U.S. Securities and Exchange Commission
Washington D.C. 20549
Form 10-QSB
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.
For the Quarter Ended September 30, 1997
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission file number 333-16031
Litigation Economics, Inc.
(name of small business issuer as specified in its charter)
Nevada 86-0793960
(State of other jurisdiction (I.R.S. employer
incorporation or organization) identification No.)
227 South Ninth Avenue, Pocatello, ID 83201
(Address of principal executive offices)
Registrant's telephone no., including area code: 208-233-8001
Former name, former address, and former fiscal year, if changed
since last report.
Securities registered pursuant to Section 12(b) of the Exchange Act: None
Securities registered pursuant to Section 12(g) of the Exchange Act: None
Check whether the Issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the 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 _____.
Common Stock outstanding at November 10, 1997 - 1,600,000 shares of $.001
par value Common Stock.
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PART 1 FINANCIAL INFORMATION
Item 1 Financial Statements
The Financial Statements of the Registrant required to be filed with this
10-QSB Quarterly Report were prepared by management together with Related
Notes. In the opinion of management, the Financial Statements fairly present
the financial condition of the Registrant.
LITIGATION ECONOMICS, INC. AND SUBSIDIARY
(Formerly Landmark Leasing, Corp.)
[Development Stage Companies]
CONDENSED BALANCE SHEETS
[Unaudited]
ASSETS
Sept. 30, 1997 Dec. 31, 1996
______________ ______________
[S] [C] [C]
CURRENT ASSETS:
Cash $23,962 $3,102
Accounts Receivable 625 --
Other Current Assets 125 --
Total Current Assets 24,712 3,102
FIXED ASSETS: - --
Equipment and Furnishings $27,548 --
Accumulated Depreciation (1,465) --
Total Fixed Assets 26,083 --
TOTAL ASSETS: $50,795 $3,102
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Sept. 30, 1997 Dec. 31, 1996
______________ ______________
CURRENT LIABILITIES:
Accounts payable $2,082 $2,478
Total Current Liabilities 2,082 2,478
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred Stock - -
Common stock 1,500 1,500
Capital in excess of par value 104,041 4,141
Deficit accumulated during the
development stage (56,829) (5,017)
Total Stockholders' Equity 48,712 624
________ _______
TOTAL LIABILITIES & EQUITY $50,795 $3,102
The accompanying notes are an integral part of these financial statements.
NOTE: The balance sheet at December 31, 1996 was taken from the
audited financial statements at that date and condensed.
2
<PAGE>
LITIGATION ECONOMICS, INC. AND SUBSIDIARY
(Formerly Landmark Leasing, Corp.)
[Development Stage Companies]
CONDENSED STATEMENTS OF OPERATIONS
[Unaudited]
For the Three For the Three From Inception,
Months Ended Months Ended Apr. 22, 1995 -
Sept. 30, 1997 Sept. 30, 1996 Sept. 30, 1997
______________ ______________ _______________
[S] [C] [C] [C]
REVENUE $ 7,036 $ - $ 7,036
EXPENSES
General and
Administrative Expenses 42,165 - 63,858
Income (Loss) from Operation $ (35,129) - ($56,823)
Other Income:
Gain on sale of asset 858 - (138)
Interest income - - 32
Total Other Income 858 - (106)
Net Loss $ (35,987) $ - ($56,929)
Net Loss Per Share Nil Nil Nil
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
LITIGATION ECONOMICS, INC. AND SUBSIDIARY
(Formerly Landmark Leasing, Corp.)
[Development Stage Companies]
CONDENSED STATEMENTS OF OPERATIONS
[Unaudited]
For the Nine For the Nine From Inception,
Months Ended Months Ended Apr. 22, 1995 -
Sept. 30, 1997 Sept. 30, 1996 Sept. 30, 1997
[S] [C] [C] [C]
REVENUE $ 7,036 $ -- $ 7,036
EXPENSES:
General and
Administrative Expenses 58,089 -- 63,859
Income (Loss) from operation $ (51,053) $ -- ($56,823)
Other Income:
Gain (Loss) on sale
of asset (858) -- (138)
Interest income -- -- 32
Total Other Income (858) -- (106)
NET LOSS ($51,911) $ 0 ($56,929)
Net Loss Per Share Nil Nil Nil
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
LITIGATION ECONOMICS, INC. AND SUBSIDIARY
(Formerly Landmark Leasing, Corp.)
[Development Stage Companies]
NOTES TO UNAUDITED CONDENSED & CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Condensed Financial Statements - The accompanying financial statements have
been prepared by the Company without audit. In the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position and results of operations at September
30, 1997 and for all the periods presented have been made.
Organization - The Company was incorporated in the State of Nevada on April
27, 1995, under the name of Landmark Leasing, Corp. The Company planned on
operating as a leasing company of residential property, commercial property,
vehicles, and related activities. The Company has discontinued pursuing any
of these activities and accordingly remains a development stage company. The
Company changed its name to Litigation Economics, Inc. on December 22, 1996.
On December 22, 1996, the Company acquired all of the outstanding stock of
GEC, Inc., (the Subsidiary) for 1,000,000 shares of the Company's common stock
valued at $.001 per share or $1,000 which represented the capital contributed
to the subsidiary. The acquisition of the Subsidiary was recorded as a
recapitalization of the Subsidiary, whereby the acquired company is treated as
the surviving entity for accounting purposes. The subsidiary was formed on
July 31, 1996 in the State of Idaho. The Subsidiary is engaged in the field
of economic advising and consulting and commenced principal business
operations as of June 2, 1997. Accordingly, the subsidiary is also considered
a development stage company.
Accounting Method - The Company's financial statements are prepared using the
accrual method of accounting. The Company has selected a December 31 year
end.
Net Loss Per Share - The computation of loss per share of common stock is
based on the weighted average number of shares outstanding at the date of the
consolidated financial statements.
Provision for Taxes - At December 31, 1996, the Company had net operating loss
carryforwards of approximately $5,000 that may be offset against future
taxable income through 2011. No tax benefit has been reported in the
financial statements, because the Company believes there is a 50% or greater
chance the carry forwards will expire unused. Accordingly, the potential tax
benefits of the loss carryforward are offset by a valuation allowance of the
same amount.
Depreciation Methods - The Company depreciates its property and equipment,
including computer equipment, fax machines, filing cabinets, etc.,
using the straight line method, over the estimated useful lives of the related
assets ranging from 3 to 10 years.
Cash and Cash Equivalents - For purposes of financial statement presentation,
the Company considers all highly liquid investments with a maturity of three
months or less to be cash equivalents.
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Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Principles of Consolidation - The consolidated financial statements include
accounts of Litigation Economics, Inc. and its wholly-owned subsidiary, GEC,
Inc. Inter-company transactions have been eliminated.
Revenue Recognition - Revenue will be recognized upon the completion of
consulting and advising services.
Computer Software - Proprietary computer software is being developed by the
president of the Company to be used in the Company's proposed economic
advising and consulting activities. The president of the Company has used his
personal computer and space in his home during the development of this
software. These facilities and equipment are used primarily by the Company's
president for his personal affairs and the business usage would be
immaterial. In addition, the president of the Company has not received any
compensation from any source for his time in developing this computer
software. Accordingly, no costs associated with the development of the
computer software have been reflected in the accompanying financial statements.
NOTE 2 - GOING CONCERN
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles which contemplate continuation of the
Company as a going concern. The Company has incurred losses since inception,
has expended most of its working capital and has not yet been successful in
establishing profitable operations. These factors raise substantial doubt about
the ability of the Company to continue as a going concern.
NOTE 3 - RELATED PARTY TRANSACTIONS
The Company sold a vehicle to a related party on July 15, 1996 for a gain of
$720.
NOTE 4 - COMMON STOCK
In October of 1996, the Board of Directors adopted the Litigation Economics,
Inc., 1996 Stock Option Plan (the "Plan"), allowing the Company to offer its
key employees, officers, directors, consultants, and sales representatives the
opportunity to acquire a proprietary interest in the Company. The total
number of shares reserved and available for distribution under the Plan is
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500,000 shares. These shares will underlie the Options issued by the
Company pursuant to the Plan. The Option holders will not be protected
against dilution if the Company should issue additional shares of common stock
in the future. Neither the Options, nor the shares underlying the Options
have preemptive rights. As of September 30, 1997, no shares have been issued
pursuant to the Plan.
NOTE 5 - SUBSEQUENT EVENTS
None.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Plan of Operation
The company was incorporated on April 27, 1995. The Company has recently
commenced full-scale business operations and has generated revenues and is
considered a development stage company. The Company was only recently
activated to raise funds from a public offering and commence business
operations. Management commenced full-scale operations as of June 2, 1997.
To date, activities have included organizational matters, leasing office space,
developing a marketing plan, constructing office space, development and
distribution of a newsletter, compiling potential client datebases, providing
economic consulting services, and other preliminary matters including the
preparation and filing of a registration statement for a $100,000 public stock
offering that was subsequently closed on July 8, 1997.
On December 22, 1996, the Company acquired all of the outstanding stock of GEC,
Inc., (the Subsidiary) for 1,000,000 shares of the Company's common stock valued
at $.001 per share or $1,000 which represented the capital contributed to the
subsidiary.
On June 2, 1997, the Company commenced full-scale business operations in the
field of economic advising and consulting. The Company targets litigation
attorneys specializing in personal injury, employment law, medical malpractice,
and other related areas in the market areas surrounding the following
locations: Idaho, Chicago, Salt Lake City, San Francisco, Portland and Phoenix.
The Company has provided its prospective clients a place to retain the
variety of economic consulting services they may need to successfully
litigate certain cases. Specifically, the Company provides economic,
financial, statistical, and other types of analysis necessary in litigation that
involves a dispute regarding economic damages. Furthermore, the Company is
marketing PreVal, a new economic consulting service provided to attorneys in the
settlement-phase of litigation.
The Company has formed exclusive business referring relationships with other
consulting companies that serve the same base of attorneys identified as
potential clients by the Company. Specifically, the Company has formed a
referring relationship with Vocational Diagnostics (a vocational and life care
7
<PAGE>
planning company in Phoenix, Arizona), Mirfak Associates (a vocational and life
care planning company in Lafayette, California), Ellis & Associates (a
vocational and life care planning company in Chicago, Illinois), Intermoutain
Vocational and VocConsult Services (vocational and life care planning companies
in Boise, Idaho), BCRC (a vocational and life care planning company in Missoula,
Montana), and The Apollo Group (a structured settlement company in Chicago,
Illinois).
In July 1997, the Company mailed the first issue of its quarterly newsletter,
The Economic Counselor, to approximately 21,000 attorneys. The Economic
Counselor is a one-page newletter with articles written by the company and
consultants at the affiliated companies mentioned above. The Economic Counselor
is also the host of a one-cell law and economics comic illustrated by Jed
Clarke. In October, the Company mailed the second issue of The Economic
Counselor. The newsletter provides attorneys a place to fax in a request for
additional information on the Company's services and as of October 21, 1997, the
Company has received more than 200 responses to the newsletter.
To cut costs associated with the printing and distribution of the newsletter,
the Company has begun solicited authorization from the attorneys on the
newsletter mailing list to fax them the newletter instead of mailing it. It
is anticipated that 2,500 to 5,000 attorneys or firms will grant the Company
permission to fax the newsletter. Converting The Economic Counselor to a faxed
newsletter will save the Company a substantial amount of labor and material
expense presently incurred by mailing the newsletter.
RESULTS OF OPERATION
While management feels that the response to and interest in the newsletter has
been good, actual business received from the newsletter has been slow. As of
September 30, 1997, the Company had received contracts for eight PreVal reports
with an associated revenue of $4,100.
The company incurred total expenses of $5,769 for the year ended December 31,
1996, $42,165 for the three months ended September 30, 1997 and $58,089 for
the nine months ended September 30, 1997.
As of September 30, 1997, the Company had tangible assets in the amount of
$50,795 and $2,082 in liabilities. The Company's tangible assets and
liabilities for the year ended December 31, 1996 were $3,102 and $2,478
respectively.
8
<PAGE>
Liquidity
The Company completed a public offering on July 8,1997, which generated
$100,000 in cash proceeds for the operation of the company. Management feels
that the Company will be able to operate sufficiently during its development
stage using these funds. Currently, management is actively seeking and
meeting with prospective clients to contract for their economic and financial
statistical analysis. Management believes that as clients contract for
services sufficient revenue should be generated to cover the Company's
operating expenses.
PART II OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
None
ITEM 2 CHANGE IN SECURITIES
None
ITEM 3 DEFAULTS ON SENIOR SECURITIES
None
ITEM 4 SUBMISSION ON MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5 OTHER INFORMATION
None
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
Litigation Economics, Inc.
Date: 11/06/97 By: /s/ Cornelius A. Hofman, CEO
President
9
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<NAME> LITIGATION ECONOMICS, INC.
<S> <C>
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<PERIOD-END> SEP-30-1997
<CASH> 23,962
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[OTHER] 125
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