SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
Quarterly Report under Section 13 and 15 (d)
of the Securities Exchange Act of 1934
For Quarter ended June 30, 1995
Commission File No. 0-1519
Leadville Corporation
(Exact Name or Registrant as Specified in its Charter)
COLORADO 84-0388216
(State of Incorporation) (I.R.S. Employer Identification No.)
2851 S. Parker Road, Suite 610, Aurora, Colorado 80014
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number including area code:(303) 671-9792
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such report) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
8,953,571
(Number of Shares of the Registrant's $1.00 Par Value
Capital Stock Outstanding as of June 30, 1995)
LEADVILLE CORPORATION
INDEX TO FINANCIAL STATEMENTS
AND SUPPLEMENTARY INFORMATION
Page
FINANCIAL STATEMENTS
Balance sheets 3 - 4
Statements of operations 5
Statements of stockholders' equity 6
Statements of cash flows 7
Notes to financial statements 8 - 15
SUPPLEMENTARY INFORMATION
Management discussion and analysis
of financial condition and results of
operations 16 - 18
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Part I
LEADVILLE CORPORATION
Balance Sheets
June 30, 1995
(Unaudited)
June 30, December 31,
1995 1994
ASSETS
CURRENT ASSETS
Cash $ 3,497 $ -
Prepaid expenses and other 2,272 7,318
Total current assets 5,769 7,318
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
9,536,147 9,536,147
Less accumulated depreciation and
depletion including amortization
applicable to assets acquired under
capital leases (2,670,679) (2,670,255)
6,865,468 6,865,892
OTHER ASSETS:
Investments - certificates of deposit 133,000 133,000
Inventories 453,889 453,889
Other 240 240
587,129 587,129
$ 7,458,366 $ 7,460,339
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Part I
June 30, December 31,
1995 1994
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Related parties: (Note 6)
Convertible debentures (Note 4) $ 531,000 $ 531,000
Notes payable, stockholders (Note 4) 374,000 326,500
Accrued interest payable 2,687,957 2,519,026
Due to officers and directors 66,390 52,040
Notes payable-other 95,000 95,000
Accounts payable 310,724 308,629
Accrued expenses 202,515 169,741
Capital lease obligations (Note 5) 714,691 687,611
Total current liabilities 4,982,277 4,689,547
SETTLEMENT OF LITIGATION (Note 5) 83,000 92,000
LONG-TERM DEBT:
Related parties - -
Other - -
COMMITMENTS AND CONTINGENCIES (Note 5)
STOCKHOLDERS' EQUITY (Notes 5)
Capital stock, par value $1 per share;
authorized 15,000,000 shares; issued and
outstanding June 30, 1995 and
December 31, 1994, 8,953,571
shares 8,953,571 8,953,571
Additional paid-in capital 8,457,949 8,457,949
17,411,520 17,411,520
Accumulated deficit (15,018,431) (14,732,728)
Total stockholders' equity 2,393,089 2,678,792
$ 7,458,366 $ 7,460,339
See Notes to Financial Statements.
-4-
Part I
LEADVILLE CORPORATION
STATEMENTS OF OPERATIONS
Six months ended June 30, 1995 and 1994
(Unaudited)
Three Months Six Months
ended June 30, ended June 30,
1995 1994 1995 1994
Operating revenue $ - $ - $ - $ -
Operating costs and expenses:
General and administrative 29,358 86,208 83,036 173,326
Depreciation 212 212 424 424
Total operating expenses 29,570 86,420 83,460 173,750
Operating loss (29,570) (86,420) (83,460) (173,750)
Financial income and expense:
Interest income 1,066 999 1,950 2,025
Other income 1,200 1,200 1,200 1,200
Interest expense (102,525) (80,568) (205,393) (157,840)
Total financial income
(expense) (100,259) (78,369) (202,243) (154,615)
Net loss $(129,829) $(164,789) $(285,703) $(328,365)
Net loss per capital
share $ (.02) $ (.02) $ (.04) $ (.04)
Weighted average number of
capital shares outstanding
(total shares) 8,953,571 8,892,621 8,953,571 8,892,621
See Notes to Financial Statements.
-5-
Part I
LEADVILLE CORPORATION
STATEMENTS OF STOCKHOLDERS' EQUITY
Six Months ended June 30, 1995
(Unaudited)
June 30, 1995 December 31, 1994
Shares Amount Shares Amount
Capital Stock 8,953,571 $ 8,953,571 8,953,571 $ 8,953,571
Additional
Paid-In Capital 8,457,949 8,457,949
Accumulated deficit,
December 31, 1994 (14,732,728) (14,732,728)
2,678,792 $ 2,678,792
Net Loss,
June 30, 1995 (285,703)
$ 2,393,089
See Notes to Financial Statements.
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Part I
LEADVILLE CORPORATION
STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 1995 and 1994
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (285,703) $ (328,365)
Adjustments to reconcile net loss
to net cash provided by (used) in
operating activities:
Depreciation 424 424
Change in assets and liabilities:
(Increase) decrease in:
Prepaid expenses 5,046 5,601
Increase (decrease) in:
Accounts payable 2,095 65,206
Accrued expenses 23,774 (31,528)
Officer payables 14,350 21,222
Accrued interest 168,931 218,032
Capital lease obligations 27,080 -
Net cash provided by (used
in) operating activities (44,003) (49,408)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowing,
related parties 47,500 40,000
Net cash provided by financing
activities 47,500 40,000
Increase (decrease) in cash and
cash equivalents 3,497 (9,408)
Cash and cash equivalents:
Beginning - 24,803
Ending $ 3,497 $ 15,395
See Notes to Financial Statements.
-7-
LEADVILLE CORPORATION
NOTES TO FINANCIAL STATEMENTS
June 30, 1995
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Nature of Business - Leadville Corporation (the Company) is engaged in
the development and mining of hard rock mineral properties.
Inventories - Inventories are stated at the lower cost (average method)
or market value. Inventories consist of operating and maintenance
supplies.
Property and Equipment - Mining properties consist primarily of patented
and unpatented mining claims. Unpatented mining claims require annual
assessment work and fees to maintain possessory titles. Mining
properties include the cost of acquisition and accumulated exploration
and development expenditures incurred in the pre-production stage.
In the event such mining properties are developed into producing
properties, depletion of these related costs will be computed on the
unit-of-production method, based on estimated tons of recoverable ore
reserves. If the properties are determined to be incapable of producing
commercial quantities of ore, the costs will be charged to operations in
the period in which the determination is made.
The Company provides for depreciation of buildings and equipment on the
straight-line method, to apportion costs over the estimated useful lives
of the assets which range principally from five to twenty years.
Net Loss Per Capital Share - The net loss per capital share is based
upon the total weighted average number of shares outstanding during the
period.
Capitalization of Interest - The Company capitalizes interest expense as
part of the historical cost of acquiring certain assets which require an
extended period of time to prepare them for their intended use (See Note
3). During 1994 and the first six months of 1995 interest was expensed
due to the suspension of development activities.
Going Concern - At June 30, 1995 the Company has a significant
investment in non-producing mining properties, recovery of which is
dependent upon the production of ore reserves in commercial quantities
or sale of these properties at an amount equal to or in excess of costs.
In addition, the Company has suffered recurring losses from operations
and at June 30, 1995 has a working capital deficiency of approximately
$4,977,000 which includes approximately $3,500,000 due to related
parties. The Company has significant materials and supplies
inventories, which the Company is attempting to sell. Since the
ultimate realization of these inventories depends on circumstances which
cannot be evaluated currently, it is not possible to determine at this
-8-
LEADVILLE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (continued):
time whether any loss from disposition of the inventories will be
realized. All real properties are collateral for convertible
debentures.
Certain mining equipment may be collateral for the settlement of a lease
obligation judgment (See Note 5). The Company has no property or
liability insurance coverage at June 30, 1995, and as of the date of
this report. The litigation concerning the environmental matters has
made it difficult for the Company to obtain working capital through
additional equity or debt financing. (See Note 5). Annual assessment
fees are required to maintain possessory titles to unpatented mining
claims. The Company has waived its control of certain unpatented claims
at the Sherman-Hilltop property and is current with required filing fees
for the unpatented claims it holds. Working capital must be obtained to
allow for future operations.
The Company has 15,000,000 shares of Common Stock authorized to
accommodate conversion of the convertible debentures, notes payable,
accrued interest and certain other obligations into Common Stock.
Management is continuing to investigate alternatives to raise required
working capital which will be used to meet current and future
obligations. The Company's immediate cash requirements are being met
with proceeds from short-term notes payable.
If the Company cannot successfully restructure its debt, obtain
significant working capital, and/or achieve profitable operations, there
is substantial doubt about the ability of the Company to continue as a
going concern.
2. MINING PROPERTIES:
At June 30, 1995, the Company owns two mining properties, the Sherman-
Hilltop Consolidation and the Diamond-Resurrection Consolidation.
Reference is made to Item 3 of Leadville's Report on Form 10-K for the
year ended December 31, 1974, for a description of its Sherman Mine
properties and the Diamond Consolidation. The Sherman Mine properties
consist of 1,854 acres of patented mining claims and approximately 4,700
acres of unpatented mining claims in Lake and Park Counties in the
Leadville - Fairplay, Colorado area, and 300 acres of fee land on which
a 350 ton per day mill and related facilities are located. During 1993,
the Company released numerous unpatented claims in order to conserve
cash while maintaining control of certain strategically located claims
which are believed to provide the greatest control of the block of
property.
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LEADVILLE CORPORATION
NOTES TO FINANCIAL STATEMENTS
MINING PROPERTIES (continued):
The Diamond-Resurrection Consolidation consists of approximately 1,180
acres of patented claims and is located in Lake County, east of
Leadville, Colorado.
3. CAPITALIZED INTEREST CHARGES:
During 1986, the Company began capitalizing interest on qualifying
expenditures for their mining properties. Due to the suspension of
development activities in November 1988 and through the date of this
report, the Company has expensed interest costs since 1988. Total
interest capitalized through June 30, 1995, is $827,017.
4. NOTES PAYABLE AND CONVERTIBLE DEBENTURES:
The notes payable are summarized as follows:
June 30, December 31,
1995 1994
Notes payable, at 10%, to
stockholders and/or officers/
directors, due dates range from
June 1995 through December 1995. $ 374,000 $ 326,500
Notes payable-other, at 10% due
dates ranging from April 1995 to
December 1995. $ 95,000 $ 95,000
The above notes payable are convertible to the Company's capital stock
at the option of note holders at conversion prices of $.80 to $1.375 per
share during the term of the notes. Certain of the notes are past due
as of June 30, 1995. Management is optimistic that due date extensions
can be secured.
The convertible debentures are summarized as follows:
June 30, December 31,
1995 1994
10% and 12% convertible debentures,
interest and principal due December 1995,
convertible to the Company's Common
Stock at the option of the debenture
holders at a conversion price of $2
per share, collateralized by mining
properties. $ 531,000 $ 531,000
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LEADVILLE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTES PAYABLE AND CONVERTIBLE DEBENTURES (continued):
Of the $531,000, $431,000 is due to stockholders. During 1994 and early
1995, the Company secured extended due dates for the debentures to
December 1995.
The Company believes, of which there can be no assurance, that
agreements can be reached with all convertible debenture holders to
further extend their debentures, if necessary, and ultimately exercise
the conversion rights.
Note 5. COMMITMENTS AND CONTINGENCIES:
United States of America Vs. Apache Energy and Minerals Company, et al.
In January, 1993, Leadville was name as one of several defendants in an
action (United States vs. Apache Energy and Mineral Company, et al)
brought by the United States in Federal District Court in Colorado
under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 ("CERCLA") in connection with the 11.5 square mile
California Gulch Superfund site in Lake County, Colorado. In August of
1986, Leadville was also named as a third party defendant in a suit
(State of Colorado vs. Asarco, Inc., et al) involving the same site.
The case was subsequently consolidated with United States Vs. Apache
Energy and Minerals Company, et al. The suits allege that the
defendants are liable for the release or threat of release of hazardous
substances from the site (notably heavy metals resulting from abandoned
and active mining operations). The consolidated actions are being
prosecuted in three phases.
Phase I of the litigation relates to the clean-up of the Yak Tunnel
Operable Unit. The Diamond Mine properties are located at the head of
the Yak Tunnel. Phase II relates to surface drainage issues and covers
properties located at the Diamond Mine property and the Stringtown
Millsite. Phase III addresses alleged contamination issues at the
Stringtown Millsite.
CERCLA has been interpreted by the courts to be a strict liability
statute, which means liability may be imposed without fault. Numerous
courts have also ruled that liability under CERCLA is joint and several
when the harm is indivisible. Contribution rights are specifically
authorized so that a potentially responsible party ("PRP") can seek
reimbursement from other PRP's if it has paid more than its equitable
share of the response costs and natural resources damages.
In connection with Phase I of the litigation, on April 17, 1989, the
United States announced that it had ordered four defendants (Leadville
was not one of the companies named) to clean up the Yak Tunnel Operable
Unit of the Superfund Site. Leadville maintains that it is not properly
-11-
LEADVILLE CORPORATION
NOTES TO FINANCIAL STATEMENTS
COMMITMENTS AND CONTINGENCIES (continued):
United States of America Vs. Apache Energy and Minerals Company, et al.
(continued)
a PRP under CERCLA for this Operable Unit since it has never owned or
operated the Yak Tunnel and because the water that naturally drains from
the Company's property into the tunnel meets National Primary Drinking
Water Standards.
Management and litigation counsel believe that the Company has
substantial, meritorious defenses to the claims being made by the United
States. However, due to the complexity of the case and Leadville's
limited financial resources, management believed that a settlement of
its alleged liability to the United States would be most expedient and
less costly than protracted litigation on the issues. Management was
optimistic that financing could be raised with a settlement in place.
During the years 1988 through 1991, Leadville pursued a settlement of
its alleged liability under all three phases of the litigation with the
United States. In January, 1992, Leadville and the United States
reached an agreement whereby the Company's alleged liability for the
three phases would be settled. The final form of that agreement was
signed by both parties in February, 1993, and the District Court
approved the settlement on August 6, 1993.
The settlement is a consent decree structured to resolve all of
Leadville's alleged liability, with the exception of natural resources
damages, if any, to the United States in the California Gulch Superfund
site and tangent areas.
In order to achieve a settlement for all phases of the litigation and to
seek contribution protection from other defendants in the Site,
Leadville has agreed to pay the United States a total of $3,000,000. Of
the $3,000,000, Leadville is obligated to pay a minimum of $250,000 over
the next fifteen years.
Minimum annual payments on the obligation will be $10,000 in each of the
first five years, $15,000 in each of the next five years, $25,000 for
the final 15 years, whichever is greater. Adjusted net income is
defined as net income, plus officer compensation and any unreasonable
business expenses.
Payments on the obligation in excess of the $250,000 will be contingent
upon profitable operations or the sale of the Company's real properties.
Leadville has agreed to make payment towards the remaining obligation of
$2,750,000 by payment of one-third of proceeds from sale or transfer of
real property.
-12-
LEADVILLE CORPORATION
NOTE TO THE FINANCIAL STATEMENTS
COMMITMENTS AND CONTINGENCIES (continued):
United States of America Vs. Apache Energy and Minerals Company, et al.
(continued)
The Company is delinquent on the first two annual installments of
$10,000 which were due in April, 1994 and 1995. Under terms of the
settlement agreement, if Leadville failed to make the April 1994 payment
by April, 1995, the United States can elect to set aside the consent
decree or accelerate the full $3,000,000 obligation. Acceleration of
the obligation would result in a deficit in stockholders' equity and
failure of the Company to maintain its stock listing requirements.
Subsequent to June 1995, the United States made a preliminary offer to
Leadville to accept use of fill dirt material as partial payment towards
the consent decree financial obligation. Management is optimistic that
a settlement of the obligation can be negotiated with the United States
in the next several weeks.
Whether claims for natural resources damages will ever be asserted
against Leadville cannot be determined at this time, but it is
anticipated that Leadville's equitable share of the natural resources
damages, if any, would be relatively small compared to PRP's that have
been ordered to clean up the site.
Management believes that if significant financing for the Diamond
property is secured in the immediate future, then the obligations of
Leadville under terms of the settlement will not have a long-term
material adverse effect on the operations or financial condition of the
Company, although no assurance can be given.
Mining Equipment, Inc. vs. Leadville Corporation
Leadville is also a defendant in legal proceedings initiated in
November, 1989, in the District Court of Lake County, Colorado, by
Mining Equipment, Inc., a party that refinanced certain of Leadville's
mining equipment in December, 1988. Leadville was past due on lease
payments under several of the lease agreements and in April, 1992, the
Court entered a final judgment against Leadville in the amount of
$672,000, plus late fees and interest charges.
In addition to the judgment amount, Mining Equipment, Inc. was awarded
possession of all equipment under the leases, with the exception of the
Diamond Mine hoist. During 1992, the plaintiff removed substantially
all equipment awarded in the Court decision. The book value of the
equipment removed was charged to Lease Obligation Settlement expense on
the Company's Statement of Operations for the year 1992. The plaintiff
in the case has also made an assertion that it has a lien on all the
real property of Leadville and further that such lien should be
foreclosed. Leadville disputes the plaintiff's assertion.
-13-
LEADVILLE CORPORATION
NOTES TO FINANCIAL STATEMENTS
COMMITMENTS AND CONTINGENCIES (continued):
Mining Equipment, Inc. vs. Leadville Corporation
Leadville disputed the amount of the plaintiff's judgement, including
the computation of late charges and interest and its claim that it is
entitled to possession of the property. In August of 1992, Leadville
filed an appeal of the District Court decision. The Court of Appeals
remanded the case back to the trial court to consider the issues of
mitigation of damages, the amount of damages and the propriety of
assessing late charges. During October, 1994, a trial was held on the
remanded issues. During trial, Leadville and the plaintiff reached
agreement on a judgement amount of $678,000, plus interest at 8% per
annum after October, 1994. The Court subsequently ruled that late
charges cannot be assessed by the plaintiff.
Leadville Corporation vs. United States Fidelity and Guaranty
During 1993, the Company filed a lawsuit against its former insurer
seeking to recover defense costs and obtain indemnification for issues
related to the environmental litigation. The insurance company counter-
claimed for approximately $65,000 in defense costs advanced. In May,
1994, the Court ruled against Leadville's claims and awarded the
insurance company the $65,000 in costs advanced. Leadville appealed the
decision and lost. Subsequent to June 30, 1995, Leadville settled the
insurance company's claim for $10,000.
Cowin & Co., Inc. Mining Engineers and Contractors vs. Leadville
Corporation
During March, 1990, a subcontractor of Leadville, Cowin & Company, Inc.
filed an action in Lake County District Court against Leadville for non-
payment of approximately $35,000 in contract mining services, plus
attorneys' fees, under a contract dated March 3, 1987. The Court
entered an Order of Possession on July 13, 1990, granting plaintiff
possession of certain personal property securing the obligation.
Leadville has filed a counter-claim against the plaintiff in the amount
of approximately $185,000 relating to the same contract. A trial of the
issues, scheduled for October, 1993, was vacated by the plaintiff. To
date, the plaintiff has not exercised its right to possession of any
equipment and the case has been inactive since October, 1993.
Certificates of Deposit
The Company is required by the Mined Land Reclamation Board to maintain
certificates of deposit for future reclamation costs. No future
reclamation costs have been accrued as of June 30, 1995.
-14-
LEADVILLE CORPORATION
NOTES TO FINANCIAL STATEMENTS
6. RELATED PARTY TRANSACTIONS:
As discussed in Note 4, certain officers, directors, and stockholders
have provided significant loans to the Company. The aggregate
indebtedness, including accrued interest, and other payables, amounted
to approximately $3,500,000 at June 30, 1995.
7. INCOME TAXES:
At December 31, 1994, the Company had available tax net operating loss
carryforwards of approximately $7,280,000, which can be utilized to
offset future taxable income. Utilization of these loss carryforwards
may be limited due to changes in ownership in the Company.
The principal differences between the accumulated deficit for financial
statement purposes and the tax loss carryforward is the result of the
expiration of tax loss carryforwards and depreciation differences.
-15-
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The discussion below should be read in conjunction with the financial
statements included herein.
Liquidity and Capital Resources
During the first six months of 1995, Leadville continued to rely on
proceeds from the private placement of short-term promissory notes to
raise operating cash. Leadville raised approximately $48,000 from
issuance of convertible promissory notes with a term of one year. Cash
proceeds were used to meet necessary general and administrative
expenses. Management anticipates that cash required to meet obligations
during the remainder of 1995 will be obtained from similar sources,
until such time as the Company secures financing from outside sources.
No assurance can be given that such financing will be available.
However, management is continuing to seek financing from mining
companies and investment groups.
During January, 1992, Leadville reached an agreement with the United
States to settle alleged claims against the Company relating to
environmental matters. The Court approved that consent decree on August
6, 1993. Under the terms of the settlement, Leadville has agreed to pay
the United States a total of $3,000,000, $2,750,000 of which is
contingent upon profitable operations or the sale of real property. The
balance of $250,000 will be paid by Leadville over a period of fifteen
years, beginning April 30, 1994. As of June 30, 1995, the Company's
balance sheet reports a $83,000 long-term liability to reflect the
present value of the $250,000 minimum payments due under the settlement
and $27,000 as accrued expenses due by April, 1996. As of August 15,
1995, Leadville has not made any payments due under terms of the
settlement agreement. See Note 5 to the Financial Statements under Item
1, hereof. Subsequent to June 30, 1995, the United States proposed a
preliminary offer to Leadville to accept use of fill dirt material as
partial payment towards the consent decree financial obligation.
Management is optimistic that a settlement of the obligation can be
achieved in the near future.
Leadville is continuing its efforts to raise financing with the
assistance of Behre Dolbear & Company, Inc. In anticipation of settling
the environmental litigation, Leadville conducted two studies of the
Diamond property during late 1992 and early 1993. One study at the
Diamond Mine included verification of known mineralization and an
evaluation of mine development. The second study included surface geo-
physics intended to indicate potential exploration targets. Conclusions
of the studies are encouraging and provide additional evidence that the
Diamond-Resurrection property may hold significant deposits of gold,
silver and base metals.
Leadville intends to use proceeds from significant financing to settle
existing obligations and to finance an exploration program on the
Diamond properties. The objective of the exploration is to identify
reserves in addition to the 700,000 tons of reserves already identified
at the Diamond Mine.
-16-
Working Capital
Leadville's working capital deficiency was approximately $4,977,000 as
of June 30, 1995, representing a $295,000 increase in the deficiency
compared to December 31, 1994. The deficiency increase was due
primarily to a $47,500 increase in notes payable and the $196,000 of
accrued interest charges associated with the Company's debt and legal
judgment obligations. See Note 5 to the Financial Statements.
As of June 30, 1995, Leadville had outstanding notes payable in the face
amount of $469,000, plus accrued interest of $834,000. Approximately
65% of the total principal and interest is held by the Company's
President. Management believes that holders will exercise the
conversion rights under the instruments and convert the obligations to
Common Stock, if Leadville can secure financing for the Diamond
property. At this time, the Company's President intends to delay any
cash repayment of notes payable and accrued interest due him until such
time as the Company obtains other financing.
Leadville also had outstanding convertible debentures payable at June
30, 1995, in the principal amount of $531,000, plus accrued interest of
$1,896,657. The Company has reached agreement with the holders to
extend the due date for the debentures to December 31, 1995, and to
reduce the interest rate on the debentures to 10%.
Management believes that, if Leadville is successful in obtaining
financing to resume operations on the Diamond property, then holders of
a substantial amount of the Company's notes and debentures payable will
exercise their options to convert the obligations to Common Stock.
Substantially all of the assets of the Company are pledged as collateral
to the debenture holders. If such holders should demand payment of
amounts due, Leadville would have to raise significant cash from outside
sources to meet the obligations. If sufficient financing could not be
secured, the Company's properties could be attached and sold, thereby
leaving Leadville with essentially no assets. Approximately 74% of the
convertible debentures and accrued interest are held by three of
Leadville's largest stockholders.
Leadville's long-term financing needs may be met with a private
placement of debt or equity, a secondary public offering or possibly
from financing obtained through a joint venture arrangement. Proceeds
from such sources will be used to settle existing obligations, to resume
operations at the Diamond Mine and to explore attractive geologic
targets, therein, indicated by the geo-physical study.
Results of Operations
During the years 1989 through the first six months of 1995, Leadville
had no operational activities, due to insufficient financing to continue
operations on the Diamond Mine property. Management believes that
outside sources of financing have not been available to the Company due
primarily to the environmental litigation which has surrounded the
property. Substantially all activities of the Company since 1989 have
centered on negotiating a settlement of environmental claims alleged by
-17-
Results of Operations (continued):
the United States, maintaining the Company's properties, performing
field work to conduct surface and underground property studies and to
comply with various regulatory permits. During the past two years,
Leadville has been seeking to raise significant financing to develop the
Diamond property. To date, such financing has not been secured.
1995 Compared to 1994
The Company had no operating revenue in the first six months of 1995 or
1994. Net loss for 1995 decreased by $42,700 compared to the net loss
in 1994, due primarily to reductions in general and administrative
expenses and costs to market the Company's Diamond property.
Interest expense increased approximately $47,500 during the first six
months of 1995, compared to the first six months of 1994, due to the
increase in debt incurred through additional borrowing and interest
charges associated with legal judgment obligations. Total general and
administrative expenses decreased approximately $90,000 during the first
six months of 1995 compared to the first six months of 1994, due to a
combination of a decrease in expenses associated with the study and
maintenance of the Diamond property and costs incurred to prepare for
trial with the Company's previous insurance carrier relating to
environmental claims coverage.
-18-
Part II
Item 6. Exhibits and reports on Form 8-K.
(b) No reports were filed on Form 8-K during the second
quarter of
of 1995.
-19-
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 thereunto duly authorized.
LEADVILLE CORPORATION
(Registrant)
Daniel F. Nibler
Daniel F. Nibler, Vice President,
Secretary-Treasurer, (Principal
Financial and Accounting Officer)
Dated: August 22, 1995
-20-
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