U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A#2
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____ to _______
Commission file number 0-25455
INTERGOLD CORPORATION
---------------------
(Exact name of small business issuer as specified in its charter)
NEVADA 88-0365453
------ ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
5000 Birch Street, West Tower, Suite 4000
Newport Beach, California 92660
-------------------------------
(Address of Principal Executive Offices)
(949) 476-3611
--------------
(Issuer's telephone number)
N/A
---
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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.
Yes X No
State the number of shares outstanding of each of the issuers classes of common
equity, as of the latest practicable date:
Class Outstanding as of June 14, 1999
- ----- -------------------------------
Common Stock, $.00025 par value 52,052,000
Transitional Small Business Disclosure Format (check one)
Yes No X
<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
- ----------------------------
The unaudited financial statements of Intergold Corporation (the "Company")
reflect all adjustments which are, in the opinion of management, necessary to
present a fair statement of the operating results for the interim period
presented.
INTERGOLD CORPORATION
(A Development Stage Company)
FINANCIAL STATEMENTS
(Unaudited)
MARCH 31, 1999
TABLE OF CONTENTS
-----------------
Page
----
Balance Sheet 2
Statements of Operations 3
Statements of Cash Flows 4
Notes to Financial Statements 5 - 14
1
<PAGE>
INTERGOLD CORPORATION
(A Development Stage Company)
Balance Sheet
(Unaudited)
March 31,
1999
-----------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 16,986
PROPERTY PLANT AND EQUIPMENT
Equipment (net of depreciation) 3,998
OTHER ASSETS
Available-for-sale investments 90,000
-----------
Total Assets $ 110,984
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
CURRENT LIABILITIES
Accounts payable - trade $ 77,022
Advances payable 243,535
Directors fees payable 27,500
Notes payable 551,890
Accrued interest payable 142,918
-----------
Total Liabilities 1,042,865
-----------
STOCKHOLDERS' EQUITY (Deficit)
Preferred stock, $.001 par value; authorized at March 31, 1999
75,000,000 shares; issued and outstanding at March 31, 1999 -
Series A - 10,000,000 shares, 10,000
Series B - 750,000 shares 750
Upon Liquidation, Series A shares have a $.25 per share
preference over other preferred or common stock, Series B
shares have a $.50 preference over other non-Series A
preferred or common stock
Common stock $.00025 par value; authorized at March 31, 1999 -
125,000,000 shares; issued and outstanding at
March 31, 1999, 52,052,000 shares 13,014
Paid - in capital 6,232,004
Accumulated unrealized gain/loss on investments (80,000)
Accumulated deficit through development stage (7,107,649)
-----------
Total Stockholders' Equity (Deficit) (931,881)
-----------
Total Liabilities and Stockholders' Equity (Deficit) $ 110,984
===========
See accompanying summary of accounting policies and notes
to financial statements.
2
<PAGE>
<TABLE>
<CAPTION>
INTERGOLD CORPORATION
(A Development Stage Company)
Statements of Operations
(Unaudited)
Inception
(July 26,
For the 3 Months Ended March 31, 1996) to
------------------------------- March 31,
1999 1998 1999
------------ ------------ ------------
REVENUES
<S> <C> <C> <C>
Other income $ -- $ -- $ 1,699
------------ ------------ ------------
Total Revenues -- -- 1,699
------------ ------------ ------------
OPERATING EXPENSES
PROPERTY EXPLORATION EXPENSES
Assay and lab 235 86,707 391,229
Geological consultants 31,796 50,329 686,699
Drilling and drill core management 2 -- 213,245
Metalurgical 65,000 -- 191,287
Research and development 3,015,000 -- 3,133,550
Claims maintenance and state fees 16,728 46,398 130,989
Staking -- 17,184 160,079
Wages and salaries 59 -- 65,140
Miscellaneous 1,539 -- 30,687
Depreciation 148 -- 302
Travel -- -- 4,686
------------ ------------ ------------
Total Property Exploration Expenses 3,130,507 200,617 5,007,893
------------ ------------ ------------
ADMINISTRATIVE EXPENSES
Overhead and Administration 308,500 90,000 1,399,500
Reports/information/subscripitions/promotion 1,580 -- 111,932
Legal and accounting 19,390 9,278 264,682
Consultants 10,000 -- 72,000
Travel 12,671 -- 89,416
Directors Fees 6,000 6,000 35,500
Advertising 4,318 -- 4,318
Auto 2,428 -- 22,609
Courier and postage 939 950 14,608
Internet design and access -- 2,280 8,397
Office rent 577 240 13,915
Office supplies 11,903 231 16,120
Transfer agent 250 43 2,766
Bank charges 442 209 2,716
Security -- -- 867
Telephone and fax 68 -- 3,574
Share issue transactions -- -- 10,500
Miscellaneous 106 -- 8,742
Wages and salaries -- -- 11,944
Utilities -- -- 34,431
------------ ------------ ------------
Total Administrative Expenses 379,172 109,230 2,128,537
------------ ------------ ------------
Total Operating Expenses 3,509,679 309,847 7,136,430
------------ ------------ ------------
Operating Income (Loss) (3,509,679) (309,847) (7,134,731)
OTHER INCOME (EXPENSE)
Sale of Future Profit Sharing Interest -- 170,000 170,000
Interest Expense (7,196) (12,941) (142,918)
------------ ------------ ------------
Net (Loss) $ (3,516,875) $ (152,788) $ (7,107,649)
============ ============ ============
Income (Loss) per Share $ (0.072) $ (0.003) $ (0.228)
============ ============ ============
Weighted Average Number of
Common Shares Outstanding 48,644,222 47,943,000 31,176,125
============ ============ ============
See accompanying summary of accounting policies and notes to financial statements.
3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INTERGOLD CORPORATION
(A Development Stage Company)
Statements of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
Inception
(July 26,
For the 3 Months Ended March 31, 1996) to
------------------------------- March 31,
1999 1998 1999
----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income (loss) $(3,516,875) $ (152,788) $(7,107,649)
Adjustments to reconcile net (loss) to cash
Depreciation and Amortization 148 -- 302
Changes in Assets and Liabilities
Accounts payable (41,599) -- 77,022
Director fees payable 6,000 6,000 27,500
Accrued interest payable 7,196 12,941 142,918
----------- ----------- -----------
Net Cash Flows Used for Operating Activities (3,545,130) (133,847) (6,859,907)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Organization costs 1,771 -- --
Acquisition of available-for-sale investments -- (170,000) (170,000)
Equipment purchases -- -- (4,300)
----------- ----------- -----------
Net Cash Flows Used for Investing Activities 1,771 (170,000) (174,300)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock 1,008 -- 13,014
Sale of preferred stock 750 -- 10,750
Additional paid-in capital 2,748,242 -- 6,232,004
Advances - net of payments 61,495 -- 243,535
Note payable advances 500,000 172,001 551,890
----------- ----------- -----------
Net Cash Flows Provided by Financing Activities 3,311,495 172,001 7,051,193
----------- ----------- -----------
Net increase in cash (231,864) (131,846) 16,986
Cash and cash equivalents - Beginning of period 248,850 134,417 --
----------- ----------- -----------
Cash and cash equivalents - End of period $ 16,986 $ 2,571 $ 16,986
=========== =========== ===========
During 1998, the Company accrued $12,941 of interest on outstanding notes and advances payable.
During 1999, the Company accrued $7,196 of interest on outstanding notes and advances payable.
Since inception the Company has not paid or capitalized any interest.
See accompanying summary of accounting policies and notes to financial statements.
4
</TABLE>
<PAGE>
INTERGOLD CORPORATION
Notes to Unaudited Financial Statements
March 31, 1999
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Intergold Corporation (the Company) was incorporated on July 26, 1996 under
the laws of the State of Nevada. The Company is a development stage
company.
International Gold Corporation's sole asset is a block of 321 contiguous
unpatented lode mining claims (the Blackhawk Claim Group) located within
T4S, R17E (Boise Meridian) in Lincoln County, south-central Idaho.
The Company engaged the services of consultants to examine the geology and
gold mineralization within the claim group and if warranted to recommend a
program for the further exploration of the property. The Company further
retained the services of Bateman Engineering International to independently
verify the Company's findings and results pursuant to its Blackhawk 1
claims that included independent drilling and assay work. The Company has
also engaged Dames and Moore to provide independent verification of assay
and metallurgical recovery work performed by Auric Metallurgical
Laboratories, as well as environmental assessment, and other services.
Basis of Accounting
-------------------
The Company utilizes the accrual basis of accounting. Financial statements
have been prepared using generally accepted accounting principles.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
Principles of Consolidation
---------------------------
The consolidated financial statements for the three months ended March 31,
1999 and March 31, 1998 include the accounts of Intergold and its wholly
owned subsidiary, International Gold Corporation. International Gold
Corporation was acquired by purchase on July 23, 1997. The acquisition of
International Gold Corporation has been accounted for on the Purchase
method of accounting. All significant intercompany transactions and account
balances have been eliminated.
Research, Development and Exploration Costs
-------------------------------------------
Research, development and exploration costs are expensed as incurred.
5
<PAGE>
INTERGOLD CORPORATION
Notes to Unaudited Financial Statements
March 31, 1999
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Cash Equivalents
----------------
For purposes of the Statement of Cash Flows, cash equivalents are defined
as investments with maturities of three months or less.
Depreciation
------------
The Company presently depreciates all equipment over 7 years using the
straight-line method.
NOTE 2: ADVANCES AND NOTES PAYABLE
Advances and Notes Payable are comprised of the following:
Advances
--------
March 31, 1999
--------------
Investor Communications Int'l, Inc. $100,496
Tri Star Financial Services, Inc. 22,066
Amero-can Marketing, Inc. 120,973
--------
$243,535
========
The advances all bear 10% simple interest and are due on demand. There is
$140,117 of interest accrued on the advances as of March 31, 1999.
6
<PAGE>
INTERGOLD CORPORATION
Notes to Unaudited Financial Statements
March 31, 1999
NOTE 2: ADVANCES AND NOTES PAYABLE (continued)
Notes Payable
-------------
For the redemption of 1,889,750 shares of
restricted common stock of the Company payable at
par value of $.00025. $ 1,890
To Sonanini Holdings, bearing interest at 7% per
annum, simple interest on the balance outstanding.
The note is dated August 6, 1998 and has no stated
maturity date. Accrued interest on the note
through March 31, 1999 totals $2,277. 50,000
To Auric Metallurgical Laboratories, LLC, pursuant
to the technology sub-license agreement dated
March 18, 1999, bearing interest at 3% per annum,
simple interest on the balance outstanding.
Maturity is upon transfer of technology and is
expected to be by the Fall of 1999. Accrued
interest on the note through March 31, 1999 totals
$262. 250,000
To Geneva Resources, Inc. pursuant to the
technology sub-license agreement dated March 18,
1999, bearing interest at 3% per annum, simple
interest on the balance outstanding. Maturity is
upon transfer of technology and is expected to be
by the Fall of 1999. Accrued interest on the note
through March 31, 1999 totals $262. 250,000
Total $ 551,890
=========
NOTE 3: STOCKHOLDERS' EQUITY
Common Stock
------------
On August 23, 1996, 1,013,000 shares were issued under an SEC Exemption
Reg. D-504 offering with gross proceeds of $10,130.
On July 23, 1997, the Company issued 42,000,000 pursuant to the
Stock-For-Stock Agreement entered into with Intergold Mining Corporation in
connection with the acquisition of International Gold Corporation.
On August 6, 1997, 1,000,000 shares were issued under an SEC Exemption Reg.
D-504 offering with gross proceeds of $500,000.
On September 9, 1997, 450,000 shares were issued under an SEC Exemption
Reg. D-504 offering with gross proceeds of $450,000.
On December 31, 1998, 79,000 shares were issued under Section 4(2) of the
Securities Act of 1933 in exchange for $39,500 of amounts owed to outside
vendor.
7
<PAGE>
INTERGOLD CORPORATION
Notes to Unaudited Financial Statements
March 31, 1999
NOTE 3: STOCKHOLDERS' EQUITY (continued)
Effective August 6, 1998, the Company increased the number of authorized
shares of common stock from 80,000,000 to 125,000,000 at a par value of
$.00025 per share.
On January 6, 1999, 30,000 shares were issued under Section 4(2) of the
Securities Act of 1933 in exchange for $15,000 owed to an outside vendor.
On March 18, 1999, the Company issued 4,000,000 restricted shares pursuant
to a sublicense agreement for metallurgical and assay technology and
know-how (See Note 6).
At March 31, 1999 there were 52,052,000 shares of common stock outstanding.
Preferred Stock
---------------
The Company authorized for issuance 5,000,000 shares of Preferred Stock at
December 31, 1997.
Effective August 6, 1998, the Company increased the number of authorized
shares of preferred stock from 5,000,000 to 75,000,000 at a par value of
$.001 per share.
Pursuant to a private placement memorandum dated August 10, 1998, the
Company offered Series A units at a cost of $50,000. Each unit consisted of
200,000 shares of Series A Preferred stock with a par value of $.001 per
share and 200,000 warrants. Each warrant entitles the holder to purchase
one share of restricted common stock at $.25 per share. The warrants expire
on July 31, 2001. The Series A preferred shares are redeemable by the
Company at any time after July 31, 2001 for $.25 per share, plus accrued
and unpaid dividends. Dividends will accrue cumulatively at the rate of 20%
per year, and will be paid annually in arrears when, as and if declared by
the Company's Board of Directors. The Company may redeem the warrants at
any time at a cost of $.01 per warrant. Each Series A preferred share is
convertible into one share of restricted common stock and all then accrued
and unpaid dividends are convertible into restricted common stock at the
conversion price of $.25 per share.
Through March 31, 1998, the Company has issued 10,000,000 Series A
preferred shares. The issuance generated $2,500,000. As of March 31, 1999,
there are 10,000,000 Series A preferred shares and 10,000,000 Series A
warrants outstanding.
8
<PAGE>
INTERGOLD CORPORATION
Notes to Unaudited Financial Statements
March 31, 1999
NOTE 3: STOCKHOLDERS' EQUTY (continued)
The Company has prepared a private placement offering memorandum dated
December 15, 1998 to offer Series B units at a cost of $50,000 per unit.
Each unit consists of 100,000 shares of Series B preferred stock with a par
value of $.001 per share and 100,000 warrants. The terms and conditions of
the Series B offering are similar to those of the Series A offering except
the cost per share and any conversion price is at $0.50 per share. The
Series B offering comprises a total of 5,000,000 convertible, redeemable
preferred shares and 5,000,000 warrants. As of March 31, 1999, the Company
had received $375,000, representing 750,000 shares of Series B preferred
stock and an equal number of warrants, pursuant to this private placement
memorandum.
NOTE 4: JOINT VENTURE AGREEMENT
On December 11, 1997, the Company and subsidiary entered into a Joint
Venture Agreement with Goldstate Corporation, an OTC Bulletin Board public,
non-reporting company. Under terms of the agreement, the Company has
received 1,000,000 restricted common shares in the capital of Goldstate
Corporation in exchange for the sale of a future profit sharing interest.
In 1997, Goldstate Corporation also reimbursed the Company $100,000 for
Blackhawk II claims maintenance and staking expenses incurred during 1997
pursuant to the agreement. Goldstate Corporation will be responsible for
providing all funding and will initially retain 80% of the profits
resulting from the agreement, while the Company will retain 20% of the
profits. After Goldstate Corporation is repaid all of its invested capital,
the profit distribution will be 51% to Goldstate and 49% to the Company.
International Gold Corporation holds possessory title to 439 unpatented
lode mining claims that form the subject of this agreement known as
Blackhawk II. These claims are in addition to the 321 Blackhawk I claims
that form the basis of the Company's current business prospects. The
Company intends to transfer the 439 unpatented lode mining claims to
Goldstate Corporation via a quit claim deed during 1999. As of March 31,
1999, there were no jointly controlled assets pursuant to the agreement and
no profits had been generated. Therefore, the Company has not included any
related amounts in its financial statements pursuant to this agreement.
The sole director of Goldstate Corporation is also a director of Intergold
Corporation.
9
<PAGE>
INTERGOLD CORPORATION
Notes to Unaudited Financial Statements
March 31, 1999
NOTE 5: DEBT SETTLEMENT
On January 6, 1999, the Company entered into a settlement agreement with
Communique Media to provide 30,000 restricted common shares in the capital
of the Company for $15,000 of services provided by Communique Media to the
Company. The market price of the Company's common trading shares at January
6, 1999 was approximately $0.59 per share. The price per share of this
settlement represents an 18 percent discount from the trading market price
at January 6, 1999. These shares were issued on January 6, 1999.
NOTE 6: INVESTMENTS
AVAILABLE FOR SALE INVESTMENTS
Pursuant to the Joint Venture Agreement discussed in Note 4 with Goldstate
Corporation, the Company now owns 1,000,000 restricted common shares in
Goldstate Corporation. This represented approximately 10 percent of the
total common stock issued by Goldstate Corporation as of December 31, 1998.
As these shares can not be marketed for a period of twelve months from
issuance the Company has valued the investment at 50% of the trading value
of the Goldstate Corporation stock. Pursuant to this methodology, this
investment was recorded at the discounted fair value as of the date of
stock issuance, $170,000. This investment is classified as an
available-for-sale investment. Accordingly any unrealized gain/loss on the
change in discounted value of the investment is reported in the equity
section of the balance sheet. The accumulated unrealized loss on the
investment as of March 31, 1999 is $80,000. During the three month period
ended March 31, 1999, the Company has recorded an unrealized gain of
$15,000. The discounted value of the investment as of March 31, 1999 was
$90,000.
NOTE 7: TECHNOLOGY SUB-LICENSE AGREEMENT
On March 18, 1999, the Company entered into a definitive sub-license
agreement with Geneva Resources, Inc. ("Geneva"), to utilize assay and
metallurgical technology, know-how, and rights to technological processes
developed specifically for the Blackhawk mineralization by Auric
Metallurgical Laboratories, LLC. ("Auric"). This sub-license is for
non-exclusive use in the Company's claim area in the State of Idaho for a
period not less than 40 years. Pursuant to this agreement, the Company has
issued 1,500,000 restricted common shares to Geneva and 2,500,000
restricted common shares to Auric. Pursuant to the same agreement, the
Company also issued promissory notes to both Geneva and Auric in the amount
of $250,000 to each company. These are 3% interest bearing notes and are
payable upon the transfer of the technology.
10
<PAGE>
INTERGOLD CORPORATION
Notes to Unaudited Financial Statements
March 31, 1999
NOTE 7: TECHNOLOGY SUB-LICENSE AGREEMENT (continued)
As the shares issued pursuant to the definitive sub-license agreement with
Geneva Resources, Inc. dated March 18, 1999 may not be marketed for a
period of twelve months from issuance, the Company has valued the
investment in the technology sub-license agreement at 50% of the trading
value of the Company's stock at March 18, 1999 plus the $500,000 in notes
payable issued pursuant to the agreement. Pursuant to this methodology,
this investment was recorded at the discounted fair value as of the date of
stock and notes issuance, $2,860,000.
As of March 31, 1999 the promissory notes and common stock have been issued
to the various parties, however, the related technology has not been
transferred. These promissory notes become due and payable upon the
transfer of the technology. Transfer of the technology will occur after
completion of pilot scale testing. The technology is scheduled for transfer
during 1999. The Company has expensed the amounts paid pursuant to the
agreement as research and development expense.
NOTE 8: EMPLOYEE STOCK OPTION PLAN
During 1997, the Company authorized an Employee Stock Option Plan. The plan
authorized the issuance of 2,000,000 options that can be exercised at $.50
per share of common stock and an additional 2,500,000 options that can be
exercised to purchase shares of common stock at $1.00 per share. All
options granted expire December 27, 2017. The options are non-cancelable
once granted. Shares which may be acquired through the plan may be
authorized but unissued shares of common stock or issued shares of common
stock held in the Company's treasury. Options granted under the plan will
not be in lieu of salary of other compensation for services.
As of December 31, 1998, no options had been granted, exercised or
forfeited, and no options had expired. During the three month period ending
March 31, 1999, the Board of Directors of the Company authorized the grant
of stock options to certain officers, directors and consultants. The
options granted consisted of 2,000,000 options with an exercise price of
$.50 per share of common stock and 1,450,000 options with an exercise price
of $1.00 per common share. Selected information regarding the options as of
March 31, 1999 and 1998 are as follows:
11
<PAGE>
INTERGOLD CORPORATION
Notes to Unaudited Financial Statements
March 31, 1999
NOTE 8: EMPLOYEE STOCK OPTION PLAN (continued)
March 31, 1999 March 31, 1998
-------------------- -----------------
Weighted Weighted
Number Average Number Average
of Exercise of Exercise
Options Price Options Price
------- ----- ------- -----
Outstanding at Beg. of Period -0- -0- -0- -0-
Outstanding at End of Period 3,450,000 $.71/share -0- -0-
Exercisable at End of Period 3,450,000 $.71/share -0- -0-
Options Granted 3,450,000 $.71/share -0- -0-
Options Exercised -0- -0- -0- -0-
Options Forfeited -0- -0- -0- -0-
Options Expired -0- -0- -0- -0-
As of March 31, 1999, outstanding options have exercise prices ranging from
$.50 to $1.00 per share. The weighted average exercise price of all options
outstanding is $.71 per share of common stock and the weighted average
remaining contractual life is 18 years 357 days. There are 3,450,000
options that are exercisable with a weighted average exercise price of $.71
per share of common stock.
NOTE 9: SERVICES AGREEMENT
The Company signed an agreement on March 18, 1999 that covers services
provided by Auric Metallurgical Laboratories, LLC which include specific
ore assay, analytical procedures development, and specific metallurgical
recovery and ore extraction procedures development on an ever increasing
scale. Through the agreement, Auric will provide up to $1,500,000 of
services during the period October 1998 through the Fall of 1999. As of
March 31, 1999, $273,550 of services related to this agreement have been
performed and paid. The services performed under this agreement are
recorded as research and development expenses.
NOTE 10: INCOME TAXES
The Company incurred operating losses for the year ended December 31, 1998
of $1,738,196. The Company has adopted FASB No. 109 for reporting purposes.
As of December 31, 1998, the Company had net operating loss carry forwards
of $3,456,454, which expire between the years 2006 - 2013. The deferred tax
assets resulting from these carry forwards were as follows:
1998
----
Deferred tax assets $ 1,175,188
Less valuation of net assets (1,175,188)
-----------
$ --
===========
12
<PAGE>
INTERGOLD CORPORATION
Notes to Unaudited Financial Statements
March 31, 1999
NOTE 11: GOING CONCERN AND CONTINUED OPERATIONS
At March 31, 1999, the Company has not generated significant revenues from
operations. The Company's successful financial operations and movement into
an operating basis are contingent on the development of the lode mining
claims and the continuing ability of generating capital financing. The
Company intends to finance operations for the next twelve months through
the December 15, 1998 private placement discussed in Note 3. This offering
would generate approximately $2,500,000 in total. The Company also believes
that the shareholders will exercise the conversion privileges of the
warrants issued with the Preferred A and B shares discussed in Note 3 as
needed.
NOTE 12: MANAGEMENT SERVICES AGREEMENT
The Company, on January 1, 1999, entered into a management services
agreement with Investor Communications, Inc. ("Investor Communications") to
provide management of the day-to-day operations of the Company. The
management services agreement requires monthly payments not to exceed
$75,000 for services rendered.
The Company's subsidiary entered into a similar agreement on January 1,
1999 with Amerocan Marketing, Inc. ("Amerocan") with required monthly
payments not to exceed $25,000 for services rendered.
The individuals comprising the management teams provided by Investor
Communications and Amerocan are the same individuals managing the
operations of Goldstate Corporation. One of the three directors of
Intergold Corporation has been employed by Investor Communications and
Amerocan and is part of the management teams provided to Intergold
Corporation, its subsidiary, and Goldstate Corporation.
NOTE 13: CONTINGENCIES
The Company is subject to a claim for unpaid consulting fees amounting to
$45,502. The consulting fees are for assay and metallurgical services
provided to International Gold Company during 1998. The Company has
substantial defenses and offsets to the claim. The maximum potential
liability due to this claim is $45,502. No provision for this claim has
been recorded in the financial statements.
13
<PAGE>
INTERGOLD CORPORATION
Notes to Unaudited Financial Statements
March 31, 1999
NOTE 13: CONTINGENCIES (continued)
Due to the nature of the Company's operations, the Technology Sub-License
(license) that the Company will receive pursuant to the discussion in Note
7 may have a significantly impaired value once it is transferred. While the
Company feels that the license is necessary to develop the Blackhawk claims
to their potential, the speculative nature of the claims and the desire to
present the Company's assets conservatively require the Company to value
the license at the discounted value of potential future cash flows that
will be generated by the claims. As the claims are still in an exploration
stage, it is anticipated that any potential future cash flows would be
deeply discounted. The Company expects that due to this conservative
approach a significant portion of the license value will be shown as an
impairment loss in future periods. The Company has not determined the
discounted future cash flow value at this time.
14
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation
Results of Operation
- --------------------
For the three-month period ended March 31, 1999, the Company recorded a net
loss of $3,516,875 compared to a net loss of $152,788 in the corresponding
period of 1998. During the three-month period ended March 31, 1999 and March 31,
1998, the Company recorded no income.
During the three-month period ended March 31, 1999, the Company recorded
operating expenses of $3,509,679 as compared to $309,847 of operating expenses
recorded in the same period for 1998. Property exploration expenses increased
significantly in the approximate amount of $2,929,890 in the three-month period
in 1999 primarily relating to work orders for research and development and
metallurgical services. Administrative expenses increased approximately $269,942
in the three-month period in 1999 compared to 1998. This increase was due
primarily to an increase in overhead and administrative expenses resulting from
the increasing scale and scope of the overall corporate activity.
Liquidity and Capital Resources
- -------------------------------
As of the three-month period ended March 31, 1999, the Company's total
assets were $110,984. This decrease from fiscal year ended December 31, 1998 was
due primarily to a decrease in cash and cash equivalents. As of the three-month
period ended March 31, 1999, the Company's total liabilities were $1,042,865.
This overall increase from fiscal year ended December 31, 1998 was due primarily
to the promissory notes issued by the Company to Geneva Resources, Inc. and
AuRIC Metallurgical Laboratories, LLC. in the amount of $250,000 each, pursuant
to the terms and conditions of a technology sub-license agreement dated March
18, 1999 between the Company and Geneva Resources, Inc., and the accrued
interest on certain advances.
Stockholders' Equity (deficit) decreased from $(180,006) for fiscal year
ended December 31, 1998 to $(931,881) for the three-month period ended March 31,
1999.
15
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
- -------------------------
On October 23, 1998, the Company filed a complaint against a previous geological
consultant for the Company in the District Court, Fourth Judicial District, in
the State of Idaho, County of Ada. The complaint seeks damages in the
approximate amount of $40,000 plus legal fees for business interruption losses
claimed by the Company against the geological consultant. The consultant filed
an answer on July 13, 1999 without providing counterclaims.
Item 2. Changes in Securities and Use of Proceeds
- -------------------------------------------------
No report required.
Item 3. Defaults Upon Senior Securities
- ---------------------------------------
No report required.
Item 4. Submission of Matters to a Vote of Security Holders
- -----------------------------------------------------------
No report required.
Item 5. Other Information
- -------------------------
No report required.
Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
(a) No exhibits required.
(b) No reports required.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
INTERGOLD CORPORATION
Dated: August 13, 1999 By: /s/ Gary Powers
------------------------------
Gary Powers, President
Dated: August 13, 1999 By: /s/ Grant Atkins
------------------------------
Grant Atkins, Secretary
16
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