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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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, is engaged in the
exploration and development of platinum group metals properties, primarily in
the United States. For the first thirty years of our existence, our activities
consisted of acquiring and exploring properties with gold and particularly
silver potential. Our management determined in 1998 to focus our activities on
the platinum group metals. To date, our activities have been limited to
exploring and acquiring rights to explore, develop and mine properties in the
United States which we believe may be suitable for development into platinum
group metal mines. We have identified and commenced prospecting efforts in
several areas of verifiable platinum group metal occurrences in favorable
geologic terrain in Nevada, Wyoming, Oregon and Montana. 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. 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.
The only commercial platinum group metal mine in the United States is
operated by Stillwater Mining Company in a geological formation in southern
Montana known as the J-M Reef.
EXPLORATION PROPERTIES
We currently control six 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 39 miles southwest of Laramie, Wyoming
and can be reached by paved highways and gravel roads.
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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. These 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 10% 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 have located an additional 446 unpatented mining claims in an agreed
area of interest near the Lake Owen property. 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.
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
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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,
similar to the Stillwater-type occurrence in Montana. 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.
The best drill intercept encountered to date at the Lake Owen property
contains 1.94 parts per million combined platinum group metals plus gold over
three feet, including one foot of 4.22 parts per million. 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 have staked six unpatented mining claims in this area and
control a 100% interest in the claim block.
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. The highest metal values were 3,780 parts per billion
palladium, 385 parts per billion platinum and 47 parts per billion rhodium.
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LADY OF THE LAKE, MONTANA
Location and Access. The Lady of the Lake platinum group metals 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 have staked 121 unpatented mining claims in the Lady of
the Lake layered iron-magnesium-rich complex and control a 100% interest in the
claim block.
Exploration History. The Lady of the Lake 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 the unpatented Vanguard claims, which covered the known anomalous
mineralization. Shortly thereafter, a third party who had leased the Vanguard
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 Vanguard claims sporadically during the 1990's.
The Vanguard claims were abandoned prior to the location of our claims. Our
claim block covers the same ground that had been covered by the Vanguard claims.
Geology and Mineralization. The Lady of the Lake 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 yielded values up to 550 parts per billion
platinum, 410 parts per billion palladium and 380 parts per billion gold.
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. McCormick Creek can be reached by public highways and access roads,
and an unimproved dirt road.
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Land Status. We have staked 57 unpatented mining claims in the McCormick
Creek area and control 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.
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 have staked 17 unpatented mining claims in this area
and control a 100% interest in the claim block.
Exploration History. The project area is located along the northern flank
of the Virgin Mountains within the Bunkerville (Copper King) Mining District.
Two principal 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 8
unpatented lode claims that encompass the Key West and Great Eastern mines.
Another third party (International Mineral Engineers) controls additional
unpatented lode claims throughout the area. Our claims are contiguous to
International's claim block and cover the on-strike 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
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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.
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 have staked five unpatented mining claims in this area
and control 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 5 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 geologic mapping, surface and underground sampling,
and completed about 9 line miles of ground magnetic surveys. Freeport's
underground sampling assayed up to 0.080 ounce per ton platinum group metals, 3%
nickel, 1% copper, and 0.05% cobalt.
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Freeport completed four reverse circulation drill holes along the norite
dike, which returned several intervals of anomalous platinum group metals
mineralization. The best intercept contained 0.012 ounce per ton platinum and
palladium over 50 feet, including five feet of 0.041 ounce per ton. Freeport
subsequently abandoned its claims.
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. The best sample yielded 0.150 ounce per
ton palladium, 0.009 ounce per ton platinum, 0.010 ounce per ton rhodium, 0.041
ounce per ton gold, 1.79% copper, 1.73% nickel and 0.09% cobalt.
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 interests in other properties that were acquired before 1998 for
their potential for minerals other than platinum group minerals, including:
o The Silver Strand property, consisting of 15 unpatented mining
claims in Kootenai County, Idaho; and
o The Pyramid property, consisting of five unpatented mining claims in
Churchill County, Nevada.
The Company has entered into an agreement to sell the Silver Strand
property and plans to divest the Pyramid property.
OUR EXPLORATION PROCESS
Our exploration program is designed to explore and evaluate our properties
in an economically efficient manner. We have not at this time identified or
delineated any platinum group metals resources or reserves on any of our
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
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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
10-20 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.
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; and
o more extensive trenching.
Each of the first two phases can typically be completed on an individual
property in several months at a cost of less than $1 million.
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 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.
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.
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NO PRODUCTION HISTORY - WE HAVE NOT MINED ANY PLATINUM GROUP OR OTHER METALS.
While we were incorporated in 1966, 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.
HISTORY OF LOSSES - WE EXPECT LOSSES TO CONTINUE FOR AT LEAST THE NEXT THREE
YEARS.
As an exploration company that has no 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.
Exploration, development and mining of mineral properties is highly
speculative and capital intensive and involves unique and greater risks than are
generally associated with other businesses. 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;
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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
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, development and mining companies doing
business in the United States, are subject to a variety of federal, 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, development and mining activities at our properties. Obtaining the
necessary governmental permits is often a complex and time-consuming process
involving numerous U.S. federal, state and local agencies. The duration and
success of each permitting effort are contingent upon many
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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. 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 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 on
domestic 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, and
the cost and uncertainty associated with the permitting process could have a
material effect on exploring, developing or mining our properties.
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 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
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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 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
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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.
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
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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.
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.
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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 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.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION
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.
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.
We have inadequate cash to fund our planned acquisition and exploration
activities and other operations during the next twelve months. We anticipate
that proceeds from the exercise by Electrum LLC of its right to acquire
additional shares of our common stock will generate sufficient revenues to fund
approximately $500,000 of those planned activities. We may also sell our common
stock to other potential investors. If Electrum and the other potential
investors do not purchase any additional shares of our common stock, we will
have to raise capital through equity or debt financing in order to meet our cash
requirements. 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.
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.
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ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth as of July 10, 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.
Number of Shares of
Common Stock Percent of
Name of Beneficial Owner Beneficially Owned Shares
------------------------ ------------------ ----------
Directors and Executive Officers:
Kurt J. Hoffman 304,996 2.31%
Blaze Julum 316,812 2.40%
John Ryan 335,000 2.53%
Arthur E. Johnson 133,267 1.01%
Fred Brackebusch 104,500 0.79%
All officers and directors as a 1,194,575 9.09%
group (5 persons)
5 Percent Stockholders:
Thomas S. Kaplan/1/ 18,817,523 72.58%
c/o William Natbony, Esq.
Rosenman & Colin LLP
575 Madison Avenue
New York, NY 10022-2585
General Minerals Corporation/2/ 1,532,927 11.44%
789 Sherman Street, Suite 600A
Denver, Colorado 80203
----------------------
/(1)/ 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, has voting and dispositive control
with respect to 6,097,588 shares, options exercisable within 60 days to acquire
4,740,174 shares and warrants exercisable within 60 days to acquire 7,979,761
shares, all owned by Electrum LLC.
/(2)/ 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
---- --- --------
Kurt J. Hoffman 33 President and Director
Blaze Julum 38 Vice President and Director
John Ryan 38 Secretary/Treasurer
Arthur E. Johnson 53 Director
Fred W. Brackebusch 55 Director
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.
Kurt Hoffman has served as our 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/political science from the College of Idaho in
Caldwell, Idaho.
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.
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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 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.
Arthur E. Johnson has served as a Director since June 1998. Since May
1995, Mr. Johnson has been engaged in the timber and ranching businesses.
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.
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
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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.
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:
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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.
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. 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 anti-dilution 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 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 and an additional 1,597,588 shares for an aggregate purchase price of
$100,000 in June 2000. Electrum also has the right to acquire an additional
4,740,174 shares for an aggregate purchase price of $545,020 on or before
September 25, 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
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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. Tigris and Electrum own approximately 46% of our outstanding
common stock and, upon exercise of their additional purchase options and
warrants, would own approximately 73% of our then outstanding common stock.
The stock purchase agreement further provides that, if Electrum exercises
its rights to acquire 4,740,174 shares on or before September 25, 2000, Electrum
will have preemptive rights as described in the agreement. Electrum would have
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
option and warrants. There were options and warrants to acquire 13,007,761
shares outstanding on June 27, 2000. Thus, assuming that no 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 their 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.
ITEM 8. DESCRIPTION OF SECURITIES
COMMON STOCK
Our authorized capital consists of 30,000,000 shares of no par value
common stock. As of July 10, 2000, 13,203,140 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. Voting rights are not cumulative
and, therefore, the holders of more than 50% of our common stock could, if they
chose to do so, elect all of our 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. 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 July 12, 2000 are described under the
heading "Certain Relationships And Related Transactions - Tigris Financial Group
Ltd."
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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.
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 Idaho Stock Transfer Co.,
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 July 10, 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
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.
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.
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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 or 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.
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.
26
<PAGE>
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.
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.
27
<PAGE>
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.
28
<PAGE>
OPTIONS
1. On July 20, 1998 we granted options to a potential investor as
follows:
<TABLE>
<CAPTION>
Shares Exercise Price Exercise Period
------ -------------- ---------------
<S> <C> <C> <C>
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
</TABLE>
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.
29
<PAGE>
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, 20002 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.
30
<PAGE>
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.
31
<PAGE>
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
------ --------
2.1 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; and Articles of Amendment to
the Articles of Incorporation dated March 3, 1999.
2.2 Bylaws adopted effective October 1, 1968.
6.1 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.
6.2 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.
6.3 Letter Agreement between John Ryan and Trend Mining Company dated
July 12, 2000.
10.1 Consent of Certified Public Accountants, dated July 24, 2000.
10.2 Consent of Certified Public Accountants, dated July 24, 2000.
32
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
TREND MINING COMPANY
Dated: July 25, 2000 By: /s/ Kurt J. Hoffman
-----------------------------------------
Kurt J. Hoffman, President and Chief
Executive Officer
33
<PAGE>
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
<PAGE>
INDEX TO EXHIBITS AND DESCRIPTION OF EXHIBITS
Exhibit
Number Exhibits
------ --------
2.1 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; and
Articles of Amendment to the Articles of Incorporation dated
March 3, 1999.
2.2 Bylaws adopted effective October 1, 1968.
6.1 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.
6.2 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.
6.3 Letter Agreement between John Ryan and Trend Mining Company dated
July 12, 2000.
10.1 Consent of Certified Public Accountants, dated July 24, 2000.
10.2 Consent of Certified Public Accountants, dated July 24, 2000.
