SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2001
OR
[ ] 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: 1-316
INDEPENDENCE LEAD MINES COMPANY
(Exact name of registrant as specified in its charter)
Arizona 82-0131980
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation)
510 Cedar Street
Wallace, Idaho 83873
(Address of principal executive offices)
Registrant's telephone number, including area code: (208) 753-2525
Common Stock None
Title of each class Name of each exchange on which registered
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
as the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
The number of outstanding shares of the registrant's common stock at
April 1, 2001 was 4,175,357 shares.
INDEPENDENCE LEAD MINES COMPANY QUARTERLY REPORT
ON FORM 10-Q FOR THE QUARTERLY PERIOD
ENDED MARCH 31, 2001
TABLE OF CONTENTS Page
PART I - FINANCIAL INFORMATION
Item 1: Financial Statements . . . . . . . . . . . 1
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of Operations 1
PART II - OTHER INFORMATION
Item 1: Legal Proceedings . . . . . . . . . . . . . 2
Item 2: Changes in Securities . . . . . . . . . . . 3
Item 3: Defaults upon Senior Securities . . . . . . 3
Item 4: Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . . 3
Item 5: Other Information . . . . . . . . . . . . . 3
Item 6: Exhibits and Reports on Form 8-K . . . . . . 3
SIGNATURES
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The unaudited financial statements of the Company for the periods
covered by this report are included elsewhere in this report,
beginning at page F/S-1.
The unaudited financial statements have been prepared by the Company
in accordance with generally accepted accounting principles for
interim financial information with the instructions to Form 10-Q and
Rule 10-01 of Regulation S-X. Accordingly, they do not include all
of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
opinion of the Company's management, all adjustments (consisting
of only normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three-month
period ended March 31, 2001 are not necessarily indicative of the
results that may be expected for the full year ending December 31,
2001.
For further information refer to the financial statements and footnotes
thereto in the Company's Annual Report on Form 10-K for the year ended
December 31, 2000 incorporated by reference herein.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
RESULTS OF OPERATIONS FOR THE PERIOD ENDED MARCH 31, 2001.
Three months Ended March 31, 2001 Compared to three months Ended
March 31, 2000.
During the three months ended March 31, 2001 the Company realized no
income other than interest income of $2,598. General and administrative
expenses decreased to $2,895 for the three-month period ended March 31,
2001 as compared to $12,300 for the three-month period ended March 31,
2000. The decrease is principally attributed to reduced legal and
shareholder expenses incurred in 2001. For the quarter ended March 31,
2001, the Company experienced a net loss of $1,237, compared to net
income of $333,162, or $0.08 per share, during the
comparable period in the previous year.
LIQUIDITY AND CAPITAL RESOURCES.
The Company is the owner of fifteen patented and seventeen unpatented
mining claims. This claim group ("the property") is situated Northwest
of Hecla Mining Company's Lucky Friday Mine in the Coeur d'Alene Mining
District, Shoshone County Idaho. Adjacent is the community of Mullan
and U.S. Interstate Highway 90.
Pursuant to the terms of an agreement dated February 8, 1968, among
Hecla Mining Company ("Hecla"), Day Mines, Inc. ("Day"), Abot Mining
Company ("Abot"), and the Company (the "Unitization Agreement"), the
Eastern portion of the Company's Property (approximately five-eighths
of the Property) was unitized with certain adjoining and near-by
properties owned by Day and Abot into a unitized area, consisting of
55 claims, (known as the "DIA Area"). Under the terms of the
Unitization Agreement, ores and minerals in place are owned by the
parties thereto in the following percentages:
Day (now Hecla by merger) 47.70%
Independence 46.30%
Abot 6.00%
By a second agreement also dated February 8, 1968 (the "Lease
Agreement"), Hecla leased the DIA Area for a period of fifty (50)
years, subject to a 30-year extension, for the purpose of conducting
mineral exploration and development of the DIA Area and mining such
commercial ore as may be discovered in the DIA Area by Hecla.
The Lease Agreement provides that all costs and expenses incurred in
the exploration, development, and operation of the DIA Area are to be
paid by Hecla subject to the right of Hecla to be reimbursed for such
costs and expenses, together with all advance royalties paid, out of any
future net profits realized from the operation of the DIA Area.
After recovery of Hecla's costs and expenses and
-1-
amounts paid as advance royalties, and the establishment of a three
month working capital reserve, net profit royalties are to be paid to the
Company and the other property owners as follows:
Day (now Hecla by merger) 19.08%
Independence 18.52%
Abot 2.40%
Under the terms of the Unitization Agreement, one-half of the first net
profit royalties received by the Company are to be paid over to Day
(now Hecla) until Day recovers the sum of $450,000. The relationship of
the parties to the Agreement may, under certain circumstances, be
converted to a joint venture at the option of the property owners,
where after the property owners would become participating, non-operating
working interest owners who would share profits and expenses in
connection with the DIA Area in the same ratio as exists pursuant to lease
arrangement with Hecla described above.
Until Hecla commences to pay net profit royalties and during such period
as the Lease Agreement is in effect, Hecla is obligated to pay an advance
royalty to the Company of $750 per month subject to increase to $1,500 if
production for the DIA Area exceeds 2,000 tons per month. The Company
currently receives an advance royalty of $1,500 per month, whish is
recorded in the financial statements as deferred income.
Pursuant to the terms of the February 8, 1968, agreements, Hecla will be
obligate to pay a royalty of 18.52 percent of defined net profits after
Hecla has recouped its costs to explore and develop this property from
the new discovery to Independence Lead Mines Company.
The current officers and directors of the Company serve without
compensation and are not considered by the Company to be employees.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
There are no legal proceedings pending.
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Item 2. Changes in Securities.
Neither the constituent instruments defining the rights of the
registrant's securities holders nor the rights evidenced
by the registrant's outstanding common stock have been modified,
limited or qualified.
Item 3. Defaults Upon Senior Securities.
The registrant has no outstanding senior securities.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of the registrant's security
holders during the period covered by this report.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
Exhibits. The following exhibit is filed as part of this report:
Exhibit 27.0 Financial Data Schedule
Reports on Form 8-K. No reports on Form 8-K were filed by the
registrant during the period covered by this
report.
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INDEPENDENCE LEAD MINES COMPANY
TABLE OF CONTENTS Page
Balance Sheets as of March 31, 2001
and December 31, 2000 . . . . . . . . . . . . . . F/S-2
Statements of Operations for the three Months
Ended March 31, 2001 and 2000 . . . . . . . . . . . F/S-3
Statements of Cash Flow for the three
Months Ended March 31, 2001 and 2000 . . . . . . . F/S-4
Notes to Interim Financial Statements . . . . . . . F/S-5
Signatures . . . . . . . . . . . . . . . . . . . . . F/S-6
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F/S - 1
INDEPENDENCE LEAD MINES COMPANY
(An Exploratory Stage Company)
BALANCE SHEET - UNAUDITED
ASSETS
March 31, 2001 December 31, 2000
-------------- -----------------
CURRENT ASSETS:
Cash $ 184,758 $ 196,726
Royalties Receivable 1,500 1,500
Investments 1,006 1,006
Total current assets 187,264 199,232
PROPERTY AND EQUIPMENT, at cost:
Equipment 0 0
Less accumulated depreciation 0 0
0 0
Mining property 2,945,407 2,945,407
Total property and equipment 2,945,407 2,945,407
OTHER ASSETS:
Unrecovered exploration costs 187,920 187,920
Total assets $3,320,591 $ 3,332,559
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 6,418 $ 12,389
Advances payable 0 0
Interest payable 0 0
Loans from Shareholders 0 0
Income taxes accrued 4,390 13,650
Total current liabilities 10,808 26,039
DEFERRED INCOME: 341,750 337,250
STOCKHOLDERS' EQUITY:
Common Stock, $1.00 par value, authorized
5,000,000 shares; issued 4,308,793 and
outstanding 4,175,357 shares at 12/31/00;
issued 4,308,793 and outstanding
4,175,357 shares at 03/31/01. 4,308,793 4,308,793
Treasury Stock (55,290) (55,290)
Additional Paid-In Capital (Deficit) (108,293) (108,293)
4,145,210 4,145,210
Less deficit accumulated during the
exploration stage (1,177,177) (1,175,940)
Total Stockholders equity 2,968,033 2,969,270
Total liabilities
and stockholders' equity $3,320,591 $3,332,559
- --------------------------
The accompanying notes are an integral part of these financial statements
F/S - 2
INDEPENDENCE LEAD MINES COMPANY
(An Exploratory Stage Company)
STATEMENTS OF OPERATIONS AND DEFICIT ACCUMULATED
DURING THE EXPLORATION STAGE - UNAUDITED
Three Months Three Months
Ended Ended
March 31, 01 March 31, 00
Revenue $ 0 $ 0
Expenses
Consulting 675 0
Licenses and fees 0 378
Office expense 38 343
Office services 150 150
Shareholder Relations 835 1,541
Interest 0 916
Transportation 0 2,735
Accounting 87 923
Legal 1,110 5,314
Total expenses 2,895 12,300
Loss from Operations ($2,895) ($12,300)
Other Income and (expense)
Interest 2,598 877
Legal settlement 0 358,085
Total other income $2,598 $358,962
NET INCOME (LOSS) before income taxes ($297) $346,662
Provision for income taxes (940) (13,500)
NET INCOME (LOSS) ($1,237) $333,162
DEFICIT, accumulated during the
exploration stage, beginning of period ($1,175,940) $(1,481,414)
DEFICIT, accumulated during the
exploration stage, end of period ($1,177,177) ($1,148,252)
Income (Loss) per share --- $0.078
Weighted average common
shares outstanding 4,175,357 4,278,357
____________________
The accompanying notes are an integral part of these financial statements.
F/ S - 3
INDEPENDENCE LEAD MINES COMPANY
(An Exploratory Stage Company)
STATEMENTS OF CASH FLOW - UNAUDITED
Three Months Three Months
Ended Ended
March 31, 2001 March 31, 2000
Operating Activities:
Net income (loss) ($1,237) $ 333,162
Adjustments to reconcile net loss to net cash
used in operating activities: 0 0
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 0 0
Increase (decrease) in accounts payable (5,971) (24,128)
Increase (decrease) in advances payable 0 (86,100)
Increase (decrease) in deferred income 4,500 4,500
Increase (decrease) in interest payable 0 (20,381)
Increase (decrease) in taxes payable (9,260) 13,500
Net cash used in operating activities (11,968) 220,553
Investing activities:
Purchase of Company's capital stock 0 (23,143)
Net cash used in investing activities 0 (23,143)
Financing activities:
Retirement of director's shares 0 (48,000)
Repurchase and retirement of common stock 0 (1,500)
Repayment of long-term debt 0 (42,000)
Net cash provided by financing activities 0 (91,500)
Net increase (decrease) in cash (11,968) 105,910
Cash and cash equivalent, beginning of period 196,726 5,298
Cash and cash equivalent, end of period $ 184,758 $ 111,208
Disclosure of accounting policy
For the three months ended March 31,
2001 and March 31, 2000, the Company
had no cash equivalents.
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest $ 0 $ 916
Income taxes 10,200 30
The accompanying notes are an integral part of these financial statements.
F/S - 4
INDEPENDENCE LEAD MINES COMPANY
NOTES TO INTERIM FINANCIAL STATEMENTS - UNAUDITED
Financing information presented in the Company's quarterly
reports follow the policies set forth in its Annual Report
on Form 10-K filed with the Securities and Exchange
Commission. In accordance with generally accepted
accounting principles for interim financial information, the
instructions to Form 10-Q, and Rule 10-01 of Regulation S-X,
these quarterly reports do not include all of the information
and footnotes.
In the opinion of the Company's management, all adjustments
(consisting of only normal recurring accruals) considered
necessary for a fair presentation have been included. Operating
results for the three-month period ended March 31, 2001 are not
necessarily indicative of the results that may be expected for
the full year ending December 31, 2001.
1. Nature of business:
Independence Lead Mines Company ("the Company") is a
corporation organized under the laws of the State of Arizona on
September 16,1929. The Company is the owner of fifteen patented
and fourteen unpatented mining claims. This claim group (the
"property") is situated Northwest of Hecla Mining Company's Lucky
Friday Mine in the Coeur d'Alene Mining District, Shoshone County
Idaho. The Company's property is part of the "DIA Area" which is
currently being developed and mined by Hecla Mining Company. The
Company has been in the development stage since its inception.
The Company's only recurring source of funds is a monthly advance
royalty from Hecla Mining Company of $1,500. The Company has
incurred operating losses since inception. The financial
statements do not contain any adjustments which might be necessary
if the Company is unable to continue as a going concern.
2. Common stock:
In September 1997 the capitalization of the Company was increased
from 4,000,000 shares to 5,000,000 shares.
During the three months ended March 31, 2000 the Company purchased
47,000 shares of the Company's common stock on the open market at
an average price of $0.49 per share. These purchases bring the total
treasury shares held by the Company to 85,436 shares. There were
no stock purchases in the three months ended March 31, 2001.
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F/S - 5
SIGNATURES
Pursuant to the requirements 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.
INDEPENDENCE LEAD MINES COMPANY
By: /s/ Bernard C. Lannen
--------------------------
Bernard C. Lannen, its
President
Date: April 30, 2001
By: /s/ Wayne Schoonmaker
-----------------------------
Wayne Schoonmaker, its
Principal Accounting Officer
Date: April 30, 2001
F/S-6