-----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, BVWv2BXYodxMTQeZ0RVpNfdFQFvZ8mxTfUwlG6wyuzVh36kIAOy3iWvqWRodv6MZ oukbGNDdAtN9E06hCUsmmw== 0001025894-98-000127.txt : 19980623 0001025894-98-000127.hdr.sgml : 19980623 ACCESSION NUMBER: 0001025894-98-000127 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980430 FILED AS OF DATE: 19980622 SROS: NASD 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: 10QSB SEC ACT: SEC FILE NUMBER: 000-20722 FILM NUMBER: 98651452 BUSINESS ADDRESS: STREET 1: 35265 WILLOW AVE STREET 2: P O BOX 95612 CITY: CLARKSBURG STATE: CA ZIP: 95612 BUSINESS PHONE: 9167441516 MAIL ADDRESS: STREET 1: 35265 WILLOW AVE STREET 2: P O BOX 260 CITY: CLARKSBURG STATE: CA ZIP: 95612 FORMER COMPANY: FORMER CONFORMED NAME: WAREHOUSE AUTO CENTERS INC /DE DATE OF NAME CHANGE: 19950510 10QSB 1 QUARTERLY REPORT U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-QSB X Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended April 30, 1998. Commission File Number : 000-20722 --------- NEWGOLD INC. ------------ (Exact Name of Small Business Issuer as Specified in Charter) Delaware ------------------------------- (State or Other Jurisdiction of Incorporation or Organization) 16-1400479 ------------------------------- (IRS Employer Identification No.) 35265 Willow Avenue Clarksburg, California 95612 ------------------------------- (Address of Principal Executive Offices) (916) 665-1840 ------------------------------- (Issuer's Telephone Number) Check whether Issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for shorter period that registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.) Yes No XX ----- ----- Check whether registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes No ----- ----- As of April 30, 1998, Registrant had 24,942,611 shares of Common Stock par value $.001, issued and outstanding. NEWGOLD, INC. Balance Sheet (Unaudited) April 30, 1998 Assets Cash and cash equivalents $ 5,406 Property, plant and equipment including undeveloped mineral properties of $3,048,763 net of $32,639 accumulated depreciation 3,016,124 Reclamation bonds 256,500 Other assets 979 ---------------- Total assets $ 3,279,009 ================ Liabilities and Stockholder's Equity Current liabilities Accounts payable $ 693,929 Accrued expenses 191,811 Accrued reclamation costs 25,000 Due to affiliate 80,238 Notes payable to stockholder 125,142 Notes payable to individuals 324,500 ---------------- Total current liabilities 1,440,620 Deferred revenue 800,000 ---------------- Total liabilities 2,240,620 Stockholders' equity Common stock - Authorized 50,000,000 shares par value $0.001; 24,942,611 outstanding 24,627 Additional paid-in capital 7,871,615 Accumulated deficit (6,857,853) ---------------- Total stockholders' equity 1,038,389 ---------------- Total liabilities and stockholders' equity $ 3,279,009 ================ NEWGOLD, INC.
Statements of Operations (Unaudited) For the three months ended April 30 April 30 1998 1997 ----------------- ----------------- Sales Net sales $ - $ - Cost of sales - - Gross Margin - - Operating expenses General and administrative expenses 175,429 370,693 Exploration costs 24,369 75,042 ----------------- ----------------- Total operating expenses 199,798 445,735 ----------------- ----------------- Loss from operations (199,798) (445,735) Other income (expense) Interest income - 1,738 Other income - 4,445 Interest expense (4,623) (12,881) Stock issuance expense (36,073) ----------------- ----------------- Total other expense (40,696) (6,698) Income tax provision - - Net loss $ (240,494) $ (452,433) ================= ================= Loss per share $ (0.011) $ (0.024) ================= ================= Weighted average number of shares outstanding 22,202,611 18,961,839 ================= ==================
NEWGOLD, INC.
Statements of Cash Flows (Unaudited) For the three months ended April 30 April 30 1998 1997 ----------------- ----------------- Cash flows from operating activities Net loss $ (240,494) $ (452,433) Adjustments to reconcile net loss to net cash used in operating activities Depreciation 4,888 16,831 Changes in operating assets and liabilities Refundable payroll taxes 154,357 Advances to stockholder repaid 92,486 Other assets (3,695) Accounts payable (271,199) 267,871 Accrued expenses 14,740 (59,252) Due to affiliate (50,238) (31,000) Notes payable to stockholder (2,600) 170,000 ----------------- ----------------- Total adjustments to net loss (304,409) 607,598 ----------------- ----------------- Net cash provided (used) by operations (544,903) 155,165 Cash flows from investing activities Capital expenditures (860,327) ----------------- ----------------- Net cash used in investing activities (860,327) Cash flows from financing activities Cash provided by stock subscription 548,000 ----------------- ----------------- Net cash provided by financing activities 548,000 ----------------- ----------------- Net increase (decrease) in cash 3,097 (705,162) Cash and cash equivalents, beginning of period 2,309 876,573 ----------------- ----------------- Cash and cash equivalents, end of period $ 5,406 $ 171,411 ================= =================
NOTES TO FINANCIAL STATEMENTS - ----------------------------- 1. Preparation of Interim Financial Statements: The accompanying financial statements have been prepared in accordance with the instructions to Form 10-QSB and, therefore, do not include all information and footnotes necessary for a presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles. In the opinion of management, the referenced financial statements reflect all normal and recurring adjustments necessary for a fair presentation of the results of operations and financial position for the interim periods presented. Operating results for the three month period ended April 30, 1998, are not necessarily indicative of the results that may be expected for the fiscal year ended January 31, 1999. 2. Income Taxes: No income tax provisions have been made due to losses incurred. Deferred income tax benefits have been fully reserved due to the uncertainty of future realization. 3. Net (Loss) Per share: Net (loss) per share has been computed on the basis of the weighted average number of shares outstanding during the period. 4. Reclamation of Mining Areas: Reclamation costs, including the removal of production facilities at the end of their useful lives, are estimated and accrued on an undiscounted basis over the productive lives of properties. Remediation costs are expensed when the liability is probable and estimable. Based on current environmental regulations and known reclamation requirements, management has included its best estimate of these obligations in it reclamation accruals. However, it is reasonably possible that the Company's estimates of its ultimate reclamation liabilities could change as a result of changes in regulations or cost estimates. The Company performs concurrent reclamation to the extent possible. However, most of the accrued costs are anticipated to be expended at the end of the mine life. 5. The Company placed the Relief Canyon Mine, a developed exploration project, into a maintenance and security status in December 1997 when it was apparent that gold prices were not returning to former levels. The Company estimates the annual cost of maintaining the mine in this status will be approximately $100,000. Included in this cost estimate are the annual BLM rent for the claims, sub-lease payments to Santa Fe Gold, water testing for Nevada Department of Environmental Protection, and costs of utilities and security at the site. Approximately $24,370 was charged to operations for the maintenance of Relief Canyon in the quarter ended April 30, 1998. During the quarter, the Company paid $215,180 to satisfy liens that had been placed upon the property and paid $28,940 to Santa Fe Gold Corporation for the total sub-lease and minimum annual royalty payments due on the leased portion of the property. 6. On April 2, 1998, the Company closed a Regulation S offering for 5,480,000 shares at $.10 per share to raise $548,000. Of this amount, approximately $265,300 was paid to creditors of the Relief Canyon project, which includes the amounts paid to lien holders and Santa Fe Gold above. Brokers who placed the offering were paid commissions of $36,073. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS ------------------------------------ Introduction. ------------ The Company is engaged in the business of acquiring dormant, potential gold-producing properties located in the continental United States and developing such properties into commercial gold mining operation. The Company is the result of a merger (the "Merger") between Warehouse Auto Centers, Inc., a Delaware corporation ("WAC"), and Newgold, Inc., a Nevada corporation ("NGNV"), pursuant to a Plan of Reorganization (the "Plan") approved by the U.S. Bankruptcy Court for the Western District of New York, effective as of November 21, 1996. For accounting purposes, under the terms of the Merger, NGNV was treated as the acquirer. Financial Plan of Operation for the Next Twelve Months. ------------------------------------------------------ As of April 30, 1998, the Company had $5,406 in cash and ($1,435,214) in working capital. If the Company were to bring the Relief Canyon Mine off the maintenance and secure status, plans and assumptions relating to operations would require approximately $2 million in additional funding to complete permitting and to begin operations and gold production at the Relief Canyon Mine. There is some question as to profitability with regard to the current price of gold. The Board of Directors has approved for the Company to investigate expansion of its operations into industrial minerals as an alternate means of producing future revenue for the Company. The industrial minerals currently being investigated by the Company include calcium bentonite, talc and pumice. The Company anticipates that production of industrial minerals would be through a wholly-owned subsidiary that Newgold, Inc. will create, thereby leaving Newgold, Inc. solely as a producer of precious metals. The Company is seeking to raise $2.5 million to finance an industrial minerals operation that will include acquisition of currently permitted mineral property and construction of production facilities. Proposals will be submitted to the Board of Directors within the next thirty days for consideration and possible approval. One proposal to be submitted to the Board is for Riverfront Development Corporation, which is wholly-owned by Newgold's president, A. Scott Dockter, to be merged into a subsidiary of Newgold, Inc. in exchange for Newgold stock. An independent appraisal has been completed of the Riverfront Development property and a fairness opinion has been issued by Certified Valuation Analyst. The Riverfront property will be proposed as a site of production facilities for products derived from the industrial minerals. There can be no assurance that any of these opportunities will result in actual funding, or that additional financing will be available to the Company, when needed, on commercially reasonable terms. If the Company is unable to obtain additional financing, it will be required to curtail its development plans and cease its operations. The Company's independent accountants will include an explanatory paragraph in their report on the Company's financial statements for the year ended January 31, 1998, indicating substantial doubt about the Company's ability to continue as a going concern. This report, as well as certain of the notes to the financial statements, contain "forward-looking statements" within the meaning of Section 27A of the Securities Exchange Act of 1934, as amended. Such statements include, but are not limited to, (i) expectations as to the funding of future capital expenditures and other cash needs, (ii) statements as to the projected development of certain ore deposits, including estimates of development and other capital costs and financing plans with respect thereto, (iii) estimates of future costs and other liabilities for certain environmental matters and (iv) statements as to the likelihood of the outcome of litigation matters. These forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from the forward-looking statements or the results projected or implied by the forward-looking statements. The amount and timing of future capital expenditures could be influenced by a number of factors, including the timing of receipt of necessary permits and other governmental approvals, the failure of equipment, processes or facilities to operate in accordance with specifications and expectations, labor disputes and unanticipated changes in mine plans. The funding of such expenditures and other cash needs will be affected by the level of cash flow generated by the Company, if any, and the ability of the Company to otherwise finance such expenditures, which in turn could be affected by general U.S. and international economic and political conditions, political and economic conditions in the country in which the expenditure is being made, a well as financial market conditions. The development of certain ore deposits could be affected by, among other things, labor disputes, delays in the receipt of or failure to receive necessary governmental permit or approvals, changes in U.S. or foreign laws or regulations or the interpretation, enforcement or implementation thereof, the failure of any of the Company's joint venture partners to perform as agreed under the relevant agreements or any termination of any such agreements, unanticipated ground and water conditions, the failure of equipment, processes or facilities to operate in accordance with specifications or expectations, or delays in the receipt of or the ability to obtain necessary financing. Future environmental costs and liabilities could be impacted by changes in U.S. or foreign laws or regulations or the interpretation, enforcement or implementation thereof and other factors beyond the control of the Company. For a more detailed discussion of the foregoing risks and uncertainties affecting the Company and its operations, see "Cautionary Statement for Purposes of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995." and "Risk Factors" contained in Item 1 and 2 of the Company's annual Report on Form 10-KSB for the period ended January 31, 1997, as well as other filings made by the Company from time to time with the Securities and Exchange Commission. Many of these factors are beyond the Company's ability to control or predict. Readers are cautioned not to put undue reliance on forward-looking statements. The Company disclaims any intent or obligation to update publicly any forward-looking statements set forth in this discussion, whether as a result of new information, future events or otherwise. PART II. OTHER INFORMATION. ----------------- ITEM 1. Legal Proceedings. ----------------- a) On December 3, 1996, the case of Christiansen v. Newgold, et al., a purported breach of contract action was filed in the Second Judicial District, Washoe County, Reno, Nevada. Christiansen prevailed in this action and the Company accrued the $250,000 judgement as of January 31, 1998; the Company is waiting for funds to complete the transaction. b) On January 28, 1997, the case of Stewart v. Newgold, a purported breach of contract for the purchase of the Cerro Gordo Mine in California, was filed in the Second Judicial District, Washoe County, Reno, Nevada. Plaintiff was unable to present clear title to the property and the Company was unable to clear title and refused to make additional payments stipulated under the contract. Plaintiff sought $40,000 in damages. The parties have reached an agreement for settlement totalling $20,000; the Company is waiting for funds to complete the transaction. c) On April 25, 1997, the Company filed a declaratory relief action in the case of Newgold v. Wirsing, et al. in the Sacramento County Superior Court. Mr. Wirsing and his fellow defendant, Mr. Wong, are each alleging that they are the owners of a 10% share of the net profits interest from Relief Canyon. The Company filed the action to seek declaratory relief that Messrs. Wirsing and Wong's claim is without merit. Mr. Wong had filed a mechanics lien on the Relief Canyon Mine. The Company believes that the use of a mechanics' lien is improper and that there is no merit in Messrs. Wirsing and Wong's claims. A motion for summary judgement filed by Messrs. Wirsing and Wong was denied by the Court in favor of the Company. The case was submitted to court ordered non-binding arbitration where again the decision was in favor of the Company. Messrs. Wirsing and Wong have exercised their right and rejected the arbitrator's decision and requested a trial de novo. Trial setting is scheduled for August of 1998. ITEM 2. Changes in Securities. --------------------- None. ITEM 3. Defaults on Senior Securities. ----------------------------- None. ITEM 4. Matters Submitted to a Vote of Security Holders. ----------------------------------------------- None. ITEM 5. Other Information. ----------------- None. ITEM 6. Exhibits and Reports on Form 8-K. -------------------------------- a) Exhibits. -------- Exhibit 3.1 Certificate of Incorporation of the Registrant(1). Exhibit 3.2 Certificate of Amendment to Certificate of Incorporation of the Registrant(2). Exhibit 3.3 Bylaws of the Registrant(1). Exhibit 27 Financial Data Schedule. (1) Incorporated by reference to the Registrant's Registration Statement on Form SB-2 (File No. 33-49920) filed with the Commission on October 14, 1993. (2) Incorporated by reference is the Registrant's Annual Report on Form 10-KSB-40 for the fiscal year ended January 31, 1996 filed with the Commission on January 22, 1997 and all amendments thereto. (3) Incorporated by reference is the Registrant's Annual Report on Form 10-KSB-40 for the fiscal year ended January 31, 1997 filed with the Commission on June 30, 1997. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto authorized. NEWGOLD, INC. /s/ A. Scott Dockter Date: June 20, 1998 - -------------------- A. Scott Dockter Chief Executive Officer /s/ Robert W. Morris Date: June 20, 1998 - -------------------- Robert W. Morris Chief Financial Officer EX-27 2
5 3-MOS JAN-31-1999 APR-30-1998 5,406 0 0 0 0 0 3,048,763 32,639 3,279,009 1,440,620 0 0 0 24,627 0 3,279,009 0 0 0 235,871 0 0 4,623 (240,494) 0 (240,494) 0 0 0 (240,494) (0.011) (0.011)
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