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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 000-25132
ICHOR Corporation
(Exact name of Registrant as specified in its charter)
Delaware 25-1741849
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Suite 1250, 400 Burrard Street
Vancouver, British Columbia, Canada V6C 3A6
(Address of principal executive offices) (Postal Code)
Registrant's telephone number, including area code: (604) 683-5767
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 par value
(Title of Class)
Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for 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
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
The aggregate market value of the voting stock held by non-affiliates of the
Registrant was approximately $1,785,095 as of March 23, 1999, computed on the
basis of the average of the bid and ask prices on such date.
As of March 23, 1999, there were 4,907,520 shares of the Registrant's Common
Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's 1998 Proxy Statement to be filed within 120 days
of the period ended December 31, 1998 are incorporated by reference into Part
III.
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FORWARD-LOOKING STATEMENTS
Statements in this report, to the extent they are not based on historical
events, constitute forward-looking statements. Forward-looking statements
include, without limitation, statements regarding the outlook for future
operations, forecasts of future costs and expenditures, evaluation of market
conditions, the outcome of legal proceedings, the adequacy of reserves, or
other business plans. Investors are cautioned that forward-looking statements
are subject to an inherent risk that actual results may vary materially from
those described herein. Factors that may result in such variance, in addition
to those accompanying the forward-looking statements, include changes in
interest rates, prices, and other economic conditions; actions by competitors;
natural phenomena; actions by government and regulatory authorities;
uncertainties associated with legal proceedings; technological development;
future decisions by management in response to changing conditions; and
misjudgments in the course of preparing forward-looking statements.
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TABLE OF CONTENTS
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PAGE
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PART I
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ITEM 1. BUSINESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ITEM 2. PROPERTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ITEM 3. LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . 5
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS . . . . . . . 5
PART II
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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS . . . . . . . . . . . . . . . . . . . . . . . 6
ITEM 6. SELECTED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . 7
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . 8
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK . . . . . . . . . . . . . . . . . . . . . . . . . . .10
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . . . . . . . .10
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE . . . . . . . . . . . . . . .10
PART III
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ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. . . . . . . .11
ITEM 11. EXECUTIVE COMPENSATION. . . . . . . . . . . . . . . . . . . . . .11
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT. . . . . . . . . . . . . . . . . . . . . . . . . .11
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. . . . . . . . . .11
PART IV
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ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . .11
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
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PART I
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ITEM 1. BUSINESS
The Corporation
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ICHOR Corporation was incorporated in July 1994 pursuant to the laws of the
Commonwealth of Pennsylvania under the name "PDG Remediation, Inc.". In
November 1996, the Corporation reincorporated under the laws of the State of
Delaware and changed its name to "ICHOR Corporation". In this document,
unless the context otherwise requires, the "Corporation" refers to ICHOR
Corporation and its subsidiaries.
General
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From its inception to December 1997, the Corporation operated in the
environmental services business. The Corporation's initial operations
included a thermal treatment facility in Florida and remediation services
offices in Florida and Pennsylvania. In December 1996, the Corporation
acquired a waste oil recycling facility in Illinois.
In response to changes in the Florida market, the Corporation closed certain
remediation services offices and sold certain remediation facilities in 1995
and 1996. The Corporation sold the balance of its remediation services
operations in April 1997 and its waste oil recycling facility in December
1997. In March 1998, the Corporation sold its wholly-owned subsidiary, ICHOR
Services, Inc. ("Services").
In 1998, the Corporation provided certain consulting services to an
industrial customer in Europe. The Corporation is currently seeking new
business opportunities.
The Corporation completed its initial public offering in February 1995. In
July 1996, Drummond Financial Corporation ("Drummond") acquired a 59.5%
interest in the Corporation from PDG Environmental, Inc. In December 1996,
the Corporation issued approximately 50.3% of the Corporation's common stock
to Logan International Corp. ("Logan") as partial consideration for a loan
receivable through which the Corporation acquired its waste oil recycling
facility. Logan and Drummond are controlled by MFC Bancorp Ltd. ("MFC"). In
the first quarter of 1998, the Corporation completed the issuance of an
aggregate of 467,500 shares of 5% Cumulative Redeemable Convertible Preferred
Stock, Series 1 (the "Preferred Stock") of the Corporation to affiliates of
MFC. In December 1998, Drummond and Logan transferred all of their shares of
common stock of the Corporation to a wholly-owned subsidiary of MFC.
Acquisition
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In October 1998, the Corporation entered into an agreement to acquire all of
the issued and outstanding shares of common stock of Nazca Holdings Ltd.
("Nazca"), subject to the satisfaction by Nazca of certain performance
criteria. Nazca, through its subsidiary, is in the business of the
exploration for and development of ground water resources in Chile. Nazca
holds two exploration concessions in Chile and has applied for an additional
six concessions, and is in the process of
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conducting exploration and development work on the granted concessions. The
consideration payable by the Corporation for the Nazca shares consists of: (i)
$200,000 per concession, upon receipt of certain regulatory approvals, by the
delivery of shares of common stock of the Corporation having an attributed
value of between $1.00 and $1.75 per share, depending upon the fair market
value of the shares at the time such approvals are granted, and (ii) one share
of common stock of the Corporation for each $1.00 of net after tax income
earned by the Corporation from the concessions, up to a maximum of 1,500,000
shares. Incorporated by reference herein is the Corporation's Form 8-K dated
October 20, 1998 relating to the agreement to acquire the shares of common
stock of Nazca.
At December 31, 1998, the Corporation had 4 employees.
ITEM 2. PROPERTIES
The Corporation's administrative facilities are located on leased premises
located in Vancouver, British Columbia, Canada.
ITEM 3. LEGAL PROCEEDINGS
In June 1995, Klein v. PDG Remediation, Inc., et al., No. CIV-4954 (DAB) was
filed in the United States District Court for the Southern District of New
York and alleged that the Corporation, its directors and certain of its
officers, PDGE and the underwriters of the Corporation's initial public
offering issued or participated in issuing a registration statement and
prospectus which contained material misstatements or omissions, which were
relied upon by the plaintiff. Specifically, the plaintiff alleged that the
defendants knew or should have known that the Florida reimbursement program in
which the Corporation participated was operating at a deficit and was being
revised to eliminate funding of environmental remediation activities for lower
priority sites. The action was certified as a class action on behalf of all
purchasers of the Corporation's common stock from February 9, 1995 through May
23, 1995. The plaintiff sought: (i) either the rescission of any agreement
with respect to the purchase of shares of common stock of the Corporation by
members of the class or statutory damages, and (ii) interest, attorneys' fees
and other costs and expenses.
In October 1998, the Corporation agreed to an out of court settlement of all
claims in the aforesaid class action lawsuit, without any admission of
liability or wrongdoing, pursuant to which it paid the settlement amount of
$259,500.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
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PART II
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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
(a) Market Information. The Corporation's common stock is quoted on the
NASDAQ SmallCap Market under the trading symbol "ICHR". The following table
sets forth the quarterly high and low sale price per share of the
Corporation's common stock for the periods indicated:
Fiscal Quarter Ended High Low
- -------------------- ------ ------
1997
March 31. . . . . . . . . . . . . $ 1.63 $ 1.19
June 30 . . . . . . . . . . . . . 1.50 1.25
September 30. . . . . . . . . . . 1.75 1.63
December 31 . . . . . . . . . . . 1.75 1.50
1998
March 31. . . . . . . . . . . . . $ 1.75 $ 1.25
June 30 . . . . . . . . . . . . . 2.00 1.25
September 30. . . . . . . . . . . 2.25 1.25
December 31 . . . . . . . . . . . 3.25 1.25
(b) Shareholders. At March 23, 1999, the Corporation had approximately 16
holders of record of its common stock, some of which are securities clearing
agencies and intermediaries.
(c) Dividends. The Corporation has not paid any dividends on its common
stock and does not anticipate that it will pay any dividends in the
foreseeable future.
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ITEM 6. SELECTED FINANCIAL DATA
The following table reflects selected consolidated financial data for the
Corporation for the fiscal years ended December 31, 1998 and 1997,
respectively, the 11 months ended December 31, 1996 and the fiscal year ended
January 31, 1996. In September 1996, the Corporation changed its fiscal year
end from January 31 to December 31. The Corporation does not have access to
the information necessary to reclassify its financial information for the year
ended January 31, 1995.
<TABLE>
<CAPTION>
For the Year For the Year For the 11 For the Year
Ended Ended Months Ended Ended
December 31, December 31, December 31, January 31,
------------ ------------ ------------ ------------
1998 1997 1996 1996
------------ ------------ ------------ ------------
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C>
OPERATING DATA
Fee income . . . . . . . . . . .$ 144 $ - $ - $ -
General and administrative
expenses . . . . . . . . . . . 497 418 1,042 791
Interest expense . . . . . . . . 102 613 423 406
Loss from continuing
operations . . . . . . . . . . (178) (1,025) (1,320) (1,183)
Net loss . . . . . . . . . . . . (178) (4,054) (1,399) (2,858)
COMMON SHARE DATA(1)
Loss from continuing
operations per common share. . (0.08) (0.21) (0.51) (0.48)
Net loss per common share. . . . (0.08) (0.83) (0.54) (1.16)
Weighted average common
shares outstanding
(in thousands) . . . . . . . . 4,908 4,913 2,586 2,456
BALANCE SHEET DATA
Working capital. . . . . . . . . 2,141 89 3,903 2,417
Total assets . . . . . . . . . . 3,281 2,028 5,582 5,578
Long-term obligations. . . . . . - - 1,916 -
Total stockholders' equity . . . 2,141 89 1,987 2,438
</TABLE>
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(1) Basic and diluted common share data is the same.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis of the results of operations and
financial condition of the Corporation for the years ended December 31, 1998
and 1997, respectively, and the 11 months ended December 31, 1996 should be
read in conjunction with the Corporation's audited consolidated financial
statements and related notes included elsewhere herein. In September 1996,
the Corporation changed its fiscal year end from January 31 to December 31.
As a result, the comparison of the year ended December 31, 1997 to the 11
months ended December 31, 1996 is a comparison between 12 and 11 month
periods.
The Corporation sold its environmental remediation services operations in
April 1997 and a waste oil recycling facility in December 1997. These
operations have been accounted for as discontinued operations for the year
ended December 31, 1997. Certain reclassifications have been made to the
prior periods' financial statements to conform to the current period's method
of presentation.
Results of Operations for the Year Ended December 31, 1998 Compared to the
- --------------------------------------------------------------------------
Year Ended December 31, 1997
- ----------------------------
Revenues for the year ended December 31, 1998 increased to $0.7 million, from
$6,000 for the comparative period of 1997. In the year ended December 31,
1998, the Corporation reported income of $0.1 million from consulting fees.
Effective March 31, 1998, the Corporation sold Services and recognized a non-
cash accounting gain of $0.4 million on the sale as a result of the disposal
of net liabilities of Services.
Costs and expenses decreased to $0.9 million in the year ended December 31,
1998 from $1.0 million in the year ended December 31, 1997. Interest expense
decreased to $0.1 million in the year ended December 31, 1998 from $0.6
million in the year ended December 31, 1997, primarily as a result of the sale
of Services in the first quarter of 1998, which had financed certain
receivables for work performed under certain Florida State rehabilitation
programs. General and administrative expenses for the year ended December 31,
1998 increased to $0.5 million from $0.4 million in the comparative period of
1997, primarily as a result of an increase in professional fees.
In the year ended December 31, 1998, the Corporation paid $0.3 million in
settlement of a class action lawsuit. See "Item 3. Legal Proceedings" herein
for further details with respect to the action.
The Corporation reported a net loss of $0.2 million, or $0.08 per share, in
the year ended December 31, 1998. In the year ended December 31, 1997, the
Corporation reported a net loss of $4.1 million, or $0.83 per share, which
included a loss of $3.0 million, or $0.62 per share, from discontinued
operations.
Results of Operations for the Year Ended December 31, 1997 Compared to the 11
- -----------------------------------------------------------------------------
Months Ended December 31, 1996
- ------------------------------
Selling, general and administrative expenses for the year ended December 31,
1997 decreased to $0.4 million from $1.0 million for the 11 months ended
December 31, 1996, primarily as a result of the legal and accounting costs
associated with certain litigation involving the Corporation and the
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costs associated with a proposed acquisition in the 11 months ended December
31, 1996 and reduced staffing as a result of the sale of the Corporation's
environmental remediation services operations and a waste oil recycling
facility in 1997. Interest expense was $0.6 million in the period ended
December 31, 1997, compared to $0.4 million in the period ended December 31,
1996, primarily as a result of an increase in amounts funded under two
agreements with Sirrom Environmental Funding, LLC during the year ended
December 31, 1997, whereby the Corporation had funded the amounts billed and
outstanding under certain Florida State environmental rehabilitation programs
in the amount of $3.0 million, at the rate of prime plus 2% and 3%,
respectively.
The Corporation reported a loss from continuing operations of $1.0 million in
the year ended December 31, 1997, compared to $1.3 million in the 11 months
ended December 31, 1996.
The Corporation recognized a loss from the operation of its environmental
remediation services operations of $0.5 million in the year ended December 31,
1997, compared to $0.2 million in the period ended December 31, 1996. The
Corporation recorded a gain of $59,000 from the sale of these operations in
the period ended December 31, 1997. The Corporation reported a loss of $1.2
million from the operation of a waste oil recycling facility and a loss of
$1.4 million from the sale of the facility in the year ended December 31,
1997. The Corporation had income from the operation of its soil remediation
facility of $90,000 in the 11 months ended December 31, 1996, as a result of a
reduction in the reserve for operating losses.
The Corporation's net loss for the year ended December 31, 1997 was $4.1
million, or $0.83 per share, compared to $1.4 million, or $0.54 per share, for
the 11 months ended December 31, 1996.
Liquidity and Capital Resources
- -------------------------------
The Corporation had cash of $50,000 at December 31, 1998, compared to $0.1
million at December 31, 1997. The Corporation maintains a line of credit with
an affiliate in the amount of $0.8 million to fund working capital
requirements. The line of credit was fully utilized as at December 31, 1998.
Net cash used in operating activities was $0.9 million in the year ended
December 31, 1998, compared to $1.0 million in the year ended December 31,
1997. A decrease in accounts payable and other liabilities used cash of $0.1
million in the year ended December 31, 1998, compared to $0.4 million in the
comparable period of 1997. A decrease in cash held in escrow provided cash of
$0.1 million in the year ended December 31, 1998, compared to $0.6 million in
the year ended December 31, 1997. The Corporation recognized a non-cash
accounting gain of $0.4 million on the sale of Services in the year ended
December 31, 1998.
Investing activities used cash of $1.5 million in the year ended December 31,
1998, primarily as a result of the acquisition of a note receivable. The note
is due in the near term and bears interest at a rate of 8.75% per annum. On
October 20, 1998, the Corporation entered into an agreement to acquire all of
the issued and outstanding shares of common stock of Nazca, which is in the
business of the exploration for and development of ground water resources in
Chile. See "Item 1. Business - Acquisition" herein for further details with
respect to the agreement.
Financing activities provided cash of $2.2 million in the year ended December
31, 1998, compared to $0.5 million in the year ended December 31, 1997. In the
first quarter of 1998, the Corporation
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completed the issuance of an aggregate of 467,500 shares of Preferred Stock of
the Corporation in consideration of debt forgiveness of $2.2 million and cash
of $2.2 million, net of expenses.
The Corporation believes that its assets and line of credit should enable the
Corporation to meet its current ongoing requirements. The Corporation
anticipates that it may require substantial capital to pursue current and
future acquisitions of businesses and/or operating assets and will seek such
capital through debt and/or equity financing.
Year 2000
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Many of the world's computer systems currently record years in a two-digit
format. These computer systems will be unable to properly interpret dates
beyond the year 1999, which could lead to business disruptions and is commonly
referred to as the "Year 2000" issue. Based on its current information,
management of the Corporation has determined that the Year 2000 issue will not
pose significant operational problems for its computer systems as it only
utilizes commercially available software and personal computers, which are
Year 2000 compliant. The total cost to the Corporation of Year 2000
compliance activities has not been and is not currently anticipated to be
material to its financial position or results of operations in any given year.
In addition, management of the Corporation has initiated communications with
clients to ascertain their Year 2000 readiness and develop contingency plans
as required, and management intends to address this issue with any prospective
client. The determination by management and costs relating to the Year 2000
issue are based on management's best estimates, which were derived utilizing
numerous assumptions of future events. However, there can be no assurance
that these estimates will be achieved and actual results could vary materially
from those anticipated.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and supplementary data required with
respect to this Item 8, and as identified in Item 14 of this annual report,
are included in this annual report commencing on page 14.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
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PART III
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ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Incorporated by reference from the Corporation's definitive proxy statement to
be filed within 120 days of the end of the Corporation's fiscal year.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated by reference from the Corporation's definitive proxy statement to
be filed within 120 days of the end of the Corporation's fiscal year.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Incorporated by reference from the Corporation's definitive proxy statement to
be filed within 120 days of the end of the Corporation's fiscal year.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated by reference from the Corporation's definitive proxy statement to
be filed within 120 days of the end of the Corporation's fiscal year.
PART IV
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ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) (1) Index to Financial Statements
-----------------------------
Independent Auditors' Report
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Changes in Shareholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
(2) Financial Statement Schedules
-----------------------------
Independent Auditors' Report
Schedule II - Valuation and Qualifying Accounts
All other schedules have been omitted because they are not applicable or
the required information is shown in the financial statements or notes
thereto.
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(3) List of Exhibits
----------------
2.1 Agreement and Plan of Merger dated October 1, 1996 between ICHOR
Corporation and PDG Remediation, Inc. Incorporated by reference
to the Corporation's Schedule 14C dated September 17, 1996.
3.1 Articles of Incorporation.(1)
3.2 Certificate of Designations. Incorporated by reference to the
Corporation's Form 8-K dated March 12, 1998.
3.3 Bylaws.(1)
10.1 Amended 1994 Stock Option Plan.(2)
10.2 1995 Qualified Incentive Stock Option Plan.(2)
10.3 Amended and Restated Employment Agreement for John M. Musacchio
dated February 1, 1997.(3)
10.4 Loan Agreement dated January 15, 1997 between Ortek Inc. and
Volendam Investments Limited.(4)
10.5 Loan Agreement dated January 15, 1997 among Drummond Financial
Corporation, the Corporation and ICHOR Services, Inc.(4)
10.6 Amendment to Loan Agreement dated June 30, 1997 among Drummond
Financial Corporation, the Corporation and ICHOR Services, Inc.(3)
10.7 Stock Purchase Agreement between the Corporation and Evergreen
Holding Inc. dated December 23, 1997. Incorporated by reference
to the Corporation's Form 8-K dated January 7, 1998.
10.8 Debt Settlement Agreement between Logan International Corp. and
the Corporation dated September 30, 1997.(5)
10.9 Debt Settlement Agreement between Logan International Corp. and
the Corporation dated February 20, 1998.(5)
10.10 Debt Settlement Agreement between Sutton Park International Ltd.
and the Corporation dated February 20, 1998.(5)
10.11 Subscription Agreement between Constable Investments Ltd. and the
Corporation dated February 26, 1998.(5)
10.12 Subscription Agreement between Conqueror Holdings Ltd. and the
Corporation dated February 26, 1998.(3)
10.13 Subscription Agreement between Sutton Park International Ltd. and
the Corporation dated February 26, 1998.(5)
10.14 Subscription Agreement between Zellstoff-und Papierfabrik
Rosenthal GmbH and the Corporation dated February 26, 1998.(3)
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10.15 Purchase Agreement between the Corporation and Nazca Holdings Ltd.
dated October 17, 1998. Incorporated by reference to the
Corporation's Form 8-K dated October 20, 1998.
23 Consent of Independent Auditors.
27 Article 5 - Financial Data Schedule for the year ended December
31, 1998.
- ---------------
(1) Incorporated by reference to the Corporation's Form 10-K dated January
31, 1996.
(2) Incorporated by reference to the Corporation's Definitive Schedule 14A
dated July 8, 1996.
(3) Incorporated by reference to the Corporation's Form 10-K dated December
31, 1997.
(4) Incorporated by reference to the Corporation's Form 10-K dated December
31, 1996.
(5) Incorporated by reference to a Schedule 13D\A dated March 13, 1998.
(b) Reports On Form 8-K
-------------------
The Corporation filed the following reports with respect to the indicated
items:
Form 8-K dated October 20, 1998:
Item 2. Acquisition or Disposition of Assets.
Item 7. Financial Statements and Exhibits.
Form 8-K/A dated January 4, 1999:
Item 7. Financial Statements and Exhibits.
13
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- ------------------------------------------------------------------------------
PETERSON SULLIVAN P.L.L.C.
601 UNION STREET SUITE 2300 SEATTLE WA 98101 (206) 382-7777 FAX 382-7700
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Board of Directors and Shareholders
Ichor Corporation and Subsidiary
We have audited the consolidated balance sheets of Ichor Corporation and its
subsidiary as of December 31, 1998 and 1997, and the related consolidated
statements of operations, changes in shareholders' equity, and cash flows for
the years ended December 31, 1998, 1997 and the eleven months ended December
31, 1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Ichor
Corporation and its subsidiary as of December 31, 1998 and 1997, and the
results of their operations and their cash flows for the years ended December
31, 1998, 1997 and the eleven months ended December 31, 1996, in conformity
with generally accepted accounting principles.
/s/ Peterson Sullivan P.L.L.C.
February 17, 1999
Seattle, Washington
14
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ICHOR CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
December 31, 1998 and 1997
(In Thousands of Dollars)
1998 1997
---------- ----------
ASSETS
Current Assets
Cash $ 50 $ 127
Cash held in escrow - 617
Accounts receivable, less allowance for doubtful
accounts of none and $562 at December 31,
1998 and 1997, respectively 560 332
Notes receivable 2,080 680
Advances to affiliates 540 270
Other assets 51 2
---------- ----------
Total current assets 3,281 2,028
---------- ----------
$ 3,281 $ 2,028
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and other liabilities $ 8 $ 402
Advances from affiliates 1,132 780
Debt - 757
---------- ----------
Total current liabilities 1,140 1,939
Shareholders' Equity
Preferred stock, $.01 par value; 5,000,000
shares authorized; Series 1, nonvoting;
shares issued and outstanding 467,500 at
December 31, 1998 and 217,500 at
December 31, 1997 5 2
Common stock, $.01 par value; 30,000,000
shares authorized; shares issued 4,970,320
at December 31, 1998 and 1997 50 50
Additional paid-in capital on preferred stock 4,400 2,173
Additional paid-in capital on common stock 5,743 5,743
Retained deficit (7,986) (7,808)
---------- ----------
2,212 160
Less cost of 62,800 shares of common stock held
in treasury at December 31, 1998 and 1997 (71) (71)
---------- ----------
2,141 89
---------- ----------
$ 3,281 $ 2,028
========== ==========
The accompanying notes are an integral part of these financial statements.
15
<PAGE> 16
ICHOR CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31, 1998 and 1997
and Eleven Months Ended December 31, 1996
(In Thousands of Dollars, Except for Per Share Amounts)
1998 1997 1996
---------- ---------- ----------
Revenues
Fees $ 144 $ - $ -
Interest 92 6 -
Gain on disposal of a subsidiary 437 - -
Other 8 - 145
---------- ---------- ----------
681 6 145
Costs and expenses
General and administrative 497 418 1,042
Interest 102 613 423
Litigation settlement 260 - -
---------- ---------- ----------
859 1,031 1,465
---------- ---------- ----------
Loss from continuing operations (178) (1,025) (1,320)
Discontinued operations (any tax
benefits from losses are fully
reserved; any taxes associated
with gains are offset by tax
losses)
Loss from operation of
environmental remediation
services segment - (489) (169)
Gain on sale of environmental
remediation services segment - 59 -
Loss from operation of waste oil
recycling facility - (1,224) -
Loss on sale of waste oil
recycling facility - (1,375) -
Gain from operation of soil
remediation facility - - 90
---------- ---------- ----------
Loss from discontinued operations - (3,029) (79)
---------- ---------- ----------
Net loss $ (178) $ (4,054) $ (1,399)
========== ========== ==========
Basic loss per common share
Loss from continuing operations $ (.08) $ (.21) $ (.51)
Discontinued operations - (.62) (.03)
---------- ---------- ----------
Net loss $ (.08) $ (.83) $ (.54)
========== ========== ==========
The accompanying notes are an integral part of these financial statements.
16
<PAGE> 17
ICHOR CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Years Ended December 31, 1998 and 1997
and Eleven Months Ended December 31, 1996
(In Thousands of Dollars)
<TABLE>
<CAPTION>
---------------Common Stock--------------- --------Preferred Stock--------
Additional Additional
Number Par Paid-in Treasury Number Par Paid-in Retained
of Shares Value Capital Stock of Shares Value Capital Deficit Total
--------- --------- ---------- -------- --------- --------- ---------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January
31, 1996 2,470,320 $ 25 $ 4,768 $ - - $ - $ - $ (2,355) $ 2,438
Net loss for eleven
months ended
December 31, 1996 - - - - - - - (1,399) (1,399)
Common shares issued in
the acquisition of
wholly-owned
subsidiary 2,500,000 25 975 - - - - - 1,000
Repurchase of 47,600
shares of common stock
held in treasury (47,600) - - (52) - - - - (52)
--------- --------- ---------- -------- --------- --------- ---------- -------- -------
Balance at December
31, 1996 4,922,720 50 5,743 (52) - - - (3,754) 1,987
Net loss for year ended
December 31, 1997 - - - - - - - (4,054) (4,054)
Conversion of debt from
related parties to
preferred stock - - - - 217,500 2 2,173 - 2,175
Repurchase of 15,200
shares of common stock
held in treasury (15,200) - - (19) - - - - (19)
--------- --------- ---------- -------- --------- --------- ---------- -------- -------
Balance at December
31, 1997 4,907,520 50 5,743 (71) 217,500 2 2,173 (7,808) 89
Net loss for year ended
December 31, 1998 - - - - - - - (178) (178)
Preferred shares issued
for cash (215,000
shares purchased by
related parties at
$10 per share) - - - - 250,000 3 2,227 - 2,230
--------- --------- ---------- -------- --------- --------- ---------- -------- -------
Balance at December
31, 1998 4,907,520 $ 50 $ 5,743 $ (71) 467,500 $ 5 $ 4,400 $ (7,986) $ 2,141
========= ========= ========== ======== ========= ========= ========== ======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
17
<PAGE> 18
ICHOR CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 1998 and 1997
and Eleven Months Ended December 31, 1996
(In Thousands of Dollars)
1998 1997 1996
---------- ---------- ----------
Cash Flows from Operating Activities
Net loss $ (178) $ (4,054) $ (1,399)
Adjustments to reconcile net
loss to cash flows from
operating activities
Gain on disposal of subsidiary (437) - -
Changes in current assets and
liabilities
Cash held in escrow 145 637 (286)
Accounts receivable (254) (185) 3,077
Advances to affiliates (270) (270) -
Repayments to former parent - - (117)
Prepaid expenses and other assets - 106 (40)
Accounts payable and other
liabilities (115) (403) (1,127)
Advances from affiliates 352 360 193
Net assets of discontinued
operations - 2,723 74
Other (100) 42 (84)
---------- ---------- ----------
Net cash provided by (used
in) operating activities (857) (1,044) 291
Cash Flows from Investing Activities
Increase in note receivable (1,400) - -
Investment (50) - -
---------- ---------- ----------
Net cash used in investing
activities (1,450) - -
Cash Flows from Financing Activities
Proceeds from issuance of preferred
shares 2,230 - -
Purchase of stock held in treasury - (19) (52)
Proceeds from debt - 750 51
Principal payments on debt - (188) (24)
---------- ---------- ----------
Net cash provided by (used
in) financing activities 2,230 543 (25)
---------- ---------- ----------
Increase (decrease) in cash (77) (501) 266
Cash, beginning of year 127 628 362
---------- ---------- ----------
Cash, end of year $ 50 $ 127 $ 628
========== ========== ==========
The accompanying notes are an integral part of these financial statements.
18
<PAGE> 19
ICHOR CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands of Dollars, Except for Per Share Amounts)
Note 1. The Company and Summary of Significant Accounting Policies
The Company
- -----------
Prior to December 1997, Ichor Corporation ("the Company") was in the
environmental industry, providing environmental remediation services and
operating a recycling waste oil facility. The Company sold the remediation
services segment of its business in April 1997 for $147 in cash and retained
the segment's current assets and liabilities. The waste oil recycling
facility was sold in December 1997 for $1,000 including $320 in cash and a
$680 note which was paid in 1999. Both segments were accounted for as
discontinued operations and unless otherwise stated, all notes to financial
statements relate to continuing operations.
In March 1998, the Company sold its subsidiary at a non-cash accounting gain
of $437 which resulted from the assumption of the subsidiary's liabilities by
the purchaser. The Company is presently evaluating other potential business
acquisitions.
During 1998, the Company entered into an agreement to acquire Nazca Holdings
Ltd. ("Nazca"). A wholly-owned subsidiary of Nazca is in the business of
locating and developing ground water resources in Chile to be sold to mining,
agricultural and public utility customers. Because the transaction was
incomplete at December 31, 1998, the results of Nazca's operations are not
included in these consolidated financial statements.
In July 1996, Drummond Financial Corporation ("Drummond") acquired a 59.5%
interest in the Company. In December 1996, Logan International Corporation
("Logan") acquired a 50.3% interest in the Company which reduced Drummond's
ownership to 29.6%. Because of these acquisitions, the Company changed its
year end from January 31 to December 31, beginning in 1996. Effective
December 31, 1998, Drummond and Logan transferred their interests in the
Company to a subsidiary of their common parent corporation, MFC Bancorp Ltd.
("MFC"). Advances to/from affiliates involve various subsidiaries of MFC and
are due in the near term.
Notes receivable include $1,400 from one company which is secured with
collateral in excess of the note balance, bears interest at 8.75%, and is due
in the near term.
19
<PAGE> 20
Note 1. (Continued)
In 1997, Logan converted $1,425 of its debt from the Company into 142,500
shares of the Company's Preferred Stock, Series 1. In addition, another
subsidiary of MFC converted a $750 advance into 75,000 shares of Preferred
Stock, Series 1. Interest paid on a cash basis was the same as interest
expense for 1998 and 1997. No interest was paid in cash in 1996.
During 1998, the Company settled a purported class action lawsuit for $260
involving purchases of its common stock in a prior year.
Principles of Consolidation
- ---------------------------
The consolidated financial statements include the accounts of the Company and
its subsidiary. Significant intercompany accounts and transactions have been
eliminated.
Cash
- ----
Cash balances are occasionally in excess of federally insured amounts. Cash
held in escrow represents amounts which were subject to withdrawal
restrictions.
Taxes on Income
- ---------------
The Company accounts for income taxes under an asset and liability approach
that requires the recognition of deferred tax assets and liabilities for
expected future tax consequences of events that have been recognized in the
Company's financial statements or tax returns. In estimating future tax
consequences, the Company generally considers all expected future events other
than enactments of changes in the tax laws or rates.
Earnings Per Share
- ------------------
Basic earnings per share is computed by dividing income available to common
shareholders by the weighted average number of common shares outstanding in
the period. Diluted earnings per share takes into consideration common shares
outstanding (computed under basic earnings per share) and potentially dilutive
common shares. The conversion of the convertible preferred stock, warrants
and the stock options have not been reflected as exercised for the purposes of
computing earnings or loss per share since the conversion of such stock or
exercise of such warrants and options would be antidilutive. The weighted
average number of shares was 4,907,520, 4,912,643, and 2,585,590 for the years
ended December 31, 1998, 1997, and the eleven months ended December 31, 1996.
The loss from operations to compute the amount attributable to common
shareholders includes the recognition of preferred stock dividends in arrears
of $214 and none for 1998 and 1997, respectively. The Company has 1,150,000
warrants outstanding which allows the holder to acquire common shares at $6
each until 2000. The Company also has 100,000 warrants outstanding which
allows the holder to acquire common shares at $1.37 each until 1999.
20
<PAGE> 21
Note 1. (Continued)
Preferred Stock
- ---------------
The entire redemption value of Preferred Shares, Series 1, can be exchanged
for common stock at 90% of the common stock average market price (as defined).
Redemption value is $10 per share and shares are redeemable only by the
Company with a 30 day notice. The Preferred Shares, Series 1, have a
liquidation preference over other stock to the extent of the redemption value
plus unpaid dividends. This stock has an annual cumulative dividend rate of
5%, payable quarterly and no dividends may be paid on common stock if
preferred share dividends are in arrears.
Stock-Based Compensation
- ------------------------
Compensation cost for stock options is measured as the excess, if any, of the
quoted market price of the Company's stock at the date of the grant over the
amount an employee is required to pay for the stock. There is no stock-based
compensation included in these consolidated financial statements.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
Fair Value of Recorded Instruments
- ----------------------------------
The fair value of the notes receivable and advances to/from an affiliate were
estimated to approximate their recorded values based on the terms of the
instruments.
New Accounting Standards
- ------------------------
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" is effective for years beginning after December 15, 1997. The primary
objective of this statement is to report and disclose a measure of all changes
in equity of an entity that result from transactions and other economic events
of the period other than transactions with owners. There are no elements of
other comprehensive income for 1998, 1997 and 1996; therefore, no disclosures
are necessary beyond the consolidated statements of operations.
21
<PAGE> 22
Note 1. (Continued)
Statement of Financial Accounting Standards No. 131, "Disclosure About
Segments of an Enterprise and Related Information," is effective for years
beginning after December 15, 1997. This statement requires use of the
"management approach" model for segment reporting. The management approach
model is based on the way a company's management organizes segments within the
company for making operating decisions and assessing performance. Currently,
the Company has limited operations and, therefore, management believes there
are no identifiable segments and no additional segment information is
provided.
Statement of Financial Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" establishes accounting and reporting
standards for derivative instruments and for hedging activities. This
statement requires that an entity recognize all derivatives as either assets
or liabilities in the statement of financial position and measure those
instruments at fair value. Because the Company does not engage in any
derivatives or hedging activities, there should be no impact on its financial
statements.
Note 2. Income Taxes
The reconciliation of income tax on income from continuing operations computed
at the federal statutory rates to income tax expense is as follows:
Eleven
Year Ended Year Ended Months Ended
December 31, December 31, December 31,
1998 1997 1996
------------ ------------ ------------
Tax at statutory rate $ (60) $ (349) $ (449)
Permanent difference
associated with gain on
disposal of subsidiary (149) - -
Valuation allowance 209 377 832
Other - (28) (383)
------------ ------------ ------------
$ - $ - $ -
============ ============ ============
22
<PAGE> 23
Note 2. (Continued)
The significant components of the Company's deferred tax asset as of December
31, 1998 and 1997, is as follows:
1998 1997
---------- ----------
Accounts receivable allowance $ - $ 191
Net operating loss carryforward 629 2,999
---------- ----------
Net deferred tax asset before valuation allowance 629 3,190
Valuation allowance for deferred tax asset (629) (3,190)
---------- ----------
Net deferred tax asset $ - $ -
========== ==========
The Company has a net operating loss carryforward of approximately $1,850 at
December 31, 1998, which expires at: $756 in 2010; $35 in 2011; $443 in 2012;
$616 in 2013. The Company's utilization of the losses is subject to
limitation due to ownership and operational changes, except those that expire
in 2012 and 2013. At December 31, 1997, $2,770 of the deferred tax asset was
attributable to the net operating loss carryforwards of a subsidiary which was
disposed of in 1998.
Note 3. Stock Option Plans
1994 Amended Stock Option Plan
- ------------------------------
The Company maintains a stock option plan which provides for the issuance of
up to 350,000 shares of the Company's common stock to employees and non-
employee directors.
The following table summarizes information with respect to the 1994 Amended
Stock Option Plan:
Weighted
Average
Number of Exercise
Shares Price
--------- --------
Outstanding at January 31, 1996 147,500 $ .75
Granted 42,500 1.18
Canceled - Reusable (10,500) .75
---------
Outstanding at December 31, 1996 179,500 .81
23
<PAGE> 24
Note 3. (Continued)
Weighted
Average
Number of Exercise
Shares Price
--------- --------
Granted 145,000 2.00
Canceled - Reusable (89,500) 1.10
---------
Outstanding at December 31, 1997 235,000 1.39
Granted - -
Canceled - Reusable (170,000) 1.39
---------
Outstanding at December 31, 1998 65,000 $ .83
========= ========
Exercisable at December 31, 1998 65,000 $ .83
========= ========
Reserved for future grants at December 31, 1998 285,000
=========
The weighted average fair value (per option) at date of grant for options
granted during the year ended December 31, 1997, and the eleven months ended
December 31, 1996, was $.65 and $1.18, respectively. Almost all options have
an expiration date ten years after issuance. No options have been exercised.
1995 Qualified Incentive Stock Option Plan
- ------------------------------------------
The Company's board of directors approved a second stock option plan on August
15, 1996. This plan provides for the issuance of up to 150,000 shares of the
Company's common stock to key employees.
The following table summarizes information with respect to the 1995 Qualified
Incentive Stock Option Plan:
Weighted
Average
Number of Exercise
Shares Price
--------- --------
Outstanding at January 31, 1996 - $ -
Granted 150,000 .75
Canceled - Reusable (25,000) .75
---------
Outstanding at December 31, 1996 125,000 .75
Granted - -
Canceled - Reusable (25,000) .75
---------
Outstanding at December 31, 1997 100,000 .75
24
<PAGE> 25
Note 3. (Continued)
Weighted
Average
Number of Exercise
Shares Price
--------- --------
Granted - -
Canceled - Reusable (100,000) .75
---------
Exercisable at December 31, 1998 - $ -
========= ========
Reserved for future grants at December 31, 1998 150,000
=========
The weighted average fair value (per option) at grant date for options granted
during the eleven months ended December 31, 1996, was $.72. All options have
an expiration date ten years after issuance. No options have been exercised.
Compensation
- ------------
For both the 1994 Amended Stock Option Plan and the 1995 Qualified Incentive
Stock Option Plan, when options are granted, or the exercise price is
adjusted, the exercise price cannot be less than the fair market value of the
Company's common stock (as defined). However, had compensation expense been
recognized on the basis of fair value pursuant to Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation,"
instead of the accepted accounting method used by the Company, net loss and
per share data would have been adjusted as follows:
Eleven
Year Ended Year Ended Months Ended
December 31, December 31, December 31,
1998 1997 1996
------------ ------------ ------------
Net loss
- -------------------------------
As reported $ (178) $ (4,054) $ (1,399)
=========== =========== ===========
Proforma $ (178) $ (4,085) $ (1,551)
=========== =========== ===========
Basic earnings per share data
- -------------------------------
As reported $ (.08) $ (.83) $ (.54)
=========== =========== ===========
Proforma $ (.08) $ (.83) $ (.60)
=========== =========== ===========
25
<PAGE> 26
Note 3. (Continued)
The fair value of each option granted is estimated on the grant date using the
Black Scholes model. The assumptions used in calculating fair value are as
follows:
Eleven
Year Ended Months Ended
December 31, December 31,
1997 1996
------------ ------------
Risk-free interest rate 6.0% 5.0%
Expected life of the options 3 years 10 years
Expected volatility 101.2% 111.5%
Expected dividend yield 0.0% 0.0%
26
<PAGE> 27
- ------------------------------------------------------------------------------
PETERSON SULLIVAN P.L.L.C.
601 UNION STREET SUITE 2300 SEATTLE WA 98101 (206) 382-7777 FAX 382-7700
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders
Ichor Corporation and Subsidiaries
Our report on the consolidated financial statements of Ichor Corporation and
Subsidiary is included on page 14 of this Form 10-K. In connection with our
audits of such financial statements, we have also audited the related
financial statement schedule listed in Item 14 of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic consolidated financial statements taken as
a whole, presents fairly in all material respects the information set forth
therein.
/s/ Peterson Sullivan P.L.L.C.
February 17, 1999
Seattle, Washington
27
<PAGE> 28
ICHOR CORPORATION AND SUBSIDIARY
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Year Ended December 31, 1998 and 1997
and Eleven Months Ended December 31, 1996
(In Thousands of Dollars)
Additions
--------------------
Balance at Charged Balance at
beginning Charged to other close
of period to income accounts Deductions of period
---------- --------- -------- ---------- ----------
Year Ended December
31, 1998 (4)
Allowance for
doubtful accounts $ 562 $ - $ - $ 562 $ -
========== ========= ======== ========== ==========
Year Ended December
31, 1997 (3)
Allowance for
doubtful accounts $ 690 $ 2 $ - $ 130 $ 562
========== ========= ======== ========== ==========
Eleven Months Ended
December 31, 1996 (1) (2)
Allowance for
doubtful accounts $ 724 $ 40 $ 130 $ 204 $ 690*
========== ========= ======== ========== ==========
(1) Allowance for uncollectibility to reflect the fair value of receivables
purchased; recorded at the date of acquisition of the waste oil recycling
facilities.
(2) Uncollectible accounts written off, net of recoveries.
(3) Allowance for uncollectibility sold in conjunction with sale of waste oil
recycling facility.
(4) Allowance for uncollectibility sold in conjunction with sale of ICHOR
Services, Inc.
* The consolidated balance sheet shows the allowance for doubtful accounts to
be $560 (instead of $690). This is because $130 was reclassified to "net
assets of discontinued waste oil recycling facility" at December 31, 1996.
28
<PAGE> 29
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Date: March 26, 1999 ICHOR CORPORATION
By: /s/ Michael J. Smith
-----------------------------------------
Michael J. Smith, President, Chief
Financial Officer, Treasurer and Director
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 and on the dates indicated.
/s/ Michael J. Smith March 26, 1999
- ------------------------------
Michael J. Smith
President, Chief Financial Officer,
Treasurer and Director
/s/ Roy Zanatta March 26, 1999
- ------------------------------
Roy Zanatta
Secretary and Director
/s/ John Musacchio March 26, 1999
- ------------------------------
John Musacchio
Director
/s/ Leonard Petersen March 26, 1999
- ------------------------------
Leonard Petersen
Director
/s/ Young-Soo Ko March 26, 1999
- ------------------------------
Young-Soo Ko
Director
/s/ Jae-Sun Lee March 26, 1999
- ------------------------------
Jae-Sun Lee
Director
29
<PAGE> 30
EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
2.1 Agreement and Plan of Merger dated October 1,
1996 between ICHOR Corporation and PDG
Remediation, Inc. Incorporated by reference to
the Corporation's Schedule 14C dated September
17, 1996.
3.1 Articles of Incorporation.(1)
3.2 Certificate of Designations. Incorporated by
reference to the Corporation's Form 8-K dated
March 12, 1998.
3.3 Bylaws.(1)
10.1 Amended 1994 Stock Option Plan.(2)
10.2 1995 Qualified Incentive Stock Option Plan.(2)
10.3 Amended and Restated Employment Agreement for
John M. Musacchio dated February 1, 1997.(3)
10.4 Loan Agreement dated January 15, 1997 between
Ortek Inc. and Volendam Investments Limited.(4)
10.5 Loan Agreement dated January 15, 1997 among
Drummond Financial Corporation, the Corporation
and ICHOR Services, Inc.(4)
10.6 Amendment to Loan Agreement dated June 30, 1997
among Drummond Financial Corporation, the
Corporation and ICHOR Services, Inc.(3)
10.7 Stock Purchase Agreement between the Corporation
and Evergreen Holding Inc. dated December 23,
1997. Incorporated by reference to the
Corporation's Form 8-K dated January 7, 1998.
10.8 Debt Settlement Agreement between Logan
International Corp. and the Corporation dated
September 30, 1997.(5)
10.9 Debt Settlement Agreement between Logan
International Corp. and the Corporation dated
February 20, 1998.(5)
<PAGE> 31
10.10 Debt Settlement Agreement between Sutton Park
International Ltd. and the Corporation dated
February 20, 1998.(5)
10.11 Subscription Agreement between Constable
Investments Ltd. and the Corporation dated
February 26, 1998.(5)
10.12 Subscription Agreement between Conqueror Holdings
Ltd. and the Corporation dated February 26, 1998.
(3)
10.13 Subscription Agreement between Sutton Park
International Ltd. and the Corporation dated
February 26, 1998.(5)
10.14 Subscription Agreement between Zellstoff-und
Papierfabrik Rosenthal GmbH and the Corporation
dated February 26, 1998.(3)
10.15 Purchase Agreement between the Corporation and
Nazca Holdings Ltd. dated October 17, 1998.
Incorporated by reference to the Corporation's
Form 8-K dated October 20, 1998.
23 Consent of Independent Auditors.
27 Article 5 - Financial Data Schedule for the year
ended December 31, 1998.
- ----------------
(1) Incorporated by reference to the Corporation's Form 10-K dated January
31, 1996.
(2) Incorporated by reference to the Corporation's Definitive Schedule 14A
dated July 8, 1996.
(3) Incorporated by reference to the Corporation's Form 10-K dated December
31, 1997.
(4) Incorporated by reference to the Corporation's Form 10-K dated December
31, 1996.
(5) Incorporated by reference to a Schedule 13D\A dated March 13, 1998.
- ------------------------------------------------------------------------------
PETERSON SULLIVAN P.L.L.C.
601 UNION STREET SUITE 2300 SEATTLE WA 98101 (206) 382-7777 FAX 382-7700
CERTIFIED PUBLIC ACCOUNTANTS
Independent Auditors' Consent
-----------------------------
We hereby consent to the incorporation by reference in the registration
statements (No. 333-15831 and 333-15829) on Form S-8 of Ichor Corporation and
Subsidiary of our report dated February 17, 1999, relating to the balance
sheets of Ichor Corporation and Subsidiary as of December 31, 1998 and 1997,
and the related statements of operations, shareholders' equity and cash flows
for the years ended December 31, 1998 and 1997, and the eleven months ended
December 31, 1996, which report appears in the Annual Report of Form 10-K for
the year ended December 31, 1998, of Ichor Corporation and Subsidiary.
/s/ Peterson Sullivan P.L.L.C.
March 26, 1999
Seattle, Washington
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS AND NOTES INCLUDED IN THIS FORM 10-K AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 50
<SECURITIES> 0
<RECEIVABLES> 2,640
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,281
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,281
<CURRENT-LIABILITIES> 1,140
<BONDS> 0
0
5
<COMMON> 50
<OTHER-SE> 2,086
<TOTAL-LIABILITY-AND-EQUITY> 3,281
<SALES> 0
<TOTAL-REVENUES> 681
<CGS> 0
<TOTAL-COSTS> 859
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 102
<INCOME-PRETAX> (178)
<INCOME-TAX> 0
<INCOME-CONTINUING> (178)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (178)
<EPS-PRIMARY> (0.08)
<EPS-DILUTED> (0.08)
</TABLE>
