UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________
FORM 10QSB/A
Amendment No. 1
Under Section 12(b) or Section 12(g) of
The Securities Exchange Act of 1934
For the quarter ended March 31, 2003
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.)
4881 East Shoreline Drive
Post Falls, Idaho 83854
(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 March 31, 2003: 30,013,874 shares
EXPLANATORY NOTE
This Quarterly Report on Form 10-QSB/A for the quarter ended March 31,
2003 (the "Report") is being filed to: (A) amend Part 1 of the Report by adding
a new section at Item 3; and (B) also adds additional certifications to the
Signature Pages in compliance with the Sarbanes-Oxley of 2002
This Form 10-QSB/A constitutes Amendment No. 1 to the Report.
================================================================================
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
FINANCIAL STATEMENTS
MARCH 31, 2003
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
CONDENSED NOTES TO THE FINANCIAL STATEMENTS 6
Board of Directors
Trend Mining Company
Post Falls, 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
March 31, 2003, and the related statements of operations and comprehensive loss,
stockholders' equity (deficit), and cash flows for the three and six months
ended March 31, 2003 and 2002 and for the period from October 1, 1996 (inception
of exploration stage) to March 31, 2003. 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
02, 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
May 16, 2003
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
BALANCE SHEETS
March 31,
2003 September 30,
(unaudited) 2002
------------ ---------------
ASSETS
CURRENT ASSETS
Cash $ 38,942 $ 2,281
Marketable securities 122,585 -
------------ ---------------
TOTAL CURRENT ASSETS 161,527 2,281
------------ ---------------
MINERAL PROPERTIES - -
------------ ---------------
PROPERTY AND EQUIPMENT, net of depreciation 20,533 25,929
------------ ---------------
OTHER ASSETS
Investments - 250
------------ ---------------
TOTAL ASSETS $ 182,060 $ 28,460
============ ===============
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $ 145,293 $ 492,250
Accrued expenses 25,500 100,542
Interest payable 93,499 52,298
Loans payable to stockholders 1,032,858 1,062,358
Current portion of long-term debt 3,084 2,897
------------ ---------------
TOTAL CURRENT LIABILITIES 1,300,234 1,710,345
------------ ---------------
LONG-TERM DEBT, net of current portion 9,920 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; 30,013,874 and 22,588,435 shares
issued and outstanding, respectively 300,139 225,884
Additional paid-in capital 5,759,692 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 (8,012,463) (7,756,602)
------------ ---------------
TOTAL STOCKHOLDERS' DEFICIT (1,128,094) (1,694,046)
------------ ---------------
TOTAL LIABILITIES AND
STOCKHOLDERS' DEFICIT $ 182,060 $ 28,460
============ ===============
The accompanying condensed 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 Six Months Six Months Exploration Stage)
Ended Ended Ended Ended to
March 31, March 31, March 31, March 31, March 31,
2003 2002 2003 2002 2003
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
----------------- -------------- ------------ ------------ -------------------
REVENUES $ - $ - $ - $ - $ -
----------------- -------------- ------------ ------------ -------------------
EXPENSES
Exploration expense 25,852 778,883 58,979 782,953 2,823,766
General and administrative 113,226 145,431 230,146 280,368 2,026,037
Officers and directors compensation 18,454 37,157 36,908 59,407 1,279,048
Legal and professional 13,366 6,117 34,752 28,001 1,124,024
Depreciation 2,668 2,419 5,396 3,030 43,782
----------------- -------------- ------------ ------------ -------------------
Total Expenses 173,566 970,007 366,181 1,153,759 7,296,657
----------------- -------------- ------------ ------------ -------------------
OPERATING LOSS (173,566) (970,007) (366,181) (1,153,759) (7,296,657)
----------------- -------------- ------------ ------------ -------------------
OTHER INCOME (EXPENSE)
Dividend and interest income - - - - 6,398
Gain (loss) on disposition and impairment - - - 500 (179,854)
of assets
Gain (loss) on investments 29,167 - 29,167 - (24,605)
Financing expense - (57,853) - (67,729) (911,513)
Interest expense (19,538) (12,442) (41,201) (48,411) (181,005)
Miscellaneous income - 2,016 - 2,016 10,345
Forgiveness of debt - - 122,354 - 564,428
----------------- -------------- ------------ ------------ -------------------
Total Other Income (Expense) 9,629 (68,279) 110,320 (113,624) (715,806)
----------------- -------------- ------------ ------------ -------------------
LOSS BEFORE INCOME TAXES (163,937) (1,038,286) (255,861) (1,267,383) (8,012,463)
INCOME TAXES - - - - -
----------------- -------------- ------------ ------------ -------------------
NET LOSS $ (163,937) $ (1,038,286) $ (255,861) $(1,267,383) $ (8,012,463)
================= ============== ============ ============ ===================
BASIC AND DILUTED NET LOSS PER SHARE $ (0.01) $ (0.05) $ (0.01) $ (0.07)
================= ============== ============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 29,749,407 19,045,473 26,173,608 18,882,276
================= ============== ============ ============
The accompanying condensed notes are an integral part of these financial
statements.
2
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
Common Stock
--------------------- Additional Stock Other
Number Paid-in Options and Accumulated
of Shares Amount Capital Warrants Deficit
----------- -------- ------------ ------------- ---------------
Balance, October 1, 1996 1,754,242 $ 17,542 $ 663,218 $ - $ (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 $ - $ 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)
============== ============
The accompanying condensed 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 Stock
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 45,461 455 34,247 - -
per share
- 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 - - - 354,000 -
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 - - - - -
---------- -------- ------------ ------------- ---------------
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 $0.44 82,429 824 35,369 - -
per share
Options issued to officers, directors and employees for - - - 29,528 -
services
Warrants issued as follows:
- for loan agreements - - - 55,352 -
Expiration of stock options and warrants - - 91,814 (91,814) -
Interest expense forgiven by shareholders - - 42,950 - -
Net loss for the year ended September 30, 2002 - - - - (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 5,500,000 55,000 495,000 - -
- for consulting services at an average of $0.13 1,106,279 11,063 138,082 - -
per share
- for loans payable at an average of $0.08 per share 369,160 3,692 25,808 - -
- for investments at $0.21 per share 450,000 4,500 88,668 - -
Net loss for the period ended March 31, 2003 - - - - (255,861)
---------- -------- ------------ ------------- ---------------
Balance, March 31, 2003 (unaudited) 30,013,874 $300,139 $ 5,759,692 $ 1,383,042 $ (8,570,967)
========== ======== ============ ============= ===============
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 - 34,702
per share
- 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 employees - 354,000
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 $0.44 - 36,193
per share
Options issued to officers, directors and employees for - 29,528
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 - 550,000
- for consulting services at an average of $0.13 - 149,145
per share
- for loans payable at an average of $0.08 per share - 29,500
- for investments at $0.21 per share - 93,168
Net loss for the period ended March 31, 2003 - (255,861)
-------------- ------------
Balance, March 31, 2003 (unaudited) $ - $(1,128,094)
============== ============
The accompanying condensed 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
Six Months Six Months Exploration Stage)
Ended Ended to
March 31, March 31, March 31,
2003 2002 2003
(unaudited) (unaudited) (unaudited)
----------------- ------------ -------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (255,861) $(1,267,383) $ (8,012,463)
Adjustments to reconcile net loss to net cash used
by operating activities:
Depreciation 5,396 3,030 43,782
Gain/Loss on investments (29,167) - 29,761
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 - 13,807 23,566
Common stock issued for services and expenses 149,145 68,193 782,694
Common stock issued for payables - 31,895 31,895
Common stock issued for incentive fees - - 21,544
Common stock and options issued as compensation - 29,528 721,119
Common stock and warrants issued to acquire mineral properties - 770,000 1,114,873
Stock options and warrants issued for financing activities - 31,536 822,257
Warrants issued for consulting fees - - 170,521
Investment traded for services - - 22,539
Changes in assets and liabilities:
Inventory - - 3,805
Accounts payable (224,603) 12,025 802,786
Accrued expenses (75,042) - (48,685)
Interest payable 41,201 7,625 64,356
----------------- ------------ -------------------
Net cash used by operating activities (511,285) (300,244) (3,790,224)
----------------- ------------ -------------------
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 (2,054) (1,325) (10,810)
Sale of warrants for common stock - - 10,000
Proceeds from short-term borrowings - 284,445 1,353,357
Sale of common stock, subscriptions
and exercise of options 550,000 - 2,358,151
----------------- ------------ -------------------
Net cash provided by financing activities 547,946 283,120 3,710,698
----------------- ------------ -------------------
NET INCREASE (DECREASE) IN CASH 36,661 (17,124) 35,335
CASH, BEGINNING OF PERIOD 2,281 24,954 3,607
----------------- ------------ -------------------
CASH, END OF PERIOD $ 38,942 $ 7,830 $ 38,942
================= ============ ===================
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 602 $ 687 $ 4,114
Income taxes paid $ - $ - $ -
NON-CASH FINANCING AND INVESTING ACTIVITIES:
Common stock and warrants issued to acquire mineral properties $ - $ 770,000 $ 1,114,873
Common stock issued for acquisition of mining equipment $ - $ - $ 180,000
Common stock issued for services and expenses $ 149,145 $ 68,193 $ 782,694
Common stock issued for investment $ 93,168 $ - $ 160,168
Common stock issued for debt $ 29,500 $ 31,895 $ 236,737
Common stock and options issued as compensation $ - $ 29,528 $ 721,119
Stock options and warrants issued for financing activities $ - $ 31,536 $ 822,257
Warrants issued for consulting fees $ - $ - $ 170,521
Deferred acquisition costs on mining property $ - $ - $ 46,242
Purchase of equipment with financing agreement $ - $ - $ 21,814
Investments received for mineral property $ - $ 500 $ 5,500
Investments traded for services $ - $ - $ 22,539
Equipment for loans payable $ - $ - $ 4,500
The accompanying condensed notes are an integral part of these financial
statements.
5
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
CONDENSED NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2003
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.
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.
Basis of Presentation
- -----------------------
The accompanying unaudited financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
for interim financial statements and with instructions to Form 10-QSB pursuant
to the rules and regulations of the Securities and Exchange Commission.
Accordingly, they do not include all of the information required by accounting
principles generally accepted in the United States of America for complete
financial statements. The accompanying financial statements should be read in
conjunction with the audited consolidated financial statements of the Company
included in the Company's September 30, 2002 Annual Report on Form 10-KSB.
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.
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
$255,861 for the period ended March 31, 2003 and has an accumulated deficit of
$8,570,967. 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 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
and thus, to continue to operate based on current expense projections.
6
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
CONDENSED NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2003
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Going Concern (continued)
- ---------------------------
However, management is unable to provide assurances that it will be successful
in obtaining sufficient sources of capital.
Recent Accounting Pronouncements
- ----------------------------------
In December 2002, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure" ("SFAS No. 148"). 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.
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.
Interim Financial Statements
- ------------------------------
The interim financial statements for the period ended March 31, 2003, 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.
Reclassification
- ----------------
Certain amounts from prior periods have been reclassified to conform to the
current period presentation. These reclassifications have not resulted in any
changes to the Company's accumulated deficit or net losses presented.
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 for15,996 shares of
common stock, $40,000 in cash to be paid in four quarterly payments of $10,000
and
7
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
CONDENSED NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2003
NOTE 3 - MINERAL PROPERTIES (CONTINUED)
Wyoming Properties (continued)
- --------------------------------
$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, Wyoming. As of March
31, 2003, 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
8
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
CONDENSED NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2003
NOTE 3 - MINERAL PROPERTIES (CONTINUED)
Montana Properties (continued)
- --------------------------------
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 Sanders 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 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.
9
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
CONDENSED NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2003
NOTE 3 - MINERAL PROPERTIES (CONTINUED)
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 - COMMON STOCK
During the period from September 30, 2002 and ended March 31, 2003, the Company
issued 5,500,000 shares of common stock for $550,000 cash, 1,106,279 shares of
common stock valued at $149,145 for consulting services, 450,000 shares of
common stock for investments valued at $93,168, and 369,160 shares of common
stock for loans payable of $29,500.
NOTE 5 - RELATED PARTY TRANSACTIONS
Investments
- -----------
In January 2003, 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 an officer of Cadence Resources Corporation and
Western Goldfields, Inc.
10
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
CONDENSED NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2003
NOTE 5 - RELATED PARTY TRANSACTIONS (CONTINUED)
Shareholder Loans Payable
- ---------------------------
The following is a listing of shareholder loans outstanding at March 31, 2003
and September 30, 2002, respectively:
March 31, September 30,
Shareholder Date 2003 2002
- ------------------------------- ---------- ---------- --------------
Electrum LLC 11/6/2000 $ 35,000 $ 35,000
12/4/2000 100,000 100,000
12/18/2000 50,000 50,000
1/26/2001 50,000 50,000
3/15/2001 50,000 50,000
4/10/2001 50,000 50,000
5/4/2001 50,000 50,000
6/4/2001 50,000 50,000
7/3/2001 85,000 85,000
1/31/2002 150,000 150,000
---------- --------------
670,000 670,000
---------- --------------
LCM Holdings, LLC 10/26/2001 50,000 50,000
11/1/2001 10,000 10,000
11/15/2001 30,000 30,000
11/28/2001 29,445 29,445
5/7/2002 60,000 60,000
5/22/2002 35,000 35,000
6/14/2002 18,413 18,413
---------- --------------
232,858 232,858
---------- --------------
Berger 8/28/2001 90,000 90,000
10/2/2001 10,000 10,000
---------- --------------
100,000 100,000
---------- --------------
Buchanan 1/8/2002 30,000 30,000
---------- --------------
Crosby 8/14/2001 - 20,000
---------- --------------
Hoffman 9/7/2001 - 9,500
---------- --------------
Total shareholder loans payable $1,032,858 $ 1,062,358
========== ==============
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.
11
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
CONDENSED NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2003
NOTE 5 - 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.
NOTE 6 - INVESTMENTS
The Company's securities investments are classified as trading securities and
are recorded at fair value as of the balance sheet date, with the change in fair
value during the period included in earnings.
In January 2003, the Company acquired shares of common stock in Cadence
Resources Corporation and Western Goldfields, Inc. See Note 5.
NOTE 7 - FORGIVENESS OF DEBT
In the quarter ending March 31, 2003 the Company and a vendor finalized the
settlement of 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 8 - 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
occupies 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.
On August 2, 2001, the Company signed a month-to-month rental agreement for
storage and office space in Dalton Gardens, Idaho. The monthly payment is $425.
Consulting Agreements
- ----------------------
Mr. Ryan has an agreement with the Company, as discussed in Note 5.
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.
12
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
CONDENSED NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2003
NOTE 8 - COMMITMENTS AND CONTINGENCIES (CONTINUED)
Consulting Agreements (continued)
- -----------------------------------
In March 2003, the Company reached a fee agreement with National Securities
Corporation ("NSC"). If NSC is successful in procuring investor funds on behalf
of the Company, a fee in the amount of 13% of the funds invested will become
payable to NSC in cash, and 15% of the funds invested will become payable in
warrants.
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 9 - CONCENTRATION
The Company has significantly relied on Mr. Thomas Kaplan and various associated
entities of Mr. Kaplan for operating capital.
NOTE 10 - SUBSEQUENT EVENT
In April 2003, the Company issued 150,000 shares of common stock to Mr. Howard
Schraub for consulting services performed. At March 31, 2003, $25,500 is
included in accrued expenses to reflect the fair value of these shares owed.
13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
Our losses for the three-month period ended March 31, 2003, were $163,937.
These losses increased our accumulated deficit since inception of the current
exploration stage to $8,012,463. Our total loss since inception of the company
is $8,570,967. Our third quarter loss is due primarily to general operating
expenses of $113,226.
Our operating cash at the end of the quarter totaled $38,942. We have
inadequate cash to continue current operations through the end of the quarter
ended June, 2003. Such operational 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 WITHIN THE NEXT THREE MONTHS.
- ----------------------------------------------
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
MARCH 31, 2003
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.
Our primary business objective for the next three months will be to focus
on raising sufficient capital to retain the mineral properties we now control.
In August, 2003 we will have to make land payments of about $90,000 to retain
control of these properties. At this time we have inadequate capital to make
these payments, and if we fail to raise such capital and do not make the
payments, we will lose the primary assets of the Company and will likely suspend
operations. 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 THE END
---------------------------------------------------------------------------
OF THE NEXT QUARTER (JUNE, 2003) UNLESS WE RAISE ADDITIONAL CAPITAL.
- --------------------------------------------------------------------
ITEM 3. CONTROLS AND PROCEDURES.
(a) Evaluation of disclosure controls and procedures. Within the 90 days prior
to the filing of this Quarterly Report on Form 10-Q (the "Evaluation
Date"), the Company carried out an evaluation, under the supervision and
with the participation of its management, including its Chief Executive
Officer and its Chief Financial Officer, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures
(as defined in Rules 13a-14(c) and 15d-14(c) under the Exchange Act).
Based upon that evaluation, the Company's Chief Executive Officer and its
Chief Financial Officer concluded that the Company's disclosure controls
and procedures are effective to ensure that material information required
to be disclosed by it in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange Commission rules and
forms. It should be noted, however, that the design of any system of
controls is based in part upon certain assumptions about the likelihood of
future events, and there can be no assurance that any design will succeed
in achieving its stated goals under all potential future conditions,
regardless of how remote.
(b) Changes in internal controls. The Company evaluates its internal controls
for financial reporting purposes on a regular basis. Based upon the
results of these evaluations, the Company considers what revisions,
improvements and/or corrective actions are necessary in order to ensure
that its internal controls are effective. The Company is currently in the
process of improving internal controls relating to transmittal of its
financial information to its accountants in a more timely manner. To
achieve this goal, the Company is implementing on a company-wide basis a
computerized system which will automate the process of collection of
financial data. The Company maintains separate bank accounts in two
locations and is implementing changes to allow consolidation of its
banking accounts to one location, which will also allow the use of tighter
security standards with respect to signing of company checks. Pending full
implementation of these improvements, the Company has instituted
additional procedures and policies to maintain its ability to accurately
record, process and summarize financial data and prepare financial
statements that fully present its financial condition, results of
operations and cash flows.
The Company has not made any other significant changes in the Company's
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their last evaluation.
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.
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
MARCH 31, 2003
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 30,013,874 shares of common stock issued and outstanding as of March
31, 2003. 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.
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
MARCH 31, 2003
Common Stock
-------------
During the period from September 30, 2002 and ended March 31, 2003, the
Company issued 5,500,000 shares of common stock for $550,000 cash, 1,106,279
shares of common stock valued at $149,145 for consulting services, 450,000
shares of common stock for investments valued at $93,168, and 369,160 shares of
common stock for loans payable of $29,500.
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.
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
MARCH 31, 2003
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
TREND MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
MARCH 31, 2003
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: June 9, 2003
By: /s/ Kurt J. Hoffman
-------------------------
Kurt J. Hoffman
President and Chief Executive Officer
(Principal Executive Officer)
Dated: June 9, 2003
By: /s/ John P. Ryan
-------------------------
John P. Ryan
Chief Financial Officer
I, Kurt J. Hoffman, Chief Executive Officer & President, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Trend Mining Company;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: 6/9/03
/s/Kurt J. Hoffman
------------------
Kurt J. Hoffman
Chief Executive Officer
I, John P. Ryan, Chief Financial Officer, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Trend Mining Company;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: 6/9/03
/s/John P. Ryan
---------------
John P. Ryan
Chief Financial Officer
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 Quarterly Report of Trend Mining Company (the
"Company") on Form 10-QSB for the period ended March 31, 2003, as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Kurt J.
Hoffman, President & CEO of the Company, certify, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002,
that:
1. The Report 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 the Report fairly presents, in
all material respects, the financial condition, and results of
operations of the Company.
/s/ Kurt J. Hoffman
- --------------------
President & CEO
Dated: June 9, 2003
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 Quarterly Report of Trend Mining Company (the
"Company") on Form 10-QSB for the period ended March 31, 2003, as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, John P.
Ryan, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:
1. The Report 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 the Report fairly presents, in all material
respects, the financial condition, and results of operations of the Company.
/s/ John P. Ryan
- -----------------
Chief Financial Officer
Dated: June 9, 2003