UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of
1934 For Quarterly period ended March 31, 2001
Transaction report under Section 13 or 15(d) of the Exchange Act For the
transition period from ____________ to _____________
Commission file number 0-1519
LEADVILLE CORPORATION
---------------------
(Exact Name or Registrant as Specified in its Charter)
COLORADO 84-0388216
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(State of Incorporation) (I.R.S. Employer Identification No.)
7002 Graham Road, Suite 106, Indianapolis, Indiana 46220
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(Address of Principal Executive Office) (Zip Code)
(317) 596-0735
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(Issuer's telephone number)
N/A
---
(Former name, address and former fiscal year, if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ___
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes ___ No ___
APPLICABLE ONLY TO CORPORATE ISSUERS
10,940,288
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State the number of Shares of the issuer's classes of
common equity, as of the latest practicable date:
Transitional Small Business Disclosure Format (Check one):
Yes ___ No X
LEADVILLE CORPORATION
INDEX TO FINANCIAL STATEMENTS
AND SUPPLEMENTARY INFORMATION
PART I - FINANCIAL INFORMATION Page
FINANCIAL STATEMENTS
Balance sheets 3 - 4
Statements of operations 5
Statements of cash flows 6
Notes to financial statements 7
MANAGEMENT'S DISCUSSION AND ANALYSIS 8 - 9
PART II - OTHER INFORMATION
Legal proceedings 10
Exhibits and reports on Form 8-K 11
2
PART I
ITEM 1. FINANCIAL STATEMENTS
----------------------------
LEADVILLE CORPORATION
Balance Sheets
March 31, 2001
(Unaudited)
March 31, December 31,
2001 2000
----------- -----------
ASSETS
CURRENT ASSETS
Cash $ 11,211 $ 18,832
Prepaid expenses and other 5,321 5,321
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Total current assets 16,532 24,153
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PROPERTY AND EQUIPMENT, at cost
(Notes 2 and 3)
Mining properties, including assets
acquired under capital leases 7,356,979 7,356,979
Buildings and equipment:
Mine, including assets acquired
under capital leases 1,219,564 1,219,564
Mill 829,032 829,032
Other 108,143 108,143
Land 22,429 22,429
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9,536,147 9,536,147
Less accumulated depreciation and
depletion including amortization
applicable to assets acquired under
capital leases (3,121,540) (3,098,422)
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6,414,607 6,437,725
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OTHER ASSETS:
Investments - certificates of deposit 104,265 104,265
Inventories 170,764 182,089
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275,029 286,354
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$ 6,706,168 $ 6,748,232
=========== ===========
3
LEADVILLE CORPORATION
Balance Sheets (Cont.)
March 31, 2001
(Unaudited)
March 31, December 31,
2001 2000
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURENT LIABILITIES
Related parties:
Convertible debentures $ 440,000 $ 440,000
Notes payable, stockholders 2,060,812 2,060,812
Accrued interest payable 5,455,733 5,133,519
Accrued salaries due staff 3,000 --
Accrued salaries due officers 613,321 583,321
Due to officers/directors/stockholders 104,075 97,950
Notes payable-other 42,500 42,500
Accounts payable 54,896 143,835
Accrued expenses 137,179 136,948
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Total current liabilities 8,911,516 8,638,884
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SETTLEMENT OF LITIGATION 114,000 114,000
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Capital stock, par value $1 per share;
authorized 15,000,000 shares; issued and
outstanding March 31, 2001 and
December 31, 2000, 10,940,288 and
10,940,288 shares, respectively 10,940,288 10,940,288
Additional paid-in capital 8,693,415 8,693,415
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19,633,703 19,633,703
Accumulated deficit (21,953,051) (21,638,356)
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Total stockholders' deficiency (2,319,348) (2,004,653)
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$ 6,706,168 $ 6,748,232
============ ============
4
LEADVILLE CORPORATION
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months ended March 31,
--------------------------------
2001 2000
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Operating revenue $ -- $ --
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Operating costs and expenses:
General and administrative 68,350 134,656
Depreciation 23,118 23,118
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Total operating expenses 91,468 157,774
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Operating loss (91,468) (157,774)
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Financial income and expense:
Other income -- --
Interest income 1,083 1,225
Interest expense (224,264) (247,269)
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Total financial income
(expense) (223,181) (246,044)
------------ ------------
Net loss $ (314,649) $ (403,818)
============ ============
Net loss per capital
share (basic and diluted) $ (.03) $ (.04)
============ ============
Weighted average number of
capital shares outstanding
(total shares) 10,940,288 10,927,063
============ ============
See Notes to Financial Statements.
5
LEADVILLE CORPORATION
STATEMENTS OF CASH FLOWS
Three Months Ended March 31, 2001 and 2000
(Unaudited)
2001 2000
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(314,649) $(403,878)
Adjustments to reconcile net loss
to net cash used in
operating activities:
Depreciation 23,118 23,118
Stock issued for officer compensation -- --
Change in assets and liabilities:
(Increase) decrease in:
Prepaid expenses -- --
Investments-CDs -- --
Inventories 11,325 11,325
Increase (decrease) in:
Accounts payable 8,965 (63,228)
Accrued expenses 3,231 44,639
Officer payables 6,125 4,054
Accrued Salaries - Officers 30,000 67,499
Accrued interest 224,264 259,090
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Net cash used
in operating activities (7,621) (57,321)
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowing, related party -- 45,000
Paid in capital adjustment -- (638)
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Net cash provided by financing
activities -- 44,362
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Increase (decrease) in cash and
cash equivalents (7,621) (12,959)
Cash and cash equivalents:
Beginning 18,832 33,445
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Ending $ 11,211 $ 20,486
========= =========
SUPPLEMENTAL DISCLOSURES OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Capital stock issued for forgiveness
of accounts payable, interest
and officer compensation $ -- $ --
========= =========
See Notes to Financial Statements.
6
LEADVILLE CORPORATION
NOTES TO FINANCIAL STATEMENTS
March 31, 2001
In the opinion of management of Leadville Corporation, (the "Company"), the
accompanying unaudited financial statements reflect all adjustments (consisting
of only normal recurring accruals) necessary to present fairly the financial
position of the Company as of March 31, 2001, and the results of operations and
cash flows for the three months ended March 31, 2001 and 2000.
These unaudited financial statements should be read in conjunction with the
Company's annual report on Form 10-KSB for the year ended December 31, 2000.
NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES:
---------------------------------------------------------------
Leadville Corporation (the Company) is engaged in the development of hard rock
mineral properties in Lake and Park Counties, Colorado. A summary of significant
accounting policies is currently on file with the Securities and Exchange
Commission on Form 10-KSB.
NOTE 2. RELATED PARTY TRANSACTIONS:
-----------------------------------
Certain officers, directors and stockholders have provided significant loans and
advanced expenses to the Company in recent years. The aggregate indebtedness to
the related parties, including accrued interest and other payables, amounted to
approximately $8,455,000 at March 31, 2001.
As of March 31, 2001, the Company owes its President accrued compensation and
expenses of approximately $442,439 and its past-CEO accrued compensation and
expenses of approximately $268,832.
NOTE 3. INCOME TAXES:
---------------------
As of December 31, 2000, the Company has available tax net operating loss
carryforwards of approximately $12,460,000, which can be utilized to offset
future taxable income. Utilization of these loss carryforwards may be limited
due to changes in ownership of the Company, and expire from 2001 through 2020.
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
--------------------------------------------
The following discussion should be read in conjunction with the Company's
consolidated financial statements and related notes included elsewhere herein.
The Company's results may be affected by various trends and factors that are
beyond the Company's control. These include factors discussed elsewhere herein.
With the exception of historical information, the matters discussed below under
the heading "Management's Discussion and Analysis" may include forward-looking
statements that involve risks and uncertainties. The Company cautions the reader
that a number of important factors discussed herein, and in other reports filed
with the Securities and Exchange Commission, could affect the Company's actual
results and cause actual results to differ materially from those discussed in
forward-looking statements.
The Company received no operating revenues during 1999 and 2000 and incurred net
losses in those years of $1,635,387 and $1,331,336, respectively. Management
does not anticipate that any operating revenues will be generated during the
year 2001. The Company's most viable prospect for generating income from
operations is by achieving production at the Diamond-Resurrection property. The
property should be primarily a gold producer, with significant quantities of
silver, lead and zinc present in the ores. In order to achieve production from
the Diamond-Resurrection property, the Company must secure significant financing
for debt reduction, for furthering mine development and re-establishing milling
capabilities, and for working capital.
The Company is severely undercapitalized. As of March 31, 2001, the Company has
a working capital deficit of $8,894,984 and minimal operating cash. With the
exception of the $500,000 in proceeds received in 1996 from issuance of stock,
substantially all of the Company's cash needs have been met by loans from the
Company's officers and directors, and by proceeds from short-term notes.
Management is hopeful that cash needs for 2001 will be met from existing cash
resources and short-term borrowings until significant financing can be secured.
In 2000 and in the first three months of 2001, the Company used cash to meet
general, administrative and property obligations. During the three months ended
March 31, 2000 and 2001, the Company received $45,000 and $0.00, respectively,
in the form of convertible loans. No capital expenditures were made during the
first three months of 2001. General and administrative costs were reduced from
2000 totals primarily because a reduction in officer compensation in 2001.
During the three months ended March 31, 2001 and 2000, interest expenses also
rose from $224,264 to $247,269, a reflection of higher interest rates on certain
recent loans to the Company.
The Company's certificates of deposit, in the amount of $104,265, are held as
mining reclamation bonds and classified as long term assets.
In order for the Company to continue as a going concern and re-start its mining
operations, a significant amount of capital from sources outside the Company
will be required. During 2001, management is continuing its efforts to obtain
financing for the Company's properties through cash investment. No assurance can
be given that the Company will be successful in securing financing.
The Company continues to incur significant interest charges associated with the
outstanding notes payable and debentures. The holders of these instruments have
the right to convert principal and accrued interest to Capital Stock at prices
of $.75 to $1.00 per share. Substantially all holders of the notes payable and
debentures are stockholders of the Company.
8
The Company intends to use the proceeds from significant financing to meet
existing obligations as needed, to finance a development program, to begin
production from the Diamond-Resurrection Mine and to evaluate other potential
sources of revenue for the Company. The objective of the development program is
to re-start mining operations and to fund an exploration program from mining
revenues in order to identify potential reserves in addition to the more than
800,000 tons already identified at the Diamond-Resurrection Mine. Studies
completed on the Diamond-Resurrection Mine property over the past 12 years
include verification of known mineralization, evaluation of mine development and
surface geo-physical investigations. These studies suggest that the
Diamond-Resurrection property may hold significant deposits of gold, silver and
base metals.
Full production at the Diamond-Resurrection Mine will require a significant
capital expenditure to refurbish and/or acquire surface plant and underground
equipment. Realizing operating revenues from Diamond-Resurrection Mine
production will require that the Company either re-establish milling
capabilities at the Stringtown Mill site, construct a new milling facility or
make other milling arrangements. No significant capital expenditures are
anticipated to be made until such time as the Company secures significant
financing or participation on the Diamond-Resurrection Mine properties.
Management does not anticipate that there will be any significant change in the
number of Company employees, until such time as significant financing can be
obtained.
9
PART II
ITEM 1. LEGAL PROCEEDINGS
-------------------------
UNITED STATES (ENVIRONMENTAL PROTECTION AGENCY)
In 1983, the Company was named as one of several defendants in an action (United
States of America vs. Apache Energy and Mineral Company, et al) in Federal
District Court in Colorado under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA") in connection with the
approximately 11.5 square mile California Gulch Superfund site in Lake County,
Colorado. In 1986, the Company was also named as a third party defendant in a
suit (State of Colorado vs. Asarco, Inc., et al) involving the same site. The
cases were subsequently consolidated.
From 1983 through 1988, the Company negotiated with the United States to have
its involvement in the consolidated case dismissed or settled on a de minimis
basis. That effort was ultimately unsuccessful. During the years 1989 and
continuing into 1993, the Company attempted to negotiate a settlement of its
alleged liability to the United States. Management believed that financing might
be obtained by the Company if the claims asserted by the United States were
settled and the financial exposure limited.
During August, 1993, a consent decree was entered by the Federal District Court
in Colorado whereby the United States agreed to settle the Company's alleged
liability, with the exception of natural resources damages, if any, in
consideration for $3,000,000. Under the original terms of the consent decree, a
total of $250,000 was to be paid by the Company over 15 years, with a contingent
liability of $2,750,000 to be paid based on profitable operations or sale of
properties. Minimum cash payments are to be $10,000 for years one through five,
$15,000 for years six through ten and $25,000 for years 11 through 15. The
Company has made no payments to the United States pending negotiations with the
EPA concerning the EPA's use of and compensation for soil and rock materials
from the Company's properties.
COWIN & COMPANY, INC.
In 1990, Cowin & Company, Inc., mining engineers and contractors, filed suit
against the Company in Lake County, Colorado District Court asserting that the
Company was obligated to Cowin & Company, Inc. for approximately $35,500 for
contract mining fees and costs. Cowin & Company, Inc. is requesting damages,
equipment possession and general relief relating to a contract mining agreement
entered into March 3, 1987.
The Company counter-claimed for damages resulting from improper construction of
the Diamond Mine shaft and damages resulting from Cowin & Company activities at
the site. Since no action had been taken in the case since October 1993, the
Court ordered a Status Report be filed on the matter by August 30, 1996. The
status report was filed with the Court; however, no action has occurred since
then.
MINING EQUIPMENT, INC.
During January 2000, the Company was named as a defendant involving equipment
under lease that was deemed part of the real property at the mine site by the
courts. The plaintiff's claims included a claim for rent, conversion and unjust
enrichment. The Company intends to vigorously defend the claims in that the
courts have already issued a judgement regarding this lease and the Company is
in compliance with this earlier judgement.
10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
----------------------------------------
(a) Exhibits filed herewith or incorporated by reference to previous filings
with the Securities and Exchange Commission.
Exhibit
Number Description
------ -----------
(2) Plan of Acquisition, reorganization, arrangement, liquidation or
succession
(3) Articles of Incorporation and By-laws
(4) Instruments defining the rights of security holders, including
indentures
(9) Voting Trust Agreement
(10) Material Contracts
(11) Statement Regarding Computation of Earning Per Share is not required
since the information is ascertainable from Leadville's financial
statements filed herewith.
(13) Annual Report to security holders, Form 10-Q or quarterly report to
security holders
(16) Letter re: change in accounting principles
(19) Documents not previously filed
(21) Subsidiaries of the Registrant
(22) Published report regarding matters submitted to vote of security
holders
(23) Consents of experts and counsel
(24) Power of Attorney
(27) Financial Data Schedule
(28) Information from reports furnished to state insurance authorities
(29) Additional Exhibits
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(3) The Articles of Incorporation of Leadville were filed with its Form 10-K on
May 6, 1965; the By-laws of Leadville were filed with its Report on Form
10-K for the year ended December 31, 1980.
(4) Filed with Form 10-K for year ended December 31, 1987.
(28) Consent Decree, State of Colorado vs. Asarco, Inc., et al, Defendants and
Third Party Plaintiffs vs. Leadville Corporation, et al, Third Party
Defendants: United States of America vs. Apache Energy and Minerals
Company, et al.
(b) Reports on Form 8-K filed during the Registrant's first quarter of 2001.
NONE
11
SIGNATURES
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Pursuant to the requirements of the Exchange Act, the registrant has caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
LEADVILLE CORPORATION
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(Registrant)
/s/ JOHN H. GASPER
------------------
John H. Gasper, President
Dated: May 12, 2001
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12
ARTICLE 5
PERIOD-TYPE 3-MOS
FISCAL-YEAR-END DEC-31-2001
PERIOD-END March 31, 2001
CASH 11,211
SECURITIES 0
RECEIVABLES 0
ALLOWANCES 0
INVENTORY 170,764
CURRENT-ASSETS 16,532
PP&E 9,536,147
DEPRECIATION 3,121,540
TOTAL-ASSETS 6,706,168
CURRENT-LIABILITIES 8,911,516
BONDS 0
PREFERRED-MANDATORY 0
PREFERRED 0
COMMON 10,940,288
OTHER-SE 8,693,415
TOTAL-LIABILITY-AND-EQUITY 6,706,168
SALES 0
TOTAL-REVENUES 1,083
CGS 0
TOTAL-COSTS 0
OTHER-EXPENSES 91,514
LOSS-PROVISION 0
INTEREST-EXPENSE 224,264
INCOME-PRETAX (314,649)
INCOME-TAX 0
INCOME-CONTINUING (314,649)
DISCONTINUED 0
EXTRAORDINARY 0
CHANGES 0
NET-INCOME (314,649)
EPS-BASIC (.03)
EPS-DILUTED (.03)