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 [FEE REQUIRED]
                                       OR
          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the fiscal year ended July 31, 1996        Commission File No. 0-13078
          Nevada                                    13-31805030
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)
                       LEADVILLE MINING AND MILLING CORP.
             (Exact name of Registrant as specified in its charter)
                   76 Beaver Street, New York New York    10005
               (Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code     (212) 344-5158

Securities registered pursuant to Section 12(b) of the Act:    None

Securities registered pursuant to Section 12(g) of the Act:    Common Stock

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_____
Indicate by check mark if disclosure of delinquent filers pursuant to Regulation
S-B  is  not  contained  herein,  and  will  not be  contained  to  registrant's
knowledge,   in  definitive  proxy  or  information  statements  incorporate  by
reference  in  Part  III of this  Form  10-KSB  or any  amendment  to this  Form
10-KSB.[X]

The aggregate market value of the voting Common stock held by non-affiliates (1)
of the  registrant  based on the average on November  12, 1996 of the bid (.125)
and asked ($.14) prices of the Company's  Common Stock, as of July 31, 1996, was
approximately  $13,804,817,  based upon the average of the bid and asked  prices
($.1325)  multiplied by the 104,187,298 shares of Registrant's Common Stock held
by non-affiliates as of July 31, 1996.

         The number of shares outstanding of each of the Registrant's classes of
Common  Stock,  as of July 31,  1996 is  124,012,674  shares all of one class of
$.0001 par value Common Stock.

(1)  "Affiliates"  solely for purposes of this item refers to those persons who,
during the 3 months  preceding  the filing of this Form  10-KSB  were  officers,
directors and/or  beneficial  owners of 5% or more of the Company's  outstanding
stock.

                       DOCUMENTS INCORPORATED BY REFERENCE
                                  See Item 13.

<PAGE>


                       LEADVILLE MINING AND MILLING CORP.
                                   Form 10-KSB
                         Fiscal Year Ended July 31, 1996
PART I                          Table of Contents                        Page

Glossary                                                                 (ii)

Item 1.        Business                                                    1

Item 2.        Properties                                                  2

Item 3.        Legal Proceedings                                           9

Item 4.        Submission of Matters to a Vote of                          9
               Security Holders
Part II

Item 5.        Market for Company's Common                                 9
               Equity and 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               14
               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                          19
               Transactions

Item 13.       Exhibits and Reports on Form 8-K                           19

Signatures                                                                21

Supplemental Information                                                  22

Financial Statements                                                     F-1

                                       (i)

<PAGE>


                           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.

Brecchia 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 which separates  valuable minerals from rock powder using
     chemical solutions.

Gravity Plant:
     Mechanical system which separates  valuable minerals from rock powder using
     the force of gravity for separation.

Hydrometallurgical  Plant :
     A  smelter  which  reduces   sulfide  faults   converging   from  different
     directions.

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.   Massive
     Polymetallic Ores: Large dense mass of sulfide minerals  containing several
     metals.

MNSO4:
     Manganese Sulfate.

                                      (ii)

<PAGE>


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  minable 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 Stope: 
     A mined area which 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 which is proven (same as proven).

Probable Ore:     
     Inferred ore. Ore which is believed to exist, but not fully proven.

Proven Ore:      
     Minerals which are determined to be recoverable.

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.

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.

                                      (iii)

<PAGE>


                                     PART I

Item 1.  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 plans to engage in the
business of mining and milling gold and other minerals from its  properties.  At
present, there is no assurance that a commercially viable ore body exists in any
of the Company's  properties until further  systematic  underground  sampling or
core drilling is done, and a final  feasibility  study based upon the results is
concluded.  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. Properties."

     During the past year,  the  Company's  activities  continued to be directed
towards  rebuilding the second exit, the Hunter shaft. Work was also carried out
on the  headframe  and the hoisting  facility.  Due to the  Company's  financial
condition, limited work was performed during the year (approximately $174,722).

     At this time,  assuming that the Company is able to obtain adequate funding
(see  "Part II,  Item 6.  Management's  Discussion  and  Analysis  of  Financial
Condition  and  Results  of  Operations-   Liquidity  and  Capital  Resources"),
management believes that the Company's Hopemore-Comstock, Hunter and Penn Groups
may be explored  with  positive  results.  If ore is  discovered  in  sufficient
quantity it could be processed at the Company's custom mill which is prepared to
process  ores at a rate of 180 tons per day;  expandable  to 300 tons per day as
required; or at the ASARCO Black Cloud Mill by Agreement.  Management has signed
an agreement whereby milling may be performed by ASARCO Incorporated  ("ASARCO")
at  ASARCO's  Black  Cloud  Unit.  All  activity  at the  mine or mill  would be
performed  by  persons  employed  by  the  Company.   (see  "Part  II,  Item  6.
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations-Liquidity and Capital Resources").

     In the event that sufficient ore is discovered and processed,  concentrates
of metallic minerals containing gold (AU), silver (AG), Lead (PB), zinc (ZN) and
copper (CU) would be processed  (smeltered) at ASARCO's  smelter in East Helena,
Montana or, other possible smelters in the United States or Canada.

     The Mine Safety Health  Administration  requires that all underground mines
have at least two shafts  which  communicate  with mine  operating  areas.  With
sufficient  funding,  the Company  expects to complete its mandated second exit,
the  Hunter  shaft,  in April  1996.  Thereupon  the  Company  hopes to  explore
potential  mineral  horizons on two levels;  including  possible  gold-  bearing
replacement  minerals in the "B-Zone" and other minerals  associated with the #4
vein and the Silica stopes. At a later date, efforts will be made to explore for
minerals on the Weston  fault,  followed by an eventual  tunnel drive to the New
President shaft (Penn Group Area).

     In the event that ore is discovered in sufficient quantity, it is estimated
that the cost to establish a viable mining and milling  operation  capable of up
to 300  tons  per  day  on a  continuous  and  long  term  basis,  will  require
approximately  $2,000,000 in capital.  These funds would be applied  towards the
completion of the Hunter Shaft, exploration for minerals in the B-zone and other
locations,  exploration  of the Weston fault area, the Penn group area and other
potential target  locations,  and their possible  development,  if economic,  in
addition to mining and milling of the  discovered  ores if these are  discovered
and  extraction  is  determined  to be  economically  feasible.  There can be no
assurance  that  sufficient  ore will be  discovered,  that  extraction  will be
economically  feasible or that  funding  can be obtained  (see "Part II, Item 6.
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations).

<PAGE>


Competition

     While there is intense  competition  in the  acquisition  of viable  mining
properties,  the Company  already has the properties  that it intends to explore
and is not  currently  involved  in further  property  acquisition.  The Company
believes  that  there  is  no  material  competition  in  the  sale  of  mineral
concentrates  because  the  prices  for  mineral  concentrates  are  based  upon
standards  established  by the  commodities  exchange  (London  Metals  Exchange
market).

Employees

     As of July 31, 1996, the Company has 10 full time employees,  consisting of
two executive officers, six mine laborers and two administrative personnel.

Item 2.  Properties

     The Company owns the following  mining claims,  all of which are located in
California Mining District, Lake County, Colorado.
<TABLE>
<CAPTION>
                                 Patented Claims
                                                       Type           Percent Of
Name                 Claim No.        Acreage          Of Claim       Ownership
<S>                  <C>              <C>              <C>           <C>
Belle Placer         02778            120.860          Placer         62.5
Pueblo (et al [6])   12718             36.534          Lode           75.0
Chicago              01295             10.020          Lode           50.0
New York             01294             10.140          Lode           50.0
Mikado               08015              9.250          Lode          100.0
Little Bertha        00504              8.380          Lode            3/8
Free America #2      01177              4.210          Lode            3/4
Emma                 00756              8.270          Lode            3/8
Colman               09747              1.446          Lode           44/50
Little Galesburg     01176              6.000          Lode            1/8
Highland Chief       00429              2.097          Lode          100.0
Robert Burns         00538              9.859          Lode          100.0
Highland Mary        00539              6.600          Lode          100.0
President            08942              6.900          Lode            1/16
J.G. Fraction        13251              1.727          Lode           31/96
Ballard              00589              3.190          Lode           23/144
</TABLE>

                                       -2-

<PAGE>

<TABLE>
<CAPTION>
                                Unpatented Claims

                    Book/                          Type               Percent Of
Name                Page No.         Acreage       Of Claim           Ownership
<S>                 <C> <C>           <C>                                  <C>  
Columbine           437/180           7.310              Lode              100.0
Judy                437/181          17.990              Lode              100.0
New Comstock #1     433/191          20.661              Lode              100.0
New Comstock #2     433/191          20.661              Lode              100.0
</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 the  foregoing  claims as  indicated.  The Company has not
formed any  partnership  regarding  these claims,  nor are there any association
whereby  profits  or  expenses  are  to  be  shared.   The  claims  are  located
approximately  2.5 miles northeast of the 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.

     The mill is new, 180 ton per day flotation  gravity plant.  The Company has
purchased an additional  ball mill of 120 tons per day capacity  which is at the
mill site and ready to be installed.  The plant would have total capacity of 300
tons per day when the second mill has been put into place.

     The  plant is  situated  on a 20.73  acre  mill  site  and has an  approved
tailings  disposal  location.  The plant has been pilot  tested and is ready for
production. All necessary permits to operate have been granted.

     Construction of the mill began in 1987 and was completed in August of 1989.
It was the Company's  intent to do  fee-milling  for other  companies  while the
federally-mandated  construction  of the  mine  second  exit  was  in  progress.
However,  the  recession  in the mining  industry,  which the Company  could not
predict,  and the  resulting  lower  metal  prices  essentially  eliminated  the
possibility  of custom  milling.  The mill is on a  stand-by  basis and has been
since its  completion.  The  Company  has  discussed  custom  milling  with many
potential  shippers of ore, but  transportation  costs from any mines not in the
Leadville District have proved to be prohibitive.  The Company  anticipates that
this mill will be used to process oxide minerals and ASARCO will process sulfide
minerals  (see  "Part  II,  Item 6.  Management's  Discussion  and  Analysis  of
Financial Condition and Results of Operations-Liquidity and Capital Resources").

                                       -3-

<PAGE>


                              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 seventh level, partial rehabilitation of the
other levels,  several raises, the fifth 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 seventh 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.


Mineralized Material

Tons         Au in OPT       Ag in OPT       %PB         %ZN         %Cu

121,200        0.178           8.63          3.98        12.2        0.35


[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 is the President of the Company.]

                                       -4-

<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 Peerless  formation  are thought to remain  unexplored.
The mineralized zones are commonly controlled by steep sulfide veins. 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 which should
have good ground  preparation  for vein  deposits.  Vein  mineralization  is not
limited to specific  host rocks and may form minable  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 Explorations Targets

     The targets in the Penn Group  area,  west of the  Hopemore,  are gold rich
magnetite  skarns,  massive  sulfide  replacement  deposits below or west or the
magnetite and vein deposits. The near surface gold rich magnetite skarn could be
over one million tons of mineralized material. [Scott Hazlitt Geological Report,
Leadville  Mining & Milling  Properties,  January 1993.  Emmons,  et.al.  (P104,
1927)] The deeper  massive  sulfide target could be in the range of one to +four
million  tons of  mineralized  material.  Vein type  deposits,  high in precious
metals are also a possibility under the magnetite deposits. The expected tonnage
from veins would be 5,000 to 25,000+ tons of mineralized  material.  [Thompson's
Magnetic  Anomaly Map (1990),  Johansing,  Plate 1,  Magnetic  Anamoly,  Emmons,
et.al. (P104, 1927)]

     The Penn Group including the area to the southwest, has not been thoroughly
prospected.  The  Magnetic  anomaly  map (1990) of the Breece  Hill area shows a
large zone with an anomalously high magnetic signature which management believes
to be a large body of magnetite skarn. Although the magnetite skarn is a contact
metamorphic type of deposit it is usually found near sulfide mineralization.

     In the adjacent mine,  massive sulfide  replacement  bodies are often found
next to  bodies  of  rhyolite  agglomerate,  which  is  also  known  locally  as
Fragmental  Porphyry.  The Fragmental  Porphyry is thought to form breccia pipes
which were formed during the late stages of  mineralization  and were reamed out
centrally to form mineralizing  conduits. In numerous cases,  magnetite is found
peripheral to the massive sulfide deposits.  Pyrite veins in the magnetite often
carry  high gold  contents.  Within  the  Leadville  Mining  District  northeast
trending  veins are generally the best feeders for the massive  sulfide  blanket
deposits. The White Prince Vein which is mapped north of the Penn Group property
is  northeast  trending and on  Johnasing's  maps is  correlated  with the Pilot
Fault.

                                       -5-

<PAGE>


     The target zone would be either between the magnetite skarn and the breccia
pipe or under the magnetite  skarn.  Magnetite skarn cappings to massive sulfide
bodies are common in the general vicinity of the Comstock shaft.


Penn Group Mines

     The Penn Group lies northwest of the Hopemore and contains  magnetite skarn
and underlying sulfide minerals hosted by the Leadville dolomite.  Magnetite ore
was mined from  shallow  open cuts and was  shipped as  smelter  flux.  The ores
produced from underground workings contained a high gold and silver content. The
underground  workings  went to depths of 450 to 600 feet and focused on "Feeder"
veins and blanket ore in the lower Leadville formation.

     Mineralization  was mined along and to the east of the White Prince  fault.
The area west of the White  Prince fault is down thrown and was  prospected  but
not to sufficient depths to locate the favorable carbonate section.


Geology and Potential Reserves

     The ore deposits in the Leadville  district include precious and base metal
massive  sulfide veins and carbonate  hosted  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 both 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

80,000 tons of this total is based upon  representations  by Hopemore Mining Co.
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 sixth level (old Ibex 7th Level).  Other quantities of unknown size are
assigned to seven other areas for which dimensions are unknown.


     The B-Zone Mineral  structure  which is of unknown size and situated in the
Manitou  limestone assayed .78 ounces of gold and 17.00 ounces of silver per ton
across a width of  several  feet.  The total  width of this bed is 15 to 20 feet
(not all  sampled).  [Donald L. Wilson,  Report on the  Properties  of Leadville
Mining & Milling Corp.  August 14, 1989 P. 25. Scott Hazlitt,  Evaluation of the
Properties  of Leadville  Mining & Milling.  Mr.  Wilson is the President of the
Company.]

                                       -6-

<PAGE>

<TABLE>
                        Location Of Mineralized Material

Tons          Area                    Au       Ag        Pb       Zn       Cu
----          ----                   ----     ----      ----     ----      ---

             #4 Vein 7 Level

<C>      <C>                         <C>      <C>       <C>      <C>      <C>
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

16,675   Replacement
         Minerals                    0.463    14.60     2.55      4.90    0.30
600      Block 429 "B" Vein          0.85     36.40     1.85      1.50    0.85
             (2' Mining Width)

             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

             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
------------------------------------------------------------------------------
                                     0.264    10.57     3.21     10.43    0.43
                                     0.139     7.63     4.38     13.10    0.31
121,200      Total                   0.178     8.63     3.98     12.20    0.35
</TABLE>

[Donald L. Wilson,  Report on the Properties of Leadville Mining & Milling Corp.
August 14, 1989. Mr. Wilson is the President of the Company.]

                                       -7-

<PAGE>


Weston Fault Massive Sulfide Exploration Targets

     The Weston fault forms the western boundary of the down-dropped block which
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
Weston fault which 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 which contain precious metals and are low in
sulfides.  The Antioch mine produced a silicious  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
which 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]

     Management believes that stockwork mineralization along the intersection of
the Ibex No. 4 vein and the Weston fault is a good target  [Thompson's  Magnetic
Anomaly Map (1990),  Johansing,  Page 9]. The stockwork  mineralization could be
hosted by  porphyries  and could range in size from  50,000 to 500,000+  tons of
mineralized material. [Scott Hazlitt,  Evaluation of the Properties of Leadville
Mining & Milling  Corp.,  January  1993.  Chapman and  Stevens,  1929,  Colorado
Mineral Survey;  Leadville District and Adjoining  Territory.] Several veins may
intersect  the Weston fault and more than one  stockwork  body on each strand of
the fault is a possibility [Scott Hazlitt Geological Report,  Leadville Mining &
Milling Properties, January 1993, Page 9].

                                      -8-

<PAGE>


Planned Exploration

     An  exploration  program,  is now being  considered  which would consist of
drilling from both  underground and surface  locations.  Some of the targets and
their locations are listed and described below:

A)   The  Hopemore-Hunter  mine area exploration for massive sulfide replacement
     deposits  and  vein  deposits  in near  previously  mined  areas  or in the
     underlying carbonate hosts.

B)   Stockwork breccia deposits near vein intersections with the Weston Fault.

C)   Massive sulfide  replacement  targets along the footwall or eastern side of
     the Weston Fault.

D)   Replacement  targets  along the hanging wall, or western side of the Weston
     Fault.

E)   The Penn Group area magnetite-gold and massive sulfide replacement and vein
     targets.

F)   The magnetic  anomaly  which  extends to the west and southwest of the Penn
     Group-new  magnetite-gold  and  massive  sulfide  mineralization.  The area
     between the breccia pipe  (rhyolite  agglomerate)  and the west side of the
     magnetic anomaly- massive sulfide mineralization.

[Scott Hazlitt Geological Report, Leadville Mining & Milling Properties, January
1993,  Pages 9- 10;  Thompson's  Magnetic Anomaly Map (1990),  Johansing,  Pages
5-12].


Item 3.  Legal Proceedings

     There is no litigation pending against the Company.

Item 4.  Submission of Matters to a Vote of Securityholders

     The Company  held an annual  meeting on January 7, 1996 and elected  Donald
Wilson,  Gifford  Dieterle,  Robert  Roningen,  Jack Everett and Horst Scherp as
Directors.


                                     PART II

Item 5.  Market for Registrant's 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:  "LDMM").  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  since  the  beginning  of fiscal  1995 as
reported by the National  Quotation  Bureau (which reflect  inter-dealer  prices
without retail mark-up,  mark-down or commission and may not necessary represent
actual transactions).

                                       -9-

<PAGE>


                          MARKET PRICE OF COMMON STOCK
Date
Quarter Ending                                   High and Low Bid

July 31, 1996                                    .15         .10
April 30, 1996                                   .19         .11
January 31, 1996                                 .20         .075
October 31, 1995                                 .11         .08
 
July 31, 1995                                    .145        .01
April 30, 1995                                   .1425       .06
January 31, 1995                                 .15         .06
October 31, 1994                                 .15         .06

     (b) Holders -- The  approximate  number of  recordholders  of the Company's
Common Stock,  as of July 31, 1996 amounts to 1,528 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
124,012,674 as of July 31, 1996.

     (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.

Item 6. Management's  Discussion and Analysis of Financial Condition and Results
of Operations.

         Fiscal 1996 Compared to Fiscal 1995

         Results of Operations

     During the fiscal year ended July 31, 1996, the Company continued  activity
at its gold/silver/base  metal mining project in Colorado. The effort was mainly
concentrated on  rehabilitating  the second exit,  Hunter shaft and installing a
new hoist.  At the present time,  the Company has not received  revenue from its
operations although it has expended considerable sums for the development of its
proposed mining and milling operation. (See "Liquidity and Capital Resources").

     To date,  the  remaining  unfinished  task  prior to  commencing  any other
activity is the  completion of the mandated  second exit,  Hunter  shaft.  It is
estimated  that the second exit will be completed,  and the mining  project will
become operational, in November, 1996.

                                      -10-

<PAGE>


     Completion  of the Hunter  shaft will be  followed by the  exploration  for
commercial minerals and, if determined economically feasible, their development,
if discovered  on the Hopemore 7th level.  A cross-cut to be driven from the 8th
level will explore the minerals  associated  with the  "B-Zone"  structure.  The
Weston fault potential will be explored for possible large scale  mineralization
in the White  limestone  with a tunnel  driven 121 feet long,  followed  by core
drilling.  These exploration and development projects will require approximately
13 months (after funding) and cost approximately $300,000.

     The  Company  has  approximately   121,000  tons  of  mineralized  material
containing  specified amounts of gold, silver,  lead, zinc and copper.  Possible
drill target  potential as indicated  by Scott  Hazlett,  Consulting  Geologist,
ranges up to 5,000,000  tons of mineralized  material.  The Company to date, has
completed  partial  exploration  of the Hopemore 7th level by cross-cut,  raise,
drift, and core drill.  Stopes, ore chutes, ore passes and various other loading
facilities are completed and operational. Assuming adequate funding, the Company
is prepared to enter into an  exploration  program  subsequent to completing the
Hunter shaft (three  months to complete)  and will,  if  sufficient  mineralized
material is discovered and extraction is determined to be economically feasible,
develop and mine the property.

     If sufficient  ore is  discovered,  the Company would  commence  mining and
milling at a rate of up to 180 tons per day and  gradually  increase the tonnage
as  conditions  would allow.  It is  understood  that in order to realize a mill
capacity of 300 tons per day the Company would need to explore and develop a two
year supply of proven ore  (225,000  tons) and a two year supply of probable ore
(225,000 tons). In order to execute the entire project, if conditions warranted,
a capital investment of approximately $2,000,000 would be required.

     With regard to all estimates of mineral  tonnage,  further geologic work is
required before the Company can conclude that  commercially  viable ore deposits
exist.

     The Company  generated no revenues from operations  during the fiscal years
ended July 31, 1996 and 1995.  There was de minimis  income during these periods
of $960 and $435, respectively. Costs and expenses more than doubled from fiscal
1995 to  fiscal  1996.  Mine  expenses  increased  by  $62,838  (40%)  from 1995
($174,722) to 1996  ($237,560).  Selling,  General and  Administrative  expenses
increased by $471,655 (298%) from 1995  ($238,052) to 1996 ($709,707)  primarily
due to increased  purchases of mine  supplies and  equipment.  As a result,  the
Company's  net loss for 1996 was $956,043,  which was $529,240  (124%) more than
its 1995 loss of $426,803.

    Liquidity and Capital Resources

    As of July 31, 1996

     As of July 31, 1996, the Company's current  liabilities  exceed its current
assets  by a ratio  of  approximately  1.8 to 1 and the  Company  had a  working
capital  deficiency  of $36,507.  Therefore,  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  $2,000,000  to become fully
operational  and begin  generating  revenues  from  operations.  To obtain  such
funding,  management intends to raise additional capital through the sale of its
securities,  debt  financing  and/or by entering into one or more joint ventures
and/or working arrangements.

                                      -11-

<PAGE>


     Specific  plans to obtain  financing  for a full scale  mining and  milling
operation  will  most  likely  include  a  combination  of  one or  more  of the
following:

     1.   Private  placements  of  the  Company's  securities  to  institutions;
          private  individuals;  mining  companies;  and/or  investment  groups.
          During fiscal 1996, the Company raised approximately  $515,000 through
          the  sale  of  common  stock.   These  investments  have  enabled  the
          continuation  of work in the  Hunter  shaft.  The  Company  wishes  to
          complete  it's  Hunter  shaft,  second  exit,  prior to seeking  major
          capital for operational purposes.

     2.   A working  arrangement  with a mining  company  pursuant  to which the
          Company would mine and the other company would mill,  smelt and market
          the products.  Under these  conditions,  the  Company's  cost would be
          concentrated on the mining effort only. The Company has finalized such
          an agreement  with ASARCO  pursuant to which the Company will mine and
          sell the  mined  material  to  ASARCO  and  ASARCO  will  process  the
          minerals.  The ASARCO agreement runs for an initial two-year term and,
          thereafter,  is cancelable by either party on 60 day's written notice.
          Notwithstanding  the foregoing,  the Agreement would not extend beyond
          June 30, 2000.  Pursuant to the  Agreement,  the Company is to deliver
          metallic  minerals  to  ASARCO's  mill  site six  miles  southeast  of
          Leadville,  Colorado.  The price for the material  would be based upon
          the London Metals Exchange market price,  less certain  deductions for
          treatment and impurities.


     3.   Joint  Venture  with other  mining  companies on a division of profits
          basis,  whereby  the  Company  would  initiate a mining  venture  with
          another mining company,  the latter  providing the capital to initiate
          mining and milling and,  thereafter,  dividing the net profit (if any)
          on an agreed amount basis.  There are no firm joint venture  prospects
          at this time.


     4.   A public underwriting. The Company may pursue a public underwriting of
          it's  securities.  The Company  has not sought out the  interest of an
          underwriter nor can the Company assure that it would be able to obtain
          an underwriter or complete a public offering.

     Assuming  that the Company is able to obtain  funds from one or more of the
above sources,  planned activities over the next year, in order of priority, are
as follows:

                                                         Estimated Time Required
                                                            to Complete 
                                                            (or Operating Time -
                                                            Production),
                 Activity               Estimated Cost      Assuming Funding

(a)Complete the mandated
        Hunter Shaft, 2nd exist.        $120,000            Three-five months

(b)Develop B-zone mineral structure
        in preparation for mining.      $36,000-55,000      Three-five months

(c)Drive tunnel to Weston fault
        mineral structure - develop.    $24,000-30,000      Three-four months

(d)Drive to IBEX mineral structures
        and develop.                    $22,000-34,000      Five-seven months

(e)Sell mined products
        to the ASARCO mill.             $1,744,000-2,000,000     Six months

                                      -12-

<PAGE>

     Aside from the above planned activities, the Company's basic administrative
capital needs (e.g. rent, salaries,  utilities,  etc.) are approximately $12,400
per month.  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, 1996, the Company obtained  approximately
$515,000 from the private sale of Common Stock.

     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  inability  to obtain  sufficient  funding  will  delay the  Company's
planned operations or, possibly, force the Company to go out of business.

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.  Recently,  the Mined Land Reclamation  Board reviewed the Company's
permit and bond and determined  that an increase in the bond was  necessary.  At
that time, the Company placed an additional  $6,000 in escrow against any future
indemnity.

     Part of the  Leadville  Mining  District  was  declared a  Superfund  site.
Several  mining  companies  and one  individual  were  declared  defendants in a
possible lawsuit.  The Company was not named a defendant or Possible Responsible
Party.  The  Company  did  respond  in full  detail to a  lengthy  questionnaire
prepared by the Environmental  Protection Agency ("EPA") regarding the Company's
proposed procedures and past activities in November 1990. No further comments or
questions have been initiated by the EPA.

     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 tailings 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.

                                      -13-

<PAGE>


Item 7.      Financial Statements.

     The following  financial  statements  have been prepared in accordance with
the requirements of Item 310(a) of Regulation S-B.

                       LEADVILLE MINING AND MILLING CORP.
                              FINANCIAL STATEMENTS
                           AND ADDITIONAL INFORMATION
                            YEAR ENDED JULY 31, 1996

                                      INDEX
                                                                     Page Number
INDEPENDENT AUDITORS' REPORT                                         F-1

FINANCIAL STATEMENTS:
  Balance Sheet
   July 31, 1996                                                      F-2

Statement of  Operations  
  For each of the two years
  ended July 31, 1996 and 
  for the period from
  September 17, 1982 (inception)
  to July 31, 1996                                                    F-3

Statement of Changes in Stockholders'
  Equity from September 17, 1982
  (inception) to July 31, 1996                                        F-4

Statement  of Cash Flows
  For each of the two years
  ended July 31, 1996 and
  for the period from
  September 17, 1982
  (inception) to July 31, 1996                                        F-9

Notes to Financial Statements                                         F-11

     All 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.

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.

                                      -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, 1996



REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

BALANCE SHEET AS OF JULY 31, 1996, LEADVILLE MINING AND MILLING CORP.

STATEMENT OF OPERATIONS FOR THE YEARS ENDED JULY 31, 1996 AND JULY 31, 1995, AND
FOR THE PERIOD SEPTEMBER 17, 1982 (INCEPTION) TO JULY 31, 1996, LEADVILLE MINING
AND MILLING CORP.

STATEMENT OF CHANGES IN  STOCKHOLDERS'  EQUITY FOR THE PERIOD SEPTEMBER 17, 1982
(INCEPTION) TO JULY 31, 1996, LEADVILLE MINING AND MILLING CORP.

STATEMENT OF CASH FLOWS FOR THE YEARS ENDED JULY 31, 1996 AND JULY 31, 1995, AND
FOR THE PERIOD SEPTEMBER 17, 1982 (INCEPTION) TO JULY 31, 1996, 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, 1996,  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,  1996 and for the  period
September 17, 1982 (Inception) to July 31, 1996. 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, 1996 and the results of
its  operations and its cash flows for each of the two years in the period ended
July 31, 1996 and for the period September 17, 1982 (Inception) to July 31, 1996
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,
1996 and has a working  capital  deficiency  of  $36,507  at July 31,  1996 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 10. The
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.



                                              WOLINETZ, GOTTLIEB & LAFAZAN, P.C.

Rockville Centre, New York
October 8, 1996
                                       F-1

<PAGE>
<TABLE>
<CAPTION>
                       LEADVILLE MINING AND MILLING CORP.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                                  BALANCE SHEET
                                  JULY 31, 1996


                                     ASSETS
<S>                                                                 <C>
Current Assets:
  Cash ...........................................................  $    34,857
  Loans Receivable ...............................................        7,908
  Other Current Assets ...........................................          207
                                                                    -----------
     Total Current Assets ........................................       42,972
                                                                    -----------
Property and Equipment (Net of
  Accumulated Depreciation of $338,482) ..........................    1,356,472
                                                                    -----------

Other Assets:
  Mining Reclamation Bonds .......................................       11,000
  Security Deposit ...............................................        3,667
  Deferred Expense ...............................................       51,408
                                                                    -----------
   Total Other Assets ............................................       66,075
                                                                    -----------
Total Assets .....................................................  $ 1,465,519
                                                                    ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Accrued Expenses and Taxes .....................................  $    69,806
  Loans Payable - Officers .......................................        9,673
                                                                    -----------
     Total Current Liabilities ...................................       79,479
                                                                    -----------
Commitments and Contingencies

Stockholders' Equity:
  Common Stock, Par Value $.0001 Per Share;
    Authorized 150,000,000 shares; Issued and
    Outstanding 126,077,150 Shares ...............................       12,608
  Capital Paid In Excess of Par Value ............................    6,076,152
  Deficit Accumulated in the Development Stage ...................   (4,702,720)
                                                                    -----------
     Total Stockholders' Equity ..................................    1,386,040
                                                                    -----------
Total Liabilities and Stockholders' Equity .......................  $ 1,465,519
                                                                    ===========
</TABLE>

     The accompany notes are an integral part of the financial statements.

                                       F-2


<PAGE>
<TABLE>
<CAPTION>
                       LEADVILLE MINING AND MILLING CORP.

                        (A DEVELOPMENT STAGE ENTERPRISE)
                             STATEMENT OF OPERATIONS
                                                                      For The Period
                                       For The Year Ended           September 17,1982
                                               July 31,                 (Inception)  
                                       -----------------------               To
                                         1996            1995          July 31, 1996
                                         ----            ----        -----------------
<S>                                 <C>              <C>              <C>
Revenues:
  Interest Income ...............   $         960    $         435    $     707,394
  Miscellaneous .................            --               --             23,483
                                    -------------    -------------    -------------

    Total Revenues ..............             960              435          730,877
                                    -------------    -------------    -------------

Costs and Expenses:
  Mine Expenses .................         237,560          174,722        1,405,572
  Selling, General and
    Administrative Expenses .....         709,707          238,052        3,553,865
  Depreciation ..................           8,344           13,810          338,482
  Loss on Write-Off of
    Investment ..................            --               --             10,000
  Loss on Joint Venture .........            --               --            101,700
                                    -------------    -------------    -------------

  Total Costs and
     Expenses ...................         955,611          426,584        5,409,619
                                    -------------    -------------    -------------

Loss Before Provision
  For Income Taxes ..............        (954,651)        (426,149)      (4,678,742)

Provision For Income
  Taxes .........................           1,392              654           23,978
                                    -------------    -------------    -------------

Net Loss ........................   $    (956,043)   $    (426,803)   $  (4,702,720)
                                    =============    =============    =============


Net Loss Per Share ..............   $        (.01)   $        (.00)
                                    =============    =============

Average Common Shares Outstanding     118,581,724      102,166,434
                                    =============    =============
</TABLE>
    The accompanying notes are an integral part of the financial statements.

                                       F-3

<PAGE>
<TABLE>
<CAPTION>
                       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, 1996
                                                                                Deficit
                                                                               Accumulated
                                                               Capital Paid      In The
                                           Common Stock        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 $.0001 Per Share ...   15,750,000        1,575         --           --          1,575

  Other Investors -
    At $.0001 Per Share ............   10,450,000        1,045         --           --          1,045

Initial - Mining Claims ............         --
  Officer - At $.0002 Per Share ....    8,750,000          875          759         --          1,634

Common Stock Issued For:
  Cash At $.05 Per Share ...........    3,000,000          300      149,700         --        150,000

Net Loss ...........................         --           --           --         (8,486)      (8,486)
                                       ----------   ----------   ----------   ----------   ----------

Balance - July 31, 1983 ............   37,950,000        3,795      150,459       (8,486)     145,768

Common Stock Issued For:
  Cash Pursuant to Initial Offering
  At $.15 Per Share, Net of
  Offering Costs of $408,763 .......   17,547,411        1,755    2,221,594         --      2,223,349

Net Income .........................         --           --           --         48,890       48,890
                                       ----------   ----------   ----------   ----------   ----------
                                      
Balance - July 31, 1984 ............   55,497,411        5,550    2,372,053       40,404    2,418,007

Net Income .........................         --           --           --         18,486       18,486
                                       ----------   ----------   ----------   ----------   ----------
                                     
Balance - July 31, 1985 ............   55,497,411        5,550    2,372,053       58,890    2,436,493

Common Stock Issued For:
  Mineral Lease At $.10 Per Share ..        1,000         --            100         --            100

Net Income .........................         --           --           --          4,597        4,597
                                       ----------   ----------   ----------   ----------   ----------
            
Balance - July 31, 1986 ............   55,498,411        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>
<TABLE>
<CAPTION>
                       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, 1996
                                                                       Deficit
                                                                     Accumulated
                                                     Capital Paid      In The
                                 Common Stock        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     55,498,411         5,550     2,372,153      (124,286)     2,253,417

Common Stock Issued For:
  Services Rendered At
    $.10 Per Share .....       920,000            92        91,908          --           92,000

Net Loss ...............          --            --            --        (328,842)      (328,842)
                           -----------   -----------   -----------   -----------    -----------

Balance - July 31, 1988     56,418,411         5,642     2,464,061      (453,128)     2,016,575

Net Loss ...............          --            --            --        (379,852)      (379,852)
                           -----------   -----------   -----------   -----------    -----------

Balance - July 31, 1989     56,418,411         5,642     2,464,061      (832,980)     1,636,723

Common Stock Issued For:
  Cash:
    At $.07 Per Share ..     2,690,601           269       194,219          --          194,488
    At $.05 Per Share ..     3,870,326           387       199,443          --          199,830
  Services:
    At $.05 Per Share ..       682,826            68        34,073          --           34,141
  Commissions:
    At $.07 Per Share ..       150,000            15           (15)         --             --

Commissions Paid .......          --            --          (2,100)         --           (2,100)

Net Loss ...............          --            --            --        (529,676)      (529,676)
                           -----------   -----------   -----------   -----------    -----------

Balance - July 31, 1990     63,812,164         6,381     2,889,681    (1,362,656)     1,533,406

Common Stock Issued For:
  Cash At $.06 Per Share     3,183,998           319       180,954          --          181,273

Net Loss ...............          --            --            --        (356,874)      (356,874)
                           -----------   -----------   -----------   -----------    -----------

Balance - July 31, 1991     66,996,162         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>
<TABLE>
<CAPTION>
                       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, 1996
                                                                       Deficit
                                                                     Accumulated
                                                       Capital Paid    In The
                                   Common Stock        In Excess of  Development
                               Shares       Amount       Par Value      Stage           Total
                               ------       ------       ---------      -----           -----
<S>                          <C>         <C>           <C>           <C>            <C>
Common Stock Issued For:
  Cash:
    At $.03 Per Share ..     1,149,167   $       115   $    34,303   $      --      $    34,418
    At $.05 Per Share ..        20,000             2           998          --            1,000
    At $.06 Per Share ..       228,666            23        13,698          --           13,721
    At $.07 Per Share ..       100,000            10         6,990          --            7,000
    At $.08 Per Share ..        62,500             6         4,994          --            5,000
    At $.09 Per Share ..        54,444             5         4,895          --            4,900
  Services:
    At $.032 Per Share .       393,597            39        12,561          --           12,600
    At $.05 Per Share ..       923,529            93        46,084          --           46,177
  Exercise of Options:
    At $.05 Per Share By
      Related Party ....     1,000,000           100        49,900          --           50,000

Net Loss ...............          --            --            --        (307,477)      (307,477)
                           -----------   -----------   -----------   -----------    -----------

Balance - July 31, 1992     70,928,065         7,093     3,245,058    (2,027,007)     1,225,144

Common Stock Issued For:
  Cash:
    At $.03 Per Share ..     1,760,575   $       176   $    51,503   $      --      $    51,679
    At $.05 Per Share ..     1,400,000           140        69,964          --           70,104
    At $.06 Per Share ..       100,000            10         5,990          --            6,000
    At $.07 Per Share ..       170,000            17        11,983          --           12,000
    At $.10 Per Share ..       500,000            50        49,950          --           50,000
  Services:
    At $.05 Per Share ..     4,955,556           496       272,504          --          273,000
  Commissions:
    At $.05 Per Share ..       202,200            20           (20)         --             --

Commissions Paid .......          --            --          (1,500)         --           (1,500)

Net Loss ...............          --            --            --        (626,958)      (626,958)
                           -----------   -----------   -----------   -----------    ----------- 

Balance - July 31, 1993     80,016,396         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>
<TABLE>
<CAPTION>
                       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, 1996

                                                                                   Deficit
                                                                                 Accumulated
                                                                   Capital Paid    In The
                                              Common Stock         In Excess of  Development
                                          Shares        Amount       Par Value     Stage          Total
                                          ------        ------       ---------     -----          -----
<S>                                     <C>         <C>           <C>           <C>            <C>
Common Stock Issued For:
  Cash:
    At $.03 Per Share .............     1,493,300   $       150   $    43,489   $      --      $    43,639
    At $.05 Per Share .............     3,772,053           377       189,894          --          190,271
Services:
    At $.03 Per Share .............     5,000,000           500       149,500          --          150,000
    At $.05 Per Share .............     1,300,000           130        71,287          --           71,417
    At $.05 Per Share
      By Related Party ............     1,560,000           156        77,844          --           78,000
    At $.07 Per Share .............        47,429             4         3,316          --            3,320
  Exercise of Options For Services:
    At $.05 Per Share .............       350,000            35        17,465          --           17,500
    At $.05 Per Share
     By Related Party .............     1,500,000           150        74,850          --           75,000

Net Loss ..........................          --            --            --        (665,909)      (665,909)
                                      -----------   -----------   -----------   -----------    -----------
Balance - July 31, 1994 ...........    95,039,178         9,504     4,333,077    (3,319,874)     1,022,707

Common Stock Issued For:
  Cash:
    At $.03 Per Share .............     1,500,000   $       150   $    49,856   $      --      $    50,006
    At $.04 Per Share .............     2,882,000           288       115,215          --          115,503
    At $.05 Per Share .............     2,696,112           270       132,831          --          133,101
    At $.06 Per Share .............     1,208,337           121        72,379          --           72,500
    At $.07 Per Share .............       230,000            23        16,077          --           16,100
Services:
    At $.04 Per Share .............     1,450,000           145        60,755          --           60,900
    At $.05 Per Share .............       750,000            75        34,925          --           35,000
Exercise of Options For:
  Cash:
  At $.05 Per Share
    By Related Party ..............     3,500,000           350       174,650          --          175,000
Services:
  At $.05 Per Share ...............       350,000            35        17,465          --           17,500

Commissions Paid ..................          --            --          (1,650)         --           (1,650)

Net Loss ..........................          --            --            --        (426,803)      (426,803)
                                      -----------   -----------   -----------   -----------    -----------

Balance - July 31, 1995 ...........   109,605,627   $    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>
<TABLE>
<CAPTION>
                       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, 1996

                                                                            Deficit
                                                                           Accumulated
                                                           Capital Paid      In The
                                      Common Stock         In Excess of    Development
                                  Shares        Amount       Par Value       Stage         Total
                                  ------        ------       ---------       -----         -----
<S>                              <C>         <C>           <C>           <C>            <C>
Common Stock Issued For:
  Cash:
    At $.04 Per Share ......       759,715   $        76   $    30,274   $      --      $    30,350
    At $.05 Per Share ......     5,504,235           550       270,074          --          270,624
    At $.06 Per Share ......     1,467,731           147        87,853                       88,000
    At $.07 Per Share ......       557,216            56        38,949                       39,005
    At $.08 Per Share ......     1,101,000           110        87,890                       88,000

Services:
    At $.04 Per Share ......     1,041,501           104        38,296          --           38,400
    At $.05 Per Share ......       420,100            42        20,963          --           21,005
    At $.06 Per Share ......        46,006             5         2,755                        2,760
    At $.07 Per Share ......     1,543,928           155       107,920                      108,075

  Commissions:
     At $.035 Per Share ....       234,286            23           (23)
     At $.05 Per Share .....       505,450            50           (50)
     At $.06 Per Share .....        19,998             2            (2)
     At $.07 Per Share .....       120,357            12           (12)

  Exercise of Options:
    Cash:
      At $.035 Per Share
        By Related Party ...       195,714            20         6,830                        6,850
 
    Services:
      At $.035 Per Share
        By  Related Party ..     2,004,286           200        69,950          --           70,150
      At $.05 Per Share ....       950,000            95        47,405          --           47,500

     Compensation Portion of
        Options Exercised ..          --            --         261,500          --          261,500

Net Loss ...................          --            --            --        (956,043)      (956,043)
                               -----------   -----------   -----------   -----------    -----------

Balance - July 31, 1996 ....   126,077,150   $    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>
<TABLE>
<CAPTION>
                       LEADVILLE MINING AND MILLING CORP.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                             STATEMENT OF CASH FLOWS
                                                                                     For The Period
                                                                                   September 17, 1982
                                                           For The Year Ended         (Inception)
                                                               July 31,                   To
                                                         1996               1995     July 31, 1996
                                                         ----               ----   ------------------
<S>                                                    <C>            <C>            <C>
Cash Flow From Operating Activities:
  Net Loss .........................................   $  (956,043)   $  (426,803)   $(4,702,720)
  Adjustments to Reconcile Net Loss to
    Net Cash Used By Operating Activities:
      Depreciation .................................         8,344         13,810        338,482
      Loss on Write-Off of Investment ..............          --             --           10,000
      Loss From Joint Venture ......................          --             --          101,700
      Value of Common Stock Issued For Services ....       287,890        113,400      1,254,445
      Compensation Portion of Options Exercised ....       261,500           --          261,500
      Changes in Operating Assets and Liabilities:
        (Increase) Decrease in Prepaid Expenses ....           164        (51,572)       (51,408)
        (Increase) Decrease  in Other Current Assets          (207)            50           (207)
        Increase in Security Deposit ...............          --           (3,667)        (3,667)
        Increase (Decrease) in Accrued Expenses
           and Taxes ...............................       (79,352)      (184,091)        69,806
                                                       -----------    -----------    -----------

Net Cash Used By Operating Activities ..............      (477,704)      (538,873)    (2,722,069)
                                                       -----------    -----------    -----------

Cash Flow From Investing Activities:
  Purchase of Property and Equipment ...............       (15,636)          --       (1,694,953)
  Investment in Joint Venture ......................          --             --         (101,700)
  Investment in Privately Held Company .............          --             --          (10,000)
                                                       -----------    -----------    -----------

Net Cash Used By Investing Activities ..............       (15,636)             0     (1,806,653)
                                                       -----------    -----------    -----------
</TABLE>

    The accompanying notes are an integral part of the financial statements.

                                       F-9

<PAGE>
<TABLE>
<CAPTION>
                       LEADVILLE MINING AND MILLING CORP.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                             STATEMENT OF CASH FLOWS
                                   (Continued)


                                                                                For The Period
                                                                              September 17, 1982
                                                         For The Year Ended      (Inception)
                                                              July 31,                To
                                                        1996          1995       July 31, 1996
                                                        ----          ----       -------------


<S>                                                 <C>           <C>            <C>
Cash Flow From Financing Activities:
  (Increase) Decrease in Loans Receivable .......   $     1,101   $    (1,626)   $    (7,908)
  Decrease in Loans Payable .....................          --          (4,050)          --
  Increase in Loans Payable - Officers ..........          --            --           18,673
  Repayment of Loans Payable - Officers .........        (7,000)       (2,000)        (9,000)
  Proceeds From Sale of Common Stock ............       522,828       562,210      4,986,827
  Commissions on Sale of Common Stock ...........          --          (1,650)        (5,250)
  Expenses of Initial Public Offering ...........          --            --         (408,763)
  Purchase of Certificate of Deposit - Restricted                        --           (5,000)
  Purchase of Mining Reclamation Bond ...........          --          (6,000)        (6,000)
                                                    -----------   -----------    -----------

Net Cash Provided By Financing Activities .......       516,929       546,884      4,563,579
                                                    -----------   -----------    -----------

Increase In Cash and Cash Equivalents ...........        23,589         8,011         34,857

Cash and Cash Equivalents - Beginning ...........        11,268         3,257           --
                                                    -----------   -----------    -----------

Cash and Cash Equivalents - Ending ..............   $    34,857   $    11,268    $    34,857
                                                    ===========   ===========    ===========

Supplemental Cash Flow Information:
  Cash Paid For Interest ........................   $      --     $      --             --
                                                    ===========   ===========    ===========

  Cash Paid For Income Taxes ....................   $     1.392   $       806    $    23,427
                                                    ===========   ===========    ===========

Non-Cash Financing Activities:
  Issuances of Common Stock as Commissions
    on Sales of Common Stock ....................   $    43,125   $      --      $    69,785
                                                    ===========   ===========    ===========
</TABLE>

    The accompanying notes are an integral part of the financial statements.

                                      F-10

<PAGE>


                       LEADVILLE MINING AND MILLING CORP.
                         (A DEVELOPMENT STAGE ENTERPRISE
                          NOTES TO FINANCIAL STATEMENTS
                                  JULY 31, 1996



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, 1996 aggregating $4,702,720, and has a working
capital  deficiency  at July 31, 1996 of 36,507 that  raises  substantial  doubt
about its ability to continue as a going  concern.  As indicated in Note 10, 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  is 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  accelerate
methods over the estimated useful lives of the related assets.

                                      F-11

<PAGE>


                       LEADVILLE MINING AND MILLING CORP.
                         (A DEVELOPMENT STAGE ENTERPRISE
                          NOTES TO FINANCIAL STATEMENTS
                                  JULY 31, 1996




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
$7,908 paid by the Company to Franklin Consolidated Mining Co., Inc., a publicly
traded corporation. These are non-interest bearing and due on demand.

                                      F-12

<PAGE>


                       LEADVILLE MINING AND MILLING CORP.
                         (A DEVELOPMENT STAGE ENTERPRISE
                          NOTES TO FINANCIAL STATEMENTS
                                  JULY 31, 1996


NOTE 4 - Property and Equipment

     Property and equipment consists of the following:

                  Land                                    $     24,364
                  Building                                      22,655
                  Machinery and Equipment                      346,980
                  Mining Claims and
                    Leasehold Improvements                     107,339
                  Mill and Mining Improvements               1,192,658
                  Office Furniture, Fixtures
                    and Equipment                                  958
                                                          ------------
                                                             1,694,954
                  Less:  Accumulated Depreciation              338,482
                                                          ------------
                                                          $  1,356,472
                                                          ============

NOTE 5 - Accrued Expenses and Taxes

     Included in accrued expenses and taxes are amounts aggregating $38,659 owed
to certain officers and stockholders of the Company for unpaid salaries.

NOTE 6 - Loans Payable - Officers
                  
     These loans  represent  advances to the Company by certain  officers of the
Company.  The  loans  have no  specific  repayment  terms  and are  non-interest
bearing.

NOTE 7 - 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,  of 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-13

<PAGE>


                       LEADVILLE MINING AND MILLING CORP.
                         (A DEVELOPMENT STAGE ENTERPRISE
                          NOTES TO FINANCIAL STATEMENTS
                                  JULY 31, 1996


NOTE 7 - 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, 1996:
                                             Options Outstanding
                                         Number of       Price Range
                                           Shares         Per Share
                                           ------         ---------

Balance - July 1, 1991 ..............          -0-        $   -

  Options Granted:
    Services ........................    4,000,000        .01 - .05
    Services - Related Parties ......    2,250,000              .05

  Options Exercised - Related Parties   (1,000,000)             .05
                                        ----------        ---------
Outstanding - July 31, 1992 .........    5,250,000        .01 - .05

  Options Granted:
    Services ........................    2,000,000              .05
                                        ----------        ---------
Outstanding - July 31, 1993 .........    7,250,000        .01 - .05

  Options Granted:
    Services ........................    3,100,000              .05
    Services - Related Parties ......    3,500,000              .05

  Exercised:
    Services ........................     (350,000)             .05
    Services - Related Parties ......   (1,500,000)             .05

  Expired: ..........................   (5,250,000)       .01 - .05
                                        ----------        ---------

Outstanding - July 31, 1994 .........    6,750,000              .05

  Exercised:
    Services ........................     (350,000)             .05
    Services - Related Parties ......   (3,500,000)             .05
                                        ----------        ---------

Outstanding - July 31, 1995 .........    2,900,000              .05

                                      F-14

<PAGE>


                       LEADVILLE MINING AND MILLING CORP.
                         (A DEVELOPMENT STAGE ENTERPRISE
                          NOTES TO FINANCIAL STATEMENTS
                                  JULY 31, 1996


NOTE 7 - 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, 1996:
                                           Options Outstanding
                                     Number of`       Price Range
                                     of Shares         Per Share


  Options Granted:
      Services - Related Parties     6,000,000               .035

   Exercised:
      Cash - Related Parties ...      (175,000)              .04
      Services .................      (950,000)              .05
      Services -Related Parties     (2,025,000)              .035

Expired: .......................    (1,650,000)              .05
                                   -----------       -----------

Outstanding - July 31, 1996 ....   $ 4,100,000       $.035 - .05
                                   ===========       ===========


     Authorized Common Stock

     In September  1993 the Company's  shareholders  approved an increase in the
unauthorized common stock from 100,000,000 shares to 150,000,000 shares.

                                      F-15

<PAGE>


                       LEADVILLE MINING AND MILLING CORP.
                         (A DEVELOPMENT STAGE ENTERPRISE
                          NOTES TO FINANCIAL STATEMENTS
                                  JULY 31, 1996



NOTE 8 - Income Taxes

     For income tax purposes,  the Company has a net operating loss carryforward
at July 31, 1996 of  approximately  $4,700,000  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   $1,598,000  and
accordingly there is no cumulative effect adjustment or current year tax benefit
recorded.

NOTE 9 - Commitments and Contingencies

     Litigation

     In June 1996, the Company commenced an action against Franklin Consolidated
Mining Company, Inc. ("Franklin") in District Court, Clear Creek County Colorado
with respect to certain monies advanced by the Company to Franklin in connection
with expenses attributable to common office space. On July 10, 1996, the Company
entered  into  a  Settlement   Agreement  with  Franklin   Consolidated   Mining
Corporation  pursuant to which it was agreed that the Company  would  settle all
claims  involved  for  $18,000  and the Company  will as soon as  possible,  (I)
discontinue  the action  against  Franklin as well as withdraw any motions filed
with respect thereto, (ii) remove any liens or other encumbrances which may have
been filed  against  the assets of  Franklin  and (iii)  execute  releases  with
respect to such claims. As of July 31, 1996 Franklin has paid the Company $9,000
of the $18,000 owed under the Settlement Agreement.

                                      F-16

<PAGE>


                       LEADVILLE MINING AND MILLING CORP.
                         (A DEVELOPMENT STAGE ENTERPRISE
                          NOTES TO FINANCIAL STATEMENTS
                                  JULY 31, 1996



NOTE 10 - Liquidity and Going Concern Uncertainty

     The company has incurred recurring losses amounting to $4,702,720 and has a
working  capital  deficiency  of $36,507 at July 31,  1996.  These  events raise
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 may include a combination of one or more of the following:

     a. Private placements of the Company's securities to institutions,  private
individuals,  mining companies, and/or investment groups. During the fiscal year
ended July 31, 1996 the Company raised approximately  $515,000 through the sales
of common stock to investors,  which enabled  continuation of work in the Hunter
Shaft.  The Company wishes to complete its Hunter Shaft,  second exit,  prior to
seeking major capital for operational purposes.

     B. A  working  arrangement  with a mining  company  pursuant  to which  the
Company  would  mine and the other  company  would  mill,  smelt and  market the
products.  Under these  conditions,  the Company's cost would be concentrated on
the mining  effort  only.  The Company has been  negotiating  such an  agreement
pursuant to which the Company will mine ore and sell the ore to a mining company
and that mining  company will process  sulfite  minerals.  Such an agreement can
have  an  initial   two  year  term   subject  to  five  one  year   extensions.
Notwithstanding the foregoing, the agreement would be terminable by either party
on thirty days' notice.  The Company  would deliver ore to the mining  company's
millsite six miles southeast of Leadville, Colorado. The price for the ore would
be based upon the London Metals  Exchange  market price on the date of delivery.
There is no assurance that such an agreement will be finalized. 

                                      F-17

<PAGE>


                       LEADVILLE MINING AND MILLING CORP.
                         (A DEVELOPMENT STAGE ENTERPRISE
                          NOTES TO FINANCIAL STATEMENTS
                                  JULY 31, 1996




NOTE 10 - Liquidity and Going Concern Uncertainty (Continued)

     c. Joint  Venture  with other  mining  companies  on a division  of profits
basis,  whereby the company would  initiate a mining venture with another mining
company,  the latter  providing the capital to initiate  mining and milling and,
thereafter,  dividing the net profits (if any) on an agreed amount basis.  There
are no joint venture prospects at this time.

     d. The  Company may pursue a public  underwriting  of its  securities.  The
Company has not sought out the  interest of an  underwriter  nor can the Company
assure  that it would be able to  obtain an  underwriter  or  complete  a public
offering.

     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
completion  of the  Hunter  Shaft,  2nd  exit,  development  of  B-Zone  mineral
structure  in  preparation  of  mining,  drive  tunnel to Weston  fault  mineral
structure and develop,  drive to IBEX mineral structures and develop (if working
arrangement with another mining company is approved), develop mine and mill.

     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-18

<PAGE>


                       LEADVILLE MINING AND MILLING CORP.
                         (A DEVELOPMENT STAGE ENTERPRISE
                          NOTES TO FINANCIAL STATEMENTS
                                  JULY 31, 1996





NOTE 11 - Subsequent Events

     Refining Contract

     The Company has entered into an agreement with ASARCO  Incorporated for the
sale and  refining of lead  concentrates  produced  from the  Company's  mine in
Colorado. The Agreement provides that the Company may ship metallic materials in
lots of 200 - 300 tons to ASARCO's smelter in East Helena,  Montana. ASARCO will
take delivery of the material,  perform the smelting  operations and pay for the
metals at 60% - 75% of the  metallic  prices as published in London or New York,
depending  on the metal,  less certain  deductions  for expenses of smelting and
adjustment for excess  impurities,  including water. The period of the agreement
shall commence with lead  concentrates  delivered on or after  September 1, 1995
through and including  August 31, 1997 and shall continue  thereafter on a sixty
(60) day written notice of cancellation by either party, provided,  however, the
agreement shall not extend beyond June 30, 2000.

                                      F-19

<PAGE>


                                    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

Donald W. Wilson          67           9/22/82         President & Director

Gifford A. Dieterle       64           9/22/82         Executive Vice President,
                                                       Secretary, Treasurer &
                                                       Chairman of the Board

Robert Roningen           63           9/14/93         Vice President - 
                                                       Operations & Director

Horst Scherp              67           1/25/95         Director

Jack V. Everett           74           1/25/95         Director

     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.  Directors can also be elected by
the Board of  Directors  and hold  service  until  their  resignation  or death.
Officers of the  corporation  are elected by the directors at meetings called by
the directors for its purpose.  Robert L. Elder and Richard  Asbury  resigned as
officers and/or directors in December 1994.

     DONALD W. WILSON, President and Director. His highest educational degree is
a High School diploma obtained from Leadville High School in Leadville, Colorado
in 1949.  He  additionally  attended the  Colorado  School of Mines in 1969 on a
non-matriculating  basis, where he took courses in geology,  surveying,  mapping
and mathematics.  He did not graduate and therefore did not obtain a degree. His
employment history since 1977 consists of the following: From May 1983 until the
present, he has been President of the Company. From January 1981 to May 1983, he
was mine and mill manager of the Franklin Mine, a gold mine in Colorado which is
owned by  Franklin  Consolidated  Mining  Company.  From  1979 to  1980,  he was
employed  by M.S.T.  Company - Rio  Blanco  Oil Shale  Corporation  as a project
engineer.  From  1977 to  1979,  he was  employed  by  United  Nuclear-Homestake
Partnership,  Inc.,  Grants,  New Mexico as a  superintendent  of shaft  sinking
operation.

                                      -15-

<PAGE>


     GIFFORD A. DIETERLE,  Executive  Vice-President,  Treasurer and Chairman of
the Board of Directors of the Company.  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.

     ROBERT RONINGEN,  Vice  President-Operations  and a director, has, for more
than  the  past  five  years,  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.

     HORST  SCHERP,  a director,  has been an Associate  Professor of Geology at
Hunter  College of the City of New York since 1963.  From 1980 to 1987, he was a
Director and geologist for Jeger Oil Corp. Mr. Scherp received a Ph.D in geology
from the University of Gottingen, Germany, in 1959.

     JACK V. EVERETT, a 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.

     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  during the fiscal year
ended July 31, 1996.

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. No other Executive
Officer received total annual salary and bonus in excess of $100,000.

                                      -16-

<PAGE>
<TABLE>
<CAPTION>
                                                   SUMMARY COMPENSATION TABLE

                                                               Long-Term Compensation
                             Annual Compensation           Awards              Payouts
        (a)             (b)     (c)     (d)      (e)        (f)       (g)      (h)       (i)
--------------------  ------- ------- ------- --------   --------- -------- --------- ------
                                              Other      Restrict-                     All Other
                                              Annual     ed 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>
Donald W. Wilson       1996   54,029    -0-      -0-         -0-     2,000,000     -0-      -0-
Chief Executive        1995   53,472    -0-      -0-         -0-       -0-         -0-      -0-
Officer                1994   38,371    -0-      -0-         -0-     2,000,000     -0-      -0-
                       1993   25,000    -0-      -0-         -0-       -0-         -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

  (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

Donald W. Wilson   2,000,000     33.3% $           .03             Jan 5, 1998
Gifford Dieterle   2,200,000     36.7% $           .03             Jan 5, 1998
Robert Roningen    1,500,000     25.0% $           .03             Jan 5, 1998
Jack Everett ...     250,000      4.2% $           .03             Jan 5, 1998
Horst Schaap ...      50,000       .8% $           .03             Jan 5, 1998

     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-        2,000,000          --
Gifford Dieterle     700,000          $ 49,000        1,500,000          --
Robert Roningen    1,500,000          $105,000              -0-          --
Jack Everett ...         -0-               -0-          250,000          --
Horst Schaap ...         -0-               -0-           50,000          --

                                      -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:

                                                   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 #)
----                 ------------  -------------  ---------  --------  --------

Donald W. Wilson     2,000,000
Gifford Dieterle     2,200,000
Robert Roningen      1,500,000
Jack .Everett          250,000
Horst Schaap            50,000


     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 July 31,
1996.

     (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 July 31, 1996, is set forth on the charts
below.

                  Name of               Amount & Nature
                  Beneficial            of Beneficial              Approximate
Title of Class    Owner                 Ownership 7/31/96(1)       Percentage

Common Stock      Donald W. Wilson          7,851,000                  6.3%

Common Stock      Gifford A. Dieterle       8,641,042                  7.0%

Common Stock      Jack Everett                250,000                   .20%

Common Stock      Robert Roningen           3,083,334                  2.5%

Common Stock      Horst Scherp                    -0-                  0.0%

All Officers and
Directors as a
Group (5)                                  19,825,376                 16.00%

                                      -18-

<PAGE>



* Less than one percent.

(1)  Supplied by the persons set forth above.

Item 12. Certain Relationships and Related Transactions.

     Between  September  1, 1991 and July 31,  1995,  the Company  and  Franklin
Consolidated  Mining & Milling  Company lent to one another on short term basis,
small  amounts of money for  current  operations.  The  Company  currently  is a
creditor of Franklin Consolidated Mining Company in the amount of $9,000.00.

     On January 5, 1996 the  Company  issued  the  following  options to certain
officers and  directors.  Donald Wilson - option to purchase  2,000,000  shares;
Gifford Dieterle - option to purchase  2,200,000 shares;  Robert Roningen option
to purchase  1,500,000  shares;  Jack Everett option to purchase 250,000 shares;
Horst Schaap - option to purchase  50,000  shares.  All options  granted on that
date expire on January 5, 1998 and are exercisable at $.035 oer share.

     During fiscal 1993 and 1994, Gifford A. Dieterle an officer and director of
the Company,  loaned the Company  $18,873,  which funds were used for  operating
expenses. There are no specific repayment terms and the loans are interest free.
As of July 31, 1996, $9,673 remained outstanding.

Item 13. Exhibits and Reports on Form 8-K.

Exhibits

  3.a     Certificate of Incorporation of Company*
  3.b     Amendments to Certificate of Incorporation of Company*
  3.c     By-Laws of Company*
 10.a     Mining Claims*
 10.b     ASARCO Agreement


*    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

     The  Company  has filed the  following  Reports of Form 8-K during the year
ended July 31, 1996 with the  principal  office of the  Securities  and Exchange
Commission in Washington, D.C.:

                                      None.

     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.

                                      -19-

<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.


Dated: November   , 1996                      By: /s/ Donald W. Wilson
                                              ------------------------
                                                  Donald W. Wilson, 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



                           President, Principal               November __, 1996
Donald W. Wilson           Executive Officer and
                           a Director

                           Treasurer and                      November __, 1996
Gifford A. Dieterle        Principal Financial
                           and Accounting
                           Officer and Chairman
                           of the Board of Directors

                           Director                          November __, 1996
Jack Everett


                           Director                          November __, 1996
Robert Roningen


                           Director                          November __, 1996
Horst Scherp


                                      -20-

<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

                                      -21-