INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION STAGE
COMPANY)
Interim Consolidated Statements of Operations and Comprehensive
Loss
For the six-months and three-months ended December 31, 2013 and December
31, 2012
and the period from Inception (June 3, 1999) to December 31,
2013
(Amounts expressed in US Dollars)
(Unaudited-Prepared by
Management)
|
|
|
|
|
For the
|
|
|
For the
|
|
|
For the
|
|
|
For the
|
|
|
|
|
|
|
six months
|
|
|
six months
|
|
|
three months
|
|
|
three months
|
|
|
|
Cumulative
|
|
|
ended
|
|
|
ended
|
|
|
ended
|
|
|
ended
|
|
|
|
since
|
|
|
December 31,
|
|
|
December
|
|
|
December
|
|
|
December 31,
|
|
|
|
inception
|
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
and administration
|
|
11,103,060
|
|
|
258,521
|
|
|
503,511
|
|
|
130,650
|
|
|
259,607
|
|
Project expenses
|
|
11,706,023
|
|
|
290,027
|
|
|
673,364
|
|
|
47,062
|
|
|
275,383
|
|
Impairment loss on mineral property interests (Note 8)
|
|
514,525
|
|
|
-
|
|
|
514,525
|
|
|
|
|
|
514,525
|
|
Depreciation
|
|
1,313,673
|
|
|
45,066
|
|
|
53,604
|
|
|
22,533
|
|
|
26,825
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Operating Expenses
|
|
24,637,281
|
|
|
593,614
|
|
|
1,745,004
|
|
|
200,245
|
|
|
1,076,340
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from Operations
|
|
(24,637,281
|
)
|
|
(593,614
|
)
|
|
(1,745,004
|
)
|
|
(200,245
|
)
|
|
(1,076,340
|
)
|
Other
income-interest
|
|
387,539
|
|
|
74
|
|
|
228
|
|
|
34
|
|
|
102
|
|
Other income-gain on
termination of option and
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
-
|
|
sale agreements (Note 10)
|
|
217,550
|
|
|
42,500
|
|
|
-
|
|
|
42,500
|
|
|
-
|
|
Other income-gain on
bargain purchase (Note 8)
|
|
238,645
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Interest
Expense
|
|
(95,758
|
)
|
|
(2,850
|
)
|
|
-
|
|
|
(222
|
)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before Income
Taxes
|
|
(23,889,305
|
)
|
|
(553,890
|
)
|
|
(1,744,776
|
)
|
|
(157,933
|
)
|
|
(1,076,238
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
(23,889,305
|
)
|
|
(553,890
|
)
|
|
(1,744,776
|
)
|
|
(157,933
|
)
|
|
(1,076,238
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per Weighted Average
Number
of Shares Outstanding
- Basic and Fully Diluted
|
|
|
|
|
(0.004
|
)
|
|
(0.018
|
)
|
|
(0.001
|
)
|
|
(0.011
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Number
of
Shares Outstanding During the Periods
- Basic and Fully
Diluted
|
|
|
|
|
124,549,850
|
|
|
98,935,486
|
|
|
137,845,373
|
|
|
98,935,486
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE LOSS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
|
|
|
(553,890
|
)
|
|
(1,744,776
|
)
|
|
(157,933
|
)
|
|
(1,076,238
|
)
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain (loss) on marketable securities (Note 10)
|
|
|
|
|
(15,723
|
)
|
|
(9,383
|
)
|
|
4,456
|
|
|
(5,132
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive Loss
|
|
|
|
|
(569,613
|
)
|
|
(1,754,159
|
)
|
|
(153,477
|
)
|
|
(1,081,370
|
)
|
See Condensed Notes to the Interim Consolidated Financial
Statements
-5-
INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION STAGE
COMPANY)
Interim Consolidated Financial Statements of Changes in
Stockholders Equity
For the six-months ended December 31, 2013
and for
the period from Inception (June 3, 1999) to December 31, 2013
(Amounts
expressed in US Dollars)
(Unaudited-Prepared by Management)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
Accumulated
|
|
|
|
|
|
|
Common Stock
|
|
|
Additional
|
|
|
Deferred
|
|
|
during the
|
|
|
Other
|
|
|
Total
|
|
|
|
Number
|
|
|
|
|
|
Paid-in
|
|
|
Stock
|
|
|
Exploration
|
|
|
Comprehensive
|
|
|
Stockholders'
|
|
|
|
of Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Compensation
|
|
|
Stage
|
|
|
Loss
|
|
|
Equity
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
For the period from inception
(June 3, 1999)
through July 1, 2004
|
|
1
|
|
|
-
|
|
|
5,895
|
|
|
|
|
|
(5,895
|
)
|
|
|
|
|
-
|
|
Net (loss)
|
|
-
|
|
|
-
|
|
|
910
|
|
|
|
|
|
(910
|
)
|
|
|
|
|
-
|
|
Balance June 30, 2005
(audited)
|
|
1
|
|
|
-
|
|
|
6,805
|
|
|
-
|
|
|
(6,805
|
)
|
|
|
|
|
-
|
|
Contribution to additional paid-in
capital
|
|
-
|
|
|
-
|
|
|
3,024
|
|
|
|
|
|
|
|
|
|
|
|
3,024
|
|
Cancelled shares
|
|
(1
|
)
|
|
-
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
Common shares issued for nil
consideration
|
|
14,360,000
|
|
|
1,436
|
|
|
(1,436
|
)
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
Common shares issued
for cash
|
|
2,050,000
|
|
|
205
|
|
|
414,795
|
|
|
|
|
|
-
|
|
|
|
|
|
415,000
|
|
Subscription for stock
|
|
|
|
|
|
|
|
300,000
|
|
|
|
|
|
-
|
|
|
|
|
|
300,000
|
|
Stock issuance cost
|
|
-
|
|
|
-
|
|
|
(24,500
|
)
|
|
|
|
|
-
|
|
|
|
|
|
(24,500
|
)
|
Net loss for the year
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
(87,574
|
)
|
|
|
|
|
(87,574
|
)
|
Balance June 30, 2006
(audited)
|
|
16,410,000
|
|
|
1,641
|
|
|
698,687
|
|
|
-
|
|
|
(94,379
|
)
|
|
|
|
|
605,949
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued
for cash
|
|
3,395,739
|
|
|
340
|
|
|
548,595
|
|
|
|
|
|
-
|
|
|
|
|
|
548,935
|
|
Common shares issued to agents in lieu
of commission for placement of common
shares and convertible debentures
|
|
1,064,000
|
|
|
106
|
|
|
265,894
|
|
|
|
|
|
-
|
|
|
|
|
|
266,000
|
|
Common shares issued
for acquisition
of interests in mineral claims
|
|
3,540,600
|
|
|
354
|
|
|
884,796
|
|
|
|
|
|
-
|
|
|
|
|
|
885,150
|
|
Common shares issued for acquisition
of
interests in mineral claims
|
|
1,850,000
|
|
|
185
|
|
|
462,315
|
|
|
|
|
|
-
|
|
|
|
|
|
462,500
|
|
Common shares issued
for acquisition
interests in a refinery
|
|
88,500
|
|
|
9
|
|
|
22,116
|
|
|
|
|
|
-
|
|
|
|
|
|
22,125
|
|
Common shares issued for purchase of
a
mill with capital equipment
|
|
6,975,000
|
|
|
697
|
|
|
1,743,053
|
|
|
|
|
|
-
|
|
|
|
|
|
1,743,750
|
|
Stock issuance cost
|
|
|
|
|
|
|
|
(59,426
|
)
|
|
|
|
|
|
|
|
|
|
|
(59,426
|
)
|
Stock based compensation
|
|
|
|
|
|
|
|
30,026
|
|
|
|
|
|
|
|
|
|
|
|
30,026
|
|
Net loss for the year
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(2,845,424
|
)
|
|
|
|
|
(2,845,424
|
)
|
Balance June 30, 2007 (audited)
|
|
33,323,839
|
|
|
3,332
|
|
|
4,596,056
|
|
|
-
|
|
|
(2,939,803
|
)
|
|
|
|
|
1,659,585
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued to consultants
|
|
3,000,000
|
|
|
300
|
|
|
2,249,700
|
|
|
(1,875,000
|
)
|
|
-
|
|
|
|
|
|
375,000
|
|
Stock based
compensation
|
|
|
|
|
-
|
|
|
139,272
|
|
|
|
|
|
-
|
|
|
|
|
|
139,272
|
|
Warrant modification expense
|
|
|
|
|
|
|
|
844,423
|
|
|
|
|
|
|
|
|
|
|
|
844,423
|
|
Conversion of
convertible debentures with accrued interest
|
|
7,186,730
|
|
|
719
|
|
|
3,590,801
|
|
|
-
|
|
|
-
|
|
|
|
|
|
3,591,520
|
|
Common shares issued for acquisition of
interests in mineral claims
|
|
175,000
|
|
|
18
|
|
|
104,982
|
|
|
|
|
|
|
|
|
|
|
|
105,000
|
|
Common stock issued to
a consultant
|
|
100,000
|
|
|
10
|
|
|
57,990
|
|
|
|
|
|
|
|
|
|
|
|
58,000
|
|
Amortization of deferred stock
compensation
|
|
|
|
|
|
|
|
|
|
|
562,500
|
|
|
|
|
|
|
|
|
562,500
|
|
Net loss for the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,635,465
|
)
|
|
|
|
|
(4,635,465
|
)
|
Balance June 30, 2008 (audited)
|
|
43,785,569
|
|
|
4,379
|
|
|
11,583,224
|
|
|
(1,312,500
|
)
|
|
(7,575,268
|
)
|
|
|
|
|
2,699,835
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for cash (net)
|
|
7,040,000
|
|
|
704
|
|
|
3,372,296
|
|
|
-
|
|
|
-
|
|
|
|
|
|
3,373,000
|
|
Common stock issued to
a consultant
|
|
75,000
|
|
|
7
|
|
|
43,493
|
|
|
-
|
|
|
-
|
|
|
|
|
|
43,500
|
|
Common stock issued on acquisition of a
subsidiary
|
|
397,024
|
|
|
40
|
|
|
31,722
|
|
|
-
|
|
|
-
|
|
|
|
|
|
31,762
|
|
Common shares issued on
warrant exercises
|
|
8,900,907
|
|
|
890
|
|
|
2,224,337
|
|
|
-
|
|
|
-
|
|
|
|
|
|
2,225,227
|
|
Stock based compensation
|
|
|
|
|
|
|
|
814,050
|
|
|
|
|
|
|
|
|
|
|
|
814,050
|
|
Warrant modification
expense
|
|
|
|
|
|
|
|
346,673
|
|
|
|
|
|
|
|
|
|
|
|
346,673
|
|
Amortization of deferred stock
compensation
|
|
|
|
|
|
|
|
|
|
|
1,125,000
|
|
|
|
|
|
|
|
|
1,125,000
|
|
Net loss for the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,045,477
|
)
|
|
|
|
|
(6,045,477
|
)
|
Balance June 30, 2009 (audited)
|
|
60,198,500
|
|
|
6,020
|
|
|
18,415,795
|
|
|
(187,500
|
)
|
|
(13,620,745
|
)
|
|
|
|
|
4,613,570
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for cash
|
|
6,973,180
|
|
|
697
|
|
|
1,603,134
|
|
|
|
|
|
|
|
|
|
|
|
1,603,831
|
|
Common stock issued on
acquisition of a
subsidiary
|
|
1,021,777
|
|
|
102
|
|
|
275,778
|
|
|
|
|
|
|
|
|
|
|
|
275,880
|
|
Stock based compensation
|
|
|
|
|
|
|
|
216,751
|
|
|
|
|
|
|
|
|
|
|
|
216,751
|
|
Amortization of
deferred stock
compensation
|
|
|
|
|
|
|
|
|
|
|
187,500
|
|
|
|
|
|
|
|
|
187,500
|
|
Net loss for the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,314,953
|
)
|
|
|
|
|
(3,314,953
|
)
|
Balance June 30, 2010
(audited)
|
|
68,193,457
|
|
|
6,819
|
|
|
20,511,458
|
|
|
-
|
|
|
(16,935,698
|
)
|
|
|
|
|
3,582,579
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued
for cash
|
|
2,083,333
|
|
|
209
|
|
|
499,791
|
|
|
|
|
|
|
|
|
|
|
|
500,000
|
|
Stock based compensation
|
|
|
|
|
|
|
|
101,503
|
|
|
|
|
|
|
|
|
|
|
|
101,503
|
|
Common stock options
exercised
|
|
50,000
|
|
|
5
|
|
|
7,495
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
|
Net loss for the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,523,079
|
)
|
|
|
|
|
(2,523,079
|
)
|
Balance June 30, 2011
(audited)
|
|
70,326,790
|
|
|
7,033
|
|
|
21,120,247
|
|
|
-
|
|
|
(19,458,777
|
)
|
|
|
|
|
1,668,503
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued
for cash (net)
|
|
26,000,000
|
|
|
2,600
|
|
|
2,212,799
|
|
|
-
|
|
|
-
|
|
|
|
|
|
2,215,399
|
|
Preferred shares converted to common
shares
|
|
2,608,696
|
|
|
261
|
|
|
299,739
|
|
|
|
|
|
|
|
|
|
|
|
300,000
|
|
Stock based
compensation
|
|
|
|
|
|
|
|
61,990
|
|
|
|
|
|
|
|
|
|
|
|
61,990
|
|
Unrealized loss on marketable
securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(88,412
|
)
|
|
(88,412
|
)
|
Net loss for the period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,362,040
|
)
|
|
|
|
|
(1,362,040
|
)
|
Balance June 30, 2012 (audited)
|
|
98,935,486
|
|
|
9,894
|
|
|
23,694,775
|
|
|
-
|
|
|
(20,820,817
|
)
|
|
(88,412
|
)
|
|
2,795,440
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock based compensation
|
|
|
|
|
|
|
|
282,992
|
|
|
|
|
|
|
|
|
|
|
|
282,992
|
|
Unrealized loss on
marketable securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(16,631
|
)
|
|
(16,631
|
)
|
Net loss for the period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,514,598
|
)
|
|
|
|
|
(2,514,598
|
)
|
Balance June 30, 2013
(audited)
|
|
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
|
|
|
|
|
|
|
|
7,746
|
|
|
|
|
|
|
|
|
|
|
|
7,746
|
|
Unrealized loss on
marketable securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(15,723
|
)
|
|
(15,723
|
)
|
Net loss for the period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(553,890
|
)
|
|
|
|
|
(553,890
|
)
|
Balance December 31, 2013
(unaudited)
|
|
138,304,619
|
|
|
13,830
|
|
|
24,739,920
|
|
|
-
|
|
|
(23,889,305
|
)
|
|
(120,766
|
)
|
|
743,679
|
|
See Condensed Notes to the Interim Consolidated Financial
Statements
- 6 -
INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION STAGE
COMPANY)
Interim Consolidated Statements of Cash Flows
For the
six-months ended December 31, 2013 and December 31, 2012
and for the period
from Inception (June 3, 1999) to December 31, 2013
(Amounts expressed in US
Dollars)
(Unaudited-Prepared by Management)
|
|
Cumulative
|
|
|
For the six
|
|
|
For the six
|
|
|
|
Since
|
|
|
months ended
|
|
|
months ended
|
|
|
|
Inception
|
|
|
December 31, 2013
|
|
|
December 31, 2012
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Cash Flows from Operating
Activities
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
(23,889,305
|
)
|
|
(553,890
|
)
|
|
(1,744,776
|
)
|
Adjustment for:
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
1,313,673
|
|
|
45,066
|
|
|
53,604
|
|
Amortization of debt issuance cost
|
|
247,490
|
|
|
-
|
|
|
-
|
|
Loss on disposal
of plant and equipment
|
|
10,524
|
|
|
-
|
|
|
-
|
|
Gain on Bargain Purchase (Note 8)
|
|
(238,645
|
)
|
|
-
|
|
|
-
|
|
Gain on
termination of option and sale agreements (Note 10)
|
|
(217,550
|
)
|
|
(42,500
|
)
|
|
-
|
|
Stock based compensation
|
|
1,654,330
|
|
|
7,746
|
|
|
171,912
|
|
Impairment loss on
mineral property interests (Note 8)
|
|
514,525
|
|
|
-
|
|
|
514,525
|
|
Warrant modification expense
|
|
1,191,096
|
|
|
-
|
|
|
-
|
|
Shares issued for
mineral claims, as part of project expenses
|
|
1,452,650
|
|
|
-
|
|
|
-
|
|
Shares issued for consultant services expensed
|
|
2,351,500
|
|
|
-
|
|
|
-
|
|
Shares issued on
acquisition of subsidiary
|
|
31,762
|
|
|
-
|
|
|
-
|
|
Shares issued in lieu of interest payment (Note 9)
|
|
3,000
|
|
|
1,926
|
|
|
|
|
Accretion of Asset
Retirement Obligation (Note 11)
|
|
28,529
|
|
|
1,358
|
|
|
1,236
|
|
Interest on convertible debentures
|
|
90,453
|
|
|
-
|
|
|
-
|
|
Changes in non-cash working
capital
|
|
|
|
|
|
|
|
|
|
Prepaid expenses and other receivables
|
|
(49,237
|
)
|
|
(33,249
|
)
|
|
(70,392
|
)
|
Accounts payable
|
|
2,723
|
|
|
(26,528
|
)
|
|
(88,438
|
)
|
Accrued liabilities
|
|
37,404
|
|
|
(31,876
|
)
|
|
(18,500
|
)
|
|
|
|
|
|
|
|
|
|
|
Net cash used in
operating activities
|
|
(15,465,078
|
)
|
|
(631,947
|
)
|
|
(1,180,829
|
)
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing
Activities
|
|
|
|
|
|
|
|
|
|
Decrease
(Increase) in Short-term investments
|
|
-
|
|
|
-
|
|
|
(46
|
)
|
Increase in Reclamation Deposit
|
|
(240,805
|
)
|
|
-
|
|
|
-
|
|
Increase in
Restricted Cash
|
|
(100,000
|
)
|
|
-
|
|
|
-
|
|
Cash received for option on claims and included in Deferred revenue
net (Note 10)*
|
|
180,000
|
|
|
27,500
|
|
|
50,000
|
|
Cash received for
termination of option and sales agreements (Note 10)
|
|
217,550
|
|
|
42,500
|
|
|
-
|
|
Acquisition of plant and equipment for cash
|
|
(123,031
|
)
|
|
-
|
|
|
(1,216
|
)
|
Proceeds from sale
of plant and equipment
|
|
2,500
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided (used) in
investing activities
|
|
(63,786
|
)
|
|
70,000
|
|
|
48,738
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities
|
|
|
|
|
|
|
|
|
|
Issuance of common shares for cash (net)
|
|
9,575,313
|
|
|
465,343
|
|
|
-
|
|
Issuance of
preferred shares later converted to common shares
|
|
300,000
|
|
|
-
|
|
|
-
|
|
Issuance of common shares for warrant exercises
|
|
2,225,227
|
|
|
-
|
|
|
-
|
|
Issuance of common
shares for option exercise
|
|
7,500
|
|
|
-
|
|
|
-
|
|
Issuance of promissory note
|
|
100,000
|
|
|
-
|
|
|
-
|
|
Repayment of
promissory note
|
|
(100,000
|
)
|
|
-
|
|
|
-
|
|
Issuance of promissory notes later converted to common shares (Note
9)
|
|
290,000
|
|
|
150,000
|
|
|
-
|
|
Issuance of
convertible debentures subsequently converted to cash
|
|
3,501,067
|
|
|
-
|
|
|
-
|
|
Stock and debenture placement commissions paid in cash
|
|
(210,000
|
)
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Net cash
provided by financing activities
|
|
15,689,107
|
|
|
615,343
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Net Change in Cash
|
|
160,243
|
|
|
53,396
|
|
|
(1,132,091
|
)
|
|
|
|
|
|
|
|
|
|
|
Cash - beginning of period
|
|
-
|
|
|
106,847
|
|
|
1,533,139
|
|
|
|
|
|
|
|
|
|
|
|
Cash - end of period
|
|
160,243
|
|
|
160,243
|
|
|
401,048
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Cash Flow
Information
|
|
|
|
|
|
|
|
|
|
Interest Paid
|
|
2,305
|
|
|
924
|
|
|
-
|
|
Income taxes
paid
|
|
-
|
|
|
-
|
|
|
-
|
|
* Excludes receipt of marketable securities for $166,836, being
a non-cash item included in Deferred Revenue
See Condensed Notes to the Interim Consolidated Financial
Statements
-7-
INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION STAGE
COMPANY)
Condensed Notes to Interim Consolidated Financial Statements
December 31, 2013
(Amounts expressed in US Dollars)
(Unaudited-Prepared
by Management)
The accompanying unaudited condensed
consolidated financial statements of Infrastructure Materials Corp. (the
Company), have been prepared in accordance with the instructions to Form 10-Q
and therefore do not include all information and footnotes necessary for a fair
presentation of financial position, results of operations and cash flows in
conformity with U.S. generally accepted accounting principles (GAAP); however,
such information reflects all adjustments that are, in the opinion of
management, necessary for a fair statement of the results for the interim
periods. The condensed consolidated financial statements should be read in
conjunction with the Consolidated Financial Statements and Notes thereto
together with Managements Discussion and Analysis of Financial Condition and
Results of Operations contained in the Companys Annual Report on Form 10-K for
the year ended June 30, 2013. In the opinion of management, the accompanying
condensed consolidated financial statements reflect all adjustments of a normal
recurring nature considered necessary to fairly state the financial position of
the Company at December 31, 2013 and June 30, 2013, the results of its
operations for the three and six-month periods ended December 31, 2013 and
December 31, 2012, and its cash flows for the six-month periods ended December
31, 2013 and December 31, 2012. In addition, some of the Companys statements in
this Quarterly Report on Form 10-Q may be considered forward-looking and involve
risks and uncertainties that could significantly impact expected results. The
results of operations for the six-month period ended December 31, 2013 are not
necessarily indicative of results to be expected for the full year.
The condensed consolidated financial
statements include the accounts of the Company and its wholly owned
subsidiaries, Infrastructure Materials Corp US (IMC US), Silver Reserve Corp.
(SRC) and Canadian Infrastructure Corp. (CIC). All material inter-company
accounts and transactions have been eliminated.
Recently Adopted Accounting
Standards
In October 2012, the Financial
Accounting Standards Board (the FASB) issued Accounting Standards Update,
Technical Corrections and Improvements
(ASU 2012-04). The amendments in
this update covered a wide range of topics in the Accounting Standards
Codification. These amendments include technical corrections and improvements to
the Accounting Standards Codification and conforming amendments related to fair
value measurements. The amendments in this update are effective for fiscal
periods beginning after December 15, 2012. The adoption of ASU 2012-04 did not
have a material impact on the financial statements of the Company.
In January 2013, the FASB issued ASU
No. 2013-01, "
Balance Sheet (Topic 210): Clarifying the Scope of Disclosures
about Offsetting Assets and Liabilities
". This ASU clarifies that the scope
of ASU No. 2011-11, "
Balance Sheet (Topic 210): Disclosures about Offsetting
Assets and Liabilities.
" applies only to derivatives, repurchase agreements
and reverse purchase agreements, and securities borrowing and securities lending
transactions that are either offset in accordance with specific criteria
contained in FASB Accounting Standards Codification or subject to a master
netting arrangement or similar agreement. The amendments in this ASU are
effective for fiscal years, and interim periods within those years, beginning on
or after January 1, 2013. The adoption of this guidance did not have a material
impact on the financial statements of the Company.
-8-
INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION
STAGE COMPANY)
Condensed Notes to Interim Consolidated Financial
Statements
December 31, 2013
(Amounts expressed in US
Dollars)
(Unaudited-Prepared by Management)
1.
|
Basis of Presentation
Contd
|
Recently Issued Accounting
Standards
In August 2012, the FASB issued ASU
2012-03,
Technical Amendments and Corrections to SEC Sections: Amendments to
SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin (SAB) No. 114,
Technical Amendments Pursuant to SEC Release No. 33-9250, and Corrections
Related to FASB Accounting Standards Update 2010-22 (SEC Update)
in (ASU
2012-03). This update amends various SEC paragraphs pursuant to the issuance of
SAB No. 114. The adoption of ASU 2012-03 is not expected to have a significant
impact on our financial position or results of operations.
In July 2013, the FASB 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. Retrospective application is permitted. The Company is
currently assessing the impacts of this guidance.
In February 2013, the FASB issued ASU
No. 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
." This ASU 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 Company is currently assessing the impact of this
guidance.
In March 2013, the FASB issued ASU No.
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
." This ASU 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 Company is currently assessing the impact
of this guidance.
-9-
INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION
STAGE COMPANY)
Condensed Notes to Interim Consolidated Financial
Statements
December 31, 2013
(Amounts expressed in US
Dollars)
(Unaudited-Prepared by Management)
2.
|
Nature of Business and
Operations
|
The Companys focus is on the
exploration and development, if feasible, of limestone and precious metals from
its claims in the State of Nevada.
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 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. In February
2010, the Company capitalized $514,525 as Mineral Property Interests, and has
written off all other property payments to project expenses as impaired costs.
The previously capitalized Mineral Property Interests were written off as
impaired costs in December 2012 as discussed in Note 8, Mineral Property
Interests.
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.
The Companys limestone assets are held
by its wholly owned subsidiary, IMC US, a Nevada corporation that was acquired
as of November 2008. As of the date of the financial statements, IMC US controls
2 limestone projects in Nevada, made up of 115 mineral claims covering
approximately 840 acres on land owned or controlled by the United States
Department of Interior Bureau of Land Management (the BLM). IMC US has also
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. (SRC). The Company assigned all fourteen
of its silver/base 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 600 mineral claims covering approximately
12,385 acres on BLM land and 14 patented claims and 6 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, mineral rights, mineral exploration permits or quarry leases
can be economically developed and has expensed related costs to project expense.
The Companys assessment of the claims, mineral exploration permits, mineral
rights and quarry leases may change after further exploration.
-
10
-
INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION
STAGE COMPANY)
Condensed Notes to Interim Consolidated Financial
Statements
December 31, 2013
(Amounts expressed in US
Dollars)
(Unaudited-Prepared by Management)
The Company's financial statements have
been prepared in accordance with 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 $23,889,305 from inception to December 31, 2013.
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 shares of its common stock (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 approximately $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.
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.
-
11
-
INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION
STAGE COMPANY)
Condensed Notes to Interim Consolidated Financial
Statements
December 31, 2013
(Amounts expressed in US
Dollars)
(Unaudited-Prepared by Management)
4.
|
Fair Value of Financial
Instruments
|
The fair values of financial assets
measured at the balance sheet date of December 31, 2013 were as follows:
|
|
|
|
|
|
Quoted prices
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in active
|
|
|
Significant
|
|
|
|
|
|
|
|
|
|
|
markets for
|
|
|
observable
|
|
|
Unobservable
|
|
|
|
|
Carrying
|
|
|
identical assets
|
|
|
inputs
|
|
|
inputs
|
|
|
|
|
Amount
|
|
|
(Level
1)
|
|
|
(Level
2)
|
|
|
(Level
3)
|
|
|
Balance
sheet
classification and nature
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
160,243
|
|
|
160,243
|
|
|
|
|
|
|
|
|
Marketable
securities
|
|
46,070
|
|
|
46,070
|
|
|
|
|
|
|
|
|
Restricted Cash
|
|
100,000
|
|
|
100,000
|
|
|
|
|
|
|
|
The fair values of financial assets
measured at the balance sheet date of June 30, 2013 were as follows:
|
|
|
|
|
|
Quoted prices
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in active
|
|
|
Significant
|
|
|
|
|
|
|
|
|
|
|
markets for
|
|
|
observable
|
|
|
Unobservable
|
|
|
|
|
Carrying
|
|
|
identical assets
|
|
|
inputs
|
|
|
inputs
|
|
|
|
|
Amount
|
|
|
(Level
1)
|
|
|
(Level
2)
|
|
|
(Level
3)
|
|
|
Balance
sheet
classification and nature
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
106,847
|
|
|
106,847
|
|
|
|
|
|
|
|
|
Marketable
securities
|
|
49,917
|
|
|
49,917
|
|
|
|
|
|
|
|
|
Restricted Cash
|
|
100,000
|
|
|
100,000
|
|
|
|
|
|
|
|
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 this cash by completing its reclamation
obligations, as the case may be.
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. Also see Note 16, Subsequent Events.
-
12
-
INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION
STAGE COMPANY)
Condensed Notes to Interim Consolidated Financial
Statements
December 31, 2013
(Amounts expressed in US
Dollars)
(Unaudited-Prepared by Management)
7.
|
Plant and Equipment, Net
|
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
|
Molds
|
30%
|
declining balance method
|
Mobile Equipment
|
20%
|
declining balance method
|
Factory Buildings
|
5%
|
declining balance method
|
|
|
|
December 31, 2013
|
|
|
June 30, 2013
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
Accumulated
|
|
|
|
|
Cost
|
|
|
Depreciation
|
|
|
Cost
|
|
|
Depreciation
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Computer
equipment
|
|
25,729
|
|
|
15,843
|
|
|
25,729
|
|
|
14,097
|
|
|
Office, furniture and fixtures
|
|
3,623
|
|
|
2,714
|
|
|
3,623
|
|
|
2,612
|
|
|
Plant and
Machinery
|
|
1,514,511
|
|
|
1,052,100
|
|
|
1,514,511
|
|
|
1,014,606
|
|
|
Tools
|
|
11,498
|
|
|
8,203
|
|
|
11,498
|
|
|
7,729
|
|
|
Vehicles
|
|
76,928
|
|
|
57,599
|
|
|
76,928
|
|
|
55,451
|
|
|
Consumables
|
|
64,197
|
|
|
63,756
|
|
|
64,197
|
|
|
63,612
|
|
|
Molds
|
|
900
|
|
|
832
|
|
|
900
|
|
|
820
|
|
|
Mobile Equipment
|
|
73,927
|
|
|
59,299
|
|
|
73,927
|
|
|
57,673
|
|
|
Factory Buildings
|
|
74,849
|
|
|
23,441
|
|
|
74,849
|
|
|
22,121
|
|
|
|
|
1,846,162
|
|
|
1,283,787
|
|
|
1,846,162
|
|
|
1,238,721
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net carrying amount
|
|
|
|
|
562,375
|
|
|
|
|
|
607,441
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation Charges
|
|
|
|
|
45,006
|
|
|
|
|
|
107,344
|
|
During the six-months ended December
31, 2013, the Company recorded depreciation expense of $45,066. During the
twelve months ended June 30, 2013, the Company recorded depreciation expense of
$107,344.
8.
|
Mineral Property Interests
|
The Company entered into an agreement
to acquire, as a wholly owned subsidiary, Canadian Infrastructure Corp. (CIC),
a Canadian corporation, pursuant to a share exchange agreement (the CIC
Agreement) dated as of December 15, 2009, between the Company, CIC and Todd D.
Montgomery. Under the terms of the CIC Agreement, the Company acquired all of
the issued and outstanding stock of CIC in exchange for 1,021,777 Common Shares
of the Company. The CIC Agreement closed on February 9, 2010.
-
13
-
INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION
STAGE COMPANY)
Condensed Notes to Interim Consolidated Financial
Statements
December 31, 2013
(Amounts expressed in US
Dollars)
(Unaudited-Prepared by Management)
8.
|
Mineral Property Interests
Contd
|
The Company accounted for the
acquisition of CIC as a business combination under the acquisition method as
discussed in FASB ASC Topic 805. ASC 805 requires acquisition-date fair value
measurement of identifiable assets, liabilities assumed and non-controlling
interests in the acquiree. The only assets acquired were CICS quarry leases
having a fair value of $514,525 (CDN$550,000) that were recorded as an asset,
Mineral Property Interests, on the date of acquisition. The Company obtained
an independent appraisal and market study to determine the fair value of the
quarry leases acquired. The stock of the Company traded at $0.27 per share on
February 9, 2010, and the Company recorded a $275,880 increase in shareholders
equity reflecting the issuance of 1,021,777 Common Shares of the Company in
exchange for all issued and outstanding shares of CIC. There were no liabilities
recorded in the financial records of CIC as of the date of acquisition. Further,
the Company acquired all the issued and outstanding shares of CIC, resulting in
the absence of non-controlling interests in the acquiree yielding a bargain
purchase price of $238,645 that was recorded as Other Income in the Companys
Consolidated Statements of Operations and Comprehensive Loss. Costs incurred in
connection with the acquisition were expensed.
Amounts recognized as assets as of the
acquisition date:
|
Mineral Property
Interests, being quarry leases in the province of Manitoba, Canada at fair
value (CDN$550,000)
|
|
$514,525
|
|
|
|
|
|
|
|
Total
consideration transferred included the following:
|
|
|
|
|
|
|
|
|
|
Fair value as of
the acquisition date of 1,021,777 common shares of the Company issued in
exchange for all issued and outstanding shares of CIC
|
|
$275,880
|
|
|
|
|
|
|
|
Gain on bargain
purchase, being the excess of the fair value of net assets acquired over
the purchase price, and recognized as Other Income in the Statements of
Operations and Comprehensive Loss
|
|
$238,645
|
|
During the quarter ended December 31,
2012, the Company performed a full review of CICs quarry leases. This review
considered the exploration potential of the area, the current probable mineral
reserves and resources, if any, regional competition, the cost to maintain
control of the quarry leases, the projected operating costs to undertake
exploration activities in light of the Companys available cash and the
condition of capital markets to fund those operating costs, and the effect of
the regional and national economies on limestone prices. These served as inputs
to determine which properties the Company considers economical to continue its
exploration activities. As a result of these factors, the Company updated its
mineral exploration plan and decided not to renew CICs quarry leases, which
resulted in an impairment charge of $514,525.
-
14
-
INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION
STAGE COMPANY)
Condensed Notes to Interim Consolidated Financial
Statements
December 31, 2013
(Amounts expressed in US
Dollars)
(Unaudited-Prepared by Management)
On April 22, 2013, the Company borrowed
$140,000 from Mont Strategies Inc., a corporation that is owned and controlled
by a member of the Companys Board of Directors. This demand loan was made
pursuant to a promissory note that called for all principal and interest to be
paid upon demand. The principal amount of the promissory note bore interest at
four percent (4%) per annum and could be prepaid by the Company at any time
without penalty. For the six-month period ended December 31, 2013, the Company
recorded interest expense of $1,519 for the promissory note.
On July 19, 2013, the Company borrowed
an additional $150,000 from Mont Strategies Inc., a corporation that is owned
and controlled by a member of the Companys Board of Directors. This demand loan
was made pursuant to a promissory note that called for all principal and
interest to be paid upon demand. The principal amount of the promissory note
bore interest at 4 percent (4%) per annum and could be prepaid by the Company at
any time without penalty. For the six-month period ended December 31, 2013, the
Company recorded interest expense of $1,331 for the promissory note.
On October 8, 2013 the Company
completed a debt conversion transaction (the Conversion) with Mont Strategies
Inc. Under the terms of the Conversion, the Company converted $293,000,
representing the combined principal amount of the two promissory notes discussed
above and $3,000 of accrued interest thereon, into 6,035,800 Common Shares at a
conversion price of CDN$0.05 per share. The remaining $924 of interest accrued
on the promissory notes was paid in cash to Mont Strategies Inc. Also see Note
12, Issuance of Common Shares and Warrants.
10.
|
Deferred Revenue, Marketable Securities, 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 14, Commitments and
Contingencies.
As of June 30, 2013, the Company had
received Consideration of $264,960, consisting of 875,000 shares of IMMC with a
fair market value of $154,960 that is recorded as Marketable Securities in the
Companys Consolidated Balance Sheets and $110,000 in cash. In September 2013,
the Company received additional Consideration of $81,876 consisting of 350,000
shares of IMMCs common stock with a fair market value of $11,876 and $70,000 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, a non-current liability. The unrealized loss
of $120,766 arising from the reduction in the market value of the Companys
shares of IMMCs common stock as of December 31, 2013, is accounted for in the
Stockholders Equity section of the Consolidated Balance Sheets as Accumulated
Other Comprehensive Loss.
-
15
-
INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION
STAGE COMPANY)
Condensed Notes to Interim Consolidated Financial
Statements
December 31, 2013
(Amounts expressed in US
Dollars)
(Unaudited-Prepared by Management)
10.
|
Deferred Revenue, Marketable Securities, Other Income
and Accumulated Other Comprehensive Loss
Contd
|
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 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 ten percent (10%) 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. 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.
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 and recognized as Other Income in the Companys Consolidated Statement
of Operations. The Option Agreement governing the NL Project, between SRC and
IMMI remains in effect.
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
Deferred
|
|
|
Marketable
|
|
|
Comprehensive
|
|
|
|
|
Revenue
|
|
|
Securities
|
|
|
Loss
|
|
|
Balance as of
June 30, 2013
|
$
|
307,460
|
|
$
|
49,917
|
|
$
|
(105,043
|
)
|
|
Consideration received during the
period ending December 31, 2013
|
|
81,876
|
|
|
11,876
|
|
|
|
|
|
Other income
recognized on termination of Sale Agreement
|
|
(42,500
|
)
|
|
|
|
|
|
|
|
Change in market value of
securities for the period ending December 31, 2013
|
|
|
|
|
(15,723
|
)
|
|
(15,723
|
)
|
|
Balance as of
December 31, 2013
|
$
|
346,836
|
|
$
|
46,070
|
|
$
|
(120,766
|
)
|
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. Based on the
existing level of ground disturbance and monitoring requirements, the discounted
asset retirement obligations ("ARO's") were estimated to be $22,455 as of June
30, 2011, assuming payments made over a three-year period. Determination of the
undiscounted ARO and the timing of these obligations were based on internal
estimates using information currently available and existing regulations.
-
16
-
INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION
STAGE COMPANY)
Condensed Notes to Interim Consolidated Financial
Statements
December 31, 2013
(Amounts expressed in US
Dollars)
(Unaudited-Prepared by Management)
11.
|
Asset Retirement Obligation
Contd
|
At the end of each reporting period,
AROs 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 asset retirement obligation 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. The
Company recorded accretion expense of $2,244 for the year ended June 30, 2012,
$2,472 for the year ended June 30, 2013, and $1,358 for the six-month period
ended December 31, 2013. The Companys entire ARO relates to the Companys Blue
Nose project.
Balance as of June 30, 2013
|
$
|
27,171
|
|
Increase in Asset Retirement Obligation
|
|
-
|
|
Accretion for the period ending December
31, 2013
|
|
1,358
|
|
|
|
|
|
Balance as of December 31, 2013
|
$
|
28,529
|
|
12.
|
Issuance of Common Shares and
Warrants
|
Common Shares:
Six-month period ended December 31,
2013
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 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 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 represents 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.
-
17
-
INFRASTRUCTURE MATERIALS CORP.
(AN
EXPLORATION STAGE COMPANY)
Condensed Notes to Interim
Consolidated Financial Statements
December 31, 2013
(Amounts expressed in
US Dollars)
(Unaudited-Prepared by Management)
12.
|
Issuance of Common Shares and Warrants
Contd
|
Year ended June 30, 2013
There were no securities issued during
this period.
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
being exercised.
13.
|
Stock Based Compensation
|
In July of 2011, the shareholders of
the Company approved an amendment and restatement of the Companys 2006 Stock
Option Plan. This amended and restated stock option plan is referred to herein
as the 2011 Amended Plan. The purpose of the 2011 Amended Plan 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.
The material terms of the 2011 Amended
Plan include (a) officers, directors, employees and consultants who provide
services to the Company may be granted options to acquire Common Shares of the
Company 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 2011 Amended Plan. It was expected that options
issued pursuant to the 2011 Amended Plan would not be qualified options under
the provisions of section 422 of the Internal Revenue Code of 1986, as amended
from time to time.
In July of 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.
-
18
-
INFRASTRUCTURE MATERIALS CORP.
(AN
EXPLORATION STAGE COMPANY)
Condensed Notes to Interim
Consolidated Financial Statements
December 31, 2013
(Amounts expressed in
US Dollars)
(Unaudited-Prepared by Management)
13.
|
Stock Based Compensation
Contd
|
Six-month period ended December 31,
2013
No options were granted pursuant to the
Current Stock Option Plan during the six-month period ended December 31, 2013.
On December 10, 2013, 25,000 options issued in accordance with the Companys
2006 Stock Option Plan expired.
For the six-month period ended December
31, 2013, the Company recognized in the financial statements, stock-based
compensation costs as per the following details. The fair value of each option
used for the purpose of estimating the stock compensation is based on the grant
date using the Black-Scholes option pricing model with the following weighted
average assumptions:
The expected term calculation is based
upon the expected term the option is to be held, which is the full term of the
option. The risk-free interest rate is based upon the U.S. Treasury yield in
effect at the time of grant for an instrument with a maturity that is
commensurate with the expected term of the stock options. The dividend yield of
zero is based on the fact that the Company has never paid cash dividends on our
common stock and has no present intention to pay cash dividends. The expected
forfeiture rate of 0% is based on the vesting of stock options in a short period
of time.
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Stock-based
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|
|
|
|
|
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compensation
|
|
|
Unexpensed
|
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|
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|
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cost expensed
|
|
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Stock-based
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|
|
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|
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
during the six-
|
|
|
compensation
|
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month period
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cost deferred
|
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Risk free
|
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Volatility
|
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Expected
|
|
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Forfeiture
|
|
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Expected
|
|
|
Exercise
|
|
|
Total number of
|
|
|
Grant date
|
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|
ended December
|
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|
over the vesting
|
|
|
Date of grant
|
|
rate
|
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factor
|
|
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Dividends
|
|
|
rate
|
|
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life
|
|
|
price
|
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|
options granted
|
|
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fair value
|
|
|
31, 2013
|
|
|
period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
Oct-8-12
|
|
3.63%
|
|
|
168.86%
|
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|
0%
|
|
|
0%
|
|
|
10 years
|
|
$
|
0.10
|
|
|
125,000
|
|
$
|
0.10
|
|
$
|
3,368
|
|
$
|
-
|
|
|
Jun-6-13
|
|
3.63%
|
|
|
169.03%
|
|
|
0%
|
|
|
0%
|
|
|
10 years
|
|
$
|
0.10
|
|
|
125,000
|
|
$
|
0.07
|
|
$
|
4,378
|
|
$
|
3,711
|
|
|
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|
|
|
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|
|
|
|
|
|
|
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|
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|
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|
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|
|
Total
|
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|
|
|
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|
|
|
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|
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$
|
7,746
|
|
$
|
3,711
|
|
As of December 31, 2013, there was
$3,711 of unrecognized expenses related to non-vested stock-based compensation
arrangements granted. The stock-based compensation expense for the six-month
period ended December 31, 2013 was $7,746.
The following table summarizes the
options outstanding at December 31, 2013:
Outstanding at June 30, 2013 (audited)
|
|
8,775,000
|
|
Granted
|
|
-
|
|
Expired
|
|
(25,000
|
)
|
Exercised
|
|
-
|
|
Forfeited
|
|
-
|
|
Cancelled
|
|
-
|
|
Outstanding at December 31, 2013
|
|
8,750,000
|
|
Exercisable at December 31, 2013
|
|
8,687,500
|
|
-
19
-
INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION STAGE
COMPANY)
Condensed Notes to Interim Consolidated Financial Statements
December 31, 2013
(Amounts expressed in US
Dollars)
(Unaudited-Prepared by Management)
14.
|
Commitments and
Contingencies
|
On August 1, 2006, the Company acquired
the Pansy Lee Project 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 8 of the 30 claims in this project. In the
event that any one or more of the 8 claims becomes a producing claim, our
revenue 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.
The Company obtained 25 mineral claims
(the Option Claims), located in Elko County, Nevada pursuant to an option
agreement (the Option Agreement) dated as of May 1, 2008 (the Date of
Closing) with Nevada Eagle Resources, LLC and Steve Sutherland (together, the
Optionees). The provisions of the Option Agreement included, among others,
payments of specified annual amounts ranging from $10,000 to $80,000 by the
Company to the Optionees over a period of ten years. Effective June 1, 2010, the
Company and the Optionees agreed to terminate the Companys interests in the
Option Claims pursuant to (1) payment by the Company of $8,750 to each of the
Optionees, (2) performance by the Company of such reclamation and remediation as
required to discharge the surface management bond posted by the Company pursuant
to a Notice of Intent filed with the BLM prior to undertaking exploration
activity on the Option Claims, and (3) conveyance by the Company to Nevada Eagle
Resources, LLC of the 124 mineral claims staked by the Company after the Date of
Closing that are within the Area of Interest described in the Option Agreement.
As of December 31, 2013, the undertakings described in (1) and (3) above have
been completed and the reclamation and remediation described in (2) above are in
progress. The 25 Option Claims together with 124 mineral claims staked by the
Company have been referred to by the Company as the Medicine Claim Group.
On December 8, 2008 IMC US entered into
a Mineral Rights Lease Agreement (the Edgar Lease Agreement) with the Earl
Edgar Mineral Trust (Edgar) to lease certain mineral rights in Elko County,
Nevada described below (the Edgar Property). The term of the Edgar Lease
Agreement was ten years. The rent was paid each year on January 1st. $1.00 per
net acre was paid upon execution of the Edgar Lease Agreement. On January 1 of
each year commencing in 2010 and extending for so long as the Edgar Lease
Agreement is in effect, IMC US was obligated to make the following payments:
|
2010
|
$1.00 per net
acre
|
|
2011
|
$2.00 per net acre
|
|
2012
|
$2.00 per net
acre
|
|
2013
|
$3.00 per net acre
|
|
2014
|
$3.00 per net
acre
|
|
2015
|
$4.00 per net acre
|
|
2016
|
$4.00 per net
acre
|
|
2017
|
$5.00 per net acre in each year
for the duration of the Edgar Lease Agreement.
|
-
20
-
INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION STAGE
COMPANY)
Condensed Notes to Interim Consolidated Financial Statements
December 31, 2013
(Amounts expressed in US Dollars)
(Unaudited-Prepared by Management)
14.
|
Commitments and Contingencies
Contd
|
The Edgar Lease Agreement covered 100%
of the mineral rights on 1,120 acres of the Edgar Property (Property A) and
50% of the mineral rights on 6,720 acres of the Edgar Property (Property B).
Edgar was entitled to receive a royalty of $0.50 per ton for material mined and
removed from Property A and $0.25 per ton for material mined and removed from
Property B during the term of the Edgar Lease Agreement and any renewal
thereof.
On April 9, 2009, the Company and Edgar
entered into an Amendment to the Edgar Lease Agreement (the Amendment),
effective as of December 8, 2008. The Amendment provided for Standard Steam LLC
to carry out exploration for geothermal energy sources on the Edgar Property
after obtaining the written consent of the Company. The Amendment also provided
for other cooperation with Standard Steam LLC regarding mineral rights on
Property B of the Edgar Property.
On November 6, 2013 the Edgar Lease
Agreement was terminated by the Company.
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. 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.
On January 15, 2010, the Company
entered into a Property Lease Agreement with Eugene M. Hammond (the Hammond
Lease) for surface rights on 80 acres in Elko County, Nevada (the Hammond
Surface Rights). The term of the Hammond Lease was five years and the annual
rent was $500. The Company was responsible for the payment of all real estate
taxes on the Hammond Surface Rights. During the term of the Hammond Lease, the
Company had the exclusive right to conduct exploration and development work on
the Hammond Surface Rights. The results of all drilling and exploration are the
property of the Company. The Company was responsible for any environmental
damage caused by the Company and any reclamation costs required as a result of
drilling and testing. The Company had an option to purchase the property covered
by the Hammond Lease for $15,000, less the amount paid in rent during the term
of the Hammond Lease.
On December 18, 2013 the Hammond Lease
was terminated by the Company.
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) covered by the Hammond Mineral Rights Agreement. The purchase price
was $400. In addition, 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.
-
21
-
INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION
STAGE COMPANY)
Condensed Notes to Interim Consolidated Financial
Statements
December 31, 2013
(Amounts expressed in US Dollars)
(Unaudited-Prepared by Management)
14.
|
Commitments and Contingencies
Contd
|
Effective July 1, 2010, the Company
entered into an employment agreement with an individual to provide business and
administrative services. The employment agreement has a term of one year and is
automatically renewable thereafter. Either party may terminate the employment
agreement upon 60 days notice. According to the terms of the employment
agreement as amended effective March 1, 2012, the Company will pay the
individual no less than $8,333 per month and reimburse related business
expenses.
Effective July 1, 2010, the Company
entered into an employment agreement with an individual to provide receptionist
and administrative services at its Reno, Nevada corporate headquarters. The
employment agreement has a term of one year and is automatically renewable
thereafter. Either party may terminate the employment agreement upon 30 days
notice. Pursuant to this employment agreement, the Company will pay no less than
$51,000 per year for such services.
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 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.
-
22
-
INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION
STAGE COMPANY)
Condensed Notes to Interim Consolidated Financial
Statements
December 31, 2013
(Amounts expressed in US Dollars)
(Unaudited-Prepared by Management)
14.
|
Commitments and Contingencies
Contd
|
On May 15, 2012, SRC entered into an
Exploration License with Option to Purchase (the Buhrman Agreement) with Ralph
L. Buhrman and Jacqueline Buhrman (together, the Owner) for three patented
claims, covering approximately 59 acres (the Property) situated in Mineral
County, Nevada. Under the terms of the Buhrman Agreement, SRC was granted the
exclusive right and option to enter and examine the Property (the Exploration
License) in consideration of a $30,000 payment to the Owner (the License
Payment). During the term of the Exploration License, SRC has the exclusive
right to undertake geological, geophysical, and geochemical examinations of the
Property; to sample the Property by means of pits, trenches, and drilling; and
to take bulk samples from the Property for the purpose of conducting
metallurgical and leaching tests. However, SRC may not commence development or
mining activities on the Property unless it exercises the Purchase Option as
defined below. SRC will be responsible for reclamation of its pits, trenches,
drill sites, and other such disturbances arising out of its activities on the
Property. The Exploration License had an initial one-year term beginning on May
1, 2012 (the Effective Date) and ending on April 30, 2013. On April 30, 2013,
SRC exercised its right to extend the Exploration License for an additional
period of one year by making an additional License Payment of $30,000 to the
Owner. SRC was also granted exclusive right and option to purchase the Owners
ownership interest in the Property (the Purchase Option) for the sum of
$90,000 less all License Payments previously made. SRC may exercise the Purchase
Option at any time during the term of the Exploration License by giving written
notice to the Owner. If SRC exercises the Purchase Option, SRC will also pay the
Owner a two percent (2%) royalty based upon gross revenues less deductions as
defined by the Buhrman Agreement, and SRC will also have 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 Owner pursuant to such royalty. SRC may
terminate the Buhrman Agreement at any time by giving 30 days notice in writing
to the Owner.
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 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.
-
23
-
INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION
STAGE COMPANY)
Condensed Notes to Interim Consolidated Financial
Statements
December 31, 2013
(Amounts expressed in US Dollars)
(Unaudited-Prepared by Management)
14.
|
Commitments and Contingencies
Contd
|
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
alleges that the cost of putting out the fire was approximately $510,000. The
Company has denied any responsibility for the fire and notified its liability
insurance carrier. The Company has not accrued any costs for this claim in its
financial statements.
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 six-month periods ended December
31, 2013, and December 31, 2012, were $12,547 and $12,165, respectively. As of
December 31, 2013, the Companys estimated future minimum cash payments under
non-cancelable operating leases for the years ending June 30, 2014, June 30,
2015, and June 30, 2016, are $10,647, $382, and $0, respectively.
Maintaining Claims in Good
Standing
The Company is required to pay to the
BLM on or before September 1
st
of each year, a fee in the amount of
$140 per mineral claim held by the Company. The total amount paid in August
2013, was $98,420 for 703 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 1
st
of each year, annual fees to counties in
Nevada in which the claims are held. In October 2013, the Company paid $7,406 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.
15.
|
Related Party Transactions
|
There are no amounts owed to or from
related parties as of December 31, 2013, or June 30, 2013, 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.
Six-months ended December 31,
2013
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 $49,000 for his
services.
-
24
-
INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION
STAGE COMPANY)
Condensed Notes to Interim Consolidated Financial
Statements
December 31, 2013
(Amounts expressed in US Dollars)
(Unaudited-Prepared by Management)
15.
|
Related Party Transactions
Contd
|
A law firm, a partner of which is also
a member of the Companys Board of Directors, Brent Walter, received $12,971 for
legal services rendered and expenses incurred on behalf of the Company.
The Companys Chief Financial Officer,
Rakesh Malhotra, received $3,472 for consulting services provided to the
Company.
Anne Macko served as
t
he
Companys Corporate Secretary and received $18,667 until her resignation on
November 5, 2013. There were no disagreements between the Company and Ms. Macko
with respect to the management, policies, operations or financial reporting of
the Company.
Jeanette Durbin was appointed Corporate
Secretary on November 5, 2013, and received $9,333 from her appointment to
December 31, 2013.
The Company recorded interest expense
of $2,850 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.
Six-months ended December 31,
2012
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 $70,002 for his
services.
A law firm, a partner of which is also
a member of the Companys Board of Directors, Brent Walter, received $3,925 for
legal services rendered and expenses incurred on behalf of the Company.
The Companys Chief Financial Officer,
Rakesh Malhotra, received $5,407 for consulting services provided to the
Company.
The Companys Corporate Secretary, Anne
Macko, received $29,500 for administrative services provided to the Company.
On January 16, 2014, the Company
received $219,205 from the BLM as a partial refund of the reclamation bond for
the Companys Blue Nose limestone project. Also see Note 6, Reclamation
Deposit.
On February 2, 2014, 50,000 options
issued in accordance with the Companys 2006 Stock Option Plan expired.
-
25
-
Item 2.