SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10Q
Quarterly Report under Section 13 or 15(d) of
the Securities Exchange Act of 1934
For Quarter Ended Commission File Number
March 31, 1996 0-12139
Leesburg Land and Mining Co., Inc.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
Colorado 82-0379959
---------------------- ---------------
(State of incorporation) (I.R.S. Employer
Identification No.)
c/o 10200 W. 44th Ave., #400, Wheat Ridge, CO 80033
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: None
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 reports), and (2) has been subject to the filing
requirements for at least the past 90 days.
Yes No X
------ ------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at November 13, 1996
- ----- --------------------------------
Common stock 52,476,317
No par value
<PAGE>
<TABLE>
<CAPTION>
LEESBURG LAND AND MINING CO., INC.
(A Development Stage Company)
BALANCE SHEET
March 31, December 31,
1996 1995
---------- -------------
(unaudited) (audited)
<S> <C> <C>
Assets:
PROPERTY AND EQUIPMENT
Vehicle $ 20,818 $ 20,818
Less: accumulated depreciation (20,818) (20,818)
Total Property and Equipment $ 0 $ 0
------------- -------------
TOTAL ASSETS $ 0 $ 0
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable (Note 2) $ 8,458 $ 26,176
Total current liabilities $ 8,458 26,176
------------- -------------
Stockholder's equity (Deficit):
Preferred stock, 1,000,000 shares 4,122,610 4,104,605
of no par value authorized, none issued
Common stock, no par value; authorized,
100,000,000 shares Issued and outstanding
52,476,317 shares at March 31, 1996
and December 31, 1995
Accumulated (deficit) during the 4,131,068 (4,130,781)
development stage
------------- -------------
Total Stockholders' equity (8,458) (26,176)
------------- -------------
TOTAL LIABILITIES & STOCKHOLDERS' $ 0 $ 0
EQUITY
============= =============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LEESBURG LAND & MINING CO., INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
(unaudited)
Cumulative During Three months ended
Development Stage March 31, 1996
----------------- -------------------
(Unaudited)
<S> <C> <C>
REVENUE:
Interest Income $ 92,753 --
Geo contract 90,000 --
Equipment rental income 13,500 --
Miscellaneous income 14,014 --
------------ ------------
TOTAL REVENUES 210,267 --
EXPENSES:
Exploration costs 867,048 --
General & administrative 1,209,177 287
Interest expense 425,767 --
Depreciation expenses 790,967 --
Abandonment of claims and leases 626,637 --
Loss- sale of mining equipment 287,173 --
Loss - sale of polaris coal co 228,000 --
Write down of mining equipment 127,664 --
Bad debts 196,985 --
Services contributed by officers 78,200 --
------------ ------------
TOTAL COSTS & EXPENSES 4,837,618 287
------------ ------------
NET INCOME (LOSS) BEFORE EXTRAORDINARY 4,627,351 (287)
ITEM
EXTRAORDINARY ITEM, Reduction of 496,283 --
payables (Note 2)
NET INCOME (LOSS) (4,131,068) $ (287)
============ ============
NET INCOME (LOSS) PER SHARE: (.46) --
Income (loss) before extraordinary item .05 --
------------ ------------
NET INCOME (LOSS) (.41) --
------------ ------------
WEIGHTED AVERAGE NUMBER OF SHARES 10,156,148 52,476,317
OUTSTANDING
------------ ------------
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LEESBURG LAND & MINING CO., INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(unaudited)
Cumulative During Three months ended
Development Stage March 31, 1996
----------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(4,131,068) $ (287)
Items not requiring cash: --
Depreciation 790,967 --
Contributed services 78,487 --
(Gain) loss on disposal of mining claims 1,040,147 18,005
and equipment
Other (5,443) --
Contingency recorded as note payable 62,386 --
Loss on investment in polaris 228,000 --
Additional payables transferred to equity 187,777 --
(Increase) decrease in accounts -- (17,718)
receivable
Increase (decrease) in accounts payable 26,176 --
---------- ----------
Cash (used) by operating activities 1,722,571
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of mining claims (72,301) --
Purchase of vehicles (103,614) --
Purchase of mining equipment (1,319,676) --
Purchase of other equipment (9,996) --
Purchase of polaris coal company (6,500) --
Proceeds - sale of mining equipment 247,910 --
---------- ----------
Cash provided (used) by investing 1,264,177 --
activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Notes payable payments (110,130) --
Proceeds from sale of common stock and 3,111,194 --
warrants, net of registration costs
Purchase of treasury stock (14,316) --
----------- -----------
Cash provided by financing activities 2,986,748 --
----------- -----------
Increase (decrease) in cash & cash -- --
equivalents
Cash & cash equivalents - beginning of year -- --
----------- -----------
Cash & cash equivalents - end of year -- --
=========== ===========
The accompanying notes are an integral part of the financial statements
</TABLE>
<PAGE>
LEESBURG LAND & MINING CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 1996 (unaudited)
NOTE 1 - OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNT PRINCIPLES
Leesburg Land & Mining, Inc. (the "Company" or "Leesburg") was incorporated on
June 21, 1983. From June 21, 1983 (Inception) to December 31, 1984, the Company
was engaged in the development of a gold placer claim located near Salmon,
Idaho. As of December 31, 1984, the Company's only mining claim was abandoned.
Pursuant to a change in control of the Company in April 1985, the Company
purchased an interest in a coal company. The Company sold its interest in the
coal company in November 1985. In December 1985, the Company entered into a
contract with a non-affiliated partnership to complete a geothermal well,
construct a power plant and assist in obtaining needed financing on a
fixed-price basis. The geothermal well was plugged and abandoned in 1986 when
the underground resource was deemed inadequate. The Partnership failed to make
payments to the Company under the contract. The Company has never derived
significant revenues from any of its attempted operations.
In 1987, the Company filed for a Chapter 11 bankruptcy, but voluntarily withdrew
the filing in 1988. Since 1988, the Company has been selling its claims,
property and equipment. In addition, the Company has been eliminating its debt
(Notes 2 and 3) and seeking a private company with which to merge. No such
company has been identified or found.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. However, the Company has incurred
cumulative net losses of $4,131,068 since inception. At March 31, 1996,
liabilities exceeded assets by $8,458. In addition, the Company has recently
eliminated amounts due to creditors based on the tolling of the statute of
limitations. As described in Notes 2 and 3, the statute of limitations does not
preclude creditors from threatening or bringing litigation, which would be
costly for the Company to defend. In view of these matters, the future of the
Company is dependent upon management's ability to find a company with which to
merge and favorable final outcome regarding the elimination of debts.
Property and equipment
Property and equipment are stated at cost and depreciated on a straight line
basis over the estimated useful lives of the asset (10 years for mining
equipment, 4-7 years for vehicles and 5-10 years for furniture and fixtures).
Maintenance and repairs are expenses as incurred. When assets are sold or
retired, the cost and related accumulated depreciation is removed from the
accounts and the resulting gain or loss is included as income. As of December
31, 1993, all of the mining equipment had been sold and the costs and
accumulated depreciation had been written off against the sales price. The
remaining asset on the balance sheet at March 31, 1996, has been fully
depreciated.
<PAGE>
LEESBURG LAND & MINING CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS, CONT.
March 31, 1996 (unaudited)
Statement of cash flows
For statement of cash flows purposes, the Company considers short-term
investments with original maturities of three months or less to be cash
equivalents.
Earnings per common share
Net income or (loss) per common share is based on the weighted average number of
shares of common stock outstanding during the periods presented. The cumulative
weighted average number of shares outstanding do not include shares issued to a
Belgian company and then later rescinded and canceled by the Company (Note 4).
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates. Significant estimates have been made with
regards to estimates of contributed services.
Note 2 - Accounts Payable
In 1985, the Company contracted to drill a geothermal well and construct a power
plant in central Nevada. In 1986, the Company's consulting engineer determined
that the well was unsuccessful and, as a result of the Partnership's failure to
pay the Company, the Company did not have cash to pay its own creditors, most of
whom had supplied services and supplies connected with the well. The payables
amounted to approximately $277,000. In 1987 the Company filed to reorganize
under Chapter 11 of the Bankruptcy Code, listing approximately $330,000 as
payable to creditors. In 1988, the Company voluntarily withdrew the bankruptcy
filing, without having yet repaid the creditors. The only creditor to reduce its
receivable to a note and judgment was Halliburton Energy Service
("Halliburton"). The Company made several payments on this debt, but interest
continued to accrue through 1993 after which an agreement on settlement was
reached.
At December 31, 1993, on the advice of Counsel, the Company eliminated a
substantial amount of accounts payable and reported $457,657 as an extraordinary
gain. The Company, based on the advice of its legal counsel, determined that the
claims of these creditors were outside the time limitations of the statutes of
the States of Colorado and Nevada for causes of action most likely to be pled by
<PAGE>
LEESBURG LAND & MINING CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS, CONT.
March 31, 1996 (unaudited)
such creditors. The statute expired for these claims in December 1993. As a
result, management and its attorney believe that the Company would most likely
have a defense that would be reasonably based upon fact and law and that the
probability of these creditors successfully overcoming such a defense is
substantially remote. It is not impossible that a creditor could seek a
jurisdiction other that Colorado or Nevada in which to commence collection and
the Company would then be forced to defend or compromise such claim at some
expense.
Legal Counsel to the Company has opined that the chance of such successful
litigation by a creditor is substantially remote, although such an outcome
cannot be absolutely determined with certainty at this time.
In late 1994, the Company reopened negotiations with Halliburton, a creditor.
The Company and Halliburton agreed to a settlement of approximately $15,000 in
early 1995. Since that settlement was substantially less than the amount plus
interest then recorded as a liability, the Company ceased to accrue interest. In
1995, the Company recognized $38,626, the amount of debt forgiven, as
extraordinary income. In January 1996, the Company settled its debt to
Halliburton by paying $14,000.
Note 3 - Notes Payable
In 1986, the Company sold 128,000 shares of its common stock to Rio Delta Land
Company ("Rio Delta"). The Company planned to work in a venture with Rio Delta
to develop a mining property. However, in 1987, after expending approximately
$70,000 on the project, the Company terminated the venture with Rio Delta and
agreed to pay Rio Delta approximately $60,000 plus interest in exchange for
return of the common stock issued to Rio Delta. The Company never received its
stock from Rio Delta but nonetheless maintained the debt on its books as a
contingency despite the fact that legally there may be no valid claim against
the Company. The Company has unsuccessfully tried to contact Rio Delta and its
controlling shareholder to resolve the matter. Interest was accrued at 12% per
annum from 1987 through December 31, 1994, and amounted to approximately
$80,000.
As of December 31, 1994, the Company, based on the advice of its legal counsel,
determined that any claim by Rio Delta, if valid, lies outside the time
limitations of the statutes of the limitation of Colorado and Nevada. The
Company believes that it would most likely have a defense that would be
reasonably based upon fact and law and that the probability of this creditor
successfully overcoming such a defense is substantially remote. The statute of
limitations is six years on the debt due to Rio Delta, and that limitaiton
<PAGE>
LEESBURG LAND & MINING CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS, CONT.
March 31, 1996 (unaudited)
expired in December, 1994. As a result of the above determination, on December
31, 1994, the Company wrote off the principal, plus accrued interest and
estimated legal expenses, totaling $142,012, to equity. The 128,000 shares of
common stock sold to Rio Delta currently remain issued and outstanding.
It is not impossible that a creditor could seek a jurisdiction other than
Colorado or Nevada in which to commence collection and the Company would then be
forced to defend or compromise such claim at some expense. Legal Counsel to the
Company has opined that chance of such successful litigation by this creditor is
substantially remote, although such an outcome cannot be absolutely determined
with certainty at this time.
Note 4 - Stockholder's Equity
The Company amended its Articles of Incorporation to authorize the issuance of
1,000,000 shares of preferred stock with no par value. The preferred stock may
be issued from time to time with such designation, rights, preferences and
limitations as the Board of Directors may determine by resolution. As of March
31, 1996, no shares of preferred stock have been issued.
In 1989, the Company sold 2,500,000 shares of the Company's common stock to a
Belgian company, N.V. Handels-Kreditkantoor/Comtoir de Credit s.a. ("HKCC") in
exchange for 7,500,000 fine art prints. In addition, the Company issued 650,000
shares to Asher Investments Limited ("Asher") as a finder's fee. As part of the
sales agreement, HKCC agreed to loan the Company $300,000. The Company valued
the combined transaction at $2,520,000. However, HKCC never delivered the prints
or made the loan. As a result, in 1990, the Company negotiated the recision of
the stock issuance. Since the transaction was never fully executed, it has not
been included in the schedule above or in calculation of weighted average shares
outstanding for determining earnings (loss) per share. The stock transfer agent
canceled the outstanding shares in 1994.
The Company's officers contributed management services valued at $18,200 and
$10,000 during 1995 and 1994, respectively. During 1995, the Board of Directors
approved issuing 2,500,000 shares of common for $100 of services to One Capital.
During 1994, the President waived $62,618 owed to him for past services rendered
in exchange for 28,500,000 shares of common stock for which $750 was deemed
consideration. During 1994, the Vice President waived $45,532 owed to him for
past services rendered in exchange for 19,000,000 shares of common stock for
which $500 was deemed consideration. These transactions were authorized by the
Board of Directors and the amounts were credited to stockholder's equity.
<PAGE>
LEESBURG LAND & MINING CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS, CONT.
March 31, 1996 (unaudited)
Also during 1994, the Company unilaterally transferred the debt and accrued
interest owed to Rio Delta, a major shareholder, to equity (see Note 3). The
principal and interest totaled $142,012 and was transferred after the time
period for the statute of limitations expired.
During the three months ended March 31, 1996, the Company's officers contributed
$18,000 in cash to reduce accounts payable by $17,718 and expenses of $287. No
stock was issued for this contribution.
Note 5 - Income Taxes
At March 31, 1996, the Company has a net operating loss (NOL) carry- forward for
tax purposes of approximately $3,620,000 (expiring in the years 1998 to 2010).
In addition, the Company has a tax credit carry- forward of approximately
$20,000 (expiring in the years 1999 to 2000).
Deferred tax assets (liabilities) at March 31, 1996:
March 31,
Deferred tax assets due to: 1996
----------
Payables $ 10,182
Receivables 1,407,844
----------
Net operating loss carry-forward 1,418,026
Valuation allowance for deferred
tax assets (1,418,026)
Net deferred tax asset $ -
<PAGE>
ITEM 2.
Management's Discussion and Analysis of Financial Condition and Results
of Operations.
- --------------------------------------------------------------------------------
Results of Operations
- ---------------------
The Company has experienced increased operating expenses for the three
month period of $287. The revenues for the period totaled $0. The Company
recorded a combined net loss of $287 for the period. The Company losses on
operations will continue until more income can be achieved. While the Company is
seeking capital sources for investment; there is no assurance that sources can
be found.
Liquidity and Capital Resources
- -------------------------------
The Company had inadequate cash capital at the end of the period. The
Company will be forced to either borrow against or sell assets or make private
placements of stock in order to fund operations continuance. No assurance exists
as to the ability to achieve sales of assets or loans against the assets, or
make private placements of stock.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
- ------- -----------------
None
ITEM 2. CHANGES IN SECURITIES
- ------- ---------------------
None
ITEM 3. DEFAULT UPON SENIOR SECURITIES
- ------- ------------------------------
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------- ---------------------------------------------------
None
ITEM 5. OTHER INFORMATION
- ------- -----------------
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------- --------------------------------
No reports on Form 8-K were made for the period for which this report
is filed.
<PAGE>
LEESBURG LAND & MINING CO., INC.
(A Development Stage Company)
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.
LEESBURG LAND & MINING CO., INC.
Date: November 13, 1996 /s/ ROBERT BEATON
----------------------------------------
President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 20,818
<DEPRECIATION> (20,818)
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 8,458
<BONDS> 0
0
0
<COMMON> 4,122,610
<OTHER-SE> (4,131,068)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 287
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (287)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (287)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
