1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2002
[ ] TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE
EXCHANGE ACT
For the transition period from ____________ to ___________
Commission file number 000-21623
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SHOSHONE SILVER MINING CO., INC.
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(Exact name of small business issuer as specified in its charter)
Idaho 82-0304993
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4903 Industrial Ave. West
Coeur d'Alene, Idaho 83814
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(Address of principal executive offices) (Zip Code)
503-632-0032
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for at least the past 90 days. Yes . No XX .
---- ----
As of September 30, 2002, 9,979,329 shares of the issuer's common stock were
outstanding.
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Shoshone Silver Mining Company, Inc.
Form 10-Q
For the Quarter Ended September 30, 2002
Table of Contents
Page
PART I. - FINANCIAL INFORMATION
Item l - Balance Sheets - September 30, 2002 and
December 31, 2001
- Statements of Operations (Unaudited) for
the Three Months and Nine Months Ended
September 30, 2002 and 2001
- Statement of Changes in Stockholders' Equity
(Unaudited) for the Nine Months Ended
September 30, 2002 and the Years Ended
December 31, 2001 and 2000
- Statement of Cash Flows for the Nine Months
Ended September 30, 2002 and the Year Ended
December 31, 2001
- Notes to Consolidated Financial Statements
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II. - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of
Security Holders
Item 6 - Exhibits and Reports on Form 8-K
SIGNATURES
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Part I - FINANCIAL INFORMATION
Shoshone Silver Mining Company, Inc.
Balance Sheets
(Unaudited) (Audited)
September 30, 2002 December 31, 2001
------------------ -----------------
Current Assets
Total Cash $ 9,248 $ 10,965
Trading Securities 4,144 226,350
Travel Advance 1,500 - -
Prepaid Expenses - - 720
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Total Current Assets 14,892 238,035
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Property, Plant and Equipment, at cost
Property, Plant and Equipment 1,634,861 1,634,861
Accumulated Depreciation (1,011,530) (982,640)
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Total Property, Plant and Equipment 623,331 652,221
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Other Assets
Depletable Assets and Mine Investments 1,170,500 1,170,500
Other Long-term Investments 20,000 20,000
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Total Other Assets 1,190,500 1,190,500
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Total Assets $ 1,828,723 $ 2,080,756
============ ============
Current Liabilities
Accounts Payable $ 1,500 $ 8,027
Margin Account Short-term Loan - - 106,660
Short-term Loan 10,000 - -
Minority Positions 1,630 1,630
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Total Current Liabilities 13,130 116,317
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Long-term Liabilities
Long-Term Debt - - - -
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Total Liabilities 13,130 116,317
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Stockholders' Equity
Common Stock, Par Value $0.10 per share 997,933 997,933
Authorized - 20,000,000 shares
Issued and outstanding - 9,979,329 shares
Paid in Capital in excess of par 2,636,425 2,636,425
Treasury Stock (65,733) (65,733)
Stock Options 12,221 12,221
Retained Earnings (Deficit) (1,765,253) (1,616,407)
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Total Stockholders' Equity 1,815,593 1,964,439
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Total Liabilities and Stockholders' Equity $ 1,828,723 $ 2,080,756
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The accompanying notes are an integral part of the financial statements.
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Shoshone Silver Mining Company, Inc.
Statements of Operations (Unaudited)
For the three months and nine months ended September 30, 2002 and 2001
Three Months Ended Nine Months Ended
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Sept 30, 2002 Sept 30, 2001 Sept 30, 2002 Sept 30, 2001
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Sales $ - - $ 16,800 $ 18,683 $ 97,452
--------- --------- --------- ---------
Costs of Sales:
Direct Mining Expenses - - 720 41,059 148,053
Freight - - - - - - 73
Contract Labor 800 8,650 900 2,650
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Total Costs of Sales (800) 9,370 41,959 150,776
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Gross Profit (Loss) (800) 7,430 (23,276) (53,324)
--------- --------- --------- ---------
Operating Expenses:
General and Administrative Expenses 8,376 10,621 5,015 18,863
Depreciation 9,630 28,890 8,962 26,887
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Total Operating Expenses 18,806 39,511 13,977 45,750
--------- --------- --------- ---------
Net Loss from Operations (18,806) (32,081) (37,253) (99,073)
--------- --------- --------- ---------
Other Income (Expenses):
Net Gain (Loss) on Sale of Investments (104,397) (472,180) (4,455) (15,503)
Unrealized Gain (Loss) on securities 106,227 353,329 (2,033) (100,824)
Option Proceeds - - - - - - (524)
Transfer Fees and Misc. Income - - - - 1,000 (3,250)
Lease Income 4,000 4,000 - - - -
Dividend Income - - 339 (374) (1,104)
Interest Income 2 2 - - (8)
Interest Expense (21) (21) - - - -
Margin Fees and Wire Costs (18) (2,204) 1,166 (2,753)
--------- --------- --------- ---------
Total Other Income 5,793 (116,735) (6,696) (118,460)
--------- --------- --------- ---------
Net Loss Before Income Taxes (13,013) (148,816) (43,949) (217,533)
Income Taxes - - 30 - - - -
--------- --------- --------- ---------
Net Loss $ (13,013) $(148,846) $ (43,949) $(217,533)
========= ========= ========= =========
Income (Loss) per Common Share, Basic $ (0.0013) $ (0.0149) $ (0.0044) $ (0.0218)
========= ========= ========= =========
Income (Loss) per Common Share, Diluted $ (0.0013) $ (0.0149) $ (0.0044) $ (0.0218)
========= ========= ========= =========
Weighted average number of common shares
outstanding, basic 9,979,933 9,979,933 9,979,933 9,979,933
========= ========= ========= =========
Weighted average number of common shares
outstanding, diluted 9,979,933 9,979,933 9,979,933 9,979,933
========= ========= ========= =========
The accompanying notes are an integral part of the financial statements.
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Shoshone Silver Mining Company, Inc.
Statement of Changes in Stockholders' Equity (Unaudited)
Common Stock
----------------------
Number of Common Additional Accumulated Treasury Stock
Shares Amount Paid-in-Capital Deficit Stock Options Total
----------------------- --------------- ----------- --------- --------- ----------
Balance, December 31, 1999,
as restated 9,974,329 $ 997,433 $2,635,925 $(1,176,200) $ (65,733) $ 12,221 $2,403,646
Issuance of stock for services
at a price of $0.20 per share 5,000 500 500 1,000
Net Loss for year ended 12/31/00 (212,048) (212,048)
Purchase of Treasury Stock - -
--------- ---------- ---------- ----------- --------- -------- ----------
Balance, December 31, 2000,
as restated 9,979,329 $ 997,933 $2,636,425 $(1,388,248) $ (65,733) $ 12,221 $2,192,598
Net Loss for year ended 12/31/01 (228,159) (228,159)
--------- ---------- ---------- ----------- --------- -------- ----------
Balance, December 31, 2001 9,979,329 $ 997,933 $2,636,425 $(1,616,407) $ (65,733) $ 12,221 $1,964,439
Net Loss for the period
ended 9/30/02 (148,846) (148,846)
--------- ---------- ---------- ----------- --------- -------- ----------
Balance, September 30, 2002 9,979,329 $ 997,933 $2,636,425 $(1,765,253) $ (65,733) $ 12,221 $1,815,593
========= ========== ========== =========== ========= ======== ==========
The accompanying notes are an integral part of the financial statements.
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Shoshone Silver Mining Company, Inc.
Statement of Cash Flows
(Unaudited) (Audited)
Nine Months Ended Year Ended
September 30, 2002 December 31, 2001
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Cash Flows From Operating Activities:
Net Income (Loss) $ (148,846) $ (228,159)
Adjustments to reconcile net income
(loss) to net cash used by operations:
Depreciation Expense 28,890 35,849
Loss on trading securities (353,329) 120,623
(Gain) Loss on sale of trading securities 472,180 11,144
Change in assets and liabilities:
Purchases of trading securities (196,843) (355,458)
Proceeds from sale of trading securities 300,198 318,518
Decrease (Increase) in other current assets (780) (720)
Increase (decrease) in accounts payable (6,527) (2,522)
Gain on sale of fixed assets - - (12,200)
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Net Cash Provided (Used) by
Operating Activities 94,943 (112,925)
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Cash Flows From Investing Activities:
Cash received on sale of fixed assets - - 12,200
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Net Cash Provided (Used) by
Investing Activities - - 12,200
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Cash Flows From Financing Activities:
Proceeds from short-term loans - - 106,660
Repayment of short-term loans (106,660) - -
Proceeds from shareholder loan 10,000 - -
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Net Cash Provided (Used) by
Financing Activities (96,660) 106,660
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Net increase (decrease) in cash (1,717) 5,935
Cash - Beginning of Period 10,965 5,030
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Cash - End of Period $ 9,248 $ 10,965
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The accompanying notes are an integral part of the financial statements.
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PART I - FINANCIAL INFORMATION
Shoshone Silver Mining Company, Inc.
Item 1. Financial Statements (Unaudited)
NOTES TO FINANCIAL STATEMENTS
Please refer to the Notes to the Financial Statements presented
with the audited financial statements for the year ended
December 31, 2001 as also being an integral part of the financial
statements herein presented for the nine months ended
September 30, 2002.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
This Quarterly Report on Form 10-Q contains forward-looking
statements. Management cautions that forward-looking statements
are subject to risks and uncertainties that could cause the
Company's actual results to differ materially from those
projected in forward-looking statements.
This has been a difficult quarter for Shoshone, but we still
remain positive for the Company.
The Company's major silica customer, PamCo, that also purchased
of some the silica property located in Mexico, is delinquent in
making their contract payments. PamCo is in arrears $120,000 of
which Shoshone would have received 42%. Shoshone is currently in
the process of taking back the property through legal proceedings
in Mexico City. For more detailed information or questions,
please contact Frank Turley, Vice President of Mexico Operations.
Mr. Turley's phone number is located at the Company's web site at
www.ssmining.com.
Shoshone has a new buyer for the silica property, but the
transaction cannot be completed until legal matters are settled
on the existing past sale referred to above.
Shoshone's holdings in Mexico concerning the silica represent
less than 51% of its assets.
Mr. Ted Bruck continues to lease the Company's Lakeview property
and is also continuing with his separate bromide leach
installation at the property. Concessions were made reducing the
lease payments for the summer months to $2,000 to facilitate Mr.
Bruck in making needed repairs to the Company's mill. Mr. Bruck
states that he will continue processing ore through the summer of
2003, of which Shoshone receives 5% of gross sales. Mr. Bruck
also intends to provide custom processing of ores from other
mining operations.
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RESULTS OF OPERATIONS
COMPARISON OF THREE MONTHS ENDED SEPTEMBER 30, 2002 AND THREE
MONTHS ENDED SEPTEMBER 30, 2001.
Sales for the current three-month period have decreased $18,683,
or 100%, over the previous three-month period sales of $18,683.
There were no mining revenues for the current three-months since
the silica operations were sold, retaining interest in the mining
properties.
Cost of sales for the current three-month period have decreased
$41,159, or 98%, over the previous three-month cost of sales of
$41,959, primarily due to the sale of the Company's interest in
the silica operations.
General and administrative expenses for the current three-month
period have increased $4,029, or 29%, over the previous three-
month period expenses of $13,977. This increase is principally
due to an increase in professional fees for the year-end audit,
travel, telephone, office supplies and other minor increases.
Other income (expenses) for the current three-month period have
increased $12,489, or 165%, from the previous three-month
period's other income of $(6,696) primarily due to increased
lease income ($4,000), increased unrealized gains on marketable
securities ($108,260), decreased margin interest expense
($1,184), partially offset by increased realized net losses on
sale of investments ($99,942).
COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 2002 AND NINE
MONTHS ENDED SEPTEMBER 30, 2001.
Sales for the current nine-month period have decreased $80,652,
or 83%, over the previous nine-month period sales of $97,452.
There were minimal mining revenues for the current nine-months
since the silica operations were sold, retaining interest in the
mining properties.
Cost of sales for the current nine-month period have decreased
$141,406, or 94%, over the previous nine-month cost of sales of
$150,776, primarily due to the sale of the Company's interest in
the silica operations.
General and administrative expenses for the current nine-month
period have decreased $6,239, or 14%, over the previous nine-
month period expenses of $45,750. This decrease is principally
due to a decrease in professional fees for the year-end audit,
partially offset by other minor increases.
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Other income (expense) for the current nine-month period have
increased $1,725, or 1%, from the previous nine-month period's
other income (expense) of $(118,460) primarily due to increased
unrealized gains on marketable securities ($454,153), increased
lease income ($4,000), partially offset by increased realized net
losses on sale of investments ($456,677).
LIQUIDITY AND CAPITAL RESOURCES
Historically, Shoshone Silver Mining Company has utilized
earnings from operations and gains from the sales of marketable
securities to generate its working capital and expects that
future cash flow from operations will be sufficient to meet
future working capital requirements.
As of September 30, 2002, cash and cash equivalents totaled
$9,248, which represents a decrease of $1,717 from the December
31, 2001 balance of $10,965. This decrease was primarily
attributable to cash used by financing activities ($96,660),
partially offset by cash provided from operating activities
($94,943). Cash provided by operations was comprised primarily
of net loss of $148,846, a realized loss on trading securities
($353,329), and purchases of trading securities ($196,843),
partially offset by unrealized gains on trading securities
($472,180), proceeds from sale of trading securities ($300,198),
and depreciation expense ($28,890).
Cash provided by investing activities had no effect on cash and
cash equivalents for the nine months ended September 30, 2002.
Cash used by financing activities of $96,660 consisted of
$106,660 utilized to repay short-term brokerage loans, partially
offset by a $10,000 short-term loan from a major shareholder.
The Company plans to continue to make investments in marketable
securities and further expansion of its operating facilities to
improve operational efficiencies and customer service. The
Company expects to meet these cash requirements through a
combination of operating cash flow and investing activities.
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Part II - OTHER INFORMATION
Shoshone Silver Mining Company, Inc.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters required submission to security holders for vote
during the three months ended September 30, 2002.
Item 6. Exhibits and Reports on Form 8-K.
No reports on Form 8-K were filed for the three months ended
September 30, 2002.
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Shoshone Silver Mining Company, Inc.
SIGNATURES
In accordance with the requirements of the Exchange Act,
the registrant has caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
SHOSHONE SILVER MINING CO., INC.
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(Registrant)
Date: November 13, 2002 By /s/ James I. Scheller
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James I. Scheller, President