Income Taxes: Deferred income taxes reflect the expected future tax consequences of temporary differ- ences between the tax basis amounts and financial statement carrying amounts of assets and liabilities at each year end and the expected future benefits of net operating loss carryforwards, tax credits and other carryforwards. Reclassifications: Certain accounts in the prior period financial statements have been reclassified for compara- tive purposes to conform with the presentation in the current period financial statements. Earnings (Loss) Per Share: Basic earnings (loss) per share is computed by dividing the net income or loss by the weighted average number of common shares out- standing during each year. Diluted earnings per share reflects the effect of dilutive options and warrants. The carrying value of the Company’s property and equipment consists of the following components at June 30, 2001 and 2000: Accumulated Depreciation Gross & Depletion Net As of June 30, 2001 Royalties GSR1 $ — $ — $ — GSR2 — — — GSR3 8,105,020 1,803,958 6,301,062 NVR1 2,135,107 33,868 2,101,239 Bald Mountain 1,978,547 1,065,323 913,224 Mule Canyon 180,714 — 180,714 Yamana Resources, Inc. 172,810 — 172,810 Total royalties 12,572,198 2,903,149 9,669,049 Office furniture, equipment and improvements 834,252 730,937 103,315 $13,406,450 $ 3,634,086 $ 9,772,364 As of June 30, 2000 Royalties GSR1 $ — $ — $ — GSR2 — — — GSR3 8,105,020 856,389 7,248,631 Bald Mountain 2,468,762 822,649 1,646,113 Mule Canyon 180,714 — 180,714 Yamana Resources, Inc. 172,809 — 172,809 Total royalties 10,927,305 1,679,038 9,248,267 Office furniture, equipment and improvements 773,906 684,427 89,479 $11,701,211 $ 2,363,465 $ 9,337,746 22 2. PROPERTY AND EQUIPMENT