<PAGE>
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, 2000
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: 1-316
INDEPENDENCE LEAD MINES COMPANY
(Exact name of registrant as specified in its charter)
Arizona 82-0131980
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation)
510 Cedar Street
Wallace, Idaho 83873
(Address of principal executive offices)
Registrant's telephone number, including area code:
(208) 753-2525
Common Stock 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 as 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 [ ]
The number of outstanding shares of the registrant's common stock
at June 30, 2000 was 4,308,793 shares.
<PAGE>
INDEPENDENCE LEAD MINES COMPANY QUARTERLY REPORT
ON FORM 10-Q FOR THE QUARTERLY PERIOD
ENDED JUNE 30, 2000
TABLE OF CONTENTS
Page
PART I - FINANCIAL INFORMATION
Item 1: Financial Statements . . . . . . . . . . . . . . . . . 1
Item 2: Management's Discussion and Analysis
of Financial Condition and Results of Operations . . . 1
PART II - OTHER INFORMATION
Item 1: Legal Proceedings . . . . . . . . . . . . . . . . . . . 2
Item 2: Changes in Securities . . . . . . . . . . . . . . . . . 3
Item 3: Defaults upon Senior Securities . . . . . . . . . . . . 3
Item 4: Submission of Matters to a Vote of Security Holders . . 3
Item 5: Other Information . . . . . . . . . . . . . . . . . . . 3
Item 6: Exhibits and Reports on Form 8-K . . . . . . . . . . . 3
SIGNATURES
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<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
The unaudited financial statements of the Company for the periods
covered by this report are included elsewhere in this report, beginning
at page F/S-1.
The unaudited financial statements have been prepared by the Company in
accordance with generally accepted accounting principles for interim
financial information with the instructions to Form 10-Q 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
recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the six-month period ended June
30, 2000 are not necessarily indicative of the results that may be
expected for the full year ending December 31, 2000.
For further information refer to the financial statements and footnotes
thereto in the Company's Annual Report on Form 10-K for the year ended
December 31, 1999 incorporated by reference herein.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS FOR THE PERIOD ENDED JUNE 30, 2000.
Six months Ended June 30, 2000 Compared to six months Ended June 30,
1999.
During the six months ended June 30, 2000 the Company realized income
of $358,085 from settlement of the litigation discussed in Item 1
(Legal Proceedings). General and administrative expenses decreased to
$17,317 for the six-month period ended June 30, 2000 as compared to
$114,411 for the six-month period ended June 30, 1999. The decrease is
principally attributed to reduced legal expenses incurred in 2000
related to the Company's litigation described in Item 1 (Legal
Proceedings). For the quarter ended June 30, 2000, the Company
experienced a net loss of $2,631, or $0.001 per share, compared to a
loss of $8,814, or $0.002 per share, during the comparable period in
the previous year. During the quarter, the company sold a portion of
the surface rights on its mining claims for a selling price of
$103,000.
During the second quarter 1999, the company's loss of $8,814 resulted
principally from legal charges of $93,426, partially offset by net
timber sales of $86,739.
LIQUIDITY AND CAPITAL RESOURCES.
The Company is the owner of fifteen patented and seventeen unpatented
mining claims. This claim group ("the property") is situated Northwest
of Hecla Mining Company's Lucky 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 Property) was unitized with certain adjoining and near-by
properties owned by 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.
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
-1-
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%
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.
The Company currently receives an advance royalty of $1,500 per month,
whish is recorded in the financial statements as deferred income.
Pursuant to the terms of the February 8, 1968, agreements, Hecla will
be obligate 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 current officers and directors of the Company serve without
compensation and are not considered by the Company to be employees.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company reported in its Form 10-K for the fiscal year ending
December 31, 1998, that two legal proceedings were pending involving
the Company. H.F.Magnuson & Company filed suit in Shoshone County,
Idaho in case #CV98-34222 to enforce two promissory notes involving a
total sum of $86,100 plus accrued interest of $12,632 as of December
31,1998. The notes were executed by Independence Lead Mine Company's
former directors, R.M.MacPhee and Dale Lavigne in favor of H.F.Magnuson
& Company. H.F.Magnuson & Company, the Plaintiff in the action, also
sought an award of attorney fees and costs. Independence Lead Mines
Company, Inc. denied any liability of Independence Lead Mines Company
under those notes.
A second action was also filed by H.F.Magnuson & Company and former
directors, R.M.MacPhee, Dale B.Lavigne and Wray Featherstone in
Shoshone County, Idaho case #CV98-34225 against Independence Lead Mines
Company and its existing directors, Bernard C. Lannen, Gordon Berkhaug,
Forrest Godde and Robert Bunde to validate 60,000 shares of
Independence Lead Mines Company stock issued to them prior to May 22,
1997. The Plaintiffs also sought monetary damages from the Defendants
in excess of $10,000 plus attorney fees and costs. All Defendants
denied the validity of those 60,000 shares and denied any liability for
monetary damages.
Independence Lead Mines Company and the other Defendants filed
counterclaims against Plaintiffs in both suits. Both of the above cases
were consolidated in a single proceeding in Shoshone County, Idaho in
May, 1999.
During the latter part of 1999, the Plaintiffs and the Defendants in
the consolidated case attended mediation conferences in an effort to
reach a settlement of the claims and issues existing between the
parties. A settlement agreement and mutual release was entered into
between the parties and that agreement was fully executed by all
parties in January, 2000. By stipulation of the parties, the above
cases were dismissed on January 25, 2000 with prejudice and without
costs or attorney fees. The settlement resulted in a cash payment to
Independence Lead Mines Company and cancellation of the two promissory
notes in the principal amount of $86,100 plus all accrued interest. The
60,000 shares of stock that were claimed by Independence Lead Mines
Company to have been over-issued were returned to Independence Lead
Mines Company and the Company has cancelled those certificates to
correct the over-issuance. All parties denied each other's claim and
allegations throughout the litigation.
The conclusion of the above proceedings ends all pending legal
proceedings involving Independence Lead Mines Company, Inc.
-2-
ITEM 2. CHANGES IN SECURITIES.
Neither the constituent instruments defining the rights of the
registrant's securities holders nor the rights evidenced by the
registrant's outstanding common stock have been modified, limited or
qualified.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
The registrant has no outstanding senior securities.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of the registrant's security
holders during the period covered by this report.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
EXHIBITS. The following exhibit is filed as part of this report:
Exhibit 27.0 Financial Data Schedule
REPORTS ON FORM 8-K. No reports on Form 8-K were filed by the
registrant during the period covered by this report.
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<PAGE>
INDEPENDENCE LEAD MINES COMPANY
TABLE OF CONTENTS Page
Balance Sheets as of June 30, 2000 and December 31, 1999 . . . F/S-2
Statements of Operations for the six Months
Ended June 30, 2000 and 1999 . . . . . . . . . . . . . . . . . F/S-3
Statements of Cash Flow for the six
Months Ended June 30, 2000 and 1999 . . . . . . . . . . . . . F/S-4
Notes to Interim Financial Statements . . . . . . . . . . . . . F/S-5
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . F/S-6
[The balance of this page has been intentionally left blank.]
F/S - 1
<PAGE>
INDEPENDENCE LEAD MINES COMPANY
(AN EXPLORATORY STAGE COMPANY)
BALANCE SHEET - UNAUDITED
<TABLE>
<CAPTION>
ASSETS
JUNE 30, 2000 DECEMBER 31, 1999
------------- ----------------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 206,042 $ 5,298
Royalties Receivable 1,500 1,500
Investments 2,908 2,908
-------- --------
Total current assets 210,450 9,706
------- --------
PROPERTY AND EQUIPMENT, at cost:
Equipment 0 0
Less accumulated depreciation 0 0
----- -----
0 0
Mining property 2,945,407 3,048,407
------------ ----------
Total property and equipment 2,945,407 3,048,407
OTHER ASSETS:
Unrecovered exploration costs 187,920 187,920
---------- ----------
Total assets $3,343,777 $ 3,246,033
========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 1,844 $ 28,711
Advances payable 0 86,100
Interest payable 0 20,381
Loans from Shareholders 0 42,000
Income taxes accrued 12,300 0
------- -------
Total current liabilities 14,144 177,192
-------- --------
DEFERRED INCOME: 328,250 319,250
-------- --------
STOCKHOLDERS' EQUITY:
Common Stock, $1.00 par value,
Authorized 5,000,000 shares;
issued 4,371,993 and out-
standing 4,333,357 shares
at 12/31/99; issued 4,308,793
and outstanding 4,223,357 shares
at 03/31/2000 4,308,793; 4,371,993
Treasury Stock at cost (48,234) (19,116)
Additional Paid-In
Capital (Deficit) (108,293) (121,873)
-------- --------
4,152,266 4,231,004
Less deficit accumulated during
the exploration stage (1,150,883) (1,481,413)
Total Stockholders equity 3,001,383 2,749,591
----------- -----------
Total liabilities and
stockholders' equity $3,343,777 $3,246,033
========== == ========
The accompanying notes are an integral part of these financial
statements
</TABLE>
F/S - 2
<PAGE>
INDEPENDENCE LEAD MINES COMPANY
(AN EXPLORATORY STAGE COMPANY)
STATEMENTS OF OPERATIONS AND DEFICIT ACCUMULATED
DURING THE EXPLORATION STAGE - UNAUDITED
<TABLE>
<CAPTION>
QUARTER SIX MONTHS QUARTER SIX MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, 00 JUNE 30, 00 JUNE 30, 99 JUNE 30, 99
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Revenue $ 0 $ 0 $ 86,739 $ 86,739
------- ------- --------- ---------
Expenses
Licenses and fees 439 817 0 30
Office expense 0 343 17 17
Office services 150 300 0 200
Shareholder Relations 884 2,425 385 1,141
Consulting 2,474 2,474 0 0
Transportation 1,501 4,236 0 0
Accounting 0 923 0 0
Legal 485 5,799 93,426 113,023
----- ----- ------ -------
Total expenses 5,933 17,317 93,828 114,411
------ ------ ------ -------
Loss from Operations $(5,933) $(17,317) $(7,089) $(27,672)
Other Income and (expense)
Interest, net 2,102 2,063 (1,725) (3,134)
Legal settlement 0 358,085 0 0
----- ------- ----- -----
Total other Income 2,102 360,148 (1,725) (3,134)
------ ------- ----- -----
NET INCOME (LOSS) before
Income Taxes $(3,831) $342,831 $(8,814) $(30,806)
Provision for
income taxes (1,200) (12,300) 0 0
------ ------- ----- -----
NET INCOME (LOSS) $(2,631) $330,531 $(8,814) $(30,806)
DEFICIT, accumulated
during the exploration
stage, beginning
of period (1,148,252) (1,481,414) (1,382,014) (1,360,022)
--------- --------- --------- ---------
DEFICIT, accumulated
during the exploration
stage, end of period $(1,150,883) $(1,150,883) $(1,390,828) $(1,390,828)
============ ============ =========== ============
Gain (Loss) per share $(0.001) $0.077 $(0.002) $(0.007)
Weighted average common
shares outstanding 4,221,357 4,271,357 4,369,993 4,369,993
____________________
The accompanying notes are an integral part of these financial statements.
</TABLE>
F/ S - 3
<PAGE>
INDEPENDENCE LEAD MINES COMPANY
(AN EXPLORATORY STAGE COMPANY)
STATEMENTS OF CASH FLOW - UNAUDITED
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, 2000 MARCH 31, 1999
------------ -----------
<S> <C> <C>
Operating Activities:
Net income (loss) $330,531 $ (30,806)
Adjustments to reconcile net
loss to net cash used in
operating activities: 0 0
Changes in operating assets
and liabilities:
(Increase) decrease in
accounts receivable 0 0
Increase (decrease) in
accounts payable (26,867) 20,136
Increase (decrease) in
advances payable (86,100) 0
Increase (decrease) in
deferred income 9,000 9,000
Increase (decrease) in
interest payable (20,381) 3,843
Increase (decrease) in
taxes payable 12,300 0
--------- ------
Net cash used in
operating activities 218,483 2,173
--------- ------
Investing activities:
Purchase of Company's
capital stock (29,239) 0
------- ------
Net cash used in
investing activities (29,239) 0
------- ------
Financing activities:
Proceeds from the sale of land 103,000 0
Retirement of director's shares (48,000) 0
Repurchase and
retirement of common stock (1,500) 0
Repayment of long-term debt (42,000) 0
------ -----
Net cash provided by
financing activities 11,500 0
------- -----
Net increase (decrease) in cash 200,744 2,173
Cash and cash equivalent,
beginning of period 5,298 55,678
------- ------
Cash and cash equivalent,
end of period $ 206,042 $ 57,851
======== =======
Disclosure of accounting policy
For the six months ended June 30,
2000 and June 30, 1999, the Company
had no cash equivalents.
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest $ 916 $ 0
Income taxes 30 30
The accompanying notes are an integral part of these financial
statements.
</TABLE>
F/S - 4
<PAGE>
INDEPENDENCE LEAD MINES COMPANY
NOTES TO INTERIM FINANCIAL STATEMENTS - UNAUDITED
Financing information presented in the Company's quarterly
reports follow the policies set forth in its Annual Report on
Form 10-K filed with the Securities and Exchange Commission. In
accordance with generally accepted accounting principles for
interim financial information, the instructions to Form 10-Q, and
Rule 10-01 of Regulation S-X, these quarterly reports do not
include all of the information and footnotes.
In the opinion of the Company's management, all adjustments
(consisting of only normal recurring accruals) considered
necessary for a fair presentation have been included. Operating
results for the six-month period ended June 30, 2000 are not
necessarily indicative of the results that may be expected for
the full year ending December 31, 2000.
1. Nature of 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 Lucky
Friday Mine in the Coeur d'Alene Mining District, Shoshone County
Idaho. The Company's property is part of the "DIA Area" which is
currently being developed and mined by Hecla Mining Company. The
Company has been in the development stage since its inception.
The Company's only recurring source of funds is a monthly advance
royalty from Hecla Mining Company of $1,500. The Company has
incurred operating losses since inception. The financial
statements do not contain any adjustments which might be
necessary if the Company is unable to continue as a going
concern.
2. Common stock:
In September 1997 the capitalization of the Company was
increased from 4,000,000 shares to 5,000,000 shares.
During the six months ended June 30, 2000 the Company
purchased 61,000 shares of the Company's common stock on the
open market at an average price of $0.49 per share. These
purchases bring the total treasury shares held by the Company
to 99,436 shares.
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F/S - 5
<PAGE>
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.
INDEPENDENCE LEAD MINES COMPANY
By: /s/ Bernard C. Lannen
---------------------
Bernard C. Lannen, its
President
Date: August 14, 2000
By: /s/ Wayne Schoonmaker
---------------------
Wayne Schoonmaker, its
Principal Accounting Officer
Date: August 14, 2000
F/S-6
