UNITED STATES
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:
September 30, 1998
[ ] 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: 0-21566
LS CAPITAL CORPORATION
(Exact name of small business issuer as specified in its charter)
Delaware 84-1219819
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
Rivercourt
17-19 Sir John Rogersons Quay
Dublin 2 Ireland
(3531) 679-0222
(Address, including zip code, and
telephone number, including area code, of
registrant's principal executive offices)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares of common stock, $0.01 par value, outstanding as of
September 30, 1998: 17,598,000 shares
Transitional Small Business Disclosure Format (check one): Yes [] No [X]
<PAGE>
LS CAPITAL CORPORATION AND SUBSIDIARIES
QUARTER ENDED SEPTEMBER 30, 1998
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements
<S> <C>
Condensed consolidated financial statements of LS Capital
Corporation and Subsidiaries:
Balance sheet as of September 30, 1998 3
Statements of income for the three months
ended September 30, 1998 and 1997 4
Statements of cash flow for the three months
ended September 30, 1998 and 1997 5
Notes to financial statements
6
Item 2.
Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. OTHER INFORMATION
Item 6. Exhibits
(a) Exhibits 8
SIGNATURE 8
</TABLE>
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
LS CAPITAL CORPORATION
Balance Sheet
September 30, 1998
(in thousands) 1998
ASSETS
Current Assets
Marketable securities $ 8
Other 2
--------
Total Current Assets 10
Property and equipment, net of depreciation 2
Equity investment in gold mining ventures 243
Other assets 6
--------
TOTAL ASSETS $ 261
========
LIABILITIES
Current Liabilities
Notes and advances payable to related parties $ 42
Accounts payable 1,175
Accrued payroll taxes and other 243
Redemption payable - redeemable preferred stock 75
--------
Total Current Liabilities 1,535
Minority interest in subsidiaries
Contingent liabilities
Stockholders' Equity
Preferred stock, par value $.01 per share, authorized
10,000,000 shares, no shares issued and outstanding
Common stock, par value $.01 per share, authorized
50,000,000 shares, issued and outstanding 17,598,000 shares 176
Additional paid-in capital 26,906
Accumulated deficit (28,358)
--------
Total Stockholders' Equity Deficit ( 1,276)
--------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 261
========
See accompanying notes.
<PAGE>
LS CAPITAL CORPORATION
Income Statements
Three Months Ended September 30,
<TABLE>
<CAPTION>
(in thousands) 1998 1997
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
REVENUES - -
OPERATING EXPENSES
Mining exploration costs $ 25 $ 151
General and administrative 161 328
Depreciation and amortization 1 16
------ ------
OPERATING LOSS ( 187) ( 495)
----- ------
OTHER INCOME (EXPENSE)
Gain on sale of investments 27
Interest expense ( 137)
------ ------
LOSS FROM CONTINUING OPERATIONS $( 160) $( 632)
====== ======
NET INCOME (LOSS) PER COMMON SHARE $(0.01) $(0.05)
Weighted average common shares outstanding 17,598 12,370
</TABLE>
See accompanying notes.
<PAGE>
LS CAPITAL CORPORATION
Statements of Cash Flows
Three Months Ended September 30,
<TABLE>
<CAPTION>
(in thousands) 1998 1997
<S> <C> <C>
Cash Flows from Operating Activities
Net loss $ ( 160) $( 272)
Adjustments to reconcile net income (loss)
to net cash used in operating activities
Depreciation and amortization 1
Writedown of mining venture investment ( 44)
Changes in
Receivable from affiliated parties 81
Other current assets ( 2)
Accounts payable 40
Due to related parties 10
Accrued payroll taxes and other 47
------
( 27)
Cash Flows from Investing Activities
Sale of JVWeb common stock 27
Proceeds from sale of Clutch Games 65
Cash Flows from Financing Activities
Collection of stock subscription receivable 242
Payments on redemption payable ( 25)
Reimbursements by affiliates of their
expenses paid in parent S-8 stock ------
217
Net increase (decrease) in cash 10
Cash at beginning of year 0 5
------ ------
Cash at end of year $ 0 $ 15
====== ======
</TABLE>
See accompanying notes.
<PAGE>
LS CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim financial statements of LS Capital
Corporation have been prepared in accordance with generally accepted accounting
principles and the rules of the Securities and Exchange Commission ("SEC"), and
should be read in conjunction with the audited financial statements and notes
thereto contained in the Company's latest Annual Report filed with the SEC on
Form 10-KSB, as amended. In the opinion of management, all adjustments,
consisting of normal recurring adjustments, necessary for a fair presentation of
financial position and the results of operations for the interim periods
presented have been reflected herein. The results of operations for interim
periods are not necessarily indicative of the results to be expected for the
full year. Notes to the financial statements which would substantially duplicate
the disclosure contained in the audited financial statements for the most recent
fiscal year, 1998, as reported in the Form 10-KSB, have been omitted.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
SIGNIFICANT EVENTS
During fiscal 1999, the Company has continued to focus its efforts on
developing precious metals mining prospects, with each project undertaken in a
separate corporate entity for the purpose of allowing its partners, who may
originate the mining prospects and/or provide technological expertise in the
recovery process to own a stake in their respective ventures. The active
Subsidiaries include Griffin Gold Group, Inc. ("Griffin"), Escopeta Minerals,
Inc. ("Escopeta"), Desert Minerals, Inc. ("DMI"), SWM Ventures, Inc. ("SWM"),
Mohave Metals Corporation ("Mohave") and DMI Land, Inc. ("DMI Land"). Griffin
Gold and Escopeta have rights in certain mining claims or properties believed to
contain precious metals. DMI, SWM and Mohave are in the processes of refining
and developing certain mineral extraction technologies. DMI Land owns two tracts
of land that are used as plant sites.
These operations are in the developmental stage and will require
minimal capital. To implement this strategy and finance these projects, the
Company may establish a public trading market in the shares of some of these
mining ventures, via an initial public offering and/or a "spin-off" of their
shares to the Company's shareholders in fiscal year 1999 so they can do their
own financing with their own shares. To the extent this strategy is implemented,
the Company may essentially become a holding company owning large share holdings
in each mining corporation.
MATERIAL CHANGES IN FINANCIAL CONDITION
At September 30, 1998, the Company has a working capital deficiency of
$1,525,000 compared to a deficit of $2,744,000 at September 30, 1997. The lower
deficiency was primarily due to the foreclosure on the assets of Papone=s Palace
LLC in fiscal 1997.
Management intends to continue its efforts to obtain funding for its
mining activities in fiscal 1999.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
Three Months Ended September 30, 1998 and 1997
The Company had incurred a net loss of $160,000 or $.01 a share, as compared to
a net loss of $632,000 or $0.17 per share for the comparable period in the prior
year. The change of $472,000 was attributable to a decrease in mining
exploration costs and general and administrative expenses together with a
decrease in interest expense as a result of the foreclosure on the assets of
Papone's Palace LLC.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS
(a) Exhibits
The following exhibits are filed with this Quarterly Report or
are incorporated herein by reference:
Exhibit Number Description
27 Financial Data Schedule
SIGNATURE
In accordance with the requirements of the Exchange Act, the Registrant
has duly caused this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
LS CAPITAL CORPORATION
(Registrant)
By: /s/ Paul J. Montle
Paul J. Montle
President, Chief Executive Officer
and Chief Financial Officer
Dated: November 23, 1998
<PAGE>
EXHIBITS INDEX
Exhibit
Number Description
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM ITEM 1
OF FORM 10-QSB FOR THE QUARTER ENDED SEPTEMBEER 30, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000897545
<NAME> LS CAPITAL CORPORATION
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-1-1998
<PERIOD-END> SEP-1-1998
<EXCHANGE-RATE> 1
<CASH> 0
<SECURITIES> 8
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<CURRENT-ASSETS> 10
<PP&E> 2
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<TOTAL-ASSETS> 261
<CURRENT-LIABILITIES> 1535
<BONDS> 0
0
0
<COMMON> 176
<OTHER-SE> (1452)
<TOTAL-LIABILITY-AND-EQUITY> 261
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<INCOME-PRETAX> (160)
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<NET-INCOME> (160)
<EPS-PRIMARY> (.01)
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</TABLE>
