<PAGE> 1
UNITED STATES
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 SEPTEMBER 30, 1998
Commission file number 0-4846-3
-------------------------------------------
CONSIL CORP.
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(Exact name of registrant as specified in its charter)
Idaho 82-0288840
- ---------------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6500 Mineral Drive
Coeur d'Alene, Idaho 83815-8788
- ----------------------------------------- ------------------
(Address of principal executive offices) (Zip Code)
208-769-4100
- -----------------------------------------------------------------
(Registrant's telephone number, including area code)
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,
and (2) has been subject to such filing requirements for at least
the past 90 days. Yes XX . No .
---- ----
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Class Outstanding October 30, 1998
- -------------------------------- -----------------------------
Common stock, no par value 9,449,757 shares
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CONSIL CORP.
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1998
I N D E X *
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Page
PART I. - Financial Information
Item l - Consolidated Balance Sheets -
September 30, 1998 and December 31, 1997 3
- Consolidated Statements of Operations -
Three Months and Nine Months Ended
September 30, 1998 and 1997 4
- Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 1998 and 1997 5
- Notes to Consolidated Financial Statements 6
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II. - Other Information
Item 1 - Legal Proceedings 11
Item 6 - Exhibits and Reports on Form 8-K 11
* Items omitted are not applicable.
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<PAGE> 3
PART I - FINANCIAL INFORMATION
CONSIL CORP.
Consolidated Balance Sheets (Unaudited)
(U.S. Dollars)
-------------
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
----------- -----------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 13,549 $ 38,267
Accounts receivable 353 - -
Other receivables - - 60,571
Income tax refund receivable 8,000 8,000
----------- -----------
Total current assets 21,902 106,838
----------- -----------
Deferred income taxes 8,000 8,000
----------- -----------
Total assets $ 29,902 $ 114,838
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable - Hecla Mining Company $ 247,224 $ 318,865
Accounts payable - trade - - 6,247
Accrued interest payable - Hecla Mining Company 130,503 77,420
Note payable - Hecla Mining Company 700,000 700,000
----------- -----------
Total current liabilities 1,077,727 1,102,532
----------- -----------
Stockholders' deficit:
Preferred stock; $0.25 par value; authorized,
10,000,000 shares; issued and outstanding, none - - - -
Common stock - no par value; authorized:
100,000,000 shares; issued 9,455,689 shares 2,111,675 2,111,675
Accumulated deficit (3,156,039) (3,095,908)
Less: Common stock reacquired at cost - 5,932 shares (3,461) (3,461)
----------- -----------
Total stockholders' deficit (1,047,825) (987,694)
----------- -----------
Total liabilities and stockholders'
deficit $ 29,902 $ 114,838
=========== ===========
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
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<PAGE> 4
PART I - FINANCIAL INFORMATION (Continued)
CONSIL CORP.
Consolidated Statements of Operations
(Unaudited) (U.S. Dollars)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
-------------------------- --------------------------
September 30, September 30, September 30, September 30,
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenue:
Interest $ 73 $ 71 $ 6,134 $ 207
Miscellaneous - - - - 5,228 - -
----------- ----------- ----------- -----------
73 71 11,362 207
----------- ----------- ----------- -----------
Expenses:
General and administrative 2,245 119,705 20,173 335,955
Exploration and acquisition - - 54,596 - - 106,646
Depreciation - - 1,014 - - 4,495
Interest 17,888 14,979 53,083 41,630
Loss on sale of equipment - - - - - - 1,158
Foreign exchange (gain) loss (3,517) 472 (1,763) 1,111
----------- ---------- ----------- -----------
16,616 190,766 71,493 490,995
----------- ---------- ----------- -----------
Loss before income taxes (16,543) (190,695) (60,131) (490,788)
Income taxes - - - - - - - -
----------- ----------- ----------- -----------
Net loss $ (16,543) $ (190,695) $ (60,131) $ (490,788)
=========== =========== =========== ===========
Net loss per share of
common stock $ nil $ (0.02) $ (.01) $ (0.05)
=========== =========== =========== ===========
Cash dividends per share $ - - $ - - $ - - $ - -
=========== =========== =========== ===========
Weighted average number of
common shares outstanding 9,449,757 9,449,757 9,449,757 9,449,757
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
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<PAGE> 5
PART I - FINANCIAL INFORMATION (Continued)
CONSIL CORP.
Consolidated Statements of Cash Flows (Unaudited)
(U.S. Dollars)
<TABLE>
<CAPTION>
Nine Months Ended
----------------------------
September 30, September 30,
1998 1997
------------- -------------
<S> <C> <C>
Operating activities:
Net loss $ (60,131) $ (490,788)
Noncash elements included in net loss:
Prepaid and deferred legal and
financing costs expensed - - 32,704
Depreciation - - 4,495
Loss on sale of equipment - - 1,158
Change in:
Accounts and other receivables 60,218 6,357
Income tax refund receivable - - 187,563
Accounts payable (77,888) (71,731)
Accrued interest payable 53,083 41,630
------------ ------------
Net cash used by operating activities (24,718) (288,612)
------------ ------------
Investing activities:
Proceeds from sale of equipment - - 18,296
------------ ------------
Net cash provided
by investing activities - - 18,296
------------ ------------
Financing activities:
Borrowing on Hecla note payable - - 369,699
Repayments on Hecla note payable - - (169,699)
------------ ------------
Net cash provided by financing
activities - - 200,000
------------ ------------
Net decrease in cash
and cash equivalents (24,718) (70,316)
Cash and cash equivalents at
beginning of period 38,267 120,216
------------ ------------
Cash and cash equivalents at
end of period $ 13,549 $ 49,900
============ ============
</TABLE>
The accompanying notes are an integral part of
the consolidated financial statements.
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<PAGE> 6
PART I - FINANCIAL INFORMATION (Continued)
CONSIL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. The notes to the consolidated financial statements as of
December 31, 1997, as set forth in ConSil Corp.'s (the
Company or ConSil) 1997 Annual Report on Form 10-K, substan
tially apply to these interim consolidated financial
statements and are not repeated here. All amounts are in
U.S. dollars unless otherwise indicated.
Note 2. The financial information given in the accompanying unaudited
interim financial statements reflects all adjustments
which are, in the opinion of management, necessary to a fair
statement of the results for the interim periods reported.
All such adjustments are of a normal recurring nature. All
financial statements presented herein are unaudited. However,
the balance sheet as of December 31, 1997, was derived from
the audited consolidated balance sheet described in Note 1
above. Certain consolidated financial statement amounts have
been reclassified to conform to the 1998 presentation. These
reclassifications have no effect on the net loss or
accumulated deficit as previously reported.
Note 3. At September 30, 1998, the Company had 9,449,757 common
share s outstanding of which Hecla Mining Company (Hecla, the
majority stockholder of the Company) owned 7,418,300 shares
or 78.503% of the outstanding shares. Certain general and
administrative expenses are incurred by Hecla and reimbursed
by the Company. These expenses totaled $279 for the first
nine months of 1998 compared to $11,705 for the first nine
months of 1997.
On June 28, 1996, ConSil and Hecla entered into a loan
agreement whereby Hecla agreed to make available to ConSil a
loan not to exceed $500,000, due in its entirety on or before
December 31, 1996. This loan agreement was subsequently
amended on five separate occasions, increasing the amount
available to borrow to $725,000 and extending the repayment
date until March 31, 1999. As of September 30, 1998,
$700,000 was payable to Hecla, excluding accrued interest of
$130,503, under the loan agreement.
Note 4. The Company prepares its consolidated financial statements in
accordance with generally accepted accounting principles
(GAAP) in the United States. The Company also has regulatory
reporting requirements in Canada. There are no differences
between U.S. GAAP and Canadian GAAP with respect to
stockholders' deficit or net loss at September 30, 1998 or
1997 and the nine months then ended.
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<PAGE> 7
PART I - FINANCIAL INFORMATION (Continued)
CONSIL CORP.
Note 5. In June 1997, Statement of Financial Accounting Standards
No. 131 (SFAS 131), "Disclosures about Segments of an
Enterprise and Related Information" was issued. SFAS 131
establishes standards for the way that a public enterprise
reports information about its operating segments in annual
financial statements and requires that those enterprises
report selected information about operating segments in
interim financial reports issued to shareholders. SFAS 131
is effective for fiscal years beginning after December 15,
1997, and requires restatement of earlier periods presented.
The Company does not expect the adoption of this standard to
have a material impact on the financial condition or results
of operations of the Company.
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<PAGE> 8
PART I - FINANCIAL INFORMATION (Continued)
CONSIL CORP.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
- ------ -----------------------------------------------------------
AND RESULTS OF OPERATIONS
-------------------------
INTRODUCTION
--------------
Except for the historical information contained herein, the
matters discussed that are forward-looking statements involve
risks and uncertainties, including the timely development of
future projects, the impact of metals prices, changing market
conditions and regulatory environment, and other risks
detailed from time to time in the Company's Form 10-K and
Form 10-Qs filed with the United States Securities and
Exchange Commission. Actual results may differ materially
from those projected or implied. Forward-looking statements
included herein represent the Company's judgment as of the
date of this filing. The Company disclaims, however, any
intent or obligation to update these forward-looking
statements.
Following the sale of the Company's Silver Summit Mine in
1995, the Company was actively involved in exploration and
acquisition activities. The Company was unsuccessful in its
exploration and acquisition activities, and since the fourth
quarter of 1997, the Company has become inactive.
RESULTS OF OPERATIONS
---------------------
FIRST NINE MONTHS OF 1998 COMPARED TO FIRST NINE MONTHS OF
----------------------------------------------------------
1997
----
The Company reported a net loss of $60,131 or $0.01 per
share, for the first nine months of 1998 compared to a net
loss of $490,788 ($0.05 per share) in the same period in
1997. The decrease in the net loss is due primarily to
decreases in general and administrative costs of $315,782 and
exploration and acquisition costs of $106,646, as well as
increases in interest income of $5,927 and miscellaneous
income of $5,228. The decreases in costs can be attributed
principally to the Company terminating its exploration and
acquisition activities at the end of 1997. Partially
offsetting the favorable items above is the increase in
interest expense of $11,453 on the note payable to Hecla (see
Note 3 of Notes to Consolidated Financial Statements).
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<PAGE> 9
PART I - FINANCIAL INFORMATION (Continued)
CONSIL CORP.
THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THREE
-------------------------------------------------------
MONTHS ENDED SEPTEMBER 30, 1997
-------------------------------
The Company reported a net loss of $16,543 or nil per share
in the third quarter of 1998, compared to a net loss of
$190,695 ($0.02 per share) in the third quarter of 1997. The
decrease in the net loss is due primarily to decreases in
general and administrative costs of $117,460 as well as
decreased exploration and acquisition costs of $54,596. These
decreases are principally due to the Company terminating its
exploration and acquisition activities at the end of 1997.
Partially offsetting the favorable items above is the
increase in interest expense of $2,909 on the note payable to
Hecla.
FINANCIAL CONDITION AND LIQUIDITY
---------------------------------
At September 30, 1998, assets totaled $29,902 and
stockholders' deficit totaled $1,047,825. Cash and cash
equivalents decreased by $24,718 to $13,549 at September 30,
1998 from $38,267 at December 31, 1997. Operating activities
used $24,718 of cash during the first nine months of 1998.
The primary uses of cash for operating activities were for
payment of accounts payable and funding of operating losses.
The primary source of cash was from the collection of
accounts receivable.
Working capital decreased $60,131 during the first nine
months of 1998, from a negative $995,694 at December 31, 1997
to a negative $1,055,825 at September 30, 1998. The decrease
in working capital is primarily the result of funding
operating losses, consisting principally of interest and
general and administrative costs.
The Company's planned expenditures include the necessary
expenditures to maintain the current inactive status of the
Company. The Company intends to finance these planned
expenditures partially through existing cash and cash
equivalents and additional borrowings under a loan agreement
with Hecla. On March 30, 1998, ConSil and Hecla entered into
a fifth amendment to the loan agreement (see note 3 of Notes
to Consolidated Financial Statements) which increased the
amount available to borrow to $725,000 and extended the due
date to March 31, 1999. As of September 30, 1998, $700,000
was payable to Hecla, excluding accrued interest of $130,503,
under the loan agreement. Any further exploration projects,
potential acquisitions or even limited operationsare subject
to ConSil being able to raise funds from external sources.
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<PAGE> 10
PART I - FINANCIAL INFORMATION (Continued)
CONSIL CORP.
NEW ACCOUNTING PRONOUNCEMENT
----------------------------
In June 1997, Statement of Financial Accounting Standards No.
131 (SFAS 131), "Disclosures about Segments of an Enterprise
and Related Information" was issued. SFAS 131 establishes
standards for the way that a public enterprise reports
information about its operating segments in annual financial
statements and requires that those enterprises report
selected information about operating segments in interim
financial reports issued to shareholders. SFAS 131 is
effective for fiscal years beginning after December 15, 1997,
and requires restatement of earlier periods presented. The
Company does not expect the adoption of this standard to have
a material impact on the financial condition or results of
operations of the Company.
YEAR 2000
----------
The Company has completed an assessment of its Year 2000
Compliance issues, and based upon the limited activity of the
Company, the Company does not believe Year 2000 Compliance
issues will be material to the Company.
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<PAGE> 11
PART II - OTHER INFORMATION
CONSIL CORP.
Item 1. Legal Proceedings
- ------ -----------------
There are no pending legal proceedings.
Item 6. Exhibits and Reports on Form 8-K
- ------ --------------------------------
(a) Exhibits
27 - Financial Data Schedule
(b) Reports on Form 8-K
None.
Items 2, 3, 4 and 5 of Part II are omitted from this report
as inapplicable.
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<PAGE> 12
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.
CONSIL CORP.
-------------------------------
(Registrant)
Date: November 12, 1998 By: /s/ George R. Johnson
--------------------------------
George R. Johnson
President, Chairman of the Board
and Director
Date: November 12, 1998 By: /s/ David F. Wolfe
--------------------------------
David F. Wolfe
Treasurer (principal accounting
and financial officer)
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<PAGE> 13
CONSIL CORP.
Form 10Q - Period Ending September 30, 1998
EXHIBIT LIST
Exhibit No. Description
----------- -------------------------------
27 Financial Data Schedule
-13-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 13,549
<SECURITIES> 0
<RECEIVABLES> 8,353
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 21,902
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 29,902
<CURRENT-LIABILITIES> 1,077,727
<BONDS> 0
0
0
<COMMON> 2,111,675
<OTHER-SE> (3,159,500)
<TOTAL-LIABILITY-AND-EQUITY> 29,902
<SALES> 0
<TOTAL-REVENUES> 11,362
<CGS> 0
<TOTAL-COSTS> 18,410
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 53,083
<INCOME-PRETAX> (60,131)
<INCOME-TAX> 0
<INCOME-CONTINUING> (60,131)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (60,131)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
