UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the quarterly period ended March 31, 2006
TREND MINING COMPANY
- -------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 81-0304651
- ----------------------------------- -----------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5439 South Prince Street
Littleton Colorado 80120
------------------------------------------------------------
(Address of principal executive offices)
Issuer's telephone number: (303) 798-7363
Not Applicable.
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since
last report)
- --------------------------------------------------------------------------------
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [_]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [_] No |X|
The number of shares of common stock, par value $0.01 per share, outstanding as
of May 9, 2006: 40,969,669 shares
Transitional Small Business Disclosure Format (Check one): Yes [_] No |X|
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets...................................................................................2
Statements of Operations.........................................................................3
Statement of Stockholders' Equity (Deficit)......................................................4
Statements of Cash Flows.........................................................................12
Notes to the Financial Statements................................................................14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION................................................................................39
ITEM 3. CONTROLS AND PROCEDURES..........................................................................42
PART II - OTHER INFORMATION
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND
USE OF PROCEEDS..................................................................................43
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.................................................................45
i
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
TREND MINING COMPANY
(An Exploration Stage Company)
BALANCE SHEETS
March 31,
2006 September 30,
unaudited) 2005
------------ ------------
ASSETS
CURRENT ASSETS
Cash $ 107,066 $ 64,391
Accounts receivable 63,473 42,500
Receivable from sale of mining interest 1,122,975
Prepaid expenses 9,403 13,494
------------ ------------
TOTAL CURRENT ASSETS 179,942 1,243,360
------------ ------------
MINERAL PROPERTIES - -
------------ ------------
PROPERTY AND EQUIPMENT, net of depreciation 12,425 13,027
------------ ------------
OTHER ASSETS
Reclamation Bond 1,000 6,500
------------ ------------
TOTAL ASSETS $ 193,367 $ 1,262,887
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $ 263,233 $ 519,631
Accounts payable related party 15,000 15,000
Accrued expenses 16,897 76,082
Interest payable, related parties 255,636 209,786
Interest payable, convertible debt 86,657 12,747
Loans payable to related parties 1,332,857 1,692,857
Current portion of long term convertible debt 304,404 304,404
------------ ------------
TOTAL CURRENT LIABILITIES 2,274,684 2,830,507
------------ ------------
LONG-TERM LIABILITES
Convertible Debt 461,064 290,983
------------ ------------
COMMITMENTS AND CONTINGENCIES - -
------------ ------------
STOCKHOLDERS' DEFICIT
Preferred stock, $0.01 par value, 20,000,000 shares
authorized; 0 and 0 share issued and outstanding, respectively - -
Common stock, $0.01 par value, 100,000,000 shares authorized;
40,216,054 and 37,373,300 shares issued and outstanding,
respectively 402,160 373,733
Additional paid-in capital 8,311,683 8,025,700
Stock options and warrants 1,762,647 1,762,647
Pre-exploration stage accumulated deficit (558,504) (558,504)
Accumulated deficit during exploration stage (12,895,287) (11,897,099)
Beneficial Conversion rights 434,920 434,920
Other comprehensive income - -
------------ ------------
TOTAL STOCKHOLDERS' DEFICIT (2,542,381) (1,858,603)
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' DEFICIT $ 193,367 $ 1,262,887
============ ============
The accompanying notes are an integral part of these unaudited
condensed financial statements.
2
TREND MINING COMPANY
(An Exploration Stage Company)
STATEMENTS OF OPERATIONS
Period from
October 1,
1996
(Inception of
Three Months Three Months Six Months Exploration
Ended Ended Ended Six Months Stage) to
March 31, March 31, March 31, Ended March 31,
2006 2005 2006 March 31, 2005 2006
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
---------- ------------ ------------ ---------- -----------
REVENUES $ - $ - $ - $ - $ -
---------- ------------ ------------ ---------- -----------
EXPENSES
Exploration expense 30,640 80,880 37,692 99,893 3,181,813
General and administrative 70,842 137,191 130,301 178,101 3,297,257
Officers and directors compensation 44,500 28,500 185,438 58,492 2,272,104
Legal and professional 153,235 70,211 320,725 81,722 1,999,124
Depreciation 719 1,101 1,409 1,993 56,913
---------- ------------ ------------ ---------- ------------
Total Expenses 299,936 317,883 675,565 420,201 10,807,212
---------- ------------ ------------ ---------- ------------
OPERATING LOSS (299,936) (317,883) (675,565) (420,201) (10,807,211)
---------- ------------ ------------ ---------- ------------
OTHER INCOME (EXPENSE)
Dividend and interest income 3,554 731 6,920 731 19,246
Settlement Expense - - - - (26,250)
Gain (loss) on disposition and impairment of
assets - - - - (175,019)
Exchange gain (loss) (167) - (167) - (6,182)
Gain on sale of mining interest - - - - 69,805
(Gain) loss on investment sales - - - - (63,813)
Gain on sale of internal securities - - - - -
Financing expense (123,498) (287,406) (231,975) (287,406) (1,953,643)
Interest expense (79,237) (48,121) (145,401) (76,765) (657,025)
Miscellaneous income - 88 - 88 (26,485)
Forgiveness of debt - 62,815 48,000 62,815 677,961
---------- ------------ ------------ ---------- ------------
Total Other Income (Expense) (199,348) (271,893) (322,623) (300,537) (2,088,075)
---------- ------------ ------------ ---------- ------------
LOSS BEFORE INCOME TAXES (499,284) (589,776) (998,188) (720,738) (12,895,287)
INCOME TAXES - - - - -
NET LOSS (499,284) (589,776) (998,188) (720,738) (12,895,287)
OTHER COMPREHENSIVE INCOME (LOSS)
Change in market value of investments - - - - -
NET COMPREHENSIVE LOSS $ (499,284) $ (589,776) $ (998,188) $ (720,738) $(12,895,287)
========== ============ ============ ========== ============
BASIC AND DILUTED NET LOSS PER SHARE $ (0.01) $ (0.02) $ (0.03) $ (0.02)
========== ============ ============ ========== ============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING 40,236,719 33,229,085 39,414,850 36,005,215
========== ============ ============ ========== ============
The accompanying notes are an integral part of these unaudited
condensed financial statements.
3
TREND MINING COMPANY
(An Exploration Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
Common
Stock Stock Other
------------------- Additional Options Comprehensive
Number Paid-in and Accumulated Income
of Shares Amount Capital Warrants Deficit (Loss) Total
--------- -------- --------- -------- ---------- ---------- ---------
Balance, October 1, 1996 1,754,242 $ 17,542 $ 663,218 $ - $ (558,504) $ - $ 122,256
Common stock issuances as follows:
- for cash at $0.50 per share 200,000 2,000 98,000 - - - 100,000
- for payment of liabilities and expenses at
$0.50 per share 45,511 455 22,301 - - - 22,756
Net loss for the year ended September 30, 1997 - - - - (128,614) - (128,614)
--------- -------- --------- ------- ---------- ---------- ---------
Balance, September 30, 1997 1,999,753 19,997 783,519 - (687,118) - 116,398
Issuance of common stock as follows:
- for mineral property at $0.50 per share 150,000 1,500 73,500 - - - 75,000
- for lease termination at $0.50 per share 12,000 120 5,880 - - - 6,000
- for debt at $0.50 per share 80,000 800 39,200 - - - 40,000
- for cash at $0.20 per share 7,500 75 1,425 - - - 1,500
- for compensation at $0.50 per share 9,000 90 4,410 - - - 4,500
Issuance of stock options for financing activities - - - 2,659 - - 2,659
Net loss for the year ended September 30, 1998 - - - - (119,163) - (119,163)
Change in market value of investments - - - - - 117,080 117,080
--------- -------- --------- ------- ---------- ---------- ---------
Balance, September 30, 1998 2,258,253 $ 22,582 $ 907,934 $ 2,659 $ (806,281) $ 117,080 $ 243,974
--------- -------- --------- ------- ---------- ---------- ---------
The accompanying notes are an integral part of these unaudited
condensed financial statements.
4
TREND MINING COMPANY
(An Exploration Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) (continued)
Common
Stock Stock Other
------------------- Additional Options Comprehensive
Number Paid-in and Accumulated Income
of Shares Amount Capital Warrants Deficit (Loss) Total
--------- -------- ---------- -------- ------------ ----------- -----------
Balance, September 30, 1998 2,258,253 $22,582 $ 907,934 $2,659 $ (806,281) $117,080 $243,974
Common stock issuances as follows:
- for cash at an average of $0.07 per share 555,000 5,550 35,450 - - - 41,000
- for prepaid expenses at $0.33 per share 50,000 500 16,000 - - - 16,500
- for consulting services at an average of $0.20
per share 839,122 8,391 158,761 - - - 167,152
- for mineral property at $0.13 per share 715,996 7,160 82,470 - - - 89,630
- for officers' compensation at an average of
$0.24 per share 300,430 3,004 70,522 - - - 73,526
- for debt, investment and expenses at $0.30
per share 9,210 92 2,671 - - - 2,763
- for directors' compensation at an average of
$0.25 per share 16,500 165 3,960 - - - 4,125
- for rent at $0.25 per share 1,000 10 240 - - - 250
- for equipment at $0.30 per share 600,000 6,000 174,000 - - - 180,000
Net loss for the year ended September 30, 1999 - - - - (716,759) - (716,759)
Other comprehensive loss - - - - - (79,179) (79,179)
--------- ------- ---------- ------ ----------- -------- --------
Balance, September 30, 1999 5,345,511 $53,454 $1,452,007 $2,659 $(1,523,040) $ 37,901 $22,982
--------- ------- ---------- ------ ----------- -------- --------
The accompanying notes are an integral part of these unaudited
condensed financial statements.
5
TREND MINING COMPANY
(An Exploration Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) (continued)
Common
Stock Stock Other
------------------- Additional Options Comprehensive
Number Paid-in and Accumulated Income
of Shares Amount Capital Warrants Deficit (Loss) Total
--------- -------- ---------- -------- ------------ ----------- -----------
Balance, September 30, 1999 5,345,511 $ 53,454 $1,452,007 $ 2,659 $(1,523,040) $ 37,901 $ 22,982
Common stock and option issuances as follows:
- for employee, officer and director
compensation at an average of $0.61 per share 231,361 2,314 140,446 15,820 - - 158,580
- for officers' and directors' compensation at
an average of $1.19 per share 11,500 115 13,615 - - - 13,730
- for services at an average of $0.47 per share 530,177 5,302 246,333 - - - 251,635
- for mineral property at $0.89 per share 1,000,000 1,000 88,000 - - - 89,000
- for investments at $0.33 per share 200,000 2,000 64,000 - - - 66,000
- for cash at $0.08 per share 456,247 4,562 28,969 - - - 33,531
- for cash, options and warrants 100,000 10,000 2,414 87,586 - - 100,000
- for incentive fees at $0.33 per share 65,285 653 20,891 - - - 21,544
- for deferred mineral property acquisition
costs at $0.13 per share 129,938 1,299 14,943 - - - 16,242
- for modification of stockholder agreement at
$0.60 per share 200,000 2,000 118,000 30,000 - - 150,000
- for modification of stockholder agreement - - 4,262 10,379 - - 14,641
-from exercise of options at $0.12 per share 9,962,762 99,628 1,103,016 (37,524) - - 1,165,120
Cash received for the issuance of common stock
warrants for 7,979,761 shares of stock - - - 10,000 - - 10,000
Miscellaneous common stock adjustments (5) - - - - - -
Net loss for the year ended September 30, 2000 - - - - (2,186,541) - (2,186,541)
Other comprehensive income (loss) - - - - - (38,314) (38,314)
---------- -------- ---------- -------- ----------- -------- -----------
Balance, September 30, 2000 18,232,776 $182,327 $3,296,897 $118,920 $(3,709,581) $ (413) $ (111,850)
---------- -------- ---------- -------- ----------- -------- -----------
The accompanying notes are an integral part of these unaudited
condensed financial statements.
6
TREND MINING COMPANY
(An Exploration Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) (continued)
Common Bene- Other
Stock Stock ficial Compre-
------------------- Additional Options Conver Accumu- hensive
Number Paid-in and sions lated Income Receiv-
of Shares Amount Capital Warrants Rights Deficit (Loss) able Total
---------- -------- ---------- ---------- ------ ----------- ------- ------ ---------
Balance, September 30, 2000 18,232,776 $182,327 $3,296,897 $118,920 - $(3,709,581) $(413) - $(111,850)
Common stock and option
issuances as follows:
- for cash of $1.00 per share 192,000 1,920 190,080 - - - - - 192,000
- for cash and consulting services
from options for $0.39 per share 33,333 333 12,737 (3,070) - - - - 10,000
- for services at a
per share average of $0.92 13,700 137 12,463 - - - - - 12,600
- for officer and employee
compensation at $1.13 per share 5,200 52 5,828 - - - - - 5,880
- for payment of accrued officer's
compensation at $1.35 per share 10,000 100 13,400 - - - - - 13,500
- for consulting services at an
average of $0.77 per share 45,461 455 34,247 - - - - - 34,702
- for directors' compensation
at $0.85 per share 75,000 750 63,000 - - - - - 63,750
- for modification of contract
at $0.78 per share 3,000 30 2,310 - - - - - 2,340
- for interest payment on contract
at an average of $0.80 per share 10,000 100 7,900 - - - - - 8,000
- for mineral property expenses at
$0.85 per share 1,000 10 840 - - - - - 850
- for debt at $1.00 per share 134,500 1,345 133,155 - - - - - 134,500
Options issued to officers,
directors and employees for services - - - 354,000 - - - - 354,000
Warrants issued as follows:
- for consulting services - - - 170,521 - - - - 170,521
- for loan agreements - - - 141,547 - - - - 141,547
- for extension of exercise
period on outstanding warrant - - - 608,058 - - - - 608,058
Net loss for the year ended
September 30, 2001 - - - - - (3,437,354) - - (3,437,354)
Other comprehensive income - - - - - - 413 - 413
---------- -------- ---------- ---------- ---- ------------ ------- ---- -----------
Balance, September 30, 2001 18,755,970 $187,559 $3,772,856 $1,389,976 $ - $(7,146,935) $ - $ - $(1,796,543)
---------- -------- ---------- ---------- ---- ------------ ------- ---- -----------
7
TREND MINING COMPANY
(An Exploration Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) (continued)
Common Stock
------------------------
Additional Stock Beneficial
Number Paid-in Options and Conversion
of Shares Amount Capital Warrants Rights
---------- ----------- ----------- ----------- -----------
Balance, September 30, 2001 18,755,970 $ 187,559 $ 3,772,856 $ 1,389,976 -
Common stock issuances as follows: -
- for cash at $0.10 per share 2,500,000 25,000 225,000 - -
- for a note payable at $1.00 per share 25,000 250 24,750 - -
- for consulting fees payable at $0.55 12,536 126 6,769 - -
per share
- for mineral properties at $0.70 per 1,100,000 11,000 759,000 - -
share
- for services at an average of $0.49 112,500 1,125 53,625 - -
per share
- for financing expense at an average
of $0.44 per share 82,429 824 35,369 - -
Options issued to officers, directors and - - - 29,528 -
employees for services
Warrants issued as follows: -
- for loan agreements - - - 55,352 -
Expiration of stock options and warrants - - 91,814 (91,814) -
Interest expense forgiven by shareholders - - 42,950 - -
Net loss for the year ended September 30, 2002 - - - - -
---------- ----------- ----------- ----------- -----------
Balance, September 30, 2002 22,588,435 225,884 5,012,133 1,383,042 -
Common stock issuances as follows:
- miscellaneous common stock adjustment 29,555 296 - - -
- for cash at $0.10 per share 5,500,000 55,000 495,000 - -
- for consulting services at an average 1,763,779 17,638 243,362 - -
of $0.15 per share
- for loans payable at an average of 369,160 3,692 33,225 - -
$0.10 per share
- for prior period services at an 245,000 2,450 30,550 - -
average of $.13 per share
- for investments at $0.21 per share 450,000 4,500 88,668 - -
- to officers and directors for 1,423,156 14,231 129,025 - -
services at $.10 per share
- penalty shares at $.26 per share 860,000 8,600 215,000 - -
Change in market value of investments - - - - -
Net loss for the year ended September 30, 2003 - - - - -
---------- ----------- ----------- ----------- -----------
Balance, September 30, 2003 33,229,085 $ 332,291 $ 6,246,963 $ 1,383,042 $ -
---------- ----------- ----------- ----------- -----------
Other
Accumulated Comprehensive
Deficit Income (Loss) Receivable Total
----------- ----------- ----------- -----------
Balance, September 30, 2001 $(7,146,935) $ - $ - $(1,796,543)
Common stock issuances as follows: -
- for cash at $0.10 per share - - - 250,000
- for a note payable at $1.00 per share - - - 25,000
- for consulting fees payable at $0.55 - - - 6,895
per share
- for mineral properties at $0.70 per - - - 770,000
share
- for services at an average of $0.49 - - - 54,750
per share
- for financing expense at an average
of $0.44 per share - - - 36,193
Options issued to officers, directors and - - - 29,528
employees for services
Warrants issued as follows:
- for loan agreements - - - 55,352
Expiration of stock options and warrants - - - -
Interest expense forgiven by shareholders - - - 42,950
Net loss for the year ended September 30, 2002 (1,168,171) - - (1,168,171)
----------- ----------- ----------- -----------
Balance, September 30, 2002 (8,315,106) - - (1,694,046)
Common stock issuances as follows:
- miscellaneous common stock adjustment - - - 296
- for cash at $0.10 per share - - - 550,000
- for consulting services at an average - - - 261,000
of $0.15 per share
- for loans payable at an average of - - - 36,917
$0.10 per share
- for prior period services at an - - - 33,000
average of $.13 per share
- for investments at $0.21 per share - - - 93,168
- to officers and directors for - - - 143,256
services at $.10 per share
- penalty shares at $.26 per share - - - 223,600
Change in market value of investments - 1,800 - 1,800
Net loss for the year ended September 30, 2003 (966,958) - - (966,958)
----------- ----------- ----------- -----------
Balance, September 30, 2003 $(9,282,064) $ 1,800 $ - $(1,317,968)
----------- ----------- ----------- -----------
8
TREND MINING COMPANY
(An Exploration Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) (continued)
Common Stock
------------------------
Additional Stock Beneficial
Number Paid-in Options and Conversion
of Shares Amount Capital Warrants Rights
------------ ------------ ------------ ------------ -----------
Balance, September 30, 2003 33,229,085 $ 332,291 $ 6,246,963 $ 1,383,042 $ -
Common stock issuances as follows:
- for cash at $0.20 per share 1,675,000 16,750 318,250 - -
- for consulting services at an average 162,500 1,625 54,800 - -
of $0.35 per share
- for accounts payable at an average of 626,130 6,261 144,584 - -
$.24 per share
- for investments at $0.20 per share 125,000 1,250 23,750 - -
- to officers and directors for 150,000 1,500 16,500 - -
services at $.12 per share
Expired options & warrants - - 503,774 (503,774) -
Options issued to officers and directors - - - 95,000 -
for services
Gain on sale of internal securities 210,194 210,194 - - -
Change in market value of investments - - - - -
Net loss for the year ended September 30, 2004 - - - - -
------------ ------------ ------------ ------------ -----------
Balance, September 30, 2004 35,967,715 $ 359,677 $ 7,518,815 $ 974,268 $ -
------------ ------------ ------------ ------------ -----------
Other
Accumulated Comprehensive
Deficit Income (Loss) Receivable Total
------------- ------------ ----------- ------------
Balance, September 30, 2003 $ (9,282,064) $ 1,800 $ - $ (1,317,968)
Common stock issuances as follows:
- for cash at $0.20 per share - - - 335,000
- for consulting services at an average - - - 56,425
of $0.35 per share
- for accounts payable at an average of - - - 150,845
$.24 per share
- for investments at $0.20 per share - - - 25,000
- to officers and directors for - - - 18,000
services at $.12 per share
Expired options & warrants - - - -
Options issued to officers and directors - - - 95,000
for services
Gain on sale of internal securities - - - -
Change in market value of investments - (1,800) - (1,800)
Net loss for the year ended September 30, 2004 (992,688) - - (992,688)
------------- ------------ ----------- ------------
Balance, September 30, 2004 $(10,274,752) $ - $ - $ (1,421,992)
------------- ------------ ----------- ------------
9
Common Stock
------------------------
Additional Stock Beneficial
Number Paid-in Options and Conversion
of Shares Amount Capital Warrants Rights
---------- ----------- ----------- ------------ -----------
Balance, September 30, 2004 35,967,715 $ 359,677 $ 7,518,815 $ 974,268 $ -
Common stock issuances as follows:
-for services at an average of $.23 per 199,585 1,996 44,591 - -
share
-for financing expense at $0.345 per 210,000 2,100 70,350 - -
share
-for financing expense at an average of 66,000 660 15,500 - -
$.24 per share
-to officers and directors for services 634,518 6,345 139,655 - -
at $.23 per share
-for convertible debt and interest 295,482 2,955 55,669 - -
Convertible debt issuance
-class A warrants at $.15 per share - - - 51,577 -
-class B warrants at $.10 per share - - - 42,248 -
-beneficial conversion rights at $.19 - - - - 77,158
per share
Cancellation of warrants and beneficial - - 170,983 (93,825) (77,158)
conversion rights
Options issued to officers and directors - - - 143,840 -
Expiration of warrants - - 10,137 (10,137) -
Convertible debt issuance - - - - -
-class A warrants at an average of - - - 386,275 -
$.15 per share
-class B warrants at an average of - - - 183,136 -
$.08 per share
-beneficial conversion rights at $.19 - - - 306,587 -
per share
Convertible debt issuance - - - - -
-class A warrants at an average of - - - 66,990 -
$.10 per share
-class B warrants at an average of - - - 18,275 -
$.02 per share
-beneficial conversion rights at $.25 - - - - 128,333
per share
Net loss for the year ended September 30, 2005 - - - - -
---------- ----------- ----------- ------------ -----------
Balance, September 30, 2005 37,373,300 373,733 8,025,700 $ 1,762,647 434,920
---------- ----------- ----------- ------------ -----------
Other
Accumulated Comprehensive
Deficit Income (Loss) Receivable Total
------------ ----------- ----------- ------------
Balance, September 30, 2004 $(10,274,752) $ - $ - $ (1,421,992)
Common stock issuances as follows:
-for services at an average of $.23 per - - - 46,587
share
-for financing expense at $0.345 per - - - 72,450
share
-for financing expense at an average of - - - 16,160
$.24 per share
-to officers and directors for services - - - 146,000
at $.23 per share
-for convertible debt and interest - - - 58,624
Convertible debt issuance
-class A warrants at $.15 per share - - - 51,577
-class B warrants at $.10 per share - - - 42,248
-beneficial conversion rights at $.19 - - - 77,158
per share
Cancellation of warrants and beneficial - - - -
conversion rights
Options issued to officers and directors - - - 143,840
Expiration of warrants - - - -
Convertible debt issuance - - -
-class A warrants at an average of - - - 386,275
$.15 per share
-class B warrants at an average of - - - 183,136
$.08 per share
-beneficial conversion rights at $.19 - - 306,587
per share
Convertible debt issuance - - - -
-class A warrants at an average of - - - 66,990
$.10 per share
-class B warrants at an average of - - - 18,275
$.02 per share
-beneficial conversion rights at $.25 - - - 128,333
per share
Net loss for the year ended September 30, 2005 (2,180,851) - - (2,180,851)
------------ ----------- ----------- ------------
Balance, September 30, 2005 $(12,455,603) - - $ (1,858,603)
------------ ----------- ----------- ------------
10
Common Stock
------------------------
Additional Stock
Number Paid-in Options and
of Shares Amount Capital Warrants
---------- ----------- ----------- -----------
Balance, September 30, 2005 37,373,300 373,733 8,025,700 $ 1,762,647
Common stock issued for convertible debt & interest 562,505 5,625 80,305 -
Common stock issued for cash at $0.10 per share 1,500,000 15,000 135,000 -
Common stock issued to officers & directors 600,000 6,000 84,000 -
for services at $0.15 per share
Common stock issued for services 7,912 79 1,721 -
Net loss for the period ended December 31, 2005
---------- ----------- ----------- -----------
Balance, December 31, 2005 40,043,717 400,437 8,326,726 $ 1,762,647
---------- ----------- ----------- -----------
Common stock issued for convertible debt & interest 437,940 4,379 46,480 -
Common stock issued for financing fees @ $0.10 per share 150,000 1,500 13,500 -
Common stock issued for exploration response 20,000 200 3,400 -
Common stock cancelled for convertible (435,603) (4,356) (78,423) -
debt and interest
Net loss for the period ended March, 31, 2006 - - - -
---------- ----------- ----------- -----------
Balance, March 31, 2006 40,216,054 402,160 8,311,683 $ 1,762,647
---------- ----------- ----------- -----------
Beneficial Other
Conversion Accumulated Comprehensive
Rights Deficit Income (Loss) Receivable Total
----------- ----------- ----------- ----------- ------------
Balance, September 30, 2005 434,920 $(12,455,603) - - $ (1,858,603)
Common stock issued for convertible debt & interest - - - - 85,930
Common stock issued for cash at $0.10 per share - - - - 150,000
Common stock issued to officers & directors - - - - 90,000
for services at $0.15 per share
Common stock issued for services - - - - 1,800
Net loss for the period ended December 31, 2005 (498,904) - - (498,904)
----------- ------------ ----------- ----------- ------------
Balance, December 31, 2005 434,920 $(12,954,507) - - $ (2,029,777)
----------- ------------ ----------- ----------- ------------
Common stock issued for convertible debt & interest - - - - 50,859
Common stock issued for financing fees @ $0.10 per share - - - - 15,000
Common stock issued for exploration response - - - - 3,600
Common stock cancelled for convertible - - - - (82,779)
debt and interest
Net loss for the period ended March, 31, 2006 - (499,284) - - (499,284)
----------- ------------ ----------- ----------- ------------
Balance, March 31, 2006 434,920 $(13,453,791) $ - - $ (2,542,381)
----------- ------------ ----------- ----------- ------------
The accompanying notes are an integral part of these unaudited
condensed financial statements.
11
TREND MINING COMPANY
(An Exploration Stage Company)
STATEMENTS OF CASH FLOWS
Period from
October 1, 1996
(Inception of
Six Months Six Months Exploration Stage)
Ended Ended to
March 31 March 31 March 31
2006 2005 2006
(unaudited) (unaudited) (unaudited)
------------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net gain (loss) $ (998,188) $ (720,738) $(12,895,287)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation 1,409 1,993 56,913
Amortization of debt discount 216,954 293,627 -
Gain on forgiveness of debt (48,000) - -
Loss (Gain) on investment sales - - 68,969
Gain on sales of internal securities - - -
Loss (Gain) on disposition and impairment of assets - - 183,391
Gain on sale of mineral property claims for securities - - (500)
Gain on sale of mining interest - - (69,805)
Gain on trade-in of property and equipment - - (7,872)
Gain on settlement of vendor account - - -
Interest expense forgiven by related parties - - -
Common stock issued for services and expenses 20,400 19,810 1,285,571
Common stock issued for payables and accrued expenses - 3,800 219,656
Common stock and options issued as compensation 90,000 - 1,211,215
Stock options and warrants issued for financing activities - - 822,257
Common stock issued for investments - - 93,168
Common stock and warrants issued to acquire mineral
property options - - 1,114,873
Common stock issued for interest payments (14,681) - 2,479
Warrants issued for consulting fees - - 170,521
Common stock issued for incentive fees - - 21,544
Investment traded for services - - 45,939
Changes in assets and liabilities:
Prepaid expenses & inventory 4,091 2,948 (5,598)
Accounts receivable 1,102,003 - -
Accounts payable (256,399) (153,806) 176,041
Accounts payable - checks in excess of bank balance - - 7
Accounts payable - related party - - -
Accrued expenses (11,856) (2,900) (9,959)
Reclamation bond 5,500 - -
Interest payable 45,850 70,507 229,578
Interest payable - convertible debt 96,398 - -
------------ ------------ ------------
Net cash used by operating activities 253,481 (484,759) (7,286,899)
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of equipment - - 37,626
Purchase of fixed assets (807) (2,513) (10,830)
Proceeds from sales of mineral property - - 223,000
Proceeds from investments sold - - 183,161
------------ ------------ ------------
Net cash provided by investing activities (807) (2,513) 432,957
------------ ------------ ------------
12
Period from
October 1, 1996
(Inception of
Six Months Six Months Exploration Stage)
Ended Ended to
March 31 March 31 March 31
2006 2005 2006
(unaudited) (unaudited) (unaudited)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on notes payable and short-term borrowings (360,000) - (734,556)
Payments on convertible debt - - -
Proceeds from internal securities sale - - 210,194
Sale of warrants for common stock - - 10,000
Proceeds from short-term borrowings - 1,245,412 -
Sale of common stock, subscriptions - - -
and exercise of options 150,000 - 2,843,151
Issuance of penalty shares - - 223,600
----------- ----------- -----------
Net cash provided by financing activities (210,000) 1,245,412 2,552,389
----------- ----------- -----------
NET INCREASE IN CASH 42,675 758,140 (4,301,551)
CASH, BEGINNING OF PERIOD 64,391 8,313 -
----------- ----------- -----------
CASH, END OF PERIOD $ 107,065 $ 766,453 $(4,301,552)
=========== =========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ - $ $ -
Income taxes paid $ - $ $ -
NON-CASH FINANCING AND INVESTING ACTIVITIES:
Common stock and warrants issued to acquire mineral properties $ - $ - $ 344,873
Common stock issued to acquire mineral property $ - $ - $ 845,000
Common stock issued for acquisition of mining equipment $ - $ - $ 180,000
Common stock issued for services and expenses $ 20,400 $ 19,810 $ 1,265,171
Common stock issued for investment $ - $ - $ 185,168
Common stock issued for payables and accrued expenses $ - $ 3,800 $ 219,657
Common stock issued for incentive fees $ - $ - $ 21,544
Common stock and options issued as compensation $ 90,000 $ - $ 1,121,215
Common stock and options issued for payment of convertible debt $ 136,789 $ - $ 178,253
Common stock issued for payment of interest $ 14,681 $ - $ 31,841
Common stock cancelled for convertible debt $ (82,779) $ - $ (82,779)
Stock options and warrants issued for financing activities $ - $ 93,825 $ 822,257
Beneficial conversion rights on convertible debt $ - $ 77,158 $ 434,920
Warrants issued for consulting fees $ - $ - $ 170,521
Deferred acquisition costs on mining property $ - $ - $ 46,242
Purchase of equipment with financing agreement $ - $ - $ 21,814
Investments received for mineral property $ - $ - $ 5,500
Investments traded for services $ - $ - $ 45,939
Equipment for loans payable $ - $ - $ 4,500
Warrants issued with convertible debt $ - $ - $ -
The accompanying notes are an integral part of these unaudited
condensed financial statements.
13
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2006
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Trend Mining Company (formerly Silver Trend Mining Company) ("the Company" or
"Trend") was incorporated on September 7, 1968 under the laws of the State of
Montana for the purpose of acquiring, exploring and developing mining
properties. From 1984 to late 1996, the Company was dormant. In November 1998,
the Company changed its focus to exploration for platinum and palladium related
metals primarily in the United States. In February of 1999, the Company changed
its name to Trend Mining Company to better reflect the Company's change of focus
and diversification into platinum group metals. In 2004, the Company further
diversified into uranium properties although actual exploration has not yet
commenced. The Company conducts operations primarily from its offices in
Littleton, Colorado. The Company has a September 30 fiscal year-end.
On March 28, 2001, the Company reincorporated in Delaware. This reincorporation
represented a change of corporate domicile and had no accounting impact. Under
its amended certificate of incorporation, Trend has authorized the issuance of
100,000,000 shares of common stock with a par value of $0.01 per share and
20,000,000 shares of authorized preferred stock with a par value of $0.01, with
rights and preferences to be determined by the Company's board of directors. One
share of Series A preferred stock was created and issued to Mr. Thomas S. Kaplan
which required the holder's approval for all stock and equity issuances. In
October 2002, this preferred share was cancelled. See Note 4.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies is presented to assist in
understanding the Company's financial statements. The financial statements and
notes rely on the integrity and objectivity of the Company's management. These
accounting policies conform to accounting principles generally accepted in the
United States of America and have been consistently applied in the preparation
of the financial statements.
Accounting Method
- -----------------
The Company's financial statements are prepared using the accrual method of
accounting.
Basic and Diluted Loss per Share
- --------------------------------
Basic and diluted loss per share are computed by dividing the net loss by the
weighted average number of shares outstanding during the year or period. The
weighted average number of shares is calculated by taking the number of shares
outstanding and weighting them by the length of time that they were outstanding.
Outstanding options and warrants and convertible debt representing an aggregate
potential conversion into 22,938,178 and 10,068,174 shares of common stock, as
of March 31, 2006 and 2005, respectively, have been excluded from the
calculation of diluted loss per share as they would be antidilutive.
Accounting for Convertible Notes and Securities with Beneficial Conversion
- --------------------------------------------------------------------------------
Features
- --------
Following guidance provided by EITF 00-27, the Company allocates proceeds
received from convertible notes and/or securities first to warrants granted the
note holders. The value of the warrants and the beneficial conversion feature
are recorded on the balance sheet as a debt discount and as an increase to
shareholders equity. The discounts are amortized over the life of the loans.
Cash and Cash Equivalents
- -------------------------
For purposes of its statement of cash flows, the Company considers all
short-term debt securities purchased with a maturity of three months or less to
be cash equivalents.
14
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2006
- --------------------------------------------------------------------------------
Compensated Absences
- --------------------
The Company's employees are entitled to paid vacation, paid sick days and
personal days off depending on job classification, length of service and other
factors. The Company estimates that the amount of compensation for future
absences is minimal and immaterial for the periods ended March 31, 2006 and
2005. Accordingly, no liability has been recorded in the financial statements.
Comprehensive Income (Loss)
- ---------------------------
The Company reports comprehensive income (loss) in accordance with Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income."
Amounts are reported net of tax and include unrealized gains or losses on
available for sale securities.
Derivative Instruments
- ----------------------
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards (hereinafter "SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities," as amended by SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities - Deferral of the Effective Date
of SFAS No. 133," and SFAS No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities," which is effective for the Company
as of January 1, 2001. These standards establish accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts and for hedging activities. They require that an
entity recognize all derivatives as either assets or liabilities in the balance
sheet and measure those instruments at fair value. If certain conditions are
met, a derivative may be specifically designated as a hedge, the objective of
which is to match the timing of gain or loss recognition on the hedging
derivative with the recognition of (i) the changes in the fair value of the
hedged asset or liability that are attributable to the hedged risk or (ii) the
earnings effect of the hedged forecasted transaction. For a derivative not
designated as a hedging instrument, the gain or loss is recognized in income in
the period of change.
Historically, the Company has not entered into derivative contracts to hedge
existing risks or for speculative purposes. During the periods ended March 31,
2006 and 2005, the Company has not engaged in any transactions that would be
considered derivative instruments or hedging activities.
Estimates
- ---------
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Employee and Non-Employee Stock Compensation
- --------------------------------------------
The Company values common stock issued without restrictions to employees and
non-employees for services, property and investments at the fair market value of
the common stock, which is the closing price of Company stock on the day of
issuance. If no trading occurred on a date of issuance, then the fair market
value used is the lower of the closing prices on the first previous day or the
first following day on which the Company's stock was traded. The Company may
issue common stock with restrictions in these circumstances and, if it does, may
issue such shares at a reasonable discount to fair market value. These stock
issuances are accounted for in the statement of stockholders' equity and as
expenses, if the stock was issued for services or exploration costs, and as
assets, if the stock was issued for investments or real property.
15
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2006
- --------------------------------------------------------------------------------
Exploration Costs
- -----------------
In accordance with accounting principles generally accepted in the United States
of America, the Company expenses exploration costs as incurred. Exploration
costs expensed during the periods ended March 31, 2006 and 2005 were $30,640 and
$80,880, respectively. As of March 31, 2006, cumulative exploration costs
expensed during the Company's exploration stage totaled $3,135,746.
Exploration Stage Activities
- ----------------------------
The Company has been in the exploration stage since October 1, 1996, when the
Company emerged from a period of dormancy, and has no revenues from operations.
The Company is primarily engaged in the acquisition and exploration of mineral
properties. Should the Company locate a commercially viable reserve, the Company
would expect to actively prepare the site for extraction. The Company's
accumulated deficit prior to the exploration stage was $558,504.
Fair Value of Financial Instruments
- -----------------------------------
The Company's financial instruments as defined by Statement of Financial
Accounting Standards No. 107, "Disclosures about Fair Value of Financial
Instruments," include cash, investment in securities available-for-sale,
accounts payable and accrued expenses and short-term borrowings. All instruments
other than the investment in securities available-for-sale are accounted for on
a historical cost basis, which, due to the short maturity of these financial
instruments, approximates fair value at March 31, 2006 and 2005. Investment in
securities available-for-sale is recorded at fair value at March 31, 2006 and
2005.
Going Concern
- -------------
As shown in the accompanying financial statements, at March 31, 2006, the
Company has limited cash, negative working capital, no revenues, incurred a net
loss of $998,188 for the period ended, and has an exploration stage accumulated
deficit of $12,895,287. These factors indicate that the Company may be unable to
continue in existence in the absence of receiving additional funding. The
financial statements do not include any adjustments related to the
recoverability and classification of recorded assets, or the amounts and
classification of liabilities that might be necessary in the event the Company
cannot continue in existence.
The Company estimates that approximately $1,400,000 is required to fund
operations of the Company for the next 12 months assuming minimal exploration
activities. The Company's management believes that it will be able to generate
sufficient cash from public or private debt or equity financing in order for the
Company to continue to operate based on current expense projections.
Impaired Asset Policy
- ---------------------
The Company adopted Financial Accounting Standards Board Statement No. 144,
"Accounting for Impairment or Disposal of Long-Lived Assets." In complying with
these standards, the Company reviews its long-lived assets quarterly to
determine if any events or changes in circumstances have transpired which
indicate that the carrying value of its assets may not be recoverable. The
Company determines impairment by comparing the undiscounted future cash flows
estimated to be generated by its assets to their respective carrying amounts
whenever events or changes in circumstances indicate that an asset may not be
recoverable.
The amount of loss, if any, is measured by the amount that the carrying value of
the long-lived asset exceeds its fair value in accordance with SFAS No. 144.
Properties are acquired and recorded at fair values negotiated in arm's length
transactions. The Company expenses the exploration and maintenance of its
properties and claims. If results of exploration warrant an assessment of the
carrying value of a mineral property's acquisition cost, or if the Company has
an indication that a property's recorded fair value has declined, such costs
will be reviewed and the related impairment, if any, will be recognized at that
time.
16
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2006
- --------------------------------------------------------------------------------
Investment Policies
- -------------------
The Company uses the average cost method to determine the gain or loss on
investment securities held as available-for-sale based upon the accumulated cost
basis of specific investment accounts.
Mineral Properties
- ------------------
The Company capitalizes only amounts paid in cash or stock as consideration for
the acquisition of real property. See Note 3. Properties are acquired and
recorded at fair values negotiated in arm's length transactions. Costs and fees
paid to locate and maintain mining claims, to acquire options to purchase claims
or properties, and to maintain the mineral rights and leases, are expensed as
incurred.
Mineral properties are periodically assessed for impairment of value and any
diminution in value is charged to operations at the time of impairment. Should a
property be abandoned, its unamortized capitalized costs are charged to
operations. The Company charges to operations the allocable portion of
capitalized costs attributable to properties sold. Capitalized costs are
allocated to properties abandoned or sold based on the proportion of claims
abandoned or sold to the claims remaining within the project area.
Option and Warrant Fair Value Calculations
- ------------------------------------------
The Company utilizes the Black-Scholes valuation model to calculate the fair
value of options and warrants issued for financing, acquisition, compensation
and payment for services. The parameters used in such valuations include a risk
free rate of 5%, the assumption that no dividends are paid, exercise periods
ranging from 1 week to 3 years, depending upon the terms of the instrument
issued, and a volatility ranging from 78%-91% which is calculated annually based
on estimates of expected volatility, in accordance with Statement of Financial
Accounting Standards No. 123. See Note 5.
Recent Accounting Pronouncements
- --------------------------------
In May 2005, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 154, "Accounting Changes and Error
Corrections," (hereinafter "SFAS No. 154") which replaces Accounting Principles
Board Opinion No. 20, "Accounting Changes", and SFAS No. 3, "Reporting
Accounting Changes in Interim Financial Statements - An Amendment of APB Opinion
No. 28". SFAS No. 154 provides guidance on accounting for and reporting changes
in accounting principle and error corrections. SFAS No. 154 requires that
changes in accounting principle be applied retrospectively to prior period
financial statements and is effective for fiscal years beginning after December
15, 2005. Management does not expect SFAS No. 154 to have a material impact on
the Company's financial position, results of operations, or cash flows.
In December 2004, the Financial Accounting Standards Board issued a revision to
Statement of Financial Accounting Standards No. 123 (revised 2004), "Share-Based
Payments" (hereinafter "SFAS No. 123 (R)"). This statement replaces FASB
Statement No. 123, "Accounting for Stock-Based Compensation", and supersedes APB
Opinion No. 25, "Accounting for Stock Issued to Employees". SFAS No. 123 (R)
establishes standards for the accounting for share-based payment transactions in
which an entity exchanges its equity instruments for goods or services. It also
addresses transactions in which an entity incurs liabilities in exchange for
goods or services that are based on the fair value of the entity's equity
instruments or that may be settled by the issuance of those equity instruments.
This statement covers a wide range of share-based compensation arrangements
including share options, restricted share plans, performance-based award, share
appreciation rights and employee share purchase plans. SFAS No. 123 (R) requires
a public entity to measure the cost of employee services received in exchange
for an award of equity instruments based on the fair value of the award on the
grant date ( with limited exceptions). That cost will be recognized in the
entity's financial statements over the period during which the employee is
required to provide services in exchange for the award. The Company currently
reports stock issued to employees under the rules of SFAS No. 123. Therefore
management expects no material impact to its financial statements from the
adoption of this statement.
17
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2006
- --------------------------------------------------------------------------------
Provision for Taxes
- -------------------
Income taxes are provided based upon the liability method of accounting pursuant
to Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" (hereinafter "SFAS No. 109"). Under this approach, deferred income taxes
arise from temporary differences between the tax bases of assets and liabilities
and their financial reporting amounts at each year-end, and the expected future
benefits of net operating loss carryforwards, tax credit and other
carryforwards. A valuation allowance is recorded against deferred tax assets if
management does not believe the Company has met the "more likely than not"
standard imposed by SFAS No. 109 to allow recognition of such an asset.
At March 31, 2006, the Company had net deferred tax assets, calculated at an
expected rate of 34% of approximately $2,612,382 (net of a deferred tax
liability of approximately $1,000) principally arising from net operating loss
carryforwards for income tax purposes. As management of the Company cannot
determine that it is more likely than not that the Company will realize the
benefit of the net deferred tax asset, a valuation allowance equal to the net
deferred tax asset has been established at March 31, 2006.
The tax effects of significant temporary differences and carryforwards which
give rise to the Company's deferred tax assets and liabilities at December 31,
2005 and 2004, are as follows:
March 31, 2006 September 30, 2005
----------- -----------
Deferred Tax Assets:
Net operating loss carryforward $ 2,524,000 $ 2,304,000
Other 88,000 67,000
----------- -----------
2,612,000 2,371,000
----------- -----------
Deferred Tax Liabilities (1,000) (24,000)
----------- -----------
Valuation Allowance:
Beginning of year (2,347,000) (1,681,000)
(Increase) decrease (264,000) (666,000)
----------- -----------
End of year (2,611,000) (2,347,000)
----------- -----------
Net Deferred Tax Assets $ -- $ --
=========== ===========
The Company's deferred tax benefits result primarily from net operating losses
for which there were no currently refundable federal taxes. March 31, 2006,
the Company has federal net operating loss carryforwards of approximately
$7,769,000 which, if not utilized, will expire in the years 2009 through 2025.
Reclassification
- ----------------
Certain amounts from prior periods have been reclassified to conform to the
current period presentation. This reclassification has resulted in no changes to
the Company's accumulated deficit or net losses presented.
NOTE 3 - MINERAL PROPERTIES
The following describes the Company's significant mineral properties at March
31, 2006:
18
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2006
- --------------------------------------------------------------------------------
Andacollo Mine, Chile
- ---------------------
During the fourth quarter of fiscal 2005, Trend entered into negotiations to
purchase 100% of Compania Minera Dayton ("CMD"), a Chilean corporation that owns
and operated the Andacollo Mine in Chile. On September 20, 2005, Trend bought
30% of the corporation's shares (and effectively 30% of the aforementioned mine)
while a separate group of investors purchased the remaining 70% on the same
date.
The Company paid an initial $900,000 in cash for the acquisition. The Company
also paid out additional related expenses for which it was to be repaid 70% by
the other investors. Before the end of the year, the investor group then
initiated an offer to buy Trend's 30% stake in exchange for cash of $1,122,975,
a 1% net smelter returns royalty, and a 30% back-in right excercisable through
April 1, 2006. At September 30, 2005 the cash portion of the purchase price had
not been received by the Company. As a result of this transaction, the Company
recognized a gain of $69,804. During the period ended December 31, 2005 the
Company received $1,000,000 on October 6, 2005 and the remaining $122,975 on
December 9, 2005.
The final operating permits were obtained on December 27, 2005 for the mine,
which is expected to be fully operational by the second quarter of 2006, after
which time Trend is contractually entitled to receive 1% of gold revenues from
the mine in monthly installments.
Diabase Peninsula, Cree Lake Area, Saskatchewan, Canada
- -------------------------------------------------------
On September 15, 2004, the Company announced that it had diversified into
uranium exploration with the staking of a mining claim comprising approximately
940 hectares (approximately 4 square miles) in the Athabasca Basin of
Saskatchewan.
The Company announced in October 2004 that it had signed an option to purchase
an additional mining claim at Cree Lake which covers approximately 6.5 square
miles. The new land position is located immediately adjacent to, and southwest
of, Trend's existing Cree Lake project at Diabase Peninsula and is referred to
herein as the Diabase Peninsula Lease.
Terms of the option require Trend to maintain the claim group in good standing
by performing a minimum of approximately CDN $20,172 worth of field work per
year. In addition, there are property payments totaling CDN $15,000, $20,000,
and $30,000, respectively, in each of the first three years. Two of these
payments have been made and the third is due in September 2006. Trend may
exercise its right to purchase the claims for CDN $1 million any time during the
first eight years of the option, at which time the property remains subject to a
3% gross royalty on any and all minerals produced.
Subsequent to the acquisition of the Diabase Peninsula Lease, Trend staked one
more claim on the southwestern edge of the lease for an additional 1603 hectares
(6.2 square miles), such that the aggregate area of uranium claims in the
Athabasca Basin totals 4224 hectares (16.2 square miles).
In December 2004, Trend announced that it and Nuinsco Resources Limited
("Nuinsco") signed a Letter of Intent to form a 50-50 joint venture to own,
operate and explore the three Cree Lake/Diabase Peninsula claims. The agreement
provides that Nuinsco, at its expense, will immediately undertake an exploration
program consisting of geophysical surveys and geochemical sampling to be
followed by drilling. A definitive joint venture agreement was executed on
September 29, 2005, under terms of which Nuinsco must maintain all three claims
in good standing and must spend CDN $2 million by December of 2007 in order to
earn its 50% share of the joint venture. Additionally, Nuinsco will grant to the
Company 250,000 freely trading shares of Nuinsco common stock. At March 31, 2006
the value of the Nuinsco shares was $49,299 and is included in accounts
receivable in the financial statements.
19
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2006
- --------------------------------------------------------------------------------
Montana Properties
- ------------------
In January 2005, Trend announced that it signed a letter of intent to form a
50-50 joint venture with Aurora Metals Limited ("Aurora"). The agreement
provides, that Trend will explore for platinum group metals on portions of an
Aurora claim known as the "Stillwater Intrusive Complex" in Montana." Trend will
be the operator during the exploration stage and will earn 50% in the project by
spending $2 million over next 5 years. Additionally, Trend issued 50,000 shares
of its common stock on commencement of the agreement. Also, Trend must issue
20,000 shares and fund $20,000 in the first year, and $20,000 in cash or stock
each year thereafter until it has spent the agreed upon sum of $2 million, at
which time the 50-50 joint venture will be formed. At March 31, 2006, the
Company has spent approximately $270,000 on the project.
Wyoming Properties
- ------------------
In September 1999, the Company entered into an option agreement with General
Minerals Corporation ("GMC") to acquire the Lake Owen Project located in Albany
County, Wyoming. The agreement with GMC entitled the Company to receive 104
unpatented mining claims in exchange for 715,996 shares of common stock, $40,000
in cash to be paid in four quarterly payments of $10,000 and $750,000 in
exploration expenditure commitments to be incurred over a three-year option
period. In May 2000, the Company issued an additional 129,938 shares of common
stock under this agreement for the acquisition of the Lake Owen Project.
The Company and GMC subsequently entered into an amendment to the agreement
under which (i) the Company issued 416,961 shares of common stock to GMC upon
GMC's exercise of preemptive rights, (ii) the Company agreed to perform an
additional $15,000 of geophysical work on the Lake Owen Project prior to
December 31, 2000 (subsequently modified), (iii) the Company issued 200,000
additional shares and warrants exercisable until June 2002 to purchase 200,000
shares at $0.70 per share, and (iv) GMC agreed to terminate its antidilution and
preemptive rights as provided in the original agreement. The Company has
expensed $295,873 for cash paid and common stock issued to acquire this project.
The 200,000 warrants have expired. See Note 5.
In 1999-2000, the Company staked additional claims at Lake Owen and an adjoining
area, Albany West, and now holds 601 unpatented mining claims at the Lake Owen
Project.
In March 2002, the Company issued 1,100,000 shares, valued at $770,000 in full
satisfaction of cash commitments relating to exploration activities. The
issuance of these shares resulted in the full ownership of the Lake Owen Project
property by Trend Mining Company.
At March 31, 2006, the Company has begun exploration of this property.
Peter Lake, Saskatchewan, Canada
- --------------------------------
As of September 30, 2005, the Company holds 8 mining claims covering 36,648
hectares (141 square miles) in the Peter Lake Domain of Saskatchewan. The Peter
Lake Domain is recognized to host known occurrences of copper-nickel and
platinum-palladium mineralization. During the summer of 2005, the Company
executed a broad reconnaissance program to search for extractable concentrations
of such mineralization. The Company's position at Peter Lake evolved as follows:
In August 2000, the Company staked five claims comprising about 26,253 hectares
(101 square miles) in northern Saskatchewan. In 2002, the Company allowed these
claims to lapse and subsequently restaked them plus one additional claim
comprising 5,543 hectares (21 square miles).
In October of 2004 the Company expanded its Peter Lake Project by acquiring 3
claims: An approximate two square miles near Ant Lake, 3.5 square miles at Swan
Lake, and 13 square miles at Seahorse Lake. The Company will be required to
spend approximately CDN$ 58,224 in 2006 to retain these claims.
20
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2006
- --------------------------------------------------------------------------------
At March 31, 2006, the Company has begun exploration of this property. The
Company commenced exploration at Peter Lake in 2005 and at March 31, 2006
continues to hold the property in hopes of finding a joint venture partner.
Nevada Properties
- -----------------
At March 31, 2006, the Company retains a 1.5% net smelter returns royalty
interest in the Pyramid Mine, which consists of five unpatented lode mining
claims within the Walker Indian Reservation near Fallon, Nevada, but has
abandoned all other projects in the state of Nevada.
NOTE 4 - CAPITAL STOCK
Preferred Stock
- ---------------
Under its amended Delaware certificate of incorporation, Trend authorized the
issuance of 20,000,000 shares of preferred stock with a par value of $0.01 per
share, with rights and preferences to be determined by the Company's board of
directors.
In 2001, one share of Series A preferred stock was created and issued to Mr.
Thomas S. Kaplan under an agreement which required the holder's approval of all
common and preferred stock and equity issuances until such time as Mr. Kaplan,
Electrum LLC or Mr. Asher B. Edelman no longer beneficially owned more than
twenty percent of the Company's outstanding stock. Holders of the Company's
common stock were to vote on the continued existence of the Series A preferred
stock at each annual meeting subsequent to this share's issuance. In the event
that the Company's preferred stock is not continued, the outstanding share of
Series A preferred stock could be tendered for one share of the Company's common
stock.
In October 2002, the Company and Mr. Kaplan reached an agreement canceling this
one share.
Common Stock
- ------------
On March 28, 2001, the Company completed its reincorporation in Delaware. Under
its amended certificate of incorporation, Trend authorized the issuance of
100,000,000 shares of common stock with a par value of $0.01 per share. Each
holder of common stock is entitled to one vote for each share of common stock
held on all matters as to which holders of common stock are entitled to vote.
Except for and subject to those preferences, rights, and privileges expressly
granted to the holders of classes of stock at the time outstanding having prior
rights, and series of preferred stock, the holders of common stock shall have
exclusively all other rights of stockholders of the Company, including, but not
limited to, the right to receive dividends, and in the event of any distribution
of assets upon the dissolution and liquidation of the Company, the right to
receive ratably and equally al of the assets of the Company remaining after the
payment to the holders of preferred stock of the specific amounts, if any, which
they are entitled to receive.
During the year ended September 30, 2005, the Company issued 199,585 shares of
common stock valued at $46,587 for accounts payable and services, 634,518 shares
of common stock valued at $146,000 for director, officer and employee
compensation, 276,000 shares of common stock valued at $88,610 for financing
expenses and 295,482 shares of common stock valued at $55,669 for convertible
debt. Of these shares 600,000 were issued under the 2000 Equity Incentive Plan
(see Note 5).
During the year ended September 30, 2004, the Company issued 626,130 shares of
common stock valued at $150,845 for accounts payable, 125,000 shares of common
stock valued at $25,000 for investments, 312,500 shares of common stock valued
at $74,425 for services, 180,000 shares of common stock valued at $36,000 for
director, officer and employee compensation, and 1,675,000 shares of common
stock for $335,000 cash. In addition, the Company received the proceeds from a
gain on the sale of internal securities in the amount of $210,914. This gain was
recorded as additional paid-in capital.
21
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2006
- --------------------------------------------------------------------------------
On December 6, 2005, the Company sold in private placement, 1,500,000 shares of
the Company's common stock for $0.10 per share, or $150,000.
During the quarter ended March 31, 2006, the Company issued 437,940 shares of
common stock valued at $50,859 for payment on convertible debt, 150,000 shares
of common stock valued at $15,000 for financing fees, 20,000 shares of common
stock valued at $3,600 for exploration expense, and cancelled 435,603 shares of
common stock valued at $82,779 that had paid convertible debt.
See Note 5 regarding future loan repayments in units of Trend securities.
The following table discloses the Company's stock and equity transactions during
its exploration stage. This information meets the disclosure requirements of
Statement of Financial Accounting Standards No. 7 for development and
exploration stage disclosures. The following abbreviations are used in the
table: CS for common stock; OPT for options; and WAR for warrants.
22
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2006
- --------------------------------------------------------------------------------
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
Common Additional Total Number Value of
Issue Number of Price per Stock Paid-in Total Number of of Options/
Date Shares Share Amount Capital Amount Options Warrants Warrants
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
Balance, October
1, 1996 1,754,242 $ - $17,542 $663,218 $680,760 $ -
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash 3/25/1997 200,000 0.50 2,000 98,000 100,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Payment of
liabilities and
expenses 9/30/1997 45,511 0.5 455 22,301 22,756
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
Balance September
30, 1997 1,999,753 19,998 783,518 803,516
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Mineral
property 7/23/1998 150,000 0.50 1,500 73,500 75,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash 7/23/1998 7,500 0.2 75 1,425 1,500
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Lease
termination 7/23/1998 12,000 0.5 120 5,880 6,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Debt 7/23/1998 80,000 0.5 800 39,200 40,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
OPT for Financing 9/24/1998 180,000 2,659
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for
Compensation 9/30/1998 9,000 0.5 90 4,410 4,500
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
Balance September
30, 1998 2,258,253 22,583 907,933 930,516 180,000 2,659
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Debt,
investment and
expenses 10/12/1998 9,210 0.30 92 2,671 2,763
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Equipment 10/30/1998 600,000 0.3 6,000 174,000 180,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash 11/28/1998 5,000 0.2 50 950 1,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Officers'
compensation 12/31/1998 30,858 0.44 309 13,191 13,500
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Directors'
compensation 1/25/1999 16,500 0.25 165 3,960 4,125
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Officers'
compensation 1/31/1999 8,572 0.35 86 2,914 3,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Officers'
compensation 3/31/1999 24,000 0.25 240 5,760 6,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Consulting
services 3/31/1999 6,000 0.25 60 1,440 1,500
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Consulting
services 4/30/1999 32,000 0.28 320 8,640 8,960
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Officers'
compensation 4/30/1999 12,000 0.28 120 3,240 3,360
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Consulting
services 5/31/1999 73,333 0.25 733 17,600 18,333
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Consulting
services 6/30/1999 34,353 0.25 344 8,244 8,588
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Officers'
compensation 6/30/1999 50,000 0.16 500 7,500 8,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Consulting
services 6/30/1999 95,833 0.16 958 14,375 15,333
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
23
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2006
- --------------------------------------------------------------------------------
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
Common Additional Total Number Value of
Issue Number of Price per Stock Paid-in Total Number of of Options/
Date Shares Share Amount Capital Amount Options Warrants Warrants
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Consulting
services 7/6/1999 5,000 0.25 50 1,200 1,250
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
OPT for Financing
activities 7/22/1999 50,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Mineral
property option 7/27/1999 715,996 0.13 7,160 82,471 89,631
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash 7/29/1999 33,333 0.15 333 4,667 5,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Consulting
services 7/30/1999 146,603 0.12 1,466 16,126 17,592
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Consulting
services 7/31/1999 133,697 0.12 1,337 14,707 16,044
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Officers'
compensation 7/31/1999 41,667 0.12 417 4,583 5,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash 8/4/1999 16,667 0.15 167 2,333 2,500
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Rent 8/9/1999 1,000 0.25 10 240 250
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
OPT for Financing 8/13/1999
activities 100,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash 8/15/1999 50,000 0.05 500 2,000 2,500
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Consulting
services 8/17/1999 5,000 0.25 50 1,200 1,250
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash 8/17/1999 100,000 0.05 1,000 4,000 5,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash 8/26/1999 100,000 0.1 1,000 9,000 10,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Consulting
services 8/31/1999 159,750 0.25 1,598 38,341 39,938
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Prepaid
expenses 9/10/1999 50,000 0.33 500 16,000 16,500
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash 9/10/1999 50,000 0.1 500 4,500 5,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash 9/13/1999 200,000 0.05 2,000 8,000 10,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Consulting
services 9/30/1999 80,053 0.26 801 20,013 20,814
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Officers'
compensation 9/30/1999 133,333 0.26 1,333 33,334 34,667
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Consulting
services 9/30/1999 67,500 0.26 675 16,875 17,550
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
Balance
September 30,
1999 5,345,511 53,455 1,452,009 1,505,464 330,000 2,659
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Consulting
services 10/4/1999 50,000 0.26 500 12,500 13,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash 10/22/1999 25,000 0.2 250 4,750 5,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Consulting
services 10/31/1999 273,675 0.31 2,737 82,103 84,840
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Officers'
compensation 11/30/1999 52,694 0.31 527 15,807 16,334
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Consulting
services 11/30/1999 4,327 0.31 43 1,298 1,341
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS, OPT & WAR for
Cash 12/31/1999 1,000,000 0.012 10,000 2,414 12,414 8,108,000 6,250,000 87,586
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Consulting
services 12/31/1999 1,200 0.35 12 408 420
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Consulting
services 1/4/2000 15,000 0.28 150 4,050 4,200
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Investments 1/15/2000 200,000 0.33 2,000 64,000 66,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Incentive
fees 1/17/2000 65,285 0.33 653 20,891 21,544
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
OPT Expiration 1/22/2000 -50,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
24
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2006
- --------------------------------------------------------------------------------
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
Common Additional Total Number Value of
Issue Number of Price per Stock Paid-in Total Number of of Options/
Date Shares Share Amount Capital Amount Options Warrants Warrants
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash 1/25/2000 14,286 0.35 143 4,857 5,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash from
options 2/22/2000 1,000,000 0.142 10,000 131,900 141,900 -1,000,000 -1,900
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS & OPT for
Employees'
compensation 2/25/2000 16,667 0.66 167 10,833 11,000 33,333 3,070
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Consulting
services 2/29/2000 10,000 0.72 100 7,100 7,200
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Mineral
property 3/24/2000 50,000 1.03 500 51,000 51,500
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash from
options 3/27/2000 2,500,000 0.142 25,000 329,750 354,750 -2,500,000 -4,750
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Consulting
services 3/31/2000 75,000 0.81 750 60,000 60,750
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Officers'
compensation 3/31/2000 3,000 0.81 30 2,400 2,430
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Mineral
property 4/4/2000 50,000 0.75 500 37,000 37,500
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS & OPT for 4/11/2000 150,000 0.7 1,500 103,500 105,000 67,000 12,750
Directors'
compensation
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Deferred
mineral property
acquisition costs 5/8/2000 129,938 0.125 1,299 14,943 16,242
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Consulting
services 5/15/2000 9,975 0.63 100 6,184 6,284
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash 6/26/2000 416,961 0.056 4,170 19,361 23,531
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS & WAR for
Modification of
stockholder
agreement 6/26/2000 200,000 0.6 2,000 118,000 120,000 200,000 30,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
OPT & WAR for
Modification of
stockholder
agreement 6/27/2000 1,729,762 1,729,761 14,641
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash from
options 6/29/2000 1,597,588 0.064 15,976 86,740 102,716 -1,597,588 -2,716
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Officers'
compensation 6/30/2000 9,000 0.81 90 7,185 7,275
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Consulting
services 6/30/2000 1,000 0.7 10 690 700
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
OPT Agreement
Modification 7/7/2000 -127,500
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash from
options 7/14/2000 10,000 0.3 100 2,900 3,000 -10,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash from
options 7/21/2000 1,800,000 0.122 18,000 201,060 219,060 -1,800,000 -12,060
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash from
options 7/26/2000 650,000 0.122 6,500 72,605 79,105 -650,000 -4,355
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Officers'
compensation 7/31/2000 3,000 1.24 30 3,690 3,720
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash from
options 8/1/2000 50,000 0.15 500 7,000 7,500 -50,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash from
options 8/1/2000 50,000 0.3 500 14,500 15,000 -50,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash from
options 8/14/2000 90,000 0.122 900 10,053 10,953 -90,000 -603
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash from
options 8/24/2000 1,000,000 0.122 10,000 111,700 121,700 -1,000,000 -6,700
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
25
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2006
- --------------------------------------------------------------------------------
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
Issue Common Additional Total Number Value of
Issue Number of Price per Stock Paid-in Total Number of of Options/
Date Shares Share Amount Capital Amount Options Warrants Warrants
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Directors'
compensation 8/25/2000 1,500 1 15 1,485 1,500
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash from
options 8/31/2000 15,000 0.3 150 4,350 4,500 -15,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Officers'
compensation 8/31/2000 1,000 1.13 10 1,120 1,130
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash from
options 9/22/2000 1,200,174 0.122 12,002 134,720 146,722 -1,200,174 -8,702
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Consulting
services 9/22/2000 90,000 1.45 900 72,000 72,900
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Officers'
compensation 9/30/2000 6,000 1.35 60 8,040 8,100
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
Cash for Warrants 9/30/2000 10,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS/ WAR Adjustment 9/30/2000 -5
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
Balance September
30, 2000 18,232,776 182,328 3,296,897 3,479,225 127,833 8,179,761 118,920
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash from
options 10/10/2000 33,333 0.39 333 12,737 13,070 -33,333 -3,070
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Consulting
services 10/15/2000 10,000 1.15 100 11,400 11,500
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Officers'
compensation 10/31/2000 3,000 1.3 30 3,870 3,900
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
WAR for
Consulting
services 11/1/2000 250,000 123,775
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Employees'
compensation 12/6/2000 2,200 0.9 22 1,958 1,980
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash 12/20/2000 100,000 1 1,000 99,000 100,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
WAR for
Consulting
services 12/31/2000 180,000 46,746
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Consulting
services 1/2/2001 10,000 1.35 100 13,400 13,500
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash 1/11/2001 47,000 1 470 46,530 47,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Consulting
services 1/11/2001 3,407 1 34 3,373 3,407
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Consulting
services 1/23/2001 604 1.1 6 658 664
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash 1/24/2001 25,000 1 250 24,750 25,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
WAR for Loan
agreements 2/1/2001 285,000 76,551
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash 2/6/2001 20,000 1 200 19,800 20,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Consulting
services 2/6/2001 483 1 5 478 483
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Directors'
compensation 2/23/2001 75,000 0.85 750 63,000 63,750
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
OPT for Director,
officer and
employee
compensation 2/23/2001 1,200,000 354,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
WAR for Loan
agreements 3/12/2001 50,000 13,430
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
WAR Extension of
exercise period 3/12/2001 608,058
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for
Modification of
contract 3/22/2001 3,000 0.78 30 2,310 2,340
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
26
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2006
- --------------------------------------------------------------------------------
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
Common Additional Total Number Value of
Issue Number of Price per Stock Paid-in Total Number of of Options/
Date Shares Share Amount Capital Amount Options Warrants Warrants
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Interest
payments 4/3/2001 5,000 0.83 50 4,100 4,150
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Consulting
Services 4/13/2001 967 0.98 10 938 948
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Mineral
Property Expense 5/11/2001 1,000 0.85 10 840 850
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
WAR for Loan
agreement 7/1/2001 185,000 45,079
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Services 7/31/2001 40,000 0.73 400 28,800 29,200
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Interest 8/8/2001 5,000 0.77 50 3,800 3,850
payments
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
WAR Attached to
note 8/16/2001 90,000 6,487
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Services 8/28/2001 3,700 0.3 37 1,063 1,100
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Loans 8/31/2001 92,000 1 920 91,080 92,000
Payable
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Loans
Payable 9/28/2001 42,500 1 425 42,075 42,500
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
Options Expired -319,700
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
Balance September 18,755,970 187,559 3,772,857 3,960,416 974,800 9,219,761
30, 2001 1,389,976
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Note
Payable 10/8/2001 25,000 1 250 24,750 25,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Payable 10/24/2001 12,536 0.55 126 6,769 6,895
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
WAR for Loan
agreements 11/1/2001 129,445 9,876
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
WAR Cancelled 11/15/2001 2,750 2,750 -275,000 -2,750
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Financing
expense 1/25/2002 64,429 0.45 644 28,349 28,993
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
Interest Expense
forgiven by
shareholders 1/30/2002 42,950 42,950
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
WAR Issued 1/30/2002 180,000 21,660
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Financing
expense 2/8/2002 18,000 0.4 180 7,020 7,200
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Services 2/8/2002 60,000 0.4 600 23,400 24,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Services 2/22/2002 20,000 0.4 200 7,800 8,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
OPT for Director,
officer and
employee
compensation 3/12/2002 307,800 29,528
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
Options Expired 3/12/2002 59,063 59,063 -196,863 -59,063
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Mineral
properties 3/20/2002 1,100,000 0.7 11,000 759,000 770,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Services 5/12/2002 32,500 0.7 325 22,425 22,750
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
WAR for Loan
agreements 6/30/2002 113,413 23,816
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
WAR Expired 6/30/2002 30,001 30,001 -200,000 -30,001
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
Options Expired 7/19/2002 -12,500
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash 9/30/2002 2,500,000 0.1 25,000 225,000 250,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
Balance September
30, 2002 22,588,435 225,884 5,012,134 5,238,018 1,073,237 9,167,619 1,383,042
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
27
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2006
- --------------------------------------------------------------------------------
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
Common Additional Total Number Value of
Issue Number of Price per Stock Paid-in Total Number of of Options/
Date Shares Share Amount Capital Amount Options Warrants Warrants
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
Misc. Common
Stock ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
Adjustment 10/1/2002 29,555 0.01 296 296
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash 10/31/2002 4,550,000 0.1 45,500 409,500 455,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Services 10/31/2002 683,000 0.12 6,830 78,490 85,320
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash 11/12/2002 600,000 0.1 6,000 54,000 60,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash 12/4/2002 100,000 0.1 1,000 9,000 10,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash 1/14/2003 250,000 0.1 2,500 22,500 25,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Investments 1/14/2003 450,000 0.21 4,500 88,668 93,168
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Note
payable 1/14/2003 369,160 0.1 3,692 33,224 36,916
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Services 1/14/2003 280,687 0.14 2,807 35,792 38,599
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Services 4/1/2003 142,592 0.21 1,426 28,574 30,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Services 4/11/2003 150,000 0.17 1,500 24,000 25,500
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Services 9/15/2003 400,000 0.14 4,000 53,841 57,841
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Director,
officer and
employee
compensation 9/15/2003 1,350,656 0.1 13,507 122,149 135,656
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Services 9/30/2003 425,000 0.15 4,250 60,091 64,341
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Financing
costs 9/30/2003 860,000 0.26 8,600 215,000 223,600
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
Balance September
30, 2003 33,229,085 332,291 6,246,963 6,579,253 1,073,237 9,167,619 1,383,042
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash 5/6/2004 250,000 0.2 2,500 47,500 50,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash 5/6/2004 250,000 0.2 2,500 47,500 50,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash 5/7/2004 550,000 0.2 5,500 104,500 110,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash 5/7/2004 250,000 0.2 2,500 47,500 50,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash 5/10/2004 50,000 0.2 500 9,500 10,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash 5/11/2004 157,500 0.2 1,575 29,925 31,500
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash 5/11/2004 17,500 0.2 175 3,325 3,500
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Investment 5/13/2004 125,000 0.2 1,250 23,750 25,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash 5/18/2004 50,000 0.2 500 9,500 10,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash 5/18/2004 45,000 0.2 450 8,550 9,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash 5/18/2004 5,000 0.2 50 950 1,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for services 5/26/2004 140,000 0.35 1,400 47,600 49,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Director,
officer and
employee
compensation 6/3/2004 180,000 0.2 1,800 34,200 36,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Services 6/9/2004 22,500 0.33 225 7,200 7,425
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Accounts
Payable 8/20/2004 13,630 0.2 136 2,626 2,762
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Accounts
Payable 8/20/2004 160,000 0.2 1,600 30,400 32,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Services 8/20/2004 150,000 0.2 1,500 28,500 30,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Accounts
Payable 8/20/2004 26,500 0.25 265 6361 6626
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Accounts
Payable 8/20/2004 60,000 0.25 600 14,307 14,907
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Accounts
Payable 8/20/2004 20,000 0.25 200 4,800 5,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Accounts
Payable 8/20/2004 166,000 0.25 1660 39,890 41,550
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Cash 9/9/2004 50,000 0.2 500 9,500 10,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
Options issued to
officer and
director 1,000,000 95,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
28
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2006
- --------------------------------------------------------------------------------
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
Common Additional Total Number Value of
Issue Number of Price per Stock Paid-in Total Number of of Options/
Date Shares Share Amount Capital Amount Options Warrants Warrants
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
Expired options
and warrants 503,774 503,774 -873,237 -299,445 -503,774
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
Gain on sale of
internal
securities 210,194 210,194
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
Balance September
30, 2004 35,967,715 $359,677 $7,518,815 $7,878,492 1,200,000 8,868,174 $974,268
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Accounts
Payable 11/11/2004 10,000 0.38 100 3,700 3,800
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
Warrants for
convertible debt 12/8/2004 750,000 93,825
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
Options for
officer and
director
compensation 12/31/04 100,000 19,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for services 1/3/2005 50,000 0.23 500 11,000 11,500
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
Expired warrants 1/9/05 6,300 6,300 -90,000 -6,300
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
Warrants for
convertible debt 1/27/2005 5,200,000 515,274
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
Cancelled
warrants for
convertible debt 1/27/2005 -750,000 -93,825
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for services 2/23/2005 37,500 0.22 375 7,935 8,310
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for services 2/25/2005 2,500 0.20 25 450 500
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
Warrants for
convertible debt 3/22/2005 450,000 54,137
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for financing
costs 4/1/2005 210,000 0.32 2,100 70,350 72,450
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
Expired warrants 6/9/05 3,837 3,837 -40,000 -3,837
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
Options for
officer and
director
compensation 6/30/05 200,000 38,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Director,
officer and
employee
compensation 7/1/2005 600,000 0.23 6,000 132,000 138,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
Options granted
for officer and
director
compensation 7/11/05 650,000 86,840
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
Warrants for
convertible debt 7/28/2005 1,400,002 85,265
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Director,
officer and
employee
compensation 7/30/2005 17,817 0.22 178 3,822 4,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Accounts
Payable 8/15/2005 23,108 0.24 231 5,419 5,650
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Financing
Expenses 8/15/2005 66,000 0.24 660 15,500 16,160
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Director,
officer and
employee
compensation 8/30/2005 16,701 0.24 167 3,833 4,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for
convertible debt 9/1/2005 295,482 0.20 2,955 55,669 58,624
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for services 9/2/2005 76,477 0.22 765 16,062 16,827
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
Balance September
30, 2005 37,373,300 $373,733 $8,025,700 $8,399,433 2,150,000 14,738,176 $1,762,647
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS for Director,
and Officer
compensation 12/31/05 600,000 .15 6,000 84,000 90,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS issued for cash 12/06/05 1,500,000 .10 15,000 135,000 150,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS issued for
convertible debt 12/31/05 562,505 .15 5,625 80,305 85,930
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
29
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2006
- --------------------------------------------------------------------------------
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
Common Additional Total Number Value of
Issue Number of Price per Stock Paid-in Total Number of of Options/
Date Shares Share Amount Capital Amount Options Warrants Warrants
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS issued for
services 11/21/05 7,912 .23 79 1721 1800
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
Balance at
12/31/05 40,043,717 $400,437 $8,326,726 $8,727,163 2,150,000 14,738,176 $1,762,647
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS issued for
convertible debt 01/01/06 65,556 .10 656 6,771 7,427
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS issued for
expense 01/03/06 20,000 .18 200 3,400 3,600
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS issued for
convertible debt 01/04/06 48,012 .11 480 5,262 5742
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS issued for
convertible debt 01/31/06 35,118 .1624 351 5,352 5,703
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS issued for
convertible debt 02/01/06 61,678 .1520 617 5,551 6,168
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS issued for
convertible debt 02/03/06 39,009 .1452 390 5274 5,664
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
Expired warrants 02/21/06 -3,241,669
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS issued for
convertible debt 03/01/06 93,099 .10 930 8,379 9,309
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS issued for
convertible debt 03/03/06 49,871 .1133 498 4,722 5,220
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS cancelled for
convertible debt 03/29/06 -435,603 -4356 -78423 -82,779
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS issued for
convertible debt 03/31/06 45,657 .1232 456 5,169 5,625
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
CS issued for
financing fees 03/31/06 150,000 .10 1,500 13,500 15,000
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
Balance at 3/31/06 40,216,054 $402,161 $8,311,684 $8,713,842 2,150,000 11,496,507 1,762,647
- ------------------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- ---------- -----------
See Note 5 for summary disclosure of options and warrants outstanding.
NOTE 5 - COMMON STOCK OPTIONS AND WARRANTS
In accordance with SFAS 123, the Company utilizes the Black Scholes fair value
model to value all options and warrant grants. Upon exercise of options and
warrants, all common stock shares issued thereunder will have the same rights
and privileges as other common stock outstanding.
On February 23, 2001, the Company's shareholders approved the adoption of the
2000 Equity Incentive Plan and the reservation of 5,000,000 shares of common
stock for distribution under the plan. These shares and options to acquire those
shares may be granted to the Company's employees, directors and consultants. The
plan will terminate on January 4, 2011. The exercise price of options granted
under this plan may not be less than the fair market price on the date of grant
and in some cases not less than 110% of the fair market price. The terms,
vesting schedule, transfer restrictions and expiration dates are to be
determined by the Company's board of directors. See Note 6 for shares issued
under the plan.
In the Black-Scholes Option Price Calculations below, the Company used the
following assumptions to estimate fair value: the risk-free interest rate of
5.0%; volatility of 78% - 91%; and a life of 3-5 years. The Company also assumed
that no dividends would be paid on common stock.
Electrum LLC/Tigris Financial Group Ltd.
- ----------------------------------------
On December 29, 1999, the Company entered into a stock purchase agreement with
Tigris Financial Group Ltd. ("Tigris") under which Tigris purchased 1,000,000
shares of the Company's common stock for $100,000, was granted an option until
March 28, 2000 to acquire up to an additional 3,500,000 shares of common stock
for an exercise price of $0.14 per share, (or $490,000 in the aggregate), and
was granted an option to purchase, for $10,000, warrants to purchase an
additional 6,250,000 shares of the Company's common stock at an exercise price
of $0.40 per share. The Company used the Black-Scholes Option Price Calculation
effective as of the transaction
30
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2006
- --------------------------------------------------------------------------------
date and estimated the fair values to be $37,524 for the option and $50,062 for
the warrants. On March 8, 2000, Tigris assigned its rights under the stock
purchase agreement to Electrum LLC ("Electrum"), an affiliate.
Electrum exercised its option and acquired 3,500,000 shares of the Company's
common stock in February and March of 2000. Pursuant to the terms of the stock
purchase agreement, Electrum received an option to purchase up to an additional
4,608,000 shares of common stock. This agreement was subsequently modified to
enable Electrum to acquire up to an additional 1,597,588 shares at $0.062 per
share and to acquire up to 4,740,174 shares at an exercise price of $0.115 per
share. In addition, the option to purchase warrants was modified to enable
Electrum to purchase, for $10,000, warrants to buy up to 7,979,761 shares at an
exercise price of $0.40 per share until September 20, 2003. The Company utilized
the Black-Scholes Option Price Calculation to estimate the fair value of the
modifications as of the grant date and recorded $4,262 for the options and
$10,379 for the warrants. The $14,641 total amount was charged as a financing
expense.
Electrum has exercised all of its options to purchase the Company's common stock
and its option to purchase the warrants. In connection with its acquisition of
those shares, Electrum has assigned 5,530,174 shares and 1,000,000 warrants to
third parties.
Pursuant to certain loan agreements, the Company issued warrants to Electrum to
acquire 285,000 shares at $1.50 per share in February 2001, exercisable through
September 30, 2003, warrants to acquire 50,000 shares at $1.50 per share in
March 2001, exercisable through September 30, 2006, and warrants to acquire
185,000 shares at $1.50 per share in July 2001, exercisable through September
30, 2006. The Company also extended through September 30, 2006 the expiration
dates of the 285,000 warrants, together with the warrants to acquire 7,979,761
shares. The fair values of the 285,000 warrants, 50,000 warrants, and the
185,000 warrants estimated on their respective grant dates, as modified for the
expiration date extension in the case of the 285,000 warrants, using the
Black-Scholes Option Price Calculation, were $76,551, $13,430 and $45,079,
respectively. The fair value of the modification to extend the expiration date,
estimated as of the date of the modification for the 7,979,761 warrants, using
the Black-Scholes Option Price Calculation, was $608,058, which was charged to
financing expense.
Pursuant to a 2002 agreement to readjust certain terms of loans and warrants,
the Company borrowed an additional $150,000 from Electrum, and Electrum waived
accrued interest owed by the Company as of January 29, 2002 totaling $37,384. In
consideration of the additional loan and waiver, the Company issued to Electrum
additional warrants to purchase 150,000 shares of common stock for $1.00 per
share through January 30, 2007. Electrum may, at its sole discretion, elect to
be repaid the $150,000 loan by converting the amount outstanding into units of
the Company's securities, at the rate of one unit per $0.50 of loans converted.
Each unit consists of one share of common stock and a warrant to purchase one
share of common stock at a price of $0.50 per share, exercisable though January
30, 2007. In addition, the Company and Electrum agreed to amend the prior loan
agreements to reduce the conversion rate of the existing units, previously at a
rate of one unit per $1.25 of loans converted to a rate of one unit per $0.50 of
loans converted, and to reduce the exercise price of the warrants included in
the units from $1.50 to $.50 per share. In addition, the exercise price of
warrants included in the units to purchase a total of 520,000 shares of common
stock, owned by Electrum, was reduced from a price of $1.50 per share to $1.00
per share and the exercise term of each such warrant was extended for a period
of one year.
As of March 31, 2006 and 2005, Tigris and Electrum own approximately 15% of the
Company's outstanding common stock and, assuming that Electrum exercises its
warrants and that the Company has issued no other shares, would own
approximately 31% of the Company's resultant (fully diluted) outstanding common
stock.
Tigris and Electrum have the right to proportional representation on the
Company's board of directors and registration rights for all of the Company's
common stock acquired through the agreement held by them.
On February 12, 2004, the Company and Electrum and LCM Holdings reached an
agreement to adjust both the conversion terms on approximately $900,000 worth of
debt outstanding to the Lenders and the exercise prices of related warrants. Per
the terms of the agreement, the Lenders can convert each $1.25 of loans into a
unit consisting of one share of common stock and one warrant. The warrant is
exercisable for a period of five years from the date of
31
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2006
- --------------------------------------------------------------------------------
conversion and is exercisable at a price of $1.50. Additionally, terms of
existing outstanding warrants were modified which generally increased the
exercise price and shortened the related expiration dates. These modifications
had no financial statement impact for the period herein reported.
Furthermore, also on February 12, 2004, the Company reached an agreement with
the Lenders concerning certain prior separate stock transactions which had
benefited certain controlling shareholders. In compliance with the Securities
and Exchange Rule 16b, the shareholders remitted the gain of $210,194 to the
Company.
Other Issuances
During the year ended September 30, 2004 the Company granted 1,000,000 options
with a strike price of $0.37 to an officer and director. The Company also
granted 200,000 options to a consultant with a strike price of $0.80 per share.
These options vest as follows: 700,000 shares vested immediately, 100,000 shares
vested on December 31, 2004, 200,000 vested on June 30, 2005, and 200,000 will
vest on June 30, 2006.
During the year ended September 30, 2005, the Company granted 1,000,000 options
to two officers with a strike price of $0.37 per share. These options vest as
follows: 650,000 vested immediately, 200,000 will vest on July 11, 2006, and
150,000 will vest on July 11, 2007.
For the six month period ended March 31, 2006, there were no common stock
issuances due to the exercise of warrants. In accordance with SFAS 123, the
Company utilizes the Black Scholes fair value model to value all option and
warrant grants.
No options or warrants were granted during the six months ended March 31, 2006.
Following is a summary of stock options for the six months ended March 31, 2006:
Weighted
Number Average
of Shares Exercise Price
Outstanding at October 1, 2005 2,200,000 $ 0.37
Granted - -
Exercised - -
Expired - -
--------- -------
Outstanding at March 31, 2006 2,200,000 $ 0.37
========= =======
Options exercisable at March 31, 2006 1,650,000 $ 0.39
========= =======
Weighted average fair value of options granted at March 31, 2006 -
========= =======
Total compensation costs related to non-vested stock options as of March 31, 2006 $84,760
========= =======
Weighted average period of nonvested stock options as of March 31, 2006 6 months
32
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2006
- --------------------------------------------------------------------------------
Following is a summary of warrants outstanding at March 31, 2006:
Number of Warrants Strike Price Expiration Date
7,954,761 $ 0.40 9/30/2006
150,000 $ 1.00 1/30/2007
520,000 $ 1.00 9/30/2007
113,413 $ 1.00 5/31/2007
1,733,333 $ 0.50 1/27/2010
825,002 $ 0.50 1/27/2010
200,000 $ 0.50 3/22/2010
- ----------------------------------------
11,496,509
========================================
NOTE 6 - RELATED PARTY TRANSACTIONS
Calumet Mining Company
- ----------------------
The Company sold its Pyramid Mine claims on November 12, 2001 to Calumet Mining
Company (aka Western Goldfields, Inc.), a related party, for 50,000 (25,000
post-split) shares of common stock of Calumet Mining Company, which were valued
at $500. The Company retained a 1.5% net smelter return production royalty
interest in the Pyramid Mine. See Notes 3 and 8. At the time of the transaction,
the two companies shared common board members and officers.
Notes Payable - Shareholders
- ----------------------------
The following is a listing of loan amounts (all of which are unsecured) due to
related parties (all of whom are shareholders of Trend Mining Company) and the
dates that these loans were made to the Company:
33
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2006
- --------------------------------------------------------------------------------
March 31,
---------------------------------------------
2006 2005
Name Date Amount Amount
--------------------- -------------------
Electrum LLC 11/6/2000 $ 35,000 $ 35,000
12/4/2000 100,000 100,000
12/18/2000 50,000 50,000
1/26/2001 50,000 50,000
3/15/2001 50,000 50,000
4/10/2001 50,000 50,000
5/4/2001 50,000 50,000
6/4/2001 50,000 50,000
7/3/2001 85,000 85,000
1/31/2002 150,000 150,000
--------------------- -------------------
670,000 670,000
--------------------- -------------------
LCM Holdings, LLC 10/26/2001 50,000 50,000
11/1/2001 10,000 10,000
11/15/2001 30,000 30,000
11/28/2001 29,445 29,445
5/7/2002 60,000 60,000
5/22/2002 35,000 35,000
6/14/2002 18,412 18,412
--------------------- -------------------
232,857 232,857
--------------------- -------------------
Berger 8/28/2001 90,000 90,000
10/2/2001 10,000 10,000
--------------------- -------------------
100,000 100,000
--------------------- -------------------
Buchanan 1/8/2002 30,000 30,000
--------------------- -------------------
Loucks 7/1/2005 100,000 -
7/14/2005 50,000 -
7/15/2005 300,000 -
8/15/2005 150,000
01/02/06 -300,000 -
--------------------- -------------------
300,000 -
--------------------- -------------------
Wu 08/15/05 31,000
10/26/05 -31,000 -
--------------------- -------------------
0 0
--------------------- -------------------
NW Exploration 08/15/05 29,000
10/26/05 -29,000 -
--------------------- -------------------
0 0
--------------------- -------------------
Total notes payable -
shareholders $ 1,332,857 1,032,857
===================== ==================
34
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2006
- --------------------------------------------------------------------------------
The loans from Electrum, LCM Holdings, Berger and Buchanan bear interest at 10%
per annum and are due upon the Company's completion of a private equity
placement and concurrently and proportionally with any amounts repaid to
Electrum or any others having provided loan facilities of this type to the
Company.
The loans from Mr. Loucks, Mr. Wu, and NW Exploration (a Company owned by Mr.
Wu) bear interest at 8% per annum and are due on demand. During the fourth
quarter of 2005, the Company issued to Mr. Loucks and Mr. Wu 60,000 and 6,000
shares of common stock, respectively, as a financing fee for the loans.
Subsequent to September 30, 2005, the amounts owing to Mr. Wu and NW Exploration
were repaid in full. During the quarter ended March 31, 2006, $300,000 was paid
to Mr. Loucks as partial payment on the outstanding loan.
Investments
- -----------
In January 2003, the Company issued 450,000 shares of its common stock to Mr.
John Ryan, the Company's chief financial officer, in exchange for 18,334 shares
of common stock in Cadence Resources Corporation and 35,000 shares of common
stock in Western Goldfields, Inc. Mr. Ryan is also an officer of Cadence
Resources Corporation and Western Goldfields, Inc.
In July and September 2003, the Company sold 5,000 and 13,000 shares
respectively of its Western Goldfields common stock to Cadence Resources for
$19,000 cash.
In September 2003, the Company transferred 12,000 shares of its Western
Goldfields common stock to Mr. David Mooney, its chief geologist, for services
valued at $23,400.
Employment Agreements
- ---------------------
In July 2000, the Company entered into an employment agreement with Mr. John
Ryan, the then chief financial officer, secretary and treasurer of the Company,
under which Mr. Ryan was to receive 3,000 shares per month of Trend common stock
as compensation for his services. When Mr. Ryan resigned in December 2000, this
agreement was terminated. In July 2001, Mr. Ryan was again designated as the
Company's chief financial officer, secretary and treasurer. A revised employment
agreement was reached in September 2002 where Mr. Ryan receives $3,000 per
month, which amount was augmented to $4,000 per month in July of 2005. Mr. Ryan
took stock in lieu of cash for July and August 2005, and then the Company
reverted to paying Mr. Ryan in cash on September 1, 2005. If the Company is
unable to pay the salary in cash, then Mr. Ryan has the option to receive $4,000
worth of the Company's common stock at the prevailing rate of which shares are
or were most recently sold by the Company. As of March 31, 2006 and 2005,
respectively, $16,000 and $0 were owed to Mr. Ryan under this agreement.
In January 2003, the Company issued 35,000 shares of common stock to Mr. Michael
Sharratt, a director of the Company, for services rendered under an agreement
with the Company.
The president and chief executive officer, Thomas Loucks has been employed by
the Company for the past year. Although there was no formal agreement, the
Company has paid Mr. Loucks $6,500 per month, through September 2005 when his
salary increased to $10,000 per month.
On November 1, 2005, the Company entered into an employment agreement with Mr.
Thomas Loucks, the president and chief executive officer, for a term of one
year, which can be extended each year for a period of one year. Mr. Loucks was
paid at an annual rate of $120,000 per year, or $10,000 per month, through
December 31, 2005, when the Board increased his salary to $130,000 per year
effective January 1, 2006.
Other Related Party Transactions
- --------------------------------
In March 2005, Mr. Ryan personally paid on behalf of the Company consulting fees
owed to an outside consultant. The Company has recorded that amount in "accounts
payable, related parties" in the financial statements.
35
NOTE 7 - PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Major additions and improvements
are capitalized. Minor replacements, maintenance and repairs that do not
increase the useful lives of the assets are expensed as incurred. Depreciation
of property and equipment, including vehicles, is being calculated using the
double-declining balance method over the expected useful lives of three to seven
years.
The following is a summary of property, equipment, and accumulated depreciation.
March 31, March 31,
2006 2005
------------------ -------------------
Furniture, Equipment, and Vehicles $ 39,549 $ 39,902
Less: Accumulated Depreciation (27,124) (32,751)
------------------ -------------------
$ 12,425 $ 7,151
================== ===================
NOTE 8 - CONVERTIBLE DEBT
2004 Convertible Bridge Loans
- -----------------------------
On December 8, 2004, the Company sold, in anticipation of a larger subsequent
offering, three year notes in the amount of $250,000 which are convertible into
common shares of the Company at the rate of one share for each $0.30 of
principal and interest. In addition, the note holders received warrants which
allow them to purchase an additional 750,000 common shares of the company at
varying prices between $0.25 and $0.50 per share. The fair value of the warrants
was estimated using the Black Scholes Option Price Calculation. The following
assumptions were made to value the warrants: strike prices of $0.25 and $0.50;
risk free interest rate of 5%; expected lives of one to five years; and expected
volatility of 78% with no dividends expected to be issued. The value of the
warrants totaled $93,825 at the issuance date and were recorded on the balance
sheet as a debt discount. Additionally, the conversion feature of the notes
resulted in a beneficial conversion amount of $77,158.
Following guidance provided by EITF 00-27, the Company allocated proceeds first
to the warrants granted the note holders. The value of the warrants and the
beneficial conversion feature are recorded on the balance sheet as a debt
discount and as an increase to shareholders equity. The discounts are being
amortized over three years, the life of the loan. The Company paid financing
fees of approximately $53,000 in connection with the offering; these fees are
being amortized over three years, the life of the loan.
As of March 31, 2005, these loans were retired upon finalizing of the
anticipated subsequent debt offering (See 2005 - Convertible Debt below) and the
related debt discount amounts have been incorporated into that offering.
Additionally, the warrant and beneficial conversion features recorded in the
equity section of the financial statements were cancelled and the values added
to additional paid-in capital on the balance sheet.
2005 - Convertible Debt
- -----------------------
In January 2005, the Company completed a private placement of secured,
convertible promissory notes in the amount of $1,300,000. This offering retired,
replaces and supersedes the terms of the $250,000 offering of December 8, 2004.
As part of this offering, the Company issued promissory notes due on January 28,
2008, bearing interest at a rate per annum equal to the "prime rate," plus 3%
percent but not less than 10%, with principal and interest payable monthly
starting June 1, 2005. The promissory notes are convertible into shares of the
Company's common stock at a rate of one share for each $0.30 of principal and
interest outstanding. Additionally the Company issued two series of warrants
(Class A and Class B) with the promissory notes. The Class A warrants allow for
the purchase of up to 1,733,333 shares of the Company's common stock at an
exercise price of $0.50 per share and Class B warrants allow for the purchase of
up to 2,166,667 shares of common stock at an exercise price of $0.25 per share.
The Class A warrants have a maturity of five years and the Class B warrants
expire 120 days after the Company files a registration statement registering the
shares issuable upon conversion of the notes and exercise of the warrants.
In addition to the warrants issued to the investors, the Company also issued to
Ghillie Finanz, Class A and Class B warrants and paid them approximately
$169,000 in cash as a finders fee in relation to the convertible debentures. The
Class A warrants allow for the purchase of up to 650,000 shares of the Company's
common stock at an exercise price of $0.50 per share and Class B warrants allow
for the purchase of up to 650,000 shares of common stock at an exercise price of
$0.25 per share. The Class A warrants have a maturity of five years and the
Class B warrants expire 120 days after the Company files a registration
statement registering the shares issuable upon conversion of the notes and
exercise of the warrants. The value of the warrants and financing fees paid are
being amortized over the life of the convertible debt and the amortized amounts
are included in financing expenses in the financial statements.
36
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2006
- --------------------------------------------------------------------------------
In March 2005, the Company completed a private placement of secured, convertible
promissory notes in the amount of $150,000. As part of this offering, the
Company issued promissory notes due on January 28, 2008, bearing interest at a
rate per annum equal to the "prime rate," plus 3% percent but not less than 10%,
with principal and interest payable monthly starting June 1, 2005. The
promissory notes are convertible into shares of the Company's common stock at a
rate of one share for each $0.30 of principal and interest outstanding.
Additionally, the Company issued two series of warrants (Class A and Class B)
with the promissory notes. The Class A warrants allow for the purchase of up to
200,000 shares of the Company's common stock at an exercise price of $0.50 per
share and Class B warrants allow for the purchase of up to 250,000 shares of
common stock at an exercise price of $0.25 per share. The Class A warrants have
a maturity of five years and the Class B warrants expire 120 days after the
Company files a registration statement registering the shares issuable upon
conversion of the notes and exercise of the warrants.
In July 2005, the Company completed a private placement of secured, convertible
promissory notes in the amount of $350,000. As part of this offering, the
Company issued promissory notes due on January 28, 2008, bearing interest at a
rate per annum equal to the "prime rate," plus 3% percent but not less than 10%,
with principal and interest payable monthly starting July 1, 2005. The
promissory notes are convertible into shares of the Company's common stock at a
rate of one share for each $0.30 of principal and interest outstanding.
Additionally, the Company issued two series of warrants (Class A and Class B)
with the promissory notes. The Class A warrants allow for the purchase of up to
466,667 shares of the Company's common stock at an exercise price of $0.50 per
share and Class B warrants allow for the purchase of up to 583,333 shares of
common stock at an exercise price of $0.25 per share. The Class A warrants have
a maturity of five years and the Class B warrants expire 120 days after the
Company files a registration statement registering the shares issuable upon
conversion of the notes and exercise of the warrants.
In addition to the warrants issued to the investors, the Company also issued to
Ghillie Finanz, Class A and Class B warrants and paid them approximately $45,000
in cash as a finders fee in relation to the convertible debentures. The Class A
warrants allow for the purchase of up to 175,001 shares of the Company's common
stock at an exercise price of $0.50 per share and Class B warrants allow for the
purchase of up to 175,001 shares of common stock at an exercise price of $0.25
per share. The Class A warrants have a maturity of five years and the Class B
warrants expire 120 days after the Company files a registration statement
registering the shares issuable upon conversion of the notes and exercise of the
warrants. The value of the warrants and financing fees paid are being amortized
over the life of the convertible debt and the amortized amounts are included in
financing expenses in the financial statements.
NOTE 9 - COMMITMENTS AND CONTINGENCIES
As of March 31, 2006, the Company has paid $234,375 in principal, and $155,498
in interest on these notes in cash and common stock. At March 31, 2006 the
Company is showing the principal value of the debt, less the unamortized debt
discounts of approximately $765,498 as the carrying value of the debt. The
Company has accrued approximately $27,708 of accrued interest related to these
notes as of March 31, 2006.
Lease Agreement
- ---------------
In July 2005 the company entered into a lease agreement for one year for office
facilities in Littleton, Colorado. The office lease requires monthly payments of
$2,100 and expires June 30, 2006. During the year ended September 30, 2005, the
Company paid $6,300, with an additional $18,900 payable under terms of the
lease.
In August 2004, the Company relocated to Colorado, and entered into a lease
agreement for office facilities in Littleton. The office lease required monthly
payments of $1,153 and expires July 31, 2005. During the quarter ended March 31,
2006 and 2005, the Company paid approximately $2,300 and $11,530, respectively,
under the terms of the lease.
37
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2006
- --------------------------------------------------------------------------------
Consulting Agreements
- ---------------------
See Note 6 for related party consulting agreements.
Mineral Properties
- ------------------
In order to retain its Peter Lake Claims in Saskatchewan, Canada, the Company
had to fulfill exploration commitments totaling by December of 2004. At
September 30, 2005 the Company had fulfilled the commitments and retained its
claim. Additionally, the claims are revalidated for the prior year and extended
for the coming year.
Legal Proceedings
- -----------------
In May, 2002, one of the Company's vendors, Nevada Southwest Investments LLC,
obtained a judgment in the Second Judicial District, Washoe County, Nevada to
collect $18,574 due under a rental lease agreement for office space the Company
chose to vacate. The judgment bears interest at 18% until paid in full. Included
in the accounts payable balance as of September 30, 2005 is approximately
$32,000 related to this judgment. The Company negotiated with the creditor to
make suitable payment arrangements to pay this judgment over time. The creditor
had scheduled a debtor's hearing in the early part of 2004 but the hearing was
cancelled and not rescheduled. On November 15, 2005, the Company was able to
settle in final terms and paid $25,250.
On August 24, 2005, a complaint was filed against the Company in the United
States District Court for the Eastern District of New York, seeking $52,500 in
legal fees, under Section 16(b) of the Securities Exchange Act of 1934, which
were allegedly incurred in connection with the Company's recovery of alleged
short-swing trading profits from an insider of the Company. The case was
dismissed with prejudice on or about November 29, 2005, pursuant to a compromise
and settlement under which the Company paid plaintiff the sum of $26,250. The
Company has included the settlement in "accounts payable" on the balance sheet
and recorded the expense as "settlement expense" on the statements of operations
at September 30, 2005. The outstanding balance was paid on November 15, 2005
NOTE 10 - CONCENTRATION
The Company has significantly relied on Mr. Thomas Kaplan and various associated
entities of Mr. Kaplan, as well as Mr. Howard Schraub and various associated
entities, for operating capital.
NOTE 11 - FORGIVENESS OF DEBT
Included in the September 30, 2005 and 2004 financial statements is $73,000 of
accrued wages owing to Mr. David Mooney, the former chief geologist for the
Company. In October 2005, the Company and Mr. Mooney agreed to a settlement of
$25,000, with the remaining amount of $48,000 to be forgiven.
38
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
FORWARD-LOOKING STATEMENTS
We make forward-looking statements in this report, in other materials
we file with the SEC or otherwise release to the public, and on our website. In
addition, our senior management might make forward-looking statements orally to
analysts, investors, the media and others. Statements concerning our future
operations, prospects, strategies, financial condition, future economic
performance (including growth and earnings) and demand for our products and
services, and other statements of our plans, beliefs, or expectations, including
the statements contained in this Item 2, "Management's Discussion and Analysis
or Plan of Operation," regarding our future plans, strategies and expectations
are forward-looking statements. In some cases these statements are identifiable
through the use of words such as "anticipate," "believe," "estimate," "expect,"
"intend," "plan," "project," "target," "can," "could," "may," "should," "will,"
"would" and similar expressions. We intend such forward-looking statements to be
covered by the safe harbor provisions contained in Section 27A of the Securities
Act of 1933, as amended and in Section 21E of the Securities Exchange Act of
1934, as amended (the "Exchange Act"). You are cautioned not to place undue
reliance on these forward-looking statements because these forward-looking
statements we make are not guarantees of future performance and are subject to
various assumptions, risks, and other factors that could cause actual results to
differ materially from those suggested by these forward-looking statements.
Thus, our ability to predict results or the actual effect of future plans or
strategies is inherently uncertain. Factors which could have a material adverse
effect on our operations and precious metals market specifically, legislative or
regulatory changes that affect us, including changes in healthcare regulation,
the availability of working capital, competition within the mining industry, and
other risk factors. These risks and uncertainties, together with the other risks
described from time to time in reports and documents that we file with the SEC
should be considered in evaluating forward-looking statements, and undue
reliance should not be placed on such statements. (There also are other such
factors that we do not describe, generally, because currently we do not perceive
them to be material that could cause actual results to differ materially from
our expectations.) Indeed, it is likely that some of our assumptions will prove
to be incorrect. Our actual results and financial position will vary from those
projected or implied in the forward-looking statements; and the variances may be
material. We expressly disclaim any obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise, except as required by law.
General
Trend is an exploration stage company. Trend's primary expenditures at this
stage consist of payment of various governmental fees to maintain the priority
of Trend's unpatented mining claims, payment of Trend's debt service, payment of
accounting and legal fees, and general office expenses.
RESULTS OF OPERATIONS
Exploration Expense
Our exploration expense for the three months ended March 31, 2006 and 2005 were
$30,640 and $80,880, respectively. Our exploration expense for the six months
ended March 31, 2006 and 2005, were 37,692 and 99,893, respectively.
General and Administrative Expense
Our general and administrative expense for the three months ended March 31, 2006
and 2005 were $70,842 and $137,191, respectively. Our general and administrative
expense for the six months ended March 31, 2006 and 2005, were 130,301 and
178,101, respectively.
39
Officers and Directors Compensation Expense
Our officers and directors compensation expense for the three months ended March
31, 2006 and 2005 were $44,500 and $28,500, respectively. Our officers and
directors compensation expense for the six months ended March 31, 2006 and 2005,
were 185,438 and 58,492, respectively.
Legal and Professional Fees
Our legal and professional fees for the three months ended March 31, 2006 and
2005 were $153,235 and $70,211, respectively. Our legal and professional fees
for the six months ended March 31, 2006 and 2005, were 320,725 and 81,722,
respectively.
Net Loss
Our net loss for the three-month period ended March 31, 2006 totaled $499,284 as
compared to a loss of $589,776 for the quarter ended March 31, 2005. Our net
loss for the six months ended March 31, 2006 and 2005, were 998,188 and 720,738,
respectively. The accumulated deficit since inception of the current exploration
stage is $12,895,287, and Trend's total loss since inception of the company is
$13,453,791.
Operating cash at the end of the quarter totaled $107,066.
LIQUIDITY AND CAPITAL RESOURCES
Trend's primary, near term business objective is to raise sufficient capital to
retain the Company's current mineral properties, to explore them and acquire
additional projects, and to pay Trend's general and administrative expenses. As
reflected in our accompanying financial statements, we have limited cash,
negative working capital, no revenues and an accumulated deficit of $12,895,287.
These factors indicate that we may be unable to continue in existence in the
absence of receiving additional funding. Our operating expenses average
approximately $70,000 per month, consisting of Trend's accounting and legal fees
and general and administrative expenses. The Company may also enter into payment
arrangement plans with creditors which could add between $50,000 and $60,000 per
month to our monthly expenses. In that case, the Company's monthly budget will
be between $120,000 and $130,000 per month. Moreover, management's plans for the
next twelve months include approximately $600,000 of cash expenditures for
exploration activity on the Stillwater, Lake Owen and Cree Lake properties.
40
Trend estimates that approximately $1,400,000 may be required to fund its
operations for the next 12 months assuming minimal exploration activities and
excluding the cost of acquisitions, if any. Trend currently does not hold
sufficient capital to continue current operations through fiscal 2006, however,
we are currently in negotiations for a financing that will provide
funds to continue operations through fiscal 2006. Trend believes that it now has
quality projects to become more active in its exploration and is seeking
additional capital to extend its operations through 2007.
To fund its operations, over the next twelve months the Company must raise
additional funds from the public or private debt or equity markets to continue
its business activities. We currently anticipate funds from a private placement
expected to close in May 2006. Moreover, several companies have expressed an
interest in leasing the Lake Owen project from Trend, which would reduce Trend's
working capital obligations while simultaneously advancing one of Trend's
projects.
Under the Company's Delaware certificate of incorporation, Trend has 100,000,000
authorized shares of common stock and is authorized to issue 20,000,000 shares
of preferred stock. Trend currently has no preferred shares issued and
outstanding. We believe that we will generate sufficient cash from the Andacollo
royalty and a public or private debt or equity financing in order for us to
continue to operate based on current expense projections and exploration plans.
Nevertheless, we are unable to provide assurances that we will be successful in
obtaining sufficient sources of capital. There can be no assurance that
Electrum, LCM Holdings, or others will continue to advance funds to Trend or
that Trend's efforts to obtain additional financing will be successful. Further,
there can be no assurance that additional financing will be available on terms
acceptable to the Company. If we fail to raise the necessary funds to continue
operations, we might be required to significantly reduce or completely cease our
operations.
The Company's business plan, contingent upon raising at least $1 million to
cover calendar 2006, includes (1) the hiring of Denver-based accounting staff
with greater proficiency in the mining industry; and (2) hiring a controller to
oversee the Company's financial system and closely supervise the preparation of
monthly, quarterly and annual financial information.
41
Off-Balance Sheet Arrangements
None.
ITEM 3. CONTROLS AND PROCEDURES.
(a) Evaluation of disclosure controls and procedures.
Within the 90 days prior to the filing of this Quarterly Report on Form 10-QSB
(the "Evaluation Date"), the Company carried out an evaluation, under the
supervision and with the participation of its management, including its Chief
Executive Officer and its Chief Financial Officer, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures (as
defined in Rules 13a-14(c) and 15d-14(c) under the Exchange Act). Based upon
that evaluation, the Company's Chief Executive Officer and its Chief Financial
Officer concluded that the Company's disclosure controls and procedures are not
effective to ensure that material information required to be disclosed by it in
the reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission rules and forms.
It should be noted, that the design of any system of controls is based in part
upon certain assumptions about the likelihood of future events, and there can be
no assurance that any design will succeed in achieving its stated goals under
all potential future conditions, regardless of how remote.
(b) Changes in internal controls.
The Company evaluates its internal controls for financial reporting purposes on
a regular basis. Based upon the results of these evaluations, the Company
considers what revisions, improvements and/or corrective actions are necessary
in order to ensure that its internal controls are effective.
During the fiscal quarter ended March 31, 2006, there have been no changes to
the Company's internal controls over financial reporting that has materially
affected or is reasonably likely to materially affect the Company's internal
42
controls over financial reporting. However, since the Company's internal
controls over financial reporting did not comply with the procedures set forth
in Rules 13a-15(e) or 15d-15(e) under the Exchange Act it is currently in the
process of improving its internal controls and procedures.
In January 2006, the Company discovered that an asset had been classified as an
expense, rather than an asset, in the financials statements for the fiscal year
ending September 30, 2005. During fiscal 2005, the Company made three
installment payments for the purchase of interests in DMC Cayman, Inc. Prior to
the fiscal year end, the Company entered into an agreement to sell its interests
in DMC Cayman, Inc. for cash that was received subsequent to the fiscal year
end, thus, resulting in an account receivable and a capital gain as of September
30, 2005. Upon each payment, an exploration expense rather than a capital asset
was recognized. Thus, as a result, the capital gain and the outstanding account
receivable were not recognized on the financial statements as of September 30,
2005. This involved only a misclassification of accounts. Upon discovery of the
misclassification, the Company restated its financial statements previously
filed on Form 10-KSB for the fiscal year ended September 30, 2005.
In light of the restatement, the Company began taking actions to improve, and
plans to continuously evaluate its internal controls and certain disclosure
controls and procedures. As part of this commitment, Trend's Chief Financial
Officer and Chief Executive Officer are initiating steps which include: (i)
hiring new accounting staff with greater proficiency in the mining industry; and
(ii) hiring a controller to oversee the Company's financial system and closely
supervise the preparation of monthly, quarterly and annual financial
information.
The Company's Chief Executive Officer and Chief Financial Officer believe that
these steps, set forth in the preceding paragraph, will be sufficient to
strengthen its disclosure procedures and that no other changes to the Company's
disclosure controls and procedures are needed in response to the discovery of
the misclassification described above.
PART II - OTHER INFORMATION
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Common Stock
- ------------
We had 40,216,054 shares of common stock issued and outstanding as of
March 31, 2006. The issuances discussed under this section are exempted from
registration under Rule 506 of the Securities Act of 1933, as amended (the
"Securities Act"), or Section 4(2) of the Securities Act, as indicated. All
purchasers of the issued securities represented to us that they acquired the
shares for investment purposes only and all stock certificates contain
appropriate restrictive legends. No underwriters or brokers or dealers were
involved in connection with the sales of securities referred to in this section.
In general, under Rule 144, a person who has beneficially owned shares
privately acquired directly or indirectly from Trend or from one of Trend's
affiliates, for at least one year is entitled to sell, within any three-month
period, a number of shares that do not exceed the greater of 1% of the then
outstanding shares or the average weekly trading volume in Trend's shares during
the four calendar weeks immediately preceding such sale. Sales under Rule 144
are also subject to certain manner of sale provisions, notice requirements and
the availability of current public information about us. A person who is not
deemed to have been an affiliate at any time during the 90 days preceding a
sale, and who has beneficially owned restricted shares for at least two years,
is entitled to sell all such shares under Rule 144 without regard to the volume
limitations, current public information requirements, manner of sale provisions
or notice requirements.
In January 2006, we issued 20,000 shares of common stock to Aurora
Metals (BVI) Limited as payment pursuant to the joint venture agreement with
Aurora. The Company relied on the exemption from registration found in Section
4(2) in connection with this issuance.
On January 4, 2006, we issued 48,012 shares of common stock, to an
accredited investors as payment of interest and principal on promissory notes
outstanding. The Company relied on the exemption from registration found in
Section 4(2) in connection with this issuance.
43
In February 2006, Trend issued 292,795 shares of common stock, to an
accredited investor, as payment of interest and principal on promissory notes
outstanding. The Company relied on the exemption from registration found in
Section 4(2) in connection with this issuance.
On February 2, 2006, we issued 35,118 shares of common stock, to an
accredited investors as payment of interest and principal on promissory notes
outstanding. The Company relied on the exemption from registration found in
Section 4(2) in connection with this issuance.
In March 2006, we issued 141,207 shares of common stock, to an
accredited investors as payment of interest and principal on promissory notes
outstanding. The Company relied on the exemption from registration found in
Section 4(2) in connection with this issuance.
On March 3, 2006, we issued 39,009 shares of common stock, to an
accredited investors as payment of interest and principal on promissory notes
outstanding. The Company relied on the exemption from registration found in
Section 4(2) in connection with this issuance.
Each investor involved in the above transactions represented to us that
they were an accredited investor.
As discussed above, during the three months ended March 31, 2006,
20,000 shares were issued as payment under a joint venture agreement and 556,141
shares were issued as payment on promissory notes outstanding. 576,141 shares
were issued in the fiscal quarter ending March 31, 2006.
All shares issued in connection with the above described events were
issued to existing stockholders or individuals or entities previously known to
us. At the time of each issuance, Trend was not aware of any such investor
having any current intent to resell Trend's stock.
44
Options
None issued during the reporting period.
Warrants
None issued during the reporting period
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
Exhibit Description
31.1 Certification Required Under Section 302 of Sarbanes-Oxley Act of 2002
31.2 Certification Required Under Section 302 of Sarbanes-Oxley Act of 2002
32.1 Certification Required Under Section 906 of Sarbanes-Oxley Act of 2002
32.2 Certification Required Under Section 906 of Sarbanes-Oxley Act of 2002
45
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
TREND MINING COMPANY
Date: May 15, 2006
By: /s/ Thomas A. Loucks
--------------------------------------
Thomas A. Loucks
President and Chief Executive Officer
(Principal Executive Officer)
By: /s/ John P. Ryan
--------------------------------------
John P. Ryan
Treasurer and Chief Financial Officer
(Principal Financial Officer)