-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, S8KB8SDmxt2VC8D9uVgxkA9Vh7n1/aRJPoixKSm3zy9an/fwzOlvuThoBXWfVTip aD+WKcfae/2UgssyClWutg== 0001012410-98-000012.txt : 19980401 0001012410-98-000012.hdr.sgml : 19980401 ACCESSION NUMBER: 0001012410-98-000012 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980331 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ICHOR CORP CENTRAL INDEX KEY: 0000927761 STANDARD INDUSTRIAL CLASSIFICATION: HAZARDOUS WASTE MANAGEMENT [4955] IRS NUMBER: 251741849 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 000-25132 FILM NUMBER: 98582839 BUSINESS ADDRESS: STREET 1: 300 OXFORD DR STREET 2: PO BOX 10354 PACIFIC CENTRE CITY: MONROEVILLE STATE: PA ZIP: 15146 BUSINESS PHONE: 6046835767 MAIL ADDRESS: STREET 1: 300 OXFORD DR CITY: MONROEVILLE STATE: PA ZIP: 15146 FORMER COMPANY: FORMER CONFORMED NAME: PDG REMEDIATION INC DATE OF NAME CHANGE: 19940801 10-K405 1 ICHOR CORPORATION - FORM 10-K 1 ============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1997 [ ] 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 000-25132 ICHOR Corporation (Exact name of Registrant as specified in its charter) Delaware 25-1741849 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Suite 1250, 400 Burrard Street, Vancouver, British Columbia, Canada V6C 3A6 (Address of principal executive offices) (Postal Code) Registrant's telephone number, including area code: (604) 683-5767 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.01 par value (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 ----- ----- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ] The aggregate market value of the voting stock held by non-affiliates of the Registrant was approximately $1,405,725 as of March 24, 1998, computed on the basis of the average of the bid and ask prices on such date. As of March 24, 1998, there were 4,907,520 shares of the Registrant's Common Stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Registrant's 1997 Proxy Statement to be filed within 120 days of the period ended December 31, 1997 are incorporated by reference into Part III. ============================================================================== 2 FORWARD-LOOKING STATEMENTS Statements in this report, to the extent they are not based on historical events, constitute forward-looking statements. Forward-looking statements include, without limitation, statements regarding the outlook for future operations, forecasts of future costs and expenditures, evaluation of market conditions, the outcome of legal proceedings, the adequacy of reserves, or other business plans. Investors are cautioned that forward-looking statements are subject to an inherent risk that actual results may vary materially from those described herein. Factors that may result in such variance, in addition to those accompanying the forward-looking statements, include changes in interest rates, prices, and other economic conditions; actions by competitors; natural phenomena; actions by government authorities; uncertainties associated with legal proceedings; technological development; future decisions by management in response to changing conditions; and misjudgments in the course of preparing forward-looking statements. 2 3 TABLE OF CONTENTS ----------------- PAGE ---- PART I ------ ITEM 1. BUSINESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 ITEM 2. PROPERTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . .6 ITEM 3. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . .6 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS . . . . . . .7 PART II ------- ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS . . . . . . . . . . . . . . . . . . . . . . .7 ITEM 6. SELECTED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . .8 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . .9 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . . . . . . . .11 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE . . . . . . . . . . . . . . .11 PART III -------- ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT . . . . . . .11 ITEM 11. EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . .12 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . .12 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS . . . . . . . . .12 PART IV ------- ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. . . . . . . . . . . . . . . . . . . . . . . . . . .12 SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33 3 4 PART I ------ ITEM 1. BUSINESS The Corporation - --------------- ICHOR Corporation was incorporated in July 1994 pursuant to the laws of the Commonwealth of Pennsylvania under the name "PDG Remediation, Inc.". In November 1996, the Corporation reincorporated under the laws of the State of Delaware and changed its name to "ICHOR Corporation". In this document, unless the context otherwise requires, the "Corporation" refers to ICHOR Corporation and its subsidiaries. General - ------- The Corporation has been in the environmental services business since 1994, when it was a wholly-owned subsidiary of PDG Environmental, Inc. ("PDGE"). The Corporation's initial operations included remediation services offices located in Melbourne and Tallahassee, Florida, and Pittsburgh, Pennsylvania and a thermal treatment facility in Florida. The Corporation responded to changes in the Florida market by closing its Tallahassee remediation office in 1995 and selling its soil remediation facility in April 1996 and its Melbourne, Florida remediation services operations in November 1996. In December 1996, the Corporation acquired a waste oil processing facility in McCook, Illinois (the "McCook Facility"), which was brought on-line in the second quarter of 1997. During 1997, the Corporation's environmental services business included remediation and recycling. Its operations consisted of providing remediation services to assist commercial, industrial and government clients in complying with environmental laws and regulations and re-refining petroleum waste products and disposing of oily waste waters. The Corporation's remediation services ranged from the initial assessment of site contamination to the design and implementation of remediation and treatment systems to remove contamination. The McCook Facility converted waste oil into distillate and other recycled petroleum products and processed and disposed of oily waste waters. In the first quarter of 1998, the Corporation commenced providing certain environmental consulting services to an industrial customer in Germany. The Corporation is currently negotiating a contract to provide environmental rehabilitation services to this customer. The Corporation completed its initial public offering in February 1995. In July 1996, PDGE transferred its 59.5% interest in the Corporation to Drummond Financial Corporation ("Drummond"). In December 1996, the Corporation issued 2,500,000 shares, or approximately 50.3%, of the Corporation's common stock to Logan International Corp. ("Logan") as partial consideration for a loan receivable through which the Corporation acquired the McCook Facility. Logan and Drummond are controlled by MFC Bancorp Ltd. ("MFC"). As at December 31, 1997, the Corporation had settled an aggregate of $2.2 million in indebtedness to Logan and MFC in consideration of the issuance of 217,500 shares of 5% Cumulative Redeemable Convertible Preferred Stock, Series 1 (the "Preferred Stock") of the Corporation. In February 1998, the Corporation completed the private placement of 250,000 shares of Preferred Stock for $2,500,000 in cash. 4 5 As of April 1997, the Corporation sold substantially all of the assets of its environmental remediation services operations for $147,000 in cash and the purchaser assumed certain liabilities related to those assets. The Corporation retained cash, accounts receivable, accounts payable and other accrued liabilities relating to such operations. Contract revenue for the Corporation's environmental remediation services operations was $0.7 million in the year ended December 31, 1997, $4.0 million in the 11 months ended December 31, 1996 and $0.3 million in the year ended January 31, 1996. In December 1997, the Corporation sold the McCook Facility for approximately $1.0 million, consisting of a down payment of $0.3 million and a final payment of $0.7 million plus interest at 2.5% per annum on or before December 23, 1998. The McCook Facility had revenues of $2.6 million for the year ended December 31, 1997. The Corporation's environmental remediation services operations and the McCook Facility have been classified separately within the Corporation's financial statements for the year ended December 31, 1997 as discontinued operations and have been excluded from the amounts of revenues and expenses for the Corporation's continuing operations. Acquisitions - ------------ The Corporation is currently negotiating to acquire a European machine tool manufacturer. In December 1997, the Corporation entered into an agreement to acquire an Italian machine tool manufacturer which did not complete. In March 1998, the Corporation entered into an agreement to acquire a company that leases and operates a carton and box making plant located in Germany, subject to certain conditions. This plant had sales of $7.5 million in 1997. The purchase price is approximately $0.8 million, subject to certain adjustments. Environmental Services Business - ------------------------------- The Corporation's environmental remediation and decontamination operations were located in Monroeville, Pennsylvania, with services offered throughout the Northeast, Midwest, Mid-Atlantic and Southeastern United States. The Corporation provided a broad range of environmental remediation services to both the public and private sectors, including assessments to determine the nature and extent of environmental contamination, feasibility studies to evaluate the application of appropriate remedial technologies, remedial design and procedures, and the maintenance of existing remedial systems. The Corporation focused primarily on the remediation of facilities contaminated by hazardous substances and the remediation of contamination caused by leakage from underground storage tanks. Several key contracts had been obtained by the Corporation, including serving as a remedial action contractor for the U.S. Navy at multiple facilities under a contract with J.A. Jones Management Services and providing similar remediation services for major industrial clients based in Pittsburgh. Most of the Corporation's environmental remediation contracts were obtained on a cost plus basis whereby the Corporation was reimbursed at standard rates for its time expended and expenses incurred with respect to a project, although certain projects were obtained on a fixed price basis. 5 6 The McCook Facility processed waste oil into distillate, which can be further processed into base oil and then into blended lube oil. The facility had a distillate production capacity of approximately one million gallons per month. Distillate can be sold to other manufacturers of lube oil or to crude oil refineries which use distillate as feed stock for gasoline. Any distillate which is further processed into base lube oil can also be sold to other lube oil manufacturers or further processed into end user lube oil. The McCook Facility also processed and disposed of oily waste waters for customers in the greater Chicago area and had the capacity to process approximately 13,000 to 15,000 gallons of oily waste waters per day. The Corporation focused its marketing efforts with respect to the McCook Facility on the sale of distillate to refineries which use distillate to produce gasoline and on niche markets such as the specialty lube oil market (metal working and railroad lubricants). Government regulations impacted on all aspects of the Corporation's environmental remediation and recycling operations, including the disposal of residual chemical wastes, operating procedures, waste water discharges, fire protection, safety standards, worker and community right-to-know initiatives, and emergency response plans. Government authorities have the power, in various circumstances, to enforce compliance with such regulations, and any violator thereof may be subject to civil or criminal penalties. Private individuals may also have the right to sue to enforce compliance with certain of the governmental requirements. At December 31, 1997, the Corporation had one full-time employee. The executive officers of the Corporation are not full-time employees, but devote such time to the business of the Corporation as is required. ITEM 2. PROPERTIES The Corporation's administrative facilities are located in Monroeville, Pennsylvania and are leased. ITEM 3. LEGAL PROCEEDINGS In June 1995, Klein v. PDG Remediation, Inc., et al., No. CIV-4954 (DAB) was filed in the United States District Court for the Southern District of New York and alleges that the Corporation, its directors and certain of its officers, PDGE and the underwriters of the Corporation's initial public offering issued or participated in issuing a registration statement and prospectus which contained material misstatements or omissions, which were relied upon by the plaintiff. Specifically, the plaintiff alleges that the defendants knew or should have known that the Florida reimbursement program in which the Corporation participated was operating at a deficit and was being revised to eliminate funding of environmental remediation activities for lower priority sites. This action has been certified as a class action on behalf of all purchasers of the Corporation's common stock from February 9, 1995 through May 23, 1995. The plaintiff is seeking: (i) either the rescission of any agreement with respect to the purchase of shares of common stock of the Corporation by the members of the class or statutory damages, and (ii) interest, attorneys' fees and other costs and expenses. On September 1, 1995, an answer to the allegations was filed on behalf of the Corporation, its officers and directors and PDGE, which generally denies the plaintiff's claims. 6 7 The Corporation believes that the allegations are without merit or that there are meritorious defenses to the allegations, and the Corporation intends to defend the action vigorously. However, if the plaintiff is successful in its claims, a judgment rendered against the Corporation and other defendants may have a material adverse effect on the business of the Corporation. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. PART II ------- ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS (a) Market Information. The Corporation's common stock is quoted on the NASDAQ SmallCap Market under the trading symbol "ICHR". The following table sets forth the quarterly high and low sale price per share of the Corporation's common stock for the periods indicated: Fiscal Quarter Ended High Low - -------------------- ------ ------ 1996 April 30. . . . . . . . . . . . . . 1.41 0.98 July 31 . . . . . . . . . . . . . . 1.38 0.75 September 30. . . . . . . . . . . . 1.19 0.56 December 31 . . . . . . . . . . . . 1.75 0.63 1997 March 31. . . . . . . . . . . . . . 1.63 1.19 June 30 . . . . . . . . . . . . . . 1.50 1.25 September 30. . . . . . . . . . . . 1.75 1.63 December 31 . . . . . . . . . . . . 1.75 1.50 - ---------------- Note: In September 1996, the Corporation changed its fiscal year end from January 31 to December 31. (b) Shareholders. At March 24, 1998, the Corporation had approximately 17 stockholders of record, some of which are securities clearing agencies and intermediaries. (c) Dividends. The Corporation has not paid any dividends with respect to its common stock and has no intention of paying any dividends in the foreseeable future. 7 8 ITEM 6. SELECTED FINANCIAL DATA The following table reflects selected consolidated financial data for the Corporation for the fiscal year ended December 31, 1997, the 11 months ended December 31, 1996 and the fiscal year ended January 31, 1996. The Corporation does not have access to the information necessary to reclassify its financial information for the years ended January 31, 1995 and 1994, respectively. The results of operations and financial condition of the Corporation have been restated to reflect the sale by the Corporation of its environmental remediation services operations and the McCook Facility in 1997 and its soil remediation facility in 1996. For the Year For the 11 For the Year Ended Months Ended Ended December 31, December 31, January 31, 1997 1996 1996 ------------ ------------ ------------ (Dollars in thousands, except per share amounts) OPERATING DATA Selling, general and administrative expenses. . . . $ (418) $ (1,042) $ (791) Interest expense . . . . . . . . (613) (423) (406) Other income . . . . . . . . . . 6 145 14 Loss from continuing operations. (1,025) (1,320) (1,183) Net loss . . . . . . . . . . . . (4,054) (1,399) (2,858) COMMON SHARE DATA(1) Loss from continuing operations per common share. . . . . . . . (0.21) (0.51) (0.48) Net loss per common share. . . . (0.83) (0.54) (1.16) Weighted average common shares outstanding (in thousands). . . 4,193 2,586 2,456 BALANCE SHEET DATA Working capital. . . . . . . . . 87 3,861 2,417 Total assets . . . . . . . . . . 2,028 5,582 5,578 Long-term obligations. . . . . . - 1,916 - Total stockholders' equity . . . 89 1,987 2,438 - -------------------- (1) Basic and diluted common share data is the same. 8 9 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of the results of operations and financial condition of the Corporation for the year ended December 31, 1997, the 11 months ended December 31, 1996 and the year ended January 31, 1996 should be read in conjunction with the Corporation's audited consolidated financial statements and related notes included elsewhere herein. In September 1996, the Corporation changed its fiscal year end from January 31 to December 31. As a result, the comparison of the year ended December 31, 1997 to the 11 months ended December 31, 1996 and the comparison of the 11 months ended December 31, 1996 to the year ended January 31, 1996 are comparisons between 11 and 12 month periods. The Corporation sold its environmental remediation services operations in April 1997 and the McCook Facility in December 1997. These operations have been accounted for as discontinued operations for the year ended December 31, 1997. As a result, the financial information provided in the Corporation's financial statements relating to the periods ended December 31, 1996 and January 31, 1996, respectively, has been restated to conform to this method of presentation. The Corporation's soil remediation facility was sold effective January 31, 1996 and has been accounted for as discontinued operations for the year ended January 31, 1996. Year Ended December 31, 1997 Compared to 11 Months Ended December 31, 1996 - -------------------------------------------------------------------------- Selling, general and administrative expenses for the year ended December 31, 1997 decreased to $0.4 million from $1.0 million for the 11 months ended December 31, 1996, primarily as a result of the legal and accounting costs associated with certain litigation involving the Corporation and the costs associated with a proposed acquisition in the 11 months ended December 31, 1996 and reduced staffing as a result of the sale of the Corporation's environmental remediation services operations and the McCook Facility in 1997. Interest expense was $0.6 million in the period ended December 31, 1997, compared to $0.4 million in the period ended December 31, 1996, primarily as a result of an increase in amounts funded under the Sirrom Agreements (as hereinafter defined) during the year ended December 31, 1997. Other income was $6,000 in the period ended December 31, 1997, compared to $0.1 million in the period ended December 31, 1996. The Corporation reported a loss from continuing operations of $1.0 million in the year ended December 31, 1997, compared to $1.3 million in the 11 months ended December 31, 1996. The Corporation recognized a loss from the operation of its environmental remediation services operations of $0.5 million in the year ended December 31, 1997, compared to $0.2 million in the period ended December 31, 1996. The Corporation recorded a gain of $59,000 from the sale of these operations in the period ended December 31, 1997. The Corporation reported a loss of $1.2 million from the operation the McCook Facility and a loss of $1.4 million from the sale of the facility in the year ended December 31, 1997. The Corporation had income from the operation of its soil remediation facility of $90,000 in the 11 months ended December 31, 1996, as a result of a reduction in the reserve for operating losses. 9 10 The Corporation's net loss for the year ended December 31, 1997 was $4.1 million or $0.83 per share, compared to $1.4 million or $0.54 per share for the 11 months ended December 31, 1996. 11 Months Ended December 31, 1996 Compared to Year Ended January 31, 1996 - ------------------------------------------------------------------------- Selling, general and administrative expenses for the 11 months ended December 31, 1996 increased to $1.0 million from $0.8 million for the year ended January 31, 1996, primarily due to the legal and accounting costs associated with certain litigation involving the Corporation and the costs associated with a proposed acquisition in the period ended December 31, 1996. Interest expense was $0.4 million in both the 11 months ended December 31, 1996 and the year ended January 31, 1996. Other income was $0.1 million in the period ended December 31, 1996, compared to $14,000 in the period ended January 31, 1996. The Corporation reported a loss from continuing operations of $1.3 million in the 11 months ended December 31, 1996, compared to $1.2 million in the year ended January 31, 1996. The Corporation recognized a loss from the operation of its environmental remediation services operations of $0.2 million in the period ended December 31, 1996, compared to $67,000 in the period ended January 31, 1996. The Corporation had income from the operation of its soil remediation facility of $90,000 in the 11 months ended December 31, 1996, compared to a loss of $0.8 million in the year ended January 31, 1996, as a result of a reduction in the reserve for operating losses in the period ended December 31, 1996. The Corporation reported a loss on the disposal of its soil remediation facility of $0.8 million in the year ended January 31, 1996. The Corporation's net loss for the 11 months ended December 31, 1996 was $1.4 million or $0.54 per share, compared to $2.9 million or $1.16 per share for the year ended January 31, 1996. Liquidity and Capital Resources - ------------------------------- At December 31, 1997, the Corporation had cash of $0.1 million, a net decrease of $0.5 million from $0.6 million at December 31, 1996. At December 31, 1997, under two agreements with Sirrom Environmental Funding, LLC (the "Sirrom Agreements"), the Corporation had funded the amounts billed and outstanding under certain Florida State environmental rehabilitation programs in the amount of $3.0 million, at the rate of prime plus 2% and 3%, respectively. The Corporation had $0.6 million held in escrow at December 31, 1997 to cover potential disallowances and future interest costs relating to the Sirrom Agreements. Due to an accelerated payment program, the amounts billed and outstanding are expected to be paid in 1998 at a discounted rate of 3.5% effective January 1, 1997, with the present value to be determined from the actual settlement date of a reimbursement application rather than the original settlement date. The Corporation will not be able to determine the impact of the discounting and any related disallowances on its operating results and financial condition until the payment dates and amount of payment have been established. The Corporation may be required to record an adjustment to reflect any negative impact. 10 11 In January 1997, the Corporation established a line of credit with Drummond in the amount of $0.3 million which was increased to $0.8 million in June 1997. As at December 31, 1997, the Corporation had settled an aggregate of approximately $2.2 million of its debt to Logan and MFC in consideration of the issuance of a total of 217,500 shares of Preferred Stock. Net cash used in operating activities was $1.0 million for the year ended December 31, 1997, compared to cash provided of $0.3 million for the 11 months ended December 31, 1996. Operating activities used cash primarily as a result of the loss from the operation and disposition of the McCook Facility. In the year ended December 31, 1997, an increase in accounts and notes receivables used cash of $0.2 million, compared to a decrease in accounts and notes receivable providing cash of $3.1 million in the period ended December 31, 1996. A decrease in cash held in escrow provided cash of $0.6 million in the year ended December 31, 1997, compared to an increase in cash held in escrow using cash of $0.3 million in the 11 months ended December 31, 1996. Investing activities provided cash of $32,000 in the period ended December 31, 1996, as a result of the sale of property and equipment. Financing activities provided cash of $0.5 million in the year ended December 31, 1997, compared to using cash of $25,000 in the 11 months ended December 31, 1996, primarily as a result of a net increase in indebtedness during the year ended December 31, 1997. In February 1998, the Corporation issued and sold 250,000 shares of Preferred Stock for proceeds of $2.5 million. The Corporation believes that its cash on hand and lines of credit should enable the Corporation to meet its ongoing liquidity requirements. The Corporation anticipates that it may require substantial capital to pursue current and future acquisitions of businesses and/or operating assets and anticipates that such capital will be provided through debt and/or equity financing. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The consolidated financial statements and supplementary data required with respect to this Item 8, and as listed in Item 14 of this annual report, are included in this annual report commencing on page 15. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. PART III -------- ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Incorporated by reference from the Corporation's definitive proxy statement to be filed within 120 days of the end of the Corporation's fiscal year. 11 12 ITEM 11. EXECUTIVE COMPENSATION Incorporated by reference from the Corporation's definitive proxy statement to be filed within 120 days of the end of the Corporation's fiscal year. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Incorporated by reference from the Corporation's definitive proxy statement to be filed within 120 days of the end of the Corporation's fiscal year. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Incorporated by reference from the Corporation's definitive proxy statement to be filed within 120 days of the end of the Corporation's fiscal year. PART IV ------- ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K INDEX (a) (1) FINANCIAL STATEMENTS Independent Auditors' Report Report of Independent Auditors Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Changes in Shareholders' Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements (2) FINANCIAL STATEMENT SCHEDULES Independent Auditors' Report Schedule II - Valuation and Qualifying Accounts All other schedules have been omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. (3) LIST OF EXHIBITS 2.1 Agreement and Plan of Merger dated October 1, 1996 between ICHOR Corporation and PDG Remediation, Inc. Incorporated by reference to the Corporation's Schedule 14C dated September 17, 1996. 12 13 3.1 Articles of Incorporation.(1) 3.2 Certificate of Designations. Incorporated by reference to the Corporation's Form 8-K dated March 12, 1998. 3.3 Bylaws.(1) 10.1 Amended 1994 Stock Option Plan.(2) 10.2 1995 Qualified Incentive Stock Option Plan.(2) 10.3 Amended and Restated Employment Agreement for John M. Musacchio dated February 1, 1997. 10.4 Purchase Agreement dated as of January 31, 1996 between Specialty Environmental, Inc. and the Corporation.(1) 10.5 Purchase Agreement dated December 13, 1996 between the Corporation and Logan International Corp.(3) 10.6 Order of Court of the Honorable Jack B. Schmeitterer of the United States Bankruptcy Court of the Northern District of Illinois, Eastern Division approving the sale of assets of Enviropur Waste Refining and Technology, Inc. to Ortek Inc. (formerly BC Ventures Limited).(3) 10.7 Loan Agreement dated January 15, 1997 between Ortek Inc. and Volendam Investments Limited.(4) 10.8 Loan Agreement dated January 15, 1997 among Drummond Financial Corporation, the Corporation and ICHOR Services, Inc.(4) 10.9 Amendment to Loan Agreement dated June 30, 1997 among Drummond Financial Corporation, the Corporation and ICHOR Services, Inc. 10.10 Stock Purchase Agreement between the Corporation and Evergreen Holding Inc. dated December 23, 1997. Incorporated by reference to the Corporation's Form 8-K dated January 7, 1998. 10.11 Debt Settlement Agreement between Logan International Corp. and the Corporation dated September 30, 1997.(5) 10.12 Debt Settlement Agreement between Logan International Corp. and the Corporation dated February 20, 1998.(5) 10.13 Debt Settlement Agreement between Sutton Park International Ltd. and the Corporation dated February 20, 1998.(5) 10.14 Subscription Agreement between Constable Investments Ltd. and the Corporation dated February 26, 1998.(5) 10.15 Subscription Agreement between Conqueror Holdings Ltd. and the Corporation dated February 26, 1998. 10.16 Subscription Agreement between Sutton Park International Ltd. and the Corporation dated February 26, 1998.(5) 13 14 10.17 Subscription Agreement between Zellstoff-und Papierfabrik Rosenthal GmbH and the Corporation dated February 26, 1998. 21 List of subsidiaries of the Registrant. 23 Consent of Independent Auditors. 27 Article 5 - Financial Data Schedule for the year ended December 31, 1997. ------------------ (1) Incorporated by reference to the Corporation's Form 10-K dated January 31, 1996. (2) Incorporated by reference to the Corporation's Definitive Schedule 14A dated July 8, 1996. (3) Incorporated by reference to the Corporation's Form 8-K dated December 17, 1996. (4) Incorporated by reference to the Corporation's Form 10-K dated December 31, 1996. (5) Incorporated by reference to a Schedule 13D\A dated March 13, 1998. (b) REPORTS ON FORM 8-K None. 14 15 - ------------------------------------------------------------------------------ PETERSON SULLIVAN P.L.L.C. 601 UNION STREET SUITE 2300 SEATTLE WA 98101 (206) 382-7777 FAX 382-7700 CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITORS' REPORT To the Board of Directors and Shareholders Ichor Corporation and Subsidiaries We have audited the consolidated balance sheets of Ichor Corporation and Subsidiaries as of December 31, 1997 and 1996, and the related consolidated statements of operations, changes in shareholders' equity, and cash flows for the year ended December 31, 1997 and the eleven months ended December 31, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. The consolidated statements of operations, changes in shareholders' equity, and cash flows of Ichor Corporation and Subsidiaries for the year ended January 31, 1996, were audited by other auditors whose report dated March 8, 1996, (except for Note 3, the date of which was April 25, 1996), expressed an unqualified opinion on those statements. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Ichor Corporation and Subsidiaries as of December 31, 1997 and 1996, and the results of their operations and their cash flows for the year ended December 31, 1997 and the eleven months ended December 31, 1996, in conformity with generally accepted accounting principles. /s/ Peterson Sullivan P.L.L.C. February 28, 1998 Seattle, Washington 15 16 ERNST & YOUNG LLP One Oxford Centre Phone 412 644 7800 Pittsburgh, Pennsylvania 15219 REPORT OF INDEPENDENT AUDITORS The Board of Directors and Stockholders Ichor Corporation We have audited the accompanying consolidated statements of operations, stockholder's equity, and cash flows of Ichor Corporation (formerly PDG Remediation, Inc.) (the "Corporation") for the year ended January 31, 1996. Our audit also included the financial statement schedule in the index at Item 14(a). These financial statements and schedule are the responsibility of the Corporation's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated results of their operations and their cash flows for the year ended January 31, 1996, in conformity with generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. /s/ Ernst & Young LLP Pittsburgh, Pennsylvania March 8, 1996, except for Note 3, as to which the date is April 25, 1996 Ernst & Young LLP is a member of Ernst & Young International, Ltd. 16 17 ICHOR CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 1997 and 1996 (In Thousands of Dollars) 1997 1996 ---------- ---------- ASSETS Current Assets Cash $ 127 $ 628 Cash held in escrow 617 1,254 Accounts and notes receivable, less allowance for doubtful accounts of $562 and $560, respectively 332 829 Note receivable 680 - Advances to an affiliate 270 - Prepaid expenses and other assets - 106 Net assets of discontinued environmental remediation services segment - 71 Net assets of discontinued waste oil recycling facility - 2,652 ---------- ---------- Total current assets 2,026 5,540 Other Assets 2 42 ---------- ---------- $ 2,028 $ 5,582 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts payable $ 39 $ 531 Accrued interest and other liabilities 363 274 Advances from an affiliate 780 420 Current portion of long-term debt 757 454 ---------- ---------- Total current liabilities 1,939 1,679 Long-Term Debt, less current portion - 1,916 ---------- ---------- Total liabilities 1,939 3,595 Shareholders' Equity Preferred stock, $.01 par value, 5,000,000 shares authorized; series 1, nonvoting; shares issued and outstanding 217,500 at December 31, 1997 and none at December 31, 1996 2 - Common stock, $.01 par value; 30,000,000 shares authorized; shares issued 4,970,320 at December 31, 1997 and 1996 50 50 Additional paid-in capital on preferred stock 2,173 - Additional paid-in capital on common stock 5,743 5,743 Retained deficit (7,808) (3,754) ---------- ---------- 160 2,039 Less cost of 62,800 and 47,600 shares of common stock held in treasury at December 31, 1997 and 1996, respectively (71) (52) ---------- ---------- 89 1,987 ---------- ---------- $ 2,028 $ 5,582 ========== ========== See Notes to Consolidated Financial Statements 17 18 ICHOR CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended December 31, 1997, Eleven Months Ended December 31, 1996 and Year Ended January 31, 1996 (In Thousands of Dollars, Except for Per Share Amounts) December 31, December 31, January 31, 1997 1996 1996 ------------ ------------ ----------- Selling, general and administrative expenses $ (418) $ (1,042) $ (791) Other income (expense) Interest expense (613) (423) (406) Other 6 145 14 ------------ ------------ ----------- (607) (278) (392) ------------ ------------ ----------- Loss from continuing operations (1,025) (1,320) (1,183) Discontinued operations (any tax benefits from losses are fully reserved; any taxes associated with gains are offset by tax losses) Loss from operation of environmental remediation services segment (489) (169) (67) Gain on sale of environmental remediation services segment 59 - - Loss from operation of waste oil recycling facility (1,224) - - Loss on sale of waste oil recycling facility (1,375) - - Gain (loss) from operation of soil remediation facility - 90 (768) Loss on disposal of soil remediation facility - - (840) ------------ ------------ ----------- Loss from discontinued operations (3,029) (79) (1,675) ------------ ------------ ----------- Net loss $ (4,054) $ (1,399) $ (2,858) ============ ============ =========== Basic earnings (loss) per common share Loss from continuing operations $ (.21) $ (.51) $ (.48) Discontinued operations (.62) (.03) (.68) ------------ ------------ ----------- Net loss $ (.83) $ (.54) $ (1.16) ============ ============ =========== See Notes to Consolidated Financial Statements 18 19 ICHOR CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY Year Ended December 31, 1997, Eleven Months Ended December 31, 1996 and Year Ended January 31, 1996 (In Thousands of Dollars)
--------------Common Stock---------------- -----------Preferred Stock-------------- Additional Additional Retained Number of Paid-in Treasury Number of Paid-in Earnings Shares Par Value Capital Stock Shares Par Value Capital (Deficit) Total --------- --------- ---------- -------- --------- --------- ---------- --------- ------- Balance at January 31, 1995 1,870,320 $ 19 $ 2,473 $ - - $ - $ - $ 503 $ 2,995 Net loss for year ended January 31, 1996 - - - - - - - (2,858) (2,858) Common shares sold in initial public offering 600,000 6 2,145 - - - - - 2,151 Warrants sold in initial public offering - - 100 - - - - - 100 Issuance of 100,000 warrants - - 50 - - - - - 50 --------- --------- ---------- -------- --------- --------- ---------- --------- ------- Balance at January 31, 1996 2,470,320 25 4,768 - - - - (2,355) 2,438 Net loss for eleven months ended December 31, 1996 - - - - - - - (1,399) (1,399) Common shares issued in the acquisition of wholly-owned subsidiary 2,500,000 25 975 - - - - - 1,000 Repurchase of 47,600 shares of common stock held in treasury (47,600) - - (52) - - - - (52) --------- --------- ---------- -------- --------- --------- ---------- --------- ------- Balance at December 31, 1996 4,922,720 50 5,743 (52) - - - (3,754) 1,987 Net loss for year ended December 31, 1997 - - - - - - - (4,054) (4,054) Conversion of debt from related parties to preferred stock - - - - 217,500 2 2,173 - 2,175 Repurchase of 15,200 shares of common stock held in treasury (15,200) - - (19) - - - - (19) --------- --------- ---------- -------- --------- --------- ---------- --------- ------- Balance at December 31, 1997 4,907,520 $ 50 $ 5,743 $ (71) 217,500 $ 2 $ 2,173 $ (7,808) $ 89 ========= ========= ========= ======== ========= ========= ========== ========= =======
See Notes to Consolidated Financial Statements 19 20 ICHOR CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, 1997, Eleven Months Ended December 31, 1996 and Year Ended January 31, 1996 (In Thousands of Dollars) December 31, December 31, January 31, 1997 1996 1996 ------------ ------------ ----------- Cash Flows from Operating Activities Net loss $ (4,054) $ (1,399) $ (2,858) Adjustments to reconcile net income (loss) to cash flows from operating activities Provision for disposal of discontinued soil remediation operation - - 840 Provision for losses on accounts receivable 2 40 387 Gain on settlement of insurance company accrual - (149) - Other - 14 (8) Changes in current assets and liabilities Cash held in escrow 637 (286) (817) Accounts and notes receivable (185) 3,077 5,216 Advances to an affiliate (270) - - Repayments to former parent - (117) (541) Prepaid expenses and other assets 106 (40) (142) Accounts payable (492) (530) 23 Advances from an affiliate 360 193 - Net assets of discontinued operations 2,723 74 (82) Other accrued liabilities 89 (597) 202 Other 40 (21) (3) ------------ ------------ ----------- Net cash provided by (used in) operating activities (1,044) 259 2,217 Cash Flows from Investing Activities Proceeds from sale of property and equipment - 32 - Cash Flows from Financing Activities Proceeds from issuance of common shares - - 2,151 Proceeds from warrants sold - - 100 Purchase of stock held in treasury (19) (52) - Proceeds from debt 750 51 3,676 Principal payments on debt (188) (24) (7,789) ------------ ------------ ----------- Net cash provided by (used in) financing activities 543 (25) (1,862) ------------ ------------ ----------- Increase (decrease) in cash (501) 266 355 Cash, beginning of year 628 362 7 ------------ ------------ ----------- Cash, end of year $ 127 $ 628 $ 362 ============ ============ =========== See Notes to Consolidated Financial Statements 20 21 ICHOR CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands of Dollars, Except for Per Share Amounts) Note 1. The Corporation and Summary of Significant Accounting Policies History - ------- Prior to February 1995, Ichor Corporation and Subsidiaries ("the Corporation"), was a wholly-owned subsidiary of PDG Environmental, Inc. ("PDGE") when 1,000,000 shares of the Corporation's common stock and 1,000,000 warrants were sold in an initial public offering. The Corporation sold 600,000 newly issued common shares and 1,000,000 warrants and received net proceeds of approximately $2,251. PDGE sold 400,000 shares of the Corporation's common stock it held which reduced its interest to approximately 59.5%. The warrants entitle the holder to purchase one share of common stock for $6 and will expire on February 8, 2000. Effective July 31, 1996, Drummond Financial Corporation ("Drummond") acquired PDGE's interest in the Corporation. The acquisition was part of a plan by Drummond's parent to financially restructure Drummond's loans outstanding to other entities. As part of this acquisition, the Corporation changed its year end to December 31 from January 31. In December 1996, another subsidiary of Drummond's parent, Logan International Corporation ("Logan"), acquired a 50.3% interest in the Corporation as part of a purchase of a subsidiary which owned a waste oil recycling facility in Illinois. At this point, Drummond's interest was reduced to 29.6%. In 1997, Logan converted $1,425 of its debt from the Corporation into 142,500 shares of the Corporation's preferred stock, series 1. In addition, another subsidiary of Logan's and Drummond's parent converted a $750 advance into 75,000 shares of preferred stock, series 1. At December 31, 1997, the Corporation had a receivable from Logan of $270 and owed $780 and $420 at December 31, 1997 and 1996, respectively, to Drummond. Business Activities - ------------------- At the beginning of 1997, the Corporation was involved in the environmental industry, providing environmental remediation services to the public and private sectors, and operating the recycling waste oil facility. As discussed in Note 2, the Corporation sold both of these operations in 1997. The Corporation is currently negotiating a transaction to acquire a business or operating assets from a European company that manufactures machine tools. Principles of Consolidation - --------------------------- The consolidated financial statements include the accounts of the Corporation and its subsidiaries. Significant intercompany accounts and transactions have been eliminated. Unless otherwise stated, all notes relate to continuing operations. 21 22 Note 1. (Continued) Cash - ---- Cash balances are occasionally in excess of federally insured amounts. Cash held in escrow represents amounts which are subject to withdrawal restrictions and relate to the credit arrangements described in Note 4. The Corporation expects the cash to be released in 1998. Environmental Conservation - -------------------------- Liabilities for environmental conservation are recorded when it is probable that obligations have been incurred and the amounts can be reasonably estimated. Any potential recoveries of such liabilities are to be recorded when there is an agreement with a reimbursing entity. Taxes on Income - --------------- The Corporation accounts for income taxes under an asset and liability approach that requires the recognition of deferred tax assets and liabilities for expected future tax consequences of events that have been recognized in the Corporation's financial statements or tax returns. In estimating future tax consequences, the Corporation generally considers all expected future events other than enactments of changes in the tax laws or rates. Earnings Per Share - ------------------ In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("FAS 128") which is effective for interim and annual financial statements for periods ending after December 15, 1997. Under FAS 128, basic and diluted earnings per share are to be presented. Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding in the period. Diluted earnings per share takes into consideration common shares outstanding (computed under basic earnings per share) and potentially dilutive common shares. The conversion of the convertible preferred stock, and the stock options and warrants have not been reflected as exercised for the purposes of computing earnings or loss per share since the conversion of such stock or exercise of such options and warrants would be antidilutive. The weighted average number of shares was 4,912,643, 2,585,590, and 2,456,000 for the year ended December 31, 1997, the eleven months ended December 31, 1996, and the year ended January 31, 1996. The adoption of FAS 128 did not result in a restatement of earnings per share in prior periods. Preferred Stock - --------------- The entire redemption value of preferred shares, series 1, can be exchanged for common stock at 90% of the common stock average market price (as defined). Redemption value is $10 per share and shares are redeemable only by the Corporation with a 30 day notice. The preferred shares, series 1, have a liquidation preference over other stock to the extent of the redemption value plus unpaid dividends. This stock has an annual cumulative dividend rate of 5%, payable quarterly and no dividends may be paid on common stock if preferred share dividends are in arrears. Because the 22 23 Note 1. (Continued) shares were issued effective December 31, 1997, no preferred dividends were paid and there are no preferred dividends in arrears. Depreciation - ------------ Property and equipment are depreciated over the estimated useful lives of the assets using the straight-line method. Permits were amortized over a 40-year period representing their estimated economic lives. 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 amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Stock-Based Compensation - ------------------------ Statement of Financial Accounting Standards No. 123, "Accounting for Stock- Based Compensation," encourages, but does not require, companies to record compensation cost for stock-based employee compensation plans at fair value. The Corporation has chosen to account for stock-based compensation using Accounting Principles Board Opinion No. 25 ("APB 25"), "Accounting for Stock Issued to Employees." Accordingly, compensation cost for stock options is measured as the excess, if any, of the quoted market price of the Corporation's stock at the date of the grant over the amount an employee is required to pay for the stock. There was no compensation expense under APB 25. Reclassifications - ----------------- Certain reclassifications have been made to the prior year financial statements to combine the assets of discontinued operations and net these assets with the related liabilities. New Accounting Standards - ------------------------ Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income," is effective for years beginning after December 15, 1997. The primary objective of this statement is to report and disclose a measure ("Comprehensive Income") of all changes in equity of a company that result from transactions and other economic events in a period other than transactions with owners. The Corporation does not anticipate that the statement will have a significant impact on its financial statements. Statement of Financial Accounting Standards No. 131, "Disclosure About Segments of an Enterprise and Related Information," is effective for years beginning after December 15, 1997. This statement requires use of the "management approach" model for segment reporting. The management approach model is based on the way a company's management organizes segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in 23 24 Note 1. (Continued) which management disaggregates a company. The Corporation does not anticipate that the adoption of the statement will have a significant impact on its financial statements other than potentially providing more financial statement disclosures. Statement of Financial Standards No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits," standardizes the disclosure requirements for pensions and other postretirement benefits. This statement requires additional information on changes in benefit obligations and fair values of plan assets. It revises prior standards and is effective for years beginning after December 15, 1997. Because the Corporation does not currently have such employee benefit plans nor intends to initiate any in the near-term, there should not be an impact on its financial statements. Note 2. Discontinued Operations Environmental Remediation Services Segment - ------------------------------------------ The Corporation sold its environmental remediation services segment effective April 30, 1997. The transaction was accounted for as a discontinued operation for the year ended December 31, 1997. Certain assets were sold and the purchaser assumed liabilities related to those assets. As part of the sale transaction, the Corporation retained cash, receivables, accounts payable and other accrued liabilities that had been part of the segment. The segment was sold for $147, which was paid in cash. Contract revenue for this segment was $748 in the year ended December 31, 1997, $4,043 in the eleven months ended December 31 ,1996, and $328 in the year ended January 31, 1996. Net assets associated with this segment at December 31, 1996, were property and equipment of $132 and long-term debt of $61, resulting in net assets of $71. Waste Oil Recycling Facility - ---------------------------- The waste oil recycling facility began operations in 1997 and had sales of $2,582 (68% to two major customers) for the year. However, later in the year, the Corporation decided to dispose of the facility and on December 23, 1997, the Corporation sold the subsidiary, including all of its assets and liabilities (except for certain debts payable to affiliated entities). The facility was sold for $1,000 with a down payment of $320 and a note for $680 due December 23, 1998, at 2.5% and secured by a letter of credit issued by a bank. Since the note is due in 1998, no interest was imputed and its fair value is estimated at $680. 24 25 Note 2. (Continued) Net assets associated with this segment at December 31, 1996, are summarized as follows: Property and equipment $ 3,542 Other assets 76 Environmental liabilities (800) Other liabilities (166) --------------- $ 2,652 =============== The Corporation originally acquired this subsidiary in December 1996 for 2.5 million shares of common stock (valued at $1.0 million) and a promissory note in the amount of $1,425. The cost of the assets acquired was $3,619, and $1,194 in liabilities were assumed. The acquisition was accounted for as a purchase. Soil Remediation Facility - ------------------------- In prior years, the Corporation provided services associated with the decontamination of petroleum contaminated soils in Florida. The Corporation developed a plan during 1996 to exit this segment of the remediation industry which was accounted for as a discontinued operation as of January 31, 1996. Note 3. Accounts Receivable and Indemnifications It is the Corporation's policy not to require collateral with respect to outstanding receivables. The Corporation continuously reviews the creditworthiness of customers and, when necessary, requests collateral. The Corporation had contracts to provide services involving the remediation of underground storage tank sites for private customers in Florida. Receivables from this Florida activity totaled $740 and $771 at December 31, 1997 and 1996, respectively. The Corporation also was a subcontractor to other remediation companies in Florida which were providing services to the state. In certain circumstances, the Corporation provided an indemnification for any amounts not paid to the prime contractor. At December 31, 1997 and 1996, the Corporation provided such indemnifications for $1,711 and $4,596, respectively. The Corporation has provided for estimated potential future losses associated with these indemnifications as a part of the allowance for doubtful accounts. Note 4. Credit Arrangements The Corporation had two credit arrangements with the same company which provided funding for certain of its remediation activities in Florida during prior years. Receivables relating to a state-sponsored remediation program were financed at 100%. Any outstanding balances under these credit arrangements are to be repaid as the financed receivables are collected. Under one of the arrangements, the Corporation has outstanding balances of $358 and $750 at December 31, 1997 and 1996 respectively, with interest accruing at 2% above the prime rate. 25 26 Note 4. (Continued) The amounts outstanding under the second arrangement were $2,605 and $4,000 at December 31, 1997 and 1996, respectively. In connection with obtaining this financing, the Corporation issued to the creditor a warrant to purchase 100,000 shares of its common stock at an exercise price of $1.37 per share. The warrant will expire on January 1, 1999 and the Corporation recorded $50 as the market value of the warrant during the year ended January 31, 1996. The interest rate on the outstanding balance under this arrangement is the prime rate plus 3%. Both arrangements required that the Corporation deposit a portion of the borrowings into an escrow account to cover potential nonpayment of receivable balances. The total amounts deposited were $617 and $1,254 at December 31, 1997 and 1996, respectively. Since 1996, no additional advances have been allowed under either arrangement. Note 5. Long-Term Debt 1997 1996 ----------- ----------- Note payable to Logan, due December 1999, interest at 8% payable monthly, collateralized by certain assets of the Corporation's subsidiaries. Interest due on this loan for 1997 was $114, which was all waived by Logan. This note was converted to preferred stock in 1997 which is a noncash transaction. $ - $ 1,425 Amounts due to an insurance company in monthly payments of $38. No interest is charged on this debt. No interest has been imputed since the amount is not material. Payments are in arrears so the entire balance is considered due in 1998. 757 945 ----------- ----------- 757 2,370 Less current portion (757) (454) ----------- ----------- $ - $ 1,916 =========== =========== The Corporation paid approximately $541, $442, and $643 for interest expense during the year ended December 31, 1997, the eleven months ended December 31, 1996, and the year ended January 31, 1996. The fair value of the note payable to Logan was estimated to approximate the recorded value. The fair value of the amount due to an insurance company is estimated to be $743 and $895 at December 31, 1997 and 1996, respectively. Fair values are based on the terms of the related debt and assume all remaining payments will be made in accordance with the o6riginal settlement terms. 26 27 Note 6. Income Taxes The reconciliation of income tax on income from continuing operations computed at the federal statutory rates to income tax expense is as follows: Eleven Year Ended Months Ended Year Ended December 31, December 31, January 31, 1997 1996 1996 ------------ ------------ ----------- Tax at statutory rate $ (349) $ (449) $ (402) Increase in net operating loss carryover 377 832 400 Other (28) (383) 2 ------------ ------------ ----------- $ - $ - $ - ============ ============ =========== The significant components of the Corporation's deferred tax assets as of December 31, 1997 and 1996, are as follows: 1997 1996 ------------ ------------ Accounts receivable allowance $ 191 $ 213 Net operating loss carryforwards 2,999 1,732 ------------ ------------ Net deferred tax assets before valuation allowance 3,190 1,945 Valuation allowance for deferred tax assets (3,190) (1,945) ------------ ----------- Net deferred tax assets $ - $ - ============ =========== The Corporation had net operating loss carryforwards of approximately $8,800 and $4,600 at December 31, 1997 and 1996, respectively. Of the $8,800 carryover as of December 31, 1997, $500 expires in 2004, $1,800 expires in 2010, $2,300 expires in 2011, and $4,200 expires in 2012. The Corporation's utilization of the losses is subject to limitation due to ownership and operational changes, except those that expire in 2012. Note 7. Stock Option Plans 1994 Amended Stock Option Plan - ------------------------------ The Corporation maintains a stock option plan which provides for the issuance of up to 350,000 shares of the Corporation's common stock to employees and non-employee directors. 27 28 Note 7. (Continued) The following table summarizes information with respect to the 1994 Amended Stock Option Plan: Weighted Average Number Exercise of Shares Price ---------------- ---------------- Outstanding at January 31, 1995 137,500 $ .75 Granted 22,500 .75 Canceled - Reusable (12,500) .75 ---------------- Outstanding at January 31, 1996 147,500 .75 Granted 42,500 1.18 Canceled - Reusable (10,500) .75 ---------------- Outstanding at December 31, 1996 179,500 .81 Granted 145,000 2.00 Canceled - Reusable (89,500) 1.10 ---------------- Outstanding at December 31, 1997 235,000 $ 1.39 ================ ================ Exercisable at December 31, 1997 115,000 $ .76 ================ ================ Reserved for future grants at December 31, 1997 115,000 ================ The weighted average fair values (per option) at date of grant for options granted during the year ended December 31, 1997, and the eleven months ended December 31, 1996, was $.65 and $1.18, respectively. Almost all options have an expiration date ten years after issuance. No options have been exercised. 1995 Qualified Incentive Stock Option Plan - ------------------------------------------ The Corporation's board of directors approved a second stock option plan on August 15, 1996. This plan provides for the issuance of up to 150,000 shares of the Corporation's common stock to key employees. 28 29 Note 7. (Continued) The following table summarizes information with respect to the 1995 Qualified Incentive Stock Option Plan: Weighted Average Number Exercise of Shares Price ---------------- ---------------- Outstanding at January 31, 1996 - $ - Granted 150,000 .75 Canceled - Reusable (25,000) .75 ---------------- Outstanding at December 31, 1996 125,000 .75 Canceled - Reusable (25,000) .75 ---------------- Outstanding at December 31, 1997 100,000 $ .75 ================ ================ Exercisable at December 31, 1997 100,000 $ .75 ================ ================ Reserved for future grants at December 31, 1997 50,000 ================ The weighted average fair value (per option) at grant date for options granted during the eleven months ended December 31, 1996, was $.72. All options have an expiration date ten years after issuance. No options have been exercised. Compensation - ------------ For both the 1994 Amended Stock Option Plan and the 1995 Qualified Incentive Stock Option Plan, when options are granted, or the exercise price is adjusted, the exercise price cannot be less than the fair market value of the Corporation's common stock (as defined). In accordance with Accounting Principles Board Opinion No. 25, no compensation expense was recognized. Had compensation expense been recognized on the basis of fair value pursuant to Statement of Financial Accounting Standards No. 123, net loss and per share data would have been adjusted as follows: Eleven Months Year Ended Ended December 31, December 31, 1997 1996 ------------ ------------- Net loss - --------------------------------- As reported $ (4,054) $ (1,399) ============ ============= Pro forma $ (4,085) $ (1,551) ============ ============= Basic earnings per share data - --------------------------------- As reported $ (.83) $ (.54) ============ ============= Pro forma $ (.83) $ (.60) ============ ============= The fair value of each option granted is estimated on the grant date using the Black Scholes model. 29 30 Note 7. (Continued) The assumptions used in calculating fair value are as follows: Eleven Months Year Ended Ended December 31, December 31, 1997 1996 ------------ ------------- Risk-free interest rate 6.0% 5.0% Expected life of the options 3 years 10 years Expected volatility 101.2% 111.5% Expected dividend yield 0.0% 0.0% Note 8. Contingencies The Corporation has been named as a defendant in a purported class action lawsuit filed in U.S. Federal Court involving all persons and entities who purchased the Corporation's common stock from February 9, 1995, the effective date of the initial public offering, through May 23, 1995. The plaintiff is seeking recision for the purchase of shares of common stock by members of the class or statutory damages, as well as interest, attorneys' fees and other costs and expenses. The Corporation believes that the plaintiff's allegations are without merit or that there are meritorious defenses, and intends to defend the action vigorously. However, if the plaintiff is successful, it may have an adverse effect on the Corporation. No liability has been recorded in connection with this lawsuit. No claims have been made against the Corporation with respect to environmental liabilities. However, if claims were to be made in the future, and were not paid by the current or future owners of the waste oil recycling facility (or other responsible parties), the Corporation could be deemed a responsible party and could potentially be liable. No liability has been recorded for potential environmental claims at December 31, 1997. Note 9. Subsequent Event In February 1998, the Corporation sold 250,000 convertible preferred shares, series 1, for $2,500 in cash to affiliates and others. 30 31 - ------------------------------------------------------------------------------ PETERSON SULLIVAN P.L.L.C. 601 UNION STREET SUITE 2300 SEATTLE WA 98101 (206) 382-7777 FAX 382-7700 CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITORS' REPORT To the Board of Directors and Shareholders Ichor Corporation and Subsidiaries Our report on the consolidated financial statements of Ichor Corporation and Subsidiaries is included on page 15 of this Form 10-K. In connection with our audits of such financial statements, we have also audited the related financial statement schedule listed in Item 14 of this Form 10-K. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein. /s/ Peterson Sullivan P.L.L.C. February 21, 1998 Seattle, Washington 31 32 ICHOR CORPORATION AND SUBSIDIARIES SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS Year Ended December 31, 1997, Eleven Months Ended December 31, 1996 and Year Ended January 31, 1996 (In Thousands of Dollars) Additions -------------------- Balance at Charged Balance at beginning Charged to other close of period to income accounts Deductions of period ---------- --------- -------- ---------- ---------- Year Ended December 31, 1997 (3) Allowance for doubtful accounts $ 690 $ 2 $ - $ 130 $ 562 ========= ========= ========= ========== ========= Eleven Months Ended December 31, 1996 (1) (2) Allowance for doubtful accounts $ 724 $ 40 $ 130 $ 204 $ 690* ========= ========= ========= ========== ========= Year Ended January 31, 1996 (2) Allowance for doubtful accounts $ 307 387 $ - $ (30) $ 724 ========= ========= ========= ========== ========= (1) Allowance for uncollectibility to reflect the fair value of receivables purchased; recorded at the date of acquisition of the waste oil recycling facility. (2) Uncollectible accounts written off, net of recoveries. (3) Allowance for uncollectibility sold in conjunction with sale of waste oil recycling facility. * The consolidated balance sheet shows the allowance for doubtful accounts to be $560 (instead of $690). This is because of $130 was reclassified to "net assets of discontinued waste oil recycling facility" at December 31, 1996. 32 33 SIGNATURES ---------- Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: March 25, 1998 ICHOR CORPORATION By: /s/ Michael J. Smith ------------------------------ Michael J. Smith, President, Chief Financial Officer and Treasurer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. /s/ Michael J. Smith March 25, 1998 - ------------------------------ Michael J. Smith President, Chief Financial Officer, Treasurer and Director /s/ Roy Zanatta March 25, 1998 - ------------------------------ Roy Zanatta Secretary and Director /s/ John Musacchio March 25, 1998 - ------------------------------ John Musacchio Director /s/ Leonard Petersen March 25, 1998 - ------------------------------ Leonard Petersen Director /s/ Young-Soo Ko March 25, 1998 - ------------------------------ Young-Soo Ko Director /s/ Jae-Sun Lee March 25, 1998 - ------------------------------ Jae-Sun Lee Director 33 34 EXHIBIT INDEX ------------- Exhibit Number Description -------------- ----------- 2.1 Agreement and Plan of Merger dated October 1, 1996 between ICHOR Corporation and PDG Remediation, Inc. Incorporated by reference to the Corporation's Schedule 14C dated September 17, 1996. 3.1 Articles of Incorporation.(1) 3.2 Certificate of Designations. Incorporated by reference to the Corporation's Form 8-K dated March 12, 1998. 3.3 Bylaws.(1) 10.1 Amended 1994 Stock Option Plan.(2) 10.2 1995 Qualified Incentive Stock Option Plan.(2) 10.3 Amended and Restated Employment Agreement for John M. Musacchio dated February 1, 1997. 10.4 Purchase Agreement dated as of January 31, 1996 between Specialty Environmental, Inc. and the Corporation.(1) 10.5 Purchase Agreement dated December 13, 1996 between the Corporation and Logan International Corp.(3) 10.6 Order of Court of the Honorable Jack B. Schmeitterer of the United States Bankruptcy Court of the Northern District of Illinois, Eastern Division approving the sale of assets of Enviropur Waste Refining and Technology, Inc. to Ortek Inc. (formerly BC Ventures Limited).(3) 10.7 Loan Agreement dated January 15, 1997 between Ortek Inc. and Volendam Investments Limited.(4) 10.8 Loan Agreement dated January 15, 1997 among Drummond Financial Corporation, the Corporation and ICHOR Services, Inc.(4) 10.9 Amendment to Loan Agreement dated June 30, 1997 among Drummond Financial Corporation, the Corporation and ICHOR Services, Inc. 10.10 Stock Purchase Agreement between the Corporation and Evergreen Holding Inc. dated December 23, 1997. Incorporated by reference to the Corporation's Form 8-K dated January 7, 1998. 10.11 Debt Settlement Agreement between Logan International Corp. and the Corporation dated September 30, 1997.(5) 35 10.12 Debt Settlement Agreement between Logan International Corp. and the Corporation dated February 20, 1998.(5) 10.13 Debt Settlement Agreement between Sutton Park International Ltd. and the Corporation dated February 20, 1998.(5) 10.14 Subscription Agreement between Constable Investments Ltd. and the Corporation dated February 26, 1998.(5) 10.15 Subscription Agreement between Conqueror Holdings Ltd. and the Corporation dated February 26, 1998. 10.16 Subscription Agreement between Sutton Park International Ltd. and the Corporation dated February 26, 1998.(5) 10.17 Subscription Agreement between Zellstoff-und Papierfabrik Rosenthal GmbH and the Corporation dated February 26, 1998. 21 List of subsidiaries of the Registrant. 23 Consent of Independent Auditors. 27 Article 5 - Financial Data Schedule for the year ended December 31, 1997. - ------------------------- (1) Incorporated by reference to the Corporation's Form 10-K dated January 31, 1996. (2) Incorporated by reference to the Corporation's Definitive Schedule 14A dated July 8, 1996. (3) Incorporated by reference to the Corporation's Form 8-K dated December 17, 1996. (4) Incorporated by reference to the Corporation's Form 10-K dated December 31, 1996. (5) Incorporated by reference to a Schedule 13D\A dated March 13, 1998. EX-10 2 EXHIBIT 10.3 - EMPLOYMENT AGREEMENT 1 AMENDED AND RESTATED EMPLOYMENT AGREEMENT ----------------------------------------- THIS AGREEMENT effective the 1st day of February, 1997 BETWEEN: JOHN M. MUSACCHIO, a resident of Monroeville, Pennsylvania (the "Executive") AND: ICHOR CORPORATION, a Delaware corporation, with offices at 300 Oxford Drive, Monroeville, Pennsylvania, U.S.A., 15146 (the "Corporation") WHEREAS: A. The Corporation desires to continue to employ the Executive, and the Executive desires to continue his employment with the Corporation, as Chief Operating Officer ("COO"); and B. The Corporation and the Executive wish to amend the employment agreement between the Corporation and the Executive dated November 30, 1995 as set out in this amended and restated employee agreement (the "Agreement"). NOW THEREFORE, in consideration of the mutual obligations herein contained, the parties hereto, intending to be legally bound hereby, covenant and agree as follows: ARTICLE 1 EMPLOYMENT 1.1 The Corporation hereby employs the Executive to render services to the Corporation as COO. The Executive shall devote his full time and attention to rendering his services in the general management of the business of the Corporation and shall report to the President and board of directors of the Corporation or a committee or subcommittee thereof, as may be established from time to time (the "Board"). 1.2 The Executive hereby accepts such employment and agrees that he will, during the continuance hereof, devote his full time and attention and best talents and abilities to the duties of employment hereby accepted by him. 1.3 The Executive agrees to serve without additional compensation as a director or member of any committee of the Board. 2 - 2 - ARTICLE 2 TERM AND TERMINATION 2.1 The Corporation acknowledges that the term of the Executive's employment commenced on November 30, 1995 and continues at the will of the Corporation. 2.2 The Executive shall have the right to terminate this Agreement provided he gives the Corporation written notice of his intent to terminate at least six (6) months before his anticipated termination date, in which case the Executive shall be entitled to the benefits, if any, hereinafter set forth. 2.3 The Corporation may terminate the employment of the Executive at any time, without cause, at which event this Agreement shall automatically terminate in its entirety, and the Executive shall be entitled to a severance benefit of one (1) year of Annual Salary (as defined herein) (the "Severance Benefit"). The Severance Benefit shall be paid in twelve (12) consecutive equal monthly instalments beginning the first of the month following termination. Notwithstanding the above, the Corporation may terminate the Executive's employment for cause without notice or payment. ARTICLE 3 COMPENSATION 3.1 As compensation to the Executive for his performance of the services to be rendered hereunder and for his performance of all the additional obligations of employment imposed by common law or statutory law with respect to his positions and offices with the Corporation, the Corporation agrees to pay to the Executive and the Executive agrees to accept the following salary, other compensation and benefits, in addition to the other compensation and benefits provided under this Agreement: (a) During the term of this Agreement, the Corporation shall pay the Executive, in equal monthly installments, a salary at an annual rate of $165,000 or such greater rate as the President or the Board may from time to time determined (the most recent rate, annualized, being herein referred to as the "Annual Salary"). (b) As long as the Executive is an employee of the Corporation, if the Corporation awards its executive class of officers bonuses and/or additional incentive compensation, the Executive shall be entitled to equitably participate in such bonuses and/or additional incentive compensation as determined and awarded in the discretion of the Compensation Committee of the Board. (c) The Executive shall be entitled to participate, so long as he is an employee of the Corporation, in any and all of the Corporation's present or future employee benefit plans, insurance plans, and other benefits, which are generally applicable to the Corporation's executives; provided, however, that the accrual and/or receipt by the 3 - 3 - Executive of benefits under and pursuant to any such present or future employee benefit plan shall be determined and controlled by the provisions of such plan. (d) The Executive shall be entitled to retain and continue to enjoy such perquisites that he is presently receiving and those which are granted by the President or the Board to the Executive during the term of this Agreement. ARTICLE 4 COVENANT AGAINST COMPETITION 4.1 The Executive agrees that: (a) at all times during the term of this Agreement; (b) for two years after the Executive retires; and (c) during any time in which the Executive is receiving an Annual Salary from the Corporation, or the equivalent of his Annual Salary from the Corporation or any of its subsidiaries, after this Agreement has been terminated, the Executive will not directly or indirectly engage in any business which is substantially competitive with any business then actively conducted by the Corporation or any of its subsidiaries, either as owner, partner or officer, or employee of such a business, and the Executive will not consult with any such a business; provided, however, that ownership by the Executive of not more than five percent (5%) of the outstanding shares of stock of any such business listed on any national stock exchange or of not more than twenty-five percent (25%) of the stock of any such business not so listed shall not be deemed to amount to a violation of this covenant. ARTICLE 5 WITHHOLDING OF APPROPRIATE TAXES 5.1 It is understood and agreed by the parties hereto that the Corporation shall withhold appropriate taxes from compensation and with respect to any other economic benefits herein provided when such withholding is, in the reasonable judgment of the Corporation, required by law or regulation. ARTICLE 6 GENERAL 6.1 This Agreement supersedes any prior agreements or understandings, oral or written, with respect to employment of the Executive with the Corporation and constitutes the entire agreement with respect thereto. It cannot be changed or terminated orally and may be modified only by a subsequent written agreement executed by both the parties hereto. There are no representations, warranties, forms, conditions, undertakings, rights, entitlements or 4 - 4 - collateral agreements, express, implied or statutory, between the parties hereto with respect to the employment of the Executive with the Corporation, except as expressly set forth in this Agreement. 6.2 This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania. 6.3 This is a personal service agreement which may not be assigned by the Executive. Any assignment in violation of this covenant shall be null and void. 6.4 Except as otherwise provided in Section 6.3, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their successors and assigns. 6.5 If any provision of this Agreement is determined to be invalid or unenforceable in whole or in part, such invalidity or unenforceability shall attach only to such provision or part thereof and the remaining part of such provision and all other provisions hereof shall continue in full force and effect. 6.6 This Agreement may be executed in several parts and in the same form and by facsimile and such parts as so executed shall together constitute one original document, and such parts, if more than one, shall be read together and construed as if all the signing parties had executed one copy of the said agreement. IN WITNESS WHEREOF, the Executive has signed and sealed this Agreement and the Corporation has caused this Agreement to be executed by a duly authorized person and its corporate seal to be hereunto affixed the day and year first above written. Signed in the presence of ) ) /s/ Dionne M. Wiederstein ) /s/ John M. Musacchio - ----------------------------------- ) ---------------------- Name of Witness ) JOHN M. MUSACCHIO 339 Haymaker Rd. ) - ----------------------------------- ) Address of Witness ) ) Monroevile, PA 15146 ) - ----------------------------------- ) ICHOR CORPORATION By: /s/ Michael J. Smith -------------------------- Name: c/s -------------------------- Title: -------------------------- EX-10 3 EXHIBIT 10.9 - AMENDMENT TO LOAN AGREEMENT 1 AMENDMENT TO LOAN AGREEMENT WHEREAS ICHOR Corporation ("Ichor"), ICHOR Services, Inc. ("ISI") and Drummond Financial Corporation (the "Lender") entered into a loan agreement effective the 15th day of January, 1997 (the "Loan Agreement"), wherein Ichor and ISI (collectively the "Borrowers") requested that a credit facility be made available to them by the Lender and the Lender agreed to make the credit facility available to the Borrowers upon the terms and conditions set out in the Loan Agreement; and WHEREAS the Borrowers and the Lender desire to amend the Loan Agreement, in accordance with section 1.3 thereof, to reflect a change in the Principal Sum to be made available by the Lender to the Borrowers pursuant to such credit facility and have agreed to enter into this amendment agreement (the "Amendment Agreement"). NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of one dollar ($1.00) paid by the parties to each other, receipt of this sum being acknowledged by each of the parties, and other good and valuable consideration, the Borrowers jointly and severally covenant and agree with the Lender and the Lender covenants and agrees with the Borrowers as follows: 1. All capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in the Loan Agreement. 2. The definition of "Principal Sum" contained in section 1.1 of the Loan Agreement is hereby amended to delete the reference to "$250,000" and insert in its place "$750,000". 3. The Lender and the Borrowers hereby confirm and ratify the Loan Agreement as amended and modified by this Amendment Agreement. 4. Each of the Borrowers represents and warrants to the Lender as follows: (a) each of the Borrowers has taken all necessary action to authorize the creation, execution, delivery and performance of this Amendment Agreement and this Amendment Agreement has been duly executed by the Borrowers, as required, and when delivered, will, together with the Loan Agreement and Ancillary Documents, constitute legal, valid and binding obligations of the Borrowers, enforceable in accordance with their terms; (b) each of the Borrowers has to date fulfilled and will hereafter continue to fulfill each covenant, agreement and condition on its part to be performed under the Loan Agreement, as amended, and Ancillary Documents; 2 - 2 - (c) neither of the Borrowers has knowledge of the existence of any event of default or any event which, upon notice or lapse of time or both, would become an event of default under the Loan Agreement, as amended; and (d) neither of the Borrowers has entered into any amendment or supplement to the Loan Agreement other than this Amendment Agreement. 5. This Amendment Agreement is declared to be supplemental to the Loan Agreement and is to form part of and shall have the same effect as though incorporated in the Loan Agreement. 6. This Amendment Agreement may be executed in several parts in the same form and by facsimile, and such parts as so executed shall together constitute one original document, and such parts, if more than one, shall be read together and construed as if all the signing parties had executed one copy of this Amendment Agreement. 7. This Amendment Agreement will enure to the benefit of and be binding upon the parties hereto and their respective successors and assigns. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to Loan Agreement to be duly executed effective as of the date set out herein. Dated: June 30, 1997 ICHOR CORPORATION DRUMMOND FINANCIAL CORPORATION By: /s/ John M. Musacchio By: /s/ Rene Randall ------------------------------ -------------------------- Name: John Musacchio Name: R. Randall ---------------------------- -------------------------- Title: Chief Operating Officer Title: Director --------------------------- ------------------------- ICHOR SERVICES, INC. By: /s/ John M. Musacchio ------------------------------ Name: John Musacchio ---------------------------- Title: President --------------------------- EX-10 4 EXHIBIT 10.15 - SUBSCRIPTION AGREEMENT 1 SUBSCRIPTION AGREEMENT February 26 , 1998 ---- TO: PURCHASERS OF 5% CUMULATIVE REDEEMABLE CONVERTIBLE PREFERRED SHARES, SERIES 1 OF ICHOR CORPORATION MFC Merchant Bank S.A. (the "Dealer") and Ichor Corporation. (the "Corporation") entered into a purchase agreement dated for reference February 20, 1998 (the "Purchase Agreement") providing for the purchase from the Corporation of 250,000 5% Cumulative Redeemable Convertible Preferred Shares, Series 1 for an aggregate purchase price of $2,500,000 (the "Purchased Shares"). A copy of the term sheet (the "Term Sheet") outlining the features of the private placement is attached as Schedule "A" hereto. The Purchase Agreement provides that the Dealer may arrange for substituted purchasers of the Purchased Shares on a "private placement" basis, and that each substituted purchaser will enter into a subscription agreement (the "Subscription Agreement") in substantially the form of this agreement. Your acceptance of this letter, as evidenced by your signature below, will constitute your offer to the Corporation to subscribe for the Purchased Shares set forth below under the heading "Details of Subscription" on the terms and conditions contained herein. The Corporation's acceptance of your offer, as evidenced by the signature of its officer below, will constitute an agreement between you and the Corporation for you to purchase from the Corporation and for the Corporation to issue and sell to you such Purchased Shares on such terms and conditions. References below to "this Agreement" are to be read as references to the agreement resulting from the Corporation's acceptance of your offer. You are referred to below as the "Purchaser". A. SUBSCRIPTION The Purchaser subscribes for and agrees to purchase from the Corporation the Purchased Shares set forth below under the heading "Details of Subscription". The Purchaser understands that the Purchased Shares subscribed for form part of the offering made pursuant to the Purchase Agreement. B. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE CORPORATION By accepting this offer, the Corporation represents, warrants, covenants and agrees as follows: 1. The Corporation is a corporation duly organized and is validly subsisting under the laws of Delaware. 2. The Corporation has all necessary corporate power to own or lease its property and to carry on its business as presently carried on by it and to execute and deliver this Agreement and the Purchased Shares. 2 2 3. This Agreement has been duly authorized by all necessary corporate action by the Corporation and constitutes legal, valid and binding obligations of the Corporation. 4. The Corporation's common shares are quoted through the National Association of Securities Dealers Authorized Distribution System SmallCap market and the Corporation will maintain such status, without default, until the Closing Date. 5. The Corporation's annual audited financial statements for the period ended December 31, 1996 and its unaudited interim financial statements for the period ended September 30, 1997 were, at the respective dates of issue or publication, true and correct in all material respects and were prepared in accordance with and complied in all material respects with the laws, regulations, policy statements and rules applicable to such documents. 6. There has been no material or adverse change in the affairs of the Corporation since December 31, 1996, and no material or adverse fact exists in relation to the proposed issue of the Purchased Shares, which in either case is not generally disclosed. C. CONDITIONS The Purchaser's obligation to complete the purchase of the Purchased Shares contemplated hereby shall be conditional upon the fulfilment either on or before the Closing Date of the following conditions: (a) the Purchased Shares will be validly and duly authorized, created and issued by the Corporation; (b) the representations and the warranties contained herein are true and correct and all covenants relating to the Corporation herein contained and required to be performed and complied with have been performed and complied with by the Corporation; and (c) no action or proceeding in the United States shall be pending or threatened by any person, company, firm, governmental authority, regulatory body or agency to cease trade, enjoin or prohibit: (i) the sale of the Purchased Shares to the Purchaser as contemplated hereby; or (ii) the right of the Corporation to issue shares on the exercise by the Purchaser of its right of conversion contained in the Purchased Shares. 3 3 D. DELIVERY AND PAYMENT Subject to acceptance by the Corporation of this Agreement, delivery and payment for the Purchased Shares shall be completed at the offices of the Dealer at 1:00 p.m. (local time) on or before February 27, 1998 or such other date, time and place as may be agreed upon in writing by the Corporation and the Dealer (the "Closing Date"). The Purchaser hereby appoints the Dealer as its agent to represent it at the closing for the purposes of all closing matters including, without limitation, to execute receipts and documents as its agent and to accept delivery of documents and the Purchased Shares and hereby irrevocably authorizes the Dealer to extend such period and modify or waive such terms and conditions as may be contemplated herein or in the Purchase Agreement as the Dealer deems appropriate in its absolute discretion. The Purchased Shares subscribed for by the Purchaser will be available for delivery on the Closing Date to the Dealer by way of a certificate representing the Purchased Shares registered in the name of the Purchaser, against delivery to the Corporation of the Purchase Price for the Purchased Shares by certified cheque or bank draft in U.S. funds or other electronic form of payment satisfactory to the Corporation, provided that, in the event that the certificates representing the Purchased Shares are not available for physical delivery on the Closing Date, the Purchase Price shall be paid to the Corporation pending delivery of the Purchased Shares. If the certificates representing the Purchased Shares are not delivered by March 31, 1998, the Dealer may agree to one or more extensions of time for delivery of the certificates and may modify or waive such terms relating thereto as the Dealer deems appropriate in its absolute discretion, or may, at its option, elect to terminate this agreement whereupon the Purchase Price paid by the Purchaser shall be returned and the Purchaser shall have no further obligations hereunder. E. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER The Purchaser represents, warrants, covenants and agrees as follows: 1. The Purchased Shares are not being purchased as a result of any material information about the Corporation's affairs which has not been publicly disclosed 2. The Purchaser has not received any general solicitation or advertisement, article, notice or other communication nor has it become aware of any advertisement in printed media of general and regular paid circulation, radio and television with respect to the distribution of the Purchased Shares. 3. The Purchaser acknowledges that the Corporation and its officers and directors are relying upon the representations and warranties made by the Purchaser. 4. The Purchased Shares being subscribed for and any rights the Purchaser may acquire as a Purchased Shares holder of the Corporation will be acquired for investment purposes and not with a view to a subsequent offering, sale or distribution thereof and the Purchaser may not participate, directly or indirectly, in any plan or scheme involving the resale or distribution of the Purchased Shares or any interest therein. 5. The Purchaser has not received or been provided with an offering memorandum or similar document, its decision to enter into this Agreement and to purchase the Purchased Shares has 4 4 not been made upon any verbal or written representation as to fact or otherwise by or on behalf of the Dealer or any other person and its decision to enter into this Agreement and purchase the Purchased Shares set forth herein is based entirely upon information concerning the Corporation which is publicly available and the Term Sheet. 6. The Purchaser has knowledge and experience in financial and business affairs as to be capable of evaluating the merits and risks of the investment and is able to bear the economic risk of loss of the investment. 7. The Purchaser has been independently advised as to and is aware of the applicable restrictions on the resale of the Purchased Shares and any securities issuable upon the conversion thereof under the securities legislation in the jurisdiction in which the Purchaser may subsequently trade such securities, and is aware of the risks and other characteristics of the Purchased Shares and of the fact that the Purchaser may not be able to resell such securities except in accordance with applicable securities legislation and regulatory policies and that the certificates representing such securities will contain a legend to that effect and the Purchaser agrees to comply with, and not in any manner violate, any applicable securities laws, rules or regulations in connection with the purchase, sale, transfer or other disposition of any of such securities. 8. The Purchaser will execute and deliver all documentation as may be required by applicable securities legislation to permit the purchase of the Purchased Shares on the terms and conditions as set forth herein and will comply with all applicable hold periods and other resale restrictions as are prescribed by applicable securities legislation. 9. Any questionnaire, statement, certificate, instrument or other documents delivered by the Purchaser in connection herewith will be considered to form part of and be incorporated into this Agreement with the same effect as if each constituted a representation and warranty or covenant of the Purchaser to the Corporation. 10. The Corporation has not provided the Purchaser with investment, legal or financial advice or acted as an advisor with respect to the purchase of the Purchased Shares and the Purchaser is relying solely on its own professional advisors, if any, for any such advice. F. RESTRICTIONS UPON TRANSFER 1. The Purchaser understands that the Purchased Shares have not been registered by the Corporation under the United States Securities Act of 1933 (the "1933 Act") and that the Corporation does not plan, and is under no obligation to provide for registration of the Purchased Shares in the future. Offer or sale of the Purchased Shares in the United States or to a U.S. person would constitute a violation of United States law unless made in compliance with the registration requirements of the 1933 Act or pursuant to an exemption therefrom. The term "United States" means the United States of America and includes its territories, possessions and all areas subject to its jurisdiction; and the term "U.S. person" has the meaning as defined in Regulation S made under the 1933 Act. 5 5 G. GENERAL PROVISIONS 1. This Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective successors and assigns. The Purchaser may, with the consent of the Corporation, acting reasonably, assign this Agreement to a subsidiary or an affiliate, but any such assignment shall not relieve the Purchaser from responsibility for performance of its obligations hereunder. 2. Each of the parties agrees to take all such actions as may be within its powers as may be necessary or desirable to implement and give effect to the provisions of this Agreement. 3. Time shall be of the essence. 4. This Agreement shall be governed and enforced in accordance with the laws of Switzerland, without regard to its conflict of laws and principles, and the parties hereto agree to submit any dispute hereunder to the jurisdiction of the courts of the Canton of Geneva. 5. The provisions herein contained constitute the entire agreement between the parties and supersede all previous communications, representations, understandings and agreements between the parties with respect to the subject matter hereof, whether verbal or written. 6. This Agreement may be executed by facsimile in any number of counterparts, each of which when delivered shall be deemed to be an original, all of which together shall constitute one and the same document. If the foregoing is in accordance with your understanding, please complete the relevant portions below under the heading "Details of Subscription" and sign and return the enclosed copy of this letter as soon as possible. The Purchaser, by such signature, authorizes the Dealer to deliver a copy of this letter, as the Purchaser's offer, on its behalf to the Corporation. CONQUEROR HOLDINGS LTD. (Name of Purchaser) /s/ Rene Randall - --------------------------- (Signature) Rene Randall - --------------------------- (Name) Director - --------------------------- (Title) 6 6 DETAILS OF SUBSCRIPTION ----------------------- TO: ICHOR CORPORATION (the "Corporation") AND TO: MFC MERCHANT BANK S.A. The undersigned accepts the foregoing and offers to purchase the Purchased Shares set forth below, on the terms and conditions of the foregoing, from the Corporation. All references to dollar amounts herein are in United States dollars. (a) Number and Aggregate Purchase Price of Purchased Shares: 30,000 Purchased Shares at an Aggregate Purchase Price of $300,000 (b) Name and address of Purchaser: Conqueror Holdings Ltd. 1250 - 400 Burrard Street Vancouver, B.C. V6C 3A6 Canada Signed by: /s/ Rene Randall --------------------- Director --------------------- Office or Title (c) Registration Instructions: If there are no instructions below, the certificate for the Purchased Shares delivered to the Purchaser will be registered in the name of the Purchaser as set forth immediately above. If registration differs from the name and address shown above, please so specify: - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ (d) Delivery and Payment Instructions (include contact name and telephone number): PAY TO MFC MERCHANT BANK S.A. (e) Delivery against Payment at: - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ Attn: Telephone: ---------------------------- ---------------------------- The foregoing offer is confirmed and accepted by Ichor Corporation this day of February, 1998. ---- By: /s/ Roy Zanatta ----------------------- (Authorized Signatory) EX-10 5 EXHIBIT 10.17 - SUBSCRIPTION AGREEMENT 1 SUBSCRIPTION AGREEMENT February 26 , 1998 ---- TO: PURCHASERS OF 5% CUMULATIVE REDEEMABLE CONVERTIBLE PREFERRED SHARES, SERIES 1 OF ICHOR CORPORATION MFC Merchant Bank S.A. (the "Dealer") and Ichor Corporation. (the "Corporation") entered into a purchase agreement dated for reference February 20, 1998 (the "Purchase Agreement") providing for the purchase from the Corporation of 250,000 5% Cumulative Redeemable Convertible Preferred Shares, Series 1 for an aggregate purchase price of $2,500,000 (the "Purchased Shares"). A copy of the term sheet (the "Term Sheet") outlining the features of the private placement is attached as Schedule "A" hereto. The Purchase Agreement provides that the Dealer may arrange for substituted purchasers of the Purchased Shares on a "private placement" basis, and that each substituted purchaser will enter into a subscription agreement (the "Subscription Agreement") in substantially the form of this agreement. Your acceptance of this letter, as evidenced by your signature below, will constitute your offer to the Corporation to subscribe for the Purchased Shares set forth below under the heading "Details of Subscription" on the terms and conditions contained herein. The Corporation's acceptance of your offer, as evidenced by the signature of its officer below, will constitute an agreement between you and the Corporation for you to purchase from the Corporation and for the Corporation to issue and sell to you such Purchased Shares on such terms and conditions. References below to "this Agreement" are to be read as references to the agreement resulting from the Corporation's acceptance of your offer. You are referred to below as the "Purchaser". A. SUBSCRIPTION The Purchaser subscribes for and agrees to purchase from the Corporation the Purchased Shares set forth below under the heading "Details of Subscription". The Purchaser understands that the Purchased Shares subscribed for form part of the offering made pursuant to the Purchase Agreement. B. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE CORPORATION By accepting this offer, the Corporation represents, warrants, covenants and agrees as follows: 1. The Corporation is a corporation duly organized and is validly subsisting under the laws of Delaware. 2. The Corporation has all necessary corporate power to own or lease its property and to carry on its business as presently carried on by it and to execute and deliver this Agreement and the Purchased Shares. 2 2 3. This Agreement has been duly authorized by all necessary corporate action by the Corporation and constitutes legal, valid and binding obligations of the Corporation. 4. The Corporation's common shares are quoted through the National Association of Securities Dealers Authorized Distribution System SmallCap market and the Corporation will maintain such status, without default, until the Closing Date. 5. The Corporation's annual audited financial statements for the period ended December 31, 1996 and its unaudited interim financial statements for the period ended September 30, 1997 were, at the respective dates of issue or publication, true and correct in all material respects and were prepared in accordance with and complied in all material respects with the laws, regulations, policy statements and rules applicable to such documents. 6. There has been no material or adverse change in the affairs of the Corporation since December 31, 1996, and no material or adverse fact exists in relation to the proposed issue of the Purchased Shares, which in either case is not generally disclosed. C. CONDITIONS The Purchaser's obligation to complete the purchase of the Purchased Shares contemplated hereby shall be conditional upon the fulfilment either on or before the Closing Date of the following conditions: (a) the Purchased Shares will be validly and duly authorized, created and issued by the Corporation; (b) the representations and the warranties contained herein are true and correct and all covenants relating to the Corporation herein contained and required to be performed and complied with have been performed and complied with by the Corporation; and (c) no action or proceeding in the United States shall be pending or threatened by any person, company, firm, governmental authority, regulatory body or agency to cease trade, enjoin or prohibit: (i) the sale of the Purchased Shares to the Purchaser as contemplated hereby; or (ii) the right of the Corporation to issue shares on the exercise by the Purchaser of its right of conversion contained in the Purchased Shares. 3 3 D. DELIVERY AND PAYMENT Subject to acceptance by the Corporation of this Agreement, delivery and payment for the Purchased Shares shall be completed at the offices of the Dealer at 1:00 p.m. (local time) on or before February 27, 1998 or such other date, time and place as may be agreed upon in writing by the Corporation and the Dealer (the "Closing Date"). The Purchaser hereby appoints the Dealer as its agent to represent it at the closing for the purposes of all closing matters including, without limitation, to execute receipts and documents as its agent and to accept delivery of documents and the Purchased Shares and hereby irrevocably authorizes the Dealer to extend such period and modify or waive such terms and conditions as may be contemplated herein or in the Purchase Agreement as the Dealer deems appropriate in its absolute discretion. The Purchased Shares subscribed for by the Purchaser will be available for delivery on the Closing Date to the Dealer by way of a certificate representing the Purchased Shares registered in the name of the Purchaser, against delivery to the Corporation of the Purchase Price for the Purchased Shares by certified cheque or bank draft in U.S. funds or other electronic form of payment satisfactory to the Corporation, provided that, in the event that the certificates representing the Purchased Shares are not available for physical delivery on the Closing Date, the Purchase Price shall be paid to the Corporation pending delivery of the Purchased Shares. If the certificates representing the Purchased Shares are not delivered by March 31, 1998, the Dealer may agree to one or more extensions of time for delivery of the certificates and may modify or waive such terms relating thereto as the Dealer deems appropriate in its absolute discretion, or may, at its option, elect to terminate this agreement whereupon the Purchase Price paid by the Purchaser shall be returned and the Purchaser shall have no further obligations hereunder. E. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER The Purchaser represents, warrants, covenants and agrees as follows: 1. The Purchased Shares are not being purchased as a result of any material information about the Corporation's affairs which has not been publicly disclosed 2. The Purchaser has not received any general solicitation or advertisement, article, notice or other communication nor has it become aware of any advertisement in printed media of general and regular paid circulation, radio and television with respect to the distribution of the Purchased Shares. 3. The Purchaser acknowledges that the Corporation and its officers and directors are relying upon the representations and warranties made by the Purchaser. 4. The Purchased Shares being subscribed for and any rights the Purchaser may acquire as a Purchased Shares holder of the Corporation will be acquired for investment purposes and not with a view to a subsequent offering, sale or distribution thereof and the Purchaser may not participate, directly or indirectly, in any plan or scheme involving the resale or distribution of the Purchased Shares or any interest therein. 5. The Purchaser has not received or been provided with an offering memorandum or similar document, its decision to enter into this Agreement and to purchase the Purchased Shares has 4 4 not been made upon any verbal or written representation as to fact or otherwise by or on behalf of the Dealer or any other person and its decision to enter into this Agreement and purchase the Purchased Shares set forth herein is based entirely upon information concerning the Corporation which is publicly available and the Term Sheet. 6. The Purchaser has knowledge and experience in financial and business affairs as to be capable of evaluating the merits and risks of the investment and is able to bear the economic risk of loss of the investment. 7. The Purchaser has been independently advised as to and is aware of the applicable restrictions on the resale of the Purchased Shares and any securities issuable upon the conversion thereof under the securities legislation in the jurisdiction in which the Purchaser may subsequently trade such securities, and is aware of the risks and other characteristics of the Purchased Shares and of the fact that the Purchaser may not be able to resell such securities except in accordance with applicable securities legislation and regulatory policies and that the certificates representing such securities will contain a legend to that effect and the Purchaser agrees to comply with, and not in any manner violate, any applicable securities laws, rules or regulations in connection with the purchase, sale, transfer or other disposition of any of such securities. 8. The Purchaser will execute and deliver all documentation as may be required by applicable securities legislation to permit the purchase of the Purchased Shares on the terms and conditions as set forth herein and will comply with all applicable hold periods and other resale restrictions as are prescribed by applicable securities legislation. 9. Any questionnaire, statement, certificate, instrument or other documents delivered by the Purchaser in connection herewith will be considered to form part of and be incorporated into this Agreement with the same effect as if each constituted a representation and warranty or covenant of the Purchaser to the Corporation. 10. The Corporation has not provided the Purchaser with investment, legal or financial advice or acted as an advisor with respect to the purchase of the Purchased Shares and the Purchaser is relying solely on its own professional advisors, if any, for any such advice. F. RESTRICTIONS UPON TRANSFER 1. The Purchaser understands that the Purchased Shares have not been registered by the Corporation under the United States Securities Act of 1933 (the "1933 Act") and that the Corporation does not plan, and is under no obligation to provide for registration of the Purchased Shares in the future. Offer or sale of the Purchased Shares in the United States or to a U.S. person would constitute a violation of United States law unless made in compliance with the registration requirements of the 1933 Act or pursuant to an exemption therefrom. The term "United States" means the United States of America and includes its territories, possessions and all areas subject to its jurisdiction; and the term "U.S. person" has the meaning as defined in Regulation S made under the 1933 Act. 5 5 G. GENERAL PROVISIONS 1. This Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective successors and assigns. The Purchaser may, with the consent of the Corporation, acting reasonably, assign this Agreement to a subsidiary or an affiliate, but any such assignment shall not relieve the Purchaser from responsibility for performance of its obligations hereunder. 2. Each of the parties agrees to take all such actions as may be within its powers as may be necessary or desirable to implement and give effect to the provisions of this Agreement. 3. Time shall be of the essence. 4. This Agreement shall be governed and enforced in accordance with the laws of Switzerland, without regard to its conflict of laws and principles, and the parties hereto agree to submit any dispute hereunder to the jurisdiction of the courts of the Canton of Geneva. 5. The provisions herein contained constitute the entire agreement between the parties and supersede all previous communications, representations, understandings and agreements between the parties with respect to the subject matter hereof, whether verbal or written. 6. This Agreement may be executed by facsimile in any number of counterparts, each of which when delivered shall be deemed to be an original, all of which together shall constitute one and the same document. If the foregoing is in accordance with your understanding, please complete the relevant portions below under the heading "Details of Subscription" and sign and return the enclosed copy of this letter as soon as possible. The Purchaser, by such signature, authorizes the Dealer to deliver a copy of this letter, as the Purchaser's offer, on its behalf to the Corporation. ZELLSTOFF-UND PAPIERFABRIK ROSENTHAL GmbH (Name of Purchaser) /s/ E.J. Haas - ---------------------------- (Signature) E.J. Haas - ---------------------------- (Name) PA - ---------------------------- (Title) 6 6 DETAILS OF SUBSCRIPTION TO: ICHOR CORPORATION (the "Corporation") AND TO: MFC MERCHANT BANK S.A. The undersigned accepts the foregoing and offers to purchase the Purchased Shares set forth below, on the terms and conditions of the foregoing, from the Corporation. All references to dollar amounts herein are in United States dollars. (a) Number and Aggregate Purchase Price of Purchased Shares: 35,000 Purchased Shares at an Aggregate Purchase Price of $350,000 (b) Name and address of Purchaser: Zellstoff-und Papierfabrik Rosenthal GmbH Hauptstrasse 16 07365 Blankenstein (Saale) Germany Signed by: /s/ E.J. Haas ---------------------------- PA ---------------------------- Office or Title (c) Registration Instructions: If there are no instructions below, the certificate for the Purchased Shares delivered to the Purchaser will be registered in the name of the Purchaser as set forth immediately above. If registration differs from the name and address shown above, please so specify: - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ (d) Delivery and Payment Instructions (include contact name and telephone number): Pay to MFC Merchant Bank S.A. (e) Delivery against Payment at: - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ Attn: Telephone: ------------------------------ ---------------------------- The foregoing offer is confirmed and accepted by Ichor Corporation this day of February, 1998. ---- By: /s/ Roy Zanatta -------------------------- (Authorized Signatory) EX-21 6 EXHIBIT 21 - SUBSIDIARIES OF THE REGISTRANT 1 ICHOR CORPORATION EXHIBIT 21 - SUBSIDIARIES OF THE REGISTRANT Shareholding at December 31, 1997 Name of Subsidiary Jurisdiction of Incorporation (Direct) - ------------------ ----------------------------- ----------------- ICHOR Services, Inc. State of Delaware 100% 501164 B.C. Ltd. Province of British Columbia, Canada 100% EX-23 7 EXHIBIT 23 - INDEPENDENT AUDITORS' CONSENT 1 - ------------------------------------------------------------------------------ PETERSON SULLIVAN P.L.L.C. 601 UNION STREET SUITE 2300 SEATTLE WA 98101 (206) 382-7777 FAX 382-7700 CERTIFIED PUBLIC ACCOUNTANTS Independent Auditors' Consent ----------------------------- We hereby consent to the incorporation by reference in the registration statements (No. 333-15831 and 333-15829) on Form S-8 of Ichor Corporation and Subsidiaries of our report dated February 28, 1998, relating to the balance sheets of Ichor Corporation and Subsidiaries as of December 31, 1997 and 1996, and the related statements of operations, shareholders' equity and cash flows for the year ended December 31, 1997, and the eleven months ending December 31, 1996, which report appears in the Annual Report of Form 10-K for the year ended December 31, 1997, of Ichor Corporation and Subsidiaries. /s/ Peterson Sullivan P.L.L.C. March 25, 1998 Seattle, Washington EX-27 8 EXHIBIT 27 - ARTICLE 5 - FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES INCLUDED IN THIS FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 12-MOS DEC-31-1997 JAN-01-1997 DEC-31-1997 127 0 894 562 0 2,026 0 0 2,028 1,939 0 0 2 50 37 2,028 0 0 0 0 0 0 613 (1,025) 0 (1,025) (3,029) 0 0 (4,054) (.83) (.83)
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