  statements.   Such  information,   except  for  that  portion  marked
"unaudited," on which we express no opinion,  has been subjected to the auditing
procedures  applied in the audits of the basic financial  statements and, in our
opinion,  is fairly  stated in all  material  respects  in relation to the basic
financial statements taken as a whole.                                          

                                          TANNER + Co.

Salt Lake City, Utah                                                            
April 6, 1999                                                                   

                                                                             F-1

10KSB
26th Page of 42
TOC
1st
Previous
Next
↓Bottom
Just 26th
                                                        [Enlarge/Download Table]

                                                      UTAH RESOURCES INTERNATIONAL, INC., AND SUBSIDIARIES 
                                                                                Consolidated Balance Sheet 

                                                                                         December 31, 1998 
---------------------------------------------------------------------------------------------------------- 

              Assets                                                                                       
                                                                                                           
Cash and cash equivalents                                                               $           27,604 
Marketable securities                                                                              238,191 
Notes receivable                                                                                   271,326 

Real estate held for resale                                                                        911,137 
Property and equipment, net of accumulated depreciation                                                    
  and amortization of $38,716                                                                        8,845 
Other assets                                                                                        14,545 
                                                                                        ------------------ 

                                                                                        $        1,471,648 
                                                                                        ------------------ 

---------------------------------------------------------------------------------------------------------- 

              Liabilities and Stockholders' Equity                                                         

Accounts payable                                                                        $          229,119 
Accrued expenses                                                                                   335,416 
Notes payable                                                                                      751,034 
Deferred credits                                                                                    74,629 
                                                                                        ------------------ 

              Total liabilities                                                                  1,390,198 
                                                                                        ------------------ 

Commitment and contingencies                                                                             - 

Stockholders' equity:                                                                                      
     Common stock; par value $.10 per share, 5,000,000                                                     
     shares authorized, 2,522,808 shares issued and outstanding                                    252,281 
     Additional paid-in capital                                                                  4,431,232 
     Note receivable from stock sale                                                            (3,633,159)
     Retained deficit                                                                             (968,904)
                                                                                        ------------------ 

              Total stockholders' equity                                                            81,450 
                                                                                        ------------------ 

                                                                                        $        1,471,648 
                                                                                        ------------------ 

---------------------------------------------------------------------------------------------------------- 
See accompanying notes to consolidated financial statements.                                               
                                                                                                       F-2 

10KSB
27th Page of 42
TOC
1st
Previous
Next
↓Bottom
Just 27th
                                                        [Enlarge/Download Table]


                                                      UTAH RESOURCES INTERNATIONAL, INC., AND SUBSIDIARIES 
                                            Consolidated Statements of Operations and Comprehensive Income 

                                                                                  Years Ended December 31, 
---------------------------------------------------------------------------------------------------------- 

                                                                             1998              1997        
                                                                       ----------------------------------- 

                                                                                                           
Sales                                                                  $         234,718  $        530,553 

Cost of sales                                                                     16,494           207,691 
                                                                       ----------------------------------- 

              Gross profit                                                       218,224           322,862 

General and administrative expenses                                              856,339         1,222,040 
                                                                       ----------------------------------- 

              Loss from operations                                              (638,115)         (899,178)
                                                                       ----------------------------------- 

Other income (expense):                                                                                    
     Royalty income                                                              194,843           176,572 
     Interest and dividend income                                                244,455           247,295 
     Interest expense                                                            (28,145)          (22,517)
     Other income (expense)                                                       23,438           (18,900)
                                                                       ----------------------------------- 

              Total other income (expense)                                       434,591           382,450 
                                                                       ----------------------------------- 

Loss before minority interest and provision                                                                
  for income taxes                                                              (203,524)         (516,728)

Minority interest in net loss of subsidiaries                                          -            21,105 
                                                                       ----------------------------------- 

Loss before provision for income taxes                                          (203,524)         (495,623)

Income tax benefit - current                                                           -            51,000 
                                                                       ----------------------------------- 

              Net loss                                                          (203,524)         (444,623)

Other comprehensive income                                                             -                 - 
                                                                       ----------------------------------- 

              Comprehensive loss                                       $        (203,524)  $      (444,623)
                                                                       ----------------------------------- 

              Loss per share                                           $            (.08)  $          (.18)
                                                                       ----------------------------------- 

---------------------------------------------------------------------------------------------------------- 
See accompanying notes to consolidated financial statements.                                               
                                                                                                       F-3 

10KSB
28th Page of 42
TOC
1st
Previous
Next
↓Bottom
Just 28th
                                                        [Enlarge/Download Table]

                                                      UTAH RESOURCES INTERNATIONAL, INC., AND SUBSIDIARIES 
                                                            Consolidated Statement of Stockholders' Equity 

                                                                    Years Ended December 31, 1998 and 1997 
---------------------------------------------------------------------------------------------------------- 

                                                                               Notes                       
                                                             Additional      Receivable                    
                                    Common Shares             Paid-In        from Stock       Retained     
                           -------------------------------                                                 
                                Shares         Amount         Capital          Sales          Earnings     
                           ------------------------------------------------------------------------------- 
Balance,                                                                                                   
                                                                                                           
January 1, 1997                   2,522,808  $     252,281  $    4,431,232  $   (3,633,159) $     (320,757)

Net loss                                  -              -               -               -        (444,623)
                           ------------------------------------------------------------------------------- 

Balance,                                                                                                   
December 31, 1997                 2,522,808        252,281       4,431,232      (3,633,159)       (765,380)

Net loss                                  -              -               -               -        (203,524)
                           ------------------------------------------------------------------------------- 

Balance,                                                                                                   
December 31, 1998                 2,522,808  $     252,281  $    4,431,232  $   (3,633,159) $     (968,904)
                           ------------------------------------------------------------------------------- 

---------------------------------------------------------------------------------------------------------- 
See accompanying notes to consolidated financial statements.                                               
                                                                                                       F-4 


10KSB
29th Page of 42
TOC
1st
Previous
Next
↓Bottom
Just 29th
                                                        [Enlarge/Download Table]

                                                      UTAH RESOURCES INTERNATIONAL, INC., AND SUBSIDIARIES 
                                                                      Consolidated Statement of Cash Flows 

                                                                                  Years Ended December 31, 
---------------------------------------------------------------------------------------------------------- 

                                                                             1998              1997        
                                                                       ----------------------------------- 
Cash flows from operating activities:                                                                      
                                                                                                           
     Net loss                                                          $        (203,524) $       (444,623)
     Adjustments to reconcile net loss to net cash                                                         
       used in operating activities:                                                                       
         Depreciation and amortization                                             9,364            12,253 
         Gain on disposition of assets                                            (6,462)                - 
         Gain on sale of marketable securities                                    (4,324)                - 
         Minority interest in net loss of subsidiaries                                 -           (21,105)
         (Increase) decrease in:                                                                           
              Accounts receivable                                                 99,079          (110,089)
              Real estate held for resale                                        (56,130)           21,081 
              Other assets                                                        14,540            83,724 
         (Decrease) increase in:                                                                           
              Accounts payable                                                   (51,683)           28,338 
              Accrued expenses                                                  (130,892)          176,582 
                                                                       ----------------------------------- 

                  Net cash used in                                                                         
                  continued operations                                          (330,032)         (253,839)
                                                                       ----------------------------------- 

Cash flows from investing activities:                                                                      
     Proceeds from disposition of assets                                           8,246                 - 
     Proceeds from sale of marketable securities                                  16,133                 - 
     Purchase of property and equipment                                                -              (399)
     Purchase of marketable securities                                          (250,000)                - 
     Increase in notes receivable                                               (117,359)         (158,533)
     Payments on notes receivable                                                 81,779            63,459 
                                                                       ----------------------------------- 

                  Net cash used in                                                                         
                  investing activities                                          (261,201)          (95,473)
                                                                       ----------------------------------- 

Cash flows from financing activities:                                                                      
     Payments on notes payable                                                    (4,393)           (5,316)
     Issuance of notes payable                                                   460,000                 - 
                                                                       ----------------------------------- 

                  Net cash provided by (used in)                                                           
                  financing activities                                           455,607            (5,316)
                                                                       ----------------------------------- 

Decrease in cash                                                                (135,626)         (354,628)

Cash and cash equivalents, beginning of year                                     163,230           517,858 
                                                                       ----------------------------------- 

Cash and cash equivalents, end of year                                 $          27,604  $        163,230 
                                                                       ----------------------------------- 

---------------------------------------------------------------------------------------------------------- 
See accompanying notes to consolidated financial statements.                                               
                                                                                                       F-5 

10KSB
30th Page of 42
TOC
1st
Previous
Next
↓Bottom
Just 30th
                                                        [Enlarge/Download Table]

                                                      UTAH RESOURCES INTERNATIONAL, INC., AND SUBSIDIARIES
                                                                      Consolidated Statement of Cash Flows
                                                                                                 Continued

----------------------------------------------------------------------------------------------------------

Supplemental disclosure of cash flow information:                                                         

                                                                             1998              1997       
                                                                       -----------------------------------

     Cash paid during the year for:                                                                       
                                                                                                          
              Interest                                                 $          14,681  $          2,259
                                                                       -----------------------------------

              Income taxes                                             $               -  $              -
                                                                       -----------------------------------

                                                        [Enlarge/Download Table]


During the year ended  December  31, 1998 the  Company  purchased  the  minority                           
interest  of its  subsidiaries  through  the  exchange  of  certain  assets  and                           
liabilities. The exchange resulted in  deferred credits of $74,629 as follows:                             

                                                                                                           
              Accounts receivable from related party                                    $         (273,678)
              Other assets                                                                         (24,202)
              Accrued liabilities                                                                  292,344 
              Long-term debt                                                                        (9,633)
              Minority interest liability                                                           89,798 
                                                                                        ------------------ 

                      Deferred credits                                                  $           74,629 
                                                                                        ------------------ 

---------------------------------------------------------------------------------------------------------- 
See accompanying notes to consolidated financial statements.                                               
                                                                                                       F-6 

10KSB
31st Page of 42
TOC
1st
Previous
Next
↓Bottom
Just 31st
                            UTAH RESOURCES INTERNATIONAL, INC., AND SUBSIDIARIES
                                      Notes to Consolidated Financial Statements

                                          Years Ended December 31, 1998 and 1997
--------------------------------------------------------------------------------

1.   Summary of Significant Accounting Policies                                 

Business                                                                        
Utah Resources  International,  Inc., and consolidated entities (the Company) is
engaged  primarily  in the  development  of real  estate  including  the sale of
developed and undeveloped  real estate.  The Company's assets are located in the
Rocky Mountain West.                                                            

Principles of Consolidation                                                     
The consolidated  financial  statements include the financial statements of Utah
Resources,  Inc., Tonaquint,  Inc. and a number of limited partnerships of which
it was the general partner.  During the year ended December 31, 1998 the Company
acquired  a 100%  ownership  interest  in all the  partnerships,  dissolved  the
partnerships   and   consolidated   their   operations   into   Utah   Resources
International,  Inc. At December 31, 1997 the Company consolidated the following
entities which it has a controlling  interest in and recorded  minority interest
for the percentage of ownership it did not own:                                 

                                                     Percent
Partnership                                                     Owned           
                                                     -----------------

Country Club Partnership                                             84.04%     
URI - MGO Partnership                                                70.00%     
Southgate Palms Ltd. Partnership                                    100.00%     
Southgate Plaza Ltd. Partnership                                     52.50%     
Southgate Resort Partnership                                        100.00%     
Resources Limited Partnership                                        83.63%     
Tonaquint Indian Hills Partnership                                   75.86%     
Service Station Partnership                                          79.00%     

All material  intercompany  transactions  and balances  have been  eliminated in
consolidation of the Companies and partnerships.                                

Cash and Cash Equivalents                                                       
For purposes of the  statement of cash flows,  the Company  considers all highly
liquid debt instruments  purchased with a maturity of three months or less to be
cash equivalents.                                                               

--------------------------------------------------------------------------------

                                                                             F-7

10KSB
32nd Page of 42
TOC
1st
Previous
Next
↓Bottom
Just 32nd
                            UTAH RESOURCES INTERNATIONAL, INC., AND SUBSIDIARIES
                                      Notes to Consolidated Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------

1.   Summary of Significant Accounting Policies Continued                       

Marketable Securities                                                           
The Company  classifies  its marketable  debt and equity  securities as "held to
maturity" if it has the positive  intent and ability to hold the  securities  to
maturity.  All other  marketable  debt and equity  securities are classifieds as
"available for sale." Securities  classified as "available for sale" are carried
int he financial statements at fair value. Realized gains and losses, determined
using the specific  identification method, are included in earnings;  unrealized
holding gains and losses are reported as a separate  component of  stockholders'
equity. Securities classified as held to maturity are carried at amortized cost.

For both  categories of securities,  declines in fair value below amortized cost
that are other than temporary are included in earnings.                         

Real Estate Held for Resale                                                     
Real estate held for resale includes  developed lots, land under development and
raw land. Real estate held for resale is carried at the lower of cost or market.
The cost of development of building lots includes the land and the related costs
of development (planning,  survey, engineering and other) which are capitalized.
The cost of interest and property taxes are expensed.                           

Property and Equipment                                                          
Property and equipment is carried at cost.  Depreciation  is computed  using the
straight-line method based upon useful lives of 3-10 years.                     

Deferred Credits                                                                
Deferred  credits  consist  of the  excess of  assets  assumed  and  liabilities
relieved over the purchase price of the minority  interests of the subsidiaries.
In the  transactions  all tangible  assets were written to zero resulting in the
remaining amount being recorded as deferred  credits.  The deferred credits will
be amortized over a period of five years.                                       

Method of Recognition of Income                                                 
Real Estate                                                                     
Profits on sale of developed lots, developed land and raw land are recognized in
accordance  with  standards  established  for the  real  estate  industry  which
generally  provide  for  deferral  of all or part of the profit on a sale if the
buyer does not meet certain down payment  requirements or certain other tests of
the buyer's financial  commitment to the purchase,  or the seller is required to
perform significant obligations subsequent to the sale.                         

--------------------------------------------------------------------------------

                                                                             F-8

10KSB
33rd Page of 42
TOC
1st
Previous
Next
↓Bottom
Just 33rd
                            UTAH RESOURCES INTERNATIONAL, INC., AND SUBSIDIARIES
                                      Notes to Consolidated Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------

1.   Summary of Significant Accounting Policies                                 
Continued                                                             

Method of Recognition of Income - continued                                     
Cost of sales include a pro rata portion of acquisition  and  development  costs
(including  estimated costs to complete) along with sales  commissions,  closing
costs and other costs specifically related to the sale.                         

Other                                                                           
Royalty income is recognized when received.  The Company has overriding  mineral
and oil and gas  royalty  interests  and  thus  exercises  no  control  over the
activities of the royalty payers and is notified of the amounts or royalties due
when the cash is received.                                                      

The  Company  follows  the  full-cost  accounting  method  of  capitalizing  all
exploration and development  costs including  nonproductive  drilling  expenses,
lease abandonments, and other related costs. Under this method of accounting, no
gains or losses are recognized  from the sale or disposition of properties  with
insignificant  proved oil and gas  reserves.  If  capitalized  costs  exceed the
present value of future net operations, the excess is charged to expense.       

Income Taxes                                                                    
Deferred  income  taxes are  provided  in amounts  sufficient  to give effect to
temporary  differences  between financial  statement and tax reporting purposes.
The  differences  are primarily a result of differing  methods of accounting for
land sales and depreciation of property and equipment.                          

Earnings Per Share                                                              
The  computation  of basic  earnings  per common  share is based on the weighted
average number of shares outstanding during each year.                          

The  computation  of diluted  earnings per common share is based on the weighted
average  number of shares  outstanding  during  the year plus the  common  stock
equivalents  which would arise from the  exercise of stock  options and warrants
outstanding  using the treasury  stock  method and the average  market price per
share during the year.  Common stock  equivalents  have not been included as the
exercise   price  is  in  excess  of  the  market  price  and  the  amounts  are
antidilutive, for the year ended December 31, 1997.                             

--------------------------------------------------------------------------------

                                                                             F-9

10KSB
34th Page of 42
TOC
1st
Previous
Next
↓Bottom
Just 34th
                            UTAH RESOURCES INTERNATIONAL, INC., AND SUBSIDIARIES
                                      Notes to Consolidated Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------

1.   Summary of Significant Accounting Policies                                 
Continued                                                             

Concentration of Credit Risk                                                    
Financial  instruments which potentially subject the Company to concentration of
credit risk consist  primarily  of trade  receivables.  In the normal  course of
business, the Company provides credit terms to its customers.  Accordingly,  the
Company  performs  ongoing  credit  evaluations  of its  customers and maintains
allowances for possible losses which, when Realized,  have been within the range
of management's expectations.                                                   

The Company  maintains its cash in bank deposit  accounts which,  at times,  may
exceed federally  insured limits.  The Company has not experienced any losses in
such  account and believes it is not exposed to any  significant  credit risk on
cash and cash equivalents.                                                      

Use of Estimates in the  Preparation of Financial  Statements The preparation of
financial statements in conformity with generally accepted accounting principles
requires  management to make estimates and assumptions  that affect the reported
amounts  of assets and  liabilities  and  disclosure  of  contingent  assets and
liabilities at the date of the financial  statements and the reported  amount of
revenues and expenses during the reporting  period.  Actual results could differ
from those estimates.                                                           

2.   Notes Receivable                                                           

The Company has notes receivable of $271,326 from an individual with interest at
9%. The note is secured by real estate and due when the real estate is sold.    

3.   Real Estate Held for Resale                                                

Real estate held for resale consists of  approximately  396 acres of real estate
of which approximately 350 acres is currently planned for single family dwelling
lots,  commercial  development  and multiple  housing in St.  George,  Utah. The
aggregate  cost of the raw land and  partially  developed  land is  $911,137  at
December 31, 1998.                                                              

4.   Marketable Securities                                                      

The  Company  owns  79,752  shares of  convertible  preferred  stock of  another
company.  The  ownership is less than 10% of the stock of another  company.  The
Company  converted  8,831 shares of preferred stock into common stock which were
sold in 1998 for a gain of $4,324.                                              

--------------------------------------------------------------------------------

                                                                            F-10

10KSB
35th Page of 42
TOC
1st
Previous
Next
↓Bottom
Just 35th
                            UTAH RESOURCES INTERNATIONAL, INC., AND SUBSIDIARIES
                                      Notes to Consolidated Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------

4.   Marketable Securities                                                      
Continued                                                             

At December  31, 1998 the Company  estimates  that the fair market  value of the
marketable   securities  held  closely  approximates  the  cost  of  the  asset.
Therefore, no unrealized gains/losses recorded for the year then ended.         

5.   Notes Payable                                                              

The Company has the following notes payable at December 31, 1998:               

Line of credit  with  another  entity  for which the  Company  may  borrow up to
$1,000,000 requiring monthly interest payments at 12.5% and due in              

November 1999, secured by real estate                     $         310,000     

Note payable to an individual requiring quarterly                               
interest payments at 11% and due in June 2000,                                  
secured by real estate                                              150,000     

Notes payable to a governmental entity requiring                                
annual payments of approximately $15,000 plus                                   
interest at 5.94%, secured by real estate                           108,935     

Notes payable to entities controlled by a former                                
shareholder of the Company bearing interest at                                  
9% and due in December 2000                                         103,181     

Note payable to an entity requiring annual                                      
payments of $10,386, holding interest at 9%                                     
unsecured                                                            67,282     

Note payable to a financial institution requiring                               
monthly payments of $491 including interest at                                  
10.5%, secured by a vehicle                                          11,636     
                                                     -----------------

Total                                                     $         751,034     
                                                     -----------------

--------------------------------------------------------------------------------

                                                                            F-11

10KSB
36th Page of 42
TOC
1st
Previous
Next
↓Bottom
Just 36th
                            UTAH RESOURCES INTERNATIONAL, INC., AND SUBSIDIARIES
                                      Notes to Consolidated Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------

5.   Notes Payable                                                              
Continued                                                             

Future maturities of notes payable are as follows:                              

Year                                                      Amount      
                                                     -----------------

1999                                                 $         383,091
2000                                                           280,238
2001                                                            23,450
2002                                                            22,800
2003                                                            23,478
Thereafter                                                      17,977
                                                     -----------------

                                                     $         751,034
                                                     -----------------

None of the  Company's  debt  instruments  are held for  trading  purposes.  The
Company  estimates that the fair value of all financial  instruments at December
31, 1998, does not differ  materially from the aggregate  carrying values of its
financial instruments recorded in the accompanying balance sheet.               

6.   Income Taxes                                                               

The benefit for income  taxes  differs  from the amount  computed at the federal
statutory rate as follows:                                                      

                                   1998             1997
                                   -----------------------------------

Income tax benefit at                                                           
federal  statutory rates              $           63,000  $       151,000   
State income taxes                                   8,000            5,000     
Valuation allowance                                (71,000)        (105,000)    
                                   -----------------------------------

Total current income taxes         $                -  $        51,000
                                   -----------------------------------

--------------------------------------------------------------------------------

                                                                            F-12

10KSB
37th Page of 42
TOC
1st
Previous
Next
↓Bottom
Just 37th
                            UTAH RESOURCES INTERNATIONAL, INC., AND SUBSIDIARIES
                                      Notes to Consolidated Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------

6.   Income Taxes                                                               
Continued                                                             

Deferred income taxes have been established to reflect timing                   
differences between financial reporting and income tax purposes.  The           
primary differences are as follows:                                             

                                   1998             1997
                                   -----------------------------------

Net operating loss carryforward         $         (504,000) $      (433,000)    
Valuation allowance                                504,000          433,000     
                                   -----------------------------------

Total                              $                -  $             -
                                   -----------------------------------

The Company has a net operating loss  carryforward of approximately  $2,015,000,
which expires between 2011 and 2012. The benefit of the net operating loss (NOL)
carryforwards  available to offset  future taxes will be limited by the tax laws
in effect at the time such  NOL's can be  utilized.  Significant  changes in the
ownership of the Company or tax laws could limit the amount of NOL benefit.     

7.   Loss Per Share                                                             

Loss per share information in accordance with SFAS 128 is as follows:           

                                Year Ended December 31, 1998
                                 -----------------------------------------------
                                   Income          Shares        Per-Share
                               (Numerator)     (Denominator)      Amount
                                 -----------------------------------------------

Net loss                         $       (203,524)                              
Less preferred stock                                                            
dividends                                     -                             
  ----------------
Basic EPS                                                                       
Income available to                                                             
  common stockholders                    (203,524)       2,522,808  $      (.08)
                                                                  --------------
Effect of Dilutive Securities                                                   
Stock options                                   -                -              
                   ---------------------------------
Diluted EPS                                                                     
Loss available to common                                                        
stockholders plus assumed                                                   
  conversions                    $       (203,524)       2,522,808  $      (.08)
                                 -----------------------------------------------

--------------------------------------------------------------------------------

                                                                            F-13

10KSB
38th Page of 42
TOC
1st
Previous
Next
↓Bottom
Just 38th
                            UTAH RESOURCES INTERNATIONAL, INC., AND SUBSIDIARIES
                                      Notes to Consolidated Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------

7.   Income (loss) Per Share                                                    

Continued                                                             

                                  Year Ended December 31, 1997
                                 -----------------------------------------------
                                   Income          Shares        Per-Share
                               (Numerator)     (Denominator)      Amount
                                 -----------------------------------------------

Net loss                         $       (444,623)                              
Less preferred stock                                                            
dividends                                     -                             
  ----------------
Basic EPS                                                                       
Income available to                                                             
  common stockholders                    (444,623)       2,522,808  $      (.18)
                                                                  --------------
Effect of Dilutive Securities                                                   
Stock options                                   -                -              
                   ---------------------------------
Diluted EPS                                                                     
Income available to common                                                      
stockholders plus assumed                                                   
  conversions                    $       (444,623)       2,522,808  $      (.18)
                                 -----------------------------------------------

8.   Stock Subscription Receivable                                              

The Company has a promissory  note receivable at December 31, 1998 in the amount
of  $3,633,159.  The note bears  interest  at the  short-term  Federal  Internal
Revenue  Service rate (5.56% at December 31, 1998).  Interest is due annually in
July of each year with the  principal  balance  due August 1, 2001.  The note is
secured by 1,285,912  shares of the Company's common stock. At December 31, 1998
the Company had received  unearned  interest in the amount of $149,128.  This is
recorded in accrued expenses.                                                   

9.   Contingencies                                                              

The  Company is aware of certain  claims made  against  the Company  which could
result in liabilities in excess of amounts accrued in the financial  statements.
Management  believes  that any such claim,  if asserted,  will not result in any
adverse effect on the financial position of the Company.                        

--------------------------------------------------------------------------------

                                                                            F-14

10KSB
39th Page of 42
TOC
1st
Previous
Next
↓Bottom
Just 39th
                            UTAH RESOURCES INTERNATIONAL, INC., AND SUBSIDIARIES
                                      Notes to Consolidated Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------

The Company is in the process of remediation of the service station property. It
is not known if any  additional  costs over what the Company has accrued will be
needed to complete the remediation.                                             

10.  Commitments                                                                

On February 27, 1998, the Company, in connection with the execution of the stock
purchase  agreement  in 1996,  entered  into an  employment  agreement  with the
president  of the  Company  for a salary of  $195,000  per year.  The  agreement
commences  the  salary on July 13,  1996.  Accrued  and  expensed  salary to the
president  for the  year  ended  December  31,  1998 and  1997 is  $195,000  and
$286,356, respectively.                                                         

The Company has agreements with former shareholders whereby upon sale of certain
pieces of  property,  a portion of the net  proceeds is to be paid to the former
shareholder                                                                     

11.  Significant Customers                                                      

The  Company  had  land  sales  of  approximately  $235,000  and  $331,000  to a
significant customer in 1998 and 1997, respectively:                            

12.  Stockholders' Proposal                                                     

The Company is in process of filing with the Securities and Exchange  Commission
(SEC)  registrations,  which  if  accepted,  by the SEC and if  approved  by the
shareholders  of the Company  will result in the  Company  effectuating  a 1 for
1,000 share  reverse stock split and the Company  becoming a non-public  company
with no SEC filing requirements.                                                

13.  Recent Accounting Pronouncements                                           

In June  1998,  the  FASB  issued  SFAS  No.  133,  "Accounting  for  Derivative
Instruments and Hedging Activities." This statement  establishes  accounting and
reporting standards for derivative  instruments and requires  recognition of all
derivatives as assets or liabilities in the statement of financial  position and
measurement of those  instruments at fair value.  The statement is effective for
fiscal  years  beginning  after June 15,  1999.  The Company  believes  that the
adoption  of SFAS  133  will  not have  any  material  effect  on the  financial
statements of the Company.                                                      

--------------------------------------------------------------------------------

                                                                            F-15

10KSB
40th Page of 42
TOC
1st
Previous
Next
↓Bottom
Just 40th
                            UTAH RESOURCES INTERNATIONAL, INC., AND SUBSIDIARIES
                                      Notes to Consolidated Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------

The  information  on the  Company's  oil and gas  operations  as  shown  in this
schedule is based on the  full-cost  method of  accounting  and is  presented in
conformity with the disclosure requirements of Statement of Financial Accounting
Standards NO. 69 "Disclosures about Oil and Gas Producing Activities."          

 Costs Incurred in Oil and Gas Property Acquisition,
Exploration and Development Activities

                                                              December 31,
                                                            ------------------
                                                            1998
                                                            ------------------

Acquisition of proved properties                             $                - 
                                                            ------------------

Exploration and affiliate costs                              $                - 
                                                            ------------------

Development costs                                            $                - 
                                                            ------------------

Results of Operations for Producing Activities

                                                              December 31,
                                                            ------------------
                                                              1998
                                                            ------------------

Royalty income                                               $          194,843 

Production costs                                                              - 
Exploration costs                                                             - 
Depreciation, depletion, amortization, and valuation                            
provisions                                                               (2,481)
                                                            ------------------

Results of operations from producing activities before                          
taxes                                                                   192,362 

Income tax expense                                                      (65,000)
                                                            ------------------

Results of operations from producing activities (excluding                      
 corporate overhead and interest costs)                     $          127,362
                                                              ------------------

--------------------------------------------------------------------------------

                                                                            F-16

10KSB
41st Page of 42
TOC
1st
Previous
Next
↓Bottom
Just 41st
                            UTAH RESOURCES INTERNATIONAL, INC., AND SUBSIDIARIES
                                      Notes to Consolidated Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------

Capitalized Costs Relating to Oil and Gas Producing Activities

                                                          Year Ended
                                                            December 31,
                                                            ------------------
                                                          1998
                                                            ------------------

Proved oil and gas properties                                $           50,210 
Accumulated depreciation, depletion, amortization and                           
  valuation allowances                                                  (50,210)
                                                            ------------------

    Net capitalized costs                                   $                -
                                                            ------------------

Estimated Quantities of Reserves (Unaudited)

The estimated  quantities of proved oil and gas reserves  disclosed in the table
below are based upon  estimates  prepared by  American  Energy  Advisors,  Inc.,
petroleum engineers.  Such estimates are inherently imprecise and may be subject
to substantial revisions.                                                       

All quantities shown in the table are proved developed  reserves and are located
within the United States.                                                       

                                      Year Ended
                                     December 31, 1998
                                           -----------------------------------
                                          Barrels            MCF
                                           -----------------------------------

Proved oil and gas reserves:                                                    
    Balance at beginning of year           $          43,000  $        386,000
     Revisions of previous estimates                   (3,000)           (2,000)
Improved recovery and acquisition                                     
      of minerals in place                                 -                 -
    Extensions and discoveries                             -                 -
     Production                                        (5,000)          (43,000)
                                           -----------------------------------

Balance at end of year                      $          35,000  $        341,000 
                                           -----------------------------------

--------------------------------------------------------------------------------

                                                                            F-17

10KSB
Last Page of 42
TOC
1st
Previous
Next
↓Bottom
Just 42nd
                            UTAH RESOURCES INTERNATIONAL, INC., AND SUBSIDIARIES
                                      Notes to Consolidated Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------

                                                        [Enlarge/Download Table]


                         Standardized Measure of Discounted Future Net Cash Flows                      
                               Relating to Proved Oil and Gas Reserves (Unaudited)                     

                                                                                       Years Ended     
                                                                                       December 31,    
                                                                                    ------------------ 
                                                                                           1998        
                                                                                    ------------------ 

                                                                                                       
Future cash in flows                                                                $          795,000 
Future production and development costs                                                              - 
Future income tax expenses                                                                    (270,000)
                                                                                    ------------------ 

Future net cash flows                                                                          525,000 

10% annual discount for estimated timing of cash flows                                        (269,000)
                                                                                    ------------------ 

Standardized measure of discounted future net cash flows                            $          256,000 
                                                                                    ------------------ 


                          Changes Relating to Standardized Measure of Discounted
                         Future Net Cash Flows (Unaudited)

                                                        [Enlarge/Download Table]


                                                                                           Years Ended     
                                                                                           December 31,    
                                                                                        ------------------ 
                                                                                               1998        
                                                                                        ------------------ 
                                                                                                           
Sales, net of production costs                                                          $         (195,000)
Net changes in prices                                                                             (196,000)
Acquisition and improved recover, less related costs                                                     - 
Revisions of previous quantity estimates                                                          (195,000)
Accretion of discount                                                                               52,000 
Net change in income taxes                                                                         270,000 
                                                                                        ------------------ 

     Net change                                                                         $         (264,000)
                                                                                        ------------------ 

---------------------------------------------------------------------------------------------------------- 
                                                                                                      F-18 

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10KSB’ Filing		Date		First		Last			Other Filings
		8/1/01		4		38
		6/15/99		39
		4/21/99		13
Filed on:		4/15/99
		4/6/99		25
		4/1/99		13
		3/16/99		5		22
		3/8/99		5		22
		2/5/99		1		21
For Period End:		12/31/98		1		41			4,  5,  5/A,  NT 10-K,  NT 10-K/A
		12/15/98		10
		12/14/98		1
		11/13/98		7		11			10QSB
		10/26/98		13
		8/21/98		13
		8/19/98		13
		8/5/98		12
		6/30/98		18					10QSB
		6/25/98		12
		5/29/98		13
		4/17/98		13
		2/27/98		11		39
		2/5/98		20
		1/20/98		12
		12/31/97		16		39			10KSB
		12/11/97		17		18
		4/16/97		10
		1/8/97		3		6			10KSB
		10/10/96		17
		9/9/96		21		22			SC 13D/A
		8/29/96		3
		8/28/96		3
		8/23/96		3
		8/22/96		3
		8/9/96		3
		7/13/96		4		39
		7/3/96		2		20			8-K
		6/26/96		3
		5/17/96		3
		4/25/96		6
		4/16/96		2		3			SC 13D
		4/5/96		2
		3/31/96		6					10QSB,  10QSB/A
		1/26/96		15
		1/12/96		15
		12/31/95		3		22			10KSB,  10KSB/A
		10/4/95		3
		7/21/95		3
		7/20/95		21		22			8-K
		7/18/95		6					8-K
		7/1/95		6
		6/13/95		5		6
		6/1/95		7
		2/16/95		5
		2/15/95		6
		1/26/95		22
		12/31/94		22
		6/19/93		18
		4/6/93		3
		12/31/92		22
									List all Filings