UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM 10-QSB
[x] Quarterly Report Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
For the Quarterly Period ended June 30, 1996
Transition Report under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Transition Period from __________ to ___________
Commission File Number _________________________________
IDAHO CONSOLIDATED METALS CORP.
-----------------------------------
(Exact Name of Small Business
Issuer as Specified in Its Charter)
British Columbia, Canada
----------------------------------------
(State or other jurisdiction of
incorporation or organization)
82-0465571
----------------------------------------
(I.R.S. Employer Identification No.)
504 Main Street, Suite 475
Post Office Box 1124
Lewiston, Idaho 83501
----------------------------------------
(Address of Principal Executive Offices)
(208) 743-0914
----------------------------------------
(Issuer's Telephone Number,
Including Area Code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes [ ] No [X]
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 5,660,508 as of
August 15, 1996.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
IDAHO CONSOLIDATED METAL CORP.
Form 10-QSB
For the Fiscal Quarter ended June 30, 1996
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements of the Company
Item 2. Management's Discussion and Analysis or Plan of
Operation
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of
Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS OF THE COMPANY
--------------------------------------------
The following unaudited interim financial statements for the period
ending 30 June, 1996, are included in response to item 1 and have been
compiled by Staley, Okada, Chandler & Scott, Chartered Accountants.
The financial statements should be read in conjunction with
Management's Discussion and Analysis or Plan of Operations and other
financial information included elsewhere in this Form 10-QSB.
SCHEDULE A
----------
IDAHO CONSOLIDATED
METALS CORP.
(An Exploration Stage Company)
INTERIM FINANCIAL STATEMENTS
30 JUNE 1996
Unaudited - See Notice to Reader
U.S. Funds
STALEY, OKADA, CHANDLER & SCOTT
Chartered Accountants
NOTICE TO READER
----------------
We have compiled the interim balance sheet of Idaho
Consolidated Metals Corp. as at 30 June 1996 and the interim
statements of changes in shareholders' equity, operations and cash
flows for the six months then ended from information provided by
management. We have not audited, reviewed or otherwise attempted to
verify the accuracy or completeness of such information. Readers are
cautioned that these statements may not be appropriate for their
purposes.
/s/ STALEY, OKADA, CHANDLER & SCOTT
CHARTERED ACCOUNTANTS
Burnaby, B.C.
2 August 1996
Idaho Consolidated Metals Corp. Statement 1
(An Exploration Stage Company)
Interim Balance Sheet
As at 30 June
U.S. Funds
Unaudited - See Notice to Reader
1996 1995
----------- -----------
ASSETS
Current:
Cash $ 1,021,393 $ 10,710
Prepaid expenses - 539
Accounts receivable 10,000 28
Inventory 129,416 99,416
----------- -----------
1,160,809 110,693
Share Capital in Trust 153,448 -
Capital Assets 3,022 3,632
Resource Property Costs
- Schedule 2 4,009,731 3,539,234
----------- -----------
$ 5,327,010 $ 3,653,559
=========== ===========
LIABILITIES
Current:
Bank loan $ 30,409 $ -
Accounts payable - related parties 118,089 215,392
- other 418,989 341,824
Accrued claims rental fees 213,850 152,750
Current portion of notes payable 699,429 80,000
----------- -----------
1,480,766 789,966
Notes Payable 20,078 -
----------- -----------
Share Subscriptions Payable 1,260,495 155,000
----------- -----------
SHAREHOLDERS' EQUITY
Share Capital - Statement 2 5,721,590 5,095,447
Deficit - Accumulated during the
exploration stage - Statement 2 (3,103,334) (2,334,269)
Foreign Currency Translation
Adjustments - Statement 2 (52,585) (52,585)
2,565,671 2,708,593
----------- -----------
$ 5,327,010 $ 3,653,559
=========== ===========
ON BEHALF OF THE BOARD:
/s/ E. R. Knickel, Director
---------------------------
/s/ Delbert W. Steiner, Director
--------------------------------
Idaho Consolidated Metals Corp. Statement 2
Interim Statement of Changes in Shareholders' Equity
U.S. Funds
Unaudited - See Notice to Reader
Deficit
Accumulated Foreign
Common Shares During the Currency
----------------------- Exploration Translation
Shares Amount Stage Adjustment Total
--------- ----------- ----------- ------------ -----------
Balance - 31 December 1994 5,310,044 $ 4,298,476 $(1,794,488) $ (52,585) $ 2,451,403
Issuance of shares for
exercise of warrants
($2.23 per share) 30,000 66,900 - - 66,900
Private placement ($1.50
per share) 290,464 435,696 - - 435,696
Release of escrowed shares
for executive compen-
sation ($1.57 per share) - 294,375 - - 294,375
Loss for the period - - (539,781) - (539,781)
--------- ----------- ----------- ----------- -----------
Balance - 30 June 1995 5,630,508 $ 5,095,447 $(2,334,269) $ (52,585) $ 2,708,593
========= =========== =========== =========== ===========
Balance - 31 December 1995 5,630,508 $ 5,510,097 $(2,645,366) $ (52,585) $ 2,812,146
Release of escrowed shares
for executive compen-
sation ($0.55 per share) - 171,973 - - 171,973
Options exercised ($1.32
per share) 30,000 39,520 - - 39,520
Loss for the period - - (457,968) - (457,968)
--------- ----------- ----------- ----------- -----------
Balance - 30 June 1996 5,660,508 $ 5,721,590 $(3,103,334) $ (52,585) $ 2,565,671
========= =========== =========== =========== ===========
Idaho Consolidated Metals Corp. Statement 3
Interim Statement of Operations
For the Six Months Ended 30 June
U.S. Funds
Unaudited - See Notice to Reader
1996 1995
---------- ----------
Operating Expenses:
General and administrative $ 422,275 $ 539,988
Other (Income) Expense:
Interest income (2,034) (356)
Interest expense 37,727 149
---------- ----------
35,693 (207)
---------- ----------
Loss for the Period $ 457,968 $ 539,781
========== ==========
Loss Per Common Share $ 0.08 $ 0.10
========== ==========
Weighted Average Number of
Common Shares Outstanding 5,633,008 5,506,981
========== ==========
Idaho Consolidated Metals Corp. Statement 4
Interim Statement of Cash Flows
For the Six Months Ended 30 June
U.S. Funds
Unaudited - See Notice to Reader
1996 1995
---------- ----------
Cash Resources Provided By (Used In)
Operating Activities:
Loss for the period $ (457,968) $ (539,781)
Items not affecting cash:
Amortization 534 1,448
Loss on disposal of capital assets - 4,576
Release of escrowed shares for
executive compensation 171,973 294,375
Changes in current assets and
liabilities:
Accounts receivable 34,238 2,283
Prepaid expenses - 1,906
Inventory (5,000) -
Accounts payable - related parties 1,216 (28,734)
- other 93,169 123,976
---------- ----------
Net cash used in operating
activities (161,838) (139,951)
---------- ----------
Investing Activities:
Share capital in trust (153,448) -
Property rights, plant and equipment (63,095) (208,376)
---------- ----------
Net cash used in investing
activities (216,543) (208,376)
---------- ----------
Financing Activities:
Bank loan (4,999) -
Proceeds (repayments) of notes payable 29,507 (400,000)
Net proceeds from sale of common
stock 39,520 502,596
Share subscriptions payable 1,168,445 155,000
---------- ----------
Net cash provided by financing
activities 1,232,473 257,596
---------- ----------
Net Increase (Decrease) in Cash 854,092 (90,731)
Cash position - Beginning of Period 167,301 101,441
---------- ----------
Cash Position - End of Period $1,021,393 $ 10,710
========== ==========
Idaho Consolidated Metals Corp. Schedule 1
Interim Schedule of Administrative Expenses
For the Six Months Ended 30 June
U.S. Funds
Unaudited - See Notice to Reader
1996 1995
---------- ----------
Executive compensation $ 171,973 $ 294,375
Professional fees 82,616 115,012
Management fees and wages 54,966 19,940
Shareholder information 54,561 27,652
Office and general 20,004 18,476
Travel 18,797 17,945
Transfer agent and filing fees 7,163 4,743
Office rent 6,181 8,210
Finance fees 5,067 21,728
Amortization 534 1,448
Entertainment and promotion 413 5,883
Loss on disposal of capital assets - 4,576
---------- ----------
Expenses for the Period $ 422,275 $ 539,988
========== ==========
Idaho Consolidated Metals Corp. Schedule 2
Interim Schedule of Resource Property Costs
For the Six Months Ended 30 June
U.S. Funds
Unaudited - See Notice to Reader
1996 1995
---------- ----------
Direct - Mineral:
Idaho County, Idaho, U.S.A.:
Staking, filing and claim rental $ 56,037 $ 70,550
Process plant and equipment 29,027 53,552
Camp and general 28,313 12,014
Lease payments 19,500 -
Geological 4,632 49,754
Assaying 4,497 8,112
Taxes and licenses 1,459 16,733
Environmental 180 -
Stripping - 26,295
Survey - 1,916
Option payments received (50,000) -
---------- ----------
Costs for the Period 93,645 238,926
Balance - Beginning of Period 3,916,086 3,300,308
---------- ----------
Balance - End of Period $4,009,731 $3,539,234
========== ==========
SCHEDULE B
1. YEAR-TO-DATE REQUIREMENTS
a. Deferred costs, exploration and development:
See attached Schedule 2 for details.
b. General and administrative:
See attached Schedule 1 for details.
c. Expenditures to non-arms length parties:
U.S. Funds
----------
Paid management fees to president and director $11,512
Paid management fees to a director 154
-------
$11,676
=======
2. FOR THE QUARTER ENDED 30 JUNE 1996a.Securities issued:
Type of Total Type of
Date Security Type of Issue Number Price Proceeds Consideration Commission
----------- -------- ------------- ------ ----- -------- ------------- ----------
17 May 1996 Common Options 30,000 $1.80 $54,000 Cash None
b. Options granted:
Date Granted Number Type Name Price Expiration Date
------------ ------- -------- -------- ----- ---------------
17 May 1996 250,000 Employee K. Scott $3.30 17 May 2000
17 May 1996 75,000 Employee T. Weed $3.30 17 May 2000
3. AS AT 30 JUNE 1996
a. Authorized and issued share capital:
Issued
----------------------
Authorized CDN Funds
Class Par Value Number Number Amount
------ --------- ---------- --------- ----------
Common N.P.V. 20,000,000 5,660,508 $5,721,590
b. Summary of options, warrants and convertible securities
outstanding:
Date Granted Number Type Name Price Expiration Date
--------------- ------- -------- ------------- ----- ---------------
30 October 1995 60,000 Director D. W. Steiner $1.80 30 October 1999
30 October 1995 50,000 Director E. R. Knickel $1.80 30 October 1999
30 October 1995 30,000 Director P. Lepik $1.80 30 October 1999
30 October 1995 50,000 Employee W. Struck $1.80 30 October 1999
30 October 1995 30,000 Employee G. Magnuson $1.80 30 October 1999
17 May 1996 250,000 Employee K. Scott $3.30 17 May 2000
17 May 1996 75,000 Employee T. Weed $3.30 17 May 2000
-------
545,000
=======
c. Shares in escrow or subject to pooling:
562,500 common shares
d. List of directors:
D. W. Steiner
E. R. Knickel
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
------------------------------------------------------------------
(Dollar references are in U.S. dollars, unless otherwise specified.)
This Report on Form 10-QSB contains forward-looking statements. A
forward-looking statement may contain words such as "will continue to
be," "will be," "continue to," "expect to," "anticipates that," "to
be," or "can impact." Management cautions that forward-looking
statements are subject to risks and uncertainties that could cause the
Company's actual results to differ materially from those projected in
forward-looking statements.
RESULTS OF OPERATIONS
Quarter ended June 30, 1996 compared with the quarter ended
June 30, 1995. The Company is in the exploration stage and has yet to
generate revenue from production. The Company continues to explore
its mineral properties in an effort to establish proven economic ore
reserves. The construction of the process plant on the Eckert Hill
Property was completed during the year ended December 31, 1995 and
will be used initially as a bulk test facility to process samples from
the Company's various properties and from other properties.
Activities at the plant have been temporarily suspended while the
Company interviews for the position of metallurgist. The metallurgist
will be responsible for finalization of plant design and construction
and start-up of the plant. The facility will remain a pilot plant
until sufficient ore reserves and gold concentrates are realized to
take the facility into economic production.
The Company has recently completed closing agreements with Idaho Gold
Corporation, a subsidiary of Bema Gold Corporation, to acquire the
Buffalo Gulch, Deadwood and Friday properties.
In the second quarter of 1996, general and administrative expenses
decreased by $83,144 as compared to 1995. The decrease was mainly due
to a decrease in executive compensation expense as a result of a
decline in qualifying exploration and development expenditures in the
quarter.
Under U.S. generally accepted accounting principles, the Company must
record executive remuneration on the release of performance shares
from escrow. The Company issued 750,000 shares at the time of its
initial public offering to the original principal founders of the
Company at a price of $0.01 CDN. per share, subject to the terms of an
escrow agreement. The number of shares released from escrow is
calculated on an annual basis as the Company expends qualifying
amounts on its exploration and development programs, and the Company
must seek regulatory approval for each release. During the second
quarter of 1996, the Company expended sufficient amounts on
exploration and development to qualify for a release of 41,475 shares,
which results in $83,365 of executive remuneration and a corresponding
$83,365 increase in share capital. During the second quarter of 1995,
the Company expended sufficient amounts to qualify for a release of
113,400 shares, which resulted in $178,038 of executive remuneration
and a corresponding $178,038 increase in share capital. The executive
remuneration is a deemed amount and is based upon the fair market
value of the Company's common shares during the relevant quarter.
Regulatory approval of this release has yet to be obtained.
During the quarter ended June 30, 1996, the Company expended $63,844
on its resource property exploration, development and acquisition
program as compared to $144,842 in the second quarter of 1995. The
decrease is related to reduced exploration and development activities
as the Company seeks to obtain sufficient financing to continue with
its programs. The expenditures during the second quarter of 1996 were
mainly related to the accrual of claim rental fees payable to the
Bureau of Land Management ("BLM") and minor exploration costs. During
the second quarter of 1996, the Company also received a $50,000 option
payment on the Petsite and Golden Eagle properties under the terms of
the Cyprus Gold Exploration Corporation ("Cyprus") joint venture
agreement.
All of the Company's resource properties continue to be explored on
the basis of independent engineering report recommendations, and a
determination as to whether the properties contain proved reserves has
yet to be made. Management has obtained independent valuations of the
various resource properties and presently believes no write down to
net realizable value is required on any of the properties.
The Company challenged the 1993 introduction of the claim rental fees
system by the BLM and has requested a waiver of these fees which would
amount to approximately $460,000 for 1993 and 1994. The request for
the waiver was denied by the BLM which resulted in an appeal to the
United States Department of the Interior which was also denied.
Management identified approximately 1,700 peripheral claims which were
dropped as a result of this decision because they do not unduly affect
the status of each claim block. The key claims in each claim block
have been maintained, and accordingly an accrual of $213,850 has been
made in the financial statements comprised of $61,100 for each of 1993
to 1995 and $15,275 for each of the quarters ended March 31, 1996 and
June 30, 1996 representing the approximate amount of claim rental fees
which are owing to the BLM.
The net loss for the year to June 30, 1996 decreased to $457,968
($0.08 per share) from $539,781 ($0.10 per share) for the year to
June 30, 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company anticipates, based on currently proposed plans and
assumptions relating to its operations and exploration activities,
that the proceeds of private placements and the exercise of stock
options during the ensuing year will be sufficient to satisfy the
Company's contemplated cash requirements for the ensuing 12 month
period. The Company has also signed a letter of engagement with
Whalen Beliveau of Toronto, Canada for a large private placement to
fund capital expenditures on the construction of the Buffalo Gulch
Mine. The Eckert Hill Property in Idaho and its related process plant
will require approximately $450,000 for commissioning of the process
plant for bulk sample testing and for the related geological
expenditures and feasibility studies. The Bema Properties will
require approximately $250,000 for permitting and an initial
exploration program. The Company estimates a cash requirement of
approximately $300,000 on the Mineral Zone and other properties for
claim rental fees and general exploration programs. The Company
requires approximately $480,000 for general and administrative
expenditures for the ensuing 12 month period, $699,429 for payments on
its notes payable and approximately $85,000 related to the proposed
application to the Toronto Stock Exchange for listing and market
making expenses. The remaining proceeds of private placements and the
exercise of stock options will be reserved for general working capital
purposes to reduce current liabilities.
The Company has $699,429 in payments on notes payable due in the next
year. The Company anticipates repayment of these notes from the
proceeds of private placements and the exercise of stock options.
The Company expects to fund exploration of the Petsite and Golden
Eagle properties through its joint venture with Cyprus under which
Cyprus has been granted an option to earn a 70% working interest in
the properties. The Company is also in discussions to obtain joint
venture partners on certain of its other properties.
As at June 30, 1996, the Company has a working capital deficiency of
$319,957. The Company anticipates improvement of this deficiency from
the proceeds of private placements and the exercise of stock options
during the ensuing year. The Company may also seek a debt
restructuring plan with its current debt holders during 1996 in order
to correct this deficiency.
The Company is dependent on the proceeds of private placements and the
exercise of stock options to fund its general and administrative
expenditures and its mineral exploration and development costs.
Without such proceeds, the Company may not continue as a going
concern. The Company anticipates revenue to be generated during 1996
from the processing of ores through its Eckert Hill facility. The
amount of positive cash flows, if any, from such production of ores at
the Eckert Hill facility, cannot be reasonably estimated, and
accordingly the Company will be required to rely on the sale of
securities or on a possible joint venture partner for its required
funding. The Company will need further funds to continue its
operations, and there is no reasonable assurance that such funding
will be available.
As at June 30, 1996, the Company had a working capital deficiency of
$319,957 as compared to a deficiency of $679,273 at June 30, 1995.
Cash flows generated from the financing activities of the Company were
recorded at the periods ended June 30 1996 and 1995 of $1,232,473 and
$257,596 respectively. The long-term debt increased to $20,078 at
June 30, 1996 from $Nil at June 30, 1995, and current liabilities
increased to $1,480,766 at June 30, 1996 from $789,966 at June 30,
1995. The Company has also raised share subscriptions totaling
$1,260,495 as compared to $155,000 as at June 30, 1995 related to a
private placement of 377,950 units comprised of 2 common shares and 1
warrant which will allow the holder to purchase an additional common
share for $1.75 U.S. during the first year following regulatory
approval and at $2.75 U.S. during the second year. The balance of the
share subscriptions were received by the Company subsequent to June
30, 1996, bringing the total private placement to $1,322,825.
Approval in principle has been received on this private placement, and
final regulatory approval is a anticipated in the near future. Of the
June 30, 1996 current liabilities, $213,850 represents accrued claim
rental fees, $699,429 represents the current portion of notes payable
to shareholders and $118,089 are amounts payable to various related
parties. The balance of current liabilities consists of a bank loan
in the amount of $30,409 and approximately 120 days of unpaid trade
accounts payable. Legal fees represent a significant portion of these
unpaid trade accounts payable.
The Company is in the process of reincorporating in the State of
Wyoming, U.S.A. which, if completed, could impair the Company's
ability to use Canadian net operating loss carryforwards and could
result in certain Canadian exit taxes.
Negative cash flows from operating activities were recorded for the
periods ended June 30, 1996 and 1995 of ($161,838) and ($139,951)
respectively. The Company will continue recording negative cash flows
from operating activities unless significant revenue is generated from
ore production. This continued negative cash flow will have a
material negative impact on liquidity.
Investing activities consist of funds being expended on resource
properties. The net cash expended on investing activities increased
to $216,543 to June 30, 1996 from $208,376 to June 30, 1995.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
-------------------------
There have been no material developments regarding the legal
proceedings described in the Company's Form 10-KSB for the period
ended December 31, 1995. The reader is therefore referred to those
filings.
ITEM 2. CHANGES IN SECURITIES
-----------------------------
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
---------------------------------------
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
-----------------------------------------------------------
(a) On June 24, 1996, the Company held its Annual Meeting of
Shareholders.
(b) At the meeting, the shareholders passed a resolution increasing
the Board of Directors from three (3) to five (5). The
shareholders re-elected two (2) directors previously serving on
the board: Delbert W. Steiner and Edwin R. Knickel. The third
prior director, Peter Lepik, did not stand for election. The
shareholders also elected Geddes Webster to sit upon the Board.
There were no other persons nominated to run for director of the
Company, and no opposing votes.
(c) The following is a tabulation of the vote for each of the matters
submitted to a vote of shareholders at the annual meeting.
For Against Abstaining
--------- ------- ----------
(i) Del Steiner
Edwin R. Knickel 2,897,895 -0- -0-
Geddes Webster
(ii) Increasing the number 2,897,895 -0- -0-
of directors on the
Board from 3 to 5.
(iii) Increasing the number
of authorized shares 2,897,895 -0- -0-
from 20,000,000 to
100,000,000.
For Against Abstaining
--------- ------- ----------
(iv) Cancellation of the
existing Articles of 2,897,895 -0- -0-
Incorporation as filed
with the Registrar of
Companies and adoption
of a new form of
Articles of the Company.
(v) Continuation of Coopers 2,897,895 -0- -0-
and Lybrand, Chartered
Accountants, as the
Company's auditor and
the setting of remunera-
tion for the auditor.
(vi) Authorization to allow 2,897,895 -0- -0-
directors to grant
incentive stock options
to insiders of the
Company and to renegoti-
ate existing stock
options upon such terms
as may be acceptable
to the Vancouver Stock
Exchange.
(vii) Motion by shareholder 892,993 1,994,902 10,000
to adjourn the motion
to cancel the existing
articles of the Company
and tabling the revised
articles.
ITEM 5. OTHER INFORMATION
--------------------------
Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
------------------------------------------
(a) The following exhibits are attached to the Company's Form 10-QSB
for the quarter ending June 30, 1996:
(3.a) Articles of Incorporation adopted by shareholder vote at
the Annual General Meeting.
(10.1) Joint Venture Agreement between the Company and Cyprus
Gold Exploration Corporation.
(10.2) Agreement to Assign Interest - Deadwood claims.
(10.3) Agreement to Assign Interest - Friday claims.
(10.4) Agreement to Assign Interest - Buffalo Gulch claims.
(20.1) Notice of Annual General Meeting, Information Circular and
Form of Proxy.
(27) Financial Data Schedule
(b) There were no reports on Form 8-K filed during the second quarter
ending June 30, 1996.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
IDAHO CONSOLIDATED METALS CORP.
DATED: August 26, 1996 By: /s/ Delbert W. Steiner
-----------------------------------
Delbert W. Steiner, President
and Chief Executive Officer
DATED: August 26, 1996 By: /s/ Kenneth A. Scott
-----------------------------------
Kenneth A. Scott
Chief Financial Officer