UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM 10-K
(Mark one)
[X] Annual report under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Fiscal Year June 30, 2015,
or
[ ] Transition report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
000-52641
Commission File Number
INFRASTRUCTURE MATERIALS CORP.
(Exact name of registrant as specified in its charter)
Delaware |
98-0492752 |
(State or other jurisdiction of incorporation or |
(I.R.S. Employer Identification Number)
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organization) |
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1135 Terminal Way, Suite 106
Reno, NV 89502 USA
(Address of Principal Executive Offices) (Zip Code)
775-322-4448
(Registrants telephone number, including area
code)
With a copy to:
Jonathan H. Gardner
Kavinoky Cook LLP
726 Exchange St., Suite 800
Buffalo, NY 14210
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $0.0001 per share
Indicate by check mark if the registrant is a well-known
seasoned issuer as defined by Rule 405 of the Securities Act
Yes [
] No [X]
Indicate by check mark if the registrant is not required
to file reports pursuant to Rule 13 or Section 15(d) of the Act
Yes [
] No [X]
Indicate by check mark whether the issuer (1) has filed
all reports required to be filed by Section 13 or 15(d) of the Exchange Act
during the past 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 [ ]
1
Indicate by check mark whether the registrant has
submitted electronically and posted on its corporate web site, if any, every
Interactive Data File required to be submitted and posted pursuant Rule 405 of
Regulation S-T (s 220.405 of this chapter) during the preceding 12 months (or
for such shorter period that the registrant was required to submit and post such
files.
Yes [X ] No [ ]
Check if disclosure of delinquent filers in response to
Item 405 of Regulation S-K is not contained in this form, and no disclosure will
be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [ ]
Indicate by check mark whether the registrant is a large
accelerated filer, a non-accelerated filer or a smaller reporter.
Large accelerated filer [ ] |
Accelerated
filer [
] |
Non-accelerated filer [ ] |
Smaller reporting company [X]
|
Indicate by check mark whether registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act).
[ ]
Yes [X] No
The issuer had no revenue during the year ended June 30, 2015.
The aggregate market value of the Common Stock held by
non-affiliates of the issuer, as of December 31, 2014, was approximately
$546,971 based upon a share valuation of $0.009 per share. This share valuation
is based upon the closing price of the Companys shares as of December 23, 2013
(the date of the last sale of the Companys shares closest to the end of the
Companys second fiscal quarter). For purposes of this disclosure, shares of
Common Stock held by persons who the issuer believes beneficially own more than
5% of the outstanding shares of Common Stock and shares held by officers and
directors of the issuer have been excluded because such persons may be deemed to
be affiliates of the issuer.
As of August 31, 2015, 138,304,619 shares of the issuers
Common Stock were outstanding.
Transitional Small Business Disclosure
Yes [
] No [X]
2
TABLE OF CONTENTS
3
Part I
This Annual Report on Form 10-K contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended,
which include, without limitation, statements about our explorations,
development, efforts to raise capital, expected financial performance and other
aspects of our business identified in this Annual Report, as well as other
reports that we file from time to time with the Securities and Exchange
Commission. Any statements about our business, financial results, financial
condition and operations contained in this Annual Report that are not statements
of historical fact may be deemed to be forward-looking statements. Without
limiting the foregoing, the words believes, anticipates, expects,
intends, projects, or similar expressions are intended to identify
forward-looking statements. Our actual results could differ materially from
those expressed or implied by these forward-looking statements as a result of
various factors, including, but not limited to, the risk factors described in
the section entitled RISK FACTORS and elsewhere in this report. We undertake
no obligation to update publicly any forward-looking statements for any reason,
except as required by law, even as new information becomes available or other
events occur in the future. Although we believe that the expectations reflected
in these forward looking statements are based on reasonable assumptions, there
are a number of risks and uncertainties that could cause actual results to
differ materially from such forward looking statements.
Item 1. Business.
Our name is Infrastructure Materials Corp. and we sometimes
refer to ourselves in this report as Infrastructure Materials or
Infrastructure, the Company or as we, our, or us. We are engaged in
the exploration and development, if warranted, of precious metal projects
located in the State of Nevada, and of cement grade limestone projects also
located in Nevada. As of the date of this report, we hold 341 unpatented lode
mineral claims and six mill site claims on land owned or controlled by the
United States Department of Interiors Bureau of Land Management (the BLM).
The Company also holds mineral rights or surface rights for 380 net acres and
holds interests in 17 patented claims and 3 leased patented claims. Our claims
cover 12 projects in Nevada. We also own a milling facility located on six BLM
mill site claims in Nevada. Our efforts going forward generally are focused on
providing liquidity to cover our ongoing operating expenses as a reporting
company in the United States and Canada. We continue to gather data and evaluate
our precious metal and limestone projects to the extent that our resources
permit, while considering our options.
Infrastructure has three wholly owned subsidiaries. They are
(a) Silver Reserve Corp., a Delaware corporation (Silver Reserve or SRC)
that holds title to our precious metal claims and leases, (b) Infrastructure
Materials Corp US, a Nevada corporation (IMC US) that holds title to our
limestone related claims and leases, and (c) Canadian Infrastructure Corp., an
Alberta, Canada corporation (CIC). The following diagram illustrates our
corporate structure.
4
Our head office is at 1135 Terminal Way, Suite 106, Reno,
Nevada 89502 and our administrative office is also at this address. Our
telephone number is 775-322-4448. We have two employees, primarily using
consultants and contract personnel to perform various professional and technical
services, including but not limited to management functions, drilling,
construction, site surveillance, environmental assessment, and field and on-site
production operating services.
Item 1A. Risk Factors
The following are certain risk factors that could affect our
business, financial condition, operating results and cash flows. These risk
factors should be considered in connection with evaluating the forward-looking
statements because they could cause actual results to differ materially from
those expressed in any forward-looking statement. The risk factors highlighted
below are not the only ones we face. If any of these events actually occur, our
business, financial condition, operating results or cash flows could be
negatively affected.
1. |
THE COMPANY HAS NO SOURCE OF OPERATING REVENUE AND
EXPECTS TO INCUR SIGNIFICANT EXPENSES BEFORE ESTABLISHING AN OPERATING
COMPANY, IF IT IS ABLE TO ESTABLISH AN OPERATING COMPANY AT ALL. |
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Currently, the Company has no source of revenue, limited
working capital and no commitments to obtain additional financing. The
Company will require additional working capital to carry out its
exploration programs and to continue its business. The Company has no
operating history upon which an evaluation of its future success or
failure can be made. The ability to achieve and maintain profitability and
positive cash flow is dependent upon: |
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further exploration of our properties and the
results of that exploration. |
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raising the capital necessary to conduct this
exploration and preserve the Companys Properties. |
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raising capital to develop our properties,
establish a mining operation, and operate this mine in a profitable manner
if any of these activities are warranted by the results of our exploration
programs and a feasibility study. |
Because the Company has no operating
revenue, it expects to incur operating losses in future periods as it continues
to spend funds to operate its business and explore its properties. Failure to
raise the necessary capital to continue operations and exploration could cause
the Company to go out of business.
2. |
WE WILL NEED TO RAISE ADDITIONAL FINANCING TO COMPLETE
FURTHER EXPLORATION |
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We will require significant additional financing in order
to resume our exploration activities and our assessment of the commercial
viability of our properties. There can be no assurance that we will be
successful in our efforts to raise these required funds, or on terms
satisfactory to us. If we are unable to obtain additional financing, we
will be unable to continue our operations. |
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3. |
WE HAVE RECEIVED A GOING CONCERN COMMENT FROM OUR
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, WHICH MAY NEGATIVELY IMPACT
OUR BUSINESS. |
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Due to the fact that we are an exploration stage company
and have no established source of revenues, the report from Schwartz
Levitsky Feldman LLP, our independent registered public accounting firm,
regarding our consolidated financial statements for the fiscal year ended
June 30, 2015, includes an explanatory paragraph stating that the
financial statements were prepared assuming we will continue as a going
concern. The existence of the going concern comment in our auditors
report may make it more difficult for us to obtain additional financing.
In the event that we are unable to raise additional capital, as to which
there can be no assurance, we may be unable to continue our
operations. |
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4. |
WE HAVE NO RESERVES AND WE MAY FIND THAT OUR PROPERTIES
ARE NOT COMMERCIALLY VIABLE |
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Our properties do not contain reserves in accordance with
the definitions adopted by the Securities and Exchange Commission, and
there is no assurance that any exploration programs that we undertake will
establish reserves. All of our mineral properties are in the exploration
stage as opposed to the development stage and have no known body of
economic mineralization. The known mineralization at these projects has
not yet been determined, and may never be determined to be economic. We
hope to conduct further exploration activities on our properties, which
future exploration may include the completion of feasibility studies
necessary to evaluate whether a commercially mineable mineral exists on
any of our properties. There is a substantial risk that these exploration
activities will not result in discoveries of commercially recoverable
quantities of minerals. Any determination that our properties contain
commercially recoverable quantities of minerals may not be reached until
such time that final comprehensive feasibility studies have been concluded
that establish that a potential mine is likely to be economic. There is a
substantial risk that any preliminary or final feasibility studies carried
out by us will not result in a positive determination that our mineral
properties can be commercially developed. |
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5. |
WE HAVE A HISTORY OF OPERATING LOSSES AND THERE CAN BE NO
ASSURANCES WE WILL BE PROFITABLE IN THE FUTURE. |
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We have a history of operating losses, expect to continue
to incur losses, and may never be profitable. Further, we have been
dependent on sales of our equity securities and debt financing to meet our
cash requirements. We have incurred losses totalling $24,946,130 from
inception to June 30, 2015, and incurred losses of $579,471 during the
fiscal year ended June 30, 2015. Further, we do not expect positive cash
flow from operations in the near term. There is no assurance that actual
cash requirements will not exceed our estimates. |
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6. |
THE RISKS ASSOCIATED WITH EXPLORATION COULD CAUSE
PERSONAL INJURY OR DEATH, ENVIRONMENTAL DAMAGE AND POSSIBLE LEGAL
LIABILITY. |
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We are not currently engaged in mining operations because
we are in the exploration phase. However, our exploration operations could
expose the Company to liability for personal injury or death, property
damage or environmental damage. Although we carry property and liability
insurance, cost effective insurance contains exclusions and limitations on
coverage and may be unavailable in some
circumstances. |
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7. |
BECAUSE OF THE UNIQUE DIFFICULTIES AND UNCERTAINTIES
INHERENT IN MINERAL EXPLORATION VENTURES AND CURRENT DETERIORATION IN
EQUITY MARKETS, WE FACE A HIGH RISK OF BUSINESS FAILURE. |
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Investors should be aware of the difficulties normally
encountered by new mineral exploration companies and the high rate of
failure of such enterprises. Our prospects are further complicated by a
pronounced deterioration in equity markets and constriction in equity
capital available to finance and maintain our exploration activities. Our
likelihood of success must be considered in light of the problems,
expenses, difficulties, complications and delays encountered in connection
with the exploration of the mineral properties that we plan to undertake
and the difficult economy and market volatility that we are experiencing.
Moreover, most exploration projects do not result in the discovery of
commercially mineable deposits. |
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8. |
OUR BUSINESS IS AFFECTED BY CHANGES IN COMMODITY
PRICES. |
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Our ability to raise capital and explore our properties
and the future profitability of those operations is directly related to
the market price of certain minerals such as silver and limestone as well
as the price and availability of cement. The Company is negatively
affected by the current decline in commodity prices. |
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9. |
THERE ARE PENNY STOCK SECURITIES LAW CONSIDERATIONS THAT
COULD LIMIT YOUR ABILITY TO SELL YOUR SHARES. |
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Our common stock is considered a "penny stock" and the
sale of our stock by you will be subject to the "penny stock rules" of the
Securities and Exchange Commission. The penny stock rules require
broker-dealers to take steps before making any penny stock trades in
customer accounts. As a result, the market for our shares could be
illiquid and there could be delays in the trading of our stock which would
negatively affect your ability to sell your shares and could negatively
affect the trading price of your shares. |
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10. |
CURRENT LEVELS OF MARKET VOLATILITY COULD HAVE ADVERSE
IMPACTS |
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The capital and credit markets have been experiencing
volatility and disruption. If the current levels of market disruption and
volatility continue or worsen, there can be no assurance that the Company
will not experience adverse effects, which may be material. These effects
may include, but are not limited to, difficulties in raising additional
capital or debt and a smaller pool of investors and funding sources. There
is thus no assurance the Company will have access to the equity capital
markets to obtain financing when necessary or desirable. |
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11. |
WE DO NOT INTEND TO PAY DIVIDENDS IN THE FORESEEABLE
FUTURE. |
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We have never declared or paid a dividend on our common
stock. We intend to retain earnings, if any, for use in the operation and
expansion of our business and, therefore, do not anticipate paying any
dividends in the foreseeable future. |
7
Item 2. Properties
Description of Property held by Silver Reserve Corp.
(SRC), a wholly owned subsidiary of Infrastructure Materials Corp.
Property Location and Description
The following is a map highlighting the counties in the State
of Nevada where the properties held by SRC are located.
![](form10kx8x1.jpg)
The following claim groups are described below: Clay Peters
Claim Group, Silver Queen Claim Group, Klondyke Claim Group, Quailey Claim
Group, NL Extension Claim Group, Dyer Claim Group, Blue Dick Claim Group, Santa
Fe Claim Group, Pansy Lee Claim Group, Gold Point Claim Group and Red Rock Mill.
These claims were originally acquired by the Company and assigned to SRC.
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Mojave Property Purchase Agreement
On August 1, 2006, the Company entered into a property purchase
agreement (the Mojave Property Purchase Agreement) with the Mojave Silver
Company, Inc. to acquire a 100% interest in claims located in Esmeralda County
and Mineral County, Nevada (as further described below) and known as the Silver
Queen Claim Group, NL Extension Claim Group, Klondyke Claim Group, Dyer Claim
Group, Blue Dick Claim Group, Clay Peters Claim Group, Santa Fe Claim Group, and
Quailey Claim Group (collectively the Mojave Claims). The Mojave Claims were
conveyed in exchange for 3,540,600 shares of the Companys common stock, then
valued at $885,150. All of the Mojave Claims were subsequently assigned to SRC.
Clay Peters Claim Group
The Clay Peters Claim Group consists of 61 unpatented, lode
mineral claims located in Mineral County, Nevada, approximately 12 miles east of
Mina, Nevada. Access is by dirt road. The elevations on the claim area range
from 6,800 feet to 7,000 feet. The Clay Peters claims are located on the
southernmost part of the Gabbs Valley Range. The workings on the property
consist of numerous shafts and prospects. This claim group covers approximately
1,260 acres. Twenty claims were acquired pursuant to the Mojave Property
Purchase Agreement. SRC has subsequently staked an additional 41 claims.
Geologic mapping completed in 2007 indicated strong NW/SE
bearing mineralized trends running across the property. Subsequent mapping
indicated new strong gold, silver and copper mineralization along NW/SE bearing
structures.
In September and October of 2012, the Company completed
approximately 2,300 meters of drilling in 19 reverse circulation holes. In
January 2013, the Company retained Zonge International Inc. of Reno, Nevada
(Zonge) to perform a ground magnetic survey at the Clay Peters project
covering a total area measuring 3,450 meters by 4,500 meters with 150 meter
spacing between 18 east-west lines for a total of approximately 62.1 line-km of
survey coverage. In July 2013 the Company announced that Zonge had completed an
Induced Polarization/Resistivity geophysical orientation survey program to
further define the geophysical features and identify drilling targets. The
Company also conducted a 7,000 ft reverse circulation drill program in the Fall
of 2013.
The 61 Clay Peters lode mineral claims are identified in the
BLM records by Nevada Mining Claim (NMC) numbers: 871217 through 871223,
871229 through 871240, 871244, 964722 through 964724, 964732, 964733, 1038681
through 1038684, 1070163, 1070164, 1070166, 1070167, 1070170 through 1070176,
1070180, 1070181, 1070186, 1070187, 1070190 through 1070192, 1071459, 1071460,
1071463, 1071464, 1085688 through 1085691, 1085708, 1085709, 1088297 through
1088299 and 1100305.
Subsequent to the period covered by this report, the Company
elected to retain 60 of 61 mineral claims and drop one claim in this claim
group.
SRC is the registered holder of these unpatented, lode mineral
claims. There are no underlying agreements or royalty interests of third parties
that pertain to these claims. SRC will remain as the record holder of the claims
as long as it continues to make all payments required by law to maintain the
claims. These payments include an annual fee of $155 per claim to the BLM. In
addition, a claim holder is required to pay annual County filing fees in most
counties within Nevada.
On May 16, 2014, SRC completed the purchase of three patented
claims covering approximately 59 acres (the Property) situated in Mineral
County, Nevada. These claims are known as the claims named Commodore, Thrush
and George F., and are identified as Mineral County Parcel APN 009-170-04,
PLSS T7N, R36E MDM Section 2 and 11, as Survey No. 2593 and recorded as Patent
File No. 45651. The Property was acquired from Ralph L. Buhrman and Jacqueline
Buhrman (together, the Buhrmans) for a total of $90,000 pursuant to an
Exploration License with Option to Purchase (the Buhrman Agreement) dated as of May 15, 2012. Mineral production, if
any, from the Property is subject to a 2% royalty payable to the Buhrmans based
upon gross revenues less deductions as defined by the Buhrman Agreement. SRC has
the exclusive right and option to purchase such royalty at any time for the sum
of $1,000,000 less any payments previously made by SRC to the Buhrmans pursuant
to such royalty.
9
In the past the Federal government permitted private parties to
obtain title to a claim known as a patented claim if certain conditions were
met. A patented mining claim arises where the Federal Government passes its
title to the claimant, making it private land. A mineral patent gives the owner
exclusive title to the mineral interests and title to the surface and other
resources. Patents for claims are no longer issued. Unpatented lode mineral
claims are created by physically inserting a stake in the ground at each corner
of the claim and filing the location of the claim as so demarcated with a
government BLM recording office. The rights associated with an unpatented claim
are restricted to the extraction and development of mineral deposits. No land
ownership is conveyed with an unpatented claim.
THERE ARE NO KNOWN RESERVES IN THIS CLAIM GROUP. OUR
OPERATIONS WITH RESPECT TO THIS CLAIM GROUP ARE ENTIRELY EXPLORATORY.
Silver Queen Claim Group
The Silver Queen Claim Group consists of 83 unpatented, lode
mineral claims located in Esmeralda County, Nevada, approximately nine miles
west of Silver Peak, Nevada on Highway 47. The claim area covers approximately
1,673 acres. The property is accessed by dirt roadways. Forty-six claims were
acquired pursuant to the Mojave Property Purchase Agreement. SRC subsequently
staked an additional 35 claims and also purchased two claims in 2008.
The claims are located in the Red Mountain District. The Silver
Queen Claim Group covers a northwest trending group of silver deposits that
include the Silver Queen and Mohawk mines. In 1920 a producing mine was
constructed and production continued through the late 1950's at the Mohawk
location.
In June 2008 four drill holes were completed to depths of 400
to 500 feet vertically in the Silver Queen area on surface anomalies noted
during grid sampling. In July 2008 five holes were drilled to intercept unmined
mineralized zones noted by a previous operator within the Mohawk workings.
SRC entered into an option agreement (the MGold Agreement)
dated August 2011 with MGold Resources Inc. (MGold), pursuant to which MGold
would have an option to earn a 50% interest in the Silver Queen Claim Group. In
October 2011, MGold commenced drilling to test mineralization below the
historical Mohawk mine workings. Five reverse circulation holes were drilled for
a total of approximately 3,500 feet of vertical drilling. Two of the five holes
were drilled to intercept the Silver Queen vein system and three of the holes
were drilled to target surface silver anomalies. Effective April 2012 MGold
elected to terminate the MGold Agreement and the Company retained its 100%
interest in the Silver Queen Claim Group.
SRC is the registered holder of this claim group. There are no
underlying agreements or royalty interests of third parties that pertain to
these claims. SRC will remain as the record holder of the claims as long as it
continues to make all payments required by law to maintain the claims. These
payments include an annual fee of $155 per claim to the BLM. In addition, a
claim holder is required to pay annual County filing fees in most counties
within Nevada.
The 83 Silver Queen lode mineral claims are identified in the
BLM records by NMC numbers: 737071, 737072, 870453, 969847 through 969850,
870454 through 870456, 870460 through 870472, 870478 through 870486, 870500
through 870508, 870516 through 870523, 870533 through 870535, 966966, 966969
through 966972, 966979, 966982 through 966985, 966990 through 966998, 967003
through 967009, 969852, 969853, 986543, 1068562 and 1068563.
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THERE ARE NO KNOWN RESERVES IN THIS CLAIM GROUP. OUR
OPERATIONS WITH RESPECT TO THIS CLAIM GROUP ARE ENTIRELY EXPLORATORY.
Klondyke Claim Group
The Klondyke Claim Group consists of 50 unpatented, lode
mineral claims located in Esmeralda County, Nevada. The Klondyke Claim Group is
accessible by road from Tonopah, Nevada. The property lies at elevations ranging
from 5,400 feet to 5,908 feet. The claim group covers approximately 1,033 acres
and is accessed by Nevada Route 93 and dirt road access. Thirteen claims were
acquired pursuant to the Mojave Property Purchase Agreement. SRC subsequently
staked an additional thirty-seven claims. This claim group also includes three
owned patented claims and two leased patented claims covering a total of
approximately 94 acres.
The Klondyke district, which was discovered in 1899, lies about
10 miles south of Tonopah, Nevada. Most of the deposits occur in veins within
limestone carrying both silver and gold. The claim area hosts numerous prospects
and mine shafts. The property geology was mapped at a scale of 1:12000 in 2007
and 5 separate sample grids were laid out and sampled to cover what appeared to
be anomalous zones outlined during the mapping program.
Mapping and grid sampling to date indicate strong NE/SW bearing
anomalous zones to the south of the old mine working where the structure runs
NW/SE. Surface sampling in this zone carried grades as high as 42.3 oz silver
and 0.1 oz gold per ton.
Grid sampling has identified a large gold-only anomalous zone
in the southern portion of the property. A trenching program is recommended to
expand this anomaly.
Five reverse circulation holes were drilled in the spring of
2012 for a total of approximately 1,600 feet. Four of the holes targeted an
anomalous vein system in the northwest portion of the property and one hole was
drilled on a gold surface anomaly in the southeast portion of the property.
The 50 Klondyke lode mineral claims are identified in the BLM
records by NMC numbers: 867458, 867467 through 867469, 867471, 867478, 867480,
867482, 867484, 867490, 867492, 867494, 867496, 964638, 964641, 964642, 964644,
964646, 964648, 964650, 964656, 964665, 964667, 964682, 1039918, 1039919,
1039924, 1039928 through 1039931, 1039934 through 1039937, 1039966 through
1039972, 1039974 through 1039978 and 1039980 through 1039982.
SRC is the registered holder of these unpatented, lode mineral
claims and the owned patented claims. There are no underlying agreements or
royalty interests of third parties that pertain to these claims. SRC will remain
as the record holder of the claims as long as it continues to make all payments
required by law to maintain the claims. These payments include an annual fee of
$155 per claim to the BLM. In addition, a claim holder is required to pay annual
County filing fees in most counties within Nevada and the patented claims are
subject to County real estate taxes.
In September 2012 SRC purchased 3 patented claims covering
approximately 60 acres. These claims are known as the claims named Annex No.
1, Annex No. 2 and Possibility, and are identified as Esmeralda County
Parcels APN 00-005-73, APN 00-005-74 & APN 00-005-76; PLSS T1N, R43E MDM
Section 29 and 30, as Survey No. 4141 and recorded as Patent File No. 485355.
In addition, SRC leases two patented claims covering
approximately 35 acres from Ovidia Harting (Harting) pursuant to an agreement
(the Lease Agreement) dated May 30, 2008. The Lease Agreement has a renewable
term of 10 years and permits SRC to explore the area covered by the patented
claims. The Lease Agreement provides for annual payments of $1,000 per claim to
Harting. The Lease Agreement also provides that SRC pay the real estate taxes
imposed by Esmeralda County. These two patented claims are subject to a 3% net
smelter return royalty to be calculated and paid to Harting within 45 days after the end of each calendar quarter. These claims
are known as the claims named President and Annex, and are identified as
Survey No. 4141 in Section 30, PLSS T1N, R43E, APN 000-005-75 and 005-005-79 of
Esmeralda County. The Company may terminate this Lease Agreement at any time by
giving 60 days notice in writing to Harting.
11
In the past the Federal government permitted private parties to
obtain title to a claim known as a patented claim if certain conditions were
met. A patented mining claim arises where the Federal Government passes its
title to the claimant, making it private land. A mineral patent gives the owner
exclusive title to the mineral interests and title to the surface and other
resources. Patents for claims are no longer issued. Unpatented lode mineral
claims are created by physically inserting a stake in the ground at each corner
of the claim and filing the location of the claim as so demarcated with a
government BLM recording office. The rights associated with an unpatented claim
are restricted to the extraction and development of mineral deposits. No land
ownership is conveyed with an unpatented claim.
THERE ARE NO KNOWN RESERVES IN THIS CLAIM GROUP. OUR
OPERATIONS WITH RESPECT TO THIS CLAIM GROUP ARE ENTIRELY EXPLORATORY
Quailey Claim Group
The Quailey Claim Group is located in Mineral County, Nevada,
and consists of 17 unpatented, lode mineral claims covering approximately 351
acres. Four of the unpatented claims were acquired pursuant to the Mojave
Property Purchase Agreement. SRC subsequently staked an additional 13 claims.
The Quailey Claim Group also includes 11 owned patented claims and one leased
patented claim, collectively covering approximately 212 acres.
The Quailey claims are located approximately 16 miles
south-southeast from the town of Hawthorne, Nevada on the northwest side of the
Excelsior Mountains and are accessible from Hawthorne via Nevada Route 359 and
dirt roadways to the claim area. A number of dirt roads provide access to the
main workings of the former mine. Most of the information for the Quailey Mine
Project was obtained from a 1975 report by J. McLaren Forbes. The early work on
the property was done in 1882 when copper ores with silver and gold values were
mined and smelted on the property. Later, between 1907 and 1914, Excelsior
Enterprises Inc. was active on the property. Just prior to this activity, a
number of the claims were surveyed and patented. During the period 1975-76 the
mine was rehabilitated. This work was done by Ladd Enterprises Inc. of Reno,
Nevada.
Historical records indicate that an unknown amount of copper,
gold and silver ores were mined from 4,000 feet of developed mine workings.
The 17 Quailey lode mineral claims are identified in the BLM
records by NMC numbers: 916095, 916096, 916099, 916103, 935444 through 935446,
1070206 through 1070207, 1070210 through 1070212, 1070215 through 1070218 and
1070221.
SRC is the registered holder of these unpatented, lode mineral
claims and the owned patented claims. There are no underlying agreements or
royalty interests of third parties that pertain to these claims. SRC will remain
as the record holder of the unpatented, lode mineral claims as long as it
continues to make all payments required by law to maintain the claims. These
payments include an annual fee of $155 per claim to the BLM. In addition, a
claim holder is required to pay annual County filing fees in most counties
within Nevada and the patented claims are subject to County real estate taxes.
The 11 owned patented claims are identified below. The 10 owned
patented claims listed below as Parcels 1, 2 and 3 were acquired pursuant to the
Mojave Property Purchase Agreement. The owned patented claim listed below as
Parcel 4 was purchased in July 2012.
Parcel 1: the claim named Nevada
identified as Mineral County Parcel APN 009-200-11; PLSS T5N R31E MDM Sections 2
and 3, as Survey No. 3298 and recorded as Patent File No. 141100.
12
Parcel 2, which includes eight claims
named Butte, Central, Calumet, Red Bank, Bonanza, Great Eastern,
Roosevelt and Bisbee and identified as Mineral County Parcels APN 009-200-10
and APN 009-200-12; PLSS T5N R31E MDM Sections 1, 2, 3, 10 & 11, as Survey
No. 3303 and recorded as Patent File No. 141941.
Parcel 3, which includes the
Northeasterly 750 feet of the San Juan claim identified as Mineral County
Parcel APN 009-200-05; PLSS T5N R31E MDM Section 2, as Survey No. 3303 and
recorded as Patent File No. 141941.
Parcel 4, the claim named
Franklin-third identified as Mineral County Parcel APN 009-200-09; PLSS T5N
R31E MDM Section 1 & 2, as Survey No. 3303.
In addition, SRC entered into a mineral lease agreement
effective February 29, 2012 (the Gumaskas Agreement) with Joseph W. Gumaskas
(Gumaskas) to lease one patented claim covering approximately 10 acres (the
Claim) in Mineral County, Nevada. The Claim is known as San Juan SW 750
feet, and is identified as Mineral County Parcel APN 009-200-02, PLSS T5N R31E
MDM Section 2, as Survey No. 3303 and recorded as Patent File No. 463521. Unless
terminated earlier by SRC, the term of the Gumaskas Agreement is ten years and
will automatically renew on the same terms and conditions for additional
five-year periods. The Gumaskas Agreement requires SRC to pay Gumaskas advance
minimum royalty payments of $500 annually. In the event that the Claim becomes a
producing claim, SRC will pay Gumaskas a 3% royalty based upon gross revenue
less deductions as defined by the Gumaskas Agreement. SRC may terminate the
Gumaskas Agreement at any time by giving 60 days notice in writing to Gumaskas.
In the past the Federal government permitted private parties to
obtain title to a claim known as a patented claim if certain conditions were
met. A patented mining claim arises where the Federal Government passes its
title to the claimant, making it private land. A mineral patent gives the owner
exclusive title to the mineral interests and title to the surface and other
resources. Patents for claims are no longer issued. Unpatented lode mineral
claims are created by physically inserting a stake in the ground at each corner
of the claim and filing the location of the claim as so demarcated with a
government BLM recording office. The rights associated with an unpatented claim
are restricted to the extraction and development of mineral deposits. No land
ownership is conveyed with an unpatented claim.
THERE ARE NO KNOWN RESERVES IN THIS CLAIM GROUP. OUR
OPERATIONS WITH RESPECT TO THIS CLAIM GROUP ARE ENTIRELY EXPLORATORY.
NL Extension Claim Group
The NL Extension Claim Group (the NL Project) consists of 18
unpatented, lode mineral claims located in Esmeralda County, Nevada,
approximately 6.5 miles southwest of Silver Peak, Nevada on Highway 47. The
claim group covers approximately 372 acres. Fifteen claims were acquired
pursuant to the Mojave Property Purchase Agreement. SRC subsequently staked an
additional three claims.
The NL Project is accessible along a dirt road 7 miles west of
Silver Peak. Elevations on the property range from 5900 feet to 6400 feet. The
NL Project lies on the eastern flank of Red Mountain and, with the
Sixteen-to-One deposit, forms a mineralized zone which trends northwesterly. The
veins trend northeasterly across the zone. The Nivloc Mine operated from 1937 to
1943. The Nivloc Mine is adjacent but not within the claim group held by the
Company. The Nivloc mine encountered non-mineralized carbonates at around 900
feet and we assume that the reserves here are exhausted.
A 5-hole exploratory reverse circulation drill program was
completed by SRC in January 2008. Hole NL5 intersected 30 feet with an average
grade of 2.5 ounce silver and 0.033 ounce gold per ton. The hole also
intersected a second 15-foot zone with five feet grading 21 ounces silver and an
average grade of 8.5 ounce silver per ton but no gold. These intersections
appear to be extension of the Nivloc veins 2800 feet east of the old mine workings. Hole NL3 also appeared to
intercept the vein but was abandoned due to up-hole collapse. Two additional
core holes were drilled to target the veins intersection in NL5 from different
angles to verify if the original intercepts went through the vein.
13
SRC is the registered holder of this claim group. On February
25, 2011, SRC entered into an option and joint venture agreement (the Option
Agreement) with International Millennium Mining Inc. (IMMI), a wholly owned
subsidiary of International Millennium Mining Corp. (IMMC), to sell an 85%
interest in the NL Project for total consideration of $350,000 and 1,925,000
shares of IMMCs common stock (the Consideration). Under the terms of the
Option Agreement, the Consideration is payable over a five-year period that ends
on September 15, 2015, with IMMIs interest in the NL Project vesting at the end
of such period. If the NL Project is determined to be economically feasible,
based upon criteria contained in the Option Agreement, SRC will be required to
fund its portion of an operating budget proposed by IMMI in order to retain its
15% interest in the NL Project and to acquire a 15% interest in IMMIs Nivloc
Mine Project (the NL Project and the Nivloc Mine Project, collectively, the
IMMI Project). In the event that SRC decides not to fund its portion of the
budget, its 15% interest would be forfeited, but SRC would be entitled to a 2%
net smelter return royalty if and when the IMMI Project enters the production
phase. Upon funding of the operating budget and SRCs acquisition of a 15%
interest in the IMMI Project, SRC and IMMI would enter into a joint venture
agreement.
On March 5, 2013, SRC executed a Sale and Purchase Agreement
(the Sale Agreement) with IMMI to sell to IMMI (1) all of SRCs interest in
the NL Project, and (2) all of its interest in the Option Agreement. Pursuant to
the terms of the Sale Agreement, upon closing IMMI would pay SRC a purchase
price of $425,000 and the Option Agreement would terminate. Also, upon closing
of the Sale Agreement, SRC would transfer 100% of its interest in the NL Project
to IMMI. The terms of the Sale Agreement provided that all Consideration paid by
IMMI under the Option Agreement prior to closing would be retained by the
Company. The closing date was scheduled to occur on or about April 30, 2013, and
was extended several times. In connection with the closing date extensions, IMMI
paid a 10% (ten percent) non-refundable deposit of $42,500 towards the purchase
price. On October 4, 2013, SRC elected to terminate the Sale Agreement after
IMMI failed to close the transaction as contemplated. Accordingly, the
non-refundable deposit of $42,500 was forfeited by IMMI. The Option Agreement,
as discussed above, remains in effect.
From late 2011 through 2012, IMMI conducted a drill program
that consisted of 37 core holes, all directed at infilling an un-mined portion
of the historical Nivloc Mine workings. Most of the holes were drilled from pads
located on SRCs claim NL6. According to information provided by IMMI, 33 of the
drill holes intercepted the target zone and drill results indicated the
existence of two vein structures, the Main Nivloc vein and an almost vertical
splay vein.
Subject to the terms of the Option Agreement, SRC will remain
as the record holder of the claims as long as all payments required by law to
maintain the claims are made. These payments include an annual fee of $155 per
claim to the BLM. In addition, a claim holder is required to pay annual County
filing fees in most counties within Nevada.
The 18 NL Project lode mineral claims are identified in the BLM
records by NMC numbers: 867511 through 867525 and 964719 through 964721.
THERE ARE NO KNOWN RESERVES IN THIS CLAIM GROUP. OUR
OPERATIONS WITH RESPECT TO THIS CLAIM GROUP ARE ENTIRELY EXPLORATORY.
Dyer Claim Group
The Dyer Claim Group consists of 2 unpatented, lode mineral
claims located in Esmeralda County, Nevada, approximately 5 miles east of the
town of Dyer, Nevada on Highway 3A. The Dyer group of claims is accessible from
the town of Dyer and cover approximately 41 acres. The Dyer district consists of
several prospects and a few small mines that were operated by unknown operators.
Phelps Dodge Corp briefly held claims in the area in the 1990s. Mineralization
consists of copper-gold in quartz veins within limestone rocks. Both of the
claims were acquired pursuant to the Mojave Property Purchase Agreement.
14
SRC is the registered holder of this claim group. There are no
underlying agreements or royalty interests of third parties that pertain to
these claims. SRC will remain as the record holder of the claims as long as it
continues to make all payments required by law to maintain the claims. These
payments include an annual fee of $155 per claim to the BLM. In addition, a
claim holder is required to pay annual County filing fees in most counties
within Nevada.
The 2 Dyer lode mineral claims are identified in the BLM
records by NMC numbers: 871092 and 871093.
THERE ARE NO KNOWN RESERVES IN THIS CLAIM GROUP. OUR
OPERATIONS WITH RESPECT TO THIS CLAIM GROUP ARE ENTIRELY EXPLORATORY.
Blue Dick Claim Group
The 13 Blue Dick claims are located in Esmeralda County,
Nevada, in the SE part of the Palmetto Mining District and cover approximately
269 acres. The Blue Dick claims are accessible from the town of Lida, Nevada.
All 13 unpatented, lode mineral claims were acquired pursuant to the Mojave
Property Purchase Agreement. Production occurred prior to 1960 and the deposits
contained silver, gold and lead and occur in veins, according to available
public records. Most of these veins trend west or northwest. The claim area
contains numerous prospects, tunnels, shafts and two small open pit mines. The
Blue Dick mine has two shafts and two tunnels but no data is available.
Geologic mapping and sampling indicates complex low angle
faulting traced from the historic underground mine workings along strike for a
length of at least 3000 feet. Rock chip sampling underground carried grades of
gold 1.3 opt and silver 69 opt.
SRC is the registered holder of this claim group. There are no
underlying agreements or royalty interests of third parties that pertain to
these claims. SRC will remain as the record holder of the claims as long as it
continues to make all payments required by law to maintain the claims. These
payments include an annual fee of $155 per claim to the BLM. In addition, a
claim holder is required to pay annual County filing fees in most counties
within Nevada.
The 13 Blue Dick lode mineral claims are identified in the BLM
records by NMC numbers: 868274 through 868278 and 868284 through 868291.
THERE ARE NO KNOWN RESERVES IN THIS CLAIM GROUP. OUR
OPERATIONS WITH RESPECT TO THIS CLAIM GROUP ARE ENTIRELY EXPLORATORY.
15
Santa Fe Claim Group
The Santa Fe Claim Group consists of 14 unpatented, lode
mineral claims located in Mineral County, Nevada, approximately five miles north
of Luning, Nevada. This claim group covers approximately 289 acres. All fourteen
claims were acquired pursuant to the Mojave Property Purchase Agreement. The
Santa Fe claims are accessible from the town of Luning, Nevada.
The Santa Fe district is located in the Gabbs Valley Range
northeast of Luning. The Santa Fe property was first located in 1879 and has
produced silver and lead, according to public records. Workings consist of a 300
ft incline and several hundred feet of tunnels on different levels. Significant
silver and gold values have been obtained from sampling on the vein systems
warranting further exploration. The property was mapped in late 2007 and a
follow up grid sampling program may be developed to define drill targets at a
future date.
SRC is the registered holder of this claim group. There are no
underlying agreements or royalty interests of third parties that pertain to
these claims. SRC will remain as the record holder of the claims as long as it
continues to make all payments required by law to maintain the claims. These
payments include an annual fee of $155 per claim to the BLM. In addition, a
claim holder is required to pay annual County filing fees in most counties
within Nevada.
The 14 Santa Fe lode mineral claims are identified in the BLM
records by NMC numbers: 868206 through 868210, 868215 through 868218 and 868224
through 868228.
THERE ARE NO KNOWN RESERVES IN THIS CLAIM GROUP. OUR
OPERATIONS WITH RESPECT TO THIS CLAIM GROUP ARE ENTIRELY EXPLORATORY.
Pansy Lee Claim Group
On August 1, 2006, the Company acquired the Pansy Lee Claims
Group from Anglo Gold Mining Inc. in exchange for 1,850,000 shares of the
Companys common stock pursuant to an Asset Purchase Agreement dated August 1,
2006 (the Pansy Lee Purchase Agreement). Pursuant to the Pansy Lee Purchase
Agreement, a 2% net smelter royalty pertains to 8 of the 30 claims in this
group, identified as follows: NMC 879333 through 879335 and NMC 859406 through
895410. In the event that any one or more of the 8 claims becomes a producing
claim, any revenue generated is subject to a 2% net smelter return royalty where
net smelter returns are based upon gross revenue. Gross revenue would be
calculated after commercial production commences and includes the aggregate of
the following amounts: revenue received by the Company from arms length
purchasers of all mineral products produced from the property, the fair market
value of all products sold by the Company to persons not dealing with the
Company at arms length and the Companys share of the proceeds of insurance on
products. From such revenue, the Company would be permitted to deduct: sales
charges levied by any sales agent on the sale of products; transportation costs
for products; all costs, expenses and charges of any nature whatsoever which are
either paid or incurred by the Company in connection with the refinement and
beneficiation of products after leaving the property and all insurance costs and
taxes.
The Pansy Lee Claim Group currently consists of 12 unpatented,
lode mineral claims located in Humboldt County, Nevada, approximately eight
miles northwest of Winnemucca, Nevada. The claim group covers approximately 248
acres. The Pansy Lee claims are accessible by road from Winnemucca, Nevada. A
graded dirt road runs northwesterly for a distance of 12 miles to the property
which lies at elevations ranging from 4600 feet to 5200 feet.
A substantial amount of underground work has been done on the
Pansy Lee Claims, as much as 910 feet below surface with over 6000 feet of
horizontal tunneling on several levels. A mine was operated at the Pansy Lee
claim site from 1937 to 1942. Further production occurred in 1964 and 1974. Work
was undertaken again in 1981 and 1982 by Santa Fe Mining Company.
16
The Nevada Bureau of Mines Bulletin 59 (1964) reported the
following production figures for this claim group:
Date |
Action |
Tons |
Au |
Ag |
1936-37 |
Shipped |
205 |
- |
- |
1939-40 |
Shipped |
1,677 |
- |
- |
1939-42 |
Milled |
39,598 |
0.134 |
11.5 |
1941 |
Shipped |
407 |
0.385 |
32.5 |
Total |
|
41,887 |
|
|
In March and April of 2008, SRC drilled three core holes and
completed to depths of 800 feet on angle below the existing workings. It appears
the 'Swede' vein was encountered in all three holes. Work to date indicates the
mineralized zone should extend to depth and along strike on the 2 main veins in
the mine. We believe further drilling of these extensions is warranted.
As described above, SRC holds this claim group subject to the
2% net smelter return royalty rights of Anglo Gold Mining Inc. SRC will remain
as the record holder of the claims as long as it continues to make all payments
required by law to maintain the claims. These payments include an annual fee of
$155 per claim to the BLM. In addition, a claim holder is required to pay annual
County filing fees in most counties within Nevada.
The 12 Pansy Lee lode mineral claims are identified in the BLM
records by NMC numbers: 879333, 859406, 879334, 859407, 879335, 859408 through
859412 and 859419 through 859420.
THERE ARE NO KNOWN RESERVES IN THIS CLAIM GROUP. OUR
OPERATIONS WITH RESPECT TO THIS CLAIM GROUP ARE ENTIRELY EXPLORATORY.
Gold Point Claim Group
On February 15, 2008, the Company entered into an agreement
with Roger Hall, then an officer and director of the Company, to acquire 14
unpatented, lode mineral claims referred to as the Gold Point Claim Group in
consideration of the sum of $5,000 dollars payable in cash and 175,000 common
shares of the Company.
As of the date of this report, the Gold Point Claim Group
consists of 3 unpatented lode mineral claims covering approximately 62 acres
located in Nye County in the Gold Point District, about 10 miles north east of
Current, Nevada off Nevada Route 6. Access is via Route 6 and along a dirt road
for approximately two miles.
Mineralization from 0.5 to 10 ppm gold was noted in shaley
rocks adjacent to substantial jasperoids on the property. The jasperoids found
in Nevada are hard, dense purple-black rocks where silica solutions have
replaced limestone.
SRC is the registered holder of this claim group. There are no
underlying agreements or royalty interests of third parties that pertain to
these claims. SRC will remain as the record holder of the claims as long as it
continues to make all payments required by law to maintain the claims. These
payments include an annual fee of $155 per claim to the BLM. In addition, a
claim holder is required to pay annual County filing fees in most counties
within Nevada.
The 3 Gold Point lode mineral claims are identified in the BLM
records by NMC numbers: 975797, 975798 and 975800.
17
THERE ARE NO KNOWN RESERVES IN THIS CLAIM GROUP. OUR
OPERATIONS WITH RESPECT TO THIS CLAIM GROUP ARE ENTIRELY EXPLORATORY.
Red Rock Mill
On August 1, 2006, the Company entered into an agreement with
International Energy Resources, Inc. (IERI) to purchase a mill building and
related milling equipment located on 28 mill site claims near the town of Mina
in Mineral County, Nevada. The mill building is a corrugated steel structure.
The assets were conveyed in exchange for 6,975,000 Shares of the Company then
valued at $1,743,750 pursuant to a property purchase agreement with IERI.
On August 1, 2006, the Company also purchased the refinery
equipment from Nevada Refinery Inc. in exchange for 88,500 shares of common
stock of the Company, then valued at $22,125. This equipment can be used to
refine doré bars or smelt concentrate produced from the milling process.
Doré bars are bars of precious metal, in this case silver and gold, poured
from molten material recovered in the final processing of the mill.
The milling facility is a custom mill installation located on
Highway 95 near the town of Mina, Nevada, approximately 185 miles southeast of
Reno, Nevada. Access is via a dirt road east of Highway 95. The mill has
operated under various configurations to meet specific requirements of prior
operators. Ore from various sources has been custom milled and processed for the
production of concentrate or doré bars.
The mill is nominally designed to process 200 tons of ore per
day. Depending on the ore hardness, the crushing circuit will be able to process
up to about 250 tons of ore per day. The flotation and leach sections are also
capable of running at the 200 tons per day rate. However, other areas of the
processing section do not appear to have sufficient capacity to sustain the
mills nominal design rate and some additions may be required.
Beginning in 2007, the Company engaged a series of independent
consulting companies to provide environmental consulting services to facilitate
the regulatory permitting process for the milling facility. Although not yet
complete, this permitting process is well advanced.
In August 2009, 22 of the 28 originally acquired mill site
claims were abandoned. The Red Rock Mill claims currently include six
unpatented, mill site claims covering approximately 30 acres.
Among the Companys efforts to generate liquidity, we are
seeking opportunities to monetize the Red Rock milling facility. At its current
advanced permitting stage and given its components and processing capacities, we
believe that we have the opportunity to either sell the mill or enter into
leasing arrangements.
SRC is the registered holder of this claim group. There are no
underlying agreements or royalty interests of third parties that pertain to
these claims. SRC will remain as the record holder of the claims as long as it
continues to make all payments required by law to maintain the claims. These
payments include an annual fee of $155 per claim to the BLM. In addition, a
claim holder is required to pay annual County filing fees in most counties
within Nevada.
The 6 Red Rock Mill site claims are identified in the BLM
records by NMC numbers: 417400 through 417403, 417406 and 417407.
THERE ARE NO KNOWN RESERVES IN THIS CLAIM GROUP. OUR
OPERATIONS WITH RESPECT TO THIS CLAIM GROUP ARE ENTIRELY EXPLORATORY.
18
Description of Property held by Infrastructure Materials
Corp US (IMC US), a wholly owned subsidiary of Infrastructure Materials Corp.
The following claim groups and leased mineral rights are
described below: The Blue Nose Claim Group and the Morgan Hill Claim Group.
Property Locations and Descriptions
The following is a map highlighting the counties in the States
of Nevada where the properties held by IMC US are located.
![](form10kx19x1.jpg)
19
Blue Nose Claim Group
The Blue Nose Claim Group consists of 40 unpatented, lode
mineral claims located in Lincoln County, Nevada, west of Tule Desert, along the
south edge of the Clover Mountains. The claim group is 8 miles east of the Union
Pacific rail line in the Meadow Valley Wash. Access is via the graded Carp and
Bunker Peak roads. The claim group covers approximately 826 acres of land
managed by the BLM and was acquired as a result of IMC US locating and staking
the claims.
In July 2010, the BLM approved the Companys Plan of Operations
for the Blue Nose Claim Group and the Company posted a reclamation bond in the
amount of $240,805 (the Reclamation Bond) with the BLM in connection with the
Blue Nose Claim Group. The Reclamation Bond backs the Companys obligations
under the Plan of Operations to restore the site and reclaim disturbance (if
any) caused by the Companys activities on the Blue Nose Claim Group. In
December 2013, the Company submitted an application to withdraw its Plan of
Operations and to seek a refund from the BLM of a portion of the Reclamation
Bond. In January 2014, the application was approved and the Company received
$219,205 from the BLM as a partial refund of the Reclamation Bond. Under the
Plan of Operations, the Company drilled 28 reverse circulation holes to depths
ranging between 150 and 900 feet for a total of approximately 17,000 feet. When
combined with three earlier drill programs, a total of 63 reverse circulation
holes approximately 30,000 feet have been completed at the Blue Nose Claim
Group.
The Company engaged Mine Development Associates of Reno, Nevada
(MDA) to assess the data from these drill programs. In a report dated January
5, 2011, MDA stated that two basic limestone units were defined by the drilling.
The Lower White limestone unit appeared to contain few impurities and contains
relatively high-grade calcium oxide (CaO). The Lower White unit is overlain by
another limestone unit that is generally lower grade and contains more
impurities. MDAs report concluded that while further study is required to
better define the extent and quality of the units, the Blue Nose Claim Group is
estimated to contain significant levels of fairly high-grade limestone.
The 40 Blue Nose lode mineral claims are identified in the BLM
records by NMC numbers: 1002040 through 1002045, 1002054 through 1002060,
1002068 through 1002075, 1002091 through 1002098, 1002114 through 1002121,
1002168, 1002188, and 1002208.
IMC US is the registered holder of this claim group. There are
no underlying agreements or royalty interests of third parties that pertain to
the above claims. IMC US will remain as the record holder of the claims as long
as it continues to make all payments required by law to maintain the claims.
These payments include an annual fee of $155 per claim to the BLM. In addition,
a claim holder is required to pay annual County filing fees in most counties
within Nevada.
THERE ARE NO KNOWN RESERVES IN THIS CLAIM GROUP. OUR
OPERATIONS WITH RESPECT TO THIS CLAIM GROUP ARE ENTIRELY EXPLORATORY.
20
Morgan Hill Claim Group
The Morgan Hill Claim Group consists of 28 unpatented, lode
mineral claims located in Elko County, Nevada, approximately 20 miles west of
the town of Wells, Nevada. The claims are situated about five miles north of
Interstate 80 and the Union-Pacific rail line. The property is accessed via the
I-80 River Ranch Exit. The Morgan Hill claims cover approximately 578 acres of
land managed by the BLM. All 28 claims were acquired when the Company purchased
IMC US in November 2008.
The Morgan Hill claims cover a northeast trending package of
sediments which include a block of favorable massive limestone that has a 2.5
mile strike length. This limestone exceeds 250 feet in thickness. The claim area
contains very significant amounts of fine grained limestone within the Devonian
Devils Gate and Nevada Formations. The unit thickness appears to range up to
500 feet and has varying amounts of interbedded magnesium oxide. There is
adjacent sandstone for a silica supply required for cement. Morgan Hill has
topography conducive to open pit mining. Preliminary tonnage estimates are
positive with little to no initial strip ratio. Area topography allows access to
drill areas with a track mounted drill rig. The property lies within 5 miles of
the railhead. It is believed to be situated to competitively reach markets in
Salt Lake City, Reno, Southern Idaho and Northern California. We have completed
a 24-hole drill program on the project identifying three separate cement grade
limestone zones of indeterminate thickness. Further drilling will be required to
verify the thickness and continuity of the cement and high calcium zones.
The 28 Morgan Hill lode mineral claims are identified in the
BLM records by NMC numbers: 989053 through 989055, 989058 through 989070,
989074, 989091, 989098, 989099, 989103 through 989105, 989121 and 997416 through
997419.
IMC US is the registered holder of this claim group. There are
no underlying agreements or royalty interests of third parties that pertain to
the Morgan Hill claims. IMC US will remain as the record holder of the claims as
long as it continues to make all payments required by law to maintain the
claims. These payments include an annual fee to the BLM of $155 per claim. In
addition, a claim holder is required to pay annual County filing fees in most
counties within Nevada.
Included in the Morgan Hill Claim Group are two groups of
mineral rights, the Perdriau Mineral Rights and the Hammond Mineral Rights.
Perdriau Mineral Rights
On November 30, 2009, IMC US entered into a Mineral Rights
Agreement with Perdriau Investment Corp. (Perdriau) to purchase 50% of the
mineral rights, including all easements, rights of way and appurtenant rights of
any type that run with the mineral rights located in the section of Elko County,
Nevada identified below (the Perdriau Property). The purchase price was $10
per net acre. IMC US purchased 340 net acres for a total purchase price of
$3,400. Perdriau will be entitled to receive a royalty of $0.25 per ton for
material mined and removed from the Perdriau Property. Material mined and stored
on the Perdriau Property or adjacent property for reclamation purposes will not
be subject to any royalty. Material removed from the Perdriau Property for the
purposes of testing or bulk sampling, provided it does not exceed 50,000 tons,
will also not be subject to any royalty. The royalty will be calculated and paid
within 45 days after the end of each calendar quarter.
21
The following description of the Perdriau Property is based
upon reference points used in the Public Land Survey System (the PLSS) that is
maintained by the BLM. The Perdriau Property is located on The National Map at
T37N, R58E Elko County, Nevada in the following sections:
Section 9 |
SW ¼ |
80 acres |
Section 15 |
W1/2 W1/2 |
80 acres |
Section 19 |
SE ¼ |
80 acres |
Section 21 |
N1/2 NE1/4 |
20 acres |
Section 21 |
SW ¼ |
80 acres |
|
|
|
Total
Net acres |
340 acres
|
Hammond Mineral Rights Agreement
As of January 15, 2010, IMC US entered into a Mineral Rights
Agreement with Eugene M. Hammond (the Hammond Mineral Rights Agreement)
pursuant to which the Company purchased a 25% interest in any and all minerals
extracted from the 160 acres covered by the Hammond Mineral Rights Agreement, as
described below (the Hammond Mineral Rights Property). The purchase price was
$400. In addition, the seller is entitled to receive a royalty of $0.125 per ton
on material mined and removed from the Hammond Mineral Rights Property. The
Hammond Mineral Rights Agreement does not cover petroleum. The Hammond Mineral
Rights Property is located at the following PLSS coordinates: T37N, R58E,
Section 17, SE ¼, Elko County, Nevada.
THERE ARE NO KNOWN RESERVES IN THIS CLAIM GROUP. OUR
OPERATIONS WITH RESPECT TO THIS CLAIM GROUP ARE ENTIRELY EXPLORATORY.
22
Regulations Governing Mineral Exploration in Nevada
All mineral exploration in Nevada is subject to regulations
that cover exploration work where the surface is disturbed, including air and
water quality; waste management; protection of the environment, wildlife,
archeological and historical sites; road building; plus other matters.
Mineral exploration in Nevada is subject to regulation by the
Nevada Division of Environmental Protections Bureau of Mining Regulation and
Reclamation (BMRR), and in some circumstances the local county where the
claims are located.
All mineral exploration on federal lands in Nevada is carried
out subject to regulations established by the BLM or the United States
Department of Agricultures United States Forest Service, depending upon which
agency manages the land where the exploration work is performed. Permits for
exploration work on federal lands are issued and supervised by the respective
agency. Notices of Intent and Plans of Operations must be submitted and
approved. Before any drilling or trenching can occur on any claim group on
public lands, the Company is required to post with the respective agency a bond
that backs the Companys obligations to restore the site and correct
environmental damage, if any, caused by the Companys activities.
Item 3. Legal Proceedings.
On April 23, 2013, the Company received a summons from the
United States District Court, District of Nevada, naming the Company as a
co-defendant in a lawsuit filed by the U.S. Attorney on behalf of the BLM
seeking reimbursement for the cost of putting out a fire that occurred on May 8,
2008, and other non-quantified damages. The fire damaged approximately 451 acres
of land administered by the BLM near Dayton, Nevada. The lawsuit alleged that
the cost of putting out the fire was approximately $510,000. The Company denied
any responsibility for the fire and notified its liability insurance carrier,
which retained counsel to defend the Company. In July 2014, the parties to the
lawsuit agreed to settle all relevant claims for $220,000, which is well below
the limits of coverage provided by the Companys liability insurance policy. The
Company has accrued $5,000 for this claim, which is equal to the Companys
deductible on the relevant liability insurance policy.
Item 4. Mine Safety Disclosures
Not applicable.
23
Part II
Item 5. Market for Registrants Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity Securities
As of August 31, 2015, there were 138,304,619 shares of common
stock of the Company (a Common Share or Common Shares) outstanding, held by
626 shareholders of record.
Securities issued during the Year Ended June 30, 2013
There were no securities issued during this period.
Securities issued during the Year Ended June 30, 2014
On August 28, 2013, the Company completed a private placement
(the Private Placement) of 33,333,333 Common Shares at a price of $0.014
(CDN$0.015) per share for gross proceeds of $474,203 (CDN$500,000). The Private
Placement was exempt from registration under the Securities Act pursuant to an
exemption afforded by Regulation S.
On October 8, 2013, the Company issued 6,035,800 Common Shares
as full settlement of a debt conversion transaction (the Conversion) with Mont
Strategies Inc. (Mont Strategies), a company that is owned and controlled by a
member of the Companys Board of Directors. Under the terms of the Conversion,
the Company converted $293,000 of indebtedness owed by the Company to Mont
Strategies (a related party) into 6,035,800 Common Shares at a conversion price
of $0.0485 (CDN$0.05) per share. The Conversion was exempt from registration
under the Securities Act pursuant to an exemption afforded by Regulation S.
Securities issued during the Year Ended June 30, 2015
There were no securities issued during this period.
Our common stock is traded on the Over the Counter Pink Sheets
(the OTC Pink) sponsored by the National Association of Securities Dealers,
Inc. under the symbol IFAM. The OTC Pink does not have any quantitative or
qualitative standards such as those required for companies listed on the Nasdaq
Small Cap Market or National Market System. Following the sale of our securities
in Canada as discussed above, the Company's Common Shares were listed for
trading on the TSX Venture Exchange (TSX-V) under the symbol IFM. The high
and low sales prices of shares of our common stock during the fiscal years ended
June 30, 2015 and June 30, 2014 are as follows:
|
|
OTC
Pink: |
|
TSX-V: |
|
|
|
|
|
Quarter ended |
|
High |
|
Low |
|
High |
|
Low |
|
|
|
|
|
|
|
|
|
September 30, 2014 |
|
$0.0042 |
|
$0.0020 |
|
$0.0100 |
|
$0.0100 |
|
|
|
|
|
|
|
|
|
December 31, 2014 |
|
$0.0250 |
|
$0.0030 |
|
$0.0450 |
|
$0.0300 |
|
|
|
|
|
|
|
|
|
March 31, 2015 |
|
$0.0100 |
|
$0.0090 |
|
$0.0100 |
|
$0.0100 |
|
|
|
|
|
|
|
|
|
June 30, 2015 |
|
$0.0100 |
|
$0.0075 |
|
$0.0100 |
|
$0.0100 |
|
|
|
|
|
|
|
|
|
September 30, 2013 |
|
$0.0410 |
|
$0.0350 |
|
$0.0300 |
|
$0.0150 |
|
|
|
|
|
|
|
|
|
December 31, 2013 |
|
$0.0900 |
|
$0.0100 |
|
$0.0300 |
|
$0.0100 |
|
|
|
|
|
|
|
|
|
March 31, 2014 |
|
$0.0151 |
|
$0.0090 |
|
$0.0200 |
|
$0.0100 |
|
|
|
|
|
|
|
|
|
June 30, 2014 |
|
$0.0090 |
|
$0.0030 |
|
$0.0100 |
|
$0.0100 |
24
Stock Option Plan
In April 2006, the Board of Directors approved the Companys
2006 Stock Option Plan, the purpose of which was to enhance the Company's
stockholder value and financial performance by attracting, retaining and
motivating the Company's officers, directors, key employees and consultants and
to encourage stock ownership by such individuals by providing them with a means
to acquire a proprietary interest in the Company's success through stock
ownership.
Under the 2006 Stock Option Plan, officers, directors,
employees and consultants who provide services to the Company could be granted
options to acquire shares of the Companys common stock at the fair market value
of the stock on the date of grant. Options could have a term of up to 10 years.
The total number of shares reserved for issuance under the 2006 Stock Option
Plan was 5,000,000. At a meeting of shareholders held on July 29, 2011, the
shareholders of the Company approved a new stock option plan as described below.
No further options will be issued under the 2006 Stock Option Plan.
The Company held an annual meeting of shareholders on July 29,
2011. At the meeting, among other actions, the shareholders of the Company
approved the amendment and restatement of the 2006 Stock Option Plan resulting
in the Companys Amended Stock Option Plan (the Amended Plan). The Amended
Plan replaced the Companys 2006 Stock Option Plan and no further options will
be issued under the 2006 Stock Option Plan. The terms of the Amended Plan
include, among others, that (a) officers, directors, employees and consultants
who provide services to the Company may be granted options to acquire shares of
the Companys Common Shares at the fair market value of the stock on the date of
grant, (b) options may have a term of up to 10 years, (c) the Company may issue
options in a number up to a maximum of 10% of the outstanding Common Shares, and
(d) outstanding stock options previously granted pursuant to the 2006 Stock
Option Plan will remain in effect and be exercisable in accordance with, and be
deemed to be issued under, the terms of the Amended Plan. It is expected that
options issued pursuant to the Amended Plan will not be qualified options
under the provisions of section 422 of the Internal Revenue Code of 1986, as
amended from time to time. At the annual meeting of shareholders on July 16,
2013, the shareholders of the Company approved the Companys 2013 Amended Stock
Option Plan (the Current Stock Option Plan), which amends and restates in its
entirety the 2011 Amended Plan. The Current Stock Option Plan effected minor
technical clarifications to the 2011 Amended Plan and did not materially change
its terms.
25
The following tables summarize the options outstanding as of
June 30, 2015 and 2014, and the option activity for the years then ended:
|
|
|
|
|
Remaining |
|
|
Remaining |
|
|
|
|
|
|
|
|
|
|
|
|
contractual |
|
|
contractual |
|
|
|
|
|
|
|
|
|
Option Price |
|
|
life (in years) |
|
|
life (in years) |
|
|
Number of
options: |
|
Expiry Date |
|
Per Share |
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
Oct. 22, 2014 |
$ |
0.33 |
|
|
- |
|
|
0.32 |
|
|
- |
|
|
25,000 |
|
Apr. 25, 2015 |
$ |
0.23 |
|
|
- |
|
|
0.83 |
|
|
- |
|
|
50,000 |
|
Apr. 24, 2022 |
$ |
0.10 |
|
|
6.82 |
|
|
7.82 |
|
|
8,375,000 |
|
|
8,375,000 |
|
Oct. 7, 2022 |
$ |
0.10 |
|
|
7.28 |
|
|
8.28 |
|
|
125,000 |
|
|
125,000 |
|
June 5, 2023 |
$ |
0.10 |
|
|
7.94 |
|
|
8.94 |
|
|
125,000 |
|
|
125,000 |
|
Options outstanding at end of year
|
|
|
8,625,000 |
|
|
8,700,000 |
|
Weighted average
exercise price at end of year |
|
$ |
0.10 |
|
$ |
0.10 |
|
Weighted average remaining
contractual life (in years) |
|
|
6.84 |
|
|
7.78 |
|
|
|
Number of options: |
|
|
|
2015 |
|
|
2014 |
|
Outstanding, beginning of
year |
|
8,700,000 |
|
|
8,775,000 |
|
Granted |
|
- |
|
|
- |
|
Expired |
|
(75,000 |
) |
|
(75,000 |
) |
Exercised |
|
- |
|
|
- |
|
Forfeited |
|
- |
|
|
- |
|
Cancelled |
|
- |
|
|
- |
|
Outstanding, end of year |
|
8,625,000 |
|
|
8,700,000 |
|
Exercisable, end of year |
|
8,625,000 |
|
|
8,700,000 |
|
Item 6. Selected Financial Data
Not applicable
26
Item 7. Managements Discussion and Analysis of Financial
Condition and Results of Operations
This section should be read in conjunction with the
accompanying financial statements and notes included in this report.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Discussion of Operations & Financial Condition
Twelve months ended June 30, 2015
The Company has no source of revenue and we continue to operate
at a loss. We expect our operating losses to continue for so long as we remain
in an exploration stage and perhaps thereafter. As of June 30, 2015, we had
accumulated losses of $24,946,130 (June 30, 2014 - $24,366,659). Our ability to
emerge from the exploration stage or even continue doing business is dependent
upon our raising additional equity financing or liquidating assets.
As described in greater detail in this Annual Report on Form
10-K, the Companys major financial endeavor over the years has been its effort
to raise capital to pursue its exploration activities. These efforts, as well as
other efforts to generate cash to cover our ongoing operating expenses as a
reporting company in the United States and Canada, continue to be our priority.
We will require additional capital or other liquidity to maintain our operations
and implement further exploration. We have limited cash to fund operations and
have taken steps to reduce our operating costs. Management is actively pursuing
all of its options to address the Companys operating capital requirements.
In March 2015 the Company entered into a Standby Support
Agreement (the Agreement) with Mont Strategies Inc., a company that is owned
and controlled by a member of the Companys Board of Directors. Pursuant to the
Agreement, Mont Strategies Inc. may, but is not obligated to, provide funding to
the Company to maintain operations. The Agreement has a two-year term and
contemplates funding backed by demand promissory notes bearing interest at a
rate of four percent (4%) per annum.
Given the present unfavorable climate for raising capital for
mineral exploration, the Company has halted its exploration efforts but will
continue to maintain its mineral interests and milling facility. Exploration of
the Companys precious metals properties held by our wholly owned subsidiary,
Silver Reserve Corp. (SRC), was most recently focused on the Clay Peters
Project. Management believes that the Clay Peters Project, as well as the Silver
Queen and Klondyke Projects, currently provide the best opportunity for
development of resources that could go to production. In the event that adequate
working capital was to be generated, the Company expects that it would focus its
exploration activities on these projects. The Company is also considering
third-party arrangements including joint venture opportunities to further
explore and develop, if warranted, these properties.
The Company also continues to look for joint venture
opportunities to develop mineral deposits of other commodities in high demand or
which we anticipate will be in high demand in the future. We continue to believe
that the United States federal government will embark on major infrastructure
expenditures in the next 10 years. Though we have been disappointed that these
investments have not come sooner, when significant infrastructure investment
does occur, we believe it will create a demand for cement that will exceed the
current sources of supply in certain areas of the United States. Because cement
is made from limestone, we believe our Blue Nose and Morgan Hill limestone
projects provide significant potential for filling an anticipated increased
demand for cement in the States of Nevada, California, Utah, Idaho and
Arizona.
The Company is also looking for opportunities to monetize its
Red Rock milling facility located on six mill site claims covering 30 acres of
land in Mina, Nevada, as well as non-essential mineral projects. With the Red
Rock mill at its current permitting stage and given its components and
processing capacities, we believe that we have the potential to either sell the
mill or enter into leasing arrangements. The Company intends to use any funds realized from these efforts towards
meeting its operating overhead and further exploration of its mineral claims, if
possible.
27
The consolidated financial statements include the accounts of
the Company and its subsidiaries, IMC US, SRC and CIC. All material
inter-company accounts and transactions have been eliminated.
SELECTED ANNUAL INFORMATION
|
|
June 30, 2015 |
|
|
June 30, 2014 |
|
|
|
|
|
|
|
|
Revenues |
|
Nil |
|
|
Nil |
|
Net (Loss) |
|
($579,471 |
) |
|
($1,031,244 |
) |
Loss per share-basic and
diluted |
$ |
0.004 |
|
$ |
0.008 |
|
Total Assets |
$ |
586,953 |
|
$ |
822,190 |
|
Total Liabilities |
$ |
775,622 |
|
$ |
431,388 |
|
Cash dividends declared per share |
|
Nil |
|
|
Nil |
|
Our total assets for the year ended June 30, 2015, include cash
and cash equivalents of $5,666, investments of $57,128, prepaid expenses and
other receivables of $14,810, restricted cash of $52,000, reclamation deposits
of $21,600, and plant and equipment of $435,749, net of depreciation. Our total
assets for the year ended June 30, 2014, include cash and cash equivalents of
$162,847, investments of $44,325, prepaid expenses and other receivables of
$15,109, restricted cash of $61,000, reclamation deposits of $21,600, and plant
and equipment of $517,309, net of depreciation. Total assets decreased from
$822,190 on June 30, 2014 to $586,953 on June 30, 2015. This decrease is the
result of expenses incurred in the normal course of business and limited
financing activities.
Net Loss
The Companys expenses are reflected in the Statements of
Operations under the category of Operating Expenses. To meet the criteria of
United States generally accepted accounting principles (GAAP), all mineral
property acquisition and exploration costs are expensed as incurred. Mineral
property acquisition costs are initially capitalized in accordance with
Accounting Standards Codification (ASC) 805-20-55-37, previously referenced as
the Financial Accounting Standards Board (FASB) Emerging Issues Task Force
("EITF") Issue 04-2. The Company assesses the carrying costs for impairment
under ASC 930 at each fiscal quarter end. The Company has determined that,
except for the amount capitalized as Mineral Property Interests for $514,525
pursuant to the acquisition of CIC, all property payments are impaired and
accordingly the Company has written off the acquisition costs to project
expenses. When it has been determined that a mineral property can be
economically developed as a result of establishing proven and probable reserves,
the costs incurred to develop such property are capitalized. For the purpose of
preparing financial information, all costs associated with a property that has
the potential to add to the Company's proven and probable reserves are expensed
until a final feasibility study demonstrating the existence of proven and
probable reserve is completed. Except for the Mineral Property Interests
discussed above, no costs have been capitalized in the periods covered by these
financial statements. Once capitalized, such costs will be amortized using the
units-of-production method over the estimated life of the probable reserve. The
previously capitalized Mineral Property Interests were written off as impaired
costs in December 2012.
28
The following table sets forth the revenues and net loss
(unaudited) of the Company for the quarter ended June 30, 2015, as well as the
seven quarterly periods completed immediately prior thereto:
|
|
For the |
|
|
For the |
|
|
For the |
|
|
For the |
|
|
For the |
|
|
For the |
|
|
For the |
|
|
For the |
|
|
|
three months |
|
|
three months |
|
|
three months |
|
|
three months |
|
|
three months |
|
|
three months |
|
|
three months |
|
|
three months |
|
|
|
ended |
|
|
ended |
|
|
ended |
|
|
ended |
|
|
ended |
|
|
ended |
|
|
ended |
|
|
ended |
|
|
|
June |
|
|
March |
|
|
December |
|
|
September |
|
|
June |
|
|
March |
|
|
December |
|
|
September |
|
|
|
2015 |
|
|
2015 |
|
|
2014 |
|
|
2014 |
|
|
2014 |
|
|
2014 |
|
|
2013 |
|
|
2013 |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
Nil |
|
|
Nil |
|
|
Nil |
|
|
Nil |
|
|
Nil |
|
|
Nil |
|
|
Nil |
|
|
Nil |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss |
|
(140,906 |
) |
|
(134,201 |
) |
|
(123,946 |
) |
|
(180,418 |
) |
|
(314,420 |
) |
|
(162,934 |
) |
|
(157,933 |
) |
|
(395,957 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per Weighted
Average Number of Shares Outstanding -Basic
and Fully Diluted |
|
(0.001 |
) |
|
(0.001 |
) |
|
(0.001 |
) |
|
(0.001 |
) |
|
(0.002 |
) |
|
(0.001 |
) |
|
(0.001 |
) |
|
(0.004 |
)
|
The significant components of expense that have contributed to
the total operating expenses are discussed as follows:
|
(a) |
General and Administration
Expenses |
General and administration expenses represent professional,
consulting, office and general and other miscellaneous costs incurred during the
periods covered by this report. General and administration expenses for the year
ended June 30, 2015 were $415,720, as compared with $531,972 for the year ended
June 30, 2014. General and administration expenses represented approximately 73%
of the total operating expenses for the year ended June 30, 2015, and 56% of the
total operating expenses for the year ended June 30, 2014. General and
administration expenses decreased by approximately $116,000 in the current year,
compared to the prior year. Most of the decrease in this category of expense is
due to reductions in employee compensation costs and stock based compensation
costs.
Project expenses include such costs as acquiring and
maintaining claims, permitting processes, consultants, drilling, assaying and
geologists. Project expenses for the year ended June 30, 2015 were $82,495 as
compared with $326,373 for the year ended June 30, 2014. Project expenses
decreased due to a curtailment in exploration activities as a result of overall
diminishing working capital with most of the project expenses incurred to
maintain the Companys mineral interests and milling facility. Project expenses
represented approximately 14% of the total operating expenses for the year ended
June 30, 2015, and approximately 34% of the total operating expenses for the
year ended June 30, 2014. Over 75% of net project expenses for the year ended
June 30, 2015, related to acquisition, exploration and maintenance of the
precious metal claims owned by the Companys SRC subsidiary.
29
Liquidity and Capital Resources
The following table summarizes the Companys cash flows and
cash in hand:
|
|
Year
ended |
|
|
Year
ended |
|
|
|
June
30, 2015 |
|
|
June
30, 2014 |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
5,666 |
|
$ |
162,847
|
|
Working capital |
$ |
(676,418 |
) |
$ |
157,365
|
|
Cash (used) in operating
activities |
$ |
(508,081 |
) |
$ |
(887,548 |
) |
Cash provided by investing
activities |
$ |
89,900 |
|
$ |
328,205
|
|
Cash provided by financing
activities |
$ |
261,000
|
|
$ |
615,343
|
|
As of June 30, 2015, the Company had a working capital deficit
of $676,418 as compared to working capital of $157,365 as of June 30, 2014.
Working capital decreased as a result of the reclassification of deferred
revenue from a non-current liability as of June 30, 2014, to a current liability
as of June 30, 2015, and due to significant decreases in cash provided by both
investing and financing activities offset only in part by a decrease in cash
used in operating activities during the year ended June 30, 2015, as compared to
the previous year.
Off-Balance Sheet Arrangement
The Company had no off-balance sheet arrangements as of June
30, 2015 and June 30, 2014.
Contractual Obligations and Commercial Commitments
On August 1, 2006, the Company acquired the Pansy Lee Claims
Group from Anglo Gold Mining Inc. in exchange for 1,850,000 Common Shares
pursuant to an Asset Purchase Agreement dated August 1, 2006 (the Pansy Lee
Purchase Agreement). Pursuant to the Pansy Lee Purchase Agreement, a 2% net
smelter royalty pertains to eight of the twelve claims in this group. In the
event that any one or more of the eight claims becomes a producing claim, any
revenue generated is subject to a 2% net smelter return royalty where net
smelter returns are based upon gross revenue less deductions as provided in the
Pansy Lee Purchase Agreement.
On May 30, 2008, the Company entered into an agreement (the
Harting Lease Agreement) with Ovidia Harting (Harting) to lease two patented
claims covering approximately 35 acres in Esmeralda County, Nevada. The Harting
Lease Agreement has a renewable term of 10 years and permits the Company to
explore the area covered by the patented claims. The Harting Lease Agreement
provides for annual payments of $1,000 per claim to Harting and also requires
that the Company pay the real estate taxes imposed by Esmeralda County on the
property. In the event that one or both of these claims enters into production,
any revenue generated is subject to a 3% net smelter return royalty to be
calculated and paid to Harting within 45 days after the end of each calendar
quarter. The Company may terminate the Harting Lease Agreement at any time by
giving 60 days notice in writing to Harting.
On November 30, 2009, IMC US entered into a Mineral Rights
Agreement with Perdriau Investment Corp. (Perdriau) to purchase 50% of the
mineral rights, including all easements, rights of way and appurtenant rights of
any type that run with the mineral rights in certain sections of Elko County,
Nevada (the Perdriau Property). The purchase price was $10 per net acre. IMC
US purchased 340 net acres for a total purchase price of $3,400. Perdriau will
be entitled to receive a royalty of $0.25 per ton for material mined and removed
from the Perdriau Property.
30
On January 15, 2010, IMC US entered into a Mineral Rights
Agreement with Eugene M. Hammond (the Hammond Mineral Rights Agreement)
pursuant to which the Company purchased a 25% interest in any and all minerals
extracted from 160 acres (the Hammond Mineral Rights Property) that is covered
by the Hammond Mineral Rights Agreement. The purchase price was $400. In the
event that the Hammond Mineral Rights Property becomes a producing property,
Eugene M. Hammond is entitled to receive a royalty of $0.125 per ton on material
mined and removed from the Hammond Mineral Rights Property. The Hammond Mineral
Rights Agreement does not cover petroleum.
On February 25, 2011, SRC entered into an option and joint
venture agreement (the IMMI Option Agreement) with International Millennium
Mining Inc. (IMMI), a wholly owned subsidiary of International Millennium
Mining Corp. (IMMC), to sell an 85% interest in SRCs NL Extension Project
(the NL Project) for total consideration of $350,000 cash and 1,925,000 shares
of IMMCs common stock (the Consideration). The NL Project consists of 18
mineral claims located in Esmeralda County, Nevada, approximately 6 miles
southwest of Silver Peak, Nevada on Highway 47. Under the terms of the IMMI
Option Agreement, the Consideration is payable over a five-year period that ends
on September 15, 2015, with IMMIs interest in the NL Project vesting at the end
of such period. In the event of early termination, IMMI is not entitled to the
return of Consideration previously paid to SRC. If the NL Project is determined
to be economically feasible, based upon criteria contained in the IMMI Option
Agreement, SRC will be required to fund its portion of an operating budget
proposed by IMMI in order to retain its 15% interest in the NL Project and to
acquire a 15% interest in IMMIs Nivloc Mine Project (the NL Project and the
Nivloc Mine Project, collectively, the IMMI Project). In the event that SRC
decides not to fund its portion of the budget, its 15% interest would be
forfeited, but SRC would be entitled to a 2% net smelter return royalty if and
when the IMMI Project enters the production phase. Upon funding of the operating
budget and SRCs acquisition of a 15% interest in the IMMI Project, SRC and IMMI
would enter into a joint venture agreement.
Effective February 29, 2012, SRC entered into a mineral lease
agreement (the Gumaskas Agreement) with Joseph W Gumaskas (Gumaskas) to
lease a patented claim covering approximately 10 acres (the Claim) in Mineral
County, Nevada. Unless terminated earlier by SRC, the term of the Gumaskas
Agreement is ten years and will automatically renew on the same terms and
conditions for additional five-year periods. The Gumaskas Agreement requires SRC
to pay Gumaskas advance minimum royalty payments of $500 annually. In the event
that the Claim becomes a producing claim, SRC will pay Gumaskas a 3% royalty
based upon gross revenue less deductions as permitted by the Gumaskas Agreement.
SRC may terminate the Gumaskas Agreement at any time by giving 60 days advance
written notice to Gumaskas.
Effective as of June 23, 2008, the Company appointed Mason
Douglas as the President of the Company. Mr. Douglas is also a director of the
Company. In connection with the appointment, the Company entered into a
consulting services agreement with a Canadian corporation that is controlled by
Mr. Douglas (the Consulting Agreement). The Consulting Agreement has a term of
one year and is then automatically renewable. Either party may terminate the
Consulting Agreement upon 90 days notice to the other party. According to the
terms of the Consulting Agreement as amended effective March 1, 2012, the
Company will pay a fee of $10,417 per month and reimburse related business
expenses. The Consulting Agreement permits Mr. Douglas to fulfill his duties for
the Company from his office in Canada. Mr. Douglas does not receive a salary
from the Company. Effective October 1, 2012, the Company appointed Mr. Douglas
to also serve as its Chief Executive Officer. In connection with this
appointment, the Consulting Agreement was further amended to increase the
consulting fee to $155,000 annually, payable in 12 equal monthly installments.
By mutual agreement between the Company and Mr. Douglas, effective as of March
1, 2013, the consulting fee was changed to an annual rate of $93,000, payable in
12 equal monthly installments.
On April 23, 2013, the Company received a summons from the
United States District Court, District of Nevada, naming the Company as a
co-defendant in a lawsuit filed by the U.S. Attorney on behalf of the BLM
seeking reimbursement for the cost of putting out a fire that occurred on May 8,
2008, and other non-quantified damages. The fire damaged approximately 451 acres
of land administered by the BLM near Dayton, Nevada. The lawsuit alleged that the cost of
putting out the fire was approximately $510,000. The Company denied any
responsibility for the fire and notified its liability insurance carrier, which
retained counsel to defend the Company. In July 2014, the Company, along with
the other parties to the lawsuit, agreed to settle all relevant claims for
$220,000, which is well below the limits of coverage provided by the Companys
liability insurance policy. The Company has accrued $5,000 for these claims,
which is equal to the Companys deductible on the relevant liability insurance
policy.
31
On May 16, 2014, SRC completed the purchase of three patented
claims covering approximately 59 acres (the Property) situated in Mineral
County, Nevada, from Ralph L. Buhrman and Jacqueline Buhrman (together, the
Buhrmans). The Property was acquired for a total of $90,000 pursuant to an
Exploration License with Option to Purchase (the Buhrman Agreement) dated as
of May 15, 2012. Mineral production from the Property is subject to a 2% royalty
payable to the Buhrmans based upon gross revenues less deductions as defined by
the Buhrman Agreement. SRC has the exclusive right and option to purchase such
royalty at any time for the sum of $1,000,000 less any payments previously made
by SRC to the Buhrmans pursuant to such royalty.
The Company has entered into operating leases for its office
space and certain office furniture and equipment. Rent payments associated with
those leases for the years ended June 30, 2015, and June 30, 2014, were $24,787
and $25,095, respectively. As of June 30, 2015, the Companys estimated future
minimum cash payments under non-cancelable operating leases for the year ending
June 30, 2016, are $163.
Maintaining Claims in Good Standing
The Company is required to pay to the BLM on or before
September 1st of each year, a fee in the amount of $155 per mineral
claim held by the Company. The total amount paid in August 2015, was $50,840 for
328 claims held by the Company at that date. The BLM fee for the 18 NL Project
claims held by the Company was paid by IMMI pursuant to the IMMI Option
Agreement described above.
The Company is also required to pay on or before November
1st of each year, annual fees to counties in Nevada in which the
claims are held. In October 2014, the Company paid $3,478 to six counties in
Nevada for annual claims-related fees.
The Company also holds certain patented claims and leases other
patented claims in Nevada. A patented claim is fee simple title to the property.
Patented claims are subject to taxes assessed by the local community based on
assessment rates set annually.
Cash Requirements
At June 30, 2015, the Company had cash and cash equivalents of
$5,666, investments of $57,128 and prepaid expenses and other receivables of
$14,810 for total current assets of $77,604.
Given the present unfavorable climate for raising capital for
mineral exploration, the Company has halted its exploration efforts. The Company
is investigating all of its options in light of current market conditions in the
capital markets. During the twelve month period ending June 30, 2016, in
addition to General and Administration Expenses, the Company expects to incur
approximately $60,000 of Project Expenses, generally to maintain its mineral
interests and milling facility. Our ability to incur Project Expenses is subject
to our having adequate funds. The Company has no firm commitment for additional
financing and will not be able to incur all of the Project and General and
Administration Expenses planned in the next fiscal year unless additional
capital is raised. In March 2015 the Company entered into a Standby Support
Agreement (the Agreement) with Mont Strategies Inc., a company that is owned
and controlled by a member of the Companys Board of Directors. Pursuant to the
Agreement, Mont Strategies Inc. may, but is not obligated to, provide funding to
the Company to maintain operations. The Agreement has a two-year term and
contemplates funding backed by demand promissory notes bearing interest at a
rate of four percent (4%) per annum.
32
SUBSEQUENT EVENTS
The Company borrowed an additional $163,300 from Mont
Strategies Inc. pursuant to the terms of the Standby Support Agreement.
Following a review of the Companys mineral claims, the Company
determined it was not in its best interest to retain one precious metals mineral
claim held by SRC and, on August 28, 2015, elected to drop one of the 61 mineral
claims of the Clay Peters Claim Group.
The Company received 350,000 shares of IMMCs common stock on
September 9, 2015, pursuant to the option agreement between SRC and IMMI, IMMCs
wholly owned subsidiary, as further described in Contractual Obligations and
Commercial Commitments. IMMI has until October 17, 2015, to make the final
payment of $100,000 that was due on September 15, 2015.
Recent Accounting Pronouncements
In February 2013, the Financial Accounting Standards Board (the
FASB) issued Accounting Standards Update (ASU) 2013-04,
Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability
Arrangements for which the Total Amount of the Obligation Is Fixed at the
Reporting Date (ASU 2013-04). ASU 2013-04 addresses the recognition,
measurement, and disclosure of certain obligations resulting from joint and
several arrangements including debt arrangements, other contractual obligations,
and settled litigation and judicial rulings. This ASU is effective for public
entities for fiscal years, and interim periods within those years, beginning
after December 15, 2013. The adoption of ASU 2013-04 did not have a material
impact on the financial statements of the Company.
In March 2013, the FASB issued ASU 2013-05, Foreign
Currency Matters (Topic 830): Parent's Accounting for the Cumulative Translation
Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within
a Foreign Entity or of an Investment in a Foreign Entity (ASU 2013-05).
ASU 2013-05 addresses the accounting for the cumulative translation adjustment
when a parent either sells a part or all of its investment in a foreign entity
or no longer holds a controlling financial interest in a subsidiary or group of
assets that is a nonprofit activity or a business within a foreign entity. The
guidance outlines the events when cumulative translation adjustments should be
released into net income and is intended by FASB to eliminate some disparity in
current accounting practice. This ASU is effective prospectively for fiscal
years, and interim periods within those years, beginning after December 15,
2013. The adoption of ASU 2013-05 did not have a material impact on the
financial statements of the Company.
In July 2013, the FASB issued ASU 2013-11, Income Taxes
(Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating
Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists
(ASU 2013-11), whereby it amended its guidance related to the presentation
of unrecognized tax benefits. The standard provides that an unrecognized tax
benefit, or a portion of an unrecognized tax benefit, should be presented in the
financial statements as a reduction to a deferred tax asset for a net operating
loss carryforward, a similar tax loss, or a tax credit carryforward, except as
follows. To the extent a net operating loss carryforward, a similar tax loss, or
a tax credit carryforward is not available at the reporting date under the tax
law of the applicable jurisdiction to settle any additional income taxes that
would result from the disallowance of a tax position or the tax law of the
applicable jurisdiction does not require the entity to use, and the entity does
not intend to use, the deferred tax asset for such purpose, the unrecognized tax
benefit should be presented in the financial statements as a liability and
should not be combined with deferred tax assets. This guidance is effective for
annual reporting periods beginning on or after December 15, 2013, and interim
periods within those annual periods. The guidance is to be applied prospectively
to all unrecognized tax benefits that exist at the effective date. The adoption
of ASU 2013-11 did not have a material impact on the financial statements of the
Company.
33
In June 2014, the FASB issued ASU 2014-10,
Development Stage Entities (Topic 915): Elimination of Certain Financial
Reporting Requirements (ASU 2014-10), which eliminates the distinction of
a development stage entity and certain related disclosure requirements,
including the elimination of inception-to-date information on the statements of
operations, cash flows and changes in stockholders equity. The amendments in
ASU 2014-10 are effective prospectively for annual reporting periods beginning
after December 15, 2014, and interim periods within those annual periods;
however early adoption is permitted. The Company evaluated and adopted ASU
2014-10 early for the current period presented.
In April 2014, the FASB issued ASU 2014-08,
Presentation of Financial Statements (Topic 205) and Property, Plant, and
Equipment (Topic 360): Reporting Discontinued Operations and Disclosures
of Disposals of Components of an Entity (ASU 2014-08), which
includes amendments that change the requirements for reporting discontinued
operations and require additional disclosures about discontinued operations.
Under the new guidance, only disposals representing a strategic shift in
operations should be presented as discontinued operations. Those strategic
shifts should have a major effect on the organizations operations and financial
results. Additionally, ASU 2014-08 requires expanded disclosures about
discontinued operations that will provide financial statement users with more
information about the assets, liabilities, income, and expenses of discontinued
operations. The new standard is effective for the Company on July 1, 2015. Early
application is permitted. The Company is evaluating the effect that ASU 2014-08
will have on its consolidated financial statements and related disclosures.
In May 2014, the FASB issued ASU 2014-09, Revenue from
Contracts with Customers (Topic 606) (ASU 2014-09), which requires an
entity to recognize the amount of revenue to which it expects to be entitled for
the transfer of promised goods or services to customers. ASU 2014-09 will
replace most existing revenue recognition guidance in U.S. GAAP when it becomes
effective. The new standard is effective for the Company on July 1, 2017. Early
application is not permitted. The standard permits the use of either the
retrospective or cumulative effect transition method. The Company is evaluating
the effect that ASU 2014-09 will have on its consolidated financial statements
and related disclosures.
In August 2014, the FASB issued ASU 2014-15, Presentation of
Financial StatementsGoing Concern (Subtopic 205-40): Disclosure of
Uncertainties about an Entitys Ability to Continue as a Going Concern (ASU
2014-15), which provides guidance on determining when and how to disclose
going-concern uncertainties in the financial statements. The new standard
requires management to perform interim and annual assessments of an entitys
ability to continue as a going concern within one year after the date the
financial statements are issued. An entity must provide certain disclosures if
conditions or events raise substantial doubt about the entitys ability to
continue as a going concern. ASU 2014-15 applies to all entities and is
effective for annual periods ending after December 15, 2016, and interim periods
thereafter, with early adoption permitted. The Company is currently assessing
the impact of this guidance.
In January 2015, the FASB issued ASU 2015-01, Income
Statement Extraordinary and Unusual Items (Subtopic 225-20): Simplifying
Income Statement Presentation by Eliminating the Concept of Extraordinary Items
(ASU 2015-01), which eliminates the concept of extraordinary items and the
uncertainty in determining when an item is both unusual in nature and infrequent
in occurrence. Presently, an event or transaction is presumed to be ordinary
activity unless evidence clearly supports the transaction as unusual in nature
and infrequent in occurrence. If an event or transaction is determined to be
unusual and infrequent, it is deemed to be extraordinary, and is required to be
segregated from the results of ordinary operations on the face of the income
statement, net of tax, after income from continuing operations, along with other
financial statement disclosures. ASU 2015-01 eliminates the concept of
extraordinary items from the income statement presentation. Eliminating this
concept removes the uncertainty in determining when a transaction is both
unusual in nature and infrequent in occurrence. However, the presentation and
disclosure guidance for items that are unusual in nature or occur infrequently
will be retained and will be expanded to include items that are both unusual in
nature and infrequently occurring. ASU 2015-01 aligns U.S. GAAP with
International Accounting Standard 1, which prohibits the presentation and
disclosure of extraordinary items. ASU 2015-01 is effective for years beginning after December 15, 2015, with early adoption
permitted. The Company is currently assessing the impact of this guidance.
34
In February 2015, the FASB issued ASU 2015-02, Consolidation
(Topic 810): Amendments to the Consolidation Analysis, (ASU 2015-02) which
eliminates the presumption that a general partner should consolidate a limited
partnership. ASU 2015-02 also modifies the evaluation of whether limited
partnerships are variable interest entities or voting interest entities and adds
requirements that limited partnerships must meet to qualify as voting interest
entities. This guidance is effective for public companies for fiscal years, and
for interim periods within those fiscal years, beginning after December 15,
2015. The Company is currently assessing the impact of this guidance.
In April 2015, the FASB issued ASU 2015-03, Interest
- Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt
Issuance Costs (ASU 2015-03). ASU 2015-03 requires that debt issuance
costs related to a recognized debt liability be presented in the balance sheet
as a direct deduction from the carrying amount of the corresponding debt
liability. ASU 2015-03 is effective for fiscal years, and for interim periods
within those fiscal years, beginning after December 15, 2015, with early
adoption permitted, and is to be applied on a retrospective basis. The Company
is currently assessing the impact of this guidance.
In May 2015, the FASB issued ASU 2015-07, Fair Value
Measurement (Topic 820): Disclosure for Investments in Certain Entities That
Calculate Net Asset Value per Share (or Its Equivalent) (ASU 2015-07).
Under ASU 2015-07, investments for which the practical expedient is used to
measure fair value at Net Asset Value (NAV) must be removed from the fair
value hierarchy. Instead, those investments must be included as a reconciling
line item so that the total fair value amount of investments in the disclosure
is consistent with the amount in the balance sheet. Further, ASU 2015-07
requires entities to provide certain disclosures only for investments for which
they elect to use the NAV practical expedient to determine fair value. ASU
2015-07 is effective for fiscal years, and for interim periods within those
fiscal years, beginning after December 15, 2015, with early adoption permitted.
The Company is currently assessing the impact of this guidance.
Management does not believe that any other recently issued, but
not yet effective accounting pronouncements, if adopted, would have a material
effect on the accompanying financial statements.
Critical Accounting Policies
The preparation of financial statements in accordance with
accounting principles generally accepted in the United States requires us to
make estimates and assumptions that affect reported amounts of assets and
liabilities at the date of the financial statements, the reported amount of
revenues and expenses during the reporting period and related disclosure of
contingent assets and liabilities. These estimates are based on our best
knowledge of current events and actions the Company may undertake in the future.
On an ongoing basis, we evaluate our estimates and judgments. To the extent
actual results differ from those estimates, our future results of operations may
be affected.
Besides this critical accounting policy on use of estimates, we
believe the following critical accounting policy affects the preparation of our
financial statements.
Acquisition, Exploration and Evaluation Expenditures
The Company is an exploration stage company and has not yet
realized any revenue from its operations. It is primarily engaged in the
acquisition and exploration of mineral properties. Mineral property acquisition
costs are initially capitalized in accordance with ASC 805-20-55-37, previously
referenced as the FASB EITF Issue 04-2. The Company assesses the carrying costs
for impairment under ASC 360 and evaluates its carrying value under ASC 930 at
each fiscal quarter end. When it has been determined that a mineral property can
be economically developed as a result of establishing proven and probable
reserves, the costs incurred to develop such property will be capitalized. The
Company previously capitalized $514,525 as Mineral Property Interests, which were written off in December
2012 as impaired costs, and has written off all other property payments to
project expenses as impaired costs. Once capitalized, such costs will be
amortized using the units-of-production method over the estimated life of the
probable reserve. To date, mineral property exploration costs have been expensed
as incurred. To date the Company has not established any proven or probable
reserves on its mineral properties.
35
Item 7A. Quantitative and Qualitative Disclosures About
Market Risk
Not applicable
Item 8. Financial Statements and Supplementary Data
See the Companys financial statements and the report of
Schwartz Levitsky Feldman LLP following the signature page of this report,
which are included as a part of this report.
Item 9. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure
None
Item 9A. Controls and Procedures
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING
Based on an evaluation, conducted by our Chief Executive
Officer and Chief Financial Officer, of the effectiveness of the design and
operation of our disclosure controls and procedures as required by Exchange Act
Rule 13a-15(e), they concluded that our disclosure controls and procedures were
effective as of June 30, 2015, to ensure that information required to be
disclosed by us in the reports that we file or submit under the Exchange Act
are:
|
1. |
recorded, processed, summarized and reported within the
time periods specified by the SEC's rules and forms, and |
|
|
|
|
2. |
accumulated and communicated to management, including the
Chief Executive Officer and Chief Financial Officer, as appropriate to
allow timely decisions regarding required
disclosure. |
Management of the Company is responsible for establishing and
maintaining adequate internal control over financial reporting. Internal control
over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated
under the Securities Exchange Act of 1934 as a process designed by, or under the
supervision of, the company's principal executive and principal financial
officers and effected by the company's board of directors, management and other
personnel, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with accounting principles generally accepted in the
United States and includes those policies and procedures that:
* Pertain to the maintenance of records that in reasonable
detail accurately and fairly reflect the transactions and dispositions of the
assets of the company;
* Provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in accordance with
accounting principles generally accepted in the United States and that receipts
and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and
* Provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of the company's
assets that could have a material effect on the financial statements.
36
In making its assessment, management used the criteria set
forth by the Committee of Sponsoring Organizations of the Treadway Commission in
Internal Control-Integrated Framework.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements. Even those systems
determined to be effective can provide only reasonable assurance with respect to
financial statement preparation and presentation. Because of the inherent
limitations of internal control, there is a risk that material misstatements may
not be prevented or detected on a timely basis by internal control over
financial reporting. However, these inherent limitations are known features of
the financial reporting process. Therefore, it is possible to design into the
process safeguards to reduce this risk.
Management believes that potential weaknesses in the Companys
internal controls may arise as a result of a lack of segregation of duties and
the existence of related party transactions. Management has added compensating
controls to address the lack of segregation of duties. In connection with
related party transactions, management and the Board have required independent
valuations prior to engaging in related party transactions that are not in the
ordinary course of business. However, only one member of the Board, Joseph
Montgomery, may be considered independent. Management has no evidence of any
breakdown in its internal controls and continues to explore methods of reducing
and minimizing the risk of a material misstatement in the Companys financial
statements.
Based on its assessment, management has concluded that the
Company's disclosure controls and procedures and internal control over financial
reporting is effective based on the above criteria.
Changes in Internal Controls
During the quarter ended June 30, 2015, there have been no
changes to the Companys internal controls over financial reporting that have
materially affected, or are reasonably likely to materially affect, the
Companys internal control over financial reporting.
Audit Committee
The Audit Committee is comprised of three directors, Randal
Ludwar, Brent Walter and Joseph Montgomery, and meets regularly with the
Companys Chief Financial Officer, Rakesh Malhotra. Mr. Montgomery does not
receive any compensation from the Company and has no immediate family
affiliation with other members of the Board or with members of management. As of
the end of the period covered by this report, the Company believes Mr.
Montgomery can be considered an independent director. The Audit Committee has
reviewed the financial statements of the Company included with this report on
Form 10-K for the year ended June 30, 2015.
Item 9B. Other Information
None.
37
Part III
Item 10. Directors, Executive Officers and Corporate
Governance
The following individuals comprise the Companys Board of
Directors and executive officers as of June 30, 2015. Each director will serve
until the next meeting of shareholders or until replaced.
Mason Douglas |
President, CEO and Director |
Randal Ludwar |
Director and Corporate Secretary |
Joseph Montgomery |
Director and Chairman of the Board |
Todd D. Montgomery |
Director |
Brent Walter |
Director |
Rakesh Malhotra |
Chief Financial Officer |
Mason Douglas - President, Chief Executive Officer and
Director
Mr. Douglas is currently President, Chief Executive Officer and
a Director of Infrastructure Materials Corp. Mr. Douglas received an MBA from
the University of Saskatchewan in 2000. He received his Bachelor of Law (LL.B)
from the University of Calgary in 2007. Mr. Douglas is presently an inactive
member of the Law Society of Alberta. Between 2001 and 2004 Mr. Douglas was Vice
President of Operations of Western Petrochemicals Corp., a privately owned oil
development company. Between 2001 and 2006 he also was an independent consultant
providing business plans, economic modeling and project management for a variety
of mining projects. Mr. Douglas is currently serving as a Director of Canadian
Platinum Corp. (TSX-V) and previously served as a Director of Anglo Canadian Oil
Corp. (TSX-V). Mr. Douglas is 40 years old.
Randal Ludwar Director and Corporate Secretary
Mr. Ludwar received a B.Sc. (1977) in Business Administration
from Yale University. Mr. Ludwar has been a private consultant to the Montgomery
Group of Companies for the past nineteen years. He previously served as Chief
Financial Officer of the Company until 2009, as a Director of Canadian Platinum
Corp. (TSX-V) and as a Director of McGregor Capital Corp. (TSX-V). Mr. Ludwar is
61 years old.
Joseph Montgomery - Chairman of the Board of Directors
Dr. Montgomery is a geological engineer. He holds a B.Sc.
(1959) in Geology, a M.Sc. (1960) in Geology and a Ph.D. (1967) in Geology. Dr.
Montgomery has been practicing since 1959 and maintains his professional status
as a member of the Association of Professional Engineers and Earth Sciences of
British Columbia. He is also a member of the advisory board of the Canadian
Institute of Gemology and is currently serving as a Director of Almaden Minerals
Ltd. (TSX). Dr. Montgomery has previously served as a Director of Cosigo
Resources Ltd. (TSX-V). Dr. Montgomery is 87 years old.
Todd D. Montgomery Director
Mr. Montgomery was the founder and former President of Anglo
Potash Ltd. (TSX-V), a Canadian mining company, formerly Anglo Minerals Ltd.
This company was purchased by BHP in 2008. In 1999, Mr. Montgomery founded and
served as President and Chief Operating Officer of SynEnco Energy Inc., an oil
sands development corporation. Mr. Montgomery has provided independent mining
consulting services for a number of private and public corporations. Mr.
Montgomery is also currently serving as President, CEO and a Director of
Canadian Platinum Corp. (TSX-V). He has previously served as CEO and a Director
of Anglo Canadian Oil Corp. (TSX-V), a Director, President, CEO and CFO of
McGregor Capital Corp. (TSX-V), as CEO, President and a Director of Pacific Iron
Ore Corporation (TSX-V), and as CEO of the Company until 2012. Mr. Montgomery is
49 years old.
38
Brent Walter - Director
Mr. Walter received a LL.B degree from the University of
Saskatchewan in 1990. He is a lawyer with the firm, ProVenture Law LLP in
Calgary, Alberta, and practices primarily in the areas of securities and
corporate/commercial law. Mr. Walter currently serves as a director and officer
of a number of public and private corporations, including Red Rock Energy Inc.
(TSX-V) and Builders Capital Mortgage Corp. (TSX-V). During the five years
preceding the period covered by this report, Mr. Walter was a Director of
AgriTec Systems, Inc. (TSX-V), Anglo Canadian Oil Corp. (TSX-V), Pacific Iron
Ore Corp. (TSX-V), Canadian Platinum Corp. (TSX-V) and McGregor Capital Corp.
(TSX-V). He is a member of the Law Societies of Alberta and Saskatchewan
(inactive). Mr. Walter is 49 years old.
Rakesh Malhotra - Chief Financial Officer
Mr. Malhotra is a United States certified public accountant and
a Canadian chartered accountant with more than 25 years of experience in
accounting and finance, including consolidations, treasury management and
financial statement audits. Mr. Malhotra graduated with a Bachelor of Commerce
(Honours) from the University of Delhi (India), worked for the accounting firm,
A.F. Ferguson & Co. (KPMG correspondent), and obtained his CA designation in
India. Having practiced as an accountant for over 10 years in New Delhi, he
moved to the Middle East and worked for five years with the highly successful
International Bahwan Group of Companies in a senior finance position. After
that, Mr. Malhotra worked for a mid-sized chartered accounting firm in Toronto,
Ontario performing audits of public companies, and has served as Vice President
of Finance for a private group of service companies in Toronto for over five
years. As of June 30, 2015, he was serving as CFO for Security Devices
International Inc. (OTC Pink) and Yukon Gold Corp. (OTC Pink/TSX). He previously
served as CFO for Pacific Copper Corp. (OTC Pink) and DynaCert Inc. (OTC
Pink/TSX-V). Mr. Malhotra is 58 years old.
Reorganization of Officers and Directors
Not applicable.
Family Relationships
There are no family relationships between or among the
directors or executive officers except for the following: Joseph Montgomery,
Chairman of the Companys Board of Directors, is a second-cousin to Todd D.
Montgomery, also a member of the Companys Board of Directors.
Involvement in Certain Legal Proceedings
During the past ten years none of the following events have
occurred with respect to any of our directors or executive officers or any of
the persons nominated by our board to become a director of the Company.
1. A petition under the Federal bankruptcy laws or any state
insolvency law was filed by or against, or a receiver, fiscal agent or similar
officer was appointed by a court for the business or property of such person, or
any partnership in which he was a general partner at or within two years before
the time of such filing, or any corporation or business association of which he
was an executive officer at or within two years before the time of such filing;
2. Such person was convicted in a criminal proceeding or is a
named subject of a pending criminal proceeding (excluding traffic violations and
other minor offenses);
3. Such person was the subject of any order, judgment, or
decree, not subsequently reversed, suspended or vacated, of any court of
competent jurisdiction, permanently or temporarily enjoining him from, or
otherwise limiting, the following activities:
39
i. Acting as a futures commission merchant, introducing broker,
commodity trading advisor, commodity pool operator, floor broker, leverage
transaction merchant, any other person regulated by the Commodity Futures
Trading Commission, or an associated person of any of the foregoing, or as an
investment adviser, underwriter, broker or dealer in securities, or as an
affiliated person, director or employee of any investment company, bank, savings
and loan association or insurance company, or engaging in or continuing any
conduct or practice in connection with such activity;
ii. Engaging in any type of business practice; or
iii. Engaging in any activity in connection with the purchase
or sale of any security or commodity or in connection with any violation of
Federal or State securities laws or Federal commodities laws;
4. Such person was the subject of any order, judgment or
decree, not subsequently reversed, suspended or vacated, of any Federal or State
authority barring, suspending or otherwise limiting for more than 60 days the
right of such person to engage in any activity described in paragraph (3)(i)
above, or to be associated with persons engaged in any such activity;
5. Such person was found by a court of competent jurisdiction
in a civil action or by the Securities and Exchange Commission (the SEC) to
have violated any Federal or State securities law, and the judgment in such
civil action or finding by the SEC has not been subsequently reversed,
suspended, or vacated;
6. Such person was found by a court of competent jurisdiction
in a civil action or by the Commodity Futures Trading Commission to have
violated any Federal commodities law, and the judgment in such civil action or
finding by the Commodity Futures Trading Commission has not been subsequently
reversed, suspended or vacated;
7. Such person was the subject of, or a party to, any Federal
or State judicial or administrative order, judgment, decree, or finding, not
subsequently reversed, suspended or vacated, relating to an alleged violation
of:
i. Any Federal or State securities or commodities law or
regulation; or
ii. Any law or regulation respecting financial institutions or
insurance companies including, but not limited to, a temporary or permanent
injunction, order of disgorgement or restitution, civil money penalty or
temporary or permanent cease- and-desist order, or removal or prohibition order;
or
iii. Any law or regulation prohibiting mail or wire fraud or
fraud in connection with any business entity; or
8. Such person was the subject of, or a party to, any sanction
or order, not subsequently reversed, suspended or vacated, of any
self-regulatory organization (as defined in Section 3(a)(26) of the Exchange
Act), any registered entity (as defined in Section 1(a)(29) of the Commodity
Exchange Act), or any equivalent exchange, association, entity or organization
that has disciplinary authority over its members or persons associated with a
member.
40
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934, as
amended, (the Exchange Act), requires the Companys directors and officers,
and persons who own more than 10% of the registered class of the Companys
equity securities (Section 16 Persons), to file with the SEC, initial reports
of ownership and reports of changes in ownership of Common Stock and other
equity securities of the Company. Section 16 Persons are required by SEC
regulation to furnish the Company with copies of all Section 16(a) reports they
filed. Based on the Companys review of the forms it has received, on reports
filed by Section 16 Persons with the SEC and on the Companys records, the
Company believes that during the twelve month period ended June 30, 2015, the
following reports were filed late:
Name |
Form Type |
Number of |
Number of |
|
|
Forms |
Transactions Reported |
|
|
|
|
Todd D. Montgomery |
Form 4 |
3 |
3 |
Code of Ethics
The Company adopted a formal written Code of Business Conduct
& Ethics for all officers, directors and senior employees, available at:
http://www.infrastructurematerialscorp.com/Corporate_Profile/code_of_ethics.html
41
Item 11. Executive Compensation
Also see Item 13, Certain Relationships and Related
Transactions, and Director Independence, regarding services provided by entities
owned by some of our Officers and Directors. We have a stock option plan only,
as described herein. Although we have no other retirement incentive, defined
benefit, actuarial, pension or profit-sharing programs for the benefit of
directors, officers or other employees, it is possible that we will adopt such a
plan in the future.
(a) Compensation of Officers
The following table shows the compensation paid to the
Companys executive officers during the fiscal years ended June 30, 2015 and
2014:
SUMMARY COMPENSATION TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-equity |
|
|
Nonqualified |
|
|
|
|
|
|
|
|
|
Year |
|
|
|
|
|
|
|
|
Stock |
|
|
Option
|
|
|
incentive
plan |
|
|
deferred
|
|
|
All other
|
|
|
|
|
Name and principal |
|
Ended |
|
|
Salary |
|
|
Bonus |
|
|
Awards |
|
|
Awards |
|
|
compensation |
|
|
compensation |
|
|
compensation |
|
|
Total |
|
position |
|
June 30, |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
earnings
($) |
|
|
($) |
|
|
($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mason Douglas |
|
2015 |
|
|
NIL |
|
|
NIL |
|
|
NIL |
|
|
NIL |
|
|
NIL |
|
|
NIL |
|
|
93,000 |
|
|
93,000 |
|
President, CEO and Director
|
|
2014 |
|
|
NIL |
|
|
NIL |
|
|
NIL |
|
|
NIL |
|
|
NIL |
|
|
NIL |
|
|
95,500 |
|
|
95,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rakesh Malhotra |
|
2015 |
|
|
NIL |
|
|
NIL |
|
|
NIL |
|
|
NIL |
|
|
NIL |
|
|
NIL |
|
|
5,165 |
|
|
5,165 |
|
CFO |
|
2014 |
|
|
NIL |
|
|
NIL |
|
|
NIL |
|
|
NIL |
|
|
NIL |
|
|
NIL |
|
|
5,808 |
|
|
5,808 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anne Macko (1) |
|
2015 |
|
|
NIL |
|
|
NIL |
|
|
NIL |
|
|
NIL |
|
|
NIL |
|
|
NIL |
|
|
NIL |
|
|
0 |
|
Corporate Secretary |
|
2014 |
|
|
56,000 |
|
|
250 |
|
|
NIL |
|
|
NIL |
|
|
NIL |
|
|
NIL |
|
|
NIL |
|
|
56,250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeanette Durbin (2) |
|
2015 |
|
|
50,000 |
|
|
1,000 |
|
|
NIL |
|
|
NIL |
|
|
NIL |
|
|
NIL |
|
|
NIL |
|
|
51,000 |
|
Corporate Secretary |
|
2014 |
|
|
47,333 |
|
|
1,000 |
|
|
NIL |
|
|
11,457 |
|
|
NIL |
|
|
NIL |
|
|
NIL |
|
|
59,790 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Randy Ludwar |
|
2015 |
|
|
NIL |
|
|
NIL |
|
|
NIL |
|
|
NIL |
|
|
NIL |
|
|
NIL |
|
|
NIL |
|
|
0 |
|
Corporate Secretary |
|
2014 |
|
|
NIL |
|
|
NIL |
|
|
NIL |
|
|
NIL |
|
|
NIL |
|
|
NIL |
|
|
NIL |
|
|
0 |
|
|
(1) |
On November 5, 2013, Ms. Macko resigned from her position
as Corporate Secretary of the Company and on the same date, Ms. Durbin was
appointed interim Corporate Secretary of the Company. Ms. Macko received
$56,250 during the fiscal year ended June 30, 2014 for administrative
services provided to the Company. |
|
|
|
|
(2) |
On March 31, 2014, Ms. Durbin resigned from her interim
position as Corporate Secretary of the Company and on the same date, Mr.
Ludwar was appointed Corporate Secretary of the Company. Ms. Durbin
received $51,000 during the fiscal year ended June 30, 2015, and $48,333
during the fiscal year ended June 30, 2014, for administrative services
provided to the Company. |
42
(b) |
Long Term Incentive Plan (LTIP
Awards) |
The Company does not have a long term incentive plan, pursuant
to which cash or non-cash compensation intended to serve as an incentive for
performance (whereby performance is measured by reference to financial
performance or the price of the Companys securities) was paid or distributed to
any executive officers during the three most recent completed years.
(c) |
Options and Stock Appreciation Rights
(SARs) |
The following table shows the stock options and stock
appreciation rights, if any, granted to the Companys executive officers as of
June 30, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
Incentive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive |
|
|
plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
plan |
|
|
awards: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
awards: |
|
|
Market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number |
|
|
or payout |
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
Market |
|
|
of |
|
|
value of |
|
|
|
|
|
|
|
|
|
Incentive |
|
|
|
|
|
|
|
|
Number |
|
|
value of |
|
|
unearned |
|
|
unearned |
|
|
|
|
|
|
|
|
|
plan |
|
|
|
|
|
|
|
|
of |
|
|
shares |
|
|
shares, |
|
|
shares, or |
|
|
|
|
|
|
|
|
|
awards: |
|
|
|
|
|
|
|
|
shares |
|
|
of units |
|
|
units or |
|
|
units or |
|
|
|
Number of |
|
|
Number of |
|
|
Number of |
|
|
|
|
|
|
|
|
or units |
|
|
of stock |
|
|
other |
|
|
other |
|
|
|
Securities |
|
|
Securities |
|
|
Securities |
|
|
|
|
|
|
|
|
of stock |
|
|
that |
|
|
rights |
|
|
rights |
|
|
|
underlying |
|
|
underlying |
|
|
underlying |
|
|
Option |
|
|
|
|
|
that |
|
|
have |
|
|
that have |
|
|
that have |
|
|
|
unexercised |
|
|
unexercised |
|
|
unexercised |
|
|
exercise |
|
|
Option |
|
|
have not |
|
|
not |
|
|
not |
|
|
not |
|
|
|
options (#) |
|
|
options (#) |
|
|
unearned |
|
|
price |
|
|
expiration |
|
|
vested |
|
|
vested |
|
|
vested |
|
|
vested |
|
Name |
|
Exercisable |
|
|
Unexercisable |
|
|
options (#) |
|
|
($) |
|
|
date |
|
|
(#) |
|
|
($) |
|
|
(#) |
|
|
($) |
|
Mason Douglas |
|
1,350,000 |
|
|
Nil |
|
|
Nil |
|
|
0.10 |
|
|
24-Apr-2022 |
|
|
Nil |
|
|
Nil |
|
|
Nil |
|
|
Nil |
|
Randal Ludwar (1) |
|
600,000 |
|
|
Nil |
|
|
Nil |
|
|
0.10 |
|
|
24-Apr-2022 |
|
|
Nil |
|
|
Nil |
|
|
Nil |
|
|
Nil |
|
Anne Macko (1) |
|
500,000 |
|
|
Nil |
|
|
Nil |
|
|
0.10 |
|
|
24-Apr-2022 |
|
|
Nil |
|
|
Nil |
|
|
Nil |
|
|
Nil |
|
Jeanette Durbin (1) |
|
125,000 |
|
|
Nil |
|
|
Nil |
|
|
0.10 |
|
|
7-Oct-2022 |
|
|
Nil |
|
|
Nil |
|
|
Nil |
|
|
Nil |
|
|
|
125,000 |
|
|
Nil |
|
|
|
|
|
0.10 |
|
|
5-Jun-2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Rakesh Malhotra |
|
425,000 |
|
|
Nil |
|
|
Nil |
|
|
0.10 |
|
|
24-Apr-2022 |
|
|
Nil |
|
|
Nil |
|
|
Nil |
|
|
Nil |
|
|
(1) |
On November 5, 2013, Ms. Macko resigned from her position
as Corporate Secretary of the Company and on the same date, Ms. Durbin was
appointed interim Corporate Secretary of the Company. On March 31, 2014,
Ms. Durbin resigned from her interim position as Corporate Secretary of
the Company and on the same date, Mr. Ludwar was appointed Corporate
Secretary of the Company. |
(d) |
Compensation of Directors |
Directors are not paid any fees in their capacity as directors
of the Company. Directors are entitled to participate in the Companys stock
option plan. See Item 12, Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters, for the number of shares subject to
exercisable options held by directors of the Company. For information regarding
the compensation of our directors who are also officers of the Company see the
SUMMARY COMPENSATION TABLE above.
No stock options were exercised by executive officers or
directors during the fiscal year ended June 30, 2015.
43
Other Arrangements
None.
Indebtedness of Directors and Executive Officers
As of June 30, 2015, the Company was owed $967 by a member of
the Companys Board of Directors for expenses advanced on behalf of the
director.
44
Item 12. Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder Matters
As of August 31, 2015, we have 138,304,619 Common Shares issued
and outstanding. We have included in the tables below the number of Common
Shares of the Company held by the officers and directors of the Company as well
as the beneficial owners of more than 5% of shares of the Companys common
stock.
|
|
|
|
|
|
|
|
|
|
|
Number of Shares |
|
|
|
|
|
|
|
|
|
|
|
|
Subject to Options |
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable as of |
|
|
|
Number of Shares of |
|
|
|
|
|
|
|
|
August 31, 2015 or |
|
|
|
Common Stock |
|
|
|
|
|
|
|
|
Which will |
|
|
|
Beneficially |
|
|
|
|
|
|
|
|
become Exercisable |
|
Name and Address |
|
Owned as of |
|
|
Nature of |
|
|
|
|
|
within 60 days |
|
of Beneficial Owner |
|
August 31, 2015 |
|
|
Ownership |
|
|
Percentage of Class Held |
|
|
of this Date |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pinetree Capital Ltd. 130 King St. W.,
Ste 2500 Toronto, ON M5X 1A9 |
|
8,177,174 |
|
|
Record |
|
|
5.91% of Common shares |
|
|
Nil |
|
45
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
Subject to
Options |
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable as of
|
|
|
|
Number of Shares
of |
|
|
|
|
|
|
|
|
August 31, 2015
or |
|
|
|
Common Stock |
|
|
|
|
|
|
|
|
Which will |
|
|
|
Beneficially |
|
|
|
|
|
|
|
|
become
Exercisable |
|
Name and Address |
|
Owned as of |
|
|
Nature of |
|
|
|
|
|
within 60 days
|
|
of Beneficial Owner |
|
August 31, 2015
|
|
|
Ownership |
|
|
Percentage of Class
Held |
|
|
of this Date |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Todd D. Montgomery, Director
1300 - 8th Street SW Calgary, AB T2R 1B2 |
|
63,686,257
(1) |
|
|
Record |
|
|
46.05% of Common
shares |
|
|
Nil |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph Montgomery, Chairman
878 W. 27th Avenue Vancouver, BC V5Z 2G7 |
|
500,000 (2) |
|
|
Record |
|
|
0.36% of Common
shares |
|
|
600,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Randal Ludwar, Corporate
Secretary and Director 1209 Normandy Dr. Moose Jaw, SK S6H 6P1
|
|
500,000 (3) |
|
|
Record |
|
|
0.36% of Common
shares |
|
|
600,000 (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brent Walter, Director
2417 - 32nd Avenue SW Calgary, AB T2T 1X4 |
|
4,100,000 (4) |
|
|
Record |
|
|
2.96% of Common
shares |
|
|
1,600,000 (6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mason Douglas, President
& CEO 1101 3rd St. E. Saskatoon, SK S7H 1N1 |
|
550,000 |
|
|
Record |
|
|
0.40% of Common
shares |
|
|
1,350,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anne Macko, former Corporate
Secretary 3300 Kauai Court Reno, NV 89509 |
|
Nil |
|
|
|
|
|
Nil |
|
|
500,000 (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeanette Durbin, former
Corporate Secretary 1135 Terminal Way, Suite 106 Reno, NV
89502 |
|
Nil |
|
|
|
|
|
Nil |
|
|
250,000 (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rakesh Malhotra, CFO 4580
Beaufort Terrace Mississauga, ON L5M 3H7 |
|
16,664 (5) |
|
|
Record |
|
|
0.01% of Common
shares |
|
|
425,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL |
|
69,352,921 |
|
|
|
|
|
50.14% of Common shares |
|
|
5,325,000 |
|
(1) |
All of Todd D. Montgomerys Common Shares are held by
companies that are owned or controlled by Mr. Montgomery. |
|
|
(2) |
400,000 of Joseph Montgomerys Common Shares are held by
family members. |
|
|
(3) |
On November 5, 2013, Ms. Macko resigned from her position
as Corporate Secretary of the Company and on the same date, Ms. Durbin was
appointed interim Corporate Secretary of the Company. On March 31, 2014,
Ms. Durbin resigned from her interim position as Corporate Secretary of
the Company and on the same date, Mr. Ludwar was appointed Corporate
Secretary of the Company. |
|
|
(4) |
800,000 of Mr. Walters Common Shares are held by a
family member. |
|
|
(5) |
All of Mr. Malhotras Common Shares are held by a family
member. |
|
|
(6) |
250,000 of Mr. Walters Common Shares subject to options
are held by a family member. |
As a group, management and the directors own or control 50.14%
of the issued and outstanding Common Shares of Infrastructure Materials
Corp.
46
Item 13. Certain Relationships and Related Transactions,
and Director Independence
A corporation owned and operated by Mason Douglas, the
Companys President and Chief Executive Officer and also a member of the
Companys Board of Directors, received $23,250 for his services for the
three-months ended June 30, 2015, and $93,000 for the year ended June 30, 2015.
The Companys Chief Financial Officer, Rakesh Malhotra,
received $455 for consulting services provided to the Company for the three
months ended June 30, 2015, and $5,165 for the year ended June 30, 2015.
The Company recorded interest expense of $2,280 for the
three-months ended June 30, 2015, and $6,868 for year ended June 30, 2015,
pursuant to promissory notes issued to a corporation that is owned and
controlled by a member of the Companys Board of Directors, Todd Montgomery.
Director Independence
We currently have one independent director, as the term
independent is defined by the rules of the NYSE-MKT. (Note-our Common Shares
are not currently listed on the NYSE-MKT or any other national securities
exchange and this reference is used for definitional purposes only.)
Item 14. Principal Accountant Fees and Expenses
The Company appointed Schwartz Levitsky Feldman, LLP as
independent auditors to audit the financial statements of the Company for the
fiscal years ended June 30, 2014 and June 30, 2015.
Audit Fees. The Company paid Schwartz Levitsky Feldman LLP
audit and audit related fees of approximately $28,261 and $25,781 for the fiscal
years ended June 30, 2014 and June 30, 2015, respectively.
All Other Fees. During the fiscal years ended June 30, 2014 and
June 30, 2015, the Company did not pay its principal accountant any additional
fees.
47
Part IV
Item 15. Exhibits, Financial Statement
Schedules
The Companys Financial Statements and the Report of Schwartz
Levitsky Feldman, LLP for the year ended June 30, 2015 and for the year ended
June 30, 2014 are filed as part of this report.
Index to Exhibits |
|
|
3.1 |
Certificate of Incorporation
filed on June 3, 1999 with the Delaware Secretary of State (previously
filed as part of the Companys registration statement filed on December
22, 2006) |
|
|
3.2 |
By Laws (previously filed as
part of the Companys registration statement filed on December 22, 2006)
|
|
|
3.3 |
Certificate of Amendment of the
Certificate of Incorporation of the Company dated June 5, 1999, changing
the capitalization of the Company (previously filed as part of the
Companys registration statement filed on December 22, 2006) |
|
|
3.4 |
Certificate of Amendment of the
Certificate of Incorporation of the Company dated April 11, 2006, and
filed with the Delaware Secretary of State on April 11, 2006 changing the
capitalization of the Company (previously filed as part of the Companys
registration statement filed on December 22, 2006) |
|
|
3.5 |
Certificate of Ownership and
Merger of the Company dated November 8, 2008 and filed with the Delaware
Secretary of State on December 1, 2008 (previously filed as part of the
Companys report on Form 8-K filed on December 1, 2008) |
|
|
3.6 |
Certificate of Amendment of the
Certificate of Incorporation of the Company dated July 29, 2011 and filed
with the Delaware Secretary of State on August 1, 2011 (previously filed
as part of the Companys report on Form 8-K filed on August 4, 2011)
|
|
|
21.1 |
Subsidiaries of the Registrant |
|
|
23.1 |
Consent of Schwartz Levitsky Feldman LLP Independent Auditors dated September 28, 2015 |
|
|
31.1 |
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
31.2 |
Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
32.1 |
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
|
F-2 |
Report of Schwartz Levitsky
Feldman, LLP dated September 25, 2015 |
48
In addition, the following reports are incorporated herein by
reference.
Current Report on Form 8-K Item 8.01: Other Events, dated
July 3, 2014
Current Report on Form 8-K Item 8.01: Other Events, dated
August 18, 2014
Current Report on Form 8-K Item 1.01: Entry into a Material
Definitive Agreement, dated March 25, 2015
49
SIGNATURES
Pursuant to the requirements of the Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this report on
Form 10-K to be signed on its behalf by the undersigned, thereunto duly
authorized, on the 28th day of September, 2015.
SIGNATURE |
TITLE |
DATE |
|
|
|
/s/Mason Douglas |
President & Chief Executive Officer |
September 28, 2015 |
Mason Douglas |
|
|
|
|
|
/s/Rakesh Malhotra |
Chief Financial Officer |
September 28, 2015 |
Rakesh Malhotra |
|
|
|
|
|
SIGNATURE |
TITLE |
DATE |
|
|
|
/s/Mason Douglas |
President, Chief Executive Officer |
September 28, 2015 |
Mason Douglas |
and Director |
|
|
|
|
/s/Randal Ludwar |
Director and Corporate Secretary |
September 28, 2015 |
Randal Ludwar |
|
|
|
|
|
/s/Joseph Montgomery |
Chairman of the Board of Directors |
September 28, 2015 |
Joseph Montgomery |
|
|
|
|
|
/s/Todd D. Montgomery |
Director |
September 28, 2015 |
Todd D. Montgomery |
|
|
|
|
|
/s/Brent Walter |
Director |
September 28, 2015 |
Brent Walter |
|
|
50
INFRASTRUCTURE MATERIALS CORP.
CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2015 AND 2014
(Amounts expressed in US Dollars)
CONTENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Infrastructure Materials Corp.
We have audited the accompanying consolidated balance sheets of
Infrastructure Materials Corp. (the Company) as at June 30, 2015 and 2014 and
the related consolidated statements of operations and comprehensive loss, cash
flows and stockholders equity for the years ended June 30, 2015 and 2014. These
consolidated financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audits to obtain reasonable assurance about
whether the consolidated financial statements are free of material misstatement.
The Company is not required to have, nor were we engaged to perform an audit of
its internal control over financial reporting. Our audits included consideration
of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company's internal control
over financial reporting. Accordingly, we express no such opinion. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, based on our audits, the consolidated financial
statements referred to above present fairly, in all material respects, the
financial position of Infrastructure Materials Corp. as at June 30, 2015 and
2014 and the results of its operations and its cash flows for the years ended
June 30, 2015 and 2014 in conformity with U.S. generally accepted accounting
principles.
The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going concern. As
discussed in Note 2 to the consolidated financial statements, the Company is an
exploration stage company and has no established source of revenues. These
conditions raise substantial doubt about its ability to continue as a going
concern. Managements plans regarding these matters are also described in the
notes to the consolidated financial statements. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
|
SCHWARTZ LEVITSKY
FELDMAN LLP |
|
|
|
|
Toronto, Ontario, Canada |
Chartered Accountants |
September 25, 2015 |
Licensed Public Accountants
|
F2
INFRASTRUCTURE MATERIALS CORP. |
Consolidated Balance Sheets as at |
June 30, 2015 and 2014 |
(Amounts expressed in US Dollars) |
|
|
June 30, |
|
|
June 30, |
|
|
|
2015 |
|
|
2014 |
|
|
|
$ |
|
|
$ |
|
ASSETS |
|
|
|
|
|
|
Current |
|
|
|
|
|
|
Cash and cash
equivalents |
|
5,666 |
|
|
162,847 |
|
Investments (Note 10) |
|
57,128 |
|
|
44,325 |
|
Prepaid expenses
and other receivables |
|
14,810 |
|
|
15,109 |
|
|
|
|
|
|
|
|
Total Current Assets
|
|
77,604 |
|
|
222,281 |
|
|
|
|
|
|
|
|
Restricted Cash (Note
5) |
|
52,000 |
|
|
61,000 |
|
Reclamation Deposit (Note 6) |
|
21,600 |
|
|
21,600 |
|
|
|
|
|
|
|
|
Plant and Equipment, net (Note 7) |
|
435,749 |
|
|
517,309 |
|
|
|
|
|
|
|
|
Total Assets |
|
586,953 |
|
|
822,190 |
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
Current |
|
|
|
|
|
|
Accounts payable |
|
8,712 |
|
|
1,056 |
|
Accrued
liabilities (Note 8) |
|
47,803 |
|
|
63,860 |
|
Notes Payable (Note 9) |
|
267,868 |
|
|
- |
|
Deferred Revenue
(Note 10) |
|
429,639 |
|
|
- |
|
Total Current Liabilities |
|
754,022 |
|
|
64,916 |
|
|
|
|
|
|
|
|
Deferred Revenue (Note 10) |
|
- |
|
|
346,836 |
|
Asset Retirement
Obligation (Note 11) |
|
21,600 |
|
|
19,636 |
|
|
|
|
|
|
|
|
Total Liabilities |
|
775,622 |
|
|
431,388 |
|
|
|
|
|
|
|
|
Going Concern (Note 2)
|
|
|
|
|
|
|
Commitments and Contingencies (Note
16) |
|
|
|
|
|
|
Related Party Transactions
(Note 17) |
|
|
|
|
|
|
Subsequent Events (Note 18) |
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY (DEFICIENCY)
|
|
|
|
|
|
|
Capital Stock (Note
12) |
|
|
|
|
|
|
Preferred stock, $0.0001
par value, 50,000,000 shares authorized,
none issued
and outstanding |
|
- |
|
|
- |
|
Common
stock, $0.0001 par value, 500,000,000 shares authorized,
138,304,619 issued
and outstanding (June 30, 2014 138,304,619) |
|
13,830 |
|
|
13,830 |
|
Additional Paid-in Capital |
|
24,743,631 |
|
|
24,743,631 |
|
Accumulated Other
Comprehensive Loss (Note 10) |
|
- |
|
|
- |
|
Deficit |
|
(24,946,130 |
) |
|
(24,366,659 |
) |
|
|
|
|
|
|
|
Total Stockholders' Equity
(Deficiency) |
|
(188,669 |
) |
|
390,802 |
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders' Equity
(Deficiency) |
|
586,953 |
|
|
822,190 |
|
(The accompanying notes are an integral part of these
consolidated financial statements.)
F3
INFRASTRUCTURE MATERIALS CORP.
Consolidated
Statements of Operations and Comprehensive Loss for the
Years Ended June 30,
2015 and 2014 (Amounts expressed in US Dollars)
|
|
For the |
|
|
For the |
|
|
|
year ended |
|
|
year ended |
|
|
|
June 30, 2015 |
|
|
June 30, 2014 |
|
|
|
$ |
|
|
$ |
|
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administration |
|
415,720 |
|
|
531,972 |
|
Project expenses
|
|
82,495 |
|
|
326,373 |
|
Depreciation |
|
74,421 |
|
|
90,132 |
|
|
|
|
|
|
|
|
Total Operating
Expenses |
|
572,636 |
|
|
948,477 |
|
|
|
|
|
|
|
|
Loss from Operations
|
|
(572,636 |
)
|
|
(948,477 |
)
|
Other
income-interest |
|
33 |
|
|
94 |
|
Other-than-temporary
impairment of investments (Note 10) |
|
- |
|
|
(122,511 |
)
|
Other income-gain on
termination of option agreement (Note 10) |
|
- |
|
|
42,500 |
|
Interest Expense (Note 9) |
|
(6,868 |
)
|
|
(2,850 |
)
|
|
|
|
|
|
|
|
Loss before Income
Taxes |
|
(579,471 |
)
|
|
(1,031,244 |
)
|
|
|
|
|
|
|
|
Provision for income taxes |
|
- |
|
|
- |
|
|
|
|
|
|
|
|
Net Loss and Comprehensive
Loss |
|
(579,471 |
)
|
|
(1,031,244 |
)
|
|
|
|
|
|
|
|
Loss per Weighted Average
Number of Shares Outstanding -Basic and Fully
Diluted |
|
(0.004 |
)
|
|
(0.008 |
)
|
|
|
|
|
|
|
|
Weighted Average Number
of Shares Outstanding During the Years -Basic and Fully
Diluted |
|
138,304,619 |
|
|
131,370,708 |
|
(The accompanying notes are an integral part of these
consolidated financial statements.)
F4
INFRASTRUCTURE MATERIALS CORP. |
Consolidated Statements of Changes in Stockholders Equity
for the |
Years Ended June 30, 2015 and 2014 |
(Amounts expressed in US Dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
Total |
|
|
|
Common Stock |
|
|
Additional |
|
|
|
|
|
Other |
|
|
Stockholders' |
|
|
|
Number |
|
|
|
|
|
Paid-in |
|
|
|
|
|
Comprehensive |
|
|
Equity |
|
|
|
of Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Loss |
|
|
(Deficiency) |
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
Balance June 30, 2013 |
|
98,935,486 |
|
|
9,894 |
|
|
23,977,767 |
|
|
(23,335,415 |
)
|
|
(105,043 |
)
|
|
547,203 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for cash
(net) |
|
33,333,333 |
|
|
3,333 |
|
|
462,010 |
|
|
|
|
|
|
|
|
465,343 |
|
Common shares issued on conversion of debt
(Note 12) |
|
6,035,800 |
|
|
603 |
|
|
210,650 |
|
|
|
|
|
|
|
|
211,253 |
|
Gain on common shares issued
on conversion of related party debt (Note 12) |
|
|
|
|
|
|
|
81,747 |
|
|
|
|
|
|
|
|
81,747 |
|
Stock based compensation |
|
|
|
|
|
|
|
11,457 |
|
|
|
|
|
|
|
|
11,457 |
|
Unrealized loss on
investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
(17,468 |
)
|
|
(17,468 |
)
|
Other-than-temporary impairment of
investments reclassified to net loss (Note 10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
122,511 |
|
|
122,511 |
|
Net loss for the year |
|
|
|
|
|
|
|
|
|
|
(1,031,244 |
)
|
|
|
|
|
(1,031,244 |
)
|
Balance June 30, 2014 |
|
138,304,619 |
|
|
13,830 |
|
|
24,743,631 |
|
|
(24,366,659 |
) |
|
- |
|
|
390,802 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year |
|
|
|
|
|
|
|
|
|
|
(579,471 |
) |
|
|
|
|
(579,471 |
) |
Balance June 30, 2015 |
|
138,304,619 |
|
|
13,830 |
|
|
24,743,631 |
|
|
(24,946,130 |
)
|
|
- |
|
|
(188,669 |
)
|
(The accompanying notes are an integral part of these
consolidated financial statements.)
F5
INFRASTRUCTURE MATERIALS CORP. |
Consolidated Statements of Cash Flows for the |
Years Ended June 30, 2015 and 2014 (Amounts expressed in US
Dollars) |
|
|
For the |
|
|
For the |
|
|
|
year ended |
|
|
year ended |
|
|
|
June 30, 2015 |
|
|
June 30, 2014 |
|
|
|
$ |
|
|
$ |
|
Cash Flows from Operating
Activities |
|
|
|
|
|
|
Net loss |
|
(579,471 |
) |
|
(1,031,244 |
) |
Adjustment to
reconcile net loss to cash used in operating activities: |
|
|
|
|
|
|
Depreciation |
|
74,421 |
|
|
90,132 |
|
Gain on disposal of plant and equipment |
|
(3,761 |
) |
|
- |
|
Gain on
termination of option and sale agreements (Note 10) |
|
- |
|
|
(42,500 |
) |
Stock based compensation |
|
- |
|
|
11,457 |
|
Other-than-temporary impairment of investments (Note 10) |
|
- |
|
|
122,511 |
|
Increase
(decrease) in Asset Retirement Obligation (Note 11) |
|
- |
|
|
(9,572 |
) |
Accretion of Asset Retirement Obligation (Note 11) |
|
1,964 |
|
|
2,037 |
|
Shares
issued in lieu of interest payment (Note 9) |
|
- |
|
|
1,926 |
|
Cash flow from
changes in certain assets and liabilities: |
|
|
|
|
|
|
Prepaid
expenses and other receivables |
|
299 |
|
|
879 |
|
Accounts payable |
|
7,656 |
|
|
(28,195 |
) |
Accrued
liabilities |
|
(16,057 |
) |
|
(4,979 |
) |
Accrued interest on promissory notes (Note 9) |
|
6,868 |
|
|
- |
|
|
|
|
|
|
|
|
Net cash used in operating
activities |
|
(508,081 |
) |
|
(887,548 |
) |
|
|
|
|
|
|
|
Cash Flows from Investing Activities |
|
|
|
|
|
|
Decrease in Reclamation Deposit (Note 6) |
|
- |
|
|
219,205 |
|
Decrease in
Restricted Cash |
|
9,000 |
|
|
39,000 |
|
Cash received for option on claims and included in Deferred revenue
(Note 10)* |
|
70,000 |
|
|
27,500 |
|
Cash
received for termination of option and sale agreements (Note 10) |
|
- |
|
|
42,500 |
|
Proceeds from sale of plant and equipment |
|
10,900 |
|
|
- |
|
|
|
|
|
|
|
|
Net cash
provided by investing activities |
|
89,900 |
|
|
328,205 |
|
|
|
|
|
|
|
|
Cash Flows from Financing
Activities |
|
|
|
|
|
|
Issuance of
common shares for cash (net) (Note 12) |
|
- |
|
|
465,343 |
|
Issuance of promissory notes (Note 9) |
|
261,000 |
|
|
- |
|
Issuance of
promissory notes later converted to common shares (Note 9) |
|
- |
|
|
150,000 |
|
|
|
|
|
|
|
|
Net cash provided by financing
activities |
|
261,000 |
|
|
615,343 |
|
|
|
|
|
|
|
|
Net Change in Cash and cash equivalents |
|
(157,181 |
) |
|
56,000 |
|
|
|
|
|
|
|
|
Cash and cash equivalents - beginning of
period |
|
162,847 |
|
|
106,847 |
|
|
|
|
|
|
|
|
Cash and cash equivalents - end of period |
|
5,666 |
|
|
162,847 |
|
|
|
|
|
|
|
|
Supplemental Cash Flow Information |
|
|
|
|
|
|
Interest Paid
(Note 10) |
|
- |
|
|
924 |
|
Income taxes paid |
|
- |
|
|
- |
|
* Excludes receipt of securities for $12,803 being a non-cash
item included in Deferred Revenue
(The accompanying notes are an integral part of these
consolidated financial statements.)
F6
INFRASTRUCTURE MATERIALS CORP. |
Notes to the Consolidated Financial Statements
|
June 30, 2015 and 2014 |
(Amounts expressed in US Dollars)
|
1. |
Nature of Business and
Operations |
The focus of Infrastructure Materials Corp. (the Company) is
on the exploration and development, if feasible, of limestone, silver and other
metals from its claims in the State of Nevada.
The Companys limestone assets are held by its wholly owned
subsidiary, Infrastructure Materials Corp US (IMC US), a Nevada corporation,
which was acquired as of November 7, 2008. As of the date of the financial
statements, IMC US controls 2 limestone projects in Nevada, made up of 68
mineral claims covering approximately 1,405 acres on land owned or controlled by
the United States Department of Interior Bureau of Land Management (BLM). IMC
US has acquired 50% of the mineral rights on 680 acres and 25% of the mineral
rights on 160 acres.
On December 18, 2008, the Company incorporated a second wholly
owned subsidiary in the State of Delaware under its former name, Silver Reserve
Corp. referred to herein as SRC. The Company assigned all fourteen of its
precious metal projects in Nevada to SRC. SRC has since terminated its interests
in four of the projects. As of the date of the financial statements, the
remaining ten projects contain 273 mineral claims covering approximately 5,599
acres on BLM land and 17 patented claims and 3 leased patented claims covering
approximately 365 acres. SRC also has a milling facility located in Mina, Nevada
on six mill site claims covering 30 acres.
The Company has not yet determined that any of its claims or
mineral rights can be economically developed and has expensed related costs to
project expense. The Companys assessment of the claims and mineral rights may
change after further exploration.
The consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries, IMC US, SRC, and CIC. All
material inter-company accounts and transactions have been eliminated.
F7
INFRASTRUCTURE MATERIALS CORP. |
Notes to the Consolidated Financial Statements
|
June 30, 2015 and 2014 |
(Amounts expressed in US Dollars)
|
The Company's financial statements have been prepared in
accordance with United States generally accepted accounting principles (GAAP)
and are presented on a going concern basis, which contemplates the realization
of assets and satisfaction of liabilities in the normal course of business. The
financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the possible inability of
the Company to continue as a going concern.
The Company is in the exploration stage and has not yet
realized revenues from its planned operations. The Company has incurred a
cumulative loss of $24,946,130 from inception to June 30, 2015. The Company has
no source of operating revenue and expects to incur significant expenses before
establishing operating revenue. Due to continuing operating losses and cash
outflows from continuing operations, the Companys continuation as a going
concern is dependent upon its ability to obtain adequate financing and to reach
profitable levels of operation. In the event that the Company is unable to raise
additional capital, as to which there is no assurance, the Company will not be
able to continue doing business. The Companys future success is dependent upon
its continued ability to raise sufficient capital, not only to finance its
operating expenses, but to continue its exploration activities and its
assessments of the commercial viability of its claims. There is no assurance
that such capital will be available on acceptable terms, if at all, or that the
Company will attain profitable levels of operation. Historically, the Company
has funded operations through the issuance of capital stock, convertible
debentures and redeemable preferred stock. Prior to December 2011 the Company
received net proceeds of $12,718,365 pursuant to the issuance of such
securities. In December 2011 the Company completed a public offering in Canada
of its Common Shares for net proceeds of $2,215,399. On August 28, 2013, the
Company completed a private placement of its Common Shares for net proceeds of
$465,343. In April 2013 and July 2013, the Company borrowed $140,000 and
$150,000, respectively, issuing promissory notes that were converted to Common
Shares in October 2013. During the twelve months ended June 30, 2015, the
Company borrowed a total of $261,000, issuing promissory notes that are payable
on demand. See Note 9, Notes Payable. Subsequent to the date of the financial
statements, the Company borrowed an additional $163,300, issuing promissory
notes that are payable on demand. See Note 18, Subsequent Events.
Management's plan is to continue raising additional funds through future equity
or debt financing until it achieves profitable operations from production of
minerals or metals on its properties, if feasible.
3. |
Summary of Significant Accounting
Policies |
The accounting policies of the Company are in accordance with
accounting principles generally accepted in the United States of America and
their basis of application is consistent with that of the previous year.
Outlined below are the significant accounting policies:
Basis of Presentation
a) |
Cash and Cash Equivalents |
Cash consists of cash and cash equivalents, which are
short-term, highly liquid investments with original terms to maturity of 90 days
or less.
F8
INFRASTRUCTURE MATERIALS CORP. |
Notes to the Consolidated Financial Statements
|
June 30, 2015 and 2014 |
(Amounts expressed in US Dollars)
|
3. |
Summary of Significant Accounting Policies -
Contd |
|
|
b) |
Investments |
Short-term investments represent bank deposits with maturities
greater than three months and less than one year. These deposits are classified
as held-for-trading and, due to the short-term maturity of these instruments,
are reflected at carrying value, which is equivalent to their fair value.
Investments in marketable securities are categorized as
available-for-sale securities that are classified within Investments on the
consolidated balance sheets. The Company measures these investments at fair
value. Realized gains and losses are included in income when the securities are
sold. Unrealized gains or losses are recognized through other comprehensive
income, except for any decline in value that is considered other-than-temporary,
in which case such decline in value is accounted for as a realized loss.
c) |
Acquisition, Exploration and Evaluation
Expenditures |
The Company is an exploration stage company and has not yet
realized any revenue from its operations. It is primarily engaged in the
acquisition and exploration of mineral properties. Mineral property acquisition
costs are initially capitalized in accordance with Accounting Standards
Codification (ASC) 805-20-55-37, previously referenced as the Financial
Accounting Standards Board (FASB) Emerging Issues Task Force ("EITF") Issue
04-2. The Company assesses the carrying costs for impairment under ASC 360 and
evaluates its carrying value under ASC 930 at each fiscal quarter end. When it
has been determined that a mineral property can be economically developed as a
result of establishing proven and probable reserves, the costs incurred to
develop such property will be capitalized.
To date, mineral property exploration costs have been expensed
as incurred. To date the Company has not established any proven or probable
reserves on its mineral properties.
Plant and equipment are recorded at cost less accumulated
depreciation. Depreciation is provided commencing in the month following
acquisition using the following annual rate and method:
Computer equipment |
30% |
declining balance method |
Office furniture and fixtures |
20% |
declining balance method
|
Plant and Machinery |
15% |
declining
balance method |
Tools |
25% |
declining balance method |
Vehicles |
20% |
declining
balance method |
Consumables |
50% |
declining balance method |
Moulds |
30% |
declining
balance method |
Mobile Equipment |
20% |
declining balance method |
Factory Buildings |
5% |
declining
balance method |
F9
INFRASTRUCTURE MATERIALS CORP. |
Notes to the Consolidated Financial Statements
|
June 30, 2015 and 2014 |
(Amounts expressed in US Dollars)
|
3. |
Summary of Significant Accounting Policies -
Contd |
|
|
e) |
Financial Instruments
|
The fair market value of the Companys financial instruments
comprising cash and cash equivalents, investments and restricted cash were
estimated to approximate their carrying values due to the short-term maturity of
these financial instruments. The Company maintains cash balances at financial
institutions. The Company has not experienced any material losses in such
accounts.
FASB defines fair value as the exchange price that would be
received for an asset or paid to transfer a liability (an exit price) in the
principal or most advantageous market for the asset or liability in an orderly
transaction between market participants on the measurement date. Valuation
techniques used to measure fair value must maximize the use of observable inputs
and minimize the use of unobservable inputs. The standard describes a fair value
hierarchy based on three levels of inputs, of which the first two are considered
observable and the last unobservable, that may be used to measure fair value,
which are the following:
|
|
Level 1 Quoted prices in active markets for
identical assets or liabilities |
|
|
Level 2 Inputs other than Level 1 that are
observable, either directly or indirectly, such as quoted prices for
similar assets or liabilities; quoted prices in markets that are not
active; or other inputs that are observable or can be corroborated by
observable market data for substantially the full term of the assets or
liabilities. |
|
|
Level 3 Unobservable inputs that are
supported by little or no market activity and that are significant to the
fair value of the assets or liabilities. |
Commodity Price Risk:
The ability of the Company to develop its properties and the
future profitability of the Company is directly related to the market price of
certain minerals.
Foreign Exchange Risk:
The Company conducts minor operating activities in Canadian
dollars. The Company is therefore subject to gains or losses due to fluctuations
in Canadian currency relative to the US dollar.
f) |
Impairment of Long-lived
Assets |
Long-lived assets to be held and used are analyzed for
impairment whenever events or changes in circumstances indicate that the related
carrying amounts may not be recoverable. The Company evaluates at each balance
sheet date whether events and circumstances have occurred that indicate possible
impairment. If there are indications of impairment, the Company uses future
undiscounted cash flows of the related asset or asset grouping over the
remaining life in measuring whether the assets are recoverable. In the event
such cash flows are not expected to be sufficient to recover the recorded asset
values, the assets are written down to their estimated fair value. Long-lived
assets to be disposed of are reported at the lower of carrying amount or fair
value of asset less cost to sell.
F10
INFRASTRUCTURE MATERIALS CORP. |
Notes to the Consolidated Financial Statements
|
June 30, 2015 and 2014 |
(Amounts expressed in US Dollars)
|
3. |
Summary of Significant Accounting Policies -
Contd |
|
|
g) |
Asset Retirement Obligation
|
The Company follows ASC 410-20 (Pre-Codification SFAS No. 143)
"Accounting for Asset Retirement Obligations," that addresses financial
accounting and reporting for reclamation obligations. ASC 410-20 requires
recognition of the present value of obligations associated with the obligation
for site reclamation and similar activities relating to its mining interests.
Over time, accretion of the liability is recognized as an operating expense.
Revenue is recognized when the limestone, silver or other
metals are extracted, processed, and sold. The Company will record revenues from
the sale of limestone, silver or other metals when delivery to the customer has
occurred, collectability is reasonably assured and title has transferred.
Deferred tax assets and liabilities are recorded for
differences between the financial statement and tax basis of the assets and
liabilities that will result in taxable or deductible amounts in the future
based on enacted tax laws and rates. Valuation allowances are established when
necessary to reduce deferred tax assets to the amount expected to be realized.
Income tax expense is recorded for the amount of income tax payable or
refundable for the period increased or decreased by the change in deferred tax
assets and liabilities during the period.
j) |
Earnings (Loss) Per Share |
Basic earnings (loss) per share are computed by dividing net
income (loss) by the weighted average number of common shares outstanding for
the year. Diluted earnings (loss) per share is computed by dividing net income
(loss) by the weighted average number of common shares outstanding plus common
stock equivalents (if dilutive) related to convertible preferred stock, stock
options and warrants for each year. There were no common equivalent shares
outstanding at June 30, 2015 and 2014 that have been included in the diluted
loss per share calculation as the effects would have been anti-dilutive.
k) |
Stock Based Compensation |
All awards granted to employees and non-employees after June
30, 2005 are valued at fair value by using the Black-Scholes option pricing
model and recognized on a straight line basis over the service periods of each
award. The Company accounts for equity instruments issued in exchange for the
receipt of goods or services from other than employees using the estimated fair
market value of the consideration received or the estimated fair value of the
equity instruments issued, whichever is more reliably measurable. The value of
equity instruments issued for consideration other than employee services is
determined on the earlier of a performance commitment or completion of
performance by the provider of goods or services.
l) |
Concentration of Credit
Risk |
The Company does not have significant off-balance sheet risk or
credit risk concentration.
F11
INFRASTRUCTURE MATERIALS CORP. |
Notes to the Consolidated Financial Statements
|
June 30, 2015 and 2014 |
(Amounts expressed in US Dollars)
|
3. |
Summary of Significant Accounting Policies -
Contd |
|
|
m) |
Use of Estimates |
Preparation of financial statements in accordance with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the amounts
reported in the financial statements and related notes to financial statements.
These estimates are based on management's best knowledge of current events and
actions the Company may undertake in the future. Actual results may ultimately
differ from such estimates. Significant estimates include the valuation of
investments, carrying value of mineral property interests, estimated useful
lives of plant and equipment, accruals for liabilities, calculations of stock
based compensation, the determination of asset retirement obligations and the
provision for income taxes.
n) |
Comprehensive Income or
Loss |
The Company reports comprehensive income or loss in its
consolidated financial statements. In addition to items included in net income
or loss, comprehensive income or loss includes items currently charged or
credited directly to stockholders equity, such as foreign currency translation
adjustments and unrealized gains or losses on available-for-sale securities.
o) |
Recently Adopted Accounting
Standards |
In February 2013, the Financial Accounting Standards Board (the
FASB) issued Accounting Standards Update (ASU) 2013-04,
Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability
Arrangements for which the Total Amount of the Obligation Is Fixed at the
Reporting Date (ASU 2013-04). ASU 2013-04 addresses the recognition,
measurement, and disclosure of certain obligations resulting from joint and
several arrangements including debt arrangements, other contractual obligations,
and settled litigation and judicial rulings. This ASU is effective for public
entities for fiscal years, and interim periods within those years, beginning
after December 15, 2013. The adoption of ASU 2013-04 did not have a material
impact on the financial statements of the Company.
In March 2013, the FASB issued ASU 2013-05, Foreign
Currency Matters (Topic 830): Parent's Accounting for the Cumulative Translation
Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within
a Foreign Entity or of an Investment in a Foreign Entity (ASU 2013-05).
ASU 2013-05 addresses the accounting for the cumulative translation adjustment
when a parent either sells a part or all of its investment in a foreign entity
or no longer holds a controlling financial interest in a subsidiary or group of
assets that is a nonprofit activity or a business within a foreign entity. The
guidance outlines the events when cumulative translation adjustments should be
released into net income and is intended by FASB to eliminate some disparity in
current accounting practice. This ASU is effective prospectively for fiscal
years, and interim periods within those years, beginning after December 15,
2013. The adoption of ASU 2013-05 did not have a material impact on the
financial statements of the Company.
F12
INFRASTRUCTURE MATERIALS CORP. |
Notes to the Consolidated Financial Statements
|
June 30, 2015 and 2014 |
(Amounts expressed in US Dollars)
|
3. |
Summary of Significant Accounting Policies -
Contd |
|
|
o) |
Recently Adopted Accounting Standards -
Contd |
In July 2013, the FASB issued ASU 2013-11, Income Taxes
(Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating
Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists
(ASU 2013-11), whereby it amended its guidance related to the presentation
of unrecognized tax benefits. The standard provides that an unrecognized tax
benefit, or a portion of an unrecognized tax benefit, should be presented in the
financial statements as a reduction to a deferred tax asset for a net operating
loss carryforward, a similar tax loss, or a tax credit carryforward, except as
follows. To the extent a net operating loss carryforward, a similar tax loss, or
a tax credit carryforward is not available at the reporting date under the tax
law of the applicable jurisdiction to settle any additional income taxes that
would result from the disallowance of a tax position or the tax law of the
applicable jurisdiction does not require the entity to use, and the entity does
not intend to use, the deferred tax asset for such purpose, the unrecognized tax
benefit should be presented in the financial statements as a liability and
should not be combined with deferred tax assets. This guidance is effective for
annual reporting periods beginning on or after December 15, 2013, and interim
periods within those annual periods. The guidance is to be applied prospectively
to all unrecognized tax benefits that exist at the effective date. The adoption
of ASU 2013-11 did not have a material impact on the financial statements of the
Company.
In June 2014, the FASB issued ASU 2014-10,
Development Stage Entities (Topic 915): Elimination of Certain Financial
Reporting Requirements (ASU 2014-10), which eliminates the distinction of
a development stage entity and certain related disclosure requirements,
including the elimination of inception-to-date information on the statements of
operations, cash flows and changes in stockholders equity. The amendments in
ASU 2014-10 are effective prospectively for annual reporting periods beginning
after December 15, 2014, and interim periods within those annual periods;
however early adoption is permitted. The Company evaluated and adopted ASU
2014-10 early for the current period presented.
p) |
Recently Issued Accounting
Standards |
In April 2014, the FASB issued ASU 2014-08,
Presentation of Financial Statements (Topic 205) and Property, Plant, and
Equipment (Topic 360): Reporting Discontinued Operations and Disclosures
of Disposals of Components of an Entity (ASU 2014-08), which
includes amendments that change the requirements for reporting discontinued
operations and require additional disclosures about discontinued operations.
Under the new guidance, only disposals representing a strategic shift in
operations should be presented as discontinued operations. Those strategic
shifts should have a major effect on the organizations operations and financial
results. Additionally, ASU 2014-08 requires expanded disclosures about
discontinued operations that will provide financial statement users with more
information about the assets, liabilities, income, and expenses of discontinued
operations. The new standard is effective for the Company on July 1, 2015. Early
application is permitted. The Company is evaluating the effect that ASU 2014-08
will have on its consolidated financial statements and related disclosures.
In May 2014, the FASB issued ASU 2014-09, Revenue from
Contracts with Customers (Topic 606) (ASU 2014-09), which requires an
entity to recognize the amount of revenue to which it expects to be entitled for
the transfer of promised goods or services to customers. ASU 2014-09 will
replace most existing revenue recognition guidance in U.S. GAAP when it becomes
effective. The new standard is effective for the Company on July 1, 2017. Early
application is not permitted. The standard permits the use of either the
retrospective or cumulative effect transition method. The Company is evaluating
the effect that ASU 2014-09 will have on its consolidated financial statements
and related disclosures.
F13
INFRASTRUCTURE MATERIALS CORP. |
Notes to the Consolidated Financial Statements
|
June 30, 2015 and 2014 |
(Amounts expressed in US Dollars)
|
3. |
Summary of Significant Accounting Policies -
Contd |
|
|
p) |
Recently Issued Accounting Standards -
Contd |
In August 2014, the FASB issued ASU 2014-15, Presentation of
Financial StatementsGoing Concern (Subtopic 205-40): Disclosure of
Uncertainties about an Entitys Ability to Continue as a Going Concern (ASU
2014-15), which provides guidance on determining when and how to disclose
going-concern uncertainties in the financial statements. The new standard
requires management to perform interim and annual assessments of an entitys
ability to continue as a going concern within one year after the date the
financial statements are issued. An entity must provide certain disclosures if
conditions or events raise substantial doubt about the entitys ability to
continue as a going concern. ASU 2014-15 applies to all entities and is
effective for annual periods ending after December 15, 2016, and interim periods
thereafter, with early adoption permitted. The Company is currently assessing
the impact of this guidance.
In January 2015, the FASB issued ASU 2015-01, Income
Statement Extraordinary and Unusual Items (Subtopic 225-20): Simplifying
Income Statement Presentation by Eliminating the Concept of Extraordinary Items
(ASU 2015-01), which eliminates the concept of extraordinary items and the
uncertainty in determining when an item is both unusual in nature and infrequent
in occurrence. Presently, an event or transaction is presumed to be ordinary
activity unless evidence clearly supports the transaction as unusual in nature
and infrequent in occurrence. If an event or transaction is determined to be
unusual and infrequent, it is deemed to be extraordinary, and is required to be
segregated from the results of ordinary operations on the face of the income
statement, net of tax, after income from continuing operations, along with other
financial statement disclosures. ASU 2015-01 eliminates the concept of
extraordinary items from the income statement presentation. Eliminating this
concept removes the uncertainty in determining when a transaction is both
unusual in nature and infrequent in occurrence. However, the presentation and
disclosure guidance for items that are unusual in nature or occur infrequently
will be retained and will be expanded to include items that are both unusual in
nature and infrequently occurring. ASU 2015-01 aligns U.S. GAAP with
International Accounting Standard 1, which prohibits the presentation and
disclosure of extraordinary items. ASU 2015-01 is effective for years beginning
after December 15, 2015, with early adoption permitted. The Company is currently
assessing the impact of this guidance.
In February 2015, the FASB issued ASU 2015-02, Consolidation
(Topic 810): Amendments to the Consolidation Analysis, (ASU 2015-02) which
eliminates the presumption that a general partner should consolidate a limited
partnership. ASU 2015-02 also modifies the evaluation of whether limited
partnerships are variable interest entities or voting interest entities and adds
requirements that limited partnerships must meet to qualify as voting interest
entities. This guidance is effective for public companies for fiscal years, and
for interim periods within those fiscal years, beginning after December 15,
2015. The Company is currently assessing the impact of this guidance.
In April 2015, the FASB issued ASU 2015-03, Interest
- Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt
Issuance Costs (ASU 2015-03). ASU 2015-03 requires that debt issuance
costs related to a recognized debt liability be presented in the balance sheet
as a direct deduction from the carrying amount of the corresponding debt
liability. ASU 2015-03 is effective for fiscal years, and for interim periods
within those fiscal years, beginning after December 15, 2015, with early
adoption permitted, and is to be applied on a retrospective basis. The Company
is currently assessing the impact of this guidance.
F14
INFRASTRUCTURE MATERIALS CORP. |
Notes to the Consolidated Financial Statements
|
June 30, 2015 and 2014 |
(Amounts expressed in US Dollars)
|
3. |
Summary of Significant Accounting Policies -
Contd |
|
|
p) |
Recently Issued Accounting Standards -
Contd |
In May 2015, the FASB issued ASU 2015-07, Fair Value
Measurement (Topic 820): Disclosure for Investments in Certain Entities That
Calculate Net Asset Value per Share (or Its Equivalent) (ASU 2015-07).
Under ASU 2015-07, investments for which the practical expedient is used to
measure fair value at Net Asset Value (NAV) must be removed from the fair
value hierarchy. Instead, those investments must be included as a reconciling
line item so that the total fair value amount of investments in the disclosure
is consistent with the amount in the balance sheet. Further, ASU 2015-07
requires entities to provide certain disclosures only for investments for which
they elect to use the NAV practical expedient to determine fair value. ASU
2015-07 is effective for fiscal years, and for interim periods within those
fiscal years, beginning after December 15, 2015, with early adoption permitted.
The Company is currently assessing the impact of this guidance.
Management does not believe that any other recently issued, but
not yet effective accounting pronouncements, if adopted, would have a material
effect on the accompanying financial statements.
4. |
Fair Value of Financial
Instruments |
The fair values of financial assets measured in the balance
sheet as of June 30, 2015 are as follows:
|
|
|
|
|
|
Quoted prices |
|
|
|
|
|
|
|
|
|
|
|
|
|
in active |
|
|
Significant |
|
|
|
|
|
|
|
|
|
|
markets for |
|
|
observable |
|
|
Unobservable |
|
|
|
|
Carrying |
|
|
identical assets |
|
|
inputs |
|
|
inputs |
|
|
Balance sheet |
|
Amount |
|
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
|
classification and nature |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
5,666 |
|
|
5,666 |
|
|
|
|
|
|
|
|
Investments |
|
57,128 |
|
|
|
|
|
|
|
|
57,128 |
|
|
Restricted Cash |
|
52,000 |
|
|
52,000 |
|
|
|
|
|
|
|
The Company has classified the fair value measurements of its
available-for-sale investments as Level 3 measurements within the fair value
hierarchy because they involve significant unobservable inputs. Investments were
transferred from Level 1 to Level 3 during the year ended June 30, 2015 as the
market value was no longer readily determinable and incorporated managements
own assumptions and involved a significant degree of judgment. See Note 10,
Deferred Revenue, Investments, Other Income and Accumulated Other Comprehensive
Loss.
F15
INFRASTRUCTURE MATERIALS CORP. |
Notes to the Consolidated Financial Statements
|
June 30, 2015 and 2014 |
(Amounts expressed in US Dollars)
|
4. |
Fair Value of Financial Instruments -
Contd |
The fair values of financial assets measured in the balance
sheet as of June 30, 2014 are as follows:
|
|
|
|
|
|
Quoted
prices |
|
|
|
|
|
|
|
|
|
|
|
|
|
in
active |
|
|
Significant |
|
|
|
|
|
|
|
|
|
|
markets
for |
|
|
observable |
|
|
Unobservable |
|
|
|
|
Carrying |
|
|
identical
assets |
|
|
inputs |
|
|
inputs |
|
|
Balance sheet |
|
Amount |
|
|
(Level
1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
|
classification and nature |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
162,847 |
|
|
162,847 |
|
|
|
|
|
|
|
|
Investments |
|
44,325 |
|
|
44,325 |
|
|
|
|
|
|
|
|
Restricted Cash |
|
61,000 |
|
|
61,000 |
|
|
|
|
|
|
|
Amounts reflected as Restricted Cash represent either cash held
as collateral or certificates of deposits pledged toward reclamation liabilities
assessed by the BLM. Periodically, the BLM may require the Company to pledge
additional cash as collateral or the Company may be allowed to remove
restrictions on such cash or certificates of deposits by completing its
reclamation obligations, as the case may be.
In July 2010, the Company posted a reclamation bond of $240,805
pursuant to the Plan of Operations for its Blue Nose limestone project, as
required by the BLM to secure remediation costs if the project is abandoned or
closed. In December 2013, the Company submitted an application to withdraw its
Plan of Operations and to seek a refund from the BLM of a portion of the
Reclamation Bond. In January 2014, the application was approved and the Company
received $219,205 from the BLM as a partial refund of the Reclamation Bond. The
Company must complete certain reclamation work for the $21,600 balance to be
released, but may leave the bond in place for future exploration programs, even
if such reclamation work is completed.
F16
INFRASTRUCTURE MATERIALS CORP. |
Notes to the Consolidated Financial Statements
|
June 30, 2015 and 2014 |
(Amounts expressed in US Dollars)
|
7. |
Plant and Equipment,
Net |
|
|
|
June 30, 2015
|
|
|
June 30, 2014
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
Accumulated |
|
|
|
|
Cost |
|
|
Depreciation |
|
|
Cost |
|
|
Depreciation |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Computer equipment |
|
25,729 |
|
|
20,031 |
|
|
25,729 |
|
|
17,589 |
|
|
Office, furniture and fixtures |
|
3,623 |
|
|
2,977 |
|
|
3,623 |
|
|
2,816 |
|
|
Plant and Machinery |
|
1,514,511 |
|
|
1,153,332 |
|
|
1,514,511 |
|
|
1,089,594 |
|
|
Tools |
|
11,498 |
|
|
9,382 |
|
|
11,498 |
|
|
8,677 |
|
|
Vehicles |
|
48,280 |
|
|
40,343 |
|
|
76,928 |
|
|
59,747 |
|
|
Consumables |
|
64,197 |
|
|
64,049 |
|
|
64,197 |
|
|
63,900 |
|
|
Moulds |
|
900 |
|
|
861 |
|
|
900 |
|
|
844 |
|
|
Mobile Equipment |
|
73,927 |
|
|
63,525 |
|
|
73,927 |
|
|
60,925 |
|
|
Factory Buildings |
|
74,849 |
|
|
27,265 |
|
|
74,849 |
|
|
24,761 |
|
|
|
|
1,817,514 |
|
|
1,381,765 |
|
|
1,846,162 |
|
|
1,328,853 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net carrying amount |
|
435,749 |
|
|
|
|
|
517,309 |
|
|
|
|
|
Depreciation charges |
|
74,421 |
|
|
|
|
|
90,132 |
|
|
|
|
During the twelve months ended June 30, 2015, the Company
recorded depreciation expense of $74,421. During the twelve months ended June
30, 2014, the Company recorded depreciation expense of $90,132.
Accrued liabilities are comprised of the following:
|
|
|
2015 |
|
|
2014 |
|
|
|
|
$ |
|
|
$ |
|
|
Professional fees for
year-end reporting and audit |
|
26,000 |
|
|
33,200 |
|
|
Reclamation Bonding |
|
16,803 |
|
|
25,613 |
|
|
Other |
|
5,000 |
|
|
5,047 |
|
|
Total |
|
47,803 |
|
|
63,860 |
|
F17
INFRASTRUCTURE MATERIALS CORP. |
Notes to the Consolidated Financial Statements
|
June 30, 2015 and 2014 |
(Amounts expressed in US Dollars)
|
Year ended June 30, 2015
On July 3, 2014, the Company borrowed $70,000 from Mont
Strategies Inc. (Mont Strategies), a company that is owned and controlled by a
member of the Companys Board of Directors. This loan was made pursuant to a
demand promissory note that bears interest at 4 percent (4%) per annum and may
also be prepaid by the Company at any time without penalty. If the Company fails
to make payment within five business days of demand by Mont Strategies, the
promissory note will bear interest at ten percent (10%) per annum. The Company
used the proceeds of this promissory note for working capital. For the year
ended June 30, 2015, the Company recorded interest expense of $2,784 for this
promissory note.
On August 18, 2014, the Company borrowed an additional $100,000
from Mont Strategies. This loan was made pursuant to a demand promissory note
that bears interest at 4 percent (4%) per annum and may also be prepaid by the
Company at any time without penalty. If the Company fails to make payment within
five business days of demand by Mont Strategies, the promissory note will bear
interest at ten percent (10%) per annum. The Company used the proceeds of this
promissory note for working capital. For the year ended June 30, 2015, the
Company recorded interest expense of $3,473 for this promissory note.
On March 25, 2015, the Company entered into a Standby Support
Agreement (the Agreement) with Mont Strategies. The Agreement contemplates
that Mont Strategies will consider advancing loans to the Company as the Company
requests funding from time to time during the two-year term of the Agreement.
The Agreement does not obligate Mont Strategies to fund such requests. Proceeds
from these loans are used as working capital. Each loan funded under the
Agreement is evidenced by a separate demand promissory note that bears simple
interest at a rate of four percent (4%) per annum. The loans may be repaid by
the Company at any time without penalty, or upon demand by Mont Strategies. If
the Company fails to make payment on a promissory note issued pursuant to the
Agreement within five business days of demand by Mont Strategies, such
promissory note will bear interest at ten percent (10%) per annum. The
promissory notes are general obligations of the Company and not secured. The
following table lists the promissory notes issued pursuant to the Agreement.
Also see Note 18, Subsequent Events.
|
|
|
|
|
|
Interest Expense |
|
|
|
|
Principal |
|
|
for the year ended |
|
|
Date of Note |
|
Amount |
|
|
June 30, 2015 |
|
|
|
|
|
|
|
|
|
|
March 25, 2015 |
$ |
34,000 |
|
$ |
365 |
|
|
April 16, 2015 |
|
8,000 |
|
|
67 |
|
|
May 5, 2015 |
|
21,000 |
|
|
131 |
|
|
June 9, 2015 |
|
18,000 |
|
|
43 |
|
|
June 26, 2015 |
|
10,000 |
|
|
5 |
|
|
|
|
|
|
|
|
|
|
Total |
$ |
91,000 |
|
$ |
611 |
|
F18
INFRASTRUCTURE MATERIALS CORP. |
Notes to the Consolidated Financial Statements
|
June 30, 2015 and 2014 |
(Amounts expressed in US Dollars)
|
9. |
Notes Payable - Contd |
Year ended June 30, 2014
On July 19, 2013, the Company borrowed $150,000 from Mont
Strategies. This loan was made pursuant to a demand promissory note that bore
interest at a rate of 4 percent (4%) per annum and could be prepaid by the
Company at any time without penalty. The Company used the proceeds of this
promissory note for working capital. For the year ended June 30, 2014, the
Company recorded total interest expense of $2,850 for this promissory note and a
promissory note for $140,000 issued to Mont Strategies in April 2013 under the
same terms.
On October 8, 2013, the Company completed a debt conversion
transaction (the Conversion) with Mont Strategies. Under the terms of the
Conversion, the Company converted $293,000, representing the combined principal
amounts of the demand promissory note issued on July 19, 2013 discussed above
and a demand promissory note issued to Mont Strategies in April 2013 and $3,000
of interest accrued on such promissory notes, into 6,035,800 Common Shares at a
conversion price of CDN$0.05 per share. The remaining $924 of interest accrued
on such promissory notes was paid in cash to Mont Strategies. Also see Note 12,
Issuance of Common Shares and Warrants.
10. |
Deferred Revenue, Investments, Other Income and
Accumulated Other Comprehensive Loss |
On February 25, 2011, SRC entered into an option and joint
venture agreement (the Option Agreement) with International Millennium Mining
Inc. (IMMI), a wholly owned subsidiary of International Millennium Mining
Corp. (IMMC), to sell an 85% interest in SRCs NL Extension Project (the NL
Project) for total consideration of $350,000 cash and 1,925,000 shares of
IMMCs common stock (together, the Consideration). The NL Project consists of
18 mineral claims located in Esmeralda County, Nevada, approximately 6 miles
southwest of Silver Peak, Nevada on Highway 47. Under the terms of the Option
Agreement, the Consideration is payable over a five-year period that ends on
September 15, 2015, with IMMIs interest in the NL Project vesting at the end of
such period. Also see Note 16, Commitments and Contingencies.
As of the date of the financial statements, the Company had
received Consideration of $429,639, consisting of 1,575,000 shares of IMMC with
an initial fair market value of $179,639 that was recorded as Investments in the
Companys Consolidated Balance Sheets, and $250,000 in cash. Because IMMIs
interest in the NL Project vests at the end of the five-year period, this
Consideration is accounted for in the Consolidated Balance Sheets as Deferred
Revenue.
IMMC common shares were traded in Canada on the TSX Venture
Exchange (the Exchange). Pursuant to the Exchanges policies, IMMCs common
shares encountered a trading halt on December 24, 2013, when IMMC announced a
proposed change in business/reverse take-over. The trading halt continues to
date. The Company considered these investments as marketable during the year
ended June 30, 2014 and recorded an other-than-temporary impairment of $122,511
in the value of these securities that was reclassified to net loss during the
year ended June 30, 2014. This loss included $17,468 representing the decline in
the market value of the securities for the year ended June 30, 2014.
F19
INFRASTRUCTURE MATERIALS CORP. |
Notes to the Consolidated Financial Statements
|
June 30, 2015 and 2014 |
(Amounts expressed in US Dollars)
|
10. |
Deferred Revenue, Investments, Other Income
and Accumulated Other Comprehensive Loss Contd
|
In the absence of any trading of IMMC's common shares on the
Exchange as a result of the ongoing trading halt for the entire twelve month
period, the Companys determination of fair value was based on the best
information available in the circumstances, and incorporates managements own
assumptions and involves a significant degree of judgment, taking into
consideration a combination of internal and external factors. This investment is
valued taking into consideration any changes in key inputs and changes in
economic and other relevant conditions. No impairment loss or change in value of
securities has been recorded for the year ended June 30, 2015.
On March 5, 2013, SRC executed a Sale and Purchase Agreement
(the Sale Agreement) with IMMI to sell to IMMI (1) all of SRCs interest in
the NL Project and (2) all of its interest in the Option Agreement. Pursuant to
the terms of the Sale Agreement, upon closing IMMI would pay SRC a purchase
price of $425,000 and the Option Agreement will terminate. Also, upon closing of
the Sale Agreement, SRC would transfer 100% of its interest in the NL Project to
IMMI. The terms of the Sale Agreement provided that all Consideration paid by
IMMI under the Option Agreement prior to closing would be retained by the
Company. The closing date was scheduled to occur on or about April 30, 2013, and
was extended several times. In connection with the closing date extensions, IMMI
paid a 10% (ten percent) non-refundable deposit of $42,500 towards the purchase
price, which was also accounted for as Deferred Revenue until such time as the
Sale Agreement closed or was cancelled. On October 4, 2013, SRC elected to
terminate the Sale Agreement after IMMI failed to close the transaction as
contemplated. Accordingly, during the year ended June 30, 2014, the
non-refundable deposit of $42,500 was forfeited by IMMI and recognized as Other
Income in the Companys Consolidated Statement of Operations. The Option
Agreement, as discussed above, remains in effect.
F20
INFRASTRUCTURE MATERIALS CORP. |
Notes to the Consolidated Financial Statements
|
June 30, 2015 and 2014 |
(Amounts expressed in US Dollars)
|
10. |
Deferred Revenue, Investments, Other Income
and Accumulated Other Comprehensive Loss Contd
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
Deferred |
|
|
|
|
|
Comprehensive |
|
|
|
|
Revenue |
|
|
Investments |
|
|
Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of July 1, 2013
|
$ |
307,460
|
|
$ |
49,917 |
|
$ |
(105,043 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Consideration received during
the year ending June 30, 2014 |
|
81,876 |
|
|
11,876 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income recognized on
termination of Sale Agreement |
|
(42,500 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in market value of
securities for the year ended June 30, 2014 |
|
|
|
|
(17,468 |
) |
|
(17,468 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Other-than-temporary
impairment of investments reclassified to net loss |
|
|
|
|
|
|
|
122,511 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2014
|
$ |
346,836
|
|
$ |
44,325 |
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Consideration received during
the year ending June 30, 2015 |
|
82,803 |
|
|
12,803 |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2015
|
$ |
429,639 |
|
$ |
57,128 |
|
$ |
- |
|
11. |
Asset Retirement
Obligation |
The Company is required to recognize a liability for its legal
obligation to perform reclamation and disturbance monitoring activities once any
of its projects are abandoned or closed. Although these activities are
conditional upon future events, the Company is required to make a reasonable
estimate of the fair value of the liability. At the end of each reporting
period, asset retirement obligations ("ARO's") are equal to the present value of
all estimated future costs required to remediate any ground disturbances that
exist as of the end of the period, using discount rates applicable at the time
of initial recognition of each component of the liability. A liability for an
ARO may be incurred over more than one reporting period if the events that
create the obligation occur over more than one reporting period. Any incremental
liability incurred in a subsequent reporting period shall be considered to be an
additional layer of the original liability. Each layer shall be initially
measured at fair value. Included in this liability are the costs of reclamation
and monitoring and maintenance costs. A discount rate of 10% was determined to
be applicable.
Based on the existing level of ground disturbance and
monitoring requirements and assuming payments made over a one-year period, the
Company decreased its estimate of the present value of its asset retirement
obligation as of June 30, 2014 to $19,636, resulting in a credit of $9,572 to
its Consolidated Statements of Operations. Determination of the undiscounted ARO
and the timing of these obligations were based on internal estimates using
information currently available and existing regulations. The Companys entire
ARO relates to its Blue Nose project.
|
Balance as of June 30,
2014 |
$ |
19,636 |
|
|
|
|
|
|
|
Accretion for the year ended
June 30, 2015 |
|
1,964 |
|
|
|
|
|
|
|
Balance as of June 30, 2015
|
$ |
21,600 |
|
F21
INFRASTRUCTURE MATERIALS CORP. |
Notes to the Consolidated Financial Statements
|
June 30, 2015 and 2014 |
(Amounts expressed in US Dollars)
|
12. |
Issuance of Common Shares and
Warrants |
Year ended June 30, 2015
There were no securities issued during this period.
Year ended June 30, 2014
On August 28, 2013, the Company completed a private placement
(the Private Placement) of 33,333,333 Common Shares at a price of $0.014
(CDN$0.015) per share for gross proceeds of $474,203 (CDN$500,000). The Private
Placement was exempt from registration under the Securities Act of 1933, as
amended, pursuant to an exemption afforded by Regulation S promulgated
thereunder.
On October 8, 2013, the Company issued 6,035,800 Common Shares
as full settlement of a debt conversion transaction (the Conversion) with Mont
Strategies, a company that is owned and controlled by a member of the Companys
Board of Directors. Under the terms of the Conversion, the Company converted
$293,000 of indebtedness owed by the Company to Mont Strategies (a related
party) into 6,035,800 Common Shares at a conversion price of $0.0485 (CDN$0.05)
per share. The amount allocated to Stockholders Equity based on a fair value of
US$0.035 per share was $211,253. The balance of $81,747 represented a gain on
the debt settlement with a related party that was also allocated to the equity
section of the Balance Sheet because the member of the Companys Board of
Directors is also a significant shareholder in the Company. The Conversion was
exempt from registration under the Securities Act of 1933, as amended, pursuant
to an exemption afforded by Regulation S promulgated thereunder. Also see Note
9, Notes Payable.
Warrants:
On December 16, 2011, the Company completed the sale of
26,000,000 Common Shares to the public in Canada at a price of $0.096 (CDN$0.10)
per share to raise gross proceeds of $2,507,180 (CDN$2,600,000). PI Financial
Corp. (PI Financial) acted as lead agent and received, among other
compensation, non-transferable Agent's Warrants valued at $14,644 entitling PI
Financial to acquire 209,850 Common Shares at a price of $0.096 (CDN$0.10) per
share exercisable for 24 months. The fair value of the Agents Warrants was
determined using the Black-Scholes option pricing model with the following
assumptions: risk-free rate of 1.63%, expected dividend yield of 0%, annualized
volatility of 142.45% and expected life of two years. These Agents Warrants
were not granted pursuant to the Companys stock option plan then in effect. On
December 15, 2013, the Agents Warrants expired with none having been exercised.
F22
INFRASTRUCTURE MATERIALS CORP. |
Notes to the Consolidated Financial Statements
|
June 30, 2015 and 2014 |
(Amounts expressed in US Dollars)
|
13. |
Stock Based Compensation |
In April 2006, the Board of Directors approved the Companys
2006 Stock Option Plan, the purpose of which was to enhance the Company's
stockholder value and financial performance by attracting, retaining and
motivating the Company's officers, directors, key employees and consultants and
to encourage stock ownership by such individuals by providing them with a means
to acquire a proprietary interest in the Company's success through stock
ownership.
Under the 2006 Stock Option Plan, officers, directors,
employees and consultants who provide services to the Company could be granted
options to acquire shares of the Companys common stock at the fair market value
of the stock on the date of grant. Options could have a term of up to 10 years.
The total number of shares reserved for issuance under the 2006 Stock Option
Plan was 5,000,000. At a meeting of shareholders held on July 29, 2011, the
shareholders of the Company approved a new stock option plan as described below.
No further options will be issued under the 2006 Stock Option Plan.
The Company held an annual meeting of shareholders on July 29,
2011. At the meeting, among other actions, the shareholders of the Company
approved the amendment and restatement of the 2006 Stock Option Plan resulting
in the Companys Amended Stock Option Plan (the Amended Plan). The Amended
Plan replaced the Companys 2006 Stock Option Plan and no further options will
be issued under the 2006 Stock Option Plan. The terms of the Amended Plan
include, among others, that (a) officers, directors, employees and consultants
who provide services to the Company may be granted options to acquire shares of
the Companys Common Shares at the fair market value of the stock on the date of
grant, (b) options may have a term of up to 10 years, (c) the Company may issue
options in a number up to a maximum of 10% of the outstanding Common Shares, and
(d) outstanding stock options previously granted pursuant to the 2006 Stock
Option Plan will remain in effect and be exercisable in accordance with, and be
deemed to be issued under, the terms of the Amended Plan. It is expected that
options issued pursuant to the Amended Plan will not be qualified options
under the provisions of section 422 of the Internal Revenue Code of 1986 as
amended from time to time.
At the annual meeting of shareholders on July 16, 2013, the
shareholders of the Company approved the Companys 2013 Amended Stock Option
Plan (the Current Stock Option Plan). The Current Stock Option Plan amends and
restates in its entirety the 2011 Amended Plan. The Current Stock Option Plan
effected minor technical clarifications to the 2011 Amended Plan and did not
materially change its terms.
Year ended June 30, 2015
No options were granted pursuant to the Current Stock Option
Plan during the year ended June 30, 2015.
On October 22, 2014, 25,000 options issued in accordance with
the Companys 2006 Stock Option Plan expired.
On April 25, 2015, 50,000 options issued in accordance with the
Companys 2006 Stock Option Plan expired.
F23
INFRASTRUCTURE MATERIALS CORP. |
Notes to the Consolidated Financial Statements
|
June 30, 2015 and 2014 |
(Amounts expressed in US Dollars)
|
13. |
Stock Based Compensation
Contd |
Year ended June 30, 2014
No options were granted pursuant to the Current Stock Option
Plan during the year ended June 30, 2014.
On December 10, 2013, 25,000 options issued in accordance with
the Companys 2006 Stock Option Plan expired.
On February 2, 2014, 50,000 options issued in accordance with
the Companys 2006 Stock Option Plan expired.
As of June 30, 2015, there were no unrecognized expenses
related to non-vested stock-based compensation arrangements granted. The
stock-based compensation expense for the years ended June 30, 2015 and June 30,
2014, was $0 and $11,457, respectively.
The following tables summarize the options outstanding as of
June 30, 2015 and 2014, and the option activity for the years then ended:
|
|
|
|
|
|
Remaining |
|
|
Remaining |
|
|
|
|
|
|
|
|
|
|
|
|
|
contractual |
|
|
contractual |
|
|
|
|
|
|
|
|
|
|
Option Price |
|
|
life (in years) |
|
|
life (in years) |
|
|
Number of options:
|
|
|
Expiry Date |
|
Per Share |
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
Oct. 22, 2014 |
$ |
0.33 |
|
|
- |
|
|
0.32 |
|
|
- |
|
|
25,000 |
|
|
Apr. 25, 2015 |
$ |
0.23 |
|
|
- |
|
|
0.83 |
|
|
- |
|
|
50,000 |
|
|
Apr. 24, 2022 |
$ |
0.10 |
|
|
6.82 |
|
|
7.82 |
|
|
8,375,000 |
|
|
8,375,000 |
|
|
Oct. 7, 2022 |
$ |
0.10 |
|
|
7.28 |
|
|
8.28 |
|
|
125,000 |
|
|
125,000 |
|
|
June 5, 2023 |
$ |
0.10 |
|
|
7.94 |
|
|
8.94 |
|
|
125,000 |
|
|
125,000 |
|
|
Options outstanding at end of year
|
|
|
|
|
|
|
|
|
8,625,000 |
|
|
8,700,000 |
|
|
Weighted average
exercise price at end of year |
|
|
|
|
$ |
0.10 |
|
$ |
0.10 |
|
|
Weighted average remaining
contractual life (in years) |
|
|
6.84 |
|
|
7.78 |
|
|
|
|
Number of
options: |
|
|
|
|
2015 |
|
|
2014 |
|
|
Outstanding, beginning of
year |
|
8,700,000 |
|
|
8,775,000 |
|
|
Granted |
|
- |
|
|
- |
|
|
Expired |
|
(75,000 |
)
|
|
(75,000 |
)
|
|
Exercised |
|
- |
|
|
- |
|
|
Forfeited |
|
- |
|
|
- |
|
|
Cancelled |
|
- |
|
|
- |
|
|
Outstanding, end of year |
|
8,625,000 |
|
|
8,700,000 |
|
|
Exercisable, end of year |
|
8,625,000 |
|
|
8,700,000 |
|
14. |
Geographic Location of
Assets |
All assets in the financial statements are located in the State
of Nevada, United States of America except for Cash and Cash equivalents of
$979, which are located in Canada.
F24
INFRASTRUCTURE MATERIALS CORP. |
Notes to the Consolidated Financial Statements
|
June 30, 2015 and 2014 |
(Amounts expressed in US Dollars)
|
The Company's current and deferred income taxes are as follows:
|
|
|
2015 |
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
Loss before income taxes |
$ |
(579,471 |
) |
$ |
(1,031,244 |
) |
|
|
|
|
|
|
|
|
|
Expected income tax recovery
at the statutory rate of 29.5% |
$ |
(170,944 |
) |
$ |
(304,217 |
) |
|
Increase in income taxes resulting from: |
|
|
|
|
|
|
|
Permanent differences |
|
- |
|
|
3,380 |
|
|
Timing Difference |
|
(5,797 |
) |
|
49,517 |
|
|
Valuation allowance |
|
176,741 |
|
|
251,320 |
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
$ |
- |
|
$ |
- |
|
The Company has deferred income tax
assets as follows:
|
|
|
2015 |
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
Net operating loss carry
forward |
$ |
21,806,144 |
|
|
19,817,037$ |
|
|
|
|
|
|
|
|
|
|
Deferred Income tax on loss
carry forward |
$ |
6,432,812
|
|
$ |
5,846,026
|
|
|
Temporary differences (due to timing
difference between tax value and book value) |
|
31,603 |
|
|
160,567 |
|
|
Valuation allowance for
deferred income tax assets |
|
(6,464,415 |
) |
|
(6,006,593 |
) |
|
|
|
|
|
|
|
|
|
Deferred income taxes |
$ |
- |
|
$ |
- |
|
As of June 30, 2015, the Company has non-capital losses of
approximately $21,806,144 available to offset future taxable incomes which
expire as follows:
|
2026 |
$ |
64,024 |
|
|
2027 |
$ |
2,324,117 |
|
|
2028 |
$ |
3,474,713 |
|
|
2029 |
$ |
4,536,752
|
|
|
2030 |
$ |
2,868,022 |
|
|
2031 |
$ |
3,849,845
|
|
|
2032 |
$ |
1,352,825 |
|
|
2033 |
$ |
1,769,492
|
|
|
2034 |
$ |
943,969 |
|
|
2035 |
$ |
622,385 |
|
|
|
$ |
21,806,144 |
|
F25
INFRASTRUCTURE MATERIALS CORP. |
Notes to the Consolidated Financial Statements
|
June 30, 2015 and 2014 |
(Amounts expressed in US Dollars)
|
16. |
Commitments and
Contingencies |
On August 1, 2006, the Company acquired the Pansy Lee Claims
Group from Anglo Gold Mining Inc. in exchange for 1,850,000 Common Shares
pursuant to an Asset Purchase Agreement dated August 1, 2006 (the Pansy Lee
Purchase Agreement). Pursuant to the Pansy Lee Purchase Agreement, a 2% net
smelter royalty pertains to eight of the twelve claims in this group. In the
event that any one or more of the eight claims becomes a producing claim, any
revenue generated is subject to a 2% net smelter return royalty where net
smelter returns are based upon gross revenue less deductions as provided in the
Pansy Lee Purchase Agreement.
On May 30, 2008, the Company entered into an agreement (the
Harting Lease Agreement) with Ovidia Harting (Harting) to lease two patented
claims covering approximately 35 acres in Esmeralda County, Nevada. The Harting
Lease Agreement has a renewable term of 10 years and permits the Company to
explore the area covered by the patented claims. The Harting Lease Agreement
provides for annual payments of $1,000 per claim to Harting and also requires
that the Company pay the real estate taxes imposed by Esmeralda County on the
property. In the event that one or both of these claims enters into production,
any revenue generated is subject to a 3% net smelter return royalty to be
calculated and paid to Harting within 45 days after the end of each calendar
quarter. The Company may terminate the Harting Lease Agreement at any time by
giving 60 days notice in writing to Harting.
On November 30, 2009, IMC US entered into a Mineral Rights
Agreement with Perdriau Investment Corp. (Perdriau) to purchase 50% of the
mineral rights, including all easements, rights of way and appurtenant rights of
any type that run with the mineral rights in certain sections of Elko County,
Nevada (the Perdriau Property). The purchase price was $10 per net acre. IMC
US purchased 340 net acres for a total purchase price of $3,400. Perdriau will
be entitled to receive a royalty of $0.25 per ton for material mined and removed
from the Perdriau Property.
On January 15, 2010, IMC US entered into a Mineral Rights
Agreement with Eugene M. Hammond (the Hammond Mineral Rights Agreement)
pursuant to which the Company purchased a 25% interest in any and all minerals
extracted from 160 acres (the Hammond Mineral Rights Property) that is covered
by the Hammond Mineral Rights Agreement. The purchase price was $400. In the
event that the Hammond Mineral Rights Property becomes a producing property,
Eugene M. Hammond is entitled to receive a royalty of $0.125 per ton on material
mined and removed from the Hammond Mineral Rights Property. The Hammond Mineral
Rights Agreement does not cover petroleum.
On February 25, 2011, SRC entered into an option and joint
venture agreement (the IMMI Option Agreement) with International Millennium
Mining Inc. (IMMI), a wholly owned subsidiary of International Millennium
Mining Corp. (IMMC), to sell an 85% interest in SRCs NL Extension Project
(the NL Project) for total consideration of $350,000 cash and 1,925,000 shares
of IMMCs common stock (the Consideration). The NL Project consists of 18
mineral claims located in Esmeralda County, Nevada, approximately 6 miles
southwest of Silver Peak, Nevada on Highway 47. Under the terms of the IMMI
Option Agreement, the Consideration is payable over a five-year period that ends
on September 15, 2015, with IMMIs interest in the NL Project vesting at the end
of such period. In the event of early termination, IMMI is not entitled to the
return of Consideration previously paid to SRC. If the NL Project is determined
to be economically feasible, based upon criteria contained in the IMMI Option
Agreement, SRC will be required to fund its portion of an operating budget
proposed by IMMI in order to retain its 15% interest in the NL Project and to
acquire a 15% interest in IMMIs Nivloc Mine Project (the NL Project and the
Nivloc Mine Project, collectively, the IMMI Project). In the event that SRC
decides not to fund its portion of the budget, its 15% interest would be
forfeited, but SRC would be entitled to a 2% net smelter return royalty if and
when the IMMI Project enters the production phase. Upon funding of
the operating budget and SRCs acquisition of a 15% interest in the IMMI
Project, SRC and IMMI would enter into a joint venture agreement.
F26
INFRASTRUCTURE MATERIALS CORP. |
Notes to the Consolidated Financial Statements
|
June 30, 2015 and 2014 |
(Amounts expressed in US Dollars)
|
16. |
Commitments and Contingencies -
Contd |
Effective February 29, 2012, SRC entered into a mineral lease
agreement (the Gumaskas Agreement) with Joseph W Gumaskas (Gumaskas) to
lease a patented claim covering approximately 10 acres (the Claim) in Mineral
County, Nevada. Unless terminated earlier by SRC, the term of the Gumaskas
Agreement is ten years and will automatically renew on the same terms and
conditions for additional five-year periods. The Gumaskas Agreement requires SRC
to pay Gumaskas advance minimum royalty payments of $500 annually. In the event
that the Claim becomes a producing claim, SRC will pay Gumaskas a 3% royalty
based upon gross revenue less deductions as permitted by the Gumaskas Agreement.
SRC may terminate the Gumaskas Agreement at any time by giving 60 days advance
written notice to Gumaskas.
Effective as of June 23, 2008, the Company appointed Mason
Douglas as the President of the Company. Mr. Douglas is also a director of the
Company. In connection with the appointment, the Company entered into a
consulting services agreement with a Canadian corporation that is controlled by
Mr. Douglas (the Consulting Agreement). The Consulting Agreement has a term of
one year and is then automatically renewable. Either party may terminate the
Consulting Agreement upon 90 days notice to the other party. According to the
terms of the Consulting Agreement as amended effective March 1, 2012, the
Company will pay a fee of $10,417 per month and reimburse related business
expenses. The Consulting Agreement permits Mr. Douglas to fulfill his duties for
the Company from his office in Canada. Mr. Douglas does not receive a salary
from the Company. Effective October 1, 2012, the Company appointed Mr. Douglas
to also serve as its Chief Executive Officer. In connection with this
appointment, the Consulting Agreement was further amended to increase the
consulting fee to $155,000 annually, payable in 12 equal monthly installments.
By mutual agreement between the Company and Mr. Douglas, effective as of March
1, 2013, the consulting fee was changed to an annual rate of $93,000, payable in
12 equal monthly installments.
On April 23, 2013, the Company received a summons from the
United States District Court, District of Nevada, naming the Company as a
co-defendant in a lawsuit filed by the U.S. Attorney on behalf of the BLM
seeking reimbursement for the cost of putting out a fire that occurred on May 8,
2008, and other non-quantified damages. The fire damaged approximately 451 acres
of land administered by the BLM near Dayton, Nevada. The lawsuit alleged that
the cost of putting out the fire was approximately $510,000. The Company denied
any responsibility for the fire and notified its liability insurance carrier,
which retained counsel to defend the Company. In July 2014, the Company, along
with the other parties to the lawsuit, agreed to settle all relevant claims for
$220,000, which is well below the limits of coverage provided by the Companys
liability insurance policy. The Company has accrued $5,000 for these claims,
which is equal to the Companys deductible on the relevant liability insurance
policy.
On May 16, 2014, SRC completed the purchase of three patented
claims covering approximately 59 acres (the Property) situated in Mineral
County, Nevada, from Ralph L. Buhrman and Jacqueline Buhrman (together, the
Buhrmans). The Property was acquired for a total of $90,000 pursuant to an
Exploration License with Option to Purchase (the Buhrman Agreement) dated as
of May 15, 2012. Mineral production from the Property is subject to a 2% royalty
payable to the Buhrmans based upon gross revenues less deductions as defined by
the Buhrman Agreement. SRC has the exclusive right and option to purchase such
royalty at any time for the sum of $1,000,000 less any payments previously made
by SRC to the Buhrmans pursuant to such royalty.
F27
INFRASTRUCTURE MATERIALS CORP. |
Notes to the Consolidated Financial Statements
|
June 30, 2015 and 2014 |
(Amounts expressed in US Dollars)
|
16. |
Commitments and Contingencies -
Contd |
The Company has entered into operating leases for its office
space and certain office furniture and equipment. Rent payments associated with
those leases for the years ended June 30, 2015, and June 30, 2014, were $24,787
and $25,095, respectively. As of June 30, 2015, the Companys estimated future
minimum cash payments under non-cancelable operating leases for the year ending
June 30, 2016, are $163.
Maintaining Claims in Good Standing
The Company is required to pay to the BLM on or before
September 1st of each year, a fee in the amount of $155 per mineral
claim held by the Company. The total amount paid in August 2015, was $50,840 for
328 claims held by the Company at that date. The BLM fee for the 18 NL Project
claims held by the Company was paid by IMMI pursuant to the IMMI Option
Agreement described above.
The Company is also required to pay on or before November
1st of each year, annual fees to counties in Nevada in which the
claims are held. In October 2014, the Company paid $3,478 to six counties in
Nevada for annual claims-related fees.
The Company also holds certain patented claims and leases other
patented claims in Nevada. A patented claim is fee simple title to the property.
Patented claims are subject to taxes assessed by the local community based on
assessment rates set annually.
17. |
Related Party Transactions |
As of June 30, 2015, the Company was owed $967 by a member of
the Companys Board of Directors for expenses advanced on behalf of the
director. There are no other amounts owed to or from related parties as of June
30, 2015, and June 30, 2014 except as discussed in Note 9, Notes Payable.
The following transactions were undertaken in the normal course
of operations and are measured at the exchange amount, which is the amount of
consideration established and agreed to by the Company and the related parties.
Year ended June 30, 2015
A corporation owned and operated by Mason Douglas, the
Companys President and Chief Executive Officer and also a member of the
Companys Board of Directors, received $23,250 for his services for the
three-months ended June 30, 2015, and $93,000 for the year ended June 30, 2015.
The Companys Chief Financial Officer, Rakesh Malhotra,
received $455 for consulting services provided to the Company for the three
months ended June 30, 2015, and $5,165 for the year ended June 30, 2015.
The Company recorded interest expense of $2,280 for the
three-months ended June 30, 2015, and $6,868 for year ended June 30, 2015,
pursuant to promissory notes issued to a corporation that is owned and
controlled by a member of the Companys Board of Directors, Todd Montgomery.
Also see Note 9, Notes Payable.
F28
INFRASTRUCTURE MATERIALS CORP. |
Notes to the Consolidated Financial Statements
|
June 30, 2015 and 2014 |
(Amounts expressed in US Dollars)
|
17. |
Related Party Transactions
Contd |
Key management personnel are those persons that have the
authority and responsibility for planning, directing and controlling the
activities of the Company, directly or indirectly. Key management personnel of
the Company include executive officers, other senior members of the management
team, and the Board of Directors. The compensation paid or payable to key
management personnel, or to companies in common with key management personnel,
for services provided as detailed above for the year ended June 30, 2015 was:
|
Compensation (fees)
|
$ |
98,165 |
|
|
|
|
|
|
|
Interest expense |
$ |
6,868 |
|
Year ended June 30, 2014
A corporation owned and operated by Mason Douglas, the
Companys President and Chief Executive Officer and also a member of the
Companys Board of Directors, received $23,250 for his services for the three
months ended June 30, 2014, and $95,500 for the year ended June 30, 2014.
A law firm, a partner of which is also a member of the
Companys Board of Directors, Brent Walter, received no payments for legal
services rendered and expenses incurred on behalf of the Company for the three
months ended June 30, 2014, and $12,971 for the year ended June 30, 2014.
The Companys Chief Financial Officer, Rakesh Malhotra,
received $1,033 for consulting services provided to the Company for the three
months ended June 30, 2014, and $5,808 for the year ended June 30, 2014.
Anne Macko served as the Companys Corporate Secretary
and received $18,667 for administrative services provided to the Company until
her resignation on November 5, 2013.
Jeanette Durbin served as the Companys interim Corporate
Secretary commencing November 5, 2013, and received $21,833 for administrative
services provided to the Company until her resignation on March 31, 2014. For
options granted to Ms. Durbin, the Company expensed stock based compensation
costs of $1,569 for the three months ended June 30, 2014, and $4,569 from
November 5, 2013 to March 31, 2014.
The Company recorded no interest expense for the three months
ended June 30, 2014, and $2,850 for the year ended June 30, 2014, pursuant to
promissory notes issued to a corporation that is owned and controlled by a
member of the Companys Board of Directors, Todd Montgomery.
Key management personnel are those persons that have the
authority and responsibility for planning, directing and controlling the
activities of the Company, directly or indirectly. Key management personnel of
the Company include executive officers, other senior members of the management
team, and the Board of Directors. The compensation paid or payable to key
management personnel, or to companies in common with key management personnel,
for services provided as detailed above for the year ended June 30, 2014 was:
|
Compensation (fees) |
$ |
154,779 |
|
|
|
|
|
|
|
Stock based compensation |
$ |
4,569 |
|
|
|
|
|
|
|
Interest expense |
$ |
2,850 |
|
F29
INFRASTRUCTURE MATERIALS CORP. |
Notes to the Consolidated Financial Statements
|
June 30, 2015 and 2014 |
(Amounts expressed in US Dollars)
|
The Company borrowed an additional $163,300 from Mont
Strategies Inc. pursuant to the terms of the Standby Support Agreement discussed
in Note 9, Notes Payable.
Following a review of the Companys mineral claims, the Company
determined it was not in its best interest to retain one precious metals mineral
claim held by SRC and, on August 28, 2015, elected to drop one of the 61 mineral
claims of the Clay Peters Claim Group.
The Company received 350,000 shares of IMMCs common stock on
September 9, 2015, pursuant to the option agreement between SRC and IMMI, IMMCs
wholly owned subsidiary, as further described in Note 16, Commitments and
Contingencies. IMMI has until October 17, 2015, to make the final payment of
$100,000 that was due on September 15, 2015.
F30
Exhibit 21.1
SUBSIDIARIES OF INFRASTRUCTURE MATERIALS CORP.
1. |
Infrastructure Materials Corp US, a Nevada corporation,
wholly owned by Infrastructure Materials Corp. |
|
|
2. |
Silver Reserve Corp., a Delaware corporation, wholly
owned by Infrastructure Materials Corp. |
|
|
3. |
Canadian Infrastructure Corp, an Alberta, Canada
corporation, wholly owned by Infrastructure Materials
Corp. |
Schwartz Levitsky Feldman llp
|
C H A R T E R E D A C C O U N T A N T S |
L I C E N S E D P U B L I C A C C O U N T A N T S |
T O R O N T O M O N T R E A L |
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The undersigned, Schwartz Levitsky Feldman llp, hereby consent
to the use of our name and the use of our opinion dated September 25, 2015 on
the consolidated financial statements of Infrastructure Materials Corp. (the
Company) included in its Annual Report on Form 10-K being filed by the
Company, for the fiscal year ended June 30, 2015.
|
SCHWARTZ LEVITSKY FELDMAN LLP |
|
|
Toronto, Ontario, Canada |
Chartered Accountants |
September 28, 2015 |
Licensed Public Accountants
|
|
|
2300 Yonge Street, Suite 1500 |
|
|
Toronto, Ontario M4P 1E4 |
|
|
Tel: 416 785 5353 |
|
|
Fax: 416 785 5663 |
|
|
|
Exhibit 31.1
CERTIFICATION
OF CHIEF EXECUTIVE OFFICER PURSUANT TO RULES
13a-14(a)/15d-14(a)
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, Mason Douglas, certify that:
1. I have reviewed this Annual Report on Form 10-K of
Infrastructure Materials Corp. (the registrant) for the year ended June 30,
2015;
2. Based on my knowledge, this 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
report;
3. Based on my knowledge, the financial statements, and other
financial information included in this 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 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-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;
(b) Designed such internal control over financial reporting, or
caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in the case
of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and
5. The registrant's other certifying officer and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves
management or other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: September 28, 2015
/s/Mason Douglas |
|
Mason Douglas |
|
President and Chief Executive Officer |
|
Infrastructure Materials Corp. |
|
Exhibit 31.2
CERTIFICATION
OF CHIEF FINANCIAL OFFICER PURSUANT TO RULES
13a-14(a)/15d-14(a)
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, Rakesh Malhotra, certify that:
1. I have reviewed this Annual Report on Form 10-K of
Infrastructure Materials Corp. (the registrant) for the year ended June 30,
2015;
2. Based on my knowledge, this 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
report;
3. Based on my knowledge, the financial statements, and other
financial information included in this 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 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-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;
(b) Designed such internal control over financial reporting, or
caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in the case
of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and
5. The registrant's other certifying officer and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves
management or other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: September 28, 2015
/s/ Rakesh Malhotra
Rakesh Malhotra
Chief
Financial Officer
Infrastructure Materials Corp.
Exhibit 32.1
CERTIFICATION
PURSUANT TO 18 U.S.C SECTION 1350 AS
ADOPTED PURSUANT TO
SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers
of Infrastructure Materials Corp. (the "Company"), does hereby certify, to such
officer's knowledge, that:
The Annual Report on Form 10-K for the year ended June 30, 2015
(the Form 10-K) of the Company fully complies with the requirement of section
13(a) or 15(d) of the Securities Exchange Act of 1934 and the information
contained in the Form 10-K fairly presents, in all material respects, the
financial condition and results of operations of the Company.
Dated: September 28, 2015
/s/
Mason Douglas |
|
Mason Douglas |
|
President and Chief Executive Officer |
|
Infrastructure Materials Corp. |
|
Dated: September 28, 2015
/s/
Rakesh Malhotra |
|
Rakesh Malhotra |
|
Chief Financial Officer |
|
Infrastructure Materials Corp. |
|
A signed original of this written statement required by Section
906 has been provided to Infrastructure Materials Corp. and will be retained by
Infrastructure Materials Corp. and furnished to the Securities and Exchange
Commission or its staff upon request.
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