UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of
1934 For Quarterly period ended September 30, 1999
Transaction report under Section 13 or 15(d) of the Exchange Act For the
transition period from ___________ to ___________
Commission file number 0-1519
LEADVILLE CORPORATION
- --------------------------------------------------------------------------------
(Exact Name or Registrant as Specified in its Charter)
COLORADO 84-0388216
-------- ----------
(State of Incorporation) (I.R.S. Employer Identification No.)
7002 Graham Road, Suite 106, Indianapolis, Indiana 46220
- -------------------------------------------------- -----
(Address of Principal Executive Office) (Zip Code)
(317) 596-0735
--------------
(Issuer's telephone number)
N/A
- --------------------------------------------------------------------------------
(Former name, address and former fiscal year, if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ____
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes ____ No ____
APPLICABLE ONLY TO CORPORATE ISSUERS
10,927,063
----------
State the number of Shares of the issuer's
classes of common equity, as of the
latest practicable date:
Transitional Small Business Disclosure Format (Check one):
Yes ____ No X
<PAGE>
LEADVILLE CORPORATION
INDEX TO FINANCIAL STATEMENTS
AND SUPPLEMENTARY INFORMATION
PART I - FINANCIAL INFORMATION Page
----
FINANCIAL STATEMENTS
Balance sheets 3 - 4
Statements of operations 5
Statements of stockholders' equity 6
Statements of cash flows 7
Notes to financial statements 8 - 12
PLAN OF OPERATION 13 - 14
PART II - OTHER INFORMATION
Legal proceedings 15
Exhibits and reports on Form 8-K 16
-2-
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
- ----------------------------
LEADVILLE CORPORATION
Balance Sheets
September 30, 1999
(Unaudited)
September 30, December 31,
1999 1998
----------- -----------
ASSETS
CURRENT ASSETS
Cash $ 15,735 $ --
Prepaid expenses and other 13,903 9,279
----------- -----------
Total current assets 29,638 9,279
----------- -----------
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 (2,989,146) (2,938,232)
----------- -----------
6,547,001 6,597,915
----------- -----------
OTHER ASSETS:
Investments - certificates of deposit 104,265 104,265
Inventories 238,714 272,689
----------- -----------
342,979 376,954
----------- -----------
$ 6,919,618 $ 6,984,148
=========== ===========
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<PAGE>
September 30, December 31,
1999 1998
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURENT LIABILITIES
Related parties: (Note 4)
Convertible debentures (Note 3) $ 440,000 $ 440,000
Notes payable, stockholders (Note 3) 1,477,037 1,311,037
Accrued interest payable 4,615,315 4,108,625
Accrued salaries due officers 346,062 184,000
Due to officers and directors 60,243 36,203
Notes payable-other 32,500 119,000
Accounts payable 43,121 41,852
Accrued expenses 196,864 198,517
------------ ------------
Total current liabilities 7,211,142 6,439,234
------------ ------------
SETTLEMENT OF LITIGATION (Note 3) 65,000 65,000
LONG-TERM DEBT:
Related parties -- --
Other -- --
COMMITMENTS AND CONTINGENCIES (Note 3)
STOCKHOLDERS' EQUITY
Capital stock, par value $1 per share;
authorized 15,000,000 shares; issued and
outstanding September 30, 1999 and
December 31, 1998, 10,927,063 and 10,505,065
shares, respectively 10,927,063 10,505,065
Additional paid-in capital 8,082,482 8,332,482
------------ ------------
19,009,545 18,837,547
Accumulated deficit (19,366,069) (18,357,633)
------------ ------------
Total stockholders' equity (356,524) 479,914
------------ ------------
$ 6,919,618 $ 6,984,148
============ ============
See Notes to Financial Statements.
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<PAGE>
<TABLE>
<CAPTION>
LEADVILLE CORPORATION
STATEMENTS OF OPERATIONS
Nine Months Ended September 30, 1999 and 1998
(Unaudited)
Three Months Nine Months
ended September 30, ended September 30,
------------------- -------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating revenue $ -- $ -- $ -- $ --
------------ ------------ ------------ ------------
Operating costs and expenses:
General and administrative 111,659 90,594 486,939 527,180
Depreciation 16,930 16,992 50,914 50,726
------------ ------------ ------------ ------------
Total operating expenses 128,589 107,586 537,853 577,906
------------ ------------ ------------ ------------
Operating loss (128,589) (107,586) (537,853) (577,906)
------------ ------------ ------------ ------------
Financial income and expense:
Other income 2,400 -- 2,778 --
Interest income 799 1,687 4,993 5,693
Interest expense (153,102) (182,938) (478,354) (506,519)
------------ ------------ ------------ ------------
Total financial income
(expense) (149,903) (181,251) (470,583) (500,826)
------------ ------------ ------------ ------------
Net loss $ (278,492) $ (288,837) $ (1,008,436) $ (1,078,732)
============ ============ ============ ============
Net loss per capital
share $ (.02) $ (.03) $ (.09) $ (.10)
============ ============ ============ ============
Weighted average number of
capital shares outstanding
(total shares) 10,919,327 10,505,065 10,903,396 10,504,065
============ ============ ============ ============
See Notes to Financial Statements.
-5-
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LEADVILLE CORPORATION
STATEMENTS OF STOCKHOLDERS' EQUITY
Nine Months Ended September 30, 1999
(Unaudited)
September 30, 1999 December 31, 1998
-------------------------- -------------------------
Shares Amount Shares Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
Capital Stock 10,927,063 $ 10,927,063 10,505,065 $ 10,505,065
Additional
Paid-in Capital 8,082,482 8,332,482
Accumulated deficit,
December 31, 1998 (18,357,633) (18,357,633)
------------ ------------
651,912 $ 479,914
============
Net Loss,
September 30, 1999 (1,008,436)
------------
$ (356,524)
============
See Notes to Financial Statements.
-6-
</TABLE>
<PAGE>
LEADVILLE CORPORATION
STATEMENTS OF CASH FLOWS
Nine Months Ended September 30, 1999 and 1998
1999 1998
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(1,008,436) $(1,078,732)
Adjustments to reconcile net loss
to net cash provided by (used) in
operating activities:
Depreciation 50,914 50,726
Stock issued for officer compensation 150,000 225,000
Change in assets and liabilities:
(Increase) decrease in:
Prepaid expenses (4,624) 8,716
Investments-CDs -- 19,263
Inventories 33,975 33,975
Increase (decrease) in:
Accounts payable 1,269 (1,225)
Accrued expenses (1,653) (4,187)
Officer payables 186,102 138,433
Accrued interest 508,688 509,161
----------- -----------
Net cash provided by (used
in) operating activities (83,765) (98,870)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowing, related party 99,500 150,000
Repayment of note principal -- (40,000)
----------- -----------
Net cash provided by financing
activities 99,500 110,000
----------- -----------
Increase (decrease) in cash and
cash equivalents 15,735 11,130
Cash and cash equivalents:
Beginning -- 9,182
----------- -----------
Ending $ 15,735 $ 20,312
=========== ===========
SUPPLEMENTAL DISCLOSURES OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Capital stock issued for forgiveness
of accounts payable, interest
and officer compensation $ 171,998 $ 3,000
=========== ===========
See Notes to Financial Statements.
-7-
<PAGE>
LEADVILLE CORPORATION
NOTES TO FINANCIAL STATEMENTS
September 30, 1999
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES:
-------------------------------------------------------
Nature of Business - Leadville Corporation (the Company) is engaged in the
development of hard rock mineral properties in Lake and Park Counties, Colorado.
Inventories - Inventories are stated at the lower of cost (average method) or
market value. Inventories consist of operating and maintenance supplies. In
1995, the Company began amortizing the carrying value of inventory to recognize
a declining useful life and obsolescence.
Property and Equipment - Mining properties consist primarily of patented and
unpatented mining claims. 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 20 years.
Accounts Receivable - The EPA has acknowledged the receipt of soil and rock
materials from two of the Company's mining properties. Based on the Company's
assessment of fair market value, the Company has invoiced the EPA for $3,880,330
for the majority of this soil and rock. However, the EPA has not yet agreed to
the fair value of the soil and rock and, as such, the Company will not record
this transaction until collectibility is assured.
Income Taxes - The Company accounts for income taxes under the liability method,
whereby deferred tax assets and liabilities are recorded for the expected future
tax consequences of events that have been included in the financial statements
or tax returns. Under this method, deferred tax assets and liabilities are
determined based on the difference between the financial statements and tax
bases of assets and liabilities using enacted tax rates in effect for the year
in which the differences are expected to reverse.
Net Income (Loss) Per Capital Share - The net income (loss) per capital share is
based on the weighted average number of shares outstanding during the period.
Convertible debt has not been included in the computation of fully diluted
earnings per share because its effect would be anti-dilutive.
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. Subsequent to 1988, interest has
been expensed due to the suspension of development activities on the Company's
properties.
Use of Estimates - The preparation of the Company's consolidated financial
statements in conformity with generally accepted accounting principles requires
the Company's management to make estimates and assumptions that affect the
amounts reported in these financial statements and accompanying notes. The
Company makes significant assumptions concerning the realizability of its
investment in property and equipment, and the ultimate liabilities associated
with asserted claims. Management believes that the interim financial statements
include all adjustments necessary in order to make the financial statements not
misleading.
-8-
<PAGE>
2. CONTINUING OPERATIONS:
----------------------
The accompanying financial statements have been prepared on a going concern
basis which contemplates the realization of assets and liquidation of
liabilities in the ordinary course of business. At September 30, 1999, 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
cost. In addition, the Company has suffered recurring losses from operations and
at September 30, 1999 has a working capital deficiency of approximately
$7,181,504, which includes approximately $6,578,436 due to related parties. The
Company also has inventories, which the Company intends to utilize in the
start-up and operation of its mining properties. As the ultimate realization of
the mining properties and related inventories depends on circumstances which
cannot currently be evaluated, it is not possible to determine whether any loss
will ultimately be realized from their disposition. All real properties are
collateral for convertible debentures. The Company has no property or liability
insurance coverage at September 30, 1999 or as of the date of this report. Past
litigation concerning environmental matters has made it difficult to date for
the Company to obtain working capital through additional equity or financing.
Annual fees are required to maintain possessory titles to unpatented mining
claims. However, without additional working capital, the Company may be unable
to pay the required fees. Working capital must be obtained to allow for future
operations.
The Company believes a substantial portion of the convertible debentures, notes
payable, accrued interest and certain other obligations may, at some future
time, be converted into capital shares. Management is continuing to investigate
alternatives to raise additional working capital which will be required to meet
current and future obligations.
If the Company cannot successfully restructure its debt, obtain working capital,
and ultimately achieve profitable operations, there is substantial doubt about
the ability of the Company to continue as a going concern. The financial
statements do not include any adjustments which might result from the outcome of
these uncertainties.
3. MINING PROPERTIES:
------------------
As of September 30, 1999, the Company owns two mining properties: the
Sherman-Hilltop Consolidation, consisting of approximately 3,000 acres and the
Diamond-Resurrection Consolidation, consisting of approximately 1,180 acres. The
Company also owns the 340 acre Stringtown Mill Site which was a functioning
milling facility in 1989 and is still permitted for this use.
Activity at the Diamond-Resurrection property, primarily a gold property along
with other metals including silver, lead and zinc in recoverable quantities, has
been suspended since 1989 due to insufficient cash resources to finance further
exploration and development work. The Company maintains a $12,700 reclamation
bond for the site.
Since May of 1987 and continuing into 1999, the Company's activities at the
Sherman Mine, primarily a silver property with other metals including gold,
copper, lead and zinc, have been limited to care, maintenance and permit related
work. During 1985, the Sherman Mine was placed in temporary cessation due to
suspension of mining activities. During 1995, the temporary cessation period
expired and the Company will be required to conduct a program of study,
exploration and sampling to maintain existing regulatory permits. In the event
the required work is not performed, the Company may be required to reclaim the
Sherman Mine site. The Company maintains a reclamation bond, in the amount of
$91,600, which relates to the Sherman and Stringtown Mill sites.
Substantially all of the Company's real properties serve as security for
outstanding convertible debentures.
-9-
<PAGE>
4. NOTES PAYABLE AND CONVERTIBLE DEBENTURES:
-----------------------------------------
The notes payable are summarized as follows:
September 30, December 31,
1999 1998
-------- --------
Note payable, at 18%, to stockholder,
due October 1, 1999, collateralized
by mining properties $867,037 $867,037
-------- --------
Notes payable, at 10% and 15%, to
stockholders and/or officers/
directors, due dates range to
December 31, 1999 $577,500 $444,000
======== ========
Notes payable-other, at 7.5% to 10%
with due dates ranging to
December 31, 1999 $ 32,500 $119,000
======== ========
Each of the above notes payable is convertible into the Company's capital stock
at the option of note holder at a conversion prices ranging from $.80 to $3.00
per share during the term of the note, except the note payable at 18% of which
only $300,000 is so convertible.
The convertible debentures are summarized as follows:
September 30, December 31,
1999 1998
-------- --------
10% convertible debentures,
interest and principal due through December 1999,
convertible to the Company's Capital
Stock at the option of the debenture
holders at a conversion price of $1.00
per share, collateralized by mining
properties. $440,000 $440,000
======== ========
Of the $440,000, $340,000 is due to stockholders.
5. COMMITMENTS AND CONTINGENCIES:
------------------------------
Environmental Litigation - The Company was named as one of several defendants in
an certain legal actions involving environmental matters. The plaintiffs in
these actions, the State of Colorado and the Federal Government, alleged that
the defendants were liable under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA") in connection with mining and
property ownership positions in the approximately 11.5 square mile California
Gulch Superfund site in Lake County, Colorado.
-10-
<PAGE>
While the Company and litigation counsel believed they had substantial and
meritorious defenses to the claims being made, in an effort to expedite a
conclusion and to minimize legal costs, the Company agreed to a settlement of
the cases. During August 1993, a consent decree was entered by the Federal
District Court in Colorado whereby the United States agreed to settle the
Company's alleged liability, with the exception of natural resources damages, if
any, in consideration for $3,000,000. Under the original terms of the consent
decree, a total of $250,000 was to be paid by the Company over 15 years, with a
contingent liability of $2,750,000 to be paid based on profitable operations or
sale of properties. Minimum cash payments are to be $10,000 for years one
through five, $15,000 for years six through ten, and $25,000 for years 11
through 15. The Company has conservatively estimated its potential current
liability to the United States under the consent decree, including interest, at
$203,484.
Contract Mining Litigation - During March 1990, a subcontractor of the Company
filed an action in Lake County District Court for non-payment of approximately
$35,500 for mining services, plus associated costs. The Company has filed a
counter-claim against the plaintiff for approximately $185,000 relating to the
same contract. Other than a Court ordered status report in August 1996, no
action has occurred in the case since 1993.
Certificates of Deposit - The Company is required by the Mined Lands Reclamation
Board to maintain certificates of deposit for future reclamation costs. No
future reclamation costs have been accrued as of September 30, 1999.
6. RELATED PARTY TRANSACTIONS:
---------------------------
Certain officers, directors and stockholders have provided significant loans and
advanced expenses to the Company in recent years. The aggregate indebtedness,
including accrued interest and other payables, amounted to approximately
$6,578,436 at September 30, 1999. Substantially all of that indebtedness is
convertible into the Company's Capital Stock at a price of $1.00 per share.
As of September 30, 1999, the Company owes its President accrued compensation
and expenses of approximately $217,500 and its CEO accrued compensation and
expenses of approximately $128,562.
7. INCOME TAXES:
-------------
At December 31, 1998, the Company has available tax net operating loss
carryforwards of approximately $9,575,000, which can be utilized to offset
future taxable income. Utilization of these loss carryforwards may be limited
due to changes in ownership of the Company, and expire from 1999 through 2018.
-11-
<PAGE>
8. STOCKHOLDERS' EQUITY:
---------------------
During this quarter ended September 30, 1999, no notes payable or accrued
interest were converted to restricted capital stock.
9. FAIR VALUE OF FINANCIAL INSTRUMENTS:
------------------------------------
The estimated fair values for financial instruments are determined at discreet
points in time based on relevant market information. These estimates involve
uncertainties and cannot be determined with precision. The carrying amounts of
cash, certificates of deposit, accounts payable, accrued liabilities, notes
payable, and convertible debentures approximate fair value because of the
short-term maturity of those instruments. The carrying amount of the settlement
of litigation liability approximates fair value as a result of the Company
discounting this liability at the Company's effective borrowing rate.
10. CONCENTRATIONS OF CREDIT RISK:
-------------------------------
Credit risk represents the accounting loss that would be recognized at the
reporting date if counterparties failed completely to perform as contracted.
Concentrations of credit risks (whether on or off balance sheet) that arise from
financial instruments exist for groups of customers or counterparties when they
have similar economic characteristics that would cause their ability to meet
contractual obligations to be similarly effected by changes in economic or other
conditions.
Financial instruments that subject the Company to credit risk consist of
certificates of deposit which are $4,265 in excess of federally insured amounts.
Impact of Year 2000 Issue
The Year 2000 Issue is the result of computer programs being written using
two digits rather than four digits to define years. This could possibly result
in computer malfunction and miscalculations. Based upon a recent assessment, the
Company has determined that it will not be necessary to modify or replace any
significant portions of its equipment or software so that its computers will
properly use dates beyond December 31, 1999. The Year 2000 Issue is not expected
to have material impact on the Company's operations. In that the Company does
not rely significantly on third parties' computer systems for the continuance of
its operations, the Company has determined that it has very little exposure, if
any, to contingencies related to the Year 2000 Issue and no costs to the Company
are anticipated.
-12-
<PAGE>
ITEM 2. PLAN OF OPERATION
-----------------
The following discussion should be read in conjunction with the Company's
consolidated financial statements and related notes included elsewhere herein.
The Company's results may be affected by various trends and factors which are
beyond the Company's control. These include factors discussed elsewhere herein.
With the exception of historical information, the matters discussed below under
the headings "Plan of Operations" may include forward-looking statements that
involve risks and uncertainties. The Company cautions the reader that a number
of important factors discussed herein, and in other reports filed with the
Securities and Exchange Commission, could affect the Company's actual results
and cause actual results to differ materially from those discussed in
forward-looking statements.
The Company received no operating revenues during 1997 and 1998 and incurred net
losses in those years of $1,106,663 and $1,268,116, respectively. Management
does not anticipate that any operating revenues will be generated during the
year 1999. The Company's most viable prospect for generating income from
operations is by achieving production at the Diamond-Resurrection property. The
property should be primarily a gold producer, with significant quantities of
silver, lead and zinc present in the ores. In order to achieve production from
the Diamond-Resurrection property, the Company must secure significant financing
for debt reduction, for furthering mine development and re-establishing milling
capabilities, and for working capital.
The Company is severely undercapitalized. As of September 30, 1999, the Company
has a working capital deficit of $7,181,504 and minimal operating cash. With the
exception of the $500,000 in proceeds received in 1996 from issuance of stock,
substantially all of the Company's cash needs have been met by loans from the
Company's officers and directors, and by proceeds from short-term notes.
Management is hopeful that cash needs for 1999 will be met from existing cash
resources and short-term borrowings until significant financing can be secured.
In 1998 and in the first nine months of 1999, the Company used cash to meet
general, administrative and property obligations. No capital expenditures were
made during the first nine months of 1999.
The Company's certificates of deposit, in the amount of $104,265, are held as
mining reclamation bonds and classified as long term assets.
In order for the Company to continue as a going concern and re-start its mining
operations, a significant amount of capital from sources outside the Company
will be required. During 1999, management is continuing its efforts to develop
business and operational plans, and to obtain financing for the Company's
properties through joint-venture or cash investment. No assurance can be given
that the Company will be successful in securing financing.
The Company continues to incur significant interest charges associated with the
outstanding notes payable and debentures. Management believes that a substantial
amount of the note, debenture and associated accrued interest obligations could
ultimately be converted to Capital Stock by the holders. The holders of these
instruments have the right to convert principal and accrued interest to Capital
Stock at prices of $.80 to $3.00 per share. Substantially all holders of the
notes payable and debentures are stockholders of the Company.
-13-
<PAGE>
The Company intends to use the proceeds from significant financing to meet
existing obligations as needed, to finance a development program, to begin
production from the Diamond-Resurrection Mine and to evaluate other potential
sources of revenue for the Company. The objective of the development program is
to re-start mining operations and to fund an exploration program from mining
revenues in order to identify potential reserves in addition to the more than
800,000 tons already identified at the Diamond Resurrection Mine. Studies
completed on the Diamond-Resurrection Mine property over the past 12 years
include verification of known mineralization, evaluation of mine development and
surface geo-physical investigations. These studies suggest that the
Diamond-Resurrection property may hold significant deposits of gold, silver and
base metals.
Full production at the Diamond-Resurrection Mine will require a significant
capital expenditure to refurbish and/or acquire surface plant and underground
equipment. Realizing operating revenues from Diamond-Resurrection Mine
production will require that the Company re-establish milling capabilities at
the Stringtown Mill site, construct a new milling facility or make other milling
arrangements. No significant capital expenditures are anticipated to be made
until such time as the Company secures significant financing or participation on
the Diamond-Resurrection Mine properties. Management does not anticipate that
there will be any significant change in the number of Company employees, until
such time as significant financing can be obtained.
-14-
<PAGE>
PART II
ITEM 1. LEGAL PROCEEDINGS
-----------------
UNITED STATES (ENVIRONMENTAL PROTECTION AGENCY)
In 1983, the Company was named as one of several defendants in an action (United
States of America vs. Apache Energy and Mineral Company, et al) in Federal
District Court in Colorado under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA") in connection with the
approximately 11.5 square mile California Gulch Superfund site in Lake County,
Colorado. In 1986, the Company was also named as a third party defendant in a
suit (State of Colorado vs. Asarco, Inc., et al) involving the same site. The
cases were subsequently consolidated.
From 1983 through 1988, the Company negotiated with the United States to have
its involvement in the consolidated case dismissed or settled on a de minimis
basis. That effort was ultimately unsuccessful. During the years 1989 and
continuing into 1993, the Company attempted to negotiate a settlement of its
alleged liability to the United States. Management believed that financing might
be obtained by the Company if the claims asserted by the United States were
settled and the financial exposure limited.
During August, 1993, a consent decree was entered by the Federal District Court
in Colorado whereby the United States agreed to settle the Company's alleged
liability, with the exception of natural resources damages, if any, in
consideration for $3,000,000. Under the original terms of the consent decree, a
total of $250,000 was to be paid by the Company over 15 years, with a contingent
liability of $2,750,000 to be paid based on profitable operations or sale of
properties. Minimum cash payments are to be $10,000 for years one through five,
$15,000 for years six through ten and $25,000 for years 11 through 15. The
Company has made no payments to the United States pending negotiations with the
EPA concerning the EPA's use of and compensation for soil and rock materials
from the Company's properties.
COWIN & COMPANY, INC.
In 1990, Cowin & Company, Inc., mining engineers and contractors, filed suit
against the Company in Lake County, Colorado District Court asserting that the
Company was obligated to Cowin & Company, Inc. for approximately $35,500 for
contract mining fees and costs. Cowin & Company, Inc. is requesting damages,
equipment possession and general relief relating to a contract mining agreement
entered into March 3, 1987.
The Company counter-claimed for damages resulting from improper construction of
the Diamond Mine shaft and damages resulting from Cowin & Company activities at
the site. Since no action had been taken in the case since October 1993, the
Court ordered a Status Report be filed on the matter by August 30, 1996. The
status report was filed with the Court, however, no action has occurred since
then.
-15-
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits filed herewith or incorporated by reference to previous filings
with the Securities and Exchange Commission.
Exhibit
Number Description
- ------ -----------
(2) Plan of Acquisition, reorganization, arrangement, liquidation or
succession
(3) Articles of Incorporation and By-laws
(4) Instruments defining the rights of security holders, including
indentures
(9) Voting Trust Agreement
(10) Material Contracts
(11) Statement Regarding Computation of Earning Per Share is not
required since the information is ascertainable from Leadville's
financial statements filed herewith.
(13) Annual Report to security holders, Form 10-Q or quarterly report
to security holders
(16) Letter re: change in accounting principles
(19) Documents not previously filed
(21) Subsidiaries of the Registrant
(22) Published report regarding matters submitted to vote of security
holders
(23) Consents of experts and counsel
(24) Power of Attorney
(27) Financial Data Schedule
(28) Information from reports furnished to state insurance authorities
(29) Additional Exhibits
- -------------------
(3) The Articles of Incorporation of Leadville were filed with its Form 10-K on
May 6, 1965; the By-laws of Leadville were filed with its Report on Form
10-K for the year ended December 31, 1980.
(4) Filed with Form 10-K for year ended December 31, 1987.
(28) Consent Decree, State of Colorado vs. Asarco, Inc., et al, Defendants and
Third Party Plaintiffs vs. Leadville Corporation, et al, Third Party
Defendants: United States of America vs. Apache Energy and Minerals
Company, et al.
(b) Reports on Form 8-K filed during the Registrant's first quarter of 1999.
NONE
-16-
<PAGE>
SIGNATURES
- ----------
Pursuant to the requirements of the Exchange Act, the registrant has caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
LEADVILLE CORPORATION
- ---------------------
(Registrant)
/s/ JOHN H. GASPER
- ------------------
John H. Gasper, President
Dated: November 19, 1999
- ------------------------
-17-
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