U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2002
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission file number 0-25455
INTERGOLD CORPORATION
(Exact name of small business issuer as specified in its charter)
NEVADA 88-0365453
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
435 Martin Street, Suite 2000
Blaine, Washington 98230
(Address of Principal Executive Offices)
(360) 332-1354
(Issuer's telephone number)
n/a
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Class Outstanding as of August 12, 2002
Common Stock, $.00025 par value 77,140,600
Transitional Small Business Disclosure Format (check one)
Yes No X
PART I. FINANCIAL INFORMATION
ITEM 1. INTERIM CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS 2
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS 3
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS 4
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION 10
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 16
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 21
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 22
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 22
ITEM 5. OTHER INFORMATION 22
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 22
SIGNATURES 23
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- ----------------------------
INTERGOLD CORPORATION
(AN EXPLORATION STAGE COMPANY)
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2002
(Unaudited)
CONSOLIDATED BALANCE SHEETS
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
INTERGOLD CORPORATION
(An Exploration Stage Company)
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2002 2001
- -----------------------------------------------------------------------------------------------------------------------------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash $ 124 $ 127
- ----------------------------------------------------------------------------------------------------------------------------
$ 124 $ 127
============================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES
Accounts payable $ 20,471 $ 79,415
Advances payable (Note 3) 1,762,912 1,693,647
Notes payable (Note 4) 51,890 51,890
Accrued Series A warrant redemption payable 60,000 60,000
Accrued interest payable 439,853 361,925
- ----------------------------------------------------------------------------------------------------------------------------
2,335,126 2,246,877
- ----------------------------------------------------------------------------------------------------------------------------
CONTINGENCIES (Note 1)
STOCKHOLDERS' EQUITY (DEFICIENCY) (Note 5)
Common stock $.00025 par value; 125,000,000 shares authorized
77,140,600 shares issued and outstanding 19,284 19,284
Preferred stock, $.001 par value; 75,000,000 shares authorized
Issued and outstanding
Series A - 6,200,000 shares 6,200 6,200
Series B - 2,510,000 shares 2,510 2,510
Upon liquidation, Series A shares have a $.25 per share preference over other
preferred or common stock, Series B shares have a $.50 preference over common stock
Additional paid-in capital 10,298,039 10,298,039
Deficit accumulated during the exploration stage (12,661,035) (12,572,783)
- ----------------------------------------------------------------------------------------------------------------------------
(2,335,002) (2,246,750)
- ----------------------------------------------------------------------------------------------------------------------------
$ 124 $ 127
============================================================================================================================
The accompanying notes are an integral part of these interim consolidated financial statements
2
INTERGOLD CORPORATION
(An Exploration Stage Company)
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months Three months Six months Six months July 26, 1996
ended June 30, ended June 30, ended June ended June 30, (inception) to
2002 2001 30, 2002 2001 June 30, 2002
- -----------------------------------------------------------------------------------------------------------------------------------
REVENUE
Other income $ -- $ -- $ -- $ -- $ 1,699
- -----------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Property exploration expenses -- -- 1,600 5,882,078
Directors fees 4,500 -- 9,000 21,500
General and administrative 23,747 215,020 54,184 398,247 4,388,985
Interest expense 39,618 35,346 77,929 65,830 500,973
Loss on settlement of debt -- -- -- -- 1,424,213
Professional fees (recovery) (52,191) 259,330 (43,861) 296,484 1,778,535
Realized loss on sale of available for
sale investment -- -- -- -- 20,000
Gain on settlement of lawsuit -- -- -- -- (1,589,224)
- -----------------------------------------------------------------------------------------------------------------------------------
11,174 514,196 88,252 771,161 12,427,060
- -----------------------------------------------------------------------------------------------------------------------------------
NET LOSS FOR THE PERIOD $ (11,174) $ (514,196) $ (88,252) $ (771,161) $(12,425,361)
===================================================================================================================================
BASIC NET LOSS PER SHARE $ (0.000) $ (0.006) $ (0.001) $ (0.009)
===================================================================================================================
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 77,140,600 81,140,600 77,140,600 81,140,600
===================================================================================================================
The accompanying notes are an integral part of these interim consolidated financial statements
3
INTERGOLD CORPORATION
(An Exploration Stage Company)
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six months Six months July 26, 1996
ended ended (inception) to
June 30, 2002 June 30, 2001 June 30, 2002
- -------------------------------------------------------------------------- ---------------- ----------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period $ (88,252) $ (771,161) $(12,425,360)
Adjustments to reconcile net loss to net cash from operating activities:
- Depreciation -- 296 1,634
- Loss on disposal of fixed assets -- -- 2,666
- Write-off of accounts payable -- -- (41,172)
- Gain on settlement of lawsuit -- -- (1,589,224)
- Loss on settlement of debt -- -- 1,424,213
- Loss on sale of investment -- -- 20,000
- Non-cash exploration costs -- -- 2,860,000
- Non-cash expense recoveries (65,501) -- (65,501)
- Changes in working capital assets and liabilities
Advances payable 69,265 399,050 2,302,132
Accounts payable 6,557 296,700 624,940
Accrued interest payable 77,928 65,830 499,438
Directors fees payable -- 9,000 --
- ----------------------------------------------------------------------------------------------------------------------------
NET CASH FLOWS USED IN OPERATING ACTIVITIES (3) (285) (6,386,234)
- ----------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of available-for-sale investments -- -- (170,000)
Equipment purchases -- -- (4,300)
- ----------------------------------------------------------------------------------------------------------------------------
NET CASH FLOWS USED IN INVESTING ACTIVITIES -- -- (174,300)
- ----------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock -- -- 1,957,658
Sale of Series A preferred stock -- -- 2,500,000
Sale of Series B preferred stock -- -- 1,255,000
Net cash received on settlement of lawsuit -- -- 798,000
Note payable -- -- 50,000
- ----------------------------------------------------------------------------------------------------------------------------
NET CASH FLOWS FROM FINANCING ACTIVITIES -- -- 6,560,658
- ----------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH (3) (285) 124
CASH, BEGINNING OF PERIOD 127 406 --
- ----------------------------------------------------------------------------------------------------------------------------
CASH, END OF PERIOD $ 124 $ 121 $ 124
============================================================================================================================
The accompanying notes are an integral part of these interim consolidated financial statements
4
INTERGOLD CORPORATION
(An Exploration Stage Company)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2002
- --------------------------------------------------------------------------------
(Unaudited)
NOTE 1: NATURE OF CONTINUED OPERATIONS AND BASIS OF PRESENTATION
The Company is in the exploration stage of its mineral property development. To
date, the Company has not generated significant revenues from operations and has
a working capital deficit and a stockholders' deficiency of $2,335,002 at June
30, 2002. The Company's continuance of operations and movement into an operating
basis are contingent on raising additional working capital, settling its
outstanding debts and on the future development of a new business venture.
Advances from certain significant shareholders will form the primary source of
short-term funding for the Company during the next twelve months. Accordingly,
these factors raise substantial doubt about the Company's ability to continue as
a going concern.
Unaudited Interim Financial Statements
The accompanying unaudited interim consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB of Regulation
S-B. They do not include all information and footnotes required by generally
accepted accounting principles for complete financial statements. However,
except as disclosed herein, there have been no material changes in the
information disclosed in the notes to the financial statements for the year
ended December 31, 2001 included in the Company's Annual Report on Form 10-KSB
filed with the Securities and Exchange Commission. The interim unaudited
financial statements should be read in conjunction with those financial
statements included in the Form 10-KSB. In the opinion of Management, all
adjustments considered necessary for a fair presentation, consisting solely of
normal recurring adjustments, have been made. Operating results for the six
months ended June 30, 2002 are not necessarily indicative of the results that
may be expected for the year ending December 31, 2002.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiary, International Gold Corporation ("IGC"). IGC was
acquired by purchase on July 23, 1997. The acquisition of International Gold
Corporation has been accounted for on the purchase method of accounting. All
significant intercompany transactions and account balances have been eliminated.
Mineral property costs
Mineral property acquisition, exploration and development costs are expensed as
incurred until such time as economic reserves are quantified. To date the
Company has not established any proven reserves on its mineral properties.
Loss Per Share
As of June 30, 2002, there were 3,450,000 exercisable options, 8,710,000 shares
of convertible preferred stock and 2,510,000 common stock warrants that can be
converted into a total of 14,670,000 shares of common stock. As these options,
convertible preferred stock and warrants would have an antidilutive effect on
the presentation of loss per share, a diluted loss per share calculation is not
presented.
Financial Instruments
The fair value of the Company's financial assets and financial liabilities
approximate their carrying values due to the immediate or short-term maturity of
these financial instruments.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles 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 period. Actual results
could differ from those estimates.
5
INTERGOLD CORPORATION
(An Exploration Stage Company)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2002
- --------------------------------------------------------------------------------
(Unaudited)
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (con't)
Stock-Based Compensation
The Company accounts for stock-based compensation in respect to stock options
granted to employees and officers using the intrinsic value based method in
accordance with APB 25. Stock options granted to non-employees are accounted for
using the fair value method in accordance with SFAS No. 123. In addition, with
respect to stock options granted to employees, the Company provides pro-forma
information as required by SFAS No. 123 showing the results of applying the fair
value method using the Black-Scholes option pricing model.
The Company accounts for equity instruments issued in exchange for the receipt
of goods or services from other than employees in accordance with SFAS No. 123
and the conclusions reached by the Emerging Issues Task Force in Issue No.
96-18. Costs are measured at the estimated fair market value of the
consideration received or the estimated fair value of the equity instruments
issued, whichever is more reliably measurable. The value of equity instruments
issued for consideration other than employee services is determined on the
earliest of a performance commitment or completion of performance by the
provider of goods or services as defined by EITF 96-18.
The Company has also adopted the provisions of the Financial Accounting
Standards Board Interpretation No.44, Accounting for Certain Transactions
Involving Stock Compensation - An Interpretation of APB Opinion No. 25 ("FIN
44"), which provides guidance as to certain applications of APB 25. FIN 44 is
generally effective July 1, 2000 with the exception of certain events occurring
after December 15, 1998.
Income taxes
The Company follows the liability method of accounting for income taxes. Under
this method, future tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
balances. Future tax assets and liabilities are measured using enacted or
substantially enacted tax rates expected to apply to the taxable income in the
years in which those differences are expected to be recovered or settled. The
effect on future tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the date of enactment or
substantive enactment.
NOTE 3: ADVANCES PAYABLE
Advances payable are comprised of cash advances and accrued fees and expenses as
follows:
June 30, December 31,
2002 2001
----------------------------
Sonanini Holdings Ltd. $ 442,770 $ 442,770
Investor Communications International, Inc. 809,827 762,711
Amerocan Marketing, Inc. 151,000 151,000
Tristar Financial Services Ltd. 284,119 266,235
Brent Pierce 70,831 70,831
Grant Atkins 4,365 100
----- ---
$ 1,762,912 $ 1,693,647
=========== ===========
The advances bear 10% simple interest and are due on demand. There is $439,853
of interest accrued on the advances as of June 30, 2002. See Note 7 - Related
Party Transactions.
6
INTERGOLD CORPORATION
(An Exploration Stage Company)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2002
- --------------------------------------------------------------------------------
(Unaudited)
NOTE 4: NOTES PAYABLE
June 30, December 31,
2002 2001
-------------------------
Sonanini Holdings Ltd., bearing interest at
7% per annum, simple interest on the balance
outstanding. The note is dated August 6, 1998
and has no stated maturity date. Accrued
interest on the note through September 30, 2001
totals $11,030. $50,000 $50,000
For the redemption of 1,889,750 shares of
restricted common stock of the Company payable at
par value of $.00025. 1,890 1,890
-----------------------
$51,890 $51,890
=======================
NOTE 5: STOCKHOLDERS' EQUITY
As of June 30, 2002, there are 6,200,000 Series A Preferred shares issued and
outstanding. If the Company's Series A Preferred shareholders elect to convert
the remaining outstanding Series A Preferred shares, an additional 10,173,800
shares of common stock would be issued, including 4,597,300 shares in settlement
of accrued 20% cumulative undeclared dividends totaling $1,149,325.
As of June 30, 2002, there are 2,510,000 Series B Preferred shares issued and
outstanding. If the Company's Series B Preferred shareholders elect to convert
the remaining outstanding Series B Preferred shares, an additional 3,889,000
shares of common stock would be issued, including 1,631,400 shares in settlement
of accrued 20% cumulative undeclared dividends totaling $815,700.
NOTE 6: EMPLOYEE STOCK OPTION PLAN
During 1997, the Company authorized an Employee Stock Option Plan. The plan
authorized the issuance of 2,000,000 options that can be exercised at $.50 per
share of common stock and an additional 2,500,000 options that can be exercised
to purchase shares of common stock at $1.00 per share. All options granted
expire December 27, 2017. The options are non-cancelable once granted. Shares
which may be acquired through the plan may be authorized but unissued shares of
common stock or issued shares of common stock held in the Company's treasury.
During the year ended December 31, 1999, the Board of Directors of the Company
authorized the grant of stock options to certain officers, directors and
consultants. The options granted consisted of 2,000,000 options with an exercise
price of $.50 per share of common stock and 1,450,000 options with an exercise
price of $1.00 per common share. Selected information regarding the Company's
employee stock options as of June 30, 2002 are as follows:
June 30, 2002
----------------------------
Weighted
Number of average
options exercise price
Outstanding at beginning of period 3,450,000 $.71/share
Outstanding at end of period 3,450,000 $.71/share
Exercisable at end of period 3,450,000 $.71/share
Options granted during period - -
Options exercised during period - -
Options forfeited during period - -
Options expired during period - -
7
INTERGOLD CORPORATION
(An Exploration Stage Company)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2002
- --------------------------------------------------------------------------------
(Unaudited)
NOTE 6: EMPLOYEE STOCK OPTION PLAN (con't)
As of June 30, 2002, outstanding options have exercise prices ranging from $.50
to $1.00 per share. The weighted average exercise price of all options
outstanding is $.71 per share of common stock and the weighted average remaining
contractual life is 15 years 180 days.
NOTE 7: RELATED PARTY TRANSACTIONS
The Company, on January 1, 1999, entered into a management services agreement
with Investor Communications, Inc. ("ICI") to provide management of the
day-to-day operations of the Company for a two year term. The management
services agreement requires monthly payments not to exceed $75,000 for services
rendered. The Company's subsidiary entered into a similar agreement on January
1, 1999 with Amerocan Marketing, Inc. ("Amerocan") with required monthly
payments not to exceed $25,000 for services rendered for a two year term. Both
agreements have been extended for a further two year term.
One director of Intergold Corporation has been contracted by ICI and Amerocan
and is part of the management team provided to Intergold Corporation and its
subsidiary. During the six month period ended June 30, 2002 a total of $53,350
(2001 - $343,000) was incurred to these private companies which are also
significant shareholders for managerial, administrative and investor relations
services provided to the Company and its subsidiary. During the period ended
June 30, 2002 these companies paid a total of $3,300 (2001 - $3,400) to this
officer and director for services provided to the Company and its subsidiary.
During the period ended June 30, 2002 net cash advances of $15,915 (2001 -
$56,050) were received from ICI and other shareholders. Interest of $77,929
(2001 - $65,830) was accrued on outstanding advances.
NOTE 8: COMPARATIVE FIGURES
Certain prior period figures have been reclassified in order to conform to this
period's financial statement presentation.
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
GENERAL
Intergold Corporation, a Nevada corporation (the "Company") currently
trades on the OTC Bulletin Board under the symbol "IGCO". The Company's prior
operational business activities were in the business of exploration of gold and
precious metals in the United States. The Company's prior operational business
activities had been carried out through International Gold Corporation ("INGC"),
a private wholly-owned subsidiary of the Company. INGC's primary assets
previously consisted of title to a block of 321 contiguous unpatented lode
mining claims located in Lincoln County, south-central Idaho (the "Blackhawk
Property"). The Company ceases to hold title to all previously held unpatented
lode mining claims that comprised the Blackhawk Property.
As of the date of this Quarterly Report, the Company has suspended further
exploration of the Blackhawk Property due to the existence of multiple breaches
of contract by AuRIC Metallurgical Laboratories LLC ("AuRIC") and Dames & Moore
under the respective Agreement for Services and the License Agreement and the
settlement of the lawsuit against AuRIC and Dames & Moore. Moreover, the Company
deemed the probability of commercial grade gold or silver located in the
Blackhawk Property claims to be nil.
New Business Endeavors
As of the date of this Quarterly Report, management of the Company is
undertaking research relating to prospective new business endeavors and possible
new acquisitions. This research may result in the Company entering into business
operations that are not in the minerals exploration field.
As of the date of this Quarterly Report, there has been no income realized
from the business operations of the Company. The Company's primary source of
financing during the prior fiscal years have been from proceeds received by IGCO
from the conversion of Series A Warrants into shares of the Company's common
stock at the redemption price of $0.25 per Series A Warrant and cash advances
provided to the Company as debt.
During fiscal year ended December 31, 2001, no Series A Warrants were
converted into shares of the Company's restricted Common Stock. During fiscal
year ended December 31, 2000, an aggregate of 3,000,000 Series A Warrants were
converted into 3,000,000 shares of the Company's restricted Common Stock for an
aggregate consideration of $750,000. Each Series A Preferred share is also
convertible into one share of Common Stock of the Company and all then accrued
and unpaid dividends are convertible into Common Stock at the conversion price
of $0.25 per share. During fiscal year ended December 31, 2001, no Preferred
Series A shares were converted into shares of the Company's restricted Common
Stock.
As of the date of this Quarterly Report, 6,200,000 shares of Series A
Preferred Stock and 6,200,000 Series A Warrants remain outstanding. If the
Series A Preferred Stock is converted by the holders thereof, an additional
10,173,800 shares of Common Stock would be issued, including 4,597,300 shares of
Common Stock as settlement of accrued 20% cumulative undeclared dividends on the
Series A Preferred Stock totaling approximately $1,149,325.
As of the date of this Quarterly Report, 2,510,000 shares of Series B
Preferred Stock remain outstanding and, if converted, an additional 3,889,000
shares of Common Stock would be issued, including 1,631,400 shares of Common
Stock as settlement of accrued 20% cumulative undeclared dividends on the Series
B Preferred Stock totaling approximately $815,700.
9
RESULTS OF OPERATION
Six-Month Period Ended June 30, 2002 Compared to Six-Month Period Ended June 30,
2001
The Company's net loss for the six-month period ended June 30, 2002 was
approximately $88,252 compared to a net loss of approximately $771,161 for the
six-month period ended June 30, 2001. During the six-month periods ended June
30, 2002 and 2001, the Company recorded no income.
During the six-month period ended June 30, 2002, the Company did not incur
any property exploration expenses compared to $1,600 of property exploration
expenses recorded during the six-month period ended June 30, 2001. The decrease
in property exploration expenses resulted from suspension of any further
exploration of the Blackhawk Property compared to property exploration expenses
incurred in the same period for 2001 relating to amounts paid by the Company for
preliminary confirmation test work undertaken by the Company associated with
contractual agreements between the Company and AuRIC, Dames & Moore and Geneva
Resources, Inc., respectively (resulting in the litigation between the Company,
INGC, Geneva Resources Inc. and AuRIC, Dames & Moore and other parties).
During the six-month period ended June 30, 2002, the Company recorded
operating expenses of $88,252 as compared to operating expenses of $771,161
recorded during the six-month period ended June 30, 2001 (a decrease of
$682,909). Although the Company actually incurred $132,113 of operating expenses
during the six-month period ended June 30, 2002, such expenses were offset by
$43,861 recorded as a recovery of professional fees, resulting in a net loss of
$88,252.
During the six-month period ended June 30, 2002, the Company's operating
expenses consisted of: (i) $77,929 as interest expense; and (ii) $54,184 as
general and administrative expenses. During the six-month period ended June 30,
2001, the Company's operating expenses consisted of: (i) $398,247 as general and
administrative expenses; (ii) $296,484 as professional fees; (iii) $65,830 as
interest expense; (iv) $9,000 as directors' fees; and (v) $1,600 as property
exploration expenses. The decrease in general and administrative expenses during
the six-month period ended June 30, 2002 compared to the six-month period ended
June 30, 2001 was primarily due to a decrease in overhead and administrative
expenses resulting from the decreasing scale and scope of overall corporate
activity pertaining to exploration and administration of the Blackhawk Property.
The decrease in professional fees during the six-month period ended June 30,
2002 compared to the six-month period ended June 30, 2001 was due primarily to
the settlement of the litigation between the Company, INGC, Geneva Resources
Inc. and AuRIC, Dames & Moore and other parties. General and administrative
expenses generally include corporate overhead, financial and administrative
contracted services and consulting costs.
Of the $54,184 incurred as general and administrative expenses during the
six-month period ended June 30, 2002, an aggregate of $53,350 was incurred
payable to Investor Communications International, Inc. ("ICI") and Amerocan
Marketing, Inc. ("Amerocan") for amounts due and owing for operational
management, administrative, financial and investor relations services rendered
by ICI and Amerocan. During the six-month period ended June 30, 2002, net cash
advances of $15,915 were made by ICI and other shareholders to the Company, and
the accrual of interest on outstanding advances was $77,929. One of the
Company's officers/directors is employed by ICI and Amerocan and part of the
management team provided by ICI and Amerocan to the Company. During the
six-month period ended June 30, 2002, Mr. Grant Atkins received from ICI and
Amerocan approximately $3,300 as compensation.
The Company and ICI entered into a two-year consulting services and
management agreement dated January 1, 1999 and the Company's subsidiary,
International Gold Corporation, and Amerocan entered into a similar agreement
dated January 1, 1999 whereby ICI and Amerocan perform a wide range of
management, administrative, financial, marketing and public company services
10
including, but not limited to, the following: (i) international business
relations and strategy development, (ii) investor relations and shareholder
liaison, (iii) corporate public relations, press release and public information
distribution, (iv) property exploration management, including administration of
metallurgical development, metallurgical liaison, BLM liaison, engineering
company liaison, drilling administration, geologist liaison, mapping, survey and
catalogue, geostatistical liaison, environmental research, geological reports
compilation and due diligence efforts, (v) administration, including auditor and
legal liaison, media liaison, corporate minutebook maintenance and record
keeping, corporate secretarial services, printing and production, office and
general duties, and (vi) financial and business planning services, including
capital and operating budgeting, banking, bookkeeping, documentation, database
records, preparation of financial statements and creation of annual reports. On
January 1, 2001, the Company and ICI and International Gold Corporation and
Amerocan, respectively, renewed its consulting services and management agreement
for an additional two-year period.
As discussed above, the decrease in net loss during the six-month period
ended June 30, 2002 as compared to the net loss incurred during the six-month
period ended June 30, 2001 is attributable primarily to the decreased general
and administrative expenses and professional fees incurred during the six-month
period ended June 30, 2002. The Company's net loss during the six-month period
ended June 30, 2002 was approximately ($88,252) or ($0.001) per share compared
to a net loss of approximately ($771,161) or ($0.009) per share during the
six-month period ended June 30, 2001. The weighted average number of shares
outstanding were 77,140,600 for the six-month period ended June 30, 2002
compared to 81,140,600 for the six-month period ended June 30, 2001.
Three-Month Period Ended June 30, 2002 Compared to Three-Month Period Ended June
30, 2001
The Company's net loss for the three-month period ended June 30, 2002 was
approximately $11,174 compared to a net loss of approximately $514,196 for the
three-month period ended June 30, 2001 (a decrease of $503,022). During the
three-month periods ended June 30, 2002 and 2001, the Company recorded no
income.
During the three-month periods ended June 30, 2002 and 2001, the Company
did not incur any property exploration expenses.
During the three-month period ended June 30, 2002, the Company recorded
operating expenses of $11,174 as compared to operating expenses of $514,196
recorded during the three-month period ended June 30, 2001 (a decrease of
$503,022). Although the Company actually incurred $63,365 of operating expenses
during the three-month period ended June 30, 2002, such expenses were offset by
$52,191 recorded as a recovery of professional fees, resulting in a net loss of
$11,174.
During the three-month period ended June 30, 2002, the Company's operating
expenses consisted of: (i) $39,618 as interest expense; and (ii) $23,747 as
general and administrative expenses. During the three-month period ended June
30, 2001, the Company's operating expenses consisted of: (i) $259,330 as
professional fees; (ii) $215,020 as general and administrative expenses; (iii)
$35,346 as interest expense; and (iv) $4,500 as directors' fees.
As discussed above, the decrease in net loss during the three-month period
ended June 30, 2002 as compared to the net loss incurred during the three-month
period ended June 30, 2001 is attributable primarily to the decreased general
and administrative expenses and professional fees incurred during the
three-month period ended June 30, 2002. The Company's net loss during the
three-month period ended June 30, 2002 was approximately ($11,174) or ($0.000)
per share compared to a net loss of approximately ($514,196) or ($0.006) per
share during the three-month period ended June 30, 2001. The weighted average
number of shares outstanding were 77,140,600 for the three-month period ended
June 30, 2002 compared to 81,140,600 for the three-month period ended June 30,
2001.
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LIQUIDITY AND CAPITAL RESOURCES
For Six-Month Period Ended June 30, 2002
The Company's financial statements have been prepared assuming that it will
continue as a going concern and, accordingly, do not include adjustments
relating to the recoverability and realization of assets and classification of
liabilities that might be necessary should the Company be unable to continue in
operations.
The Company must raise additional capital. Further, the Company has not
generated sufficient cash flow to fund operations and activities. Historically,
the Company has relied upon internally generated funds, funds from the sale of
shares of stock and loans from its shareholders and private investors to finance
its operations and growth. The Company's future success and viability are
entirely dependent upon the Company's current management to successfully
research and identify new business endeavors, and to raise additional capital
through further private offerings of its stock or loans from private investors.
There can be no assurance, however, that the Company will be able to
successfully research, identify and acquire new business endeavors and to raise
additional capital. The Company's failure to successfully identify and acquire
new business endeavors and to raise additional capital will have a material and
adverse affect upon the Company and its shareholders.
As of June 30, 2002, the Company's current assets were $124 and its current
liabilities were $2,335,126, which resulted in a working capital deficit of
$2,335,002. As of fiscal year ended December 31, 2001, the Company's total
assets were $127 and its current liabilities were $2,246,877, which resulted in
a working capital deficit of $2,246,750. The increase in liabilities from fiscal
year ended December 31, 2001 was due primarily to an increase in advances
payable and accrued interest due and owing by the Company to significant
shareholders and debt holders which totaled $1,762,912 and $439,853,
respectively.
Stockholders' deficit increased from ($2,246,750) for fiscal year ended
December 31, 2001 to ($2,335,002) for the six-month period ended June 30, 2002.
The Company has not generated positive cash flows from operating
activities. For the six-month period ended June 30, 2002, net cash flows used in
operating activities was ($3) compared to ($285) of net cash flows used in
operating activities for the six-month period ended June 30, 2001. The net
operating loss of $88,252 decreased during the six-month period ended June 30,
2002 from a net operating loss of $771,161 during the six-month period ended
June 30, 2001. Changes in working capital assets and liabilities decreased to an
aggregate of $153,750 for the six-month period ended June 30, 2002 from an
aggregate of $770,580 for the six-month period ended June 30, 2001.
Cash flows from financing activities and cash flows from investing
activities were $-0- for both six-month periods ended June 30, 2002 and 2001,
respectively.
FUNDING
Current management of the Company anticipates a possible increase in
operating expenses in order to successfully research and identify new business
endeavors. The Company may finance these expenses with further issuance of
common stock of the Company. The Company believes that any anticipated private
placements of equity capital and debt financing, if successful, may be adequate
to fund the Company's operations over the next six months. Thereafter, the
Company expects it will need to raise additional capital to meet long-term
operating requirements. The Company may encounter business endeavors that
require significant cash commitments or unanticipated problems or expenses that
could result in a requirement for additional cash before that time. If the
Company raises additional funds through the issuance of equity or convertible
debt securities other than to current shareholders, the percentage ownership of
its current shareholders would be reduced, and such securities might have
rights, preferences or privileges senior to its common stock. Additional
financing may not be available upon acceptable terms, or at all. If adequate
funds are not available or are not available on acceptable terms, the Company
may not be able to take advantage of prospective new business endeavors or
opportunities, which could significantly and materially restrict the Company's
business operations.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
No report required.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
No report required.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
No report required.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No report required.
ITEM 5. OTHER INFORMATION
No report required.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
99.1 Certification Pursuant to 18 U.S.C. Section 1350.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
INTERGOLD CORPORATION
Dated: August 12, 2002 By: /s/ Grant Atkins
---------------------------
Grant Atkins, President and
Chief Executive Officer
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