-----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, VgNqQjarlQLH+5TWyeXsxe+SKetxcMZi4ocKVYxN6dDxBs5sJlGdds+aAptGTYHQ Q/YTEnLlGh/Um7iWr758aw== 0001025894-99-000215.txt : 19991018 0001025894-99-000215.hdr.sgml : 19991018 ACCESSION NUMBER: 0001025894-99-000215 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981031 FILED AS OF DATE: 19991001 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: 99721318 BUSINESS ADDRESS: STREET 1: 35265 WILLOW AVE STREET 2: P O BOX 95612 CITY: CLARKSBURG STATE: CA ZIP: 95612 BUSINESS PHONE: 9166651840 MAIL ADDRESS: STREET 1: 35265 WILLOW AVE STREET 2: P O BOX 230 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, D.C. 20549 Form 10-QSB Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended October 31, 1998 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.) 3090 Boeing Road, Cameron Park, 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 No X --- --- 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 January 31, 1998: 19,462,611 ---------- Transitional Small Business Disclosure Format (check one): Yes No X --- --- PART I. Financial Information. 1. Interim Financial Statements (unaudited) Balance Sheet - October 31, 1998............................................1 Statements of Operations - Three months ended October 31, 1998 and October 31, 1997....2 Statements of Cash Flows - Three months ended October 31, 1998 and October 31, 1997....3 Notes to Financial Statements........................................4 2. Management's Discussion and Analysis.................................5 PART II. Other information Signatures...........................................................8 NEWGOLD, INC. Balance Sheet October 31, 1998 (Unaudited) Assets Cash and cash equivalents $ 1,644 Property, plant and equipment including undeveloped mineral properties of $800,000, net of $41,034 accumulated depreciation 857,729 Reclamation bonds 50,500 Other assets 12,579 ------------ Total assets $ 922,452 ============ Liabilities and Stockholder's Equity Current liabilities Accounts payable $ 408,306 Accrued expenses 385,796 Due to affiliate 72,862 Notes payable to stockholders 231,028 Notes payable to individuals 462,500 ------------ Total current liabilities 1,560,492 Other Liabilities Accrued reclamation costs 50,500 Deferred revenue 800,000 ------------ Total other liabilities 850,500 ------------ Total liabilities 2,410,992 Stockholders' equity Common stock - Authorized 50,000,000 shares par value $0.001; 25,244,588 shares outstanding 25,245 Additional paid-in capital 7,932,497 Accumulated deficit (9,446,282) ------------ Total stockholders' equity (1,488,540) ------------ Total liabilities and stockholders' equity $ 922,452 ============ NEWGOLD, INC. Statements of Operations (Unaudited) For the three months ended October 31 October 31 1998 1997 -------------- -------------- Sales Net sales $ - $ - Cost of sales - - -------------- -------------- Gross Margin - - Operating expenses General and administrative expenses 125,119 313,736 Exploration costs 14,882 48,173 -------------- -------------- Total operating expenses 140,001 361,909 -------------- -------------- Loss from operations (140,001) (361,909) Other income (expense) Interest income Other income (loss) - Loss on disposal of assets - (151,171) Interest expense (56,563) (9,917) -------------- -------------- Total other expense (56,563) (161,088) Income tax provision - - -------------- -------------- Net loss $ (196,564) $ (522,997) ============== ============== Loss per share $ (0.008) $ (0.028) ============== ============== Weighted average number of shares outstanding 24,942,611 18,961,839 ============== ==============
NEWGOLD, INC. Statements of Cash Flows (Unaudited) For the three months ended October 31 October 31 1998 1997 -------------- -------------- Cash flows from operating activities Net loss $ (196,564) $ (522,997) -------------- -------------- Adjustments to reconcile net loss to net cash used in operating activities Depreciation 5,074 9,051 Changes in operating assets and liabilities Other assets (10,000) 3,454 Accounts payable (27,155) 83,179 Accrued expenses 120,829 33,007 Due to affiliate 8,052 Notes payable to stockholders 13,791 -------------- -------------- Total adjustments to net loss 110,591 128,691 -------------- -------------- Net cash provided (used) by operations (85,973) (394,306) Cash flows from investing activities Capital expenditures - (131,657) -------------- -------------- Net cash used in investing activities - (131,657) -------------- -------------- Net increase (decrease) in cash (85,973) (525,963) Cash and cash equivalents, beginning of period 87,617 876,573 -------------- -------------- Cash and cash equivalents, end of period $ 1,644 $ 350,610 ============== ==============
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, 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. 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 are anticipated to be expended 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 $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. Charges care and maintenance of Relief Canyon Mine in the quarter ended October 31, 1998 were approximately $21,900 less a credit of $7,000 for equipment disposals. The charges included BLM and Santa Fe rents of $20,193. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS - -------------------------------------------- Introduction. ------------- Reference is made to Form 10-KSB as of January 31, 1998, which was filed October 1, 1999, which reports on the signing of a meger agreement between the Company and Business Web, Inc as of July 26, 1999. This report discusses the effects of the merger, the financial plans for future operations and the risks associated therewith. The Company 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. ------------------------------------------------------- As of October 31, 1998, the Company had $1,644 in cash and ($1,558,848) in working capital. If the Company were to bring the Relief Canyon Mine off care and maintenance status, plans and assumptions relating to operations would require approximately $1.5 million in additional funding to complete permitting and to resume operations and gold production at the Relief Canyon Mine. The Board of Directors previously 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. has created, 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. To date no funds to develop alternate revenues for the Company through the production of industrial minerals are available. 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, 1998, 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. On August 14, 1998, the Board Of Directors accepted the resignation of Bradley S. Slattery as Secretary of the Company and appointed Michael M. Kessler as Secretary. General and Administrative expenses of approximately $125,120 include an accrual of $64,500 for officers' salaries of which $13,405 was paid. 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 settlement was paid October 22, 1998. 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 $100,000,000 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 manadatory arbitration where again the decision was in favor of the Company. ITEM 2. Changes in Securities. --------------------- None. 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. 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. (3) Incorporated by reference to the Registrant's Annual Report on Form 10-KSB-40 for the fiscal year ended January 31, 1998 filed with the Commission on October 1, 1999. 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: August 23, 1999 - -------------------- --------------- A. Scott Dockter Chief Executive Officer /s/ Robert W. Morris Date: August 23, 1999 - -------------------- --------------- Robert W. Morris Chief Financial Officer EX-27 2
5 3-MOS JAN-31-1999 OCT-31-1998 1,644 0 0 0 0 0 898,763 41,034 922,452 1,560,492 0 0 0 25,245 0 922,452 0 0 0 140,001 0 0 56,563 (196,564) 0 (196,564) 0 0 0 (196,564) (0.008) (0.008)
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