- --------------------------------------------------------------------------------
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------
FORM 10-QSB
Amendment No. 1
|X| QUARTERLY REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly Period ended September 30, 1998
|_| TRANSITION REPORT UNDER SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the Transition Period from _________ to _________
Commission File Number _____________________
IDAHO CONSOLIDATED METALS CORPORATION
(Exact Name of Small Business Issuer as Specified in its Charter)
British Columbia, Canada 82-0465571
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
504 Main Street, Suite 470
Post Office Box 1124
Lewiston, Idaho 83501
(Address of Principal Executive Offices)
(208) 743-0914
(Issuer's Telephone Number, Including Area Code)
Check whether the issuer has (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes |_| No
|X|
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 8,867,441 as of March 31, 1998.
Transitional Small Business Disclosure Format (check one): Yes |_| No |X|
<PAGE>
IDAHO CONSOLIDATED METALS CORP.
Form 10-QSB
For the Fiscal Quarter ended September 30, 1998
TABLE OF CONTENTS
<TABLE>
<S> <C>
Page
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS OF THE COMPANY...................................................................3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION..................................................................................10
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS....................................................................................13
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS............................................................13
ITEM 3. DEFAULTS UPON SENIOR SECURITIES......................................................................14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..................................................14
ITEM 5. OTHER INFORMATION....................................................................................14
ITEM 6. EXHIBITS AND REPORTS FILED ON FORM 8-K..............................................................15
SIGNATURES.......................................................................................................16
</TABLE>
Page 2
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS OF THE COMPANY
The following unaudited financial statements for the period ended 30 September,
1998 are included in response to Item 1 and have been compiled by Staley, Okada,
Chandler & Scott, Chartered Accountants.
The financial statements should be read in conjunction with Management's
Discussion and Analysis or Plan of Operations and other financial information
included elsewhere in this Form 10-QSB.
<PAGE>
STALEY, OKADA, CHANDLER & SCOTT
Chartered Accountants
(A Partnership of Incorporated Professionals)
- --------------------------------------------------------------------------------
[X] 225 - 4299 Canada Way L.M. Okada, Ltd. 221 - 20316 56th Avenue
Burnaby, B.C. V5G 1H3 C.N. Chandler, Ltd. Langley, B.C. V3A 3Y7
Tel: (604) 434-1384 K.A. Scott, Ltd. Tel: (604) 532-9913
Fax: (604) 434-7045 J.M Bhagirath, Ltd. Fax: (604) 532-1209
NOTICE TO READER
- --------------------------------------------------------------------------------
We have compiled the interim consolidated balance sheet of Idaho Consolidated
Metals Corp. as at 30 September 1998 and the interim consolidated statements of
changes in shareholders' equity, operations and cash flows for the three months
and nine months then ended from information provided by management. We have not
audited, reviewed or otherwise attempted to verify the accuracy or completeness
of such information. Readers are cautioned that these statements may not be
appropriate for their purposes.
signed "Staley, Okada, Chandler & Scott"
Burnaby, B.C. STALEY, OKADA, CHANDLER & SCOTT
1 December 1998 CHARTERED ACCOUNTANTS
- --------------------------------------------------------------------------------
[Logo]
Members of Institute of Chartered Accountants of British Columbia
Page 4
<PAGE>
Idaho Consolidated Metals Corp. Statement 1
(An Exploration Stage Company)
Interim Consolidated Balance Sheet
As at 30 September
U.S. Funds
Unaudited - See Notice to Reader
<TABLE>
ASSETS 1998 1997
- ---------------------------------------------------------------------- -- ------------------ -- ------------------
<S> <C> <C>
Current
Cash $ 1,445 $ 125,455
Accounts receivable 3,005 7,452
Cash in trust 50,000 -
------------------ -- ------------------
54,450 132,907
Restricted Investments 90,000 90,000
Property Rights, Plant and Equipment 3,153,233 4,238,902
------------------ -- ------------------
$ 3,297,683 $ 4,461,809
- ---------------------------------------------------------------------- -- ------------------ -- ------------------
LIABILITIES
- ---------------------------------------------------------------------- -- ------------------ -- ------------------
Current
Accounts payable - Related parties $ 84,362 $ 244,175
- Other 221,642 400,317
Current portion of notes payable 255,139 623,970
------------------ -- ------------------
561,143 1,268,462
------------------ -- ------------------
Notes Payable 560,773 14,140
------------------ -- ------------------
Share Subscriptions Payable - 574,837
------------------ -- ------------------
SHAREHOLDERS' EQUITY
- ---------------------------------------------------------------------- -- ------------------ -- ------------------
Share Capital - Statement 2 8,710,329 7,651,427
Deficit - Accumulated during the exploration stage - Statement 2 (6,481,977) (4,994,472)
Foreign Currency Translation Adjustment - Statement 2 (52,585) (52,585)
------------------ -- ------------------
2,175,767 2,604,370
------------------ -- ------------------
$ 3,297,683 $ 4,461,809
- ---------------------------------------------------------------------- -- ------------------ -- ------------------
</TABLE>
ON BEHALF OF THE BOARD
"Robert Young" , Director
- ------------------------------
"Delbert W. Steiner" , Director
- ------------------------------
- See Accompanying Notes -
Page 5
<PAGE>
Idaho Consolidated Metals Corp. Statement 2
Interim Consolidated Statement of Changes
In Shareholders' Equity
U.S. Funds
Unaudited - See Notice to Reader
<TABLE>
Deficit
Accumulated Foreign
During the Currency
Common Shares Exploration Translation
Shares Amount Stage Adjustment Total
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance - 31 December 1996 6,854,208 $ 7,466,177 $ (4,291,402) $ (52,585) $ 3,122,190
Shares issued for resource
properties 250,000 182,250 - - 182,250
Loss for the period - - (703,070) - (703,070)
--------------------------------------------------------------------------------------
Balance - 30 June 1997 7,104,208 $ 7,651,427 $ (4,994,472) $ (52,585) $ 2,604,370
- -----------------------------------------------------------------------------------------------------------------------
Balance - 31 December 1997 $ 9,434,650 $ 8,710,329 $ (6,015,621) $ (52,585) $ 2,642,123
Loss for the period - - $ (466,356) - $ (466,356)
--------------------------------------------------------------------------------------
Balance - 30 June 1998 $ 9,434,650 $ 8,710,329 $ (6,481,977) $ (52,585) $ 2,175,767
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
Statement 3
Interim Consolidated Statement of Operations
U.S. Funds
Unaudited - See Notice to Reader
<TABLE>
1998 1997
------------------------------------- -------------------------------------
Three Months Nine Months Three Months Nine Months
Ended Ended Ended Ended
30 September 30 September 30 September 30 September
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating Expenses
General and administrative
- Schedule 1 $ 115,179 $ 420,492 $ 260,611 $ 677,228
----------------------------------------------------------------------------
Other Income (Expenses)
Interest income (1,208) (3,521) - -
Interest expense 9,946 49,385 14,946 25,842
----------------------------------------------------------------------------
8,738 45,864 14,946 25,842
----------------------------------------------------------------------------
Loss for the Period $ 123,917 $ 466,356 $ 221,557 $ 703,070
- -------------------------------------------------------------------------------------------------------------------------
Loss per Common Share $ 0.01 $ 0.05 $ 0.03 $ 0.10
- -------------------------------------------------------------------------------------------------------------------------
Weighted Average Number of Common Shares
Outstanding $ 9,434,650 $ 9,434,650 $ 6,990,078 $ 6,984,687
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
- See Accompanying Notes -
Page 6
<PAGE>
Idaho Consolidated Metals Corp. Statement 4
Interim Consolidated Statement of Cash Flows
U.S. Funds
Unaudited - See Notice to Reader
<TABLE>
1998 1997
---------------------------- -----------------------------
Three Months Nine Months Three Months Nine Months
Ended Ended Ended Ended
Cash Resources Provided By (Used In) 30 September 30 September 30 September 30 September
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating Activities
Loss for the period (123,917) $ (466,356) $ (221,557) $ (703,070)
Item not affected by cash
Amortization 2,276 6,828 3,145 9,433
------------------------------------------------------------------------
Changes in current assets and
liabilities
Accounts receivable 5,666 983 (2,368) (4,702)
Accounts payable - Related parties (18,589) (96,630) 18,920 71,819
- Other (5,941) 67,068 (207,266) (2,468)
------------------------------------------------------------------------
Net cash used in operating activities (140,505) (488,107) (409,126) (628,988)
Investing Activities
Property rights, plant and equipment (49,571) (138,025) 43,730 (152,070)
Restricted investments - - - (5,000)
------------------------------------------------------------------------
Net cash used in investing activities (49,571) (138,025) 43,730 (157,070)
------------------------------------------------------------------------
Financing Activities
Bank loan - - (17,175) (22,173)
Notes payable 191,060 548,692 75,058 91,707
Share subscriptions payable - - 407,842 574,837
------------------------------------------------------------------------
Net cash provided by financing
activities 191,060 548,692 465,725 644,371
------------------------------------------------------------------------
Net Increase (Decrease) in Cash 984 (77,440) 100,329 (141,687)
Cash position - Beginning of period 461 78,885 25,126 267,142
------------------------------------------------------------------------
Cash Position - End of Period $ 1,445 $ 1,445 $ 125,455 $ 125,455
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
- See Accompanying Notes -
Page 7
<PAGE>
Idaho Consolidated Metals Corp.
Interim Consolidated Schedule of General and Administrative Schedule 1
Expenses
U.S. Funds
Unaudited - See Notice to Reader
<TABLE>
1998 1997
--------------------------------- ---------------------------------
Three Months Nine Months Three Months Nine Months
Ended Ended Ended Ended
30 September 30 September 30 September 30 September
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Management fees and wages $ 42,113 $ 157,658 $ 92,709 $ 204,874
Professional fees 36,858 134,159 2,339 194,234
Travel 423 36,077 9,076 53,039
Shareholder information 2,452 20,957 42,230 105,488
Office and general 14,656 30,147 21,421 50,325
Office rent 8,423 20,002 7,233 16,413
Amortization 2,276 6,828 3,145 9,433
Transfer agent and filing fees 4,562 9,048 7,041 13,032
Entertainment and promotion 3,416 5,616 1,504 5,432
Finance fees - - 19,913 24,958
--------------------------------------------------------------------
Expenses for the Period $ 115,179 $ 420,492 $ 206,611 $ 677,228
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
Interim Consolidated Schedule of Property Rights, Schedule 2
Plant and Equipment
U.S. Funds
Unaudited - See Notice to Reader
<TABLE>
1998 1997
---------------------------------- ----------------------------------
Three Months Nine Months Three Months Nine Months
Ended Ended Ended Ended
30 September 30 September 30 September 30 September
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Direct - Mineral
Idaho County, Idaho, U.S.A.
Geological $ 7,837 $ 47,842 $ 20,403 $ 82,215
Lease payments and acquisition 13,200 37,800 65,454 235,715
Camp and general 93 7,538 3,481 44,390
Assaying, staking and claim rental 22,141 27,597 (2,680) (2,272)
Survey 601 5,377 (6,360) 3,464
Transportation 1,257 4,958 10,106 10,106
Process plant and equipment - - 6,923 20,545
Environmental 3,452 3,452 - 2,964
Taxes and licenses 990 990 5,193 5,193
Option payments received - - (65,000) (65,000)
---------------------------------------------------------------------
49,571 135,554 37,520 337,320
Equipment - 2,471 - -
---------------------------------------------------------------------
Costs for the Period $ 49,571 $ 138,025 $ 37,520 $ 337,320
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
- See Accompanying Notes -
Page 8
<PAGE>
Idaho Consolidated Metals Corp.
Notes to Interim Consolidated Financial Statements
30 September 1998
U.S. Funds
Unaudited - See Notice to Reader
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
The notes to the consolidated financial statements as at 31 December
1997, as set forth in the company's 1997 Annual Report substantially
apply to these interim consolidated financial statements and are not
repeated here.
- --------------------------------------------------------------------------------
2. Interim Consolidated Financial Statements Adjustments
The financial information given in the accompanying unaudited interim
consolidated financial statements reflects all adjustments which are,
in the opinion of management, necessary to a fair statement of the
results for the interim periods reported. All such adjustments are of a
normal recurring nature. All financial statements presented herein are
unaudited.
- --------------------------------------------------------------------------------
Page 9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
1. Results of Operations
Third Quarter Fiscal 1998 Compared with Third Quarter 1997
The Company is in the exploration stage and has yet to generate revenue from
production. The Company continues to explore its mineral properties in an effort
to establish proven ore reserves, and now has the additional resources of a
joint venture partner to assist in this regard.
In the third quarter, general and administrative expenses decreased from
$206,611 to $115,179 compared to the third quarter of 1997, representing a 44.2%
savings. Significant decreases were experienced in both travel and shareholder
information expenses (94.3% decrease), as well as a 32% reduction in office and
general expenses. Management fees and wages also decreased by 54.6% over the
same period in 1997, as a result of the reduction of administrative staff and
the related decrease in expenses, due to the price of gold and the marketplace.
On a quarter over quarter basis the Company saved over $97,000.
Under U.S. generally accepted accounting principles, the Company must record
executive remuneration on the release of performance shares from escrow. The
Company issued 750,000 shares at the time of its initial public offering to the
original principal founders of the Company at a price of C$0.01 per share,
subject to the terms of an escrow agreement. The number of shares released from
escrow is calculated on an annual basis as the Company expends qualifying
amounts on its exploration and development programs, and the Company must seek
regulatory approval for each release. During the third quarter of 1998, the
Company did not apply for regulatory approval for a release of any escrow
shares, and accordingly there was no executive remuneration expense and no
corresponding change to the Company's share capital. The executive remuneration
is a deemed amount and is based upon the fair market value of the Company's
common shares during 1998.
The Company had very little income during the quarter. The Company experienced a
net loss for the period of $123,917, of which $115,179 was related to general
and administrative expenses. The Company had a loss of $221,557 for the same
period in 1997.
During the quarter, the Company expended $49,571 on its resource property
exploration, development and acquisition program as compared to $37,520 in the
comparable 1997 period. The Company had lease payments and acquisition costs of
$13,200 in the quarter, compared to $65,454 in 1997 and geological expenses of
$7,837 in the quarter compared to $20,403 in 1997. The Company had no
expenditures on process plant and equipment, and limited expenditures on
environmental and experienced an 88% reduction in transportation expenses. The
Company has experienced cost savings on it resource expenditures by virtue of
having entered into joint venture agreements with Kinross Gold Corporation on
the Company's most promising properties.
Nine Months Ended September 1998 Compared with Nine Months Ended September 1997
The Company is in the exploration stage and has yet to generate revenue from
production. The Company continues to explore its mineral properties in an effort
to establish proven ore reserves, and now has the additional resources of a
joint venture partner to assist in this regard.
For the nine month period, general and administrative expenses decreased from
$677,228 to $420,492 compared to the same period in 1997, representing a 37.9%
savings. Significant decreases were experienced in both travel and shareholder
information expenses (64% decrease), as well as a 40%
Page 10
<PAGE>
reduction in office and general expenses. Management fees and wages also
decreased by 23% over the same period in 1997, as a result of the reduction of
administrative staff and the related decrease in expenses, due to the price of
gold and the marketplace. For the nine month period, the Company saved $236,714
compared to 1997.
Under U.S. generally accepted accounting principles, the Company must record
executive remuneration on the release of performance shares from escrow. The
Company issued 750,000 shares at the time of its initial public offering to the
original principal founders of the Company at a price of C$0.01 per share,
subject to the terms of an escrow agreement. The number of shares released from
escrow is calculated on an annual basis as the Company expends qualifying
amounts on its exploration and development programs, and the Company must seek
regulatory approval for each release. During the first nine months of 1998, the
Company did not apply for regulatory approval for a release of any escrow
shares, and accordingly there was no executive remuneration expense and no
corresponding change to the Company's share capital. The executive remuneration
is a deemed amount and is based upon the fair market value of the Company's
common shares during 1998.
The Company had very little income for the nine month period. The Company
experienced a net loss for the period of $466,356, of which $420,492 was related
to general and administrative expenses. The Company had a loss of $703,070 for
the same period in 1997.
During the nine month period, the Company expended $138,025 on its resource
property exploration, development and acquisition program as compared to
$337,320 in the comparable 1997 period. The Company had lease payments and
acquisition costs of $37,800 for the nine months, compared to $235,715 in 1997
and geological expenses of $47,842 in the period compared to $82,215 in 1997.
The Company had no expenditures on process plant and equipment, and limited
expenditures on environmental and experienced an 51% reduction in transportation
expenses. The Company has experienced cost savings on it resource expenditures
by virtue of having entered into joint venture agreements with Kinross Gold
Corporation on the Company's most promising properties.
2. Liquidity and Capital Resources
The Company is dependent on the proceeds of debt and equity financing, including
but not limited to public offerings, private placements and the exercise of
stock options and warrants as well as from the optioning or sale of its
properties and the sale of other assets to fund its general and administrative
expenditures and its mineral exploration and development costs. Without such
proceeds, the Company may not continue as a going concern. See note 1 to the
Company's December 31, 1997 Financial Statements for additional information. The
Company will need further funds to continue its operations and there is no
reasonable assurance that such funding will be available.
The Company plans to conduct exploration and development on its various
properties within the constraints of current market conditions, with its
objective being the maximization of geologic understanding of the projects with
minimal expenditures. The Company's estimated budget for all properties is
$175,000 including BLM rental fees and contractual payments to underlying claim
owners. The majority of the budget will be spent on geologic mapping, sampling
and assays, geologic interpretation, geophysics, geochemical soil sampling,
property payments and claim fees. The estimated budget is exclusive of
expenditures by the Company's joint venture partner on the Deadwood and Petsite
properties.
The Company requires approximately $125,000 for general and administrative
expenses for the remainder of the fiscal year, and $255,139 for payments on its
current notes payable, of which $250,000 is a demand note, currently subject to
litigation as discussed herein under the title Legal Proceedings -
Page 11
<PAGE>
Gumprecht - Promissory Note. The Company anticipates repayment of these notes
from the proceeds of the Private Placement, the proceeds of convertible debt
issues, the conversion of the promissory notes and the exercise of stock
options.
During the third quarter ended September 30, 1998, the Company received cash in
the amount of $183,660 from the issue of convertible promissory notes which
notes are to be issued in the aggregate principal amount of $250,000 to related
parties. The balance of $66,340 was received by the Company in the fourth
quarter. These funds were designated for the Company's corporate and
administrative expenses. In addition, on October 1, 1998, the Company agreed to
borrow an additional $300,000 by way of the issue of a convertible promissory
note to a related party and the Company received cash in the amount of $300,000
on November 17, 1998. On November 24, 1998, the principal amount of the
convertible note was increased to $322,000 as a result of the Company receiving
an additional cash payment of $22,000 from the related party. These funds have
been applied towards settling the civil suit against the Company by Gumprecht.
See Item 1. "Legal Proceedings - Civil Suit by Gumprecht Promissory Note" below.
See Item 2. "Changes in Securities" below for further details regarding the
convertible promissory notes.
As at September 30, 1998, the Company has a working capital deficiency of
$506,693 versus a working capital deficiency of $1,135,555 for the same period
in 1997. Accounts payable to related parties accounts for approximately 17% of
the deficiency, while trade accounts payable and the current portion of notes
payable accounts for the other approximate 83%. The Company anticipates
improvement of this deficiency from the proceeds of the convertible promissory
notes issued in 1998.
Positive cash flow from the financing activities of the Company of $548,692 and
$644,371 were recorded at September 30, 1998 and 1997, respectively. The current
liabilities decreased to $561,143 in 1998 from $1,268,462 in 1997. Of the
September 30, 1998 current liabilities, $221,642 represents the amounts payable
to non-related parties and $84,362 represents amounts payable to various related
parties.
Negative Cash flows from operating activities of ($488,107) and ($628,988) were
recorded as at September 30, 1998 and 1997, respectively. The Company will
continue recording negative cash flow from operating activities unless
significant revenue is generated from ore production. The continued negative
cash flow will have a material negative impact on liquidity.
Investing activities consist of funds being expended on resource properties. The
net cash expended on investing activities was $138,025 in 1998 compared to
$157,070 in 1997. The 1998 and 1997 additions to resource properties were
primarily from cash.
Page 12
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Civil Suit by Gumprecht - Promissory Note
As reported in the Company's Form 10-QSB for the quarter ended March 31, 1998,
the Company elected to allow a default to be entered in the District Court of
the Third Judicial District of the State of Idaho, in and for the County of
Idaho on January 30, 1998. On May 18, 1998 the Court ordered the Company to pay
the amount of $332,216.71 which included interest through May 17, 1998. The
Company is currently negotiating payment terms of the judgment with the
Plaintiffs. and believes that issue will be resolved in the fourth quarter of
1998.
Civil Suit by Gumprecht - Derivative Action
During the quarter ended September 30, 1998 the Company has been added as a
party to the lawsuit. The Company is of the view that the allegations are
generally without merit and will vigorously defend against this suit.
ITEM 2. CHANGES IN SECURITIES and use of proceeds
Convertible Promissory Notes
Convertible Loan #4
On September 10, 1998 the Company entered into convertible loan agreement #4
with the Tomasovich Family Trust (the "Trust") pursuant to which the Company
issued convertible promissory notes in the aggregate amount of $250,000
($183,660 - September 10, 1998; $7,400 - October 14, 1998 and $58,940 - November
17, 1998). The Company received VSE acceptance of this transaction as to
$191,060 on November 3, 1998 and as to $58,940 on November 17, 1998. The
repayment terms and conversion features are more particularly detailed below.
The lender with respect to the convertible promissory notes is the Trust, which
owned 1,498,611 shares, or 15.88% of the Company on a non-diluted basis, as of
September 30, 1998. The Trust is a private family trust, of which Mr. Theodore
Tomasovich, a Director of the Company, is a trustee.
The aggregate $250,000 convertible promissory notes are repayable on or before
September 10, 2000 bearing interest at 9% per annum. The lender may require the
Company to convert all or any portion of the principal amount of the loan
advanced and then outstanding into units at a conversion price of one unit for
each C$0.17 of indebtedness until and including September 10, 1999 and at a
conversion price of one unit for each C$0.22 of indebtedness during the period
from September 11, 1999 until September 10, 2000 for a maximum of 2,227,941
units if the principal amount is converted in its entirety in the first year and
a maximum of 1,721,590 units if the principal amount is converted in its
entirety between September 11, 1999 and September 10, 2000. Each unit consists
of one common share and one non-transferable common
Page 13
<PAGE>
share purchase warrant with each warrant being exercisable at a price of C$0.17
per share until September 10, 1999 and C$0.27 per share from September 11, 1999
to September 10, 2000.
Convertible Loan #5
On October 1, 1998 the Company entered into convertible loan agreement #5 with
the Trust pursuant to which the Company issued a convertible promissory note in
the amount of $300,000 dated November 17, 1998. The Company received VSE
acceptance of this transaction on November 20, 1998. Effective November 24,
1998, the Company and the Trust amended convertible loan agreement #5 by
increasing the principal amount of the convertible promissory note from $300,000
to $322,000 and the Company issued a convertible promissory note in the amount
of $22,000 dated November 17, 1998. The Company received VSE acceptance of the
increase in the convertible loan agreement #5 on November 20, 1998. The
repayment terms and conversion features are more particularly detailed below.
The aggregate $322,000 convertible promissory notes is repayable on or before
October 1, 2000 bearing interest at 9% per annum. The lender may require the
Company to convert all or any portion of the principal amount of the loan
advanced and then outstanding into units at a conversion price of one unit for
each C$0.20 of indebtedness until and including October 1, 1999 and at a
conversion price of one unit for each C$0.25 of indebtedness during the period
from October 2, 1999 until October 1, 2000 for a maximum of 2,439,150 units if
the principal amount is converted in its entirety in the first year and a
maximum of 1,951,320 units if the principal amount is converted in its entirety
between October 2, 1999 and October 1, 2000. Each unit consists of one common
share and one non-transferable warrant with each warrant being exercisable at a
price of C$0.20 per share until October 1, 1999 and C$0.25 per share from
October 2, 1999 to October 1, 2000.
The policies of the VSE require shareholder approval to any possible change of
control of a company resulting from certain transactions including the issuance
of convertible securities. If the Trust converts all or a portion of the
principal amount outstanding under the convertible promissory notes aggregating
$910,000 issued to it by the Company into shares and warrants pursuant to the
five convertible loan agreements with the Company, it could result in Theodore
Tomasovich and the Trust exercising control or direction over more than 20% of
the voting rights attached to the common shares of the Company, which under the
British Columbia Securities Act is deemed, in the absence of evidence to the
contrary, to affect materially the control of the Company. The Company requested
and received approval of its securities holders to the possible change of
control of the Company to Theodore Tomasovich and the Trust at the annual and
extraordinary general meeting held on June 17, 1998.
Item 3. Defaults upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the quarter ended
September 30, 1998.
ITEM 5. OTHER INFORMATION
None.
Page 14
<PAGE>
ITEM 6. EXHIBITS AND REPORTS FILED ON FORM 8-K
(a) None.
(b) None.
Page 15
<PAGE>
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized, on the 8th day of April, 1998.
IDAHO CONSOLIDATED METALS CORPORATION
By: /s/ Delbert W. Steiner
-----------------------------------------
Delbert W. Steiner
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated on the 8th day of April, 1998.
Signature Title Date
--------- ----- ----
/s/ Delbert W. Steiner Director, President and April 8, 1998
- --------------------------- Chief Executive Officer
Delbert W. Steiner
/s/ Kenneth A. Scott Chief Financial Officer April 8, 1998
- ---------------------------
Kenneth A. Scott
Page 16
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 1,445
<SECURITIES> 0
<RECEIVABLES> 3,005
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 54,450
<PP&E> 3,192,710
<DEPRECIATION> 39,477
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0
0
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