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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2
TO
FORM 10-SB
General Form for Registration of Securities
of Small Business Issuers
Under Section 12(b) or Section 12(g) of
The Securities Exchange Act of 1934
TREND MINING COMPANY
(Name of Small Business Issuer in its Charter)
Montana 81-0304651
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
410 Sherman Avenue, Suite 209
Coeur d'Alene, Idaho 83814
(Address of principal executive office)
Issuer's telephone number: (208) 664-8095
Copies to:
Deborah J. Friedman, Esq.
Randall E. Hubbard, Esq.
Davis, Graham & Stubbs LLP
370 17th Street, Suite 4700
Denver, Colorado 80202
Securities to be registered under Section 12(b) of the Act:
None
(Title of Class)
Securities to be registered under Section 12(g) of the Act:
Common Stock
(Title of Class)
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
Trend Mining Company, incorporated in Montana in 1968, has been engaged
since 1998 in the acquisition and exploration of platinum group metals
properties, primarily in the United States. From 1968 through 1982, our
activities consisted primarily of acquiring and exploring properties with silver
potential and developing and operating two silver mines. From 1982 to 1998, we
were largely inactive, although we did acquire, explore and maintain silver
properties from time to time during this period. We are an exploration stage
company, and our activities have been limited to exploring and acquiring rights
to explore, develop and mine properties which we believe may be suitable for
development into platinum group metal mines. We have identified and commenced
prospecting efforts in several areas in favorable geologic terrain in Wyoming,
Montana, Nevada, Oregon, California and Saskatchewan, Canada. There can be no
assurance that any of our properties contain a commercially viable ore body or
reserves until additional exploration work is done and an evaluation based on
such work concludes that development of and production from the ore body is
technically, economically and legally feasible. None of our properties are in
production, and consequently we have no operating income or cash flow.
As used in this registration statement, Trend Mining, our company, we
and our refer to Trend Mining Company. Prior to February 1999, our corporate
name was Silver Trend Mining Company.
Six metals comprise the platinum group metals: platinum, palladium,
rhodium, iridium, ruthenium and osmium. Platinum group metals are rare precious
metals with unique physical properties that are used in diverse industrial
applications and in the jewelry industry. The largest and fastest growing use
for platinum group metals is in the automotive industry for the production of
catalysts that reduce automobile emissions. Palladium is also used in the
production of electronic components for personal computers, cellular telephones,
facsimile machines and other devices, as well as dental applications and
jewelry. Platinum's largest use is for jewelry. Industrial uses for platinum
include the production of data storage disks, glass, paints, nitric acid,
anti-cancer drugs, fiber optic cables, fertilizers, unleaded and high-octane
gasolines and fuel cells.
According to publications of the CPM Group, approximately 6.9 million
ounces of palladium and 5.1 million ounces of platinum were consumed in 1999,
with less than five percent of palladium and slightly less than one third of
platinum used for jewelry manufacture. CPM Group reports that palladium prices
averaged approximately $359 per ounce in 1999, an increase of approximately 29
percent over the previous year, and have averaged $585 per ounce in the first
five months of 2000. Platinum prices averaged approximately $373 per ounce in
1999, a slight increase over 1998 prices, and have averaged approximately $475
in the first five months of 2000, their highest levels since 1990.
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EXPLORATION PROPERTIES
We currently own or have the right to acquire nine platinum group metals
mineral exploration properties, which are described below.
LAKE OWEN, WYOMING
Location and Access. The Lake Owen platinum group metals property is
located in Albany County, Wyoming, in the Medicine Bow-Routt National Forest.
The Lake Owen property is approximately 40 miles southwest of Laramie, Wyoming
and can be reached by paved highways and gravel roads.
Land Status. In July 1999, we entered into a three-year option agreement
with General Minerals Corporation, owner of a block of unpatented mining claims
comprising a portion of the Lake Owen property, that gives us the option to earn
a 100% interest in 104 unpatented claims. General Minerals acquired some of
these unpatented mining claims from Chevron Minerals in the early 1990's, and
subsequently located additional claims. Terms of that agreement (as subsequently
amended) include the following:
o To keep the option in effect, we were required to pay General
Minerals a total of $40,000 during 1999 and 2000. All of those
payments have been made.
o To keep the option in effect, we are obligated to incur
exploration expenditures of not less than $750,000 by July 27,
2002, with no less than $150,000 in exploration expenditures
being completed by July 27, 2000. The expenditures required by
July 27, 2000 have been completed.
o On the effective date of the option agreement, we issued to
General Minerals 715,996 shares of our common stock, which
represented approximately 25% of our outstanding common stock at
that time. We have subsequently issued an additional 616,961
shares of our common stock to General Minerals pursuant to an
amendment to the option agreement. The shares owned by General
Minerals now represent approximately 9% of our outstanding common
stock.
o If we exercise the option to acquire a 100% interest in these 104
unpatented mining claims by completing the exploration
expenditures described above, those claims will be subject to a
4% net profits interest with respect to ore mined from the
property payable to either Chevron Minerals, which originally
located certain of the claims, or to General Minerals.
We located an additional 502 unpatented mining claims in an agreed area
of interest near the Lake Owen property in the first half of 2000. We are
obligated to pay to Chevron Minerals or General Minerals a 4% net profits
interest with respect to these claims and any other claims we acquire in an area
of interest.
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Exploration History. Chevron Minerals initiated geological
reconnaissance exploration at Lake Owen in 1982, which included detailed surface
geologic mapping, geochemical sampling, and geophysical surveys. Chevron
Minerals later completed thirteen diamond-drill holes totaling approximately
5,200 feet in the 1980s and early 1990s. Drilling consisted of relatively
shallow angle holes generally less than 250 feet in vertical depth, and
encountered several zones of platinum group metals mineralization, ranging from
anomalies to ore-grade mineralization.
Exploration Plans. The exploration program for the Lake Owen property
has been divided into three phases that we currently plan to conduct over a
three-year period which began in March 2000. In phase one, we plan to focus on
the evaluation of existing geologic data generated by Chevron Minerals, and on
geologic logging and assaying of existing drill core. Phase two is expected to
involve continued field exploration, including geologic mapping, geochemical
sampling, and geophysical surveys to define drill targets. We expect phase three
to consist of a diamond drilling program intended to better delineate known
precious metal anomalies and to include exploration for new zones of
higher-grade platinum group metals mineralization.
Geology and Mineralization. The Lake Owen property is a
platinum-gold-palladium occurrence hosted in an extensive layered igneous
intrusive complex with a lateral dimension of approximately four by six miles.
The complex is about 1.4 billion years old and occurs as a steeply dipping body
of rock along the margin of the Archean Wyoming Province. The exposed
stratigraphic thickness of these rock units is approximately 20,000 feet.
Four separate zones of anomalous platinum group metals mineralization
have been identified at Lake Owen. The upper zone has been traced for about six
miles along strike. The middle zone is about 1,500 feet stratigraphically below
the upper zone, while the lower zone is situated approximately 5,500 feet
stratigraphically below the upper zone. Surface geochemical sampling identified
one additional platinum group metal zone, although the outcrop exposure in this
fourth zone is limited and the extent of the anomaly has not yet been defined.
Drill intercepts encountered to date at the Lake Owen property contain
encouraging mineralization of combined platinum group metals and gold. The
majority of the platinum group metals mineralization encountered in the Chevron
Minerals drilling program remains untested along both strike and dip.
ALBANY, WYOMING
Location and Access. The Albany platinum group metals property is also
located in southwest Albany County, Wyoming, approximately 35 miles southwest of
Laramie in the Medicine Bow-Routt National Forest. The Albany property is
accessible by an unimproved dirt road.
Land Status. We located six unpatented mining claims in this area in
mid-1999 and own a 100% interest in the claim block.
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Exploration History. Minor exploration for platinum group metals has
been conducted previously in the Albany property area. We have no specific data
regarding previous exploration activities or results.
Geology and Mineralization. The Albany property is a platinum-palladium-
rhodium occurrence hosted along the contact of dark-colored dikes and a
lighter-colored granite stock on the northern edge of a large iron-magnesium-
rich complex. Our limited geochemical sampling program conducted in 1999
returned platinum group metal values, ranging from anomalies to ore-grade
mineralization.
SPRUCE MOUNTAIN, WYOMING
Location and Access. The Spruce Mountain platinum group metals property
is located in Albany County, Wyoming, in the Medicine Bow-Routt National Forest.
The Spruce Mountain property is approximately 35 miles southwest of Laramie,
Wyoming and can be reached by paved highways and gravel roads.
Land Status. We have staked 42 unpatented mining claims in this area in
mid-2000 and own a 100% interest in the claim block.
Exploration History. Spruce Mountain is situated near our Lake Owen
property and the northwestern margin of the Lake Owen layered ultramafic/mafic
intrusive complex and is surrounded to the north by the New Rambler and
Centennial West platinum group metals districts, and to the west by the Mullen
Creek layered ultramafic/mafic intrusion. Historically, exploration has been
conducted in the region for gold, silver, base metals and platinum group metals.
Geology and Mineralization. Our claims are located on a platinum group
metals occurrence within mafic intrusives along an interpreted northwest to
east-west trending structural zone. The area is characterized by intense
shearing and hydrothermal alteration, which apparently concentrated the platinum
group metals that were present in the surrounding mafic host rocks.
CENTENNIAL WEST, WYOMING
Location and Access. The Centennial West platinum group metals property
is located in Albany County, Wyoming, in the Medicine Bow-Routt National Forest.
The Centennial West property is approximately 35 miles southwest of Laramie,
Wyoming and can be reached by paved highways and gravel roads.
Land Status. We have staked approximately 200 unpatented mining claims
in this area in September 2000 and own a 100% interest in the claim block.
Exploration History. Exploration has occurred throughout this area
historically, and small amounts of platinum group metals were produced by placer
mining from drainages.
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Geology. Mafic, ultramafic and metamorphic rocks overlie and host
several known hydrothermal platinum group metal occurrences in dikes, veins and
shear zones. Placer gold and platinum group metals are present in several
streams that drain the area.
VANGUARD, MONTANA
Location and Access. The Vanguard platinum group metals property
formerly described as the Lady of the Lake property is located on Bureau of
Land Management land in Madison County, Montana. The property is approximately
12 miles northeast of Sheridan and is accessible only by helicopter or trail.
Land Status. We located 121 unpatented mining claims in the Lady of the
Lake layered iron-magnesium-rich complex in early 2000 and own a 100% interest
in the claim block.
Exploration History. The Vanguard area was initially mapped and
geochemically sampled in the mid 1980s by a small exploration company. Our
review of the results of that program indicates the existence of anomalous
platinum, palladium and gold values throughout the district. In 1987, that
company staked unpatented mining claims, which covered the known anomalous
mineralization. Shortly thereafter, a third party who had leased the claim group
began a surface mapping and sampling program. After approximately one year, the
lease was terminated, and the original locator continued to perform exploration
work on the claims sporadically during the 1990's. The claims were abandoned
prior to the location of our claims. Our claim block covers the same ground that
had been covered by the previous claims.
Geology and Mineralization. The Vanguard property is a platinum-
palladium-gold occurrence hosted in an iron-magnesium-rich layered intrusive
complex that is approximately 1,500 feet thick. Three zones, from bottom to top,
characterize this layered complex. The lowermost zone is formed of
coarse-grained, dark, chrome-iron-magnesium-rich rocks, and the rocks become
progressively lighter in color, less rich in iron and magnesium and more soda
and lime enriched towards the top.
A large body of granite of Cretaceous age intersects portions of the
complex, and geologic mapping evidence suggests that this intrusive may
represent a possible border phase of the granite itself. Sulfides in the layered
intrusive complex consist of pyrite and chalcopyrite, which were probably formed
with the rocks. These sulfides are also concentrated in younger hydrothermal
veins. A third type of sulfide occurrence is observed as a "reef" zone. The
highest platinum group metals values are associated with the middle portion of
the complex and the sulfide reef. The reef is poorly exposed, but where it crops
out, the zone ranges in thickness from five to ten feet. Select samples
collected from the sulfide reef showed encouraging platinum and gold
mineralization.
MCCORMICK CREEK, MONTANA
Location and Access. The McCormick Creek platinum group metals property
is located in northwest Missoula County, Montana, approximately 34 miles
northwest of Missoula.
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McCormick Creek can be reached by public highways and access roads, and an
unimproved dirt road.
Land Status. We located 46 unpatented mining claims in the McCormick
Creek area in 2000 and own a 100% interest in the claim block.
Exploration History. The history of mineral exploration in the McCormick
Creek area is currently unknown.
Geology and Mineralization. The dark-colored dikes and/or sills that
occur in the McCormick Creek region are located due south of the past producing
Green Mountain copper-gold-platinum mine, which is situated on the Flathead
Indian Reservation. The dark-colored dikes/sills in this region intrude Burke
Formation sediments and may be similar to, or an extension of, the Green
Mountain dike, which has a known strike length of more than five miles.
Rocks in the prospect area are comprised of altered sediments of the
Burke Formation, which is the lowermost of the Ravalli Group of the Belt
Supergroup. A sub-parallel, repetitious series of dikes, which includes the
Green Mountain dike, intruded the Ravalli quartzites throughout the district.
The Green Mountain dike commonly contains visible disseminations of secondary
copper minerals, which may be associated with platinum group and precious
metals. The extension of this dike, and/or other parallel dikes or sills, may be
geologically similar with respect to primary sulfide mineralogy and associated
platinum group and precious metal mineralization.
REINDEER LAKE, SASKATCHEWAN, CANADA
Location and Access. The Reindeer Lake platinum group metals property is
located near Peter Lake in northern Saskatchewan, Canada, approximately 190 air
miles north/northeast from La Ronge, Saskatchewan. The property is accessible
only by plane or helicopter.
Land Status. The Reindeer Lake property consists of 5 mining claim units
covering approximately 27,000 hectares, or 66,000 acres, or about 100 square
miles. We own 100% of the mining claim units.
Exploration History. The Reindeer Lake claims are a portion of the Peter
Lake intrusive complex. In 1982, exploration geologists discovered platinum and
palladium-bearing sulfides in this area. During the mid-1980's, additional
exploration revealed that the lower gabbroic sequence contained
platinum-palladium-copper-nickel occurrences spread over approximately 81 miles
of strike. Additional exploration work was completed this year by another
company.
Geology and Mineralization. The Peter Lake complex, with a length of 180
kilometers (approximately 112 miles) and a width of 30 kilometers (approximately
19 miles) is one of the largest layered complexes in the world. The Peter Lake
complex represents reef type platinum group metals mineralization that has
undergone some metamorphism and hydrothermal remobilization. Two types of
mineralization are present in the Archaean aged Peter Lake layered complex. The
lowermost sequence of the complex consists of primarily cumulate layering of
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anorthosite and pyroxenite with sulfides concentrated at the lithological
boundaries. Metamorphism has altered pyroxenes to amphiboles and obliterated
much of the layering. The thickness of this zone is approximately 2 kilometers.
An upper sequence separated by a gneissic and granitic zone shows, in its basal
part, textures that include marginal mixed magma textures, inclusion breccia
zones and plagioclase-hornblende veinlets, as well as hosting ultramafic and
mafic dykes. The upper sequence has a width of over 1.5 kilometers.
HARD ROCK JOHNSON, NEVADA
Location and Access. The Hard Rock Johnson platinum group metals
property is located on Bureau of Land Management land in Clark County, Nevada,
approximately 25 miles southwest of the town of Mesquite. The property is
accessible by a gravel road.
Land Status. We located 13 unpatented mining claims in this area in 1999
and early 2000 and own a 100% interest in the claim block.
Exploration History. The Hard Rock Johnson property is located along the
northern flank of the Virgin Mountains within the Bunkerville (Copper King)
Mining District. Two principal copper and precious metals mines, the Key West
and Great Eastern, have been worked sporadically from the 1890s, when copper was
discovered in the area. A third party currently controls the 140 acres of
patented land and eight unpatented lode claims that encompass the Key West and
Great Eastern mines, adjoining our mining claims. Our claims cover the onstrike
extension of the mineralized zone to the northeast.
Geology and Mineralization. The Hard Rock Johnson property is located
within the historic Bunkerville Mining district, which produced platinum,
palladium, gold, silver, copper, lead, nickel, tungsten and cobalt. The claims
are situated within a northeast-trending belt of gneiss and schist that is
crosscut by fault zone. Scattered throughout the gneiss are dikes and irregular
coarse-grained bodies of rock, as well as layers of highly altered rock.
Precious and base metal mineralization is hosted within dikes that occur
throughout the project area.
The zone of mineralization is over 2,000 feet wide and extends at least
two miles in strike length along a north 70 degrees east structural zone that is
parallel to the regional metamorphic foliation. The primary sulfides associated
with platinum group metals are chalcopyrite, pyrite, pyrrhotite, and magnetite,
which occur as disseminated grains and pods throughout the dikes. Platinum and
nickel are most likely associated with the magnetic pyrite.
POLE CORRAL, CALIFORNIA
Location and Access. The Pole Corral platinum group metals property is
located on Bureau of Land Management land in Tehema County, California,
approximately 18 miles southwest of Platina, California. The property is
accessible by paved highways and unimproved dirt roads.
Land Status. We located 72 unpatented mining claims in this area in
mid-2000 and own a 100% interest in the claim block.
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Exploration History. Pole Corral is situated within the Rattlesnake
Terrain of the Klamath Mountains geologic province. Within the Pole Corral
project area, sporadic exploration and mining have occurred throughout the
1900's, as indicated by the prospect pits and small mines which we encountered.
During our preliminary geochemical sampling program, we found encouraging
platinum group metals mineralization, ranging from anomalies to ore-grade
mineralization.
Geology and Mineralization. The Pole Corral property is a platinum-
rhodium-ruthenium-iridium occurrence hosted in mafic rocks of the Rattlesnake
Terrain. In addition to podiform chromite, cumulate-textured disseminated
chromite have been encountered. Zoned felsic intrusives comprise the margins of
the mafic rocks and are also manifest as pegmatoids within the project area.
SHAMROCK, OREGON
Location and Access. The Shamrock platinum group metals property is
located on Bureau of Land Management land in Jackson County, Oregon,
approximately 21 miles northwest of the city of Medford. The property is
accessible by unimproved dirt roads.
Land Status. We located five unpatented mining claims in this area in
mid-1999 and own a 100% interest in the claim block.
Exploration History. During the first half of the 20th century, the
Shamrock property area was explored for mercury and its copper and nickel
potential.
The U.S. Bureau of Mines conducted extensive exploration and development
of the nickel-copper-cobalt mineralization in 1949 and 1950. This work included
the construction of 4,000 feet of mine access roads, rehabilitating two adits,
driving approximately an additional 400 feet of drifts and crosscuts, drilling
eleven diamond core drill holes totaling approximately 3,400 feet, excavating
five exploration bulldozer trenches, and conducting extensive auger-hole
sampling and metallurgical testing.
The U.S. Bureau of Mines encountered anomalous platinum group metals
mineralization in drill hole composite samples and delineated two small, near
surface base metal ore deposits. The Bureau reported a bulk metallurgical sample
containing 0.030 ounce per ton platinum, 1.3% nickel, 1.1% copper, and 0.07%
cobalt.
The U.S. Bureau of Mines mapped the surface exposure of sulfide
mineralization, which extends for at least 200 feet long and 200 feet deep, and
ranges from about five to 38 feet wide. The Bureau also discovered a four foot
wide zone of nickel sulfide mineralization at the base of a road cut 500 feet
southwest from the main norite dike. This sulfide zone may represent a parallel,
mineralized mafic dike that has not yet been evaluated.
During the mid 1980s, Freeport Exploration investigated the Shamrock
property for its platinum group metals potential. Freeport staked approximately
40 lode claims, conducted
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geologic mapping, surface and underground sampling, and completed about nine
miles of ground magnetic surveys. In June 1999, we staked our five lode claims
on ground where Freeport had located its drill holes, and we conducted limited
surface and underground geologic mapping and sampling. All of our underground
samples returned anomalous to ore-grade precious and base metals.
Geology and Mineralization. The Shamrock property is a platinum group
metals, gold, copper, nickel, and cobalt occurrence associated with dikes that
intrude rocks of the May Creek Formation. The May Creek Formation is composed of
quartz-mica schist, iron-magnesium-rich schist/gneiss, and highly altered
quartzite. Various intrusive rocks are also present on the property.
Platinum group metals, gold, nickel, copper, and cobalt are probably
hosted in magnetic pyrite and other sulfide minerals. These sulfides may
comprise as much as 40% of the rock and occur as disseminations, blebs, and
masses within the tabular, course-grained, highly altered dikes. Weak but
pervasive sulfide mineralization is also disseminated throughout most of the
adjacent May Creek Formation.
OTHER PROPERTIES
We have recently sold, or are holding for sale the properties described
below, which had been acquired for their potential for minerals other than
platinum group minerals.
o In July 2000, we sold 15 unpatented mining claims in Kootenai
County, Idaho, comprising the Silver Strand property to another
exploration company in exchange for the purchaser's commitment to
spend a total of $200,000 on exploration of the property over the
three year period ending in July 2003. We also retained a 1.5%
net smelter return production royalty, decreasing to 0.5% once we
have received payments totaling $50,000, on the production of
minerals from the Silver Strand property. During the three year
period, we may reacquire the property if the purchaser does not
complete the required expenditures or chooses to terminate the
purchase agreement.
o In May 1999, we sold the Rae-Wallace Company, which owned four
patented mining claims in Alaska, to another exploration company
in exchange for a 2.5% net smelter return production royalty on
the production of minerals from the property.
o We are holding the Pyramid property, consisting of five
unpatented mining claims in Churchill County, Nevada, for sale.
From time to time, we conduct discussions regarding the sale of
the property with parties who have expressed an interest or whom
we believe may have an interest in the property.
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OUR EXPLORATION PROCESS
Our exploration program is designed to acquire, explore and evaluate
exploration properties in an economically efficient manner. We have not at this
time identified or delineated any platinum group metals reserves on any of our
properties.
Our current focus is primarily on the acquisition of additional
exploration properties. As indicated above, we have formulated specific
exploration plans for our Lake Owen property. Subject to our ability to raise
the necessary funds, we intend to implement an exploration program that may
cover some or all of our other properties at various times as we deem prudent.
We expect our exploration work on a given property to proceed generally
in three phases. Our first phase typically begins with research of the available
geologic literature, as well as personal interviews with geologists, mining
engineers and others familiar with the prospect sites. When the research is
completed, we augment this initial work with geologic mapping, geophysical
testing and geochemical testing of our claims. We examine any existing workings,
such as trenches, prospect pits, shafts or tunnels. If we identify an apparent
mineralized zone and are able to narrow it down to a specific area, we begin
trenching the area. Trenches are generally approximately 150 feet in length and
10 to 20 feet wide. These dimensions allow for a thorough examination of the
surface of the vein structure types that we would expect to encounter at our
properties. They also allow for efficient reclamation, re-contouring and
re-seeding of disturbed areas. Once excavation of a trench is completed, samples
are taken and analyzed for economically potential minerals that are known to
have occurred in the area in question. Careful interpretation of the data
collected from the various tests assists us in determining whether a prospect
has current economic potential and whether further exploration is warranted.
The first phase can typically be completed on an individual property in
several months at a cost of less than $300,000. We have completed research on
and examination of each of our properties, and have commenced geophysical work
and sampling on our Lake Owen property.
Our second phase would involve an initial examination of the underground
characteristics of mineralization that has been identified at any particular
property during the first phase of the exploration program. This phase is
intended to identify any mineral deposits of potential economic importance. The
methods employed would include:
o more detailed geologic mapping;
o more advanced geochemical and geophysical surveys;
o more extensive trenching; and
o exploration drilling.
The second phase can typically be completed on an individual property in
six to nine months at a cost of less than $1 million. None of our properties has
reached the second phase.
Our third phase would be aimed at precisely defining depth, width,
length, tonnage and value per ton of any deposit that has been identified. We
would accomplish this through
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development drilling, metallurgical testing, and obtaining other pertinent
technical information required to define an ore reserve and complete a
feasibility study. Depending upon the nature of the particular deposit, the
third phase on any one property could take 1 to 5 years and cost up to
$20,000,000 or more.
We intend to explore and develop our properties ourselves, although our
plans could change depending on the terms and availability of financing and the
terms or merits of any joint venture proposals.
ENVIRONMENTAL COMPLIANCE
Our primary cost of complying with applicable environmental laws during
exploration is likely to arise in connection with the reclamation of drill holes
and access roads. Drill holes typically can be reclaimed for nominal costs.
Access road reclamation may cost up to $50,000 to $100,000 if roadbuilding has
been done. As we are currently in the exploration stage on all of our
properties, reclamation costs have not yet been incurred.
EMPLOYEES
Currently, we have five employees, all of whom are full time.
RISK FACTORS
An investment in Trend Mining involves a high degree of risk. Investors
and prospective investors should consider carefully the following risk factors,
in addition to all of the other information in this registration statement.
NO PRODUCTION HISTORY - WE HAVE NOT MINED ANY PLATINUM GROUP OR OTHER METALS.
While we were incorporated in 1968, our company has no history of
producing platinum group or other metals. We have not developed or operated a
mine since the 1980s, and we have no operating history upon which an evaluation
of our future success or failure can be made. Our ability to achieve and
maintain profitable mining operations is dependent upon a number of factors,
including:
o our ability to locate an economically feasible mineral property;
and
o our ability to successfully build and operate mines, processing
plants and related infrastructure.
We are subject to all the risks associated with establishing new mining
operations and business enterprises. There can be no assurance that we will
successfully establish mining operations or profitably produce platinum group or
other metals at any of our properties.
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HISTORY OF LOSSES - WE EXPECT LOSSES TO CONTINUE FOR AT LEAST THE NEXT THREE
YEARS.
As an exploration stage company that has only a limited production
history, we have incurred losses since our inception. We expect to continue to
incur additional losses for at least the next three years due to expenses
associated with the research, exploration and development of our mineral
properties. As of March 31, 2000, we had an accumulated deficit of $1.5 million.
There can be no assurance that we will achieve or sustain profitability in the
future.
WE ARE SUBJECT TO ALL OF THE RISKS INHERENT IN THE MINING INDUSTRY.
As an exploration stage company, our work is highly speculative and
capital intensive and involves unique and greater risks than are generally
associated with other businesses. There can be no assurance that any of our
properties contain a commercially viable ore body or reserves until additional
exploration work is done and an evaluation based on such work concludes that
development of and production from the ore body is technically, economically and
legally feasible. We are subject to all of the risks inherent in the mining
industry, including, without limitation, the following (some of which we discuss
in more detail below):
o Success in discovering and developing commercially viable
quantities of minerals is the result of a number of factors,
including the quality of management, the interpretation of
geological data, the level of geological and technical expertise
and the quality of land available for exploration;
o Exploration for minerals is highly speculative and involves
substantial risks, even when conducted on properties known to
contain significant quantities of mineralization, and most
exploration projects do not result in the discovery of
commercially mineable deposits of ore;
o Operations are subject to a variety of existing laws and
regulations relating to exploration and development, permitting
procedures, safety precautions, property reclamation, employee
health and safety, air and water quality standards, pollution and
other environmental protection controls, all of which are subject
to change;
o A large number of factors beyond our control, including
fluctuations in metal prices and production costs, inflation, the
proximity and capacity of precious metals markets and processing
equipment, government regulations, including regulations relating
to prices, taxes, royalties, land tenure, land use, importing and
exporting of minerals and environmental protection, and other
economic conditions, will affect the economic feasibility of
mining;
o Once mineralization is discovered, it may take several years from
the initial phases of drilling until production is possible,
during which time the economic feasibility of production may
change;
o Substantial expenditures are required to establish proven and
probable ore reserves through drilling, to determine
metallurgical processes to extract the metals from the ore and,
in the case of new properties, to construct mining and processing
facilities; and
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o If we proceed to development of a mining operation, our mining
activities would be subject to substantial operating risks and
hazards, including metal bullion losses, environmental hazards,
industrial accidents, labor disputes, encountering unusual or
unexpected geologic formations or other geological or grade
problems, encountering unanticipated ground or water conditions,
cave-ins, pit-wall failures, flooding, rock falls, periodic
interruptions due to inclement weather conditions or other
unfavorable operating conditions and other acts of God. Some of
these risks and hazards are not insurable or may be the subject
of exclusions or limitations on any coverage which we obtain or
may not be insured due to economic considerations.
OUR ACTIVITIES ARE SUBJECT TO ENVIRONMENTAL LAWS AND REGULATIONS WHICH MAY
MATERIALLY AFFECT OUR FUTURE OPERATIONS.
We, like other exploration companies doing business in the United States
and Canada, are subject to a variety of federal, provincial, state and local
statutes, rules and regulations designed:
o to protect the environment, including the quality of the air and
water in the vicinity of exploration, development and mining
operations;
o to remediate the environmental impacts of those exploration,
development and mining operations;
o to protect and preserve wetlands and endangered species; and
o to mitigate negative impacts on certain archeological and
cultural sites.
We are required to obtain various governmental permits to conduct
exploration at our properties. Obtaining the necessary governmental permits is
often a complex and time-consuming process involving numerous U.S. or Canadian
federal, provincial, state and local agencies. The duration and success of each
permitting effort are contingent upon many variables not within our control. In
the context of permitting, including the approval of reclamation plans, we must
comply with known standards, existing laws and regulations that may entail
greater or lesser costs and delays depending on the nature of the activity to be
permitted and the interpretation of the laws and regulations implemented by the
permitting authority. Currently, three or four months are generally required to
obtain the necessary permits. The failure to obtain certain permits, the
adoption of more stringent permitting requirements or the imposition of
extensive conditions upon certain permits could have a material adverse effect
on our business, operations and prospects.
Federal legislation and implementing regulations adopted and
administered by the U.S. Environmental Protection Agency, the Forest Service,
the Bureau of Land Management, the Fish and Wildlife Service, the Army Corps of
Engineers, the Mine Safety and Health Administration, and other federal
agencies, and legislation such as the federal Clean Water Act, the Clean Air
Act, the National Environmental Policy Act, the Endangered Species Act and the
Comprehensive Environmental Response, Compensation and Liability Act, have a
direct bearing
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on U.S. exploration, development and mining operations. These federal
initiatives are often administered and enforced through state agencies operating
under parallel state statutes and regulations. Although some mines continue to
be approved for development in the United States, the process is cumbersome,
time-consuming, and expensive, and the cost and uncertainty associated with the
permitting process could have a material effect on exploring, developing or
mining our properties. We expect that laws and regulations designed to minimize
the impact of exploration, development and mining activities on the environment
and human health and safety will likely have a similar effect on any activities
we undertake in Canada.
Compliance with statutory environmental quality requirements described
above may require significant capital outlays, significantly affect our earning
power, or cause material changes in our intended activities. No assurance can be
given that environmental standards imposed by either federal, state or local
governments will not be changed or become more stringent, which could materially
and adversely affect our proposed activities.
TITLE TO OUR MINERAL PROPERTIES MAY BE DEFECTIVE AND MAY BE CHALLENGED.
Our interests in our properties located in the United States are in the
form of unpatented mining claims. Unpatented mining claims are unique property
interests, in that they are subject to the paramount title of the United States
of America and rights of third parties to certain uses of the surface and to
non-locatable minerals within their boundaries, and are generally considered to
be subject to greater title risk than other real property interests. The
validity of all unpatented mining claims is dependent upon inherent
uncertainties and conditions. These uncertainties relate to matters such as:
o The existence and sufficiency of a discovery of valuable
minerals, required under the federal 1872 Mining Law to establish
and maintain a valid unpatented mining claim;
o Proper posting and marking of boundaries in accordance with the
1872 Mining Law and applicable state statutes;
o Whether the minerals discovered were properly locatable as a lode
claim or a placer claim;
o Whether sufficient annual assessment work has been timely and
properly performed; and
o Possible conflicts with other claims not determinable from
descriptions of record.
The validity of an unpatented mining claim also depends on the claim
having been located on unappropriated federal land open to appropriation by
mineral location, compliance with the 1872 Mining Law and applicable state
statutes in terms of the contents of claim location notices or certificates and
the timely filing and recording of the same, and timely payment of annual claim
maintenance fees (and the timely filing and recording of proof of such payment).
In the absence of a discovery of valuable minerals, the ground covered by an
unpatented mining claim is open to location by others unless the owner is in
actual possession of and diligently working the claim. There can be no assurance
that the unpatented mining claims we own or control are valid or that the title
to those claims is free from defects. There also can be no
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assurance that the validity of our claims will not be contested by the federal
government or challenged by third parties.
LEGISLATIVE AND ADMINISTRATIVE CHANGES TO THE MINING LAWS COULD MATERIALLY
ADVERSELY AFFECT OUR FUTURE EXPLORATION, DEVELOPMENT OR MINING ACTIVITIES.
New laws and regulations, amendments to existing laws and regulations,
administrative interpretation of existing laws and regulations, or more
stringent enforcement of existing laws and regulations, could have a material
adverse impact on our ability to conduct exploration, development and mining
activities. For example, during the 1999 legislative session, legislation was
considered in the United States Congress which proposed a number of
modifications to the Mining Law of 1872, which governs the location and
maintenance of unpatented mining claims and related activities on federal land.
Among these modifications were proposals which would have imposed a royalty on
production from unpatented mining claims, increased the cost of holding and
maintaining such claims, and imposed more specific reclamation requirements and
standards for operations on such claims. None of these proposed modifications
was enacted into law. The same or similar proposals may be considered by
Congress this year or in the future. In addition, the Bureau of Land Management
is currently working to revise federal regulations which govern surface
activities (including reclamation and financial assurance requirements) on
unpatented mining claims. Those regulations are likely to be finalized during
2000, are likely to be more stringent than current regulations, and may result
in a more detailed analysis of and more challenges to the validity of existing
mining claims, impose more permitting requirements earlier in the exploration
process, and be more costly to comply with than existing regulations.
USE OF THE SURFACE OF OUR UNPATENTED MINING CLAIMS IS SUBJECT TO REGULATION
WHICH COULD MATERIALLY ADVERSELY AFFECT OUR ACTIVITIES.
Any activities we conduct on the surface of our unpatented mining claims
are subject to compliance with and may be constrained or limited by Bureau of
Land Management or Forest Service surface management regulations (in addition to
the environmental and other statutes and regulations discussed above). In
addition, there are limits to the uses of the surface of unpatented mining
claims, particularly for the types of facilities which would be ancillary to our
mining operations, and both the Bureau of Land Management and the Forest Service
have some degree of discretion in allowing the use of federal lands that might
adjoin any of our unpatented mining claims for surface activities which we would
need for exploration, development and mining operations. To the extent we
progress towards the development of a mine at any of our properties, there can
be no assurance that sufficient surface land will be available for the ancillary
facilities necessary to develop the mine.
WE CANNOT INSURE AGAINST ALL OF THE RISKS ASSOCIATED WITH MINING.
We currently are not insured against most commercial losses or
liabilities which may arise from our exploration and other activities. Even if
we obtain additional insurance in the future, we may not be insured against all
losses and liabilities which may arise from our activities, either because such
insurance is unavailable or because we have elected not to purchase such
insurance due to high premium costs or other reasons.
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WE MAY NOT BE ABLE TO RAISE THE FUNDS NECESSARY TO EXPLORE AND DEVELOP OUR
MINERAL PROPERTIES.
We will need to raise additional funds in order to maintain our
operations and to continue to conduct our planned exploration activities. Our
continued operations therefore will depend upon our ability to raise additional
funds through bank borrowings or equity or debt financings. There is no
assurance that we will be able to obtain additional funding when needed, or that
such funding, if available, can be obtained on terms acceptable to us. If we
cannot obtain needed funds, we may be forced to curtail or cease our activities.
COMPETITION - WE COMPETE AGAINST LARGER, BETTER FINANCED AND MORE EXPERIENCED
COMPANIES.
The exploration industry is very competitive. Exploration companies
compete to obtain and to evaluate exploration prospects for their drilling,
exploration, development, and, ultimately, mining potential. We encounter
competition from both larger, better financed companies and other
similarly-situated junior mining companies in connection with the acquisition of
properties with the potential of profitably producing platinum group metals.
There can be no assurance that such competition, although customary in the
industry, will not result in delays, increased costs, or other types of negative
consequences affecting us, or that our planned exploration program will yield
commercially mineable ore reserves.
WE DEPEND ON THE SERVICES OF KEY PERSONNEL.
The success of our exploration program will depend, in part, on our
ability to retain our existing employees, and on our ability to hire such
additional employees, temporary employees and consultants as are necessary to
complete each phase of our planned exploration program. No assurance can be
given that we will be successful in our efforts in either of these areas.
VOLATILITY OF METALS PRICES - OUR PROFITABILITY AND VIABILITY WILL BE AFFECTED
BY CHANGES IN THE PRICES OF METALS.
To the extent we are able to identify ore reserves, our ability to
develop those reserves and conduct profitable mining operations will be greatly
influenced by the prices of the platinum group metals. These prices fluctuate
widely and are affected by numerous factors beyond our control, including:
o expectations for inflation;
o the strength of the United States dollar;
o global and regional supply and demand; and
o political and economic conditions and production costs in major
platinum group metals producing regions of the world,
particularly Russia and South Africa.
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The aggregate effect of these factors on metals prices is impossible for
us to predict. In addition, the prices of platinum group metals sometimes are
subject to rapid short-term and/or prolonged changes because of speculative
activities. The current demand for and supply of platinum group metals affect
platinum group metal prices, but not necessarily in the same manner as current
supply and demand affect the prices of other commodities. The supply of platinum
group metals is primarily new production from mining. If the prices of platinum
group metals are, for a substantial period, below our foreseeable cost of
production, we could determine that it is not economically feasible to continue
the development of our projects.
POTENTIAL FUTURE SALES PURSUANT TO RULE 144 COULD DEPRESS OUR STOCK PRICE AND
ADVERSELY AFFECT OUR ABILITY TO RAISE ADDITIONAL EQUITY FINANCING.
Of our outstanding shares of common stock as of July 10, 2000,
approximately 80% are currently "restricted securities," as that term is defined
in Rule 144 under the Securities Act. In general, under Rule 144 a person who
has satisfied a one-year holding period may sell limited numbers of shares. Rule
144 also permits the sale of shares without any quantity limitation, by persons
who are not our affiliates and who have beneficially owned the shares for a
minimum period of two years. The possible sale of these restricted shares may
have a depressive effect on the price of our securities and such sales, if
substantial, might also adversely affect our ability to raise additional equity
capital.
FUTURE ISSUANCES OF ADDITIONAL COMMON STOCK COULD DILUTE THE OWNERSHIP INTERESTS
OF INVESTORS.
Approximately 3,789,099 shares of our common stock are unissued and are
not reserved for issuance under outstanding options, warrants and contracts. Our
board of directors has the power to issue such shares, subject, in some
instances, to shareholder approval. Any additional issuance by us from our
authorized but unissued shares would have the effect of diluting the interest of
investors.
THE PUBLIC MARKET FOR OUR COMMON STOCK IS THINLY TRADED AND LACKS LIQUIDITY,
WHICH MAY MAKE IT MORE DIFFICULT FOR INVESTORS TO SELL THEIR SHARES.
At present, our common stock is traded under the symbol TRDM on the
"pink sheets" maintained by the National Quotation Bureau. This market is thinly
traded and lacks the liquidity of other public markets with which some investors
may have more experience. There is no assurance that a more liquid trading
market will develop or, if developed, that it will be sustained. A purchaser of
shares may, therefore, be unable to resell any securities should he or she
desire to do so. Furthermore, it is unlikely that a lending institution will
accept our securities as pledged collateral for loans unless a regular trading
market develops.
THE UNITED STATES PENNY STOCK RULES MAY MAKE IT MORE DIFFICULT FOR INVESTORS TO
SELL THEIR SHARES.
Because shares of our common stock will not be quoted on a national
securities exchange in the United States, the shares will be subject to rules
adopted by the U.S. Securities and
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Exchange Commission regulating broker-dealer practices in connection with
transactions in "penny stocks." These rules require that prior to effecting any
transaction in a penny stock, a broker or dealer must give the customer a risk
disclosure document that describes various risks associated with an investment
in penny stocks, as well as various costs and fees associated with such an
investment. It is possible that some brokers may be unwilling to engage in
transactions of shares of our common stock because of these added disclosure
requirements, which would make it more difficult for a purchaser in this
offering to sell his shares.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This registration statement contains forward-looking statements that
involve substantial risks and uncertainties. Investors and prospective investors
in our common stock can identify these statements by forward-looking words such
as "may," "will," "expect," "intend," "anticipate," "believe," "estimate,"
"continue" and other similar words. Statements that contain these words should
be read carefully because they discuss our future expectations, make projections
of our future results of operations or of our financial condition or state other
"forward-looking" information. We believe that it is important to communicate
our future expectations to our investors. However, there may be events in the
future that we are not able to accurately predict or control. The factors listed
in the sections captioned "Risk Factors" and "Management's Discussion and
Analysis or Plan of Operation," as well as any cautionary language in this
registration statement, provide examples of risks, uncertainties and events that
may cause our actual results to differ materially from the expectations we
describe in our forward-looking statements. Investors and prospective investors
in our common stock should be aware that the occurrence of the events described
in the "Risk Factors" and "Management's Discussion and Analysis or Plan of
Operation" sections and elsewhere in this registration statement could have a
material adverse effect on our business, operating results and financial
condition.
GLOSSARY OF TERMS
AMPHIBOLITE: granular metamorphic rocks.
ANOMALY: a deviation from uniformity or regularity in geophysical or geochemical
quantities.
ARCHEAN: geologic age older than 2,500,000 years.
BLEBS: a vesicle, blister or bubble.
BRECCIA: rock in which angular fragments are surrounded by a mass of
fine-grained minerals.
CHALCOPYRITE: the main copper ore, which is widely occurring and found mainly in
veins.
CIRCULATION DRILL: a rotary drill or rotary percussion drill in which the
drilling fluid and cuttings return to the surface through the drill pipe,
minimizing contamination.
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CRETACEOUS AGE: the geologic age period dating from approximately 68 million
years to 142 million years.
CROSS CUTS: a horizontal opening driven from a shaft and (or near) right angles
to the strike of a vein or other ore body.
DIAMOND DRILL: a type of rotary drill in which the cutting is done by abrasion
rather than by percussion. The hollow bit of the drill cuts a core of rock which
is recovered in long cylindrical sections.
DISSEMINATED: fine particles of mineral dispensed through the enclosing rock.
DEVELOPMENT: work carried out for the purpose of opening up a mineral deposit
and making the actual extraction possible.
DIKES: a tabular igneous intrusion that cuts across the structures of
surrounding rock.
DIP: the angle at which a vein, structure or rock bed is inclined from the
horizontal as measured at right angles to the strike.
DRIFTS: a horizontal passage underground that follows along the length of a vein
or mineralized rock formation.
EXPLORATION: work involved in searching for ore by geological mapping,
geochemistry, geophysics, drilling and other methods.
GABBRO: Dark colored basic intrusive rocks. Intrusive equivalent of volcanic
basalt.
GEOCHEMISTRY: study of variation of chemical elements in rocks or soils.
GEOPHYSICS: study of the earth by quantitative physical methods.
GNEISS: a layered or banded crystalline metamorphic rock the grains of which are
aligned or elongated into a roughly parallel arrangement.
HYDROTHERMAL: pertaining to hot water, especially with respect to its action in
dissolving, re-depositing, and otherwise producing mineral changes within the
earth's crust.
INTRUSION/INTRUSIVE: a volume of igneous rock that was injected, while still
molten, into the earth's crust or other rocks.
LITHOLOGY: The character of a rock described in terms of its structure, color,
mineral composition, grain size and arrangement of its component parts.
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MAFIC: Pertaining to or composed dominantly of the ferromagnesian rock-forming
silicates; used to describe some igneous rocks and their constituent minerals.
METAMORPHISM: The mineralogical and structural changes in solid rock that have
been caused by heat and pressure at depth over time.
MINERALIZATION: the concentration of metals and their compounds in rocks, and
the processes involved therein.
NORITE: a course grained igneous rock formed at great depth.
ORE: material that can be economically mined and processed.
ORE BODY: a continuous, well-defined mass of material of sufficient ore content
to make extraction economically feasible.
OUTCROP: the part of a rock formation that appears at the earth's surface, often
protruding above the surrounding ground.
PYRITE: the most widespread sulfide mineral.
PYROXENITE: any group of minerals.
QUARTZITE: a sedimentary rock consisting mostly of silica sand grains that have
been welded together by heat and compaction.
RECLAMATION: the restoration of a site after exploration activity or mining is
completed.
SCHIST: a foliated metamorphic rock the grains of which have a roughly parallel
arrangement.
SEDIMENTARY ROCKS/SEDIMENTS: rocks resulting from the consolidation of loose
sediments of older rock transported from its source and deposited.
SHEAR OR SHEARING: The deformation of rocks by lateral movement along numerous
parallel planes, generally resulting from pressure and producing such
metamorphic structures as cleavage and schistosity.
SILLS: a near horizontal flat-bedded strata of intrusive rock.
SULFIDE: a metallic mineral containing unoxidized sulphur.
STRIKE: the course or bearing of a vein or a layer of rock.
ULTRAMAFIC: said of an igneous rock composed chiefly of mafic materials.
UNPATENTED MINING CLAIM: a parcel of property located on federal lands pursuant
to the U.S. General Mining Law of 1872 and the requirements of the state in
which the unpatented claim is
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located, the paramount title of which remains with the federal government. The
holder of a valid, unpatented lode mining claim is granted certain rights
including the right to explore and mine such claim.
VEIN: an epigenetic mineral filling the fault or other fracture, in tabular or
sheetlike form, often with associated replacement of the host rock, or a mineral
deposit of this form or origin.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION
We have suffered losses in the first six months of fiscal year 2000 and
in the year ended September 30, 1999 of $492,124 and $415,044, respectively, and
had accumulated deficits as of March 31, 2000 and September 30, 1999 of
$1,512,204 and $1,020,080, respectively. We have inadequate cash to fund our
planned acquisition and exploration activities and other operations during the
next 12 months. These factors raise substantial doubts about our ability to
continue as a going concern without raising significant additional capital.
Since March 31, 2000, the exercise by Electrum LLC of its options to
acquire our common stock has generated approximately $645,000 in revenues to
fund our planned activities. We also may sell our common stock to other
potential investors. If Electrum and other potential investors do not purchase
any additional shares of our common stock, we will be required to raise capital
through other equity or debt financing in order to meet our cash requirements.
For a discussion of our agreement with Electrum LLC, see "Certain Relationships
and Related Transactions - Tigris Financial Group, Ltd." There is no assurance
that we will be able to complete any equity or debt financing on acceptable
terms. If we are unable to raise additional capital, we may have to suspend or
cease operations.
Our primary business objective over the next twelve months will be to
focus on the evaluation and possible acquisition of additional properties which
have platinum group minerals potential. We may acquire properties by locating
unpatented mining claims on federal lands that are open for mining claim
location, by leasing state lands, or through leases, joint ventures or purchases
of lands that are controlled by other companies or individuals. We expect to
spend from $300,000 to $500,000 on acquisitions during this period, if funds are
available on acceptable terms for these activities.
We will also focus on satisfying the work commitments that are required
on the Lake Owen property under the Lake Owen option agreement. We plan to spend
from $50,000 to $100,000 during the next twelve months on claim-staking
activities, scientific analyses of existing geologic data, and general
exploration activities on the Lake Owen property.
In regard to our other properties, during the next twelve months we plan
to continue, on a selected basis, both reconnaissance and detailed exploration
work, which will include geological mapping, geochemical sampling, and/or
geophysical surveys, if funds are available on acceptable terms for these
activities.
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As of September 30, 1999, we had a net operating loss for federal income
tax purposes of approximately $1,000,000. A significant portion of this net
operating loss may expire without it being utilized, as we may be unable to
begin profitable operations, which would involve moving from being a new
exploration stage company to a development stage and finally an operating
entity, before its expiration. The net operating loss may be further limited
under Internal Revenue Service rules concerning limitations from ownership
changes. Our management believes there is no current basis for the recognition
of the value of the deferred tax assets derived from the net operating loss. At
such time that our management believes that profitable operations are imminent,
the value of any net operating loss then available will be used to determine the
net deferred tax asset, if any, to be recognized.
ITEM 3. DESCRIPTION OF PROPERTIES
Our interests in our exploration properties are described in Item 1.
Our offices are located at 410 Sherman Avenue, Suite 209, Coeur d'Alene,
Idaho 83814, and our telephone number is (208) 664-8095. We lease our office
space on a month-to-month basis for monthly lease payments of $565. The lease
can be terminated by either party on 30 days written notice.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth as of September 30, 2000 the common stock
ownership of the directors, executives officers and each person known by us to
be the beneficial owner of five percent or more of our common stock. The
percentage of ownership is based on 18,175,814 shares of our common stock
outstanding as of September 30, 2000.
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NUMBER OF SHARES OF
COMMON STOCK PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED SHARES
------------------------ ------------------ -----------
DIRECTORS AND EXECUTIVE OFFICERS:
J. Michael Sharratt 2,500 *
Fred Brackebusch 104,500 *
Jeffrey M. Christian/1/ 180,000 *
Kurt J. Hoffman 304,996 1.68%
Arthur E. Johnson 133,267 *
Blaze Julum 314,812 1.73%
Ishiung J. Wu - -
John Ryan 335,000 1.84%
All officers and directors as a 1,375,075 7.57%
group (8 persons)
5 PERCENT STOCKHOLDERS:
Thomas S. Kaplan/2/ 14,787,349 57.64%
c/o William Natbony, Esq.
Rosenman & Colin LLP
575 Madison Avenue
New York, NY 10022-2585
Asher B. Edelman/3/ 2,300,000 12.32%
c/o Edelman Companies
717 Fifth Avenue
New York, NY 10022
General Minerals Corporation/4/ 1,532,927 8.34%
789 Sherman Street, Suite 600A
Denver, Colorado 80203
----------------------
* Amounts shown as less than 1 percent.
/(1)/ Mr. Christian has voting and dispositive control with respect to 180,000
shares owned by CPM Group of which he is the sole stockholder.
/(2)/ Mr. Kaplan has voting and dispositive control with respect to 1,000,000
shares owned by Tigris Financial Group Ltd. of which he is the sole stockholder.
He also, pursuant to voting trust agreements expiring March 31, 2001, has voting
and dispositive control with respect to 6,307,588 shares and warrants
exercisable within 60 days to acquire 7,479,761 shares, all owned by Electrum
LLC.
/(3)/ Mr. Edelman directly owns 900,000 shares and has voting and dispositive
control with respect to an additional 900,000 shares and warrants exercisable
within 60 days to acquire 500,000 shares, owned by several individuals, the
Edelman Family Partnership and Asher B. Edelman and Associates LLC.
/(4)/ These shares include 200,000 shares issuable pursuant to a warrant
exercisable within 60 days.
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ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information concerning our directors and
executive officers.
NAME AGE POSITION
---- --- --------
J. Michael Sharratt 71 Chairman and Director
Fred W. Brackebusch 55 Director
Jeffrey M. Christian 45 Director
Kurt J. Hoffman 33 Chief Executive Officer, President
and Director
Arthur E. Johnson 53 Director
Blaze Julum 38 Vice President and Director
Ishiung Wu 55 Director
John Ryan 38 Chief Financial Officer, Secretary
and Treasurer
Our Board of Directors has established a Compensation Committee
consisting of Fred W. Brackebusch, Kurt J. Hoffman, and John Ryan.
Set forth below is certain additional information with respect to the
directors and executive officers.
J. Michael Sharratt became a member of the Board and began serving as
the Company's Chairman in August 2000. Prior to joining the Company, Mr.
Sharratt served as Vice Chairman, from 1994 to 1997, and President, from 1992 to
1994, of Stillwater Mining Company. Mr. Sharratt previously served as Vice
President and Senior Director of Mining and Minerals for Manville Corp and as a
Director of the International Precious Metals Institute, the Canadian Institute
of Mining and Metallurgy and of the Society of Mining Engineers. Mr.
Sharratt earned a B.A. in geology at McGill University.
Fred W. Brackebusch has served as a Director since September 1991. Since
May 1995, Mr. Brackebusch has been the owner and President of Mine Systems
Design, Inc. a consulting company which specializes in mine backfill, the new
technology paste backfill, and tailings disposal. Mr. Brackebusch earned a B.S.
and M.S. in geological engineering from the University of Idaho.
Jeffrey M. Christian was elected to the Board of Directors in August
2000. Since 1986, Mr. Christian has owned and has been Managing Director of CPM
Group, an independent precious metals research and consulting firm which he
founded in 1986. From 1980 until 1986, he was the head of the precious metals
and commodities market statistics research groups of
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Goldman, Sachs & Co. and J. Aron & Company. Mr. Christian is President and a
Director of the International Precious Metals Institute. Mr. Christian received
a B.A. in journalism at the University of Missouri and completed post-graduate
work in economics at the University of Missouri, New York University and the
University of Iowa.
Kurt Hoffman has served as our Chief Executive Officer, President and a
Director since June 1998. From March 1995 to June 1998, Mr. Hoffman was the
owner and President of Kurt J. Hoffman Mining & Land Services, a private mining
consulting firm that provided property sales, acquisitions and land management
services for a number of U.S. based mining and timber companies. Mr. Hoffman has
been a director of New Jersey Mining Company since 1996 and Atlas Mining Company
since 1998. Mr. Hoffman received a B.A. in economics and political science from
the College of Idaho in Caldwell, Idaho.
Arthur E. Johnson has served as a Director since June 1998. Since May
1995, Mr. Johnson has been engaged in family-owned timber and ranching
businesses.
Blaze Julum has served as a Director since June 1998 and as our Vice
President since July 1999. He served as our Director of Corporate Development
from November 1998 to June 1999. Since 1995, Mr. Julum has owned and been
President of Cascade Equipment, an international mining equipment brokerage
which has from time to time been involved in equipment procurement and sales for
mining companies in North America, South America, and Australia. Prior to his
involvement in mining, Mr. Julum held various positions in the management of the
Heath Tecna Aerospace Company, British Petroleum - Advanced Composite Division,
and as an industrial engineer for the Boeing Airplane Company. Mr. Julum earned
a B.A. in industrial organization from Western Washington University in
Bellingham, Washington.
Ishiung Wu became a Director in August 2000. He is the co-founder and
since 1994 has been a Director and the Vice President of Acquisitions of General
Minerals Corporation. Dr. Wu has over 30 years experience in mineral exploration
management. Previously, he was manager of exploration for Chevron Resources
Company in North and South America. Prior to his service at Chevron, Dr. Wu
gained extensive field experience and made several mineral discoveries, through
various positions with Exxon Minerals, Kennecott Exploration, Cerro de Pasco and
Compania de Minas Buenaventura. Dr. Wu holds an M.A. and Ph.D. in economic
geology from Harvard University and is a fellow of the Society of Economic
Geologists.
John Ryan has served since March 2000 as our Chief Financial Officer,
Treasurer and Secretary. Since November 1999, Mr. Ryan has served as Secretary
of Elite Logistics, Inc., a company in the telematics (wireless tracking)
business. Since May 1998, Mr. Ryan has been the Secretary and a Director of
Bitterroot Mining Company, which is engaged in the business of mineral
exploration. Mr. Ryan expects to devote approximately 10% of his time to the
business of Trend Mining. From April 1999 to November 1999, Mr. Ryan was the
President and Chief Executive Officer of Elite Logistics, Inc. From May 1996 to
November 1999, Mr. Ryan was Secretary and a Director of Metalline Mining
Company, a Nevada corporation engaged in the mining business. From January 1998
to February 1999, Mr. Ryan was President and a Director of Grand Central Silver
Mines, Inc., a Utah mining corporation. Mr. Ryan has been Vice President of
Corporate Development for Royal Silver Mines, Inc., a Utah corporation engaged
in
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the business of mining, since October 1996, and a Director since April 1997.
From May 1995 to May 1996, Mr. Ryan was a financial consultant for Pennaluna &
Company, a registered broker/dealer located in Coeur d'Alene, Idaho. Mr. Ryan
received a B.S. in mining engineering from the University of Idaho, and earned a
J.D. from the Boston College Law School.
KEY EMPLOYEES
Thomas E. Callicrate, 44, has served as Vice President of Exploration
since August 1999. Mr. Callicrate is a professional geologist who is a
certified, licensed, registered geologist with the American Institute of
Professional Geologist (AIPG) in the states of Wyoming and Wisconsin. Since
January 1999, Mr. Callicrate has been the President and a Director of Nevada
Natural Stone Supply, Inc., an industrial rock company. Since September 1998, he
has been the Vice President and a Director of Terradyne Resources, Inc., an
inactive minerals exploration company. Since 1988, Mr. Callicrate has been
President and a Director of Mountain Gold Exploration, Inc., a minerals
exploration consulting company. Further, since 1988 Mr. Callicrate has conducted
exploration as a consulting geologist for various exploration companies. Mr.
Callicrate earned a B.S. in Geology from Southern Oregon University.
David G. Mooney, 40, has served as Chief Geologist since March 2000. Mr.
Mooney is an economic geologist with extensive experience of platinum group
element deposits. During 1999, Mr. Mooney was an associate geologist with Micon
International Ltd., an international geological and mining consulting COMPANY,
and provided consulting services to Stillwater Mining Company, a platinum mining
company. From July 1993 to November 1998, Mr. Mooney was Chief Geologist with
Lonmin Plc. responsible for its platinum group mining and exploration activities
in Bushveld, South Africa. Mr. Mooney is a member of the Geological Association
of Canada, as well as the Geological Society of South Africa. Mr. Mooney earned
a B.A. and M.A. in natural science (geology), from the Trinity College, Dublin,
Ireland, and an M.S. in exploration geology from Rhodes University, South
Africa.
ITEM 6. EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by Trend Mining
from October 1, 1998 through September 30, 1999 for the President and Chief
Executive Officer. No other officer received more than $36,000 in compensation
from Trend Mining.
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SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
-------------------
NAME AND PRINCIPAL POSITION YEAR SALARY
--------------------------- ---- ------
Kurt J. Hoffman 1999 $37,287
President and Chief Executive
Officer
Mr. Hoffman received $13,287 of his salary in cash and $24,000 in shares
of our common stock, comprised of 257,572 shares at approximately $0.093 per
share.
We have entered into an agreement with Mr. Ryan under which, commencing
March 1, 2000, he receives 3,000 shares of our common stock per month as
compensation for his services as Chief Financial Officer, Treasurer and
Secretary. Our agreement with Mr. Ryan may be terminated by either party on 30
days notice.
We are currently negotiating employment agreements with Mr. Hoffman
and Mr. Julum.
COMPENSATION OF DIRECTORS
For fiscal year 1999, we granted to each of our directors 15,000 shares
of our common stock as compensation. On April 11, 2000, we granted to each
departing director options to purchase 1,000 shares of common stock for each
completed year of service. These options are exercisable from April 15, 2000 to
April 15, 2003. The following table sets forth information regarding these
option grants:
YEARS OF OPTIONS EXERCISE
NAME SERVICE GRANTED PRICE
-------------------------------- ------------ ------------ ----------
Lovon Fausett 17 17,000 $0.50
Don Springer 17 17,000 $0.50
Geraldine Schimpf 17 17,000 $0.50
Robert Gee 8 8,000 $0.50
Bill Jacobson 5 5,000 $0.50
Grant Brackebusch 3 3,000 $0.50
We are currently considering director compensation arrangements for
fiscal year 2000.
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ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
GENERAL MINERALS CORPORATION
Effective July 27, 1999, we entered into the Lake Owen option agreement
with General Minerals Corporation, which owns beneficially approximately 9
percent of our common stock. The primary terms and conditions of that option
agreement are described in Item 1 of Part I under the heading "Exploration
Properties - Lake Owen, Wyoming." The Lake Owen option agreement was amended in
June 2000. Pursuant to that amendment, General Minerals agreed to give up
certain antidilution protections and the right to participate in future stock
offerings. In return, we issued to General Minerals in June 2000 an additional
200,000 shares of our common stock, and warrants to purchase an additional
200,000 shares of our common stock at any time during a two-year period ending
in June 2002 at $0.70 per share. In addition, in connection with the amendment
of the Lake Owen option agreement, General Minerals exercised its rights under
the original option agreement to purchase 416,961 shares of our common stock for
an aggregate purchase price of $23,351.
TIGRIS FINANCIAL GROUP LTD.
On December 29, 1999, we entered into a stock purchase agreement with
Tigris Financial Group Ltd., under which Tigris purchased 1,000,000 common
shares of our common stock for $100,000, and was granted rights to acquire
additional common stock and warrants. Tigris is solely owned by Thomas S.
Kaplan, who beneficially owns approximately 62 percent of our common stock.
Tigris has assigned certain of its rights under the stock purchase agreement to
its affiliate, Electrum LLC. The stock purchase agreement was amended in June
2000. Pursuant to that amendment, Electrum agreed to give up certain
anti-dilution protections in exchange for the right to acquire additional shares
of our common stock and certain preemptive rights.
Pursuant to the stock purchase agreement, Electrum acquired 3,500,000
shares of our common stock for an aggregate purchase price of $450,000 in March
2000, 1,597,588 shares for an aggregate purchase price of $100,000 in June 2000,
and an additional 4,740,174 shares for an aggregate purchase price of $545,020
in August and September 2000. Also pursuant to the stock purchase agreement and
in exchange for a cash payment of $10,000, we issued in June 2000 a warrant to
Electrum to purchase an additional 7,979,761 shares of our common stock for an
aggregate purchase price of $3,191,900, exercisable in whole or in part through
September 30, 2003. Electrum sold 3,530,174 shares of our common stock in
connection with its acquisition of those shares and 500,000 warrants. Tigris and
Electrum own approximately 40.4% of our outstanding common stock and, upon
exercise of their warrants and assuming we have issued no other shares, would
own approximately 57.8% of our then outstanding common stock.
Electrum has certain preemptive rights as described in the stock
purchase agreement. Electrum has the right to acquire additional shares to
maintain a 60.4% ownership interest in the total number shares of our common
stock outstanding on June 27, 2000, plus any shares we issue pursuant to options
or warrants outstanding on that date and reduced by any shares we issue after
June 27, 2000 other than pursuant to those options and warrants. There were
options and warrants to acquire 13,007,761 shares outstanding on June 27, 2000.
Thus, assuming that no
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shares are issued except pursuant to those options or warrants, Electrum would
own a greater than 60.4% ownership interest and thus would not be able to
exercise its preemptive rights.
In addition, under the stock purchase agreement, Tigris and Electrum
have the right to proportional representation on our board of directors, and we
agreed to retain the CPM Group as financial advisors. We also agreed that at the
request of Tigris, we would use reasonable efforts to divest ourselves of our
silver exploration properties. Tigris and Electrum have demand registration
rights.
CPM Group performs various services for us, including public and
shareholder relations, research and market intelligence on platinum group metal
markets and financial advisory functions in connection with possible mergers and
acquisitions. CPM Group has also assisted us in the private placement of our
common stock. CPM Group has not performed services for and is not affiliated
with Tigris or Electrum.
ITEM 8. DESCRIPTION OF SECURITIES
COMMON STOCK
Our authorized capital consists of 30,000,000 shares of no par value
common stock. As of September 30, 2000, 18,175,814 shares of our common stock
are issued and outstanding. All outstanding shares have equal voting rights and
are validly issued, fully paid and non-assessable. Stockholders may employ
cumulative voting in the election of directors.
Upon liquidation, dissolution, or winding up, our assets, after the
payment of liabilities, would be distributed pro rata to the holders of our
common stock. Except as described under the heading "Certain Relationships and
Related Transactions - Tigris Financial Group Ltd.," our shareholders do not
have preemptive rights to subscribe for any of our securities and have no right
to require us to redeem or purchase their shares.
WARRANTS
The only warrants outstanding as of September 30, 2000 are described
under the headings "Certain Relationships And Related Transactions - General
Minerals Corporation" and "- Tigris Financial Group Ltd."
REGISTRATION RIGHTS
If we receive a request from Tigris that we register under the
Securities Act of 1933, as amended (the "Securities Act") all or any portion of
the shares of our common stock held by Tigris or Electrum, we are required to
use our best efforts to cause those shares to be registered under the Securities
Act and applicable state securities laws at our expense.
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DIVIDENDS
Our shareholders are entitled to share equally in dividends when, as and
if declared by the board of directors, out of funds legally available therefore.
No dividend has been paid on our common stock since inception, and none is
contemplated in the foreseeable future.
TRANSFER AGENT
The transfer agent for our common stock is Columbia Stock Transfer,
421 Coeur d'Alene Avenue, Coeur d'Alene, Idaho 83814.
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PART II
ITEM 1. MARKET PRICE FOR COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS
Until May 2000, our shares were traded on the Bulletin Board operated by
the National Association of Securities Dealers, Inc. (NASD) under the trading
symbol "TRDM." Our shares are now traded on the "pink sheets" maintained by the
National Quotation Bureau. Our shares began trading in 1968. Summary trading by
quarter for the 1999 and 1998 fiscal years and the first three quarters of 2000
are as follows:
FISCAL QUARTER HIGH BID [1] LOW BID [1]
-------------- ------------ -----------
2000
Third Quarter $1.06 $0.50
Second Quarter $1.06 $0.28
First Quarter $0.44 $0.26
1999
Fourth Quarter $0.44 $0.08
Third Quarter $1.06 $0.41
Second Quarter $0.45 $0.19
First Quarter $0.50 $0.19
1998
Fourth Quarter $0.63 $0.25
Third Quarter $1.00 $0.63
Second Quarter $1.88 $0.63
First Quarter $1.88 $1.25
[1] These quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commissions and may not represent actual
transactions.
As of September 30, 2000, we had approximately 960 holders of record of our
common stock.
We have not paid any dividends since our inception and do not anticipate
paying any dividends on our common stock in the foreseeable future. There are no
restrictions which preclude the payment of dividends.
ITEM 2. LEGAL PROCEEDINGS
We are not a party to any pending or threatened litigation and to our
knowledge, no action, suit or proceeding has been threatened against any of our
officers or directors.
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ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
Our previous accountant, LeMaster and Daniels, PLLC resigned, effective
September 1999. LeMaster and Daniels did not prepare financial statements or an
audit opinion for the fiscal year ended September 30, 1998. There were no
disagreements with LeMaster and Daniels on accounting and financial disclosures.
Williams & Webster, P.S., our current accountants, were appointed in
February 2000. There have been no disagreements on accounting and financial
disclosures through the date of this registration statement.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
We had 13,203,140 shares of common stock issued and outstanding as of
July 10, 2000. Of these shares, 2,736,754 shares are freely tradeable and
10,466,386 shares can only be resold in compliance with Rule 144 adopted under
the Securities Act.
Effective February 16, 1999, we completed a 1 for 10 reverse stock split
of our common stock. Unless otherwise stated, all share amounts set forth in
this registration statement are presented on a post-split basis.
In general, under Rule 144, a person who has beneficially owned shares
privately acquired directly or indirectly from us or from one of our affiliates,
for at least one year, or who is an affiliate, is entitled to sell, within any
three-month period, a number of shares that do not exceed the greater of 1% of
the then outstanding shares or the average weekly trading volume in our shares
during the four calendar weeks immediately preceding such sale. Sales under Rule
144 are also subject to certain manner of sale provisions, notice requirements
and the availability of current public information about us. A person who is not
deemed to have been an affiliate at any time during the 90 days preceding a
sale, and who has beneficially owned restricted shares for at least two years,
is entitled to sell all such shares under Rule 144 without regard to the volume
limitations, current public information requirements, manner of sale provisions
or notice requirements.
Rule 701, as currently in effect, permits resales of shares in reliance
upon Rule 144 but without compliance with certain restrictions, including the
holding period requirement, of Rule 144. Any of our employees, officers,
directors or consultants who purchased shares under a written compensatory plan
or contract may be entitled to rely on the resale provisions of Rule 701. Rule
701 permits affiliates to sell their Rule 701 shares under Rule 144 without
complying with the holding period requirements of Rule 144. Rule 701 further
provides that non-affiliates may sell such shares in reliance on Rule 144
without having to comply with the holding period, public information, volume
limitation or notice provisions of Rule 144.
Unless otherwise stated, issuances were made pursuant to Section 4(2) of the
Securities Act.
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COMMON STOCK
1. In September 1997, we issued 45,514 shares to a consultant in lieu of
payment for consulting services valued at $22,757.
2. On July 23, 1998, we issued 12,000 shares to the lessor under a
mining lease pursuant to Section 4(2) of the Securities Act, as consideration
for termination of the lease, valued at $75,000.
3. On July 23, 1998, we issued 150,000 shares to eight investors in
exchange for a exploration property valued at $75,000.
4. On July 23, 1998, we issued 80,000 shares to two investors in lieu of
repayment of a $40,000 loan.
5. On August 15, 1998, we issued 7,500 shares to an investor for an
aggregate purchase price of $1,500.
6. From September 1998 to January 1999, we issued 48,429 shares in the
aggregate to three of our officers pursuant to Rule 701 under the Securities Act
in lieu of cash payments for services, with an aggregate value of $21,000.
7. From September 1998 to January 1999, we issued 16,500 shares in the
aggregate to our 11 directors pursuant to Rule 701 under the Securities Act as
compensation for their service on the Board of Directors, with an aggregate
value of $5,775.
8. On October 12, 1998, we issued 9,210 shares to one of our directors
in satisfaction of outstanding indebtedness in the amount of $340, and in
exchange for common stock of two public companies valued at $427 and $1,075,
respectively, for a total aggregate consideration of $1,842.
9. On October 30, 1998, we issued 600,000 shares to an investor in
exchange for equipment valued at $180,000.
10. On April 21, 1999, we issued 6,000 shares pursuant to Rule 701 under
the Securities Act to a consultant in lieu of payment for services valued at
$1,500.
11. From May to December 1999, we issued 447,016 shares at prices
ranging from $0.06 to $0.25 per share to certain of our officers pursuant to
Rule 701 under the Securities Act in lieu of cash payments for their services,
with an aggregate value of $43,200.
12. On May 14, 1999, we issued 32,000 shares to a consultant in lieu of
payment for consulting services with an aggregate value of $8,000.
13. From May to December 1999, we issued 441,706 shares to a consultant
in lieu of payment for consulting services with an aggregate value of $36,259.
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14. From May to November 1999, we issued 205,364 shares pursuant to Rule
701 under the Securities Act to a consultant in lieu of payments for consulting
services valued at $16,122.
15. On July 27, 1999, we issued 715,996 shares to an investor as partial
consideration for an option to purchase an exploration property.
16. On August 10, 1999, we issued 5,000 shares of stock to an investor
for an aggregate purchase price of $1,000.
17. In August and November 1999, we issued a total of 43,750 shares
pursuant to Rule 701 under the Securities Act to a consultant in lieu of payment
for consulting services valued at $5,125.
18. In August and December 1999, we issued 8,000 shares to a consultant
in lieu of payment for consulting services valued at $2,000.
19. On August 18,1999, we issued 33,333 shares to an investor for an
aggregate purchase price of $5,000.
20. On August 27, 1999, we issued 1,000 shares to an investor in
exchange for equipment storage services valued at $250.
21. From October 1999 to May 2000, we issued 99,475 shares to a
consultant in lieu of payment for consulting services valued at $12,435.
22. On October 19, 1999, we issued 450,000 shares to investors at prices
ranging from $0.05 to $0.10 per share, for an aggregate purchase price of
$32,500.
23. On October 19,1999, we issued 96,000 shares to an investor as a
commission on the sale of mining equipment and in lieu of payment for consulting
services, with an aggregate value of $5,050.
24. On November 24, 1999, we issued 25,000 shares to two investors for
an aggregate purchase price of $5,000.
25. On November 24, 1999, we issued 57,145 shares to a consultant in
lieu of payment for consulting services valued at $5,715.
26. On December 6, 1999, we issued 100,000 shares to an accredited
investor for an aggregate purchase price of $5,000.
27. On December 29, 1999, we issued 1,000,000 shares to an accredited
investor for an aggregate purchase price of $100,000.
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28. In January 2000, we issued 30,953 shares to investors at prices
ranging from $0.15 to $0.35 per share for an aggregate purchase price of $7,500.
29. On January 18, 2000, we issued 65,285 shares to two investors as
repayment of indebtedness in the aggregate amount of $16,321.
30. On February 2, 2000, we issued 200,000 shares to four investors in
exchange for common stock of another mining company for an aggregate purchase
price of $26,000.
31. On February 25, 2000, we issued 16,667 shares to a consultant in
lieu of payment for consulting services valued at $5,000.
32. On March 1, 2000, we issued 10,000 shares to a consultant pursuant
to Rule 701 under the Securities Act in lieu of payment for consulting services
valued at $1,500.
33. In March 2000, we issued 3,500,000 shares to an accredited investor
for an aggregate purchase price of $450,000.
34. On March 13, 2000, we issued 4,327 shares to a consultant pursuant
to Rule 701 under the Securities Act in lieu of payment for consulting services
valued at $1,125.
35. On March 24, 2000, we issued 50,000 shares of our common stock to
three investors in connection with the acquisition of an option to acquire
certain mineral properties, with an aggregate value of $50,000.
36. On March 31, 2000, we issued 140,000 shares to two consultants in
lieu of payment for consulting services valued at $29,300.
37. In May and June 2000, we issued an additional 746,899 shares to an
existing investor at prices ranging from $0.06 to $0.125 per share as additional
payments for mineral properties and in connection with the exercise of
preemptive rights, for an aggregate consideration of $163,926.
38. On June 26, 2000, we issued an additional 1,597,588 shares to an
existing accredited investor for an aggregate purchase price of $100,000.
39. On June 26, 2000, we issued 150,000 shares to ten of our directors
pursuant to Rule 701 under the Securities Act as compensation for their 1999
board service, with an aggregate value of $52,500.
40. On June 26, 2000, we issued 1,200 shares to an employee pursuant to
Rule 701 under the Securities Act in lieu of salary payments with an aggregate
value of $420.
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OPTIONS
1. On July 20, 1998 we granted options to a potential investor as
follows:
SHARES EXERCISE PRICE EXERCISE PERIOD
------ -------------- ---------------
100,000 $0.10 July 20, 1998 to July 19, 1999
25,000 $0.20 July 20, 1998 to July 19, 1999
50,000 $0.50 September 1, 1998 to July 19, 2001
25,000 $1.00 September 1, 1998 to July 19, 2001
They also agreed to purchase 10,000 shares for $1,000 upon execution of the
agreement. None of the options were exercised and the shares were not purchased.
The agreement to purchase and the unexercised options were terminated on
September 24, 1998.
On September 24, 1998, we granted options to the same potential investor as
follows:
SHARES EXERCISE PRICE TERMINATION DATE
------ -------------- ----------------
80,000 $0.20 July 19, 1999
25,000 $0.30 July 19, 2000
50,000 $0.50 July 19, 2001
25,000 $1.00 July 19, 2002
They also agreed to purchase 20,000 shares for $2,000 upon execution of the
agreement. None of the options were exercised and none of the shares were
purchased. The agreement to purchase and the unexercised options were terminated
on July 7, 2000, and we issued options to the same potential investor as
follows:
SHARES EXERCISE PRICE TERMINATION DATE
------ -------------- ----------------
25,000 $0.30 August 31, 2000
15,000 $0.50 July 19, 2001
12,500 $1.00 July 19, 2002
These options have not yet been exercised.
2. On July 22, 1999, we issued an option until January 22, 2000 to two
existing investors to acquire an additional 33,333 shares at an exercise price
of $0.35 per share. This option has expired.
3. On August 13, 1999, we granted options to an existing investor as
follows:
SHARES EXERCISE PRICE TERMINATION DATE
------ -------------- ----------------
50,000 $0.15 August 13, 2000
50,000 $0.30 August 13, 2000
These options have not yet been exercised.
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4. On December 29, 1999, we granted to an existing accredited investor
the option until March 28, 2000 to purchase up to an additional 3,500,000 shares
for an exercise price of $0.14 per share, or $490,000 in the aggregate. This
option was exercised in March 2000.
Upon exercise of the option described in paragraph 1, the investor
received an option until September 25, 2000 to purchase up to an additional
4,608,000 shares for an exercise price of $0.14 per share, or $645,120 in the
aggregate. On June 27, 2000, this option was terminated, and replaced with an
option until July 5, 2000 to acquire up to an additional 1,597,588 shares at
$0.062 per share or $545,120 in the aggregate, and, upon exercise in full of
this option, an option until September 25, 2000 to acquire up to an additional
4,740,174 shares at an exercise price of $0.115 per share. The option to acquire
1,597,588 shares has been exercised in full.
On December 29, 1999, we granted an option to the same investor to
purchase, for $10,000, warrants to buy an additional 6,250,000 shares. On June
27, 2000, this option was terminated and replaced with an option to purchase,
for $10,000, warrants to buy up to 7,979,761 shares. The replacement option to
purchase the warrant was exercised in June 2000. The terms of the warrant are
described below in paragraph 1 under the heading "Warrants."
5. On April 11, 2000, we granted options to purchase 67,000 shares in
the aggregate at an exercise price of $0.50 per share to six of our directors
pursuant to Rule 701 under the Securities Act. These options are exercisable
from April 15, 2000 until April 15, 2003. None of these options has yet been
exercised.
WARRANTS
1. On June 9, 2000, we sold a warrant to purchase 7,979,761 shares at an
exercise price of $0.40 per share to an existing accredited investor in exchange
for a $10,000 cash payment. This warrant expires on September 20, 2003 and has
not yet been exercised.
2. On June 12, 2000, we sold a warrant to purchase 200,000 shares at an
exercise price of $0.70 per share to an existing investor in exchange for the
relinquishment of certain anti-dilution rights. This warrant expires on June 12,
2000 and has not yet been exercised.
We offered and sold the above securities in reliance upon exemptions
from registration pursuant to either (i) Section 4(2) of the Securities Act as
transactions not involving any public offering; (ii) Regulation D promulgated
under the Securities Act as limited offers and sales of services, or (iii) Rule
701 promulgated under the Securities Act. All purchasers of the above securities
acquired the shares for investment purposes only and all stock certificates
reflect the appropriate legends. No underwriters were involved in connection
with the sales of securities referred to in this Item 4.
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ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The laws of the State of Montana (ss.35-1-451 to 459) under certain
circumstances provide for indemnification of a corporation's directors,
officers, employees and agents against liabilities that they may incur in such
capacities.
In general, any director, officer, employee or agent of a corporation
made a party to a proceeding because he or she serves in that capacity with the
corporation may be indemnified against expenses, fines, settlements or judgments
arising in connection with the proceeding, if that person's actions were in good
faith, were reasonably believed to be in the corporation's best interest, and
were reasonably believed not to be unlawful. Unless such person is successful
upon the merits in such an action, indemnification may be awarded only after a
determination by either a majority vote of a quorum of the corporation's
directors not at the time party to the proceeding, or a specially designated
committee if no quorum can be obtained, or by special legal counsel, or by a
vote of the shareholders, excluding those shares owned by or voted under control
of directors who are at the time party to the proceedings, that the applicable
standard of conduct was met by the person to be indemnified.
Our articles of incorporation and bylaws contain no indemnification
provisions.
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PART F/S
FINANCIAL STATEMENTS
Page
Index to Financial Statements......................... F-1
PART III
ITEMS 1 and 2. INDEX TO EXHIBITS AND DESCRIPTION OF EXHIBITS
Exhibit
Number Exhibits
------ --------
3.1 Articles of Incorporation dated September 7, 1968; Certificate of
Amendment of Articles of Incorporation dated September 23, 1970;
Articles of Amendment of the Articles of Incorporation dated January 25,
1980; Articles of Amendment to the Articles of Incorporation dated
July 23, 1984; Articles of Amendment 1984 to the Articles of
Incorporation dated October 31, 1984; Articles of Amendment to the
Articles of Incorporation filed August 13, 1998; and Articles of
Amendment to the Articles of Incorporation dated March 3, 1999./*/
3.2 Bylaws adopted effective October 1, 1968./*/
10.1 Stock Purchase Agreement dated as of December 29, 1999, between Tigris
Financial Group Ltd. and Trend Mining Company; Amendment to Stock
Purchase Agreement dated as of June 27, 2000 between Electrum LLC and
Trend Mining Company; and Warrant Agreement dated June 9, 2000 between
Trend Mining Company and Tigris Financial Group Ltd./*/
10.2 Lake Owen Option Agreement between General Minerals Corporation and
Trend Mining Company; Amendment to Lake Owen Option Agreement dated
June, 2000 between General Minerals Corporation and Trend Mining
Company; and Warrant Agreement dated June 12, 2000 between Trend Mining
Company and General Minerals Corporation./*/
10.3 Letter Agreement between John Ryan and Trend Mining Company dated
July 12, 2000./*/
23.1 Consent of Certified Public Accountants, dated July 24, 2000./*/
23.2 Consent of Certified Public Accountants, dated July 24, 2000./*/
23.3 Consent of CPM Group, dated September 25, 2000./*/
--------------------
* Previously filed.
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SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this Amendment No. 2 to Registration Statement on Form 10-SB
to be signed on its behalf by the undersigned, thereunto duly authorized.
TREND MINING COMPANY
Dated: October 2, 2000 By: /s/ Kurt J. Hoffman
----------------------------------------
Kurt J. Hoffman, President and Chief
Executive Officer
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TREND MINING COMPANY
(formerly Silver Trend Mining Company)
INDEX TO FINANCIAL STATEMENTS
Financial Statements for the Years Ended September 30, 1999 and 1998
Independent Auditor's Report........................................F-2
Balance Sheets at September 30, 1999 and 1998.......................F-3
Statements of Operations and Comprehensive Income (Loss)
for the Years Ended September 30, 1999 and 1998..................F-4
Statement of Stockholders' Equity for the Years Ended
September 30, 1999 and 1998......................................F-5
Statements of Cash Flows for the Years Ended
September 30, 1999 and 1998......................................F-9
Notes to the Financial Statements..................................F-11
Interim Financial Statements
Accountant's Review Report.........................................F-20
Balance Sheets at March 31, 2000 and 1999 (Unaudited)..............F-21
Statements of Operations and Comprehensive Income (Loss) for
the Six Months Ended March 31, 2000 and 1999 (Unaudited)........F-22
Statement of Stockholders' Equity for the Period from
September 30, 1998 to March 31, 2000 (Unaudited)................F-23
Statements of Cash Flows for the Six Months Ended
March 31, 2000 and 1999 (Unaudited).............................F-27
Notes to Interim Financial Statements (Unaudited)..................F-29
F-1
<PAGE>
The Board of Directors
Trend Mining Company
Coeur d'Alene, Idaho
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheets of Trend Mining Company
(formerly Silver Trend Mining Company) as of September 30, 1999 and 1998, and
the related statements of operations and comprehensive income, stockholders'
equity, and cash flows for the years then ended. 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 audits provide 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 Trend Mining Company as of
September 30, 1999 and 1998, and the results of its operations and its cash
flows for the years then ended 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 9 to the
financial statements, the Company's significant operating losses raise
substantial doubt about its ability to continue as a going concern. Management's
plans regarding the resolution of this issue are also discussed in Note 9. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Williams & Webster, P.S.
Certified Public Accountants
Spokane, Washington
January 24, 2000
F-2
<PAGE>
TREND MINING COMPANY
(formerly Silver Trend Mining Company)
BALANCE SHEETS
September 30
----------------------------
1999 1998
-------------- -------------
ASSETS
CURRENT ASSETS
Cash $ 8,998 $ 2,926
Accounts receivable 1,000 -
Equipment held for resale 4,000 -
- -
-------------- -------------
TOTAL CURRENT ASSETS 13,998 2,926
-------------- -------------
MINERAL PROPERTIES 338,246 269,086
-------------- -------------
PROPERTY AND EQUIPMENT 997 -
-------------- -------------
OTHER ASSETS
Investments 96,750 184,491
-------------- -------------
TOTAL ASSETS $ 449,991 $ 456,503
============== =============
LIABILITIES AND
STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 14,264 $ 5,693
Accrued expenses 11,786 12,750
Notes payable 32,000 -
-------------- -------------
TOTAL CURRENT LIABILITIES 58,050 18,443
-------------- -------------
COMMITMENTS AND CONTINGENCIES - -
-------------- -------------
STOCKHOLDERS' EQUITY
Common stock, no par value,
30,000,000 shares authorized,
5,405,188 and 2,249,353 shares
issued and outstanding,
Respectively 1,374,120 926,016
Accumulated deficit (1,020,080) (605,036)
Accumulated other comprehensive income 37,901 117,080
-------------- -------------
TOTAL STOCKHOLDERS' EQUITY 391,941 438,060
-------------- -------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 449,991 $ 456,503
============== =============
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
TREND MINING COMPANY
(formerly Silver Trend Mining Company)
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
Years Ended September 30
-----------------------------
1999 1998
-------------- -------------
REVENUES $ - $ -
-------------- -------------
GENERAL AND ADMINISTRATIVE EXPENSES
Mineral property expense 100,122 42,503
General & administrative 39,742 15,630
Officers & directors compensation 78,675 12,750
Legal & professional 10,325 8,933
Depreciation 288 -
-------------- -------------
Total Expenses 229,152 79,816
-------------- -------------
OPERATING LOSS (229,152) (79,816)
-------------- -------------
OTHER INCOME (EXPENSES)
Dividends & interest income 319 1,870
Loss on disposition and impairment of (191,674) (1,552)
assets
Gain (loss) on investment sales 1,177 (1,386)
Interest expense (504) -
Income taxes 130 -
Miscellaneous income 4,660 400
-------------- -------------
Total Other Income (Expense) (185,892) (668)
-------------- -------------
NET INCOME (LOSS) (415,044) (80,484)
OTHER COMPREHENSIVE INCOME (LOSS)
Change in market value of investments (79,179) 117,080
-------------- -------------
COMPREHENSIVE INCOME (LOSS) $ (494,223) $ 36,596
============== =============
BASIC AND DILUTED NET LOSS
PER COMMON SHARE $ (0.0346) $ (0.0039)
============== =============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 11,990,814 20,465,469
============== =============
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
TREND MINING COMPANY
(formerly Silver Trend Mining Company)
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Accumulated
------------------------- Additional Other
Number Paid-in Accumulated Comprehensive
of Shares Amount Capital Deficit Income Total
------------ ----------- ------------ ------------ ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance
October 1, 1997 1,999,853 $ 999,927 $ (196,411) $ (493,032) $ - $ 310,484
Write-off of
reorganization costs - - - (31,520) - (31,520)
Change to no par value - (196,411) 196,411 - - -
Issuance of shares for
mineral property at
$0.50 per share 150,000 75,000 - - - 75,000
Issuance of shares for
lease termination
at $0.50 per share 12,000 6,000 - - - 6,000
Issuance of shares for
debt at $0.50 per
share 80,000 40,000 - - - 40,000
Issuance of shares for
cash at $0.50 per share 7,500 1,500 - - - 1,500
Net income - - - (80,484) - (80,484)
------------ ----------- ------------ ------------ ------------- ------------
Balance,
Carried forward 2,249,353 $ 926,016 $ - $ (605,036) $ - $ 320,980
------------ ----------- ------------ ------------ ------------- ------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
F-5
<PAGE>
TREND MINING COMPANY
(formerly Silver Trend Mining Company)
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Accumulated
--------------------------- Additional Other
Number Paid-in Accumulated Comprehensive
of Shares Amount Capital Deficit Income Total
------------- ------------- ------------- -------------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance
Brought forward 2,249,353 $ 926,016 $ - $ (605,036) $ - $ 320,980
Change in market value of
investments - - - - 117,080 117,080
------------- ------------- ------------- -------------- -------------- -----------
Balance,
September 30, 1998 2,249,353 926,016 - (605,036) 117,080 438,060
Issuance of shares to
officers, and
directors for
services at prices
varying from $0.25
per share to $0.45
per share 64,929 25,125 - - - 25,125
Issuance of shares for
debt and investment
at $0.20 per share 9,210 1,842 - - - 1,842
Issuance of shares for
cash at $0.20
per share 5,000 1,000 - - - 1,000
------------- ------------- ------------- -------------- -------------- -----------
Balance,
Carried forward 2,328,492 $ 953,983 $ - $ (605,036) $ 117,080 $ 466,027
------------- ------------- ------------- -------------- -------------- -----------
The accompanying notes are an integral part of these financial statements.
</TABLE>
F-6
<PAGE>
TREND MINING COMPANY
(formerly Silver Trend Mining Company)
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Accumulated
--------------------------- Additional Other
Number Paid-in Accumulated Comprehensive
of Shares Amount Capital Deficit Income Total
------------- ------------- ------------ -------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance
Brought forward 2,328,492 $ 953,983 $ - $ (605,036) $ 117,080 $ 466,027
Issuance of shares for
equipment at $0.30
Per share 600,000 180,000 - - - 180,000
Issuance of shares to
officers, directors,
consultants and
employees for
services at prices
varying from $0.05
per share to $0.25
per share 1,155,600 104,534 - - - 104,534
Issuance of shares for
property acquisition
at $0.12 per share 715,996 89,631 - - - 89,631
Issuance of shares for
cash at prices varying
from $0.05 to $0.20
per share 605,000 46,000 - - - 46,000
------------- ------------- ------------ -------------- --------------- -------------
Balance,
Carried forward 5,405,088 $ 1,374,148 $ - $ (605,036) $ 117,080 $ 886,192
------------- ------------- ------------ -------------- --------------- -------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
F-7
<PAGE>
TREND MINING COMPANY
(formerly Silver Trend Mining Company)
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Accumulated
--------------------------- Additional Other
Number Paid-in Accumulated Comprehensive
of Shares Amount Capital Deficit Income Total
------------- ------------- ------------ -------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance
Brought forward 5,405,088 $ 1,374,148 $ - $ (605,036) $ 117,080 $ 886,192
Issuance of shares for
equipment storage
at $0.25 per share 1,000 250 - - - 250
Retirement of shares at
$0.31 per share (900) (278) - - (278)
Net loss - - (415,044) (415,044)
Change in market value of
investments - - - - (79,179) (79,179)
----------- ------------ ----------- -------------- ------------- ------------
Balance,
September 30, 1999 5,405,188 $ 1,374,120 $ - $ (1,020,080) $ 37,901 $ 391,941
=========== ============ =========== ============== ============= ============
The accompanying notes are an integral part of these financial statements.
</TABLE>
F-8
<PAGE>
TREND MINING COMPANY
(formerly Silver Trend Mining Company)
STATEMENTS OF CASH FLOWS
Years Ended September 30,
-----------------------------
1999 1998
-------------- --------------
Cash flows from operating activities
Net income (loss) $ (415,044) $ (80,484)
Adjustments to reconcile net income
(loss) to net cash used by
operating activities:
Depreciation 288 -
Loss on disposition and impairment 191,674 1,552
of assets
Common stock issued for services 129,659 -
Common stock issued for storage 250 -
Changes in assets and liabilities:
Inventory write off - 3,805
Accounts receivable (1,000) -
Equipment available for resale (4,000) -
Accounts payable 8,571 5,693
Accrued expenses (964) 12,690
-------------- --------------
Net cash used in operating activities (90,566) (56,744)
-------------- --------------
Cash flows from investing activities:
Proceeds from sale of equipment 39,326 -
Proceeds from sale of mineral 20,000 -
property
Purchase of furniture & equipment (1,285) -
Purchase of mineral properties (18,408) -
Cost of investments sold 8,284 8,875
-------------- --------------
Net cash provided by investing
activities 47,917 8,875
-------------- --------------
Cash flows from financing activities:
Proceeds from short term borrowings 2,000 40,000
Sale of common stock 47,000 1,500
Retirement of common stock (279) -
Common stock issued for lease - 6,000
termination -------------- --------------
Net cash provided by financing 48,721 47,500
activities
-------------- --------------
NET INCREASE (DECREASE) IN CASH 6,072 (369)
CASH, BEGINNING OF YEAR 2,926 3,295
-------------- --------------
CASH, END OF YEAR $ 8,998 $ 2,926
============== ==============
The accompanying notes are an integral part of these financial statements.
F-9
<PAGE>
TREND MINING COMPANY
(formerly Silver Trend Mining Company)
STATEMENTS OF CASH FLOWS
Years Ended September 30,
-----------------------------
1999 1998
------------- -------------
SUPPLEMENTAL INFORMATION:
Interest paid $ 504 $ -
Taxes paid $ - $ -
Non-cash financing activities:
Common stock issued for
acquisition of mineral property $ 89,631 $ 75,000
Common stock issued for $ 180,000 $ -
acquisition of resale equipment
Common stock issued for services $ 129,659 $ -
Common stock issued for storage $ 250 $ -
Common stock issued for investment $ 1,000 $ -
Common stock issued for debt $ 842 $ 40,000
Common stock issued for lease
termination $ - $ 6,000
The accompanying notes are an integral part of these financial statements.
F-10
<PAGE>
TREND MINING COMPANY
(formerly Silver Trend Mining Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 1999 and 1998
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Trend Mining Company (formerly Silver Trend Mining Company) was incorporated on
September 20, 1968 under the laws of the State of Montana for the purpose of
acquisition, exploration and development of mining properties. In February 1999,
the Company changed its name from Silver Trend Mining Company to Trend Mining
Company to better reflect the Company's involvement in metals other than silver.
The Company conducts operations primarily from its offices in Coeur d'Alene,
Idaho.
The Company is actively seeking additional capital and management believes that
its stock can be sold to enable the Company to continue its operations. However,
there are inherent uncertainties in mining operations and management cannot
provide assurances that it will be successful in its endeavors.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of Silver Trend Mining Company
is presented to assist in understanding the Company's financial statements. The
financial statements and notes are representations of the Company's management,
which is responsible for their integrity and objectivity. These accounting
policies conform to generally accepted accounting principles and have been
consistently applied in the preparation of the financial statements.
ACCOUNTING METHOD
The Company's financial statements are prepared using the accrual method of
accounting.
LOSS PER SHARE
Loss per share is computed by dividing the net loss by the weighted average
number of shares during the year. The weighted average number of shares is
calculated by taking the number of shares outstanding and weighting them by the
amount of time that they were outstanding. Outstanding options were not included
in the computation of loss per share because the exercise price of the
outstanding options is substantially higher than the market price of the stock,
thereby causing the options to be antidulutive.
F-11
<PAGE>
TREND MINING COMPANY
(formerly Silver Trend Mining Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 1999 and 1998
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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 reporting period.
Actual results could differ from those estimates.
MINERAL PROPERTIES
Costs of acquiring, exploring and developing mineral properties are capitalized
by project area. Costs to maintain the mineral rights and leases are expensed as
incurred. When a property reaches the production stage, the related capitalized
costs will be amortized, using the units of production method on the basis of
periodic estimates of ore reserves. Mineral properties are periodically assessed
for impairment of value and any losses are charged to operations at the time of
impairment.
Should a property be abandoned, its capitalized costs are charged to operations.
The Company charges to operations the allocable portion of capitalized costs
attributable to properties sold. Capitalized costs are allocated to properties
sold based on the proportion of claims sold to the claims remaining within the
project area.
CASH AND CASH EQUIVALENTS
For purposes of the Statement of Cash Flows, the Company considers all
short-term debt securities purchased with a maturity of three months or less to
be cash equivalents.
IMPAIRED ASSET POLICY
The Company reviews its long-lived assets quarterly to determine if any events
or changes in circumstances have transpired which indicate that the carrying
value of its assets may not be recoverable. The Company determines impairment by
comparing the undiscounted future cash flows estimated to be generated by its
assets to their respective carrying amounts. The Company does not believe any
adjustments are needed to the carrying value of its assets at September 30,
1999.
F-12
<PAGE>
TREND MINING COMPANY
(formerly Silver Trend Mining Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 1999 and 1998
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
PROVISION FOR TAXES
At September 30, 1999, the Company has net operating losses of approximately
$1,020,000, which may be offset against future taxable income through 2014. No
tax benefit has been reported in the financial statements, as the Company
believes there is a significant chance the net operating loss carryforwards will
expire unused. Accordingly, the potential tax benefits of the net operating loss
carryforwards are offset by a valuation allowance of the same amount.
REVERSE STOCK SPLIT
The Company authorized a 1 for 10 reverse stock split of its no par value common
stock. (Note 4.) All references in the accompanying financial statements to the
number of common shares outstanding and per share amounts have been restated to
reflect the reverse stock split.
CHANGE IN ACCOUNTING POLICIES
During the year ended September 30, 1998, the Company changed its method of
accounting for reorganization costs to conform to the requirements of Statement
on Position 98-5, which required such costs to be expensed as incurred. The
change was recorded as a prior period adjustment and decreased retained earnings
by $31,520 and $0.002 per weighted average number of common shares outstanding.
NOTE 3 - MINERAL PROPERTIES
NEVADA PROPERTY
In 1979 the Company acquired the Pyramid Mine consisting of five unpatented lode
mining claims near Fallon, Nevada. The claims are within the Walker Indian
Reservation and located on the site of an old bombing range. As of the date of
these financial statements, no clean up has commenced on these claims nor is the
Company aware of any pending requirements for clean up of hazardous materials.
During the year ended September 30, 1999, the Company entered into an agreement
whereby Mountain Gold Exploration would explore and stake claims, transferring
title to the Company upon completion thereof. Subsequent to the date of these
financial statements, transactions were finalized for nine claims known as the
Hardrock Johnson Property located in Clark County, Nevada.
F-13
<PAGE>
TREND MINING COMPANY
(formerly Silver Trend Mining Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 1999 and 1998
NOTE 3 - MINERAL PROPERTIES (Continued)
IDAHO PROPERTY
During the 1960's, the Company acquired the Silver Strand Mine located in
Kootenai County, Idaho. The area is an inactive mine site and was formerly used
by a government agency to conduct research on workers' safety. This agreement
did not inhibit the Company's ability to explore the site or lease the site to
other third parties.
ALASKA PROPERTY
During the year ended September 30, 1998, the Company purchased, through the
issuance of 1,500,000 shares of its common stock, four patented mining claims
known as the Rae Wallace mine located just north of Anchorage, Alaska. The
property was recorded at the fair market value of the shares paid on the date of
issuance at $0.05 per share for a total purchase price of $75,000. (Note 4.) In
the year ended September 30, 1999, the Company sold the property for $20,000
resulting in a loss of $55,000. The Company retained a 2.5% net smelter return
in the property.
WYOMING PROPERTY
During the year ended September 30, 1999, the Company entered into an agreement
with General Minerals Corporation to acquire the Lake Owen Project located in
Albany County, Wyoming in exchange for 715,996 shares of common stock, $40,000
cash and exploration expenditures during a three year option period. (Notes 4
and 12.)
The Company also staked and claimed six claims known as the Albany Claim during
the year ended September 30, 1999. These claims are located in Albany County,
Wyoming.
OREGON PROPERTY
During the year ended September 30, 1999, the Company entered into an agreement
whereby Mountain Gold Exploration would explore and stake five claims located in
Jackson County, Oregon known as the Shamrock property. Subsequent to the date of
these financial statements, all transactions have been completed and the Company
has received title to these claims.
F-14
<PAGE>
TREND MINING COMPANY
(formerly Silver Trend Mining Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 1999 and 1998
NOTE 4 - COMMON STOCK
During the year ended September 30, 1998, the Company issued 150,000 shares of
its common stock in exchange for mineral properties (Note 3) and sold 7,500
shares of common stock for $1,500. The Company also issued 80,000 shares of
common stock in payment of $40,000 debt and issued 12,000 shares of common stock
for a lease termination valued at $6,000.
On February 16, 1999, the Board of Directors authorized a 1 for 10 reverse stock
split of the Company's no par value common stock. As a result of the split,
26,356,430 shares were retired. All references in the accompanying financial
statements to the number of common shares and per-share amounts for the years
ended September 30, 1998 and 1999 have been restated to reflect the reverse
stock split.
During the fiscal year ended September 30, 1999, the Company issued 1,219,529
shares of its common stock for services. The shares were valued at their fair
market value at the date of issuance, which ranged from $0.25 to $2.50 per
share. The Company also issued 600,000 shares of its common stock for equipment
valued at $180,000. Other common stock issuances included 9,210 shares of common
stock for payment of $340 debt, 4,500 shares of Atlas Mining Co. common stock
valued at $427 and 6,050 shares of Merger Mines Corporation common stock valued
at $1,075 and 5,000 shares common stock for $1,000 cash.
Also during the fiscal year ended September 30, 1999, the Company issued 715,996
shares of its common stock for mineral properties. (Note 3.) The shares were
valued at their fair market value at the date of issuance, which was $89,631.
The Company also sold 605,000 shares of its common stock for $46,000 and issued
1,000 shares for equipment storage valued at $250.
Subsequent to the date of these financial statements, the Company has entered
into an agreement with General Minerals Corporation (GMC) wherein GMC will
receive shares of common stock equivalent to 25% of the outstanding shares at
the effective date of the agreement. See Note 12.
NOTE 5 - COMMON STOCK OPTIONS
The Company has a Stock Option Plan, which was initiated to encourage and enable
qualified officers, directors and other key employees to acquire and retain a
proprietary interest in the Company by ownership of its stock. A total of ten
percent of the currently issued and outstanding shares of the Company's common
stock may be subject to, or issued pursuant to the terms of the plan. As of
September 30, 1999, no options associated with this Plan had been issued. During
1999 and 1998, the Company issued options associated with equity and financing
agreements. Following is a summary of the status of options during the years
ended September 30, 1999 and 1998:
F-15
<PAGE>
TREND MINING COMPANY
(Formerly Silver Trend Mining Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 1999 and 1998
Weighted
Average
Number Exercise
of Shares Price
----------------- -------------
Outstanding at October 1, 1997 - $ -
Granted 200,000 .30
---------- ---------
Outstanding at September 30, 1998 200,000 $ .30
========== =========
Options exercisable at September 30, 1998 200,000 $ .30
========== =========
Outstanding at October 1, 1998 200,000 $ .30
Granted 150,000 .27
Exercised ( 10,000) .20
Forfeited - -
Expired (100,000) .10
---------- ---------
Outstanding at September 30, 1999 240,000 $ .38
========== =========
Options exercisable at September 30, 1999 240,000 $ .38
========== =========
Number Price
Exercise Date of Shares Per Share
------------------------------ ----------------- -------------
On or before January 22, 2000 50,000 $ .35
On or before July 19, 2000 25,000 .20
On or before August 13, 2000 100,000 .23
On or before July 19, 2001 50,000 .50
On or before July 19, 2002 25,000 1.00
NOTE 6 - RELATED PARTY TRANSACTIONS
The Company has accrued director and officer fees in the amounts of $9,746 and
$12,750 at September 30, 1999 and 1998, respectively. These amounts are included
in accrued expenses in the accompanying financial statements.
F-16
<PAGE>
TREND MINING COMPANY
(formerly Silver Trend Mining Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 1999 and 1998
NOTE 7 - PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is computed using the
straight-line method for financial reporting purposes and amounted to $288 and
$-0- for the fiscal years ended September 30, 1999 and 1998, respectively.
NOTE 8 - INVESTMENTS
The Company's securities that are bought and held principally for the purpose of
selling them in the near term are classified as trading securities. Trading
securities are recorded at fair value on the balance sheet in current assets,
with the change in fair value during the period included in earnings.
Available-for-sale securities consist of common stock stated at fair value and
are summarized as follows:
September 30,
-------------------------
INVESTMENT 1999 1998
---------------------------- ----------- ----------
New Jersey Mining Company $ 94,000 $ 172,000
Royal Silver Mines, Inc. 2,750 -
Global Income Fund Class A - 8,150
U.S. Government Securities Series
Class A - 4,341
---------- -----------
$ 96,750 $ 184,491
========== ===========
NOTE 9 - GOING CONCERN
As shown in the accompanying financial statements, the Company has no revenues,
has incurred a net loss of $415,044 for the year ended September 30, 1999 and
has an accumulated deficit of $1,020,080. These factors indicate that the
Company may be unable to continue in existence. The financial statements do not
include any adjustments related to the recoverability and classification of
recorded assets, or the amounts and classification of liabilities that might be
necessary in the event the Company cannot continue in existence.
The Company's management has strong beliefs that significant and imminent
private placements will generate sufficient cash for the Company to operate for
the next few years.
F-17
<PAGE>
TREND MINING COMPANY
(formerly Silver Trend Mining Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 1999 and 1998
NOTE 10 - SUBSEQUENT EVENTS
COMMON STOCK
The Company entered into an agreement with Tigris Financial Group (Tigris) on
December 29, 1999 whereby Tigris can ultimately purchase 60% of the Company's
outstanding shares based on the number of shares outstanding on that date.
Pursuant to this agreement, Tigris has paid the Company $100,000 for the
purchase of 1,000,000 shares with additional options as follows:
Number Price Total
Effective Date of Shares per Share Price
-------------------------------- ------------- ------------- --------------
90 days after December 29, 1999 3,500,000 $0.14 $490,000
180 days after exercise of above
option 4,608,000 $0.14 $645,120
Tigris was also granted warrants to acquire up to an additional 6,250,000 common
shares at an aggregate purchase price equal to $0.40 per share. The warrants may
be exercised in whole or in part at any time from the date of issue through
September 30, 2003.
MINERAL PROPERTIES
Subsequent to the date of these financial statements, the Company acquired the
Hardrock Johnson property in Clark County, Nevada and the Shamrock Mine in
Jackson County, Oregon. Both properties were acquired by quit claim deed from
Mountain Gold Exploration. See Note 3.
NOTE 11 - YEAR 2000 ISSUES
The Company has modified its business technologies to be ready for the year
2000. Critical data processing systems have been reviewed and the Company does
not expect a significant effect on internal operations. However, like other
companies, Trend Mining Company could be adversely affected if the computer
systems its suppliers or customers use do not properly process and calculate
date-related information and data for the period surrounding and including
January 1, 2000. This is commonly known as the "Year 2000" issue. Additionally,
this issue could impact non-computer systems and devices such as production
equipment, elevators, etc. At this time, because of the complexities involved in
the issue, management cannot provide absolute assurances that the Year 2000
issue will not have an impact on the Company's operations. The costs related to
Year 2000 compliance are expensed as incurred.
F-18
<PAGE>
TREND MINING COMPANY
(formerly Silver Trend Mining Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 1999 and 1998
NOTE 12 - COMMITMENTS AND CONTINGENCIES
LAKE OWEN OPTION AGREEMENT
In October 1999, the Company executed an option agreement with General Minerals
Corporation (hereinafter "GMC") wherein the Company can earn a 100% interest in
a mineral property in Albany County, Wyoming in exchange for its payment of
exploration expenditures during the three-year option period which commenced on
July 27, 1999. Under the agreement, the Company is obligated to spend $750,000
on exploration expenditures for this project commonly known as the Lake Owen
property, during the option period, with no less than $150,000 of such
expenditures to be made within the first year.
In consideration for the aforementioned option, the Company has agreed to pay
GMC $40,000 in cash and to issue to GMC 715,996 shares of its common stock or
the equivalent of 25% of the outstanding Trend shares at the effective date
(July 27, 1999) of the agreement. Additionally, GMC has the option to
participate in any future stock offerings by the Company at no less than a
proportionate basis to maintain their 25% interest.
NOTE 13 - IMPAIRMENT OF ASSETS
During the year ended September 30, 1999, the Company initiated a plan to
dispose of equipment held for resale. In connection with the plan of disposal,
the Company determined that the carry value of such assets exceeded their fair
values. Accordingly, a loss of $14,000, which is included as part of loss on
disposition and impairment of assets, and represents the excess of the carrying
value of $18,000, over the fair value of $4,000, has been charged to operations
in the year ended September 30, 1999.
F-19
<PAGE>
The Board of Directors
Trend Mining Company
(formerly Silver Trend Mining Company)
Coeur d'Alene, Idaho
ACCOUNTANT'S REVIEW REPORT
We have reviewed the accompanying balance sheet of Trend Mining Company
(formerly Silver Trend Mining Company) as of March 31, 2000, and the related
statements of operations and comprehensive income (loss), stockholders' equity,
and cash flows for the six months and three months ended March 31, 2000 and
March 31, 1999. These financial statements are the responsibility of the
Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit in accordance with
generally accepted auditing standards, the objective of which is the expression
of an opinion regarding the financial statements taken as a whole. Accordingly,
we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements in order for them to be in
conformity with generally accepted accounting principles.
The balance sheet for the year ended September 30, 1999 was audited by us and we
expressed an unqualified opinion on it in our report dated January 24, 2000. We
have not performed any auditing procedures since that date.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 9 to the
financial statements, the Company's significant operating losses raise
substantial doubt about its ability to continue as a going concern. Management's
plans for the resolution of this matter are also discussed in Note 9. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Williams & Webster, P.S.
Certified Public Accountants
Spokane, Washington
May 11, 2000
F-20
<PAGE>
TREND MINING COMPANY
(formerly Silver Trend Mining Company)
BALANCE SHEETS
March 31, September 30,
2000 1999
(Unaudited)
------------ --------------
ASSETS
CURRENT ASSETS
Cash $ 262,785 $ 8,998
Accounts receivable - 1,000
Related party receivable 3,056 -
Equipment held for resale 4,000 4,000
------------ ------------
TOTAL CURRENT ASSETS 269,841 13,998
------------ ------------
MINERAL PROPERTIES 436,375 338,246
------------ ------------
PROPERTY AND EQUIPMENT 24,602 997
------------ ------------
OTHER ASSETS
Deposit 1,000 -
Investments 101,750 96,750
------------ ------------
TOTAL OTHER ASSETS 102,750 96,750
------------ ------------
TOTAL ASSETS $ 833,568 $ 449,991
============ ============
LIABILITIES AND
STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 77,373 $ 14,264
Accrued expenses 9,981 2,040
Related party payables 62,500 9,746
Short-term notes payable 22,000 32,000
Notes payable - current portion 2,966 -
------------ ------------
TOTAL CURRENT LIABILITIES 174,820 58,050
------------ ------------
LONG-TERM DEBT
Notes payable - net of current portion 11,749 -
------------ ------------
COMMITMENTS AND CONTINGENCIES - -
------------ ------------
STOCKHOLDERS' EQUITY
Common stock, no par value, 30,000,000
shares authorized, 10,697,478 and
5,405,188 shares issued and
outstanding, respectively 2,115,616 1,374,120
Accumulated deficit (1,512,204) (1,020,080)
Accumulated other comprehensive income 43,587 37,901
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 646,999 391,941
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 833,568 449,991
============ ============
See accountant's review and accompanying notes.
F-21
<PAGE>
TREND MINING COMPANY
(formerly Silver Trend Mining Company)
STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
------------------------ ------------------------
2000 1999 2000 1999
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
REVENUES $ $ $ $
- - - -
----------- ------------ ------------ -----------
GENERAL AND ADMINISTRATIVE EXPENSES
Mineral property expense 114,961 38,176 174,994 38,666
Officers & directors compensation 85,500 23,975 118,500 32,975
Legal & professional 70,922 5,368 77,238 5,971
Other administrative expense 110,315 10,548 126,191 14,094
Depreciation 775 75 875 144
---------- ------------ ------------ -----------
Total Expenses 382,473 78,142 497,798 91,850
---------- ------------ ------------ -----------
OPERATING LOSS
(382,473) (78,142) (497,798) (91,850)
----------- ------------ ------------ -----------
OTHER INCOME
Dividends & interest income 129 152 154 270
Gain on investment sales - 17,981 5,420 19,177
Loss on disposition and impairment
of assets - (154,674) - (154,674)
Miscellaneous income - - 100 2,000
---------- ------------ ------------ -----------
Total Other Income 129 (136,541) 5,674 (133,227)
---------- ------------ ------------ -----------
LOSS BEFORE INCOME TAXES (382,344) (214,683) (492,124) (225,077)
PROVISION FOR INCOME TAXES - - - -
---------- ------------ ------------ -----------
NET LOSS (382,344) (214,683) (492,124) (225,077)
OTHER COMPREHENSIVE INCOME (LOSS)
Change in market value of
investments 21,750 (15,875) 5,686 (31,000)
---------- ------------ ------------ -----------
COMPREHENSIVE LOSS $(360,594) $ (230,558) $ (486,438) $ (256,077)
=========== ============ ============ ===========
BASIC AND DILUTED NET LOSS
PER COMMON SHARE $ (0.06) $ (0.07) $ (0.08) $ (0.10)
=========== ============ ============ ===========
WEIGHTED AVERAGE NUMBER OF
BASIC AND DILUTED
COMMON SHARES OUTSTANDING 6,585,467 2,915,264 6,037,903 2,299,719
=========== ============ ============ ===========
</TABLE>
See accountant's review and accompanying notes.
F-22
<PAGE>
TREND MINING COMPANY
(formerly Silver Trend Mining Company)
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Accumulated
------------------------- Other
Number Accumulated Comprehensive
of Shares Amount Deficit Income Total
------------ ----------- ------------ ------------- ----------
<S> <C> <C> <C> <C> <C>
Balance
September 30, 1998 2,249,354 $ 926,016 $ (605,036) $ 117,080 $ 438,060
Issuance of shares for
property
Acquisition at
$0.12 per Share 715,996 89,631 - - 89,631
Issuance of shares for
debt and investment
at $0.20 per share 9,210 1,842 - - 1,842
Issuance of shares for
cash at prices varying
from $0.05 to $0.20
per share 610,000 47,000 - - 47,000
Issuance of shares for
equipment at $0.30
per share 600,000 180,000 - - 180,000
Issuance of shares to
officers, directors,
consultants and
employees for services
at prices varying from
$0.05 per share to
$0.45 per share 1,220,528 129,659 - - 129,659
------------ ----------- ------------ ------------ ----------
Balance
Carried forward 5,405,088 $1,374,148 $ (605,036) $ 117,080 $ 886,192
------------ ----------- ------------ ------------ ----------
See accountant's review and accompanying notes.
</TABLE>
F-23
<PAGE>
TREND MINING COMPANY
(formerly Silver Trend Mining Company)
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Accumulated
------------------------- Other
Number Accumulated Comprehensive
of Shares Amount Deficit Income Total
------------ ----------- ------------ ------------- ----------
<S> <C> <C> <C> <C> <C>
Balance
Brought forward 5,405,088 $1,374,148 $ (605,036) $ 117,080 $ 886,192
Issuance of shares for
equipment storage at
$0.25 per share 1,000 250 - - 250
Retirement of shares at
$0.31 per share (900) (278) - - (278)
Net loss for the year ended
September 30, 1999 - - (415,044) (415,044)
Change in market value of
investments
- - - (79,179) (79,179)
----------- ------------ ------------ ------------- ----------
Balance,
September 30, 1999
5,405,188 ,374,120 (1,020,080) 37,901 391,941
Issuance of shares to
officers, and
consultants for
services at
prices varying
from $0.06 to
$0.26 per share 421,188 46,675 - - 46,675
----------- ------------ ------------ ------------- ----------
Balance
Carried forward 5,826,376 $ 1,420,795 $(1,020,080) $ 37,901 $ 438,616
----------- ------------ ------------ ------------- ----------
See accountant's review and accompanying notes.
</TABLE>
F-24
<PAGE>
TREND MINING COMPANY
(formerly Silver Trend Mining Company)
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Accumulated
------------------------- Other
Number Accumulated Comprehensive
of Shares Amount Deficit Income Total
------------ ----------- ------------ ------------- ----------
<S> <C> <C> <C> <C> <C>
Balance
Brought Forward 5,826,376 $1,420,795 $(1,020,080) $ 37,901 $ 438,616
Issuance of shares for
property acquisition
at $1.00 per share 50,000 50,000 - - 50,000
Issuance of shares for
investment at
$0.13 per share 200,000 26,000 - - 26,000
Issuance of shares for
cash at prices
varying from $0.10
to $0.20 per share 4,555,953 602,500 - - 602,500
Issuance of shares for
incentive fee at
$0.25 per share 65,285 16,321 - - 16,321
Share adjustment (136) - - - -
------------ ----------- ------------ ------------ -----------
Balance
Carried forward 10,697,478 $2,115,616 $(1,020,080) $ 37,901 $1,133,437
------------ ----------- ------------ ------------ -----------
See accountant's review and accompanying notes.
</TABLE>
F-25
<PAGE>
TREND MINING COMPANY
(formerly Silver Trend Mining Company)
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Accumulated
------------------------- Other
Number Accumulated Comprehensive
of Shares Amount Deficit Income Total
------------ ----------- ------------ ------------- ----------
<S> <C> <C> <C> <C> <C>
Balance
Brought forward 10,697,478 $2,115,616 $(1,020,080) $ 37,901 1,133,437
Net loss for the period
ended March 31, 2000 - - (492,124) - (492,124)
Change in market value of
Investments - - - 5,686 5,686
------------ ----------- ------------ ------------ ----------
Balance, March 31, 2000
(Unaudited) 10,697,478 $2,115,616 $(1,512,204) $ 43,587 646,999
============ =========== ============ ============ ==========
See accountant's review and accompanying notes.
</TABLE>
F-26
<PAGE>
TREND MINING COMPANY
(formerly Silver Trend Mining Company)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
March 31,
----------------------------
2000 1999
(Unaudited) (Unaudited)
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (492,124) $ (225,077)
Adjustments to reconcile net income
(loss) to net cash used by
operating activities:
Depreciation 875 144
Common stock issued for services 46,675 28,868
Common stock issued for
incentive fees 16,321 -
Loss on disposal and impairment
of assets - 154,674
Changes in assets and liabilities:
Accounts receivable 1,000 -
Related party receivable (3,056) -
Equipment available for resale - 4,000
Accounts payable 63,109 (1,247)
Deposit (1,000) -
Accrued expenses 7,941 (1,500)
Related party payables 52,754 -
------------- -------------
Net cash used in operating activities
(307,505) (40,138)
------------- -------------
Cash flows from investing activities:
Purchase of furniture & equipment (24,480) (748)
Proceeds from sale of equipment - 32,300
Purchase of mineral properties (48,130) -
Proceeds from sale of investments 36,687 8,875
Purchase of investments (10,000) (262)
------------- -------------
Net cash provided by (used in)
investing activities (45,923) 40,165
------------- -------------
Cash flows from financing activities:
Proceeds from notes payable 14,830 -
Payments of short term borrowings (10,115) -
Sale of common stock 602,500 1,000
------------- -------------
Net cash provided by financing activities 607,215 1,000
------------- -------------
NET INCREASE IN CASH 253,787 1,027
CASH, BEGINNING OF PERIOD 8,998 2,926
------------- -------------
CASH, END OF PERIOD $ 262,785 $ 3,953
============= =============
</TABLE>
See accountant's review and accompanying notes.
F-27
<PAGE>
TREND MINING COMPANY
(formerly Silver Trend Mining Company)
STATEMENTS OF CASH FLOWS (Continued)
<TABLE>
<CAPTION>
Six Months Ended
March 31,
----------------------------
2000 1999
(Unaudited) (Unaudited)
------------- -------------
<S> <C> <C>
SUPPLEMENTAL INFORMATION:
Interest paid in cash $ 65 $ -
Taxes paid in cash $ - $ -
Non-cash financing activities:
Common stock issued for services $ 46,675 $ 28,868
Common stock issued for investment $ 26,000 $ -
Common stock issued for debt $ - $ 1,842
Common stock issued for property
acquisition $ 50,000 $ -
Common stock issued for incentive fees $ 16,321 $ -
Common stock issued for acquisition
of resale equipment $ - $ 180,000
</TABLE>
See accountant's review and accompanying notes.
F-28
<PAGE>
TREND MINING COMPANY
(formerly Silver Trend Mining Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Trend Mining Company (formerly Silver Trend Mining Company) was incorporated on
September 20, 1968 under the laws of the State of Montana for the purpose of
acquisition, exploration and development of mining properties. In February 1999,
the Company changed its name from Silver Trend Mining Company to Trend Mining
Company to better reflect the Company's involvement in metals other than silver.
The Company conducts operations primarily from its offices in Coeur d'Alene,
Idaho. The Company has elected a September 30 fiscal year-end.
The Company is actively seeking additional capital and management believes that
its stock can be sold to enable the Company to continue its operations. However,
there are inherent uncertainties in mining operations and management cannot
provide assurances that it will be successful in its endeavors.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of Trend Mining Company is
presented to assist in understanding the Company's financial statements. The
financial statements and notes are representations of the Company's management,
which is responsible for their integrity and objectivity. These accounting
policies conform to generally accepted accounting principles and have been
consistently applied in the preparation of the financial statements.
ACCOUNTING METHOD
The Company's financial statements are prepared using the accrual method of
accounting.
LOSS PER SHARE
Loss per share is computed by dividing the net loss by the weighted average
number of shares during the year. The weighted average number of shares is
calculated by taking the number of shares outstanding and weighting them by the
amount of time that they were outstanding. Outstanding options were not included
in the computation of diluted loss per share because the exercise price of the
outstanding options is substantially higher than the market price of the stock,
thereby causing the options to be antidulutive.
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 reporting period.
Actual results could differ from those estimates.
F-29
<PAGE>
TREND MINING COMPANY
(formerly Silver Trend Mining Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
MINERAL PROPERTIES
Costs of acquiring, exploring and developing mineral properties are capitalized
by project area. Costs to maintain the mineral rights and leases are expensed as
incurred. When a property reaches the production stage, the related capitalized
costs will be amortized, using the units of production method on the basis of
periodic estimates of ore reserves. Mineral properties are periodically assessed
for impairment of value and any losses are charged to operations at the time of
impairment.
Should a property be abandoned, its capitalized costs are charged to operations.
The Company charges to operations the allocable portion of capitalized costs
attributable to properties sold. Capitalized costs are allocated to properties
sold based on the proportion of claims sold to the claims remaining within the
project area.
CASH AND CASH EQUIVALENTS
For purposes of the Statement of Cash Flows, the Company considers all
short-term debt securities purchased with a maturity of three months or less to
be cash equivalents.
IMPAIRED ASSET POLICY
The Company reviews its long-lived assets quarterly to determine if any events
or changes in circumstances have transpired which indicate that the carrying
value of its assets may not be recoverable. The Company determines impairment by
comparing the undiscounted future cash flows estimated to be generated by its
assets to their respective carrying amounts. The Company does not believe any
adjustments are needed to the carrying value of its assets at March 31, 2000.
PROVISION FOR TAXES
At March 31, 2000, the Company has net operating losses of approximately
$1,512,000, which may be offset against future taxable income through 2014. No
tax benefit has been reported in the financial statements, as the Company
believes there is a significant chance the net operating loss carryforwards will
expire unused. Accordingly, the potential tax benefits of the net operating loss
carryforwards are offset by a valuation allowance of the same amount.
REVERSE STOCK SPLIT
The Company authorized a 1 for 10 reverse stock split of its no par value common
stock. (Note 4.) All references in the accompanying financial statements to the
number of common shares outstanding and per-share amounts have been restated to
reflect the reverse stock split.
F-30
<PAGE>
TREND MINING COMPANY
(formerly Silver Trend Mining Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
DERIVATIVE INSTRUMENTS
In June 1998 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This new standard establishes accounting
and reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. It requires
that an entity recognize all derivatives as either assets or liabilities in the
balance sheet and measure those instruments at fair value.
At March 31, 2000, the Company has not engaged in any transactions that would be
considered derivative instruments or hedging activities.
INTERIM FINANCIAL STATEMENTS
The interim financial statements as of and for the six months ended March 31,
2000 included herein have been prepared for the Company, without audit. They
reflect all adjustments, which are, in the opinion of management, necessary to
present fairly the results of operations for these periods. All such adjustments
are normal recurring adjustments. The results of operations for the periods
presented are not necessarily indicative of the results to be expected for the
full fiscal year.
COMPENSATED ABSENCES
Employees of the Company are entitled to paid vacation, paid sick days and
personal days off depending on job classification, length of service, and other
factors. The Company estimates that the amount of compensation for future
absences is minimal and immaterial at the reporting dates and accordingly, no
liability has been recorded in the accompanying financial statements. The
Company's policy is to recognize the cost of compensated absences when actually
paid to employees.
NOTE 3 - MINERAL PROPERTIES
NEVADA PROPERTIES
In 1979 the Company acquired the Pyramid Mine consisting of five unpatented lode
mining claims near Fallon, Nevada. Exploration has been completed on this
property by the Company with no further work planned. The Company is actively
seeking a buyer for this property.
F-31
<PAGE>
TREND MINING COMPANY
(formerly Silver Trend Mining Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
NOTE 3 - MINERAL PROPERTIES (Continued)
NEVADA PROPERTIES (Continued)
During the year ended September 30, 1999, the Company entered into an agreement
whereby Mountain Gold Exploration would explore and stake claims, transferring
title to the Company upon completion thereof. In January 2000, transactions were
finalized for the acquisition of five claims known as the Hardrock Johnson
Property located in Clark County, Nevada. In February 2000, the Company acquired
an additional four claims on this property.
During the period ended March 31, 2000 and subsequent to the date of these
financial statements, the Company has also explored claims located in Nye
County, Nevada.
IDAHO PROPERTY
During the 1960's, the Company acquired the Silver Strand Mine located in
Kootenai County, Idaho. The area is an inactive mine site and was formerly used
by a government agency to conduct research on workers' safety. This agreement
did not inhibit the Company's ability to explore the site or lease the site to
other third parties. The Company completed a four hole drill program on the
property in 1998 but no further work is planned at this time. See Note 2.
ALASKA PROPERTY
During the year ended September 30, 1998, the Company purchased, through the
issuance of 1,500,000 shares of its common stock, four patented mining claims
known as the Rae Wallace mine located just north of Anchorage, Alaska. The
property was recorded at the fair market value of the shares paid on the date of
issuance at $0.05 per share for a total purchase price of $75,000. (Note 4.) In
the year ended September 30, 1999, the Company sold the property for $20,000
resulting in a loss of $55,000. The Company retained a 2.5% net smelter return
in the property.
WYOMING PROPERTY
During the year ended September 30, 1999, the Company entered into an agreement
with General Minerals Corporation to acquire the Lake Owen Project located in
Albany County, Wyoming in exchange for 715,996 shares of common stock, $40,000
cash and exploration expenditures during a three year option period. (Note 12.)
The Company also staked and claimed six claims known as the Albany Claim during
the year ended September 30, 1999. These claims are located in Albany County,
Wyoming.
OREGON PROPERTY
During the year ended September 30, 1999, the Company entered into an agreement
whereby Mountain Gold Exploration would explore and stake five claims (known as
the Shamrock property) located in Jackson County, Oregon. In January 2000 the
Company received title to these claims from Mountain Gold.
F-32
<PAGE>
TREND MINING COMPANY
(formerly Silver Trend Mining Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
NOTE 3 - MINERAL PROPERTIES (Continued)
MONTANA PROPERTY
During March 2000, the Company entered into an agreement to purchase mining
claims in Madison County, Montana called the Intrepid claims. The agreement
calls for $1,000 nonrefundable earnest money, which is reflected as a deposit in
these financial statements. Subsequent to the date of these financial
statements, the Company has paid $5,000 cash and issued 50,000 shares of its
common stock at $1.00 per share to complete this agreement. If the Company
elects to proceed with the project, an additional 100,000 shares of its common
stock will be issued.
Additionally, the Company has expended $17,705 to stake 121 claims known as the
Lady of the Lake Project.
The Company also expended $30,425 to explore and stake 57 MAC claims (known as
the McCormick Creek Project) in Missoula County, Montana.
NOTE 4 - COMMON STOCK
On February 16, 1999, the Board of Directors authorized a 1 for 10 reverse stock
split of the Company's no par value common stock. As a result of the split,
26,356,430 shares were retired. All references in the accompanying financial
statements to the number of common shares and per-share amounts for the periods
ended March 31, 1999 and 2000 have been restated to reflect the reverse stock
split.
During the fiscal year ended September 30, 1999, the Company issued 1,803,885
shares of its common stock for services. The shares were valued at their fair
market value at the date of issuance, which ranged from $0.025 to $0.25 per
share. The Company also issued 600,000 shares of its common stock for equipment
valued at $180,000. Other common stock issuances included 9,210 shares of common
stock for payment of $340 debt, 4,500 shares of Atlas Mining Co. common stock
valued at $427, and 6,050 shares of Merger Mines Corporation common stock valued
at $1,075, and 5,000 shares common stock for $1,000 cash.
Also during the fiscal year ended September 30, 1999, the Company issued 715,996
shares of its common stock for mineral properties. (Note 3.) The shares were
valued at their fair market value at the date of issuance, which was $89,631.
The Company also sold 605,000 shares of its common stock for $46,000 and issued
1,000 shares for equipment storage valued at $250.
F-33
<PAGE>
TREND MINING COMPANY
(formerly Silver Trend Mining Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
NOTE 4 - COMMON STOCK (Continued)
During the period ended March 31, 2000, the Company issued 421,188 shares of its
common stock to officers and consultants for services. The Company also issued
50,000 shares of its common stock for mineral properties valued at $50,000,
200,000 shares of its common stock (plus $10,000 cash) for New Jersey Mining
Company Stock valued at $36,000, and 65,285 shares of its common stock for
incentive fees amounting to $16,321. The shares were valued at their fair market
value at the date of issuance, which ranged from $0.13 to $1.00 per share. The
Company also sold 4,555,953 shares of its common stock for $602,500 which
includes options exercised by Tigris Financial Group to acquire 1,000,000 shares
of the Company's common stock at $0.14 per share. (Note 5.)
The Company entered into an agreement on July 27, 1999 with General Minerals
Corporation (GMC) wherein GMC received 715,996 shares of common stock equivalent
to 25% of the outstanding shares at the effective date of the agreement. See
Note 12.
Subsequent to the date of these financial statements, the board of directors
voted to issue 15,000 shares of its common stock to each director for services
during 1999. The stock is to be valued at $0.35 per share for a total of
$52,500. This amount is included in related party payables in these financial
statements. See Note 10.
NOTE 5 - COMMON STOCK OPTIONS
The Company has a Stock Option Plan, which was initiated to encourage and enable
qualified officers, directors and other key employees to acquire and retain a
proprietary interest in the Company by ownership of its stock. A total of ten
percent of the currently issued and outstanding shares of the Company's common
stock may be subject to, or issued pursuant to the terms of the plan.
The Company also entered into an agreement with Tigris Financial Group (Tigris)
on December 9, 1999 whereby Tigris can ultimately purchase 60% of the Company's
outstanding shares based on the number of shares outstanding on that date.
Pursuant to this agreement, Tigris has paid the Company $490,000 for the
purchase of 3,500,000 shares. Tigris has 4,608,000 additional options
exercisable on or before September 24, 2000 at $0.14 per share.
Following is a summary of the status of the options during the year ended
September 30, 1999 and the six months ended March 31, 2000:
F-34
<PAGE>
TREND MINING COMPANY
(formerly Silver Trend Mining Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
NOTE 5 - COMMON STOCK OPTIONS (Continued)
<TABLE>
<CAPTION>
Weighted
Average
Number Exercise
of Shares Price
------------ ------------
<S> <C> <C>
Outstanding at October 1, 1998 200,000 $.30
Granted 150,000 .27
Exercised ( 10,000) .20
Forfeited - -
Expired (100,000) .10
------------ ------------
Outstanding at September 30, 1999 240,000 $ .38
============ ==========
Options exercisable at September 30, 1999 240,000 $ .38
============ ==========
Outstanding at October 1, 1999 240,000 $ .38
Granted 8,108,000 .14
Exercised (3,500,000) .14
Forfeited - -
Expired ( 40,000) .14
------------ ------------
Outstanding at March 31, 2000 4,808,000 $ .14
============ ==========
Options exercisable at March 31, 2000 200,000 $ .39
============ ==========
</TABLE>
<TABLE>
<CAPTION>
Number Price
Exercise Date of Shares Per Share
---------------------------------- ------------ ------------
<S> <C> <C
On or before July 19, 2000 25,000 $ .20
On or before August 13, 2000 100,000 .23
After exercise of option expiring
March 28, 2000 but before
September 24, 2000 4,608,000 .14
On or before July 19, 2001 50,000 .50
On or before July 19, 2002 25,000 1.00
</TABLE>
Tigris was also granted warrants during December 1999 to acquire up to an
additional 6,250,000 common shares at an aggregate purchase price equal to $0.40
per share. The warrants may be exercised in whole or in part anytime from the
date of issue through September 30, 2003.
F-35
<PAGE>
TREND MINING COMPANY
(formerly Silver Trend Mining Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
NOTE 5 - COMMON STOCK OPTIONS (Continued)
Subsequent to the date of these financial statements, the Company's board of
directors issued options to purchase 67,000 share of its common stock at $0.50
per share to six directors who have retired. The options were based on the years
of service and are exercisable from April 15, 2000 to April 15, 2003.
NOTE 6 - RELATED PARTY TRANSACTIONS
The Company has accrued director and officer fees in the amounts of $9,746 and
$62,500 at September 30, 1999 and March 31, 2000, respectively.
NOTE 7 - PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is computed using the
straight-line method for financial reporting purposes and amounted to $775 and
$75 for the six month periods ended March 31, 2000 and 1999, respectively.
NOTE 8 - INVESTMENTS
The Company's securities that are bought and held principally for the purpose of
sale in the near term are classified as trading securities. Trading securities
are recorded at fair value on the balance sheet in current assets, with the
change in fair value during the period included in earnings.
Available-for-sale securities consist of common stock stated at fair value and
are summarized as follows:
March 31, September 30,
Investment 2000 1999
-------------------------- ------------- -------------
New Jersey Mining Company $ 101,750 $ 94,000
Royal Silver Mines, Inc. - 2,750
------------- -------------
$ 101,750 $ 96,750
============= =============
F-36
<PAGE>
TREND MINING COMPANY
(formerly Silver Trend Mining Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
NOTE 9 - GOING CONCERN
As shown in the accompanying financial statements, the Company has no revenues,
has incurred a net loss of $492,124 for the six months ended March 31, 2000 and
has an accumulated deficit of $1,512,204. These factors indicate that the
Company may be unable to continue in existence. The financial statements do not
include any adjustments related to the recoverability and classification of
recorded assets, or the amounts and classification of liabilities that might be
necessary in the event the Company cannot continue in existence.
The Company's management has strong beliefs that significant and imminent
private placements will generate sufficient cash for the Company to operate for
the next few years.
NOTE 10 - NOTES PAYABLE
Following is a summary of long-term debt at March 31, 2000:
Note payable to First Security Bank, N.A.
Interest at 14.99%, secured by
1989 Chevy, payable in monthly
installments of $179.28 through
February 28, 2003. $ 5,058
Note payable to First Security Bank, N.A.
Interest at 14.99%, secured by
1995 Ford F-250, payable in
monthly installments of $231.03
through April 7, 2005 9,657
-----------
14,715
Less: Current maturities included in
current liabilities (2,966)
-----------
$ 11,749
===========
F-37
<PAGE>
TREND MINING COMPANY
(formerly Silver Trend Mining Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
NOTE 10 - NOTES PAYABLE (Continued)
Following are the maturities of long-term debt for each of the next five years:
2000 $ 2,966
2001 3,419
2002 3,754
2003 2,231
2004 2,345
---------
$ 14,715
==========
NOTE 11 - YEAR 2000 ISSUES
Like other companies, Trend Mining Company could be adversely affected if the
computer systems it, its suppliers or customers use do not properly process and
calculate date-related information and data from the period surrounding and
including January 1, 2000. This is commonly known as the "Year 2000" issue.
Additionally, this issue could impact non-computer systems and devices such as
production equipment, elevators, etc. At this time there have been no known
problems related to the Year 2000 issue.
The Company has reviewed its business and processing systems and believes that
the majority of its systems are already year 2000 compliant or can be made so
with software updates. Based on its assessments, the Company regards the costs
associated with Year 2000 readiness to be immaterial. All costs associated with
the Year 2000 issue will be expensed as incurred.
NOTE 12 - COMMITMENTS AND CONTINGENCIES
LAKE OWEN OPTION AGREEMENT
In October 1999, the Company executed an option agreement with General Minerals
Corporation (hereinafter "GMC") wherein the Company can earn a 100% interest in
a mineral property in Albany County, Wyoming in exchange for its payment of
exploration expenditures during the three-year option period which commenced on
July 27, 1999. Under the agreement, the Company is obligated to spend $750,000
on exploration expenditures for this project, commonly known as the Lake Owen
property, during the option period, with no less than $150,000 of such
expenditures to be made within the first year.
F-38
<PAGE>
TREND MINING COMPANY
(formerly Silver Trend Mining Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
NOTE 12 - COMMITMENTS AND CONTINGENCIES (Continued)
LAKE OWEN OPTION AGREEMENT (Continued)
In consideration for the aforementioned option, the Company paid GMC $40,000 in
cash and issued to GMC 715,996 shares of its common stock which is equivalent to
25% of the outstanding Trend shares at the effective date (July 27, 1999) of the
agreement. Additionally, GMC has the option to participate in any future stock
offerings by the Company at no less than a proportionate basis to maintain their
25% interest.
NEW JERSEY MINING COMPANY
The Company has signed a letter of agreement with New Jersey Mining Company
(New Jersey) whereby the Company will receive 50,000 shares of New Jersey's
restricted common stock in exchange for New Jersey's opportunity to earn a 100%
interest less a net smelter royalty in the Company's unpatented claims in
Kootenai County, Idaho following a three year work commitment payable in New
Jersey common stock as follows:
Year 1 $ 25,000
Year 2 50,000
Year 2 125,000
----------
Total $ 200,000
==========
The Company will retain a 1.5% net smelter return until an aggregate of $50,000
in net smelter royalties have been received. Thereafter, the Company's net
smelter return will decrease to 0.5%.
LEASE AGREEMENT
The Company rents office facilities in Coeur d'Alene, Idaho on a month to month
basis for $350 per month. Total rents paid during the six months ended March 31,
2000 were $2,100.
NOTE 13 - IMPAIRMENT OF ASSETS
During the year ended September 30, 1999, the Company initiated a plan to
dispose of equipment held for resale. In connection with the plan of disposal,
the Company determined that the carrying value of such assets exceeded their
fair values. Accordingly, the Company recorded a loss of $14,000 on disposition
and impairment of assets. The remaining assets available for sale are valued at
$4,000.
F-39
<PAGE>
TREND MINING COMPANY
(formerly Silver Trend Mining Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
NOTE 14 - SUBSEQUENT EVENTS
COMMON STOCK
As of the date of issuance of these financial statements, the board of directors
has voted to issue 15,000 shares of its common stock to each director for
services performed during 1999. See Note 4.
COMMON STOCK OPTIONS
Subsequent to the date of these financial statements, in April 2000, the
Company's board of directors voted to issue options to purchase 67,000 shares of
its common stock at $0.50 share to six directors who have retired. See Note 5.
F-40
