-----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, G022choVHVFYAyUxZLKh0irrtPHDVmnWJq1YxipL2QcZ/ZOkt5Zz9DRc9zl0hm1z hoScEQZzOiL+WgJFTtegBQ== 0001025894-00-000352.txt : 20001221 0001025894-00-000352.hdr.sgml : 20001221 ACCESSION NUMBER: 0001025894-00-000352 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20001031 FILED AS OF DATE: 20001220 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: 792130 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 October 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.) PO Box 1626, Shingle Springs, CA 95682 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (Address of principal executive offices) (530) 672-1116 - - - - - - - - - - - (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 October 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 - October 31, 2000............................................1 Statements of Operations - Three months ended October 31, 2000 and October 31, 1999....2 Statements of Cash Flows - Three months ended October 31, 2000 and October 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 October 31, 2000 (Unaudited) ================================================================================ ASSETS CURRENT ASSETS Cash $ 885 Note Receivable 250,000 Deposits 284,001 Prepaid expenses 4,500 ------------ Total current assets 539,386 PROPERTY, PLANT AND EQUIPMENT, including undeveloped mineral properties of $800,000, net of $28,004 of accumulated depreciation 817,508 OTHER ASSETS Reclamation bonds 50,500 Investment in common stock warrants -0- ------------ Total assets $ 1,407,394 ============ LIABILITIES AND STOCKHOLDERS' DEFICIT CURRENT LIABILITIES Account payable $ 612,755 Accrued expenses 835,533 Accrued reclamation costs 50,500 Notes payable to officers 262,750 Note payable to individual 12,500 ------------ Total current liabilities 1,774,038 DEFERRED REVENUE 800,000 ------------ Total liabilities 2,574,038 STOCKHOLDERS' EQUITY Common stock, $.001 par value, 50,000,000 shares authorized, 43,872,703 shares issued and outstanding 43,872 Additional paid in capital 10,908,140 Accumulated deficit (12,118,657) ------------ Total stockholders' equity (1,166,644) ------------ Total liabilities and stockholders' equity $ 1,407,394 ============= F-1 NEWGOLD, INC. STATEMENTS OF OPERATIONS For the Three Months Ended October 31, 2000 and October 31, 1999 (Unaudited) ================================================================================
Three Months Three Months Ended Ended October 31, 2000 October 31, 1999 ---------------- ---------------- SALES Net sales $ -0- $ -0- Cost of sales -0- -0- ---------------- ---------------- Gross margin -0- -0- OPERATING EXPENSES General and administrative expenses 396,369 33,572 Exploration costs 38,142 25,800 ---------------- ---------------- Total operating expenses 434,511 59,372 ---------------- ---------------- Loss from operations (434,511) (59,372) OTHER INCOME (EXPENSE) Interest expense (5,172) -0- ---------------- ---------------- Total other expense (5,172) -0- ---------------- ---------------- NET LOSS $ (439,683) $ (59,372) ================ ================ LOSS PER SHARE (after giving effect to the Three-for-two stock split declared on June 8, 1999) (.010) (.002) ---------------- ---------------- WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING (after giving effect to the Three-for-two stock split declared on June 8, 1999) 43,872,703 37,866,882 ================ ================
F-2 NEWGOLD, INC. STATEMENTS OF CASH FLOWS For the Three Months Ended October 31, 2000 and October 31, 1999 (Unaudited) ================================================================================
Three Months Three Months Ended Ended October 31, 2000 October 31, 1999 ---------------- ---------------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (439,683) $ (59,372) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 3,206 3,963 Changes in operating assets and liabilities: Accounts payable 42,378 (29,642) Accrued expenses 175,125 14,087 Deposits 350 -0- Due to Business Web, Inc. -0- 10,000 Due to affiliate -0- (300) Notes payable to stockholder -0- 59,839 ---------------- ---------------- Net cash used in operating activities (218,624) (1,425) ---------------- ---------------- CASH FLOWS FROM INVESTING ACTIVITIES Net cash used in investing activities -0- -0- ---------------- ---------------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of notes payable 144,550 -0- Proceeds from issuance of common stock 67,000 -0- ---------------- ---------------- Net cash provided by financing activities 211,550 -0- ---------------- ---------------- NET DECREASE IN CASH (7,074) (1,425) CASH, beginning of period 7,959 1,966 ---------------- ---------------- CASH, end of period $ 885 $ 541 ================ ================ 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 October 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 nine months ended October 31, 2000 were $38,142 and $60,142, 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 the capital markets environment has changed dramatically. Valuations for similar 4 types of companies have generally fallen to 5% to 10% of their market price per share in March 2000. Accordingly the Company has been unsuccessful in obtaining short term funding to meets its current needs. The Company currently must reach settlement with its creditors before it can implement new business plans. If it is successful Newgold will attempt to establish operations in the area of natural resources including the exploration and mining / drilling of gold and silver as well as natural gas and oil. 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 $5 to $25 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. 8. As part of the redirection of Newgold's business, A. Scott Dockter was reappointed Chairman, President and CEO in December 2000. Mr. Dockter was hired at an annual salary of $60,000. Additionally, Mr. Dockter has an incentive stock option plan that is based strictly on the market price performance of Newgold, Inc. common stock. Mr. Dockter will earn one million options at each of the following market prices, which must be maintained for 10 consecutive business days: $1.00 per common share; $2.00 per common share; $3.00 per common share; $4.00 per common share and $5.00 per common share. 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. ------------------------------------------------------ At the beginning of the current fiscal year, the Company began to implement a new business strategy of investing in Internet start-up companies. Since that time the capital markets have treated such companies poorly as it relates to the market price per share. Because of this 5 and other factors the Company has determined that it is no longer feasible to solely focus on business development in this area. The Company will focus during the next quarter on stabilizing its financial condition. When and if it is successful at its stabilization efforts, new business opportunities will be evaluated, specifically in the natural resources industry and in providing capital market services. The operating expenses of the Company have increased substantially since the prior year and are expected to continue to increase in order to implement a new business strategy. We will be required to obtain additional financing in both the short term and the long term to successfully carry out any 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 a new business plan will impact how much additional financing we will require over the next 24 months; we could require up to an additional $5 to $25 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. If the Company can stabilize its financial condition and decides to pursue new business opportunities in the natural resource industry then it most likely incur these types of expense. Until it is determined that such business will occur it is not reasonable to estimate what these costs may be. As of the date of this filing, the Company has derived no significant revenue from its operations. As a mine owner, 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. Financial Condition of the Company as of October 31, 2000 --------------------------------------------------------- As of October 31, 2000, the Company had $885 in cash and working capital deficit of ($1,234,652). 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 not continuing its efforts to obtain funding for its mining operations, and will not do so until such time that its financial condition can be stabilized. The Company obtained funding for its Internet business operations earlier this year. The Company raised approximately $1.75 million based on its new operating strategy in the first fiscal quarter of this year. There can be no assurance that additional financing will be available when needed, on commercially reasonable terms, or at all. The Company's independent 6 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. 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. 7 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. (4) In September 2000 the Company closed a private placement offering for 400,000 shares at $0.1675 per share. ITEM 3. Defaults on Senior Securities. ----------------------------- None. 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. -------- 8 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/ A. Scott Dockter Date: December 20, 2000 - -------------------- A. Scott Dockter Chief Executive Officer /s/ James W. Kluber Date: December 20, 2000 - ------------------- James W. Kluber Chief Financial Officer 9 EX-27 2 0002.txt
5 3-MOS JAN-31-2001 AUG-31-2000 885 0 250,000 0 0 539,386 845,512 28,004 1,407,394 1,774,038 0 0 0 43,872 (1,122,772) 1,407,394 0 0 0 0 434,511 0 5,172 (439,683) 0 (439,683) 0 0 0 (439,683) (0.010) (0.010)
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