UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended September 30, 2008
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 000-30651
INDUSTRIAL MINERALS, INC.
---------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 11-3763974
-------------------------- --------------------------------
(State or other jurisdiction (IRS Employer of incorporation or
organization) Identification No.)
346 Waverley Street, Ottawa, Ontario, Canada K2P 0W5
----------------------------------------
(Address of principal executive offices)
(613) 288-4288
---------------------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes [X] No [_]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act:
Large Accelerated Filer |_| Accelerated Filer |_|
Non-accelerated Filer |_| Smaller reporting company |X|
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes [_] No [X]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section l2, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [_]No [_]
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: November 11, 2008: 147,018,416 shares
..
PART I - FINANCIAL INFORMATION
Item 1 - FINANCIAL STATEMENTS
For financial information, please see the financial statements and the notes
thereto, attached hereto and incorporated by this reference.
The financial statements have been adjusted with all adjustments which, in the
opinion of management, are necessary in order to make the financial statements
not misleading.
The financial statements have been prepared by Industrial Minerals, Inc. without
audit pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnotes disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted as allowed by such rules and
regulations, and management believes that the disclosures are adequate to make
the information presented not misleading. These financial statements include all
the adjustments which, in the opinion of management, are necessary for a fair
presentation of financial position and results of operations. All such
adjustments are of a normal and recurring nature. These financial statements
should be read in conjunction with the audited financial statements at December
31, 2007, included in the Company's Form 10-KSB.
INDUSTRIAL MINERALS, INC.
And Subsidiary
(An Exploration Stage Company)
CONSOLIDATED BALANCE SHEET
September 30, 2008 and December 31, 2007
September 30 December 31
2008 2007
----------- -----------
CURRENT ASSETS
Cash $ 4,609 $ 104,236
Receivables 15,886 18,520
Prepaid expenses -- --
Deposits 12,362 12,510
----------- -----------
Total Current Assets 32,857 135,266
LONG-TERM DEPOSITS 230,000 230,000
FIXED ASSETS
Building and Equipment 2,388,876 2,388,876
Less accumulated depreciation (1,046,748) (895,366)
----------- -----------
1,342,128 1,493,510
----------- -----------
$ 1,604,986 $ 1,858,776
=========== ===========
CURRENT LIABILITIES
Accounts payable $ 332,323 $ 114,986
Accrued interest payable 60,849 52,089
Loans payable - current 218,415 310,932
Due to related party 58,286 25,300
Customer Deposit 47,619 --
----------- -----------
Total Current Liabilities 717,492 503,307
OTHER LIABILITIES
Asset retirement obligations 230,000 230,000
Accrued interest payable -- --
Loans payable 600,626 567,607
----------- -----------
1,548,118 1,300,914
----------- -----------
STOCKHOLDERS' EQUITY
Common stock, 200,000,000 shares authorized,
$0.0001 par value; 147,018,416 and 137,644,476
shares issued and outstanding, respectively 14,699 13,761
Additional paid-in capital 9,423,370 8,801,197
Common stock subscriptions 265,000 --
Accumulated other comprehensive income (105,985) (105,985)
Deficit accumulated during exploration stage (9,540,216) (8,151,111)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 56,868 557,862
----------- -----------
$ 1,604,986 $ 1,858,776
=========== ===========
SEE ACCOMPANYING NOTES TO UNAUDITED FINANCIAL STATEMENTS
INDUSTRIAL MINERALS, INC
(An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three and Nine Month periods ended September 30, 2008 and 2007
and for the period from November 6, 1996
(date of inception) to September 30, 2008
Period from
November 6, 1996
(Inception of
Exploration
Stage)
To
Three Months Ended Nine Months Ended September 30,
September 30, September 30, 2008
---------------------------- ---------------------------- ------------
2008 2007 2008 2007
INCOME EARNED DURING EXPLORATION STAGE -- -- -- -- $ 19,337
------------ ------------ ------------ ------------ ------------
EXPENSES
Cost of Revenue -- -- -- -- 86,901
Professional fees -- 5,783 104,405 44,130 1,659,095
Royalty fees -- 14,301 11,971 27,000 137,349
Depreciation and amortization 50,461 59,993 151,383 173,185 1,129,021
Impairment of long-lived assets -- -- -- -- 582,176
Loss on disposal of assets -- -- -- 11,920 66,171
Stock compensation expense 66,820 139,518 192,410 286,245 639,263
Management fees and salaries 256,417 284,187 633,540 933,883 2,729,324
General exploration expense -- 268,055 38,929 268,055 457,528
Other general and administrative 124,833 71,111 272,362 266,030 4,877,092
------------ ------------ ------------ ------------ ------------
TOTAL EXPENSES 498,531 842,948 1,405,000 2,010,448 12,363,920
------------ ------------ ------------ ------------ ------------
LOSS FROM OPERATIONS 498,531 (842,948) 1,405,000 2,010,448 12,344,583
OTHER INCOME (EXPENSE)
Interest income -- -- -- -- 3,172
Gain from extinguishment of debt -- -- -- -- 1,047,634
Foreign currency gain (loss) 10,741 104,972 15,897 48,414 (24,194)
Other income -- -- -- -- 594
------------ ------------ ------------ ------------ ------------
TOTAL OTHER INCOME -- 104,972 15,897 48,414 1,027,206
------------ ------------ ------------ ------------ ------------
LOSS FROM OPERATIONS 487,790 (737,976) 1,389,103 2,058,862 11,317,377
INCOME TAXES -- -- -- -- --
------------ ------------ ------------ ------------ ------------
NET LOSS 487,790 (737,976) 1,389,103 2,058,862 11,317,377
============ ============ ============ ============ ============
NET LOSS PER SHARE, BASIC AND DILUTED (0.01) (0.01) (0.01) (0.02)
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF COMMON
STOCK SHARES OUTSTANDING,
BASIC AND DILUTEd 139,149,728 133,365,233 139,149,728 124,311,554
============ ============ ============ ============
SEE ACCOMPANYING NOTES TO UNAUDITED FINANCIAL STATEMENTS
INDUSTRIAL MINERALS, INC.
(An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Period from
November 6, 1996
(Inception of
Exploration
Stage)
Nine Months Ended To
September 30 September 30,
2008 2007 2008
------------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,389,103) $ (1,962,034) $ (11,237,196)
Adjustments to reconcile net loss
to net cash used by operating activities:
Depreciation 151,383 173,185 1,120,729
Provision for bad debts -- -- 49,676
Stock issued for services 220,500 636,817 1,724,576
Stock issued for debt retirement
Stock compensation 192,410 286,245 192,410
Impairment of long-lived assets -- -- 297,882
Loss on disposal of assets -- 11,920 66,170
Accrued interest payable 8,760 2,882 8,760
Gain on extinguishment of debt -- -- (1,047,634)
Changes in: --
Receivables 2,634 (27,040) (20,055)
Inventory -- -- (5,527)
Prepaid expenses -- (2,408) (540)
Deposits 148 (2,480) (12,362)
Accounts payable and accrued expenses 188,268 12,881 144,826
Customer deposit 47,619 47,619
Accrued interest payable -- -- 320,370
Due to related parties 37,248 6,982 697,154
------------ ------------ ------------
Net cash used in operating activities (540,133) (863,050) (7,653,142)
------------ ------------ ------------
Cash flows from investing activities:
Purchase of building and equipment -- (38,235) (2,116,266)
Investment inMultiplex -- -- (75,000)
Acquisition of goodwill -- -- (149,057)
Loan to related party -- -- (50,000)
Loan repayments -- -- 4,493
Long-term deposits -- -- (159,600)
Proceeds from sale of assets -- 18,080 --
------------ ------------ ------------
Net cash used in investing activites -- (20,155) (2,545,430)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from sale of common stock 210,201 943,283 4,472,268
Subscriptions received 265,000 265,000
Net proceeds from loans payable -- 7,272,185 7,272,185
Loan repayments (18,798) (10,000) (1,790,515)
Proceeds from mortgage -- -- 17,000
Principal payments on mortgage -- (894) (17,000)
Cash acquired in acquisition of Peanut Butter & 140 140
Jelly, Inc. -- --
------------ ------------ ------------
Net cash provided by financing activities 456,403 932,388 10,219,078
------------ ------------ ------------
Effect of exchange rate changes on cash and
cash equivaLENTS (15,897) -- (15,897)
NET INCREASE (DECREASE) IN CASH (99,627) 49,182 4,609
Cash, beginning of period 104,236 6,759 --
------------ ------------ ------------
Cash, end of period $ 4,609 $ 55,941 $ 4,609
============ ============ ============
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid $ -- $ -- $ --
============ ============ ============
Income taxes paid $ -- $ -- $ --
============ ============ ============
Non-cash investing and financing activities:
Shares issued for debt -- -- --
============ ============ ============
Shares issued for services -- 636,817 --
Shares issued for investment -- -- --
============ ============ ============
Shares issued for accrued interest -- -- --
============ ============ ============
Long term deposits financed by accounts payable -- -- --
============ ============ ============
Property costs financed by issuance of common stock -- -- --
============ ============ ============
Equipment financed by:
Accounts payable -- -- --
============ ============ ============
Issuance of common stock -- -- --
============ ============ ============
INDUSTRIAL MINERALS, INC.
AND SUBSIDIARY
(An Exploration Stage Company)
Notes to Consolidated Financial Statements Nine month period
ended September 30, 2008 and 2007
NOTE 1 - BASIS OF PRESENTATION
The financial statements have been prepared in accordance with generally
accepted accounting principles for the interim financial information with the
instructions to Form 10-QSB 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
accruals) considered necessary for a fair presentation have been included.
We translate all assets and liabilities using period-end exchange rates. We
translate statements of operations items using average exchange rates for the
period. We record the resulting translation adjustment within accumulated other
comprehensive loss, a separate component of stockholders' equity. We recognize
foreign currency transaction gains and losses in our consolidated statements of
operations, including unrealized gains and losses on short-term inter-company
obligations using period-end exchange rates. We recognize unrealized gains and
losses on long-term inter-company obligations within accumulate other
comprehensive loss, a separate component of stockholders' equity.
We recognize exchange gains and losses primarily as a result of fluctuations in
currency rates between the U.S. dollar (the functional reporting currency) and
the Canadian dollar (currencies of our subsidiaries), as well as their effect on
the dollar denominated inter-company obligations between us and our foreign
subsidiaries. All inter-company balances are revolving in nature and we do not
deem them to be long-term balances. For the nine months ended September 30, 2008
and 2007, we recognized foreign currency gain of $10,741 and nil, respectively.
For further information, refer to the financial statements and notes thereto
included in the Company's Annual Report on Form 10KSB for the year ended
December 31, 2007.
The Company's fiscal year-end is December 31.
NOTE 2 - ACCOUNTING POLICIES
This summary of significant accounting policies of Industrial Minerals, Inc. is
presented to assist in understanding the Company's financial statements. The
financial statements and notes are representations of the Company's management,
which is responsible for their integrity and objectivity. These accounting
policies conform to accounting principles generally accepted in the United
States of America and have been consistently applied in the preparation of the
financial statements.
Recently Issued Accounting Standards
- ------------------------------------
In September 2006, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS) NO.157, "Fair Value
Measurements". SFAS 157 defines fair value, establishes a framework for
measuring fair value, and expands disclosures about fair value measurements.
SFAS 157 is effective as of the beginning of the first fiscal year that begins
after November 15, 2007. As such, the Company is required to adopt these
provisions at the beginning of the fiscal year ended December 31, 2008. Adoption
of SFAS 157 did not have a material effect on the Company's financial
statements.
In February 2007, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 159, "The Fair Value
Option for Financial Assets and Financial Liabilities, including an amendment of
FASB Statement NO. 115. SFAS 159 permits entities to choose to measure many
financial instruments and certain other items at fair value at specified
election dates. This Statement applies to all entities, including not-for-profit
organizations. SFAS 159 is effective as of the beginning of an entity's first
fiscal year that begins after November 14, 2007. As such, the Company is
required to adopt these provisions at the beginning of the fiscal year ended
December 31, 2008. Adoption of SFAS 157 did not have a material effect on the
Company's financial statements.
Basic and Diluted Loss Per Share
- --------------------------------
Loss per share was computed by dividing the net loss by the weighted average
number of shares outstanding during the period. The weighted average number of
shares was calculated by taking the number of shares outstanding and weighting
them by the amount of time that they were outstanding. Basic and diluted loss
per share are the same, as inclusion of common stock equivalents would be
anti-dilutive.
Going Concern
- -------------
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and satisfaction of
liabilities in the normal course of business. The Company has suffered material
recurring losses from operations since inception. At September 30, 2008, the
Company had a negative working capital of $ 684,635, recurring losses, and an
accumulated deficit of $ 9,540,216 and negative cash flow from operations. These
factors raise substantial doubt about the Company's ability to continue as a
going concern.
Continuation of the Company is dependent on achieving sufficiently profitable
operations and possibly obtaining additional financing. Management has and is
continuing to raise additional capital from various sources. The Company's
website contains all news releases in the past year as well as detailed
descriptions and analysis of the Company's mineral property. There can be no
assurance that the Company will be successful in raising additional capital as
and when it is required.
The financial statements do not include any adjustment relating to the
recoverability and classification of assets and liabilities that might be
necessary should the Company be unable to continue as a going concern.
NOTE 3 - ORGANIZATION
The Company was incorporated on November 6, 1996, as Winchester Mining
Corporation in the State of Delaware. On May 13, 2000, in connection with its
merger with Hi-Plains Energy Corp. the Company changed its name from Winchester
Mining Corporation to PNW Capital, Inc. On January 31, 2002, the Company
acquired 91% of the outstanding shares of Industrial Minerals, Inc. On May 2,
2002, the Company merged the remaining 9% of Industrial Minerals, Inc. into PNW
Capital, Inc. and changed its name to Industrial Minerals, Inc.
NOTE 4 - PRESENTATION OF INTERIM INFORMATION
The accompanying interim financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
and, in the opinion of management, include all normal adjustments considered
necessary to present fairly the financial position as of September 30, 2008 and
the results of operations and cash flows for the nine month period ended
September 30, 2008 and 2007. Interim results are not necessarily indicative for
results for a full year.
The financial statements and notes are presented as permitted by Form 10-Q, and
do not include information included in the Company's audited financial
statements and notes for the year ended December 31, 2007.
FINANCING
During the nine -month period ending September 30, 2008 the Company has been
able to secure equity financing in the amount of $ $475,200, from non-affiliated
shareholders. This includes $265,000 in subscriptions at September 30, 2008
where the stock is being issued subsequent to September 30, 2008.
NOTE 5 - RECLASSIFICATION
Certain amounts in prior year financial statements have been reclassified to
conform to the current year information.
NOTE 6 - COMMON STOCK OPTIONS AND WARRANTS
The Board of Directors have authorized creation of a stock option plan and the
issuance of options in the amount of 19,300,000 shares at various prices and for
periods of one to four years. The purpose of the Plan is to advance the business
and development of the Company and its shareholders by enabling employees,
officers, directors, and independent contractors or consultants of the Company
the opportunity to acquire a proprietary interest in the Company from the grant
of options to such persons under the Plans' terms. The Plans provide that the
Company's board of directors may exercise its discretion in awarding options
under the Plan and to determine the per share option price for the stock subject
to each option.
The Company adopted SFAS 123, "Accounting for Stock-Based Compensation",
effective April 1, 2007. Compensation cost for the Company's stock option plans
had been determined in accordance with the fair value based method prescribed is
SFAS 123. The fair value of option grants is estimated on the date of grant
utilizing the Black-Scholes option pricing model.
The fair value of each option grant is estimated on the date of the grant using
the Black-Scholes option-pricing model with the following weighted
average assumptions used for option granted during the nine months ended
September 30, 2008: expected volatility of 88%; risk-free interest rate ranging
from 4.93% to 5.18%; and an expected term of up to 6 years.
In April 2007, the Company granted 4,000,000 stock options to a Director,
vesting over 4 years at 1,000,000 per annum, starting April 3, 2008. The
exercise price of these stock options is to be determined at market price on the
date the stock options vest. The price at April 3, 2008 was $0.07 per share.
This vested stock option of 1,000,000 will expire on April 2, 2010. The balance
of the stock options will be cancelled as this director resigned June 20, 2008.
The Company also granted 1,000,000 stock options to a second Director, vesting
over 4 years at 250,000 per annum, starting April 3, 2008. The exercise price of
those stock options is to be determined at market price on the date the stock
options vest. The price at April 3, 2008 was $0.07 per share. This vested stock
option of 250,000 will expire on April 2, 2010. The balance of the stock options
will be cancelled as this director resigned July 9, 2008.
An Officer/Director was granted 2,000,000 stock options, vesting over 4 years at
500,000 stock options per year starting April 3, 2008 exercisable at a price of
$0.10 per share. These stock options expire 2 years from the vesting date of
each 500,000 amount, thus 500,000 stock options will expire on April 2, 2010
through to April 2, 2013.
In April 2007, the Company also granted a total of 12,000,000 stock options to
two Officers and an advisor. The 12,000,000 stock options that were granted to
two Officers and an advisor (4,000,000 each) vest over 3 years, in an amount of
1,333,333 per annum for each of the three officers, exercisable at a price of
$0.10 per share. These stock options expire 2 years from the vesting date of
each 1,333,000 amount, thus 1,333,333 stock options will expire on April 2, 2010
through to April 2, 2012.
Subsequent to the grant date, the Company and the advisor mutually agreed to
reduce his stock option entitlement from 4,000,000 stock options to 2,000,000
stock options; those stock options are to vest over 3 years in an amount of
666,667 per annum. The final 666,667 stock options for that officer expire April
2, 2012. This advisor was terminated in September 2008 and the last two years of
options, namely 666,667 per annum, were cancelled.
On January 31, 2008, an officer who had been granted 4,000,000 of the
above 12,000,000 stock options terminated his employment with the Company. The
Company agreed to vest 1,100,000 of those stock options on April 3, 2008; the
remaining 2,900,000 stock options were cancelled.
On June 12, 2008, an officer who had been granted 4,000,000 of the above 12,
000,000 stock options terminated his employment with the Company. Under terms of
his agreement, the Company will vest 1,333,333 of the stock options and the
remaining 2,666,667 stock options were cancelled.
In April 2007, a consultant of the Company was granted 1,200,000 stock options
exercisable at a price of $0.20 per share. 200,000 of these options fully vested
on July 1, 2007, and expire on July 1 2009. An additional 1,000,000 stock
options vest on July 1, 2008 and expire on June 30, 2010.
On January 29, 2008, this consultant was granted 2,000,000 stock options
exercisable at $0.15 per share. These stock options vest over 3 years commencing
April 3, 2008 in an amount 666,667 per annum, and expire 2 years after their
vesting date; thus 666,667 stock options will expire on April 2, 2010 through to
April 2, 2013. These options were surrendered by the consultant in April 2008.
In June 2007, the Chief Financial Officer was granted 250,000 stock options that
vested on June 30, 2007 exercisable at a price of $0.10 per share. These stock
options were granted as settlement for a debt owed by the Company to the CFO in
the amount of $25,000. This debt was settled by issuance of 250,000 restricted
common stock subsequent to September 30, 2008.
In July 2007, an advisor to the Company was granted 1,250,000 stock options
exercisable at $0.20 per stock. 250,000 of these options vested fully on July 1,
2007 and expire in 2 years on June 30, 2009. The vesting of the remaining PAGE>
1,000,000 stock options are conditional on the achievement of performance
milestones, and expire 2 years from the date on which the vesting milestones are
achieved. This advisor was terminated in September 30, 2008 and the 1,000,000
conditional stock options will be cancelled.
In July 2007, a second advisor to the Company was granted 750,000 stock options
exercisable at $0.20 per share. These stock options vest over 3 years commencing
July 1, 2008 in an amount 250,000 per annum, and expire 2 years after their
vesting date; thus 250,000 stock options expire on June 30, 2010 through to June
30, 2013. On February 18, 2008, this advisor terminated his employment with the
Company. All of these stock options were cancelled on that date.
On January 29, 2008, an advisor to the Company was granted 500,000 stock options
exercisable at $0.15 per share. These stock options vest over 3 years commencing
April 3, 2008 in an amount 166,667 per annum, and expire 2 years after their
vesting date; thus 166,667 stock options will expire on April 2, 2010 through to
April 2, 2013. This advisor was terminated in September 2008 and the last two
years of options, 333,334 shares will be cancelled.
As at June 30, 2008, the total stock options still granted and outstanding were
6,766,665, of which 5,266,665 are vested and exercisable.
The following table summarizes stock option activity for the nine months ended
September 30, 2008:
Number of securities to be Weighted-average Weighted
Equity compensation plans issued exercise price Average
not approved by security upon exercise of of outstanding Fair
holders outstanding options options Value
- --------------------------- ---------------------------- ----------------- --------
Outstanding Dec 31, 2007 20,450,000 $ 0.106 $0.09
Granted 2,500,000 $ 0.15 $0.05
Exercised 0 $ 0.00 $0.00
Cancelled or expired 16,183,335 $ 0.12 $0.07
---------------------------- --------
Total 6,766,665
============================
Exercisable 5,266,665
Using the Black-Scholes option pricing model, the Company had stock compensation
expense for the nine months ending September 30, 2008 of $192,410. There remains
a balance of $356,731 to be expensed over the vesting period of the
options.
As at September 30, 2008, there are 3,690,000 warrants to acquire common shares
of the Company outstanding.
910,000 warrants, entitling the owner to acquire a share of common stock at
$0.10 per share on or before April 3, 2009, were issued in June 2007 as part of
a private placement with a single investor.
5,000,000 warrants, entitling the owner to acquire an additional share of common
stock at $0.05 per share on or before April 3, 2008, were issued in June 2007 as
part of a private placement with a single investor. These were never exercised
and expired April 3, 2008.
500,000 broker warrants, entitling the owner to acquire a share of common stock
at $0.16 per share on or before April 27, 2009, were issued in July 2007 as part
of a private placement arranged by Wellington West Capital Inc.
500,000 broker warrants, entitling the owner to acquire a share of common stock
at $0.17 per share on or before October 17, 2009, were issued in October 2007 as
part of a private placement arranged by Wellington West Capital Inc.
1,780,000 warrants, entitling the owner to acquire a share of common stock at
$0.15 per share on or before March 10, 2010 were issued in March 2008 as part of
a private placement with five investors.
Note 7 - ASSET RETIREMENT OBLIGATION
SFAS No. 143 "Accounting for Asset Retirement Obligations" (ARO) addresses
financial accounting and reporting obligations associated with the retirement of
tangible long-lived assets and the associated asset retirement costs. SFAS No
143 requires that the fair value of a liability for an ARO be recognized in the
period in which it is incurred and the corresponding cost capitalized by
increasing the carrying amount of the long-lived asset.
In March 2005, the FASB issued interpretation 47, "Accounting for Conditional
Assets Retirement Obligations (FIN 47). This interpretation clarifies the term
conditional asset retirement obligation as used in SFAS No 143. Conditional
asset retirement obligation refers to a legal obligation to perform as asset
retirement activity in which the timing and/or method of settlement are
conditional on a future event that may or may not be within the control of the
entity. Accordingly, an entity is required to recognize a liability for the fair
value of a conditional asset retirement obligation if the fair value of the
liability can be reasonably estimated. In conjunction with FIN 47, an ARO
liability of $230,000 has been recorded and the capitalized costs are included
in "Property and Equipment".
NOTE 8 - SUBSEQUENT EVENT
On July 9, 2008, William Booth resigned as a director of the Company. This
followed the resignation of William Thomson on June 20, 2008 as Chairman and
Director and David Wodar, on June 12, 2008 as President. New directors were
appointed - Chris Crupi,C.A. and Gregory Bowes, who were appointed to the Board
of Directors on June 23, 2008. They joined Robert Dinning C.A. who was appointed
President and CEO of the Company in addition to being CFO and Secretary.
NOTE 9 - COMMITMENTS AND CONTINGENCIES
Operating Lease
- ---------------
Effective August 1, 2007, the Company leased office facilities in Oakville
Ontario for a three year period expiring July 31, 2010 that provides for monthly
payments of approximately $2,350 in U.S. dollars.
The Company has relocated its head office to 346 Waverley Street, Ottawa
Ontario, Canada, K2P 0W5.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Overview
- -------
Industrial Minerals, Inc. ("the Company"), a Delaware Corporation, was
incorporated on November 6, 1996 under the name Winchester Mining Corp. The name
of the Company was subsequently changed to PNW Capital, Inc. on May 16, 2000.
The Company is a successor registrant pursuant to Section 12(g)3 of the
Securities Exchange Act of 1934, by virtue of a statutory merger of the Parent,
Winchester Mining Corp., a Delaware corporation, and its wholly owned
subsidiary, Hi-Plains Energy Corp., a Wyoming corporation, with Winchester
Mining Corporation being the survivor. There was no change to the issued and
outstanding shares of Winchester Mining Corporation, and all shares of Hi-Plains
Energy Corp. were retired by virtue of the merger.
On May 15, 2000, Winchester Mining Corp. completed a Share Purchase
Agreement with shareholders of Hi-Plains Energy Corp. in which Winchester Mining
Corp., a Delaware Corporation, acquired all 780,000 shares outstanding of the
Registrant for the purposes of accomplishing a Merger of Hi-Plains Energy Corp.
and Winchester Mining Corp. The Merger was completed on May 15, 2000.
In fall of 2000 the Company acquired 100% of the issued and outstanding
stock of PB&J Inc., a newly formed Colorado Corporation upon issuance of
47,460,000 shares of common stock to the principals of PB&J, who became the
management and Directors of PNWC.
On December 14, 2001, the shareholders adopted a reverse split of the then
issued and outstanding shares on a 100 for one basis, except that no shareholder
shall be reduced to less than 50 shares. The effective date of the reverse split
was January 7, 2002.
On January 31, 2002, PNW Capital, Inc. ("PNW" or the "Company"), entered
into a definitive acquisition agreement to acquire Industrial Minerals
Incorporated ("IMI"), a private Nevada Corporation, owner of certain mineral
leases located in the Townships of Head, Clara and Maria in the County of
Renfrew and the Province of Ontario, Canada. The Agreement for Share Exchange
was executed January 31, 2002 and approved by the Board of Directors on January
31, 2002. Under the terms of the acquisition agreement, PNW exchanged a total of
31,511,700 shares of its common stock for 91% of the issued and outstanding
shares of IMI. As a result of the transaction, IMI became a wholly owned
subsidiary of PNW and changed its company name to Industrial Minerals, Inc.
On June 13, 2003, the directors approved a resolution to forward split the
common shares of the Company on a two shares for one basis, and a majority of
the shareholders consented in writing to the forward split. This resulted in the
issuance of an additional 36,031,948 shares of common stock.
The Ministry of Environment of the Province of Ontario has requested a
storm water management plan from the Company. The Company has retained Knight
Piesold to author this plan and that this plan will be submitted to the Ministry
of Environment when completed.
In August 2004, the Company through its wholly owned subsidiary, Industrial
Minerals Canada, Inc. received notice from the Ministry of Northern Development
and Mines for the Province of Ontario that the Bissett Creek Graphite Project
Certified Closure Plan as per Subsection 141(3)(a) of the Mining Act for the
Province of Ontario is now considered filed.
In March, 2007, a significant management change occurred when three of the
existing board members resigned and two new directors were appointed. Mr.
William Thomson was appointed a director and Chairman of the Board, and Mr.
William Booth was appointed a director. They joined Mr. Robert Dinning C.A. who
continued as CFO, secretary, and a director of the Company.
On April 3, 2007, Mr. Dick van Wyck was appointed interim President and
CEO. Mr. van Wyck is a practicing lawyer with over 20 years of business and
commercial law, mergers and acquisitions, and intellectual property matters, and
was formerly in-house counsel with the Department of Justice, as well as with
two large Corporations. Mr. van Wyck resigned July 9, 2007 and provides legal
opinions from time to time when requested.
On July 9, 2007, Mr. David Wodar was appointed President and CEO. Mr. Wodar
is a private business consultant and an Economics graduate from University of
Western Ontario. Mr. Wodar operated his own Consulting business, Vantage Point
Capital for the past 11 years, specializing in Marketing and Communications for
private and public entities. Mr. Wodar resigned his position with the Company on
June 12, 2008.
In June 2007, Mr. Paul Hynek was appointed to the Advisory Board. Mr.Hynek
has an extensive background in large scale mining projects and was formerly with
Inco. Mr. Hynek was joined on the advisory board by David Michaud, as Senior
Metallurgical Advisor.
Mr. Michaud, who holds a degree in Mining Engineering, has more than 15 years of
experience in mine and mill design, including operations in Canada and South
America. Mr. Michaud resigned from the advisory board on February 18,2008.
The former Chairman and Director, Mr. William Thomson resigned as Chairman
and a Director of the Company, effective June 20, 2008.
On June 23, 2008, Mr. Chris Crupi C.A. and Mr. Gregory Bowes, MBA joined
the Board of Directors. Mr. Robert Dinning C.A. continued as a director and was
reappointed CFO of the Company and also appointed President and CEO effective
June 23, 2008.
On July 9, 2008, Mr. William Booth resigned as a director of the Company.
The Company signed a contract with Geostat International Inc on May 22,
2007 regarding the preparation of a technical report NI-43101 on the Bissett
Creek Project. The Geostat work program included a site visit and independent
certification of resources, estimation of resources and classification of
resources, certification and validation of the database, verification and
validation of the interpretation of ore zones, and an assessment of the mill and
processing procedures, the market, the Capex, and related operating costs. The
process included the drilling of an additional 6 holes for just under 300 meters
in order to assist in verification of previously obtained data. The specific
drill targets have been determined by Geostat following their review of the
original drill target data prepared by Kilborn Engineering. These samples have
been analyzed for verification and validation of the graphite ore zones. The
report was finalized and on December 27, 2007.
As previously outlined, the Company has a 100% undivided interest in the
mineral lease. The property consists of 28 claims covering 1,400 acres (566
hectares) plus 900 acres (364 hectares) which are contiguous to its mine
property. In July, 2007, the Company completed the staking of an additional 950
acres (384 hectares), for a total area available for development of
approximately 3,250 acres (1,315 hectares). The Bissett Creek mine site is
located in Maria Township, about 180 miles (300 km) north-northeast of Toronto
Ontario and about 8 miles (14 km) south of Highway 17 in Northern Ontario
Canada.
During the nine months ending September 30, 2008, the Company continued
work at the mine site, including various meetings with Knight-Piesold
(environmental consulting firm) to review and update environmental monitoring
requirements under the Mine Closure Plan (MCP), initial meetings with the area
First Nations communities (Algonquin)including an inter-ministerial meeting to
work towards a Memorandum of understanding between the Company, Government
agencies, and First Nations leaders, general site cleaning, building repairs,
and commencement of construction of a lab facility.
The Company is delaying its plans to install a one (1) metric ton per hour
pilot plant at the mine site while it explores different options available,
including financial options, regarding the production of product samples for
prospective customers.
The Company has also completed a comprehensive program of metallurgical
testing to identify the key liberation and classification characteristics of the
ore body. This review included a general review of existing dry process at
Bissett Creek and existing processes used elsewhere for the liberation and
extraction of graphite. The dry process has many shortcomings which would
require a complete re-engineering and rebuild at great risk to stakeholders
whereas the froth flotation system is used extensively elsewhere in the world
and is proven. The Company selected Process Research Ortech (Mississauga
Ontario) and Actlabs (of Ancaster Ontario) as its processing and assaying
entities. Both were approved by Geostat and they provided the necessary data for
the completion of the NI 43101 that was been prepared by Geostat. The positive
preliminary assessment was completed and filed with Sedar on December 27, 2007.
Effective August 1, 2007, the Company moved into new corporate
headquarters, located at 2904 South Sheridan Way, Suite 100, Oakville Ontario,
Canada, L6J 7L7. It previously occupied premises in Toronto, Ontario, on a
month-to-month basis. On September 22, 2008, the Company moved its headquarters
to 346 Waverley Street, Ottawa Ontario, Canada, K2P 0W5.
On October 27, 2008, the Company engaged RBC Capital Markets, a division of
the Royal Bank of Canada, as financial advisor with respect to strategic options
facing the company. The engagement is for a term of 12 months with success fee
based compensation for completion of a transaction.
RESULTS OF OPERATIONS
For the nine month period ending September 30, 2008, the Company incurred a loss
of $ 1,322,284 compared to a loss of $ $2,058,862 for the nine months ending
September 30, 2007. The Company had no revenues for the nine months ending
September 30, 2008. The Company continues as an Exploration Stage Company and
will not have revenues until a proposed feasibility study is completed, a
determination is made as to the method of production, and the Company acquires
the necessary equipment to commence production.
During the nine month period ending September 30, 2008, the Company completed
the following private placements:
The first private placement was completed on February 26, 2008 with one
accredited investor at a price of $0.11 per share for net proceeds of $25,000.
This financing resulted in the issuance of 227,273 common shares.
The second private placement was completed on March 10, 2008 with five
accredited investors, at a price of $0.09 per share for net proceeds of
$160,200. This financing resulted in the issuance of 1,780,000 common shares
plus 1,780,000 warrants exercisable at $0.15 per share up to March 10, 2010.
At June 30, 2008, the Company completed an additional private placement of
$25,000 with an accredited investor at a price of $0.06 per common share which
resulted in the issuance of 416,667 restricted common shares. As well, the
Company received $175,000 in subscription agreements for issuance of restricted
common shares. Subsequent to Sept 30, 2008, two subscription agreements totaling
$175,000 resulted in issuance of 3,125,000 restricted common shares at $0.04 per
share plus a half warrant for one year at $0.08 per share to the first
accredited investor and 1,250,000 restricted common shares at $0.04 per share
plus a half warrant for one year at $0.08 per share to the second accredited
investor.
In the quarter ending September 30, 2008, the Company completed private
placements totaling $90,000 to four accredited investors. Three of the investors
acquired a total of 2,000,000 restricted common shares at $0.04 per share while
the fourth investor acquired 200,000 restricted common shares at $0.05 per
share.
The Company relied on Section 4(2) of The Securities Act of 1933, as amended and
Regulation S regarding the issuance of unregistered shares.
For the nine months ending September 30, 2008, expenses amounted to $1,338,180
compared to $2,010,448 for the nine months ending September 30, 2007.
Professional fees have increased to $105,915 compared to $44,130 for the nine
months ended September 30, 2007 mainly because of increased legal fees related
to proposed financings, and statutory filings related to financings.
Management fees and salaries were $759,130 for the nine months ended September
30, 2008 compared to $933,883 for the nine months ending September 30, 3007.
This is the result of a reduction in management fees and personnel in the
current year. Fees for the current year include payment to a marketing
consultant involved in identifying potential market opportunities in North
America.
General exploration expenses in the nine months ending September 30, 2008 of
$40,742 vs. $268,055 for the nine month period ending September 30, 2007 is a
reflection of more significant work done in 2007 in preparation of a technical
report, which included drilling at the site. This work was completed in December
2007 and resulted in the issuance of a NI 43-101 report. Very little exploration
work has been carried out at the site this year as the Company reviews its
financial requirements for further development work at Bissett Creek.
For the nine months ending September 30, 2008 stock compensation expense
amounted to $125,590 compared to $286,245 in the nine month period ending
September 30, 2007. Stock options were approved by the Board of Directors for
directors, officers and consultants but the options have not been registered nor
have they been submitted to shareholders for approval. Stock compensation
expense in total amounts to $482,321 and this is being amortized over the life
period of the stock options. This life period varies between 24 and 60 months.
At December 31, 2007, the Company had outstanding options in the amount of
20,450,000 shares. In 2008, an additional 2,500,000 options were issued. As of
September 30, 2008, with the resignations and terminations of various people,
the number of option shares still outstanding have been reduced to 6,766,665
shares of which 5,266,665 are currently vestible. When an
employee/consultant/director resigns or is terminated, only shares vested at
time of departure remain with the individual as an option.
General and administrative expenses for the nine months ending September 30,
2008 amount to $268,153 compared to $266,030 in the nine months ended September
30, 2007. The Company expects a significant reduction in general and
administrative expenses in the future as it has reduced its general overhead
overall while assessing its options for additional financing.
On September 23, 2008, the Company moved its headquarters to 346 Waverley St.
Ottawa Ontario, Canada K2P 0W5 and intends to seek a sublease for its previous
premises in Oakville Ontario.
The Company currently has no full time employees and it contracts with four
consultants for engineering, technical and administrative support and financial
services.
The Company will continue the use of outside professional consultants as it
continues its mineralogical assessment and its development of a detailed
mineralogy study. On November 7, 2008, the Company announced the appointment of
Mr. George Hawley as Technical Advisor to the Board of Directors and to assist
both the Board of Directors and RBC Dominion Capital Markets regarding their
current financial advisory services mandate. Mr. Hawley has nearly 40 years of
experience in the processing of industrial minerals including mica, graphite,
and silica, all of which are specific to the Bissett Creek property. He has
conducted projects for government agencies, mining companies in the USA, Europe,
Japan, Australia, Africa and Canada and has published over 50 papers on
technical and marketing topics pertaining to industrial minerals products.
As it is uncertain when revenue will be generated, expenses will need to be
financed by continued outside financial support. The Company has completed
several private placements this year as indicated earlier and intends to seek
additional equity financing and/or loans from shareholders and other interested
parties in order to finance its operations. While the Company feels it can
obtain the necessary financing there is no assurance that such investments,
loans, or other financial assistance will be forthcoming.
For the nine months ended September 30, 2008, the Company incurred a loss of $
$1,322,284 vs. a loss of $2,058,862 for the nine months ended September 30,
2007. While the Company has been successful in arranging necessary private
placement financing over the years, the Company cautions that until it has
completed its feasibility study and Baseline Mineralogical Assessment, there is
no assurance that a commercially viable mineral deposit exists on the property,
and that further exploration may be required before a final evaluation as to any
economic and legal feasibility is determined. The Company received its NI 43101
report December 27, 2007 and it was filed with regulatory authorities at that
time.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 2008, the Company had cash on hand in the amount of $ $4,609
compared to $104,236 at December 31, 2007. The Company has completed several
private placements in the nine months ending September 30, 2008 resulting in
$475,200 being raised. This includes subscription agreements outstanding at
September 30, 2008 that have subsequently been converted to restricted common
shares.
The Company also has a $10,000 deposit on a fuel tank located at the mine site
in Bissett Creek, and a deposit of $2,414 representing the last month's rent on
its facilities in Oakville, Ontario. The Company has a lease on premises located
at 2904 South Sheridan Way, Suite #100, Oakville Ontario, Canada, L6J 7L7. The
lease is for a period of 3 years at a monthly rate of $2,480 in Canadian dollars
and expires in June 2010. At September 22, 2008, the company moved its head
offices to 346 Waverley Street, Ottawa Ontario, Canada, K2P 0W5.
The Company has a long-term deposit of $230,000 with the Ministry of Finance for
the Province of Ontario. During the year ending December 31, 2004 a Mine
Development and Closure Plan was filed with, and accepted by, the Ministry of
Northern Development and Mines, in accordance with the MINING ACT, R.S.O. 1990,
Ontario Regulation 240/00, including the standards, procedures and requirements
of the Mining Code of Ontario. The Company's deposit in the amount of $230,000
is a financial guarantee to the Province of Ontario ensuring that there are
enough funds on hand to affect a proper closure of the Bissett Creek Graphite
property.
The Company has accounts payable of $332,321 at September 30, 2008 vs. $114,986
at December 31, 2007. Accrued interest payable of $60,849 is outstanding at
September 30, 2008. This pertains to accruals on loans payable of $218,415
currently due. Negotiations are continuing regarding settlement of this debt.
In September, 2002, the Company purchased a house at the entrance to the road
leading into the Bissett Creek property at a cost of $24,050. Subsequent
additions increased the house cost to $45,191. At the time of purchase, the
Company negotiated a first mortgage in the amount of $17,000 with the vendor
which required a payment of $359 (Canadian $400) monthly for five years. The
mortgage matured August 29, 2007 and $11,837 was paid in October 2007 in full
settlement.
The Company has current loans payable of $218,415 at September 30, 2008. Loans
of $195,558 have promissory notes and consist of a loan of $90,796 with interest
at 7% and a loan of $104,762 with interest at 10%. The remaining balance of
$22,,857 is unsecured and is being retired in an orderly basis. The promissory
notes are currently due and discussions are in process regarding settlement. The
Company has non-current loans of $ 600,626 as at September 30, 2008. This
includes loans from non affiliated parties in the amount of $384,626 which have
no specific terms of repayment and no promissory notes. The balance of $216,000
also has no specific terms or repayment and the amount is due to two former
officers of the Company who have assisted the Company in financing its current
deficit and in retiring current liabilities outstanding. Discussions are
proceeding with these former officers regarding an orderly settlement of this
debt.
The Company intends to obtain additional financing either by way of private
placements, loans, or a combination of both from shareholders and other
interested parties to retire outstanding debt, and finance its operations over
the next twelve months. While the Company intends to procure these private
placements and/or loans, there is no assurance that the Company will be
successful in its attempt to obtain said funding.
It is the Company's opinion that the intrinsic value of the Bissett Creek
property deposit lies in the large 1 to 6 mm (18 mesh to 1/4") Graphite and Mica
flakes. There is not presently any data available as to the specific
size-by-size weight distribution of graphite and mica in the ore. Graphite flake
values vary widely based on its size, but due to the fundamental lack of size
and chemical data, it is not possible at this stage to assign a clear specific
value to the rock.
Going Concern Consideration
- ---------------------------
As the independent certified public accountants have indicated in their report
on the financial statements for the year ended December 31, 2007, and as shown
in the financial statements, the Company has experienced significant operating
losses that have resulted in an accumulated deficit of $9,473,396 at September
30, 2008. These conditions raise doubt about the Company's ability to continue
as a going concern.
The ability of the Company to achieve its operating goals and thus positive cash
flows from operations is dependent upon the future market price of graphite,
future capital raising efforts, and the ability to achieve future operating
efficiencies. Management's plans will require additional financing, and
completion of final feasibility report. While the Company has been successful in
these capital-raising endeavors in the past, there can be no assurance that its
future efforts, and anticipated operating improvements will be successful.
Depending on the level of exploration activity, the Company does not have
adequate capital to continue its contemplated business plan through December 31,
2009, The Company is presently investigating all of the alternatives identified
above to meet its short-term liquidity needs. The Company believes that it can
arrange a transaction or transactions to meet its short-term liquidity needs,
however there can be no assurance that any such transactions will be concluded
or that if concluded they will be on terms favorable to the Company.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities
Exchange Act of 1934 and are not required to provide the information under this
item
Item 4. CONTROLS AND PROCEDURES
The Company maintains disclosure controls and procedures that are designed to
ensure that information required to be disclosed in the Company's Exchange Act
reports is recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms, and that such information is accumulated
and communicated to the Company's management, including its Chief Executive
Officer / Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure based closely on the definition of "disclosure
controls and procedures" in Rule 13a-14(c). In designing and evaluating the
disclosure controls and procedures, management recognized that any controls and
procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives, and management
necessarily was required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures.
On or about September 30, 2008, the end of the period of this report, the
Company carried out an evaluation, under the supervision and with the
participation of the Company's management, including the Company's President /
Chief Financial Officer, and a Board Member, of the effectiveness of the design
and operation of the Company's disclosure controls and procedures. Based on the
foregoing, the Company's President and Chief Financial Officer concluded that
the Company's disclosure controls and procedures were effective.
There have been no changes in the Company's internal controls or in other
factors that could affect the internal controls subsequent to the date the
Company completed its evaluation.
PART II. - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The Company had been named in a lawsuit filed by an individual pertaining to a
dispute with an alleged shareholder of the Company.
The lawsuit was filed in the State of Washington in the Superior Court of the
State of Washington For King County. The Company was served on February 6, 2007
in Delaware.
The Plaintiffs are Mohamad S. Bakizada and Henriette Bakizada.
The Defendants are the Company, Robert D Poirier and Jane Doe Poirier, John
Melnyk and Jane Doe Melnyk, and Larry Van Tol and Jane Doe Van Tol.
Mr. Bakizada was claiming that shares allegedly purchased by him from the
Defendants is in violation of Washington State Securities Act.
Mr. Bakizada was requesting relief for the amount of his investment plus
interest at 8% from date of purchase plus reimbursement of losses plus interest
at 8%.
Mr. Melnyk and Mr. Van Tol are previous officers and directors of the Company
while Mr. Poirier is allegedly a shareholder or former share holder of the
Company. The lawsuit was unspecified as to amount and the Company felt it was
without merit.
On April 23, 2008, the State of Washington dismissed the case for lack of
jurisdiction.
Mr. David Wodar, former President of the Company has filed a Statement of Claim
in the Province of Ontario, Canada, claiming severance and termination benefits
in the amount of $220,000. Counsel for both Mr. Wodar and the Company have
agreed that a Statement of Defense is not required at this time as the parties
are attempt to negotiate a settlement. As Mr. Wodar resigned from his position
the Company is of the view that Mr. Wodar's claim is frivolous and vexatious.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During the nine months ending September 30, 2008, the Company completed three
private placements for net proceeds of $475,200. The first private placement was
completed on February 26, 2008 with one accredited investor at a price of $0.11
per share for net proceeds of $25,000. This financing resulted in the issuance
of 227,273 common shares. The second private placement was completed on March
10, 2008 with five accredited investors, at a price of $0.09 per share for net
proceeds of $160,200. This financing resulted in the issuance of 1,780,000
common shares plus 1,780,000 Warrants, exercisable at $0.15 per share up to
March 10, 2010.
During the quarter ending June 30, 2008, the Company completed a private
placement with an accredited investor for net proceeds of $25,000, at a price of
$0.06 per share. This resulted in the issuance of 416,667 restricted common
shares.
At June 30, 2008 the Company received subscription agreements from two
accredited investors for a total of $175,000. Subsequent to Sept 30, 2008, the
Company issued 3,125,000 and 1,250,000 shares respectively at $0.04 per share.
There was also a warrant attached for every 2 shares issued and this warrant is
exercisable for one year.
The Company also issued 250,000 restricted shares during the quarter ending June
30, 2008 at $0.05 per share for consulting services rendered.
In the quarter ending September 30, 2008, the company completed private
placements with 3 accredited investors $80,000 at a price of $0.04 per share for
a total of 2,000,000 restricted common shares. An additional private placement
was also completed for $10,000 at a price of $0.05 per share for a total of
200,000 restricted common shares. All four investors also received one warrant
for every 2 shares purchased and said warrant is exercisable for one year.
The Company also issued 2,700,000 for services rendered and for settlement of an
outstanding debt. This was completed at $0.04 per share.
With respect to the unregistered sales made, the Company relied on Section 4(2)
of the Securities Act of 1933, as amended and Regulation S. No advertising or
general solicitation was employed in offering the securities. The securities
were offered to sophisticated investors who were provided all of the current
public information available on the Company.
Item 3. DEFAULTS UPON SENIOR SECURITIES: None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS: None.
Item 5. OTHER INFORMATION: None.
Item 6. EXHIBITS
EXHIBIT NO. DESCRIPTION
- ----------- -----------
31.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION
302 OF THE SARBANES-OXLEY ACT
31.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION
302 OF THE SARBANES-OXLEY ACT
32.1 CERTIFICATION OF DISCLOSURE BY CHIEF EXECUTIVE PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
32.2 CERTIFICATION OF DISCLOSURE BY CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: November 14, 2008 INDUSTRIAL MINERALS, INC.
By: /s/ Robert G. Dinning
---------------------------------
President and CEO
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
Dated: November 14, 2008 INDUSTRIAL MINERALS, INC.
By: /s/ Robert Dinning
-----------------------------------------
Robert Dinning, Chief Financial Officer