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 June 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 June 30, 1997 - 1,500,000 shares of $.001 par
value Common Stock.
<PAGE>
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
Jun. 30, 1997 Dec. 31, 1996
______________ ______________
[S] [C] [C]
CURRENT ASSETS:
Cash $565 $3,102
Total Current Assets 565 3,102
OTHER ASSETS: - -
TOTAL ASSETS $565 $3,102
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Jun. 30, 1997 Dec. 31, 1996
______________ ______________
CURRENT LIABILITIES:
Accounts payable $15,866 $2,478
Total Current Liabilities 15,866 2,478
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred Stock - -
Common stock 1,500 1,500
Capital in excess of par value 4,141 4,141
Deficit accumulated during the
development stage (20,942) (5,017)
Total Stockholders' Equity (15,300) 624
________ _______
TOTAL LIABILITIES & EQUITY $565 $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 -
June 30, 1997 June 30, 1996 June 30, 1997
______________ ______________ _______________
[S] [C] [C] [C]
REVENUE $ 0 $ 0 $ 0
EXPENSES
General and
Administrative Expenses 5,509 0 21,694
Income (Loss) from Operation ($5,509) 0 ($21,694)
Other Income:
Gain on sale of asset 0 0 720
Interest income 0 0 32
Total Other Income 0 0 752
Net Loss ($5,509) $ 0 ($20,942)
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 Six For the Six From Inception,
Months Ended Months Ended Apr. 22, 1995 -
June 30, 1997 June 30, 1996 June 30, 1997
[S] [C] [C] [C]
REVENUE $ 0 $ 0 $ 0
EXPENSES:
General and
Administrative Expenses 15,924 0 21,694
Income (Loss) from operation ($15,924) $ 0 ($21,694)
Other Income:
Gain on sale of asset 0 0 720
Interest income 0 0 32
Total Other Income 0 0 752
NET LOSS ($15,924) $ 0 ($20,942)
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 June 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 has net operating loss
carry forwards 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.
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.
5
<PAGE>
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 t he Company has not received any
compensation from any source for his time in developing this computer
software. He is employed full-time elsewhere and presently devotes
approximately 10% of his time to the development of the computer software and
operations of the Company. Accordingly, no costs associated with the
development of the computer software have been reflected in the accompanying
financial statements.
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. However, the Company does not have significant cash and has not had
significant operations since the inception of its development stage. Without
realization of additional adequate financing it would be unlikely for the
Company to pursue and realize its objectives. The Company completed a public
offering on July 8, 1997, that raised $100,000. With the funds from the
public offering, the Company plans to commence full-scale
business operations and begin recognizing revenue as consulting and advising
services are performed. As of June 30, 1997, the Company had accounting and
legal fees totaling $15,866, the entire accounts payable amount. Subsequent
to the date of this report all accounts payable have been satisfied.
Officers of the Company have committed to make capital contributions or
advances to the Company should additional funds be needed to pay operating
expenses.
NOTE 3 - RELATED PARTY TRANSACTIONS
None.
NOTE 4 - COMMON STOCK OPTIONS
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 ownership in the Company. The total number of shares
reserved and available for distribution under the Plan shall
buy 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 June 30, 1997, no options have been granted
or exercised pursuant to the Plan.
NOTE 5 - SUBSEQUENT EVENTS
The Company completed a public offering on July 8, 1997 which raised capital
of $100,000.
6
<PAGE>
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 no significant
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 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, 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 June 2, 1997, the company commenced 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, Los Angeles, Las Vegas and Phoenix. The
Company sent out 22,000 information/advertising newsletters to litigation
attorneys in these areas during the month of July to market it's product and
services. The Company has provided prospective clients a place to retain the
variety of economic consulting services they may need to successfully
litigate any given case. 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. Although the Company does not have
contracts with any clients at this time, it is beginning to receive interest
from prospective clients from it's newsletter marketing efforts during the
month of July.
Results of Operations
The company incurred total expenses of $5,769 for the year ended December 31,
1996, $5,509 for the three months ended June 30, 1997 and $15,924 for the six
month period ended June 30, 1997. These expenses were related primarily to
start-up costs for the company mainly accounting and legal fees and have
subsequently been satisfied.
At June 30, 1997, the Company had tangible assets in the amount of $565 and
$15,866 in liabilities. The Company's tangible assets and liabilities for the
year ended December 31, 1996 were $3,102 and $2,478 respectively.
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.
7
<PAGE>
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: 8/12/97 By /s/ Cornelius A. Hofman, CEO
President
8
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<NAME> LITIGATION ECONOMICS, INC.
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<PERIOD-END> JUN-30-1997
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