Convertible Note Purchase Agreement – Initial Financing
On February 6, 2012, the Company entered into a Convertible Note Purchase Agreement with ISLV Partners, LLC (the Lenders) to provide funding in the amount of $600,000 for working capital and other corporate purposes. The general terms and conditions of the loan provided that the “lenders” retain out of the funding, the sum of the $90,300 and $80,000, to satisfy full repayment of the cognovit promissory notes (see Note G) which were assigned to the lender, including all unpaid accrued interest to the closing date. The initial note in the principal amount of $600,000 is secured by the mortgages, deeds of trust, fixture filings, security agreements and assignment of leases and rents, and such security agreements executed and delivered on the closing date, pursuant to which certain real properties owned by the Company and /or any subsidiary, as more particularly specified in such mortgages, deeds of trust, assignment of leases and rents are pledged as collateral security for the obligations (Initial Mortgages). The principal and unpaid interest, at a per annum interest rate of eight (8%) percent, is due on or before July 27, 2013.
The lender was given the right, at its option, to make an additional loan to the Company in the principal amount of $4,000,000. On May 17, 2012, the $4,000,000 was amended to $2,000,000.
Optional Conversion
The “Lender” may, at its option, upon written notice to the Company, convert all or any portion of the unpaid principal balance of the note and/or unpaid accrued interest into shares of common stock of the Company, at a price of $0.20 per share of common stock. If converted, the total market value of the shares would be $600,000. At June 30, 2012, no conversion had occurred.
Warrants
Upon execution of the Convertible Note Purchase Agreement, dated February 6, 2012, the Company issued 3,000,000 warrants to purchase additional shares of common stock of the Company, at an exercise price of $0.40 per share. The number of such warrants issued equals the number of shares into which the applicable Lender’s note is convertible.
Security
The Notes shall be secured by a first priority security interest in all tangible property of the Company, whether now owned or hereafter acquired, and all proceeds thereof.
Registration rights
Upon demand by the Lenders, the Company will file a registration statement on Form S-1 covering all shares issued or issuable upon conversion of the Notes and exercise of the Warrants. The Lenders will have customary piggy-back registration rights.
Lender’s Option on Certain Projects
If additional financing is completed, Lenders or their designees have a three-year (3) option to acquire a 20% interest in each of the Company’s Projects located in the Pioche Mining District in Nevada at a price equal to approximately the fair market value for each respective Project.
Convertible Note Purchase Agreement – Additional Financing
On May 17, 2012 and May 25, 2012, loans in the amount of $130,000 and $1,870,000, respectively, were procured by the Company pursuant to the first amendment to the convertible note purchase agreement.
Terms and conditions are identical to the initial financing, which are disclosed above. On May 25, 2012, 10,000,000 warrants were issued to ISLV Partners, LLC on the additional financing. The warrants entitled the holder to purchase additional shares of common stock of the Company, at an exercise price of $0.40 per share. The number of such warrants issued equals the number of shares into which the applicable Lender’s note is convertible.
Convertible notes payable as of June 30, 2012 and December 31, 2011, respectively, are shown below:
|
|
|
June 30,
2012
|
|
|
December 31,
2011
|
|
|
Convertible Notes Payable – ISLV Partners, LLC:
|
|
|
|
|
|
|
|
Issued February 6, 2012
|
|
$
|
600,000
|
|
|
$
|
0
|
|
|
Issued May 17, 2012
|
|
$
|
130,000
|
|
|
$
|
0
|
|
|
Issued May 25, 2012
|
|
$
|
1,870,000
|
|
|
$
|
0
|
|
|
Total
|
|
$
|
2,600,000
|
|
|
$
|
0
|
|
|
Discount on Notes Payable
|
|
|
(546,322
|
)
|
|
$
|
0
|
|
|
Net Carrying Value
|
|
$
|
2,053,668
|
|
|
$
|
0
|
|
Outstanding convertible instrument
An optional conversion feature was included in the Convertible Term Notes issued. The terms of the optional conversion grants the “Lender” the option to convert all or any portion of the unpaid principal balance of the note and/or unpaid accrued interest into shares of common stock of the Company, at a price of $0.20 per share of common stock. At June 30, 2012, the convertible note instruments had no beneficial conversion feature, thus a discount on the note was not recognized.
Qualified Financing
In the event that the Company, at any time after the original issuance of the Notes, proposes to consummate any equity offering or series of related equity offerings resulting in gross proceeds to the Company of not less than $250,000, the Company shall give written notice to the holder not less than 20 days prior to the consummation of such Qualified Financing. Upon consummation of such Qualified Financing, the Notes shall then and thereafter be convertible into shares of the same class as the shares issued in the Qualified Financing, and the conversion price per share shall be equal to the lesser of a) 90% of the implied price per share of common stock in such Qualified Financing, or b) the then-effective conversion price, subject to adjustments.
Warrants
In addition to the conversion feature, on the Convertible Term Notes issued, the Company issued a total of 13,000,000 warrants to purchase additional shares of common stock of the Company, at an exercise price of $0.40 per share. The number of such warrants issued equals the number of shares into which the applicable Lender’s note is convertible. The beneficial conversion option was derived as follows:
|
|
|
|
|
|
(
Allocation)
|
|
|
|
|
Allocation
|
|
|
Relative
|
|
|
|
|
of Proceeds
|
|
|
Value
|
|
|
Convertible Note – Issued on February 6, 2012
|
|
|
|
|
|
|
|
|
Face Value of Convertible Note
|
|
$
|
600,000
|
|
|
|
|
|
No. of Common Shares
|
|
|
3,000,000
|
|
|
|
|
|
Current Market Value
|
|
|
|
|
|
|
|
|
Market Share price at Feb. 6, 2012
|
|
$
|
0.200
|
|
|
|
|
|
Market Value of Stock, if converted
|
|
$
|
600,000
|
|
|
$
|
533,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value - Warrants - At Time of Issuance - Feb 6, 2012
|
|
|
|
|
|
|
|
|
|
No. of Warrants Issued
|
|
|
3,000,000
|
|
|
|
|
|
|
Exercise Price
|
|
$
|
0.400
|
|
|
|
|
|
|
Fair Value - Based on Black-Scholes Method
|
|
|
|
|
|
|
|
|
|
Black-Scholes Value
|
|
$
|
0.025
|
|
|
|
|
|
|
Fair Value of Warrants
|
|
$
|
75,000
|
|
|
$
|
66,667
|
|
|
|
|
|
|
|
|
|
|
|
|
Total/Relative Value
|
|
$
|
675,000
|
|
|
$
|
600,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial Conversion Option Calculation
|
|
|
|
|
|
|
|
|
|
Relative Note Value
|
|
|
|
|
|
$
|
533,333
|
|
|
Face value of Note
|
|
|
|
|
|
$
|
600,000
|
|
|
Conversion price
|
|
|
|
|
|
$
|
0.200
|
|
|
Intrinsic Conversion price/share
|
|
|
|
|
|
$
|
0.178
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial Conversion Option for fully converted note
|
|
|
|
|
|
$
|
66,667
|
|
|
|
|
Allocation
|
|
|
Relative
|
|
|
|
|
of Proceeds
|
|
|
Value
|
|
|
Convertible Notes – Issued on May 17 and May 25, 2012
|
|
|
|
|
|
|
|
Face Value of Convertible Notes
|
|
$
|
2,000,000
|
|
|
|
|
|
No. of Common Shares
|
|
|
10,000,000
|
|
|
|
|
|
Current Market Value
|
|
|
|
|
|
|
|
|
Market Share price at May 25, 2012
|
|
$
|
0.200
|
|
|
|
|
|
Market Value of Stock, if converted
|
|
$
|
2,000,000
|
|
|
$
|
1,777,778
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value - Warrants - At Time of Issuance – May 25, 2012
|
|
|
|
|
|
|
|
|
|
No. of Warrants Issued
|
|
|
10,000,000
|
|
|
|
|
|
|
Exercise Price
|
|
$
|
0.400
|
|
|
|
|
|
|
Fair Value - Based on Black-Scholes Method
|
|
|
|
|
|
|
|
|
|
Black-Scholes Value
|
|
$
|
0.0250
|
|
|
|
|
|
|
Fair Value of Warrants
|
|
$
|
250,000
|
|
|
$
|
222,222
|
|
|
|
|
|
|
|
|
|
|
|
|
Total/Relative Value
|
|
$
|
2,250,000
|
|
|
$
|
2,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial Conversion Option Calculation
|
|
|
|
|
|
|
|
|
|
Relative Note Value
|
|
|
|
|
|
$
|
1,777,778
|
|
|
Face value of Note
|
|
|
|
|
|
$
|
2,000,000
|
|
|
Conversion price
|
|
|
|
|
|
$
|
0.200
|
|
|
Intrinsic Conversion price/share
|
|
|
|
|
|
$
|
0.178
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial Conversion Option for fully converted note
|
|
|
|
|
|
$
|
222,222
|
|
Adjustment to Warrant Price
The exercise price and the number of shares purchasable are subject to adjustment, but in no case shall the exercise price be reduced to below the par value of the class of stock for which this warrant is exercisable at such time, and the Company shall not take or permit to be taken any action which would cause the exercise price to be reduced below the par value per share of the class of stock for which this warrant is exercisable at such time.
If the Company makes a dividend or distribution on its common stock payable in common shares, the exercise price shall be proportionately adjusted effective as of the record date for the dividend or distribution. Other provisions requiring the adjustment to the warrant price relate to distributions other than common stock, adjustment upon merger, consolidation or exchange, recapitalization or reclassification.
Note I - Income Taxes
The Company has reported (for income tax purposes) net operating losses for 2011, 2010 and prior years as follows:
|
Net Operating Loss carry-forward to Year 2006
|
|
$
|
106,508
|
|
|
Net Operating Income - Year 2006 (Applied)
|
|
|
(4,693
|
)
|
|
Net Operating Loss carry-forward to Year 2007
|
|
$
|
101,815
|
|
|
Net Operating Loss - Year 2007
|
|
|
111,921
|
|
|
Net Operating Loss carry-forward to Year 2008
|
|
$
|
213,736
|
|
|
Net Operating Loss - Year 2008
|
|
|
237,958
|
|
|
Net Operating Loss carry-forward to Year 2009
|
|
$
|
451,694
|
|
|
Net Operating Loss - Year 2009
|
|
|
62,811
|
|
|
Net Operating Loss carry-forward to Year 2010
|
|
$
|
514,505
|
|
|
Net Operating Loss - Year 2010
|
|
|
47,369
|
|
|
Net Operating Loss carry-forward to Year 2011
|
|
$
|
561,874
|
|
|
Net Operating Loss - Year 2011
|
|
|
1,195,343
|
|
|
Net Operating Loss carry-forward to Year 2012
|
|
$
|
1,767,216
|
|
Pursuant to the provisions of the Internal Revenue Code, the Company has elected to forego the carry-back provisions, allowable under the IRS regulations, for the stated accounting periods.
At June 30, 2012, the Company recorded a deferred tax benefit of $915,568 but due to a going-concern issue, management made an allowance for a provision of an equal amount, should the Company not be able to avail itself of that tax benefit. The deferred tax asset is based on prevailing IRS graduated tax tables, which average 33% at June 30, 2012 and December 31, 2011.
Net deferred tax assets consist of the following components:
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
Deferred Tax Asset
|
|
$
|
915,568
|
|
|
$
|
203,503
|
|
|
Valuation Account
|
|
|
(915,568
|
)
|
|
|
(203,503
|
)
|
|
Net Deferred Tax Asset
|
|
$
|
0
|
|
|
$
|
0
|
|
At December 31, 2011, The Company had a net operating loss carry-forward of $1,767,216 for federal income tax purposes that may be offset against future taxable income from years 2012 through 2030. Our deferred tax benefit is adjusted for interim results, but we simultaneously adjust the allowance for a net zero effect.
Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur net operating loss carry forwards may be limited as to use in future years.
Note J – Shareholders’ Equity
Stock Issuances
The Company was incorporated on September 4, 1992 with the initial issuance of 1,000 shares of common stock at a par value of $1.00 per share. On June, 2006, the Board of Directors adopted a new business strategy to change its emphasis from providing engineering services to conducting mine exploration and development. As a result, the Board of Directors amended its Articles of Incorporation to authorize 500,000,000 shares of common stock, at a par value of $0.0001 to allow for equity financing. Additionally, the Board of Directors passed a resolution, dated June 16, 2006, to effectuate a stock split of 12,000 to 1, for all represented shares. On July 24, 2006, the three shareholders of record were given their new share distribution of 4,000,000 shares each.
On September 13, 2006, the Company issued 1,000,000 shares of common stock at $0.075 per share in exchange for legal services.
On September 19, 2006, the Company issued 30,000 shares of common stock at $1.00 per share for land.
On October 21, 2006, the Company issued 300,000 shares of common stock at $.185 per share in exchange for a 98% interest in the holdings of Metales Preciosos Atlas, S.A. de C.V., a Mexican subsidiary.
On October 21, 2006, the Company issued 100,000 shares of common stock at $.050 per share in exchange for Directors’ fees.
During 2007, the Company conducted a private placement and issued an additional 260,000 shares of common stock for cash as follows:
On May, 2007, the Company issued 7,000 shares of common stock at $0.500 per share for $3,500 to fourteen (14) accredited investors.
On June, 2007, the Company issued 3,000 shares of common stock at $0.500 per share for $1,500 to seven (7) accredited investors.
On October, 2007, the Company issued 4,000 shares of common stock at $0.500 per share for $2,000 to an accredited investor.
On November, 2007, the Company issued 246,000 shares of common stock at $0.297 per share for $73,000 to six (6) accredited investors.
On May 22, 2007, the Company issued 100,000 shares of common stock at $0.055 per share in exchange for transfer agent fees.
On June 30, 2007, the Company issued 336,186 shares of common stock at $0.500 per share in exchange for an outstanding debt owed to a shareholder/officer.
On September 13, 2007, the Company issued 100,000 shares of common stock at $0.040 per share in exchange for Director fees.
On September 13, 2007, the Company issued 150,000 shares of common stock at $0.040 per share in exchange for engineering consulting services.
On September 21, 2007, the Company issued 150,000 shares of common stock at $0.040 per share in exchange for consulting services.
On June 12, 2008, the Company issued 150,000 shares of common stock at $0.133 per share in exchange for legal services.
On September 8, 2008, the Company issued 335,567 shares of common stock at $0.289 per share in exchange for an outstanding debt owed to a shareholder/officer.
On November 10, 2008, the Company repurchased 30,000 of its own shares in common stock upon relinquishing its holdings in the Tecoma Mining District. These shares are being held in Treasury as of December 31, 2009, valued at $1.00 per share, their original issue price.
On September 23, 2009, the Board of Directors passed a resolution for the issuance of 3,550,000 shares of common stock at $0.010 to its directors, officers and certain consultants for services rendered. The share certificates were effective October 6, 2009, but are “restricted” pursuant to Rule 144 of the Securities Act of 1934.
On March 1, 2010, the Company purchased its 70% interest in the Estrades Mine in exchange for 6,000,000 shares of its common stock, at a share price of $0.0025 per share.
On August 18, 2010, the Company issued 2,000,000 shares of common stock at $0.025 per share in exchange for an outstanding debt of $50,000 owed to a shareholder/officer.
On August 24, 2010, the Company conducted a private
placement and issued an additional 2,000,000 shares of common stock at $0.02 per share for $40,000 to two (2) accredited investors.
On December 31, 2010, the Company issued 50,000 shares of common stock in exchange for a convertible note to Tintic Standard Gold, Inc. for $75,000.
On April 25, 2011, the Company issued 499,077 shares of its common stock upon the conversion of the Tintic Standard Gold Mines, Inc. bridge loan convertible note in full satisfaction of the principal and interest up to the conversion date. This included the additional 25,000 shares for the note extension made on March 21, 2011.
During the second quarter, 2011, the Company issued 7,699,998 shares of its common stock for $1,155,000 from May 18, 2011 through June 23, 2011 on a private placement. The sale of unregistered securities was to seventeen (17) accredited investors comprised of third party individuals and companies not related to the Company.
There were no stock issuances during the three months ended June 30, 2012 nor for the six months ended June 30, 2012.
At June 30, 2012, the Company had authorized 500,000,000 shares of common stock, 36,780,828 shares had been issued and are outstanding.
Stock Option Plan
At November 1, 2010, the Board of Directors (“Board”) of the Company authorized the approval of a stock option plan (the “Plan”). The plan allows the Board of Directors, or a committee thereof at the Board’s discretion, to grant stock options to officers, directors, key employees and consultants of the company and its affiliates. The Board authorized the Corporation to issue up to 20% of the total number of outstanding shares of the Company’s common stock as Stock Options. Because no vesting is required, the cost of compensation was recognized entirely during the quarter the options were issued. The plan expires October 31, 2020.
Options outstanding as of June 30, 2012 are as follows:
|
|
|
No. of
shares
|
|
|
Weighted Average
Exercise Price
|
|
Contractual
Life Remaining
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding – January 1, 2012
|
|
|
3,300,000
|
|
|
$
|
0.20
|
|
8.6 years
|
|
Granted
|
|
|
0
|
|
|
|
-
|
|
|
|
Exercised
|
|
|
0
|
|
|
|
-
|
|
|
|
Forfeited
|
|
|
0
|
|
|
|
-
|
|
|
|
Outstanding – June 30, 2012
|
|
|
3,300,000
|
|
|
$
|
0.20
|
|
8.3 years
|
Warrants
To date, the Board of Directors has approved the issuance of 21,238,998 warrants resulting from a private placement for $2,000,000 in financing in year 2011 and on convertible notes issued for $2,600,000 during the first six months of 2012. These warrants are exercisable at prices ranging from $0.20 to $0.40 per share, vesting over a period of 36 months, and expire at various times through May 25, 2015.
During the quarter ended June 30, 2011, as a component of the 8,238,998 “units” the Company sold in private placements, 8,238,998 Class A common stock warrants, each granting the holder the right to purchase one share of common stock at an exercise price of $0.20 per share. Each warrant expires in three years. At June 30, 2012, none had yet been exercised.
On February 6, 2012, the Company negotiated a convertible note agreement, whereby the lender was issued 3,000,000 warrants, with an expiry date of February 6, 2015, exercisable at $0.40 per share for a number of shares equal to the number of shares into which the initial note is convertible.
On May 17 and May 25, 2012, the Company negotiated convertible term notes of $130,000 and $1,870,000, respectively, aggregating $2,000,000, whereby the lender was issued an additional 10,000,000 warrants, with an expiry date of May 25, 2015, exercisable at $0.40 per share for a number of shares equal to the number of shares into which the notes are convertible (Refer to Note H - Convertible Note Payable).
At June 30, 2012, none had yet been exercised.
A summary of warrant activity for the years 2012 and 2011 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
Average
|
|
|
|
|
Number of
|
|
|
Average
|
|
|
Warrants
|
|
|
Exercise
|
|
|
|
|
Warrants
|
|
|
Exercise Price
|
|
|
Exercisable
|
|
|
Price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding, January 1, 2010
|
|
|
0
|
|
|
|
|
|
|
0
|
|
|
|
|
|
Granted
|
|
|
8,238,998
|
|
|
$
|
0.20
|
|
|
|
8,238,998
|
|
|
$
|
0.20
|
|
|
Exercised
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
Outstanding, December 31, 2011
|
|
|
8,238,998
|
|
|
$
|
0.20
|
|
|
|
8,238,998
|
|
|
$
|
0.20
|
|
|
Granted
|
|
|
3,000,000
|
|
|
$
|
0.40
|
|
|
|
3,000,000
|
|
|
$
|
0.40
|
|
|
Exercised
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
Outstanding, March 31, 2012
|
|
|
11,238,998
|
|
|
$
|
0.32
|
|
|
|
11,238,998
|
|
|
$
|
0.32
|
|
|
Granted
|
|
|
10,000,000
|
|
|
$
|
0.40
|
|
|
|
10,000,000
|
|
|
$
|
0.40
|
|
|
Exercised
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
Outstanding, June 30, 2012
|
|
|
21,238,998
|
|
|
$
|
0.32
|
|
|
|
21,238,998
|
|
|
$
|
0.32
|
|
At June 30, 2012, the range of warrant prices for shares under warrants and the weighted-average
remaining contractual life is as follow
|
|
|
|
Warrants Outstanding
|
|
|
Warrants Exercisable
|
|
|
Range of
|
|
|
Weighted-Average
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
Warrant Exercise
|
|
|
Remaining
|
|
|
Number of
|
|
|
Average
|
|
|
Number of
|
|
|
Exercise
|
|
|
Price
|
|
|
Contractual Life
|
|
|
Warrants
|
|
|
Exercise Price
|
|
|
Warrants
|
|
|
Price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.20
|
|
|
|
1.89
|
|
|
|
7,699,998
|
|
|
$
|
0.20
|
|
|
|
7,699,998
|
|
|
$
|
0.20
|
|
|
$
|
0.20
|
|
|
|
1.96
|
|
|
|
539,000
|
|
|
$
|
0.20
|
|
|
|
539,000
|
|
|
$
|
0.20
|
|
|
$
|
0.40
|
|
|
|
2.61
|
|
|
|
3,000,000
|
|
|
$
|
0.40
|
|
|
|
3,000,000
|
|
|
$
|
0.40
|
|
|
$
|
0.40
|
|
|
|
2.99
|
|
|
|
10,000,000
|
|
|
$
|
0.40
|
|
|
|
10,000,000
|
|
|
$
|
0.40
|
|
|
|
|
|
|
|
|
|
|
|
21,238,998
|
|
|
|
|
|
|
|
21,238,998
|
|
|
|
|
|
Adjustment to Warrant Price
The exercise price and the number of shares purchasable are subject to adjustment, but in no case shall the exercise price be reduced to below the par value of the class of stock for which this warrant is exercisable at such time, and the Company shall not take or permit to be taken any action which would cause the exercise price to be reduced below the par value per share of the class of stock for which this warrant is exercisable at such time.
If the Company makes a dividend or distribution on its common stock payable in common shares, the exercise price shall be proportionately adjusted effective as of the record date for the dividend or distribution. Other provisions requiring the adjustment to the warrant price relate to distributions other than common stock, adjustment upon merger, consolidation or exchange, recapitalization or reclassification.
Note K - Related Party Transactions
Amounts due from and to related parties, are receivable from or payable to entities controlled by the shareholders, officers, or directors of the Company (“Related Entities”). The underlying transactions are with these related parties. These amounts are unsecured and not subject to specific terms of repayment.
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
|
2012
|
|
|
2011
|
|
|
Due From Related Parties
|
|
|
|
|
|
|
|
Atlas Precious Metals, Inc.
|
|
$
|
0
|
|
|
$
|
236
|
|
|
Arimetco International, Inc.
|
|
|
63
|
|
|
|
36
|
|
|
Total
|
|
$
|
63
|
|
|
$
|
299
|
|
|
Due To Related Parties
|
|
|
|
|
|
|
|
Harold R. Shipes - Shareholder/Officer
|
|
$
|
23,551
|
|
|
$
|
15,443
|
|
|
Atlas Precious Metals, Inc.
|
|
|
0
|
|
|
|
10,123
|
|
|
Total
|
|
$
|
23,551
|
|
|
$
|
25,566
|
|
Related party transactions have occurred with the following related party entities:
The Company rents (subleases) its administrative offices in Tucson, Arizona from Atlas Precious Metals Inc., an affiliate. Effective April 1, 2011, the Company entered into a revised lease agreement for additional office space for a short-term period effective through September 30, 2011, with total rents due in the amount of $51,000, payable $8,500 per month. This rental agreement with Atlas Precious Metals, Inc. was renewed for an additional one-year period, effective October 1, 2011 with a monthly rental of $9,500 or $114,000 annually. Rental expense for the administrative offices for the year ended December 31, 2011 was $81,000 and for the six months ended June 30, 2012, rental expense was $57,000. At June 30, 2012, all rents are current and there was $9,500 in prepaid rent from a related party.
Arimetco International, Inc. utilizes periodic courier services paid by the Company and reimburses the Company.
Harold R. Shipes, the Company’s Chief Executive Officer and Chairman of the Board of Directors, does extensive travel related to the Company’s holdings or prospective holdings, reimbursable by the Company. At December, 31, 2011 and June 30, 2012, Mr. Shipes was owed $25,566 and $23,551, respectively.
Note L – Exploration Costs
Acquired mineral interests are presented as “exploration costs” as required by “Industry Guide 7” of the Securities and Exchange Commission’s Guides for the Preparation of Registration Statements and with the Society for Mining, Metallurgy and Exploration’s “Guide for Reporting Exploration Information, Mineral Resources, and Mineral Reserves”. Exploration costs incurred since inception through June 30, 2012 are $461,036. Exploration costs incurred for the six months ended June 30, 2012 were $94,279.
Note M – Reclassification
Subsequent to filing the annual 10-K report for the year ended December 31, 2011, a reclassification of $10,000 was made from Accounts Payable –Trade to Note Payable to reflect the proper nature of the liability on the Balance Sheet as of December 31, 2011.
Note N – Subsequent Events
Management has reviewed all subsequent events through the issuance date of the condensed financial statements and discloses the following material events that have transpired subsequent to June 30, 2012 up through the issuance date:
On April 27, 2012, the Company entered into an agreement with Chattel, LLC, a Montana limited liability company, for the purchase of certain real property located in Silver Bow County, Montana. Close of escrow is expected to occur in August, 2012. The total purchase price is $1,450,000, plus interest on the unpaid balance at a rate of four (4%) percent per annum. Payment terms are 1) $50,000 at close of escrow, 2) $50,000 due on the first and second anniversary date of the date of closing and 3) the balance due on the third anniversary date of the date of closing.
ITEM 2 – MANAGEMENT DISCUSSION’S AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
Management Discussion and Analysis Section
Forward-Looking Statements
This Management’s Discussion and Analysis should be read in conjunction with our financial statements and its related notes. The terms “we,” “our” or “us” refer to International Silver, Inc. This discussion contains forward-looking statements based on our current expectations, assumptions, and estimates. The words or phrases “believe,” “expect,” “may,” “anticipates,” or similar expressions are intended to identify “forward-looking statements.” The
results shown herein are not necessarily indicative of the results to be expected in any future periods. Actual results could differ materially from those projected in the forward-looking statements as a result of a number of risks and uncertainties pertaining to our business, included the risk factors contained herein.
We are an exploration stage company that engages in minerals exploration activities in the United States and Mexico involving silver, gold, zinc, copper and other minerals. To date, we have not generated any revenues from any of these activities since approximately June, 2006, when we switched our emphasis in our business plan and commenced our mineral exploration business. To date, our exploration activities have been limited to the exploration and purchasing of mineral interests in the United States and Mexico.
Results of Operations
Operating Performance for the three months ended June 30, 2012 (the “June 2012 Quarter”) as compared to the three months ended June 30, 2011 (the “June 2011 Quarter”) was as follows:
For the June 2012 Quarter, we recorded a net loss of $519,288, as compared to a net loss of $1,856,889 for the June 2011 Quarter or a decrease in net loss of $1,337,601. The primary reason for the substantial decrease resulted from the recognition of an impairment loss of Goodwill in the amount of $1,564,900 during the June 2011 Quarter. Due to the acquisition of the Prince Mine and New Butte properties in Nevada and Montana, administrative costs, planning, consulting, exploratory and development work increased substantially during the June 2012 Quarter over the June 2011 Quarter.
During the June 2012 Quarter and the June, 2011 Quarter, we did not realize any revenues.
Operating expenses reflected during the June 2012 Quarter were $430,480, an increase of $155,324 or 56% as compared to operating expenses of $275,156 for the June 2011 Quarter. Most of the increase resulted from administrative expenses, salaries, consulting, lease expense as a result of the Company obtaining financing to commence plans for development work on the two properties located in the Pioche Mining District in Lincoln County, Nevada and the New Butte Mining District in Silver Bow County, Montana recently acquired and exploration work underway on other mining leased property.
Other Income/(Expense) during the June 2012 Quarter was $88,808, a net decrease of $1,498,425, as compared to the June 2011 Quarter of $1,587,233 due to the impairment loss on Goodwill resulting from the recognition of the Pan American business acquisition. The purchase option was later rescinded on December 31, 2011 by the Board of Directors. Interest expense for the June 2012 Quarter of $88,808 reflects an increase of $66,475 over June 2011 Quarter. During the June 2012 Quarter, two additional convertible notes were issued to ISLV Partners, LLC bringing the total financing for the six month period ended June 30, 2012 to $2,600,000. The June 2011 Quarter reflects interest expense related to the notes issued for bridge financing by Tintic Standard Gold Mines, whose debt was settled during that same period.
Operating Performance for the six months ended June 30, 2012 (the “First Half 2012”) as compared to the six months ended June 30, 2011 (the “First Half 2011”) was as follows:
For the First Half 2012, we recorded a net loss of $955,258, as compared to a net loss of $2,030,434 for the First Half 2011 or a decrease in net loss of $1,075,176. The primary reason for the substantial decrease resulted from the recognition of an impairment loss of Goodwill in the amount of $1,564,900 during the First Half 2011. Due to the acquisition of the Prince Mine and New Butte properties in Nevada and Montana, administrative costs, planning, consulting, exploratory and development work increased substantially during the First Half 2012 over the First Half 2011.
During the First Half 2012, we did not realize any revenues, whereas $5,500 in related company revenue was realized during the First Half 2011.
Operating expenses reflected during the First Half 2012 were $805,914 an increase of $450,130 as compared to operating expenses of $355,784 for the First Half 2011. Most of the increase resulted from administrative expenses, salaries, consulting, lease expense as a result of the Company obtaining financing to commence plans for development work on the two properties located in the Pioche Mining District in Lincoln County, Nevada and the New Butte Mining District in Silver Bow County, Montana recently acquired and exploration work underway on other mining leased property.
Other Income/(Expense) during the First Half 2012 was $149,344, a net decrease of $1,530,806, as compared $1,680,150 incurred during the First Half 2011, due to the impairment loss on Goodwill resulting from the recognition of the Pan American business acquisition. Interest expense for the First Half 2012 of $149,344 reflects an increase of $34,094 over the interest expense of $115,250 for First Half 2011. During the First Half 2012, three convertible notes were issued to ISLV Partners, LLC bringing the total financing to $2,600,000. The June 2011 Quarter reflects interest expense related to the notes issued for bridge financing by Tintic Standard Gold Mines, whose debt was settled during that same period.
Liquidity and Capital Resources
Our financial statements as presented in Item 1 of this report have been prepared in conformity with US GAAP, which contemplate our continuation as a going concern. However, the report of our independent registered public accounting firm on our financial statements, for the six months ended June 30, 2012, contains an explanatory paragraph expressing substantial doubt as to our ability to continue as a going concern. The “going concern” qualification results from, among other things, our development-stage status, no revenue recognized since inception, other than for engineering services, and our net losses from inception as a development stage company, which total $3,409,398 and the outstanding arrangements with related parties and uncertainty in raising additional capital. Our financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary if we were unable to continue as a going concern.
Currently, we have funded our operations through private placements, short-term notes payable, and some on-going engineering consulting services. The capital required to execute our total business vision and objectives is significant. On May 25, 2012, the Company negotiated two convertible term notes totaling $2,000,000, bringing the total of financing procured during the first six months of 2012 to $2,600,000. The convertible note agreement, as amended on May 17, 2012, contains a provision whereby the lender has an option to lend up to an additional $2.0 million. During 2012, we will continue our efforts to raise additional capital to fund the working capital requirements and exploration and development activities necessary to meet our business objectives.
Our global capital budget for the completion of acquisitions, exploration and development programs in the Pioche Mining District in Nevada and the New Butte Mining District in Montana is approximately $2.0 million.
Cash and Cash Flows
Cash on hand at June 30, 2012 was $1,582,651 as compared to $1,913 at December 31, 2011. The increase in cash of $1,580,738 was due primarily from proceeds realized from the issuance convertible notes of $2,600,000, less operating expenditures up through June 30, 2012.
Net cash flows from operating activities were ($813,809) for the six months ended June 30, 2012, compared to ($383,649) for the six months ended June 30, 2011, a net decrease in cash flows of $430,160 over the six months ended June 30, 2011. Negative cash flows from Operating Activities for the six months ended June 30, 2012 reflect higher exploration and general administrative expenses in the areas of consulting, rent, salaries and mineral leases due to procurement of financing and the commencement of planning for development work on the Prince mine property in Nevada and the Butte properties in Montana recently acquired. During the six months ended June 30, 2011, there were minimal exploration activities.
Investment activities during the six months ended June 30, 2012 included the purchase of mineral land in Butte, Montana for $47,500, an investment of $110,000 in a newly-formed joint venture with Aurum, LLC, a reclamation bond of $14,406, as required by the Bureau of Land Management, where the Company proposes to conduct exploratory drilling and the purchase of surveying equipment of $3,537 for a total of $175,453 in capital expenditures. There were no investing activities during the six months ended June 30, 2011.
Financing activities undertaken during the six months ended June 30, 2012 included the issuance of three convertible notes to ISLV Partners, LLC totaling $2,600,000, less $30,000 in note payments due Lawrence Atkinson, for a net total of $2,570,000 from financing activities. In comparison, for the six months ended June 30, 2011, We generated cash proceeds of $1,155,000 less issuance costs of $139,724 on a private placement of our common stock. Additionally, there were note installment payments to Lawrence Atkinson of $20,000, bringing the net of investing activities for the six months ended June 30, 2011 to $995,276. The difference in investing activities of $1,574,724 represents an increase of 158% over the six months ended June 30, 2011.
Going forward, our business plan does not reflect, nor do we anticipate, any revenues from our properties during the remaining part of our exploration phase and until we confirm previously demonstrated mineralization, obtain operating permits, and construct mining and processing facilities. We are presenting pursuing, through our engineering company, Western States Engineering Inc, several engineering contracts.
Exploration Costs – Inception to Date
On June 16, 2006, our Board of Directors passed a resolution to change the nature of its operations from an engineering services company to an exploration company. Since converting our business plan to conducting exploration activities, we have purchased the following properties and engaged in the exploration activities and incurred the following exploration costs since inception:
|
Capitalized Acquisitions
|
|
|
|
|
|
A) Purchase of the Tecoma Mine (fee simple) – Year 2007
|
|
$
|
90,000
|
|
|
|
|
|
|
|
|
B) Sale of Tecoma Mine – Year 2008
|
|
|
(90,000
|
)
|
|
C) Purchase of Magna Charta property – Silver Bow County, Montana
|
|
|
47,500
|
|
|
Total Acquisitions
|
|
$
|
47,500
|
|
|
|
|
|
|
|
|
Exploration Costs
:
|
|
|
|
|
|
A) Acquired a 98% interest in Metales Preciosos, S.A. de C.V., a Mexican company, later abandoned
|
|
|
|
|
|
1) El Cumbro property
|
|
$
|
14,260
|
|
|
|
|
|
|
|
|
2) El Cusito property
|
|
|
15,000
|
|
|
|
|
|
|
|
|
3) Canada de Oro property
|
|
|
15,000
|
|
|
|
|
|
|
|
|
4) La Moneda property
|
|
|
10,000
|
|
|
|
|
|
|
|
|
B) Langtry property (options expired – exploration abandoned)
|
|
|
|
|
|
1) Option payment
|
|
|
10,000
|
|
|
|
|
|
|
|
|
2) Option payment
|
|
|
90,000
|
|
|
|
|
|
|
|
|
3) Exploration
|
|
|
21,075
|
|
|
|
|
|
|
|
|
C) Acquisition of BLM mineral claims - Calico District
|
|
|
|
|
|
1) Silverado mining claims
|
|
|
4,250
|
|
|
|
|
|
|
|
|
2) Leviathon mining claims
|
|
|
38,224
|
|
|
|
|
|
|
|
|
D) Pioche Mining District – Lincoln County, Nevada
|
|
|
|
|
|
1) Prince Mine lease
|
|
|
143,306
|
|
|
|
|
|
|
|
|
2) Caselton Tailings
|
|
|
13,238
|
|
|
|
|
|
|
|
|
3) Caselton Mine
|
|
|
3,348
|
|
|
|
|
|
|
|
|
E) Silver Bow County, Montana
|
|
|
|
|
|
1) New Butte Property lease
|
|
|
28,940
|
|
|
|
|
|
|
|
|
2) Continental Public Land Trust
|
|
|
3,726
|
|
|
|
|
|
|
|
|
F) Other Exploration Sites (evaluation)
|
|
|
|
|
|
|
|
|
|
|
|
1) Anaconda
|
|
|
7,500
|
|
|
|
|
|
|
|
|
2) Oro Blanco
|
|
|
8,840
|
|
|
|
|
|
|
|
|
4) SE Arizona Silver
|
|
|
4,829
|
|
|
|
|
|
|
|
|
5) Mohave Gold
|
|
|
1,050
|
|
|
|
|
|
|
|
|
6) Zonia Mine
|
|
|
6,650
|
|
|
|
|
|
|
|
|
e) General Administrative Costs
|
|
|
21,800
|
|
|
|
|
|
|
|
|
Total Exploration Costs
|
|
$
|
461,036
|
|
These direct exploration costs account for approximately 14% of the total operating expenditures of $3,411,636, since our exploration activities commenced on June 16, 2006. General and administrative expenses, which include salaries, consulting, rent, mineral leases and travel, comprise the majority of the remaining of the operating expenditures for this time period.
Uncertainties and Trends
Our operations, potential funding, and potential revenues are dependent now, and in the future, upon the following factors:
|
|
Price volatility in worldwide commodity prices, including silver, gold, and other minerals, which is affected by: (a) sale or purchase of silver by central banks and financial institutions; (b) interest rates; (c) currency exchange rates; (d) inflation or deflation; (e) speculation; and (f) fluctuating prices in worldwide and local commodities for petroleum-related products, chemicals, and solvents,
|
|
|
Global and regional supply and demand of silver, gold, and other minerals, including investment, industrial and jewelry demand;
|
|
|
Political and economic conditions of major silver, gold or other mineral-producing countries;
|
|
|
Threatened changes to the U.S. Mining Law that may cause increasing federal land royalties, or other unanticipated consequences and related increased costs of conduct in mining operations in the United States;
and
Global economic conditions may affect pricing and availability of materials and supplies.
|
Off-Balance Sheet Arrangements
We have not entered into any transaction, agreement or other contractual arrangement with an entity unconsolidated with us under whom we have:
|
|
an obligation under a guarantee contract,
|
|
|
a retained or contingent interest in assets transferred to the unconsolidated entity or similar arrangement that serves as credit, liquidity or market risk support to such entity for such assets,
|
|
|
any obligation, including a contingent obligation, under a contract that would be accounted for as a derivative instrument, or
|
|
|
any obligation, including a contingent obligation, arising out of a variable interest in an unconsolidated entity that is held by us and material to us where such entity provides financing, liquidity, market risk or credit risk support to, or engages in leasing, hedging or research and development services with us.
|
We do not have any off-balance sheet arrangements or commitments that have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that are material.
Changes in Accounting Policies
The significant accounting policies outlined within our Condensed Consolidated Financial Statements for the six months ended June 30, 2012 have been applied consistently with the year ended December 31, 2011.
Recently Enacted Accounting Standards
Management has evaluated the recent accounting pronouncements issued since the audited financial statements and in management’s opinion, the relevant pronouncements reviewed have no material effect on the Company’s financial statements.
PLAN OF OPERATIONS
Our Plan of Operations has been organized for each of our properties and claims to account for the similarities and differences in the location, geology, the prospective metals that may be hosted by each property or claim, and the current stage of exploration of each property and claim; accordingly, we have several Plans of Operations to account for those similarities and differences among our various properties and claims. Our Plans of Operations represent our expected exploration activities and are for a period of twelve months. Our total amount budgeted for exploration in 2012 is $ 4,090,000.
We are
continuing with the evaluation of mine plans, potential drill targets and resource potential of the Prince Mine. Drill testing of the projected extensions of the possible silver mineralization should begin in the fall of 2012. On the Caselton Tailings remediation Project, we will conduct site characterization studies with geotechnical drilling in conjunction with metallurgical testing. The data generated from the program will be used to design a processing facility and to determine the feasibility of economic precious metals recovery. At the newly acquired Butte Silver Mines properties, we will be evaluating and compiling the voluminous historic exploration and mining data on the properties and will commence with preliminary mine development planning. We have initiated planning on the Butte properties, which will be concurrent with geologic mapping and sampling of mineralized structures and surveying of existing underground development. Based upon our analysis of the test results and studies, we will determine whether to proceed with development plans. We cannot determine, predict, or assure whether we will be able to proceed with advanced exploration and development activities regarding any of our properties or claims. Our exploration activities will be conducted under the overall direction of our registered Consulting Geologist using industry standard quality assurance and control procedures.
Properties - The Calico Silver Project in San Bernardino County, California, the Pioche Mining District properties in Lincoln County, Nevada and the Butte Silver Mines properties in Silver Bow County, Montana.
We will continue to hold the Calico Silver property and will focus our exploration efforts on the Pioche and Butte Mining Districts. We will use employees, consultants and existing infrastructure to conduct our activities in the Pioche Nevada and the Butte, Montana properties. Our exploration program is shown below:
Exploration at Butte Silver Mines
|
1)
|
Data and property acquisition.
Our staff will continue to compile the exploration records from these historic Anaconda Company mines. While much data is in our possession, other sources will be utilized in order to make the records as complete as possible. Once acquired, the exploration and development data will be compiled using mine planning software to regenerate resource estimates. Underground levels will be plotted as will drift sampling records and exploration drill holes. Selected mineral and surface interests ancillary to our properties are also slated for acquisition.
|
|
2)
|
Development Planning.
Based on the presently known historic resources and proposed AMC underground mine plans, we expect to be able to create new preliminary mine development plans for the Project. This will require underground mapping, surveying and confirmation sampling. As the condition of much of the existing underground development headings is presently unknown, the extent of this work to be conducted in 2012 is uncertain.
|
Exploration at Prince Mine:
|
1)
|
Surface and underground drilling.
All accumulated data from underground and surface sampling, geochemical and geophysical studies will be evaluated to confirm the highest priority targets for exploration on the Prince Mine. A drilling contractor will be hired to conduct the drilling program using the dual tube reverse circulation air rotary method of drilling and sample collection under the supervision of our registered Geologist. This drilling method is widely accepted as providing high quality sample integrity. Industry standard chain of custody and quality assurance and control procedures will be followed. This will include the use of duplicate samples and sample standards. Accurate geologic logs of the drill holes will be created and the drill hole locations surveyed. Geologic samples will be continuously collected and delivered to an independent certified analytical laboratory for assaying. It is estimated that this program will require up to four months for completion.
|
|
2)
|
Mine planning.
As assays come back from drilling programs, the corporate engineering department will enter them into a data base with mine planning software to produce a preliminary scoping study. Assuming the exploration is successful, an independent engineering firm will be hired to produce a deposit model using computerized mine planning software. This phase will require approximately three months and will most probably commence at approximately month twelve.
|
Site Characterization and Planning at the Caselton Tailings:
|
1)
|
Geotechnical drilling.
Drilling using split spoon sampling and hollow stem auger drill methods will be conducted. All hole locations will be surveyed. Sample collection will be conducted under the supervision of a registered professional geologist. Samples will be split and the duplicates stored for reference. The first split will be shipped for chemical analysis and metallurgical testing. Industry standard chain of custody and quality control procedures will be followed.
|
|
|
|
|
2)
|
Feasibility and Permitting.
This phase of the Operations Plan will commence providing the results of the drill testing and metallurgical work has been positive. The study will be done in 'house' by the Western States Engineering division with assistance from an established and reputable independent mining engineering firm. Permit applications for the combined metal recovery and site remediation project will be prepared by a reputable independent environmental firm for submittal in conjunction with the process design work.
|
Our ability to complete the activities described under “Plan of Operations” require significant funding. We presently have received t a portion of the funding and expect to receive the balance of the funding sometime in the third quarter, but we cannot assure you that we will be able to obtain full funding or that the terms on which additional funding may be available will be acceptable. To the extent that we are able to secure funding for a portion of our needs, we will have to allocate such funding among the projects, and we may not be able to complete components of these projects. If we are able to obtain only limited funding, it may result in significant dilution to our shareholders. Further, our use of proceeds may be determined by the investors based on their priorities, which may be different from our priorities.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4 - CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our filings under the Exchange Act is recorded, processed, summarized and reported within the periods specified in the rules and forms of the SEC. This information is accumulated and communicated to our executive officer to allow timely decisions regarding required disclosure. Our Chief Executive Officer and our Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. Based on that evaluation and the requirements of the Exchange Act, our Chief Executive Officer and our Chief Financial Officer concluded that, as of June 30, 2012, our disclosure controls and procedures needed to be declared as ineffective. The small size of our company does not provide for the desired separation of control functions, and we do not have the required level of documentation of our monitoring and control procedures. The potential remedies for this situation are described below.
Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Management conducted an evaluation of the effectiveness of our internal control over financial reporting and determined that our internal control over financial reporting was ineffective as of June 30, 2012 due to material weaknesses. A material weakness in internal control over financial reporting is defined by the Public Company Accounting Oversight Board’s Audit Standard No. 5 as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of our financial reporting. Management’s assessment identified the following material weaknesses in internal control over financial reporting:
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The small size of our Company limits our ability to achieve the desired level of separation our internal controls and financial reporting. We do have a separate CEO and CFO; however we do not have an Audit Committee to review and oversee the financial policies and procedures of the Company. Until such time as we are able to install an audit committee, we do not meet the full requirement for separation. In the interim, we will continue to strengthen the role of our CEO and CFO and their review of our internal control procedures.
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We have not achieved the desired level of documentation of our internal controls and procedures. This documentation will be strengthened to limit the possibility of any lapse in controls occurring.
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In light of the material weaknesses described above, we performed additional analysis and other post-closing procedures to ensure our financial statements were prepared in accordance with generally accepted accounting principles. Accordingly, we believe that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.
Subject to the Company’s financial resources management hopes to further mitigate the risk of the material weaknesses going forward by utilizing external financial consulting services, in a more effective manner, prior to the review by our principal independent accounting firm to ensure that all information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported accurately and within the time periods specified in the Commission’s rule and forms.
Changes in internal controls
Our management, with the participation our Chief Executive Officer and Chief Financial Officer, performed an evaluation as to whether any change in our internal controls over financial reporting occurred during the financial quarter ending June 30, 2012. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that no change occurred in our internal controls over financial reporting during the financial quarter ending June 30, 2012 that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
We are not aware of any pending or threatened litigation against us or our directors in their capacity as such.
ITEM 1A - RISK FACTORS
Risk Factors
Item 1A. Risk Factors.
As a smaller reporting Company, we are not required to provide risk factors; however, please consult our Form 10-K to review risk factors.
ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
We issued no shares of our common stock during the quarter ended June 30, 2012, or subsequently.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 - REMOVED AND RESERVED
ITEM 5 - OTHER INFORMATION
None
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.
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INTERNATIONAL SILVER, INC.
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Dated: August 9, 2012
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By:
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/s/ Harold R Shipes
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Harold R. Shipes,
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Chief Executive Officer/Chairman of the Board
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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 indicated.
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Signature
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Title
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Date
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/s/ Harold R. Shipes
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Chairman of the Board/Director
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August 9, 2012
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Harold R. Shipes
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Chief Executive Officer
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(Principal Executive Officer)
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/s/John A. McKinney
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Chief Financial Officer
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August 9, 2012
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John A. McKinney
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Executive Vice President
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(Principal Financial Officer)
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Exhibits
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Exhibit 31.1
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Certification by the Principal Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002
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Exhibit 31.2
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Certification by the Principal Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002
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Exhibit 32.1
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Certification by the Principal Executive Officer pursuant to Section 1350 as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002
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Exhibit 32.2
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Certification by the Principal Financial Officer pursuant to Section 1350 as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002
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101.INS **
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XBRL Instance Document
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101.SCH **
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XBRL Taxonomy Extension Schema Document
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101.CAL **
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XBRL Taxonomy Extension Calculation Linkbase Document
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101.DEF **
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XBRL Taxonomy Extension Definition Linkbase Document
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101.LAB **
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XBRL Taxonomy Extension Label Linkbase Document
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101.PRE **
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XBRL Taxonomy Extension Presentation Linkbase Document
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** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
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