UNITED STATES
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 quarterly period ended September 30, 1995
Commission file number 0-11226
GOLDEN CYCLE GOLD CORPORATION
(Exact name of registrant as specified in its charter)
COLORADO 84-0630963
(State or other jurisdiction of (I.R.S. Employer Identification
No.)
incorporation or organization)
2340 Robinson Street, Suite 209, Colorado Springs, Colorado
80904
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code: (719) 471-9013
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 the
filing requirements for the past 90 days.
YES [ ] NO [ X ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practical date:
Common Stock, no par value - 1,573,050 shares as of October 10, 1995.
<PAGE>
<TABLE>
PART I. - FINANCIAL INFORMATION
GOLDEN CYCLE GOLD CORPORATION
BALANCE SHEETS
<CAPTION>
September 30, December 31,
1995 1994
(Unaudited)
_________ _________
<S>
<C> <C>
Assets
_________________________________________
Current assets:
Cash and cash equivalents $
24,646 $ 517,427
Short-term investments
366,519 323,854
Interest receivable
9,971 3,637
_________ _________
Total current assets
401,136 844,918
Assets held for sale
176,907 176,907
Property and equipment
8,027 11,064
Investment in mining joint venture (Note 2)
- - - -
Other
539 -
_________ _________
586,609 1,032,889
Liabilities and Shareholders' Equity
_________________________________________
Current liabilities:
Accounts payable and accrued liabilities $ 10,219
$ 14,961
Note payable
- 500,000
Total current liabilities
10,219 514,961
Deferred Revenue
20,000 20,000
Shareholders' equity:
Common Stock - no par value.
Authorized 3,500,000 shares; issued and
outstanding 1,573,050 shares
4,989,737 4,975,612
Additional paid-in capital
1,927,736 1,927,736
Accumulated deficit
(6,361,084) (6,405,420)
_________ _________
Total shareholders' equity
556,390 497,928
_________ _________
$ 586,609 $1,032,889
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
GOLDEN CYCLE GOLD CORPORATION
STATEMENTS OF OPERATION AND ACCUMULATED DEFICIT
FOR THE THREE AND NINE MONTHS ENDED
September 30, 1995 AND 1994
(Unaudited)
<CAPTION>
Three
Months Ended Nine Months Ended
September 30, September 30,
___________________ ___________________
1995
1994 1995 1994
_________
_________ _________ _________
<S> <C>
<C> <C> <C>
Revenue:
Distribution from mining joint
venture in excess of
carrying value $ -
- 250,000 250,000
Expenses:
General and administrative (66,753) (127,273)
(223,587) (383,820)
_________
_________ _________ _________
Operating income (loss) (66,753) (127,273)
26,413 (133,820)
Other income (expenses):
Interest and other income 7,032
5,084 20,134 34,110
Interest expense -
- (2,210) -
Gain on sale of mining claims - -
- 13,221
_________
_________ _________ _________
Net income (loss) $ (59,720) (122,189)
44,337 (86,489)
_________
_________ _________ _________
Income (loss) per share $ (0.04)
(0.08) 0.03 (0.06)
Weighted average common
shares outstanding 1,573,050 1,571,050
1,572,050 1,571,050
ACCUMULATED DEFICIT:
Beginning of period $ (6,301,363) (6187,330)
(6,405,420) (6,223,030)
_________
_________ _________ _________
End of Period (6,361,084)
(6,309,519) (6,361,084) (6,309,519)
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
GOLDEN CYCLE GOLD CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHE ENDED
September 30, 1995 and 1994
(Unaudited)
<CAPTION>
1995 1994
__________ __________
<S>
<C> <C>
Cash flows from operating activities:
Net Income
$ 44,337 $ (86,489)
Adjustments to reconcile net income to net
cash provided by operating activities:
Gain on sale of mining claims
- (13,221)
Depreciation expense
3,037 3,282
Provision for uncollectible receivable
- 15,955
Decrease (increase) in interest receivable
and other current assets
(6,873) (1,846)
Decrease in accounts payable and accrued
liabilities
(4,742) (22)
__________ __________
Net cash provided (used) by operating activities
35,759 (82,342)
Cash flows provided (used) by investing activities:
Increase in short-term investments, net
(42,665) (432,534)
Proceeds from sale of mining claims
- 25,269
__________ __________
Net cash used by investing activities
(42,665) (407,265)
Cash flows from financing activities:
Proceeds from issuance of Common Stock
14,125 -
Proceeds from issuance of note payable
- 500,000
Cash used to retire note payable
(500,000) -
__________ __________
Net cash used by financing activities
(485,875) 500,000
Net increase (decrease) in cash and
cash equivalents
(492,781) 10,394
Cash and cash equivalents, beginning of nine months 517,427
5,907
__________ __________
Cash and cash equivalents, end of nine months $
24,646 $ 16,301
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>
GOLDEN CYCLE GOLD CORPORATION
NOTES TO FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements (other than the Balance Sheet at
December 31, 1994) are unaudited but, in the opinion of management, include all
adjustments, consisting solely of normal recurring items, necessary for a fair
presentation. Interim results are not necessarily indicative of results for a
full year.
These financial statements should be read in conjunction with the financial
statements and notes thereto which are included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1994. The accounting policies set
forth in those annual financial statements are the same as the accounting
policies utilized in the preparation of these financial statements, except as
modified for appropriate interim financial statement presentation.
(2) INVESTMENT IN JOINT VENTURE
The Company accounts for its investment in the Cripple Creek & Victor Gold
Mining Company (the "Joint venture") on the equity method. During 1992, the
Company's investment balance in the Joint Venture was reduced to zero. Joint
Venture distributions in excess of the investment carrying value are recorded
as income, as the Company is not required to finance the Joint Venture's
operating losses or capital expenditures. Correspondingly, the Company does
not record its share of Joint Venture losses incurred subsequent to the
reduction of its investment balance to zero. To the extent the Joint Venture
is subsequently profitable, the Company will not record its share of equity
income until the cumulative amount of previously unrecorded Joint Venture
losses has been recouped. As of September 30, 1995, the company's share of
accumulated unrecorded losses from the Joint Venture is $3,615,058.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Company's principal mining investment and source of cash flows is its
interest in the Joint Venture. The Joint Venture engages in gold mining
activity in the Cripple Creek area of Colorado. The Company's Joint Venture
co-venturer is Pikes Peak Mining Company, a wholly-owned subsidiary of
Independence Mining Company.
The Company's rights and obligations relating to its Joint Venture interest
are governed by the Joint Venture Agreement. The Joint Venture is currently
operating in the Initial Phase, as defined. In accordance with the Joint
Venture Agreement, Pikes Peak manages the Joint Venture, and is required to
finance all operations and capital expenditures during the Initial Phase.
The Initial Phase will terminate after Initial Loans, as defined, have been
repaid and Net Proceeds (defined generally as gross revenues less operating
costs including Pikes Peak's administrative fees) of $58 million have been
distributed to the venture participants in the proportion of 80% to Pikes Peak
and 20% to the Company. Initial Loans generally constitute funds loaned to the
Joint Venture, and interest thereon, to finance operations and mine development
by either Pikes Peak or third-party financial institutions and are repayable
prior to distributions to the venture participants. The Manager reported
initial Loans, payable to Pikes Peak, of approximately $131.998 million were
outstanding at September 30, 1995. To date, the Joint Venture has not earned
or distributed any Net Proceeds.
After the Initial Phase, the Joint Venture will distribute metal in kind in
the proportion of 67% to Pikes Peak and 33% to the Company, and the venture
participants will be responsible for their proportionate share of the Joint
Venture costs.
During the Initial Phase, the Company is entitled to receive a Minimum
Annual Distribution of $250,000. Minimum Annual Distributions received after
1993 constitute an advance of Net Proceeds. Accordingly, such Net Proceeds
advances will be recouped from future Net Proceeds distributions allocable to
the Company. Based on the reported amount of Initial Loans currently payable
to PPMC, and the recurring operating losses incurred by the Joint Venture,
management of the Company believes that, absent a significant and sustained
increase in the prevailing market prices for gold, it is unlikely that the
Company will receive more than the Minimum Annual Distribution from the Joint
Venture in the foreseeable future.
The Company's working capital was approximately $391,000 at September 30,
1995 compared to $905,000 at September 30, 1994. Cash provided by operations
was approximately $36,000 in 1995 and cash used by operations was $82,000 in
1994. Prior to 1993 the $250,000 Minimum Annual Distribution was classified as
an investing cash flow; beginning in 1993, the Minimum Annual Distribution was
reflected as an operating cash flow by reason of the fact that the joint
venture investment balance was reduced to zero during 1992, as discussed below
under "Results of Operations".
Working capital decreased approximately $14,000 in 1995 after eliminating
the effect of repayment of the $500,000 note payable. Cash provided by
operations increased from 1994 by approximately $118,000 primarily due to
decreased general and administrative expenses.
On July 11, 1994 the Company borrowed $500,000 under a promissory note
bearing interest at 4.3%. The purpose of this loan was to bring the Company's
total assets to approximately $1.2 million, thereby exceeding the Pacific Stock
Exchange's (the "Exchange") minimum total asset criteria of $1,000,000 to
maintain Exchange's listing of the Company's equities. The $500,000 note
payable and accrued interest was paid on January 17, 1995 with proceeds from
liquidating the money market account, the Exchange's requirements having
changed so that the loan was unnecessary. The Company is not currently aware
of any significant future capital commitments by the Company.
Management believes that the Company's working capital, augmented by the
Minimum Annual Distribution, is adequate to support operations at the current
level for several years, barring unforeseen events. The possible inflow of
proceeds from the pending sale of water would further serve to strengthen the
Company's financial condition. Unless and until it receives Net Proceeds from
the Joint Venture on a recurring and predictable basis, the Company will not be
positioned to expand operations or to consider payment of cash dividends.
Results of Operations
The Company had net income, for the nine months ended September 30, of
approximately $44,000 in 1995, compared to net loss of approximately $86,000 in
1994.
The increase in net income for the first nine months of 1995 compared with
the same nine months of 1994 of approximately $131,000 was primarily due to
decreased general and administrative expenses during the 1995 period of
approximately $160,000 as compared to the same nine months of 1994.
Additionally, other income (expense) decreased in 1995 approximately $29,000
due to a sale in 1994 of approximately 55 acres of Company property in the
Cripple Creek area (outside the Caldera) resulting in a net profit of
approximately $13,000 and in addition the Company recognized an income which
was subsequently adjusted and recorded as deferred revenue.
The Company has undertaken cost reduction measures and anticipates that its
budgeted general and administrative expenses in 1995 of approximately $265,000
will be at a level below forecasted revenue, plus interest income, of $270,000.
The Company accounts for its investment in the Joint Venture on the equity
method. During 1992, the Company's investment balance in the Joint Venture was
reduced to zero. Joint Venture distributions in excess of the investment
carrying value are recorded as income, as the Company is not required to
finance the Joint Venture's operating losses or capital expenditures.
Correspondingly, the Company does not record its share of Joint Venture losses
incurred subsequent to the reduction of its investment balance to zero. To the
extent the Joint Venture is subsequently profitable, the Company will not
record its share of equity income until the cumulative amount of previously
unrecorded Joint Venture losses has been recouped. As of June, 1995, the
Company's share of accumulated unrecorded losses from the Joint Venture is
$3,615,058.
The Joint Venture incurred annual net losses of $9,350,000, $8,538,000, and
$7,042,000 in 1994, 1993 and 1992 respectively and it appears the Joint Venture
will continue to incur losses in the near future unless the price of gold rises
substantially. The Joint Venture achieved a net income of $.361 million for
the three months ended September 30, 1995, and a net income of $.340 million
for the six months ended June 30, 1995.
<PAGE>
PART II - OTHER INFORMATION
Item 1 through 4 are not being reported due to a lack of circumstances that
require a response.
Item 5. Other Information. None.
Item 6. Exhibits and Reports on Form 8-K.
None.
<PAGE>
GOLDEN CYCLE GOLD CORPORATION
SIGNATURES
Pursuant to 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.
THE GOLDEN CYCLE
GOLD CORPORATION
(Registrant)
November 10, 1995 Birl W. Worley Jr.
Birl W.
Worley Jr.
President & CEO
November 10, 1995 R. Herbert Hampton
R.
Herbert Hampton
Vice
President, Finance
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<LEGEND>
GOLDEN CYCLE GOLD CORPORATION
[/LEGEND]
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 24,646
<SECURITIES> 366,519
<RECEIVABLES> 9,971
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 401,136
<PP&E> 708,964
<DEPRECIATION> 524,030
<TOTAL-ASSETS> 586,609
<CURRENT-LIABILITIES> 10,219
<BONDS> 0
<COMMON> 556,390
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 586,609
<SALES> 0
<TOTAL-REVENUES> 270,134
<CGS> 0
<TOTAL-COSTS> 223,587
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,210
<INCOME-PRETAX> 44,337
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 44,337
<EPS-PRIMARY> 0.03
<EPS-DILUTED> 0.03
</TABLE>
