<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
OR
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transaction period from to
Commission file number 1-316
INDEPENDENCE LEAD MINES COMPANY
(Exact name of registrant as specified on its charter)
ARIZONA 82-0131980
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation)
P O BOX 717
WALLACE, IDAHO 83873
(Address of principal executive offices)
Registrant's telephone number, including area code: (208) 753-2525
Securities registered pursuant to Section 12 (b) of the Act:
Common Non-Assessable Stock,
Par Value $1.00 per Share None
----------- -----------
Title of each class Name of each exchange
on which registered
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period 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 [ ]
As of December 31, 1998, the aggregate market value of the voting
stock held by non-affiliates of the registrant was $3,491,222.
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
As of December 31, 1998, there were 4,369,993 shares outstanding
of the registrant's $1.00 par value common stock; authorized
common shares of 5,000,000.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents are incorporated by reference in the
indicated parts of this Form 10-K:
NONE
<PAGE>
INDEPENDENCE LEAD MINES COMPANY
Form 10-K Annual Report
For the year ended December 31, 1998
TABLE OF CONTENTS
PART I
Page
Item 1. Business . . . . . . . 1
Item 2. Properties . . . . . . . 3
Item 3. Legal Proceedings . . . . . . 4
Item 4. Submission of Matters to a Vote of Security Holders.4
PART II
Item 5. Market for the Registrant's Common Stock and
Related Stockholder Matters . . . . . 5
Item 6. Selected Financial Data . . . . . . 5
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . 6
Item 8. Financial Statements and Supplementary Data . . 6
Item 9. Disagreements on Accounting and Financial Disclosure6
Index to Financial Statements . . . . 7
PART III
Item 10. Directors and Executive Officers of the Registrant 13
Item 11. Executive Compensation . . . . . .13
Item 12. Security Ownership of Certain Beneficial
Owners and Management . . . . .14
Item 13. Certain Relationships and Related Transaction .14
PART IV
Item 14. Exhibits, Financial Statement Schedules
And Reports on Form 8-K . . . . . .14
Exhibit Index . . . . . . . 15
Schedule of Property, Plant and Equipment . .16
Signature Page . . . . . . . 17
[The balance of this page has been intentionally left blank]
<PAGE>
INDEPENDENCE LEAD MINES COMPANY
Form 10-K Annual Report
For the year ended December 31, 1998
PART I
ITEM 1. BUSINESS.
Independence Lead Mines Company (the "Company") is a
corporation organized under the laws of the State of Arizona
on September 16, 1929. The Company is the owner of fifteen
patented and fourteen unpatented mining claims. This claim
group (the "property") is situated Northwest of Hecla Mining
Company's Luck Friday Mine in the Coeur d' Alene Mining
District, Shoshone County Idaho. Adjacent is the community
of Mullan and U.S. Interstate Highway 90.
Pursuant to the terms of an agreement dated February 8,
1968, among Hecla Mining Company ("Hecla"), Day Mines, Inc.
("Day"), Abot Mining Company ("Abot") and the Company (the
"Unitization Agreement"), the Eastern portion of the
Company's Property (approximately five-eighths of the total
area of the Property) was unitized with certain adjoining
and near-by properties owned by the Day and Abot into a
unitized area, consisting of 55 claims, (known as the "DIA
Area"). Under the terms of the Unitization Agreement, ores
and minerals in place are owned by the parties thereto in
the following percentages:
Day (now Hecla by merger) 47.70%
Independence 46.30%
Abot 6.00%
By a second agreement also dated February 8, 1968, (the
"Lease Agreement"), Hecla leased the DIA Area for a period
of fifty (50) years, subject to a 30-year extension, for the
purpose of conducting mineral exploration and development of
the DIA Area and mining such commercial ore as may be
discovered in the DIA Area by Hecla. Since inception of the
Lease Agreement, Hecla has performed exploration and
development work on the DIA Project at a cost of more than
$32,000,000 at year end December 31, 1998. To date
exploration has revealed a resource estimate of 7,933,418
tons. Ore production for 1998 was 193,891 tons and averaged
18.41 ounces silver, 10.33 % lead and 1.35% zinc per ton.
The Lease Agreement provides that all costs and expenses
incurred in the exploration, development and operation of
the DIA Area are to be paid by Hecla subject to the right of
Hecla to be reimbursed for such costs and expenses, together
with all advance royalties paid, out of any future net
profits realized from the operation of the DIA Area. After
recovery of Hecla's costs and expenses and amounts paid as
advance royalties, and the establishment of a three month
working capital reserve, net profit royalties are to be paid
to the Company and the other property owners as follows:
Day (now Hecla by Merger) 19.08%
Independence 18.52%
Abot 2.40%
1
<PAGE>
Hecla, as the lessee, will retain the remaining sixty
percent (60%) of any net profits realized. Under the terms
of the Unitization Agreement, one-half of the first net
profit royalties received by the Company are to be paid over
to Day (now Hecla) until Day recovers the sum of $450,000.
The relationship of the parties to the Agreement may, under
certain
circumstances, be converted to a joint venture at the option
of the property owners, where after the property owners
would become participating, non-operating working interest
owners who would share profits and expenses in connection
with the DIA Area in the same ratio as exists pursuant to
lease arrangement with Hecla described above.
Until Hecla commences to pay net profit royalties and during
such period as the Lease Agreement is in effect, Hecla is
obligated to pay an advance royalty to the Company of $750
per month subject to increase to $1,500 if production for
the DIA Area exceeds 2,000 tons per month.
Pursuant to the terms of the February 8, 1968, agreements,
Hecla will be obligated to pay a royalty of 18.52 percent of
defined net profits after Hecla has recouped its costs to
explore and develop this property from the new discovery to
Independence Lead Mines Company.
The Company has no patents, licenses, franchises or
concessions which are considered by the Company to be of
importance. The business is not of a seasonal nature.
Since the potential products are traded in the open market,
the Company has no control over the competitive conditions
in the industry. There is no backlog of orders.
There are numerous Federal and State laws and regulation
related to environmental protection which have direct
application to mining and milling activities. The more
significant of these laws deal with mined land reclamation
and waste water discharge from mines and milling operations.
The Company does not believe that these laws and regulations
as presently enacted will have a direct material adverse
effect on its operations.
The current officers and directors of the Company serve
without compensation and are not considered by the Company
to be employees.
The western portion of the Company's property is not under
the DIA Area agreement. West Independence, as it is called,
consists of 10 patented mining claims of which four (4)
claims are partly included in the DIA Area agreement.
Patented acres owned are listed below.
West Independence Acres 81.362
East Independence Acres 91.808
---------
Total Acres 173.170
On November 10, 1997 present management was informed by
Hecla that Hecla had given notice of termination of the West
Independence Agreements in 1993. The former management had
been notified of this by Hecla's certified letter dated
December 21, 1993. Former Management did not disclose the
termination of the West Independence agreements in the 1993
10-K. Erroneous statements as to the status of the West
Independence continued in the 10-K's for 1994,1995, and
1996. Two letters from Hecla dated November 12, 1993 and
December 21, 1993 regarding the West Independence Agreements
are missing from the corporate records received from
previous management. The minute book is silent on this
subject.
2
<PAGE>
Within the boundaries of the property covered by the West
Independence agreement were three unpatented claims owned by
the Company, named Goethals, Panama Number 2 and Silver
Mountain. After the termination of the West Independence
Agreements, the former management failed to make the
necessary filings and to pay the necessary fees. Those
three mining claims lapsed and were lost to Independence
Lead Mines Company.
These three unpatented claims were re-staked and filed in
the name of Hunter Mining Company by Don Springer, a former
geological consultant of Independence Lead mines Company, on
May 7, 1996. The Idaho Secretary of State's annual report
form for 1997 lists the following persons as officers and
directors of Hunter Mining Company.
Harry F. Magnuson, President
R.M. MacPhee, Secretary/Treasure
Tom Magnuson, Director
H. James Magnuson, Director
H. James Magnuson is a former Director of Independence. R.M.
MacPhee is a former director and was a long time
Secretary/Treasurer of Independence.
During 1998, Hunter Mining Company offered to return the
three unpatented claims to Independence for its cost
involved with these claims and Independence accepted this
offer.
During 1998, The Company conducted a voluntary share buyback
program for shareholders with no more than 200 shares, in
order to relieve those shareholders of the inconvenience and
cost of brokerage commission. As result of the buyback
program, the company purchased a total of 6,793 shares at a
price of $1.70 per share. The program was terminated in
October 1998.
ITEM 2. PROPERTIES
By an agreement dated February 8, 1968 among the Company and
the owners of other adjacent or neighboring mining
properties, the Company and the owners of the other
properties entered into certain agreements, the general
effect of which was to establish certain vertical boundaries
between their respective properties and to waive certain
existing or potential claims to extralateral rights to veins
or ores found outside of the vertical boundaries of their
respective properties. The Property of the Company is
subject to this agreement.
Pursuant to existing law, the Company is required to perform
the equivalent of $100 of work each year on each of its 14
unpatented claims included in the agreements mentioned in
paragraph above, or to pay $100.00 per claim as a rental fee
in order to maintain possessory title to such properties.
These requirements are performed by Hecla Mining Company
under the terms of the February 8, 1968 agreements described
in Item 1 of this report.
In addition the three (3) claims in West Independence not
included in the above agreements are paid for directly by
Independence Lead Mine.
Further information regarding the Properties of the Company
is set forth in this report under "Item 1. Business" and is
incorporated herein by reference.
3
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
1. H.F. Magnuson & Company, the accounting firm, which, prior
to May 22, 1997 provided accounting, bookkeeping, geological and
other professional services to Independence Lead Mines Company.
H.F. Magnuson Company has filed suit in Shoshone County, Idaho in
case #CV98-34222 to enforce two promissory notes. One note in
the amount of $47,800.00 executed by former directors, R.M.
MacPhee and Dale B. Lavigne, in favor of H.F. Magnuson & Company
was executed on September 10, 1996 and states interest at nine
percent (9%) per annum. The other note is in the principal
amount of $38,300 and was executed by former directors R.M.
MacPhee and Dale B. Lavigne in favor of H.F. Magnuson & Company
on May 13, 1997 and states interest at the rate of nine percent
(9%) per annum. H.F. Magnuson & Company also seeks an award of
its attorney fees and costs in that action. Independence Lead
Mines Company, Inc. has denied any liability of Independence Lead
Mines Company under those notes. Independence Lead Mines Company
has also filed a counterclaim against H.F. Magnuson & Company.
Management believes that the promissory notes will be invalidated
by the court and believes that Independence Lead Mines Company
will prevail on its counterclaims.
2. H.F. Magnuson & Company and former directors, R.M. MacPhee,
Dale B. Lavigne and Wray Featherstone have filed suit in Shoshone
County, Idaho case #CV98-34225 against Independence Lead Mines
Company, Bernard Lannen, Gordon Berkhaug, Forrest Godde, and
Robert Bunde to validate 60,000 shares of Independence stock
issued to them prior to May 22, 1997 for alleged past advances of
expenses, services and as directors fees. The Plaintiffs also
seek monetary damages from the Defendants in excess of $10,000
plus attorney fees and costs for the actions for the Defendants.
Independence Lead Mines Company, Bernard Lannen, Gordon Berkhaug,
Forrest Godde, and Robert Bunde have denied the validity of those
60,000 shares and have denied any liability for monetary damages.
Independence Lead Mines company and the other named Defendants
have made counterclaims against the Plaintiffs. Management
believes the 60,000 shares of stock claimed by the plaintiffs
will be invalidated by the court, the Plaintiffs will recover
nothing from any of the Defendants and the Plaintiffs, including
Independence Lead Mines Company, will prevail on their
counterclaim. See note 5 to the financial statements.
The hearing date for both proceedings has been set for
December, 1999. Dale Lavigne, a director of the company at
the time the lawsuits were filed, was a party to the
lawsuits against the company and its directors. As a
consequence, the remaining directors asked for and received
Mr. Lavigne's resignation from the board in 1998.
ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
There was no shareholder meeting held in 1998.
[The balance of this page has been intentionally left blank.]
4
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
(a) The market price ranges of the Company's common stock during
each quarter of the years 1998 and 1997, respectively, were as
follows:
<TABLE>
<CAPTION>
1998 1997
----- -----
High Low High Low
----- ------ ------- -------
<S> <C> <C> <C> <C>
1st Quarter 1.80 1.50 2.10 1.28
2nd Quarter 1.80 1.55 2.15 1.65
3rd Quarter 1.80 1.10 2.00 1.50
4th Quarter 1.35 .90 2.05 1.65
</TABLE>
(b) Approximate Number of Equity Security Holders.
Title of Class (1) Number of Record Holders
December 31, 1998
------------------ ------------------------------
Common non-assessable Approximately 2,300 (1)
Capital stock, par value
$1.00 per share
(1) Included in the number of shareholders of record are shares
held in "nominee" or "street" name.
(c) No dividends were paid by the Registrant in 1998 or 1997,
and the Company has no plans to pay a dividend in the foreseeable
future.
ITEM 6. SELECTED FINANCIAL DATA
Selected Income Statements Data:
<TABLE>
<CAPTION>
Year ended December 31,
------------------------------
1998 1997 1996 1995
----- ----- ------ -----
<S> <C> <C> <C> <C>
Net Revenues 3,592 -0- -0- -0-
Net Income (29,023) (34,788) (51,353) (22,868)
(Loss)
Net Income
(Loss) (.0067) (.0087) (.0061) (.0058)
Per share
</TABLE>
[The balance of this page has been intentionally left blank.]
5
<PAGE>
Selected Balance Sheets Data:
<TABLE>
<CAPTION>
Year ended December 31,
1998 1997 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
Current Assets 60,086 8,883 396 158
Current 105,065 105,185 79,160 88,319
Liabilities
Working (44,979) (96,302) (78,764) (88,161)
Capital
Total Assets 3,296,413 3,244,105 3,235,618 3,235,380
Deferred 301,250 283,250 266,000 253,250
Income
Long-Term Debt -0- -0- -0- -0-
Stockholders' 2,890,098 2,855,670 2,890,458 2,893,811
Equity
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULT OF
OPERATIONS.
Liquidity. The liquidity of the Company increased over the
past year, primarily due the proceeds from a private
placement of 50,000 shares of company stock. It is
anticipated that working capital will be provided in the
future by advanced royalties and proceeds from the sale of
company stock.
CAPITAL RESOURCES. The Property of the Company is leased
to Hecla Mining Company. Capital improvements are to paid
for by Hecla pursuant to the terms of the leases. The
Company has no long-term debt.
RESULTS OF OPERATIONS. The Company is in the exploratory
and development stage and has no operations. The general
and administrative costs remained substantially constant
with 1997 levels in 1998.Revenue of $3,592 was realized in
1998 from the sale of timber and interest income.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Company's financial statements appear following Item 9.
See index to Financial Statements at Page 12 of this report.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
Not applicable.
6
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Filed as part of the Annual Report Form 10-K
December 31, 1998
Page
FINANCIAL STATEMENTS:
Balance Sheet, December 31, 1998 and 1997 . 8
Statement of Operations and Deficit Accumulated
During The Exploratory Stage for the Years Ended
December 31, 1998, 1997 and 1996 . . . . 9
Statement of Cash flows, for the years ended
December 31, 1998, 1997 and 1996 . . . . 10
Notes to Financial Statements, December 31, 1998
And 1997 . . . . . . . . 11
The Company's financial statements are unaudited in reliance
upon Section 210.3-11 of Regulations S-X adopted by the
Securities and Exchange Commission.
[The balance of this page has been intentionally left blank.]
7
<PAGE>
INDEPENDENT LEAD MINES COMPANY
(An Exploration Stage Company)
PART III
BALANCE SHEET - UNAUDITED
December 31, 1998 and 1997
A S S E T S
<TABLE>
<CAPTION>
CURRENT ASSETS 1998 1997
------ -------
<S> <C> <C>
Cash 55,678 8.883
Royalties Receivable 1,500 -
-------- ---------
Total current assets 60,086 8,883
-------- ---------
PROPERTY AND EQUIPMENT, at cost
Equipment - -
Less accumulated depreciation - -
-------- ---------
Mining property 3,048,407 3,047,302
-------- --------
3,048,407 3,047,302
-------- ---------
OTHER ASSETS
Unrecovered exploration costs 187,920 187,920
-------- ---------
TOTAL ASSETS 3,296,413 3,244,105
======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES 1998 1997
------- ------
Accounts payable 6,333 3,905
Advances payable 86,100 86,100
Interest payable 12,632 5,180
Loans from Shareholders - 10,000
-------- ---------
Total current liabilities 105,065 105,185
-------- ---------
DEFERRED INCOME 301,250 283,250
-------- ---------
STOCKHOLDERS' EQUITY
Common stock, $1.00 par value;
authorized 5,000,000 shares;
issued 4,324,306shares (Note5) 4,369,993 4,324,306
Additional Paid in
Capital(deficit) (119,873) (137,630)
--------- ---------
4,250,120 4,186,668
Less deficit accumulated
during the Exploratory stage (1,360,022) (1,330,998)
--------- ---------
Total Stockholder's equity 2,890,098 2,855,670
--------- ---------
Total Liabilities & Stockholders'
equity 3,296,413 3,244,105
========= =========
The accompanying notes are an
integral part of these financial
Statements.
</TABLE>
8
<PAGE>
INDEPENDENT LEAD MINES COMPANY
(An Exploration Stage Company)
STATEMENT OF OPERATIONS AND DEFICIT ACCUMULATED DURING THE
EXPLORATORY STAGE - UNAUDITED
For the years ended December 31, 1998, 1997, 1996
<TABLE>
<CAPTION>
REVENUE 1998 1997 1996
------- ------ ------
<S> <C> <C> <C>
Sales - Timber 2,091 - -
Interest Income 1,501 - -
------- --------- --------
3,592 - -
EXPENSES ------- --------- --------
Management and directors fees $ $ $ 24,000
Licenses and fees 1,372 290 560
Office expense 2,661 2,939 3,131
Office services 497 4,900 8,445
Geological - 2,050 7,169
Interest 7,810 7,004 6,535
Legal 14,233 9,671 1,513
Accounting 1,450 877 -
Shareholder & Public Relations 4,592 7,057 -
------- --------- --------
32,615 34,788 $51,353
------- --------- --------
NET LOSS 29,023 34,788 51,353
DEFICIT, accumulated during the
exploratory stage, beginning
of year 1,330,999 1,296,210 1,244,857
--------- --------- ---------
DEFICIT, accumulated during the
exploratory stage, end of 1,360,022 1,330,998 1,296,210
year ========= ========= ========= =
LOSS PER SHARE .0067 .0087 .0061
======= ========= ========
</TABLE>
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The accompanying notes are an integral part of these financial
statements.
9
<PAGE>
INDEPENDENT LEAD MINES COMPANY
(An Exploration Stage Company)
STATEMENT OF CASH FLOWS - UNAUDITED
For the years ended December 31, 1998, 1997, 1996
<TABLE>
<CAPTION>
CASH FLOWS FROM OPERATING ACTIVITIES 1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Net loss (29,023) (34,788) (22,868)
Adjustment to reconcile net
Loss to net cash provided by
Operating activities
1. Increase (decrease) in cash
Due to changes in assets
And liabilities
Receivable (1,500) - -
Accounts payable 2,428 (9,119) 2,124
Deferred income 18,000 17,250 12,750
Interest payable 7,452 (1,356) 917
------- -------- -------
Net cash used by
Operating activities (2,643) (28,013) (35,562)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of capital stock 75,000 - 24,000
Net borrowing on short-term (10,000) 36,500 11,800
advances --------- ------- -------
65,000 36,500 35,800
--------- ------- -------
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Mining Claims (1,105) - -
Purchase of Company's Capital (11,549) - -
Stock
Purchase of Investments (2,908) - -
--------- ------- -------
(15,562) - -
--------- ------- -------
Net increase (decrease) in cash 46,795 8,487 238
CASH, beginning of year 8,883 396 158
-------- ------- -------
CASH, end of year 55,678 8,883 396
========= ======= =======
</TABLE>
DISCLOSURE OF ACCOUNTING POLICY
For the years ended December 31, 1998, 1997 and 1996, the
Company had no cash equivalents.
SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION
<TABLE>
<CAPTION>
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Interest paid 0 8,324 5,618
====== ====== ======
Taxes paid - State of Idaho 10 10 10
====== ====== ======
The accompanying notes are an integral part of these financial
statements.
</TABLE>
10
<PAGE>
INDEPENDENT LEAD MINES COMPANY
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997
Note 1 - Company business - The Company was incorporated under
the laws of the State of Arizona on September 16, 1929.
The Company is presently in the exploratory stage.
Note 2 - The significant accounting principles and practices of
the Company are as follows:
a. The financial statements are prepared on the accrual basis
of accounting.
b. In accordance with Statement No. 7 of the Financial
Accounting Standards Boards, the Company charges current costs
related to exploration and development to operations.
c. The Company depreciated its equipment on the straight-line
method over their estimated useful life of 7 years. The Company
currently has no depreciable property.
d. Earning per share have been computed using the weighted
average of shares outstanding during the period.
Note 3 - Company property - The Company has 15 patented and 17
unpatented claims situated in the Hunter Mining
District, Shoshone County, Idaho. On February 8, 1968,
the Company entered into an agreement with Day Mines,
Inc., Abot Mining Company and Hecla Mining Company.
Certain properties of the four companies were combined
for purposes of exploration and development. These
properties were referred to as the DIA Area. The DIA
Area consists of 9 patented and 14 unpatented claims of
Independence Lead Mines Company. Hecla Mining Company
is the exploring and developing company. The DIA
agreement allows Hecla Mining Company to recover all of
its exploration and development cost, advance royalties
paid, and to build a three months' reserve for working
capital prior to splitting profits. Independence is to
receive 18.52% of the profits, and under the terms of
the DIA agreement the Company receives an advance of
$1,500 for each month 2,000 tons of ore is mined.
Note 4 - In addition to cash costs in the amount of $23,302, the
amount reflected in the balance sheet as the cost of
mining claims reflects the par value assigned to
3,024,000 shares of stock issued for $3,034,000. The
underlying cost basis of the mining claims is unknown
and unobtainable. Since it was an accepted accounting
practice at the time of the transaction, all subsequent
financial statements have used the par value of the
shares issued as the cost basis of the mining claims.
The Company has considered revaluation of the mining
properties, but feels that to revalue them at an amount
that has no basis would be misleading. The Company
feels that the claims are of value, as Hecla Mining
Company has continued with its lease since 1968.
11
Note 5 - As reported in previous forms 10-K by management, the
stock ledger and shareholders list in the past
indicated more shares issued and outstanding than the
shares authorized and reported on the financial
statements. In spite of the apparent over-issuance of
stock, on September 10, 1996 the previous board of
directors authorized the issuance of 30,000 shares to
H.F. Magnuson & Co. and 30,000 shares to themselves as
compensation for services. Immediately prior to the
issuance of the 60,000 shares, the shares issued and
outstanding according to the shareholder list exceeded
authorized capitalization by 255,806 shares. Shares
outstanding, according to the shareholders list, were
understated in the company's then - current form 10-K
by 325,759 shares. Current management has not found
what it considers to be adequate substantiation that
the Company was not over-capitalized when the 60,000
shares were issued. Because of this, the recipients of
the shares have been requested to return the shares to
the company. This request has been refused by all
recipients.
Note 6 - As shown in the financial statements, the Company
incurred net losses of $29,023, $34,788 and $51,353,
during the years ending December 31, 1998, 1997, and
1996, respectively, and on these dates, the Company's
current liabilities exceeded current assets by $44,979,
$96,302and $78,764. These factors indicate doubt as to
the ability of the Company to continue business on a
going concern basis. Current liabilities at December
31, 1998 include advances payable to H.F. Magnuson &
Co. of $86,100 plus accrued interest of $12,632. These
liabilities are being disputed by the Company and
subsequent to December 31, 1997 have become involved in
litigation which is still ongoing as of December 31,
1998. The Company has taken the position that the
advances and accrued interest are not valid claims
against the Company. The financial statements do not
include any adjustments relating to the recoverability
of recorded asset amounts or the amounts and
classification of liabilities that might be necessary
should the company be unable to continue in existence.
Note 7 - Statements of income, cash flows, and shareholders'
equity since the inception of the Company, September
16, 1929, through December 31, 1998 have not been
presented. Generally accepted Accounting principles
require that such statements be presented when
financial statements purport to present financial
position and results of operations for a development
stage company.
Early records of income and expense for the Company are incomplete.
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12
<PAGE>
INDEPENDENT LEAD MINES COMPANY
Form 10-K Annual Report
For the year ended December 31, 1998
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Name of Executive
Officers and Directors Brief profile of
And Position Held Age Officers and Directors
- ------------------ ---- -----------------------
Bernard C. Lannen 62 Semi Retired
President and Director Director of Lucky
Friday Extension Mining
Company
Wayne L. Schoonmaker 62 Certified Public Accountant
Secretary/Treasurer Secretary/Treasurer of
Hanover Gold Company Inc.
Treasurer of Metalline Mining
Company.
Forrest G. Godde 82 President of Corporate
Ranches in
Director California and Nevada,
Director of Mineral Mountain
Mining
Robert Bunde 60 Semi retired farmer with
investments in
Director The mining field.
Gordon Berkhaug 64 Management of real estate
investments
Director With experience in the mining
field
The by-laws of the Company provide that the Directors serve
until the next annual meeting of shareholders or until their
respective successors have been duly elected and qualified.
Officers serve at the discretion of the Board of Directors.
ITEM 11. EXECUTIVE COMPENSATION
(a) The following table sets forth all remuneration paid by the
Company during the fiscal year ended December 31, 1998, for
services in all capacities to all directors and executive
officers of the Company.
Name of Individual Capacities in
Or Number in Group Which served Compensation
- -------------------- ---------------- ------------------
Five persons in the All executive -0-
group officers and
Directors as a group
No retirement benefit, bonus or other remuneration plans are
in effect with respect to the Company's officers and
directors.
The Company has no standard or other arrangements for
compensating directors.
13
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
To the knowledge of the Company, no person beneficially
owned more than five percent (5%) of any class of the
Registrant's voting securities as of January 31, 1999.
The following tabulation shows the beneficial ownership's of
the Company's officers and directors in the securities of
the Company as of January 31, 1999:
<TABLE>
<CAPTION>
Shares of Approximate
Common Stock Percentage of
Name Beneficially Owned Class
---------- -------------------- ----------
<S> <C> <C>
Bernard C. Lannen 171,082 3.91
Wayne L. Schoonmaker 4,000 .09
Forrest G. Godde (1) 95,000 2.17
Robert Bunde 152,500 3.49
Gordon Berkhaug 68,275 1.56
</TABLE>
All directors and executive officers of the Company as a
group (5 persons in a group) own 490,857 shares or
approximately 11.23 percent of the Company are outstanding
voting securities.
(1) Includes 45, 000 shares that represent Mr. Godde's 50%
interest in the Godde 1980 Trust.
During 1998, the Company had a private placement of 50,000
shares, primarily to the Company's officers and directors.
The purpose of the private placement was to raise working
capital for company operations. The Company realized
$75,000 from the sale.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTION
Not applicable.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(b) 1. Financial Statements - See index to Financial Statements
at page 12 of this report
2. Financial Statement Schedules V - Statement of Property,
Plant and Equipment, Page 25
Other financial statement schedules are omitted because
of conditions under which they are required, or because
the required information given in the financial
statements or notes thereto.
(c) The company filed its report on Form 8-K during the last
quarter of 1992.
(d) Exhibits - No additional exhibits are filed as a part of
this report. The Exhibit Index appears at Page 23 of this
report.
14
<PAGE>
INDEPENDENT LEAD MINES COMPANY
Form 10-K Annual Report
For the year ended December 31, 1998
EXHIBIT INDEX
Exhibits
3.1 Articles of Incorporation of Independence Lead Mines, Inc.,
as amended, previously filed as Exhibit 3.1 to form 10-K for 1983
and incorporated by reference herein.
3.2 Bylaws of Independence Lead Mines Company, as amended,
previously filed as Exhibit 3.2 to form 10-K for 1983 and
incorporated by reference herein.
10.1 Unitization Agreement dated February 8, 1968 among Day
Mines, Inc., Independence Lead Mines company and Abot Mining
Company, previously filed as Exhibit 10.1 to Form 10-K for 1983
and incorporated by reference herein.
10.2 Agreement dated February 8, 1968 among Hecla Mining Company,
Day Mines, Inc., Independence Lead Mines Company and Abot Mining
Company, previously filed Exhibit 10.2 to Form 10-K for 1983 and
incorporated by reference herein.
10.3 Agreement dated February 8, 1968 among Independence
Lead Mines Company, Day Mines, Inc., Abot Mining
Company, Wall Street Mining Company, Hunter Creek
Mining Company, Lucky Friday Extension Mining Company,
Hecla Mining Company and the Bunker Hill Mining Company
relating to extralateral and intralimital rights to
mining claims, previously filed as Exhibit 10.7 to Form
10-K for 1983 and incorporated by reference herein.
[The balance of this page has been intentionally left blank.]
15
<PAGE>
INDEPENDENCE LEAD MINES COMPANY
(AN EXPLORATION STAGE COMPANY)
PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
Balance, Balance
Beginning Other End of
Of year Addition Retirements Changes Year
--------- -------- ----------- --------- ------
<S> <C> <C> <C> <C> <C>
December
31,1998
Equipment 0 - - -0-
--------- -------- -------- ---------
Mining Property 3,047,302 1,105 - 3,048,407
Less deferred 283,250 18,000 - 301,250
credits --------- -------- -------- ---------
Net 2,764,052 (16,895) - 2747,157
--------- -------- -------- ---------
Total 2,764,052 (16,895) - NONE 2,747,157
========= ======== ========= ====== =========
December
31,1997
Equipment 118 - (118) -
--------- -------- --------- ---------
Mining Property 3,047,302 3,047,302
Less deferred 266,000 17,250 - 283,250
credits --------- -------- --------- ---------
Net 2,781,302 (17,250) (118) 2,764,052
--------- -------- --------- ---------
Total 2,781,420 (17,250) (118) NONE 2,794,170
========= ======== ========= ====== =========
December
31,1996
Equipment 118 - - 118
--------- -------- -------- ---------
Mining Property 3,047,302 - - 3,047,302
Less deferred 253,250 12,750 - 266,000
credits --------- -------- -------- ---------
Net 3,794,052 (12,750) - 2,781,302
--------- -------- -------- ---------
Total 3,794,170 (12,750) NONE NONE 2,781,420
========= ======== ====== ====== =========
</TABLE>
16
<PAGE>
SIGNATURES
Pursuant to the requirement of Section 13 of the Securities
Exchange Act of 1934, the Registrant has duly caused this
report to be sign on its behalf by the undersigned,
thereunto duly Authorized.
INDEPENDENCE LEAD MINES
COMPANY
By: /s/ Bernard C. Lannen
-----------------------------
Bernard C. Lannen, its President
and Chief Administrative Officer
Dated: March 13, 1999
By: /s/ Wayne L. Schoonmaker
------------------------------
Wayne L. Schoonmaker, its Principal
Accounting Officer
Dated: March 13, 1999
Pursuant to the requirements of the Securities Exchange Act
of 1934, this Report has been signed below by the following
persons on behalf of the Registrant and in the capacities and as
of the date indicated.
By: /S/ BERNARD C. LANNEN By: /S/ WAYNE L. SCHOONMAKER
--------------------- ------------------------
Bernard C. Lannen Wayne L. Schoonmaker
Director Secretary and Treasurer
Dated: March 13, 1999 Dated: March 13, 1999
By: /S/ FORREST G. GODDE By: /S/ GORDON BERKHAUG
-------------------- -------------------
Forrest G. Godde Gordon Berkhaug
Director Director
Dated: March 13, 1999 Dated: March 13, 1999
By: /S/ ROBERT BUNDE
----------------
Robert Bunde
Director
Dated: March 13, 1999
17
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000050073
<NAME> INDEPENDENCE LEAD MINES CO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 55,678
<SECURITIES> 2,908
<RECEIVABLES> 1,500
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 60,086
<PP&E> 3,236,327<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,296,413
<CURRENT-LIABILITIES> 105,065
<BONDS> 0
0
0
<COMMON> 4,369,993
<OTHER-SE> (1,479,859)<F2>
<TOTAL-LIABILITY-AND-EQUITY> 3,296,413
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 32,615
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,810
<INCOME-PRETAX> (29,023)
<INCOME-TAX> 0
<INCOME-CONTINUING> (29,023)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (29,023)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
<FN>
<F1>Consists of $3,236,327 in resource properties and claims.
<F2>Consists of $119,873 deficit in additional paid-in captial plus a
deficit of $1,360,022 accumulated during the development stage.
</FN>
</TABLE>
