- --------------------------------------------------------------------------------
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------
FORM 10-QSB/A
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 March 31, 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 March 31, 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............................................................14
ITEM 3. DEFAULTS UPON SENIOR SECURITIES......................................................................16
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..................................................16
ITEM 5. OTHER INFORMATION....................................................................................16
ITEM 6. EXHIBITS AND REPORTS FILED ON FORM 8-K...............................................................16
SIGNATURES.......................................................................................................17
</TABLE>
Page 2
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS OF THE COMPANY
The following unaudited financial statements for the period ended 31 March, 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 3
<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 31 March 1998 and the interim consolidated statements of
changes in shareholders' equity, operations and cash flows for the three 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
- --------------------------------------------------------------------------------
Page 4
<PAGE>
Idaho Consolidated Metals Corp. Statement 1
(An Exploration Stage Company)
Interim Consolidated Balance Sheet
As at 31 March
U.S. Funds
Unaudited - See Notice to Reader
<TABLE>
ASSETS 1998 1997
- -------------------------------------------------------------------- ------------------- -------------------
<S> <C> <C>
Current
Cash $ 128,084 $ 70,986
Accounts receivable 4,351 3,686
Cash in trust 50,000 --
------------------- -------------------
182,435 74,672
Restricted Investments 90,000 85,000
Property Rights, Plant and Equipment 3,057,073 4,139,399
------------------- -------------------
$ 3,329,508 $ 4,299,071
- -------------------------------------------------------------------- ------------------- -------------------
LIABILITIES
- -------------------------------------------------------------------- ------------------- -------------------
Current
Bank loan $ -- $ 22,173
Accounts payable - Related parties 193,362 176,044
- Other 161,911 498,924
Current portion of notes payable 254,243 533,672
------------------- -------------------
609,516 1,230,813
------------------- -------------------
Notes Payable 221,976 16,209
------------------- -------------------
- -------------------------------------------------------------------- ------------------- -------------------
SHAREHOLDERS' EQUITY
- -------------------------------------------------------------------- ------------------- -------------------
Share Capital - Statement 2 8,710,329 7,609,927
Deficit - Accumulated during the exploration stage - Statement 2 (6,159,728) (4,505,293)
Foreign Currency Translation Adjustment - Statement 2 (52,585) (52,585)
------------------- -------------------
2,498,016 3,052,049
------------------- -------------------
$ 3,329,508 $ 4,299,071
- -------------------------------------------------------------------- ------------------- -------------------
</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 125,000 143,750 -- -- 143,750
Loss for the period
- Statement 3 -- -- (213,891) -- (213,891)
---------------- ----------------- ---------------- ----------------- ----------------
Balance - 31 March 1997 6,979,208 $ 7,609,927 $ (4,505,293) $ (52,585) $ 3,052,049
- ---------------------------------- ---------------- ----------------- ---------------- ----------------- ----------------
Balance - 31 December 1997 9,434,686 $ 8,710,329 $ (6,015,621) $ (52,585) $ 2,642,123
Loss for the period
- Statement 3 -- -- (144,107) -- (144,107)
---------------- ----------------- ---------------- ----------------- ----------------
Balance - 31 March 1998 9,434,686 $ 8,710,329 $ (6,159,728) $ (52,585) $ 2,498,016
- ---------------------------------- ---------------- ----------------- ---------------- ----------------- ----------------
</TABLE>
Interim Consolidated Statement of Operations Statement 3
For the Three Months Ended 31 March
U.S. Funds
Unaudited - See Notice to Reader
<TABLE>
1998 1997
- --------------------------------------------------------------------------- --------------------- --------------------
<S> <C> <C>
Operating Expenses
General and administrative - Schedule 1 $ 135,596 $ 210,012
Other (Income) Expenses (661) --
Interest income 9,172 3,879
Interest expense 8,511 3,879
Loss for the Period $ 144,107 $ 313,891
- --------------------------------------------------------------------------- --------------------- --------------------
Loss per Common Share $ 0.02 $ 0.03
- --------------------------------------------------------------------------- --------------------- --------------------
Weighted Average Number of Common Shares Outstanding 8,823,530 6,863,930
- --------------------------------------------------------------------------- --------------------- --------------------
</TABLE>
- See Accompanying Notes -
Page 6
<PAGE>
Idaho Consolidated Metals Corp. Statement 4
Interim Consolidated Statement of Cash Flows
For the Three Months Ended 31 March
U.S. Funds
Unaudited - See Notice to Reader
<TABLE>
Cash Resources Provided By (Used In) 1998 1997
- --------------------------------------------------------------------------- --------------------- --------------------
<S> <C> <C>
Operating Activities
Loss for the period $ (144,107) $ (213,891)
Item not affected by cash
Amortization 2,276 3,144
Changes in current assets and liabilities
Accounts receivable (363) (936)
Accounts payable - Related parties 12,370 3,688
- Other 7,337 96,139
--------------------- --------------------
Net Cash used in operating activities (122,487) (111,856)
--------------------- --------------------
Investing Activities
Property rights, plant and equipment (37,313) (87,778)
--------------------- --------------------
Net cash used in investing activities (37,313) (87,778)
--------------------- --------------------
Financing Activities
Notes payable 208,999 3,478
--------------------- --------------------
Net cash provided by financing activities 208,999 3,478
--------------------- --------------------
Net Increase (Decrease) in Cash 49,199 (196,156)
Cash position - Beginning of period 78,885 267,142
--------------------- --------------------
Cash Position - End of Period $ 128,084 $ 70,986
- --------------------------------------------------------------------------- --------------------- --------------------
</TABLE>
- See Accompanying Notes -
Page 7
<PAGE>
Idaho Consolidated Metals Corp. Schedule 1
Interim Consolidated Schedule of Administrative Expenses
For the Three Months Ended 31 March
U.S. Funds
Unaudited - See Notice to Reader
<TABLE>
1998 1997
- --------------------------------------------------------------------------- --------------------- --------------------
<S> <C> <C>
Management fees and wages $ 54,889 $ 54,473
Professional fees 32,654 77,482
Travel 17,233 24,912
Shareholder information 10,368 26,337
Office and general 9,587 14,562
Office rent 6,383 4,590
Amortization 2,276 3,144
Transfer agent and filing fees 1,853 2,712
Entertainment and promotion 353 1,800
Expenses for the Period $ 135,596 $ 210,012
- --------------------------------------------------------------------------- --------------------- --------------------
</TABLE>
Interim Consolidated Schedule of Resource Property Costs Schedule 2
For the Three Months Ended 31 March
U.S. Funds
Unaudited - See Notice to Reader
<TABLE>
1998 1997
- --------------------------------------------------------------------------- --------------------- --------------------
<S> <C> <C>
Direct - Mineral
Idaho County, Idaho, U.S.A.
Geological $ 14,681 $ 29,603
Lease payments and acquisition costs 12,600 163,910
Survey 4,278 188
Camp and general 3,680 9,403
Staking, filing and claim rental 1,890 --
Taxes, licenses and permits 184 4,120
Drilling -- 14,970
Process plant and equipment -- 4,600
Environmental -- 2,964
Roadwork -- 1,770
Costs for the Period $ 37,313 $ 231,528
- --------------------------------------------------------------------------- --------------------- --------------------
</TABLE>
Page 8
<PAGE>
Idaho Consolidated Metals Corp.
Notes to Interim Consolidated Financial Statements
31 March 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.
- --------------------------------------------------------------------------------
3. Share Capital
Details are as follows:
<TABLE>
Shares Amount
--------------------- --------------------
<S> <C> <C>
Issued and fully paid: 7,104,208 $ 7,651,427
Allotted for issuance for private placement 1,763,233 759,060
Allotted for issuance for debt settlement 567,245 299,842
--------------------- --------------------
9,434,686 $ 8,710,329
--------------------- --------------------
</TABLE>
- --------------------------------------------------------------------------------
Page 9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
1. Results of Operations
First Quarter 1998 Compared with First 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 first quarter, general and administrative expenses decreased from
$210,012 to $135,596 compared to the first quarter of 1997, representing a 35%
savings. Significant decreases were experienced in travel and shareholder
information expenses, as well as a 58% reduction in professional fees.
Management fees and wages remained steady, while office rent increased slightly.
On a quarter over quarter basis, the Company saved nearly $75,000.
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 qualified to
be 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. The Company has already made
sufficient expenditures to qualify for the release of all of the escrow shares.
During the first quarter of 1998, the Company did not apply for the regulatory
approval for 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 $144,107, of which $135,596 was related to general
and administrative expenses. The Company had a loss of $213,891 for the same
period in 1997.
During the quarter, the Company expended $37,313 on its resource property
exploration, development and acquisition program as compared to $231,528 in the
comparable 1997 period. The Company experienced its greatest savings in regard
to lease payments and acquisition costs, which decreased from $163,910 to
$12,600, or approximately 92%. The Company had no expenditures on drilling,
process plant and equipment, environmental and roadwork expenses. The Company
experienced the majority of these cost savings on its resource expenditures by
virtue of having entered into joint venture agreements with Cyprus Gold
Exploration Corporation on the Company's most promising properties.
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 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, 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.
Page 10
<PAGE>
During the quarter ended March 31, 1998 the Company closed its non-brokered
private placement ("Private Placement") which resulted in the issue of 1,763,233
units pursuant to the terms of an Offering Memorandum dated November 12, 1997.
Each unit consisted of one common share and one non-transferable warrant. Each
warrant entitles the holder to purchase one additional share at a price of
C$0.60 per share in the first year and C$0.70 per share in the second year. The
Vancouver Stock Exchange ("VSE") accepted the Private Placement for filing
effective March 18, 1998, and accordingly, the Private Placement closed
effective March 18, 1998. The Company anticipates, based on currently proposed
plans and assumptions relating to its operations and exploration activities,
that the proceeds of the Private Placement (without the exercise of any of the
warrants) will be sufficient to satisfy the Company's contemplated cash
requirements for the 12 month period following the closing of the offering. Any
proceeds from the exercise of stock options or warrants 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 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 $375,000 for general and administrative
expenses for the remainder of the fiscal year following the closing of the
Private Placement and $254,243 for payments on its notes payable of which
$250,000 is a demand note, currently subject to litigation as disclosed herein
under the heading Legal Proceedings - Gumprecht - Promissory Note. The Company
anticipates repayment of these notes from the proceeds of the Private Placement,
the proceeds of convertible debt issues and the exercise of stock options.
During the first quarter ended March 31, 1998, the Company has received cash in
the amount of $210,000 advanced under two convertible loan agreements both dated
April 9, 1998 with a related party. See note 12 to the Company's December 31,
1997 Financial Statements for additional information. Subsequent to March 31,
1998 the Company has received cash in the amount of $150,000 advanced under a
convertible loan agreement dated May 15, 1998 with a related party. The three
convertible loan agreements were subject to acceptance by the VSE. (See note 12
to the Company's December 31, 1997 Financial Statements and Item 2 - Changes in
Securities - for further details.)
As at March 31, 1998, the Company has a working capital deficiency of $427,081
versus a working capital deficiency of $1,156,141 for the same period in 1997.
Accounts payable to related parties accounts for approximately 45% of the
deficiency, while trade accounts payable and the current portion of notes
payable accounts for the other approximate 55%. The Company anticipates
improvement of this deficiency from the proceeds of private placements and the
exercise of stock options during 1998. The Company is in the process of
restructuring certain of its obligations with certain creditors during 1998 in
order to assist in the correction of this deficiency. Subsequent to March 31,
1998, the VSE accepted the Company's shares for debt exchange agreements with
those creditors, which resulted in the removal of C$414,063.17 in debt in
exchange for approximately 567,209 shares.
Positive cash flow from the financing activities of the Company of $208,999 and
$3,478 were recorded at March 31, 1998 and 1997 respectively. The long-term debt
increased to $221,976 at March 31, 1998 from $16,209 in 1997 and current
liabilities decreased to $609,516 in 1998 from $1,230,813 in 1997. Of the March
31, 1998 current liabilities, $161,911 represents the amount due to non related
party accounts
Page 11
<PAGE>
payable accounts, $193,362 represents accounts payable amounts due to various
related parties, and $254,243 represents the current portion of notes payable.
Negative cash flows from operating activities of ($122,487) and ($111,856) were
recorded as at March 31, 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 acquisition and
exploration of resource properties. The net cash expended on investing
activities as of March 31 decreased to $37,313 in 1998 from $87,778 in 1997.
Page 12
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Civil Suit by Joe Swisher and IMD
On October 18, 1996 Mr. J. Swisher and Idaho Mining and Development Company,
Inc. ("IMD") filed suit against the Company for $3,473,857 or alternatively
$344,257 and 1,304,000 common shares of the Company plus interest, attorney fees
and any further relief available.
Subsequently, the Company filed a suit against Mr. Swisher and Silver Crystal
Mines, Inc. alleging breach of contract on the Eckert's Hill processing plant
contract and filed a counter-claim against Mr. Swisher and IMD for alleged
failure to perform contracted assessment work, alleged breach of the Swisher-Br
metallurgical process contract and alleged breach of certain other mineral
property arrangements.
Subsequent to March 31, 1997 the parties entered into a Global Settlement
Agreement dated April 29, 1998 which causes all claims and counter-claims
between the parties to be resolved. A copy of this agreement is filed as an
exhibit to the Company's 1997 Form 10-KSB. In full and final settlement of all
existing and potential claims between and amongst the parties, the Company will
pay $50,000 to IMD within 2 business days of the settlement and deposit in trust
a further $50,000. Both of these payments have been made. The balance in trust
will be released to IMD upon delivery by IMD to the Company of certain quitclaim
deeds to the Claim Block properties. The Company has recorded a gain on the
settlement of the lawsuit of $223,946.
The settlement has been recorded as of December 31, 1997 and the $100,000 is
accrued within amounts payable to related parties in the financial statements.
See also note 7 to the Company's December 31, 1997 Financial Statements for
further details. The gain on debt settlement has been recorded as an
extraordinary item in the statement of operations for the year ended December
31, 1997. See also note 8 to the Company's December 31, 1997 Financial
Statements for additional information.
Civil Suit by Gumprecht - Promissory Note
The Company elected to allow a default to be entered in the District Court of
the Second Judicial District of the State of Idaho, in and for the County of
Idaho on January 30, 1998.
Civil Suit By Gumprecht - Derivative Action
Two of the parties named in the lawsuit, Mr. Delbert Steiner and Ms. Elli
Steiner filed an Amended Answer to Amended Complaint, dated March 20, 1998.
Subsequent to March 31, 1998, the Company has been added as a party to this
lawsuit. The Company is of the view that the allegations are generally without
merit and will vigorously defend against this suit.
Page 13
<PAGE>
ITEM 2. CHANGES IN SECURITIES and use of proceeds
Private Placement pursuant to November 1997 Offering Memorandum
On March 18, 1998 the VSE accepted for filing the Company's non-brokered Private
Placement of 1,763,233 units, each unit consisting of one common share and one
non-transferable warrant. Each warrant entitles the holder to purchase one
additional share at a price of C$0.60 per share in the first year until March
18, 1999 and C$0.70 per share in the second year until March 18, 2000. The
shares and warrants were issued effective March 18, 1998. The private placees
were as follows:
Full Name and Residential Address of Purchaser Number of Units Purchased
- --------------------------------------------------------------------------------
Morton Borch 83,333
Advokat
Nedre Vollgt. 4
P.B. 597 Sentrum
101106 Oslo
Norway
- --------------------------------------------------------------------------------
Michael Bousefield and Rosemarie Bousefield, 93,599
Rosebank the Street
Ridgehill, Near Winford
Bristol B518 8TB
England
- --------------------------------------------------------------------------------
Cathy Bruce 47,492
c/o Salem Management Company Ltd./ International Freedom
Design House, Leeward Highway
P.O. Box 150
Providenciales, Turks & Caicos Islands
British West Indies
- --------------------------------------------------------------------------------
Cardinal Forestry Consulting Company Ltd. (1) 25,889
Beneficial Owner: Bernd Struck
2485 Orchard Road
Sidney, B.C.
V8L 1S1
- --------------------------------------------------------------------------------
Bernd Struck (2) 25,890
2485 Orchard Road
Sidney, B.C.
V8L 1S1
- --------------------------------------------------------------------------------
Ceemac Holdings Inc. 14,167
Beneficial Owner: Ron Merrit
603 - 2020 Highbury Street
Vancouver, B.C.
V6R 4N9
- --------------------------------------------------------------------------------
Tomasovich Family Trust (2) 927,062
600 Wilshire Blvd., Suite 1410
Los Angeles, CA
U.S.A. 90017
- --------------------------------------------------------------------------------
Page 14
<PAGE>
Full Name and Residential Address of Purchaser Number of Units Purchased
- -------------------------------------------------------------------------------
Hideo Kita 545,801
600 Wilshire Blvd., Suite 1410
Los Angeles, CA
U.S.A. 90017
- --------------------------------------------------------------------------------
TOTAL 1,763,233
- --------------------------------------------------------------------------------
Note:
(1) Bernd Struck is the brother of Wilfried Struck, who is Vice President,
Mining and Exploration, and Chief Operating Officer of the Company.
(2) Theodore Tomasovich, a director of the Company, is the Trustee of the
Tomasovich Family Trust and has voting control over the Trust.
Shares for Debt Exchange
By Debt Settlement Agreements dated September 30, 1997 between the Company and
certain creditors, the Company agreed to settle outstanding indebtedness
totaling C$414,063.17 by issuing a total of 567,209 common shares at a price of
C$0.73 per share as payment for the debts. The Company received VSE acceptance
of this transaction on March 18, 1998. The shares were issued on April 21, 1998
and accordingly, the debts were extinguished upon the issuance of the shares.
The debt settlement was recorded in the Company's December 31, 1997 Financial
Statement. In addition to the debt settlement, the Company negotiated a
reduction of previously invoiced and accrued legal fees of $179,138 from the
Company's former U.S. securities counsel. The reduction has been recorded as an
extraordinary item in the consolidated statement of operations for the year
ended December 31, 1997. See also note 8 to the Company's December 31, 1997
Financial Statements. Certain of the debts settled were owed to parties related
to the Company. See Item 12 - Related Transactions - of the Company's 1997 Form
10-KSB for further information.
Convertible Promissory Notes
Subsequent to March 31, 1998 the Company entered into two convertible loan
agreements each dated April 9, 1998 with the Tomasovich Family Trust (the
"Trust"), pursuant to which the Company issued convertible promissory notes in
the amounts of $100,000 and $110,000 dated January 23, 1998 and March 31, 1998
respectively. The Company received VSE acceptance of the two convertible loan
agreements on June 22, 1998, following approval by the shareholders of the
Company at the annual general meeting held on June 16, 1998, of the possible
change of control of the Company to Theodore Tomasovich and the Trust. The
repayment terms and conversion features are more particularly detailed below.
The Trust owned 1,421,474 common shares of the Company, or 16.03% of the
Company, as of March 31, 1998. Mr. Theodore Tomasovich, a Director of the
Company, is the trustee of the Trust and has voting control of the Trust.
The repayment terms and conversion features for each convertible note are
summarized as follows:
1. $100,000 convertible promissory note repayable on or before January 23,
2000 bearing interest at 9% per annum. After June 17, 1998, 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$0.26 of indebtedness until and including January 23,
1999 and at a conversion price of one unit for each C$0.31 of indebtedness
during the period from January 24, 1999 until January 23, 2000 for a
maximum of 546,154 units if the principal amount is converted in its
entirety by January 23, 1999 and a maximum of 458,064 units if the
principal amount is converted in its entirety between January 24, 1999 and
January 23, 2000. Each unit consists of one common share and one
non-transferable warrant with each warrant being exercisable at a price of
Page 15
<PAGE>
C$0.26 per share until January 23, 1999 and C$0.31 per share from January 24,
1999 to January 23, 2000; and
2. $110,000 convertible promissory note repayable on or before March 31, 2000
bearing interest at 9% per annum. After June 17, 1998, 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$0.26 of indebtedness until and including March 31,
1999 and at a conversion price of one unit for each C$0.31 of indebtedness
during the period from April 1, 1999 until March 31, 2000 for a maximum of
600,769 units if the principal amount is converted in its entirety by March
31, 1999 and a maximum of 508,871 units if the principal amount is
converted in its entirety between April 1, 1999 and March 31, 2000. Each
unit consists of one common share and one non-transferable warrant with
each warrant being exercisable at a price of C$0.26 per share until March
31, 1999 and C$0.31 per share from April 1, 1999 to March 31, 2000.
The Company has also entered into a convertible loan agreement dated May 15,
1998 with the Trust for a loan of $150,000. The details will be described in the
Company's Form 10-QSB to June 30, 1998.
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 the principal amount
outstanding under the promissory notes into shares and warrants pursuant to the
convertible loan agreements, 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. Accordingly, the Company requested
approval of its securities holders to the possible change of control at the
annual and extraordinary general meeting held on June 17, 1998. The details will
be described in the Company's Form 10-QSB for the quarter ended June 30, 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
March 31, 1998. See Item 2 - Changes in Securities - Convertible Promissory
Notes for a discussion of a matter which will be put to a vote of the security
holders in the next quarter.
ITEM 5. OTHER INFORMATION
Edwin R. Knickel resigned as a director of the Company effective March 20, 1998.
ITEM 6. EXHIBITS AND REPORTS FILED ON FORM 8-K
(a) None.
(b) None.
Page 16
<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 17
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 128,024
<SECURITIES> 0
<RECEIVABLES> 4,351
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 182,435
<PP&E> 3,091,998
<DEPRECIATION> 34,925
<TOTAL-ASSETS> 3,329,508
<CURRENT-LIABILITIES> 609,516
<BONDS> 0
0
0
<COMMON> 8,710,329
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,329,508
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 144,107
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,172
<INCOME-PRETAX> (144,107)
<INCOME-TAX> 0
<INCOME-CONTINUING> (144,107)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (144,107)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
