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 March 31, 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 May 15, 1995: 28,976,210 shares
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VANDERBILT GOLD CORPORATION
Condensed Consolidated Balance Sheets
(In Thousands)
March December
31, 31,
1995 1994
Unaudited
Current Assets:
Cash and Cash Equivalents $ 41 $ 153
Accounts Receivable - Trade 5 68
Employee Advances Receivable 23 23
Due From Related Party 20 17
Inventories 857 867
Prepaid Expenses 4 3
Other 3 2
Total Current Assets 953 1,133
Plant and Equipment - Net 2,197 2,159
Total Assets $ 3,150 $ 3,292
Current Liabilities:
Accounts Payable $ 1,106 $ 1,062
Accrued Expenses 156 156
Accrued Salaries and Wages 480 480
Deferred Revenue - Gold Sales 95 95
Gold Loan Payable 38 38
Total Current Liabilities 1,875 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 March 31, 1995 and at December 31, 1994 290 290
Common Stock Subscribed but Unissued:
1,147,421 Shares at March 31, 1995 and
825,546 Shares at December 31, 1994 184 133
Additional Paid in Capital 24,411 24,411
Accumulated Deficit (23,655) (23,418)
Net Shareholders' Equity 1,230 1,416
Total Liabilities and Shareholders' Equity $ 3,150 $ 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 Three Months
Ended Ended
March 31, 1995 March 31, 1994
Unaudited Unaudited
Revenues:
Precious Metals Sales $ 15 $ 14
Total Revenues 15 14
Expenses:
Direct Cost of Sales 9 -
Leaching, Refining and Shipping Costs 9 10
Depreciation and Amortization 14 15
Reclamation and Remediation Costs 60 42
Exploration Expenses 80 -
General and Administrative Expenses 79 151
Total Expenses 251 218
Operating Loss 236 204
Dividend Income 1 -
Interest Expense 2 3
Debt Cancellation Income - 11
Net Loss Before Taxes 237 196
Provision for Income Taxes - -
Net Loss $ 237 $ 196
Net Loss Per Share $ 0.01 $ 0.01
Weighted Average Number of Shares
Outstanding Used in Calculation of
Loss Per Share 29,881 24,021
See Accompanying Notes to Condensed Consolidated Financial Statements
See Accompanying Accountant's Disclaimer Letter
<PAGE>
VANDERBILT GOLD CORPORATION
Condensed Consolidated Statements of Cash Flows
(in thousands)
Three Months Three Months
Ended Ended
March 31, 1995 March 31, 1994
Unaudited Unaudited
Cash Flows from Operating Activities:
Net Loss $ (237) $ (196)
Adjustments for Noncash Items Included
in Net (Loss):
Depreciation and Amortization Charged:
to Costs and Expenses from Current Period 14 15
Income from Cancellation of Debt - 11
Payment of Current Expenses with Common Stock
Subscribed - 19
Changes in Current Assets and Liabilities:
Accounts Receivable 63 -
Employee Advances Receivable - (5)
Due from Related Party (3) (23)
Inventories - Net of Depreciation and
Amortization Charged to Costs and Expenses 10 2
Other Current Assets (2) 1
Accounts Payable 44 61
Accrued Expenses - (2)
Accrued Salaries and Wages - 28
Net Cash Used in Operating
Activities 111 89
Cash Flows from Investing Activities:
Purchase of Fixed Assets 27 1
Payment on Option - Mexico Property 25 -
Net Cash Used in
Investing Activities 52 1
Cash Flows from Financing Activities:
Proceeds From Common Stock Subscribed 51 106
Payment of Notes Payable - Other - (4)
Payment of Amounts Due Related Parties - (5)
Net Cash Provided by
Financing Activities 51 97
Increase (Decrease) in Cash and Cash Equivalents (112) 7
Cash and Cash Equivalents at Beginning of Period 153 36
Cash and Cash Equivalents at End of Period $ 41 $ 43
Supplemental Information:
Interest Paid - -
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
March 31, 1995
Unaudited
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
The Condensed Consolidated Balance Sheet as of March 31, 1995, and the
related Condensed Consolidated Statements of Operations and Cash Flows for
the three months ended March 31, 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 March
31, 1995, and the results of operations and cash flows for the three months
ended March 31, 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
months ended March 31, 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 is 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 $857,000 inventory amount shown on the March 31,
1995 balance sheet is composed of $847,000 for ore in process on the heap
leach pad and metals in solution and $10,000 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 March 31, 1995 and the related
condensed consolidated statements of operations for the three months ended
March 31, 1995 and 1994 and the statements of cash flows for the three months
ended March 31, 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
May 3, 1995
Burbank, California
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
Comparison of three months ended March 31, 1995 to three months ended March 31,
1994:
The Company realized a net loss of $237,000 ($0.01 per share) for the three
months ended March 31, 1995 which is $41,000 more than the $196,000 ($0.01 per
share) net loss for the three months ended March 31, 1994. These quarterly
losses reflect the facts that the Company was concentrating on reclamation and
remediation activities at the Morning Star Mine ("Mine"); $60,000 paid out
during the quarter ended March 31, 1995 compared to $42,000 expended for the
same purposes during the quarter ended March 31, 1994. The Company spent
$80,000 on exploration expenses during the quarter ended March 31, 1995 on
concessions in Mexico (see below) contrasted to no exploration expenditures
during the same period in 1994. The Registrant was concentrating during the
quarter ended March 31, 1994 on bringing itself current on all of its required
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
March 31, March 31,
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 39 ** 36*
Sold 39 36
Payable Silver (troy ounces):
Produced 7 33
Sold 7 ** 33*
Average realization:
Gold (per payable ounce) $ 377.25 $ 373.10
Silver (per payable ounce) 4.35 5.16
Estimated ounces of recoverable gold
remaining on heap leach pads 2,410 2,449
Estimated Percentage of Recoverable
Gold Remaining on the heap leach pads 4.46% 4.52%
Bullion Sales $ 15 $ 14
Operating Loss 236 204
<PAGE>
Net Loss 237 196
Cash Used in Operations 111 89
Cash Flow Used in Investing Activities 52 1
Cash Flow Provided by Financing Activities 51 97
Loss Per Common Share .01 .01
Total Assets 3,150 3,024
Total Liabilities 1,920 1,739
Accumulated Deficit 23,655 22,905
Shareholders' Equity 1,230 1,285
Working Capital (Deficit) (922) (783)
* Metals recovered from the spent carbon removed from the recovery tanks.
** 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 detoxify heap leach pad #2,
complete and place in service enclosed leach and detoxification vats at the
Morning Star Mine, commence mining, crushing, agglomerating, leaching and
detoxifying significant grade ores from the Mine, and continue exploration on
the Mexican concessions (see below). 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 continues to devote much of its time and effort to improving the
mine site. Clean up efforts have been 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.
LIQUIDITY AND CAPITAL RESOURCES:
The following financial highlights summarize the Company's cash flows, for the
periods indicated:
Three months ended
March 31, March 31,
1994 1993
(in thousands)
(Unaudited)
Cash Used in Operating Activities $ 111 $ 89
Cash Used to Acquire Capital Assets 52 1
Cash Provided by Proceeds from Common Stock Subscribed 51 106
Cash Used for Payment of Notes Payable - Other - 4
Cash Used for Payment of Related Parties Loans - 5
<PAGE>
As reflected in the table above, the Company was able to raise cash through
common stock subscribed (private placements).
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, the parties to the agreement negotiated and agreed to a deferred
payment schedule for Vanderbilt for the option and the exploration.
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, 1994 Annual Report on Form 10-K and
related 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
<PAGE>
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: May 15, 1995 By /S/ John F. Jordan, Jr.
John F. Jordan, Jr.,
President and Chief
Financial Officer
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<OTHER-SE> 756
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