U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 2000
[ ] 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 issuer's classes of common
equity, as of the latest practicable date:
Class Outstanding as of October 31, 2000
Common Stock, $.00025 par value 81,140,600
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
(An Exploration Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
September 30, 2000
TABLE OF CONTENTS
Page
----
Table of Contents 1
Interim Consolidated Balance Sheet 2
Interim Consolidated Statements of Operations 3
Interim Consolidated Statements of Cash Flows 4
Notes to Interim Consolidated Financial Statements 5 - 9
1
<PAGE>
<TABLE>
<CAPTION>
INTERGOLD CORPORATION
(An Exploration Stage Company)
Interim Consolidated Balance Sheet
(Unaudited)
September 30,
2000
------------
ASSETS
<S> <C>
CURRENT ASSETS
Cash and cash equivalents $ 983
PROPERTY PLANT AND EQUIPMENT
Equipment (net of accumulated depreciation) 3,110
------------
Total Assets $ 4,093
============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - trade $ 344,175
Advances payable (Note 3) 652,445
Directors fees payable 47,500
Notes payable 551,890
Accrued Series A warrant redemption payable 60,000
Accrued interest payable 235,909
------------
Total Liabilities 1,891,919
------------
STOCKHOLDERS' EQUITY (Note 4)
Common stock $.00025 par value; authorized at September 30, 2000
125,000,000 shares; 81,140,600 shares issued and outstanding at September 30, 2000 20,284
Preferred stock, $.001 par value; authorized at September 30, 2000
75,000,000 shares; issued and outstanding at September 30, 2000
Series A - 6,200,000 shares 6,200
Series B - 2,510,000 shares 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 common stock
Additional Paid - in capital 8,892,826
Accumulated deficit through exploration stage (10,809,646)
------------
Total Stockholders' Equity (Deficit) (1,887,826)
------------
Total Liabilities and Stockholders' Equity $ 4,093
============
See accompanying notes to interim consolidated financial statements.
2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INTERGOLD CORPORATION
(An Exploration Stage Company)
Interim Consolidated Statements of Operations
(Unaudited)
Inception
(July 26,
For the 3 Months Ended Sep. 30, For the 9 Months Ended Sep. 30, 1996) to
------------------------------ ------------------------------ September 30,
2000 1999 2000 1999 2000
------------ ------------ ------------ ------------ ------------
REVENUE
<S> <C> <C> <C> <C> <C>
Other income $ -- $ -- $ -- $ -- $ 1,699
------------ ------------ ------------ ------------ ------------
OPERATING EXPENSES
Property Exploration Expenses 25,434 279,368 62,787 4,002,885 6,069,673
------------ ------------ ------------ ------------ ------------
General and Administrative Expenses 301,709 407,550 1,034,107 1,198,889 4,394,771
------------ ------------ ------------ ------------ ------------
Total Operating Expenses 327,143 686,918 1,096,894 5,201,774 10,464,444
------------ ------------ ------------ ------------ ------------
Operating Loss (327,143) (686,918) (1,096,894) (5,201,774) (10,462,745)
OTHER INCOME (EXPENSE)
Sale of profit sharing interest -- -- -- -- 170,000
Realized loss on sale of available for
sale investment -- -- (20,000) -- (20,000)
Interest expense (19,663) (8,115) (62,770) (26,385) (261,226)
------------ ------------ ------------ ------------ ------------
Net Loss $ (346,806) $ (695,033) $ (1,179,664) $ (5,228,159) $(10,573,971)
============ ============ ============ ============ ============
Loss per Share $ (0.004) $ (0.013) $ (0.017) $ (0.102) $ (0.249)
============ ============ ============ ============ ============
Weighted Average Number of
Common Shares Outstanding 81,045,848 52,673,739 70,566,836 51,216,176 42,486,046
============ ============ ============ ============ ============
See accompanying notes to interim consolidated financial statements.
3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INTERGOLD CORPORATION
(An Exploration Stage Company)
Interim Consolidated Statements of Cash Flows
(Unaudited)
Inception
(July 26,
For the 3 Months Ended Sep. 30, For the 9 Months Ended Sep. 30, 1996) to
------------------------------- ------------------------------- September 30,
2000 1999 2000 1999 2000
------------ ------------ ------------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C> <C> <C>
Net income (loss) $ (346,806) $ (695,033) $ (1,179,664) $ (5,228,159) $(10,573,971)
Adjustments to reconcile net (loss) to cash
Depreciation and Amortization 148 148 444 296 1,190
Non-Cash Realized loss on sale of AFS investment -- -- 20,000 -- 20,000
Non-Cash R&D -- -- -- -- 2,360,000
Organization costs -- -- -- 1,771 --
Changes in Working Capital Assets and Liabilities
Prepaid expenses -- -- 5,000 -- --
Accounts payable 90,680 81,275 (23,517) 35,229 344,175
Accrued interest payable 19,662 8,114 62,769 18,271 261,220
Director fees payable 4,500 6,000 2,000 12,000 47,500
------------ ------------ ------------ ------------ ------------
Net Cash Flows Used by Operating Activities (231,816) (599,496) (1,112,968) (5,160,592) (7,539,886)
------------ ------------ ------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Equipment purchases -- -- -- -- (4,300)
------------ ------------ ------------ ------------ ------------
Net Cash Flows Used for Investing Activities -- -- -- -- (4,300)
------------ ------------ ------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock -- 150 750 1,108 12,986
Sale of preferred stock Series A -- -- -- -- 10,000
Sale of preferred stock Series B -- -- -- 2,510 2,510
Additional paid-in capital 235,675 149,851 749,250 3,726,382 5,449,265
Net advances received (repaid) 201,675 476,005 362,482 715,439 1,270,408
Convertible debenture -- -- -- -- 250,000
Note payable advances -- -- -- 500,000 550,000
------------ ------------ ------------ ------------ ------------
Net Cash Flows Provided by Financing Activities 437,350 626,006 1,112,482 4,945,439 7,545,169
------------ ------------ ------------ ------------ ------------
Net increase in cash 205,534 26,510 (486) (215,153) 983
Cash and cash equivalents - Beginning of period 31,124 7,187 1,469 248,850 --
------------ ------------ ------------ ------------ ------------
Cash and cash equivalents - End of period $ 236,658 $ 33,697 $ 983 $ 33,697 $ 983
============ ============ ============ ============ ============
During 1998, the Company accrued $135,722 of interest on outstanding notes and advances payable.
During 1999, the Company accrued $62,729 of interest on outstanding notes and advances payable.
During 2000, the Company accrued $43,107 of interest on outstanding notes and advances payable.
Since inception the Company has not capitalized any interest.
On Feb. 11, 2000, the Company exchanged its Available for Sale investments for debt outstanding to a creditor for $150,000.
On March 20, 2000, a shareholder converted 1,000,000 Series A preferred shares for 1,000,000 common shares.
On March 20, 2000, the Company issued 326,100 common shares as a dividends pursuant to the conversion of the 1,000,000 Series A
preferred shares. The dividend was valued at $81,525.
On March 31, 2000, the Company issued 20,345,900 common shares in exchange for advances received and accrued interest owed to
creditors in the amount of $610,378.
See accompanying notes to interim consolidated financial statements.
4
</TABLE>
<PAGE>
INTERGOLD CORPORATION
(An Exploration Stage Company)
Notes to Interim Consolidated Financial Statements
September 30, 2000
(Unaudited)
--------------------------------------------------------------------------------
NOTE 1: NATURE OF CONTINUED OPERATIONS AND BASIS OF PRESENTATION
To date, the Company has not generated significant revenues from
operations and has a working capital deficit of $1,890,936 and a
stockholders' deficit of $1,887,826 The Company's continuance of
operations and movement into an operating basis are contingent on
raising additional working capital and on the development of the
Company's lode mining claims. Advances from certain significant
shareholders will form the primary source of short term funding for the
Company during the next twelve months.
During the first quarter of 2000, the Company 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. 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.
The accompanying unaudited interim financial statements have been
prepared in accordance with the rules and disclosure requirements of
Regulation S-B and Form 10-QSB. They do not necessarily include all
information and footnotes required by generally accepted accounting
principles applicable to the Company's annual audited financial
statements. However, except as disclosed herein, there has been no
material change in accounting principles used or the information
disclosed in the notes to the financial statements for the year ended
December 31, 1999 included in the Company's Annual Report on Form 10-KSB
filed with the Securities and Exchange Commission. The interim unaudited
financial statements should be read in conjunction with those financial
statements included in the Form 10-KSB. In the opinion of Management,
all adjustments considered necessary for a fair presentation have been
made. Operating results for the nine months ended September 30, 2000 are
not necessarily indicative of the results that may be expected for the
year ending December 31, 2000.
5
<PAGE>
INTERGOLD CORPORATION
(An Exploration Stage Company)
Notes to Interim Consolidated Financial Statements
September 30, 2000
(Unaudited)
--------------------------------------------------------------------------------
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
---------------------------
The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiary, International Gold Corporation,
incorporated in Nevada.
Loss Per Share
--------------
As of September 30, 2000, there were 3,450,000 exercisable options,
8,710,000 shares of convertible preferred stock and 2,510,000 common
stock warrants that can be converted into a total of 14,670,000 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.
Use of Estimates
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the period. Actual results could differ from those estimates.
Financial Instruments
---------------------
The fair value of the Company's current assets and current liabilities
were estimated to approximate their carrying values due to the immediate
or short-term maturity of these financial instruments.
NOTE 3: ADVANCES PAYABLE
Advances are comprised of the following:
Sonanini Holdings Ltd. $442,770
Investor Communications International, Inc. 121,675
Amerocan Marketing, Inc. 30,000
Tristar Financial Services Ltd. 58,000
--------
$652,445
========
The advances bear 10% simple interest and are due on demand. There is
$205,358 of interest accrued on the advances as of September 30, 2000.
Advances increased from $450,770 at June 30, 2000 to $652,445 at
September 30, 2000 from further contribution.
6
<PAGE>
INTERGOLD CORPORATION
(An Exploration Stage Company)
Notes to Interim Consolidated Financial Statements
September 30, 2000
(Unaudited)
--------------------------------------------------------------------------------
NOTE 4: STOCKHOLDERS' EQUITY
Common Stock
------------
On February 16, 2000, the Company settled advances and associated
accrued interest totalling $488,478 at $.03 per share, which represents
a 35% discount on the trading value of the common stock as of February
16, 2000, for a total of 16,282,600 shares. The Company settled advances
and associated accrued interest of the Company's wholly owned
subsidiary, International Gold Corporation totalling $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.
On March 20, 2000, the Company shareholders converted 1,000,000 Series A
preferred shares into 1,000,000 shares of the Company's common stock. On
March 20, 2000, an additional 326,100 shares of the common stock were
issued in settlement of declared cumulative dividends of $81,525 payable
upon conversion of the 1,000,000 Series A preferred shares into
1,000,000 common shares.
On May 5, 2000, 3,000,000 common shares were issued from the exercise of
3,000,000 Series A warrants for a total of $750,000.
On August 31, 2000, a Company shareholder converted 100,000 Series A
preferred shares into 100,000 shares of the Company's common stock. On
August 31, 2000, an additional 40,600 shares of the common stock were
issued in settlement of declared cumulative dividends of $10,125 payable
upon conversion of the 100,000 Series A preferred shares into 100,000
common shares.
Preferred Stock
---------------
Series A
--------
On October 27, 1999, the Company issued a notice of redemption on all
remaining outstanding Series A Preferred warrants. The Company has
redeemed the warrants at $.01 per warrant and has recorded a $60,000
redemption liability for the 6,000,000 warrants that were outstanding.
During the first quarter of 2000, 1,000,000 of the Series A Preferred
shares were converted into the Company's common stock. The Company also
issued an additional 326,100 common shares at $.25 per share
representing the accumulated dividend of $81,525 on the 1,000,000
converted Series A Preferred Shares.
7
<PAGE>
INTERGOLD CORPORATION
(An Exploration Stage Company)
Notes to Interim Consolidated Financial Statements
September 30, 2000
(Unaudited)
--------------------------------------------------------------------------------
During the third quarter of 2000, 100,000 of the Series A Preferred
shares were converted into the Company's common stock. The Company also
issued an additional 40,600 common shares at $.25 per share representing
the accumulated dividend of $10,150 on the 100,000 converted Series A
Preferred Shares.
If the Company's Series A Preferred shareholders elect to convert the
remaining outstanding Series A Preferred stock, an additional 6,200,000
shares of common stock would be issued, plus accrued 20% cumulative
undeclared dividends totalling $599,950 at September 30, 2000.
Series B
--------
As of September 30, 2000, the Company has $370,850 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 3,251,700 shares of common stock would
be issued, which represents 2,510,000 shares for the remaining preferred
stock and 741,700 shares for the undeclared dividends.
NOTE 5: EMPLOYEE STOCK OPTION PLAN
Selected information regarding the Company's employee stock options as
of September 30, 2000 are as follows:
September 30, 2000
-------------------------
Weighted
Number Average
of Exercise
Options Price
-------------------------
Outstanding at Beg. of Period 3,450,000 $.71/share
Outstanding at End of Period 3,450,000 $.71/share
Exercisable at End of Period 3,450,000 $.71/share
Options Granted 3,450,000 $.71/share
Options Exercised -0- -0-
Options Forfeited -0- -0-
Options Expired -0- -0-
As of September 30, 2000, 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 16 years 187 days.
There are 3,450,000 options that are exercisable with a weighted average
exercise price of $.71 per share of common stock.
8
<PAGE>
INTERGOLD CORPORATION
(An Exploration Stage Company)
Notes to Interim Consolidated Financial Statements
September 30, 2000
(Unaudited)
--------------------------------------------------------------------------------
NOTE 6: LEGAL PROCEEDINGS
International Gold Corporation, in conjunction with Geneva Resources,
Inc., is continuing with legal claims against Dames & Moore and Auric
Metallurgical Laboratories, LLC, and other individuals named. The
Company has proceeded through initial deposition and document discovery
stages. See Company press release dated July 20, 2000. The outcome of
these legal proceedings is presently unknown.
NOTE 7: RELATED PARTY TRANSACTIONS
During the nine month period ended September 30, 2000 net cash advances
of $362,482 were received from related companies and/or individuals,
interest of $48,894 was accrued on advances outstanding, an advance was
partially settled in the amount of $150,000 by the disposal of an
investment held by the Company, and 20,112,600 shares were issued to
settle partial amounts of outstanding advances in the amount of $603,378
including interest of $25,311.
During the nine month period ended September 30, 2000 a director of the
Company was paid $30,000 for management fees.
During the nine month period ended September 30, 2000 a total of
$635,063 was paid to two private companies associated with certain
directors for comprehensive management and administration services
provided to the Company and its subsidiary.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
GENERAL
To date, there has been no income realized from the business operations of
the Company. During fiscal year ended December 31, 1999 and the nine-month
period ended September 30, 2000, the Company's primary source of financing has
been from cash advances provided to the Company and the conversion of Series A
Warrants into shares of the Company's restricted Common Stock at the redemption
price of $0.25 per Series A Warrant.
Pursuant to a letter from the Company which provided notice to the holders
of Series A Preferred Shares that the Company intended to redeem in whole the
outstanding Series A Warrants. As of March 31, 2000, 1,000,000 Series A Warrants
had been converted into 1,000,000 shares of the Company's restricted Common
Stock for an aggregate consideration of $250,000.00. Subsequently, on May 1,
2000, the Company issued a warrant to a Series A Preferred shareholder who did
not timely convert its Series A Warrants in exchange for the settlement and
discharge of the redemption liability of $30,000 owed by the Company to the
Series A Preferred shareholder. On May 1, 2000, the Series A Preferred
shareholder converted such warrant into 3,000,000 shares of the Company's
restricted Common Stock at the conversion price of $0.25 per share for an
aggregate consideration of $750,000. Therefore, as of September 30, 2000, an
aggregate of 4,000,000 Series A Warrants had been converted into 4,000,000
shares of the Company's restricted Common Stock for an aggregate consideration
of $1,000,000. As of September 30, 2000, 6,000,000 Series A Warrants remained
outstanding, which the Company will redeem at $0.01 per Series A Warrant and has
booked as a redemption liability for $60,000.
Each Series A Preferred share is also convertible into one share of Common
Stock of the Company and all then accrued and unpaid dividends are convertible
into Common Stock at the conversion price of $0.25 per share. As of March 31,
2000, the holders of Series A Preferred shares had converted an aggregate of
3,700,000 Series A Preferred shares into 3,700,000 shares of the Company's
Common Stock, and an additional 902,100 shares of Common Stock were issued by
the Company as a dividend pursuant to such conversion. As of June 30, 2000, no
other Series A Preferred shareholder had converted any Series A Preferred shares
into shares of the Company's Common Stock, thus no additional shares of Common
Stock were issued as a dividend. As of September 30, 2000, the holder of Series
A Preferred shares had converted an aggregate of 100,000 Series A Preferred
shares into 100,000 shares of the Company's Common Stock, and an additional
40,600 shares of Common Stock were issued by the Company as a dividend pursuant
to such conversion. As of September 30, 2000, 6,200,000 shares of Series A
Preferred Stock remained outstanding and, if converted, an additional 6,200,000
shares of Common Stock would be issued plus accrued 20% cumulative undeclared
dividends on the Series A Preferred Stock totaling $599,950.
As of September 30, 2000, 2,510,000 shares of Series B Preferred Stock
remained outstanding and, if converted, an additional 2,510,000 shares of Common
Stock would be issued plus accrued 20% cumulative undeclared dividends on the
Series B Preferred Stock totaling $370,850.
10
<PAGE>
RESULTS OF OPERATION
Nine-Month Period Ended September 30, 2000 Compared to Nine-Month Period Ended
September 30, 1999
For the nine-month period ended September 30, 2000, the Company recorded a
net loss of $1,179,666 compared to a net loss of $5,228,159 in the corresponding
period of 1999. During the nine-month period ended September 30, 2000 and
September 30, 1999, the Company recorded no income.
During the nine-month period ended September 30, 2000, the Company recorded
operating expenses of $1,096,894 compared to $5,201,774 of operating expenses
recorded in the same period for 1999. Property exploration expenses decreased by
approximately $3,940,098 during the nine-month period ended September 30, 2000
as compared to the nine-month period ended September 30, 1999. This decrease in
property exploration expenses resulted from suspension of any further
exploration of the Blackhawk Property and the cessation of work orders for
research, development and metallurgical services compared to the significant
property exploration expenses incurred in the same period for 1999 relating to
amounts paid by the Company for research, development and metallurgical services
performed associated with contractual agreements between the Company and AuRIC
Metallurgical Laboratories LLC ("AuRIC") and Geneva Resources, Inc. ("Geneva"),
respectively.
Administrative expenses decreased approximately $164,782 during the
nine-month period ended September 30, 2000 as compared to the nine-month period
ended September 30, 1999. This decrease in administrative expenses was due
primarily to a decrease in overhead and administrative expenses resulting from
the decreasing scale and scope of overall corporate activity pertaining to
exploration and administration of the Blackhawk Property. Interest expense,
however, increased by $36,385 during the nine-month period ended September 30,
2000 as compared to the nine-month period ended September 30, 1999 due primarily
to an increase in advances from further contributions to the Company.
As discussed above, the decrease in net loss during the nine-month period
ended September 30, 2000 as compared to the nine-month period ended September
30, 1999 is attributable primarily to the substantial decrease in property
exploration expenses. The Company's net earnings (losses) during the nine-month
period ended September 30, 2000 were approximately ($1,179,664) or ($0.017) per
share compared to a net loss of approximately ($5,228,159) or ($0.102) per share
during the nine-month period ended September 30, 1999. The weighted average
number of shares outstanding were 70,566,836 for the nine-month period ended
September 30, 2000 compared to 51,216,176 for the nine-month period ended
September 30, 1999.
Three-Month Period Ended September 30, 2000 Compared to Three-Month Period Ended
September 30, 1999
For the three-month period ended September 30, 2000, the Company recorded a
net loss of $346,806 compared to a net loss of $695,033 in the corresponding
period of 1999. During the three-month period ended September 30, 2000 and
September 30, 1999, the Company recorded no income.
During the three-month period ended September 30, 2000, the Company
recorded operating expenses of $327,143 compared to $686,918 of operating
expenses recorded in the same period for 1999. Property exploration expenses
decreased by approximately $253,952 during the three-month period ended
September 30, 2000 as compared to the three-month period ended September 30,
1999. Administrative expenses decreased by approximately $105,841 during the
three-month period ended September 30, 2000 as compared to the three-month
period ended September 30, 1999. This decrease in administrative expenses was
11
<PAGE>
due primarily to a decrease in overhead and administrative expenses resulting
from the decreasing scale and scope of overall corporate activity pertaining to
exploration and administration of the Blackhawk Property. Interest expense,
however, increased by $11,548 during the three-month period ended September 30,
2000 as compared to the three-month period ended September 30, 1999 due
primarily to an increase in advances from further contributions to the Company.
As discussed above, the decrease in net loss during the three-month period
ended September 30, 2000 as compared to the three-month period ended September
30, 1999 is attributable primarily to the substantial decrease in property
exploration expenses. The Company's net earnings (losses) during the three-month
period ended September 30, 2000 were approximately ($346,806) or ($0.004) per
share compared to a net loss of approximately ($695,033) or ($0.013) during the
three-month period ended September 30, 1999. The weighted average number of
shares outstanding were 81,045,848 for the three-month period ended September
30, 2000 compared to 52,673,739 for the three-month period ended September 30,
1999.
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 the nine-month period ended September 30, 2000, the Company's total
assets were $4,093. This decrease from total assets of $30,023 for fiscal year
ended December 31, 1999 was due primarily to a decrease in cash and cash
equivalents and prepaid expenses. As of the nine-month period ended September
30, 2000, the Company's total liabilities were $1,891,919. This decrease from
total liabilities of $2,278,562 for fiscal year ended December 31, 1999 was due
primarily to (i) settlement of advances and accrued interest due and owing by
the Company in the amount of $488,478 by issuance of 16,282,600 shares of the
Company's restricted Common Stock, and (ii) settlement of advances and accrued
interest due and owing by the Company's wholly-owned subsidiary, International
Gold Corporation, in the amount of $121,899 by issuance of 4,062,300 shares of
the Company's restricted Common Stock.
Stockholders' Equity (deficit) increased from ($1,571,020) for the
six-month period ended June 30, 2000 to ($1,887,826) for the nine-month period
ended September 30, 2000. Stockholders' Equity (deficit) decreased from
($2,248,539) for fiscal year ended December 31, 1999 to $(1,887,826) for the
nine-month period ended September 30, 2000.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On September 27, 1999, Geneva and INGC, on behalf of the Company, 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 an 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
12
<PAGE>
Property (the "Proprietary Technology"). Dames & Moore verified the fire and
chemical assay techniques and procedures developed by AuRIC and their
repeatability. The Company subsequently entered into multiple work orders with
Dames & Moore relating to a variety of services. Gevena and AuRIC entered into a
License Agreement whereby AuRIC agreed to (i) supply the Proprietary Technology
to Geneva, (ii) grant to Geneva a license to use the Proprietary Technology on
claims located adjacent to the Blackhawk Property and the right to sub-license
the Proprietary Technology to the Company for use on the Blackhawk Property. The
Company and Geneva simultaneously entered into the Sub-License Agreement whereby
the Company acquired from Geneva a sub-license to utilize AuRIC's Proprietary
Technology and related precious metals recovery processes on the Blackhawk
Property.
On September 27, 1999, Geneva and INGC, on behalf of the Company, 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 the
Company, Geneva and Dames & Moore; (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 the
Company, also named Dames & Moore in the legal proceeding in a declaratory
relief cause of action. Dames & Moore is currently a division of URS Corporation
pursuant to a merger.
On October 8, 1999, Geneva and INGC, on behalf of the Company, 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 the Company, 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 the Company, 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
second amended complaint 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 the Company, in the
complaints as filed with the District Court. Geneva and INGC, on behalf of the
Company, 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 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 that was allegedly developed by AuRIC and
confirmed by multiple engineering reports by Dames & Moore for Geneva's and
INGC's restricted use by its legal counsel and industry experts. Geneva and
INGC, on behalf of the Company, have obtained an expert opinion as to the
ineffectiveness of the Proprietary Technology.
13
<PAGE>
As of the date of this Quarterly Report, various depositions have been
taken by various parties to the lawsuit. Discovery and document production have
been conducted by both sides to the dispute. Geneva and INGC, on behalf of the
Company, continue to pursue all such legal actions and review further legal
remedies against AuRIC and Dames & Moore. 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, Dames & Moore, and other
parties to the lawsuit. 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.
The Company and Geneva 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 Assignment 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.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
o During the quarter ended September 30, 2000, 100,000 Series A
Preferred shares were converted into 100,000 shares of the Company's
Common Stock and an additional 40,600 shares of the Company's Common
Stock were issued as a dividend pursuant to such conversion. As of
September 30, 2000, the holders of Series A Preferred shares have
converted an aggregate of 3,800,000 Series A Preferred shares into
3,800,000 shares of the Company's Common Stock, and an additional
942,700 shares of Common Stock have been issued by the Company as a
dividend pursuant to such conversions. The Company issued the shares
of Common Stock pursuant to Section 4(2) of the Securities Act and
Regulation D, Rule 506 promulgated thereunder. The investor had
previously executed a subscription agreement and acknowledged that the
securities to be issued have not been registered under the Securities
Act, that the investors understood the economic risk of an investment
in the securities, and that the investors had the opportunity to ask
questions of and receive answers from the Company's management
concerning any and all matters related to the acquisition of
securities. No underwriter is involved in the transaction, and no
commissions or other remuneration have been or will be paid in
connection with the issuance of the securities.
14
<PAGE>
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 Form 8-Ks have been filed.
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: October 31, 2000 By: /s/ Gary Powers
---------------------------
Gary Powers, President
Dated: October 31, 2000 By: /s/ Grant Atkins
----------------------------
Grant Atkins, Secretary
15
