U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 TO
FORM 10-KSB
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 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
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(Exact name of small business issuer as specified in its charter)
NEVADA 88-0365453
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(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
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(Address of Principal Executive Offices)
(949) 476-3611
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(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
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<PAGE>
Check here if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B 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 amendment to this Form 10-KSB. [ X ]
State the issuer's revenues for its more recent fiscal year (ending
December 31, 1999): $ -0-.
State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the common
equity was sold, or the average bid and asked prices of such common equity, as
of January 31, 2000: $212,520.
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the most practicable date:
Class Outstanding as of August 14, 2000
Common Stock, $.00025 par value 81,000,000
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Business Development
Intergold Corporation, which currently trades on the OTC Bulletin Board
under the symbol "IGCO" (referred to in this Form 10-KSB as "IGCO"), is
primarily engaged in the business of exploration of gold and precious metals in
the United States. In 1996, IGCO was incorporated under the laws of the State of
Nevada under the name All Wrapped Up, Inc. During 1997, control and management
of IGCO changed, its primary business focus was redirected to the exploration of
gold and precious metals, and its name was changed to Intergold Corporation.
IGCO's operational business activities are carried out through International
Gold Corporation ("INGC"), a private wholly-owned subsidiary of IGCO. INGC's
primary asset consists of title to a block of 321 contiguous unpatented lode
mining claims located in Lincoln County, south-central Idaho (the "Blackhawk
Property"). IGCO is considered to be in the exploration stage without any
assurance that the Blackhawk Property contains a commercially viable mineral
deposit (a reserve).
<PAGE>
Business of IGCO
The Blackhawk Property is comprised of 321 contiguous unpatented lode
mining claims. IGCO also holds a forty-nine percent (49%) joint venture interest
in profits with Goldstate Corporation pertaining to a further 439 unpatented
lode mining claims in an area adjacent to the Blackhawk Property (the Blackhawk
II Property). INGC, the wholly-owned subsidiary of IGCO, holds possessory title
to the unpatented lode mining claims on the Blackhawk Property.
The Blackhawk Property was initially explored by surface mapping and
sampling and recirculation drilling which identified a large potentially
mineralized zone on the Blackhawk Property showing anomalously high
concentrations of gold from certain assays. Subsequently, the Blackhawk Property
was further explored by drilling nine core holes each to a depth of five hundred
feet.
Management of IGCO retained AuRIC Metallurgical Laboratories, LLC of Salt
Lake City, Utah ("AuRIC") to carry out fire assay testing and chemical leach
analysis of core samples derived from the drilling. AuRIC developed a fire assay
procedure that was validated in a November 30, 1998 report by Dames and Moore,
an internationally recognized engineering and consulting firm ("Dames & Moore")
entitled Verification of Validity of Developed Analytical Procedures - The
Blackhawk Project" and in a subsequent report dated January 6, 1999 entitled
Determination of Repeatability of the Verified Developed Analytical Procedures
for the Blackhawk Project".
AuRIC conducted this fire assay procedure on the core samples of each of
the nine holes drilled. Such assays at fifty-foot intervals indicated an average
gold and silver grade of 0.090 and 0.190 ounces per ton, respectively. AuRIC
also provided further assays at every five-foot interval throughout each of
eight drill core holes. Such assays indicated an average gold and silver grade
of 0.075 and 0.179 ounces per ton, respectively.
The services of Dames & Moore were also engaged by IGCO directly and
indirectly through AuRIC to provide validation audits during the assay and
metallurgical recovery process conducted by AuRIC. In November of 1998,
according to independent testing conducted by Dames & Moore, Dames & Moore
validated AuRIC's fire assay and metallurgical recovery procedures as a method
to verify the existence of gold and silver mineralization. The positive outcome
of the testing program conducted by Dames & Moore formed the subject of the
November 30, 1998 report referenced above, providing verification of
mineralization in the actual testing. Dames & Moore subsequently verified the
fire and chemical assay techniques and procedures developed by AuRIC and their
repeatability.
IGCO subsequently entered into multiple work orders with Dames & Moore
relating to a variety of services, such as professional and independent project
management, project cost control, geological mapping and studies, permitting and
land use, chain of custody drill sample collection, environmental assessment
reports, survey mapping, petrographic studies, data management and entry, chain
of custody assay database, geographic information systems, development geology,
<PAGE>
project control, scheduling, geology support, chain of custody protocol,
laboratory evaluations, public involvement, and field mobilization.
INGC, on behalf of IGCO, entered into an Agreement for Services dated March
18, 1999 (the "Agreement for Services") with AuRIC whereby AuRIC agreed to
perform certain services, including the development of proprietary technology
and know-how relating to fire and chemical assay analysis techniques and
metallurgical ore extraction procedures developed specifically for the Blackhawk
Property.
AuRIC and Geneva Resources, Inc., a Nevada corporation ("Geneva") entered
into a Technology License Agreement dated March 17, 1999 (the "License
Agreement") whereby AuRIC agreed to supply the proprietary technology to Geneva
and grant to Geneva the right to sub-license the proprietary technology to IGCO
for use on the Blackhawk Property. IGCO and Geneva simultaneously entered into a
Technology Sub-License Agreement dated March 18, 1999 (the "Sub-License
Agreement") whereby IGCO acquired from Geneva a sub-license to utilize AuRIC's
proprietary information and related precious metals recovery processes to carry
out assay testing and metallurgical recovery analysis of core samples derived
from drilling on the Blackhawk Property.
Pursuant to certain contractual terms and provisions, AuRIC and Dames &
Moore have not been successful in transferring the proprietary fire assay
technology to any independent third party assay laboratory. Therefore, on
September 27, 1999, Geneva and INGC, on behalf of IGCO, initiated legal
proceedings against AuRIC for mutiple breaches of contract stemming from the
Agreement for Services, the License Agreement, and the Sub-License Agreement and
against Dames & Moore in a declaratory relief cause of action. See "Item 3.
Legal Proceedings".
Subsequent to initiation of legal proceedings against AuRIC and Dames &
Moore, during November 1999, IGCO engaged the services of Strathcona Mineral
Services Limited ("Strathcona") to review the available data and provide
independent assay and metallurgical recovery testing. Strathcona analyzed both
core samples from previous drilling and surface samples collected by Strathcona
using assaying and extractive leach procedures. The methods utilized by
Strathcona included fire assaying, neutron activation assaying, and cyanide and
thiourea leaching for gold. The tests were performed on some of the splits of
core materials from which AuRIC had previously performed over 800 assays and had
reported some of the highest gold results to IGCO (gold values of 0.1 to 94.1
g/t).
Strathcona engaged the laboratories of Lakefield Research and Activation
Laboratories for testing analysis. Strathcona reported that both laboratories
could not find gold above the minimum detection limits in the samples, and
concluded that based on the samples provided, gold and silver were not present
in economic quantities on the Blackhawk Property.
<PAGE>
During November 1999, IGCO also engaged Mineral Science, Limited of London,
England ("Mineral Science"), which obtained the services of the internationally
recognized facilities of OMAC Laboratories Ltd to provide fire assay, ICP and
geochemical analysis and CSMA Consultants Ltd. to perform leach testing. Splits
of the same samples provided to Strathcona were provided to Mineral Science. The
results obtained from Mineral Science confirmed and reiterated the negative
findings of Strathcona, that gold values were below the detection limits.
Due to the litigation, there have been delays in the transfer of technology
under the Sub-License Agreement. There is a change that the transfer of
technology under the Sub-License Agreement may never occur, or at a minimum,
will be delayed pending the outcome of the litigation against AuRIC and Dames &
Moore.
As of the date of this Annual Report, management of IGCO has suspended
further exploration of the Blackhawk Property indefinitely due to (i) the
independent assessment information from Strathcona and Mineral Science which
does not support the claims of AuRIC and Dames & Moore, (ii) the existence of
multiple breaches of contract by AuRIC and Dames & Moore under the Agreement for
Services and the License Agreement, and (iii) the ensuing litigation against
AuRIC and Dames & Moore.
ITEM 2. PROPERTIES
Except as described above, IGCO does not own any other real estate or other
properties. IGCO leases office space and its offices are located at 5000 Birch
Street, West Tower, Suite 4000, Newport Beach, California 92660.
ITEM 3. LEGAL PROCEEDINGS
On September 27, 1999, Geneva and INGC, on behalf of IGCO, initiated legal
proceedings against AuRIC and Dames & Moore by filing its complaint in the
District Court of the Third Judicial District for Salt Lake City, State of Utah.
INGC and AuRIC entered into the Agreement for Services whereby AuRIC agreed
to perform certain services, including the development of proprietary technology
and know-how relating to fire and chemical assay analysis techniques and
metallurgical ore extraction procedures developed specifically for the Blackhawk
Property (the "Proprietary Technology"). Dames & Moore verified the fire and
chemical assay techniques and procedures developed by AuRIC and their
repeatability, and metallurgical recovery procedures. IGCO subsequently entered
into multiple work orders with Dames & Moore relating to a variety of services.
Gevena and AuRIC entered into the License Agreement whereby AuRIC agreed to (i)
supply the Proprietary Technology to Geneva, (ii) grant to Geneva a license to
use such technology on its claims located adjacent to the Blackhawk Property and
the right to sub-license the Proprietary Technology to IGCO for use on the
Blackhawk Property. IGCO and Geneva simultaneously entered into the Sub-License
Agreement whereby IGCO and INGC acquired from Geneva a sub-license to utilize
AuRIC's Proprietary Technology, assay technology and related precious metals
recovery processes on the Blackhawk Property.
<PAGE>
On September 27, 1999, Geneva and INGC, on behalf of IGCO, initiated legal
proceedings against AuRIC for: (i) multiple breaches of contract relating to the
Agreement for Services and the License Agreement, respectively, including, but
not limited to, establishment and facilitation of the Proprietary Technology and
fire assay procedures developed by AuRIC at an independent assay lab and failure
to deliver the proprietary technology and procedures to IGCO and Geneva; (ii)
breach of the implied covenant of good faith and fair dealing; (iii) negligent
misrepresentation; (iv) specific performance, (v) non-disclosure injunction;
(vi) failure by AuRIC to repay advances, and (vii) quantum meruit/unjust
enrichment. INGC, on behalf of IGCO, also named Dames & Moore in the legal
proceeding in a declaratory relief cause of action.
On October 8, 1999, Geneva and INGC, on behalf of IGCO, amended its
complaint by naming as defendants AuRIC, Dames & Moore, Ahmet Altinay General
Manager of AuRIC, and Richard Daniele, Chief Metallurgist for Dames & Moore and
specifying damages in excess of $10,000,000. The damages sought by Geneva and
INGC, on behalf of IGCO, are based on the general claims and causes of action
set forth in the amended complaint relating to reliance on the assays and
representations made by AuRIC, the actions and engineering reports produced by
Dames & Moore and, specifically, the negligent misrepresentations and
inaccuracies contained within some or all of those Dames & Moore reports and
breaches of contract by AuRIC and Dames & Moore.
On June 21, 2000, Geneva and INGC, on behalf of IGCO, filed a second
amended complaint in the District Court of the Third Judicial District for Salt
Lake City, State of Utah. The second amended complaint increased detail
regarding the alleged breaches of contract and increased causes of action
against other parties involved by adding two new defendants, MBM Consulting,
Inc. and Dr. Michael B. Merhtens, who provided consulting services to INGC. The
amendment also added certain claims of other entities involved through Geneva
against the defendants. The Proprietary Technology forms the basis of claims
made by Geneva and INGC, on behalf of IGCO, in the complaints as filed with the
District Court. Geneva and INGC, on behalf of IGCO, allege that the Proprietary
Technology does not exist and that Geneva and INGC were fraudulently, recklessly
and/or negligently deceived by AuRIC, Dames & Moore, and other parties to the
lawsuit.
Geneva and INGC, on behalf of IGCO, have subsequently obtained an order
from the District Court granting its Motion to Compel. The Order requires that
AuRIC and Dames & Moore produce the Proprietary Technology for Geneva's and
INGC's restricted use by its legal counsel and industry experts. Geneva and
INGC, on behalf of IGCO, intend to obtain an expert opinion as to the validity
or ineffectiveness of the Proprietary Technology.
As of the date of this Annual Report, various depositions have been taken
by various parties to the lawsuit, with more expected in the scheduling process.
Discovery and document production have been conducted by both sides to the
dispute, but not completed. Geneva and INGC, on behalf of IGCO, continue to
pursue all such legal actions and review further legal remedies against AuRIC
and Dames & Moore. Management deems the Proprietary Technology crucial with
respect to successful exploration of the Blackhawk Property. Management has,
therefore, suspended exploration of the Blackhawk Property indefinitely until
resolution of the legal proceedings. Management believes that the legal
proceedings will prove that the Proprietary Technology is invalid.
If the Proprietary Technology is proven to be invalid and not transferable,
and INGC/Geneva are not successful in the outcome of the litigation and damages
are not awarded, the Company may not be able to recover its potential losses and
expenses incurred due to the breach of the Sub-License Agreement by Geneva.
However, if the Proprietary Technology is proven to be invalid and not
transferable, and INGC/Geneva are successful in the outcome of the litigation,
INGC/Geneva may then receive damages from AuRIC and Dames & Moore. Geneva's
damages result primarily from its inability to transfer the proprietary
technology to the Company in accordance with the provisions of the Sub-License
Agreement. Management believes that the Company will, under these circumstances,
be entitled to receive a pro-rata portion of the awarded damages for potential
losses incurred due to the breach of the Sub-License Agreement by Geneva.
<PAGE>
The Company and Geneva have entered into an assignment agreement dated May
9, 2000 (the "Assignment Agreement") that transferred and conveyed to Geneva the
potential claims and causes of action that the Company may have under the
Sub-License Agreement with Geneva. If damages are recovered in the lawsuit
initiated by Geneva and INGC, on behalf of the Company, the Company will receive
a pro rata share of such damages relating to its claims and causes of action in
relation to all other claims and causes of action for which damages are
recovered. Thus, Geneva will receive any such pro rata share of the damages
recovered pursuant to the terms and provisions of the Geneva Assignment
Agreement.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of IGCO's shareholders through the
solicitation of proxies or otherwise during fiscal year ended December 31, 1999.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
Intergold Corporation's common stock is traded on the OTC Bulletin Board
under the symbol "IGCO". The market for IGCO's common stock is limited, volatile
and sporadic. The following table sets forth the high and low sales prices
relating to IGCO's common stock for the last two fiscal years. These quotations
reflect inter-dealer prices without retail mark-up, mark-down, or commissions,
and may not reflect actual transactions.
<PAGE>
FISCAL YEARS ENDED
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DECEMBER 31, 1999 DECEMBER 31, 1998
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HIGH BID LOW BID HIGH BID LOW BID
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First Quarter $1.937 $0.593 $2.50 $0.9375
Second Quarter $2.125 $$0.630 $2.6875 $1.25
Third Quarter $1.00 $0.375 $1.5625 $0.4375
Fourth Quarter $0.312 $0.090 $1.50 $0.4375
Holders
As of January 31, 2000, IGCO had approximately 61 shareholders of record.
Dividends
No dividends have ever been declared by the board of directors of IGCO on
its common stock. Holders of shares of Series A Preferred stock and Series B
Preferred stock are entitled to receive, when, as, and if declared by the board
of directors of IGCO out of funds at the time legally available therefore, cash
dividends at an annual rate of 20%, payable annually in arrears, commencing
January 1, 1999. During the fiscal year ended December 31, 1999, the Series A
Preferred dividend was paid through the issuance of shares of common stock to
shareholders who elected to convert their shareholdings into common stock.
Accordingly, 576,000 shares of common stock were issued at $0.25 per share
representing payment of a total dividend of $144,000.
IGCO's losses do not currently indicate the ability to pay any cash
dividends, and IGCO does not indicate the intention of paying cash dividends
either on its common stock or preferred stock in the foreseeable future.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS
The following discussions of the results of operations and financial
position of IGCO should be read in conjunction with the financial statements and
notes pertaining to them that appear elsewhere in this Form 10-KSB.
For Fiscal Year Ended December 31, 1999 compared with Fiscal Year Ended
December 31, 1998
General
As of the date of this Annual Report, there has been no income realized
from the business operations of IGCO. IGCO's primary source of financing during
the year has been from proceeds received by IGCO from issuance of Series B
Preferred shares, cash advances provided to IGCO as debt and the conversion of
<PAGE>
Series A Warrants into shares of IGCO's common stock at the redemption price of
$0.25 per Series A Warrant. Pursuant to a letter from IGCO which provided notice
to the holders of Series A Preferred shares that IGCO intended to redeem in
whole the outstanding Series A Preferred warrants, as of December 31, 1999,
1,000,000 Series A warrants have been converted into 1,000,000 shares of IGCO's
restricted common stock for an aggregate consideration of $250,000.00. As of
December 31, 1999, 9,000,000 Series A Warrants remained outstanding which IGCO
will redeem at $0.01 per Series A warrant and has booked as a redemption
liability of 490,000. See "- Liquidity and Capital Resources".
Each Series A Preferred share is also convertible into one share of common
stock of IGCO and all then accrued and unpaid dividends are convertible into
common stock at the conversion price of $0.25 per share. During December 1999,
the holders of Series A Preferred shares converted an aggregate of 2,700,000
Series A Preferred shares into 2,700,000 shares of IGCO's common stock, and an
additional 576,000 shares of Common Stock were issued by the Company as a
divident pursuant to such conversion.
Results of Operation
IGCO's net losses for fiscal year ended December 31, 1999 were
approximately $5,803,534 compared to a net loss of approximately $1,811,255 for
fiscal year ended 1998. During fiscal year ended December 31, 1999 and
December 31, 1998, the Company recorded no income.
During fiscal year ended 1999, IGCO recorded operating expenses of
$5,740,800 as compared to $1,906,795 of operating expenses recorded in the same
period for fiscal year ended 1998. Property exploration expenses increased in
the approximate amount of $2,974,822 during fiscal year ended 1999 compared to
fiscal year 1998. The increase in property exploration expenses resulted
primarily from the increased scale and scope of exploration, research and
development and metallurgical services performed on the Blackhawk Property by
(i) AuRIC pursuant to the Agreement for Services, (ii) Dames & Moore pursuant to
work orders, (iii) independent laboratories, including Strathcona and Mineral
Science, subsequently engaged by IGCO to review the data and findings provided
by AuRIC and Dames & Moore, and (iv) IGCO's required issuance of common shares
and promissory notes under the Sub-License Agreement that IGCO acquired from
Geneva to utilize AuRIC's proprietary information and related precious metals
recovery processes.
Administrative expenses also increased by approximately $859,183 during
fiscal year ended 1999 compared to 1998. This increase in administrative
expenses was due primarily to an increase in overhead and administrative
expenses resulting from the increasing scale and scope of overall corporate
activity pertaining to the exploration and administration of the Blackhawk
Property, as well as the increasing scale and scope of associated costs and
corporate activity pertaining to the litigation initiated by IGCO against AuRIC
and Dames & Moore including, but not limited to, overhead and administration
expenses, legal fees and consultant fees.
As discussed above, the increase in net loss during fiscal year ended
December 31, 1999 as compared to fiscal year ended December 31, 1998 is
attributable primarily to the substantial increase in property exploration
expenses resulting from the increased scale and scope of exploration, research
and development and metallurgical services performed on the Blackhawk Property.
The Company's net earnings (losses) during fiscal year ended December 31, 1999
were approximately ($5,803,534) or ($0.112) per share compared to a net loss of
approximately ($1,811,255) or ($0.038) per share during fiscal year ended
December 31, 1998. The weighted average number of diluted shares outstanding
were 51,830,453 for fiscal year ended December 31, 1999 compared to 47,943,216
for fiscal year ended December 31, 1998.
<PAGE>
Liquidity and Capital Resources
The Company's financial statements have been prepared assuming that it will
continue as a going concern and, accordingly, do not include adjustments
relating to the recoverability and realization of assets and classification of
liabilities that might be necessary should the Company be unable to continue in
operation.
As of fiscal year ended December 31, 1999, IGCO's total assets were $30,023
compared to total assets of $329,767 for fiscal year ended 1998. This decrease
in assets from fiscal year ended 1998 was due primarily to a decrease in cash
and cash equivalents and the valuation adjustment of IGCO's equity ownership of
1,000,000 shares of restricted common stock of Goldstate Corporation. On
February 11, 2000, IGCO sold to Investor Communications International, Inc. its
equity ownership of 1,000,000 shares of restricted common stock of Goldstate
Corporation for $150,000.
As of fiscal year ended December 31, 1999, IGCO's total liabilities were
$2,278,562 compared to total liabilities of $509,772 for fiscal year ended 1998.
This increase in liabilities from fiscal year ended 1998 was due primarily to
(i) cash advances in the approximate amount of $842,991 made to IGCO plus
accrued interest, (ii) the promissory notes issued by IGCO to Geneva Resources,
Inc. and AuRIC in the amount of $250,000 each pursuant to the terms and
conditions of the Sub-License Agreement, (iii) recording of an accrued payable
in the amount of $90,000 to reflect IGCO's redemption liability for the
remaining 9,000,000 Series A Warrants outstanding, and (iv) an increase in
accounts payable in the amount of $249,070.
Stockholders' Deficit increased from $(180,005) for fiscal year ended
December 31, 1998 to $(2,248,539) for fiscal year ended December 31, 1999.
ITEM 7. FINANCIAL STATEMENTS
The information required under Item 310(a) of Regulation S-B is included in
this report as set forth in the "Index to Financial Statement".
Index to Financial Statements
Report of Independent Public Accountants
Balance Sheet
Statements of Operations
Statements of Stockholders' Equity
Statement of Cash Flow
Notes to Financial Statements
<PAGE>
TABLE OF CONTENTS
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Page
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Independent Auditors' Opinion ......................................... 1
Balance Sheet ......................................................... 2
Statements of Operations .............................................. 3
Statements of Cash Flows .............................................. 4
Statements of Stockholders' Equity (Deficit) .......................... 5
Notes to Financial Statements ......................................... 6-17
<PAGE>
Johnson, Holscher & Company, P.C.
Certified Public Accountants
Stockholders and Board of Directors
Intergold Corporation
INDEPENDENT AUDITORS' REPORT
----------------------------
We have audited the balance sheets of Intergold Corporation (the Company), as of
December 31, 1999 and 1998, and the related statements of operations,
stockholders' equity (deficit) and cash flows for the years ended December 31,
1999 and 1998 and for the period from inception (July 26, 1996) to December 31,
1999. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the 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 audit provides a reasonable basis for our opinion
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Intergold Corporation as of
December 31, 1999 and 1998, and the results of its operations and its cash flows
for the years ended December 31, 1999 and 1998, and for the period from
inception (July 26, 1996) to December 31, 1999, in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has not generated revenues from operations,
has a working capital deficit of $2,272,093, and a stockholders' deficit of
$2,248,539, which raises substantial doubt about its ability to continue as a
going concern. The Company has established a plan to continue operations through
additional stock offerings and advances as outlined in Note 1. The financial
statements do not include any adjustments that might result if management's plan
is unsuccessful.
/s/ Johnson, Holscher & Company, P.C.
-------------------------------------
Johnson, Holscher & Company, P.C.
Greenwood Village, Colorado
March 13, 2000
1
Member of the American Institute of Certified Public Accountants
Member of the Private Companies Practice Section
Member of the SEC Practice Section
5975 Greenwood Plaza Blvd., Suite 140
Greenwood Village, CO 80111
(303) 694-2727
Fax (303) 694-3172
<PAGE>
<TABLE>
<CAPTION>
INTERGOLD CORPORATION
(An Exploration Stage Company)
Balance Sheet
December 31, December 31,
1999 1998
----------- -----------
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash and cash equivalents $ 1,469 $ 248,850
Prepaid expenses 5,000 --
PROPERTY PLANT AND EQUIPMENT
Equipment (net of depreciation) 3,554 4,146
OTHER ASSETS
Available-for-sale investments 20,000 75,000
Organizational Costs -- 1,771
----------- -----------
Total Assets $ 30,023 $ 329,767
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
CURRENT LIABILITIES
Accounts payable - trade $ 367,691 $ 118,621
Advances payable 1,025,030 182,039
Directors fees payable 45,500 21,500
Notes payable 551,890 51,890
Accrued Series A warrant redemption payable 90,000 --
Accrued interest payable 198,451 135,722
----------- -----------
Total Liabilities 2,278,562 509,772
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STOCKHOLDERS' EQUITY (Deficit)
Preferred stock, $.001 par value; authorized
at December 31, 1999 and 1998
75,000,000 shares; issued and outstanding
at December 31, 1999 and 1998
Series A- 7,300,000 shares and 10,000,000 shares respectively 7,300 10,000
Series B - 2,510,000 shares and 0 shares respectively 2,510 --
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
December 31, 1999 and 1998
125,000,000 shares; issued and outstanding at
December 31, 1999 and 1998, 56,328,000 shares
and 48,022,000 respectively 14,081 12,006
Paid - in capital 7,271,877 3,483,762
Accumulated unrealized gain/loss on investments (150,000) (95,000)
Accumulated deficit through development stage (9,394,307) (3,590,773)
----------- -----------
Total Stockholders' Equity (Deficit) (2,248,539) (180,005)
----------- -----------
Total Liabilities and Stockholders' Equity (Deficit) $ 30,023 $ 329,767
=========== ===========
See accompanying summary of accounting policies and notes to financial statements.
2
<PAGE>
INTERGOLD CORPORATION
(An Exploration Stage Company)
Statements of Operations
Inception
(July 26,
For the 3 Months For the 12 Months 1996) to
Ended Dec. 31, Ended Dec. 31, December 31,
1999 1998 1999 1998 1999
------------ ------------ ------------ ------------ ------------
REVENUES
Other income $ -- $ 1 $ -- $ 1 $ 1,699
------------ ------------ ------------ ------------ ------------
Total Revenues -- 1 -- 1 1,699
------------ ------------ ------------ ------------ ------------
OPERATING EXPENSES
PROPERTY EXPLORATION EXPENSES
Assay and lab (15,391) 15,280 (15,391) 320,159 375,603
Geological consultants 8,775 104,471 88,719 232,450 743,622
Independent project consulting 121,684 -- 392,310 -- 392,310
Consultants - survey and mapping 523 (70,198) 21,582 -- 21,582
Drilling and drill core management (10,427) 62,384 30,455 213,243 243,698
Metallurgical 29,700 119,240 680,802 119,240 925,639
Research and development -- -- 2,860,000 -- 2,860,000
Claims maintenance and state fees -- 1,106 66,932 107,776 181,193
Staking (8,757) 52,418 3,080 75,588 163,159
Wages and salaries -- 56,920 -- 56,920 65,140
Miscellaneous 360 29,011 419 29,148 29,508
Depreciation 148 154 592 154 746
Travel -- -- -- -- 4,686
------------ ------------ ------------ ------------ ------------
Total Property Exploration Expenses 126,615 370,786 4,129,500 1,154,678 6,006,886
------------ ------------ ------------ ------------ ------------
ADMINISTRATIVE EXPENSES
Overhead and Administration 288,050 150,000 1,186,955 510,000 2,277,955
Reports/information/subscripitions/promotion 6,021 61,346 29,426 90,241 139,778
Legal and accounting 61,935 (14,626) 130,511 (966) 375,803
Consultants 28,000 50,000 109,500 52,000 171,500
Travel (17,086) 25,730 55,945 47,942 132,690
Directors Fees 6,000 4,500 24,000 19,500 53,500
Advertising -- (14,000) 7,368 -- 7,368
Auto 3,237 9,552 16,147 13,027 36,328
Courier and postage 1,041 1,742 7,698 5,149 21,367
Internet design and access 7,861 1,346 10,531 4,406 18,928
Insurance -- (2,194) 80 -- 80
Office rent 224 1,905 1,468 2,767 14,806
Office supplies 4,978 106 22,818 2,578 27,035
Transfer agent 910 1,203 1,605 2,146 4,121
Bank charges 90 903 890 1,598 3,164
Security -- -- -- 867 867
Telephone and fax 5,619 862 6,026 862 9,532
Share issue transactions -- -- -- -- 10,500
Miscellaneous 15,531 (11,104) 332 -- 8,967
Wages and salaries -- -- -- -- 11,944
Utilities -- -- -- -- 34,431
------------ ------------ ------------ ------------ ------------
Total Administrative Expenses 412,411 267,271 1,611,300 752,117 3,360,664
------------ ------------ ------------ ------------ ------------
Total Operating Expenses 539,026 638,057 5,740,800 1,906,795 9,367,550
------------ ------------ ------------ ------------ ------------
Operating Income (Loss) (539,026) (638,056) (5,740,800) (1,906,794) (9,365,851)
OTHER INCOME (EXPENSE)
Sale of future profit sharing interest -- 170,000 -- 170,000 170,000
Interest expense (36,349) (14,797) (62,734) (74,461) (198,456)
------------ ------------ ------------ ------------ ------------
Net (Loss) $ (575,375) $ (482,853) $ (5,803,534) $ (1,811,255) $ (9,394,307)
============ ============ ============ ============ ============
Income (Loss) per Share $ (0.011) $ (0.010) $ (0.112) $ (0.038) $ (0.262)
============ ============ ============ ============ ============
Weighted Average Number of
Common Shares Outstanding 53,653,252 47,943,859 51,830,453 47,943,216 35,924,613
============ ============ ============ ============ ============
See accompanying summary of accounting policies and notes to financial statements.
3
<PAGE>
INTERGOLD CORPORATION
(An Exploration Stage Company)
Statements of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
Inception
(July 26,
For the 3 Months For the 12 Months 1996) to
Ended Dec. 31, Ended Dec. 31, December 31,
1999 1998 1999 1998 1999
------------ ------------ ------------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (575,375) $ (482,853) $(5,803,534) $(1,811,255) $(9,394,307)
Adjustments to reconcile net (loss) to cash
Depreciation and Amortization 148 154 592 154 746
Changes in Assets and Liabilities
Prepaid expenses (5,000) -- (5,000) -- (5,000)
Accounts payable 132,566 (53,698) 249,071 (53,699) 367,691
Accrued interest payable 36,344 14,797 62,729 74,461 198,451
Director fees payable 6,000 (500) 24,000 14,500 45,500
----------- ----------- ----------- ----------- -----------
Net Cash Flows Used
for Operating Activities (405,317) (522,100) (5,472,142) (1,775,839) (8,786,919)
----------- ----------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Organization costs -- -- 1,771 -- --
Acquisition of available-for-sale investments -- (170,000) -- (170,000) (170,000)
Equipment purchases -- 39,965 -- (4,300) (4,300)
----------- ----------- ----------- ----------- -----------
Net Cash Flows Used
for Investing Activities -- (130,035) 1,771 (174,300) (174,300)
----------- ----------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock 819 20 2,075 20 14,081
Sale of preferred stock Series A (2,700) 6,200 (2,700) 10,000 7,300
Sale of preferred stock Series B -- -- 2,510 -- 2,510
Additional paid-in capital 1,882 1,583,280 3,878,115 2,529,480 7,361,877
Advances - net of payments 373,088 (926,834) 842,990 (524,928) 1,025,030
Note payable advances -- -- 500,000 50,000 551,890
----------- ----------- ----------- ----------- -----------
Net Cash Flows Provided
by Financing Activities 373,089 662,666 5,222,990 2,064,572 8,962,688
----------- ----------- ----------- ----------- -----------
Net increase in cash (32,228) 10,531 (247,381) 114,433 1,469
Cash and cash equivalents - Beginning of period 33,697 238,319 248,850 134,417 --
----------- ----------- ----------- ----------- -----------
Cash and cash equivalents - End of period $ 1,469 $ 248,850 $ 1,469 $ 248,850 $ 1,469
=========== =========== =========== =========== ===========
During 1998, the Company accrued $135,722 of interest on outstanding notes and advances payable.
During 1999, the Company has accrued $62,729 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
<PAGE>
INTERGOLD CORPORATION
(An Exploration Stage Company)
Statements of Stockholders' Equity (Deficit)
Deficit Accumulated
Accumulated Unrealized
Common Stock Preferred Stock During Gain/(Loss)
----------------- ---------------- Paid - in Development On
Shares Amount Shares Amount Capital Stage Investments Total
------ ------ ------ ------ ------- ----- ----------- -----
Balance, July 26, 1996 -- $ -- -- $ -- $ -- $ -- $ -- $ --
Issuance of common stock
for cash ($.001
per share) 3,013,000 3,013 -- -- 9,117 -- -- 12,130
Less offering costs -- -- -- -- (4,473) -- -- (4,473)
Net income, July 26, 1996
(inception) to
December 31, 1996 -- -- -- -- -- 215 -- 215
---------- -------- ----------- ------- ----------- ----------- ----------- -----------
Balance, December 31, 1996 3,013,000 3,013 -- -- 4,644 215 -- 7,872
Redemption of shares
of stock for note payable (1,889,750) (1,890) -- -- -- -- -- (1,890)
Exchange of stock per SEC
Rule 15C2-11 exchanged
($.001 per share) (1,123,250) (1,123) -- -- -- -- -- (1,123)
exchanged ($.00025
per share) 46,493,000 11,623 -- -- -- -- -- 11,623
Issuance of common stock
for cash ($.00025
per share) 1,000,000 250 -- -- 499,750 -- -- 500,000
Issuance of common stock
for cash ($.00025
per share) 450,000 113 -- -- 449,888 -- -- 450,001
Net loss, Year ended
December 31, 1997 -- -- -- -- -- (1,779,733) -- (1,779,733)
---------- -------- ----------- ------- ----------- ----------- ----------- -----------
Balance, December 31,
1997 47,943,000 11,986 -- -- 954,282 (1,779,518) -- (813,250)
Issuance of preferred
stock for cash ($.001
per share)
- August 1998 -- -- 1,100,000 1,100 273,900 -- -- 275,000
Issuance of preferred
stockfor cash ($.001
per share)
- September 1998 -- -- 2,700,000 2,700 672,300 -- -- 675,000
Issuance of preferred
stock for cash ($.001
per share)
- November 1998 -- -- 4,000,000 4,000 996,000 -- -- 1,000,000
Issuance of preferred
stock for cash ($.001
per share)
- December 1998 -- -- 1,200,000 1,200 298,800 -- -- 300,000
5
<PAGE>
INTERGOLD CORPORATION
(An Exploration Stage Company)
Statements of Stockholders' Equity (Deficit)(Continued)
Deficit Accumulated
Accumulated Unrealized
Common Stock Preferred Stock During Gain/(Loss)
----------------- ---------------- Paid - in Development On
Shares Amount Shares Amount Capital Stage Investments Total
------ ------ ------ ------ ------- ----- ----------- -----
Issuance of preferred
stock in settlement of
covertible debenture -- -- 1,000,000 1,000 249,000 -- -- 250,000
($.001 per share)
Issuance of common stock
in settlement of vendor
payable ($.00025 per
$.50 per share) 79,000 20 -- -- 39,480 -- -- 39,500
Accumulated unrealized
gain/(loss) on
investments (95,000) (95,000)
Net Loss, Year Ended
December 31, 1998 -- -- -- -- -- (1,811,255) (1,811,255)
---------- -------- ----------- ------- ----------- ----------- ----------- -----------
Balance, December 31, 1998 48,022,000 12,006 10,000,000 10,000 3,483,762 (3,590,773) (95,000) (180,005)
Issuance of common stock
pursuant to technology sub
license agreement
($.00025 par,
$.58 per share) 4,000,000 1,000 -- -- 2,359,000 -- -- 2,360,000
Issuance of common stock
is settlement of vendor
payable ($.00025 par,
$.50 per share) 30,000 7 -- -- 14,993 -- -- 15,000
Issuance of common stock
pursuant to Preferred
Series A warrant
redemption ($.00025 par,
$.25 per share) 1,000,000 250 -- -- 249,750 -- -- 250,000
Issuance of common stock
pursuant to Preferred
Series A conversion
($.00025 par common
$.001 par Preferred) 2,700,000 674 (2,700,000) (2,700) 2,026 -- -- --
Issuance of common stock
in settlement of Preferred
Dividend on converted
preferred stock ($.00025
par $.25 per share 576,000 144 -- -- 143,856 -- -- 144,000
Issuance of Series B
Preferred Stock pursuant
to private placement
($.001 par, $.50 per share) -- -- 2,510,000 2,510 1,252,490 -- -- 1,255,000
Accumulated unrealized
gain/(loss) on investments -- -- -- -- -- -- (55,000) (55,000)
20% Cumulative Preferred
Dividends Paid on Converted
Series A Preferred Stock -- -- -- -- (144,000) -- -- (144,000)
Preferred Series A Warrant
Redemption ($.01 per
warrant) -- -- -- -- (90,000) -- -- (90,000)
Net Loss, Year Ended
December 31, 1999 -- -- -- -- -- (5,803,534) -- (5,803,534)
---------- -------- ----------- ------- ----------- ----------- ----------- -----------
Balance, December 31, 1999 56,328,000 $ 14,081 9,810,000 $ 9,810 $ 7,271,877 $(9,394,307) $ (150,000) $(2,248,539)
========== ======== =========== ======= =========== =========== =========== ===========
The accompanying notes are an integral part of the financial statements.
5a
</TABLE>
<PAGE>
INTERGOLD CORPORATION
(An Exploration Stage Company)
Notes to Financial Statements
December 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 had 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. Dames and Moore was
unable to independently verify the work performed by Auric
Metallurgical Laboratories. The Company has since filed suit against
both parties and has temporarily ceased exploration of the claims.
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
December 31, 1999 and December 31, 1998 and for the year ended
December 31, 1999 and December 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.
6
<PAGE>
INTERGOLD CORPORATION
(An Exploration Stage Company)
Notes to Financial Statements
December 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.
Earnings Per Share
------------------
As of December 31, 1999, there were 3,450,000 exercisable options,
9,810,000 shares of convertible preferred stock and 11,510,000 common
stock warrants that can be converted into 24,770,000 shares of common
stock. As these options, convertible preferred stock and warrants
would have an antidilutive effect on the presentation of loss per
share, a diluted loss per share calculation is not presented.
Going Concern and Continued Operations
--------------------------------------
At December 31, 1999, the Company has not generated significant
revenues from operations and has a working capital deficit of
$2,272,093 and a stockholders' deficit of $2,248,539. 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. Advances from
existing shareholders will form the primary source of short term
funding for the Company during the next twelve months. A secondary
source of financing is through the December 15, 1998 private placement
discussed in Note 3 if that financing instrument is marketable. This
offering would generate approximately $2,500,000 in total, with
$1,255,000 being generated through December 31, 1999.
Subsequent to December 31, 1999, the Company has ceased exploration of
the Blackhawk claims located in the State of Idaho, pending the
outcome of the Company's ongoing litigation with regard to the
transfer of technology pursuant to the Sub-license Agreement between
the Company and Geneva Resources, Inc. and the Company's Agreement for
Services with Auric Metallurgical Laboratories, LLC. (Note 11). There
is a chance that the technology to be transferred under the
Sub-license Agreement may be delayed indefinitely, or cancelled all
together, depending on the outcome of the Intergold/Geneva litigation.
As the alleged assay and metallurgical recovery technology developed
by Auric is deemed essential to the further development of the
Blackhawk claims, and since further consulting conducted by
independent consultants to the Company indicate that gold is not
present in economic quantities on the claims, business operations are
expected to be minimal pending the outcome of the litigation in
process.
7
<PAGE>
INTERGOLD CORPORATION
(An Exploration Stage Company)
Notes to Financial Statements
December 31, 1999
--------------------------------------------------------------------------------
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
On February 16, the Company authorized the execution of agreements for
the settlement of outstanding advances and accrued interest payable
through the issuance of common stock (Note 12).
NOTE 2: ADVANCES AND NOTES PAYABLE
Advances and Notes Payable are comprised of the following:
Advances
--------
----------------------------------------------------------------------
December 31, 1999
----------------------------------------------------------------------
Investor Communications Int'l, Inc. $ 193,801
Guest Investments 3,000
Tri Star Financial Services, Inc. 23,066
Alexander Cox 190,540
Sonanini Holdings 417,500
Amero-can Marketing, Inc. 197,123
------------
$ 1,025,030
----------------------------------------------------------------------
The advances all bear 10% simple interest and are due on demand. There
is $181,775 of interest accrued on the advances as of December 31,
1999.
8
<PAGE>
INTERGOLD CORPORATION
(An Exploration Stage Company)
Notes to Financial Statements
December 31, 1999
--------------------------------------------------------------------------------
NOTE 2: ADVANCES AND NOTES PAYABLE (continued)
Notes Payable
-------------
----------------------------------------------------------------------
For the redemption of 1,889,750 shares $ 1,890
of restricted common stock of the
Company payable at par value of $.00025.
To Sonanini Holdings, bearing interest 50,000
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 December 31, 1999 totals
$4,902.
To Auric Metallurgical Laboratories, 250,000
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 was to be upon
transfer of technology described in Note
6. Accrued interest on the note through
December 31, 1999 totals $5,887.
To Geneva Resources, Inc. pursuant to 250,000
the technology sub-license agreement
dated March 18, 1999, bearing interest
at 3% per annum, simple interest on the
balance outstanding. Maturity was to be
upon transfer of technology described in
Note 6. Accrued interest on the note
through December 31, 1999 totals $5,887.
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.
9
<PAGE>
INTERGOLD CORPORATION
(An Exploration Stage Company)
Notes to Financial Statements
December 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).
On May 4, 1999, the Company received $100,000 for the exercise of
400,000 Series A warrants to purchase 400,000 restricted shares of
common stock at $0.25/share pursuant to the Preferred Series A private
placement memorandum dated August 10, 1998.
On August 27, 1999, the Company received $150,000 for the exercise of
600,000 Series A warrants to purchase 600,000 restricted shares of
common stock at $0.25/share pursuant to the Preferred Series A private
placement memorandum dated August 10, 1998.
On December 14, 1999, the Company shareholders converted 2,600,000
Series A Preferred shares into 2,600,000 shares of the Company's
common stock. On December 17, 1999, an additional 100,000 Series A
Preferred shares were converted into 100,000 shares of the common
stock.
At December 31, 1999 there were 56,328,000 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.
10
<PAGE>
INTERGOLD CORPORATION
(An Exploration Stage Company)
Notes to Financial Statements
December 31, 1999
--------------------------------------------------------------------------------
NOTE 3: STOCKHOLDERS' EQUITY (continued)
Series A
--------
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 December 31, 1999, the Company had issued 10,000,000 Series A
preferred shares. The issuance generated $2,500,000.
Prior to December 31, 1999, 2,700,000 of the Series A Preferred shares
were converted into the Company's common stock. Additionally 1,000,000
of the outstanding warrants had been exercised. On October 27, 1999,
the Company issued a notice of redemption on the remaining outstanding
warrants. The Company will redeem the warrants at $.01 per warrant and
has recorded a $90,000 redemption liability for the remaining
9,000,000 outstanding.
Concurrent with the conversion of the Series A Preferred shares, the
Company paid a dividend on the Series A Preferred shares of 20% from
issuance. The Series A Preferred dividend was paid in common stock.
Accordingly, 576,000 common shares were issued at $.25 per share for a
total dividend of $144,000. As of December 31, 1999, the Company has
an additional $441,125 of undeclared dividends on the Series A
Preferred shares. If the Company's Series A Preferred shareholders
elect to convert the remaining outstanding Series A Preferred stock,
an additional 9,064,500 shares of common stock would be issued, which
represents 7,300,000 shares for the remaining preferred stock and
1,764,500 shares for the undeclared dividends.
As of December 31, 1999, there are 7,300,000 Series A preferred shares
and 9,000,000 Series A warrants outstanding.
11
<PAGE>
INTERGOLD CORPORATION
(An Exploration Stage Company)
Notes to Financial Statements
December 31, 1999
--------------------------------------------------------------------------------
NOTE 3: STOCKHOLDERS' EQUITY (continued)
Series B
--------
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 and the Series B offering is subordinate to the
Series A offering. The Series B offering comprises a total of
5,000,000 convertible, redeemable preferred shares and 5,000,000
warrants. As of December 31, 1999, the Company had received
$1,255,000, representing 2,510,000 shares of Series B preferred stock
and an equal number of warrants, pursuant to this private placement
memorandum. As of December 31, 1999, the Company has $179,800 of
undeclared dividends on the Series B Preferred shares. If the
Company's Series B Preferred shareholders elect to convert the
remaining outstanding Series B Preferred stock, an additional
2,869,600 shares of common stock would be issued, which represents
2,510,000 shares for the remaining preferred stock and 359,600 shares
for the undeclared dividends.
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.
Originally, International Gold Corporation held 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 completed the transfer of the 439
unpatented lode-mining claims to Goldstate Corporation via a
quit-claim deed on September 10, 1999. As of December 31, 1999, there
were no jointly controlled assets pursuant to the agreement and no
profits had been generated. Accordingly, the Company has not included
any related amounts in its financial statements pursuant to this
agreement.
12
<PAGE>
INTERGOLD CORPORATION
(An Exploration Stage Company)
Notes to Financial Statements
December 31, 1999
--------------------------------------------------------------------------------
NOTE 4: JOINT VENTURE AGREEMENT (continued)
Subsequent to December 31, 1999, the Company, along with its joint
venture partner, Goldstate Corporation, has indefinitely ceased
exploration of the joint venture claims due to unconfirmed assay and
metallurgical recovery testing results.
The sole director of Goldstate Corporation is also a director of
Intergold Corporation.
NOTE 5: 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 could not be marketed for a
period of twelve months from issuance the Company initially 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
December 31, 1999 is $150,000. During the year ended December 31,
1999, the Company recorded an unrealized loss of $55,000. The
discounted value of the investment as of December 31, 1999 was
$20,000.
NOTE 6: 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.
13
<PAGE>
INTERGOLD CORPORATION
(An Exploration Stage Company)
Notes to Financial Statements
December 31, 1999
--------------------------------------------------------------------------------
NOTE 6: 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 September 30, 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.
The Company has initiated legal proceedings related to this agreement
(See Note 12).
NOTE 7: 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 year ended December
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 December 31, 1999 and 1998 are as follows:
14
<PAGE>
INTERGOLD CORPORATION
(An Exploration Stage Company)
Notes to Financial Statements
December 31, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NOTE 7: EMPLOYEE STOCK OPTION PLAN (continued)
December 31, 1999 December 31, 1998
----------------------------------------------------
Weighted Weighted
Number Average Number Average
of Exercise of Exercise
Options Price Options Price
------- ----- ------- -----
<S> <C> <C> <C> <C>
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-
</TABLE>
As of December 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 17 years 4 days.
There are 3,450,000 options that are exercisable with a weighted
average exercise price of $.71 per share of common stock.
NOTE 8: 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 December 31, 1999, $680,802 in services related to this
agreement have been paid. The services performed under this agreement
are recorded as research and development expenses.
The Company has initiated legal proceedings related to this agreement
(See Note 12).
15
<PAGE>
INTERGOLD CORPORATION
(An Exploration Stage Company)
Notes to Financial Statements
December 31, 1999
--------------------------------------------------------------------------------
NOTE 9: INCOME TAXES
The Company incurred operating losses for the year ended December 31,
1999 and 1998 of $5,673,878 and $1,738,196, respectively. The Company
has adopted FASB No. 109 for reporting purposes. As of December 31,
1999 and 1998, the Company had net operating loss carry forwards of
$9,130,332 and $3,456,454, respectively, which expire between the
years 2006 - 2014. The deferred tax assets resulting from these carry
forwards were as follows:
1999 1998
----------- -----------
Deferred tax assets $ 3,104,313 $ 1,175,188
Less valuation of net assets (3,104,313) (1,175,188)
----------- -----------
$ - $ -
=========== ===========
NOTE 10: 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 11: CONTINGENCIES
The Company is subject to a various claims for unpaid consulting fees.
The consulting fees are for property exploration services provided to
International Gold Company during 1998 and 1999. The Company has
substantial defenses and offsets to the claims. No provision for
losses related to these claims has been recorded in the financial
statements.
16
<PAGE>
INTERGOLD CORPORATION
(An Exploration Stage Company)
Notes to Financial Statements
December 31, 1999
--------------------------------------------------------------------------------
NOTE 11: CONTINGENCIES (continued)
On October 8, 1999, the Company's wholly owned subsidiary,
International Gold Corporation ("IGC") joined a legal complaint
initiated by Geneva Resources, Inc., against AuRIC Metallurgical
Laboratories, LLC ("AuRIC"), Dames & Moore, Ahmet Altinay, General
Manager of AuRIC, and Richard Daniele, Chief Metallurgist for Dames &
Moore. The damages sought by IGC/Geneva are to be determined in court.
The damages incurred stem from reliance on assays and representations
made by AuRIC and upon actions and engineering reports produced by
Dames & Moore. IGC/Geneva also alleges there were breaches of contract
by AuRIC and Dames and Moore, as well as other causes of action.
NOTE 12: SUBSEQUENT EVENTS
Subsequent to December 31, 1999, one of the Company's Series A
Preferred shareholders converted 1,000,000 Series A shares into
1,000,000 common shares. The Company has also issued additional common
stock to satisfy all accrued dividends related to the converted stock.
On February 11, 2000, the Company's available for sale investments
totaling 1,000,000 common shares in the capital of Goldstate
Corporation were sold to Investor Communications International, Inc.
for $150,000, such amount represented a premium of 114% to the market
value of these securities at the date of the sale.
On February 16, 2000, the Company authorized the future execution of
agreements for the settlement of advances and accrued interest payable
through the issuance of common stock. The Company is settling advances
and associated accrued interest totaling at $488,478 at $.03 per
share, which represents a 35% discount on the value of the common
stock as of February 16, 2000, for a total of 16,282,600 shares. The
Company is settling advances and associated accrued interest of the
Company's wholly owned subsidiary, International Gold Corporation
totaling $121,899 at $.03 per share, which represents a 35% discount
on the value of the common stock as of February 16, 2000, for a total
of 4,063,300 shares.
17
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS OF ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT
Identification of Directors and Executive Officers
As of the date of this Annual Report, the directors and executive officers
of IGCO are as follows:
Name Age Position with IGCO
---- --- ------------------
Gary J. Powers 52 President and Director
Grant Atkins 39 Secretary, Treasurer and Director
As of the date of this Annual Report, the directors and executive officers
of IGCO's wholly-owned subsidiary, International Gold Corporation ("INGC") are
as follows:
Name Age Position with INGC
---- --- ------------------
Gary J. Powers 52 President, Secretary/Treasurer and
Director
As of the date of this Annual Report, the directors and executive officers
of Intergold Mining Corporation are as follows:
Name Age Position with Intergold Mining
---- --- ------------------------------
Grant Atkins 39 President, Secretary/Treasurer and
Director
GARY J. POWERS has been the President and a Director of IGCO since
September of 1998 and the President and a Director of INGC since September of
1998. Mr. Powers has worked in the public sector at a senior Canadian
governmental level and has private sector experience in project development and
business management. His background in the process of government and the needs
of business will aid in the course of developing infrastructure and resources.
Mr. Powers devoted his time exclusively to the operations of IGCO during 1999.
For the past six years, Mr. Powers has worked for Guest Investments Ltd. as a
management and education consultant and for Helen Kupper Enterprises, Ltd. as a
business manager.
GRANT ATKINS has been the Secretary, Treasurer and a Director of IGCO since
September of 1998. Mr. Atkins has also been the sole director and the President,
Secretary and Treasurer of Intergold Mining Corporation since March of 1998. For
the past six years, Mr. Atkins has been self-employed as a financial and project
<PAGE>
coordination consultant to clients in government and private industry. He has
extensive multi-industry experience in the fields of finance, administration and
business development. Mr. Atkins has provided organization and controller duties
in IGCO since its formation. Mr. Atkins is also the director and president for
Vega-Atlantic Corporation, an OTC Bulletin Board public company, that is also
exploring claims close to the Blackhawk Property.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Exchange Act requires IGCO's directors and officers,
and the persons who beneficially own more than ten percent of the common stock
of IGCO, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission. Copies of all filed reports are required to
be furnished to IGCO pursuant to Rule 16a-3 promulgated under the Exchange Act.
Based solely on the reports received by IGCO and on the representations of the
reporting persons, IGCO believes that these persons have complied with all
applicable filing requirements during the fiscal year ended December 31, 1999.
ITEM 10. EXECUTIVE COMPENSATION
Compensation of Officers and Directors
As of the date of this Annual Report, all directors of IGCO are to receive
$500 per month in director's fees for their roles as directors. All officers of
IGCO are to be paid up to $5,000 per month for their executive officer roles.
Gary Powers, the President of IGCO, currently invoices IGCO through Guest
<PAGE>
Investments Ltd ("Guest Investments") for management consulting services
performed. Grant Atkins derives remuneration from IGCO directly and through
either Amerocan Marketing Inc. ("Amerocan") or Investor Communications
International, Inc. ("ICI"), which provide a wide range of management, financial
and administrative services to IGCO and INGC.
As of fiscal year ended December 31, 1999, IGCO accrued approximately
$78,000 and paid approximately $61,000 to its officers and directors as
executive compensation, and INGC accrued approximately $66,000 and paid
approximately $57,000 to the officers and directors of INGC as executive
compensation. As of fiscal year ended December 31, 1999, INGC (i) accrued
$60,000 and paid approximately $57,000 to Guest Investments for services
rendered, and (ii) accrued $289,150 and paid approximately $222,000 to Amerocan
for services rendered. As of fiscal year ended December 31, 1999, IGCO accrued
$897,810 and paid approximately $704,000 to ICI for services rendered. Of the
amounts paid to Amerocan and ICI during fiscal year 1999, neither Gary Powers,
Grant Atkins nor Harold Gooding received any compensation directly or directly
from Amerocan or ICI. See "Summary Compensation Table" below.
All executive officers and directors of IGCO are reimbursed for any
out-of-pocket expenses incurred by them on behalf of IGCO. Executive
compensation is subject to change concurrent with IGCO requirements. None of the
officers and directors of IGCO are officers or directors of Amerocan or ICI, nor
does IGCO own of record capital stock of Amerocan or ICI.
<TABLE>
<CAPTION>
Summary Compensation Table
--------------------------
Annual Compensation Awards Payouts
--------------------- ---------- -------
$ $ $ $ # $ $
Name and Position Salary Bonus Other RSA Options LTIP Other
----------------- ------ ----- ----- --- ------- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Roger Taylor 1997 4,135 0 0 0 0 0 0
Pres./Director
Arthur Lilly 1997 500 0 0 0 0 0 0
Sec.,/Tres./Dir.
Gary Powers 1997 0 0 0 0 0 0 0
Pres./Director 1998 0 0 $10,000(1) 0 0 0 0
1999 0 0 57,000(1) 0 0 0 0
Grant Atkins 1997 0 0 $24,000 0 0 0 0
Secretary/Director 1998 0 0 55,000(1) 0 0 0 0
1999 0 0 61,000(1) 0 0 0 0
Harold Gooding 1997 0 0 0 0 0 0 0
Director 1998 0 0 7,500(1) 0 0 0 0
1999 0 0 0 0 0 0 0
Michael Mehrtens, Ph.D. 1997 0 0 53,903(2) 0 0 0 0
Chief Geologist, 1998 0 0 200,000(2) 0 0 0 0
Consultant 1999 0 0 97,425(2) 0 0 0 0
(1) Received pursuant to respective contractual arrangements between Company
and Guest Investments, Ltd., and/or Amerocan Marketing, Inc. and/or
Investor Communications International, Inc.
(2) Received pursuant to contractual arrangement between Company and MBM
Consultants, Inc.
<PAGE>
</TABLE>
Non-Qualified Stock Option Plan
-------------------------------
During fiscal year ended 1999, the Board of Directors of IGCO authorized
the grant of stock options to certain officers, directors and significant
consultants as reflected below in the "Aggregated Options/SAR Exercises and
Fiscal Year-End Options/SAR Value Table". As of the date of this Annual Report,
none of the officers, directors or significant consultants have exercised such
stock options.
Aggregated Options/SAR Exercises and Fiscal Year-End Options/SAR Value Table
--------------------------------------------------------------------------------
Number of Date of Grant Exercise Price Date of
Shares Granted Expiration
--------------------------------------------------------------------------------
Harold Gooding 100,000 6-Jan-99 $0.50 Dec. 27, 2017
100,000 6-Jan-99 $1.00 Dec. 27, 2017
Gary Powers 50,000 6-Jan-99 $0.50 Dec. 27, 2017
50,000 6-Jan-99 $1.00 Dec. 27, 2017
Brent Pierce 850,000 6-Jan-99 $0.50 Dec. 27, 2017
500,000 6-Jan-99 $1.00 Dec. 27, 2017
Grant Atkins 500,000 6-Jan-99 $0.50 Dec. 27, 2017
500,000 6-Jan-99 $1.00 Dec. 27, 2017
Michael Merhtens 200,000 6-Jan-99 $0.50 Dec. 27, 2017
Herb Ackerman 100,000 6-Jan-99 $0.50 Dec. 27, 2017
100,000 6-Jan-99 $1.00 Dec. 27, 2017
Marcus Johnson 200,000 6-Jan-99 $0.50 Dec. 27, 2017
--------------------------------------------------------------------------------
No share options have been exercised as at the date of this Annual Report.
<PAGE>
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 14, 2000 By: /s/ Gary Powers
----------------------------------
Gary Powers, President
Dated: August 14, 2000 By: /s/ Grant Atkins
----------------------------------
Grant Atkins, Secretary
