SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission File Number: 0-13078
LEADVILLE MINING & MILLING CORPORATION
(Exact name of small business issuer as specified in its charter)
NEVADA 13-3180530
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
76 Beaver Street, New York, NY 10005
(Address of principal executive offices)
Issuer's telephone number, including area code: (212) 344-5158
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes [X] No[_]
Indicate the number of shares outstanding of each of the issuer's classes of
common equity as of the latest practicable date.
Class Outstanding at October 31, 1998
----------------------- -------------------------------
Common Stock, par value 17,675,796 Shares
$.001 per share
Transitional Small Business Format (check one); Yes [_] No [X]
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
The accompanying financial statements are unaudited for the interim
periods, but include all adjustments (consisting only of normal recurring
accruals) which management considers necessary for the fair presentation of
results for the three months ended October 31, 1998.
Moreover, these financial statements do not purport to contain complete
disclosure in conformity with generally accepted accounting principles and
should be read in conjunction with the Company's audited financial statements
at, and for the fiscal year ended July 31, 1998.
The results reflected for the three months ended October 31, 1998 are not
necessarily indicative of the results for the entire fiscal year.
2
<PAGE>
LEADVILLE MINING AND MILLING CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEET
OCTOBER 31, 1998
ASSETS
Current Assets:
Cash $ 63,608
Loans Receivable 15,030
Other Current Assets 333
-----------
Total Current Assets 78,971
-----------
Property and Equipment (Net of
Accumulated Depreciation of $351,485) 1,354,166
Other Assets:
Mining Reclamation Bonds 11,000
Security Deposit 3,667
-----------
Total Other Assets 14,667
-----------
Total Assets $ 1,447,804
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accrued Expenses and Taxes $ 38,688
-----------
Commitments and Contingencies
Stockholders' Equity:
Common Stock, Par Value $.001 Per Share;
Authorized 150,000,000 shares; Issued and
Outstanding 17,675,796, Shares 17,676
Capital Paid In Excess of Par Value 7,879,523
Deficit Accumulated in the Development Stage (6,488,083)
-----------
Total Stockholders' Equity 1,409,116
-----------
Total Liabilities and Stockholders' Equity $ 1,447,804
===========
The accompany notes are an integral part of the financial statements.
3
<PAGE>
LEADVILLE MINING AND MILLING CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For The Period
Three Months Ended September 17,1982
October 31, (Inception)
------------------------------------ To
1998 1997 October 31, 1998
------------ ----------- -----------------
<S> <C> <C> <C>
Revenues:
Interest Income $ 198 $ 216 $ 709,309
Miscellaneous 300 -- 25,506
------------ ------------ ------------
Total Revenues 498 216 734,815
------------ ------------ ------------
Costs and Expenses:
Mine Expenses 92,487 115,681 2,231,836
Selling, General and
Administrative Expenses 79,196 77,067 4,501,673
Depreciation 1,331 1,242 351,485
Loss on Write-Off of
Investment -- -- 10,000
Loss on Joint Venture -- -- 101,700
------------ ------------ ------------
Total Costs and
Expenses 173,014 193,990 7,196,694
------------ ------------ ------------
Loss before Provision
For Income Taxes (172,516) (193,774) (6,461,879)
Provision For Income
Taxes 170 688 26,204
------------ ------------ ------------
Net Loss $ (172,686) $ (194,462) $ (6,488,083)
============ ============ ============
Net Loss Per Share $ (.01) $ (01)
============ ============
Average Common Shares Outstanding 17,367,201 14,676,864
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
LEADVILLE MINING AND MILLING CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
For The Period
Three Months Ended September 17, 1982
October 31, (Inception)
-------------------------------- To
1998 1997 October 31, 1998
----------- ----------- -----------------
<S> <C> <C> <C>
Cash Flow from Operating Activities:
Net Loss $ (172,686) $ (194,462) $(6,488,083)
Adjustments to Reconcile Net Loss to
Net Cash Used by Operating Activities:
Depreciation 1,331 1,242 351,485
Loss on write-off of Investment -- -- 10,000
Loss From Joint Venture -- -- 101,700
Value of Common Stock Issued For Services 12,500 4,696 1,599,570
Compensation Portion of Options Exercised -- 8,725 261,500
Changes in Operating Assets and Liabilities:
(Increase) Decrease in Other Current Assets (149) 618 (333)
Increase in Security Deposit -- -- (3,667)
Increase (Decrease) in Accrued Expenses
and Taxes (21,908) (10,920) 38,688
----------- ----------- -----------
Net Cash Used By Operating Activities (180,912) (190,101) (4,129,140)
----------- ----------- -----------
Cash Flow from Investing Activities:
Purchase of Property and Equipment -- -- (1,705,650)
Investment in Joint Venture -- -- (101,700)
Investment in Privately Held Company -- -- (10,000)
----------- ----------- -----------
Net Cash Used By Investing Activities -- (2,000) (1,817,350)
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
LEADVILLE MINING AND MILLING CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CASH FLOWS
(Continued)
<TABLE>
<CAPTION>
For The Period
Three Months Ended September 17, 1982
October 31, (Inception)
------------------------------ To
1998 1997 October 31, 1998
----------- ----------- ------------------
<S> <C> <C> <C>
Cash Flow from Investing Activities:
(Increase) Decrease in Loans Receivable $ (6,540) $ (4,855) $ (15,030)
Increase in Loans Payable - Officers -- -- 18,673
Repayment of Loans Payable - Officers -- -- (18,673)
Proceeds From Sale of Common Stock 239,486 201,025 6,450,141
Commissions on Sale of Common Stock -- -- (5,250)
Expenses of Initial Public Offering -- -- (408,763)
Purchase of Certificate of Deposit - Restricted -- -- (5,000)
Purchase of Mining Reclamation Bond -- -- (6,000)
----------- ----------- -----------
Net Cash Provided By Financing Activities 232,946 196,170 6,010,098
----------- ----------- -----------
Increase (Decrease) In Cash and Cash Equivalents 52,034 6,069 63,608
Cash and Cash Equivalents - Beginning 11,574 27,510 --
----------- ----------- -----------
Cash and Cash Equivalents - Ending $ 63,608 $ 33,579 $ 63,608
=========== =========== ===========
Supplemental Cash Flow Information:
Cash Paid For Interest $ -- $ -- $ --
=========== =========== ===========
Cash Paid For Income Taxes $ 170 $ 688 $ 25,653
=========== =========== ===========
Non-Cash Financing Activities:
Issuances of Common Stock as Commissions
on Sales of Common Stock $ 14,000 $ 8,760 $ 240,421
=========== =========== ===========
Issuances of Common Stock For
Acquisition of Property and Equipment $ -- $ -- $ 4,500
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
LEADVILLE MINING AND MILLING CORP.
(A DEVELOPMENT STAGE ENTERPRISE
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1998
NOTE 1 - Basis of Presentation
In the opinion of the Company, the accompanying unaudited financial
statements reflect all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position, results of
operations and cash flows for the periods presented.
Results of operations for interim periods are not necessarily indicative of
the results of operations for a full year due to external factors, which are
beyond the control of the Company.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Cautionary Statement on Forward-Looking Statements
Except for the historical information contained herein, certain of the matters
discussed in this quarterly report are "forward-looking statements," as defined
in Section 21E of the Securities Exchange Act of 1934, which involve certain
risks and uncertainties, which could cause actual results to differ materially
from those discussed herein including, but not limited to, risks relating to
changing economic conditions, changes in the prices of minerals and the results
of testing and actual mining.
The Company cautions readers that any such forward-looking statements are based
on management's current expectations and beliefs but are not guarantees of
future performance. Actual results could differ materially from those expressed
or implied in the forward-looking statements.
Results of Operations
Once again the Company generated no revenues from operations because the Company
has yet to commence mining activities. Mine expenses decreased by $23,194
(approximately 20.0%) from $115,681 during the three months ended October 31,
1997 to $92,487 during the three months ended October 31, 1998. Management
believes that this decrease in mine expenses was due primarily to the lower cost
of work in progress. Selling, general and administrative expenses increased
slightly by $2,129 (approximately 2.8%) from $77,067 during the three months
ended October 31, 1997 to $79,196 during the three months ended October 31,
1998.
As a result of mine expense decreases, the net loss decreased by $21,776 from
$194,462 during the three months ended October 31, 1997 to $172,686 during the
three months ended October 31, 1998.
During the quarter ended October 31, 1998, the Company continued exploration and
development activity at its gold/silver/base metal mine located in Colorado. The
effort focused on the vertical raise to connect the 5th and 7th levels in
addition to long-hole drilling, mapping and sampling.
The vertical raise has now reached the track level of the 5th level and the
horizontal connection is about to commence. During this time, the Company did
not receive revenue from its operations although it expended considerable sums
for the development of its proposed mining and milling operation.
Exploration was carried out on the SE 1/4, Block 427, 7th level by long hole
drilling. The results indicated a zone of magnetite skarn containing low-grade
gold.
8
<PAGE>
Exploration was also carried out on the SW 1/4 quarter, Block 994 and SE 1/4,
Block 995, 6th level by mapping and channel sampling. Geological conditions
suggest the presence of the Ibex #4 vein and replacement mineralization in the
adjacent Blue limestone. Extensive copper mineralization was visible. This
structure will be drifted upon to its juncture with the Weston Fault where
large-scale mineralization may be discovered.
The Company has, at present, approximately 126,200 tons of mineralized material
containing varied amounts of gold, silver, lead, zinc and copper. The possible
mineral potential of all the Company's properties, as indicated by Scott
Hazlett, Consulting Geologist, ranges up to 5,000,000 tons. The Company to date
has completed only limited exploration of the Hopemore 7th level (by crosscut,
raise, drift, and drill). Stopes, chutes, ore passes and handling facilities are
in operational condition. Assuming that adequate funding is available, the
Company is prepared to enter into a limited mining and milling schedule should
sufficient mineralized material be judged to exist and extraction be determined
to be economically profitable. As such, the Company would commence mining and
milling at an initial pilot rate of 35-50 tons per day and, gradually increase
tonnage as conditions allowed. To operate the mine and mill on a four-month
pilot basis would cost an estimated $350,000. Cash flow is anticipated (but
cannot be assured) during the fifth month after commencement of mining and
milling.
With Regards, to all estimates of mineral tonnage, additional geologic work is
needed before a conclusion can be made that it is commercial material or, that
ore exists.
Liquidity and Capital Resources
As of October 31, 1998, the Company had working capital of $40,283 (defined as
current assets less current liabilities) which represents a net increase in
working capital of $80,631 from July 31, 1998. This increase in working capital
is a result of funds received from the private sale of securities. As was
explained in the Company's 1998 10-KSB, the Company is in a precarious financial
condition and there is no assurance whatsoever that the Company will be able to
continue as a going concern or that any of its plans with respect to its gold
mining properties will come to fruition. The Company, in order to continue its
mine program must obtain substantial financing. While management is seeing such
financing through private placement of its shares, joint venture partners, and
other arrangements, there is no assurance that management will succeed therein.
It should be emphasized that the Company's financial condition has remained
critical since the date of the last 10-KSB and that in order to survive, the
Company will need an infusion of capital within the near future.
9
<PAGE>
Environmental Issues
Management does not expect that environmental issues will have an adverse
material effect on the Company's liquidity or earnings. Before any mining
development or mining exploration or construction of milling facilities could
begin, it was necessary to meet all environmental requirements and to satisfy
the regulatory agencies in Colorado that the Company's proposed procedures fell
within the boundaries of sound environmental practice. The Company is bonded to
insure procedures and reclamation of any areas disturbed by the Company's
activities. In 1997, the Mined Land Reclamation Board reviewed the Company's
permit and bond and determined that an increase in the bond was necessary. At
that time, the Company placed an additional $6,000 in escrow against any future
indemnity.
Part of the Leadville Mining District was declared a Superfund site. Several
mining companies and one individual were declared defendants in a possible
lawsuit. The Company was not named a defendant or Possible Responsible Party.
The Company did respond in full detail to a lengthy questionnaire prepared by
the Environmental Protection Agency ("EPA") regarding the Company's proposed
procedures and past activities in November 1990. To the Company's knowledge, the
EPA has initiated no further comments or questions.
The Company does include in all its internal revenue and cost projections a
certain amount for environmental and reclamation costs on an ongoing basis. This
amount is determined at a fixed amount of $1.50 per ton of material to be milled
on a continual, ongoing basis to provide for further tailing disposal sites and
to reclaim the tailings disposal sites in use. At this time, there does not
appear to be any environmental costs to be incurred by the Company beyond those
already addressed above. No assurance can be given that environmental
regulations will not be changed in a manner that would adversely affect the
Company's planned operations.
Year 2000 Computer Issue
At the present, and for the foreseeable future, management does not believe that
computers will play a material role in the company's operations. At present, the
Company only uses computers for simple tasks such as word processing.
Accordingly, management does not believe that the potential year 2000 computer
problem will materially affect the Company's current or planned operations. If
and when the Company commences mining and milling operations, it will interact
with outside entities such as suppliers, smelters, refiners and government
agencies. The Company is unable to predict whether the potential year 2000
computer problem will adversely affect these entities. It is conceivable, that
if one or more of these entities is adversely affected by the potential year
2000 computer problem, the Company's operations might be adversely affected
also.
10
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities and Use of Proceeds
During the quarter ended October 31, 1998, the Company issued the following
shares of its common stock pursuant to the exemption from registration provided
by Section 4(2) of the Securities Act of 1933. In August 1998, the Company sold
an aggregate of 333,227 shares to sixteen individuals for an aggregate of
$103,672. In September 1998, the Company sold an aggregate of 213,786 shares to
eight individuals for an aggregate of $66,800 and issued 40,000 shares to one
individual for commissions of $14,000. In October 1998, the Company sold an
aggregate of 212,920 shares to eight individuals for an aggregate of $69,014 and
issued 34,722 shares to one individual for expenses of $12,500."
Item 3. Defaults 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
None.
11
<PAGE>
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 thereto duly authorized.
LEADVILLE MINING & MILLING CORP.
--------------------------------
Registrant
By: /s/ Gifford A. Dieterle
--------------------------------
Gifford Dieterle
Treasurer/Secretary
Date: December 15, 1998
12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> JUL-31-1999
<PERIOD-START> AUG-1-1998
<PERIOD-END> OCT-31-1998
<CASH> 63,608
<SECURITIES> 0
<RECEIVABLES> 15,030
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 78,971
<PP&E> 1,705,651
<DEPRECIATION> 351,485
<TOTAL-ASSETS> 1,447,804
<CURRENT-LIABILITIES> 38,888
<BONDS> 0
0
0
<COMMON> 17,676
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,447,804
<SALES> 0
<TOTAL-REVENUES> 498
<CGS> 0
<TOTAL-COSTS> 92,487
<OTHER-EXPENSES> 80,527
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (172,516)
<INCOME-TAX> 170
<INCOME-CONTINUING> (172,586)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (172,686)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> 0
</TABLE>
