SECURITIES EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
Annual Report Pursuant to
the Securities Exchange Act of 1934
For the fiscal year ended 12-31-96
Commission file number 012139
LEESBURG LAND & MINING, 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
----
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: None
----
Name of each exchange on which registered: N/A
----
Securities registered pursuant to Section 12(g) of the Act:
Title of each class: Common No Par Value
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 X No
--- ---
Check if disclosure of delinquent filers pursuant to Item 405 of Regulation S-B
is not contained in this form, and no disclosure will be contained, to the best
of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. X
---
State issuer's revenues for its most recent fiscal year. $0
1
<PAGE>
Transitional Small Business Disclosure Format:
Yes X No
--- ---
Aggregate market value of the voting stock held by non-affiliates of the
registrant as of December 31, 1996: $0
Number of outstanding shares of the registrant's no par value common stock, as
of December 31, 1996: 52,476,317.
2
<PAGE>
PART 1
Item 1. Business
Leesburg Land & Mining, Inc. (the Company), was organized under the laws of
the State of Colorado on June 21, 1983. The Company is in the development
stage as defined in Financial Standards Board Statement No. 7.
In 1983, the Company sold 30,000,000 shares of no par value common stock in
an S-18 public offering. The offering price for each share was $.10. The
Company received $2,550,000, net of offering costs, from the sale of common
stock in the public offering. In 1985 the shareholders authorized and the
board implemented a one for forty share reverse split of the common shares.
From June 21, 1983 (Inception) to December 31, 1984, the Company was
engaged in the exploitation 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 drill
and 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 and seeking a private company with which to merge. No
such company has been identified or found.
No significant business activity was conducted by the Company during the
fiscal year. As a result, no income was realized by the Company in its last
fiscal year.
The Company was inactive and presently does not participate in any industry
segment. The Company had no material revenues, or operating profits or
identifiable assets attributable to its industry segment.
3
<PAGE>
Item 2. Property
--------
The Company does not have any formal offices at year end. Records are
maintained and mail received at 10200 W. 44th Ave., #400, Wheat Ridge, CO
80033. The company owns no real property.
Item 3. Legal Proceedings
-----------------
The Company is a party to no pending legal proceedings, nor is its property
subject to such proceedings, at year end 1996.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
No matters were submitted during the fiscal year covered by this report to
a vote of security holders of the Company, through the solicitation of
proxies or otherwise.
PART II
-------
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
----------------------------------------------------------------------
As of the date of this report, management knows of no trading or quotation
of the Company's common stock. The range of high and low bid quotations for
each fiscal quarter since the last report, as reported by the National
Quotation Bureau Incorporated, was as follows:
1996 High Low
--------------- ---- ---
First quarter * *
Second quarter * *
Third quarter * *
Fourth quarter * *
1995 High Low
--------------- ---- ---
First quarter * *
Second quarter * *
Third quarter * *
Fourth quarter * *
1994 High Low
--------------- ---- ---
First quarter * *
Second quarter * *
Third quarter * *
Fourth quarter * *
* No quotations reported
4
<PAGE>
The above quotations reflect inter-dealer prices, without retail mark-up,
mark-down, or commission and may not necessarily represent actual
transactions.
As of December 31, 1996 there were 1,059 record holders of the Company's
common Stock.
The Company has not declared or paid any cash dividends on its common stock
and does not anticipate paying dividends for the foreseeable future.
Item 6. Management's Discussion and Analysis of
Financial Condition and Results of Operations
----------------------------------------------
Financial Condition and Changes in Financial Condition
-------------------------------------------------------
1996 Compared to 1995
No operations were conducted and no revenues were generated in the fiscal
year. The Company had $38,626 in extraordinary income in 1995 (reduction in
payables). The Company at year end had no capital, no cash, and a few pieces of
miscellaneous mining equipment. The Company at year end was totally illiquid and
would have needed cash infusions from shareholders to provide capital, or loans
from any sources.
1995 Compared to 1994
No operations were conducted and no revenues were generated in the fiscal
year. The Company received extraordinary income of $38,626 from reduction of
payables but no other income as compared with $2,883 in miscellaneous income in
1994. The Company at year end had no capital, no cash, and a few pieces of
miscellaneous mining equipment. The Company at year end was totally illiquid and
needed cash infusions from shareholders, or loans from others to provide
capital.
Results of Operations
---------------------
1996 Compared to 1995
During the fiscal year ended December 31, 1996, the Company incurred
$16,781 general and administrative expenses, and $5,000 for services contributed
by officers. In 1995 the Company incurred $5,415 in General and Administrative
expenses, and $18,200 for services rendered by officers. At present, the Company
has no business income or operations. Accordingly, the reported financial
information herein may not be indicative of future operating results. Loss on
operations in 1996 was ($22,481) compared to the 1995 loss on operations
($24,715) in extraordinary items of gain on settlement of debt.
5
<PAGE>
1995 Compared to 1994
During the fiscal year ended December 31, 1995, the Company incurred $5,415
in general and administrative expenses, $1,100 in interest expense, and $18,200
for services contributed by officers. This compares to 1994 in which the Company
incurred $28,072 in general and administrative expenses, $14,680 in interest
expenses, and $10,000 for services contributed by officers. At present the
Company has no business income or operations. Accordingly, the reported
financial information herein may not be indicative of future operating results.
Total costs and expenses for 1995 were $24,715 as compared to $52,752 in 1994.
The net loss for 1995 was ($24,715) and for 1994 the net loss was ($49,869). In
1995 the Company recognized an extraordinary item in reduction of payables of
$38,626 which adjusted its net income to $13,911.
Item 7. Financial Statements and Supplementary Data
--------------------------------------------
Please refer to pages F-1 through F-14.
Item 8. Changes in and Disagreements on Accounting and Financial Disclosure
-------------------------------------------------------------------
In connection with audits of two most recent fiscal years and any interim
period preceding resignation, no disagreements exist with any former accountant
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope of procedure, which disagreements if not resolved
to the satisfaction of the former accountant would have caused him to make
reference in connection with his report to the subject matter of the
disagreement(s).
The principal accountant's report on the financial statements for any of
the past two years contained no adverse opinion or a disclaimer of opinion nor
was qualified as to uncertainty, audit scope, or accounting principles except
for the "going concern" qualification.
PART III
Item 9. Directors and Executive Officers of the
Registrant and Compliance with Section 16(a)
--------------------------------------------
The directors and executive officers of the Company as of December 31,
1996, are as follows:**
Name Age Position
---- --- --------
Robert Beaton 49 President, Director
James Poulos 70 Vice President, Director
Michael Schranz 54 Secretary, Treasurer, Director
6
<PAGE>
The term of office of each director and executive officer ends at, or
immediately after, the next annual meeting of shareholders of the Company.
Except as otherwise indicated, no organization by which any director or officer
has been previously employed is an affiliate, parent or subsidiary of the
Company.
Robert Beaton, age 49, received his BA in Business from the University of
Alabama in 1970. Mr. Beaton has acted as President and a director of Leesburg
since 1985. He has acted as an independent consultant for mergers and
acquisitions by public companies, for his own account since 1988.
James Poulos, age 70, acted as a mining Engineer for his career with only
informal on the job training. He has acted as an officer and director of the
Company since 1985. He is otherwise retired.
Michael Schranz, age 54, obtained his B.S. in Civil Engineering from Purdue
University in 1965 and received his MBA at the University of Denver in 1975. He
is a Certified Public Accountant in Colorado. He has been a Vice President and
Director of Registrant since 1988. Mr. Schranz has been a Vice President and
Director of One Capital Corp. from 1982-96 and Vice President and Director of
Overthrust Resources, Ltd. from 1980-96. He has been Managing Director of
Polaris Coal Co., from 1988-96.
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors, and persons who
own more than 10% of a registered class of the Company's equity securities, to
file reports of ownership and changes in ownership of equity securities of the
Company with the Securities and Exchange Commission and NASDAQ. Officers,
directors and greater-than 10% shareholders are required by the Securities and
Exchange Commission regulation to furnish the Company with copies of all Section
16(a) filings.
1. The following people did not file any reports under Section 16(a) during
the most recent fiscal year or prior years:
a. Robert Beaton President and Director
b. James Poulos Secretary and Director
c. Michael Schranz Vice President and Director
2. For each person, listed by subparagraph letter above:
Number of
transactions not
Number of late reported on a Known failures
reports timely basis to file forms
- ------- ------------ -------------
a. 1996 1 (1996) i) Annual Form
5 (1996)
7
<PAGE>
Number of
transactions not
Number of late reported on a Known failures
reports timely basis to file forms
- ------- ------------ -------------
b. 1996 1 (1996) i) Annual Form
5 (1996)
c. 1996 2 (1996) i) Annual Form
5 (1996)
Item 10. Executive Compensation
----------------------
No one executive officer received, or has accrued for his benefit, in
excess of $60,000 for the year. No cash bonuses were or are to be paid to such
persons.
The Company does not have any employee incentive stock option plans.
There are no plans pursuant to which cash or non-cash compensation was paid
or distributed during the last fiscal year, or is proposed to be paid or
distributed in the future, to the executive officers of the Company except that
certain accruals for officer's services were settled with stock issued as more
particularly set forth in "Certain Transactions". No other compensation not
described above was paid or distributed during the last fiscal year to the
executive officers of the Company. There are no compensatory plans or
arrangements, with respect to any executive office of the Company, which result
or will result from the resignation, retirement or any other termination of such
individual's employment with the Company or from a change in control of the
Company or a change in the individual's responsibilities following a change in
control.
8
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE OF EXECUTIVES
Annual Compensation Awards
===================================================================================================================================
Name and Year Salary Bonus Other Annual Restricted Securities
Principal ($) ($) Compensation Stock Underlying
Position ($) Award(s) ($) Options/SARs (#)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert 1994 9,200 0 0 0 0
Beaton, **
President
------------------------------------------------------------------------------------------------------------------
1995 1,800 0 0 0 0
**
------------------------------------------------------------------------------------------------------------------
1996 0 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
James 1994 0 0 0 0 0
Poulos,
Secretary
------------------------------------------------------------------------------------------------------------------
1995 3,000 0 0 0 0
**
------------------------------------------------------------------------------------------------------------------
1996 0 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Michael 1994 0 0 0 0 0
Schranz,
Vice
President
------------------------------------------------------------------------------------------------------------------
1995 100** 0 0 0 0
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
1996 0 0 0 0 0
===================================================================================================================================
</TABLE>
** Restricted common stock shares totalling 47,600,000 were issued for the
unpaid accruals for services and forgiveness of debt. (See "certain Relationship
and Related Transactions") The shares had no market value and a negative net
tangible book value at the time of the award. In 1995 2,500,000 restricted
common shares were issued for services rendered by Michael Schranz in 1995. The
shares had no market value and a negative net tangible book value at the time of
the issuance.
Option/SAR Grants Table (None)
Aggregated Option/SAR Exercises in Last Fiscal Year an FY-End Option/SAR
value (None)
Long Term Incentive Plans - Awards in Last Fiscal Year (None)
9
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR COMPENSATION FOR LAST FISCAL YEAR
(Except for compensation of Officers who are also Directors which Compensation
is listed in Summary Compensation Table of Executives)
Cash Compensation Security Grants
===================================================================================================================================
Name Annual Meeting Consulting Number Number of
Retainer Fees Fees/Other of Securities
Fees ($) ($) Fees ($) Shares Underlying
(#) Options/SARs(#)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
A. Director 0 0 0 0 0
Robert Beaton
- -----------------------------------------------------------------------------------------------------------------------------------
B. Director 0 0 0 0 0
James Poulos
- -----------------------------------------------------------------------------------------------------------------------------------
C. Director 0 0 0 0 0
Michael Schranz
===================================================================================================================================
</TABLE>
Item 11. Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
The following table sets forth information, as of December 31, 1996, with
respect to the beneficial ownership of the Company's no par value common stock
by each person known by the Company to be the beneficial owner of more than five
percent of the outstanding common stock.
<TABLE>
<CAPTION>
Stock Names and Address Beneficial Percent
Title of Class of Beneficial Owner Ownership of Class
- -------------- ------------------- --------- --------
<S> <C> <C> <C>
Common American International 1,185,700 2.2%*
Systems, Inc. (see note 1)
12002 W. 14th Avenue (see note 2)
Golden, CO 80401
(Note 1: Robert Beaton owns 44% of the shares of
American International Systems, Inc. which if
combined with his personal holdings would
result in 55.32% ownership)
Common Robert Beaton 28,510,000 54.3%
12002 W. 14th Avenue
Golden, CO 80401
Common James Poulos 19,031,434 36.3%
4065 Easley Rd.
Golden, CO 80403
(Note 2: James Poulos owns 15.95% of American
International Systems, Inc. which if combined
with his personal holding, would result in
36.6% ownership)
10
<PAGE>
Common Michael Schranz, V.P. & Dir. 244,254 .4%
Polaris Resources
410 17th Street, Ste. 1940
Denver, CO 80202
Common One Capital Corp. of which 2,500,000 4.8%
Mr. Schranz is an officer,
director and shareholder
</TABLE>
Security Ownership of Certain Beneficial Owners and Management (Continued)
--------------------------------------------------------------------------
The following table sets forth information, as of December 31, 1996, with
respect to the beneficial ownership of the Company's no par value common stock
by the directors and officers of the Company, both individually and as a group.
<TABLE>
<CAPTION>
Stock Names and Address Beneficial Percent
Title of Class of Beneficial Owner Ownership of Class
- -------------- ------------------- --------- --------
<S> <C> <C> <C>
Common American International 1,185,700 2.2%*
Systems, Inc.
12002 W. 14th Avenue
Golden, CO 80401
(Note 1: Robert Beaton owns 44% of the shares of
American International Systems, Inc. which if
combined with his personal holdings would
result in 55.32% ownership)
Common Robert Beaton, Pres & Dir. 28,510,000 54.3%
12002 W. 14th Avenue
Golden, CO 80401
Common James Poulos, Secy. & Dir. 19,031,434 36.3%
4065 Easley Rd.
Golden, CO 80403
(Note 2: James Poulos owns 15.95% of American
International Systems, Inc. which if combined
with his personal holding, would result in
36.6% ownership)
Common Michael Schranz, V.P. & Dir. 244,254 .4%
Polaris Resources
410 17th Street, Ste. 1940
Denver, CO 80202
Common One Capital Corp. of which 2,500,000 4.8%
Mr. Schranz is an officer,
director and shareholder
Officers and Directors as a group 95.8%
</TABLE>
11
<PAGE>
Item 12. Certain Relationships and Related Transactions
----------------------------------------------
The Company agreed to issue and authorized issuance of shares to certain
shareholders as compensation and for forgiveness of certain claims for services
rendered to Robert M. Beaton & James F. Poulos for wages accrued from 1987 to
1994; The company issued to Robert M. Beaton: 28.5 million shares for $750 value
and waiver of all other amounts; and the company agreed to issue to James F.
Poulos: 19 million shares for $500 value and waiver of all other amounts. In
1995 the Company issued 2,500,000 restricted common shares to the nominee of
Michael Schranz, Capital One, Inc. for services rendered by Mr. Schranz valued
at $100. The shares had no market value and negative net tangible book value at
date of issue.
PART IV
-------
Item 13. Exhibits and Reports on Form 8-K
---------------------------------
The following documents are filed as part of this report:
1. Reports on Form 8-K: None
2. Exhibits:
INDEX
-----
Form 10-K
Regulation Consecutive
S-K Number Exhibit Page Number
- ---------- ------- -----------
3.1 Articles of Incorporation *Incorporated by reference
to Registration Statement
#2-87742-D
3.2 Bylaws *Incorporated by reference
to Registration Statement
#2-87742-D
27.1 Financial Data Schedule F-15- F-18
12
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, INC.
(Registrant)
Date: April 22, 1997
/S/ ROBERT M. BEATON
-----------------------------------
Robert M. Beaton, President,
Chief Executive Officer
Pursuant to the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.
LEESBURG LAND & MINING, INC.
(Registrant
Date: April 22, 1997
/S/ ROBERT M. BEATON
-------------------------------------
Robert M. Beaton, Director
/S/ MICHAEL SCHRANZ
-------------------------------------
Michael Schranz, Director
/S/ JAMES F. POULOS
-------------------------------------
James F. Poulos, Director
13
<PAGE>
LEESBURG LAND & MINING
FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
<PAGE>
CONTENTS
--------
Page
----
Independent auditors' report 1
Financial statements:
Balance sheets 2
Statements of operations 3
Statements of stockholders' equity (deficit) 4
Statements of cash flows 5 - 6
Notes to financial statements 7 - 12
<PAGE>
HOLBEN, BOAK, COOPER & CO.
- --------------------------------------------------------------------------------
Certified Public Accountants 1720 S. Bellaire Street, Suite 500
Professional Corporation Denver, Colorado 80222
(303) 759-2727 Fax (303) 759-2728
INDEPENDENT AUDITORS' REPORT
----------------------------
Board of Directors
Leesburg Land & Mining, Inc.
Golden, Colorado
We have audited the accompanying balance sheets of Leesburg Land & Mining, Inc.
(a development stage company) as of December 31, 1996 and 1995, and the related
statements of operations, stockholders' equity (deficit) and cash flows for the
years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Leesburg Land & Mining, Inc. (a
development stage company) as of December 31, 1996 and 1995, and the results of
its operations and cash flows for the years then ended, in conformity with
generally accepted accounting principles.
As described in Note 1 to the financial statements, the accompanying financial
statements have been prepared assuming that the Company will continue as a going
concern. As shown in the financial statements, the Company has incurred
cumulative net losses of $4,153,262 since inception. At December 31, 1996,
liabilities exceeded assets by $12,855 and the Company had no cash. These
factors raise substantial doubt about the Company's ability to continue as a
going concern. The financial statements do not include any adjustments that
might result from the outcome of the above uncertainty.
HOLBEN, BOAK, COOPER & CO.
April 18, 1997
Denver, Colorado
<PAGE>
LEESBURG LAND AND MINING CO., INC.
(A Development Stage Company)
BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
----------- -----------
ASSETS
PROPERTY AND EQUIPMENT
<S> <C> <C>
Vehicle $ 20,818 $ 20,818
Less: accumulated depreciation (20,818) (20,818)
----------- -----------
TOTAL PROPERTY AND EQUIPMENT - -
----------- -----------
TOTAL ASSETS $ - $ -
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable (Note 2) $ 12,855 $ 26,176
----------- -----------
TOTAL CURRENT LIABILITIES 12,855 26,176
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, no par value, 1,000,000
shares authorized, none issued
Common stock, no par value;
authorized, 100,000,000 shares;
issued and outstanding, 52,476,317
shares in 1996 and 1995 4,140,407 4,104,605
Accumulated (deficit) during the development stage (4,153,262) (4,130,781)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (12,855) (26,176)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)
$ - $ -
=========== ===========
See notes to financial statements Page 2
</TABLE>
<PAGE>
LEESBURG LAND AND MINING CO., INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
AND FROM JUNE 21, 1983 (INCEPTION) TO DECEMBER 31, 1996 (Unaudited)
<TABLE>
<CAPTION>
Cumulative
During
Development Stage
(Unaudited) 1996 1995
----------------- ---------- -----------
REVENUE:
<S> <C> <C> <C>
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 1,225,671 16,781 5,415
Interest expense 426,467 700 1,100
Depreciation expense 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 83,200 5,000 18,200
------------ ------------ ------------
TOTAL COSTS & EXPENSES 4,859,812 22,481 24,715
------------ ------------ ------------
NET (LOSS) BEFORE
EXTRAORDINARY ITEMS (4,649,545) (22,481) (24,715)
EXTRAORDINARY ITEM,
Reduction of payables ( Note 2) 496,283 -- 38,626
------------ ------------ ------------
NET INCOME (LOSS) $ (4,153,262) $ (22,481) $ 13,911
============ ============ ============
NET INCOME (LOSS) PER SHARE:
(Loss) before extraordinary item $ (.52) $ -- $ --
Extraordinary item 0.06 -- --
------------ ------------ ------------
NET INCOME (LOSS) $ (.46) $ -- $ --
============ ============ ============
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 8,910,402 52,476,317 49,983,166
============ ============ ============
See notes to financial statements Page 3
</TABLE>
<PAGE>
LEESBURG LAND AND MINING CO., INC.
(A Development Stage Company)
STATEMENTS OF CHANGES IN STOCKHOLDER' EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
(See Note 4)
<TABLE>
<CAPTION>
(Deficit)
Accumulated
Common Stock During the
------------------------ Development
Shares Amount Stage Total
------ ------ ----- -----
<S> <C> <C> <C> <C>
Balances, December 31, 1994 49,976,317 $ 4,080,541 $(4,144,692) $ (64,151)
Management services
contributed by officers/shareholders -- 18,200 -- 18,200
Operating expenses paid
by officer/shareholder -- 5,764 -- 5,764
Stock issued to shareholder in
exchange for services at
$ .00004 per share 2,500,000 100 -- 100
Net Income -- -- 13,911 13,911
----------- ----------- ----------- -----------
Balances, December 31, 1995 52,476,317 4,104,605 (4,130,781) (26,176)
Management services
contributed by officers/shareholders -- 5,000 -- 5,000
Operating expenses paid
by officer/shareholder -- 30,802 -- 30,802
Net (loss) -- -- (22,481) (22,481)
----------- ----------- ----------- -----------
Balances, December 31, 1996 52,476,317 $ 4,140,407 $(4,153,262) $ (12,855)
=========== =========== =========== ===========
See notes to financial statements Page 4
</TABLE>
<PAGE>
LEESBURG LAND AND MINING CO., INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
AND FROM JUNE 21, 1983 (INCEPTION) TO DECEMBER 31, 1996 (Unaudited)
<TABLE>
<CAPTION>
Cumulative
Since
Inception
(Unaudited) 1996 1995
----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income (loss) $(4,153,262) $ (22,481) $ 13,911
Items not requiring cash:
Depreciation 790,967 -- --
Contributed services 83,200 5,000 18,200
(Gain) loss on disposal of mining claims
and equipment 1,040,147 -- --
Operating expenses paid by shareholders 36,566 30,802 5,764
Other (11,206) -- 100
Contingency recorded as note payable 62,386 -- --
Loss on investment in Polaris Coal Company 228,000 -- --
Additional payables transferred to equity 187,777 -- --
Increase (decrease) in accounts payable 12,854 (13,321) (37,975)
----------- ----------- -----------
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 activities (1,264,177) -- --
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Note payable payments (110,130) -- --
Proceeds from sale of common stock and
warrants, net of registration costs 3,111,194 -- --
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 $ -- $ -- $ --
=========== =========== ===========
See notes to financial statements Page 5
</TABLE>
<PAGE>
LEESBURG LAND AND MINING CO., INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
(Continued)
Non-Cash Activities
- -------------------
Capital transactions
- --------------------
During 1995, the Company issued 2,500,000 shares of common stock as payment
for services of $100 to a shareholder (see Note 4).
During 1994, officers contributed to the Company $108,151 which constituted
amounts due to them for past services and $1,250 of which was exchanged for
47,500,000 shares of common stock. Also during 1994, the Company
unilaterally eliminated principal and interest payable of $142,012 and
transferred the amount to equity (see Note 4).
Mining claims
- -------------
In 1983, the Company acquired claims valued at approximately $2,000,000
from certain stockholders in exchange for debt and common stock. In 1984,
the claims were returned and the debt terminated. The common stock issued
(525,000 shares) was retained by the stockholders.
Polaris Resources, Inc.
- -----------------------
In 1985, the Company acquired all of the outstanding common stock of
Polaris Coal Company ("Polaris") in exchange for 750,000 shares of its
common stock (valued at $293,500), assumption of $1,200,000 of Polaris debt
and $6,500 in cash. Later in 1985, the Company sold the stock of Polaris
back to the seller in exchange for cancellation of the $1,200,000 debt and
forgiveness of $53,000 in interest. The Company's common stock was retained
by the original seller and the Company realized a loss of $228,000 on the
sale.
See notes to financial statements Page 6
<PAGE>
LEESBURG LAND AND MINING CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
Note 1 - Operations and Summary of Significant Accounting 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 $4,153,262 since inception. At December 31, 1996,
liabilities exceeded assets by $12,855. 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 statue 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 a 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 expensed 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 December 31, 1996
and 1995 has been fully depreciated.
Page 7
<PAGE>
LEESBURG LAND AND MINING CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(CONTINUED)
Note 1 - Operations and Summary of Significant Accounting Principles (Continued)
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.
Net income (loss) 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 Services ("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 legal 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 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.
Page 8
<PAGE>
LEESBURG LAND AND MINING CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(CONTINUED)
Note 2 - Accounts Payable (continued)
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 $14,000 in early 1995. 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 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 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 limitation 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
additional paid-in capital. The 128,000 shares of common stock sold to Rio
Delta currently remain issued and outstanding.
It is not impossible that this 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.
Page 9
<PAGE>
LEESBURG LAND AND MINING CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(CONTINUED)
Note 4 - Stockholders' 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 December 31, 1996, no shares of preferred stock have been
issued.
The Company has been in the development stage since its inception in 1983
and the stockholders' equity (deficit) transactions from inception through
December 31, 1994 are summarized in the schedule below. The transactions
from inception through December 31, 1985 have been audited by other
auditors. The transactions from January 1, 1986 to December 31, 1992 have
not been audited.
<TABLE>
<CAPTION>
Common Stock
--------------------------------- Cumulative
Shares Amount (Deficit)
------ ------ -----------
<S> <C> <C> <C>
Initial stockholder private
placements for cash 329,167 $ 492,500 $ --
Issuance of common stock
for mining claims 525,000 380,000 --
Public offering, net of offering
costs 750,000 2,490,594 --
Issuance of common stock warrants -- 100 --
Retirement of treasury stock (6,250) (14,316) --
Issuance of common stock for
Polaris Coal Company 750,000 293,500 --
Net (losses) Inception to
December 31, 1985 -- -- (2,945,073)
---------- ----------- ------------
Balances,
December 31, 1985 (Audited by
predecessor auditors) 2,348,317 3,642,378 (2,945,073)
Issuance of common stock
for cash 128,000 128,000 --
Services contributed by
shareholders -- 20,000 --
Net (losses), January 1, 1986
to December 31, 1992 -- -- (1,511,274)
----------- ----------- -----------
Balances,
December 31, 1992 (Unaudited) 2,476,317 3,790,378 (4,456,347)
----------- ----------- -----------
(Schedule continues)
Page 10
</TABLE>
<PAGE>
LEESBURG LAND AND MINING CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(CONTINUED)
Note 4 - Stockholders' Equity (Continued)
<TABLE>
<CAPTION>
Common Stock
--------------------------------- Cumulative
Shares Amount (Deficit)
------ ------ -----------
<S> <C> <C> <C>
Services contributed by
shareholders -- 40,000 --
Involuntary conversion of
shareholders' debt -- 142,012 --
Debt forgiven by shareholders -- 106,901 --
Stock issued shareholders
in exchange for debt at
$.00003 per share 47,500,000 1,250 --
Net income, January 1, 1993
to December 31, 1994 -- -- 311,655
----------- --------- ---------
Balances,
December 31, 1994 (Audited 49,976,317 $4,080,541 $(4,144,692)
========== ========== ===========
</TABLE>
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 recission 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 $5,000 and
$18,200 during 1996 and 1995, respectively. During 1995, the Board of
Directors approved issuing 2,500,000 shares of common for $100 of services
to One Capital Corporation ("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 stockholders'
equity (deficit).
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 1996 and 1995, the Company's President and Shareholder paid
operating expenses and creditors $30,803 and $5,764, respectively and
contributed those amounts to the Company.
Page 11
<PAGE>
LEESBURG LAND AND MINING CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(CONTINUED)
Note 5 - Income Taxes
At December 31, 1996, the Company has a net operating loss (NOL)
carry-forward for tax purposes of approximately $3,635,000 (expiring in the
years 1998 to 2011). 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 December 31, 1996 and 1995 are as
follows:
1996 1995
---- ----
Deferred tax assets due to:
Payables $ 5,000 $ 10,182
Net operating loss carry-forward 1,414,372 1,407,844
--------- ---------
1,419,372 1,418,026
Valuation allowance for deferred
tax assets (1,419,372) (1,418,026)
---------- ----------
Net deferred tax asset $ -- $ --
========== ==========
Deferred income taxes are recorded to reflect the tax consequences on
future years of differences between the tax basis of assets and liabilities
and their financial reporting amounts at each year end. Deferred income tax
assets are recorded to reflect the tax consequences on future years of
income tax carry-forward benefits, reduced by benefit amounts not expected
to be realized by the Company.
There were no income tax expenses or benefits for the years ended December
31, 1996 and 1995.
Note 6 - Related Party Transactions
The Company utilizes office space provided free by the President and
shareholder. The Company provides an automobile for the President's use. In
prior years, the Company paid for the vehicle's maintenance and operating
costs. The President currently pays for all of the vehicle's maintenance
and operating costs. In addition, the officers have contributed management
services to the Company without compensation (Note 4). In 1994, the
Company's officers contributed past amounts owed to them in exchange for a
substantial number of shares of the Company's common stock (Note 4).
Page 12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995
<PERIOD-END> DEC-31-1996 DEC-31-1995
<CASH> 0 0
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 0 0
<PP&E> 20,818 20,818
<DEPRECIATION> (20,818) (20,818)
<TOTAL-ASSETS> 0 0
<CURRENT-LIABILITIES> 12,855 26,176
<BONDS> 0 0
0 0
(4,153,262)<F1> (4,130,781)
<COMMON> 4,140,407 4,104,605
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 0 0
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 22,481 24,715
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (22,481) (24,715)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 38,626
<CHANGES> 0 0
<NET-INCOME> (22,481) 13,911
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
<FN>
<F1>Accumulated Deficit
</FN>
</TABLE>
