<PAGE> 1
1995
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the period ended April 1, 1995
Commission File Number 1-7241
ALASKA GOLD COMPANY
(exact name of registrant as specified in its charter)
Delaware 13-2774390
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2959 NORTH ROCK ROAD
WICHITA, KANSAS 67226
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (316) 636-6316
Indicate by a 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
As of April 28, 1995, 5,000,000 shares of the Registrant's common stock were
outstanding.
<PAGE> 2
ALASKA GOLD COMPANY
FORM 10-Q
For the Period Ended April 1, 1995
INDEX
Part I. Financial Information Page
Item 1. Financial Statements (Unaudited)
a.) Statements of Operations
for the quarters ended April 1, 1995 and
March 26, 1994.......................................................3
b.) Balance Sheets
as of April 1, 1995 and December 31, 1994............................4
c.) Statements of Cash Flows
for the quarters ended April 1, 1995 and
March 26, 1994.......................................................5
d.) Notes to Financial Statements........................................6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations...........................................7
Part II. Other Information
Signatures..................................................................9
<PAGE> 3
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ALASKA GOLD COMPANY
STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
<CAPTION>
For the Quarter Ended
April 1, 1995 March 26, 1994
<S> <C> <C>
Net sales $ - $ 61
Sales to Mueller - -
---------- ----------
Total sales - 61
Cost of sales 179 280
General and administrative expenses 226 163
---------- ----------
Operating loss (405) (382)
Interest expense:
Mueller (1,114) (628)
Other (43) -
Other income, net 451 139
---------- ----------
Loss before income taxes (1,111) (871)
Income tax expense - -
---------- ----------
Net loss $ (1,111) $ (871)
========== ==========
Number of common shares outstanding 5,000 5,000
========== ==========
Net loss per share $ (0.22) $ (0.17)
========== ==========
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE> 4
<TABLE>
ALASKA GOLD COMPANY
BALANCE SHEETS
(Unaudited)
(In thousands, except share data)
<CAPTION>
April 1, 1995 December 31, 1994
<S> <C> <C>
Assets
Current assets:
Cash $ 36 $ 542
Gold inventory 8 233
Due from affiliate 183 191
Prepaid preparation costs 2,994 1,568
---------- ----------
Total current assets 3,221 2,534
Properties, net 3,891 4,155
Other assets 25 25
---------- ----------
$ 7,137 $ 6,714
========== ==========
Liabilities and Stockholders' Deficit
Current liabilities:
Current portion of long-term debt $ 496 $ 486
Accounts payable 271 239
Accrued expenses 441 314
Term loans and advances payable to
Mueller 92,827 91,334
---------- ----------
Total current liabilities 94,035 92,373
Long-term debt:
Notes payable to Mueller 3,400 3,400
Other 1,430 1,558
Environmental reserve 1,800 1,800
Restructuring reserve 1,436 1,436
---------- ----------
Total liabilities 102,101 100,567
---------- ----------
Stockholders' deficit:
Common stock, $.10 par value;
10,000,000 shares authorized;
5,000,000 shares issued and
outstanding 500 500
Additional paid-in capital 4,897 4,897
Accumulated deficit (100,361) (99,250)
---------- ----------
Total stockholders' deficit (94,964) (93,853)
Commitments and contingencies - -
---------- ----------
$ 7,137 $ 6,714
========== ==========
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE> 5
<TABLE>
ALASKA GOLD COMPANY
STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<CAPTION>
For the Quarter Ended
April 1, 1995 March 26, 1994
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (1,111) $ (871)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Interest not paid on
Mueller borrowings 1,114 628
Gain on sales of land (49) (92)
Changes in assets and liabilities:
Receivables - 112
Inventories 225 57
Prepaid preparation costs (1,165) (1,049)
Other assets 19 10
Current liabilities 159 (78)
---------- ----------
Net cash used in operating
activities (808) (1,283)
---------- ----------
Cash flows from investing activities:
Capital expenditures (8) (14)
Proceeds from sales of properties 49 93
---------- ----------
Net cash provided by
investing activities 41 79
---------- ----------
Cash flows from financing activities:
Net principal repayments and advances
from Mueller 379 118
Repayment of long-term debt (118) -
Issuance of note payable to Mueller - 2,000
---------- ----------
Net cash provided by
financing activities 261 2,118
---------- ----------
Increase (decrease) in cash (506) 914
Cash at the beginning of the period 542 350
---------- ----------
Cash at the end of the period $ 36 $ 1,264
========== ==========
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE> 6
ALASKA GOLD COMPANY
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Financial Statements
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. This quarterly report on Form 10-Q
should be read in conjunction with the Alaska Gold Company's ("the Company")
Annual Report on Form 10-K, including the annual financial statements
incorporated therein.
The accompanying unaudited interim financial statements include all
adjustments which are, in the opinion of management, necessary to a fair
statement of the results for the interim periods presented. Certain amounts
in the 1994 quarterly financial statements have been reclassified to conform
with current period presentation.
Operations of the Company are seasonal in nature because of the climatic
conditions in Alaska. In addition, the Company sells gold based upon gold
market conditions and cash needs and does not necessarily sell gold in any
given period, quarter or year. Accordingly, the results of operations for any
interim period are not necessarily indicative of the results for any other
periods or for a full year.
Note 2 - Sales to Mueller
On August 29, 1994 the Company granted to Mueller Industries, Inc.
("Mueller"), the Company's majority stockholder, an option to purchase gold
produced or received as royalties. Terms of the option include establishing
the method of pricing the Mueller purchase as the average of the London PM
price for gold for the first ten days following shipment to the refiner.
During the first quarter of 1995, no produced gold was sold. However, in
February 1995, Mueller purchased $505,000 of gold received as royalties by the
Company.
Note 3 - Prepaid Preparation Costs
Expenditures related to open pit mining and removal of overburden and pay
gravel in preparation for 1995 operations are classified as prepaid
preparation costs. These expenditures are capitalized as inventory when the
gold-bearing material is processed through the wash plant.
Note 4 - Commitments and Contingencies
The Company is subject to normal environmental standards imposed by
federal, state and local environmental laws and regulations. Management
believes that the outcome of pending environmental matters will not materially
affect the overall financial position of the Company.
<PAGE> 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
The Company's operating capital requirements are subject to significant
fluctuation because of the seasonal nature of operations. Total aggregate
operating costs during the first quarter were approximately $1,570,000 of
which $1,165,000 were capitalized as prepaid preparation costs.
Open Pit
The Company commenced full scale open pit operations during the winter of
1994-95 at its Nome properties. For more detail on the open pit mining
operation, reference is made to the Company's Form 10-Ks for 1994, 1993 and
1992. Implementation of a full scale operation required the Company to obtain
additional equipment during the latter part of 1994. Although a later than
anticipated delivery of equipment delayed start up of the larger scale
operation in the fall of 1994, the Company has been able to proceed with its
winter operations according to plan. Production and removal of overburden and
pay gravel are expected to be substantially completed in May 1995. Through
April 30, 1995, over 210,000 cubic yards of pay gravel have been stockpiled
for processing through the wash plant from May through September 1995.
Preliminary exploratory drilling studies by management and independent
consultants indicate that there may be scattered gold reserve blocks available
that contain necessary grades to support open pit mining for up to ten years.
Dredging
The Company's only remaining operating dredge, Dredge 5, operated in
naturally thawed, low grade ground during 1994. At the end of the 1994
dredging season, Dredge 5 was operating in an area where the pay grades were
marginal. During the winter of 1994-95, an assay drilling program was
undertaken to determine if further operations are economically feasible. The
assays indicate the pay grade adjacent to the dredge is sufficient to support
limited mining during the summer of 1995. More drilling will be performed to
determine if further mining is feasible.
Lode Mining
In July, 1994, the Company entered into an Exploration and Option
Agreement ("Agreement") with Bering Straits Native Corp. (d.b.a. Golden
Glacier, Inc., ("GGI")), and Kennecott Exploration Company ("Kennecott") to
allow Kennecott to explore the lode mining potential of certain lands in the
Nome area. The Company and GGI jointly committed lands to an area of interest
which Kennecott believes may contain gold bearing ore. Kennecott has
substantial exploration operations now in progress near Nome working on this
area of interest as well as on adjacent lands. The committed area contains
approximately 10,000 acres of which 9,100 acres are controlled by GGI, and 900
acres are owned by the Company. For more detail on the lode mining Agreement
with Kennecott, reference is made to the Company's Form 10-K for 1994.
<PAGE> 8
Other
Subsequent to the end of the first quarter of 1995, the Company borrowed
$1,500,000 from Mueller (the Notes). Proceeds will be used to continue open
pit operations until the pay gravel can be processed and sold. The Notes
include interest at eight and three quarters percent (8.75%) payable quarterly
beginning June 30, 1995. Principal on the Notes is due December 31, 2001, and
is secured by an interest in substantially all assets of the Company.
The continued viability of the Company as a going concern is dependent
upon its ability to generate sufficient working capital through future
profitable operations and sales of assets, including land owned by the
Company, and to maintain or restructure its existing financing from Mueller in
a manner acceptable to both Mueller and the Company. The Company's ability to
attain and maintain profitable operations depends in part upon the market
price of gold and production yield. If the Company were unable to generate or
obtain sufficient working capital or if demand were made for the payment of
loans and advances made to it by Mueller, the Company's management may have no
choice other than to file for protection under the Federal Bankruptcy Code.
In that event, it is likely that the Company's stockholders, other than
Mueller as the holder of the Company's debt, would receive no distribution
with respect to their shares from the Company's bankruptcy estate.
Results of Operations
Activity in the first quarter was limited primarily to excavation of
overburden and pay gravel from the open pit.
No produced gold has been sold by the Company in the first quarter of
1995, compared to $61,000 (153 ounces) in the first quarter of 1994. Cost of
sales, consisting of expenditures not directly related to open pit
preparation, decreased to $179,000 in 1995 compared to $280,000 in 1994. The
reduction is principally due to the reduction of sales. General and
administrative expenses increased to $226,000 in 1995 compared to $163,000 in
1994. This increase is principally due to increased payroll and employment
costs.
Interest expense increased to $1,114,000 in 1995 compared to $628,000 in
1994. This increase is primarily due to increases in interest rates, in
addition to increased borrowings. Other income, net, increased in 1995 to
$451,000 compared to $139,000 in 1994. This increase is due to increased
receipts of gold royalties, offset by a reduction in gains from sales of
properties.
PART II. OTHER INFORMATION
Items 1, 2, 3, 4, 5, and 6 are not applicable and have been omitted.
<PAGE> 9
ALASKA GOLD COMPANY
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, on May 3, 1995.
ALASKA GOLD COMPANY
/s/ Gary L. Barker
Gary L. Barker
President
/s/ Richard W. Corman
Richard W. Corman
Treasurer, Chief Financial
Officer and Chief Accounting
Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FORM 10-Q FOR THE FISCAL QUARTER ENDED APRIL 1, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000003228
<NAME> ALASKA GOLD COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> APR-01-1995
<CASH> 36
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 8
<CURRENT-ASSETS> 3,221
<PP&E> 6,197
<DEPRECIATION> 2,306
<TOTAL-ASSETS> 7,137
<CURRENT-LIABILITIES> 94,035
<BONDS> 4,830
<COMMON> 500
0
0
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<TOTAL-LIABILITY-AND-EQUITY> 7,137
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<CGS> 179
<TOTAL-COSTS> 179
<OTHER-EXPENSES> 226
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,157
<INCOME-PRETAX> (1,111)
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<INCOME-CONTINUING> (1,111)
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<NET-INCOME> (1,111)
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