U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JULY 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-13078
LEADVILLE MINING AND MILLING CORP.
(Name of Small business issuer in its charter)
State of Nevada 13-31805030
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
76 Beaver Street, New York, New York 10005
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (212) 344-2785
Securities registered under Section 12(b) of the Exchange Act: none
Securities registered under Section 12(g) of the Exchange Act: Common Stock, par
value $.001 per share
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 [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulations S-B contained in this form, and no disclosure will be contained, to
the best of the 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
The aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the average between the closing bid
($0.50) and asked ($0.562) price of the issuer's Common Stock as of October 27,
2000, was $11,660,296, based upon the average between the closing bid and asked
price (0.531) multiplied by the 21,956,127 shares of the issuer's Common Stock
held by non-affiliates. (In computing this number, issuer has assumed all record
holders of greater than 5% of the common equity and all directors and officers
are affiliates of the issuer.)
The number of shares outstanding of each of the issuer's classes of common
equity as of October 27, 2000: 26,081,843
DOCUMENTS INCORPORATED BY REFERENCE: None.
Transitional Small Business Disclosure Format: Yes [ ] No [X]
<PAGE>
LEADVILLE MINING AND MILLING CORP.
Form 10-KSB
July 31, 2000
Table of Contents Page
Glossary iii
Part I
Item 1. Description of Business. 1
Item 2. Description of Properties. 3
Item 3. Legal Proceedings. 9
Item 4. Submission of Matters to a Vote of 9
Security Holders.
Part II
Item 5. Market for Common Equity and 9
Related Stockholder Matters.
Item 6. Management's Discussion and Analysis of 10
Financial Condition and Results of Operations.
Item 7. Financial Statements. 14
Item 8. Changes in and Disagreement with Accountants 15
on Accounting and Financial Disclosure.
Part III
Item 9. Directors, Executive Officers, Promoters 15
and Control Persons; Compliance with
Section 16(a) of the Exchange Act.
Item 10. Executive Compensation. 16
Item 11. Security Ownership of Certain Beneficial 18
Owners and Management.
Item 12. Certain Relationships and Related Transactions. 19
Item 13. Exhibits and Reports on Form 8-K 20
Signatures 21
Supplemental Information 22
Financial Statements F-1 to F-22
ii
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GLOSSARY OF TECHNICAL TERMS
Backfilling: Putting waste rock in an open stope.
Ball Mill: Instrument which reduces rock to powder form.
Blanket Ore: Ore, which usually lies horizontal in the form of
a sedimentary bed.
Breccia Pipe: A funnel of broken rock descending into the earth
(along a fault line) through which mineralizing
solutions may rise.
Contact Metamorphic
Type of Deposit: Where minerals result from ion exchange or
replacement between an intrusive igneous rock and
a host rock.
CuSO4: Copper Sulfate.
Feeder Veins: Small veins.
Floatation Plant: Mechanical system that separates valuable minerals
from rock powder using chemical solutions.
Gravity Plant: Mechanical system that separates valuable minerals
from rock powder using the force of gravity for
separation.
Heap Leaching: Broken and crushed ore on a pile subjected to
dissolution of metals by leach solution.
Hydrometallurgical
Plant: A smelter that reduces sulfide faults converging
from different directions.
Jasperoid: Quartz mineral resulting from hydrothermal
alteration.
Leadville Dolomite: Name of a specific limestone bed in Leadville,
Colorado.
Leadville Silver
Gold Process: Generally similar to the Sherrit Gordon process
whereby chemicals are used to produce oxides and
sulfates of zinc.
Lode Claim: Claim on which mineral is found underground; i.e.,
vein.
Magnetic Anomaly: A variation in the earth's magnetic field.
Magnetite Skarn: The mineral magnetite (iron Oxide) in combination
with quartz emplaced in limestone.
Major
Intrusive Center: An area where large funnels exist and through
which large amounts of mineralizing fluids rose.
Manto: A bedded deposit of minerals.
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Massive
Polymetallic Ores: Large dense mass of sulfide minerals containing
several metals.
MNSO4: Manganese Sulfate.
Mineral Deposit or
Mineralized Material: A mineralized underground body which has
been intersected by sufficient closely spaced
drill holes and or underground sampling to support
sufficient tonnage and average grade of metal(s)
to warrant further exploration-development work.
This deposit does not qualify as a commercially
mineable ore body (Reserves), as prescribed under
Commission standards, until a final and
comprehensive economic, technical and legal
feasibility study based upon the test results is
concluded.
Open Pit Mine -
Strip Mine: Surface mining without shafts or underground
working.
Open Stope: A mined area that remains as an open space.
OPT: Ounces per ton.
Patented Claim: Privately owned mineral land.
PbSO4: Lead Sulfate.
Place Claim: Claim on which minerals are found in sand and
gravel - on surface.
Positive Ore: Ore that is proven (same as proven).
Probable Ore: Inferred ore. Ore that is believed to exist, but
not fully proven.
Proven Ore: Minerals that are determined to be recoverable.
Reverse Circulation
Drilling: Type of drilling using air to expel cuttings.
Run of the Mill
Concentrate: Unenhanced product directly extracted from a
standard milling process.
Replacement
Ore Body: Mineral ore, irregular in form, which is emplaced
in limestone.
Rhyolite
Agglomerate: An igneous rock (rhyolite) which has been
fractured (crushed) and recemented.
Sherrit
Gordon Process: Hydrometallurgical method of processing (smelting)
zinc concentrates into oxides and sulfates.
Shockwork Breccia: Earth's crust broken by two or more sets of
parallel faults converging from different
directions.
iv
<PAGE>
Silica Stope: Name of a mine location in the Hopemore mine.
Square Setting: A system of timbering a tunnel or opening
underground to prevent cave-in.
Stockwork: Ore, when not in strata or in veins but in large
masses, so as to be worked in chambers or in large
blocks.
Unpatented Claim: Mineral land owned by the government and rented
for an annual fee.
ZNSO4: Zinc Sulfate.
v
<PAGE>
PART I
Item 1. Description of Business
Leadville Mining and Milling Corp. (the "Company") was incorporated in the state
of Nevada in February 1982. The Company owns rights to property located in the
California Mining District, Lake County, Colorado and is engaged in the business
of mining and explorations of gold and other minerals from its properties.
During the fiscal year ended July 31, 2000, exploration has taken place at an
accelerated pace on surface and below (see the discussion below). The future of
the Company is dependent upon the Company's properties producing gold, silver,
lead and zinc in sufficient quantities so that the Company will be a
commercially viable entity. A description of the mining claims owned by the
Company is contained in "Item 2. Description of Properties."
During fiscal 2000, the Company conducted extensive Reverse Circulation ("R.C.
drilling"), diamond core and long hole drilling at its' Leadville properties.
Approximately 17,190 feet of R.C. drilling, 9,767 feet of diamond core drilling
and 1,388 feet of longhole drilling was completed, logged and assayed. The
preliminary results indicate the possible existence of a near surface body of
gold/silver mineralization on Breece Hill and, several potentially mineable
gold/silver structures in the Hopemore Mine.
Surface R.C. drilling began in July 2000 and resulted in the completion of 34
holes, to date. The purpose of the R.C. drilling program was to locate and
define a surface mineable resource of gold and silver on Breece Hill.
Underground activity also continued with exploration below the Silica stope on
#69 vein, located in the 7L-428 south drift. Exploration is continuing in this
area.
The Company also has been involved in an aggressive mineral lease program in the
Breece Hill area where, 150.5 gross acres have been acquired. The leases where
obtained on a small royalty basis for periods of 10 to 20 years. No cash was
involved. The lease acquisition program began in July 2000. Other areas in the
Leadville district are also being targeted for property acquisition with special
emphasis on locations where historically, large amounts of precious metals were
mined in the 19th century.
Management believes that the Company's Breece Hill properties may have strip
mining potential for the extraction of gold and silver from shallow oxide
deposits. The metallurgy would employ leach technology at a site chosen on
Breece Hill. Gold and silver extraction would not require smelter interaction.
Although the results of exploration continue to be promising, a final prognosis
of the results must await completion of the interim project.
The Company has conducted extensive diamond core-drilling from the 5th level of
the Hopemore mine, targeting potential mineral horizons in a wide arc directed
downward to and, below the 8th level. The objectives consist of fissure and
replacement targets associated with the #4, #5, #69 and #70 veins and the
B-Zone. The result of core drilling to date has indicated the presence of
pervasive, low-grade gold/silver mineralization throughout the target area and a
number of high-grade gold and silver structures, which require further drilling
to define size and grade. Longhole
1
<PAGE>
drilling on the east, 7th level also indicated the presence of pervasive,
low-grade gold/silver mineralization.
The discovery of extensive low-grade gold/silver mineralization within the
Hopemore mine workings combined with similar surface indications prompted the
Company to initiate an exploration program with the objective of locating a
surface mineable body of silver and gold.
The capital cost to establish an open pit, heap leach mining operation on Breece
Hill, if economically feasible, could range from $10 to $15 million or more.
Financing would likely be through bank loans, joint venture or private
placement. Normal expenditures for the new fiscal year such as holding cost,
general administration, accounting and legal is estimated to be $350,000 with
exploration and related activities estimated at $455,000. Management believes,
but cannot assure, that the Company will be able to obtain funding to accomplish
all projected tasks. There can be no assurance that current or future mining
will be profitable or that additional funding can be obtained. Assuming that the
Company is able to obtain adequate funding, the continuation of the Company
projects can be maintained. (See "Part II, Item 6, Management's Discussion and
Analysis of Financial Condition and Results of Operations; Liquidity and Capital
Resources).
All activities at the mine site are performed by persons employed by the
Company.
The Company has a mill situated on a 20.73-acre site. Construction of the mill
began in 1987 and was completed in August of 1989. The mill is not in operation
at this time. An agreement between the Company and ASARCO, whereby ASARCO would
smelt Company metallic concentrates terminated June 30, 2000. Such services
would not be required if heap leach technology is employed in future operations.
The Company's mill will remain on standby in the event that high-grade gold is
discovered in commercial quantities or for possible custom milling purposes. A
future ASARCO smelting agreement will not be needed under the circumstances and
any refining will be carried out at the mill site.
Competition
There is intense competition in the acquisition of viable mining properties. The
Company is currently active in a program of property acquisition where the
possibility of finding ore is promising. The Company believes that there is no
material competition in the sale of metallic products because prices are based
upon standards established by the commodity exchange (London Metals Exchange
market).
Employees
As of July 31, 2000, the Company has 10 full time employees, consisting of 2
executive officers, 7 mine laborers, and 1 administrative personnel.
2
<PAGE>
Item 2. Description of Properties
The Company owns the following mining claims, all of which are located in
California Mining District, Lake County, Colorado.
Patented Claims
<TABLE>
<CAPTION>
Gross Net
Percent Acreage Acreage
Ownership CLAIM NAME CLAIM# of Claim % Owned of Claim Section
<S> <C> <C> <C> <C> <C> <C>
12% Colman 9747 1.5 0.12 0.2 20-9-79
44% President 8942 0.44 3.0 20-9-79
3% Big Six (West End) 1616 3.7 0.03 0.1 20-9-79
3% Elbert 4163 9.9 0.03 0.3 20-9-79
3% Greenwood 630 9.4 0.03 0.3 19-9-79
3% Little Maud 758 4.9 0.03 0.1 20-9-79
6% Big Six (West End) 1616 0.06 0.2 20-9-79
6% Elbert 4163 0.06 0.6 20-9-79
6% Greenwood 630 0.06 0.5 19-9-79
6% Little Maud 758 0.06 0.3 20-9-79
50% Medium 13344 4.8 0.50 2.4 20-9-79
50% Medium 13344 0.50 2.4 20-9-79
13% Great Hope 489 10.3 0.13 1.3 20-9-79
8% Big Six (West End) 1616 0.083 0.3 20-9-79
8% Elbert 4163 0.083 0.8 20-9-79
8% Ishpeming 1018 8.2 0.083 0.7 20-9-79
8% KRL 4299 4.7 0.083 0.4 20-9-79
8% Little Maud 758 0.083 0.4 20-9-79
8% Mineral Farms 1359 9.1 0.083 0.8 20-9-79
8% Minnesota 2651 2.8 0.083 0.2 20-9-79
8% Park 838 10.3 0.083 0.9 20-9-79
8% Park#2 897 9.7 0.083 0.8 20-9-79
8% Silver Cloud 1016 4.9 0.083 0.4 20-9-79
8% Snow 4161 3.7 0.083 0.3 20-9-79
8% XYT 4162 7.1 0.083 0.6 20-9-79
100% Cora Belle 3919 6.7 1.000 6.7 20-9-79
100% Comstock 1542 3.5 1.00 3.5 20-9-79
100% Homestake 1540 7.6 1.00 7.6 20-9-79
100% Lady Jane 491 8.9 1.00 8.9 20-9-79
100% Little Chippewa 655 9.9 1.00 9.9 20-9-79
100% Silver Spray 1539 2.1 1.00 2.1 20-9-79
100% Wade Hampton 1538 6.1 1.00 6.1 20-9-79
100% Ohio 584 1.1 1.00 1.1
100% St. Louis 558 8.0 1.00 8.0 21-9-79
100% St. Ann 4640 6.7 1.00 6.7 21-9-79
92% XYT 4162 0.92 6.5 20-9-79
</TABLE>
3
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
83% Ishpeming 1018 0.83 6.9 20-9-79
100% Grand Prize 473 AM 4.5 1.00 4.5 20-9-79
100% Curran 449 8.8 1.00 8.8 20-9-79
100% Comstock 3613 unpatented 1.00 9.7 20-9-79
100% Golden rod 9441 4.0 1.00 4.0 20-9-79
100% Highland Chief 429 2.1 1.00 2.1 20-9-79
100% Highland Mary 539 6.6 1.00 6.6 20-9-79
100% Robert Burns 538 9.9 1.00 9.9 20-9-79
6% President 8942 6.9 0.06 0.4 20-9-79
13% Little Galesburg 1176 6.0 0.13 0.1 20-9-79
16% Ballard 589 3.2 0.16 0.5 20-9-79
75% Free America #2 1177 4.2 0.75 3.2 20-9-79
38% Little Bertha 504 8.4 0.38 3.1 20-9-79
32% J G Fraction 13251 1.7 0.32 0.6 20-9-79
50% Greenback 1043 4.0 0.50 2.0 19-9-79
8% Chestnut 712 9.4 0.08 0.8 30-9-79
100% Codfish Balls 767 2.6 1.00 2.6 19-9-79
39% Pyrenees 1537 6.8 0.39 2.6 19-9-79
100% R A M 1566 5.9 1.00 5.9 19-9-79
100% Cyclops 1567 8.7 1.00 8.7 19-9-79
100% Devlin 1579 7.6 1.00 7.6 19-9-79
50% PRIDE OF THE WEST 3963 0.9 0.50 0.4 19-9-79
63% PROSPERINE & 5214 9.9 0.63 6.2 19-9-79
96% PHARMACIST 11617 1.2 0.96 1.2 19-9-79
38% EMMA 756 8.3 0.38 3.1 29-9-79
50% NEW YORK 1294 10.1 0.50 5.1 23-9-79
50% CHICAGO 1295 10.2 0.50 5.1 23-9-79
50% BELLE PLACER 2778 129.0 0.50 64.5 14-9-79
13% BELLE PLACER 2778 0.13 16.8 14-9-79
100% MIKADO 8015 9.3 1.00 9.3 23-9-79
88% COLMAN 9747 1.5 0.88 1.3 20-9-79
75% PUEBLO 12718 36.6 0.75 27.5 23-9-79
100% PT ZUNI PLACER Personal prop. 22.0 1.00 22.0
100% JUDY CMC-248957 18.0 1.00 18.0 14&23
100% COLUMBINE CMC-248958 7.3 1.00 7.3 14&23
totals owned 540.8 363.2
</TABLE>
The Company additionally owns 20.73 acres located in the same area, namely, the
California Mining District, Lake County, Colorado on which its mill site for
processing of ore is located.
The Company owns or has rights to mine the foregoing claims as indicated. The
Company has not formed any partnership regarding these claims, nor is there any
associations whereby profits or expenses are to be shared. The claims are
located approximately 2.5 miles northeast of the
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town of Leadville, Colorado by County Road. The principal acreage forms a
contiguous group and is located on a prominent topographic feature known as
Breece Hill. See below.
History Hopemore Mine
The Leadville mining district is located 100 miles west of Denver, Colorado in
the heart of the Rocky Mountains. The weather is harsh with long winters and
short summers.
The Company's properties are within the high gold zone of the Leadville
district, which was dominated by the Ibex Mines on Breece Hill. The high gold
zone has produced approximately 3 million ounces of gold. The average grade of
ore from the Hopemore area is not known. On adjacent properties a weighted
average of siliceous precious metal ore shipments from the Garbutt Lode and
South Ibex Stockwork between 1913 and 1922 is 0.850 OPT Au, and 4.97 OPT Ag from
63,796 tons.
Historically, the Company's properties were worked as two separate mining areas,
the Hopemore shaft in the Ibex area and the Penn Group area further west; and
the ores were not concentrated by milling but were shipped directly to the
Arkansas Valley Smelter in Leadville.
Work by the Company started in 1984 with acquisition of the Comstock Hopemore
Group of claims. Retimbering of the entire Hopemore shaft followed along with
establishment of the new 7th level, partial rehabilitation of the other levels,
several raises, the 5th level connection with the Hunter shaft, construction of
a mill and the present retimbering of the Hunter escape shaft.
The Hopemore shaft was worked as part of the Ibex mines until approximately
1902. The Hopemore shaft was sunk in 1907 to reach the 7th level of the Ibex No.
4 mine. Large replacement ore bodies in the Leadville dolomite (Blue limestone)
lie on the hanging wall side (southwest) of the Ibex No. 4 vein. The ore is
associated with a large magnetite skarn replacement body in the Leadville
dolomite. The Leadville dolomite on the footwall (east) side of the Ibex No. 4
vein was mined via the Hunter Shaft.
Ground conditions in the district generally do not allow open stopes, therefore,
square setting and backfilling with waste of low-grade ore was commonly
practiced. When the large ore bodies of the Hopemore were mined, zinc sulfide
ore was of no value. High zinc ore was penalized at the local lead smelter, and
it is believed that much of the backfill may be high-grade (+12%) zinc
mineralization.
5
<PAGE>
GEOLOGY
Exploration Targets
Hopemore Mine Exploration Target
The Hopemore area has been mined from the Ibex No. 7 level. The lower host rocks
of the Manitou and Dyer formations are thought to remain unexplored. Steep
sulfide veins commonly control the mineralized zones. Four veins have been
identified which could feed replacement mineral bodies in these underlying
formations. The potential mineral bodies are massive sulfide and could contain
between 25,000 to 80,000 tons each of mineralized material. [Scott Hazlitt
Geological Report, Leadville Mining & Milling Properties, January 1993, Page 7].
The Company's holdings in the Hopemore area are in a location that should have
good ground preparation for vein deposits. Vein mineralization is not limited to
specific host rocks and may form mineable bodies of mineralization. The veins in
the gold belt of the Leadville district are generally low in base metals and
higher in quartz and precious metals. [Scott Hazlitt Geological Report,
Leadville Mining & Milling Properties, January 1993, Page 7]. The expected
tonnage from veins would be 5,000 to 25,000 tons of mineralized material.
[Emmons, et. al., 1927.Fig.98, 99]
Penn Group Mines
The lease on these properties has expired and the Company is in the process of
determining whether to renew the lease.
Geology and Potential Reserves
The ore deposits in the Leadville district include precious and base metal
massive sulfide veins and carbonate hosted deposits near surface oxidized
deposits, gold bearing magnetite skarns, and gold rich veins. The major ore
bodies are hosted in Paleozoic aged, shelf carbonate rocks with a total
thickness of 600 feet.
These sedimentary rocks have been intruded by a series of sills and dikes and
faulted, resulting in complex geology. The Company's properties are located on
Breece Hill, which is a major intrusive center, and contain gold, silver and
base metal minerals.
Mineralized Material
Tons Au in OPT Ag in OPT %PB %ZN %Cu
---- --------- --------- --- --- ---
121,200 0.178 8.63 3.98 12.2 0.35
6
<PAGE>
[Donald Wilson, August 14, 1989, report on Properties of Leadville Mining &
Milling Corp. Donald Wilson, February 1994, Ore Reserves on Properties of
Leadville Mining & Milling Corp. Mr. Wilson was the President of the Company.]
Hopemore Mining Co. bases 80,000 tons of this total upon representations at
cessation of mining activities in 1913. Another 30,000 tons is represented by
the 640 "Zinc Stope" which is accessed by the 740-service raise and is above the
Hopemore 6th level (old Ibex 7th level).
The B-Zone mineral body is situated in a shaly member of the Peerless Formation.
The mineralized thickness of the shale bed is approximately 17 feet, situated in
block 729, the 7th level. Core and longhole drilling indicated the existence of
a wide range of gold values hosted in predominately pyrite. High gold grades
were found to be generally associated with veins and veinlets near the #5 vein
but diminished rapidly away from that structure.
Location of Mineralized Material
Tons Area Au Ag Pb Zn Cu
---- ---- -- -- -- -- --
#4 Vein 7 level
300 N 1/2 Block 428 0.14 8.4 2.65 4.40 0.55
300 S 1/2 Block 428 0.40 16.0
600 S 1/2 Block 441 0.11 9.2 1.95 7.90 1.30
#4 Vein 6 level
100 N 1/2 Block 428 0.78 45.90 2.40 4.10 0.70
400 N 1/2 Block 428 0.16 13.20 2.10 4.70 0.35
#4 Vein (North Split)
600 N 1/2 Block 428 0.15 15.10 2.35 3.30 0.40
200 N 1/2 Block 428 0.36 23.70 2.10 4.10 0.46
7 level "B" Zone
6 640 Stope Area
17,325 Blocks 440, 441 0.092 5.80 3.95 16.20 0.40
7 level
3,200 Block 475 0.11 9.70 4.25 16.00 0.35
7
<PAGE>
6 level
500 Block 475 0.26 4.30 2.50 6.00 0.30
#4 Vein 5 level
300 S 1/2 Block 430 and
N 1/2 Block
441 0.07 9.10 1.55 2.90 6.30
--------------------------------------------------------------------------------
121,200 Total 0.178 8.63 3.98 12.20 0.35
[Donald L. Wilson, Report on the Properties of Leadville Mining & Milling Corp.
August 14, 1989. Mr. Wilson was the President of the Company].
Weston Fault Massive Sulfide Exploration Targets
The Weston fault forms the western boundary of the down-dropped block that
contains the deposits or the Black Cloud mine south and east of the Company's
properties. The Hopemore-Hunter workings are separated from the Penn Group by
the Weston fault that has had a complex history of movement. Early compressional
tectonics are believed to have resulted in minor over thrusting and drag
folding, possibly similar to that along the Tucson Main Fault on Iron Hill.
Later normal faulting resulted in a near vertical structure with the east side
down faulted. These two episodes of movement are believed to have produced two
strands of the Western Fault. The ground between the two strands of the fault
should have undergone good ground preparation and may contain the favorable
carbonate section for massive sulfide blanket mineralization. [Scott Hazlitt
Geological Report, Leadville Mining & Milling Properties, January 1993, Page 8].
Weston Fault Stockwork Breccia Exploration Targets
Along the southern strike of the Weston fault zone, intersecting faults have
hosted stockwork breccia zones that contain precious metals and are low in
sulfides. The Antioch mine produced a siliceous gold ore contained in a broken
and brecciated porphyry body between two fault strands. Another similar
stockwork breccia zone is known as the South Ibex stockwork or Capital stope
that contained approximately 250,000 tons of ore. There are two strands of the
Weston fault on the Company's property. The strike length controlled is from
1,400-1,600 feet. [Scott Hazlitt Geological Report, Leadville Mining & Milling
Properties, January 1993, Page 9].
8
<PAGE>
Planned Exploration
1. Continue R.C. drilling of Hunter location, as required in drilling as well
as offset drilling.
2. Continue R.C. drilling N.W. end of Breece Hill magnetic anomaly, as
required.
3. R.C. drilling of certain properties in the Leadville Mining district which
are presently subject to a leasing effort.
4. Continue underground exploration of Hunter and Hopemore ground by drift and
longhole drilling.
5. Mapping and digitizing exploration results to produce a computer model of
exploration results.
6. Examine other mines and mineral deposits for acquisition.
This project will cost approximately $455,000 and require approximately one year
to accomplish. Additional financing may be required if certain acquisitions are
made. See "Part II, Item 6. Management's Discussion and Analysis of Financial
Condition and Results of Operations- Liquidity and Capital Resources."
Item 3. Legal Proceedings
The Company is not presently a party to any material litigation.
Item 4. Submission of Matters to a Vote of Security holders
No matters were submitted to a vote of the Company's shareholders during the
fourth quarter of fiscal 2000.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
(a) Marketing Information -- The principal U.S. market in which the
Company's common shares (all of which are of one class, $.0001 par value Common
Stock) are traded or will trade is in the over-the-counter market (Bulletin
Board Symbol: "LMMI"). The Company's stock is not traded or quoted on any
Automated Quotation System.
The following table sets forth the range of high and low bid quotes of the
Company's Common Stock per quarter for the past two fiscal years and the first
quarter of fiscal 2000 as reported by the OTC Bulletin Board (which reflect
inter-dealer prices without retail mark-up, mark-down or commission and may not
necessary represent actual transactions).
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<PAGE>
MARKET PRICE OF COMMON STOCK
Quarter Ending High and Low Bid
-------------- ------------------------
July 31, 2000 0.5313 0.36
April 30, 2000 2.8125 0.3438
January 31, 2000 1.875 0.5313
October 31, 1999 1.2813 0.7813
July 31, 1999 1.9063 1.0625
April 30, 1999 2.5313 1.1875
January 31, 1999 1.9063 .47
October 31, 1998 .65625 .39
(b) Holders -- The approximate number of recordholders of the Company's
Common Stock, as of October 27, 2000 amounts to 1,510 inclusive of those
brokerage firms and/or clearing houses holding the Company's common shares for
their clientele (with each such brokerage house and/or clearing house being
considered as one holder). The aggregate number of shares of Common Stock
outstanding is 26,081,843 as of October 27, 2000.
(c) Dividends -- The Company has not paid or declared any dividends upon
its Common Stock since its inception and, by reason of its present financial
status and its contemplated financial requirements, does not contemplate or
anticipate paying any dividends upon its Common Stock in the foreseeable future.
During the quarter ended July 31, 2000, 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. The Company sold an aggregate of
1,362,599 shares for an aggregate of $286,857 to 41 persons. The Company also
issued 30,917 shares to two individuals for services of $11,543.
Item 6. 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 annual 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.
10
<PAGE>
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.
Fiscal 2000 Compared to Fiscal 1999
Results of Operations
During the fiscal year ended July 31, 2000, the Company continued exploration
and development activity at its gold/silver/base metal mining project in
Colorado. 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. (See "Liquidity and Capital Resources").
The primary effort during fiscal 2000 was exploration of the Hopemore mine by
longhole, diamond core drilling, tunneling and drifting. In addition, an R.C.
drilling program was initiated on Breece Hill in search of a surface mineable
deposit of gold and silver.
During the year, the Company drilled approximately 7,800 feet of diamond core
hole in the Hopemore mine, directing the drill towards projected targets
associated with the #4, #5, #69 and #70 veins and B-Zone. Much of the drill core
exhibited low-grade gold/silver mineralization and included a number of
high-grade gold and silver intervals that require further drilling to determine
size and grade. The exploratory effort was judged to have served its primary
purpose to test promising targets and to locate sites of potential, high-grade
gold ore. The underground drilling program also provided vital information
which, when combined with surface geological data such as oxidized material,
casts, box works, and jasperoid from old mine dumps, contributed to the decision
to initiate the R.C. drilling program, in search of a surface mineable deposit
of gold and silver.
The Phase #1 R.C. drilling program on Breece Hill generally covered the area
occupied by the Hunter, Old Highland Chief, Highland Mary and President mines.
The drill site measured 1/4 mile in length and 500 feet in width. The drill
results were logged, mapped and digitized. The evaluation is continuing. The
Phase #2 program followed Phase #1 after a short time interval and covered the
northwest end of the Breece Hill magnetic anomaly near Adelaide Park, but also
included additional drilling at the Hunter location. The Phase #2 drilling
program and evaluation is also continuing. A total number of 34 R.C. holes have
been drilled to date, each varying in depth from 350 to 600 feet, totaling
17,190 feet of hole. The preliminary results of drilling suggest the possible
existence of a body of near surface gold/silver mineralization that may be
amendable to open pit-mining methods. More information is needed before this can
be confirmed.
During fiscal year 2000, the Company engaged in an aggressive effort to acquire
new mineral leases on Breece Hill. This effort has been successful and is
continuing. As a result, the Company was able to acquire an additional 150.5
gross acres and 63.0 net acres. This acreage was leased on a royalty basis for a
period of 10 to 20 years.
11
<PAGE>
The Company generated no revenues from operations during the fiscal years ended
July 31, 2000 and 1999. There were de minimis non-operating revenues during
these periods of $1,945 and $1,519, respectively.
Over all, costs and expenses decreased by $434,001 (approximately 22.1%) from
1999 ($1,965,286) to 2000 ($1,531,285).
Mine expenses increased by $299,630 (approximately 61.6%) from 1999 ($486,730)
to 2000 ($786,360). The increase in mine expenses resulted primarily from
expanded work at the mine.
Selling, general and administrative expenses decreased by $733,631
(approximately 49.8%) from 1999 ($1,473,234) to 2000 ($739,603) primarily due to
a decrease in the cost of raising capital.
As a result, the Company's net loss for 2000 was $1,530,020, which was $434,427
(approximately 22.1%) less than its 1999 loss of $1,964,447.
Liquidity and Capital Resources
As of July 31, 2000, the Company had working capital of $8,729. The Company can
only continue as a going concern in the event that it obtains additional
capital. As noted above, management anticipates that it will need at least
$805,000 in order to carry out its plans for fiscal 2001 which includes the
costs of administration and mine related activities. To the extent that cash
flow is unavailable, management intends to raise all necessary capital through
the sale of its securities and/or debt financing.
Specific plans to obtain financing will most likely include private placements
of the Company's securities to institutions; private individuals and/or
investment groups. During fiscal 2000, the Company raised approximately
$1,074,455 through the sale of common stock. These investments have enabled the
Company to initiate R.C. drilling from the surface, core drilling and long hole
drilling from underground and to drive tunnels and drifts from the Hopemore 7th
level and conduct metallurgical testing of B-zone minerals.
12
<PAGE>
Assuming that the Company is able to obtain funds, planned activities over the
next year, in order of priority, are as follows:
Estimated Time Required
to Complete (or Operating
Time),
Activity Estimated Cost Assuming Funding
-------- -------------- ----------------
(a) Hunter - R.C. Drilling $ 30,000 12 Months
5 Holes
(b) Magnetic Anomaly $ 60,000 12 Months
R.C. Drilling 10 holes
(c) Foot Hills Location $120,000 12 Months
20 Holes
(d) Mapping and digitizing $ 20,000 12 Months
(e) Underground exploration $200,000 12 Months
(f) Examination of other $ 25,000 12 Months
Properties For Acquisition
--------------
TOTAL $455,000
Aside from the above planned activities, the Company's basic administrative
capitals needs (e.g. rent, salaries, utilities, etc.) are approximately $29,000
per month ($350,000 per year). Management has been funding these basic
requirements and hopes to continue to fund these requirements through the
private sale of its Common Stock. During the year ended July 31, 2000, the
Company obtained approximately $1,074,456 from the private sale of Common Stock.
During the fiscal year the Company needs approximately $805,000 in order to
complete the planned projects. In the event not all funds are available, some
projects could be curtailed or eliminated
There is no assurance whatsoever that the Company will generate any significant
revenues from its initial mining operations or that any of the Company's
proposed plans to raise capital and otherwise fund operations will prove
successful. The Company's inability to obtain sufficient funding will delay the
Company's planned operations or, possibly, force the Company to go out of
business.
13
<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. The Company again increased the bond by an additional $24,550 and
$5,600, respectively on March 14, 2000 and July 25, 2000.
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.
Item 7. Financial Statements.
For the Financial Statements required by Item 7 see the Financial Statements
included elsewhere in this Form 10-KSB.
14
<PAGE>
LEADVILLE MINING AND MILLING CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
INDEX TO FINANCIAL STATEMENTS
FILED WITH THE ANNUAL REPORT OF THE
COMPANY ON FORM 10-KSB
FOR THE YEAR ENDED JULY 31, 2000
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
BALANCE SHEET AS OF JULY 31, 2000, LEADVILLE MINING AND MILLING CORP.
STATEMENT OF OPERATIONS FOR THE YEARS ENDED JULY 31, 2000 AND JULY 31, 1999, AND
FOR THE PERIOD SEPTEMBER 17, 1982 (INCEPTION) TO JULY 31, 2000, LEADVILLE MINING
AND MILLING CORP.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE PERIOD SEPTEMBER 17, 1982
(INCEPTION) TO JULY 31, 2000, LEADVILLE MINING AND MILLING CORP.
STATEMENT OF CASH FLOWS FOR THE YEARS ENDED JULY 31, 2000 AND JULY 31, 1999, AND
FOR THE PERIOD SEPTEMBER 17, 1982 (INCEPTION) TO JULY 31, 2000, LEADVILLE MINING
AND MILLING CORP.
NOTES TO FINANCIAL STATEMENTS
------------------------------
Other schedules not submitted are omitted, because the information is included
elsewhere in the financial statements or the notes thereto, or the conditions
requiring the filing of these schedules are not applicable.
As to certain matters, the financial statements herein differ in presentation
from, and include data which are not contained in, the Company's published
financial statements to stockholders. Such presentation and additional data are
submitted solely for the purpose of complying with the applicable accounting
requirements of Form 10-KSB and Regulation S-X.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To The Board of Directors & Shareholders of
Leadville Mining and Milling Corp.
We have audited the accompanying balance sheet of Leadville Mining and Milling
Corp. (A Development Stage Enterprise) as of July 31, 2000, and the related
statements of operations, changes in stockholders' equity and cash flows for
each of the two years in the period ended July 31, 2000 and for the period
September 17, 1982 (Inception) to July 31, 2000. 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 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 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 Leadville Mining and Milling
Corp. (A Development Stage Enterprise) as of July 31, 2000 and the results of
its operations and its cash flows for each of the two years in the period ended
July 31, 2000 and for the period September 17, 1982 (Inception) to July 31, 2000
in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has incurred recurring losses through July 31,
2000 of $9,809,864 that raises substantial doubt about its ability to continue
as a going concern. Management's plans in regard to these matters are described
in Note 8. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
WOLINETZ, LAFAZAN & COMPANY, P.C.
Rockville Centre, New York
October 15, 2000
F-1
<PAGE>
LEADVILLE MINING AND MILLING CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEET
JULY 31, 2000
ASSETS
Current Assets:
Cash $ 49,422
Loans Receivable 14,550
Other Current Assets 3,179
------------
Total Current Assets 67,151
------------
Property and Equipment (Net of
Accumulated Depreciation of $360,798) 1,344,853
------------
Other Assets:
Mining Reclamation Bonds 41,150
Security Deposit 3,667
------------
Total Other Assets 44,817
------------
Total Assets $ 1,456,821
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accrued Expenses and Taxes $ 53,514
Note Payable - Current Portion 4,908
------------
Total Current Liabilities 58,422
Long Term Liabilities
Note Payable - Net of Current Portion 5,492
------------
Total Liabilities 63,914
------------
Commitments and Contingencies
Stockholders' Equity:
Common Stock, Par Value $.001 Per Share;
Authorized 150,000,000 shares; Issued and
Outstanding 24,024,096 Shares 24,024
Capital Paid In Excess of Par Value 11,178,747
Deficit Accumulated in the Development Stage (9,809,864)
------------
Total Stockholders' Equity 1,392,907
------------
Total Liabilities and Stockholders' Equity $ 1,456,821
============
The accompany notes are an integral part of the financial statements.
F-2
<PAGE>
LEADVILLE MINING AND MILLING CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For The Period
For The Year Ended September 17,1982
July 31, (Inception)
------------------------------------- To
2000 1999 July 31, 2000
------------ ------------ ------------
<S> <C> <C> <C>
Revenues:
Interest Income $ 1,475 $ 919 $ 711,505
Miscellaneous 470 600 26,276
------------ ------------ ------------
Total Revenues 1,945 1,519 737,781
------------ ------------ ------------
Costs and Expenses:
Mine Expenses 786,360 486,730 3,418,039
Selling, General and
Administrative Expenses 739,603 1,473,234 6,635,314
Depreciation 5,322 5,322 360,798
Loss on Write-Off of Investment -- -- 10,000
Loss on Joint Venture -- -- 101,700
------------ ------------ ------------
Total Costs and Expenses 1,531,285 1,965,286 10,525,851
------------ ------------ ------------
Loss Before Provision
For Income Taxes (1,529,340) (1,963,767) (9,788,070)
Provision For Income
Taxes 680 680 27,394
------------ ------------ ------------
Net Loss $ (1,530,020) $ (1,964,447) $ (9,815,464)
============ ============ ============
Net Loss Per Share $ (.07) $ (.10)
============ ============
Average Common Shares Outstanding 21,783,072 18,801,542
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
LEADVILLE MINING AND MILLING CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD SEPTEMBER 17, 1982 (INCEPTION) TO JULY 31, 2000
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Capital Paid In The
------------------------- In Excess of Development
Shares Amount Par Value Stage Total
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance
September 17, 1982
(Inception) -0- $ -0- $ -0- $ -0- $ -0-
Initial Cash
Officers - At $.001 Per Share 1,575,000 1,575 -- -- 1,575
Other Investors -
At $.001 Per Share 1,045,000 1,045 -- -- 1,045
Initial - Mining Claims --
Officer - At $.002 Per Share 875,000 875 759 -- 1,634
Common Stock Issued For:
Cash At $.50 Per Share 300,000 300 149,700 -- 150,000
Net Loss -- -- -- (8,486) (8,486)
---------- ---------- ---------- ---------- ----------
Balance - July 31, 1983 3,795,000 3,795 150,459 (8,486) 145,768
Common Stock Issued For:
Cash Pursuant to Initial Offering
At $1.50 Per Share, Net of
Offering Costs of $408,763 1,754,741 1,755 2,221,594 -- 2,223,349
Net Income -- -- -- 48,890 48,890
---------- ---------- ---------- ---------- ----------
Balance - July 31, 1984 5,549,741 5,550 2,372,053 40,404 2,418,007
Net Income -- -- -- 18,486 18,486
---------- ---------- ---------- ---------- ----------
Balance - July 31, 1985 5,549,741 5,550 2,372,053 58,890 2,436,493
Common Stock Issued For:
Mineral Lease At $1.00 Per Share 100 -- 100 -- 100
Net Income -- -- -- 4,597 4,597
---------- ---------- ---------- ---------- ----------
Balance - July 31, 1986 5,549,841 5,550 2,372,153 63,487 2,441,190
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE>
LEADVILLE MINING AND MILLING CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - (Continued)
FOR THE PERIOD SEPTEMBER 17, 1982 (INCEPTION) TO JULY 31, 2000
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Capital Paid In The
----------------------------- In Excess of Development
Shares Amount Par Value Stage Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net Loss -- $ -- $ -- $ (187,773) $ (187,773)
----------- ----------- ----------- ----------- -----------
Balance - July 31, 1987 5,549,841 5,550 2,372,153 (124,286) 2,253,417
Common Stock Issued For:
Services Rendered At
$1.00 Per Share 92,000 92 91,908 -- 92,000
Net Loss -- -- -- (328,842) (328,842)
----------- ----------- ----------- ----------- -----------
Balance - July 31, 1988 5,641,841 5,642 2,464,061 (453,128) 2,016,575
Net Loss -- -- -- (379,852) (379,852)
----------- ----------- ----------- ----------- -----------
Balance - July 31, 1989 5,641,841 5,642 2,464,061 (832,980) 1,636,723
Common Stock Issued For:
Cash:
At $.70 Per Share 269,060 269 194,219 -- 194,488
At $.50 Per Share 387,033 387 199,443 -- 199,830
Services:
At $.50 Per Share 68,282 68 34,073 -- 34,141
Commissions:
At $.70 Per Share 15,000 15 (15) -- --
Commissions Paid -- -- (2,100) -- (2,100)
Net Loss -- -- -- (529,676) (529,676)
----------- ----------- ----------- ----------- -----------
Balance - July 31, 1990 6,381,216 6,381 2,889,681 (1,362,656) 1,533,406
Common Stock Issued For:
Cash At $.60 Per Share 318,400 319 180,954 -- 181,273
Net Loss -- -- -- (356,874) (356,874)
----------- ----------- ----------- ----------- -----------
Balance - July 31, 1991 6,699,616 6,700 3,070,635 (1,719,530) 1,357,805
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE>
LEADVILLE MINING AND MILLING CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - (Continued)
FOR THE PERIOD SEPTEMBER 17, 1982 (INCEPTION) TO JULY 31, 2000
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Capital Paid In The
----------------------------- In Excess of Development
Shares Amount Par Value Stage Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Common Stock Issued For:
Cash:
At $.30 Per Share 114,917 $ 115 $ 34,303 $ -- $ 34,418
At $.50 Per Share 2,000 2 998 -- 1,000
At $.60 Per Share 22,867 23 13,698 -- 13,721
At $.70 Per Share 10,000 10 6,990 -- 7,000
At $.80 Per Share 6,250 6 4,994 -- 5,000
At $.90 Per Share 5,444 5 4,895 -- 4,900
Services:
At $.32 Per Share 39,360 39 12,561 -- 12,600
At $.50 Per Share 92,353 93 46,084 -- 46,177
Exercise of Options:
At $.50 Per Share By
Related Party 100,000 100 49,900 -- 50,000
Net Loss -- -- -- (307,477) (307,477)
----------- ----------- ----------- ----------- -----------
Balance - July 31, 1992 7,092,807 7,093 3,245,058 (2,027,007) 1,225,144
Common Stock Issued For:
Cash:
At $.30 Per Share 176,057 $ 176 $ 51,503 $ -- $ 51,679
At $.50 Per Share 140,000 140 69,964 -- 70,104
At $.60 Per Share 10,000 10 5,990 -- 6,000
At $.70 Per Share 17,000 17 11,983 -- 12,000
At $1.00 Per Share 50,000 50 49,950 -- 50,000
Services:
At $.50 Per Share 495,556 496 272,504 -- 273,000
Commissions:
At $.50 Per Share 20,220 20 (20) -- --
Commissions Paid -- -- (1,500) -- (1,500)
Net Loss -- -- -- (626,958) (626,958)
----------- ----------- ----------- ----------- -----------
Balance - July 31, 1993 8,001,640 8,002 3,705,432 (2,653,965) 1,059,469
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-6
<PAGE>
LEADVILLE MINING AND MILLING CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - (Continued)
----------------------------------------------------------
FOR THE PERIOD SEPTEMBER 17, 1982 (INCEPTION) TO JULY 31, 2000
--------------------------------------------------------------
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Capital Paid In The
---------------------------- In Excess of Development
Shares Amount Par Value Stage Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Common Stock Issued For:
Cash:
At $.30 Per Share 149,330 $ 150 $ 43,489 $ -- $ 43,639
At $.50 Per Share 377,205 377 189,894 -- 190,271
Services:
At $.30 Per Share 500,000 500 149,500 -- 150,000
At $.50 Per Share 130,000 130 71,287 -- 71,417
At $.50 Per Share
By Related Party 56,000 156 77,844 -- 78,000
At $.70 Per Share 4,743 4 3,316 -- 3,320
Exercise of Options For Services:
At $.50 Per Share 35,000 35 17,465 -- 17,500
At $.50 Per Share
By Related Party 150,000 150 74,850 -- 75,000
Net Loss -- -- -- (665,909) (665,909)
----------- ----------- ----------- ----------- -----------
Balance - July 31, 1994 9,503,918 9,504 4,333,077 (3,319,874) 1,022,707
Common Stock Issued For:
Cash:
At $.30 Per Share 150,000 $ 150 $ 49,856 $ -- $ 50,006
At $.40 Per Share 288,200 288 115,215 -- 115,503
At $.50 Per Share 269,611 270 132,831 -- 133,101
At $.60 Per Share 120,834 121 72,379 -- 72,500
At $.70 Per Share 23,000 23 16,077 -- 16,100
Services:
At $.40 Per Share 145,000 145 60,755 -- 60,900
At $.50 Per Share 75,000 75 34,925 -- 35,000
Exercise of Options For:
Cash:
At $.50 Per Share
By Related Party 350,000 350 174,650 -- 175,000
Services:
At $.50 Per Share 35,000 35 17,465 -- 17,500
Commissions Paid -- -- (1,650) -- (1,650)
Net Loss -- -- -- (426,803) (426,803)
----------- ----------- ----------- ----------- -----------
Balance - July 31, 1995 10,960,563 $ 10,961 $ 5,005,580 $(3,746,677) $ 1,269,864
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-7
<PAGE>
LEADVILLE MINING AND MILLING CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - (Continued)
FOR THE PERIOD SEPTEMBER 17, 1982 (INCEPTION) TO JULY 31, 2000
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Capital Paid In The
----------------------------- In Excess of Development
Shares Amount Par Value Stage Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Common Stock Issued For:
Cash:
At $.40 Per Share 75,972 $ 76 $ 30,274 $ -- $ 30,350
At $.50 Per Share 550,423 550 270,074 -- 270,624
At $.60 Per Share 146,773 147 87,853 88,000
At $.70 Per Share 55,722 56 38,949 39,005
At $.80 Per Share 110,100 110 87,890 88,000
Services:
At $.40 Per Share 104,150 104 38,296 -- 38,400
At $.50 Per Share 42,010 42 20,963 -- 21,005
At $.60 Per Share 4,600 5 2,755 2,760
At $.70 Per Share 154,393 155 107,920 108,075
Commissions:
At $.35 Per Share 23,428 23 (23)
At $.50 Per Share 50,545 50 (50)
At $.60 Per Share 2,000 2 (2)
At $.70 Per Share 12,036 12 (12)
Exercise of Options:
Cash:
At $.35 Per Share
By Related Party 19,571 20 6,830 6,850
Services:
At $.35 Per Share
By Related Party 200,429 200 69,950 -- 70,150
At $.50 Per Share 95,000 95 47,405 -- 47,500
Compensation Portion of
Options Exercised -- -- 261,500 -- 261,500
Net Loss -- -- -- (956,043) (956,043)
----------- ----------- ----------- ----------- -----------
Balance - July 31, 1996 12,607,715 12,608 6,076,152 (4,702,720) 1,386,040
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-8
<PAGE>
LEADVILLE MINING AND MILLING CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - (Continued)
FOR THE PERIOD SEPTEMBER 17, 1982 (INCEPTION) TO JULY 31, 2000
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Capital Paid In The
----------------------------- In Excess of Development
Shares Amount Par Value Stage Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Common Stock Issued For:
Cash:
At $.35 Per Share 50,000 $ 50 $ 17,450 $ -- $ 17,500
At $.40 Per Share 323,983 324 128,471 -- 128,795
At $.50 Per Share 763,881 762 381,174 -- 381,936
At $.60 Per Share 16,667 17 9,983 -- 10,000
At $.70 Per Share 7,143 7 4,993 -- 5,000
At $.80 Per Share 28,750 29 22,971 -- 23,000
Services:
At $.50 Per Share 295,884 296 147,646 -- 147,942
Commissions:
At $.35 Per Share 44,614 45 (45)
At $.40 Per Share 41,993 42 (42)
At $.50 Per Share 37,936 38 (38)
Expense:
At $.35 Per Share 8,888 9 3,099 3,108
At $.40 Per Share 9,645 10 3,848 3,858
Property and Equipment
At $.60 Per Share 7,500 8 4,492 4,500
Exercise of Options
Services:
At $.35 Per Share
By Related Party 136,301 136 47,569 47,705
Net Loss -- -- -- (805,496) (805,496)
----------- ----------- ----------- ----------- -----------
Balance - July 31, 1997 14,380,900 $ 14,381 $ 6,847,723 $(5,508,216) $ 1,353,888
</TABLE>
F-9
<PAGE>
LEADVILLE MINING AND MILLING CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - (Continued)
FOR THE PERIOD SEPTEMBER 17, 1982 (INCEPTION) TO JULY 31, 2000
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Capital Paid In The
----------------------------- In Excess of Development
Shares Amount Par Value Stage Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Common Stock Issued For:
Cash:
At $.20 Per Share 10,000 $ 10 $ 1,990 $ -- $ 2,000
At $.25 Per Share 100,000 100 24,900 -- 25,000
At $.27 Per Share 45,516 46 12,244 -- 12,290
At $.28 Per Share 150,910 151 41,349 -- 41,500
At $.30 Per Share 60,333 60 18,040 -- 18,100
At $.31 Per Share 9,677 10 2,990 -- 3,000
At $.32 Per Share 86,750 87 27,673 -- 27,760
At $.33 Per Share 125,364 125 41,245 -- 41,370
At $.35 Per Share 75,144 75 26,225 -- 26,300
At $.38 Per Share 49,048 49 18,311 -- 18,360
At $.40 Per Share 267,500 268 106,732 -- 107,000
At $.45 Per Share 65,333 65 29,335 -- 29,400
At $.50 Per Share 611,184 610 304,907 -- 305,517
Services:
At $.23 Per Share 48,609 49 11,131 -- 11,180
Exercise of Options:
Services:
At $.22 Per Share 82,436 82 18,054 -- 18,136
At $.35 Per Share 183,846 184 64,162 -- 64,346
Compensation:
At $.22 Per Share 105,000 105 22,995 -- 23,100
At $.35 Per Share 25,000 25 8,725 -- 8,750
Commissions:
At $.22 Per Share 67,564 68 (68) --
At $.35 Per Share 291,028 291 (291) --
Net Loss -- -- -- (807,181) (807,181)
----------- ----------- ----------- ----------- -----------
Balance - July 31, 1998 16,841,142 $ 16,841 $ 7,628,372 $(6,315,397) $ 1,329,816
</TABLE>
F-10
<PAGE>
LEADVILLE MINING AND MILLING CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - (Continued)
FOR THE PERIOD SEPTEMBER 17, 1982 (INCEPTION) TO JULY 31, 2000
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Capital Paid In The
------------------------------ In Excess of Development
Shares Amount Par Value Stage Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Common Stock Issued For:
Cash:
At $0.20 Per Share 12,500 $ 13 $ 2,487 $ -- $ 2,500
At $0.22 Per Share 45,454 45 9,955 -- 10,000
At $0.25 Per Share 248,788 249 61,948 -- 62,197
At $0.27 Per Share 132,456 132 35,631 -- 35,763
At $0.28 Per Share 107,000 107 30,493 -- 30,600
At $0.29 Per Share 20,000 20 5,780 -- 5,800
At $0.30 Per Share 49,333 49 14,751 -- 14,800
At $0.32 Per Share 152,725 153 48,719 -- 48,872
At $0.33 Per Share 149,396 149 49,151 -- 49,300
At $0.35 Per Share 538,427 538 187,912 -- 188,450
At $0.40 Per Share 17,000 17 6,783 -- 6,800
At $0.50 Per Share 53,000 53 26,447 -- 26,500
At $0.55 Per Share 6,000 6 3,294 -- 3,300
At $0.65 Per Share 33,846 34 21,966 -- 22,000
At $0.68 Per Share 13,235 13 8,987 -- 9,000
At $0.70 Per Share 153,572 154 107,346 -- 107,500
At $0.90 Per Share 57,777 58 51,942 -- 52,000
At $1.00 Per Share 50,000 50 49,950 -- 50,000
At $1.10 Per Share 150,000 150 164,850 -- 165,000
Expenses:
At $0.21 Per Share 37,376 37 7,812 -- 7,849
At $0.30 Per Share 19,450 19 5,816 -- 5,835
At $0.36 Per Share 34,722 35 12,465 -- 12,500
Commission:
At $0.21 Per Share 158,426 158 (158) -- --
At $0.25 Per Share 28,244 28 (28) -- --
At $0.30 Per Share 132,759 133 (133) -- --
At $0.35 Per Share 40,000 40 (40) -- --
Services: 95,238 95 19,905 -- 20,000
At $0.25 Per Share 17,000 17 4,233 -- 4,250
At $0.30 Per Share 145,941 146 43,636 -- 43,782
At $0.50 Per Share 71,808 72 35,832 -- 35,904
19,612,615 $ 19,611 $ 8,646,104 $(6,315,397) $ 2,350,318
</TABLE>
F-11
<PAGE>
LEADVILLE MINING AND MILLING CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - (Continued)
FOR THE PERIOD SEPTEMBER 17, 1982 (INCEPTION) TO JULY 31, 2000
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Capital Paid In The
---------------------------- In Excess of Development
Shares Amount Par Value Stage Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Compensation portion of Cash
Issuances -- $ -- $ 618,231 $ -- $ 618,231
Compensation Portion of
Options Granted -- -- 48,000 -- 48,000
Exercise of Options:
Cash
At $0.10 Per Share 510,000 510 50,490 -- 51,000
Services:
At $0.70 Per Share 100,000 100 69,900 -- 70,000
Compensation Portion of Options
Exercised -- -- 256,900 -- 256,900
Net Loss -- -- -- (1,964,447) (1,964,447)
----------- ----------- ----------- ----------- -----------
Balance - July 31, 1999 20,222,615 20,221 9,689,625 (8,279,844) 1,430,002
Common Stock Issued For:
Cash:
At $.18 Per Share 27,778 28 4,972 -- 5,000
At $.20 Per Share 482,500 483 96,017 -- 96,500
At $.21 Per Share 47,500 47 9,953 -- 10,000
At $.22 Per Share 844,821 845 185,012 -- 185,857
At $.30 Per Share 100,000 100 29,900 -- 30,000
At $.35 Per Share 280,000 280 97,720 -- 98,000
At $.37 Per Share 56,000 56 19,944 -- 20,000
At $.38 Per Share 100,000 100 37,900 -- 38,000
At $.40 Per Share 620,000 620 247,380 -- 248,000
At $.42 Per Share 47,715 48 19,952 -- 20,000
At $.45 Per Share 182,445 182 81,918 -- 82,100
At $.50 Per Share 313,000 313 156,187 -- 156,500
At $.55 Per Share 122,778 123 67,377 -- 67,500
At $.58 Per Share 12,069 12 6,988 -- 7,000
Expenses:
At $.20 Per Share 4,167 4 829 -- 833
At $.22 Per Share 46,091 46 10,094 -- 10,140
Compensation Portion -- -- 94,430 -- 94,430
</TABLE>
F-12
<PAGE>
LEADVILLE MINING AND MILLING CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - (Continued)
FOR THE PERIOD SEPTEMBER 17, 1982 (INCEPTION) TO JULY 31, 2000
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Capital Paid In The
------------------------------- In Excess of Development
Shares Amount Par Value Stage Total
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Exercise of Options:
Services:
At $.25 Per Share 30,000 30 7,470 -- 7,500
At $.40 Per Share 95,000 95 37,905 -- 38,000
At $.50 Per Share 25,958 26 12,954 -- 12,980
Compensation Portion -- -- 86,375 -- 86,375
Commissions:
At $.20 Per Share 26,750 27 (27) -- --
At $.22 Per Share 86,909 87 (87) -- --
Compensation Portion -- -- 3,210 -- 3,210
Exercise of Options:
Cash:
At $.10 Per Share 100,000 100 9,900 -- 10,000
Exercise of Options:
Services:
At $.22 Per Share 150,000 150 32,850 -- 33,000
Compensation Portion -- -- 132,000 -- 132,000
Net Loss -- -- -- (1,530,020) (1,530,020)
------------ ------------ ------------ ------------ ------------
Balance - July 31, 2000 24,024,096 $ 24,023 $ 11,178,748 $ (9,809,864) $ 1,392,907
============ ============ ============ ============ ============
</TABLE>
F-13
<PAGE>
LEADVILLE MINING AND MILLING CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
For The Period
For The Year Ended September 17, 1982
July 31, (Inception)
-------------------------------- To
2000 1999 July 31, 2000
----------- ----------- -----------
<S> <C> <C> <C>
Cash Flow From Operating Activities:
Net Loss $(1,530,020) $(1,964,447) $(9,815,464)
Adjustments to Reconcile Net Loss to
Net Cash Used By Operating Activities:
Depreciation 5,322 5,322 360,798
Loss on Write-Off of Investment -- -- 10,000
Loss From Joint Venture -- -- 101,700
Value of Common Stock Issued For Services 78,335 276,829 1,942,234
Compensation Portion of Options Exercised 340,132 846,424 1,448,056
Changes in Operating Assets and Liabilities:
(Increase) Decrease in Other Current Assets (714) (2,281) (3,179)
Increase in Security Deposit -- -- (3,667)
Increase (Decrease) in Accrued Expenses
and Taxes 128 (7,210) 53,514
----------- ----------- -----------
Net Cash Used By Operating Activities (1,106,817) (845,363) (5,906,008)
----------- ----------- -----------
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 -- -- (1,817,350)
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-14
<PAGE>
LEADVILLE MINING AND MILLING CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CASH FLOWS
(Continued)
<TABLE>
<CAPTION>
For The Period
For The Year Ended September 17, 1982
July 31, (Inception)
-------------------------------- To
2000 1999 July 31, 2000
----------- ----------- -----------
<S> <C> <C> <C>
Cash Flow From Financing Activities:
Increase in Loans Receivable $ (5,360) $ (700) $ (14,550)
Increase in Loans Payable - Officers -- -- 18,673
Repayment of Loans Payable - Officers -- -- (18,673)
Increase in Note Payable 11,218 -- 11,218
Payments of Note Payable (818) -- (818)
Proceeds From Sale of Common Stock 1,074,456 941,382 8,226,493
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 (30,150) -- (30,550)
----------- ----------- -----------
Net Cash Provided By Financing Activities 1,049,346 940,682 7,772,780
----------- ----------- -----------
Increase (Decrease) In Cash and Cash Equivalents (57,471) 95,319 49,422
Cash and Cash Equivalents - Beginning 106,893 11,574 --
----------- ----------- -----------
Cash and Cash Equivalents - Ending $ 49,422 $ 106,893 $ 49,422
=========== =========== ===========
Supplemental Cash Flow Information:
Cash Paid For Interest $ -- $ -- --
=========== =========== ===========
Cash Paid For Income Taxes $ 680 $ 680 $ 26,843
=========== =========== ===========
Non-Cash Financing Activities:
Issuances of Common Stock as Commissions
on Sales of Common Stock $ 24,370 $ 94,159 $ 344,950
=========== =========== ===========
Issuance of Common Stock as Payment for Expenses $ 78,335 $ 13,684 $ 192,647
=========== =========== ===========
Issuance of Common Stock as Payment for Property
and Equipment $ -- $ -- $ 4,500
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-15
<PAGE>
LEADVILLE MINING AND MILLING CORP.
(A DEVELOPMENT STAGE ENTERPRISE
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2000
NOTE 1 - Summary of Significant Accounting Policies
Basis of Presentation
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. However, the Company has incurred
recurring losses through July 31, 2000 aggregating $9,809,864 that raises
substantial doubt about its ability to continue as a going concern. As indicated
in Note 8, the Company is in the process of raising additional capital and
financing. Continuation of the Company is dependent on (1) consummation of the
contemplated financings, (2) achieving sufficiently profitable operations and
(3) subsequently maintaining adequate financing arrangements. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Property and Equipment
Property and equipment is reported at cost. It is the Company's policy to
capitalize costs incurred to improve and develop the mining and milling
property. General and administrative expenses are expensed as incurred.
Depletion of mine and mill improvements is computed at cost using the units
of production method. The Company has made no provision for depletion as the
mine and mill are not in the production stage. Provision is made for the
depreciation of office furniture and fixtures, machinery and equipment, and
building. Depreciation is computed using both straight-line and accelerated
methods over the estimated useful lives of the related assets.
F-16
<PAGE>
LEADVILLE MINING AND MILLING CORP.
(A DEVELOPMENT STAGE ENTERPRISE
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2000
NOTE 1 - Summary of Significant Accounting Policies (Continued)
Income Taxes
The Company accounts for income taxes under the asset and liability method.
The objective of the asset and liability method is to establish deferred tax
assets and liabilities for the temporary differences between the financial
reporting basis and the tax basis of the Company's assets and liabilities at
enacted tax rates expected to be in effect when such amounts are realized or
settled.
NOTE 2 - Mining Reclamation Bonds
This represents certificates of deposit that have been deposited as
security for a Mining Reclamation Bond.
NOTE 3 - Loans Receivable
Included in loans receivable are unsecured short-term revolving loans of
$12,050 and $2,500 paid by the Company respectively to WCM Capital, Inc., a
publicly traded corporation and South American Minerals, Inc. a publicly traded
corporation. These are non-interest bearing and due on demand.
F-17
<PAGE>
LEADVILLE MINING AND MILLING CORP.
(A DEVELOPMENT STAGE ENTERPRISE
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2000
NOTE 4 - Property and Equipment
Property and equipment consists of the following:
Land $ 24,364
Building 22,655
Machinery and Equipment 358,230
Mining Claims and
Leasehold Improvements 106,786
Mill and Mining Improvements 1,192,658
Office Furniture, Fixtures
and Equipment 958
----------
1,705,651
Less: Accumulated Depreciation 360,798
----------
$1,344,853
==========
NOTE 5 - Stockholders' Equity
At various stages in the Company's development, shares of stock have been
issued in exchange for the fair market value, as determined by the Board of
Directors, for services received with a corresponding charge to operations,
property and equipment or capital paid in excess of par value depending on the
nature of the services provided.
F-18
<PAGE>
LEADVILLE MINING AND MILLING CORP.
(A DEVELOPMENT STAGE ENTERPRISE
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2000
NOTE 5 - Stockholders' Equity (Continued)
Common Stock Reserved For Issuance
The following is a table with respect to common stock reserved for options
as of July 31, 2000:
Options Outstanding
-------------------------
Number of Price Range
Shares Per Share
---------- -----------
Balance - July 1, 1991 -0- $ --
Options Granted:
Services 400,000 .10 - .50
Services - Related Parties 225,000 .50
Options Exercised - Related Parties (100,000) .50
---------- ----------
Outstanding - July 31, 1992 525,000 .10 - .50
Options Granted:
Services 200,000 .50
---------- ----------
Outstanding - July 31, 1993 725,000 .10 - .50
Options Granted:
Services 310,000 .50
Services - Related Parties 350,000 .50
Exercised:
Services (35,000) .50
Services - Related Parties (150,000) .50
Expired: (525,000) .10 - .50
---------- ----------
Outstanding - July 31, 1994 675,000 .50
Exercised:
Services (35,000) .50
Services - Related Parties (350,000) .50
---------- ----------
Outstanding - July 31, 1995 290,000 .50
F-19
<PAGE>
LEADVILLE MINING AND MILLING CORP.
(A DEVELOPMENT STAGE ENTERPRISE
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2000
NOTE 5 - Stockholders' Equity (Continued)
Common Stock Reserved For Issuance
The following is a table with respect to common stock reserved for options
as of July 31, 2000:
Options Outstanding
-------------------------
Number of Price Range
Shares Per Share
---------- -----------
Options Granted:
Services - Related Parties 600,000 $ .10
Exercised:
Cash - Related Parties (17,500) .40
Services (95,000) .50
Services -Related Parties (202,500) .35
Expired: (165,000) .50
---------- ----------
Outstanding - July 31, 1996 410,000 .35 - .50
Options Granted
Services - Related Party 1,545,000 .022
Services 10,000 .35
Exercised
Service - Related Party (101,730) .35
Expired (30,000) .35
---------- ----------
Outstanding July 31, 1997 1,833,270 .22
Options Granted:
Services - Related Parties 610,000 .022
Services 755,000 .22-.40
Exercised:
Services (720,000) .22-.35
---------- ----------
Outstanding - July 31, 1998 2,478,270 .022-.40
Options Granted:
Services 100,000 .70
Exercised:
Services (260,000) .10-.70
Services Related Party (350,000) --
---------- ----------
Outstanding - July 31, 1999 1,968,270 .10-.40
==========
Options Granted:
Services - Related Parties 2,350,000 .022
Services 1,210,000 .22-.50
Exercised:
Services (250,000) .10-.22
---------- ----------
Outstanding - July 31, 2000 5,278,270 $ .022-.50
========== ==========
F-20
<PAGE>
LEADVILLE MINING AND MILLING CORP.
(A DEVELOPMENT STAGE ENTERPRISE
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2000
NOTE 5 - Stockholders' Equity (Continued)
Authorized Common Stock
In September 1993 the Company's shareholders approved an increase in the
authorized common stock from 100,000,000 shares to 150,000,000 shares.
Effective April 11, 1998 the Company underwent a 1 for 10 reverse split
with all fractions being rounded up into new common stock.
All references to common stock is restated to reflect the 1 for 10 reverse
split.
NOTE 6 - Income Taxes
For income tax purposes, the Company has a net operating loss carryforward
at July 31, 2000 of approximately $6,675,000 beginning to expire at July 31,
2001 if not offset against future federal taxable income.
Pursuant to FASB 109, the Company has elected to take a 100% reserve on the
deferred tax asset arising from the net operating loss of $2,269,500 and
accordingly there is no cumulative effect adjustment or current year tax benefit
recorded.
NOTE 7 - Commitments and Contingencies
From time to time, the Company may be named in legal actions which are
incidential to the industry in which the Company operates. Currently, the
Company is not a party to any legal proceedings.
F-21
<PAGE>
LEADVILLE MINING AND MILLING CORP.
(A DEVELOPMENT STAGE ENTERPRISE
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2000
NOTE 8 - Liquidity and Going Concern Uncertainty
The Company has incurred recurring losses amounting to $9,809,864 at July
31, 2000. This raises substantial doubt about the Company's ability to continue
as a going concern.
Specific plans to obtain financing for a full scale mining and mill
operation includes the following:
Private placements of the Company's securities to institutions, private
individuals, mining companies, and/or investment groups. During the fiscal year
ended July 31, 2000 the Company raised approximately $1,074,455 through the
sales of common stock to investors, which enabled the Company to complete the
Hunter Shaft, test the mill and do core drilling.
Assuming that the Company is able to obtain funds from one or more of the
above sources, planned activities over the next twelve months should include A)
Continue drilling of Hunter location, as required. B) Continue drilling N.W. end
of Breece Hill magnetic anomaly, as required. C) Drilling of certain properties
in the Leadville Mining district which are presently subject to a leasing
effort. D) Continue underground exploration of Hunter and Hopemore ground by
drift and longhole drilling. E) Mapping and digitizing exploration results to
produce a computer model of exploration results. F) Examine other mines and
mineral deposits for acquisition. During Fiscal 2000 the company needs to raise
additional capital in order to complete these projects.
There is no assurance whatsoever that any of the Company's proposed plans
to raise capital and otherwise fund operations will prove successful. The
Company's ability to continue as a going concern is dependent upon its ability
to obtain sufficient funding as discussed above and its inability to do so will
delay or cease the Company's planned operations as discussed above.
F-22
<PAGE>
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures.
There have been no changes in or disagreements with accountants with respect to
accounting and/or financial disclosure.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act.
The following table sets forth certain information concerning the directors and
executive officers of the Company:
First
Became
Name Age Director Position
---- --- -------- --------
Gifford A. Dieterle 68 9/22/82 President, Treasurer
& Chairman of the Board
Robert Roningen 67 9/14/93 Senior Vice President, Secretary
Jack V. Everett 79 1/25/95 Director, Vice President - Exploration
Roger A Newell 56 8/28/00 Director, Vice President -
Development
Jeffrey W. Pritchard 42 1/27/00 Director, Vice President -
Investor Relations
----------
Directors are elected at the meeting of shareholders called for that purpose and
hold office until the next shareholders meeting called for that purpose or until
their resignation or death. Officers of the corporation are elected by the
directors at meetings called by the directors for its purpose.
GIFFORD A. DIETERLE, President, Treasurer and Chairman of the Board of Directors
of the Company. Mr. Dieterle was appointed President in September 1999 following
the resignation of Donald W. Wilson. His highest educational degree is a M.S. in
Geology obtained from New York University. From 1977 until July 1993, he was
Chairman, Treasurer, and Executive Vice-President of Franklin Consolidated
Mining Company. From 1965 to 1987, he was lecturer in geology at the City
University of N.Y. (Hunter Division). Since 1962, he has been a consulting
geologist engaged in the geological evaluation of oil and mineral properties.
From 1978 until the present, he has been a registered representative with Datek
Securities.
15
<PAGE>
ROBERT RONINGEN, Senior Vice President, Secretary and Director, has been engaged
in the practice of law as a sole practitioner and is a self-employed consultant
geophysicist in Duluth, Minnesota. From 1988 to August 1993, he was an officer
and director of Franklin Consolidated Mining Company, Inc. He graduated from the
University of Minnesota in 1957 with a B.A. in geology and in 1962 with a degree
in Law.
JACK V. EVERETT, Vice President - Exploration and Director, has been a
consulting mining geologist for 25 years, with expertise in all phases of
exploration for base and precious metals. Following his 1947 graduation from
Michigan State University, he was District Geologist for Pickands Mather &
Company on the Cuyuna Iron Range, Minnesota. From 1951 to 1970, he was Chief
Geologist and Exploration Manager for W.S. Moore Company, Duluth, Minnesota an
iron mining company with gold and base metal sulfide holdings in the U.S. and
Canada.
ROGER A. NEWELL, Vice President - Development and Director, has been in the
mining industry for over 30 years. From 1977 through 1989, he served as
Exploration Manager/Senior Geologist for the Newmont Mining Company and, from
1989 through 1995, was the Exploration Manager for Gold Fields Mining Company.
He was Vice President Development, for Western Exploration Company from 1997
through 2000. His highest educational degree is a Ph.D. in mineral exploration
from Stanford University.
JEFFREY W. PRITCHARD, Vice President - Investor Relations and Director, has
worked for the Company for the past five years. He has been in the
marketing/public relation's field since receiving a Bachelor's degree from the
State University of New York in 1979. Jeff has served as the Director of
Marketing for the New Jersey Devils, July 1987-April 1990, and as the Director
of Sales for the New York Islanders from May 1985-June 1987. He also was an
Executive Vice President with Long Island based Performance Network, a marketing
and publishing concern, from May 1990 through October 1995.
Compliance with Section 16(a) of The Securities Exchange Act of 1934
To the Company's knowledge, based solely on a review of such materials as are
required by the Securities and Exchange Commission, no officer, director or
beneficial holder of more than ten percent of the Company's issued and
outstanding shares of Common Stock failed to timely file with the Securities and
Exchange Commission any form or report required to be so filed pursuant to
Section 16(a) of the Securities Exchange Act of 1934, except that Messrs.
Pritchard, Shevchenko and Newell failed to timely file forms 3 and Messrs.
Dieterle, Roningen, Everett, Sherp, Pritchard, Wilson and Shevchenko failed to
timely file Forms 5.
Item 10. Executive Compensation
The following table shows all the cash compensation paid or to be paid by the
Company or any of its subsidiaries, as well as certain other compensation paid
or accrued, during the fiscal years indicated, to the Chief Executive Officer
for such period in all capacities in which he served. Information concerning the
Chief Executive Officer relates to Gifford Dieterle. Donald W. Wilson, the
former Chief Executive Officer, retired in September 1999. No other Executive
Officer received total annual salary and bonus in excess of $100,000.
16
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
-------------------------------------------
Annual Compensation Awards Payouts
---------------------------------------- -------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
--- --- --- --- --- --- --- --- ---
Other Restricted All Other
Annual Stock LTIP Compensa
Name and Principal Compen- Award Options Payouts -tion
Position Year Salary ($) sation($) ($) SARs ($) (i)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gifford A. Dieterle 2000 47,473 -0- -0- -0- 1,000,00 -0- -0-
Chief Executive
Officer
Donald W. Wilson 2000 13,368 -0- -0- -0- -0- -0- -0-
Chief Executive 1999 76,998 -0- -0- -0- -0- -0- -0-
Officer 1998 63,320 -0- -0- -0- 150,000 -0- -0-
</TABLE>
The following table sets forth information with respect to the Company's
Executive Officers concerning the grants of options and Stock Appreciation
Rights ("SAR") during the past fiscal year:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
-----------------------------------------------------------------------------------------------------
Percent of Total
Options/SARs
Options/ Granted to
SARs Employed in Exercise or Base Expiration
Name Granted Fiscal Year Price ($/SH) Date
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Donald W. Wilson -0-
Gifford Dieterle 1,000,000 28% $.022 11-2-02
Robert Roningen 1,000,000 28% $.022 11-2-02
Jack Everett 250,000 7% $.022 11-2-02
Horst Scherp -0-
Jeffrey Pritchard 100,000 3% $.022 3-6-03
</TABLE>
The following table sets forth information with respect to the Company's
Executive Officers concerning exercise of options during the last fiscal year
and unexercised options and SARs held as of the end of the fiscal year:
Aggregated Option/SAR Exercises and Fiscal Year-End Option/SAR
(a) (b) (c) (d) (e)
--------------------------------------------------------------------------------
Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs Option/SARs
Shares at FY-End(#) at FY-End(#)
Acquired on Value Exercisable/ Exercisable/
Name Exercise(#) Realized Unexercisable Unexercisable
--------------------------------------------------------------------------------
Donald W. Wilson -0- -0- 700,000 --
Gifford Dieterle -0- -0- 1,553,270 --
Robert Roningen -0- -0- 1,150,000 --
Jack Everett -0- -0- 475,000 --
Horst Scherp -0- -0- 20,000 --
Jeffrey Pritchard -0- -0- 100,000 --
17
<PAGE>
The following table sets forth information with respect to the Executive
Officers concerning awards under long term incentive plans during the last
fiscal year:
<TABLE>
<CAPTION>
Estimated Future Payouts under Non-Stock
Price Based Plans
(a) (b) (c) (d) (e) (f)
-------------------------------------------
Performance
Number of or Other
Shares, Units Period Until
or Other Maturation or Threshold Target Maximum
Name Rights(#) Payout ($ or #) ($ or #) ($ or #)
---- --------- ------ -------- -------- --------
<S> <C>
Donald W. Wilson -0-
Gifford Dieterle -0-
Robert Roningen -0-
Jack. Everett -0-
Horst Scherp -0-
</TABLE>
Directors are not compensated for acting in their capacity as Directors.
Directors are reimbursed for their accountable expenses incurred in attending
meetings and conducting their duties.
Item 11. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners -- The persons set
forth on the charts below are known to the Company to be the beneficial owners
of more than 5% of the Company's outstanding voting Common Stock as of October
27, 2000.
(b) Security Ownership of Management - Information concerning the number
and percentage of shares of voting Common Stock of the Company owned of record
and beneficially by management as of October 27, 2000, is set forth on the
charts below.
Name of Amount & Nature
Beneficial of Beneficial Approximate
Title of Class Owner Ownership 10/27/00 Percentage(1)(2)
Common Stock Gifford A. Dieterle* 2,764,053(2)(3) 10.0%
Common Stock Jack Everett* 475,000(2) 1.8%
Common Stock Robert Roningen* 1,693,905(2)(4) 6.2%
Common Stock Horst Scherp* 25,000(2) **
Common Stock Jeffrey W. Pritchard* 206,354(2) **
Common Stock Roger A Newell* 0 **
Common Stock Donald W. Wilson* 701,000(2) 2.6%
Common Stock Richard Shevchenko 3,255,674(2)(5) 12.0%
All Officers and
Directors as a
Group (7)* 5,865,312(2)(3)(4) 19.5%
----------
18
<PAGE>
* Officer and/or Director of the Company, including Mr. Wilson who resigned as
President and a Director of the Company in September 1999 and Horst Scherp, who
resigned as a Director in January 2000.
** Less than one percent.
(1) Based upon 26,081,843 shares issued and outstanding as of October 27, 2000.
(2) For Messrs. Wilson, Dieterle, Everett, Roningen, Scherp, Pritchard and
Shevchenko, includes, respectively, 700,000 shares, 1,553,270 shares,
475,000 shares, 1,150,000 shares, 20,000 shares, 100,000 shares and
1,000,000 shares issuable upon exercise of options and/or warrants.
(3) Includes shares owned by Mr. Dieterle's wife.
(4) Includes shares owned by Mr. Roningen's wife and children.
(5) Includes shares owned by Mr. Shevchenko's wife and children.
Item 12. Certain Relationships and Related Transactions.
On March 6, 2000, the Company issued to Jeffrey W. Pritchard, a Vice President
and Director of the Company, options to purchase 100,000 shares. These options
expire on March 6, 2003 and are exercisable at $0.022 per share.
On November 1, 1999, the Company issued the following options to certain
officers, directors and principal shareholders: Gifford Dieterle- option to
purchase 1,000,000 shares, Robert Roningen - option to purchase 1,000,000
shares, Richard Shevchenko - option to purchase 1,000,000 shares, Jack Everett
250,000 shares. All options granted on that date expire on November 1, 2002 and
are exercisable at $0.022 per share.
On June 5, 1998, the Company issued the following options to certain officers
and directors. Donald Wilson - option to purchase 150,000 shares; Gifford
Dieterle - option to purchase 150,000 shares; Robert Roningen option to purchase
150,000 shares; Jack Everett -option to purchase 150,000 shares; Horst Scherp -
option to purchase 10,000 shares. All options granted on that date expire on
June 5, 2001. All shares held by Messrs. Wilson and Scherp are exercisable at
$.22 per share. The exercise price of the other options were reduced on July 15,
2000 to $0.022 per share.
Effective April 11, 1997, the Company reverse split its outstanding shares of
Common Stock on a one-for-ten basis and adjusted the terms of all outstanding
options and warrants accordingly. Unless the context specifically indicates
otherwise, all references herein to Shares, options and warrants have been
adjusted to take into account the reverse split.
19
<PAGE>
On April 2, 1997, the Company issued the following options to certain officers
and directors. Donald Wilson - option to purchase 350,000 shares; Gifford
Dieterle - option to purchase 350,000 shares; Robert Roningen option to purchase
350,000 shares; Jack Everett -option to purchase 50,000 shares; Horst Scherp -
option to purchase 10,000 shares. All options granted On that date expire on
April 2, 2001. The options were exercisable at $.35 per share. On November 10,
1997 the exercise price decreased to $0.10 per share. On July 15, 2000 the
exercise price was reduced to $0.022 per share for Messrs. Dieterle and Everett.
On January 5, 1996, the Company issued the following options to certain officers
and directors. Donald Wilson - option to purchase 200,000 shares; Gifford
Dieterle - option to purchase 220,000 shares; Robert Roningen - option to
purchase 150,000 shares; Jack Everett -option to purchase 25,000 shares; Horst
Scherp - option to purchase 5,000 shares. All options granted on that date were
to expire on January 5, 1998 and were to be exercisable at $.35 per share. On
November 20, 1997 the Board of Directors approved a 3-year extension expiring
January 5, 2001 at an exercisable price decrease to $.10 per share.
Item 13. Exhibits and Reports on Form 8-K.
Exhibits
3.a Certificate of Incorporation of Company(1)
3.b Amendments to Certificate of Incorporation of Company (1)
3.c By-Laws of Company (1)
10.a Mining Claims (1)
(1) Previously filed as an exhibit to the Company's Registration Statement
on Form S-18 (SEC File No. 2-86160-NY) filed on or about November 10,
1983, and incorporated herein by this reference.
Reports of Form 8-K
Form 8-K filed with the Commission on September 30, 1999.
Statements contained in this Form 10-KSB as to the contents of any agreement or
other document referred to are not complete, and where such agreement or other
document is an exhibit to this Report or is included in any forms indicated
above, each such statement is deemed to be qualified and amplified in all
respects by such provisions.
20
<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.
LEADVILLE MINING AND MILLING CORP.
/s/ Gifford A. Dieterle, Pres.
----------------------------------
Dated: November 7, 2000 By Gifford A. Dieterle, President
Pursuant to the requirements of 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.
SIGNATURES TITLE DATE
---------- ----- ----
/s/ Gifford A. Dieterle President, November 7, 2000
------------------------- Treasurer,
Gifford A. Dieterle Principal Financial
and Accounting
Officer and Chairman
of the Board of Directors
/s/ Jack Everett V.P, Director November 7, 2000
-------------------------
Jack Everett
/s/ Robert Roningen Senior V.P,
------------------------- Secretary, Director November 7, 2000
Robert Roningen
/s/ Roger A. Newell Director November 7, 2000
-------------------------
Roger A. Newell
/s/ Jeffrey W. Pritchard Director November 7, 2000
-------------------------
Jeffrey W. Pritchard
21
<PAGE>
SUPPLEMENTAL INFORMATION
Supplemental Information to be Furnished With Reports Filed Pursuant to Section
15(d) of the Act by Registrants Which Have Not Registered Securities Pursuant to
Section 12 of the Act.
NOT APPLICABLE.
22
