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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, 2002
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, 2002, the aggregate market value of the
voting stock held by non-affiliates of the registrant was
$614,788.
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
As of December 31, 2002, there were 4,175,357 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
INDEPENDENCE LEAD MINES COMPANY
FORM 10-K ANNUAL REPORT
FOR THE YEAR ENDED DECEMBER 31, 2002
----------------
TABLE OF CONTENTS
PART I
Page
Item 1. Business . . . . . . . . . . . . . . . . . . 1
Item 2. Properties . . . . . . . . . . . . . . . . . 2
Item 3. Legal Proceedings . . . . . . . . . . . . . 3
Item 4. Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . . 3
PART II
Item 5. Market for the Registrant's Common Stock
and Related Stockholder Matters . . . . . . . 3
Item 6. Selected Financial Data . . . . . . . . . . . 4
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . 4
Item 8. Financial Statements and Supplementary Data . 4
Item 9. Disagreements on Accounting and Financial
Disclosure . . . . . . . . . . . . . . . . . 4
PART III
Item 10. Directors and Executive Officers of the
Registrant . . . . . . . . . . . . . . . . . . 5
Item 11. Executive Compensation . . . . . . . . . . . . 5
Item 12. Security Ownership of Certain Beneficial
Owners and Management . . . . . . . . . . . . 6
Item 13. Certain Relationships and Related
Transaction . . . . . . . . . . . . . . . . . 6
PART IV
Item 14. Exhibits, Financial Statement Schedules
and Reports on Form 8-K . . . . . . . . . . . 6
Exhibit Index . . . . . . . . . . . . . . . . . . . . . 7
Schedule of Property, Plant and Equipment . . . . . . . 8
Index to Financial Statements . . . . . . . . . . . . . 9
Signature Page . . . . . . . . . . . . . . . . . . F/S 10
[The balance of this page has been intentionally left blank]
(i)
INDEPENDENCE LEAD MINES COMPANY
FORM 10-K ANNUAL REPORT
FOR THE YEAR ENDED DECEMBER 31, 2002
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
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 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 (now Hecla by purchase) 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. In the seventies Hecla performed exploration from
what is called the 4050 foot level. Hecla reentered this level
in the early nineties performing additional exploration. This
work lead to a deeper exploration effort from the 4900 level. In
mid 1995 a 4,500 foot tunnel was started from Hecla's Silver
Shaft to the mineral zone. The DIA Project was divided into
Phase I, II and III. By December 31, 1996 Phase I and II had
been completed and a promising deposit had been identified. The
total cost of the project from the time of its inception was
less than $16,000,000.
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 now Hecla by purchase) 2.40%
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.
Page 1
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 when 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 wastewater 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
Since June 30, 1999 the Company has experienced substantial
differences with the Lessee. In January 1997 Hecla chose to go
forward with the DIA Projects Phase III and by June 1, 1998 the
Project reached full production. In the first year of full
production the Project lost $785,000 after mining and milling
260,000 tons. Independence requested Hecla to stop mining to
prevent loss of the resource. Hecla's management has refused all
requests to act with prudence, and continues to mine at this
writing. Since Hecla chose to go forward with Phase III through
the end of 2002 there has been 1,111,000 tons mined and milled
and all development costs have been lost. Request for prudence
over the years have failed. During 2002 Hecla mined and milled
159,651 tons containing 13 oz. silver per ton, 7.45% lead, and
2.14% zinc. For the year 2002 the Project lost an additional
$1,369,439. The DIA Project total cost at year-end was
$32,629,507. We believe the record indicates the DIA Project was
not viable to undertake with the mining method chosen and the
existing economic conditions, and did not justify the start-up
of a large mining operation on the Lessor's property.
In 1999 the Company acquired 38,436 shares on the open market at
an average price of $0.49 per share, and in 2000 the Company
acquired 94,800 shares at an average price of $0.38 per share.
These shares are carried as treasury stock by the Company.
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 extra-
lateral 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 pay $100
per claim as a rental fee in order to maintain possessory title
to such properties. This requirement has been performed by Hecla
Mining Company under the terms of the February 8, 1968
agreements described in Item 1 of this report.
Page 2
Further information regarding the Properties of the Company is
set forth in this report under "Item 1. Business" and is
incorporated herein by reference.
Item 3. Legal Proceedings
- -------------------------
The Company has retained the Boise law firm of Marcus, Merrick,
Christian and Hardee. As required by terms of a 1968 Lease
Agreement with Hecla Mining Company, our Company gave notice of
termination of that agreement early March 2002. This agreement
covered the DIA Project, which is Hecla's principle operation at
the Lucky Friday Mine near Mullan, Idaho. Both parties agreed to
waive the arbitration requirement contained in the lease and
agreed to a trial without a jury. In late June 2002,
Independence Lead Mines Company's attorneys filed a complaint in
the District Court of the First Judicial District of The State
of Idaho, In And For the County of Kootenai, case #CV-02-4061,
and asked for Declaratory Judgment, Injunctive Relief, and
Damages.
Before mid March 2003, the Company will amend its case against
Hecla. The court will be asked to also rule the 1968 Unitization
Agreement was violated by Hecla's actions, and under case #CV-
02-4061, the Company will file a motion for Partial Summary
Judgment, or in the alternative, for Preliminary Injunction.
Item 4. Submission of matter to a Vote of Security Holders
- -------------------------------
There was no shareholder meeting held in 2002.
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
the years 2002 and 2001, respectively, were as follows:
2002 2001
---- ----
High Low High Low
---- --- ---- ---
Annual 0.31 0.09 0.11 0.07
(b)Approximate Number of Equity Security Holders.
- --------------------------
Title of Class (1) Number of Record Holders December 31, 2002
- ----------------- ---------------------------------
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 2002 or 2001,
and the Company has no plans to pay a dividend in the
foreseeable future.
[The balance of this page has been intentionally left blank.]
Page 3
Item 6. Selected Financial Data
- --------------------------
Selected Income Statements Data:
Year ended December 31,
------------
2002 2001 2000 1999
---- ---- ---- ----
Net Revenues -0- -0- -0- 84,688
Net Income (Loss) (28,221) (33,225) 305,473 (121,391)
Net Income (Loss)
Per share (1.01) (0.01) 0.07 (0.03)
Selected Balance Sheets Data:
Year ended December 31,
------------
2002 2001 2000 1999
---- ---- ---- ----
Current Assets 157,345 170,180 199,232 60,086
Current Liabilities 8,848 11,462 26,039 105,065
Working Capital 148,497 158,718 173,193 (44,979)
Total Assets 3,290,672 3,303,507 3,332,559 3,296,413
Deferred Income 374,000 356,000 337,250 301,250
Long-Term Debt -0- -0- -0- -0-
Stockholders' Equity 2,907,824 2,936,045 2,969,270 2,890,098
Item 7. Management's Discussion and Analysis of Financial
Condition and Result of Operations.
- --------------------------------
LIQUIDITY. The liquidity of the Company decreased over the past
year, primarily due to normal expenses of operation with no
offsetting revenue. Current assets of the Company consist
primarily of cash, which decreased by $15,042 from 2001.
CAPITAL RESOURCES. The Property of the Company is leased to
Hecla Mining Company. Capital improvements are to be 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. General and
administrative costs in 2002 decreased by $5,376 over 2001 due
to generally reduced activity and reduced shareholder expenses.
The Company realized no revenue from operations and received
$2,274 in interest income. The Company reported a net loss of
$28,221 after provision for income taxes.
Item 8. Financial Statements and Supplementary Data.
- --------------------------------
The Company's financial statements appear elsewhere in this
report, beginning at page F/S 1, following page 9.
Item 9. Disagreements on Accounting and Financial Disclosure.
- --------------------------------
Not applicable.
Page 4
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 66 Semi Retired Director of Lucky
President and Director Friday Extension Mining Company
Wayne L Schoonmaker 65 Certified Public Accountant,
Secretary / Treasurer Secretary/Treasurer of Hanover
Gold Company Inc, Sterling Mining
Company, and Metalline Mining Co
Forrest G Godde 86 President of Corporate Ranches
Director in California and Nevada, Director
of Mineral Mountain Mining
Robert Bunde 64 Semi-retired farmer with
Director investments in the mining field
Gordon Berkhaug 68 Management of real estate
Director Investments 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
- ------------------------
The directors and officers of this company are not considered
employees. There was no remuneration paid to any of the
directors and officers of this company during the fiscal year
ended December 31, 2002, other than the payment of $853 to the
Treasurer for accounting services.
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.
Page 5
Item 12. Security Ownership of Certain Beneficial Owners and
Management
- -----------------------------
To the knowledge of the Company, one person beneficially owned
more than five percent (5%) of any class of the Registrant's
voting securities as of December 31, 2002.
The following tabulation shows the beneficial ownership's of the
Company's officers and directors in the securities of the
Company as of March 1, 2003:
Shares of Approximate
Common Stock Percentage of
Name Beneficially Owned Class
---- ------------------ ------------
Bernard C. Lannen 238,182 5.70
Wayne L. Schoonmaker 4,000 0.10
Forrest G. Godde 95,000 (F1) 2.28
Robert Bunde 159,500 3.82
Gordon Berkhaug 62,275 1.49
All directors and executive officers of the Company as a group
(5 persons in a group) own 558,957 shares or approximately 13.39
percent of the Company are outstanding voting securities.
(FN1) Includes 45, 000 shares that represent Mr. Godde's 50%
interest in the Godde 1980 Trust.
Item 13. Certain Relationships and Related Transaction
- --------------------------------
NONE.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K
- ---------------------------------
(a)1. Financial Statements
See index to Financial Statements at page 9 of this report
2. Financial Statement Schedules
V-Statement of Property, Plant and Equipment, Page 8.
Other financial statement schedules are omitted because of
conditions under which they are required, or because the
required information is given in the financial statements
or notes thereto.
(b) The company filed its report on Form 8-K during the last
quarter of 1992.
(c) Exhibits
No additional exhibits are filed as a part of this report.
The Exhibit Index appears at Page 7 of this report.
Page 6
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.]
Page 7
INDEPENDENCE LEAD MINES COMPANY
(AN EXPLORATION STAGE COMPANY)
PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 2002, 2001, AND 2000
---------------------------------------
Balance, Balance
Beginning Other End of
of Year Addition Retirements Changes Year
------- -------- ----------- ------- -------
December 31, 2002
Equipment - - - -
----- ----- ---- -----
Mining Property 2,945,407 - - 2,945,407
Less deferred credits 356,000 18,000 - 374,000
------- ------ ---- -------
Net Total 2,589,407 (18,000) - NONE 2,571,407
======== ====== ==== ==== ========
December 31, 2001
Equipment - - - -
----- ----- ---- -----
Mining Property 2,945,407 - - 2,945,407
Less deferred credits 337,250 18,750 - 356,000
------- ------ ---- -------
Net Total 2,608,157 (18,750) - NONE 2,589,407
======== ====== ==== ==== ========
December 31, 2000
Equipment - - - -
----- ----- ---- -----
Mining Property 2,945,407 - - 2,945,407
Less deferred credits 319,250 18,000 - 337,250
------- ------ ---- -------
Net Total 2,626,157 (18,000) - NONE 2,608,157
======== ====== ==== ==== ========
Page 8
INDEX TO FINANCIAL STATEMENTS
Filed as part of the Annual Report Form 10-K
December 31, 2002
FINANCIAL STATEMENTS: Page
Balance Sheets, December 31, 2002 and 2001 . . . . . . F/S 1
Statement of Operations and Deficit Accumulated
During The Exploratory Stage for the Years Ended
December 31, 2002, 2001 and 2000 . . . . . . . . . . . F/S 2
Statement of Cash flows, for the years ended
December 31, 2002, 2001 and 2000 . . . . . . . . . . . F/S 3
Notes to Financial Statements . . . . . . . . . . . . . F/S 4
Certifications . . . . . . . . . . . . . . . . . . . . F/S 6
Signatures . . . . . . . . . . . . . . . . . . . . . . F/S 10
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.]
Page 9
INDEPENDENCE LEAD MINES COMPANY
(AN EXPLORATION STAGE COMPANY)
BALANCE SHEET - UNAUDITED
DECEMBER 31, 2002 AND 2001
--------------------
ASSETS
2002 2001
---- ----
CURRENT ASSETS
Cash 152,632 167,674
Royalties receivable 1,500 1,500
Refunds and deposits receivable 2,207 0
Investments 1,006 1,006
------ ------
Total Current Assets 157,345 170,180
------- -------
PROPERTY AND EQUIPMENT, at cost
Equipment - -
Less accumulated depreciation - -
----- -----
Mining property 2,945,407 2,945,407
------- -------
2,945,407 2,945,407
--------- ---------
OTHER ASSETS
Unrecovered exploration costs 187,920 187,920
------ ------
Total Assets 3,290,672 3,303,507
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
2002 2001
---- ----
CURRENT LIABILITIES
Accounts payable 8,848 10,926
Accrued Expenses 0 536
----- -----
Total current liabilities 8,848 11,462
------ ------
DEFERRED INCOME 374,000 356,000
------- -------
STOCKHOLDERS' EQUITY
Common stock, $1.00 par value;
authorized 5,000,000 shares;
issued 4,308,793 shares at
12/31/02 and at 12/31/01 4,308,793 4,308,793
Treasury Stock (133,436 shares) (55,290) (55,290)
Additional Paid in Capital (deficit) (108,293) (108,293)
-------- --------
4,145,210 4,145,210
Less deficit accumulated during
the Exploration stage (1,237,386) (1,209,165)
-------- --------
Total Stockholders' Equity 2,907,824 2,936,045
======== ========
Total Liabilities
& Stockholders' Equity 3,290,672 3,303,507
======== ========
The accompanying notes are an integral part of these financial
Statements.
F/S 1
INDEPENDENCE LEAD MINES COMPANY
(AN EXPLORATION STAGE COMPANY)
STATEMENT OF OPERATIONS AND DEFICIT
ACCUMULATED DURING THE EXPLORATION STAGE
UNAUDITED
FOR THE YEARS ENDED DECEMBER 31, 2002, 2001, 2000
-----------------------------------------------
2002 2001 2000
---- ---- ----
Revenue $ 0 $ 0 $366,877
---- ------ ------
Expenses
Management and Director fees 0 0 5,000
Licenses and fees 474 630 217
Office expense 1,058 1,419 716
Office services 600 600 600
Shareholder Relations 1,322 5,592 3,781
Consulting 10,787 11,226 17,772
Transportation 2,453 1,962 5,766
Accounting 1,058 853 615
Legal 14,868 15,714 10,438
------ ------ ------
Total Expenses 32,620 37,996 44,905
------ ------ ------
Loss from Operation (32,620) (37,996) (44,905)
Other Income and (Expense)
Disposition of Assets 0 0 (1,902)
Interest, net 2,274 7,167 7,875
Legal settlement 0 0 358,085
----- ----- -------
Total Other Income 2,274 7,167 364,058
----- ----- -------
Net Income (Loss) before
Income Taxes (30,346) (30,829) 319,153
Provision for income taxes (2,125) 2,396 13,680
----- ----- -----
Net Income (Loss) (28,221) (33,225) 305,473
DEFICIT, accumulated during the
Exploration stage,
beginning of period (1,209,165) (1,175,940) (1,481,413)
DEFICIT, accumulated during the
Exploration stage,
end of period (1,237,386) (1,209,165) (1,175,940)
-------- -------- --------
GAIN (LOSS) PER SHARE (0.01) (0.01) 0.07
Weighted average common
Shares outstanding 4,175,357 4,175,357 4,225,757
The accompanying notes are an integral part of these financial
statements.
[The balance of this page has been intentionally left blank.]
F/S 2
INDEPENDENCE LEAD MINES COMPANY
(AN EXPLORATION STAGE COMPANY)
STATEMENT OF CASH FLOWS - UNAUDITED
FOR THE YEARS ENDED DECEMBER 31, 2002, 2001, 2000
------------------------------------
2002 2001 2000
---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) (28,221) (33,225) 305,473
Adjustment to reconcile net Loss to
net cash provided by Operating Activities:
Increase (decrease) in cash due to changes
in assets and liabilities:
Receivable (2,207) 0 0
Accounts payable (2,078) (1,463) (16,322)
Deferred income 18,000 18,750 18,000
Accrued Expense (536) (13,114) (6,730)
Advances Payable 0 0 (86,100)
------ ------ -----
Net cash used by Operating Activities (15,042) 29,052 214,321
------ ----- -----
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the sale of land 0 0 103,000
Retirement of director's shares 0 0 (48,000)
Repurchase and retirement of common stock 0 0 (1,500)
Repayment of shareholder loans 0 0 (42,000)
Net borrowing on short-term advances 0 0 0
---- ----- -----
0 0 11,500
---- ----- -----
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Company's
Capital Stock - Treasury 0 0 (36,295)
Purchase of Investments 0 0 1,902
---- ----- -----
0 0 (34,393)
--- ----- -----
Net increase (decrease) in cash (15,042) (29,052) 191,428
CASH, beginning of year 167,674 196,726 5,298
----- ------ -----
CASH, end of year 152,632 167,674 196,726
===== ====== =====
Disclosure of Accounting Policy-
For years ended Dec. 31, 2002, 2001, and
2000, the company had no cash equivalents.
SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION
2002 2001 2000
---- ---- ----
Interest paid 0 17 916
Taxes paid - State of Idaho 0 5,310 30
Federal 0 10,191 0
The accompanying notes are an integral part of these financial statements.
F/S 3
INDEPENDENCE LEAD MINES COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
------------------------------
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. 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.
c. 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 has been receiving 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 and is
currently conducting mining operations on the property.
F/S 4
Note 5 -As shown in the financial statements, the Company
incurred net loss of $28,221 during the year ended
December 31, 2002, a net loss of $33,225 during the
year ended December 31, 2001, and a net income of
$305,473 during the year ending December 31, 2000.
The income for the year 2000 was a one-time benefit
And the Company has no continuing source of cash.
These factors indicate doubt as to the ability of
the Company to continue business on a going concern
basis.
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 6 -Statements of income, cash flows, and shareholders'
equity since the inception of the Company, September 16,
1929, through December 31, 2002 have not been presented
due to the unavailability of past records. Generally
accepted Accounting principles require that such
statements be presented when financial statements
purport to present financial position and results of
operations for an exploration stage company.
[The balance of this page has been intentionally left blank.]
F/S 5
INDEPENDENCE LEAD MINES COMPANY
AN EXPLORATION STAGE COMPANY
DECEMBER 31, 2002
CERTIFICATIONS
I, Bernard C. Lannen, certify that:
1. I have reviewed this annual report on Form 10-K of
Independence Lead Mines Company.
2. Based on my knowledge, this annual report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not
misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly
present in all material respects the financial condition,
results of operations, and cash flows of the registrant as of,
and for, the periods presented in this annual report;
4. The registrant's other certifying officer and I, are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and 15d-
14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which
this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent
function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize, and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officer and I have
indicated in this annual report whether or not there were
significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material
weaknesses.
Date: March 25, 2003
/s/ Merlin D. Bingham
------------
President
F/S 6
INDEPENDENCE LEAD MINES COMPANY
AN EXPLORATION STAGE COMPANY
DECEMBER 31, 2002
CERTIFICATIONS
I, Wayne L. Schoonmaker, certify that:
1. I have reviewed this annual report on Form 10-K of
Independence Lead Mines Company.
2. Based on my knowledge, this annual report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not
misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly
present in all material respects the financial condition,
results of operations, and cash flows of the registrant as of,
and for, the periods presented in this annual report;
4. The registrant's other certifying officer and I, are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and 15d-
14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which
this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent
function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize, and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officer and I have
indicated in this annual report whether or not there were
significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material
weaknesses.
Date: March 25, 2003
/s/ Wayne L. Schoonmaker
------------
Principal Accounting Officer
F/S 7
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Independence Lead
Mines Company (the "Company") on Form 10-KSB for the period
ended December 31, 2002, as filed with the Securities and
Exchange Commission on the date hereof (the "Report"), I,
Bernard C. Lannen, President of the Company, certify, pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in
all material respects, the financial condition, and results of
operations of the Company.
/s/ Bernard C. Lannen
- -----------
President
Dated: March 25, 2003
F/S 8
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Independence Lead
Mines Company (the "Company") on Form 10-K for the period ended
December 31, 2002, as filed with the Securities and Exchange
Commission on the date hereof (the "Report"), I, Wayne L.
Schoonmaker, Principal Accounting Officer of the Company,
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in
all material respects, the financial condition, and results of
operations of the Company.
/s/ Wayne L. Schoonmaker
- ------------
Principal Accounting Officer
Dated: March 25, 2003
F/S 9
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 25, 2003
By: /s/ Wayne L. Schoonmaker
------------------------
Wayne L. Schoonmaker, its Principal
Accounting Officer
Dated: March 25, 2003
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 25, 2003 Dated: March 25, 2003
By: /s/ Forrest G. Godde By: /s/ Gordon Berkhaug
--------------------- ------------------------
Forrest G. Godde Gordon Berkhaug
Director Director
Dated: March 25, 2003 Dated: March 25, 2003
By: /s/ Robert Bunde
---------------------
Robert Bunde
Director
Dated: March 25, 2003
F/S 10