-----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, GqBxJYECPGULX2jEAeJbtJxl6V4239ACG5ugIH4ChpxKnrDjQdc5lkbuQhOSBCV4 NYL3aMj+ucE7F10T4GyK6A== 0001025894-99-000218.txt : 19991018 0001025894-99-000218.hdr.sgml : 19991018 ACCESSION NUMBER: 0001025894-99-000218 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990430 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: 99721327 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 10QSB Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended April 30, 1999 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, 1999: 25,244,588 - ---------- Transitional Small Business Disclosure Format (check one): Yes No X PART I. Financial Information. ---------------------- 1. Interim Financial Statements (unaudited) Balance Sheet - April 30, 1999.................................................1 Statements of Operations - Three months ended April 30, 1999 and April 30, 1998...........2 Statements of Cash Flows - Three months ended April 30, 1999 and April 30, 1998...........3 Notes to Financial Statements.......................................4 2. Management's Discussion and Analysis................................5 PART II. Other information ----------------- Signatures..........................................................8 NEWGOLD, INC. Balance Sheet (Unaudited) April 30, 1999 Assets Cash and cash equivalents $ 18,189 Property, plant and equipment including undeveloped mineral properties of $800,000 net of $32,639 accumulated depreciation 849,339 Reclamation bonds 50,500 Other assets 3,600 ------------ Total assets $ 921,628 ============ Liabilities and Stockholder's Equity Current liabilities Accounts payable $ 398,509 Accrued expenses 513,772 Due to affiliates 365,561 Notes payable to stockholders 193,098 Notes payable to individuals 462,500 ------------ Total current liabilities 1,933,440 Other Liabilities Accrued reclamation costs 50,500 Deferred revenue 800,000 ------------ Total other liabilities 850,500 Total liabilities 2,783,940 Stockholders' equity Common stock - Authorized 50,000,000 shares par value $0.001; 25,244,588 outstanding 25,245 Additional paid-in capital 7,932,497 Accumulated deficit (9,820,054) ------------ Total stockholders' equity (1,862,312) ------------ Total liabilities and stockholders' equity $ 921,628 ============ NEWGOLD, INC. Statements of Operations (Unaudited) For the three months ended April 30 April 30 1999 1998 -------------- -------------- Sales Net sales $ - $ - Cost of sales - - Gross Margin - - Operating expenses General and administrative expenses 108,212 139,057 Exploration costs 4,472 17,626 -------------- -------------- Total operating expenses 112,684 156,683 -------------- -------------- Loss from operations (112,684) (156,683) Other income (expense) Interest expense (43,738) (4,619) Stock issuance expense (36,073) -------------- -------------- Total other expense (43,738) (40,692) Income tax provision - Net loss $ (156,422) $ (197,375) ============== ============== Loss per share $ (0.006) $ (0.009) ============== ============== Weighted average number of shares outstanding 25,244,588 22,202,611 ============== ==============
NEWGOLD, INC. Statements of Cash Flows (Unaudited) For the three months ended April 30 April 30 1999 1998 -------------- -------------- Cash flows from operating activities Net loss $ (156,422) $ (197,375) -------------- -------------- Adjustments to reconcile net loss to net cash used in operating activities Depreciation 3,963 4,888 Changes in operating assets and liabilities Refundable payroll taxes Advances to stockholder repaid Other assets (2,000) Accounts payable (15,595) (288,416) Accrued expenses (29,404) (111) Due to affiliates (6,634) (53,202) Notes payable to stockholder (56,605) (6,100) -------------- -------------- Total adjustments to net loss (106,275) (342,941) -------------- -------------- Net cash provided (used) by operations (262,697) (540,316) Cash flows from financing activities Cash provided by stock subscription 548,000 Cash provided by Business Web Inc. loan 280,000 -------------- -------------- Net cash provided by financing activities 280,000 548,000 -------------- -------------- Net increase (decrease) in cash 17,303 7,684 Cash and cash equivalents, beginning of period 886 2,309 -------------- -------------- Cash and cash equivalents, end of period $ 18,189 $ 9,993 ============== ==============
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, 1999, are not necessarily indicative of the results that may be expected for the fiscal year ended January 31, 2000. 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, 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 April 30, 1999 were approximately $4,500. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS ------------------------------------ Introduction. ------------- Reference is made to Form 10-KSB as of January 31, 1999, which was filed October 1, 1999, which reports on the signing of a merger 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 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. ------------------------------------------------------- On April 2, 1999, the Company issued a Letter of Intent to Business Web, Inc. (BWI) to effect a reverse merger of Newgold, Inc. and BWI with BWI being the acquirer corporation. A merger agreement, which has been approved by the Boards of Directors, will be submitted to the shareholders of both companies for their expected approval. Terms of the agreement allow a 3:2 split of the Company stock in June 1999, which will be treated as a dividend. After the merger, the Company shareholders will receive one share of BWI stock for each twelve shares of Newgold stock. This exchange of shares will give the Company shareholders approximately a 14% interest in BWI. BWI, a Texas corporation, is an Internet company specializing in the development of web sites for communities of like businesses and the development of e-trade shows on the Internet for industries and professional organizations. To date, BWI has raised capital of approximately $2.6 million. Of this amount $280,000 has been loaned to Newgold for payment of liabilities and current operating costs. Other Newgold liabilities will be settled with BWI stock and cash as required. The Relief Canyon Mine will be transferred to another corporation and a portion of any funds raised by this corporation will be committed to repay BWI for loans and other payments made for the benefit of Newgold. BWI estimates that revenues for the year ended January 31, 2000 will be in excess of $3,000,000. At the Relief Canyon Mine, the Company had placed all mining operations on hold and has placed the mine into care and maintenance. The Company has two experienced personnel in place at the mine site. The personnel currently are lowering the water levels of the preg and barren ponds under a plan approved and monitored by the Nevada Department of Environmental Protection (NDEP). Prior to suspending operations in November 1997, the mine facilities to recover gold from ore were completed by the Company with the exception of an upgrade to leach pad 4 and construction of an additional leach pad. The upgrade to leach pad 4 has been approved by NDEP. Under the merger agreement, operations at Relief Canyon Mine may be resumed only by the entity that acquires ownership of the mine and all related liabilities from the Company. Reclamation. As of April 30, 1999, the Company had $18,189 in cash and ($1,915,251) in working capital. Costs of care and maintenance of Relief Canyon were approximately $4,500 for the quarter ended April 30, 1999. 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. 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, 1999, 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. 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, 1999, 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 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 mandatory arbitration where again the decision was in favor of the Company. This matter was settled by the parties for an issuance of an additional 25,000 shares of the Company's common stock. Said stock is restricted and the settlement agreement gave no registration rights to the defendants. 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, 1999 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-31-2000 APR-30-1999 18,189 0 0 0 0 18,189 881,978 32,639 921,628 1,933,440 0 0 0 25,245 0 921,628 0 0 0 112,684 0 0 43,738 (156,422) 0 (156,422) 0 0 0 (156,422) (0.006) (0.006)
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