UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________
FORM 10QSB
Under Section 12(b) or Section 12(g) of
The Securities Exchange Act of 1934
For the quarter ended December 31, 2002
TREND MINING COMPANY
(Name of Small Business Issuer in its Charter)
Delaware 81-0304651
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
5968 Government Way
Dalton Gardens, Idaho 83815
(Address of principal executive office)
Issuer's telephone number: (208) 773-2250
Securities to be registered under Section 12(b) of the Act:
None
(Title of Class)
Securities to be registered under Section 12(g) of the Act:
None
(Title of Class)
================================================================================
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [ x ] No [ ]
The number of shares outstanding at December 31, 2002: 28,933,782 shares
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
FINANCIAL STATEMENTS
DECEMBER 31, 2002
WILLIAMS & WEBSTER, P.S.
CERTIFIED PUBLIC ACCOUNTANTS
BANK OF AMERICA FINANCIAL CENTER
601 W. RIVERSIDE, SUITE 1940
SPOKANE, WASHINGTON 99201
(509) 838-5111
TREND MINING COMPANY
FINANCIAL STATEMENTS
Balance Sheets 1
Statements of Operations 2
Statement of Stockholders' Equity (Deficit) 3
Statements of Cash Flows 5
NOTES TO THE FINANCIAL STATEMENTS 6
Board of Directors
Trend Mining Company
Coeur d'Alene, Idaho
ACCOUNTANT'S REVIEW REPORT
--------------------------
We have reviewed the accompanying balance sheet of Trend Mining Company
(formerly Silver Trend Mining Company) (an exploration stage company) as of
December 31, 2002, and the related statements of operations and comprehensive
loss, stockholders' equity (deficit), and cash flows for the three ended
December 31, 2002 and 2001 and for the period from October 1, 1996 (inception of
exploration stage) to December 31, 2002. All information included in these
financial statements is the representation of the management of Trend Mining
Company.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit in accordance with
auditing standards generally accepted in the United States of America, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements in order for them to be in
conformity with accounting principles generally accepted in the United States of
America.
The financial statements for the year ended September 30, 2002 were audited by
us and we expressed an unqualified opinion on them in our report dated December
2, 2002. We have not performed any auditing procedures since that date.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company's significant operating losses raise
substantial doubt about its ability to continue as a going concern.
Management's plans regarding the resolution of this issue are also discussed in
Note 2. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Williams & Webster, P.S.
Certified Public Accountants
Spokane, Washington
February 18, 2002
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
BALANCE SHEETS
December 31,
2002 September 30,
(unaudited) 2002
-------------------- ---------------------
ASSETS
CURRENT ASSETS
Cash $ 153,172 $ 2,281
TOTAL CURRENT ASSETS 153,172 2,281
-------------------- ---------------------
MINERAL PROPERTIES - -
-------------------- ---------------------
PROPERTY AND EQUIPMENT, net of depreciation 23,201 25,929
-------------------- ---------------------
OTHER ASSETS
Investments 250 250
-------------------- ---------------------
TOTAL ASSETS $ 176,623 $ 28,460
==================== =====================
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $ 121,705 $ 492,250
Accrued expenses 52,213 100,542
Interest payable 73,125 52,298
Loans payable to stockholders 1,052,858 1,062,358
Current portion of long-term debt 2,608 2,897
-------------------- ---------------------
TOTAL CURRENT LIABILITIES 1,302,509 1,710,345
-------------------- ---------------------
LONG-TERM DEBT, net of current portion 11,465 12,161
-------------------- ---------------------
COMMITMENTS AND CONTINGENCIES - -
-------------------- ---------------------
STOCKHOLDERS' DEFICIT
Preferred stock, $0.01 par value, 20,000,000 shares
authorized; 0 and 1 share issued and outstanding, respectively - -
Common stock, $0.01 par value, 100,000,000
shares authorized; 28,933,782 and
22,588,435 shares issued and outstanding, respectively 289,337 225,884
Additional paid-in capital 5,597,300 5,012,134
Stock options and warrants 1,383,042 1,383,042
Pre-exploration stage accumulated deficit (558,504) (558,504)
Accumulated deficit during exploration stage (7,848,526) (7,756,602)
-------------------- ---------------------
TOTAL STOCKHOLDERS' DEFICIT (1,137,351) (1,694,046)
-------------------- ---------------------
TOTAL LIABILITIES AND
STOCKHOLDERS' DEFICIT $ 176,623 $ 28,460
==================== =====================
<FN>
The accompanying notes are an integral part of these financial statements.
1
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
STATEMENTS OF OPERATIONS
Period from
October 1, 1996
(Inception of
Three Months Three Months Exploration Stage)
Ended Ended to
December 31, December 31, December 31,
2002 2001 2002
(unaudited) (unaudited) (unaudited)
-------------- -------------- -------------------
REVENUES $ - $ - $ -
-------------- -------------- -------------------
EXPENSES
Exploration expense 33,127 4,070 2,797,914
General and administrative 116,920 134,937 1,912,811
Officers and directors compensation 18,454 22,250 1,260,594
Legal and professional 21,386 21,884 1,110,658
Depreciation 2,728 611 41,114
-------------- -------------- -------------------
Total Expenses 192,615 183,752 7,123,091
-------------- -------------- -------------------
OPERATING LOSS (192,615) (183,752) (7,123,091)
-------------- -------------- -------------------
OTHER INCOME (EXPENSE)
Dividend and interest income - - 6,398
Gain (loss) on disposition and impairment of assets - 500 (179,854)
Loss on investment sales - - (53,772)
Financing expense - (9,876) (911,513)
Interest expense (21,663) (35,969) (161,467)
Miscellaneous income - - 10,345
Forgiveness of debt 122,354 - 564,428
-------------- -------------- -------------------
Total Other Income (Expense) 100,691 (45,345) (725,435)
-------------- -------------- -------------------
LOSS BEFORE INCOME TAXES (91,924) (229,097) (7,848,526)
INCOME TAXES - - -
-------------- -------------- -------------------
NET LOSS $ (91,924) $ (229,097) $ (7,848,526)
============== ============== ===================
BASIC AND DILUTED NET LOSS PER SHARE $ nil $ (0.01)
============== ==============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 24,687,545 18,787,746
============== ==============
<FN>
The accompanying notes are an integral part of these financial statements.
2
TREND MINING EXPLORATION
(AN EXPLORATION STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
Common Stock
--------------------- Additional Stock
Number Paid-in Options and Accumulated
of Shares Amount Capital Warrants Deficit
----------- -------- ------------ ------------- --------------
Balance, October 1, 1996 1,754,242 $ 17,542 $ 663,218 $ 0 $ (558,504)
Common stock issuances as follows:
- for cash at $0.50 per share 200,000 2,000 98,000 - -
- for payment of liabilities and expenses at $0.50
per share 45,511 455 22,301 - -
Net loss for the year ended September 30, 1997 - - - - (128,614)
----------- -------- ------------ ------------- --------------
Balance, September 30, 1997 1,999,753 19,997 783,519 - (687,118)
Issuance of common stock as follows:
- for mineral property at $0.50 per share 150,000 1,500 73,500 - -
- for lease termination at $0.50 per share 12,000 120 5,880 - -
- for debt at $0.50 per share 80,000 800 39,200 - -
- for cash at $0.20 per share 7,500 75 1,425 - -
- for compensation at $0.50 per share 9,000 90 4,410 - -
Issuance of stock options for financing activities - - - 2,659 -
Net loss for the year ended September 30, 1998 - - - - (119,163)
Change in market value of investments - - - - -
----------- -------- ------------ ------------- --------------
Balance, September 30, 1998 2,258,253 22,582 907,934 2,659 (806,281)
Common stock issuances as follows:
- for cash at an average of $0.07 per share 555,000 5,550 35,450 - -
- for prepaid expenses at $0.33 per share 50,000 500 16,000 - -
- for consulting services at an average of
$0.20 per share 839,122 8,391 158,761 - -
- for mineral property at $0.13 per share 715,996 7,160 82,470 - -
- for officers' compensation at an average of
$0.24 per share 300,430 3,004 70,522 - -
- for debt, investment and expenses at $0.30 per share 9,210 92 2,671 - -
- for directors' compensation at an average of
$0.25 per share 16,500 165 3,960 - -
- for rent at $0.25 per share 1,000 10 240 - -
- for equipment at $0.30 per share 600,000 6,000 174,000 - -
Net loss for the year ended September 30, 1999 - - - - (716,759)
Other comprehensive loss - - - - -
----------- -------- ------------ ------------- --------------
Balance, September 30, 1999 5,345,511 53,454 1,452,007 2,659 (1,523,040)
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 -
- for officers' and directors' compensation
at an average of $1.19 per share 11,500 115 13,615 - -
- for services at an average of $0.47 per share 530,177 5,302 246,333 - -
- for mineral property at $0.89 per share 1,000,000 1,000 88,000 - -
- for investments at $0.33 per share 200,000 2,000 64,000 - -
- for cash at $0.08 per share 456,247 4,562 28,969 - -
- for cash, options and warrants 100,000 10,000 2,414 87,586 -
- for incentive fees at $0.33 per share 65,285 653 20,891 - -
- for deferred mineral property acquisition
costs at $0.13 per share 129,938 1,299 14,943 - -
- for modification of stockholder agreement
at $0.60 per share 200,000 2,000 118,000 30,000 -
- for modification of stockholder agreement - - 4,262 10,379 -
- from exercise of options at $0.12 per share 9,962,762 99,628 1,103,016 (37,524) -
Cash received for the issuance of common stock
warrants for 7,979,761 shares of stock - - - 10,000 -
Miscellaneous common stock adjustments (5) - - - -
Net loss for the year ended September 30, 2000 - - - - (2,186,541)
Other comprehensive income (loss) - - - - -
----------- -------- ------------ ------------- --------------
Balance, September 30, 2000 18,232,776 $182,327 $ 3,296,897 $ 118,920 $ (3,709,581)
----------- -------- ------------ ------------- --------------
Other
Comprehensive
Income(Loss) Total
------------- ------------
Balance, October 1, 1996 $ 0 $ 122,256
Common stock issuances as follows:
- for cash at $0.50 per share - 100,000
- for payment of liabilities and expenses at $0.50
per share - 22,756
Net loss for the year ended September 30, 1997 - (128,614)
------------- ------------
Balance, September 30, 1997 - 116,398
Issuance of common stock as follows:
- for mineral property at $0.50 per share - 75,000
- for lease termination at $0.50 per share - 6,000
- for debt at $0.50 per share - 40,000
- for cash at $0.20 per share - 1,500
- for compensation at $0.50 per share - 4,500
Issuance of stock options for financing activities - 2,659
Net loss for the year ended September 30, 1998 - (119,163)
Change in market value of investments 117,080 117,080
------------- ------------
Balance, September 30, 1998 117,080 243,974
Common stock issuances as follows:
- for cash at an average of $0.07 per share - 41,000
- for prepaid expenses at $0.33 per share - 16,500
- for consulting services at an average of
$0.20 per share - 167,152
- for mineral property at $0.13 per share - 89,630
- for officers' compensation at an average of
$0.24 per share - 73,526
- for debt, investment and expenses at $0.30 per share - 2,763
- for directors' compensation at an average of
$0.25 per share - 4,125
- for rent at $0.25 per share - 250
- for equipment at $0.30 per share - 180,000
Net loss for the year ended September 30, 1999 - (716,759)
Other comprehensive loss (79,179) (79,179)
------------- ------------
Balance, September 30, 1999 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 - 158,580
- for officers' and directors' compensation
at an average of $1.19 per share - 13,730
- for services at an average of $0.47 per share - 251,635
- for mineral property at $0.89 per share - 89,000
- for investments at $0.33 per share - 66,000
- for cash at $0.08 per share - 33,531
- for cash, options and warrants - 100,000
- for incentive fees at $0.33 per share - 21,544
- for deferred mineral property acquisition
costs at $0.13 per share - 16,242
- for modification of stockholder agreement
at $0.60 per share - 150,000
- for modification of stockholder agreement - 14,641
- from exercise of options at $0.12 per share - 1,165,120
Cash received for the issuance of common stock
warrants for 7,979,761 shares of stock - 10,000
Miscellaneous common stock adjustments - -
Net loss for the year ended September 30, 2000 - (2,186,541)
Other comprehensive income (loss) (38,314) (38,314)
------------- ------------
Balance, September 30, 2000 $ (413) $ (111,850)
------------- ------------
<FN>
The accompanying notes are an integral part of these financial statements.
3
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) (CONTINUED)
Common Stock
-------------------- Additional
Number Paid-in Options and Accumulated
of Shares Amount Capital Warrants Deficit
---------- -------- ------------ ------------- --------------
Balance, September 30, 2000 18,232,776 $182,327 $ 3,296,897 $ 118,920 $ (3,709,581)
Common stock and option issuances as follows:
- for cash of $1.00 per share 192,000 1,920 190,080 - -
- for cash and consulting services from
options for $0.39 per share 33,333 333 12,737 (3,070) -
- for services at an average of $0.92 per share 13,700 137 12,463 - -
- for officer and employee compensation at
$1.13 per share 5,200 52 5,828 - -
- for payment of accrued officer's compensation
at $1.35 per share 10,000 100 13,400 - -
- for consulting services at an average of
$0.77 per share 45,461 455 34,247 - -
- for directors' compensation at $0.85 per share 75,000 750 63,000 - -
- for modification of contract at $0.78 per share 3,000 30 2,310 - -
- for interest payment on contract
at an average of $0.80 per share 10,000 100 7,900 - -
- for mineral property expenses at $0.85 per share 1,000 10 840 - -
- for debt at $1.00 per share 134,500 1,345 133,155 - -
Options issued to officers, directors and
employees for services - - - 354,000 -
Warrants issued as follows:
- for consulting services - - - 170,521 -
- for loan agreements - - - 141,547 -
- for extension of exercise period
on outstanding warrants - - - 608,058 -
Net loss for the year ended September 30, 2001 - - - - (3,437,354)
Other comprehensive income - - - - -
---------- -------- ------------ ------------- --------------
Balance, September 30, 2001 18,755,970 187,559 3,772,857 1,389,976 (7,146,935)
Common stock and option issuances as follows:
- for cash at $0.10 per share 2,500,000 25,000 225,000 - -
- for a loan payable at $1.00 per share 25,000 250 24,750 - -
- for consulting fees payable at $0.55 per share 12,536 126 6,769 - -
- for mineral properties at $0.70 per share 1,100,000 11,000 759,000 - -
- for services at an average of $0.49 per share 112,500 1,125 53,625 - -
- for financing expense at an average of 82,429 824 35,369 - -
$0.44 per share
Options issued to officers, directors and
employees for services - - - 29,528 -
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 - - - - (1,168,171)
---------- -------- ------------ ------------- --------------
Balance, September 30, 2002 22,588,435 225,884 5,012,134 1,383,042 (8,315,106)
Common stock issuances as follows:
- for cash at $0.10 per share 5,250,000 52,500 472,500 - -
- for consulting services at an average of 926,187 9,261 104,858 - -
$0.17 per share
- for a loan payable at $0.06 per share 169,160 1,692 7,808 - -
Net loss for the period ended
December 31, 2002 (unaudited) - - - - (91,924)
---------- -------- ------------ ------------- --------------
Balance, December 31, 2002 (unaudited) 28,933,782 $289,337 $ 5,597,300 $ 1,383,042 $ (8,407,030)
========== ======== ============ ============= ==============
Other
Comprehensive
Income(loss) Total
------------- ------------
Balance, September 30, 2000 $ (413) $ (111,850)
Common stock and option issuances as follows:
- for cash of $1.00 per share - 192,000
- for cash and consulting services from
options for $0.39 per share - 10,000
- for services at an average of $0.92 per share - 12,600
- for officer and employee compensation at
$1.13 per share - 5,880
- for payment of accrued officer's compensation
at $1.35 per share - 13,500
- for consulting services at an average of
$0.77 per share - 34,702
- for directors' compensation at $0.85 per share - 63,750
- for modification of contract at $0.78 per share - 2,340
- for interest payment on contract
at an average of $0.80 per share - 8,000
- for mineral property expenses at $0.85 per share - 850
- for debt at $1.00 per share - 134,500
Options issued to officers, directors and - 354,000
employees for services
Warrants issued as follows:
- for consulting services - 170,521
- for loan agreements - 141,547
- for extension of exercise period
on outstanding warrants - 608,058
Net loss for the year ended September 30, 2001 - (3,437,354)
Other comprehensive income 413 413
------------- ------------
Balance, September 30, 2001 - (1,796,543)
Common stock and option issuances as follows:
- for cash at $0.10 per share - 250,000
- for a loan payable at $1.00 per share - 25,000
- for consulting fees payable at $0.55 per share - 6,895
- for mineral properties at $0.70 per share - 770,000
- for services at an average of $0.49 per share - 54,750
- for financing expense at an average of - 36,193
$0.44 per share
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)
------------- ------------
Balance, September 30, 2002 - (1,694,046)
Common stock issuances as follows:
- for cash at $0.10 per share - 525,000
- for consulting services at an average of - 114,119
$0.17 per share
- for a loan payable at $0.06 per share - 9,500
Net loss for the period ended - (91,924)
------------- ------------
December 31, 2002 (unaudited)
Balance, December 31, 2002 (unaudited) $ 0 $(1,137,351)
============= ============
<FN>
The accompanying notes are an integral part of these financial statements.
4
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
STATEMENTS OF CASH FLOWS
Period from
October 1, 1996
(Inception of
Three Months Three Months Exploration Stage)
Ended Ended to
December 31, December 31, December 31,
2002 2001 2002
(unaudited) (unaudited) (unaudited)
----------------- -------------- -------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (91,924) $ (229,097) $ (7,848,526)
Adjustments to reconcile net loss to net cash used by
operating activities:
Depreciation 2,728 611 41,114
Loss on investment sales - - 58,928
Loss on disposition and impairment of assets - - 188,226
Gain on sale of mineral property claims for securities - (500) (500)
Gain on trade-in of property and equipment - - (7,872)
Gain on forgiveness of debt (122,354) - (564,428)
Interest expense forgiven by shareholders - - 23,566
Common stock issued for services
and expenses 81,119 - 714,668
Common stock issued for payables - 6,895 31,895
Common stock and options issued as compensation - - 721,119
Stock options and warrants issued for financing activities - 9,876 822,257
Common stock and warrants issued to acquire mineral
property options - - 1,114,873
Warrants issued for consulting fees - - 170,521
Common stock issued for incentive fees - - 21,544
Investment traded for services - - 22,539
Changes in assets and liabilities:
Inventory - - 3,805
Accounts payable (248,191) 47,516 779,198
Accrued expenses (15,329) 11,625 11,028
Interest payable 20,827 - 43,982
----------------- -------------- -------------------
Net cash used by operating activities (373,124) (153,074) (3,652,063)
----------------- -------------- -------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of equipment - - 35,126
Proceeds from sale of mineral property - - 20,000
Purchase of furniture and equipment - - (41,695)
Proceeds from investments sold - - 101,430
----------------- -------------- -------------------
Net cash provided by investing activities - - 114,861
----------------- -------------- -------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on notes payable and short-term borrowings (985) (732) (9,741)
Sale of warrants for common stock - - 10,000
Proceeds from short-term borrowings - 129,445 1,353,357
Sale of common stock, subscriptions
and exercise of options 525,000 - 2,333,151
----------------- -------------- -------------------
Net cash provided by financing activities 524,015 128,713 3,686,767
----------------- -------------- -------------------
NET DECREASE IN CASH 150,891 (24,361) 149,565
CASH, BEGINNING OF PERIOD 2,281 24,954 3,607
----------------- -------------- -------------------
CASH, END OF PERIOD $ 153,172 $ 593 $ 153,172
================= ============== ===================
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 323 $ 132 $ 3,835
Income taxes paid $ 0 $ 0 $ 0
NON-CASH FINANCING AND INVESTING ACTIVITIES:
Common stock and warrants issued to acquire
mineral properties $ 0 $ 0 $ 344,873
Common stock issued to acquire mineral property $ 0 $ 0 $ 845,000
Common stock issued for acquisition of
mining equipment $ 0 $ 0 $ 180,000
Common stock issued for services and expenses $ 0 $ 0 $ 633,549
Common stock issued for investment $ 0 $ 0 $ 67,000
Common stock issued for debt $ 42,500 $ 31,895 $ 249,737
Common stock issued for incentive fees $ 0 $ 0 $ 21,544
Common stock and options issued as compensation $ 0 $ 0 $ 691,591
Options issued to officers, directors and employees for services $ 0 $ 0 $ 383,528
Stock options and warrants issued for financing activities $ 0 $ 9,876 $ 822,257
Warrants issued for consulting fees $ 0 $ 0 $ 170,521
Deferred acquisition costs on mining property $ 0 $ 0 $ 46,242
Purchase of equipment with financing agreement $ 0 $ 0 $ 21,814
Investments received for mineral property $ 0 $ 500 $ 5,500
Investments traded for services $ 0 $ 0 $ 22,539
Equipment for loans payable $ 0 $ 0 $ 4,500
<FN>
The accompanying notes are an integral part of these financial statements.
5
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Trend Mining Company (formerly Silver Trend Mining Company) ("the Company") was
originally 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. In February 1999, the Company changed its name from Silver Trend Mining
Company to Trend Mining Company to better reflect the Company's change of focus
to platinum group metals. The Company conducts operations primarily from its
office in Post Falls, Idaho. The Company has elected a September 30 fiscal
year-end.
On March 28, 2001, the Company reincorporated in Delaware. 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 preferred stock with a par value of $0.01, with rights and preferences to be
determined by the Company's board of directors.
The Company is actively seeking additional capital. Management believes that
additional stock can be sold to enable the Company to continue to fund its
property acquisition and platinum group metals exploration activities, however,
management is unable to provide assurances that it will be successful in
obtaining sufficient sources of capital.
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 representing 10,240,856 and 10,049,006 shares
as of December 31, 2002 and 2001, respectively, have been excluded from the
calculation of diluted loss per share as they would be antidilutive.
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.
6
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 December 31, 2002 and
2001. Accordingly, no liability has been recorded in the financial statements.
The Company's policy is to recognize the cost of compensated absences when
compensation is actually paid to employees.
Comprehensive Income (Loss)
- -----------------------------
The Company reports comprehensive income (loss) in accordance with Statement of
Financial Accounting Standards ("SFAS") 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 ("FASB") issued Statement of Financial
Accounting Standards ("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 December 31, 2002 and 2001, 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 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 that day, 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.
7
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 December 31, 2002 and 2001 were $33,127
and $4,070, respectively. As of December 31, 2002, the exploration costs
expensed during the Company's exploration stage were $2,797,914.
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 carrying amounts for cash, accounts payable, loans payable and accrued
liabilities approximate their fair value.
Going Concern
- --------------
As shown in the accompanying financial statements, the Company has limited cash,
has negative working capital, has no revenues, has incurred a net loss of
$91,924 for the period ended December 31, 2002 and has an accumulated deficit of
$8,407,030. 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's management believes that it will be able to generate
sufficient cash from public or private debt or equity financing for the Company
to continue to operate based on current expense projections.
Impaired Asset Policy
- -----------------------
The Company adopted FASB statement SFAS No. 121 titled "Accounting for
Impairment of Long-Lived Assets," which has been replaced by SFAS 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. Properties are acquired and recorded at fair values negotiated in
arm's length transactions. The Company expenses, as costs, 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.
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
bases of specific investment accounts.
8
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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. When a property reaches the production stage, the related capitalized
costs will be amortized, using the units of production method on the basis of
periodic estimates of ore reserves.
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 purposes. The parameters used in such valuations
include a risk free rate of 5.5%, the assumption that no dividends are paid,
exercise periods ranging from 1 week to 5.5 years depending upon the terms of
the instrument issued, and a volatility factor calculated annually based on
estimates of expected volatility, in accordance with SFAS No. 123. The Company
used its historic volatility data to develop the 1998 estimate of 30%,
consistent with its limited public trading in 1998. The volatility estimates
for calculation purposes reflect an average of Company data and volatility
factors reported by two other mining companies at comparable stages in their
respective public trading histories, resulting in expected volatilities of
55.12% in 1999, 48.05% in 2000, 46.4% in 2001 and 50% in 2002.
Reverse Stock Split
- ---------------------
The Company's board of directors in 1999 authorized a 1 for 10 reverse stock
split of its no par value common stock. See Note 4. All references in the
accompanying financial statements to the number of common shares outstanding and
per share amounts have been restated to reflect the reverse stock split.
Recent Accounting Pronouncements
- ----------------------------------
In April 2002, the FASB issued SFAS No. 145, "Rescission of SFAS Statements No.
4, 44 and 64, Amendment of SFAS No. 13, and Technical Corrections," which
updates, clarifies and simplifies existing accounting pronouncements. SFAS No.
4, which required all gains and losses from the extinguishment of debt to be
aggregated and, if material, classified as an extraordinary item, net of related
tax effect was rescinded, and as a result, SFAS No. 64, which amended SFAS No.
4, was rescinded as it was no longer necessary. SFAS No. 145 amended SFAS No.
13 to eliminate an inconsistency between the required accounting for
sale-leaseback transactions and the required accounting for certain lease
modifications which have economic effects similar to those of sale-leaseback
transactions. Management has not yet determined the effects of adopting this
Statement on the financial position or results of operations, except for the
need to classify debt extinguishments as ordinary.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities." SFAS No. 146 addresses significant issues
regarding the recognition, measurement, and reporting of costs associated with
exit and disposal activities, including restructuring activities. SFAS No. 146
also addresses recognition of certain costs related to terminating a contract
that is not a capital lease, costs to consolidate facilities or relocate
employees, and termination benefits provided to employees that are involuntarily
terminated under the terms of a one-time benefit arrangement that is not
9
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recent Accounting Pronouncements (continued)
- -----------------------------------------------
an ongoing benefit arrangement or an individual deferred-compensation contract.
SFAS No. 146 was issued in June 2002 and its adoption has had no impact on the
Company's financial position or results of operations.
In November 2002, the FASB issued FASB Interpretation ("FIN") No. 45,
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees." FIN 45 elaborates on the disclosures to be made by a
guarantor in its interim and annual financial statements about its obligations
under certain guarantees that it has issued. It also clarifies that a guarantor
is required to recognize, at the inception of a guarantee, a liability for the
fair value of the obligation undertaken in issuing the guarantee. FIN 45 does
not prescribe a specific approach for subsequently measuring the guarantor's
recognized liability over the term of the related guarantee. It also
incorporates, without change, the guidance in FASB Interpretation No. 34,
Disclosure of Indirect Guarantees of Indebtedness of Others, which is being
superseded. FIN No. 45 has had no impact on the Company's financial position or
results of operations as the Company has not entered into any of the
aforementioned transactions.
In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure." SFAS 148 amends SFAS No. 123,
"Accounting for Stock-Based Compensation," to provide alternative methods of
transition for an entity that voluntarily changes to the fair value based method
of accounting for stock-based employee compensation. In addition, it also amends
the disclosure provisions of SFAS 123 to require prominent disclosure about the
effects on reported net income of an entity's accounting policy decisions with
respect to stock-based employee compensation. SFAS 148 also amends APB Opinion
No. 28, Interim Financial Reporting, to require disclosure about the effect in
interim financial information. Prior to the issuance of SFAS No. 148, the
Company adopted the fair value based method of accounting for stock-based
employee compensation. Thus, the Company's financial reporting will not be
significantly effected by SFAS 148.
Provision for Taxes
- ---------------------
Income taxes are provided based upon the liability method of accounting pursuant
to SFAS No. 109 "Accounting for Income Taxes." Under this approach, deferred
income taxes are recorded to reflect the tax consequences on future years of
differences between the tax basis of assets and liabilities and their financial
reporting amounts at each year-end. 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 December 31, 2002, the Company had net deferred tax assets of approximately
$1,190,000, 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 December 31, 2002.
At December 31, 2002, the Company has net operating loss carryforwards of
approximately $3,950,000, which expire in the years 2001 through 2021. The net
operating loss carryforwards do not include expenses that are not deductible for
tax purposes, such as compensation expense, in the amount of $2,398,837
attributable to options and warrants issued to employees and consultants. The
Company also owes to the Internal Revenue Service employment taxes of
approximately $50,000 as of December 31, 2002.
10
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
Interim Financial Statements
- ------------------------------
The interim financial statements for the period ended December 31, 2002,
included herein, have not been audited, at the request of the Company. They
reflect all adjustments, which are, in the opinion of management, necessary to
present fairly the results of operations for the period. All such adjustments
are normal recurring adjustments. The results of operations for the period
presented is not necessarily indicative of the results to be expected for the
full fiscal year.
NOTE 3 - MINERAL PROPERTIES
The following describes the Company's significant mineral properties:
Wyoming Properties
- -------------------
During the year ended September 30, 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.
The Company has obtained an additional 497 unpatented mining claims in an agreed
area of interest near 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.
The Company also staked and claimed six claims known as the Albany Project
during the year ended September 30, 1999. These claims are located in Albany
County, Wyoming.
The Company additionally staked and claimed 42 unpatented mining claims known as
the Spruce Mountain claims, 159 unpatented mining claims known as the Centennial
West claims (dropped on September 1, 2002), 34 unpatented mining claims at the
Douglas Creek property and 121 unpatented mining claims known as the Keystone
property. These claims are also located in Albany County,
11
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE 3 - MINERAL PROPERTIES (CONTINUED)
Wyoming Properties (continued)
- --------------------------------
Wyoming. As of December 31, 2002, the Company owns a total of 804 unpatented
mining claims in Albany County, Wyoming.
Montana Properties
- -------------------
In March 2000, the Company entered into a three-year lease and option agreement
under which it had the right to acquire a 100% interest in the Intrepid claims.
Upon entering into the agreement, the Company paid the claim owners $5,800 in
cash and 100,000 shares of common stock. In the Company's acquisition of this
option, it expensed $97,140 for cash paid and common stock issued.
Under the agreement, the Company was obligated to incur minimal exploration
expenditures of $10,000 by September 30, 2001, $15,000 by March 4, 2002 and
$15,000 by March 4, 2003. In addition, the Company must make advance royalty
payments of $10,000 by March 4, 2001, $25,000 by March 4, 2002 and $35,000 each
year thereafter. In March 2001, the Company and the claim holders agreed to
replace the March $10,000 advance royalty payment with a $9,000 payment due May
11, 2001. In connection with this agreement, the Company issued to the holders
3,000 shares of common stock on March 11, 2001 with an aggregate value of
$2,340.
Following this agreement, the Company was unable to make the May 11th payment.
On May 24, 2001, the claim holders agreed to a modification to continue to
extend this payment initially to June 5th, but this payment was also not made as
scheduled. The Company issued an additional 1,000 shares with value of $850 and
paid $1,000 in cash per the terms of the modification, which reduced the
outstanding $9,000 payment to $8,000. By September 30, 2001, the Company
abandoned all of its interests in the Intrepid claims.
Other properties in Montana include the Vanguard Project and the McCormick Creek
Project, which is in Missoula County. In 2000, the Company staked 121 claims in
regards to the Vanguard Project and explored and staked 36 claims for the
McCormick Creek Project. By September 30, 2001, the Company had abandoned all
of its interests in the Vanguard Project.
During the year ended September 30, 2000, the Company located and staked 211
claims in Stillwater County Montana. During the year ended September 30, 2001,
172 claims were staked and added, and 304 claims were abandoned. In September
2002, the Company abandoned all of its interests in the Stillwater County
claims.
During the year ended September 30, 2002, the Company entered into an agreement
in which the Company acquired a 100% interest in four mineral leases covering a
total of 920 acres in Missoula County, Montana.
Oregon Property
- ----------------
During the year ended September 30, 1999, the Company entered into an agreement
in which it would explore and stake five claims located in Jackson County,
Oregon known as the Shamrock property. All transactions were completed and the
Company acquired title to these claims. On September 1, 2002, the Company
abandoned all of its interests in the Jackson County claims.
Nevada Properties
- ------------------
During the year ended September 30, 1999, the Company entered into an agreement
whereby Mountain Gold Exploration would explore and stake claims, transferring
title to the Company upon completion
12
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE 3 - MINERAL PROPERTIES (CONTINUED)
Nevada Properties (continued)
- -------------------------------
thereof. Transactions were finalized for 13 claims known as the Hardrock
Johnson Property located in Clark County, Nevada.
During March of 2000, the Company located and staked 31 unpatented claims known
as the Willow Springs claims. These claims are located in Nye County, Nevada.
On September 1, 2002, the Company abandoned all of its interests in the Willow
Springs claims.
In 1979, the Company acquired the Pyramid Mine, which consists of five
unpatented lode mining claims within the Walker Indian Reservation near Fallon,
Nevada. Pursuant to an impairment analysis performed by the Company, the
Company wrote off its $70,333 investment in the Pyramid Mine, effective prior to
the inception of the Company's exploration stage.
The Company sold the Pyramid Mine claims on November 12, 2001 to Calumet Mining
Company, a related party, for 50,000 shares of common stock of Calumet Mining
Company. This company's stock was subsequently acquired by Western Goldfields,
Inc. on a 1 for 2 basis. As a result, the Company now holds 25,000 shares of
Western Goldfields, Inc. The Company retained a 1.5% net smelter return
production royalty interest in the Pyramid Mine. See Notes 6 and 8.
California Properties
- ----------------------
In mid-2000, the Company acquired 79 unpatented mining claims, known as the Pole
Corral property, in Tehema County, California. On September 1, 2002, the
Company abandoned all of its interests in the Pole Corral property.
Canadian Property
- ------------------
In August 2000, the Company entered into an agreement whereby Spectra Management
Corporation would, on behalf of the Company, explore and stake five claims
comprising about 67,000 acres in northern Saskatchewan. This property is now
known as the Peter Lake Claims. The Company abandoned these claims in September
2002. In December 2002, the Company restaked these claims. Exploration
commitments totaling $268,000 must be completed by December 2004 as a condition
of acquiring these claims.
Idaho Property
- ---------------
The Company owned the Silver Strand Mine in Idaho until it was disposed of in
July 2001. The Company initially entered into an agreement with New Jersey
Mining Company (New Jersey) whereby the Company received 50,000 shares of New
Jersey's restricted common stock in exchange for New Jersey's opportunity to
earn a 100% interest less a net smelter royalty in the Company's unpatented
claims in Kootenai County, Idaho. In July 2001, the Company quitclaimed any
remaining interest in the Silver Strand property to Mine Systems Design, Inc. in
exchange for cancellation of $22,539 of outstanding invoices due Mine Systems.
The Company also transferred 50,000 shares of New Jersey stock to Mine Systems
Design as part of this settlement.
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.
13
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE 4 - CAPITAL STOCK (CONTINUED)
Preferred Stock (continued)
- ---------------------------
One share of Series A preferred stock was issued to Mr. Thomas S. Kaplan under
an agreement which requires 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 own more than twenty percent of the
Company's outstanding stock. Holders of the Company's common stock will vote on
the continued existence of the Series A preferred stock at each subsequent
annual meeting. In the event that the Company's preferred stock is not
continued, the outstanding share of Series A preferred stock can be tendered for
one share of the Company's common stock. In October 2002, this one and only
share of outstanding preferred stock was cancelled at the holder's request.
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.
On February 16, 1999, the Company's board of directors authorized a 1 for 10
reverse stock split of the Company's no par value common stock. As a result of
the split, 26,356,430 shares were retired. All references in the accompanying
financial statements to the number of common shares and per-share amounts for
the periods presented have been restated to reflect the reverse stock split.
During the period ended December 31, 2002, the Company issued 5,250,000 shares
of common stock for $525,000 cash, 926,187 shares of common stock valued at
$114,119 for consulting services, and 169,160 shares of common stock for a loan
payable of $9,500.
During the year ended September 30, 2002, the Company issued 25,000 shares of
common stock valued at $25,000 for a note payable, 12,536 shares of common stock
valued at $6,895 for accounts payable, 1,100,000 shares of common stock valued
at $770,000 for mineral property, 112,500 shares of common stock valued at
$54,750 for services, 82,429 shares of common stock valued at $36,193 for
financing expense, and 2,500,000 shares of common stock for $250,000 cash.
During the year ended September 30, 2001, the Company issued 69,161 shares of
common stock valued at $60,802 for services, 5,200 shares of common stock valued
at $5,880 as compensation, 33,333 shares of common stock from options exercised
by an employee for cash of $10,000, 75,000 shares valued at $63,750 to directors
as compensation, 3,000 shares valued at $2,340 to modify an agreement, 10,000
shares valued at $8,000 in lieu of interest on unpaid invoices, 1,000 shares
valued at $850 for mineral property expenses, 192,000 shares of common stock
sold for $192,000 cash as a private placement, and 134,500 shares of common
stock valued at $134,500 for loans payable.
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
SFAS 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.
14
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE 4 - CAPITAL STOCK (CONTINUED)
COMMON ADDITIONAL
NUMBER OF PRICE PER STOCK PAID-IN TOTAL NUMBER OF
ISSUE DATE SHARES SHARE AMOUNT CAPITAL AMOUNT OPTIONS
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
BALANCE, OCTOBER 1, 1996 1,754,242 $ - $17,542 $ 663,218 $ 680,760
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
CS for Cash 03/25/1997 200,000 0.50 2,000 98,000 100,000
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
CS for Payment of liabilities
and expenses 09/30/1997 45,511 0.50 455 22,301 22,756
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
BALANCE SEPTEMBER 30, 1997 1,999,753 19,998 783,518 803,516
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
CS for Mineral property 07/23/1998 150,000 0.50 1,500 73,500 75,000
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
CS for Cash 07/23/1998 7,500 0.20 75 1,425 1,500
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
CS for Lease termination 07/23/1998 12,000 0.50 120 5,880 6,000
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
CS for Debt 07/23/1998 80,000 0.50 800 39,200 40,000
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
OPT for Financing 09/24/1998 180,000
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
CS for Compensation 09/30/1998 9,000 0.50 90 4,410 4,500
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
BALANCE September 30, 1998 2,258,253 22,583 907,933 930,516 180,000
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
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 0.30 6,000 174,000 180,000
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
CS for Cash 11/28/1998 5,000 0.20 50 950 1,000
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
CS for Officers' compensation 12/31/1998 30,858 0.44 309 13,191 13,500
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
CS for Directors' compensation 01/25/1999 16,500 0.25 165 3,960 4,125
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
CS for Officers' compensation 01/31/1999 8,572 0.35 86 2,914 3,000
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
CS for Officers' compensation 03/31/1999 24,000 0.25 240 5,760 6,000
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
CS for Consulting services 03/31/1999 6,000 0.25 60 1,440 1,500
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
CS for Consulting services 04/30/1999 32,000 0.28 320 8,640 8,960
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
CS for Officers' compensation 04/30/1999 12,000 0.28 120 3,240 3,360
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
CS for Consulting services 05/31/1999 73,333 0.25 733 17,600 18,333
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
CS for Consulting services 06/30/1999 34,353 0.25 344 8,244 8,588
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
CS for Officers' compensation 06/30/1999 50,000 0.16 500 7,500 8,000
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
CS for Consulting services 06/30/1999 95,833 0.16 958 14,375 15,333
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
CS for Consulting services 07/06/1999 5,000 0.25 50 1,200 1,250
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
OPT for Financing activities 07/22/1999 50,000
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
CS for Mineral property option 07/27/1999 715,996 0.13 7,160 82,471 89,631
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
CS for Cash 07/29/1999 33,333 0.15 333 4,667 5,000
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
CS for Consulting services 07/30/1999 146,603 0.12 1,466 16,126 17,592
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
CS for Consulting services 07/31/1999 133,697 0.12 1,337 14,707 16,044
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
CS for Officers' compensation 07/31/1999 41,667 0.12 417 4,583 5,000
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
CS for Cash 08/04/1999 16,667 0.15 167 2,333 2,500
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
CS for Rent 08/09/1999 1,000 0.25 10 240 250
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
OPT for Financing activities 08/13/1999 100,000
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
CS for Cash 08/15/1999 50,000 0.05 500 2,000 2,500
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
CS for Consulting services 08/17/1999 5,000 0.25 50 1,200 1,250
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
CS for Cash 08/17/1999 100,000 0.05 1,000 4,000 5,000
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
CS for Cash 08/26/1999 100,000 0.10 1,000 9,000 10,000
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
CS for Consulting services 08/31/1999 159,750 0.25 1,598 38,341 39,938
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
CS for Prepaid expenses 09/10/1999 50,000 0.33 500 16,000 16,500
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
CS for Cash 09/10/1999 50,000 0.10 500 4,500 5,000
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
CS for Cash 09/13/1999 200,000 0.05 2,000 8,000 10,000
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
CS for Consulting services 09/30/1999 80,053 0.26 801 20,013 20,814
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
CS for Officers' compensation 09/30/1999 133,333 0.26 1,333 33,334 34,667
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
CS for Consulting services 09/30/1999 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
- ------------------------------------------- ---------- --------- ---------- ------- ----------- ---------- ---------
NUMBER OF VALUE OF
WARRANTS OPTIONS/
WARRANTS
- ------------------------------------------- --------- ---------
BALANCE, OCTOBER 1, 1996 $ -
- ------------------------------------------- --------- ---------
CS for Cash
- ------------------------------------------- --------- ---------
CS for Payment of liabilities and expenses
- ------------------------------------------- --------- ---------
BALANCE SEPTEMBER 30, 1997
- ------------------------------------------- --------- ---------
CS for Mineral property
- ------------------------------------------- --------- ---------
CS for Cash
- ------------------------------------------- --------- ---------
CS for Lease termination
- ------------------------------------------- --------- ---------
CS for Debt
- ------------------------------------------- --------- ---------
OPT for Financing 2,659
- ------------------------------------------- --------- ---------
CS for Compensation
- ------------------------------------------- --------- ---------
BALANCE September 30, 1998 2,659
- ------------------------------------------- --------- ---------
CS for Debt, investment and expenses
- ------------------------------------------- --------- ---------
CS for Equipment
- ------------------------------------------- --------- ---------
CS for Cash
- ------------------------------------------- --------- ---------
CS for Officers' compensation
- ------------------------------------------- --------- ---------
CS for Directors' compensation
- ------------------------------------------- --------- ---------
CS for Officers' compensation
- ------------------------------------------- --------- ---------
CS for Officers' compensation
- ------------------------------------------- --------- ---------
CS for Consulting services
- ------------------------------------------- --------- ---------
CS for Consulting services
- ------------------------------------------- --------- ---------
CS for Officers' compensation
- ------------------------------------------- --------- ---------
CS for Consulting services
- ------------------------------------------- --------- ---------
CS for Consulting services
- ------------------------------------------- --------- ---------
CS for Officers' compensation
- ------------------------------------------- --------- ---------
CS for Consulting services
- ------------------------------------------- --------- ---------
CS for Consulting services
- ------------------------------------------- --------- ---------
OPT for Financing activities
- ------------------------------------------- --------- ---------
CS for Mineral property option
- ------------------------------------------- --------- ---------
CS for Cash
- ------------------------------------------- --------- ---------
CS for Consulting services
- ------------------------------------------- --------- ---------
CS for Consulting services
- ------------------------------------------- --------- ---------
CS for Officers' compensation
- ------------------------------------------- --------- ---------
CS for Cash
- ------------------------------------------- --------- ---------
CS for Rent
- ------------------------------------------- --------- ---------
OPT for Financing activities
- ------------------------------------------- --------- ---------
CS for Cash
- ------------------------------------------- --------- ---------
CS for Consulting services
- ------------------------------------------- --------- ---------
CS for Cash
- ------------------------------------------- --------- ---------
CS for Cash
- ------------------------------------------- --------- ---------
CS for Consulting services
- ------------------------------------------- --------- ---------
CS for Prepaid expenses
- ------------------------------------------- --------- ---------
CS for Cash
- ------------------------------------------- --------- ---------
CS for Cash
- ------------------------------------------- --------- ---------
CS for Consulting services
- ------------------------------------------- --------- ---------
CS for Officers' compensation
- ------------------------------------------- --------- ---------
CS for Consulting services
- ------------------------------------------- --------- ---------
BALANCE SEPTEMBER 30, 1999 2,659
- ------------------------------------------- --------- ---------
15
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE 4 - CAPITAL STOCK (CONTINUED)
COMMON ADDITIONAL
NUMBER OF PRICE PER STOCK PAID-IN TOTAL
ISSUE DATE SHARES SHARE AMOUNT CAPITAL AMOUNT
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
BALANCE SEPTEMBER 30, 1999 5,345,511 $ - $ 53,455 $ 1,452,009 $1,505,464
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
CS for Consulting services 10/04/1999 50,000 0.26 500 12,500 13,000
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
CS for Cash 10/22/1999 25,000 0.20 250 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
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
CS for Consulting services 12/31/1999 1,200 0.35 12 408 420
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
CS for Consulting services 01/04/2000 15,000 0.28 150 4,050 4,200
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
CS for Investments 01/15/2000 200,000 0.33 2,000 64,000 66,000
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
CS for Incentive fees 01/17/2000 65,285 0.33 653 20,891 21,544
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
OPT Expiration 01/22/2000
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
CS for Cash 01/25/2000 14,286 0.35 143 4,857 5,000
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
CS for Cash from options 02/22/2000 1,000,000 0.142 10,000 131,900 141,900
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
CS & OPT for Employees' compensation 02/25/2000 16,667 0.66 167 10,833 11,000
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
CS for Consulting services 02/29/2000 10,000 0.72 100 7,100 7,200
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
CS for Mineral property 03/24/2000 50,000 1.03 500 51,000 51,500
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
CS for Cash from options 03/27/2000 2,500,000 0.142 25,000 329,750 354,750
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
CS for Consulting services 03/31/2000 75,000 0.81 750 60,000 60,750
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
CS for Officers' compensation 03/31/2000 3,000 0.81 30 2,400 2,430
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
CS for Mineral property 04/04/2000 50,000 0.75 500 37,000 37,500
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
CS & OPT for Directors' compensation 04/11/2000 150,000 0.70 1,500 103,500 105,000
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
CS for Deferred mineral property acquisition costs 05/08/2000 129,938 0.125 1,299 14,943 16,242
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
CS for Consulting services 05/15/2000 9,975 0.63 100 6,184 6,284
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
CS for Cash 06/26/2000 416,961 0.056 4,170 19,361 23,531
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
CS & WAR for Modification of stockholder agreement 06/26/2000 200,000 0.60 2,000 118,000 120,000
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
OPT & WAR for Modification of stockholder agreement 06/27/2000
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
CS for Cash from options 06/29/2000 1,597,588 0.064 15,976 86,740 102,716
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
CS for Officers' compensation 06/30/2000 9,000 0.81 90 7,185 7,275
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
CS for Consulting services 06/30/2000 1,000 0.70 10 690 700
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
OPT Agreement Modification 07/07/2000
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
CS for Cash from options 07/14/2000 10,000 0.30 100 2,900 3,000
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
CS for Cash from options 07/21/2000 1,800,000 0.122 18,000 201,060 219,060
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
CS for Cash from options 07/26/2000 650,000 0.122 6,500 72,605 79,105
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
CS for Officers' compensation 07/31/2000 3,000 1.24 30 3,690 3,720
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
CS for Cash from options 08/01/2000 50,000 0.15 500 7,000 7,500
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
CS for Cash from options 08/01/2000 50,000 0.30 500 14,500 15,000
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
CS for Cash from options 08/14/2000 90,000 0.122 900 10,053 10,953
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
CS for Cash from options 08/24/2000 1,000,000 0.122 10,000 111,700 121,700
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
CS for Directors' compensation 08/25/2000 1,500 1.00 15 1,485 1,500
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
CS for Cash from options 08/31/2000 15,000 0.30 150 4,350 4,500
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
CS for Officers' compensation 08/31/2000 1,000 1.13 10 1,120 1,130
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
CS for Cash from options 09/22/2000 1,200,174 0.122 12,002 134,720 146,722
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
CS for Consulting services 09/22/2000 90,000 1.45 900 72,000 72,900
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
CS for Officers' compensation 09/30/2000 6,000 1.35 60 8,040 8,100
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
Cash for Warrants 09/30/2000
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
CS/ WAR Adjustment 09/30/2000 (5)
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
BALANCE SEPTEMBER 30, 2000 18,232,776 182,328 3,296,897 3,479,225
- --------------------------------------------------- ---------- ----------- ---------- -------- ----------- ----------
VALUE OF
NUMBER OF NUMBER OF OPTIONS/
OPTIONS WARRANTS WARRANTS
- --------------------------------------------------- ----------- --------- ----------
BALANCE SEPTEMBER 30, 1999 330,000 $ 2,659
- --------------------------------------------------- ----------- --------- ----------
CS for Consulting services
- --------------------------------------------------- ----------- --------- ----------
CS for Cash
- --------------------------------------------------- ----------- --------- ----------
CS for Consulting services
- --------------------------------------------------- ----------- --------- ----------
CS for Officers' compensation
- --------------------------------------------------- ----------- --------- ----------
CS for Consulting services
- --------------------------------------------------- ----------- --------- ----------
CS, OPT & WAR for Cash 8,108,000 6,250,000 87,586
- --------------------------------------------------- ----------- --------- ----------
CS for Consulting services
- --------------------------------------------------- ----------- --------- ----------
CS for Consulting services
- --------------------------------------------------- ----------- --------- ----------
CS for Investments
- --------------------------------------------------- ----------- --------- ----------
CS for Incentive fees
- --------------------------------------------------- ----------- --------- ----------
OPT Expiration (50,000)
- --------------------------------------------------- ----------- --------- ----------
CS for Cash
- --------------------------------------------------- ----------- --------- ----------
CS for Cash from options (1,000,000) (1,900)
- --------------------------------------------------- ----------- --------- ----------
CS & OPT for Employees' compensation 33,333 3,070
- --------------------------------------------------- ----------- --------- ----------
CS for Consulting services
- --------------------------------------------------- ----------- --------- ----------
CS for Mineral property
- --------------------------------------------------- ----------- --------- ----------
CS for Cash from options (2,500,000) (4,750)
- --------------------------------------------------- ----------- --------- ----------
CS for Consulting services
- --------------------------------------------------- ----------- --------- ----------
CS for Officers' compensation
- --------------------------------------------------- ----------- --------- ----------
CS for Mineral property
- --------------------------------------------------- ----------- --------- ----------
CS & OPT for Directors' compensation 67,000 12,750
- --------------------------------------------------- ----------- --------- ----------
CS for Deferred mineral property acquisition costs
- --------------------------------------------------- ----------- --------- ----------
CS for Consulting services
- --------------------------------------------------- ----------- --------- ----------
CS for Cash
- --------------------------------------------------- ----------- --------- ----------
CS & WAR for Modification of stockholder agreement 200,000 30,000
- --------------------------------------------------- ----------- --------- ----------
OPT & WAR for Modification of stockholder agreement 1,729,762 1,729,761 14,641
- --------------------------------------------------- ----------- --------- ----------
CS for Cash from options (1,597,588) (2,716)
- --------------------------------------------------- ----------- --------- ----------
CS for Officers' compensation
- --------------------------------------------------- ----------- --------- ----------
CS for Consulting services
- --------------------------------------------------- ----------- --------- ----------
OPT Agreement Modification (127,500)
- --------------------------------------------------- ----------- --------- ----------
CS for Cash from options (10,000)
- --------------------------------------------------- ----------- --------- ----------
CS for Cash from options (1,800,000) (12,060)
- --------------------------------------------------- ----------- --------- ----------
CS for Cash from options (650,000) (4,355)
- --------------------------------------------------- ----------- --------- ----------
CS for Officers' compensation
- --------------------------------------------------- ----------- --------- ----------
CS for Cash from options (50,000)
- --------------------------------------------------- ----------- --------- ----------
CS for Cash from options (50,000)
- --------------------------------------------------- ----------- --------- ----------
CS for Cash from options (90,000) (603)
- --------------------------------------------------- ----------- --------- ----------
CS for Cash from options (1,000,000) (6,700)
- --------------------------------------------------- ----------- --------- ----------
CS for Directors' compensation
- --------------------------------------------------- ----------- --------- ----------
CS for Cash from options (15,000)
- --------------------------------------------------- ----------- --------- ----------
CS for Officers' compensation
- --------------------------------------------------- ----------- --------- ----------
CS for Cash from options (1,200,174) (8,702)
- --------------------------------------------------- ----------- --------- ----------
CS for Consulting services
- --------------------------------------------------- ----------- --------- ----------
CS for Officers' compensation
- --------------------------------------------------- ----------- --------- ----------
Cash for Warrants 10,000
- --------------------------------------------------- ----------- --------- ----------
CS/ WAR Adjustment
- --------------------------------------------------- ----------- --------- ----------
BALANCE SEPTEMBER 30, 2000 127,833 8,179,761 118,920
- --------------------------------------------------- ----------- --------- ----------
16
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE 4 - CAPITAL STOCK (CONTINUED)
COMMON
NUMBER OF PRICE PER STOCK ADDITIONAL TOTAL
ISSUE DATE SHARES SHARE AMOUNT PAID-IN CAPITAL AMOUNT
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
BALANCE SEPTEMBER 30, 2000 18,232,776 $ - $182,328 $ 3,296,897 $3,479,225
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
CS for Cash from options 10/10/2000 33,333 0.39 333 12,737 13,070
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
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 1.30 30 3,870 3,900
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
WAR for Consulting services 11/01/2000
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
CS for Employees' compensation 12/06/2000 2,200 0.90 22 1,958 1,980
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
CS for Cash 12/20/2000 100,000 1.00 1,000 99,000 100,000
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
WAR for Consulting services 12/31/2000
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
CS for Consulting services 01/02/2001 10,000 1.35 100 13,400 13,500
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
CS for Cash 01/11/2001 47,000 1.00 470 46,530 47,000
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
CS for Consulting services 01/11/2001 3,407 1.00 34 3,373 3,407
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
CS for Consulting services 01/23/2001 604 1.10 6 658 664
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
CS for Cash 01/24/2001 25,000 1.00 250 24,750 25,000
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
WAR for Loan agreements 02/01/2001
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
CS for Cash 02/06/2001 20,000 1.00 200 19,800 20,000
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
CS for Consulting services 02/06/2001 483 1.00 5 478 483
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
CS for Directors' compensation 02/23/2001 75,000 0.85 750 63,000 63,750
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
OPT for Director, officer and employee compensation 02/23/2001
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
WAR for Loan agreements 03/12/2001
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
WAR Extension of exercise period 03/12/2001
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
CS for Modification of contract 03/22/2001 3,000 0.78 30 2,310 2,340
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
CS for Interest payments 04/03/01 5,000 0.83 50 4,100 4,150
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
CS for Consulting Services 04/13/01 967 0.98 10 938 948
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
CS for Mineral Property Expense 05/11/01 1,000 0.85 10 840 850
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
WAR for Loan agreement 07/01/01
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
CS for Services 07/31/01 40,000 0.73 400 28,800 29,200
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
CS for Interest payments 08/08/01 5,000 0.77 50 3,800 3,850
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
WAR Attached to note 08/16/01
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
CS for Services 08/28/01 3,700 0.30 37 1,063 1,100
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
CS for Loans Payable 08/31/01 92,000 1.00 920 91,080 92,000
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
CS for Loans Payable 09/28/01 42,500 1.00 425 42,075 42,500
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
Options Expired
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
BALANCE SEPTEMBER 30, 2001 18,755,970 187,559 3,772,857 3,960,416
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
CS for Note Payable 10/08/01 25,000 1.00 250 24,750 25,000
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
CS for Payable 10/24/01 12,536 0.55 126 6,769 6,895
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
WAR for Loan agreements 11/01/01
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
WAR Cancelled 11/15/01 2,750 2,750
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
CS for Financing expense 1/25/02 64,429 0.45 644 28,349 28,993
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
Interest Expense forgiven by shareholders 1/30/02 42,950 42,950
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
WAR Issued 1/30/02
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
CS for Financing expense 2/8/02 18,000 0.40 180 7,020 7,200
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
CS for Services 2/8/02 60,000 0.40 600 23,400 24,000
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
CS for Services 2/22/02 20,000 0.40 200 7,800 8,000
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
OPT for Director, officer and employee compensation 3/12/02
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
Options Expired 3/12/02 59,063 59,063
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
CS for Mineral properties 3/20/02 1,100,000 0.70 11,000 759,000 770,000
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
CS for Services 5/12/02 32,500 0.70 325 22,425 22,750
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
WAR for Loan agreements 6/30/02
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
WAR Expired 6/30/02 30,001 30,001
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
Options Expired 7/19/02
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
CS for Cash 9/30/02 2,500,000 0.10 25,000 225,000 250,000
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
BALANCE SEPTEMBER 30, 2002 22,588,435 $225,884 $ 5,012,134 $5,238,018
- --------------------------------------------------- ---------- ---------- ---------- -------- ---------------- ----------
VALUE OF
NUMBER OF NUMBER OF OPTIONS/
OPTIONS WARRANTS WARRANTS
- --------------------------------------------------- ---------- ---------- -----------
BALANCE SEPTEMBER 30, 2000 127,833 8,179,761 $ 118,920
- --------------------------------------------------- ---------- ---------- -----------
CS for Cash from options (33,333) (3,070)
- --------------------------------------------------- ---------- ---------- -----------
CS for Consulting services
- --------------------------------------------------- ---------- ---------- -----------
CS for Officers' compensation
- --------------------------------------------------- ---------- ---------- -----------
WAR for Consulting services 250,000 123,775
- --------------------------------------------------- ---------- ---------- -----------
CS for Employees' compensation
- --------------------------------------------------- ---------- ---------- -----------
CS for Cash
- --------------------------------------------------- ---------- ---------- -----------
WAR for Consulting services 180,000 46,746
- --------------------------------------------------- ---------- ---------- -----------
CS for Consulting services
- --------------------------------------------------- ---------- ---------- -----------
CS for Cash
- --------------------------------------------------- ---------- ---------- -----------
CS for Consulting services
- --------------------------------------------------- ---------- ---------- -----------
CS for Consulting services
- --------------------------------------------------- ---------- ---------- -----------
CS for Cash
- --------------------------------------------------- ---------- ---------- -----------
WAR for Loan agreements 285,000 76,551
- --------------------------------------------------- ---------- ---------- -----------
CS for Cash
- --------------------------------------------------- ---------- ---------- -----------
CS for Consulting services
- --------------------------------------------------- ---------- ---------- -----------
CS for Directors' compensation
- --------------------------------------------------- ---------- ---------- -----------
OPT for Director, officer and employee compensation 1,200,000 354,000
- --------------------------------------------------- ---------- ---------- -----------
WAR for Loan agreements 50,000 13,430
- --------------------------------------------------- ---------- ---------- -----------
WAR Extension of exercise period 608,058
- --------------------------------------------------- ---------- ---------- -----------
CS for Modification of contract
- --------------------------------------------------- ---------- ---------- -----------
CS for Interest payments
- --------------------------------------------------- ---------- ---------- -----------
CS for Consulting Services
- --------------------------------------------------- ---------- ---------- -----------
CS for Mineral Property Expense
- --------------------------------------------------- ---------- ---------- -----------
WAR for Loan agreement 185,000 45,079
- --------------------------------------------------- ---------- ---------- -----------
CS for Services
- --------------------------------------------------- ---------- ---------- -----------
CS for Interest payments
- --------------------------------------------------- ---------- ---------- -----------
WAR Attached to note 90,000 6,487
- --------------------------------------------------- ---------- ---------- -----------
CS for Services
- --------------------------------------------------- ---------- ---------- -----------
CS for Loans Payable
- --------------------------------------------------- ---------- ---------- -----------
CS for Loans Payable
- --------------------------------------------------- ---------- ---------- -----------
Options Expired (319,700)
- --------------------------------------------------- ---------- ---------- -----------
BALANCE SEPTEMBER 30, 2001 974,800 9,219,761 1,389,976
- --------------------------------------------------- ---------- ---------- -----------
CS for Note Payable
- --------------------------------------------------- ---------- ---------- -----------
CS for Payable
- --------------------------------------------------- ---------- ---------- -----------
WAR for Loan agreements 129,445 9,876
- --------------------------------------------------- ---------- ---------- -----------
WAR Cancelled (275,000) (2,750)
- --------------------------------------------------- ---------- ---------- -----------
CS for Financing expense
- --------------------------------------------------- ---------- ---------- -----------
Interest Expense forgiven by shareholders
- --------------------------------------------------- ---------- ---------- -----------
WAR Issued 180,000 21,660
- --------------------------------------------------- ---------- ---------- -----------
CS for Financing expense
- --------------------------------------------------- ---------- ---------- -----------
CS for Services
- --------------------------------------------------- ---------- ---------- -----------
CS for Services
- --------------------------------------------------- ---------- ---------- -----------
OPT for Director, officer and employee compensation 307,800 29,528
- --------------------------------------------------- ---------- ---------- -----------
Options Expired (196,863) (59,063)
- --------------------------------------------------- ---------- ---------- -----------
CS for Mineral properties
- --------------------------------------------------- ---------- ---------- -----------
CS for Services
- --------------------------------------------------- ---------- ---------- -----------
WAR for Loan agreements 113,413 23,816
- --------------------------------------------------- ---------- ---------- -----------
WAR Expired (200,000) (30,001)
- --------------------------------------------------- ---------- ---------- -----------
Options Expired (12,500)
- --------------------------------------------------- ---------- ---------- -----------
CS for Cash
- --------------------------------------------------- ---------- ---------- -----------
BALANCE SEPTEMBER 30, 2002 1,073,237 9,167,619 $1,383,042
- --------------------------------------------------- ---------- ---------- -----------
17
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE 4 - CAPITAL STOCK (CONTINUED)
COMMON
NUMBER OF PRICE PER STOCK ADDITIONAL NUMBER OF NUMBER OF
ISSUE DATE SHARES SHARE AMOUNT PAID-IN CAPITAL TOTAL AMOUNT OPTIONS WARRANTS
- -------------------------- ---------- ---------- --------- -------- ---------------- ------------- --------- ---------
BALANCE SEPTEMBER 30, 2002 22,588,435 $225,884 $ 5,012,134 $ 5,238,018 1,073,237 9,167,619
- -------------------------- ---------- ---------- --------- -------- ---------------- ------------- --------- ---------
CS for Cash 12/31/02 5,250,000 0.10 52,500 472,500 525,000
- -------------------------- ---------- ---------- --------- -------- ---------------- ------------- --------- ---------
CS for Services 12/31/02 926,187 0.17 9,261 104,858 114,119
- -------------------------- ---------- ---------- --------- -------- ---------------- ------------- --------- ---------
CS for Loan Payable 12/31/02 169,160 0.06 1,692 7,808 9,500
- -------------------------- ---------- ---------- --------- -------- ---------------- ------------- --------- ---------
BALANCE DECEMBER 31, 2002 28,933,782 $289,337 $ 5,597,300 $ 5,886,637 1,073,237 9,167,619
- -------------------------- ---------- ---------- --------- -------- ---------------- ------------- --------- ---------
VALUE OF
OPTIONS/
WARRANTS
- -------------------------- ----------
BALANCE SEPTEMBER 30, 2002 $1,383,042
- -------------------------- ----------
CS for Cash
- -------------------------- ----------
CS for Services
- -------------------------- ----------
CS for Loan Payable
- -------------------------- ----------
BALANCE DECEMBER 31, 2002 $1,383,042
- -------------------------- ----------
NOTE 5 - COMMON STOCK OPTIONS AND WARRANTS
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 will 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.
In the Black-Scholes Option Price Calculations below, the Company used the
following assumptions to estimate fair value: the risk-free interest rate was
5.5%, volatility was 46.4% in 2001 and 50% in 2002, and the expected life of the
options and warrants varied from one week to 5.5 years. The Company also
assumed that no dividends would be paid on common stock.
During 2002, for purposes of compensation, the Company granted an officer
107,800 options which expire February 23, 2004 and granted to a consultant
200,000 options which expire March 3, 2006. These options, all with exercise
prices of $0.80 per share, were estimated on the grant date using the
Black-Scholes Option Price Calculation and had a fair value of $29,528.
On January 8, 2002, a stockholder loaned the Company $30,000. This loan bears
interest at 8% per annum and is due upon the Company's completion of a private
equity placement and concurrently and proportionally with any amounts repaid to
Electrum LLC or any others having provided similar loans to the Company.
Attached to each dollar of debt is a warrant with a strike price of $1.50,
exercisable through January 9, 2004. The lender may also elect to be repaid
partially or completely in "units" of Trend securities, at the rate of one unit
per each $1.25 owed. Each unit would consist of one share of common stock and a
warrant to purchase one share of common stock at $1.50 per share, originally
exercisable through September 30, 2006. On January 30, 2002, the aforementioned
stockholder forgave interest due in the amount of $138 in exchange for the
adjustment to the conversion feature, such as Electrum was granted, which is
explained later in this Note.
During 2002, LCM Holdings, LLC loaned the Company $113,413. This debt has the
warrants and conversion feature attached to them, as described in The January
30, 2002 Financing Agreement, which is explained later in this Note.
On February 23, 2001, the Company issued under the 2000 Equity Incentive Plan to
its five non-employee directors an aggregate of 75,000 shares of common stock
and options to acquire 75,000 shares with an exercise price of $0.80 per share
exercisable until February 23, 2004. The Company also issued under the plan to
certain employees options to acquire 1,125,000 shares with an exercise price of
$0.80 per share exercisable until February 23, 2004. The total fair value of
the options issued to directors and employees, estimated on the grant date using
the Black-Scholes Option Price Calculation was $354,000.
18
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE 5 - COMMON STOCK OPTIONS AND WARRANTS (CONTINUED)
On August 16, 2001, a stockholder loaned the Company $90,000 and received a note
and one warrant for each dollar of debt, with a strike price of $1.50,
exercisable through June 9, 2004. The fair value of these warrants, estimated
on the grant date using the Black-Scholes Option Price Calculation, was $6,487.
This same stockholder, on October 2, 2001, loaned the Company an additional
$10,000 under the same terms as the $90,000 loan. The warrants attached to the
October loan are exercisable until January 9, 2004. The fair value of these
warrants, estimated on the grant date using the Black-Scholes Option Price
Calculation, was $840. See Note 6. On January 30, 2002, this stockholder
forgave interest due her in the amount of $3,299 in exchange for the adjustment
to the conversion feature, such as Electrum was granted, which is explained
later in this Note.
LCM Holdings, LLC loaned the Company $119,445 on October 22, 2001 and received a
note and one warrant for each dollar of debt, with a strike price of $1.50,
exercisable through January 9, 2004. The fair value of these warrants,
estimated on the grant date using the Black-Scholes Option Price Calculation,
was $9,036. On January 30, 2002, LCM Holdings, LLC forgave interest due in the
amount of $2,129 for the adjustment to the conversion feature, such as Electrum
was granted, which is explained later in this Note.
On November 8, 2000, effective November 1, 2000, the Company entered into a
24-month agreement with Eurofinance Inc. under which the entity would assist the
Company with certain investment community matters in return for a monthly fee of
$5,000, plus expenses, and warrants to purchase 820,000 shares of common stock
at $1.50 per share. The warrants were exercisable until November 1, 2005. In
early January 2001, this agreement was terminated, with the Company no longer
obligated for the remaining monthly fees, and with only the warrants for 250,000
shares that vested on November 1, 2000 remaining outstanding. The fair value of
these warrants, estimated on the grant date using the Black-Scholes Option Price
Calculation, was $123,775.
On November 17, 2000, the Company entered into a consulting agreement with R. H.
Barsom Company, Inc., under which the consultant would perform certain services
for the Company until June 30, 2001, for an advance fee of $100,000 and 180,000
shares of common stock. In early January 2001, the Company and the consultant
agreed to terminate the agreement. In connection with the termination, the
consultant surrendered the 180,000 shares of common stock and received warrants
to purchase 180,000 shares of the Company's common stock at $1.50 per share,
exercisable until January 12, 2003. The fair value of these warrants estimated
on the grant date using the Black-Scholes Option Price Calculation was $46,746,
which was included in consulting expenses for the year ended September 30, 2001.
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 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
19
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE 5 - COMMON STOCK OPTIONS AND WARRANTS (CONTINUED)
Electrum LLC/Tigris Financial Group Ltd. (continued)
- ----------------------------------------------------
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 ("The January 30, 2002 Financing 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, in 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
$1.00 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 December 31, 2002, Tigris and Electrum own approximately 41% 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 61% 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.
20
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE 5 - COMMON STOCK OPTIONS AND WARRANTS (CONTINUED)
Electrum LLC/Tigris Financial Group Ltd. (continued)
- ----------------------------------------------------
Warrants for 250,000 shares of common stock with a strike price of $1.50 and
warrants for 25,000 shares of common stock with a strike price of $0.40 were
cancelled in a letter dated November 15, 2001. Prior to cancellation, these had
been assigned by Electrum LLC to Eurofinance, which in turn had assigned them to
a third party holder at the time of cancellation.
Following is a summary of stock options for the periods ended December 31, 2002
and September 30, 2002:
Weighted Average
Number of Shares Exercise Price
----------------- -----------------
Outstanding at October 1, 2001 974,800 $ 0.86
Granted 307,800 0.80
Exercised - -
Expired (209,363) 0.86
----------------- -----------------
Outstanding at September 30, 2002 1,073,237 $ 0.85
================= =================
Options exercisable at September 30, 2002 1,073,237 $ 0.85
================= =================
Outstanding at October 1, 2002 1,073,237 $ 0.85
Granted - -
Exercised - -
Expired - -
----------------- -----------------
Outstanding at December 31, 2002 1,073,237 $ 0.85
================= =================
Options exercisable at December 31, 2002 1,073,237 $ 0.85
================= =================
Options exercisable:
-On or before April 15, 2003 67,000 $ 0.50
-On or before February 23, 2004 806,237 $ 0.80
-On or before March 3, 2006 200,000 $ 0.80
Shares Issuable
Equity Compensation Plans Upon Exercise of Weighted Average Available
Approved by Shareholders Outstanding Options Exercise Price for Issuance
- -------------------------- ------------------- ----------------- ------------
2000 Equity Incentive Plan 1,073,237 $ 0.85 3,926,763
------------------- ------------
Total 1,073,237 3,926,763
=================== ============
21
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE 6 - RELATED PARTY TRANSACTIONS
Calumet Mining Company and Western Goldfields, Inc.
- ---------------------------------------------------
The Company sold its Pyramid Mine claims on November 12, 2001 to Calumet Mining
Company for 50,000 shares of common stock of Calumet Mining Company, which were
valued at $500. This company's stock was subsequently acquired by Western
Goldfields, Inc. on a 1 for 2 basis. As a result, the Company now holds 25,000
shares of Western Goldfields, Inc. The chief financial officer of Trend Mining
Company is also the president of Calumet Mining Company. See Notes 3 and 8.
Subsequent to December 31, 2002, the Company acquired an additional 35,000
shares of common stock in Western Goldfields, Inc., as described in the
following paragraph.
Cadence Resources Corporation
- -------------------------------
Subsequent to this reporting period, the Company exchanged 450,000 shares of its
common stock for 18,334 shares of common stock in Cadence Resources Corporation
and 35,000 shares of common stock in Western Goldfields, Inc. The chief
financial officer of Trend Mining Company is also the vice president and
secretary of Cadence Resources Corporation.
22
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE 6 - RELATED PARTY TRANSACTIONS (CONTINUED)
Shareholder Loans Payable
- ---------------------------
The following is a listing of shareholder loan amounts and the dates that these
loans were made to the Company:
Shareholder Date Amount
- --------------------------------- ---------- ----------
Electrum LLC 11/6/00 $ 35,000
12/4/00 100,000
12/18/00 50,000
1/26/01 50,000
3/15/01 50,000
4/10/01 50,000
5/4/01 50,000
6/4/01 50,000
7/3/01 85,000
1/31/02 150,000
----------
670,000
----------
LCM Holdings, LLC 10/26/01 50,000
11/1/2001 10,000
11/15/2001 30,000
11/28/2001 29,445
5/7/2002 60,000
5/22/2002 35,000
6/14/2002 18,413
----------
232,858
----------
Berger 8/28/01 90,000
10/2/01 10,000
----------
100,000
----------
Buchanan 1/8/2002 30,000
----------
Crosby 8/14/2001 20,000
----------
Total shareholder loans payable $1,052,858
==========
The loans from Electrum, LCM Holdings, LLC, Berger and Buchanan bear interest at
8% 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 LLC or any others having provided similar loans to the Company. The
Crosby loan is non-interest bearing and payable upon demand. In January 2003,
the Crosby loan was fully converted into 200,000 shares of common stock in the
Company.
23
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE 6 - RELATED PARTY TRANSACTIONS (CONTINUED)
Employment Agreement
- ---------------------
In July 2000, the Company entered into an employment agreement with John Ryan,
then the 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 under which Mr. Ryan received 7,500 shares per
month of the Company's common stock, and such agreement was in effect until
August 2002. Beginning in September 2002, Mr. Ryan's agreement was revised to
$3,000 cash per month. As of December 31, 2002, 37,500 shares were owed to Mr.
Ryan under the previous terms of the agreement. These shares were issued in
January 2003.
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.
December 31, September 30,
2002 2002
-------------- ---------------
Furniture, Equipment, and Vehicles $ 52,251 $ 52,251
Less: Accumulated Depreciation (29,050) (26,322)
-------------- ---------------
$ 23,201 $ 25,929
============== ===============
NOTE 8 - INVESTMENTS
The Company's securities investments are classified as available-for-sale
securities and are recorded at fair value as investments in other assets on the
balance sheet, with the change in fair value during the period excluded from
earnings and recorded net of tax as a component of other comprehensive income.
The Company has no securities that are classified as trading securities.
In the year ended September 30, 2001, the Company recognized income of $413 from
the change in the market value of investments. An investment in New Jersey
Mining Company stock was liquidated during the period ended March 31, 2001 and
the Company realized a loss of $78,033.
The Company disposed of its last 50,000 shares of New Jersey Mining Company
stock to Mine Systems Design, Inc. in settlement of a consulting invoice of
$22,539. The Company realized a gain of $22,539 on this transaction.
The Company sold the Pyramid Mine claims on November 12, 2001 to Calumet Mining
Company for 50,000 shares of common stock of Calumet Mining Company, a related
party. Calumet Mining Company stock was subsequently acquired by Western
Goldfields, Inc. on a 1 for 2 basis. As a result, the Company now holds 25,000
shares of Western Goldfields, Inc. The Company retained a 1.5% net smelter
return production royalty interest in the Pyramid Mine. See Note 6.
In January 2003, the Company acquired shares of common stock in Cadence
Resources Corporation and Western Goldfields, Inc. See Note 13.
24
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE 9 - LONG-TERM DEBT
December 31, September 30,
2002 2002
----------------- ---------------
Note payable to Wells Fargo
Interest at 14.99%, secured by vehicle, payable in
monthly installments of $179 through February 28, 2003 $ 577 $ 1,080
Note payable to Sterling Savings
Interest at 8.37%, secured by vehicle, payable in
monthly installments of $257 through June 30, 2008 13,496 13,978
----------------- ---------------
Total notes payable 14,073 15,058
Less: Current maturities included in current liabilities (2,608) (3,709) (2,897)
----------------- ---------------
$ 11,465 $ 12,161
================= ===============
Following are the expected maturities of long-term debt:
2004 $ 2,207
2005 2,400
2006 2,609
2007 2,835
2008 1,414
--------
$ 11,465
========
NOTE 10 - FORGIVENESS OF DEBT
In September 2002, two vendors agreed to settle outstanding invoices with the
Company totaling $534,221 in exchange for $92,147 in cash. This resulted in
forgiveness of debt of $442,074.
In December 2002, the Company and a vendor settled outstanding invoices totaling
$272,354 in exchange for $150,000 in cash. This resulted in forgiveness of debt
of $122,354, which is recorded as other income.
NOTE 11 - COMMITMENTS AND CONTINGENCIES
Lease Agreements
- -----------------
During the period ended December 31, 2000, the Company entered into a three-year
lease for its executive offices in Coeur d'Alene, Idaho. In January 2002, the
Company decreased its occupancy space and effectively lowered its monthly
payment from $2,656 to $1,422. As of September 1, 2002, the Company no longer
occupied this office space.
In July 2000, the Company entered into a lease agreement for additional office
facilities in Reno, Nevada. As of September 30, 2001, the Company no longer
occupied these facilities in Nevada and stopped payment under the lease. On May
23, 2002, a Nevada court entered a judgment by default against the Company in
the total amount of $18,574 that bears interest at 18% per annum until paid in
full. This amount has been recorded in accounts payable on the Company's
balance sheet.
25
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE 11 - COMMITMENTS AND CONTINGENCIES (CONTINUED)
Lease Agreements (continued)
- ------------------------------
On August 2, 2001, the Company signed a month-to-month rental agreement for
storage and office space in Dalton Gardens, ID. The monthly payment is $425.
Consulting Agreements
- ----------------------
On October 31, 2000, the Company entered into a consulting agreement with Mr.
Brian Miller who performed certain services for the Company. Under this
agreement, Mr. Miller was to have received cash for his consulting services and
was granted 10,000 shares of common stock effective January 2, 2001. On
February 23, 2001, Mr. Miller was also granted an option to purchase 107,800
shares at $0.80. On July 20, 2001, Mr. Miller was informed that the Company
would no longer require his services. The Company is currently negotiating with
Mr. Miller regarding outstanding invoices due to him. The 107,800 options have
expired because they were not exercised within 90 days of termination of his
consulting agreement.
Mr. Ryan has an agreement with the Company, as discussed in Note 6.
In October 2002, the Company reached a consulting agreement with Mr. Howard
Schraub. Under the agreement, the Company will issue 50,000 shares of
restricted common stock per month plus additional shares of restricted common
stock totaling $10,000 in value per month for one year to the consultant in
exchange for services rendered.
Mineral Properties
- -------------------
In order to retain the Peter Lake Claims in Saskatchewan, Canada, the Company
must fulfill exploration commitments totaling $268,000 by December 2004.
NOTE 12 - CONCENTRATION
The Company has significantly relied on Mr. Thomas Kaplan and various associated
entities of Mr. Kaplan for operating capital.
NOTE 13 - SUBSEQUENT EVENTS
Common Stock Issuances
- ------------------------
In January 2003, the Company issued 250,000 shares of its common stock for
$25,000 cash, 200,000 shares of its common stock for loans payable of $20,000,
37,500 shares of its common stock for consulting fees owed Mr. Ryan, and 450,000
shares of its common stock for 18,334 shares of common stock in Cadence
Resources Corporation and 35,000 shares of common stock in Western Goldfields,
Inc.
26
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
Our losses for the three-month period ended December 31, 2002, were
$91,924. These losses increased our accumulated deficit since inception of the
current exploration stage to $7,848,526. Our total loss since inception of the
company is $8,407,030. Our third quarter loss is due primarily to general
operating expenses of $192,615. We had a one-time gain on forgiveness of debt of
$122,354 which reduced our net quarterly loss to $91,924
Our operating cash at the end of the quarter totaled $153,172. We have
inadequate cash to fund our planned acquisition and exploration activities and
other operations during the next 12 months. Such funding uncertainty raises
substantial doubts about our ability to continue as a going concern without
raising significant additional capital.
Since February 2001, we have borrowed funds principally from the major
shareholder of the Company to fund the minimum activities of the Company. As of
December 31, 2002, we have borrowed approximately $670,000 from Electrum LLC,
Our largest stockholder pursuant to certain financial arrangements. LCM
Holdings, LDC, also a major stockholder of the Company has loaned a total of
$232,858 to the Company. In total the Company has borrowed $1,032,858 from
parties affiliated with Tom Kaplan, our major shareholder.
Pursuant to an agreement made as of January 30, 2002, the Company agreed to
adjust the conversion terms of the loans provided by Electrum and affiliated
parties. This adjustment also included redefining the terms of the warrants
previously granted to Electrum and others. The loans from Electrum LLC, LCM
Holdings, and several other affiliated shareholders, as a result of this
Agreement, are now convertible into "units" of the Company at $0.50 per unit. A
unit is comprised of one share of our common stock and a warrant to acquire one
share of common stock at an exercise price of $1.00, exercisable through
September 30, 2006. In connection with such loan agreements, we have also
granted 1,032,858 warrants to purchase shares of our common stock at $1.00 per
share that begin to expire September 30, 2006, and we have extended for three
years through September 30, 2006 the expiration date of additional warrants to
acquire 7,979,761 shares.
We must seek additional financing from the public or private debt or equity
markets to continue our business activities. Under our Delaware certificate of
incorporation, we have 100,000,000 authorized shares of common stock and are
authorized to issue 20,000,000 shares of preferred stock. We currently have no
preferred shares issued and outstanding.
There can be no assurance that Electrum or others will continue to advance
funds to us or that our 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 ARE UNABLE TO RAISE ADDITIONAL CAPITAL, WE MAY HAVE TO SUSPEND OR
---------------------------------------------------------------------------
CEASE OPERATIONS.
- ------------------
27
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
DECEMBER 31, 2002
During July and August 2001, we implemented plans to close the Reno, Nevada
office and reduce staff. Since then we have continued to review the Company's
mineral properties and the expenses associated with holding such properties as
well as their exploration and development. We have implemented plans towards
further cost-cutting and a focus on the mineral properties which we view as
having the greatest potential to host economic mineralization.
If we are able to raise additional capital on acceptable terms, our primary
business objective for 2003 will be to focus on the evaluation of the mineral
properties we now control. During the remainder of 2003 we plan to spend from
$90,000 to $100,000 on land payments. We plan to spend other monies on
exploration work but can not specify the amount, if any, until we are successful
at raising additional capital. We have allocated approximately $25,000 per month
to cover our general and administrative expenses, accounting and legal fees, as
well as payments made to creditors pursuant to payment arrangement plans. WE
HAVE INSUFFICIENT CAPITAL TO REMAIN IN BUSINESS THROUGH 2003 UNLESS WE RAISE
ADDITIONAL CAPITAL.
As of December 31, 2002, we had a net operating loss for federal income tax
purposes of approximately $3,950,000. A significant portion of this net
operating loss may expire without its being utilized, as we may be unable to
begin profitable operations, which would involve moving from being an
exploration stage company to a development stage company and finally an
operating entity, before its expiration. The net operating loss may be further
limited under Internal Revenue Service rules concerning limitations from
ownership changes. Our management believes there is no current basis for the
recognition of the value of the deferred tax assets derived from the net
operating loss. The net operating loss carry forward does not include expenses
that are generally not tax deductible for federal tax purposes, such as employee
compensation expenses, or the cost of issuances of options or warrants. Our
accountants have recently adjusted down the amount available as operating loss
carry-forwards to reflect the non-deductibility of certain expense items. At
such time that our management believes that profitable operations are imminent,
the value of any net operating loss then available will be used to determine the
net deferred tax asset, if any, to be recognized.
FORWARD-LOOKING STATEMENTS
- ---------------------------
This Form 10-QSB contains forward-looking statements that involve
substantial risks and uncertainties. Investors and prospective investors in our
common stock can identify these statements by forward-looking words such as
"may," "will," "expect," "intend," "anticipate," believe," "estimate,"
"continue" and other similar words. Statements that contain these words should
be read carefully because they discuss our future expectations, make projections
of our future results of operations or of our financial condition or state other
"forward-looking" information.
We believe that it is important to communicate our future expectations to
our investors. However, there may be events in the future that we are not able
to predict accurately or control. The factors listed in the section captioned
"Management's Discussion and Analysis or Plan of Operation," as well as any
cautionary language in this Form 10-QSB, provide examples of risks,
uncertainties and events that may cause our actual results to differ materially
from the expectations we describe in our forward-looking statements. Investors
and prospective investors in our common stock should be aware that the
occurrence of the events described in the "Management's Discussion and Analysis
or Plan of Operation" section and elsewhere in this Form 10-QSB could have a
material adverse effect on our business, operating results and financial
condition.
28
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
DECEMBER 31, 2002
PART II
ITEM 1. LEGAL PROCEEDINGS.
Several vendors of the Company have threatened to take legal action to
recover sums owed to them. Additionally, one vendor, Nevada Southwest
Investments LLC, dba Reno Business Park, filed and obtained a judgment against
the Company in the Second Judicial District, Washoe County, Nevada to collect
the amount of $17,608.29 due under a rental lease agreement for office space the
Company chose to vacate. The Company did not contest this action since it had no
basis to do so. This court judgment, unless paid, may ultimately result in liens
against the Company bank account, other Company assets, or the mineral
properties held by the Company. Such liens may have the impact of reducing the
capability of the Company to remain as a going concern. The Company is currently
negotiating with the counsel of the creditor to make Suitable payment
arrangements to pay this judgment over time.
Additionally, both the State of Idaho and the Internal Revenue Service have
threatened to impose liens against the Company bank account, other assets, or
the Company mineral properties unless the Company adheres to a rigorous payment
schedule imposed by these entities to repay past due withholding taxes. The
Company has to date complied with such payment arrangements but may be unable to
comply with such schedules in the future due to funding constraints, in which
case, actions by these entities may severely hamper the ability of the Company
to maintain itself as a going concern.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
RECENT SALES OF UNREGISTERED SECURITIES
- ---------------------------------------
We had 28,933,782 shares of common stock issued and outstanding as of
December 31, 2002. The issuances discussed under this section are exempted from
registration under Rule 506 of the Securities Act ("Rule 504") or Section 4(2)
of the Securities Act ("Section 4(2)"), as provided. All purchasers of the
issued securities acquired the shares for investment purposes only and all stock
certificates reflect the appropriate legends. No underwriters 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 us or from one of our affiliates,
for at least one year, or who is an affiliate, 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 our 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.
29
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
DECEMBER 31, 2002
Common Stock
------------
During the period ended December 31, 2002, the Company issued 5,250,000
shares of common stock for $525,000 cash, 926,187 shares of common stock valued
at $114,119 for consulting services, and 169,160 shares of common stock for a
loan payable of $9,500.
Options
-------
None issued during the reporting period. See Note 5 of the "Notes to
Financial Statements for a further discussion and explanation of the options
outstanding.
Warrants
--------
None issued during the reporting period. See Note 5 of the "Notes to
Financial Statements for a further discussion and explanation of the warrants
outstanding.
30
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
DECEMBER 31, 2002
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
None.
-------------
(b) Reports on Form 8-K.
None
31
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
DECEMBER 31, 2002
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
Dated: January 18, 2003
By: /s/ Kurt J. Hoffman
-------------------------
Kurt J. Hoffman
President and Chief Executive Officer
(Principal Executive Officer)
Dated: January 18, 2003
By: /s/ John P. Ryan
-------------------------
John P. Ryan
Chief Financial Officer
32
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the accompanying 10-QSB of Trend Mining Company for the
period beginning October 01, 2002 and ending December 31, 2002, Kurt J. Hoffman,
Chief Executive Officer, and John P. Ryan, Chief Financial Officer of Trend
Mining Company, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge,
that:
(1) such Form 10-QSB of Trend Mining Company, for the period beginning
October 01, 2002 and ending December 31, 2002, fully complies with the
requirements of section 13(a) or 15(d) of the Securities Exchange Act
of 1934; and
(2) the information contained in such Form 10-QSB of Trend Mining Company
for the period beginning October 01, 2002 and ending December 31,
2002, fairly presents, in all material respects, the financial
condition and results of operations of Trend Mining Company
/s/Kurt J. Hoffman
-------------------------
Kurt J. Hoffman
Chief Executive Officer
/s/John P. Ryan
-------------------------
John P. Ryan
Chief Financial Officer
33