<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 JUNE 30, 1998
Commission file number 0-4846-3
------------------------------------------
CONSIL CORP.
-------------------------------------------
(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 July 31, 1998
- -------------------------------------- -------------------------
Common stock, no par value 9,449,757 shares
<PAGE> 2
CONSIL CORP.
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1998
I N D E X *
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Page
----
PART I. - Financial Information
Item l - Consolidated Balance Sheets - June 30,
1998 and December 31, 1997 3
- Consolidated Statements of Operations -
Three Months and Six Months Ended
June 30, 1998 and 1997 4
- Consolidated Statements of Cash Flows -
Six Months Ended June 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 7
PART II. - Other Information
Item 1 - Legal Proceedings 10
Item 6 - Exhibits and Reports on Form 8-K 10
* 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>
June 30, December 31,
1998 1997
--------- ---------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 15,619 $ 38,267
Accounts receivable 640 - -
Other receivables - - 60,571
Income tax refund receivable 8,000 8,000
--------- ---------
Total current assets 24,259 106,838
--------- ---------
Deferred income taxes 8,000 8,000
--------- ---------
Total assets $ 32,259 $ 114,838
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable - Hecla Mining Company $ 250,927 $ 318,865
Accounts payable - trade - - 6,247
Accrued interest payable - Hecla Mining Company 112,614 77,420
Note payable - Hecla Mining Company 700,000 700,000
--------- ---------
Total current liabilities 1,063,541 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 (3,139,496) (3,095,908)
Less: Common stock reacquired at cost - 5,932 shares (3,461) (3,461)
--------- ---------
Total stockholders' deficit (1,031,282) (987,694)
--------- ---------
Total liabilities and stockholders'
deficit $ 32,259 $ 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 Six Months Ended
------------------------- -------------------------
June 30, June 30, June 30, June 30,
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenue:
Interest $ 73 $ 70 $ 6,061 $ 136
Miscellaneous - - - - 5,228 - -
----------- ----------- ----------- -----------
73 70 11,289 136
----------- ----------- ----------- -----------
Expenses:
General and administrative 7,793 84,195 17,928 216,250
Exploration and acquisition - - 35,465 - - 52,050
Depreciation - - 1,521 - - 3,481
Interest 17,695 14,443 35,195 26,651
Loss on sale of equipment - - - - - - 1,158
Foreign exchange (gain) loss 127 (15) 1,754 639
----------- ----------- ----------- -----------
25,615 135,609 54,877 300,229
----------- ----------- ----------- -----------
Loss before income taxes (25,542) (135,539) (43,588) (300,093)
Income taxes - - - - - - - -
----------- ----------- ----------- -----------
Net loss $ (25,542) $ (135,539) $ (43,588) $ (300,093)
=========== =========== =========== ===========
Net loss per share of
common stock $ nil $ (0.01) $ nil $ (0.03)
=========== =========== =========== ===========
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>
Six Months Ended
--------------------------
June 30, June 30,
1998 1997
----------- ------------
<S> <C> <C>
Operating activities:
Net loss $ (43,588) $ (300,093)
Noncash elements included in net loss:
Depreciation - - 3,481
Loss on sale of equipment - - 1,158
Change in:
Accounts and other receivables 59,931 9,376
Income tax refund receivable - - 179,133
Prepaid and deferred expenses - - 3,022
Accounts payable (74,185) 14,489
Accrued interest payable 35,194 26,650
----------- ------------
Net cash used by operating activities (22,648) (62,784)
----------- ------------
Investing activities:
Proceeds from sale of equipment - - 18,296
----------- ------------
Net cash provided
by investing activities - - 18,296
----------- ------------
Financing activities:
Borrowing on Hecla note payable - - 150,000
Repayments on Hecla note payable - - (169,699)
Deferred stock offering costs - - (19,728)
----------- ------------
Net cash used by financing activities - - (39,427)
----------- ------------
Net decrease in cash
and cash equivalents (22,648) (83,915)
Cash and cash equivalents at
beginning of period 38,267 120,216
----------- ------------
Cash and cash equivalents at
end of period $ 15,619 $ 36,301
=========== ============
</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 June 30, 1998, the Company had 9,449,757 common shares
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
six months of 1998 compared to $9,750 for the first six
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 June 30, 1998, $700,000 was
payable to Hecla, excluding accrued interest of $112,614,
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 June 30, 1998 or 1997
and the six months then ended.
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<PAGE> 7
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 SIX MONTHS OF 1998 COMPARED TO FIRST SIX MONTHS OF 1997
---------------------------------------------------------------
The Company reported a net loss of $43,588 or nil per share,
for the first six months of 1998 compared to a net loss of
$300,093 ($0.03 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 $198,322 and exploration
and acquisition costs of $52,050, as well as increases in
interest income of $5,925 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
$8,544 on the note payable to Hecla (see Note 3 of Notes to
Consolidated Financial Statements).
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<PAGE> 8
PART I - FINANCIAL INFORMATION (Continued)
CONSIL CORP.
THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THREE MONTHS
---------------------------------------------------------
ENDED JUNE 30, 1997
-------------------
The Company reported a net loss of $25,542 or nil per share
in the second quarter of 1998, compared to a net loss of
$135,539 ($0.01 per share) in the second quarter of 1997. The
decrease in the net loss is due primarily to decreases in
general and administrative costs of $76,402 as well as
decreased exploration and acquisition costs of $35,465. 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 $3,252 on the note payable to
Hecla.
FINANCIAL CONDITION AND LIQUIDITY
---------------------------------
At June 30, 1998, assets totaled $32,259 and stockholders'
deficit totaled $1,031,282. Cash and cash equivalents
decreased by $22,648 to $15,619 at June 30, 1998 from $38,267
at December 31, 1997. Operating activities used $22,648 of
cash during the first six 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 $43,588 during the first six months
of 1998, from a negative $995,694 at December 31, 1997 to a
negative $1,039,282 at June 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 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 June 30, 1998, 700,000 was payable to
Hecla, EXCLUDING ACCRUED INTEREST OF $112,614, under the loan
agreement. Any further exploration projects, potential
acquisitions or even limited operations are subject to ConSil
being able to raise funds from external sources.
-8-
<PAGE> 9
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.
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<PAGE> 10
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> 11
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: August 10, 1998 By:
--------------------------------
George R. Johnson
President, Chairman of the Board
and Director
Date: August 10, 1998 By:
--------------------------------
David F. Wolfe
Treasurer (principal accounting
and financial officer)
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<PAGE> 12
CONSIL CORP.
Form 10Q - Period Ending June 30, 1998
EXHIBIT LIST
Exhibit No. Description
----------- ------------------------------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 15,619
<SECURITIES> 0
<RECEIVABLES> 8,640
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 24,259
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 32,259
<CURRENT-LIABILITIES> 1,063,541
<BONDS> 0
0
0
<COMMON> 2,111,675
<OTHER-SE> (3,142,957)
<TOTAL-LIABILITY-AND-EQUITY> 32,259
<SALES> 0
<TOTAL-REVENUES> 11,289
<CGS> 0
<TOTAL-COSTS> 19,682
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 35,195
<INCOME-PRETAX> (43,588)
<INCOME-TAX> 0
<INCOME-CONTINUING> (43,588)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (43,588)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
