SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
Date of Report (Date of earliest event reported) June 9 , 1999
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TOUCAN GOLD CORPORATION
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(Exact name of registrant as specified in charter)
Delaware 33-28562 75-2661571
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No
8201 Preston Road, Suite 600, Dallas, Texas 75225
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (214) 890-8065
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(Former name or former address, if changed since last report)
1
Item 2. Acquisition or Disposition of Assets
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On July 15, 1999, Toucan Gold Corporation (the "Company") completed the
sale of all of the share capital of Mineradora de Bauxita Ltda. ("MBL"), the
Brazilian subsidiary through which the Company's Brazilian exploration
activities had been conducted. As reported in a Current Report on Form 8-K,
filed with the Securities and Exchange Commission on January 5, 1999 (the
"January 8-K"), the Company on December 4, 1998 consummated certain
transactions, involving, among other things, the grant of an option (the "MBL
Option") to Minmet PLC ("Minmet"), an Irish company, whose shares are quoted on
the Exploration Securities Market of the Irish Stock Exchange, to purchase all
of the issued share capital of MBL.
Toucan Mining Limited ("TML"), the Company's wholly-owned subsidiary
that was the beneficial owner of the issued share capital of MBL at such time,
granted the MBL Option to Minmet to acquire all of the issued share capital of
MBL. TML received 7.5 million ordinary shares (the "Option Shares") in Minmet
solely for TML granting the MBL Option.
On June 30, 1999, Minmet exercised the MBL Option. The exercise of the
MBL Option was consummated on July 15, 1999 and in connection therewith Minmet
has acquired all of the issued share capital of MBL by issuing an additional 25
million ordinary shares (the "Completion Shares") in Minmet to TML.
Additionally, as reported in the January 8-K, the sale and distribution
of the Completion Shares are restricted without Minmet's consent as follows: TML
or the Company may sell up to 3 million of the Completion Shares in each of the
three six (6) month periods after the issuance thereof. Any Completion Shares
not disposed of in a six (6) month period may be added to the number of
Completion Shares that may be sold in later periods.
Minmet has agreed that the Completion Shares may be placed through
Minmet's brokers with Minmet's consent and that it will act reasonably in
respect of all such requests by the Company or TML in connection with the sale
of the Completion Shares.
Finally, on December 4, 1998, the Company granted an option (the "Loan
Option") to Minmet to acquire from the Company the benefit of the loans that it
has made to MBL in the principal amount of $1 million. The Company received the
sum of U.S. $275,000 solely for the Company granting the Loan Option. On June
30, 1999, Minmet exercised the Loan Option. The exercise of the Loan Option was
consummated on July 15, 1999 and in connection therewith Minmet paid the Company
$250,000 and issued to the Company warrants (the "Warrants") to subscribe for a
further 7.7 million Ordinary Shares (the "Warrant Shares") of Minmet at an
exercise price of (sterling) 8 pence per share.
Following the consummation of the MBL Option and the Loan Option, TML
retained the claim in the Cuiaba Basin of Brazil that has been delivered to TML
pursuant to the Agreement of Settlement and Release with Joseph J. Haraoui (as
described in Item 5 hereof) and its rights pursuant to such agreement to acquire
the other six (6) claims in the Cuiaba Basin of Brazil.
2
On July 16, 1999, the Board of Directors of the Company approved the
spin-off of all of the outstanding shares (the "TML Shares") of TML to the
stockholders of the Company. The TML shares will be distributed on a share for
share basis to holders of Common Stock as of the record date. The record date
for determining the holders of Common Stock entitled to the distribution of the
TML Shares has been set for August 3, 1999. Pursuant to Delaware corporate law,
if the distribution of the TML Shares is not consummated within 60 days of such
date a new record date will be selected. The date of the distribution of the TML
Shares has not been determined because the consummation of the distribution of
the TML Shares is dependent upon the satisfaction of the following conditions:
(i) the conversion of TML into a public limited company under Isle of Man law
and the change of its name from Toucan Mining Limited to Toucan Mining Plc; (ii)
the registration of the TML Shares under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"); and (ii) the furnishing of an Information
Statement to the stockholders as of the record date describing TML and the
distribution of the TML Shares that substantially complies with Regulation 14C
under the Exchange Act.
Item 5. Other Events
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In September 1996, the Company entered into an agreement (the "Claims
Agreement") to acquire from Joseph J. Haraoui twenty-five (25) priority claims
(the "Claims") in the Cuiaba Basin of Brazil. Subsequently, there was a dispute
between the Company and Mr. Haraoui relating to the Claims and the amount and
nature of the consideration that was to be paid by the Company to Mr. Haraoui in
connection with the delivery of the Claims. On June 9, 1999, the Company (and
related parties) seeking to resolve this dispute entered into an Agreement of
Settlement and Release (the "Agreement") with Mr. Haraoui and related parties
(collectively "Haraoui") to settle all disputes between the Company and Haraoui
relating to the Claims.
Pursuant to the terms of the Agreement, Haraoui released the Company
and certain related parties, including the officers and directors of the Company
and MBL, from all claims or liabilities relating to the Claims. The Company
delivered to Haraoui an aggregate of 250,000 shares of the Company's common
stock, par value $0.01 per share (the "Common Stock"). The Agreement
acknowledged that Haraoui was entitled to receive 210,000 shares (the "Initial
Shares") of Common Stock pursuant to the Claim Agreement and, therefore, the
Company acknowledged that the holding period for purposes of Rule 144
promulgated pursuant to the Securities Act of 1933, as amended, with respect to
the Initial Shares had commenced on the date of the Claims Agreement. In
addition, TML paid to Haraoui a cash payment of U.S. $50,000.
Pursuant to the terms of the Agreement, Haraoui delivered to TML the
seventh (7th) claim on Exhibit A to the Agreement and agreed to use his best
efforts to deliver to TML (or its assignee) all of the first six (6) claims
described on Exhibit A to the Agreement, certified by the Departamento Nacional
De Produca Mineral ("DNPM"), with priority, having good, clean and transferrable
title and published by the Brazilian authorities in the Government Gazette (each
a "Certified Claim" and collectively the "Certified Claims"). Further, it was
agreed that prior to June 30, 2002 (the "Termination Date"), Haraoui would not
pledge, sell, give an option to purchase, contract to sell or otherwise assign
any of the above-referenced claims to any person or entity other than TML (or
its assignees).
3
TML agreed to pay to Haraoui or Haraoui's nominee an additional cash
payment of U.S.$20,000 for each Certified Claim that is delivered to TML. If a
claim referenced on Exhibit A to the Agreement was not delivered to TML as a
Certified Claim on or before the Termination Date, TML would have no obligation
whatsoever to make any payment to Haraoui with respect to such claim.
Item 7. Financial Statements and Exhibits
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(a) Financial Statements of Business Acquired
Not applicable.
(b) Pro Forma Financial Information Page
Pro Forma Unaudited Balance Sheet F-1
as of March 31, 1999
Notes to Pro Forma Financial F-2
Statements (unaudited)
(c) Exhibits
10.1* Agreement of Settlement and Release, dated
June 9, 1999, by and among Joseph J. Haraoui,
Toucan Gold Corporation and Toucan Mining
Limited.
10.2(1) Agreement for the sale and purchase of the
whole of the issued share capital of Anagram
Limited, dated December 3, 1998, among Toucan
Mining Limited, Toucan Gold Corporation, Inc.
and Minmet Plc (Exhibit 10.1).
10.3(1) Supplemental Agreement, dated December 3,
1998 among Toucan Mining Limited, Toucan Gold
Corporation, Inc., and Minmet Plc (Exhibit
10.2).
10.4(1) Option Agreement Regarding Mineradora De
Bauxita Ltda, dated December 3, 1998, among
Toucan Mining Limited, Toucan Gold
Corporation, Inc. and Anagram Limited
(Exhibit 10.3).
10.5(1) Agreement for the purchase of the whole of
the issued share capital of Mineradora de
Bauxita Ltda, dated December 3, 1998 among
Toucan Mining Limited, Toucan Gold
Corporation, Inc. and Anagram Limited
(Exhibit 10.4).
10.6(1) Form of Minmet Plc Warrant Instrument
(Exhibit 10.5).
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4
(1) Incorporated by reference to the exhibit
shown in parenthesis included in the
Company's Current Report on Form 8-K, filed
by the Company with the Securities and
Exchange Commission on January 5, 1999.
* Filed herewith
5
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TOUCAN GOLD CORPORATION
(Registrant)
Date: July 30, 1999 By: /s/ Robert A. Pearce
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Robert A. Pearce
Chief Financial Officer
6
Toucan Gold Corporation
PRO FORMA UNAUDITED BALANCE SHEET
Pro forma
Actual adjustments - Pro forma
March 31, increase March 31,
ASSETS 1999 (decrease) 1999
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Cash $ 14,439 (2) $ (12,382) $ 252,057
(1) 250,000
Investment in Minmet Plc - (1) 1,380,400 774,200
(2) (606,200)
Receivable and other assets 133,156 (2) (158) 132,998
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Total current assets 147,595 1,011,660 1,159,255
Investment in Minmet Plc, less current portion - (1) 1,769,600 718,900
(2) (1,050,700)
Investment in Toucan Mining Limited - (2) 1,597,964 1,597,964
Mineral rights 2,589,869 (1) (2,589,869) -
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$ 2,737,464 $ 738,655 $3,476,119
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LIABILITIES AND STOCKHOLDERS' EQUITY
Amounts payable to related parties $ 24,476 (2) $ (24,476) $ -
Accrued expenses and other liabilities 201,454 (2) (47,000) 154,454
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Total current liabilities 225,930 (71,476) 154,454
Stockholders' equity
Preferred stock, par value $.01 per share; authorized,
2,000,000 shares; issued and outstanding, none - -
Common stock, $.01 par value per share; authorized
30,000,000 shares; issued and outstanding,
8,237,933 shares 82,379 82,379
Additional paid-in capital 4,526,226 4,526,226
Accumulated deficit (2,097,071) (1) 810,131 (1,286,940)
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Total stockholders' equity 2,511,534 810,131 3,321,665
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$ 2,737,464 $ 738,655 $3,476,119
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The accompanying notes are an integral part of these statements.
F-1
Toucan Gold Corporation
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(unaudited)
NOTE A - GENERAL
On June 30, 1999, Minmet Plc (Minmet) exercised its option to acquire all of
the issued share capital of Mineradora de Bauxita Ltda. (MBL), a subsidiary
of Toucan Mining Limited (TML) which is a subsidiary of Toucan Gold
Corporation (Toucan Gold). All of the Company's exploration activities had
been conducted through MBL. Minmet also exercised its option to acquire
loans made from Toucan Gold to MBL in the principal amount of $1,000,000.
Consideration due under the option, which consisted of (1) 25,000,000 Minmet
Ordinary Shares, (2) $250,000 in cash and (3) warrants to purchase 7,700,000
Minmet Ordinary Shares for (pound).08 per share, was paid in July 1999.
On July 16, 1999, the Board of Directors of Toucan Gold approved the
spin-off of all of the outstanding common shares of Toucan Mining to the
Toucan Gold stockholders. Record date for the spin-off is August 3, 1999;
provided, however, that the record date will be effective only if the
spin-off is effected with 60 days of the record date.
The accompanying pro forma balance sheet gives effect to the sale of MBL as
though it had occurred on March 31, 1999. The pro forma balance sheet
presents Toucan Gold's investment in Toucan Mining on the equity method of
accounting because of the spin-off of Toucan Mining.
As a result of the sale of MBL and the spin-off of Toucan Mining, Toucan
Gold will have no operations. On July 22, 1999, Toucan Gold acquired all of
the outstanding capital shares of ITIS Technologies Limited
(ITIS), a U.K. company. Consideration given was 4,680,375 Toucan Gold common
shares, which shares are to be issued within 20 days of the closing. Upon
issuance of such shares, the ITIS shareholders will own 34% of the common
stock of Toucan Gold, not including outstanding options or warrants. ITIS is
a software development company offering business to business software to
facilitate secure Internet transactions. The transaction with ITIS will
deemed to be a recapitalization of ITIS for accounting purposes.
F-2
Toucan Gold Corporation
NOTES TO PRO FORMA STATEMENTS - CONTINUED
NOTE B - PRO FORMA ADJUSTMENTS
(1) To reflect the sale of MBL and MBL's debt held by to the Company:
Proceeds:
Shares of Minmet Plc $ 2,765,000
Minmet Plc warrants 385,000
Cash 250,000
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3,400,000
Cost of investment in MBL and MBL's debt (2,589,869)
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Gain $ 810,131
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(2) To reclassify the accounts of Toucan Mining to the equity method of
accounting, because of the proposed spin-off of 100% of the equity
ownership of Toucan Mining, and to allocate the proceeds of sale
between Toucan Gold and Toucan Mining.
Allocated to
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Form of proceeds Total Toucan Gold Toucan Mining
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Cash $ 250,000 $ 250,000 $ -
Shares of Minmet Plc 2,765,000 1,493,100 1,271,900
Minmet Plc warrants 385,000 - 385,000
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$3,400,000 $1,743,100 $1,656,900
For purposes hereof, shares of Minmet Plc were valued at (sterling) 7
pence per share based on the trading price of shares of Minmet Plc on
the Irish Stock Exchange, as of June 30, 1999, of (sterling) 8.25
pence per share and taking into account the restrictions on transfer
of the Minmet Plc shares applicable to Toucan Gold and Toucan Mining.
F-3