UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-9904
VANDERBILT GOLD CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 88-0224117
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4625 Wynn Road, Suite 103, Building C, Las Vegas NV 89103
(Address of principal executive offices)
(Zip Code)
(702) 362-3152
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 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 [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
Common stock outstanding on November 7, 1994: 26,245,585 shares
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
VANDERBILT GOLD CORPORATION
Condensed Consolidated Balance Sheets
(In Thousands)
<CAPTION>
September December
30, 31,
1994 1993
Unaudited
<S> <C> <C>
Current Assets:
Cash and Temporary Investments $ 2 $ 36
Accounts Receivable - Trade 2 -
Employee Advances Receivable 19 5
Due from Related Parties 17 -
Inventories 855 851
Prepaid Expenses 3 4
Other 2 3
______ ______
Total Current Assets 900 899
Plant and Equipment - Net 2,092 2,129
______ ______
Total Assets 2,992 3,028
====== ======
Current Liabilities:
Accounts Payable $ 1,000 $ 959
Accrued Expenses 162 169
Accrued Salaries & Wages 454 370
Notes Payable - Other - 14
Due to Related Parties - 5
Deferred Revenue - Gold Sales 45 70
Gold Loan Payable 38 38
______ ______
Total Current Liabilities 1,699 1,625
Long Term Liabilities:
Accrued Reclamation Expense 45 47
Shareholders' Equity:
Preferred Stock, Par Value $.01 Per Share;
Authorized 5,000,000 Shares;
Series A, 100,000 shares Designated,
Issued and Outstanding 9,670 Shares 148 148
Common Stock, Par Value $.01 Per Share;
Authorized 45,000,000 Shares at September 30, 1994;
25,000,000 shares at December 31, 1993; Issued and
Outstanding 25,945,585 Shares at September 30, 1994
and 23,558,412 at December 31, 1993 259 235
Common Stock Subscribed but Unissued (358,068 shares) 57 -
Additional Paid in Capital 24,010 23,682
Accumulated Deficit (23,226) (22,709)
Net Shareholders' Equity 1,248 1,356
______ ______
Total Liabilities and Shareholders' Equity $ 2,992 $ 3,028
====== ======
<FN>
See Accompanying Notes to Condensed Consolidated Financial Statements
</TABLE>
<PAGE>
<TABLE>
VANDERBILT GOLD CORPORATION
Condensed Consolidated Statements of Operations
(In Thousands, Except per Share Amounts)
<CAPTION>
Three Months Nine Months
Ended Ended
September 30, September 30,
1994 1993 1994 1993
Unaudited Unaudited
<S> <C> <C> <C> <C>
Revenues:
Bullion Sales $ - $ - $ 14 $ 4
Rental Income - 7 - 7
_____ _____ _____ _____
Total Revenues - 7 14 11
Expenses:
Refining and Shipping Costs - 1 10 1
Reclamation & Environmental Expenses 75 19 132 50
Claim Lease/Rentals & Property Taxes 10 15 39 31
Debt Restructuring Expenses - 31 13 31
Depreciation and Amortization 14 16 43 89
Exploration Costs 2 - 3 -
General and Administrative Expenses 32 68 304 125
_____ _____ _____ _____
Total Expenses 133 150 544 327
_____ _____ _____ _____
Operating Loss 133 143 530 316
_____ _____ _____ _____
Interest Expense (1) (3) (30) (66)
Debt Cancellation Income - 96 11 96
Gain on Termination of Joint Venture 32 - 32 -
Loss on Disposal of Assets - - - (166)
_____ _____ _____ _____
Net Loss $ 102 $ 50 $ 517 $ 452
===== ===== ===== =====
Net Loss Per Share $ 0.00 $ 0.00 $ 0.02 $ 0.03
===== ===== ===== =====
Weighted Average Number of Shares
Outstanding Used in Calculation of
Loss Per Share 26,085 19,777 24,850 13,821
====== ====== ====== ======
<FN>
See Accompanying Notes to Condensed Consolidated Financial Statements
</TABLE>
<PAGE>
<TABLE>
VANDERBILT GOLD CORPORATION
Condensed Consolidated Statement of Cash Flows
(in thousands)
<CAPTION>
Nine Months Nine Months
Ended Ended
September 30, September 30,
1994 1993
Unaudited Unaudited
<S> <C> <C>
Cash Flows from Operating Activities:
Net Loss $ (517) $ (452)
Adjustments for Noncash Items Included
in Net (Loss):
Depreciation and Amortization Charged:
to Costs and Expenses from Current Period 43 89
included in Ending Inventory 1 4
Payments for Accrued Reclamation Costs (2) (7)
Deferred Revenue Settled with Common Stock 13 31
Current Period Expenses Settled with
Common Stock 45 41
Income from Cancellation of Debt (11) (96)
(Gain) Loss on Disposal of Assets - 166
Changes in Current Assets and Liabilities:
Accounts Receivable (2) 3
Employee Advances (14) -
Due from Related Parties (17) -
Inventories - Net of Depreciation and
Amortization Charged to Costs and Expenses (5) 2
Other Current Assets 2 6
Accounts Payable 165 87
Accrued Expenses (7) (44)
Accrued Salaries and Wages 84 85
Deferred Credit - 50
Bank Overdraft - 3
_____ _____
Net Cash Provided by (Used in) Operating
Activities (222) (32)
_____ _____
Cash Flows from Investing Activities:
Purchase of Fixed Assets (7) -
Proceeds from Fixed Asset Disposals - 6
_____ _____
Net Cash Provided by (Used in) Investing
Activities (7) 6
_____ _____
<FN>
See Accompanying Notes to Condensed Consolidated Financial Statements
</TABLE>
<PAGE>
<TABLE>
VANDERBILT GOLD CORPORATION
Condensed Consolidated Statement of Cash Flows, Continued
(in thousands)
<CAPTION>
Nine Months Nine Months
Ended Ended
September 30, September 30,
1994 1993
Unaudited Unaudited
<S> <C> <C>
Cash Flows from Financing Activities:
Proceeds from Common Stock Sold
and Subscribed 204 99
Increase in Notes Payable - Other - 12
Payment of Notes Payable - Other (4) (8)
Increase in Amounts Due Related Parties - 6
Payment of Amounts Due Related Parties (5) (13)
_____ _____
Net Cash Provided by (Used in) Financing
Activities 195 96
_____ _____
Increase (Decrease) in Cash and Cash Equivalents (34) 70
Cash and Cash Equivalents at Beginning of Period 36 0
_____ _____
Cash Equivalents at End of Period 2 70
====== ======
Supplemental Information:
Payment of Amounts Due Related Parties
with Common Stock - 12
Payment of Amounts Due Related Parties
with Preferred Stock (Subscribed) - 48
Settlement of Forward Gold Sale with Common
Stock (Subscribed) 25 118
Payment of Notes Payable - Other with Common
Stock (Subscribed) 10 400
Payment of Accounts Payable with Preferred
Stock (Subscribed) - 100
Payment of Accounts Payable with Common Stock
(Subscribed) 112 914
Interest Paid with Common Stock (Subscribed) 25 60
Interest Paid 1 -
Noncash Investment in Joint Venture 50 -
<FN>
See Accompanying Notes to Condensed Consolidated Financial Statements
</TABLE>
<PAGE>
VANDERBILT GOLD CORPORATION
Notes to Condensed Consolidated Financial Statements
September 30, 1994
Unaudited
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
The Condensed Consolidated Balance Sheet as of September 30, 1994, and the
related Condensed Consolidated Statements of Operations for the three and
nine months ended September 30, 1994 and 1993 and of Consolidated Cash
Flows for the nine months ended September 30, 1994 and 1993 have been
prepared without audit. The Condensed Consolidated Balance Sheet as of
December 31, 1993 was taken from the audited financial statements of that
date. In the opinion of management, all adjustments (which include only
normal recurring adjustments) necessary to present fairly the financial
position as of September 30, 1994, the results of operations for the three
and nine months ended September 30, 1994 and 1993, and cash flows for the
nine months ended September 30, 1994 and 1993 have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is intended that
these condensed consolidated financial statements be read in conjunction
with the audited financial statements and notes thereto included in the
Company's December 31, 1993 Form 10-K. The results of operations for the
three and nine months ended September 30, 1994 and 1993 are not
necessarily indicative of the operating results for the full year.
These condensed consolidated financial statements include the accounts of
the Registrant and its proportionate share of the assets, liabilities,
income and expenses of a joint venture in which it was a 50% member
through August, 1994, at which time the joint venture was terminated.
Loss per common share is computed based upon the weighted average number
of shares outstanding during each period, including common shares
subscribed for which the Registrant has received full consideration. The
effect on loss per common share resulting from the exercise of outstanding
options would be antidilutive.
Inventories of ores on the heap leach pad and gold-in-process are stated
at the lower of average cost or market. Operating materials and supplies
are stated at the lower of cost (as determined under the first-in
first-out method) or market. The $855,000 shown as inventories on the
balance sheet at September 30, 1994 consists entirely of ore in process.
Certain reclassifications have been made to the 1993 financial statements
for comparability to 1994. Such reclassifications had no effect on the
amount of net loss.
<PAGE>
VANDERBILT GOLD CORPORATION
Notes to Condensed Consolidated Financial Statements, continued
September 30, 1994
Unaudited
During 1991, due to the existence of a small leak in the top pad liner of
heap leach pad #2, the Company was prohibited by regulatory authorities
from adding any further cyanide to the leaching solution. Vanderbilt
continued to circulate untreated liquids through the pad, during 1991 and
into 1992, from which it was able to recover measurable amounts of gold and
silver. However, by the end of 1992, virtually no gold or silver was being
recovered from the pad. In light of the Company's financial condition, the
fact that the pad was no longer suitable for its originally intended use,
and the fact that the pad had reached the end of its estimated useful life
of two years, Management decided it would be appropriate to remove it from
the books of account. In February 1993, the cost associated with the
original construction of heap leach pad #2 was written off excluding any
salvageable equipment and materials. The net book value at the date of
write-off was $43,000. Pad #2 is currently in the process of being
detoxified.
In 1987, Vanderbilt developed a land site upon which a contractor could
place a mobile ore crushing facility. The costs incurred, primarily those
for grading the site and laying concrete pads, were capitalized. The
contractor has long since removed its equipment from the site and the site
is no longer in use. Management has determined that the site is not
compatible with more modern day equipment and it is no longer suitable for
the purpose for which it was originally intended. Therefore, Management
elected to write it off of the books of account. The net book value at the
date of write-off, February 28, 1993, was $126,000.
The accumulated depreciation and amortization at September 30, 1994 is
$6,905,000 and $6,860,000 at December 31, 1993.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
General Commentary
During the first nine months of 1994, Vanderbilt Gold Corporation continued the
progress which it started in 1993. The Company has reduced old debts by
$147,000; the creditors agreed to accept the Company's common shares for the
debt. Funds were generated by private placements ($205,000) during the nine
months ended September 30, 1994. The Company was able to pay $58,000 of its
current expenses with common shares. The Registrant brought its filings
current with the United States Securities and Exchange Commission by filing all
required reports for 1991, 1992 and 1993. The private placement funds were
used to pay the necessary legal, accounting, auditing, printing, proxy,
mailing, and meeting costs to bring the filings current and hold the
shareholders' meeting as well as pay for ongoing reclamation, permitting and
licensing and environmental expenses. Vanderbilt held its shareholders' meeting
(the first in three years) in June, 1994. The shareholders approved an
increase in the authorized number of common shares to 45,000,000, voted in
favor of the recommended Board of Directors, which now consists of seven (7)
members, and approved amendments to the Company's 1989 Stock Option Plan.
On August 11, 1994, the California Regional Water Quality Control Board,
Lahontan Region, met at Mammoth Lakes, California, in formal session, and
approved and adopted the amended waste discharge requirements for Vanderbilt
Gold Corporation's Morning Star Mine. This approval means that the Company may
now begin operations at the mine and that heap leach pad #1 is reclassified as
detoxified.
The California Desert Protection Act of 1994 ("ACT") was passed by Congress and
signed into law by the President. The Morning Star Mine ("Morning Star") is
located in the newly designated "Mojave National Preserve". In general, the
Morning Star's mining and processing operations, under the new Act, may be
conducted as provided in the existing Plan of Operations ("Plan"). One change
will be that the public land, including the Morning Star, will be administered
by the National Park Service ("NPS") instead of the Bureau of Land Management
("BLM"). The timetable for this transfer has not yet been announced. The NPS
has, however, notified the Company that operating mines, with approved BLM
Plans, that are now on lands to be administered by the NPS will be temporarily
allowed to continue until the approved BLM Plan can be converted to an
approvable NPS Plan and a validity determination of its claims can be made.
The land around the Morning Star will no longer be open to new mining claims,
but the new Act expressly provides that this withdrawal of land from mineral
entry is "subject to valid existing rights", which would obligate the United
States Government to honor the Morning Star's valid mining claims, permits and
the approved Plan of Operation.
<PAGE>
Since the Morning Star has an approved Plan (approved by BLM) and state water
permits, it appears that the mining and processing operations can proceed in
accordance with the Company's plans. However, it is not possible at this time
to assess the ultimate impact(s), if any, that the Act will have upon the
Company's operations at Morning Star and when the Act will be fully
implemented.
RESULTS OF OPERATIONS:
COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1994 TO NINE MONTHS ENDED
SEPTEMBER 30, 1993:
The Company realized a net loss of $517,000 ($0.02 per share) for the nine
months ended September 30, 1994 which is $65,000 more than the $452,000 ($0.03
per share) loss for the nine months ended September 30, 1993. Note that the
number of shares used in the computation for the 1994 per share amount are
nearly double the amount for the 1993 per share calculation as the Company
utilized a significant number of its common shares to retire debt and pay other
obligations. For 1994, the loss is attributable to increased general and
administrative expenses and higher reclamation and environmental expenses. The
1994 general and administrative expenses are higher because the Company
incurred the expense in the first nine months of 1994 to complete its
independent audits for 1991, 1992 and 1993, completion and filing of its Forms
10-K for 1991, 1992 and 1993, together with the costs of compiling the
information and preparing Forms 10-Q for 1992 and 1993 (three quarterly reports
for each year), preparing a proxy and proxy statement, mailing the proxy
statements together with the 1993 Annual Reports to shareholders, and holding a
shareholders' meeting in June 1994. The reclamation and environmental expenses
include the costs of the continuing cleanup of the minesite, environmental
compliances, payment for bonds, permits, fees and other charges related to
reclamation and remediation at the Morning Star mine.
The following financial and operational highlights summarize the Company's
results of operations and financial position:
<TABLE>
<CAPTION>
Nine Months Ended
September 30, September 30,
1994 1993
(in thousands except
percentages, per share,
ounces, and per ounce
amounts)
(Unaudited)
<S> <C> <C>
Overburden and waste removed (tons) 0 0
Ore mined (tons) 0 0
Payable gold (troy ounces):
Produced 0 0
Sold 36 * 12
Payable Silver (troy ounces):
Produced 0 0
Sold 33 * 1
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Nine Months Ended
September 30, September 30,
1994 1993
(in thousands except
percentages, per share,
ounces, and per ounce
amounts)
(Unaudited)
<S> <C> <C>
Average realization:
Gold (per payable ounce) * $ 373.10 $ 334.02
Silver (per payable ounce) 5.16 3.64
Estimated ounces of recoverable gold
remaining on heap leach pads 2,449 2,449
Estimated Percentage of Recoverable
Gold Remaining on the heap leach pads 4.52% 4.52%
Bullion Sales $ 14 $ 4
Operating Loss 530 316
Net Loss 517 452
Cash Flow Used in Operations 222 32
Cash Flow Provided (Used by) Investing Activities (7) 6
Cash Flow Provided by Financing Activities 195 96
Loss Per Common Share .02 .03
Total Assets 2,992 3,074
Total Liabilities 1,744 1,713
Accumulated Deficit 23,226 22,634
Shareholders' Equity 1,248 1,361
Working Capital (Deficit) (799) (700)
<FN>
* Metals recovered from the spent carbon removed from the recovery tanks.
</TABLE>
COMPARISON OF THREE MONTHS ENDED SEPTEMBER 30, 1994 TO THREE MONTHS ENDED
SEPTEMBER 30, 1993:
During the three months ended September 30, 1994, the Company earned no
revenues as the California Regional Water Quality Control Board consent to
resume operations under the revised Plan of Operations was not received until
August 11, 1994. By September 30, 1994, the Company had not raised the funding
necessary to resume operations at Morning Star although several possibilities
were being explored and negotiations had commenced. Reclamation, remediation
and other environmental related expenses of $75,000 were incurred in the three
months ended September 30, 1994 as opposed to $19,000 in the same quarter of
1993. The 1994 reclamation, remediation and other environmental expenditures
were higher in anticipation of the resumption of operations. General and
administrative expenses were $32,000 for the quarter ended September 30, 1994
as compared to $68,000 for the same period in 1993. During 1993, there was
considerable commission expense ($34,000) relating to private placements made
during that quarter.
<PAGE>
The Morning Star Joint Venture (a joint venture between Vanderbilt Gold
Corporation and some private persons) was terminated during the third quarter;
such termination giving rise to a $32,000 gain.
LIQUIDITY AND CAPITAL RESOURCES:
The following financial highlights summarize the Company's cash flows:
<TABLE>
<CAPTION>
Nine Months Ended
September 30, September 30,
1994 1993
(in thousands)
(Unaudited)
<S> <C> <C>
Cash Used in Operating Activities $ 222 $ 32
Cash Used to Acquire Capital Assets 7 -
Cash Provided by Disposals of Fixed Assets - 6
Cash Provided from Proceeds from Common Stock
Sold and Subscribed 204 99
Cash Provided from Notes Payable - Other Proceeds - 12
Cash Used for Payment of Notes Payable - Other 4 8
Cash Provided by Loans from Related Parties - 6
Cash Used for Payment of Related Parties Loans 5 13
</TABLE>
As stated in the General Commentary to this Management Discussion and Analysis,
Management has been able to reduce old accounts payable and debts by $147,000
as the creditors agreed to accept the Company's common shares in payment. The
Registrant still is operating with a working capital deficit, at $799,000 at
September 30, 1994, as compared to a working capital deficit of $700,000 at
September 30, 1993. Although Management has not been able to restore the
Company's working capital to a positive balance, it has been able to, with
limited resources and no net income, reduce its working capital deficit by
$1,531,000 since December 31, 1992.
Like other companies, Vanderbilt is subject to the existing and evolving
standards relating to the protection of the environment. It has established a
reserve for the reclamation costs it can estimate that it will probably incur
when the operations at the Mine finally cease. However, the Company is subject
to contingencies as a result of changing environmental laws and regulations.
The related future cost is indeterminable due to such factors as the unknown
timing and extent of corrective actions which may be required and due to the
application of joint and several liability. Vanderbilt believes that those
costs, if and when incurred, will not have a material adverse effect on its
operations or financial position.
<PAGE>
The Company's continued existence and resumption of operations at the Mine and
the possible continuation of evaluation, exploration and development of other
mineral properties is dependent upon its ability to continue to raise
additional capital through private placements, restructuring of debt, joint
venture and other financing arrangements.
During the period from October 1, 1994 through November 7, 1994, the Company
has entered into agreements for additional private placements totalling more
than $200,000 and a gold forward sale for $50,000.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There have been no current period changes in the legal proceedings
against the company as outlined in the December 31, 1993 Annual Report
on Form 10-K and subsequent Quarterly Reports on Forms 10-Q.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits:
None.
(B) Reports on Form 8-K:
None
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
VANDERBILT GOLD CORPORATION
(Registrant)
Dated: November 7, 1994 By /S/Howard T. Urband
Howard T. Urband, Vice President
and Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FORM
10-Q FINANCIAL STATEMENTS FOR THE QUARTER ENDED SEPTEMBER 30, 1994 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> QTR-3
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 2
<SECURITIES> 0
<RECEIVABLES> 2
<ALLOWANCES> 0
<INVENTORY> 855
<CURRENT-ASSETS> 900
<PP&E> 8997
<DEPRECIATION> 5905
<TOTAL-ASSETS> 2992
<CURRENT-LIABILITIES> 1699
<BONDS> 0
<COMMON> 316
0
148
<OTHER-SE> 784
<TOTAL-LIABILITY-AND-EQUITY> 2992
<SALES> 14
<TOTAL-REVENUES> 14
<CGS> 10
<TOTAL-COSTS> 10
<OTHER-EXPENSES> 230
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 30
<INCOME-PRETAX> (517)
<INCOME-TAX> 0
<INCOME-CONTINUING> (517)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (517)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> 0
</TABLE>
