FORM 10-QSB
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from to
Commission file number 0-9137
U.S. GOLD CORPORATION
(Exact name of small business issuer as specified in its charter)
COLORADO 84-0796160
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2201 Kipling Street, Suite 100
Lakewood, Colorado 80215-1545
(Address of principal executive offices)
(303) 238-1438
(Issuer's telephone number)
(Former name, former address and former fiscal year, if changed since
last report)
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 X No
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date:
Class Outstanding as of November 1, 2000
Common Stock, $0.10 par value 13,973,730
U.S. GOLD CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended September 30, 2000 and 1999
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
Revenues:
Project payments $135,000 $135,000 $405,000 $505,000
Interest income 34 22 65 73
Gain (loss) on sale of assets - - - (6,606)
Total revenues 135,034 135,022 405,065 498,467
Other costs and expenses:
General and administrative 130,167 126,810 350,637 482,248
Capitalization of prior
period costs (140,000) - (40,803) -
Consulting fees, related Parties - - - 10,000
Interest 869 1,846 2,853 5,524
Depreciation 3,903 4,211 11,612 12,659
Total expense (5,061) 132,867 324,299 510,431
Income (loss) before income taxes 140,095 2,155 80,766 (11,964)
Provision for income taxes - - - -
Net income (loss) $140,095 $2,115 $80,766 $(11,964)
Basic and diluted per share data:
Basic $0.01 $0.00 $0.01 $(0.00)
Diluted $0.01 $0.00 $0.01 $(0.00)
Weighted average shares
outstanding 13,973,730 13,927,469 13,966,210 13,927,469
U.S. GOLD CORPORATION
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME
Nine Months Ended September 30, 2000 and 1999
(Unaudited)
September 30, 2000 September 30, 1999
Net income (loss) $80,766 $(11,964)
Comprehensive item-
unrealized gain on
securities available for sale - 21,640
Comphensive income (loss) $80,766 $9,676
See accompanying notes to consolidated financial statements.
U.S. GOLD CORPORATION
CONSOLIDATED BALANCE SHEET
September 30, 2000
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $46,182
Project payments receivable 495,000
Total current assets 541,182
Project payments receivable 135,000
Investment in Tonkin Springs LLC 2,262,578
Investment in affiliate-
Gold Resource Corporation 170,648
Other assets 52,542
$3,161,950
LIABILITIES, DEFERRED CREDIT &
SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $8,469
Installment purchase contracts 9,522
Related party payables 247,975
265,966
Installment purchase contracts, long-term 26,218
Deferred credit, project payments 675,000
Reserve for reclamation 640,000
Total liabilities and deferred credit 1,607,184
Shareholders' equity:
Common stock, $.10 par value, 18,000,000
shares authorized; 13,973,730 shares
issued and outstanding 1,397,373
Additional paid-in capital 31,972,214
Accumulated deficit (31,814,821)
Total shareholders' equity 1,554,766
$3,161,950
See accompanying notes to consolidated financial statements.
U.S. GOLD CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 2000 and 1999
(Unaudited)
September 30, September 30,
2000 1999
Cash flows from operating activities:
Interest received $65 $73
Project Payments 450,000 505,000
Cash paid to suppliers and employees (439,224) (520,205)
Cash provided by (used in)
operating activities 10,841 (15,132)
Cash flows from investing activities:
Sale of marketable securities
and assets - 21,720
Capital expenditures (2,665) (1,193)
Cash provided by (used in)
investing activities (2,665) 20,527
Cash flows from financing activities:
Payments on installment
purchase contracts (10,474) (6,871)
Cash (used in) financing activities (10,474) (6,871)
Decrease in cash and cash equivalents (2,298) (1,476)
Cash and cash equivalents,
beginning of period 48,480 1,954
Cash and cash equivalents,
end of period $46,182 $478
Reconciliation of net loss to cash used
in operating activities:
Net income (loss) $80,766 $(11,964)
Items not requiring (providing) cash:
Capitalization of prior years costs (40,803) -
Loss on sale of assets - 7,778
Depreciation 11,612 12,659
Increase (decrease) in current
liabilities related to operations 85,237 (757)
Decrease (increase) in other assets,
long term (125,971) (22,848)
Cash provided by (used in)
operating activities $10,841 $(15,132)
See accompanying notes to consolidated financial statements.
U.S. GOLD CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Summary of Significant Accounting Policies
Basis of Presentation: The interim financial statements included herein have
been prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information
and footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the information
presented not misleading.
These statements reflect all adjustments, consisting of normal recurring
adjustments which, in the opinion of management, are necessary for fair
presentation of the information contained therein. It is suggested that these
financial statements be read in conjunction with the financial statements and
notes thereto included in the Company's Form 10-KSB as of December 31,
1999. Results of operations for the interim period are not indicative of
annual results.
Basis of Consolidation: The consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries, as well as the
accounts of the wholly-owned Tonkin Springs Venture Limited Partnership
("TSVLP"). Significant intercompany accounts and transactions have been
eliminated. The investment in an affilate company, Gold Resource
Corporation, is carried at cost.
Per share amounts: Statement of Financial Accounting Standards No. 128
provides for the calculation of "Basic" and "Diluted" earnings per share.
Basic earnings per share includes no dilution and is computed by dividing
income available to common shareholders by the weighted-average number
of shares outstanding during the period (13,973,730 and 13,966,210,
respectively for the three and nine month periods ended September 30, 2000
and 13,927,469 for both the corresponding periods of 1999). Diluted
earnings per share reflect the potential dilution of securities that could
share in the earnings of the Company, similar to fully diluted earnings per
share with the weighted-average number of shares outstanding during the
period (14,162,595 and 14,541,252, respectively for the three and nine
month periods ended September 30, 2000 and 14,266,674 for the three
month period ended September 30, 1999). For the nine months ended
September 30, 1999 options are not considered in the computation of diluted
earnings per share as their inclusion would be antidilutive.
Recent Pronouncements: The FASB recently issued Interpretation No. 44,
"Accounting for Certain Transactions involving Stock Compensation." This
interpretation effects applications under APB Opinion No. 25. This
interpretation is effective for interim statements beginning after July 1,
2000 and requires variable option plan accounting for plans where certain
option agreements were terminated and new option agreements were entered
into by a company. Under variable option plan accounting, outstanding
options to acquire shares must be marked-to-market with the cumulative net
adjustment included in the statement of operations and with the net
cumulative adjustment balance reflected in paid in capital within shareholders'
equity. This accounting is required until the options in question are
either exercised, terminated or expire. The Company adopted this
interpretation effective with interim statements as of September 30, 2000.
However, since the exercise price of outstanding stock options were greater
than the share price as of September 30, 2000, no adjustment was required.
The FASB has also issued Statement No. 137, "Accounting for Derivative
Instruments and Hedging Activities-Deferral of Effective Date of FASB
Statement No. 133." The Statement defers for one year the effective date of
FASB Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities."
The rule now will apply to all fiscal quarters of all fiscal years beginning
after June 15, 2000. In June 1998, the FASB issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which is
required to be adopted in years beginning after June 15, 1999. The
Statement permits early adoption as of the beginning of any fiscal quarter
after its issuance. The Statement requires the Company to recognize all
derivatives on the balance sheet at fair value. Derivatives that are not
hedges must be adjusted to fair value through income. If the derivative is a
hedge, depending on the nature of the hedge, changes in the fair value of
derivatives will either be offset against the change in fair value of the
hedged assets, liabilities, or firm commitments through earnings or recognized
in other comprehensive income until the hedged item is recognized in
earnings. The ineffective portion of a derivative's change in fair value
will be immediately recognized in earnings. The Company has determined
that implementation of SFAS No. 133 has no effect on the earnings and
financial position of the Company.
Adjustments: The preparation of the Company's consolidated financial
statements in conformity with generally accepted accounting principles
requires the Company's management to make estimates and assumptions that
affect the amounts of assets and liabilities, the disclosure of contingent
assets and liabilities at the date of the financial statements, and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
2. Tonkin Springs Project
From December 31, 1993 until February 26, 1999, TSVLP, a partnership
owned by subsidiaries of the Company, held a 40 percent undivided interest
in the Tonkin Springs Properties (the "Properties") subject to a mining joint
venture, the Tonkin Springs Project Joint Venture as amended (the "1993
Agreement"), with Gold Capital Corporation ("Gold Capital") being the holder
of 60 percent undivided interest and project manager. Effective February 26,
1999 (the "Effective Date") TSVLP and Gold Capital terminated the 1993
Agreement and each retained their respective 40 percent and 60 percent
undivided interests in the Properties. Gold Capital then immediately sold its
60 percent undivided interest in the Properties to Tonkin Springs Holdings
Inc., a Colorado corporation ("TSHI") which is owned by subsidiaries of
Sudbury Contact Mines Limited, an Ontario, Canada corporation ("Sudbury")
(SUD:TSE), which is itself a subsidiary of Agnico-Eagle Mines Limited, an
Ontario, Canada corporation ("Agnico-Eagle") (AME:NYSE). TSHI then
immediately contributed its 60 percent undivided interest in the Properties
into a new limited liability company, Tonkin Springs LLC ("TSLLC") in
exchange for 60 percent of the equity membership interest of TSLLC, and
TSVLP contributed its 40 percent undivided interest in the Properties into
TSLLC in exchange for 40 percent of the equity membership interest of
TSLLC. The deemed amount of the Initial Contribution of TSVLP to TSLLC
is $2 million and for TSHI the Initial Contribution to TSLLC is $3 million.
The objective of TSLLC is the exploration, evaluation and, if justified, the
development and mining of mineralization in the Properties.
Under the Members' Agreement and the Operating Agreement of the TSLLC,
TSHI is required to fund all costs related to the Properties, including all
holding, administrative, operational and exploration costs, until TSHI has
first expended $4 million on Exploration (exploration related costs only) of
the Properties (the "Cut-Off Date"). All expenditures funded by TSHI prior to
the Cut-Off Date, including Exploration, holding, administrative or other
operational costs of the Properties, shall be added to TSHI's Recoupable
Amount which has as its opening balance the sum of $5,625,000, which was
intended to represent approximately one-half of the recoupment account
balance of Gold Capital under the 1993 Agreement as of the Effective Date.
TSHI has reported that through September 30, 2000 the balance of
Exploration expenditures on the Properties is approximately $1,330,818 and
that the balance of the Recoupable Amount as of that date is approximately
$8,788,651. If TSHI should withdraw from the TSLLC prior to Cut-Off, TSHI
shall have no further right, title or interest in the Properties of TSLLC and
its ownership interest shall be deemed transferred to TSVLP. In addition,
TSHI shall remain obligated to TSVLP: (i) to fund the remaining balance of
the adopted Program and Budget in effect upon termination, (ii) to complete
its Minimum Work Commitment for Exploration of the Properties in the
amount of $2 million, or pay to TSVLP the deficiency, (iii) to pay any unpaid
Monthly Minimum Payments to TSVLP (as described further below) that are
due and payable, and (iv) to fund and satisfy all unfunded liabilities to third
parties arising out of operations conducted subsequent to the Effective Date
but prior to the date of TSHI's withdrawal or deemed withdrawal. TSVLP
and TSHI (the "Members") have designated Tonkin Springs Management Co.,
a Colorado corporation ("TSMC", and an affiliate of TSHI) as the initial
Manager of the Properties with overall management responsibilities for
operations.
At the Effective Date, TSHI paid to TSVLP $190,000, and commencing March
1, 1999 TSHI began making additional payments to TSVLP in the amount of
$45,000 per month through December 1, 2001 (collectively "Minimum
Payments to TSVLP"). One half of Minimum Payments to TSVLP are added
to TSHI's Recoupable Amount as discussed further below (and included in the
September 30, 2000 balance as reported above). As of September 30, 2000,
there remains recorded a $630,000 receivable due from the TSLLC reflecting
remaining Minimum Payments to TSVLP, of which $495,000 is classified as
a current asset, offset by a $675,000 deferred credit, with the effect that
the entire receivable is offset by a deferred credit.
The Operating Agreement of the TSLLC defines Commencement of
Commercial Production ("CCP"). After CCP 60 percent of positive cash flow
from the operations of the Properties ("Cash Flow"), if any, shall be
distributed to TSHI until TSHI has recovered its Recoupment Amount, and the
remaining 40 percent of Cash Flow shall be distributed to the Members based
upon their respective ownership interest on a calendar quarter basis. After
TSHI has recovered the Recoupment Amount, 100 percent of Cash Flow shall
be distributed to the Members in proportion to the Member's ownership
interest. Therefore, initially during the period in which TSHI is thus
receiving preferential payments, TSVLP shall receive 16 percent of Cash Flow,
if any, from operations. Cash Flow otherwise due TSVLP shall first be applied
to reduce any Elected Loans outstanding from TSHI, as discussed further
below.
On the last day in the calendar month in which CCP is achieved, TSHI shall
pay TSVLP an additional amount to be calculated by multiplying $15,000
times the number of months from the Effective Date through the month in
which CCP is achieved (the "Lump-Sum Payment").
After the Cut-Off Date, TSHI is required to exercise reasonable efforts to
attempt to obtain third party project financing for any development of the
Properties requiring funding of more than $20 million. After the Cut-Off
Date, TSVLP is required to fund its 40 percent share of all costs of the
Properties or be subject to dilution under a formula. Either party may
elect to contribute a lesser amount or none towards its share of an adopted
program and budget. However, as long as TSHI owns at least 50 percent
interest in TSLLC, TSHI is obligated to loan TSVLP its share of funding of
an adopted program and budget after the Cut-Off Date under one-year term
loans (the "Elected Loan") with an interest rate of LIBOR plus 2 percent.
If, however, TSVLP does not repay an Elected Loan when due, TSHI shall
have no further obligation to make additional Elected Loans to TSVLP and the
amounts of defaulted Elected Loans and accrued interest thereon shall be
incorporated into the computation of dilution of TSVLP's working interest
under a formula. If the ownership interest of any Member falls to 10 percent
or less as a result of the dilution formula, then such Member shall
be deemed to have withdrawn from the TSLLC and to have automatically
relinquished and transferred its interest to the other Member and upon such
relinquishment the withdrawing Member shall be granted an overriding 2
percent net smelter royalty (the "NSR") on products subsequently extracted,
removed and sold from the Properties.
The Company has guaranteed TSVLP's obligations under the TSLLC and
TSVLP has given a security interest (consisting of its ownership interest
arising under the TSLLC) in favor of TSHI to secure its performance under the
TSLLC. Sudbury has guaranteed certain obligations of TSHI. The Company
recognized neither a gain nor a loss on the termination of the 1993
Agreement or with the contribution of its 40 percent undivided interest in
the Properties to the TSLLC.
3. Condensed Financial Information of Tonkin Springs LLC
As noted in Footnote 2 above, effective February 26, 1999, the Company's
interest in the Tonkin Springs Properties were contributed into the Tonkin
Springs LLC with TSMC as manager. The following is the condensed
unaudited balance sheet of Tonkin Springs LLC as of September 30, 2000, and
a condensed statement of operations for the nine months then ended. All
costs associated with the Properties have been funded by TSHI.
STATEMENT OF OPERATIONS Nine Months Ended
September 30, 2000
Interest income $30,063
Exploration expense 697,856
Property holding costs, net 660,410
Depreciation 34,759
1,393,025
Net loss $(1,362,962)
BALANCE SHEET September 30, 2000
Assets:
Cash $184,248
Prepaid claim fees 29,552
213,836
Property, plant, equipment, net 5,057,934
Restricted time deposit for reclamation bond 1,347,224
Total assets $6,618,994
Liabilities, Reserves and Members' Equity:
Current liabilities $19,287
Reserve for reclamation 1,469,000
1,488,287
Members' Equity-
TSHI 3,130,707
TSVLP 2,000,000
Total members' equity 5,130,707
Total liabilities, reserves and
members' equity $6,618,994
Note A. TSVLP and TSHI are jointly responsible for reclamation of
disturbances of the Properties. The current estimate of reclamation costs,
on a 100 percent basis, totals approximately $1.47 million of which TSVLP
and the Company reflects $640,000 on its balance sheet related to its 40
percent share. Actual reclamation, generally, will be commenced upon the
completion of operations at the Properties. Bonding of reclamation under
various Nevada and Federal Bureau of Land Management agencies, tentatively
set at $1.3 million, is the responsibility of TSHI under the terms of the
Tonkin Springs LLC prior to Cut-Off. Tonkin Springs LLC has a cash bond
posted in the initial amount of $1.3 million with the required governmental
agencies secured by a restricted cash time deposit for a total balance of
reclamation deposits of $1,347,224.
4. Loan Settlement Agreement with FABC
On February 21, 1992, the Company, among other related things, entered into
a Loan Settlement Agreement with its senior secured lender, The French
American Banking Corporation ("FABC"). The Company discharged its debt
to FABC and terminated all prior security interests related thereto. As part
of the consideration to FABC under the Loan Settlement Agreement, the
Company entered into an agreement between Tonkin Springs Gold Mining
Company, a wholly-owned subsidiary of the Company ("TSGMC") and FABC
entitled "Agreement To Pay Distributions," which requires TSGMC to pay a
limited portion of certain distributions from TSVLP through TSGMC to FABC.
The Company has complete control of such distributions, if any, from TSVLP
to TSGMC. Under the terms of the Agreement To Pay Distributions, TSGMC
is required to pay to FABC (i) the first $30,000 in cash or value of asset
distributions, as defined in such agreement, received from TSVLP, plus (ii)
an amount equal to 50% of such retained distributions in cash or value of
asset distributions after TSGMC has first received and retained $500,000 of
such retained distributions. This obligation to FABC shall terminate after
FABC has been paid a total of $2,030,000 thereunder or upon disposition by
TSGMC of its interest in TSVLP.
5. Related Party Transactions
Effective November 15, 1997 through February, 1999, the Company and
Moyes & Newby & Co, ("Moyes Newby") entered into a month-to-month
arrangement whereby Moyes Newby provided the Company general corporate
and financial advisory services for a retainer of $5,000/month for a total
paid or accrued for 1999 of $10,000. Douglas J. Newby, a director of the
Company, was then managing partner of Moyes Newby.
Commencing July 1, 1998, the three executive officers of the Company
voluntarily deferred a portion of their individual salaries in order to
conserve working capital of the Company. As of September 30, 2000, the
total amount of such voluntary deferral was $229,975. In addition, certain
of the director fees accrued for 1999 and the first nine months of 2000 in
the amount of $18,000 remain unpaid as of September 30, 2000. All of these
amounts are reflected as liabilities of the Company as of September 30, 2000.
Effective July 1, 2000, the Company and Gold Resource Corporation ("GRC"),
a private Colorado corporation, entered into a management contract whereby
the Company provides general management of GRC business activities in
exchange for common shares of GRC. The business objective of GRC is to
acquire and develop mining properties in Mexico. GRC is responsible for all
funding needed and anticipates raising funds through the sale of GRC stock
and debt financing. Under the management contract, the Company will
receive approximately 166,667 shares of GRC per quarter over the 18 month
duration of the contract for an aggregate 1,000,000 shares of GRC common
stock, of which 166,670 were recieved for the three month period ended
September 30, 2000, all with stated value under the agreement of $.50/share.
In addition, the Company received 280,000 shares in GRC with the execution
of the management contract as consideration for staff time and expenses
associated with evaluation of opportunities in Mexico during 1999 and the
first half of year 2000. The aggregate number of GRC shares owned by the
Company as of September 30, 2000 is 446,670. The management contract
may be terminated by either party for cause with 30 days prior written notice.
The Company anticipates that performance under the contract will involve no
more than approximatley 50 percent of the available time of its staff. The
aggregate shares of GRC to be received by the Company under this contract,
1,280,000, initially represents approximately 39 percent of the current
capitalization of GRC but that percentage is anticipated to be temporary in
nature since it is anticipated that GRC will issue additional shares for
funding and/or for the acquisition of property interests. The shares of GRC
are not publicly traded. The Company is accounting for its investment in GRC
under the cost method of accounting and as of September 30, 2000 has
reflected an investment of $170,648, representing staff time and expenses,
with respect to 446,670 shares of GRC earned through that date under the
management contract. William W. Reid, president, chief executive officer and
chairman of the Board of Directors of the Company and David C. Reid, vice
president and director of the Company are currently the controlling
shareholders of GRC. William F. Pass, vice president, chief financial officer
and secretary of the Company, has been granted by GRC a non-qualified stock
option to purchase 200,000 shares of GRC common stock at an exercise price
of $.50 per share. Through the arrangement with GRC the Company has the
opportunity to participate in potential business activities in Mexico with no
additional expenditures, other than those related to the current level of
corporate overhead expenditures.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATIONS
Changes in Financial Condition
The principal property of U.S. Gold Corporation (the "Company") is it's 40
percent interest in Tonkin Springs (the "Properties"). The Company holds it's
interest in the Properties through Tonkin Springs Venture Limited Partnership
("TSVLP"), a partnership owned by subsidiaries of the Company.
Until February 26, 1999, the Properties were subject to the Tonkin Springs
Project Joint Venture as amended (the "1993 Agreement") with Gold Capital
Corporation ("Gold Capital") owner of 60 percent, project manager and
responsible for all funding. Effective February 26, 1999 (the "Effective
Date") TSVLP and Gold Capital terminated the 1993 Agreement and each
retained their respective 40% and 60% undivided interests in the Properties.
Gold Capital then immediately sold it's 60% undivided interest in the
Properties to Tonkin Springs Holdings Inc., a Colorado corporation ("TSHI")
which is owned by subsidiaries of Sudbury Contact Mines Limited, an Ontario,
Canada corporation ("Sudbury")(SUD:TSE), which is itself a subsidiary of
Agnico-Eagle Mines Limited, an Ontario, Canada corporation ("Agnico-Eagle")
(NYSE:AME).
TSVLP and TSHI (the "Members") then immediately contributed their
respective undivided interests in the Properties into a new limited liability
company, Tonkin Springs LLC ("TSLLC") in exchange for 40% and 60%,
respectively, of the equity membership interest of TSLLC. TSHI is manager
of TSLLC.
The objective of the Company is to maximize its shareholder value through
maintaining its 40% interest in the Tonkin Springs Property and participating
in other mining opportunities, particularly in Mexico. The Company may also
consider acquisition, merger opportunities or other business transactions to
achieve its objectives.
Liquidity and Capital Resources
At the Effective Date, TSHI paid to TSVLP $190,000, and commencing March
1, 1999 TSHI began making additional payments to TSVLP in the amount of
$45,000 per month through December 1, 2001 (collectively "Minimum
Payments to TSVLP"). During the nine months ended September 30, 2000
and 1999, the Company received $405,000 and $505,000, respectively, in
Minimum Payments to TSVLP which are reflected in revenue including for the
2000 period the January 2000 payment of $45,000 which was received in
December, 1999. One half of Minimum Payments to TSVLP will be added to
TSHI's Recoupable Amount as discussed further below. As of September 30,
2000, there remains recorded a $630,000 receivable due from the TSLLC
reflecting remaining Minimum Payments to TSVLP of which $495,000 is
classified as a current asset offset by a $675,000 deferred credit, with
the effect that the entire receivable is offset by a deferred credit.
During the nine months ended September 30, 1999, the Company sold
200,000 shares of Globex for aggregate $20,970 recognizing a gain on the
sale of $1,172.
The Operating Agreement of the TSLLC defines Commencement of
Commercial Production ("CCP"). On the last day in the calendar month in
which CCP is achieved, TSHI shall pay TSVLP an additional amount to be
calculated by multiplying $15,000 times the number of months from the
Effective Date through the month in which CCP is achieved (the "Lump-Sum
Payment").
As of September 30, 2000, the Company had working capital of $275,216
made up of current assets of $541,182 and current liabilities of $265,966.
During the next twelve months the Company anticipates receipt of $495,000
in Minimum Payments to TSVLP from the TSLLC. The Company may also
issue equity in public or private transactions to raise additional working
capital. These items are the primary source of working capital presently
anticipated during 2000 and 2001.
Net cash provided by (used in) operations increased to $10,841 for the nine
months ended September 30, 2000 from $(15,132) for the corresponding
period of 1999, primarily reflecting $505,000 in Minimum Payments to TSVLP
during the 1999 period compared to $450,000 received during the 2000
period, as well as lower cash paid to suppliers and employees. Cash flow
from investing activities for the 1999 period was $20,527 compared to
($2,665) for the 2000 period reflecting the sale of marketable securities
in the 1999 period and capital expenditures in the 2000 period. Cash flows
from financing activities decreased to $(10,473) for the 2000 period compared
to ($6,871) for the corresponding period of 1999 reflecting payments on
installment purchase contracts.
Results of Operations - 2000 Compared to 1999
For the nine month period ended September 30, 2000, the Company
recorded a net income of $80,766 ($0.01 per share) compared to a net loss
of $11,964 in the corresponding period of 1999. During the 2000 period,
$405,000 in Minimum Payments to TSVLP were recognized compared to
$505,000 in the corresponding period of 1999. General and Administrative
expenses decreased approximately $131,611 in the 2000 period compared to
1999, primarily reflecting capitalization of overhead costs of approximatley
$129,845 associated with the management contract with Gold Resources
Corporation ("GRC") for which the Company recieved shares of GRC, as well
as lower legal, financial consulting and office rental related costs offset,
in part, by higher deferred salary expense. In addition, the 2000 period
reflects capitalization of 1999 staff time and expenses under the management
contract in the amount of $40,803. Under the management contract with
GRC which was effective July 1, 2000, the Company recieved 280,000 shares
of GRC as consideration for staff time and expenses associated with evaluation
of opportunities in Mexico prior to the date of the contract (including the
1999 period) and 166,670 shares related to management services for the three
months ended September 30, 2000, for an aggregate of 446,670 shares of
common stock of GRC.
For the three month period ended September 30, 2000, the Company
recorded a net income of $140,095 compared to a net income of $2,115 in
the corresponding period of 1999. During both the 2000 and 1999 periods,
$135,000 in Minimum Payments to TSVLP were recognized. General and
Administrative expenses increased approximately $3,357 in the 2000 period
reflecting capitalization of $30,648 in overhead costs related to 166,670
shares of GRC common stock recieved for the period compared to
approximatley $15,724 of capitalized property evaluation costs during the
1999 period. That comparison is further offset by higher 2000 period
expenses, primarily deferred salaries, audit, tax and legal expenses. In
addition, $140,000 of staff time and expenses related to and expensed during
1999 ($40,803) and the six months period ended June 30, 2000 ($99,197)
were capitalized effective July 1, 2000 as part of the consideration for
280,000 shares of GRC common stock recieved effective under the
management contract with GRC.
PART II
1. No report required.
2. No report required.
3. No report required.
4. No report required.
5. No report required.
6.a No report required.
6.b No report required.
* Filed herewith.
SIGNATURES
In accordance with the requirements of the Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
U.S. GOLD CORPORATION
Dated: November 1, 2000 By /s/ William W. Reid
William W. Reid, President and Chairman
of the Board
Dated: November 1, 2000 By /s/ William F. Pass
William F. Pass, Vice President and Chief
Financial Officer
