UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------
FORM 10-QSB
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period ended September 30, 1999
|_| 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 CORP.
-----------------------------------------------------------------
(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
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(Address of Principal Executive Offices)
(208) 743-0914
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(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 |X| No
| |
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 24,499,361 as of September 30, 1999.
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, 1999
TABLE OF CONTENTS
<TABLE>
Page
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<S> <C> <C>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS OF THE COMPANY...................................................3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION............................11
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS....................................................................15
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS............................................17
ITEM 3. DEFAULTS UPON SENIOR SECURITIES......................................................18
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..................................18
ITEM 5. OTHER INFORMATION....................................................................18
ITEM 6. EXHIBITS AND REPORTS FILED ON FORM 8-K...............................................18
SIGNATURES
</TABLE>
Page 2
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS OF THE COMPANY
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 3
<PAGE>
IDAHO CONSOLIDATED
METALS CORP.
(An Exploration Stage Company)
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
30 SEPTEMBER 1999
Unaudited - See Notice to Reader
U.S. Funds
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 1999 1998
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current
Cash $ 131,343 $ 1,445
Accounts receivable 6,241 3,005
Cash in trust - 50,000
---------------------------------
137,584 54,450
Restricted Investments 82,000 90,000
Property Rights, Plant and Equipment 1,989,269 3,153,233
---------------------------------
$ 2,208,853 $ 3,297,683
- ------------------------------------------------------------------------------------------------------------
LIABILITIES
- ------------------------------------------------------------------------------------------------------------
Current
Accounts payable
- Related parties $ 157,758 $ 42,347
- Other 204,515 221,642
Current portion of notes payable 9,842 848,214
---------------------------------
372,115 1,112,203
---------------------------------
Notes Payable 4,871 9,713
---------------------------------
SHAREHOLDERS' EQUITY
- ------------------------------------------------------------------------------------------------------------
Share Capital - Statement 2 9,653,485 7,508,593
Convertible Securities 63,985 -
Deficit - Accumulated during the exploration stage - Statement 2 (7,885,603) (5,332,826)
---------------------------------
1,831,867 2,175,767
---------------------------------
$ 2,208,853 $ 3,297,683
- ------------------------------------------------------------------------------------------------------------
</TABLE>
ON BEHALF OF THE BOARD:
- --------------------------------, Director
- --------------------------------, 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
During the
Common Shares Convertible Exploration
Shares Amount Securities Stage Total
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance - 31 December 1997 9,434,650 $ 7,508,593 $ - $ (4,866,470) $ 2,642,123
Loss for the period - - - (466,356) (466,356)
----------------------------------------------------------------------------------
Balance - 30 September 1998 9,434,650 $ 7,508,593 - $ (5,332,826) $ 2,175,767
- ----------------------------------------------------------------------------------------------------------------------
Balance - 31 December 1998 9,434,650 $ 7,508,593 $ 249,862 $ (7,263,201) $ 495,254
Shares issued on conversion
of promissory notes 7,947,000 1,193,042 (146,042) - 1,047,000
Shares issued - private
placement 2,000,000 200,000 - - 200,000
Shares issued - exercise of
warrants 5,117,711 751,850 (82,057) - 669,793
Equity component on issuance
of convertible securities - - 42,222 - 42,222
Loss for the period - - - (622,402) (622,402)
----------------------------------------------------------------------------------
Balance - 30 September 1999 24,499,361 $ 9,653,485 $ 63,985 $ (7,885,603) $ 1,831,867
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
- See Accompanying Notes -
Page 6
<PAGE>
Interim Consolidated Statement of Operations Statement 3
U.S. Funds
Unaudited - See Notice to Reader
<TABLE>
1999 1998
------------------------------------- ----------------------------------
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 $ 130,143 $ 348,340 $ 115,179 $ 420,492
------------------------------------------------------------------------
Other (Income) Expenses
Abandonment of property rights - 8,453 - -
Interest income (883) (3,320) (1,208) (3,521)
Interest expense 121,989 268,929 9,946 49,385
------------------------------------------------------------------------
121,106 274,062 8,738 45,864
------------------------------------------------------------------------
Loss for the Period $ 251,249 $ 622,402 $ 123,917 $ 466,356
- ----------------------------------------------------------------------------------------------------------------------
Loss per Common Share $ 0.02 $ 0.04 $ 0.01 $ 0.05
- ----------------------------------------------------------------------------------------------------------------------
Weighted Average Number of Common Shares
Outstanding 16,620,311 16,620,311 9,434,650 9,434,650
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
- See Accompanying Notes -
Page 7
<PAGE>
Idaho Consolidated Metals Corp. Statement 4
Interim Consolidated Statement of Cash Flow
U.S. Funds
Unaudited - See Notice to Reader
<TABLE>
1999 1998
------------------------------------- ----------------------------------
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 $ (251,249) $ (622,402) $ (123,917) $ (466,356)
Items not affected by cash
Amortization 2,072 5,259 2,276 6,828
Amortization of interest discount 109,650 206,921 - -
Changes in current assets and
liabilities
Cash in trust - 50,000 - -
Accounts receivable (672) (4,178) 5,666 983
Accounts payable
- Related parties 5,096 29,071 (15,985) (138,645)
- Other 80,734 5,157 (5,941) 67,068
------------------------------------------------------------------------
Net cash used in operating activities (54,369) (330,172) (137,901) (530,122)
------------------------------------------------------------------------
Investing Activities
Property rights, plant and equipment (293,352) (528,329) (49,571) (138,025)
Restricted investments - 8,000 - -
------------------------------------------------------------------------
Net cash used in investing activities (293,352) (520,329) (49,571) (138,025)
------------------------------------------------------------------------
Financing Activities
Proceeds of notes payable - 72,778 188,456 590,707
Net proceeds from issuance of
convertible securities - 42,222 - -
Repayment of notes payable (1,144) (3,356) - -
Share capital 371,826 869,793 - -
------------------------------------------------------------------------
Net cash provided by financing activities 370,682 981,437 188,456 590,707
------------------------------------------------------------------------
Net Increase (Decrease) in Cash 22,961 130,936 984 (77,440)
Cash position - Beginning of period 108,382 407 461 78,885
------------------------------------------------------------------------
Cash Position - End of Period $ 131,343 $ 131,343 $ 1,445 $ 1,445
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
- See Accompanying Notes -
Page 8
<PAGE>
Idaho Consolidated Metals Corp. Schedule 1
Interim Consolidated Schedule of General and
Administrative Expenses
U.S. Funds
Unaudited - See Notice to Reader
<TABLE>
1999 1998
------------------------------------- ----------------------------------
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 $ 21,700 $ 68,077 $ 42,113 $ 157,658
Professional fees 75,905 181,197 36,858 134,159
Travel 5,624 28,677 423 36,077
Shareholder information 9,479 17,059 2,452 20,957
Office and general 3,606 19,219 14,656 30,147
Office rent 7,352 18,290 8,423 20,002
Amortization 2,072 5,259 2,276 6,828
Transfer agent and filing fees 4,212 8,727 4,562 9,048
Entertainment and promotion 145 1,522 3,416 5,616
Property search 48 313 - -
------------------------------------------------------------------------
Expenses for the Period $ 130,143 $ 348,340 $ 115,179 $ 420,492
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Interim Consolidated Schedule of Property Rights, Schedule 2
Plant and Equipment
U.S. Funds
Unaudited - See Notice to Reader
<TABLE>
1999 1998
------------------------------------- ----------------------------------
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 $ 590 $ 11,298 $ 7,837 $ 47,842
Lease payments and acquisition 11,500 30,400 13,200 37,800
Camp and general 68 1,563 93 7,538
Assaying, staking and claim rental 18,100 18,100 22,141 27,597
Survey - - 601 5,377
Transportation 2,131 3,676 1,257 4,958
Environmental 1,088 4,375 3,452 3,452
Taxes and licenses - - 990 990
Montana, U.S.A.
Staking, filing and claim rental 77,561 141,700 - -
Geological 122,525 197,032 - -
Assaying 4,260 36,295 - -
Field transportation 28,285 49,927 - -
Survey 15,812 18,840 - -
Environmental 7,162 9,984 - -
Camp and general 12 881 - -
Equipment 4,258 4,258 - 2,471
------------------------------------------------------------------------
Costs for the Period $ 293,352 $ 528,329 $ 49,571 $ 138,025
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
- See Accompanying Notes -
Page 9
<PAGE>
Idaho Consolidated Metals Corp.
Notes to Interim Consolidated Financial Statements
30 September 1999
U.S. Funds
Unaudited - See Notice to Reader
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
The notes to the consolidated financial statements as at 31 December 1998,
as set forth in the company's 1998 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 10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Certain statements within this Form 10-QSB are "forward-looking statements"
within the meaning of the United States Private Securities Litigation Reform Act
of 1995. Any statements that express or involve discussions with respect to
predictions, expectations, beliefs, plans, objectives, assumptions or future
events or performance (often, but not always, using words and phrases such as
"expects", "believe", "believes", "plans", "anticipates", "is anticipated", or
stating that certain actions, events or results "will", "may", "should", or
"can" be taken, occur or be achieved) are not statements of historical fact and
may be "forward-looking statements". The statements referred to above generally
relate to the prospects of the Company's exploration and development activities.
Forward-looking statements are based on expectations, estimates and projections
at the time the statements are made that involve a number of risks and
uncertainties which could cause actual results or events to differ materially
from those anticipated by the Company. These risks and uncertainties include,
but are not limited to, the inherent risks associated with precious metals and
mineral property development and production such as, the competitive nature of
the precious metals industry, the existence of competitors with integrated
development and marketing organizations, market fluctuations in the world price
of gold and other precious metals, the fluctuation in the supply and demand for
gold and other precious metals and the proximity and capacity of competitors,
the risks and uncertainties associated in complying with governmental
regulations, including regulations relating to price controls, taxes, royalties,
land tenure, allowable production, the import and export of precious metals and
environmental protection, the risk that no commercial quantities of precious
metals will be discovered, the uncertainties related to dealing with third-party
operators of precious metal properties, the risks and uncertainties related to
the future development and acquisition of suitable additional producing
properties or prospects, the risks associated with unusual or unexpected
geological formations, pressures or other unforeseen conditions during drilling,
the risks associated with liabilities and damages relating to pollution or other
hazards against which the Company may not be able to adequately insure against
and the risk that actual costs incurred in the abandonment of drilling or mines
will substantially exceed the estimated abandonment costs. The Company assumes
no obligation to update the information contained in this Form 10-QSB upon the
occurrence of one or more of the factors listed above.
1. Results of Operations
Third Quarter 1999 Compared with Third Quarter 1998
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 has relied, in part, on the resources of a
joint venture partner (Kinross Gold U.S.A., Inc.) to assist in its exploration
activities.
In the third quarter, general and administrative expenses increased from
$115,179 to $130,143 compared to the third quarter of 1998, representing a 13%
increase in costs. Significant decreases were experienced in management fees and
wages, but were more than offset by an increase in professional fees in the
quarter. On a quarter over quarter basis, the Company increased operating
expenses by nearly $15,000.
The Company experienced a net loss for the period of $251,249, of which $130,143
was related to general and administrative expenses. The Company had a loss of
$123,917 for the same period in 1998.
During the quarter, the Company expended $293,352 on its resource property
exploration, development and acquisition program as compared to $49,571 in the
comparable 1998 period.
Page 11
<PAGE>
The Company's expenditures on its mining interests located in Idaho, U.S.A.
decreased to $33,477 for the quarter ended September 30, 1999 as compared to
$49,571 in the same quarter in 1998 as the Company focuses its attention on its
Montana properties.
The Company has acquired and leased three non-contiguous properties in Montana.
During the quarter ended September 30, 1999, the Company continued its staking
and filing program in Montana, U.S.A. and commenced its 1999 prospecting and
geological program on the Montana properties. During the quarter the Company
completed a tri-party lease agreement with a purchase option, subject to
regulatory approval, on the 54 claim Platinum Fox property. The Platinum Fox
property overlies platinum/palladium-bearing Chromite horizons in the Stillwater
Complex in Montana. The Company has staked multiple sulfide rich horizons that
are anomalous in platinum and palladium adjacent to the operating Stillwater
Mine located in Stillwater and Sweet Grass counties, Montana. The Company
conducted research of the geology of the area and detailed title research into
the land position. Based on the results of that research, the Company has staked
or acquired three large blocks of claims.
The Company's expenditures on its mining interests located in Montana, U.S.A.
have increased to $259,875 for the quarter ended September 30, 1999 as compared
to $0 in the same quarter in 1998. Staking, filing and claim rental costs
incurred in the quarter ended September 30, 1999, amounted to $77,561 as
compared to $0 in the same period in 1998. The Company also expended $122,525 on
geological and assaying in the quarter ended September 30, 1999, as compared to
$0 for these activities in the same period in 1998.
Nine Months Ended September 30, 1999 Compared with the Nine Months Ended
September 30, 1998
For the nine months ended September 30, 1999, general and administrative
expenses decreased from $420,492 to $348,340 compared to the nine months ended
September 30, 1998, representing a 17% savings. Significant decreases were
experienced in management fees and wages, travel and office and general
expenses. On a period over period basis, the Company reduced operating expenses
by approximately $72,000.
The Company experienced a net loss for the period of $622,402, of which $348,340
was related to general and administrative expenses. The Company had a loss of
$466,356 for the same period in 1998.
During the nine months, the Company expended $528,329 on its resource property
exploration, development and acquisition program as compared to $138,025 in the
comparable 1998 period.
The Company's expenditures on its mining interests located in Idaho, U.S.A.
decreased to $69,412 for the nine months ended September 30, 1999 as compared to
$138,025 in the same period in 1998 as the Company focuses its attention to its
Montana properties.
The Company's expenditures on its mining interests located in Montana, U.S.A.
have increased to $458,917 for the period ended September 30, 1999 as compared
to $0 in the same period in 1998. Staking, filing and claim rental costs
incurred in the period ended September 30, 1999, amounted to $141,700 as
compared to $0 in the same period in 1998. The Company also expended $197,032 on
geological, $36,295 on assaying and $49,927 on field transportation in the
period ended September 30, 1999, as compared to $0 on these activities in the
same period in 1998.
Page 12
<PAGE>
2. Liquidity and Capital Resources
The Company is dependent on the proceeds of debt and equity financings,
including but not limited to public offerings, private placements, issuances of
convertible securities and the exercise of stock options or 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, 1998 Financial
Statements for additional information. The Company will need further funds to
continue its operations and there can be no assurance that such funding will be
available.
During the quarter ended September 30, 1999, the Tomasovich Family Trust as
lender (the "Trust"), elected to convert a convertible loan in the amount of
$250,000 for 2,247,941 units of the Company. Each unit consists of one common
share of the Company's stock and one non-transferable share purchase warrant.
The Company reduced notes payable by $250,000, reduced convertible securities by
$33,419 and increased share capital by $283,419 on conversion of these notes.
The Trust then exercised the related warrants and was issued 2,227,941 common
shares from treasury. The Company reduced convertible securities by $33,419,
received cash proceeds of $252,626 and increased share capital by $286,045.
During the quarter ended September 30, 1999, the Trust elected to convert a
convertible loan in the amount of $322,000 for 2,466,681 units of the Company.
Each unit consists of one common share of the Company's stock and one
non-transferable share purchase warrant. The Company reduced notes payable by
$322,000, reduced convertible securities by $44,400 and increased share capital
by $366,400 on conversion of these notes. The remaining $44,400 of equity
remains in convertible securities until the related warrants are exercised.
During the quarter ended September 30, 1999, the Tomasovich Family Trust as
lender (the "Trust"), elected to convert a convertible loan in the amount of
$115,000 for 1,172,847 units of the Company. Each unit consists of one common
share of the Company's stock and one non-transferable share purchase warrant.
The Company reduced notes payable by $115,000, reduced convertible securities by
$21,111 and increased share capital by $136,111 on conversion of these notes.
The Trust then exercised the related warrants and was issued 1,172,847 common
shares from treasury. The Company reduced convertible securities by $21,111,
received cash proceeds of $119,200 and increased share capital by $140,311.
The Company anticipates, based on currently proposed plans and assumptions
relating to its operations and exploration activities, that the proceeds of the
warrants exercised in the quarter ended September 30, 1999, will not be
sufficient to satisfy the Company's contemplated cash requirements for the
following 12 month period. Any proceeds from the exercise of stock options or
warrants will be applied to satisfy the Company's contemplated cash
requirements. The remaining proceeds, if any, will be added to general working
capital purposes or used to reduce current liabilities.
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 the remainder of 1999,
for all properties is $250,000, including contractual payments to underlying
claim owners and general exploration and development. The Company intends to
continue the extensive exploration program on the recently staked and optioned
claims located near the operating Stillwater Mine in Montana. The program will
consist of mapping, sampling, compilation of field data and review of historic
information during the remainder of 1999. The estimated budget is exclusive of
expenditures by the Company's joint venture partner on the Petsite property.
Page 13
<PAGE>
The Company requires approximately $125,000 for general and administrative
expenses for the remainder of the fiscal year and approximately $8,000 for
payments on its notes payable. The Company anticipates repayment of these notes
from the proceeds on the exercise of stock options and warrants.
As at September 30, 1999, the Company has a working capital deficiency of
$234,531 versus a working capital deficiency of $1,057,753 at September 30,
1998. Accounts payable to related parties accounts for approximately 67% of the
working capital deficiency. The Company anticipates improvement of this
deficiency from the proceeds of private placements and the exercise of stock
options and warrants during 1999.
Positive cash flow from the financing activities of the Company of $370,682 and
$188,456 were recorded during the quarters ended September 30, 1999 and 1998,
respectively. Positive cash flow from the financing activities of the Company of
$981,437 and $590,707 were recorded during the nine months ended September 30,
1999 and 1998, respectively. The convertible securities increased to $63,985 at
September 30, 1999 from $0 at September 30, 1998. The long-term debt decreased
to $4,871 at September 30, 1999 from $9,713 in 1998 and current liabilities
decreased to $372,115 in 1999 from $1,112,203 in 1998. Of the September 30,
1999, current liabilities, $204,515 represents the amount due to non related
party accounts payable accounts, $157,758 represents accounts payable amounts
due to various related parties, and $9,842 represents the current portion of
notes payable.
Negative cash flows from operating activities of ($54,369) and ($137,901) were
recorded during the quarters ended September 30, 1999 and 1998, respectively.
Negative cash flows from operating activities of ($330,172) and ($530,122) were
recorded during the nine months ended September 30, 1999 and 1998, 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 acquisition and
exploration of resource properties. The net cash expended on investing
activities for the quarters ended September 30 increased to $(293,352) in 1999
from $(49,571) in 1998. Negative cash flows from investing activities of
($520,329) and ($138,025) were recorded during the nine months ended September
30, 1999 and 1998, respectively.
Page 14
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Civil Suit by Gumprecht - Promissory Note
On October 1, 1997, a lawsuit was brought against the Company, IMD and Mr.
Joseph Swisher in the Nez Perce and Idaho County District Court by the
plaintiffs, Thomas Gumprecht and Bonnie Witrak (the "Plaintiffs"). The
Plaintiffs brought the action to collect on a promissory note dated October 19,
1995 entered into between the Plaintiffs and the Company in the amount of
$250,000. In connection with the execution of the promissory note, the Company
and Plaintiffs entered into a security agreement, which granted the Plaintiffs a
security interest in certain assets. The Plaintiffs sought possession of certain
assets, which included equipment located at the Eckert's Hill Mine and Mill site
and at the Golden Eagle site. The Plaintiffs sought a judgment in the total
amount of $308,000 for principal and interest up to and including October 1,
1997.
During 1998, the Company elected to allow a default to be entered in the lawsuit
and the Court ordered the Company to pay the amount of $332,216 (paid) which
included interest through May 17, 1998. The Plaintiffs' claim for attorney fees
was denied by the Court and they have appealed this decision. The Company has
indicated its willingness to attend a settlement conference to conclude this
matter. The parties have agreed to non-binding arbitration set to commence on
January 7, 2000.
Civil Suit by Gumprecht - Share Exchange
In November 1997, a lawsuit was brought against IMD and Mr. Joseph Swisher in
the Nez Perce and Idaho County District Court, by Thomas Gumprecht (the
"Plaintiff"). On October 6, 1997, the Plaintiff filed an Amended Complaint which
added the Company and Delbert and Elli Steiner as defendants (with IMD and
Joseph Swisher, collectively the "Defendants"). The Plaintiff alleges that the
Plaintiff made various loans to Idaho Non-Metallic Mineral, a company owned in
part by Mr. Steiner and Mr. Swisher, in exchange for shares of Silver Crystal
Mines and IMD. The Plaintiff claims that prior to December 1991, the parties to
the lawsuit had an oral agreement to exchange the Plaintiff's shares in Silver
Crystal and IMD for 250,000 of the Company's shares, which were owned by IMD.
The Plaintiff is seeking transfer of such shares. The Defendants deny that any
such oral agreement was made and have raised the statute of frauds and statute
of limitations as defenses to the Plaintiff's claims.
During 1998, the claims for securities fraud and negligent misrepresentation
were dismissed by the Court, on summary judgment. The remaining claims of the
lawsuit are in the discovery phase, the trial set for August 23, 1999 has been
put aside and the parties have agreed to non-binding arbitration set to commence
on January 7, 2000. The Company is of the view that the allegations are
generally without merit and will continue to defend such actions vigorously.
Page 15
<PAGE>
Civil Suit by Gumprecht - Derivative Action
Thomas Gumprecht and Kirke White (the "Plaintiffs") filed an Amended Complaint,
Shareholders Direct and Derivative Action in the District Court of the Second
Judicial District of the State of Idaho, in and for the County of Idaho on
August 5, 1997. While the Complaint names the Company as a defendant on several
pages, the Company is not named formally as a party to the Amended Complaint.
The lawsuit makes allegations against Mr. Steiner and names the Company with
respect to the transfer of various funds and alleged agreements between Mr.
Steiner and the Plaintiffs set out more particularly as follows:
The Plaintiffs allege that Mr. Joseph Swisher was involved in the creation of
the Company, an allegation that the Company denies. The Plaintiffs further
allege that the Company paid Silver Crystal $800,000 for the construction of the
Eckert's Hill Mine and Mill site which the Company admits. The Plaintiffs allege
that such funds were diverted for the personal use of Mr. Joseph Swisher, which
the Company denies. These funds were utilized by the Company for an independent
metallurgical evaluation of the entire Swisher-Br Process and for general and
administrative expenditures.
The Plaintiffs alleged that an agreement was made in August of 1995 by IMD to
exchange the Plaintiffs' stock in Silver Crystal for that of the Company owned
by IMD. The Company admits an offer was made to this effect but denies that such
offer was accepted and as a result no agreement was formed.
The Plaintiffs allege that Mr. Steiner solicited funds from the Plaintiffs while
acting as their attorney and deposited such funds into his attorney/client trust
account and/or his attorney general business account. The Plaintiffs allege such
funds were given to Mr. Steiner in exchange for stock in the Company, owned by
IMD, which was not delivered. The Plaintiffs allege that the solicitation of
funds, the depositing of such funds into Mr. Steiner's client accounts, the
disbursement of such funds without accounting, and the failure to transfer stock
to the Plaintiffs exhibits negligence by failure to exhibit the care expected of
a reasonably prudent attorney acting in the same or similar circumstances in the
same or similar community. Mr. Steiner specifically denies soliciting funds from
the Plaintiffs and states that the disbursement of such funds was undertaken at
the instruction of the Plaintiff, Mr. Gumprecht. All alleged negligence was
prior to or at the time of the incorporation of the Company and for which the
statute of limitations has run, prior to the date of the filing of the
complaint. Mr. Steiner further denies the remainder of the aforementioned
allegations.
The Plaintiffs are seeking recission and restitution of funds, compensatory
damages, specific performance of the alleged contract, the formation of a
constructive trust in the Golden Eagle Mining properties and all Company stock
owned by Mr. Joseph Swisher and IMD, punitive damages for $1,000,000, and
several orders relating to the Golden Eagle Property, Silver Crystal Mines,
Inc., IMD and Mr. Swisher.
The lawsuit is on hold pending the plaintiffs locating a shareholder who will be
willing to represent a class of Silver Crystal shareholders in the action. There
are no specific claims or allegations made against the Company.
The Company is of the view that the allegations are generally without merit and
will continue to defend such actions vigorously. The parties have agreed to
non-binding arbitration set to commence on January 7, 2000.
Page 16
<PAGE>
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Conversions of Convertible Promissory Notes Payable and Exercises of Warrants
On August 16, 1999, the Tomasovich Family Trust as lender (the "Trust"),
Theodore Tomasovich being both Trustee of the Trust and a Director of the
Company, elected to convert convertible loan #4 in the amount of $250,000 of the
notes issued during 1998 for 2,227,941 units of the Company. Each unit consisted
of one common share of the Company's stock and one non-transferable share
purchase warrant. The warrants allow the holder to purchase additional common
shares at C$0.28 per share to May 15, 2000.
The issuance of the common shares and warrants was exempt from registration by
virtue of Section 3(a)(9) of the Securities Act of 1933, as amended (the
"Securities Act"), as an exchange by the Company with an existing
securityholder.
On August 19, 1999, the Trust then exercised the related warrants and was issued
2,227,941 common shares from treasury. This issuance was exempt by virtue of
Section 4(2) of the Securities Act and Rule 506 under the Securities Act.
On September 2, 1999, the Trust elected to convert convertible loan #5 in the
amount of $322,000 of the notes issued during 1998 for 2,466,681 units of the
Company. Each unit consists of one common share of the Company's stock and one
non-transferable share purchase warrant.
The issuance of the common shares and warrants was exempt from registration by
virtue of Section 3(a)(9) of the Securities Act of 1933, as amended (the
"Securities Act"), as an exchange by the Company with an existing
securityholder.
On September 14, 1999, the Trust elected to convert convertible loan #6 in the
amount of $115,000 of the notes issued during 1999 for 1,172,847 units of the
Company. Each unit consists of one common share of the Company's stock and one
non-transferable share purchase warrant.
The issuance of the common shares and warrants was exempt from registration by
virtue of Section 3(a)(9) of the Securities Act of 1933, as amended (the
"Securities Act"), as an exchange by the Company with an existing
securityholder.
On September 17, 1999, the Trust then exercised the related warrants and was
issued 1,172,847 common shares from treasury. This issuance was exempt by virtue
of Section 4(2) of the Securities Act and Rule 506 under the Securities Act.
Page 17
<PAGE>
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the quarter ended September 30, 1999, the were no matters which were
submitted to a vote of, or approved by, the security holders of the Company.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS FILED ON FORM 8-K
(a) Exhibits
Exhibit Number Description
-------------- -----------
10.1* Platinum Fox Lease Agreement
27 Financial Data Schedule
--------------
* To be filed by amendment.
(b) None.
Page 18
<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 9th day of November, 1999.
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 9th day of November, 1999.
Signature Title Date
--------- ----- ----
/s/ "DELBERT W. STEINER" Director, President and November 9, 1999
- -------------------------- Chief Executive Officer
Delbert W. Steiner
/s/ "KENNETH A. SCOTT" Chief Financial Officer November 9, 1999
- --------------------------
Kenneth A. Scott
<PAGE>
EXHIBIT INDEX
-------------
Exhibit Number Description
-------------- -----------
10.1* Platinum Fox Lease Agreement
27 Financial Data Schedule
--------------
* To be filed by amendment.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-END> Sep-30-1999
<CASH> 131,343
<SECURITIES> 0
<RECEIVABLES> 6,241
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 137,584
<PP&E> 2,036,281
<DEPRECIATION> 47,012
<TOTAL-ASSETS> 2,208,853
<CURRENT-LIABILITIES> 372,115
<BONDS> 0
0
0
<COMMON> 9,653,485
<OTHER-SE> 63,985
<TOTAL-LIABILITY-AND-EQUITY> 2,208,853
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 622,402
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 268,929
<INCOME-PRETAX> (622,402)
<INCOME-TAX> 0
<INCOME-CONTINUING> (622,402)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (622,402)
<EPS-BASIC> (0.04)
<EPS-DILUTED> (0.04)
</TABLE>
