U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 TO
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____ to _______
Commission file number 0-25455
INTERGOLD CORPORATION
(Exact name of small business issuer as specified in its charter)
NEVADA 88-0365453
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
5000 Birch Street, West Tower, Suite 4000
Newport Beach, California 92660
(Address of Principal Executive Offices)
(949) 476-3611
(Issuer's telephone number)
N/A
(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
State the number of shares outstanding of each of the issuers classes of common
equity, as of the latest practicable date:
Class Outstanding as of August 14, 2000
Common Stock, $.00025 par value 81,000,000
Transitional Small Business Disclosure Format (check one)
Yes No X
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
The unaudited financial statements of Intergold Corporation (the "Company")
reflect all adjustments which are, in the opinion of management, necessary to
present a fair statement of the operating results for the interim period
presented.
INTERGOLD CORPORATION
(An Exploration Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
March 31, 2000
TABLE OF CONTENTS
Page
----
Table of Contents 1
Balance Sheet 2
Statements of Operations 3
Statements of Cash Flows 4
Notes to Financial Statements 5-9
1
INTERGOLD CORPORATION
(An Exploration Stage Company)
Balance Sheet
March 31,
2000
----------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 19,943
PROPERTY PLANT AND EQUIPMENT
Equipment (net of accumulated depreciation) 3,406
-----------
Total Assets $ 23,349
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
CURRENT LIABILITIES
Accounts payable - trade $ 343,168
Accounts payable - related parteis 39,962
Advances payable 603,747
Directors fees payable 51,500
Notes payable 551,890
Accrued Series A warrant redemption payable 90,000
Accrued interest payable 201,360
-----------
Total Liabilities 1,881,627
-----------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, $.001 par value;
authorized at March 31, 2000
75,000,000 shares; issued and
outstanding at March 31, 2000
Series A- 6,300,000 shares 6,300
Series B - 2,510,000 shares 2,510
Upon Liquidation, Series A shares
have a $.25 per share preference
over other preferred or common stock,
Series B shares have a $.50 preference
over other non-Series A preferred
or common stock
Common stock $.00025 par value;
authorized at March 31, 2000
125,000,000 shares; 78,000,000 shares
issued and outstanding at March 31, 2000 19,499
Paid - in capital 7,877,836
Accumulated deficit through exploration stage (9,764,423)
-----------
Total Stockholders' Equity (Deficit) (1,858,278)
-----------
Total Liabilities and Stockholders' Equity (Deficit) $ 23,349
===========
See accompanying summary of accounting
policies and notes to financial statements.
2
INTERGOLD CORPORATION
(An Exploration Stage Company)
Statements of Operations
Inception
(July 26,
1996) to
For the 3 Months Ended Mar. 31, March 31,
--------------------------------- ------------
2000 1999 2000
------------ ------------ ------------
REVENUES
Other income $ -- $ -- $ 1,699
------------ ------------ ------------
OPERATING EXPENSES
PROPERTY EXPLORATION EXPENSES
Total Property Exploration Expenses 15,239 3,130,507 6,022,125
------------ ------------ ------------
ADMINISTRATIVE EXPENSES
Total Administrative Expenses 306,656 379,172 3,667,320
------------ ------------ ------------
Total Operating Expenses 321,895 3,509,679 9,689,445
------------ ------------ ------------
Operating Income (Loss) (321,895) (3,509,679) (9,687,746)
OTHER INCOME (EXPENSE)
Sale of future profit sharing interest -- -- 170,000
Realized loss on sale of available for sale investment (20,000) -- (20,000)
Interest expense (28,221) (7,196) (226,677)
------------ ------------ ------------
Net (Loss) $ (370,116) $ (3,516,875) $ (9,764,423)
============ ============ ============
Income (Loss) per Share $ (0.007) $ (0.072) $ (0.262)
============ ============ ============
Weighted Average Number of
Common Shares Outstanding 50,916,934 48,627,778 37,332,084
============ ============ ============
See accompanying summary of accounting policies and notes to financial statements.
3
INTERGOLD CORPORATION
(An Exploration Stage Company)
Statements of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
Inception
(July 26,
For the 3 Months Ended Mar. 31, 1996) to
-------------------------------- March 31,
2000 1999 2000
----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Cash Flows Used by Operating Activities $ (295,309) $(3,530,131) $(9,127,539)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Organization costs -- 1,771 --
Equipment purchases -- -- (4,300)
----------- ----------- -----------
Net Cash Flows Used for Investing Activities -- 1,771 (4,300)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock -- 1,000 12,236
Sale of preferred stock Series A -- -- 6,300
Sale of preferred stock Series B -- 750 2,510
Additional paid-in capital -- 2,733,250 7,217,532
Advances received 333,783 293,500 4,565,760
Advances repaid (20,000) (232,004) (3,204,446)
Note payable advances -- 500,000 551,890
----------- ----------- -----------
Net Cash Flows Provided by Financing Activities 313,783 3,296,496 9,151,782
----------- ----------- -----------
Net increase in cash 18,474 (231,864) 19,943
Cash and cash equivalents - Beginning of period 1,469 248,850 --
----------- ----------- -----------
Cash and cash equivalents - End of period $ 19,943 $ 16,986 $ 19,943
=========== =========== ===========
During 1998, the Company accrued $135,722 of interest on outstanding notes and advances payable.
During 1999, the Company has accrued $62,729 of interest on outstanding notes and advances payable.
During 2000, the Company has accrued $28,221 of interest on outstanding notes and advances payable.
Since inception the Company has not capitalized any interest.
On Feb. 11, 2000, the Company exchanged its Available for Sale investments (1,000,000 GDSA shares) for debt outstanding to
a creditor for $150,000.
On March 20, 2000, a shareholder converted 1,000,000 Series A preferred shares for 1,000,000 common shares.
On March 20, 2000, the Company issued 326,100 common shares as a dividends pursuant to the conversion of the 1,000,000
Series A preferred shares. The dividend was valued at $81,525.
On March 31, 2000, the Company issued 20,345,900 common shares in exchange for advances received and accrued interest
owed to creditors in the amount of $610,378.
See accompanying summary of accounting policies and notes to financial statements.
4
INTERGOLD CORPORATION
(An Exploration Stage Company)
Notes to Financial Statements
March 31, 2000
- --------------------------------------------------------------------------------
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Presentation
------------
Intergold Corporation (the Company) has included the consolidated
balance sheet of the Company and its subsidiary as of March 31, 2000
(unaudited), and unaudited consolidated statements of operations and
cash flows for the three month periods ended March 31, 2000 and 1999
and for the period from inception (July 26, 1996) to March 31, 2000,
together with unaudited condensed notes thereto. In the opinion of
management of the Company, the financial statements reflect all
adjustments necessary to fairly present the consolidated financial
condition, results of operations, and cash flows of the Company for
the interim periods presented. The interim period financial statements
presented should be read in conjunction with the audited financial
statements of the Company and notes thereto included with the annual
report of the Company on Form 10-K for the year ended December 31,
1999.
Earnings Per Share
------------------
As of March 31, 2000, there were 3,450,000 exercisable options,
8,810,000 shares of convertible preferred stock and 2,510,000 common
stock warrants that can be converted into 14,770,000 shares of common
stock. As these options, convertible preferred stock and warrants
would have an antidilutive effect on the presentation of loss per
share, a diluted loss per share calculation is not presented.
Going Concern and Continued Operations
--------------------------------------
At March 31, 2000, the Company has not generated significant revenues
from operations and has a working capital deficit of $1,856,684 and a
stockholders deficit of $1,853,278. The Company's successful
financial operations and movement into an operating basis are
contingent on the development of the Company's lode mining claims and
the continuing ability of generating capital financing. Advances from
existing shareholders will form the primary source of short term
funding for the Company during the next twelve months. A secondary
source of financing is through the December 15, 1998 private placement
discussed in Note 3 if that financing instrument is marketable. This
offering could potentially generate an additional $1,230,000 of
financing.
5
INTERGOLD CORPORATION
(An Exploration Stage Company)
Notes to Financial Statements
March 31, 2000
- --------------------------------------------------------------------------------
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
During the first quarter of 2000, the Company ceased exploration of
the Blackhawk claims located in the State of Idaho, pending the
outcome of the Company's ongoing litigation with regard to the
transfer of technology pursuant to the Sub-license Agreement between
the Company and Geneva Resources, Inc. and the Company's Agreement for
Services with Auric Metallurgical Laboratories, LLC. There is a chance
that the technology to be transferred under the Sub-license Agreement
may be delayed indefinitely, or cancelled all together, depending on
the outcome of the Intergold/Geneva litigation. As the alleged assay
and metallurgical recovery technology developed by Auric is deemed
essential to the further development of the Blackhawk claims, and
since further consulting conducted by independent consultants to the
Company indicate that gold is not present in economic quantities on
the claims, business operations are expected to be minimal pending the
outcome of the litigation in process.
On February 16, the Company authorized the execution of agreements for
the settlement of outstanding advances and accrued interest payable
through the issuance of common stock (Note 3).
NOTE 2: ADVANCES
Advances are comprised of the following:
Advances
--------
---------------------------------------------------------------
Mar. 31, 2000
---------------------------------------------------------------
Investor Communications Int'l, Inc. $ 1,530
Guest Investments 3,000
Alexander Cox 17,194
Sonanini Holdings 442,770
Amero-can Marketing, Inc. 139,253
-----------
$ 603,747
---------------------------------------------------------------
The advances all bear 10% simple interest and are due on demand. There
is $180,059 of interest accrued on the advances as of March 31, 2000.
Advances decreased from $1,025,030 at December 31, 2000 to $603,747 at
March 31, 2000 pursuant to debt settlements for various advances and
accrued interest outstanding (Note 3).
6
INTERGOLD CORPORATION
(An Exploration Stage Company)
Notes to Financial Statements
March 31, 2000
- --------------------------------------------------------------------------------
NOTE 3: STOCKHOLDERS' EQUITY
Common Stock
------------
On February 16, 2000, the Company authorized the execution of
agreements for the settlement of advances and accrued interest payable
through the issuance of common stock. The Company settled advances and
associated accrued interest totaling $488,478 at $.03 per share, which
represents a 35% discount on the value of the common stock as of
February 16, 2000, for a total of 16,282,600 shares. The Company
settled advances and associated accrued interest of the Company's
wholly owned subsidiary, International Gold Corporation totaling
$121,899 at $.03 per share, which represents a 35% discount on the
value of the common stock as of February 16, 2000, for a total of
4,063,300 shares.
On March 20, 2000, the Company shareholders converted 1,000,000 Series
A preferred shares into 1,000,000 shares of the Company's common
stock. On March 20, 2000, an additional 326,100 shares of the common
stock were issued with regard to deemed dividends issued upon
conversion of the 1,000,000 Series A preferred shares into 1,000,000
common shares.
At March 31, 2000 there were 78,000,000 shares of common stock
outstanding.
Preferred Stock
---------------
Series A
--------
On October 27, 1999, the Company issued a notice of redemption on all
remaining outstanding Series A Preferred warrants. The Company will
redeem the warrants at $.01 per warrant and has recorded a $90,000
redemption liability for the remaining 9,000,000 warrants outstanding.
During the first quarter of 2000, 1,000,000 of the Series A Preferred
shares were converted into the Company's common stock. The Company
also issued an additional 326,100 common shares at $.25 per share
representing the accumulated dividend of $81,525 on the 1,000,000
converted Series A Preferred Shares. If the Company's Series A
Preferred shareholders elect to convert the remaining outstanding
Series A Preferred stock, an additional 6,300,000 shares of common
stock would be issued, plus accrued undeclared dividends.
As of March 31, 2000, there are 6,300,000 Series A preferred shares
outstanding.
7
INTERGOLD CORPORATION
(An Exploration Stage Company)
Notes to Financial Statements
March 31, 2000
- --------------------------------------------------------------------------------
NOTE 4: INVESTMENTS
AVAILABLE FOR SALE INVESTMENTS
On February 11, 2000, the Company sold its available for sale
investment in Goldstate Corporation to Investor Communications
International, Inc. for $150,000. The Corporation had incurred debt to
Investor Communications International, Inc. for services and or
advances provided to the Corporation inclusive of accrued interest.
Pursuant to this sale, the Company recorded a realized loss of $20,000
on the original investment's discounted fair value.
NOTE 5: TECHNOLOGY SUB-LICENSE AGREEMENT
As of March 31, 2000 the Company has issued the promissory notes and
common stock required by the technology sub-license agreement to the
various parties, however, the related technology has not been
transferred. These promissory notes become due and payable upon the
transfer of the technology.
NOTE 6: EMPLOYEE STOCK OPTION PLAN
Selected information regarding the Company's employee stock options as
of March 31, 2000 are as follows:
March 31,2000
-------------
Weighted
Number Average
of Exercise
Options Price
------- -----
Outstanding at Beg. of Period 3,450,000 $.71/share
Outstanding at End of Period 3,450,000 $.71/share
Exercisable at End of Period 3,450,000 $.71/share
Options Granted 3,450,000 $.71/share
Options Exercised -0- -0-
Options Forfeited -0- -0-
Options Expired -0- -0-
As of March 31, 2000, outstanding options have exercise prices ranging
from $.50 to $1.00 per share. The weighted average exercise price of
all options outstanding is $.71 per share of common stock and the
weighted average remaining contractual life is 16 years 278 days.
There are 3,450,000 options that are exercisable with a weighted
average exercise price of $.71 per share of common stock.
8
INTERGOLD CORPORATION
(An Exploration Stage Company)
Notes to Financial Statements
March 31, 2000
- --------------------------------------------------------------------------------
NOTE 7: LEGAL PROCEEDINGS
International Gold Corporation, in conjunction with Geneva Resources,
Inc., is continuing with legal claims against Dames & Moore and Auric
Metallurgical Laboratories, LLC, and other individuals named. The
Company has proceeded through initial deposition stages.
NOTE 8: SUBSEQUENT EVENTS
On May 5, 2000, the Company accepted the resignation of Mr. Harold
Gooding from the Board of Directors. Mr. Gooding also resigned
effective April 17, 2000 from his position as Director and Officer of
Goldstate Corporation.
On May 8, 2000, the Company executed an assignment agreement that
transferred and conveyed the potential claims and causes of action
that the Company may have in connection with the Sub-license Agreement
with Geneva Resources, Inc. If amount are recovered by the lawsuit
initiated by International Gold Corporation and Geneva Resources,
Inc., the Company will receive the equivalent pro rata share of the
Claims in relation to all other claims and causes of action for which
any damages of settlement amounts are recovered. The Company has made
this assignment to Geneva Resources, Inc.
9
Item 2. Management's Discussion and Analysis or Plan of Operation
General
As of the date of this Quarterly Report, there has been no income realized
from the business operations of the Company. During fiscal year 1999, the
Company's primary source of financing has been from proceeds received by the
Company from issuance of Series B Preferred shares, cash advances provided to
the Company as debt, and the conversion of Series A Warrants into shares of the
Company's restricted Common Stock at the redemption price of $0.25 per Series A
Warrant.
Pursuant to a letter from the Company which provided notice to the holders
of Series A Preferred Shares that the Company intended to redeem in whole the
outstanding Series A Warrants, as of March 31, 2000, 1,000,000 Series A Warrants
had been converted into 1,000,000 shares of the Company's restricted Common
Stock for an aggregate consideration of $250,000,00.
On May 1, 2000, the Company issued a warrant to a Series A Preferred
shareholder who did not timely convert its Series A Warrants in exchange for the
settlement and discharge of the redemption liability of $30,000 owed by the
Company to the Series A Preferred shareholder. On May 1, 2000, the Series A
Preferred shareholder converted such warrant into 3,000,000 shares of the
Company's restricted Common Stock at the conversion price of $0.25 per share for
an aggregate consideration of $750,000. As of the date of this Quarterly Report,
an aggregate of 4,000,000 Series A Warrants have been converted into 4,000,000
shars of the Company's Common Stock for an aggregate consideration of
$1,000,000. As of the date of this Quarterly Report, 6,000,000 Series A Warrants
remain outstanding, which the Company will redeem at $0.01 per Series A Warrant
and has booked as a redemption liability of $60,000. See " - Liquidity and
Capital Resources."
Each Series A Preferred share is also convertible into one share of Common
Stock of the Company and all then accrued and unpaid dividends are convertible
into Common Stock at the conversion price of $0.25 per share. During fiscal
quarter ended March 31, 2000, the holders of Series A Preferred shares converted
an aggregate of 3,700,000 Series A Preferred shares into 3,700,000 shares of the
Company's Common Stock, and an additional 902,100 shares of Common Stock were
issued by the Company as a dividend pursuant to such conversion.
Results of Operation
Quarter Ended March 31, 2000 compared to March 31, 1999
For the three-month period ended March 31, 2000, the Company recorded a net
loss of $370,116 compared to a net loss of $3,516,875 in the corresponding
period of 1998. During the three-month period ended March 31, 2000 and March 31,
1999, the Company recorded no income.
During the three-month period ended June 30, 1999, the Company recorded
operating expenses of $321,895 compared to $3,509,679 of operating expenses
recorded in the same period for 1999. Property exploration expenses decreased by
approximately $3,115,268 during the three-month period in 2000. This decrease
during the first quarter of 2000 in property exploration expenses resulted from
suspension of any further exploration of the Blackhawk Property and the
cessation of work orders for research, development and metallurgical services
compared to the significant property exploration expenses incurred in the same
period for 1999 relating to amounts paid by the Company for research,
development and metallurgical services performed associated with contractual
agreements between the Company and AuRIC Metallurgical Laboratories LLC
("AuRIC") and Geneva Resources, Inc. ("Geneva"), respectively.
Administrative expenses decreased approximately $72,516 in the three-month
period in 2000 compared to 1999. This decrease in administrative expenses was
due primarily to a decrease in overhead and administrative expenses resulting
from the decreasing scale and scope of overall corporate activity pertaining to
exploration and administration of the Blackhawk Property.
As discussed above, the decrease in net loss during the three-month period
ended March 31, 2000 as compared to the three-month period ended March 31, 1999
is attributable primarily to the substantial decrease in property exploration
expenses. The Company's net earnings (losses) during the three-month period
ended March 31, 2000 were approximately ($370,116) or ($0.007) per share during
the three-month period ended March 31, 1999. The weighted average number of
diluted shares outstanding were 50,916,934 for the three-month period ended
March 31, 2000 compared to 48,627,778 for the three-month period ended March 31,
1999.
10
Liquidity and Capital Resources
The Company's financial statements have been prepared assuming that it will
continue as a going concern and, accordingly, do not include adjustments
relating to the recoverability and realization of assets and classification of
liabilities that might be necessary should the Company be unable to continue in
operation.
As of the three-month period ended March 31, 2000, the Company's total
assets were $23,349. This decrease from fiscal year ended December 31, 1999 was
due primarily to a decrease in cash and cash equivalents and the transfer to
Investor Communications International, Inc. of the Company's equity ownership of
1,000,000 shares of restricted common stock of Goldstate Corporation as debt
settlement. As of the three-month period ended March 31, 2000, the Company's
total liabilities were $1,881,627. This decrease from fiscal year ended December
31, 1999 was due primarily to (i) settlement of advances and accrued interest
due and owing by the Company in the amount of $488,478 by issuance of 16,282,600
shares of the Company's restricted Common Stock, and (ii) settlement of advances
and accrued interest due and owing by the Company's wholly-owned subsidiary,
International Gold Corporation ("INGC"), in the amount of $121,899 by issuance
of 4,063,300 shares of the Company's restricted Common Stock.
Stockholders' Equity (deficit) decreased from $(2,248,539) for fiscal year
ended December 31, 1999 to $(1,858,278) for the three-month period ended March
31, 2000.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
On September 27, 1999, Geneva and INGC, on behalf of the Company, initiated
legal proceedings against AuRIC and Dames & Moore by filing its complaint in the
District Court of the Third Judicial District for Salt Lake City, State of Utah.
INGC and AuRIC entered into an Agreement for Services whereby AuRIC agreed
to perform certain services, including the development of proprietary technology
and know-how relating to fire and chemical assay analysis techniques and
metallurgical ore extraction procedures developed specifically for the Blackhawk
Property (the "Proprietary Technology"). Dames & Moore verified the fire and
chemical assay techniques and procedures developed by AuRIC and their
repeatability. The Company subsequently entered into multiple work orders with
Dames & Moore relating to a variety of services. Gevena and AuRIC entered into a
License Agreement whereby AuRIC agreed to (i) supply the Proprietary Technology
to Geneva, (ii) grant to Geneva a license to use the Proprietary Technology on
claims located adjacent to the Blackhawk Property and the right to sub-license
the Proprietary Technology to the Company for use on the Blackhawk Property. The
Company and Geneva simultaneously entered into the Sub-License Agreement whereby
the Company acquired from Geneva a sub-license to utilize AuRIC's proprietary
information and related precious metals recovery processes on the Blackhawk
Property.
Thus, on September 27, 1999, Geneva and INGC, on behalf of the Company,
initiated legal proceedings against AuRIC for: (i) multiple breaches of contract
relating to the Agreement for Services and the License Agreement, respectively,
including, but not limited to, establishment and facilitation of the Proprietary
Technology and fire assay procedures developed by AuRIC at an independent assay
lab and failure to deliver the Proprietary Technology and procedures to the
Company, Geneva and Dames & Moore; (ii) breach of the implied covenant of good
faith and fair dealing; (iii) negligent misrepresentation; (iv) specific
performance, (v) non-disclosure injunction; (vi) failure by AuRIC to repay
advances, and (vii) quantum meruit/unjust enrichment. INGC, on behalf of the
Company, also named Dames & Moore in the legal proceeding in a declaratory
relief cause of action.
11
On October 8, 1999, Geneva and INGC, on behalf of the Company, amended its
complaint by naming as defendants AuRIC, Dames & Moore, Ahmet Altinay General
Manager of AuRIC, and Richard Daniele, Chief Metallurgist for Dames & Moore and
specifying damages in excess of $10,000,000. The damages sought by Geneva and
INGC, on behalf of the Company, are based on the general claims and causes of
action set forth in the amended complaint relating to reliance on the assays and
representations made by AuRIC, the actions and engineering reports produced by
Dames & Moore and, specifically, the negligent misrepresentations and
inaccuracies contained within some or all of those Dames & Moore reports and
breaches of contract by AuRIC and Dames & Moore.
On June 21, 2000, Geneva and INGC, on behalf of the Company, filed a second
amended complaint in the District Court of the Third Judicial District for Salt
Lake City, State of Utah. The second amended complaint increased detail
regarding the alleged breaches of contract and increased causes of action
against other parties involved by adding two new defendants, MBM Consulting,
Inc. and Dr. Michael B. Merhtens, who provided consulting services to INGC. The
second amended complaint also added certain claims of other entities involved
through Geneva against the defendants. The Proprietary Technology forms the
basis of claims made by Geneva and INGC, on behalf of the Company, in the
complaints as filed with the District Court. Geneva and INGC, on behalf of the
Company, allege that the Proprietary Technology does not exist and that Geneva
and INGC were fraudulently, recklessly and/or negligently deceived by AuRIC,
Dames & Moore, and other parties to the lawsuit.
Geneva and INGC subsequently obtained an order from the District Court
granting its Motion to Compel. The Order requires that AuRIC and Dames & Moore
produce the Proprietary Technology for Geneva's and INGC's restricted use by its
legal counsel and industry experts. Geneva and INGC, on behalf of the Company,
intend to obtain an expert opinion as to the validity or ineffectiveness of the
Proprietary Technology.
As of the date of this Quarterly Report, various depositions have been
taken by various parties to the lawsuit, with more expected in the scheduling
process. Discovery and document production have been conducted by both sides to
the dispute, but not completed. Geneva and INGC, on behalf of the Company,
continue to pursue all such legal actions and review further legal remedies
against AuRIC and Dames & Moore. Management believes that the legal proceedings
will prove that the proprietary technology is invalid.
If the Proprietary Technology is proven to be invalid and not transferable,
and INGC/Geneva are not successful in the outcome of the litigation and damages
are not awarded, the Company may not be able to recover its potential losses and
expenses incurred due to the breach of the Sub-License Agreement by Geneva.
However, if the Proprietary Technology is proven to be invalid and not
transferable, and INGC/Geneva are successful in the outcome of the litigation,
INGC/Geneva may then receive damages from AuRIC, Dames & Moore, and other
parties to the lawsuit. Geneva's damages result primarily from its inability to
transfer the Proprietary Technology to the Company in accordance with the
provisions of the Sub-License Agreement.
The Company and Geneva entered into an assignment agreement dated May 9,
2000 (the "Assignment Agreement") that transferred and conveyed to Geneva the
potential claims and causes of action that the Company may have under the
Sub-License Agreement with Geneva. If damages are recovered in the lawsuit
initiated by Geneva and INGC, on behalf of the Company, the Company will receive
a pro rata share of such damages relating to its claims and causes of action in
relation to all other claims and causes of action for which damages are
recovered. Thus, Geneva will receive any such pro rata share of the damages
recovered pursuant to the terms and provisions of the Assignment Agreement.
Management believes that the Company will, under these circumstances, be
entitled to receive a pro-rata portion of the awarded damages for potential
losses incurred due to the breach of the Sub-License Agreement by Geneva.
Item 2. Changes in Securities and Use of Proceeds
|X| As of March 31, 2000, 1,000,000 Series A Warrants were converted into
1,000,000 shares of the Company's restricted Common Stock at the
conversion price of $0.25 per share for an aggregate consideration of
$250,000. As of March 31, 2000, the holders of Series A Preferred
shares converted an aggregate of 3,700,000 Series A Preferred shares
into 3,700,000 shares of the Company's Common Stock, and an additional
902,1000 shares of Common Stock were issued by the Company as a
dividend pursuant to such conversion. The Company issued the shares of
Common Stock pursuant to Section 4(2) of the Securities Act of 1933,
as amended (the "Securities Act") and Regulation D, Rule 506
promulgated thereunder. The investors had previously executed
subscription agreements and acknowledged that the securities to be
issued have not been registered under the Securities Act, that the
investors understood the economic risk of an investment in the
securities, and that the investors had the opportunity to ask
questions of and receive answers from the Company's management
concerning any and all matters related to the acquisition of
securities. No underwriter is involved in the transactions, and no
commissions or other remuneration will be paid in connection with the
issuance of the securities.
|X| On May 1, 2000, the Company issued a warrant to a Series A Preferred
shareholder who did not timely convert its Series A Warrants in
exchange for the settlement and discharge of the redemption liability
of $30,000 owed by the Company to the Series A Preferred shareholder.
On May 1, 2000, the Series A Preferred shareholder converted such
warrant into, and the Company issued, 3,000,000 shares of the
Company's restricted Common Stock at the conversion price of $0.25 per
share for an aggregate consideration of $750,000. The Company issued
the warrant and the shares of Common Stock pursuant to Section 4(2) of
the Securities Act and Regulation D, Rule 506 promulgated thereunder.
No underwriter is involved in the transaction, and no commissions or
other remuneration will be paid in connection with the issuance of the
securities.
Item 3. Defaults Upon Senior Securities
No report required.
Item 4. Submission of Matters to a Vote of Security Holders
No report required.
Item 5. Other Information
No report required.
Item 6. Exhibits and Reports on Form 8-K
(a) No exhibits required.
(b) A report of Form 8-K was filed with the Securities and Exchange
Commission on august 11, 2000 regarding a change in the Company's principal
independent auditors.
12
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.
INTERGOLD CORPORATION
Dated: August 14, 2000 By: /s/ Gary Powers
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Gary Powers, President
Dated: August 14, 2000 By: /s/ Grant Atkins
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Grant Atkins, Secretary