UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(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, 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 no. 0-19502
SISKON GOLD CORPORATION
(Exact name of registrant as specified in its charter)
CALIFORNIA 68-0254824
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
350 Crown Point Circle, Suite 100
Grass Valley, CA. 95945 (916) 273-4311
(Address of principal executive offices) (Zip Code) (Registrant's telephone
number)
Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act:
CLASS A COMMON STOCK
(Title of Class)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934, 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 [ ]
As of November 18, 1996, the number of Class A common stock outstanding was
11,602,186 and the number of Series 1 Class B Common Stock outstanding was 638.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
<PAGE>
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements 2
ITEM 2. Management's Discussion and Analysis 2
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings 6
ITEM 2. Changes in Securities 6
ITEM 3. Defaults Upon Senior Securities 6
ITEM 4. Submission of Matters to a Vote of Security Holders 6
ITEM 5. Other Information 6
ITEM 6. Exhibits and Reports on Form 8-K 7
SIGNATURES 8
FINANCIAL STATEMENTS 9
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS.
The Consolidated Interim Financial Statements of Siskon Gold Corporation are
attached at the end of this document and incorporated fully by this reference.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
(A) PLAN OF OPERATIONS
The Company's short term and long term liquidity position is dependent upon
profitable levels of production from the San Juan Mine and on the successful
development of the Company's other properties. The Company has historically
relied on debt and equity financing for property exploration and development
and operating requirements.
San Juan
The San Juan Mine produced 9,239 ounces of dore' during the first nine months
of 1996 and construction and development of the mine was completed in mid-May.
Gold production for the third quarter was lower than expected. Actual
production for the quarter was 698 tons per day. While productivity per miner
went up 45% over the second quarter demonstrating increased efficiency,
variable roof support requirements hindered the mining crews ability to smooth
out operating procedures and attain their goals. While not unusual in the
learning curve of mining a new deposit this is proving to be a further
challenge in achieving our production goals. On site management at San Juan
has designed a roof support program which they believe will handle variable
conditions more efficiently. In addition, the ore grade for the quarter was
lower than the previous quarter as the mine plan worked through a low grade
section. Based upon the high grade ore blocks directly in front of the current
workings, as a forward looking statement, the Company is anticipating ore
grades to return to, or exceed, the average grade set forth in the Company's
feasibility and ore reserve study. This statement is made on the assumption
that the Company's geological data developed in its drilling programs
accurately reflect the overall grade of the deposit directly in front of the
area the Company just traversed.
With the completion of construction and development activities and initial
attainment of sustained levels of production at the mine in mid-May, the
Company commenced the recognition of revenues, production costs, non-cash costs
and royalties in operations. During the nine months ended September 30, 1996,
124,245 tons of ore were mined producing 9,239 ounces of dore' of which
62,668 tons yielding 3,865 ounces of dore' have been reflected in
operations. Production for the period from mid-May to September 30, 1996
averaged 674 tons and 42 ounces of dore' per day which resulted in an
operating loss of $706,808. Daily production figures are based on five day
weeks. As a forward looking statement, the Company is anticipating achieving
levels of production of 1,570 tons per day yielding an average of 2,000 ounces
of gold dore' per month before the end of its fiscal year. In making this
statement, the Company is assuming the following important factors are true: 1)
the Company will not encounter further delays in increasing the levels of
production due to poor ground conditions, unexpected increases in the flow of
groundwater into the mine or the lack of availability of experienced mining
personnel; 2) the grade of the gold deposit meets or exceeds the grade set
forth in the Company's feasibility and ore reserve study; and 3) the Company's
mining permits will continue in force and effect without modifications which
would materially affect the level of gold production and any that modifications
if required to sustain production will be obtained.
In May the Board of Directors determined that the proceeds received in the
Vengold Inc. private placement in November 1995 had been fully expended, the
two directors appointed by Vengold resigned and the Board dissolved the Budget
Committee. Additionally, the Company borrowed $500,000 from Carl Seaman, a
shareholder and holder of a majority of existing convertible debt. The loan
will be secured by the San Juan and Big Horn mines, is due November 15, 1998
and bears interest at ten percent with the principle and interest convertible
into Class A common stock at $1.75 per share. In connection with the loan Mr.
Seaman was granted the right to convert $500,000 of the Seamans' existing
convertible debt into Class A common stock at $1.75 per share as well. If a
private placement is completed prior to November 15, 1998 at a price below
$1.75 per share, Mr. Seaman would have the right to change the conversion price
of his new note to the same as that under the private placement. In August
Vengold converted the 39,062.5 shares of Class B Series 2 common stock into
781,250 shares of Class A common stock.
On October 17, 1996 the Company borrowed $1,150,000 through the issuance of a
convertible debenture bearing interest at 8% and a maturity date of October 1,
1998. The principle plus accrued interest may be converted into shares of the
Company's Class A common stock at a conversion price equal to the lesser of (a)
the market price of the common stock on October 17, 1996, or (b) 75% of the
market price if the conversion is before January 25, 1997 or 70% of the
market price if the conversion is after January 24, 1997. The market price for
the applicable date is defined as the average closing bid price of the common
stock for five days preceding that date. One quarter the principle amount and
accrued interest may be converted after November 27, 1996, with additional one
quarter amounts eligible for conversion after December 15, 1996, January 4,
1997 and January 24, 1997. In the event that the conversion price is less than
or equal to $1.00 per share, then the Company has the right to redeem the
debenture for 133% of the principle amount if the redemption occurs prior to
January 25, 1997 and 142.8% of the principle amount if the redemption occurs
thereafter. At maturity, the Company has the option of repaying the principle
and accrued interest in cash or in shares of common stock using the conversion
prices set forth above. The holder of the debenture has agreed not to convert
the debenture if at any time, except at maturity, the holder would beneficially
own more than 5% of the common stock of the Company. The Company issued the
convertible debentures in reliance upon an exemption from the registration
provisions of the Securities Act of 1933, as amended, provided for in
Regulation S promulgated thereunder.
In addition to the $1,150,000 the Company borrowed on October 17, 1996, on
November 18, 1996, the Company agreed to issue another $2,000,000 in aggregate
principal amount in a different series of 8% convertible debentures due January
1, 2000. Principal, plus accrued interest, may be converted into shares of the
Company's Series A Convertible Preferred Stock (the "Preferred Stock") at a
conversion price of $1,000 per share. The debentures may not be converted into
Preferred Stock for a period of sixty days from the date of issue. On or after
the sixtieth day from the date of issue, up to one third of the principal
amount of the debenture may be converted, at the option of the holder, into
shares of the Company's Class A Common Stock. On or after the eightieth day
from the date of issue, another one third of the principal amount may be
converted, at the option of the holder, into shares of the Company's Class A
Common Stock. On or after the one hundredth day after the date of issue, the
remaining one third principal amount of the debenture, plus all accrued and
unpaid interest, may be converted, at the option of the holder, into shares of
the Company's Class A Common Stock. The number of shares of Class A Common
Stock issuable upon the conversion of the Preferred Stock is determined by
dividing the number 1,000 by seventy five percent of the average bid price of
the Company's Class A Common Stock over a ten trading day period immediately
preceding the holder's election to convert. The debenture may be prepaid,
without penalty, anytime after one hundred eighty days from the date of issue
by paying the aggregate principal amount outstanding, plus accrued interest.
Likewise, the Preferred Stock may be redeemed by the Company at its liquidation
value of $1,000 per share, plus accrued dividends. Dividends on the Preferred
Stock accrue at eight percent per annum and are cumulative. If any debenture
in this series or any share of the Preferred Stock remain outstanding on
January 1, 2000, then the debenture or the Preferred Stock, as the case may be,
shall automatically convert to shares of the Company's Class A Common Stock at
the conversion price set forth above. So long as any debenture in this series,
or any share of Preferred Stock issuable upon conversion of any debenture in
this series, remains outstanding, the holder may not, directly or indirectly,
initiate or maintain any short position in the securities of the Company. The
Company agreed to issue this series of debentures in reliance upon an exemption
from the registration provisions of the Securities Act of 1933, as amended,
provided for in Regulation S promulgated thereunder. As of November 18, 1996,
subscriptions for $500,000 in aggregate principal amount of the debentures have
been executed. The Company anticipates receiving additional subscriptions, up
to an aggregate principal amount of $2,000,000, before the end of the Company's
fiscal year. However, since the debentures are not being underwritten on a
"firm commitment" basis, no assurances can be given that the Company will be
successful in selling all the remaining principal amount of the debentures.
In July the Company sold for $450,000 cash the merchantable timber on the San
Juan property which must be harvested over the next three years.
Big Horn
The Company received the major air and water quality permits for the mine site
of the Big Horn Mine in 1995. Ore from the mine is proposed to be trucked to an
off site processing plant. Environmental permits will have to be obtained for
the mill site. A mill site located in the City of Adelanto was purchased in
March 1995 and the Company is currently evaluating other mill sites that may be
more appropriate before resuming environmental permitting. The Company is
presently considering various alternatives to expand the reserves at the mine
through further geology reviews and conducting additional drilling. The cash
requirements for this work would be met from additional debt or equity capital
raising in future periods.
Exploration
The Company is reviewing historical data on properties in California that have
the same geology and characteristics as San Juan Mine and has identified
several potential deposits. In addition, the Company is investigating other
properties in the U.S., Mexico and South America.
General and Administrative
General and administrative expenses for the remainder of 1996 are estimated to
be $147,000 net of royalty and lease receipts and interest income. The Company
plans to meet these requirements from existing working capital and the proceeds
from production. The note receivable secured by the Comstock property amounting
to $275,326 is in default. The Company is negotiating with the payee to either
bring the note current or the Company will initiate foreclosure.
(B) FINANCIAL CONDITION AND RESULTS OF OPERATIONS
YEAR TO DATE COMPARISON
Siskon had cash on hand of $421,769 and $727,716 at September 30, 1996 and
September 30, 1995 respectively.
For the nine months ended September 30, 1996 cash used by operating activities
totalled $1,289,520 versus $846,601 for the same period in 1995.
Cash used in investing activities for 1996 totalled $2,501,005 as compared to
$4,147,481 for 1995. During 1996 $2,143,340 was expended on development costs,
$500,688 on equipment, $160,772 on bonds, as compared with $3,624,725 for
development, $460,356 for equipment, $130,017 on land and $7,277 on bonds
during 1995. Collections of notes receivable and sales of equipment amounted to
$303,795 during 1996, as compared with $74,894 during 1995 primarily from the
sale of USNGS property.
Pre-production development costs and related plant and equipment for the San
Juan Mine aggregated $2,437,752 net of gold recoveries of $1,993,170 during
1996 as compared to $2,923,055 net of gold recoveries of $603,808 for 1995.
Permitting and land acquisition costs at the Big Horn Mine amounted to $100,720
during 1996 versus $233,429 in 1995.
Cash used in financing activities during 1996 totalled $38,738 as compared to
cash provided of $1,477,100 during 1995. During 1996 $500,000 was received from
borrowing of convertible debt as compared to $2,000,000 during 1995. Payments
of capital lease obligations and long-term debt amounted to $491,621 as
compared to $492,439 during 1995. In 1996 $47,117 was expended on financing
costs for financing raised in November 1995 and May 1996.
Siskon incurred a net loss of $2,012,316 for the nine months ended September
30, 1996, compared to a net loss of $580,170 for the same period in 1995.
Commencing in mid-May 1996, revenues, production costs, non-cash costs and
royalties at the San Juan Mine were reflected in operations. During 1995
production costs were capitalized as the Company's operations were in the
development stage and gold revenues received were credited against capitalized
costs. During 1996 revenues of $1,344,833 resulted from 3,497 ounces of fine
gold at an average price of $385 per ounce. Production costs, non-cash costs
and royalty expense totalled $2,051,641, $532,607 and $26,785 respectively.
In July 1996, the Company sold for $450,000 cash the merchantable timber on the
San Juan property which must be harvested in three years. There were no sales
of timber in 1995.
General and administrative expenses were $905,242 for 1996 as compared with
$798,646 during 1995. The increase is primarily due to compensation expense
that was included in general and administrative in 1996 versus being
capitalized in deferred development costs in 1995.
Exploration costs were $64,405 for 1996 versus $61,717 during 1995. The loss on
sale of property and equipment was $31,083 during 1996. The gain of $92,672
during 1995 related to the sale of the USNGS Beatty property. Interest and
miscellaneous income was $89,135 for 1996 as compared with $98,637 during 1995
reflecting higher cash balances during 1995. Interest expense in 1996 amounted
to $334,779 reflecting commencement of production while such costs were
capitalized in 1995.
The Company believes that its business and operations were not materially
affected by inflation during 1996 and 1995.
QUARTER TO QUARTER COMPARISON
Siskon incurred a net loss of $1,057,372 for the third quarter of 1996 compared
to a net loss of $137,648 for the third quarter of 1995. The increased loss in
1996 compared to 1995 was primarily attributable to the recognition of
revenues, production costs, non-cash costs and royalties commencing in mid-May
1996. During the third quarter of 1996 revenues of $735,490 resulted from 3,914
ounces of fine gold at an average price of $384 per ounce. Production costs,
non-cash costs and royalty expense totalled $1,412,571, $320,815 and $14,633
respectively.
In July 1996, the Company sold for $450,000 cash the merchantable timber on the
San Juan property which must be harvested in three years. There were no sales
of timber in 1995.
General and administrative expenses were $233,912 in the third quarter of 1996
as compared with $177,721 during the third quarter of 1995. The increase is
primarily due to compensation expense that was included in general and
administrative in 1996 versus being capitalized in deferred development costs
in 1995.
Exploration costs were $23,492 in the third quarter of 1996 versus $10,308 in
the third quarter of 1995 resulting primarily from increased activities in
California. The loss on sale of property and equipment was $34,453 during 1996.
There were no sales during the same period in 1995. Interest and miscellaneous
income was $18,043 in the third quarter of 1996 as compared with $13,520 in the
third quarter of 1995 reflecting higher cash balances during 1995. Interest
expense in 1996 amounted to $233,500 reflecting commencement of production
while such costs were capitalized in 1995.
<PAGE>
PART II
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995.
With the exception of historical facts stated herein, the matters discussed in
this report are "forward looking" statements that involve risks and
uncertainties that could cause actual results to differ materially from
projected results. Such "forward looking" statements include, but are not
necessarily limited to, statements regarding anticipated levels of future
production in tons of material produced as well as ounces of gold recovered
from the mining operations of the Company, projected costs and expenditures
relating to the Company's mining operations and exploration activities, and the
availability of future debt and equity capital on commercially reasonable
terms. Factors that could cause actual results to differ materially include, in
addition to the other factors identified in this report, risks and
uncertainties relating to general economic and political conditions, both
domestically and internationally, the cyclical and volatile prices of gold,
unanticipated ground and water conditions, unanticipated grade and geological
problems, including lower than anticipated ore grades, metallurgical and other
processing problems, availability of seasoned personnel and equipment, delays
in the receipt of, or failure to receive necessary governmental permits or the
renewals thereof, changes in the law and regulations governing gold mining
specifically and environmental matters generally, results of financing efforts
and market conditions, and other risk factors detailed in the Company's
Securities and Exchange Commission filings, including the risk factors set
forth in the Company's registration statement on Form S-3, SEC File Number
33-307833. Readers of this report are cautioned not to put undue reliance on
"forward looking" statements which are, by their nature, uncertain as reliable
indicators of future performance. The Company disclaims any intent or
obligation to publicly update these "forward looking" statements, whether as a
result of new information, future events or otherwise.
As previously disclosed in the Company's Form 10-KSB, item 2, Description of
Properties - Environmental Matters, in March 1994, the Company received
preliminary notice from the U.S. Forest Service (USFS) naming the Company and
six other parties as potentially responsible parties to a hazardous waste site
in Siskiyou County, California. The hazardous waste site is believed to be
related to old mill tailings, storage containers and a mine tunnel. One of the
sites may have been the Siskon Mine which was previously owned by the Company
and may have been operated by a predecessor of the Company among others. In
September 1995, the Company received a letter from the USFS requesting a field
visit to the Siskon Mine, however the field visit was postponed due to the
occurrence of forest fires in the area. On October 31, 1996, the Company
received a notice from the USFS that a field visit to the site was scheduled
for November 4-7, 1996. The USFS has contracted with a private contractor to
prepare an environmental evaluation to determine if the site poses any
significant environmental risk and, if so, the establishment of clean-up goals.
If necessary, an Engineering Evaluation/Cost Assessment may be conducted to
determine appropriate alternatives, if any, for removal of any hazardous wastes
located on the site. The USFS has agreed to an additional visit to the site
with Company representatives at a later date during November 1996. Until more
information is developed, the Company is not able to determine if it will be
liable for environmental remediation or estimate the amount of liability, if
any. In the event that the Company incurs any liability associated with the
site, the Company intends to seek indemnification from other potentially
responsible parties who may have been responsible for creating the hazardous
waste site on the property.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
10.26 Convertible note agreement
(B) REPORTS ON FORM 8-K
Not applicable.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
SISKON GOLD CORPORATION
Dated November 18, 1996 /s/ Timothy A. Callaway
Timothy A. Callaway, President,
CEO and Chairman of the Board
Dated November 18, 1996 /s/ Michael K. Epstein
Michael K. Epstein, Vice-President
Finance and Chief Financial Officer
<PAGE>
FINANCIAL STATEMENTS
FORM 10-QSB - ITEM 1
SISKON GOLD CORPORATION AND SUBSIDIARY
LIST OF FINANCIAL STATEMENTS
The following consolidated financial statements of the Company are included
in response to Item 1:
Consolidated Balance Sheets -
September 30, 1996 (Unaudited) and December 31, 1995..................11
Consolidated Statements of Operations -
Nine Months Ended September 30, 1996 and 1995 (Unaudited).............12
Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 1996 and 1995 (Unaudited).............13
Notes to Consolidated Financial Statements..................................14
<PAGE>
SISKON GOLD CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1996 (UNAUDITED) AND DECEMBER 31, 1995
1996 1995
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 421,769 $ 4,251,032
Accounts receivable 9,106 7,586
Inventories 253,301 240,605
Prepaid expenses and other 138,803 74,121
Total Current Assets 822,979 4,573,344
NOTES RECEIVABLE 287,628 288,053
PROPERTY, PLANT AND EQUIPMENT 27,152,018 24,753,240
OTHER ASSETS 359,946 257,416
TOTAL ASSETS $ 28,622,571 $ 29,872,053
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 563,999 $ 719,113
Capital lease obligations - 48,964
Current portion of long-term debt 292,693 513,971
Total Current Liabilities 856,692 1,282,048
LONG TERM DEBT ($8,308,947 in 1996 and
$7,811,657 in 1995 to related parties) 8,747,492 8,171,205
OTHER LIABILITIES 58,234 51,190
Total Liabilities 9,662,418 9,504,443
COMMITMENTS AND CONTINGENCIES (Note 5)
SHAREHOLDERS' EQUITY
Capital Stock
Preferred stock, $.001 par value; no
shares issued
Common stock, $.001 par value; issued and
outstanding:
Class A 11,602,186 in 1996;
9,072,893 in 1995 11,602 10,562
Convertible Class B Series 2 0 in 1996
and 39,062.5 in 1995 - 39
Convertible Class B Series 1 638 in 1996
and 1995 1 1
Additional paid-in capital 53,307,388 52,690,024
Stock subscription receivable (331,347) (317,841)
Accumulated deficit (34,027,491) (32,015,175)
Total Shareholders' Equity 18,960,153 20,367,610
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 28,622,571 $ 29,872,053
See notes to consolidated financial statements.
<PAGE>
SISKON GOLD CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
Three months ended Nine Months ended
September 30 September 30
REVENUES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1996 1995 1996 1995
Gold sales $ 735,490 $ - $ 1,344,833 $ -
Timber sales 450,000 - 450,000 -
Royalties and leases 12,471 36,861 50,258 88,884
Total Revenue 1,197,961 36,861 1,845,091 88,884
OPERATING EXPENSES
Production 1,412,571 - 2,051,641 -
Depreciation, depletion and amortization 320,815 - 532,607 -
General and administrative 233,912 177,721 905,242 798,646
Exploration costs 23,492 10,308 64,405 61,717
Royalties 14,633 - 26,785 -
Total Operating Expenses 2,005,423 188,029 3,580,680 860,363
OPERATING LOSS (807,462) (151,168) (1,735,589) (771,479)
OTHER INCOME(EXPENSES)
Gain on sale of property and equipment (34,453) - (31,083) 92,672
Interest and other income 18,043 13,520 89,135 98,637
Interest expense (233,500) - (334,779) -
Total Other Income(Expenses) (249,910) 13,520 (276,727) 191,309
NET LOSS $ (1,057,372) $ (137,648 ) $ (2,012,316) $ (580,170)
NET LOSS PER SHARE $ (0.10) $ (0.02) $ (0.19)$ (0.06)
WEIGHTED AVERAGE
NUMBER OF SHARES 11,056,207 9,070,611 10,754,721 9,061,511
</TABLE>
See notes to consolidated financial statements.
<PAGE>
SISKON GOLD CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 (UNAUDITED)
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (2,012,316) $ (580,170)
Adjustments to reconcile net loss to net cash
used in operating activities
Issuance of common stock for services 50,000 57,500
Issuance of common stock for interest 280,211 -
Depreciation, depletion and amortization 532,607 17,139
Gain on sale of mineral rights and equipment 31,083 (92,671)
Accrued interest receivable (13,506) -
(Increase) decrease in accounts receivable (1,520) 8,786
Increase in inventories (12,696) (6,719)
Decrease (increase) in prepaid expenses 11,731 (18,786)
Decrease in accounts payable and accrued liabilities (155,114) (211,680)
Decrease in accrued reclamation costs - (20,000)
Net cash used in operating activities (1,289,520) (846,601)
CASH FLOWS FROM INVESTING ACTIVITIES
Collection on notes receivable 425 1,894
Sale of mineral rights and equipment 303,370 73,000
Purchase of equipment (500,688) (460,356)
Purchase and additions to land - (130,017)
Deferred development costs (2,143,340) (3,624,725)
Increase in bonds (160,772) (7,277)
Net cash used in investing activities (2,501,005) (4,147,481)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowing of convertible debt 500,000 2,000,000
Registration costs - (38,320)
Deferred financing costs (47,117) -
Proceeds from exercise of warrants - 7,859
Payments of obligations under capital leases (48,964) (492,439)
Payments of long-term debt (442,657) -
Net cash provided by financing activities (38,738) 1,477,100
DECREASE IN CASH (3,829,263) (3,516,982)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 4,251,032 4,244,698
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 421,769 $ 727,716
See notes to consolidated financial statements.
<PAGE>
SISKON GOLD CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF OPERATIONS
Siskon Gold Corporation and subsidiary (the Company) is engaged in the business
of exploring, developing and mining precious mineral properties, principally
gold. Gold dore', the Company's principle product, is produced and sold in
the United States. At September 1996, the Company owned (directly or through a
joint venture) interests in various mineral properties located in the Western
United States. The Company's operations are conducted in one business segment:
mineral resource exploration, development and production.
The accompanying interim consolidated financial statements have been prepared
by the Company without audit and contain all adjustments which, in the opinion
of management, are necessary to present fairly the Company's financial position
as of September 30, 1996 and December 31, 1995 and the results of its
operations and cash flows for the interim periods ending September 30, 1996 and
1995. Such adjustments consist of normal, recurring adjustments.
The accompanying interim consolidated financial statements do not contain all
disclosures required by generally accepted accounting principles for annual
financial statements. It is suggested that these financial statements be read
in conjunction with the audited consolidated financial statements and the
related notes contained in the Company's Annual Report on Form 10-KSB, for the
year ended December 31, 1995.
Operating results for interim periods are not necessarily indicative of those
expected for a full year.
2. INVENTORIES
Inventories at September 30 and December 31, 1995 were as follows:
1996 1995
Gold dore' inventory $ 45,996 $ 319,041
Materials and supplies 207,305 100,581
$253,301 $ 132,485
3. PROPERTY, PLANT AND EQUIPMENT
In March 1995, USNGS sold its interest in the Beatty claims for $175,000 in
cash, assumption of all reclamation liabilities and a two percent NSR royalty
resulting in a gain on sale to the Company of $93,001.
4. CONVERTIBLE DEBT
In May 1996, the Company borrowed $500,000 from Carl Seaman, a shareholder and
holder of a majority of existing convertible debt. The loan will be secured by
the San Juan and Big Horn mines, is due November 15, 1998 and bears interest at
ten percent with the principle and interest convertible into Class A common
stock at $1.75 per share. In connection with the loan Mr. Seaman was granted
the right to convert $500,000 of the Seamans' existing convertible debt into
Class A common stock at $1.75 per share. If a private placement is completed
prior to November 15, 1998 at a price below $1.75 per share, Mr. Seaman would
have the right to change the conversion price of his new note to the same as
that under the private placement.
5. CAPITAL STOCK, STOCK OPTIONS AND WARRANTS
Stock option and warrant transactions for the nine months ended September 30,
1996 were as follows:
Number of Exercise Exercisable
CLASS A SHARES PRICE PER SHARE OPTIONS
Options outstanding at
December 31, 1995 606,666 $2.00 - $4.94 504,166
Granted 354,000 1.75 - 2.56 161,500
Cancelled (237,166) 2.82 - 4.50 (97,166)
Vested - 3.05 20,000
Options outstanding at
September 30, 1996 723,500 $1.75 - $4.94 583,500
Warrants outstanding at
December 31, 1995 and
September 30, 1996 4,719,083 $2.82 - $7.50 4,719,083
In June 1996, the shareholders approved an increase in the number of Class A
common stock issuable under the Directors Stock Grant Plan by 75,000 shares.
6. COMMITMENTS AND CONTINGENCIES
In May 1991, the Company received a request from the California Regional Water
Quality Control Board to prepare an environmental site assessment report on a
site known as the Croman Mill Site, located in Siskiyou County, California. In
April 1996, state and federal environmental officials and a representative of
the Company conducted a site visit. Several soil and water samples were taken
by the officials as well as the Company. The Croman Mill Site is a historical
mining mill site which contains stockpiled mine tailings from mining operations
conducted by prior operators and represents a "pre-existing" condition in
relation to the time the Company owned the property. The Company owned the site
from 1989 to June 1996 and conducted only monitoring activities during that
time. As of September 30, 1996, no further correspondence has been received. In
the event that the test results lead to further testing and analysis which
ultimately results in a clean-up or abatement order issued by a state or
federal environmental agency, then the Company intends to seek indemnification
from the prior operators of the property which may have been primarily
responsible for the condition of the mine tailings located on the mill site.
In March 1994, the Company received preliminary notice from the U.S. Forest
Service (USFS) naming the Company and six other parties as potentially
responsible parties to a hazardous waste site in Siskiyou County, California.
The hazardous waste site is believed to be related to old mill tailings,
storage containers and a mine tunnel. One of the sites may have been the
Siskon Mine which was previously owned by the Company and may have been
operated by a predecessor of the Company among others. In September 1995, the
Company received a letter from the USFS requesting a field visit to the Siskon
Mine, however the field visit was postponed due to the occurrence of forest
fires in the area. On October 31, 1996, the Company received a notice from the
USFS that a field visit to the site was scheduled for November 4-7, 1996. The
USFS has contracted with a private contractor to prepare an environmental
evaluation to determine if the site poses any significant environmental risk
and, if so, the establishment of clean-up goals. If necessary, an Engineering
Evaluation/Cost Assessment may be conducted to determine appropriate
alternatives, if any, for removal of any hazardous wastes located on the site.
The USFS has agreed to an additional visit to the site with Company
representatives at a later date during November 1996. Until more information
is developed, the Company is not able to determine if it will be liable for
environmental remediation or estimate the amount of liability, if any. In the
event that the Company incurs any liability associated with the site the
Company intends to seek indemnification from other potentially responsible
parties who may have been responsible for creating the hazardous waste site on
the property.
<PAGE>
7. SUBSEQUENT EVENT
On October 17, 1996 the Company borrowed $1,150,000 through the issuance
of a convertible debenture bearing interest at 8% and a maturity date of
October 1, 1998. The principle plus accrued interest may be converted
into shares of the Company's Class A common stock at a conversion price
equal to the lesser of (a) the market price of the common stock on
October 17, 1996, or (b) 75% of the market price if the conversion is
before January 25, 1997 or 70% of the market price if the conversion is
after January 24, 1997. The market price for the applicable date is
defined as the average closing bid price of the common stock for five
days preceding that date. One quarter the principle amount and accrued
interest may be converted after November 27, 1996, with additional one
quarter amounts eligible for conversion after December 15, 1996, January
4, 1997 and January 24, 1997. In the event that the conversion price is
less than or equal to $1.00 per share, then the Company has the right to
redeem the debenture for 133% of the principle amount if the redemption
occurs prior to January 25, 1997 and 142.8% of the principle amount if
the redemption occurs thereafter. At maturity, the Company has the option
of repaying the principle and accrued interest in cash or in shares of
common stock using the conversion prices set forth above. The holder of
the debenture has agreed not to convert the debenture if at any time,
except at maturity, the holder would beneficially own more than 5% of the
common stock of the Company. The Company issued the convertible
debentures in reliance upon an exemption from the registration provisions
of the Securities Act of 1933, as amended, provided for in Regulation S
promulgated thereunder. The Company issued 200,000 warrants at $2.00 to
the underwriters that expire in two years
In addition to the $1,150,000 the Company borrowed on October 17, 1996,
on November 18, 1996, the Company agreed to issue another $2,000,000 in
aggregate principal amount in a different series of 8% convertible
debentures due January 1, 2000. Principal, plus accrued interest, may be
converted into shares of the Company's Series A Convertible Preferred
Stock (the "Preferred Stock") at a conversion price of $1,000 per share.
The debentures may not be converted into Preferred Stock for a period of
sixty days from the date of issue. On or after the sixtieth day from the
date of issue, up to one third of the principal amount of the debenture
may be converted, at the option of the holder, into shares of the
Company's Class A Common Stock. On or after the eightieth day from the
date of issue, another one third of the principal amount may be
converted, at the option of the holder, into shares of the Company's
Class A Common Stock. On or after the one hundredth day after the date
of issue, the remaining one third principal amount of the debenture, plus
all accrued and unpaid interest, may be converted, at the option of the
holder, into shares of the Company's Class A Common Stock. The number of
shares of Class A Common Stock issuable upon the conversion of the
Preferred Stock is determined by dividing the number 1,000 by seventy
five percent of the average bid price of the Company's Class A Common
Stock over a ten trading day period immediately preceding the holder's
election to convert. The debenture may be prepaid, without penalty,
anytime after one hundred eighty days from the date of issue by paying
the aggregate principal amount outstanding, plus accrued interest.
Likewise, the Preferred Stock may be redeemed by the Company at its
liquidation value of $1,000 per share, plus accrued dividends. Dividends
on the Preferred Stock accrue at eight percent per annum and are
cumulative. If any debenture in this series or any share of the
Preferred Stock remain outstanding on January 1, 2000, then the debenture
or the Preferred Stock, as the case may be, shall automatically convert
to shares of the Company's Class A Common Stock at the conversion price
set forth above. So long as any debenture in this series, or any share
of Preferred Stock issuable upon conversion of any debenture in this
series, remains outstanding, the holder may not, directly or indirectly,
initiate or maintain any short position in the securities of the Company.
The Company agreed to issue this series of debentures in reliance upon an
exemption from the registration provisions of the Securities Act of 1933,
as amended, provided for in Regulation S promulgated thereunder. As of
November 18, 1996, subscriptions for $500,000 in aggregate principal
amount of the debentures have been executed. The Company anticipates
receiving additional subscriptions, up to an aggregate principal amount
of $2,000,000, before the end of the Company's fiscal year. However,
since the debentures are not being underwritten on a "firm commitment"
basis, no assurances can be given that the Company will be successful in
selling all the remaining principal amount of the debentures.
FORM 10-QSB - ITEM 6
SISKON GOLD CORPORATION AND SUBSIDIARY
LIST OF EXHIBITS
The following exhibit of the Company is included in response to Item 6:
10.26 Convertible note agreement
NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON CONVERSION
HEREOF HAVE BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE OR UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES ARE RESTRICTED
AND MAY NOT BE OFFERED, RESOLD, PLEDGED OR TRANSFERRED EXCEPT IN
ACCORDANCE WITH REGULATION S UNDER THE ACT, OR AS PERMITTED UNDER THE
ACT PURSUANT TO REGISTRATION OR EXEMPTION OR SAFE HARBOR THEREFROM.
No. 1 US $1,150,000
SISKON GOLD CORPORATION
8% CONVERTIBLE DEBENTURE DUE OCTOBER 1, 1998
THIS DEBENTURE is one of a duly authorized issue of $1,150,000 in
Debentures of SISKON GOLD CORPORATION, a corporation duly organized and
existing under the laws of the State of California (the "Company")
designated as its 8% Convertible Debenture Due October 1, 1998.
FOR VALUE RECEIVED, the Company promises to pay to Cygna S.A., a
corporation organized under the laws of the Bahamas, c/o RTH AG,
Baarerstrasser 73, CH-6302, Zug Switzerland, the registered holder hereof
(the "Holder"), the principal sum of One Million One Hundred Fifty Thousand
Dollars (US $1,150,000) on October 1, 1998 (the "Maturity Date") and to pay
interest on the principal sum outstanding from time to time in arrears on
October 1, 1998 at the rate of 8% per annum accruing from the date of
initial issuance. Accrual of interest shall commence on the first such
business day to occur after the date hereof until payment in full of the
principal sum has been made or duly provided for. Subject to the
provisions of paragraph 4 below, the principal of, and interest on, this
Debenture are payable at the option of the Company, in shares of Common
Stock of the Company or in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts, at the address last appearing on the Debenture Register of
the Company as designated in writing by the Holder from time to time. The
Company will pay the principal of and interest upon this Debenture on the
Maturity Date, less any amounts required by law to be deducted, to the
registered holder of this Debenture as of the tenth day prior to the
Maturity Date and addressed to such holder as the last address appearing on
the Debenture Register. The forwarding of such check shall constitute a
payment of interest hereunder and shall satisfy and discharge the liability
for principal and interest on this Debenture to the extent of the sum
represented by such check plus any amounts so deducted.
This Debenture is subject to the following additional provisions:
1. The Debentures are issuable in denominations of Ten Thousand
Dollars (US $10,000) and integral multiples thereof. The Debentures are
exchangeable for an equal aggregate principal amount of Debentures of
different authorized denominations, as requested by the Holders
surrendering the same.
No service charge will be made for such registration or transfer or
exchange.
2. The Company shall be entitled to withhold from all payments of
principal of, and interest on, this Debenture any amounts required to be
withheld under the applicable provisions of the United States income tax
laws or other applicable laws at the time of such payments and Holder shall
execute and deliver all required documentation in connection therewith.
3. This Debenture has been issued subject to investment
representations of the original purchaser hereof and may be transferred or
exchanged only in compliance with the Securities Act of 1933, as amended
(the "Act"), and other applicable state and foreign securities laws. In the
event of any proposed transfer of this Debenture, the Company may require,
prior to issuance of a new Debenture in the name of such other person, that
it receive reasonable transfer documentation including opinions that the
issuance of the Debenture in such other name does not and will not cause a
violation of the Act or any applicable state or foreign securities laws.
Prior to due presentment for transfer of this Debenture, the Company and
any agent of the Company may treat the person in whose name this Debenture
is duly registered on the Company's Debenture Register as the owner hereof
for the purpose of receiving payment as herein provided and for all other
purposes, whether or not this Debenture be overdue, and neither the Company
nor any such agent shall be affected by notice to the contrary.
4. The Holder of this Debenture is entitled, at its option, to
convert at any time (a) commencing forty-one (41) days after the closing of
sale of the debenture (the "Closing"), up to one-quarter
(1/4) of the principal amount of this Debenture, (b) commencing sixty (60)
days after the Closing of the sale of the Debenture up to an additional
one-quarter (1/4) of the principal amount of this Debenture, (c) commencing
eighty (80) days of the sale of the Debenture up to an additional one-
fourth (1/4) of the principal amount of this Debenture, and (d) commencing
one hundred (100) days after the Closing, the balance of the principal
amount, provided that the principal amount is at least US $10,000 (unless
if at the time of such election to convert the aggregate principal amount
of all Debentures registered to the Holder is less than Ten Thousand
Dollars (US $10,000), then the whole amount thereof) into shares of Common
Stock of the Company at a conversion price for each share of Common Stock
equal to the lesser of (a) 100% of the Market Price
on the Closing, or (b)(i) 75 % the Market Price on the Conversion Date if
such Conversion Date is less than 100 days from the date hereof; or (ii)
70% of the Market Price on the Conversion Date if the Conversion Date is
more than 100 days from the date hereof. For purposes of this Section 4,
the Market Price shall be the average closing bid price of the Common Stock
on the five (5) trading days immediately preceding the Closing or
Conversion Date, as may be applicable, as reported by the National
Association of Securities Dealers, or the closing bid price on the over-the
counter market on such date or, in the event the Common Stock is listed on
a stock exchange, the Market Price shall be the closing price on the
exchange on such date, as reported in The Wall Street Journal. If the
Conversion Price as calculated above is less than or equal to $1.00 on the
Conversion Date, then the Company shall have the right to extinguish the
Holder's right to convert by paying the Holder, in cash, an amount equal to
the unpaid principal owed to Holder under the Debenture together with a
redemption penalty of thirty-three percent (33%) if the Conversion Date is
prior to one hundred (100) days from Closing and a redemption penalty of
forty-two and eight tenths percent (42.8%) thereafter. If the Company
elects to extinguish the Holder's right to convert, then the Company must
pay the Holder the foregoing amount within fifteen (15) days of the date of
the Holder's election to convert. Upon maturity, the Company may elect, by
written notice given at least thirty (30) days prior to the maturity date,
to convert the principal and all unpaid interest into Shares of Common
Stock ("Mandatory Conversion") in which event the Maturity Date shall be
deemed the Conversion Date. Conversion shall be effectuated by
surrendering the Debentures to be converted to the Company with the form of
conversion notice attached hereto as Exhibit A, executed by the Holder of
the Debenture evidencing such Holder's intention to convert this Debenture
or a specified portion (as above provided) hereof, and accompanied, if
required by the Company, by proper assignment hereof in blank. Interest
accrued or accruing from the date of issuance to the date of conversion
shall, at the option of the Company, be paid in cash or Common Stock upon
conversion. No fraction of Shares or scrip representing fractions of
shares will be issued on conversion, but the number of shares issuable
shall be rounded to the nearest whole share. The date on which notice of
conversion is given (the "Conversion Date") shall be deemed to be the date
on which the Holder has delivered this Debenture, with the conversion
notice duly executed, to the Company or, if earlier, the date set forth in
such notice of conversion if the Debenture is received by the Company
within three (3) business days therefrom. Facsimile delivery of the
conversion notice shall be accepted by the Company at telephone number
(916) 273-3933. Certificates representing Common Stock upon conversion
will be delivered within five (5) business days from the date the notice of
conversion is delivered to the Company.
5. No provision of this Debenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of, and interest on, this Debenture at the time, place, and rate,
and in the coin or currency, herein proscribed. This Debenture and all
other Debentures now or hereafter issued of similar terms are direct
obligations of the Company.
6. No recourse shall be had for the payment of the principal of, or
the interest on, this Debenture, or for any claim based hereon, or
otherwise in respect hereof, against any incorporator, shareholder, officer
or director, as such, past, present or future, of the Company or any
successor corporation, whether by virtue of any constitution, statute or
rule of law, or by the enforcement of any assessment or penalty or
otherwise, all such liability being, by, the acceptance hereof and as part
of the consideration for the issue hereof, expressly waived and released.
7. If the Company merges or consolidates with another corporation or
sells or transfers all or substantially all of its assets to another person
and the holders of the Common Stock are entitled to receive stock,
securities or property in respect of or in exchange for Common Stock, then
as a condition of such merger, consolidation, sale or transfer, the Company
and any such successor, purchaser or transferee shall amend this Debenture
to provide that it may thereafter be converted on the terms and subject to
the conditions set forth above into the kind and amount of stock,
securities or property receivable upon such merger, consolidation, sale or
transfer by a holder of the number of shares of Common Stock into which
this Debenture might have been converted immediately before such merger,
consolidation, sale or transfer, subject to adjustments which shall be as
nearly equivalent as may be practicable. ln the event of any proposed
merger, consolidation or sale or transfer of all or substantially all of
the assets of the Company (a "Sale"), the Holder hereof shall have the
right to convert by delivering a Notice of Conversion to the Company within
fifteen (15) days of receipt of notice of such Sale from the Company. In
the event the Holder hereof shall elect not to convert, the Company may
prepay all outstanding principal and accrued interest on this Debenture,
less all amounts required by law to be deducted, upon which tender of
payment following such notice, the right of conversion shall terminate.
8. The Holder of the Debenture, by acceptance hereof, agrees that
this Debenture is being acquired for investment and that such Holder will
not offer, sell or otherwise dispose of this Debenture or the Shares of
Common Stock issuable upon conversion thereof except under circumstances
which will not result in a violation of the Act or any applicable Blue Sky
or foreign laws or similar laws
relating to the sale of securities.
9. This Debenture shall be governed by and construed in accordance
with the laws of the State of California. Each of the parties consents to
the jurisdiction of the federal courts whose
districts encompass any part of the City of New York or the state courts of
the State of New York sitting in the City of New York in connection with
any dispute arising under this Agreement and hereby waives, to the maximum
extent permitted by law, any objection, including any objection based ON
FORUM NON COVENIENS, to the bringing of any such proceeding in such
jurisdictions.
10. The following shall constitute an "Event of Default":
a. The Company shall default in the payment of principal or
interest on this Debenture; or
b. Any of the representations or warranties made by the Company
herein, in the Subscription Agreement, or in any certificate
or financial or other written statements heretofore or
hereafter furnished by the Company in connection with the
execution and delivery of this Debenture or the Subscription
Agreement shall be false or misleading in any material
respect at the time made; or
c. The Company shall fail to perform or observe, in any
material respect, any other covenant, term, provision,
condition, agreement or obligation of the Company under this
Debenture and such failure shall continue uncured for a
period of thirty (30) days after written notice from the
Holder of such failure; or
d. The Company shall (1) admit in writing its inability to pay
its debts generally as they mature; (2) make an assignment
for the benefit of creditors or commence proceedings for its
dissolution; or (3) apply for or Consent to the appointment
of a trustee, liquidator or receiver for its or for a
substantial part of its property or business; or
e. A trustee, liquidator or receiver shall be appointed for the
Company or for a substantial part of its property or
business without its consent and shall not be discharged
within sixty (60) days after such appointment; or
f. Any governmental agency or any court of competent
jurisdiction at the instance of any governmental agency
shall assume custody or control of the whole or any
substantial portion of the properties or assets of the
Company and shall not be dismissed within sixty (60) days
thereafter; or
g. Any money judgment, writ or warrant of attachment, or
similar process in excess of Two Hundred Thousand ($200,000)
in the aggregate shall be entered or filed against the
Company or any of its properties or other assets and shall
remain unpaid, unvacated, unbonded or unstayed for a period
of sixty (60) days or in any event later than five (5) days
prior to the date of any proposed sale thereunder; or
h. Bankruptcy, reorganization, insolvency or liquidation
proceedings or other proceedings for relief under any
bankruptcy law or any law for the relief of debtors shall be
instituted by or against the Company and, if instituted
against the Company, shall not be dismissed within sixty
(60) days after such institution or the Company shall by any
action or answer approve of, consent to, or acquiesce in any
such proceedings or admit the material allegations of, or
default in answering a petition filed in any such
proceeding; or
i. The Company shall have its Common Stock suspended or
delisted from an exchange or over-the-counter market from
trading.
Then, or at any time thereafter, and in each and every such case, unless
such Event of Default shall have been waived in writing by the Holder
(which waiver shall not be deemed to be a waiver of any subsequent default)
at the option of the Holder and in the Holder's sole discretion, the Holder
may consider this Debenture immediately due and payable, without
presentment, demand, protest or notice of any kinds, all of which are
hereby expressly waived, anything herein or in any note or other
instruments contained to the contrary notwithstanding, and the Holder may
immediately enforce any and all of the Holder's rights and remedies
provided herein or any other rights or remedies afforded by law.
11. Nothing contained in this Debenture shall be construed as
conferring upon the Holder the right to vote or to receive dividends or to
consent or receive notice as a shareholder in respect of any meeting of
shareholders or any rights whatsoever as a shareholder of the Company,
unless and to the extent converted in accordance with the terms hereof.
IN WITNESS WHEREOF, the Company has cause this instrument to be duly
executed by an officer thereunto duly authorized.
Dated: October 13, 1996
SISKON GOLD CORPORATION
By: /s/ Tim Callaway
Tim Callaway
(Print Name)
President
(Title)
ATTEST:
/s/ Claudia Mack
Claudia Mack, Secretary
<PAGE>
EXHIBIT A
NOTICE OF CONVERSION
(To Be Executed by the Registered Holder in order to Convert the Debenture)
The undersigned hereby irrevocably elects to convert $___________ of the
principal amount of the above Debenture No. ____ into Shares of Common Stock of
SISKON GOLD CORPORATION (the "Company") according to the conditions hereof, as
of the date written below.
The undersigned represents that it is not a U.S. Person as defined in
Regulation S promulgated under the Securities Act of 1933 and is not converting
the Debenture on behalf of any U.S. Person.
Date of Conversion* ________________________________________________________
Applicable Conversion Price ________________________________________________
Signature __________________________________________________________________
(Name)
Address: ___________________________________________________________________
___________________________________________________________________
*This original Debenture and Notice of Conversion must be received by the
Company by the fifth business date following the Date of Conversion.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 10-QSB
FOR THE PERIOD ENDED SEPTEMBER 30, 1996 FOR SISKON GOLD CORPORATION AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 421,769
<SECURITIES> 0
<RECEIVABLES> 9,106
<ALLOWANCES> 0
<INVENTORY> 253,301
<CURRENT-ASSETS> 822,979
<PP&E> 27,152,018
<DEPRECIATION> 0
<TOTAL-ASSETS> 28,622,571
<CURRENT-LIABILITIES> 856,692
<BONDS> 8,747,492
0
0
<COMMON> 11,603
<OTHER-SE> 52,976,041
<TOTAL-LIABILITY-AND-EQUITY> 28,622,571
<SALES> 1,794,833
<TOTAL-REVENUES> 1,845,091
<CGS> 2,051,641
<TOTAL-COSTS> 3,580,680
<OTHER-EXPENSES> 58,052
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 334,779
<INCOME-PRETAX> (2,012,316)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,012,316)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,012,316)
<EPS-PRIMARY> (0.19)
<EPS-DILUTED> (0.19)
</TABLE>
