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 September 30, 1996
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 0-11226
GOLDEN CYCLE GOLD CORPORATION
(Exact name of registrant as specified in its
charter)
COLORADO 84-0630963
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization)
Identification No.)
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
_____________________________________________________________________
(Former name, former address and former fiscal year, if changed since last
report)
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 XX NO.
Number of Shares outstanding at September 30, 1996: 1,758,050
<PAGE>
<TABLE>
PART I. - FINANCIAL INFORMATION
GOLDEN CYCLE GOLD CORPORATION
BALANCE SHEETS
<CAPTION>
September 30, December 31,
1996 1995
(Unaudited)
_________ _________
<S>
<C> <C>
Assets
_________________________________________
Current assets:
Cash and cash equivalents $
302,942 $ 9,840
Short-term investments
1,101,053 354,118
Interest receivable and other current assets 25,030
492
_________ _________
Total current assets
1,429,024 364,450
Accounts receivable, net 261 -
Assets held for sale
176,907 176,907
Property and equipment
14,518 7,033
Investment in mining joint venture (Note 2)
- - -
_________ _________
$ 1,620,711 $ 548,390
Liabilities and Shareholders' Equity
_________________________________________
Accounts payable and accrued liabilities $ 10,234
$ 14,056
Deferred Revenue
20,000 20,000
Shareholders' equity:
Common Stock - no par value.
Authorized 3,500,000 shares; issued and
outstanding 1,758,050 shares at September
30, 1996 and 1,573,050 shares at
December 31, 1995 6,053,147 4,989,737
Additional paid-in capital
1,927,736 1,927,736
Accumulated deficit
(6,390,405) (6,403,139)
_________ _________
Total shareholders' equity
1,590,477 514,334
_________ _________
$ 1,620,711 $ 548,390
<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, 1996 and 1995
(Unaudited)
<CAPTION>
Three Months Ended
Nine Months Ended
September 30,
September 30,
____________________
___________________
1996 1995 1996
1995
_________
_________ _________ _________
<S> <C> <C>
<C> <C>
Revenue:
Distribution from mining joint
venture in excess of
carrying value $ -
- - $ 250,000 250,000
Other operating revenue - -
27,602 -
_________
_________ _________ _________
Total operating revenue - -
277,602 250,000
Expense, general and administrative (104,754) (66,753) (297,989)
(223,587)
_________
_________ _________ _________
Operating income (loss) (104,754) (66,753)
(20,387) 26,413
Other income (expenses):
Interest and other income 16,458 7,032
33,121 20,134
Interest expense -
- - (2,210)
_________
_________ _________ _________
Net income (loss) $ (88,296) $ (59,720) $
12,734 $ 44,337
_________
_________ _________ _________
Income (loss) per share $ (0.05) $ (0.04) $
0.01 $ 0.03
Weighted average common
shares outstanding 1,748,050 1,573,050
1,659,717 1,572,050
ACCUMULATED DEFICIT:
Beginning of period $(6,302,109) $(6,301,363)
$(6,403,139) $(6,405,420)
_________
_________ _________ _________
End of Period (6,390,405) (6,361,084)
(6,390,405) (6,361,084)
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
GOLDEN CYCLE GOLD CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED
September 30, 1996 and 1995
(Unaudited)
<CAPTION>
1996 1995
__________ __________
<S>
<C> <C>
Cash flows from operating activities:
Net Income
$ 12,734 $ 44,337
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation expense
3,038 3,037
Increase in interest receivable
and other current assets
(24,538) (6,873)
Increase in accounts receivable
(261) -
Decrease in accounts payable
and accrued liabilities
(3,822) (4,742)
__________ __________
Net cash provided by (used in)
operating activities
(12,849) 35,759
__________ __________
Cash flows from investing activities:
Increase in short-term investments, net
(746,935) (42,665)
Purchases of property and equipment
(10,523) -
__________ __________
Net cash used by investing activities
(757,459) (42,665)
__________ __________
Cash flows from financing activities:
Proceeds from issuance of Common Stock
1,063,410 14,125
Cash used to retire note payable
- (500,000)
__________ __________
Net cash provided by (used in)
financing activities
1,063,410 (485,875)
__________ __________
Net increase (decrease) in cash and
cash equivalents
293,102 (492,718)
Cash and cash equivalents, beginning of nine months 9,840
517,427
__________ __________
Cash and cash equivalents, end of nine months $
302,942 $ 24,646 <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, 1995) 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, 1995. 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, 1996, the Company's share of
accumulated unrecorded losses from the Joint Venture is $4,449,458.
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 has been
its interest in the Joint Venture, and in 1996 proceeds from the sale of Common
Stock (see discussion below). 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 ("Pikes Peak"), 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 $148.3 million were
outstanding at September 30, 1996. 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 amount of Initial Loans payable to the Manager 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 $1,419,000 at September 30,
1996 compared to $391,000 at September 30, 1995. Cash used in operations was
approximately $13,000 in the 1996 period as compared to cash provided by
operations of approximately $36,000 in the 1995 period. 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 increased by approximately $1,028,000 at September 30, 1996
compared to September 30, 1995. The increase resulted primarily from the sale
of 170,000 shares of the Company's common stock to two mutual funds which are
part of the Bull & Bear Mutual Fund group for aggregate gross proceeds of
$1,020,000. The shares are "restricted" under the federal securities laws,
although the Company has agreed to register the shares for public resale. The
exercise of options for an aggregate of 15,000 shares of the Company's common
stock by two Directors of the Company during the third quarter provided an
additional $83,000.
Approximately $49,000 more cash was used in operations during the 1996
period when compared to the cash provided by operations in the same period in
1995, primarily due to an increase in interest receivable and other current
assets of $24,000, and reduced net income of approximately $31,000.
The Company committed $200,000 as start-up capital for a Philippine
subsidiary in October 1996. The Company is exploring the possibility of
engaging, through the subsidiary, in mining activities in the Republic of the
Philippines which, if undertaken, would require significant capital
expenditures.
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. However, the Company
anticipates that its Philippine subsidiary will enter into an agreement with a
Philippine mining company by the end of 1996, pursuant to which it will begin
exploration and development activities in the Philippines. In such event, a
substantial portion of existing working capital will be required to fund
Philippine operations during at least the first two years. If opportunities to
economically expand Philippine operations beyond initial exploration are
available, additional working capital not currently on hand may also be needed.
There is no assurance that the Company will be able to obtain such additional
capital, if required. Furthermore, if such operations are commenced, it is
unlikely they would generate positive cash flow and/or profit for several
years. The possible inflow of proceeds from the pending sale of water rights
would further serve to strengthen the Company's financial condition.
Results of Operations
The Company had net income, for the nine months ended September 30, of
approximately $13,000 in 1996, compared to net income of approximately $44,000
in 1995.
The decrease in net income for the first nine months of 1996 compared with
the same nine months of 1995 of approximately $31,000 was due to an increase of
approximately $74,000 in general and administrative expenses during the 1996
period, partially offset by the elimination of interest expense, increased
interest income and other operating revenue of approximately $28,000 from a
non-affiliated company in the Republic of the Philippines for consulting
services. Approximately $48,000 of the increase in general and administrative
expenses was attributable to expenses incurred in connection with investigating
the possibility of establishing operations in the Philippines; the remainder
of the increase was largely attributable to increased salary expense.
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 September 30, 1996,
the Company's share of accumulated unrecorded losses from the Joint Venture is
$4,449,458.
The Joint Venture's audited financial statements show that the Joint
Venture incurred annual net losses of $3,654,000, $9,350,000, and $7,042,000 in
1995, 1994 and 1993 respectively. The Joint Venture incurred a net loss of
$115,000 (unaudited) for the nine months ended September 30, 1996.
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>
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)
/s/ Alan P. Ploesser
Alan P. Ploesser
Chairman of the Board of Directors
/s/ R. Herbert Hampton
R. Herbert Hampton,
Vice President, Finance
November 12, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 302,942
<SECURITIES> 1,101,053
<RECEIVABLES> 41,245
<ALLOWANCES> 15,954
<INVENTORY> 0
<CURRENT-ASSETS> 1,429,286
<PP&E> 718,763
<DEPRECIATION> 527,338
<TOTAL-ASSETS> 1,620,711
<CURRENT-LIABILITIES> 10,234
<BONDS> 0
<COMMON> 1,590,477
0
0
<OTHER-SE> 20,000
<TOTAL-LIABILITY-AND-EQUITY> 1,620,711
<SALES> 0
<TOTAL-REVENUES> 310,723
<CGS> 0
<TOTAL-COSTS> 297,989
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 12,734
<INCOME-TAX> 0
<INCOME-CONTINUING> 12,734
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,734
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
