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 June 30, 1995
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 August 12, 1995: 28,976,210 shares
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<PAGE>
VANDERBILT GOLD CORPORATION
Condensed Consolidated Balance Sheets
(In Thousands)
June 30, December 31,
1995 1994
Current Assets: Unaudited
Cash and Cash Equivalents $ 3 $ 153
Accounts Receivable - Trade 2 68
Due From Related Parties 42 40
Inventories 837 867
Prepaid Expenses 6 3
Other 4 2
Total Current Assets 894 1,133
Plant and Equipment - Net 2,181 2,159
Total Assets $ 3,075 $ 3,292
Current Liabilities:
Accounts Payable $ 1,159 $ 1,062
Accrued Expenses 157 156
Accrued Salaries and Wages 489 480
Loans Payable 1 -
Due to Related Parties 6 -
Deferred Revenue - Gold Sales 95 95
Gold Loan Payable 38 38
Total Current Liabilities 1,945 1,831
Long Term Liabilities:
Accrued Reclamation Expense 45 45
Shareholders' Equity:
Preferred Stock, Par Value $.01 Per Share;
Authorized 5,000,000 Shares;
Issued and Outstanding 0 Shares - -
Common Stock, Par Value $.01 Per Share;
Authorized 45,000,000 Shares; Issued
and Outstanding 28,976,210 Shares
at June 30, 1995 and at December 31, 1994 290 290
Common Stock Subscribed but Unissued:
1,221,925 Shares at June 30, 1995 and
825,546 Shares at December 31, 1994 186 133
Additional Paid in Capital 24,411 24,411
Accumulated Deficit (23,802) (23,418)
Net Shareholders' Equity 1,085 1,416
Total Liabilities and Shareholders' Equity $ 3,075 $ 3,292
See Accompanying Notes to Condensed Consolidated Financial Statements
See Accompanying Accountant's Disclaimer Letter
<PAGE>
VANDERBILT GOLD CORPORATION
Condensed Consolidated Statements of Operations
(In Thousands, Except per Share Amounts)
Three Months Six Months
Ended Ended
June 30, June 30,
1995 1994 1995 1994
Unaudited Unaudited
Revenues:
Bullion Sales $ 14 $ - $ 29 $ 14
Total Revenues 14 - 29 14
Expenses:
Direct Cost of Sales 13 - 22 -
Leaching, Refining and Shipping Costs 23 - 32 10
Reclamation & Environmental Expenses 31 44 91 86
Debt Restructuring Expenses - 13 - 13
Depreciation and Amortization 18 14 32 29
Exploration Costs 27 1 107 1
General and Administrative Expenses 44 121 123 272
Total Expenses 156 193 407 411
Operating Loss 142 193 378 397
Interest Expense 4 26 7 29
Dividend Income - - 1 -
Debt Cancellation Income - - - 11
Net Loss $ 146 $ 219 $ 384 $ 415
Net Loss Per Share $ 0.00 $ 0.01 $ 0.01 $ 0.02
Weighted Average Number of Shares
Outstanding Used in Calculation of
Loss Per Share 30,186 25,179 29,991 24,397
See Accompanying Notes to Condensed Consolidated Financial Statements
See Accompanying Accountant's Disclaimer Letter
<PAGE>
VANDERBILT GOLD CORPORATION
Condensed Consolidated Statement of Cash Flows
(in thousands)
Six Months Six Months
Ended Ended
June 30, 1995 June 30, 1994
Unaudited Unaudited
Cash Flows from Operating Activities:
Net Loss $ (384) $ (415)
Adjustments for Noncash Items Included
in Net (Loss):
Depreciation and Amortization 32 30
Payment of Current Expense with
Common Stock (Subscribed) - 57
Income from Cancellation of Debt - 11
Changes in Current Assets and Liabilities:
Accounts Receivable 66 -
Employee Advances - (9)
Due from Related Parties (2) (34)
Inventories 30 (3)
Other Current Assets (5) 3
Accounts Payable 96 134
Accrued Expenses 1 (4)
Accrued Salaries and Wages 9 56
Net Cash Used in
Operating Activities 157 174
Cash Flows from Investing Activities:
Purchase of Fixed Assets 29 1
Payment for Option on Mexico Property 25 -
Net Cash Used in
Investing Activities 54 1
See Accompanying Notes to Condensed Consolidated Financial Statements
See Accompanying Accountant's Disclaimer Letter
<PAGE>
VANDERBILT GOLD CORPORATION
Condensed Consolidated Statement of Cash Flows, Continued
(in thousands)
Six Months Six Months
Ended Ended
June 30, 1995 June 30, 1994
Unaudited Unaudited
Cash Flows from Financing Activities:
Proceeds from Common Stock Subscribed 54 147
Increase in Notes Payable - Other 1 -
Increase in Amounts Due Related Parties 8 4
Payment of Amounts Due Related Parties (2) (5)
Net Cash Provided by
Financing Activities 64 146
Decrease in Cash and Cash Equivalents 150 29
Cash and Cash Equivalents at Beginning of Period 153 36
Cash and Cash Equivalents at End of Period $ 3 $ 7
Supplemental Information:
Settlement of Forward Gold Sale with Common
Stock (Subscribed) - 25
Payment of Notes Payable - Other with Common
Stock (Subscribed) - 10
Payment of Accounts Payable with Common Stock
(Subscribed) - 113
Non Cash Investment in Joint Venture - 50
See Accompanying Notes to Condensed Consolidated Financial Statements
See Accompanying Accountant's Disclaimer Letter
<PAGE>
VANDERBILT GOLD CORPORATION
Notes to Condensed Consolidated Financial Statements
June 30, 1995
Unaudited
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
The Condensed Consolidated Balance Sheet as of June 30, 1995, and the
related Condensed Consolidated Statements of Operations for the three and
six months ended June 30, 1995 and 1994 and Condensed Consolidated
Statements of Cash Flows for the three months ended June 30, 1995 and 1994
have been prepared without audit. The Condensed Consolidated Balance Sheet
as of December 31, 1994 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 June 30, 1995, and the results of operations and
cash flows for the three and six months ended June 30, 1995 and 1994 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, 1994 Form 10-K. The results of operations for the three and
six months ended June 30, 1995 and 1994 are not necessarily indicative of
the operating results for a full year.
For 1994, these condensed consolidated financial statements include the
accounts of the Company and its proportionate share of the assets,
liabilities, income and expenses of a joint venture in which it was a 50%
member.
Loss per common share is computed based upon the weighted average number of
shares outstanding during each period, including common stock subscribed
for which the Company has been fully paid. The effect on the 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 $837,000 inventory amount shown on the June 30,
1995 balance sheet is composed of $835,000 for ore in process on the heap
leach pad and metals in solution and $2,000 for operating supplies. The
$867,000 shown as inventories on the balance sheet as of December 31, 1994
consists of $856,000 for ore in process on the heap leach pads and metals
in solution and $11,000 for operating supplies.
Certain reclassifications have been made to the 1994 financial statements
for comparability to 1995. Such reclassifications had no effect on the
amount of net loss.
<PAGE>
To the Board of Directors of
Vanderbilt Gold Corporation
Las Vegas NV 89103
The accompanying condensed consolidated balance sheet of Vanderbilt Gold
Corporation (A Delaware Corporation) as of June 30, 1995 and the related
condensed consolidated statements of operations for the three months and six
ended June 30, 1995 and 1994 and the statements of cash flows for the six
months ended June 30, 1995 and 1994 were not audited by me and, accordingly, I
do not express an opinion on them.
The balance sheet amounts of Vanderbilt Gold Corporation for December 31, 1994
were audited by another accountant and he expressed a qualified opinion on them
in his report dated March 15, 1995, but he has not performed any auditing
procedures since that date.
I am not independent with respect to Vanderbilt Gold Corporation.
/S/ Bradley S. Brokop
Bradley S. Brokop
Certified Public Accountant
August 12, 1995
Burbank, California
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL:
It is with sadness that Vanderbilt Gold Corporation reports the passing of John
F. Jordan, Jr., its President and Chief Financial Officer on July 12, 1995,
from cancer. Mr. Jordan had been at the helm of the Company since 1987 and was
its vice president from 1982 to 1987. He was singularly responsible for its
continuing existence through the difficult financial times since the mining
activity was halted at the Morning Star Mine in 1990.
At its Board Meeting on July 26, 1995, the Board of Directors elected Keith
Fegert as interim President and interim Chief Financial Officer. Mr. Fegert has
over eleven years experience in the mining industry. He was elected to
the Board of Directors on June 16, 1994 during the last stockholders' meeting.
RESULTS OF OPERATIONS:
Comparison of three months ended June 30, 1995 to three months ended June 30,
1994:
The Company realized a net loss of $146,000 ($0.00 per share) for the three
months ended June 30, 1995 which is $73,000 less than the $219,000 ($0.01 per
share) net loss for the three months ended June 30, 1994. The Company spent
$27,000 on exploration expenses during the quarter ended June 30, 1995 on
concessions in Mexico contrasted to $1,000 in exploration expenditures during
the same period in 1994. The Registrant was concentrating its efforts during
the quarter ended June 30, 1994 on bringing itself current on all of its
delinquent filings with the Securities and Exchange Commission (for 1991, 1992
and 1993) and working toward planning and arranging for a shareholders' meeting
incurring costs of in the range of $60,000 to $70,000 for this purpose.
The following financial and operational highlights summarize the Company's
results of operations and financial position, for the periods indicated:
Three months ended
June 30, June 30,
1995 1994
(in thousands except
percentages, per share,
ounces, and per ounce
amounts)
(Unaudited)
Overburden and waste removed (tons) 0 0
Ore mined (tons) 0 0
Payable gold (troy ounces):
Produced 37 ** -
Sold 37 -
<PAGE>
Payable Silver (troy ounces):
Produced - -
Sold - -
Loss Per Common Share .00 .01
Total Assets 3,075 2,987
Total Liabilities 1,990 1,694
Accumulated Deficit 23,802 23,124
Shareholders' Equity 1,085 1,293
Working Capital (Deficit) (1,051) (760)
** Metals produced and recovered from heap leach pad #2 solutions as part of
the detoxification process.
The Company's operational emphasis for 1995 is to complete and place in service
enclosed leach and detoxification vats at the Morning Star Mine, detoxify heap
leach pad #2, commence mining, crushing, agglomerating, leaching and
detoxifying significant grade ores from the Mine, and continue exploration on
the Mexican concessions. For 1994, the emphasis was to gain detoxification
certification for heap leach pad #1, to continue reclamation and remediation
activities at the Mine, to seek out new mining opportunities and to raise funds
and restructure the Company's finances. Vanderbilt believes it has met or
exceeded the requirements imposed by the regulations of all environmental
government agencies.
During both 1995 and 1994, Vanderbilt continues to devote much of its time and
effort to improving the mine site. In 1994, the clean up efforts were focused
on the removal of used equipment and various hazardous waste. Used equipment
and parts and materials abandoned by former contractors as well as hazardous
waste, primarily diesel fuel, motor oil, and filters have been removed in
accordance with current environmental regulations.
Comparison of six months ended June 30, 1995 to six months ended June 30, 1994:
The Company realized a net loss of $384,000 ($0.01 per share) for the six
months ended June 30, 1995 which is $31,000 less than the $415,000 ($0.02 per
share) net loss for the six months ended June 30, 1994. The Company spent
$107,000 in exploration expenses during the six months ended June 30, 1995 on
its concessions in Mexico contrasted to $1,000 in exploration expenditures
during the same period in 1994. The general and administrative expenses for
the six months ended June 30, 1995 were $149,000 lower than the same period in
1994 because, as indicated above, the Company brought its Securities and
Exchange filings current in 1994.
<PAGE>
The following financial and operational highlights summarize the Company's
results of operations and financial position, for the periods indicated:
Six months ended
June 30, June 30,
1995 1994
(in thousands except
percentages, per share,
ounces, and per ounce
amounts)
(Unaudited)
Overburden and waste removed (tons) 0 0
Ore mined (tons) 0 0
Payable gold (troy ounces):
Produced 76 ** -
Sold 76 36
Payable Silver (troy ounces):
Produced 7 -
Sold 7 ** 33*
Average realization:
Gold (per payable ounce) $ 384.42 $ 373.10
Silver (per payable ounce) 4.35 5.16
Estimated ounces of recoverable gold
remaining on heap leach pads 2,373 2,449
Estimated Percentage of Recoverable
Gold Remaining on the heap leach pads 4.39% 4.52%
Bullion Sales $ 29 $ 14
Operating Loss 378 397
Net Loss 384 415
Loss Per Common Share .01 .02
Cash Flow Used in Operations 157 174
Cash Flow Used in Investing Activities 54 1
Cash Flow Provided by Financing Activities 61 146
Total Assets 3,075 2,987
Total Liabilities 1,990 1,694
Accumulated Deficit 23,802 23,124
Shareholders' Equity 1,085 1,293
Working Capital (Deficit) (1,051) (760)
* Metals recovered from spent carbon removed from the recovery tanks.
** Metals produced and recovered from heap leach pad #2 solutions as part of
the detoxification process.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES:
The Company has financed its operations and exploration activities through
small private placements and loans for both 1994 and 1995. 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 costs are 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.
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 raise additional capital
through private placements, restructuring of debt, joint venture and other
financing arrangements.
OTHER:
On January 13, 1995, Vanderbilt entered into a contract with Compania Minera
Rosarence S. A. de C. V., also known as Rosarence, under which the Company is
to fund certain exploration and development activities in a concession of
67,000 acres in the western part of the State of Durango, Mexico. Preliminary
sampling identified gold, silver and copper potentials. The Company also
acquired a one year option to acquire a specified portion of the concession,
including all equipment purchased pursuant to the agreement, and further, the
option to acquire all of the outstanding shares of Rosarence at no further
cost. This option expires one year from January 13, 1995.
Vanderbilt is required to pay $200,000 for the grant of the option, as follows:
1) the delivery of a Caterpillar D8K bulldozer to Rosarence, valued in the
agreement at $55,000, 2) $25,000 upon execution of the agreement, and 3) four
quarterly payments of $30,000 each beginning April 1, 1995.
The Company is obligated to provide $400,000 for the exploration and
development of the concession during the one year term following the execution
of the agreement.
Vanderbilt may exercise its option to purchase the specified portion of the
concession and all of the shares of Rosarence by notifying Rosarence of its
intention and transferring 1,800,000 restricted common shares; the shares shall
be covered by Regulation S of the United States Securities and Exchange
Commission and thus be freely tradeable 45 days following proper transfer. If,
however, the shares have a value less than $1.00 (average of bid and ask price
on the electronic bulletin board trading system), Rosarence may elect to
receive the remainder of the option exercise price in cash or in additional
Vanderbilt common shares. In effect, Rosarence is to receive $1,800,000 in
value (Vanderbilt common shares and cash).
<PAGE>
During the term of the agreement, Rosarence shall be the operator of the
concession pursuant to a mutually agreed upon work plan. Any revenues earned
during the term of the agreement are restricted to be used for additional
exploration and development and cannot be used by Vanderbilt as an offset
against its $400,000 funding obligation.
In May, 1995, and subsequent, the parties to the agreement negotiated and
agreed to deferred payment schedules for Vanderbilt for the option and the
exploration.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On June 29, 1995, the Appellate Department of the Trial Courts for the County of
San Bernardino in the State of California, in the matter of the People of the
State of California vs Vanderbilt Gold Corporation and John F. Jordan, Jr.,
affirmed the judgment of the lower court on convictions on all counts under
appeal. The Company is preparing its appeal to the California Court of Appeals.
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: August 13, 1995 By /S/ Keith Fegert
Keith Fegert, Interim President
and Interim Chief Financial
Officer
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