-----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, QqFAQPKUmARF7sFuxfQIcIxz2F/GMmtyN5m7U9Nd4jUNRlzej2a4swRSnez4HwCb AwlzCX45s/qf/0Ht4A3feg== 0001025894-99-000219.txt : 19991018 0001025894-99-000219.hdr.sgml : 19991018 ACCESSION NUMBER: 0001025894-99-000219 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990731 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: 99721329 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 July 31, 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 - July 31, 1999..................................................1 Statements of Operations - Three months ended July 31, 1999 and July 31, 1998.............2 Statements of Cash Flows - Three months ended July 31, 1999 and July 31, 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) July 31, 1999 Assets Cash and cash equivalents 1,966 Property, plant and equipment including undeveloped mineral properties of $800,000, net of $35,960 accumulated depreciation 845,376 Reclamation bonds 50,500 Other assets 3,600 ------------- Total assets 901,442 ============= Liabilities and Stockholder's Equity Current liabilities Accounts payable 397,512 Accrued expenses 261,960 Due to Business Web, Inc. 774,038 Notes payable to stockholders 110,000 Notes payable to individuals 462,500 ------------- Total current liabilities 2,006,010 Other liabilities Accrued reclamation costs 50,500 Deferred revenue 800,000 ------------- Total other liabilities 850,500 Total liabilities 2,856,510 Stockholders' equity Common stock - Authorized 50,000,000 shares par value $0.001; 37,866,882 outstanding 37,867 Additional paid-in capital 7,932,497 Accumulated deficit (9,925,432) ------------- Total stockholders' equity (1,955,068) ------------- Total liabilities and stockholders' equity 901,442 ============= NEWGOLD, INC. Statements of Operations (Unaudited) For the three months ended July 31 July 31 1999 1998 -------------- -------------- Sales Net sales $ - $ - Cost of sales $ - $ - -------------- -------------- Gross Margin - - Operating expenses General and administrative expenses 132,271 117,297 Exploration costs 8,135 (15,887) -------------- -------------- Total operating expenses 140,406 101,410 -------------- -------------- Loss from operations (140,406) (101,410) Other income (expense) Interest income - Gain (Loss) on sale of assets - (21,000) Interest expense - (5,671) -------------- -------------- Total other expense - (26,671) Income tax provision - - -------------- -------------- Net loss $ (140,406) $ (128,081) ============== ============== Loss per share $ (0.004) $ (0.004) ============== ============== Weighted average number of shares outstanding 37,866,882 29,193,917 ============== ==============
NEWGOLD, INC. Statements of Cash Flows (Unaudited) For the three months ended July 31 July 31 1999 1998 -------------- -------------- Cash flows from operating activities Net loss $ (140,406) $ (128,081) -------------- -------------- Adjustments to reconcile net loss to net cash used in operating activities Depreciation 3,963 3,321 Changes in operating assets and liabilities Reclamation bonds 206,000 Other assets (1,600) Accounts payable (997) (8,645) Accrued expenses (204,162) 60,356 Reclamation costs (25,000) Due to affiliate (85,561) (12,323) Notes payable to stockholder (83,098) (16,404) -------------- -------------- Total adjustments to net loss (369,855) 205,705 -------------- -------------- Net cash provided (used) by operations (510,261) 77,624 Cash flows from financing activities Increase in Business Web Inc. (BWI)loan 155,000 BWI stock issued to shareholder for debt 39,038 - -------------- -------------- Net cash provided by financing activities 494,038 -------------- -------------- Net increase (decrease) in cash (16,223) 77,624 Cash and cash equivalents, beginning of period 18,189 9,993 -------------- -------------- Cash and cash equivalents, end of period $ 1,966 $ 87,617 ============== ==============
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, 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 for care and maintenance of Relief Canyon Mine in the quarter ended July 31, 1999 were approximately $8,100. 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. Common shares outstanding after the stock split are 37,866,882. 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 12% 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 $380,000 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. As of July 31, 1999, the Company had $1,966 in cash and a negative working capital of $1,915,251. Based upon plans and assumptions relating to any mining operation, the Company would require approximately $1.5 million in additional working capital. Since January 1998, the Company has pursued several possible funding opportunities including the sales of royalties on other gold properties and on industrial minerals. The Company continues its efforts to obtain funding, but has no current commitments for funding operations. 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. 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's independent accountants have included 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. 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. 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, 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 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. --------------------- Stock split 3:2 on June 17, 1999 for shareholders of record June 10, 199, resulting in total outstanding shares of 37,866,882. 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 August 27, 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 JUL-31-1999 1,966 0 0 0 0 1,966 881,336 35,960 901,441 2,053,658 0 0 0 37,867 0 901,441 0 0 0 140,406 0 0 (56,158) (140,406) 0 0 (140,406) 0 0 (140,406) (0.004) (0.004)
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