-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AsDzhZXFZ34Zy78zf156/X4/IHzwtQYnmdsJzxvhRB6dF+q6vJ/Dl0xeq0oHwldH fwQiUKoAGPGpEFw49ylkaQ== 0000878808-97-000021.txt : 19970320 0000878808-97-000021.hdr.sgml : 19970320 ACCESSION NUMBER: 0000878808-97-000021 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970312 ITEM INFORMATION: Changes in control of registrant ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Bankruptcy or receivership ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970319 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEWGOLD INC CENTRAL INDEX KEY: 0000878808 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-AUTOMOTIVE REPAIR, SERVICES & PARKING [7500] IRS NUMBER: 161400479 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-20722 FILM NUMBER: 97559035 BUSINESS ADDRESS: STREET 1: 5190 NEIL ROAD, SUITE 320 CITY: RENO STATE: NV ZIP: 89502 BUSINESS PHONE: 7028234000 FORMER COMPANY: FORMER CONFORMED NAME: WAREHOUSE AUTO CENTERS INC /DE DATE OF NAME CHANGE: 19950510 8-K 1 U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT: MARCH 12, 1997 DATE OF EARLIEST EVENT REPORTED: NOVEMBER 21, 1996 NEWGOLD, INC. ------------- (Exact Name of Small Business Issuer as Specified in Charter) Delaware 0-20722 16-1400479 ----------- ----------- -------------- (State or Other (Commission File No.) (IRS Employer Jurisdiction of Identification No.) Incorporation) 5190 Neil Road, Suite 320 Reno, Nevada 89502 -------------------------------- (Address of Principal Executive Offices) (702) 823-4000 (Issuer's Telephone Number) --------------------------------- Warehouse Auto Centers, Inc. ---------------------------- (Former Name, if changed since Last Report) ITEM 1. CHANGES IN CONTROL OF REGISTRANT. ------------------------------------- Pursuant to a Chapter 11 Plan of Reorganization, confirmed by the U.S. Bankruptcy Court for the Western District of New York at a hearing held on November 21, 1996 and by Order entered November 25, 1996, Warehouse Auto Centers, Inc., Debtor, merged with and acquired all of the assets of Newgold, Inc., a Nevada corporation, in exchange for a total of 12,000,000 shares of its restricted Common Stock. As a result of such merger and stock issuance, the shareholders of Newgold, Inc., the Nevada corporation, acquired control of the Registrant. The consideration paid consisted of all of the outstanding shares of Newgold, Inc., the Nevada corporation. The percentage of voting securities of Registrant now beneficially owned, directly or indirectly, by the Newgold, Inc. (Nevada) shareholders is 61%. The control shares were issued by the Registrant from its authorized but unissued shares of Common Stock. A. Scott Dockter, President and Chairman of the Board of Directors of the Reorganized Debtor, as a controlling shareholder of Newgold, Inc. (Nevada) acquired beneficial ownership of a total of 6,686,358 shares representing 34% of the voting control of Registrant's issued and outstanding shares. There are no arrangements or understandings among members of the former and new control person(s) or there associates with respect to the election of directors or other matters pertaining to Registrant. There are no arrangements known to the Registrant, including any pledge by any person of securities of the Registrant or any of its parents, the operation of which may, at a subsequent date, result in a change in control of the Registrant. ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. ----------------------------------------- On November 25, 1996, pursuant to Order of the U.S. Bankruptcy Court confirming Warehouse Auto Center's Chapter 11 Plan of Reorganization, Registrant merged with and acquired all of the assets of Newgold, Inc., a Nevada corporation, consisting of gold mining properties and equipment located in California and Nevada in exchange for 12,000,000 shares of restricted Common Stock of Registrant. Newgold, Inc. (Nevada) was incorporated under the laws of the State of Nevada on September 1, 1993. Newgold's goal has been to acquire small to medium-sized precious metals mines which have drill-indicated reserves and little or no permitting requirements prior to commencement of production. The ultimate goal of Newgold is to become a junior-sized gold production organization diversified in various aspects of the mining industry. On January 1, 1995, Newgold purchased the Relief Canyon Mine, located in Lovelock Nevada, from J.D. Welsh & Associates, an unrelated third party, for the sum of $500,000 cash. Newgold has performed extensive research, development and drilling on the property and is currently in the process of obtaining permits to put the mine into operation. On June 21, 1995, Newgold acquired the Washington Gulch Mine in Montana from Edward Mackay, an officer, director and principal shareholder of the Reorganized Debtor, in exchange for 2,644,293 restricted shares of Newgold, Inc. Common Stock. Registrant is currently performing research, development and drilling on the property to determine the presence of minerals. On September 21, 1996, Newgold entered into a Lease with an Option to purchase the Mission Mine in Twenty-Nine Palms, California, from Joie Jamison, an unrelated third party, for the cash sum of $3,500,000. The terms of the Lease provide for a cash down payment of $5,113 on execution of the Lease; $5,000 per month for the first 90 days after execution of the Lease; $8,000 per month for an additional 90 days; and a cash payment of $300,000 at the end of the 180-day period. Beginning on March 1, 1997, payment shall be the greater of 2.5% Net Smelter Return ("NSR") or minimum monthly payments of $10,000 through February, 1998; then $20,000 per month through February, 1999; $30,000 per month through February, 2000; $40,000 per month through February, 2001; $50,000 per month through February, 2002; $60,000 per February, 2003; and $70,000 per month through February 2004, until the total purchase price of $3,500,000 is paid in full, either with the 2.5% NSR or the monthly payments. ITEM 3. BANKRUPTCY OR RECEIVERSHIP. ----------------------------- On November 25, 1996, the U.S. Bankruptcy Court for the Western District of New York entered an Order confirming Warehouse Auto Center's Chapter 11 Plan of Reorganization. Following is a summarization of the material features of the Plan: 1)The Debtor has successfully reorganized and merged with Newgold, Inc., a Nevada corporation, wherein Registrant acquired 100% of the outstanding shares of Common Stock of Newgold, Inc. in exchange for 12,000,000 restricted shares of Common Stock in the Reorganized Debtor. (2)Registrant filed an Amendment to its Articles of Incorporation with the Secretary of State of the State of Delaware on December 2, 1996, changing the name of the corporation to Newgold, Inc. and increasing the authorized capital stock of the corporation to 50,000,000 shares of Common Stock with a par value of $.001 per share. (3)Registrant has effected a 65:1 reverse split of Registrant's pre-petition Common Stock and obtained the new CUSIP Number 651362-10-5 to reflect said reverse split. (4)Registrant paid the allowed claims of its secured creditors in full in cash following entry of an Order from the U.S. Bankruptcy Court for the Western District of New York on August 28, 1996, directing a sale of its remaining assets for the total sum of $375,000. (5)Registrant has paid all allowed claims of unsecured trade debts and other unsecured liabilities in full with Common Stock in the Reorganized Debtor, issued pursuant to Section 1145 of the Code, on the basis of one share for each $42.00 of debt. (6)Registrant has paid all loans incurred pursuant to Section 364 of the Code and the holders of priority Debtor Certificates, according to the terms of their Certificates, and has offered all holders the option to convert their debt to equity in the Reorganized Debtor in lieu of cash payment, through issuance of shares of Common Stock of the Reorganized Debtor, pursuant to Section 1145 of the Code. (7)Registrant has paid all Administrative Claims incurred during the Bankruptcy proceedings either in cash in full or in Common Stock of the Reorganized Debtor, pursuant to Section 1145 of the Code, on the basis of one share of Common Stock for each $1.00 of debt, at the discretion of the Creditor. (8)Registrant has paid all Priority Administrative Claims, including, but not limited to taxes and U.S. Trustee fees in full in cash. (9)Registrant has appointed a new Board of Directors and Management of the Reorganized Debtor. (10)Registrant has applied for and obtained the new trading symbol , "NGLD" from NASDAQ. (11) Registrant has canceled all outstanding pre-petition options, warrants and/or other rights or commitments by Registrant to issue any securities or pay any benefits to any person or business entity other than those approved in the Plan of Reorganization. (12) Registrant has appointed Oxford Transfer & Registrar, 317 SW Alder, Portland, Oregon, as the corporation's new transfer agency. As of the date of this Report, Registrant has substantially consummated the Plan according to its terms and intends to apply to the U.S. Bankruptcy Court for a Closing Order of the Chapter 11 proceeding in the very near future. As of the date of this Report, there is a total of 19,718,263 shares of Common Stock of Registrant issued and outstanding. This amount includes all shares which were to be issued pursuant to the terms of the Plan and there are no shares reserved for future issuance in respect of claims and interests filed and allowed under the Plan. On the date of confirmation of the Plan of Reorganization, Registrant's only asset was cash in the amount of $39,645 held in an escrow account, which amount represented the balance of funds left over from the asset sale in August 1996. Upon confirmation of the Plan, these funds were used to pay allowed Administrative and priority claims. On the date of confirmation of the Plan, Registrant's liabilities totaled $3,031,145, all of which have been paid in full either in cash or with Common Stock of the Reorganized Debtor, as allowed, pursuant to the terms of the Plan of Reorganization. ITEM 7. FINANCIAL STATEMENTS. PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. ------------------------------------------------------------------- Following are the unaudited financial statements of Registrant (Newgold-Nevada) for the last two years and pro forma financial information as of November 21, 1996, the date of confirmation of the Plan of Reorganization. Registrant will file its audited financial statements with its Report on Form 10-KSB for the period ended January 31, 1997 on or before the due date of such Report. (This space left blank intentionally.)
NEWGOLD, INC. BALANCE SHEET DECEMBER 31, 1994 ASSETS CURRENT ASSETS Cash $ 6,688 Due from officers 47,810 ---------- Total Current Assets $ 54,498 INVESTMENT Golden Asset mine Leasehold $ 352,642 Equipment 17,000 Less accumulated depreciation (1,700) 367,942 ------- TOTAL ASSETS $ 422,440 LIABILITIES AND SHAREHOLDER'S DEFICIT CURRENT LIABILITIES Accounts payable $ 111,635 Payroll taxes payable 914 Payable to affiliated companies 73,858 Notes payable to individuals 355,000 Notes payable-Investment 122,642 ---------- Total Liabilities $ 664,049 SHAREHOLDER'S EQUITY (DEFICIT) Common Stock - Authorized, 1,000 shares $ 1,000 Issued and outstanding, 100 shares Less accumulated deficit (242,609) ---------- Shareholder's Deficit (241,609) TOTAL LIABILITIES AND SHAREHOLDER'S DEFICIT $ 422,440 ----------
See Notes to Financial Statements
NEWGOLD, INC. STATEMENT OF LOSS AND ACCUMULATED DEFICIT FOR THE PERIOD MAY 16, 1994 (INCEPTION) TO DECEMBER 31, 1994 INCOME Sales of gold and silver $ 72,762 EXPENSES Royalty payments 35,000 Accounting fees 1,393 Vehicle expenses 106 Fees and service charges 930 Legal and professional 125 Licenses and permits 437 Production payments 3,000 Travel and entertainment 6,765 Office expense and postage 3,651 Depreciation 1,700 Outside services 189,211 Cement 5,717 Delivery and freight 4,922 Miscellaneous 6,853 Equipment rental 3,059 Equipment repairs 3,644 Equipment operation 3,873 Supplies 9,732 Wages 28,000 Payroll taxes 2,590 Penalties 270 Telephone 2,781 Engineering fees 1,612 ----------- Total Expenses $ 315,371 NET LOSS ($242,609) Accumulated Deficit - Beginning 0 Accumulated Deficit - December 31,1994 ($242,609)
NEWGOLD, INC. STATEMENT OF CASH FLOWS FOR THE PERIOD MAY 16, 1994 (INCEPTION) TO DECEMBER 31, 1994 Cash Flows from Operating Activities Net Income (Loss) ($242,609) Add back depreciation 1,700 Adjusted net loss 240,909) Adjustments to reconcile Net Loss to Net Cash Used by Operating Activities (Increase in Due from officers (46,810) Increase in Accounts payable 111,635 Increase in Payroll taxes payable 914 Increase in payable to affiliated company 73,858 ----------- Total adjustments $ 139,597 Net cash used by Operating Activities ($101,312) Cash Flows from Investing Activities Net Cash Payments on purchase of Golden Asset (369,642) Increase in common stock 1,000 ----------- Net cash Used In Investing Activities ($368,642) Cash Flows from Financing Activities Cash borrowings from individuals 355,000 Notes Payable for Golden Asset 122,642 ----------- Net Cash Provided By Financing Activities $ 477,642 Increase (Decrease) in Cash 6,688 Cash at Beginning of the Year 0 Cash at End of Year $ 6,688
See Notes to Financial Statements NEWGOLD, INC. NOTES TO FINANCIAL STATEMENTS FOR THE PERIOD MAY 16, 1994 (INCEPTION) TO DECEMBER 31, 1994 NOTE 1 - Summary of Significant Accounting Policies ---------------------------------------------- Business Activity - Newgold, Inc. (the Company) was incorporated in the state - ------------------ of Nevada on September 1, 1993 and remained inactive until May 16, 1994. The Company is engaged in the acquisition and development of small to medium mining properties using the heap leach method. In 1994, the Company operated one mine located near Jefferson City, Montana. Income and Expense Recognition - The Company uses the accrual method of - --------------------------------- accounting where income is recognized when earned and expenses are recorded as - ------ they are incurred. Property and Equipment - Property and equipment are stated at cost. - ------------------------ Depreciation is calculated using the double declining balance method and - ---------- half-year convention as stipulated in the Internal Revenue Code. This - ----- depreciation method is designed to amortize the cost of the assets over their - ----- estimated useful lives of five years with greater expense being recorded in the initial years of service. In this initial period of operation, straight-line and accelerated methods of depreciation are approximately equal in expense. Maintenance and repairs are charged to expense as incurred. For equipment retirements or other disposals, the equipment cost is removed from the asset account and the related depreciation allowance is adjusted with the difference being charged or credited to income. Income Taxes - The shareholders have elected that income and losses of the - ------------- Company will be allocated to the shareholders under provisions of Sub-chapter - --- S of the Internal Revenue Code. Therefore, no income tax benefit for the future loss carryforward has been recorded in the financial statements. NOTE 2 - Related Party Transactions ---------------------------- The Company is owned by Arthur Scott Dockter and Richard C. Kimball with ownership of 70% and 30%, respectively. The Company has accounts receivable from Scott Dockter and Richard Kimball of $21,200 and $26,610, respectively. The Company has an account payable to another company owned by the shareholders of $73,858. NOTE 3 - In the acquisition of the Golden Asset mine, Alta Gold Corporation sold its interests to the Company for $322,642. The Company paid a deposit of $200,000 and had made two of the $10,000 monthly payments through March 1995. The balance payable at December 31, 1995 was $102,642 and was paid in October 1996. Depreciation expense for equipment for the period ended December 31, 1994 was $1,700. The Company has borrowed funds from 8 individuals under Investor's Agreements which promises repayment of the principle plus net profit percentage interest (NPI) in the net income of the mine. The total borrowed from individuals for the Golden Asset mine is $355,000 and the lenders have been granted a total NPI of 36% of net income generated by the mine. NOTE 4 - Subsequent to the balance sheet date, the Company negotiated a capital lease to acquire the mineral rights for the Relief Canyon mine near Lovelock, Nevada. The $500,000 lease required a down payment of $100,000 and twelve monthly payments of $35,166 beginning February 1, 1995. (This space left blank intentionally.)
NEWGOLD, INC. BALANCE SHEET DECEMBER 31, 1995 ASSETS CURRENT ASSETS Cash $ 909 Note receivable 38,074 Due from officer 26,939 Prepaid expenses 2,150 ---------- Total Current Assets $ 68,072 INVESTMENTS Golden Asset mine 0 Relief Canyon mine 0 TOTAL ASSETS $ 68,072 LIABILITIES AND SHAREHOLDER'S DEFICIT CURRENT LIABILITIES Accounts payable $ 209,277 Accrued payroll 5,656 Payroll taxes payable 49,528 Payable to affiliated companies 307,935 Notes payable to individuals 1,189,305 Notes payable-Investments 0 ---------- Total Liabilities $1,761,701 SHAREHOLDER'S EQUITY (DEFICIT) Common Stock - Authorized, 1,000 shares $ 1,000 Issued and outstanding, 100 shares Less accumulated deficit 0 ---------- Shareholder's Deficit $ 1,000 TOTAL LIABILITIES AND SHAREHOLDER'S DEFICIT $1,762,701
See Notes to Financial Statements NEWGOLD, INC. STATEMENT OF LOSS AND ACCUMULATED DEFICIT FOR THE YEAR ENDING DECEMBER 31, 1995 INCOME Sales of gold and silver $ 40,773 EXPENSES Assay and refining expenses 2,000 Accounting fees 4,655 Vehicle expenses 723 Bank service charges 2,578 Vendor service charges 9,049 Dues and subscriptions 53 Interest expense 15,419 Legal and professional 3,343 Licenses and permits 4,727 Travel 3,014 Meals and entertainment 494 Office supplies 2,270 Postage 645 Printing 212 Outside services 5,368 ADP fees 662 Laboratory fees 818 Miscellaneous 850 Equipment rental 1,605 Equipment fuel and oil 1,545 Repairs and maintenance 572 Supplies 5,168 Wages 35,255 Payroll taxes 4,215 Telephone 3,447 Engineering fees 6,500 ----------- Total Expenses $ 115,187 NET LOSS ($74,415) Accumulated Deficit - December 31, 1994 ($257,609) Accumulated Deficit - December 31,1995 ($332,024)
See Notes to Financial Statements
NEWGOLD, INC. STATEMENT OF CASH FLOWS FOR THE YEAR ENDING DECEMBER 31, 1995 Cash Flows from Operating Activities Net Income (Loss) ($74,415) Adjustments to reconcile Net Loss to Net Cash Used by Operating Activities (Increase) in Note receivable (38,074) Decrease in Due from officer 20,871 (Increase) in Prepaid expenses (2,150) Increase in Accounts payable 97,642 Increase in Accrued payroll 5,656 Increase in Payroll taxes payable 48,615 Increase in payable to affiliated company 234,077 ------------- Total adjustments $ 366,637 Net cash provided by Operating Activities $ 292,222 Cash Flows from Investing Activities Net Cash Payments on purchase of Relief Canyon ($1,112,306) Cash Flows from Financing Activities Cash borrowings from individuals $ 866,805 Payments on Notes Payable for Golden Asset (52,500) ------------- Net Cash Provided By Financing Activities $ 814,305 Net Increase (Decrease) in Cash (5,779) Cash at Beginning of the Year $ 6,688 Cash at End of Year $ 909
See Notes to Financial Statements NEWGOLD, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDING DECEMBER 31, 1995 Note 1 - Summary of Significant Accounting Policies ---------------------------------------------- Business Activity - Newgold, Inc. (the Company) was incorporated in ------------------ the State of Nevada on September 1, 1993 and began operations on May 16, 1994. The Company is engaged in the acquisition of inactive mining properties that have the potential to be reopened as productive gold mines. The Company uses drill data of others to determine areas of known reserves and engages engineers and geologists to review geological formations to define target areas to implement drill programs that will establish additional areas for mining gold and silver bearing ore. Known reserves at December 31, 1996 were 700,000 troy ounces with a market value of $2,100,000. Income and Expense Recognition - The Company uses the accrual ------------------------------ method of accounting where income is recognized when earned and expenses are recorded as they are incurred. As Relief Canyon property and equipment had not been placed into service as of the balance sheet date, all expenditures exceeding gold revenues from clear water tests of the equipment, have been capitalized. Investments - Investments are stated at cost and represent the leasehold ----------- cost of mineral rights and costs incurred for equipment and its refurbishment. Maintenance and repairs to equipment in production will be charged to expense as incurred. Income Taxes - The Company has filed to be treated as a partnership ------------- under Subchapter S of the Internal Revenue Code; therefore, no income tax provision has been made in the financial statements. Note 2 - Related Party Transactions ---------------------------- At December 31, 1995, the Company is 100% owned by Arthur Scott Dockter. In lieu of wages, the shareholder has been paid advances by the Company. There is an account receivable from Mr. Dockter of $26,939 as of December 31, 1995. A former officer and shareholder sold his 30% interest in the Company to Mr. Dockter as of June 30, 1995. There is a note receivable from the former shareholder for $38,074 for repayment of advances paid to him in lieu of salary. The note bears interest at 12% per annum. The Company has an account payable of $307,935 to Riverfront Development Corporation, an affiliated company. Of this balance at December 31, 1995, $250,000 represents used material and equipment sold to Relief Canyon to refurbish the mine's processing building and equipment. The remainder represents cash advances and expenses paid by Riverfront Development for the benefit of the Company. Note 3 - Notes Payable to Individuals ------------------------------- The Company has borrowed funds from 19 individuals under Investor's Agreements which promises repayment of the principle plus net profit percentage interest (NPI) in the net income of each mine. The total borrowed from individuals for the Golden Asset mine is $382,500 and the lenders have been granted a total NPI of 46% of net income generated by this mine. The total borrowed from individuals for the Relief Canyon mine is $806,805 and they have been granted a total NPI of 59.5% in the net income generated by this mine. Note 4 - Notes Payable - Investments ------------------------------ In the acquisition of the Golden Asset mine, Alta Gold Corporation sold its interests to the Company for $322,642. The Company paid a deposit of $200,000 and had made two of the $10,000 monthly payments through March 1995. The balance payable at December 31, 1995 was $102,642 and was paid in October 1996. The processing building, leach ponds and mineral rights of Relief Canyon mine were acquired from Welsh & Associates for the sum of $450,000. The contract required a down payment of $100,000 and twelve monthly payments of $35,166 including interest at 10%. The balance due of $53,765 at December 31, 1995 represents a final payment made in April 1996. Note 5 - Operating Rents ---------------- The mineral rights lease for Golden Asset mine requires future annual minimum lease payments to the landowner of $10,000 in lieu of 2.5% royalty on Net Smelter Return for gold purchased by a smelter. A mineral rights lease for Relief Canyon mine requires future annual minimum lease payments of $13,125 to Santa Fe Pacific Gold Corporation for 800 acres of land and $12,500 minimum annual royalty in lieu of 2.5% royalty on Net Smelter Return for gold purchased by smelter. There are 39 unpatented claims on land owned by the Federal government. These claims require a minimum annual rent of $3,900 payable to the Bureau of Land Management to remain active as claims of the Company. Note 6 - Contingencies ------------- Payroll Taxes - Payroll taxes payable of $49,529 represent delinquent -------------- amounts. These taxes were paid in December 1996. Liens - A vendor who did earthwork for the Company at Golden Asset has ----- filed a lien against the property for $95,534. The lien was settled in December 1996 for $84,419. (This space left blank intentionally.)
NEWGOLD INC. BALANCE SHEET JUNE 30, 1996 ASSETS CURRENT ASSETS Cash $ 24,273 Due from officer - Note 2 56,969 Prepaid expenses 16,573 ----------- Total Current Assets $ 97,815 INVESTMENTS Cerro Gordo property - Notes 4 and 7 $ 611,000 Golden Asset mine - Notes 4 and 8 387,942 Relief Canyon Ltd - Notes 2 and 8 1,398,000 Washington Gulch mine - Note 3 385,000 ----------- TOTAL ASSETS $2,879,757 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 215,160 Accrued payroll due officer - Note 2 83,259 Payroll taxes payable - Note 6 42,605 Payable to affiliated companies - Note 2 622,397 Notes payable to individuals - Note 3 517,500 Notes payable-Investments-Current - Note 4 192,642 ----------- Total Current Liabilities $1,673,563 LONG TERM LIABILITIES Notes payable-Investments - Note 4 $ 500,000 Total Liabilities 2,173,563 SHAREHOLDERS' EQUITY Common Stock - Authorized, 50,000,000 shares, Par Value $001 $ 11,441 Issued and outstanding, 11,440,958 shares Additional paid-in capital 1,073,864 Less accumulated deficit (379,111) ----------- Total Shareholders' Equity $ 706,194 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,879,757
NEWGOLD, INC. STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDING JUNE 30, 1996 INCOME Option income $ 100,000 EXPENSES Vehicle expenses 1,073 Fees and service charges 577 Premium to redeem notes to individuals 27,500 Insurance 1,992 Legal and professional 15,488 State fees 10,285 Travel and entertainment 5,465 Office supplies and postage 935 Outside services 1,050 Rent 10,000 Equipment rental 23,925 Computer expense 1,550 Supplies 1,720 Wages 37,253 Payroll taxes 3,790 Telephone 448 Note receivable write off 19,037 ---------- Total Expenses $ 162,087 ---------- NET LOSS ($62,087)
NEWGOLD, INC. STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDING JUNE 30, 1996 Net Income (Loss) ($62,087) Adjustments to reconcile Net Loss to Net Cash Used by Operating Activities Decrease in Note receivable 38,074 (Increase) in Due from officer (31,030) (Increase) in Prepaid expenses (14,423) Increase in Accounts payable 5,882 Increase in Accrued payroll 77,603 (Decrease) in Payroll taxes payable (6,925) Increase in Notes payable to individuals 27,500 Increase in payable to affiliated companies 314,462 ---------- Total adjustments $ 411,143 Net cash provided by Operating Activities $ 349,056 Cash Flows from Investing Activities Cash Payments to purchase Cerro Gordo property $ (21,000) Cash Payments on Golden Asset mine (20,000) Cash Payments on Relief Canyon mine (182,929) ---------- Net Cash Payments on Investment Activities $(223,929) Cash Flows from Financing Activities Net cash payments on Investment Notes Payable $(103,765) Net Increase in Cash $ 21,362 Cash at Beginning of the Period $ 911 Cash at End of Period $ 21,362
See Notes to Financial Statements
NEWGOLD, INC. STATEMENT OF SHAREHOLDERS' EQUITY FOR THE SIX MONTHS ENDING JUNE 30, 1996 Number of Additional Common Shares Issued and ParPaid-In Accumulated Outstanding ValueCapital Deficit ----------------------------------- -------------- ----------- Balance, December 31, 1995 1,000 $ 1.00 $ 999 $ (317,024) Stock issued to redeem Investor Agreements 1,431,642 1,432 691,665 Stock issued to acquire Washington Gulch Mine 3,800,000 3,800 381,200 Stock issued for bonus 67,000 670 Stock issued as founder's stock 6,141,316 6,141 0 Net loss for six months ended June 30, 1996 $ (62,087) $ (379,111) ----------------------------------- -------------- Balance, June 30, 1996 11,440,958 $ 11,441 $ 1,073,864 ----------------------------------- -------------- -----------
See Notes to Financial Statements NEWGOLD, INC. NOTES TO FINANCIAL STATEMENTS FOR SIX MONTHS ENDING JUNE 30, 1996 Note 1 - Summary of Significant Accounting Policies ---------------------------------------------- Business Activity - Newgold, Inc. (the Company) was incorporated in ------------------ the State of Nevada on September 1, 1993 and began operations on May 16, 1994. The Company is engaged in the acquisition of inactive mining properties that have potential to be reopened as productive gold mines. The Company uses drill data of others to determine areas of proven reserves and engages engineers and geologists to review geological formations to define target areas to implement drill programs to establish additional gold and silver bearing ore areas. Income and Expense Recognition - The Company uses the accrual method of -------------------------------- accounting where income is recognized when earned and expenses are recorded as they are incurred. Investments - Investments are stated at cost and represent the leasehold ----------- cost of mineral rights, expenditures for equipment or refurbishment and reclamation bonds posted. Maintenance and repairs to equipment in production are charged to expense as incurred. Note 2 - Related Party Transactions ---------------------------- In lieu of wages through May 31, 1996, Scott Dockter, President, was paid advances by the Company. There is an account receivable from Mr. Dockter of $56,969 as of June 30, 1996. The account receivable was offset against $83,259 of accrued salary paid in December 1996. The Relief Canyon mine was transferred at a cost of $1,398,000 to a Limited Liability Company on April 26, 1996 in exchange for 50% ownership of Relief Canyon, Ltd. Casmyn Corp. owns the other 50% of the LLC in exchange for $775,000 in cash and a commitment to pay an additional $623,000 after Relief Canyon Ltd. posts a reclamation bond with the U.S. Bureau of Land Management. The Company has purchased the interests of Casmyn Corp. in the Relief Canyon mine (Note 8). The Company has an account payable of $287,901 to Riverfront Development Corporation, an affiliated company. Of this balance $250,000 represents used material and equipment sold to Relief Note 3 - Notes Payable - Individuals and Common Stock -------------------------------------------------- The Company had borrowed $1,189,305 from 19 individuals under Investor's Agreements. The Investor's Agreements have been replaced by a Common Stock issue and other notes payable to three individuals. One individual received stock for a portion of his loan and was given a note payable for $215,000. The note is due September 30, 1996 and bears interest at 8% per annum. Two individuals owed $275,000 chose not to exchange their notes payable for shares of stock. They are to be paid 110% of the amount loaned within 90 days. The note redemption premium of $27,500 has been accrued in notes payable and has been charged to expense. The Company issued 3,800,000 shares to individuals to acquire the Washington Gulch mine. The mine was recorded at the book value of the sellers. The Company issued 67,000 shares to six employees for services rendered since inception of the Company and the president was issued 6,701,358 shares as founder's stock. Note 4 - Notes Payable - Investments ------------------------------ In the acquisition of the Golden Asset mine, Alta Gold Corporation sold its interests to the Company for $322,642. The Company paid a deposit of $200,000 and has made two of the $10,000 monthly payments through March 1995. The balance payable at June 30, 1996 was $102,642 and was paid in October 1996. The Company has reclaimed the Golden Asset property (Note 8). The Cerro Gordo property was acquired from the owner on May 24, 1996 for $600,000. Another $16,000 was paid to geologists and attorneys for work relating to the property. The property was purchased with a $10,000 option payment, $90,000 payable within one year and lump sum payments of $250,000 each in 1998 and 1999. Note 5 - Operating Rents ---------------- The mineral rights lease for Golden Asset mine requires future annual minimum lease payments to the landowner of $10,000 in lieu of 2.5% royalty on Net Smelter Return for gold purchased by a smelter. (See Note 8.) A mineral rights lease for Relief Canyon mine requires future annual minimum lease payments of $13,125 to Santa Fe Pacific Gold Corporation for 800 acres of land and $12,500 minimum royalty in lieu of 2.5% royalty on Net Smelter Return for gold purchased by smelter. There are 39 unpatented claims on land owned by the Federal government. These claims require a minimum annual rent of $3,900 payable to the Bureau of Land Management to remain active as claims of the Company. Note 6 - Contingencies ------------- Payroll Taxes - Payroll taxes payable of $42,605 represent delinquent -------------- amounts. These taxes were paid in December 1996. Liens - A vendor who did earthwork for the Company at Golden Asset has ----- filed a lien against the property for $95,534. The lien was settled in December 1996 for $84,419. Note 7 - Litigation ---------- The former owner of the Cerro Gordo property had executed a one year minerals lease in 1995 with another organization. As the lessee did not make the required monthly lease payments, the former owner advised the lessee that the lease had been terminated. The lessee has refused to give up the lease rights and the former owner has filed suit to terminate the lease. It is the opinion of counsel that the former owner will prevail. Note 8 - Subsequent Events ------------------ The Company has leased patented claims (personally owned) in the Cerro Gordo area and unpatented claims of the Mission mine in southern California. The gold reserves in these two properties more than equate to the reserves of the Cerro Gordo Unpatented Property (See Note 7). In December 1996 Casmyn Corp. sold its interests in Relief Canyon Ltd. to the Company for $900,000 plus one million shares of restricted Newgold Inc. stock. Casmyn Corp. purchased its interests in Relief Canyon Ltd. for $775,000 in cash plus a note for $623,000 which is canceled under the repurchase agreement (See Note 2). The Golden Asset mine was reclaimed in November 1996. The Company retains the option to reopen this mine at a future date.
NEWGOLD, INC. PROFORMA BALANCE SHEET (POST-MERGER NOVEMBER 21, 1996 ASSETS Current Assets Cash $4,745,724 Debtor Certificate Funds Receivable 347,500 Prepaid Expenses and Other Assets 122,280 ---------- Total Current Assets$5,215,504 Investments in Mining Properties $2,186,798 Other Assets 12,096 - -------------------------------------------------- TOTAL ASSETS$7,414,398 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts Payable and Accrued Liabilities$611,714 Accrued Expenses 123,408 Accrued Taxes 39,661 Notes Payable - Other 277,642 Notes Payable to Shareholders 435,000 Due to Related Parties 618,915 - -------------------------------------------------- Total Current Liabilities$2,106,340 Stockholders' Equity Common Stock, $.001 par value, 50,000,000 shares authorized; 16,819,407 issued and outstanding $ 17,248 Additional Paid-in Capital 5,290,810 - -------------------------------------------------- Total Stockholders' Equity $5,308,058 ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $7,414,398 ----------
NEWGOLD, INC. PROFORMA STATEMENT OF CHANGE IN STOCKHOLDERS' EQUITY POST-MERGER NOVEMBER 21, 1996 Number of Common Shares Additional Issued and Par Paid-In Accumulated Outstanding Value Capital Deficit --------------- --------- ------------- ------------- Balance, January 31, 1996 3,299,191 $ 16,496 $ 7,208,113 $ (9,591,333) Adjustments to cancel stock issued without consideration pursuant to Order of the U.S. Bankruptcy Court (100,000) (500) --------------- --------- Pre-Merger Balance- October 31, 1996 3,199,191 $ 15,996 $ 7,206,113 $ (9,591,333) Stock issued to Unsecured Creditors paid with one share for each $42 in debt 63,189 $ 63 $ 2,653,856 Stock issued to reflect reverse split on the basis of 1:65 to Warehouse Auto Centers Shareholders 49,218 $ 49 ($1,989,634) Stock issued to shareholders of Newgold, Inc. (Nevada) 12,000,000 $ 12,000 $824,728 Stock issued for services rendered in private placement 428,130 $ 428 $ 99,568 Stock issued to holders of Debtor Certificates 4,707,000 $ 4,707 $ 4,702,293 --------------- --------- ------------- Balance, November 22, 1996 17,247,537 $ 17,248 $ 5,290,810 --------------- --------- -------------
EXHIBITS -------- Exhibit No. Description - ------------ ----------- 2 Plan of Reorganization, as confirmed by the U.S. Bankruptcy Court for the Western District of NewYork on November 22, 1996 SIGNATURES ---------- In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. NEWGOLD, INC., formerly known as Warehouse auto Centers, Inc. By: /s/ Arthur Scott Dockter, President Dated: 3/17/97 ----------------------------------------- By: /s/ Robert W. Morris, Chief Financial Officer Dated: 3/17/97 ----------------------------------------------- EX-2 2 LEONARD RELIN, ESQ. EXHIBIT 2 --------- 1 EAST MAIN STREET ROCHESTER, NEW YORK 14614 (716)4544336 ATTORNEY FOR DEBTOR UNITED STATES BANKRUPTCY COURT FOR THE WESTERN DISTRICT OF NEW YORK IN RE ) CASE NO. 95-21279 ) WAREHOUSE AUTO CENTERS, ) INC. ) DEBTOR'S PLAN OF REORGANIZATION ) ) CHAPTER 11 ) ) DATE: NOVEMBER 21, 1996 Debtor. ) ________________________________) The above-referenced Debtor hereby proposes the following Plan of Reorganization (the "Plan") pursuant to the provisions of Chapter 11 of the United States Bankruptcy Code. ARTICLE I DEFINITIONS AND INTERPRETATIONS 1. For purposes of the Plan, the following terms shall have the respective meanings hereinafter set forth (such meaning to be equally applicable to both the singular and plural forms of such terms defined). A term used in the Plan and not defined herein but that is defined in the Bankruptcy Code the meaning set forth in the Bankruptcy Code. a. "Administrative Expense or Claim" shall mean any Allowed Claim which is a cost or expense of administration in connection with this Chapter 11 case having priority in accordance with Section 503, Section 330, and Section 507(a)(1) of the Bankruptcy Code. Including but not limited to any actual and necessary expenses of operating or liquidating the business of the Debtor-in-Possession, and all allowances of compensation or reimbursement of expenses to the extent allowed by the Bankruptcy Rules, including Post-Confirmation Expenses. b. "Allowed Claim" shall mean a scheduled non-disputed Claim that has been timely filed with the Clerk of the Bankruptcy Court by the Holder of the Claim within the applicable period of limitation fixed by Bankruptcy Court order, as to which Claim no written objection to the allowance thereof has been interposed within the period of time fixed by the Bankruptcy Court, or as to which Claim an objection to the Claim has been resolved by the Bankruptcy Court. c. "Allowed Secured Claim" shall mean an Allowed Claim secured by a lien, security interest or other charge against or interest in property in which the Debtor has an interest, or which is subject to set off under Section 553 of the Code, to the extent of the value, determined in accordance with Section 506(a) and (b) of the Code, of the interest of the Holder of such Allowed Claim in the Debtor's interest in such property, or to the extent of the amount subject to such set off, as the case may be, and reduced by such further amount or amounts, if any, as may be determined by the Bankruptcy Court after notice and a hearing to be reasonable and necessary costs and expenses of preserving and disposing of such asset(s) pursuant to Section 506(c) of the Bankruptcy Code. d. "Claim" shall mean any claim as defined by Section 101(4) of the Code and any other debt or obligation of whatever character of the Debtor through Bar Date. e. "Plan Payments" shall mean the payments made by the Debtor pursuant to the Reorganization Plan. f. "Claimant" shall mean any holder of a claim against the Debtor that arose on or before the petition date or a Claim against the Debtor's estate of a kind specified in Section 502(g), (h) or (i) of the Bankruptcy Code. g. "Class" shall mean a category of claims or interests, the holders of which hold substantially similar Claims or interests. h. "Code" shall mean Title I of Public Law No.95-598, as codified in Chapter 11 of the United States Bankruptcy Code and any amendments thereto. i. "Confirmation Date" shall mean the date upon which the Confirmation Order is entered by the Court and becomes a Final Order. j. Confirmation Order" shall mean the order entered by the Bankruptcy Court confirming the Plan. k. "Consummation Date" shall mean the date one business day after the Debtor's Plan has been fully completed and all claims disposed of in accordance with the terms of the Plan. l. "Court" shall mean the United States Bankruptcy Court for the Western District of New York in which the Debtor's Chapter 11 case, pursuant to which the Plan is proposed, is pending, including any Bankruptcy Judge thereof, and any Court having competent jurisdiction to review Orders of, or to hear appeals from said Bankruptcy Court and Judge(s) thereof. "Court" shall also mean, to the extent any proceedings have been referred to the above Bankruptcy Court by the United States District Court for the Western District of New York, to that District Court. 2. "Creditors Committee" shall mean the official committee of unsecured creditors of the Debtor appointed by the Court pursuant to Section 1102 of the Bankruptcy Code, as constituted from time to time. a. "Debtor" and "Debtor-in-Possession" shall mean Warehouse Auto Centers, Inc. or any successor corporation or entity of Warehouse Auto Centers, Inc. b. "Debtor's Assets" shall mean all the property, rights, claims and interests of the Debtor and/or Debtor-in-Possession, real or personal, tangible or intangible, and the proceeds thereof. c. "Disputed Claim" shall mean a Claim to which written objection to the allowance or classification thereof, in whole or part, has been timely filed by any party in interest and as to which no Final Order or Judgment sustaining or denying such objection or allowing or disallowing such Claim, in whole or in part, has been entered by the Court. d. "Effective Date" shall mean the 10th day after confirmation date of the Plan. e. "Final Order of Judgment" shall mean an order of judgment of the Court: i. as to which the time to appeal, petition for certiorari, or seek re-argument, rehearing or de novo review has expired and as to which no appeal, re-argument, certiorari petition, rehearing, or de novo review is pending, or ii. if an appeal, re-argument, certiorari, rehearing or de novo review thereof has been sought, the order of the Court has been affirmed by the highest Court to which the order was appealed from which the re-argument, rehearing, or de novo review was sought, or certiorari has been denied, or the appeal is dismissed or rendered moot, and the time to take any further appeal or to seek certiorari or further re-argument, rehearing or de novo review has expired. f. "Holder" of a Claim or interest shall mean the person holding a Claim or interest which was listed or filed with the Court, or the person to whom such Claim or interest was last transferred by the Final Order or Judgment of the Court substituting the transferee for the prior Holder thereof. g. "Insider" shall mean an insider as defined in Section 101(30) of the United States Bankruptcy Code. h. "Newgold" shall mean Newgold, Inc. a corporation which proposes to merge with the Debtor. i. "Person" shall mean an individual, corporation, partnership, joint venture, trust, estate, unincorporated organization or government unit, or any agency or political subdivision of a government unit. j. "Plan" shall mean this Plan of Reorganization and any duly authorized amendment(s) thereto and modification(s) thereof. k. "Post-Confirmation Expense" shall mean all expenses reasonably incurred subsequent to the Confirmation Date in consummating the Plan. l. "Priority Claim" shall mean all Unsecured Claims entitled to priority under 11 U.S.C. Section 507(a), (1), (3), (4), (5), (6), or (7), unless further specified. m. "Pro Rata", with respect to any creditor, shall mean in the proportion that the amount of the Allowed Claim of such creditor in any class as provided in Article II bears to the aggregate amount of all claims of creditors in such class, including in such aggregate amount both the Allowed Claims and any then unresolved Disputed Claims which may apply to that class of claims as of the date of any distribution payment pursuant to this Plan. n. "Reorganized Debtor" means Newgold, Inc. which company is merging with the Debtor and which name (Newgold, Inc.) shall be the corporate name of the Debtor after reorganization. o. "Unsecured Claim" shall mean all unsecured Allowed Claims, including, but no limited to: i. claims of creditors under executory contracts and unexpired leases that have heretofore been rejected by the Debtor under this Plan, and that may be rejected by the Debtor under this Plan, and that may be rejected by the Debtor prior to the Confirmation Date; ii claims of general trade creditors; iii. loss and damage claims, overcharge claims, personal injury claims, liability claims; iv. claims for monies paid to the Debtor by mistake and belonging to others, claims for C.O.D. monies collected by the Debtor that should have been paid over to others, insurance and surety bonds claims, worker's compensation claims; and v. other obligations, liabilities, damages and claims of and against the Debtor of every type and nature whatsoever, incurred on or before the date of filing of the Chapter 11 petition (June 6, 1995), including all claims arising from the rejection of leases and other executory contracts effective on June 6, 1995, as provided in this Plan and by Section 365 and Section 1 123(1,)(2) of the Code. ARTICLE II CLASSIFICATION OF ADMINISTRATIVE EXPENSES AND PRIORITY ADMINISTRATIVE CLAIMS 1. Class 1 Allowed administrative expenses, including attorney's and accountant fee's and fees owed the United States Trustee's Office of the kinds specified in Code Section 507(a)(1), and trade payables arising after commencement of the Case. 2. Class 2 Claims consist of Code Section 364 Priority Debtor Certificate holders in the approximate amount of $5,000,000. 3. Class 3 Claims consist of Priority Unsecured New York State Sales Tax Claims in the approximate amount of $30,000. ARTICLE III CLASSIFICATION OF CLAIMS 1. Class 4 Claims consist of approximately 327 unsecured creditors in the approximate amount of $2,392,967. 2. Class 5 Claims consist of approximately 321 equity holders of the debtor holding 3,299,191 shares of common stock in the Debtor. ARTICLE IV CLASSES OF CLAIMS NOT IMPAIRED UNDER THE PLAN 1. Classes 1,2, 3 and 4 will not be impaired under the Plan. 2. Class 1 Claims consist of allowed administrative expenses, including attorney and accountant fees of the kind specified in Code Section 507(a)(1); approved salaries of officers, and trade payables arising after commencement of the Case, and shall be paid in full by the Reorganized Debtor with stock in the reorganized Debtor at a ratio of one (1) share of stock for each $1 owed the Creditor. 3. Class 2 Claims consist of Priority Debtor Certificate holders in the approximate amount of $5,000,000. The holders of allowed claims in Class 2 shall be paid by the Reorganized Debtor as originally agreed and such holders shall retain their respective security interests. Class 2 claimants, at their exclusive option, shall be allowed to exchange their claims for one (1) share of Common Stock of the Reorganized Debtor for each $1 of indebtedness. The common stock being offered will be set aside in trust for Class 2 claimants who shall have ninety (90) days from the date of confirmation of the Plan of Reorganization to exercise the conversion of their debt to equity. The Reorganized Debtor shall retain the right to sell said stock , from time to time, to non claimants with the proceeds to be paid to the Class 2 Claimants who opt not to convert . Any difference realized in the sale of equity in excess of the principal sum owed Class 3 Debtor Certificate holders, plus interest thereon, shall be retained by the Reorganized Debtor for working capital. Upon confirmation of the Plan of Reorganization, Debtor Certificate holders shall be issued promissory notes bearing interest at 10% per annum. These notes must be surrendered by Debtor Certificate holders who elect to convert their debt to equity. Those who do not choose to convert shall be paid their principal and all accrued interest two years from the anniversary of the date of confirmation of this Plan. 4. Class 3 Claims consist of Priority Unsecured New York Sales Tax claims owed approximately $30,000. Said claim shall be paid in cash on the Effective Date of the Plan. 5. Class 5 Claims consist of approximately 321 shareholders holding 3,299,191 shares of common stock which represents 100% of the total outstanding and issued shares of common stock of the Debtor. There are no other equity securities issued by the Debtor other than the one class of common stock. Existing Class 5 claimants will have their interest diluted by a factor of 1:65. In other words, existing shares shall be reverse split by a factor of 65 or, for each 65 shares of pre-petition stock, such 65 shares shall be exchanged for one (1) share of post-petition stock in the Reorganized Debtor. Existing Equity holders will be reduced on a pro-rata basis to a total of approximately 50,000 shares in the aggregate. However, in no event will any existing shareholder of the Debtor hold less than two (2) shares after the reverse split. Shareholders shall be obligated to surrender their shares of stock to the Reorganized Debtor's transfer agent within six months of the effective date of the Plan. Any shares not surrendered and exchanged within the time period shall be canceled and the shareholder who fails to surrender his shares shall have no further rights or recourse against the Reorganized Debtor as an equity holder. ARTICLE V CLASSES OF CLAIMS OR INTEREST IMPAIRED UNDER THE PLAN 1. Class 4 Claims will be impaired under the Plan. 2. Class 4 Claims consist of 327 unsecured creditors with aggregate claims amounting to approximately $2,392,967. Class 4 Creditors shall receive one (1) share of Common Stock in the Reorganized Debtor for each $42 of debt. Approximately 58,042 shares of Common Stock shall be issued to Class 3 claimants. ARTICLE VI TITLE TO PROPERTY; DISCHARGE OF CLAIMS 1. Except as otherwise provided in the Plan or the Confirmation Order, upon completion of all actions required by the Plan to be taken on or before the Confirmation Date, all property of the estate wherever situated, shall vest in the Reorganized Debtor, free and clear of all claims and interest of creditors and equity holders of the Debtor. Any property that the Debtor abandons pursuant to the Bankruptcy Code and the approval of the Court would be deemed to vest in the Reorganized Debtor free and clear of all claims and interests of creditors immediately prior to abandonment. 2. Title to Property to be Brought into the Estate. Assuming Plan ------------------------------------------------ confirmation as a condition precedent, the Reorganized Debtor will acquire the assets of Newgold, Inc. which are described in the Disclosure Statement accompanying this Plan. 3. Retention of Claims. Each claim or interest belonging to the -------------------- Debtor of every kind and description shall be retained and shall be vested in the Reorganized Debtor, upon confirmation, and the reorganized successor to the Debtor may enforce, settle or adjust any such Claim or Interest. 4. Notices. Unless otherwise specifically provided in the Plan or --------- the Bankruptcy Rules, any notice required or contemplated by any provision of the Plan shall be in writing and shall be sent by First Class Mail, postage prepaid, to the address of the person or entity entitled thereto, as it appears on the matrix list filed in connection with the service of the Disclosure Statement in the Case. 5. Record dates for Determining Holders of Claims and Interest. The ------------------------------------------------------------ date the order of the Bankruptcy Court approving the Disclosure Statement is entered shall be the record date for determining the holders of the Claims and Interests entitled to vote on the Plan, all in accordance with the provisions of the Bar Order. The Confirmation Date shall be the record date for determining the holders of the Claim and Interests which, if allowed, will be entitled to receive distributions under the Plan, provided, however, that this sentence shall not vary, affect, or impair the provisions of the Bar Order. 6. Retention of Jurisdiction. Following confirmation and prior to -------------------------- the completion of all actions required to be taken on the Confirmation Date or as soon as practicable thereafter, the Bankruptcy Court shall retain solely for the following purposes to which its jurisdiction shall be exclusive: (a) to hear and determine any objections to Claims filed, both before and after Confirmation; (b) to supervise any distribution of funds or stock pursuant to this Plan; (c) to hear and determine all applications for compensation of professionals and reimbursement of expenses under Code Sections 330 and 331, including compensation of professionals employed by the Debtor for services rendered in connection with the Case, or in connection with the Plan and incident to the Case; (d) to hear and determine any and all pending motions for rejection of executory contracts or un-executory leases and the allowance of Claims resulting therein; (e) to hear and determine all claims and causes of actions arising prior to Confirmation that may exist in favor of the debtor or its successor or shall seek such a hearing and determination; (f) to enter orders enforcing and implementing the Plan and to resolve disputes arising under or in connection with the Plan; (g) to correct any defect, cure any omission or reconcile any inconsistency in the Plan, the Confirmation Order or any document executed in connection therewith, as may be necessary to carry out the purposes and intent of the Plan; and (h) to consider the modification of this Plan after confirmation pursuant to the Bankruptcy Code and Rules; and (i) except as otherwise provided in the Plan, to make any determinations and to issue any orders to enforce, interest or effectuate the Plan; and (j) to determine all questions and disputes regarding tide to assets of the estate, and determination of all causes of action, controversies, disputes or conflicts, between the Debtor, the Creditors' Committee and any third party, including but not limited to, any right of the Debtor, or the provisions of the Code or applicable state or federal law; and (k) to enter an Order concluding and terminating this Case; and (l) to determine such other matters as may be provided for in the Order of the Court confirming the Plan; and (m) to grant extensions of any deadline set herein; and (n) to enter and implement such orders as may be appropriate in the event that the Confirmation Order for any reason is stayed, reversed, revoked, modified or vacated, and; (o) to enforce all discharge provisions under the Plan, and; (p) to make such order(s) or give such direction(s) as may be appropriate under Sections 364, 1109, 1129, 1141, 1142 and 145 of the Code. ARTICLE VII MEANS OF EXECUTION, AND IMPLEMENTATION OF THE PLAN 1. Means of Execution. Remaining funds and funds generated from ------------------- the sale of Certificates of Indebtedness and funds generated from the operation of the successor to the Debtor will be used to fund payment under the Plan other than the issuance of equity of the successor to the Debtor as specified herein. ARTICLE VIII THE EFFECTIVE DATE OF THE PLAN 1. Effective Date of the Plan. The effective date of the Plan --------------------------- shall be ten days after the Order of Confirmation becomes final. However, immediately upon confirmation of the Plan, the new management described in the accompanying Disclosure Statement shall take over management of the Reorganized Debtor. ARTICLE IX CRAM DOWN PROVISIONS 1. Cram Down Provisions. In the event that any class of ----------------------- creditors is deemed impaired by the Plan of Reorganization, and the requisite majorities of such class or classes fail to approve the Plan, then the Debtor intends to confirm its Plan over the objection of any such dissenting class by the use of the provisions of the United States Bankruptcy Code, Section 1111, and any other provisions relating to the cram down of dissenting classes. ARTICLE X MODIFICATION OF THE PLAN 1. Modification of the Plan. This Plan may be amended or ---------------------------- modified by the proponents at any time prior to the Confirmation Date upon such notice as the Court may require. After the Confirmation Date, the proponents may, with the approval of the Court and so long as it does not materially and adversely affect the interests of creditors, remedy any defects or omissions or reconcile any inconsistencies in the Plan or in the Confirmation Order in such manner as may be necessary to carry out the purposes and intent of the Plan. ARTICLE XI COMPLIANCE WITH SECTION 1123(A)(6) 1. Compliance with Section 1123(a)(6). The Debtor shall within sixty ----------------------------------- (60) days after the Confirmation Date, cause a provision to be inserted in its corporate charter prohibiting it from issuing non-voting equity securities. However, the Debtor may issue a convertible debenture convertible to Common Stock. which Common Stock bears the right to vote The Debtor presently has no class of securities possessing voting power other than in its Common Stock. ARTICLE XII ABANDONMENT OF CERTAIN CLAIMS 1. Abandonment of Certain Claims. The Debtor and its successor ------------------------------ after reorganization, will abandon all claims under 11 U.S.C. Section 547 (avoiding preferential transfer) and 11 U.S.C. Section 548 (avoiding fraudulent transfer), to the extent any such claims exist, and for which an action was not already pending the time this Plan was filed with the Court. ARTICLE XIII VOTING 1. Claimants entitled to vote are those whose claims are "impaired" by the Plan. A claim to which the legal, equitable or contractual rights are altered, or an interest that is adversely impaired. Only class 4 Interests are impaired under the Plan; therefore, it is important that you vote. If you fail to vote, your rights may be jeopardized. 2. Impaired Claimants may vote to accept or reject the Plan by indicating their acceptance or rejection on the appropriate ballot. EXECUTED BALLOTS MUST BE RECEIVED PRIOR TO 5:00 P.M. (EASTERN DAYLIGHT TIME). Ballots should be mailed to: Clerk of the U. S. Bankruptcy Court, 100 State Street, Rochester, New York 14614. Any ballots received after that date may not be included in any calculation to determine whether the creditors have voted to accept or reject the plan. 1. A Class of Claims will have accepted the Plan if it is accepted by creditors holding at least two-thirds in amount and more than one-half in number of the holders of allowed claims that actually vote on the Plan. Only those votes received will be counted. ARTICLE XIV MISCELLANEOUS 1. Notices. All notices required or permitted to be made in -------- accordance with the Plan shall be in writing and shall be delivered personally or by fax or other telegraphic means or mailed by registered or certified mail, return receipt requested; (a) If to Debtor: Warehouse Auto Centers, Inc., 2452 West Henrietta Road, Rochester, New York 14623. (b) With copies to: Leonard Relin, Esq. One East Main Street Rochester, New York 14614; Albert Solochek, Esq., Attorney for Creditors Committee, and Howard, Solochek & Weber, S.C., 324 E. Wisconsin Avenue, #1100, Milwaukee, WI 53202. (c) If a holder of an Allowed Claim or Allowed Interest, at the address set forth in its allowed proof of claim or proof of interest, or, if none, at its address set forth in the schedules prepared and filed with the Court pursuant to Rule 1007(b). (d) Notice shall be deemed given when received. Any person may change the address at which it is to receive notices under the Plan by sending written notice pursuant to the provisions of this Section to the person to be charged with the knowledge of such change. 2. Effective Date. For purposes of all determinations to be made --------------- pursuant to the Code in respect of the Plan or any Claims or Interests, the "Effective Date" of the Plan shall be 10 days (10) after Confirmation of the Plan. 3. Written Objections. The Debtor or any other party in interest ------------------- may file with the Court confirmation of the Plan, a written objection to the allowance of any Claim. This provision is not intended to abridge the right of the Debtor to modify the Plan pursuant to Bankruptcy Code 1127. 4. Reporting Company Requirements. The Company represents that it ------------------------------- is a reporting company under Section 13 and 15(d) of the Securities and Exchange Act of 1934 and will be in continued compliance with the applicable requirements for the continuing of trading in the security on the date the Debtor or sells the securities to the investors. 5. Implementation of the Plan. The Plan is to be implemented ------------------------------ consistent with the terms of the Bankruptcy Code. The Plan shall be implemented beginning on the effective date of the Plan by the distribution of stock by the Debtor in accordance with the provisions of the Plan. The Debtor agrees to use its best efforts to fully implement and consummate the Plan. 6. Complete Satisfaction, Discharge, and Release. The payments, ---------------------------------------------- distributions and other treatments provided in respect of each Allowed Claim in this Article shall be in complete satisfaction, discharge, and release of such Allowed Claim. ARTICLE XV OTHER 1. Certificates of Indebtedness. Prior to the filing of the Plan ----------------------------- of Reorganization and Disclosure Statement the Debtor moved the Bankruptcy Court to authorize it to sell $5,000,000 in Code Section 364 Certificates of Indebtedness ("Debtor Certificates"). The U.S. Bankruptcy Court approved the Debtor's motion to sell Debtor Certificates in September 1996. 2. Finders Fee. The Debtor has agreed to issue to David Rinker ------------ and Christina Nichols 5,000 shares each of Common Stock in the Reorganized Debtor as a finder's fee. Additionally, the Debtor has agreed to issue 1,000 shares as a finders fee to Steve Nichols who introduced the parties to the Debtor and to issue 12,500 shares of Common Stock in the Reorganized Debtor to Michael J. Morrison, ESQ. as a finder's fee. Said parties were instrumental in bringing about the transactions involving the assets being merged under the Plan of Reorganization. 3. Consulting. The Reorganized Debtor has agreed to pay $10,000 ----------- in cash and issue 7,500 shares of the Reorganized Debtor's Common Stock to Dan-Com, Inc. for consulting services rendered. Dan-Com, Inc. is a firm which specializes in coordinating mergers of solvent businesses into public companies which are under protection of Chapter 11 of the Bankruptcy Code. 4. Change of Corporate Name. The Reorganized Debtor will change ------------------------- its name to Newgold, Inc. and recapitalize at 50,000,000 shares of Common Stock authorized, .001 par value. 5. Asset Acquisition. The Reorganized Debtor will issue a total ------------------ of 12,000,000 shares of its Common Stock to existing shareholders of Newgold, Inc. and thereby acquire 100% of the outstanding shares of Newgold, Inc. and its assets described in the Disclosure Statement. A detailed description of Newgold, Inc. can be found in the accompanying Disclosure Statement. 6. Other Corporate Matters. The Board of Directors of the -------------------------- Reorganized Debtor shall take whatever actions are necessary in order to bring the Reorganized Debtor into conformance with securities laws and regulations including, but not limited to, amending the Reorganized Debtor's by-laws and Articles of Incorporation. Respectfully submitted this 25th day of September, 1996. /s/ Nathan J. Morton, Chairman, Debtor ------------------------------------------- /s/ Leonard Relin, Esq., Attorney for Debtor -------------------------------------------------- UNITED STATES BANKRUPTCY COURT WESTERN DISTRICT OF NEW YORK _______________________________________ In re: WAREHOUSE AUTO CENTERS, INC., Case No. 95-21279 -------- Chapter 11 Debtor ________________________________________ NOTICE OF ENTRY Take Notice that an ORDER Confirming a Plan of Reorganization was duly granted in the within entitled matter on the 25th day of November, 1996, and ---- --------- ---- entered in the Clerk's Office of the United States Bankruptcy Court, Western District of New York, John C. Ninfo, II, United States Bankruptcy Judge, on the 26th day of November, 1996. The Order is on file with the Court. Dated this 2nd day of December, 1996 /s/ Carm Capogreco, Deputy Clerk United States Bankruptcy Court - ------------------------------------ 1220 U.S. Courthouse 100 State Street Rochester, New York 14614 UNITED STATES BANKRUPTCY COURT WESTERN DISTRICT OF NEW YORK IN RE: WAREHOUSE AUTO CENTERS, INC., CHAPTER 11 Case No.95-21279 Debtor. ORDER CONFIRMING PLAN --------------------- The Plan under Chapter 11 of the Bankruptcy Code filed by Warehouse Auto Centers, Inc., on November 4, 1996, or a summary thereof, having been transmitted to creditors and equity security holders; and it having been determined after hearing on notice that the requirements for confirmation set forth in 11 U.S.C. Section 1129(a) have been satisfied; IT IS ORDERED THAT: The plan filed by Warehouse Auto centers, Inc. on November 4, 1996, is confirmed. IT IS FURTHER ORDERED that the debtor shall, within 90 days after the date of the entry of this Order: (1) file a report of substantial consummation and final report; or (2) take appropriate action to amend the plan. Failure to comply with these requirements may result in conversion of the case. IT IS FURTHER ORDERED that all fees payable to the United States Trustee pursuant to 28 U.S.C. Section 1930 shall be paid within 10 days of the entry of this order. IT IS FURTHER ORDERED that the reorganized debtor or the disbursing agent under the plan shall be responsible for timely payment of quarterly fees incurred pursuant to 28 U.S.C. 1930(a) (6) until the case is dismissed, converted or closed by the court with a final decree (whichever is first). After confirmation, said party shall file with the court and serve on the UnitedStates Trustee a monthly financial report for each month (or portion thereof) the case remains open in a format prescribed by the UST and provided to the debtor by the UST. Said report shall set forth all disbursements of the reorganized debtor so that quarterly fee amounts can be determined. IT IS FURTHER ORDERED that the proceeds of the Debtor Certificates held in escrow by Smith & Lyons, Barristers and Solicitors of Toronto, Canada, may be released to the Debtor in accordance with the terms of the Plan of Reorganization. IT IS FURTHER ORDERED that all warrants and options of Warehouse Auto Service, Inc. are canceled pursuant to the terms of the Plan of Reorganization. IT IS FURTHER ORDERED that the Escrow Bank Accounts held by the Debtor at First National Bank of Rochester may be released to the Debtor to effectuate the Plan of Reorganization. IT IS FURTHER ORDERED that pursuant to Bankruptcy Rules 2002(a) (7) and 2002(i) & (m), Notice of Hearings on all applications for approval of compensation and/or reimbursement of Professional Persons employed under Bankruptcy Code 327 or 1103, whose retention has been approved by prior Order of this Court, shall be deemed good and sufficient for all purposes if served more than 20 days prior to the date of the entry of this Order or the hearing date set hereafter thereupon, by regular mail by any party upon the Counsel retained by the Official Unsecured Creditors' Committee appointed herein pursuant to 11 U.S.C. 1102, on Counsel for the Debtor, on the Office of the United States Trustee, and on all persons appearing and requesting service. IT IS FURTHER ORDERED, that fees and disbursements requested in Lacy, Katzen, Ryan and Mittleman, LlP's first application filed herein on July 25, 1996, are hereby allowed in the amount of $12,843.25 plus $587.72 in disbursements and that fees and disbursements requested in its second application filed herein are hereby allowed in the amount of $8,498 plus the sum of $600.00 for hours expended by said firm in reviewing the ballots of Claimants, assisting creditors in voting and appearing at the Confirmation Hearing herein which were not included in the prior applications pending before this Court plus $581.71 in disbursements being a total of $21,941.25 in fees and $1,175.43 in disbursements on all applications for a total final award $23,110.68. IT IS FURTHER ORDERED that Howard, Solochek, Nashban and Weber is hereby allowed, subject to further review On appropriate notice, a fee in the amount of $17,710.50 together with disbursements in the amount of $1872.59 for acting as Lead Counsel to the Official Unsecured Creditors' Committee for a total final award of $19,583.09. IT IS FURTHER ORDERED, that the Debtor shall forthwith pay or cause to be paid, in cash all fees and disbursements due Counsel for the Committee approved in this Order, provided, however, that Howard, Solochek, Nashban and Weber and Lacy, Katzen, Ryan & Mittleman, LLP shall be liable to disgorge all or any part of their fees awarded hereby, if upon hearing after notice as required above, the Court shall for good cause shown, modify this award of fees and disbursements. Dated: November 25, 1996 /s/ John C. Ninfo, II, U.S. Bankruptcy Judge --------------------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----