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 12-31-97
Commission file number 0-12139
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
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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,
1997: $0
Number of outstanding shares of the registrant's no
par value common stock, as of December 31, 1997: 52,476,317.
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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 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
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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 1997.
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:
1997 High Low
First quarter * *
Second quarter * *
Third quarter * *
Fourth quarter * *
1996 High Low
First quarter * *
Second quarter * *
Third quarter * *
Fourth quarter * *
1995 High Low
First quarter * *
Second quarter * *
Third quarter * *
Fourth quarter * *
* No quotations reported
4
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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, 1997, 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
1997 Compared to 1996
No operations were conducted and no revenues
were generated in the fiscal year. The Company
had $1,277 in income from disposal of a car.
The Company at year end had no capital, no cash,
and no other assets. The Company at year end was
totally illiquid and needed cash infusions from
shareholders to provide capital, or loans from any
sources.
Results of Operations
1997 Compared to 1996
During the fiscal year ended December 31, 1997,
the Company incurred $20,383 in general and
administrative expenses, and accrued $5,000 for
services of officers. In 1996 the Company incurred
$22,481 in General and Administrative expenses,
and $5,000 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 1997
was ($19,106) compared to the 1996 loss on operations
($22,481).
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
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Item 7. Financial Statements and Supplementary Data
Please refer to pages F-1 through F-11.
Item 8. Changes in and Disagreements on Accounting
and Financial Disclosure
Holben, Boak, Cooper & Co., formerly CPA's for
the Company, resigned as auditor in November, 1997
due to pending dissolution of the firm. Gordon,
Hughes & Banks, LLP, CPA's were engaged in November
1997 as auditors for Company.
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 audit report by Holben, Boak, Cooper & Co.
for the year ended December 31, 1996, contained an opinion which
included a paragraph discussing uncertainties related to
continuation of the Registrant as a going concern.
The decision to change accountants was approved
by the Board of Directors as the registrant has no
audit committee.
The principal accountants' reports 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, 1997, are as follows:
Name Age Position
Robert Beaton 50 President,Director
James Poulos 71 Vice President, Director
Michael Schranz 55 Secretary, Treasurer, Director
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
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organization by which any director or officer has been
previously employed is an affiliate, parent or
subsidiary of the Company.
Robert Beaton, age 50, 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 71, 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 55, 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 1982-97 and Vice President and Director of
Overthrust Resources, Ltd. from 198097. He has been
Managing Director of Polaris Coal Co., from 198897.
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:
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 late Number of Known failures
reports transactions not to file forms
reported on a
timely basis
a. none none none
b. none none none
c. 1 none Annual Form 5 (1997)
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Item 10. Executive Compensation
The Company accrued a total of $5,000 in
compensation to the executive officers as a group
for services rendered to the Company in all
capacities during the 1996 fiscal year. No one
executive officer received, or has accrued for his
benefit, in excess of $60,000 for the year. No cash
bonuses were or are to be paid to such persons.
The Company does not have any employee
incentive stock option plans.
There are no plans pursuant to which cash
or non-cash compensation was paid or distributed
during the last fiscal year, or is proposed to be
paid or distributed in the future, to the executive
officers of the Company. No other compensation
not described above was paid or distributed during
the last fiscal year to the executive officers of
the Company. There are no compensatory plans or
arrangements, with respect to any executive office
of the Company, which result or will result from the
resignation, retirement or any other termination of
such individual's employment with the Company or
from a change in control of the Company or
a change in the individual's responsibilities
following a change in control.
SUMMARY COMPENSATION TABLE OF EXECUTIVES
Annual Compensation Awards
Name and Year Salary Bonus Other Annual Restricted Securities
Principal ($) ($) Compensation Stock Underlying
Position ($) Award(s) Options/
($) SARs (#)
Robert 1995 1,800** 0 0 0 0
Beaton,
President 1996 0 0 0 0 0
1997 0 0 0 0 0
James 1995 3,000** 0 0 0 0
Poulos,
Secretary 1996 0 0 0 0 0
1997 0 0 0 0 0
Michael 1995 100** 0 0 0 0
Schranz,
Vice
President 1996 0 0 0 0 0
1997 0 0 0 0 0
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** Restricted common stock shares totalling
47,600,000 were issued for the unpaid accruals for
services and forgiveness of debt. (See "certain
Relationship and Related Transactions") The
shares had no market value and a negative net
tangible book value at the time of the award. In
1995 2,500,000 restricted common shares were issued
for services rendered by Michael Schranz in 1995.
The shares had no market value and a negative net
tangible book value at the time of the issuance.
Option/SAR Grants Table (None)
Aggregated Option/SAR Exercises in Last Fiscal
Year an FYEnd Option/SAR value (None)
Long Term Incentive Plans - Awards in Last Fiscal Year (None)
DIRECTOR COMPENSATION FOR LAST FISCAL YEAR
(Except for compensation of Officers who are also
Directors which Compensation is listed in
Summary Compensation Table of Executives)
Cash Compensation Security Grants
Name Annual Meeting Consulting Number Number of
Retainer Fees Fees/Other of Securities
Fees ($) ($) Fees ($) Shares Underlying
(#) Options/SARs(#)
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
Item 11. Security Ownership of Certain Beneficial
Owners and Management
The following table sets forth information, as of December
31, 1997, 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.
Stock Names and Address Beneficial Percent
Title of Class of Beneficial Owner Ownership of Class
Common American International 1,185,700 2.2%*
Systems, Inc. (see note 1)
12002 W. 14th Avenue (see note 2)
Golden, CO 80401
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(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)
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
Security Ownership of Certain Beneficial Owners and
Management (Continued)
The following table sets forth information, as of
December 31, 1997, 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.
Stock Names and Address Beneficial Percent
Title of Class of Beneficial Owner Ownership of Class
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
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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%
Item 12. Certain Relationships and Related Transactions-
None.
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: October
31, 1997 and November 12, 1997
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-12
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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: June 17, 1998
/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: June 17, 1998
/s/Robert M. Beaton
Robert M. Beaton, Director
/s/Michael Schranz
Michael Schranz, Director
/s/James F. Poulos
James F. Poulos, Director
12
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LEESBURG LAND & MINING, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
<PAGE>
CONTENTS
Page
Independent auditors' report F-1
Financial statements:
Balance sheets F-2
Statements of operations F-3
Statements of stockholders' equity F-4
Statements of cash flows F-5-F- 6
Notes to financial statements F-7 - F-11
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Leesburg Land & Mining, Inc.
Golden, Colorado
We have audited the accompanying balance sheet of
Leesburg Land & Mining, Inc. (a development stage
company) as of December 31, 1997, and the
related statements of operations, stockholders'
equity and cash flows for the year 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 audit. The financial statements of
Leesburg Land & Mining, Inc. as of December 31, 1996
were audited by other auditors whose report dated
April 18, 1997, on those statements included an
explanatory paragraph that questioned the Company's
ability to continue as a going concern as discussed
in Note 1 to the financial statements.
We conducted our audit in accordance with
generally accepted auditing standards. Those
standards require that we plan and perform the
audit 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 audit
provides 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, 1997, and the results of its operations and cash
flows for the year 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 $4,172,368 since inception. At December 31, 1997,
liabilities exceeded assets by $23,536 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.
Gordon, Hughes & Banks, LLP
May 12, 1998
Englewood, Colorado
Page F-1
<PAGE>
LEESBURG LAND AND MINING CO., INC.
(A Development Stage Company)
BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
1997 1996
ASSETS
PROPERTY AND EQUIPMENT
Vehicle $ - $ 20,818
Less: accumulated depreciation - (20,818)
TOTAL PROPERTY AND EQUIPMENT - -
TOTAL ASSETS $ - $ -
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable (Note 2) $ 23,536 $ 12,855
TOTAL CURRENT LIABILITIES 23,536 12,855
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, 1,000,000 shares of
no par value authorized, none issued
Common stock, no par value;
authorized, 100,000,000 shares;
issued and outstanding, 1,749,211 4,148,832 4,140,407
shares in 1997 and 1996
Accumulated (deficit) during the
development stage (4,172,368) (4,153,262)
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (23,536) (12,855)
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ - $ -
See Notes to financial statements Page F-2
<PAGE>
[CAPTION]
<TABLE>
LEESBURG LAND AND MINIING CO., INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
AND FROM JUNE 21, 1983 (INCEPTION) TO DECEMBER 31, 1997 (Unaudited)
<S> <C> <C> <C>
Cumulative
During
Development
Stage
(Unaudited) 1997 1996
REVENUE:
Interest income $ 92,753 $ - $ -
Geo contract 90,000 - -
Equipment rental income 13,500 - -
Disposal of equipment 15,291 1,277 -
TOTAL REVENUES 211,544 1,277 -
EXPENSES:
Exploration costs 867,048 - -
General & administrative 1,240,154 14,483 16,781
Interest expense 427,367 900 700
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 88,200 5,000 5,000
TOTAL COSTS & EXPENSES 4,880,195 20,383 22,481
NET INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM (4,668,651) (19,106) (22,481)
EXTRAORDINARY ITEM,
Reduction of payables (Note 2) 496,283 - -
NET INCOME (LOSS) $(4,172,368) $(19,106) $(22,481)
NET INCOME (LOSS) PER SHARE:
Income (loss) before
extraordinary item $ (11.95) (.01) (.01)
Extraordinary item 1.27 - -
NET INCOME (LOSS) $ (10.68) $ (.01) $ (.01)
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 390,704 1,749,211 1,749,211
See Notes to financial statements Page F-3
</TABLE>
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[CAPTION]
<TABLE>
LEESBURG LAND AND MINING CO., INC.
(A Development Stage Company)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
(See Note 4)
(Deficit)
Accumulated
During
the
Development
Shares Amount Stage Total
<S> <C> <C> <C> <C>
Balances, December 31, 1995 1,749,211 $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 1,749,211 4,104,407 (4,153,262) (12,855)
Management services
contributed by officers/
shareholders - 5,000 - 5,000
Operating expenses paid
by oficer/shareholder - 3,425 - 3,425
Net (loss) - - (19,106) (19,106)
Balance, December 31, 1997 1,749,211 $4,148,832 $(4,172,368) $(23,536)
See Notes to financial statements Page F-4
</TABLE>
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[CAPTION]
<TABLE>
LEESBURG LAND AND MINING CO., INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
AND FROM JUNE 21, 1983 (INCEPTION) TO DECEMBER 31, 1997 (Unaudited)
Cumulative
Since
Inception
(Unaudited) 1997 1996
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(4,172,368) $(19,106) $(22,481)
Items not requiring cash:
Depreciation 790,967 - -
Contributed services 88,200 5,000 5,000
(Gain) loss on disposal of mining claims
of mining claims and equipment 1,040,147 - -
Operating expenses paid by shareholders 39,991 3,425 30,802
Other (11,206) - -
Contingency recorded as note payable 62,386 - -
Loss on investment in
Polaris Coal Company 228,000 - -
Shareholder payables transfered
to equity 187,777 - -
Increase (decrease) in accounts payable 23,535 10,681 (13,321)
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 year - - -
Cash & cash equivalents - end of year $ - $ - $ -
See Notes to financial statements Page F-5
</TABLE>
<PAGE>
LEESBURG LAND AND MINING CO., INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
(Continued)
Non-Cash Activities
Capital transactions
During 1995, the Company issued of 83,333 shares of common stock
for payment of services of $100 to a shareholder (see Note 4).
During 1994, officers contributed $108,151 to the Company, for
amounts due them for past services, $1,250 of which was exchanged
for 1,583,333 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 (17,500 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 25,000 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.
Page F-6
<PAGE>
LEESBURG LAND AND MINING CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
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 disposed of all 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
$4,172,368 since inception. At December 31, 1997,
liabilities exceeded assets by $23,536. 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 has been stated at cost and
depreciated on a straight line basis over the estimated
useful lives of the assets (4-7 years for vehicles).
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.
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.
Page F-7
<PAGE>
LEESBURG LAND AND MINING CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
(Continued)
Note 1 - Operations and Summary of Significant Accounting Principles (Continued)
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.
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.
Reverse Stock Split
Effective March 31, 1998, the Company approved a one for
thirty reverse stock split of all outstanding common shares.
All share amounts and (losses) per share amounts have been
retroactively restated for the reverse stock split.
Note 2 - Accounts Payable
Since 1993, the Company has eliminated a substantial amount
of its 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.
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 by Halliburton, 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 4,267 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 until 1994 when it was reclassified to
equity.
Page F- 8
<PAGE>
[CAPTION]
<TABLE>
LEESBURG LAND AND MINING CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
(Continued)
Note 4 - Stockholders' Equity
The Company amended its Articles of Incorporation to
authorize the issuance of 33,333 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, 1997, 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 transactions
from inception through December 31, 1995 are summarized in
the schedule below. The transactions from inception through
December 31, 1985 and from January 1, 1993 to December 31,
1995 have been audited by other auditors. The transactions
from January 1, 1986 to December 31, 1992 have not been
audited.
<C> <C> <C> <C>
Common Stock Cumulative
Shares Amount (Deficit)
Initial stockholder private
placements for cash 10,972 $ 492,500 $ -
Issuance of common stock
for mining claims 17,500 380,000 -
Public offering, net of
offering costs 25,000 2,490,594 -
Issuance of common stock
Warrants - 100 -
Retirement of treasury stock (208) (14,316) -
Issuance of common stock for
Polaris Coal Company 25,013 293,500 -
Net (losses) Inception to
December 31, 1985 - - (2,945,073)
Balances,
December 31, 1985
(Audited by
predecessor auditors) 78,277 3,642,378 (2,945,073)
Issuance of common stock
for cash 4,267 128,000 -
Services contributed by
Shareholders - 20,000 -
Net (losses), January 1, 1986
to December 31, 1992 - - (1,511,274)
Balances,
December 31, 1992 Unaudited 82,544 3,790,378 $(4,456,347)
(Schedules continues)
Page F-9
</TABLE>
<PAGE>
[CAPTION]
<TABLE>
LEESBURG LAND AND MINING CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
(Continued)
Note 4 - Stockholders' Equity (Continued)
<C> <C> <C> <C>
Common Stock Cumulative
Shares Amount (Deficit)
Services contributed by
Shareholders - 58,200 -
Expenses paid by shareholder - 5,764 -
Involuntary conversion of
Shareholders' debt - 142,012 -
Debt forgiven by shareholders - 106,901 -
Stock issued shareholders
in exchange for debt at
$.00004 per share 1,666,667 1,350 -
Net income, January 1, 1993
to December 31, 1995 - - 325,566
Balances,
December 31, 1995 (Audited) 1,749,211 $4,104,605 $(4,130,781)
During 1995, the Board of Directors approved issuing 83,333
shares of common for $100 of services to One Capital, a
shareholder. During 1994, The President waived $62,618 owed
to him for past services rendered in exchange for 950,000
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 633,334 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.
Also during 1994, the Company unilaterally transferred the
debt and accrued interest owed to Rio Delta, a shareholder,
to equity. The principal and interest totaled $142,012 and
was transferred after the time period for the statute of
limitations expired.
During 1997 and 1996, the Company's President and
Shareholder paid operating expenses and creditors $3,425 and
$30,802, respectively, and contributed those amounts to the
Company.
Page F-10
</TABLE>
<PAGE>
LEESBURG LAND AND MINING CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
(Continued)
Note 5 - Income Taxes
At December 31, 1997, the Company has a net operating loss
(NOL) carry-forward for tax purposes of approximately
$3,659,000 (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, 1997 and
1996 are as follows:
1997 1996
Deferred tax assets due to:
Payables $ 3,530 5,000
Net operating loss carry-forward 1,406,406 1,414,372
1,409,936 1,414,372
Valuation allowance for deferred
tax assets (1,409,936) (1,419,372)
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, 1997 and 1996.
Note 6 - Related Party Transactions
The Company utilizes office space provided free by
the President and shareholder. 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).
Note 7 - Subsequent Event
On March 11, 1998, the shareholders approved a one
for thirty reverse stock split (effective March 31,
1998) and to redomicile the corporation from Colorado
to Nevada.
Page F-11
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 23,536
<BONDS> 0
0
0
<COMMON> 4,148,832
<OTHER-SE> (4,172,368)
<TOTAL-LIABILITY-AND-EQUITY> (23,536)
<SALES> 0
<TOTAL-REVENUES> 1,277
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 20,383
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (19,106)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (19,106)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
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