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 March 31, 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 March 31, 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 - 14
SUPPLEMENTARY INFORMATION
Management discussion and analysis
of financial condition and results of
operations 15 - 17
-2-
Part I
LEADVILLE CORPORATION
Balance Sheets
March 31, 1995
(Unaudited)
March 31,
December 31,
1995
1994
ASSETS
CURRENT ASSETS
Cash $ 2,027
$ -
Prepaid expenses and other 4,795
7,318
Total current assets 6,822
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 (2,670,467)
(2,670,255)
6,865,680
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
$ 7,459,631
$ 7,460,339
-3-
Part I
March 31,
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) 357,000
326,500
Accrued interest payable 2,601,056
2,519,026
Due to officers and directors 65,753
52,040
Notes payable-other 95,000
95,000
Accounts payable 310,478
308,629
Accrued expenses 183,275
169,741
Capital lease obligations (Note 5) 701,151
687,611
Total current liabilities 4,844,713
4,689,547
SETTLEMENT OF LITIGATION (Note 5) 92,000
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 March 31, 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 (14,888,602)
(14,732,728)
Total stockholders' equity 2,522,918
2,678,792
$ 7,459,631
$ 7,460,339
See Notes to Financial Statements.
-4-
Part I
LEADVILLE CORPORATION
STATEMENTS OF OPERATIONS
Three Months ended March 31, 1995 and 1994
(Unaudited)
Three Months
ended March 31,
1995 1994
Operating revenue $ - $ -
Operating costs and expenses:
General and administrative 53,678 87,118
Depreciation 212 212
Total operating expenses 53,890 87,330
Operating loss ( 53,890) ( 87,330)
Financial income and expense:
Interest income 884 1,026
Interest expense (102,868) (
77,272)
Total financial income
(expense) (101,984) (
76,246)
Net loss $ (155,874) $
(163,576)
Net loss per capital
share $ (.02) $
(.02)
Weighted average number of
capital shares outstanding
(total shares) 8,953,571 8,892,621
See Notes to Financial Statements.
-5-
Part I
LEADVILLE CORPORATION
STATEMENTS OF STOCKHOLDERS' EQUITY
Three Months ended March 31, 1995
(Unaudited)
March 31, 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,
March 31, 1995 (155,874)
$ 2,522,918
See Notes to Financial Statements.
-6-
Part I
LEADVILLE CORPORATION
STATEMENTS OF CASH FLOWS
Three Months Ended March 31, 1995 and 1994
1995
1994
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (155,874) $
(163,576)
Adjustments to reconcile net loss
to net cash provided by (used) in
operating activities:
Depreciation 212
212
Change in assets and liabilities:
(Increase) decrease in:
Prepaid expenses 2,523
3,078
Increase (decrease) in:
Accounts payable 1,849
21,735
Accrued expenses 13,534
10,284
Officer payables 13,713
15,746
Accrued interest 82,030
76,911
Capital lease obligations 13,540
-
Net cash provided by (used
in) operating activities (28,473)
(35,610)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowing, related parties 30,500
20,000
Net cash provided by financing
activities 30,500
20,000
Increase (decrease) in cash and
cash equivalents 2,027
(15,610)
Cash and cash equivalents:
Beginning -
24,803
Ending $ 2,027 $
9,193
See Notes to Financial Statements.
-7-
LEADVILLE CORPORATION
NOTES TO FINANCIAL STATEMENTS
March 31, 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 quarter.
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 quarter
of 1995 interest was expensed due to the suspension of
development activities.
Going Concern - At March 31, 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 March 31, 1995 has a working capital deficiency
of approximately
$4,838,000 which includes approximately $3,555,000 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 time
whether any loss from disposition of the inventories will be
realized. All real
properties are collateral for convertible debentures.
-8-
LEADVILLE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
(continued):
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
March 31, 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 March 31, 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.
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 March 31, 1995, is
$827,017.
-9-
LEADVILLE CORPORATION
NOTES TO FINANCIAL STATEMENTS
4. NOTES PAYABLE AND CONVERTIBLE DEBENTURES:
The notes payable are summarized as follows:
March 31, December
31,
1995 1994
Notes payable, at 10%, to
stockholders and/or officers/
directors, due dates range from
June 1995 through December 1995. $ 357,000 $
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.
The convertible debentures are summarized as follows:
March 31, 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
Of the $531,000, $431,000 is due to stockholders. During 1994,
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 extend their
debentures and
ultimately exercise the conversion rights.
-10-
LEADVILLE CORPORATION
NOTES TO FINANCIAL STATEMENTS
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 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.
-11-
LEADVILLE CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 5. COMMITMENTS AND CONTINGENCIES (continued):
United States of America Vs. Apache Energy and Minerals Company,
et al. (continued)
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 then
lodged with the
District Court. After a public comment period, 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.
The Company is delinquent on the first annual installment of
$10,000 which was due
April, 1994. Under terms of the settlement agreement, if
Leadville failed to make that
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. In April, 1995, Leadville asked the United
States for a ninety
day extension of the April, 1995 deadline. To date, the United
States has not
responded to Leadville's request.
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.
-12-
LEADVILLE CORPORATION
NOTE TO THE FINANCIAL STATEMENTS
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.
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 in the case 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
has appealed the
decision and in March, 1995, the appellate court heard oral
arguments in the case. The
parties are currently awaiting a ruling by the appellate court.
The Company has made
provision for the $65,000 under other expenses on its Statements
of Operations for 1994
and reports the liability under accrued expenses on the balance
sheet.
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.
-13-
LEADVILLE CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 5. COMMITMENTS AND CONTINGENCIES (continued):
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 March 31, 1995.
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
$3,555,000 at March 31, 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.
-14-
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 three 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 $30,500 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
participation on the
Diamond property with mining companies or investment groups.
During January, 1992, Leadville reached an agreement with the
United States to settle
alleged claims against the Company relating to environmental
matters. Leadville was
notified that the agreement was signed in February 1993, and
lodged with the District
Court for a public comment period. 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 March 31,
1995, the Company's balance sheet reports a $92,000 long-term
liability to reflect the
present value of the $250,000 minimum payments due under the
settlement and $18,000 as
current portion due by April, 1995. As of May 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. Leadville has asked the United
States for a ninety
day extension of the deadline date of April 30, 1995. As of May
15, 1995, Leadville
has not received a response from the United States.
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.
Working Capital
Leadville's working capital deficiency was approximately
$4,838,000 as of March 31,
1995, representing a $156,000 increase in the deficiency compared
to December 31, 1994.
The deficiency increase was due primarily to $30,500 increase in
notes payable and the
$103,000 of accrued interest charges associated with the
Company's debt and legal
judgment obligations. See Note 5 to the Financial Statements.
-15-
Working Capital (continued).
As of March 31, 1995, Leadville had outstanding notes payable in
the face amount of
$452,000, plus accrued interest of $806,000. 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
March 31, 1995, in the
principal amount of $531,000, plus accrued interest of
$1,838,000. 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 also 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 three 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 the United
States, maintaining the Company's properties and performing field
work to conduct
surface and underground property studies and to comply with
various regulatory permits.
During the past 18 months, Leadville has been seeking to raise
significant financing
to develop the Diamond property. To date, no financing has been
secured.
1995 Compared to 1994
The Company had no operating revenue in the first three months of
1995 or 1994. Net
loss for 1995 decreased by $7,700 compared to the net loss in
1994, due primarily to
reductions in general and administrative expenses.
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1995 Compared to 1994 (continued).
Interest expense increased approximately $26,000 during the first
three months of 1995,
compared to the first three 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
$33,000 during the first three months of 1995 compared to the
first quarter 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.
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Part II
Item 6. Exhibits and reports on Form 8-K.
(b) No reports were filed on Form 8-K during the first
quarter of
of 1995.
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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, Vice President,
Secretary-Treasurer, (Principal
Financial and Accounting Officer)
Dated: 05/23/95
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