-----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, JUAIUMh0z4Ilrbq5CTBDpqfsmNvavlJEbpXlyI3moUvtZcdQo0CbGZ9y0zyOULu8 JznLAFM1QQJQTjopsfZ5HA== /in/edgar/work/20000920/0001025894-00-000276/0001025894-00-000276.txt : 20000924 0001025894-00-000276.hdr.sgml : 20000924 ACCESSION NUMBER: 0001025894-00-000276 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000731 FILED AS OF DATE: 20000920 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEWGOLD INC CENTRAL INDEX KEY: 0000878808 STANDARD INDUSTRIAL CLASSIFICATION: [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: 726018 BUSINESS ADDRESS: STREET 1: 3090 BOEING RD CITY: CAMERON PARK STATE: CA ZIP: 95612 BUSINESS PHONE: 9166651840 MAIL ADDRESS: STREET 1: 3090 BOEING RD CITY: CAMERON PARK STATE: CA ZIP: 95612 FORMER COMPANY: FORMER CONFORMED NAME: WAREHOUSE AUTO CENTERS INC /DE DATE OF NAME CHANGE: 19950510 10QSB 1 0001.txt QUARTERLY REPORT U.S. Securities And Exchange Commission Washington, D.C. 20549 Form 10QSB Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended July 31, 2000 Commission file number 0-20722 NEWGOLD, INC. - -------------------------------------------------------------------------------- (Exact name of small business issuer as specified in its charter) Delaware 16-1400479 - - - - - - - - - - - - - - - - - (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 500 Nolen Drive, Suite 300, Southlake, TX 76092 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (Address of principal executive offices) (817) 410-4400 - - - - - - - - - - - (Issuer's telephone number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by court. Yes X ; No --- The number of shares of Common Stock outstanding as of July 31, 2000: 43,472,703 ---------- Transitional Small Business Disclosure Format (check one): Yes No X PART I. Financial Information. ---------------------- 1. Interim Financial Statements (Unaudited) Balance Sheet - July 31, 2000...............................................1 Statements of Operations - Three months ended July 31, 2000 and July 31, 1999..........2 Statements of Cash Flows - Three months ended July 31, 2000 and July 31, 1999..........3 Notes to Financial Statements.......................................4 2. Management's Discussion and Analysis................................5 PART II. Other information ----------------- Signatures..........................................................9 NEWGOLD, INC. BALANCE SHEET July 31, 2000 (Unaudited) ASSETS CURRENT ASSETS Cash $ 7,959 Note Receivable 250,000 Deposits 284,351 Prepaid expenses 4,500 ----------- Total current assets 546,810 PROPERTY, PLANT AND EQUIPMENT, including undeveloped mineral properties of $800,000, net of $24,798 of accumulated depreciation 820,714 OTHER ASSETS Reclamation bonds 50,500 Investment in common stock warrants -0- ----------- Total assets $ 1,418,024 =========== LIABILITIES AND STOCKHOLDERS' DEFICIT CURRENT LIABILITIES Account payable $ 570,377 Accrued expenses 660,408 Accrued reclamation costs 50,500 Notes payable to officer 118,200 Note payable to individual 12,500 ----------- Total current liabilities 1,411,985 DEFERRED REVENUE 800,000 ----------- Total liabilities 2,211,985 STOCKHOLDERS' EQUITY Common stock, $.001 par value, 50,000,000 shares authorized, 43,472,703 shares issued and outstanding 43,472 Additional paid in capital 10,841,540 Accumulated deficit (11,678,973) ----------- Total stockholders' equity (793,961) ----------- Total liabilities and stockholders' equity $ 1,418,024 =========== F-1 NEWGOLD, INC. STATEMENTS OF OPERATIONS For the Three Months Ended July 31, 2000 and July 31, 1999 (Unaudited) Three Months Three Months Ended Ended July 31, 2000 July 31, 1999 ------------- ------------- SALES Net sales $ -0- $ -0- Cost of sales -0- -0- ----------- ----------- Gross margin -0- -0- OPERATING EXPENSES General and administrative expenses 798,779 132,271 Exploration costs 11,000 8,135 ----------- ----------- Total operating expenses 809,779 140,406 ----------- ----------- Loss from operations (809,779) (140,406) OTHER INCOME (EXPENSE) Interest expense (1,278) -0- ----------- ----------- Total other expense (1,278) -0- ----------- ----------- NET LOSS $ (811,057) $ (140,406) =========== =========== LOSS PER SHARE (after giving effect to the Three-for-two stock split declared on June 8, 1999) (.019) (.004) WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING (after giving effect to the Three-for-two stock split declared on June 8, 1999) 43,472,703 37,866,882 =========== =========== F-2
NEWGOLD, INC. STATEMENTS OF CASH FLOWS For the Three Months Ended July 31, 2000 and July 31, 1999 (Unaudited) Three Months Three Months Ended Ended July 31, 2000 July 31, 1999 ------------- ------------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (811,057) $ (140,406) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 3,207 3,963 Changes in operating assets and liabilities: Accounts payable 234,089 (997) Accrued expenses 307,548 (204,162) Due to affiliate -0- (85,561) Notes payable to stockholder -0- (83,098) ----------- ----------- Net cash used in operating activities (266,213) (510,261) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Capital Expenditures (3,992) -0- Funding of deposits (120,000) -0- ----------- ----------- Net cash used in investing activities (123,992) -0- ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of notes payable 118,200 155,000 Payments on notes payable -0- 339,038 ----------- ----------- Net cash provided by financing activities 118,200 494,038 ----------- ----------- NET DECREASE IN CASH (272,005) (16,223) CASH, beginning of period 279,964 18,189 ----------- ----------- CASH, end of period $ 7,959 $ 1,966 =========== =========== SUPPLEMENTAL DISCLOSURES REGARDING CASH FLOWS Cash paid for interest $ -0- $ -0- =========== =========== Cash paid for income taxes $ -0- $ -0- =========== ===========
F-3 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 July 31 2000, are not necessarily indicative of the results that may be expected for the fiscal year ended January 31, 2001. 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. No options were outstanding at the end of 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 its 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 would be spent at the end of the mine life. 5. The Company placed the Relief Canyon Mine, a developed exploration project, on care and maintenance in December 1997. The Company estimates the annual cost of maintaining the mine in this status may be approximately $50,000. Included in this cost estimate are the annual BLM rent for the claims, water testing for Nevada Department of Environmental Protection, and costs of utilities and security at the site. Charges for care and maintenance of Relief Canyon in the quarter and six months ended July 31, 2000 were $11,000 and $22,000, respectively. 6. Newgold, Inc., in February 2000, established itself as an Internet company focused on incubating, funding and developing a portfolio of Internet companies: business-to-business companies (B2B), e-commerce enterprises and application service providers (ASPs). Since that time, we have expanded our strategy to include revenue streams generated from 4 offering our business development and technology services to a variety of clients including our strategic partners, venture capital companies and recently funded B2B/ASP Internet startups. Our goal is to successfully build increased value for our shareholders by transitioning Newgold's focus to a revenue/profitability structure, rather than being measured solely on the equity value potential of our portfolio companies. Moving forward, our portfolio companies will continue receiving all the benefits of the incubation environment but we will be able to expand our revenue and profit potential to many more client companies enabling them to emerge as successful Internet firms and Newgold profiting from this success. We believe that revenue creation from our unique offerings of business services will allow us to capitalize on new opportunities and to attract and develop leading B2B e- commerce companies. 7. We will be required to obtain additional financing in both the short term and the long term to successfully carry out our new business plan. Depending on how rapidly we are able to implement this business plan will impact how much additional financing we will require over the next 24 months; we could require up to an additional $30 to $40 million in funding. We currently have no committed sources of additional capital. We can offer no assurances that additional funds can be raised. In addition, even if we find outside funding sources, we may be required to issue to such outside sources securities with greater rights than those currently possessed by holders of our common stock. We may also be required to take other actions that may lessen the value of our common stock, including borrowing money on terms that are not favorable to us. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS ------------------------------------ Introduction. ------------- The Company formerly was 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. ------------------------------------------------------- The Company's new strategy is comprised of solutions for the three most critical points of failure for any high-tech or Internet company: operations management, funding and technology. These services integrate strategic business/corporate hatching and acceleration, technology infrastructure provision and funding assistance, and enable clients to achieve success in the market place by effectively managing the most critical points of failure. Revenue will be generated from these three business service areas. 5 Strategic business hatching and acceleration services apply proven, "best-in-class" business management methodologies and processes to high-tech and Internet companies, allowing them to concentrate on core competencies without the resource consuming trial and error approach that plagues most Internet companies. In addition, the Company will receive compensation from a group of core service partners that provide day-to-day operational business services such as staff recruiting and human resources, strategic sales and marketing, financial and accounting, technology development and information systems management. Funding assistance is comprised of equity funding and liquidity event services. These services are targeted at both the venture capital community and successful startups that are ready to execute an exit strategy. Equity funding services identifies superior venture opportunities through venture assessment, detailed due diligence, funding agreement development and cash flow funding management. Liquidity event services provide potential capitalization for qualified high-tech or Internet companies as well as liquidity for investors by the arrangement and execution of a variety equity events such as an IPO, M&A, RTO, or LBO. At the beginning of the current fiscal year, the Company began to implement its new business strategy. Accordingly, the Company has begun to hire executives and professional staff familiar with such operations. The operating expenses of the Company have increased substantially since the prior year and are expected to continue to increase in order to implement its new business strategy. We will be required to obtain additional financing in both the short term and the long term to successfully carry out our new business plan; current working capital is not sufficient to fund operations for the remainder of the current fiscal year. Depending on how rapidly we are able to implement this business plan will impact how much additional financing we will require over the next 24 months; we could require up to an additional $30 to $40 million in funding. We currently have no committed sources of additional capital. We can offer no assurances that additional funds can be raised. In addition, even if we find outside funding sources, we may be required to issue to such outside sources securities with greater rights than those currently possessed by holders of our common stock. We may also be required to take other actions that may lessen the value of our common stock, including borrowing money on terms that are not favorable to us. The Company does not conduct research and development per se, but does expend considerable effort to source viable business opportunities. Currently most employees are utilized in this effort. As opportunities are become a revenue producing service, some of the current management employees are becoming actively involved with overseeing the provisioning of services to customers. Current plans are for the company to have between 20 and 30 employees; the timing of the hiring of any additional employees is dependent on how successful we are at finding qualified opportunities. As of the date of this filing, the Company has derived no significant revenue from its operations. As a mine owner, and until the mining assets are sold, the Company's capital requirements have been and will continue to be significant. The Company has been dependent primarily on the private placements of its securities as its sole source of funding its operations. 6 Financial Condition of the Company as of July 31, 2000 ------------------------------------------------------ As of July 31, 2000, the Company had $7,959 in cash and working capital deficit of ($865,175). If the Company were to attempt to continue pursuing mining operations, the Company would require approximately $2.5 million in additional working capital to bring the mine into full production. Since January 1998, the Company had pursued several possible funding opportunities including the sales of royalties on other gold properties and on industrial minerals. As the Company has been unable to obtain additional financing, it was required to curtail its development plans in November 1997 and cease operations except for care and maintenance of the Relief Canyon Mine. The Company is no longer continuing its efforts to obtain funding for its mining operations. Currently the Company is attempting to obtain funding for its Internet business service operations. The Company raised approximately $1.75 million based on its new operating strategy in the first fiscal quarter of this year and is continuing its efforts to raise additional capital for future business expansion and to fund current operating expenses. There can be no assurance that any of such opportunities will result in actual funding or that additional financing will be available when needed, on commercially reasonable terms, or at all. The Company's independent accountants have included an explanatory paragraph in their report on the Company's financial statements for the year ended January 31, 2000, 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. 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, 2000, 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. 7 PART II. OTHER INFORMATION. ----------------- ITEM 1. Legal Proceedings. ----------------- Environmental Obligations - The Company's mining and exploration activities are subject to various federal and state laws and regulations governing the protection of the environment. These laws and regulations are continually changing and are generally becoming more restrictive. The Company strives to conduct its operations so as to protect the public health and environment and believes its operations are in compliance with all applicable laws and regulations. The Company has made, and expects to make in the future, expenditures to comply with such laws and regulations. The Company is involved in various other claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate dispositions of these matters will not have a material adverse effect on the Company's financial position, results or operations or liquidity. ITEM 2. Changes in Securities. --------------------- Private Placements ------------------ (1) In February 2000, the Company closed a private placement offering or 1,200,000 shares to raise $600,000 at $.50 per share. Additionally, a warrant was issued with each share to purchase an additional share of common stock at $1 per share. The warrants expire four years from the original date of closing. In connection with this offering $60,000 were paid as commission to brokers. (2) In April 2000, the Company closed a private placement offering for 500,000 shares to raise $500,000 at $1.00 per share. Additionally, a warrant was issued with each share to purchase an additional share of common stock at $1 per share. The warrants expire four years from the original date of closing. In connection with this offering $45,000 were paid and 50,000 warrants issued with the same terms as those above as commission to brokers. (3) In April 2000, a $200,000 note payable and a $250,000 judgment payable were settled and paid off in full by a shareholder of the company. The total balances due including interest and legal fees had grown to approximately $650,000 at the time of settlement. The shareholder has received an additional 650,000 shares of stock as reimbursement for the payment of these amounts on behalf of the Company. ITEM 3. Defaults on Senior Securities. ----------------------------- None. 8 ITEM 4. Matters Submitted to a Vote of Shareholders. ------------------------------------------- None. ITEM 5. Other Information. ----------------- None. ITEM 6. Exhibits and Reports on Form 10-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 to 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. 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/ James H. Cutburth Date: September 20, 2000 - --------------------- James H. Cutburth Chief Executive Officer /s/ James W. Kluber Date: September 20, 2000 - ------------------- James W. Kluber Chief Financial Officer 9 EX-27 2 0002.txt
5 3-MOS JAN-31-2001 JUL-31-2000 7,959 0 250,000 0 0 546,810 845,512 24,798 1,418,024 1,411,985 0 0 0 43,472 (837,433) 1,569,243 0 0 0 0 809,779 0 1,279 (811,057) 0 (811,057) 0 0 0 (811,057) (0.019) (0.019)
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