U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: MARCH 12, 1997
DATE OF EARLIEST EVENT REPORTED: NOVEMBER 21, 1996
NEWGOLD, INC.
-------------
(Exact Name of Small Business Issuer as Specified in Charter)
Delaware 0-20722 16-1400479
----------- ----------- --------------
(State or Other (Commission File No.) (IRS Employer
Jurisdiction of Identification No.)
Incorporation)
5190 Neil Road, Suite 320
Reno, Nevada 89502
--------------------------------
(Address of Principal Executive Offices)
(702) 823-4000 (Issuer's Telephone Number)
---------------------------------
Warehouse Auto Centers, Inc.
----------------------------
(Former Name, if changed since Last Report)
ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
-------------------------------------
Pursuant to a Chapter 11 Plan of Reorganization, confirmed by the U.S.
Bankruptcy Court for the Western District of New York at a hearing held on
November 21, 1996 and by Order entered November 25, 1996, Warehouse Auto
Centers, Inc., Debtor, merged with and acquired all of the assets of
Newgold, Inc., a Nevada corporation, in exchange for a total of 12,000,000
shares of its restricted Common Stock. As a result of such merger and stock
issuance, the shareholders of Newgold, Inc., the Nevada corporation, acquired
control of the Registrant. The consideration paid consisted of all of the
outstanding shares of Newgold, Inc., the Nevada corporation. The percentage of
voting securities of Registrant now beneficially owned, directly or
indirectly, by the Newgold, Inc. (Nevada) shareholders is 61%. The control
shares were issued by the Registrant from its authorized but unissued shares
of Common Stock.
A. Scott Dockter, President and Chairman of the Board of Directors of the
Reorganized Debtor, as a controlling shareholder of Newgold, Inc. (Nevada)
acquired beneficial ownership of a total of 6,686,358 shares representing 34%
of the voting control of Registrant's issued and outstanding shares.
There are no arrangements or understandings among members of the former
and new control person(s) or there associates with respect to the election of
directors or other matters pertaining to Registrant.
There are no arrangements known to the Registrant, including any pledge
by any person of securities of the Registrant or any of its parents, the
operation of which may, at a subsequent date, result in a change in control of
the Registrant.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
-----------------------------------------
On November 25, 1996, pursuant to Order of the U.S. Bankruptcy Court
confirming Warehouse Auto Center's Chapter 11 Plan of Reorganization,
Registrant merged with and acquired all of the assets of Newgold, Inc., a
Nevada corporation, consisting of gold mining properties and equipment located
in California and Nevada in exchange for 12,000,000 shares of restricted
Common Stock of Registrant.
Newgold, Inc. (Nevada) was incorporated under the laws of the State of
Nevada on September 1, 1993. Newgold's goal has been to acquire small to
medium-sized precious metals mines which have drill-indicated reserves and
little or no permitting requirements prior to commencement of production. The
ultimate goal of Newgold is to become a junior-sized gold production
organization diversified in various aspects of the mining industry.
On January 1, 1995, Newgold purchased the Relief Canyon Mine, located in
Lovelock Nevada, from J.D. Welsh & Associates, an unrelated third party, for
the sum of $500,000 cash. Newgold has performed extensive research,
development and drilling on the property and is currently in the process of
obtaining permits to put the mine into operation.
On June 21, 1995, Newgold acquired the Washington Gulch Mine in Montana
from Edward Mackay, an officer, director and principal shareholder of the
Reorganized Debtor, in exchange for 2,644,293 restricted shares of Newgold,
Inc. Common Stock. Registrant is currently performing research, development
and drilling on the property to determine the presence of minerals.
On September 21, 1996, Newgold entered into a Lease with an Option to
purchase the Mission Mine in Twenty-Nine Palms, California, from Joie Jamison,
an unrelated third party, for the cash sum of $3,500,000. The terms of the
Lease provide for a cash down payment of $5,113 on execution of the Lease;
$5,000 per month for the first 90 days after execution of the Lease; $8,000
per month for an additional 90 days; and a cash payment of $300,000 at the end
of the 180-day period. Beginning on March 1, 1997, payment shall be the
greater of 2.5% Net Smelter Return ("NSR") or minimum monthly payments of
$10,000 through February, 1998; then $20,000 per month through February, 1999;
$30,000 per month through February, 2000; $40,000 per month through February,
2001; $50,000 per month through February, 2002; $60,000 per February, 2003;
and $70,000 per month through February 2004, until the total purchase price of
$3,500,000 is paid in full, either with the 2.5% NSR or the monthly payments.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
-----------------------------
On November 25, 1996, the U.S. Bankruptcy Court for the Western District
of New York entered an Order confirming Warehouse Auto Center's Chapter 11
Plan of Reorganization. Following is a summarization of the material features
of the Plan:
1)The Debtor has successfully reorganized and merged with Newgold, Inc., a
Nevada corporation, wherein Registrant acquired 100% of the outstanding shares
of Common Stock of Newgold, Inc. in exchange for 12,000,000 restricted shares
of Common Stock in the Reorganized Debtor.
(2)Registrant filed an Amendment to its Articles of Incorporation with the
Secretary of State of the State of Delaware on December 2, 1996, changing the
name of the corporation to Newgold, Inc. and increasing the authorized
capital stock of the corporation to 50,000,000 shares of Common Stock with a
par value of $.001 per share.
(3)Registrant has effected a 65:1 reverse split of Registrant's pre-petition
Common Stock and obtained the new CUSIP Number 651362-10-5 to reflect said
reverse split.
(4)Registrant paid the allowed claims of its secured creditors in full in
cash following entry of an Order from the U.S. Bankruptcy Court for the
Western District of New York on August 28, 1996, directing a sale of its
remaining assets for the total sum of $375,000.
(5)Registrant has paid all allowed claims of unsecured trade debts and other
unsecured liabilities in full with Common Stock in the Reorganized Debtor,
issued pursuant to Section 1145 of the Code, on the basis of one share for
each $42.00 of debt.
(6)Registrant has paid all loans incurred pursuant to Section 364 of the Code
and the holders of priority Debtor Certificates, according to the terms of
their Certificates, and has offered all holders the option to convert their
debt to equity in the Reorganized Debtor in lieu of cash payment, through
issuance of shares of Common Stock of the Reorganized Debtor, pursuant to
Section 1145 of the Code.
(7)Registrant has paid all Administrative Claims incurred during the
Bankruptcy proceedings either in cash in full or in Common Stock of the
Reorganized Debtor, pursuant to Section 1145 of the Code, on the basis of one
share of Common Stock for each $1.00 of debt, at the discretion of the
Creditor.
(8)Registrant has paid all Priority Administrative Claims, including, but not
limited to taxes and U.S. Trustee fees in full in cash.
(9)Registrant has appointed a new Board of Directors and Management of the
Reorganized Debtor.
(10)Registrant has applied for and obtained the new trading symbol , "NGLD"
from NASDAQ.
(11) Registrant has canceled all outstanding pre-petition options,
warrants and/or other
rights or commitments by Registrant to issue any securities or
pay any benefits to
any person or business entity other than those approved in the
Plan of Reorganization.
(12) Registrant has appointed Oxford Transfer & Registrar, 317 SW Alder,
Portland, Oregon, as the corporation's new transfer agency.
As of the date of this Report, Registrant has substantially
consummated the Plan according to its terms and intends to apply to the U.S.
Bankruptcy Court for a Closing Order of the Chapter 11 proceeding in the very
near future.
As of the date of this Report, there is a total of 19,718,263 shares
of Common Stock of Registrant issued and outstanding. This amount includes
all shares which were to be issued pursuant to the terms of the Plan and there
are no shares reserved for future issuance in respect of claims and interests
filed and allowed under the Plan.
On the date of confirmation of the Plan of Reorganization,
Registrant's only asset was cash in the amount of $39,645 held in an escrow
account, which amount represented the balance of funds left over from the
asset sale in August 1996. Upon confirmation of the Plan, these funds were
used to pay allowed Administrative and priority claims. On the date of
confirmation of the Plan, Registrant's liabilities totaled $3,031,145, all of
which have been paid in full either in cash or with Common Stock of the
Reorganized Debtor, as allowed, pursuant to the terms of the Plan of
Reorganization.
ITEM 7. FINANCIAL STATEMENTS. PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
-------------------------------------------------------------------
Following are the unaudited financial statements of Registrant
(Newgold-Nevada) for the last two years and pro forma financial information as
of November 21, 1996, the date of confirmation of the Plan of Reorganization.
Registrant will file its audited financial statements with its Report on Form
10-KSB for the period ended January 31, 1997 on or before the due date of such
Report.
(This space left blank intentionally.)
<PAGE>
<TABLE>
<CAPTION>
NEWGOLD, INC.
BALANCE SHEET
DECEMBER 31, 1994
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 6,688
Due from officers 47,810
----------
Total Current Assets $ 54,498
INVESTMENT
Golden Asset mine
Leasehold $ 352,642
Equipment 17,000
Less accumulated depreciation (1,700) 367,942
-------
TOTAL ASSETS $ 422,440
LIABILITIES AND SHAREHOLDER'S DEFICIT
CURRENT LIABILITIES
Accounts payable $ 111,635
Payroll taxes payable 914
Payable to affiliated companies 73,858
Notes payable to individuals 355,000
Notes payable-Investment 122,642
----------
Total Liabilities $ 664,049
SHAREHOLDER'S EQUITY (DEFICIT)
Common Stock - Authorized, 1,000 shares $ 1,000
Issued and outstanding, 100 shares
Less accumulated deficit (242,609)
----------
Shareholder's Deficit (241,609)
TOTAL LIABILITIES AND
SHAREHOLDER'S DEFICIT $ 422,440
----------
</TABLE>
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
NEWGOLD, INC.
STATEMENT OF LOSS AND ACCUMULATED DEFICIT
FOR THE PERIOD MAY 16, 1994 (INCEPTION) TO DECEMBER 31, 1994
<S> <C>
INCOME
Sales of gold and silver $ 72,762
EXPENSES
Royalty payments 35,000
Accounting fees 1,393
Vehicle expenses 106
Fees and service charges 930
Legal and professional 125
Licenses and permits 437
Production payments 3,000
Travel and entertainment 6,765
Office expense and postage 3,651
Depreciation 1,700
Outside services 189,211
Cement 5,717
Delivery and freight 4,922
Miscellaneous 6,853
Equipment rental 3,059
Equipment repairs 3,644
Equipment operation 3,873
Supplies 9,732
Wages 28,000
Payroll taxes 2,590
Penalties 270
Telephone 2,781
Engineering fees 1,612
-----------
Total Expenses $ 315,371
NET LOSS ($242,609)
Accumulated Deficit - Beginning 0
Accumulated Deficit - December 31,1994 ($242,609)
</TABLE>
<TABLE>
<CAPTION>
NEWGOLD, INC.
STATEMENT OF CASH FLOWS
FOR THE PERIOD MAY 16, 1994 (INCEPTION) TO DECEMBER 31, 1994
<S> <C>
Cash Flows from Operating Activities
Net Income (Loss) ($242,609)
Add back depreciation 1,700
Adjusted net loss 240,909)
Adjustments to reconcile Net Loss to
Net Cash Used by Operating Activities
(Increase in Due from officers (46,810)
Increase in Accounts payable 111,635
Increase in Payroll taxes payable 914
Increase in payable to affiliated company 73,858
-----------
Total adjustments $ 139,597
Net cash used by Operating Activities ($101,312)
Cash Flows from Investing Activities
Net Cash Payments on purchase of Golden Asset (369,642)
Increase in common stock 1,000
-----------
Net cash Used In Investing Activities ($368,642)
Cash Flows from Financing Activities
Cash borrowings from individuals 355,000
Notes Payable for Golden Asset 122,642
-----------
Net Cash Provided By Financing Activities $ 477,642
Increase (Decrease) in Cash 6,688
Cash at Beginning of the Year 0
Cash at End of Year $ 6,688
</TABLE>
See Notes to Financial Statements
<PAGE>
NEWGOLD, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD MAY 16, 1994 (INCEPTION) TO DECEMBER 31, 1994
NOTE 1 - Summary of Significant Accounting Policies
----------------------------------------------
Business Activity - Newgold, Inc. (the Company) was incorporated in the state
- ------------------
of Nevada on September 1, 1993 and remained inactive until May 16, 1994. The
Company is engaged in the acquisition and development of small to medium
mining properties using the heap leach method. In 1994, the Company operated
one mine located near Jefferson City, Montana.
Income and Expense Recognition - The Company uses the accrual method of
- ---------------------------------
accounting where income is recognized when earned and expenses are recorded as
- ------
they are incurred.
Property and Equipment - Property and equipment are stated at cost.
- ------------------------
Depreciation is calculated using the double declining balance method and
- ----------
half-year convention as stipulated in the Internal Revenue Code. This
- -----
depreciation method is designed to amortize the cost of the assets over their
- -----
estimated useful lives of five years with greater expense being recorded in
the initial years of service. In this initial period of operation,
straight-line and accelerated methods of depreciation are approximately equal
in expense. Maintenance and repairs are charged to expense as incurred. For
equipment retirements or other disposals, the equipment cost is removed from
the asset account and the related depreciation allowance is adjusted with the
difference being charged or credited to income.
Income Taxes - The shareholders have elected that income and losses of the
- -------------
Company will be allocated to the shareholders under provisions of Sub-chapter
- ---
S of the Internal Revenue Code. Therefore, no income tax benefit for the
future loss carryforward has been recorded in the financial statements.
NOTE 2 - Related Party Transactions
----------------------------
The Company is owned by Arthur Scott Dockter and Richard C. Kimball with
ownership of 70% and 30%, respectively.
The Company has accounts receivable from Scott Dockter and Richard Kimball of
$21,200 and $26,610, respectively.
The Company has an account payable to another company owned by the
shareholders of $73,858.
NOTE 3 - In the acquisition of the Golden Asset mine, Alta Gold Corporation
sold its interests to the Company for $322,642. The Company paid a deposit of
$200,000 and had made two of the $10,000 monthly payments through March 1995.
The balance payable at December 31, 1995 was $102,642 and was paid in October
1996. Depreciation expense for equipment for the period ended December 31,
1994 was $1,700.
The Company has borrowed funds from 8 individuals under
Investor's Agreements which promises repayment of the principle plus net
profit percentage interest (NPI) in the net income of the mine. The total
borrowed from individuals for the Golden Asset mine is $355,000 and the
lenders have been granted a total NPI of 36% of net income generated by the
mine.
NOTE 4 - Subsequent to the balance sheet date, the Company negotiated a
capital lease to acquire the mineral rights for the Relief Canyon mine near
Lovelock, Nevada. The $500,000 lease required a down payment of $100,000 and
twelve monthly payments of $35,166 beginning February 1, 1995.
(This space left blank intentionally.)
<TABLE>
<CAPTION>
NEWGOLD, INC.
BALANCE SHEET
DECEMBER 31, 1995
<S> <C>
ASSETS
CURRENT ASSETS
Cash $ 909
Note receivable 38,074
Due from officer 26,939
Prepaid expenses 2,150
----------
Total Current Assets $ 68,072
INVESTMENTS
Golden Asset mine 0
Relief Canyon mine 0
TOTAL ASSETS $ 68,072
LIABILITIES AND SHAREHOLDER'S DEFICIT
CURRENT LIABILITIES
Accounts payable $ 209,277
Accrued payroll 5,656
Payroll taxes payable 49,528
Payable to affiliated companies 307,935
Notes payable to individuals 1,189,305
Notes payable-Investments 0
----------
Total Liabilities $1,761,701
SHAREHOLDER'S EQUITY (DEFICIT)
Common Stock - Authorized, 1,000 shares $ 1,000
Issued and outstanding, 100 shares
Less accumulated deficit 0
----------
Shareholder's Deficit $ 1,000
TOTAL LIABILITIES AND
SHAREHOLDER'S DEFICIT $1,762,701
</TABLE>
<TABLE>
<CAPTION>
See Notes to Financial Statements
NEWGOLD, INC.
STATEMENT OF LOSS AND ACCUMULATED DEFICIT
FOR THE YEAR ENDING DECEMBER 31, 1995
<S> <C>
INCOME
Sales of gold and silver $ 40,773
EXPENSES
Assay and refining expenses 2,000
Accounting fees 4,655
Vehicle expenses 723
Bank service charges 2,578
Vendor service charges 9,049
Dues and subscriptions 53
Interest expense 15,419
Legal and professional 3,343
Licenses and permits 4,727
Travel 3,014
Meals and entertainment 494
Office supplies 2,270
Postage 645
Printing 212
Outside services 5,368
ADP fees 662
Laboratory fees 818
Miscellaneous 850
Equipment rental 1,605
Equipment fuel and oil 1,545
Repairs and maintenance 572
Supplies 5,168
Wages 35,255
Payroll taxes 4,215
Telephone 3,447
Engineering fees 6,500
-----------
Total Expenses $ 115,187
NET LOSS ($74,415)
Accumulated Deficit - December 31, 1994 ($257,609)
Accumulated Deficit - December 31,1995 ($332,024)
</TABLE>
See Notes to Financial Statements
<TABLE>
<CAPTION>
NEWGOLD, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDING DECEMBER 31, 1995
<S> <C>
Cash Flows from Operating Activities
Net Income (Loss) ($74,415)
Adjustments to reconcile Net Loss to
Net Cash Used by Operating Activities
(Increase) in Note receivable (38,074)
Decrease in Due from officer 20,871
(Increase) in Prepaid expenses (2,150)
Increase in Accounts payable 97,642
Increase in Accrued payroll 5,656
Increase in Payroll taxes payable 48,615
Increase in payable to affiliated company 234,077
-------------
Total adjustments $ 366,637
Net cash provided by Operating Activities $ 292,222
Cash Flows from Investing Activities
Net Cash Payments on purchase of Relief Canyon ($1,112,306)
Cash Flows from Financing Activities
Cash borrowings from individuals $ 866,805
Payments on Notes Payable for Golden Asset (52,500)
-------------
Net Cash Provided By Financing Activities $ 814,305
Net Increase (Decrease) in Cash (5,779)
Cash at Beginning of the Year $ 6,688
Cash at End of Year $ 909
</TABLE>
See Notes to Financial Statements
<PAGE>
NEWGOLD, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDING DECEMBER 31, 1995
Note 1 - Summary of Significant Accounting Policies
----------------------------------------------
Business Activity - Newgold, Inc. (the Company) was incorporated in
------------------
the State of Nevada on September 1, 1993 and began operations on May 16, 1994.
The Company is engaged in the acquisition of inactive mining properties that
have the potential to be reopened as productive gold mines. The Company uses
drill data of others to determine areas of known reserves and engages
engineers and geologists to review geological formations to define target
areas to implement drill programs that will establish additional areas for
mining gold and silver bearing ore. Known reserves at December 31, 1996 were
700,000 troy ounces with a market value of $2,100,000.
Income and Expense Recognition - The Company uses the accrual
------------------------------
method of accounting where income is recognized when earned and expenses are
recorded as they are incurred.
As Relief Canyon property and equipment had not been placed into service
as of the balance sheet date, all expenditures exceeding
gold revenues from clear water tests of the equipment, have been
capitalized.
Investments - Investments are stated at cost and represent the leasehold
-----------
cost of mineral rights and costs incurred for equipment and its
refurbishment. Maintenance and repairs to equipment in production will be
charged to expense as incurred.
Income Taxes - The Company has filed to be treated as a partnership
-------------
under Subchapter S of the Internal Revenue Code; therefore, no income tax
provision has been made in the financial statements.
Note 2 - Related Party Transactions
----------------------------
At December 31, 1995, the Company is 100% owned by Arthur Scott
Dockter.
In lieu of wages, the shareholder has been paid advances by the Company.
There is an account receivable from Mr. Dockter of $26,939 as of December
31, 1995.
A former officer and shareholder sold his 30% interest in the Company to
Mr. Dockter as of June 30, 1995. There is a note receivable from the
former shareholder for $38,074 for repayment of advances paid to him in
lieu of salary. The note bears interest at 12% per annum.
The Company has an account payable of $307,935 to Riverfront Development
Corporation, an affiliated company. Of this balance at December 31, 1995,
$250,000
represents used material and equipment sold to Relief Canyon to
refurbish the mine's processing building and equipment. The remainder
represents cash advances and expenses paid by Riverfront Development for the
benefit of the Company.
Note 3 - Notes Payable to Individuals
-------------------------------
The Company has borrowed funds from 19 individuals under Investor's
Agreements which promises repayment of the principle plus net profit
percentage interest (NPI) in the net income of each mine. The total borrowed
from individuals for the Golden Asset mine is $382,500 and the lenders have
been granted a total NPI of 46% of net income generated by this mine. The
total borrowed from individuals for the Relief Canyon mine is $806,805 and
they have been granted a total NPI of 59.5% in the net income generated by
this mine.
Note 4 - Notes Payable - Investments
------------------------------
In the acquisition of the Golden Asset mine, Alta Gold Corporation sold
its interests to the Company for $322,642. The Company paid a deposit of
$200,000 and had made two of the $10,000 monthly payments through March
1995. The balance payable at December 31, 1995 was
$102,642 and was paid in October 1996.
The processing building, leach ponds and mineral rights of Relief Canyon
mine were acquired from Welsh & Associates for the sum of
$450,000. The contract required a down payment of $100,000
and twelve monthly payments of $35,166 including interest at 10%. The
balance due of $53,765 at December 31, 1995 represents a final payment
made in April 1996.
Note 5 - Operating Rents
----------------
The mineral rights lease for Golden Asset mine requires future annual
minimum lease payments to the landowner of $10,000 in lieu
of 2.5% royalty on Net Smelter Return for gold purchased by a smelter.
A mineral rights lease for Relief Canyon mine requires future annual minimum
lease payments of $13,125 to Santa Fe Pacific Gold Corporation for 800 acres
of land and $12,500 minimum annual royalty in lieu of 2.5% royalty on Net
Smelter Return for gold purchased by smelter. There are 39 unpatented claims
on land owned by the Federal government. These claims require a minimum
annual rent of $3,900 payable to the Bureau of Land Management to remain
active as claims of the Company.
Note 6 - Contingencies
-------------
Payroll Taxes - Payroll taxes payable of $49,529 represent delinquent
--------------
amounts. These taxes were paid in December 1996.
Liens - A vendor who did earthwork for the Company at Golden Asset has
-----
filed a lien against the property for $95,534. The lien was settled in
December 1996 for $84,419.
(This space left blank intentionally.)
<PAGE>
<TABLE>
<CAPTION>
NEWGOLD INC.
BALANCE SHEET
JUNE 30, 1996
<S> <C>
ASSETS
CURRENT ASSETS
Cash $ 24,273
Due from officer - Note 2 56,969
Prepaid expenses 16,573
-----------
Total Current Assets $ 97,815
INVESTMENTS
Cerro Gordo property - Notes 4 and 7 $ 611,000
Golden Asset mine - Notes 4 and 8 387,942
Relief Canyon Ltd - Notes 2 and 8 1,398,000
Washington Gulch mine - Note 3 385,000
-----------
TOTAL ASSETS $2,879,757
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 215,160
Accrued payroll due officer - Note 2 83,259
Payroll taxes payable - Note 6 42,605
Payable to affiliated companies - Note 2 622,397
Notes payable to individuals - Note 3 517,500
Notes payable-Investments-Current - Note 4 192,642
-----------
Total Current Liabilities $1,673,563
LONG TERM LIABILITIES
Notes payable-Investments - Note 4 $ 500,000
Total Liabilities 2,173,563
SHAREHOLDERS' EQUITY
Common Stock - Authorized, 50,000,000 shares,
Par Value $001 $ 11,441
Issued and outstanding, 11,440,958 shares
Additional paid-in capital 1,073,864
Less accumulated deficit (379,111)
-----------
Total Shareholders' Equity $ 706,194
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,879,757
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NEWGOLD, INC.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDING JUNE 30, 1996
<S> <C>
INCOME
Option income $ 100,000
EXPENSES
Vehicle expenses 1,073
Fees and service charges 577
Premium to redeem notes to individuals 27,500
Insurance 1,992
Legal and professional 15,488
State fees 10,285
Travel and entertainment 5,465
Office supplies and postage 935
Outside services 1,050
Rent 10,000
Equipment rental 23,925
Computer expense 1,550
Supplies 1,720
Wages 37,253
Payroll taxes 3,790
Telephone 448
Note receivable write off 19,037
----------
Total Expenses $ 162,087
----------
NET LOSS ($62,087)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NEWGOLD, INC.
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDING JUNE 30, 1996
<S> <C>
Net Income (Loss) ($62,087)
Adjustments to reconcile Net Loss to
Net Cash Used by Operating Activities
Decrease in Note receivable 38,074
(Increase) in Due from officer (31,030)
(Increase) in Prepaid expenses (14,423)
Increase in Accounts payable 5,882
Increase in Accrued payroll 77,603
(Decrease) in Payroll taxes payable (6,925)
Increase in Notes payable to individuals 27,500
Increase in payable to affiliated companies 314,462
----------
Total adjustments $ 411,143
Net cash provided by Operating Activities $ 349,056
Cash Flows from Investing Activities
Cash Payments to purchase Cerro Gordo property $ (21,000)
Cash Payments on Golden Asset mine (20,000)
Cash Payments on Relief Canyon mine (182,929)
----------
Net Cash Payments on Investment Activities $(223,929)
Cash Flows from Financing Activities
Net cash payments on Investment Notes Payable $(103,765)
Net Increase in Cash $ 21,362
Cash at Beginning of the Period $ 911
Cash at End of Period $ 21,362
</TABLE>
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
NEWGOLD, INC.
STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDING JUNE 30, 1996
Number of Additional
Common Shares Issued and ParPaid-In Accumulated
Outstanding ValueCapital Deficit
----------------------------------- -------------- -----------
<S> <C> <C> <C> <C>
Balance, December 31, 1995 1,000 $ 1.00 $ 999 $ (317,024)
Stock issued to redeem
Investor Agreements 1,431,642 1,432 691,665
Stock issued to acquire
Washington Gulch Mine 3,800,000 3,800 381,200
Stock issued for bonus 67,000 670
Stock issued as founder's
stock 6,141,316 6,141 0
Net loss for six months
ended June 30, 1996 $ (62,087) $ (379,111)
----------------------------------- --------------
Balance, June 30, 1996 11,440,958 $ 11,441 $ 1,073,864
----------------------------------- -------------- -----------
</TABLE>
See Notes to Financial Statements
NEWGOLD, INC.
NOTES TO FINANCIAL STATEMENTS
FOR SIX MONTHS ENDING JUNE 30, 1996
Note 1 - Summary of Significant Accounting Policies
----------------------------------------------
Business Activity - Newgold, Inc. (the Company) was incorporated in
------------------
the State of Nevada on September 1, 1993 and began operations on May 16, 1994.
The Company is engaged in the acquisition of inactive mining properties that
have potential to be reopened as productive gold mines. The Company uses
drill data of others to determine areas of proven reserves and engages
engineers and geologists to review geological formations to define target
areas to implement drill programs to establish additional gold and silver
bearing ore areas.
Income and Expense Recognition - The Company uses the accrual method of
--------------------------------
accounting where income is recognized when earned and expenses
are recorded as they are incurred.
Investments - Investments are stated at cost and represent the leasehold
-----------
cost of mineral rights, expenditures for equipment or
refurbishment and reclamation bonds posted. Maintenance and repairs to
equipment in production are charged to expense as incurred.
Note 2 - Related Party Transactions
----------------------------
In lieu of wages through May 31, 1996, Scott Dockter, President, was paid
advances by the Company. There is an account receivable from Mr. Dockter of
$56,969 as of June 30, 1996. The account receivable was offset against
$83,259 of accrued salary paid in December 1996.
The Relief Canyon mine was transferred at a cost of $1,398,000 to a
Limited Liability Company on April 26, 1996 in exchange for 50% ownership
of Relief Canyon, Ltd. Casmyn Corp. owns the other 50% of the LLC in
exchange for $775,000 in cash and a commitment to pay an additional $623,000
after Relief Canyon Ltd. posts a reclamation bond with the U.S. Bureau of Land
Management. The Company has purchased the interests of Casmyn Corp. in
the Relief Canyon mine (Note 8).
The Company has an account payable of $287,901 to Riverfront Development
Corporation, an affiliated company. Of this balance $250,000 represents used
material and equipment sold to Relief
Note 3 - Notes Payable - Individuals and Common Stock
--------------------------------------------------
The Company had borrowed $1,189,305 from 19 individuals under Investor's
Agreements. The Investor's Agreements have been replaced by a Common Stock
issue and other notes payable to three individuals.
One individual received stock for a portion of his loan and was given a note
payable for $215,000. The note is due September 30, 1996 and bears interest
at 8% per annum. Two individuals owed $275,000 chose not to exchange their
notes payable for shares of stock. They are to be paid 110% of the amount
loaned within 90 days. The note redemption premium of $27,500 has been accrued
in notes payable and has been charged to expense.
The Company issued 3,800,000 shares to individuals to acquire the
Washington Gulch mine. The mine was recorded at the book value of the
sellers.
The Company issued 67,000 shares to six employees for services
rendered since inception of the Company and the president was issued 6,701,358
shares as founder's stock.
Note 4 - Notes Payable - Investments
------------------------------
In the acquisition of the Golden Asset mine, Alta Gold Corporation sold
its interests to the Company for $322,642. The Company paid a deposit of
$200,000 and has made two of the $10,000 monthly payments through March
1995. The balance payable at June 30, 1996 was $102,642 and was paid in
October 1996. The Company has reclaimed the Golden Asset property (Note 8).
The Cerro Gordo property was acquired from the owner on May 24, 1996 for
$600,000. Another $16,000 was paid to geologists and attorneys for work
relating to the property. The property was purchased with a $10,000
option payment, $90,000 payable within one year and lump sum payments of
$250,000 each in 1998 and 1999.
Note 5 - Operating Rents
----------------
The mineral rights lease for Golden Asset mine requires future annual
minimum lease payments to the landowner of $10,000 in lieu of 2.5% royalty
on Net Smelter Return for gold purchased by a smelter. (See Note
8.)
A mineral rights lease for Relief Canyon mine requires future annual minimum
lease payments of $13,125 to Santa Fe Pacific Gold Corporation for 800 acres
of land and $12,500 minimum royalty in lieu of 2.5% royalty on Net Smelter
Return for gold purchased by smelter. There are 39 unpatented claims on land
owned by the Federal government. These claims require a minimum annual rent
of $3,900 payable to the Bureau of Land Management to remain active as claims
of the Company.
Note 6 - Contingencies
-------------
Payroll Taxes - Payroll taxes payable of $42,605 represent delinquent
--------------
amounts. These taxes were paid in December 1996.
Liens - A vendor who did earthwork for the Company at Golden Asset has
-----
filed a lien against the property for $95,534. The lien was settled in
December 1996 for $84,419.
Note 7 - Litigation
----------
The former owner of the Cerro Gordo property had executed a one year
minerals lease in 1995 with another organization. As the lessee did not make
the required monthly lease
payments, the former owner advised the lessee that the lease had been
terminated. The lessee has refused to give up the lease rights and the former
owner has filed suit to terminate the lease. It is the opinion of counsel
that the former owner will prevail.
Note 8 - Subsequent Events
------------------
The Company has leased patented claims (personally owned) in the Cerro
Gordo area and unpatented claims of the Mission mine in southern
California. The gold reserves in these two properties more than equate to
the reserves of the Cerro Gordo Unpatented Property (See Note 7).
In December 1996 Casmyn Corp. sold its interests in Relief Canyon Ltd. to the
Company for $900,000 plus one million shares of restricted Newgold Inc. stock.
Casmyn Corp. purchased its interests in Relief Canyon Ltd. for $775,000 in
cash plus a note for $623,000 which is canceled under the repurchase agreement
(See Note 2).
The Golden Asset mine was reclaimed in November 1996. The Company retains the
option to reopen this mine at a future date.
<PAGE>
<TABLE>
<CAPTION>
NEWGOLD, INC.
PROFORMA BALANCE SHEET (POST-MERGER
NOVEMBER 21, 1996
<S> <C>
ASSETS
Current Assets
Cash $4,745,724
Debtor Certificate Funds Receivable 347,500
Prepaid Expenses and Other Assets 122,280
----------
Total Current Assets$5,215,504
Investments in Mining Properties $2,186,798
Other Assets 12,096
- --------------------------------------------------
TOTAL ASSETS$7,414,398
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable and Accrued Liabilities$611,714
Accrued Expenses 123,408
Accrued Taxes 39,661
Notes Payable - Other 277,642
Notes Payable to Shareholders 435,000
Due to Related Parties 618,915
- --------------------------------------------------
Total Current Liabilities$2,106,340
Stockholders' Equity
Common Stock, $.001 par value, 50,000,000 shares
authorized; 16,819,407 issued and outstanding $ 17,248
Additional Paid-in Capital 5,290,810
- --------------------------------------------------
Total Stockholders' Equity $5,308,058
----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $7,414,398
----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NEWGOLD, INC.
PROFORMA STATEMENT OF CHANGE IN STOCKHOLDERS' EQUITY
POST-MERGER
NOVEMBER 21, 1996
Number of
Common Shares Additional
Issued and Par Paid-In Accumulated
Outstanding Value Capital Deficit
--------------- --------- ------------- -------------
<S> <C> <C> <C> <C>
Balance, January 31, 1996 3,299,191 $ 16,496 $ 7,208,113 $ (9,591,333)
Adjustments to cancel stock
issued without consideration
pursuant to Order of the
U.S. Bankruptcy Court (100,000) (500)
--------------- ---------
Pre-Merger Balance-
October 31, 1996 3,199,191 $ 15,996 $ 7,206,113 $ (9,591,333)
Stock issued to Unsecured
Creditors paid with one
share for each $42 in debt 63,189 $ 63 $ 2,653,856
Stock issued to reflect reverse
split on the basis of 1:65 to
Warehouse Auto Centers
Shareholders 49,218 $ 49 ($1,989,634)
Stock issued to shareholders
of Newgold, Inc. (Nevada) 12,000,000 $ 12,000 $824,728
Stock issued for services
rendered in private placement 428,130 $ 428 $ 99,568
Stock issued to holders of
Debtor Certificates 4,707,000 $ 4,707 $ 4,702,293
--------------- --------- -------------
Balance, November 22, 1996 17,247,537 $ 17,248 $ 5,290,810
--------------- --------- -------------
</TABLE>
<PAGE>
EXHIBITS
--------
Exhibit No. Description
- ------------ -----------
2 Plan of Reorganization, as confirmed by the U.S.
Bankruptcy Court for the Western District of NewYork on November 22, 1996
SIGNATURES
----------
In accordance with the requirements of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
NEWGOLD, INC., formerly known as Warehouse auto Centers, Inc.
By: /s/ Arthur Scott Dockter, President Dated: 3/17/97
-----------------------------------------
By: /s/ Robert W. Morris, Chief Financial Officer Dated: 3/17/97
-----------------------------------------------
<PAGE>
LEONARD RELIN, ESQ. EXHIBIT 2
---------
1 EAST MAIN STREET
ROCHESTER, NEW YORK 14614
(716)4544336
ATTORNEY FOR DEBTOR
UNITED STATES BANKRUPTCY COURT FOR THE
WESTERN DISTRICT OF NEW YORK
IN RE ) CASE NO. 95-21279
)
WAREHOUSE AUTO CENTERS, )
INC. ) DEBTOR'S PLAN OF REORGANIZATION
)
) CHAPTER 11
)
) DATE: NOVEMBER 21, 1996
Debtor. )
________________________________)
The above-referenced Debtor hereby proposes the following Plan of
Reorganization (the "Plan") pursuant to the provisions of Chapter 11 of the
United States Bankruptcy Code.
ARTICLE I
DEFINITIONS AND INTERPRETATIONS
1. For purposes of the Plan, the following terms shall have the
respective meanings hereinafter set forth (such meaning to be equally
applicable to both the singular and plural forms of such terms defined). A
term used in the Plan and not defined herein but that is defined in the
Bankruptcy Code the meaning set forth in the Bankruptcy Code.
a. "Administrative Expense or Claim" shall mean any Allowed Claim which is
a cost or expense of administration in connection with this Chapter 11 case
having priority in accordance with Section 503, Section 330, and Section
507(a)(1) of the Bankruptcy Code. Including but not limited to any actual and
necessary expenses of operating or liquidating the business of the
Debtor-in-Possession, and all allowances of compensation or reimbursement of
expenses to the extent allowed by the Bankruptcy Rules, including
Post-Confirmation Expenses.
b. "Allowed Claim" shall mean a scheduled non-disputed Claim that has been
timely filed with the Clerk of the Bankruptcy Court by the Holder of the Claim
within the applicable period of limitation fixed by Bankruptcy Court order, as
to which Claim no written objection to the allowance thereof has been
interposed within the period of
time fixed by the Bankruptcy Court, or as to which Claim an objection to the
Claim has been resolved by the Bankruptcy Court.
c. "Allowed Secured Claim" shall mean an Allowed Claim secured by a lien,
security interest or other charge against or interest in property in which the
Debtor has an interest, or which is subject to set off under Section 553 of
the Code, to the extent of the value, determined in accordance with Section
506(a) and (b) of the Code, of the interest of the Holder of such Allowed
Claim in the Debtor's interest in such property, or to the extent of the
amount subject to such set off, as the case may be, and reduced by such
further amount or amounts, if any, as may be determined by the Bankruptcy
Court after notice and a hearing to be reasonable and necessary costs and
expenses of preserving and disposing of such asset(s) pursuant to Section
506(c) of the Bankruptcy Code.
d. "Claim" shall mean any claim as defined by Section 101(4) of the Code
and any other debt or obligation of whatever character of the Debtor through
Bar Date.
e. "Plan Payments" shall mean the payments made by the Debtor pursuant to
the Reorganization Plan.
f. "Claimant" shall mean any holder of a claim against the Debtor that
arose on or before the petition date or a Claim against the Debtor's estate of
a kind specified in Section 502(g), (h) or (i) of the Bankruptcy Code.
g. "Class" shall mean a category of claims or interests, the holders of
which hold substantially similar Claims or interests.
h. "Code" shall mean Title I of Public Law No.95-598, as codified in
Chapter 11 of the United States Bankruptcy Code and any amendments thereto.
i. "Confirmation Date" shall mean the date upon which the Confirmation
Order is entered by the Court and becomes a Final Order.
j. Confirmation Order" shall mean the order entered by the Bankruptcy
Court confirming the Plan.
k. "Consummation Date" shall mean the date one business day after the
Debtor's Plan has been fully completed and all claims disposed of in
accordance with the terms of the Plan.
l. "Court" shall mean the United States Bankruptcy Court for the Western
District of New York in which the Debtor's Chapter 11 case, pursuant to which
the Plan is proposed, is pending, including any Bankruptcy Judge thereof, and
any Court having competent jurisdiction to review Orders of, or to hear
appeals from said
Bankruptcy Court and Judge(s) thereof. "Court" shall also mean, to the extent
any proceedings have been referred to the above Bankruptcy Court by the United
States District Court for the Western District of New York, to that District
Court.
2. "Creditors Committee" shall mean the official committee of
unsecured creditors of the Debtor appointed by the Court pursuant to Section
1102 of the Bankruptcy Code, as constituted from time to time.
a. "Debtor" and "Debtor-in-Possession" shall mean Warehouse Auto Centers,
Inc. or any successor corporation or entity of Warehouse Auto Centers, Inc.
b. "Debtor's Assets" shall mean all the property, rights, claims and
interests of the Debtor and/or Debtor-in-Possession, real or personal,
tangible or intangible, and the proceeds thereof.
c. "Disputed Claim" shall mean a Claim to which written objection to the
allowance or classification thereof, in whole or part, has been timely filed
by any party in interest and as to which no Final Order or Judgment sustaining
or denying such objection or allowing or disallowing such Claim, in whole or
in part, has been entered by the Court.
d. "Effective Date" shall mean the 10th day after confirmation date of the
Plan.
e. "Final Order of Judgment" shall mean an order of judgment of the
Court:
i. as to which the time to appeal, petition for certiorari, or seek
re-argument, rehearing or de novo review has expired and as to which no
appeal, re-argument, certiorari petition, rehearing, or de novo review is
pending, or
ii. if an appeal, re-argument, certiorari, rehearing or de novo
review thereof has been sought, the order of the Court has been affirmed by
the highest Court to which the order was appealed from which the re-argument,
rehearing, or de novo review was sought, or certiorari has been denied, or the
appeal is dismissed or rendered moot, and the time to take any further appeal
or to seek certiorari or further re-argument, rehearing or de novo review has
expired.
f. "Holder" of a Claim or interest shall mean the person holding a Claim
or interest which was listed or filed with the Court, or the person to whom
such Claim or interest was last transferred by the Final Order or Judgment of
the Court substituting the transferee for the prior Holder thereof.
g. "Insider" shall mean an insider as defined in Section 101(30) of the
United States Bankruptcy Code.
h. "Newgold" shall mean Newgold, Inc. a corporation which
proposes to merge with the Debtor.
i. "Person" shall mean an individual, corporation, partnership, joint
venture, trust, estate, unincorporated organization or government unit, or any
agency or political subdivision of a government unit.
j. "Plan" shall mean this Plan of Reorganization and any duly authorized
amendment(s) thereto and modification(s) thereof.
k. "Post-Confirmation Expense" shall mean all expenses reasonably incurred
subsequent to the Confirmation Date in consummating the Plan.
l. "Priority Claim" shall mean all Unsecured Claims entitled to priority
under 11 U.S.C. Section 507(a), (1), (3), (4), (5), (6), or (7), unless
further specified.
m. "Pro Rata", with respect to any creditor, shall mean in the proportion
that the amount of the Allowed Claim of such creditor in any class as
provided in Article II bears to the aggregate amount of all claims of
creditors in such class, including in such aggregate amount both the Allowed
Claims and any then unresolved Disputed Claims which may apply to that class
of claims as of the date of any distribution payment pursuant to this Plan.
n. "Reorganized Debtor" means Newgold, Inc. which company is merging with
the Debtor and which name (Newgold, Inc.) shall be the corporate name of the
Debtor after reorganization.
o. "Unsecured Claim" shall mean all unsecured Allowed Claims, including,
but no limited to:
i. claims of creditors under executory contracts and
unexpired leases that have heretofore been rejected by the Debtor under this
Plan, and that may be rejected by the Debtor under this Plan, and that may be
rejected by the Debtor prior to the Confirmation Date;
ii claims of general trade creditors;
iii. loss and damage claims, overcharge claims, personal injury
claims, liability claims;
iv. claims for monies paid to the Debtor by mistake and belonging to
others, claims for C.O.D. monies collected by the Debtor that should have
been paid over to others, insurance and surety bonds claims, worker's
compensation claims; and
v. other obligations, liabilities, damages and claims of and against
the Debtor of every type and nature whatsoever, incurred on or before the date
of filing of the Chapter 11 petition (June 6, 1995), including all claims
arising from the rejection of leases and other executory contracts effective
on June 6, 1995, as provided in this Plan and by Section 365 and Section 1
123(1,)(2) of the Code.
ARTICLE II
CLASSIFICATION OF ADMINISTRATIVE EXPENSES AND
PRIORITY ADMINISTRATIVE CLAIMS
1. Class 1 Allowed administrative expenses, including attorney's and
accountant fee's and fees owed the United States Trustee's Office of the kinds
specified in Code Section 507(a)(1), and trade payables arising after
commencement of the Case.
2. Class 2 Claims consist of Code Section 364 Priority Debtor
Certificate holders in the approximate amount of $5,000,000.
3. Class 3 Claims consist of Priority Unsecured New York State Sales
Tax Claims in the approximate amount of $30,000.
ARTICLE III
CLASSIFICATION OF CLAIMS
1. Class 4 Claims consist of approximately 327 unsecured creditors in
the approximate amount of $2,392,967.
2. Class 5 Claims consist of approximately 321 equity holders of the
debtor holding 3,299,191 shares of common stock in the Debtor.
ARTICLE IV
CLASSES OF CLAIMS NOT IMPAIRED UNDER THE PLAN
1. Classes 1,2, 3 and 4 will not be impaired under the Plan.
2. Class 1 Claims consist of allowed administrative expenses,
including attorney and accountant fees of the kind specified in Code Section
507(a)(1); approved salaries of officers, and trade payables arising after
commencement of the Case, and shall be paid in full by the Reorganized Debtor
with stock in the reorganized Debtor at a ratio of one (1) share of stock for
each $1 owed the Creditor.
3. Class 2 Claims consist of Priority Debtor Certificate holders in
the approximate amount of $5,000,000. The holders of allowed claims in Class
2 shall be paid by the Reorganized Debtor as originally agreed and such
holders shall retain their respective security interests.
Class 2 claimants, at their exclusive option, shall be allowed to
exchange their claims for one (1) share of Common Stock of the Reorganized
Debtor for each $1 of indebtedness. The common stock being offered will be set
aside in trust for Class 2 claimants who shall have ninety (90) days from the
date of confirmation of the Plan of Reorganization to exercise the conversion
of their debt to equity. The Reorganized Debtor shall retain the right to sell
said stock , from time to time, to non claimants with the proceeds to be paid
to the Class 2 Claimants who opt not to convert . Any difference realized in
the sale of equity in excess of the principal sum owed Class 3 Debtor
Certificate holders, plus interest thereon, shall be retained by the
Reorganized Debtor for working capital. Upon confirmation of the Plan of
Reorganization, Debtor Certificate holders shall be issued promissory notes
bearing interest at 10% per annum. These notes must be surrendered by Debtor
Certificate holders who elect to convert their debt to equity. Those who do
not choose to convert shall be paid their principal and all accrued interest
two years from the anniversary of the date of confirmation of this Plan.
4. Class 3 Claims consist of Priority Unsecured New York Sales Tax
claims owed approximately $30,000. Said claim shall be paid in cash on the
Effective Date of the Plan.
5. Class 5 Claims consist of approximately 321 shareholders holding
3,299,191 shares of common stock which represents 100% of the total
outstanding and issued shares of common stock of the Debtor. There are no
other equity securities issued by the Debtor other than the one class of
common stock. Existing Class 5 claimants will have their interest diluted by a
factor of 1:65. In other words, existing shares shall be reverse split by a
factor of 65 or, for each 65 shares of pre-petition stock, such 65 shares
shall be exchanged for one (1) share of post-petition stock in the Reorganized
Debtor. Existing Equity holders will be reduced on a pro-rata basis to a
total of approximately 50,000 shares in the aggregate. However, in no event
will any existing shareholder of the Debtor hold less than two (2) shares
after the reverse split. Shareholders shall be obligated to surrender their
shares of stock to the Reorganized Debtor's transfer agent within six months
of the effective date of the Plan. Any shares not surrendered and exchanged
within the time period shall be canceled and the shareholder who fails to
surrender his shares shall have no further rights or recourse against the
Reorganized Debtor as an equity holder.
ARTICLE V
CLASSES OF CLAIMS OR INTEREST IMPAIRED UNDER THE PLAN
1. Class 4 Claims will be impaired under the Plan.
2. Class 4 Claims consist of 327 unsecured creditors with aggregate
claims amounting to approximately $2,392,967. Class 4 Creditors shall receive
one (1) share of Common Stock in the Reorganized Debtor for each $42 of debt.
Approximately 58,042 shares of Common Stock shall be issued to Class 3
claimants.
ARTICLE VI
TITLE TO PROPERTY; DISCHARGE OF CLAIMS
1. Except as otherwise provided in the Plan or the Confirmation
Order, upon completion of all actions required by the Plan to be taken on or
before the Confirmation Date, all property of the estate wherever situated,
shall vest in the Reorganized Debtor, free and clear of all claims and
interest of creditors and equity holders of the Debtor. Any property that the
Debtor abandons pursuant to the Bankruptcy Code and the approval of the Court
would be deemed to vest in the Reorganized Debtor free and clear of all claims
and interests of creditors immediately prior to abandonment.
2. Title to Property to be Brought into the Estate. Assuming Plan
------------------------------------------------
confirmation as a condition precedent, the Reorganized Debtor will acquire the
assets of Newgold, Inc. which are described in the Disclosure Statement
accompanying this Plan.
3. Retention of Claims. Each claim or interest belonging to the
--------------------
Debtor of every kind and description shall be retained and shall be vested in
the Reorganized Debtor, upon confirmation, and the reorganized successor to
the Debtor may enforce, settle or adjust any such Claim or Interest.
4. Notices. Unless otherwise specifically provided in the Plan or
---------
the Bankruptcy Rules, any notice required or contemplated by any provision of
the Plan shall be in writing and shall be sent by First Class Mail, postage
prepaid, to the address of the person or entity entitled thereto, as it
appears on the matrix list filed in connection with the service of the
Disclosure Statement in the Case.
5. Record dates for Determining Holders of Claims and Interest. The
------------------------------------------------------------
date the order of the Bankruptcy Court approving the Disclosure Statement is
entered shall be the record date for determining the holders of the Claims and
Interests entitled to vote on the Plan, all in accordance with the provisions
of the Bar Order. The Confirmation Date shall be the record date for
determining the holders of the Claim and Interests which, if allowed, will
be entitled to receive distributions under the Plan, provided, however, that
this sentence shall not vary, affect, or impair the provisions of the Bar
Order.
6. Retention of Jurisdiction. Following confirmation and prior to
--------------------------
the completion of all actions required to be taken on the Confirmation Date or
as soon as practicable thereafter, the Bankruptcy Court shall retain solely
for the following purposes to which its jurisdiction shall be exclusive:
(a) to hear and determine any objections to Claims filed, both
before and after Confirmation;
(b) to supervise any distribution of funds or stock pursuant to
this Plan;
(c) to hear and determine all applications for compensation of
professionals and reimbursement of expenses under Code Sections 330 and 331,
including compensation of professionals employed by the Debtor for services
rendered in connection with the Case, or in connection with the Plan and
incident to the Case;
(d) to hear and determine any and all pending motions for
rejection of executory contracts or un-executory leases and the allowance of
Claims resulting therein;
(e) to hear and determine all claims and causes of actions
arising prior to Confirmation that may exist in favor of the debtor or its
successor or shall seek such a hearing and determination;
(f) to enter orders enforcing and implementing the Plan and to
resolve disputes arising under or in connection with the Plan;
(g) to correct any defect, cure any omission or reconcile any
inconsistency in the Plan, the Confirmation Order or any document executed
in connection therewith, as may be necessary to carry out the purposes and
intent of the Plan; and
(h) to consider the modification of this Plan after
confirmation pursuant to the Bankruptcy Code and Rules; and
(i) except as otherwise provided in the Plan, to make any
determinations and to issue any orders to enforce, interest or effectuate the
Plan; and
(j) to determine all questions and disputes regarding tide to
assets of the estate, and determination of all causes of action,
controversies, disputes or conflicts, between the Debtor, the Creditors'
Committee and any third party, including but not limited to, any right of the
Debtor, or the provisions of the Code or applicable state or federal law; and
(k) to enter an Order concluding and terminating this Case; and
(l) to determine such other matters as may be provided for in
the Order of the Court confirming the Plan; and
(m) to grant extensions of any deadline set herein; and
(n) to enter and implement such orders as may be appropriate in
the event that the Confirmation Order for any reason is stayed, reversed,
revoked, modified or vacated, and;
(o) to enforce all discharge provisions under the Plan, and;
(p) to make such order(s) or give such direction(s) as may be
appropriate under Sections 364, 1109, 1129, 1141, 1142 and 145 of the
Code.
ARTICLE VII
MEANS OF EXECUTION, AND IMPLEMENTATION OF THE PLAN
1. Means of Execution. Remaining funds and funds generated from
-------------------
the sale of Certificates of Indebtedness and funds generated from the
operation of the successor to the Debtor will be used to fund payment under
the Plan other than the issuance of equity of the successor to the Debtor as
specified herein.
ARTICLE VIII
THE EFFECTIVE DATE OF THE PLAN
1. Effective Date of the Plan. The effective date of the Plan
---------------------------
shall be ten days after the Order of Confirmation becomes final. However,
immediately upon confirmation of the Plan, the new management described in the
accompanying Disclosure Statement shall take over management of the
Reorganized Debtor.
ARTICLE IX
CRAM DOWN PROVISIONS
1. Cram Down Provisions. In the event that any class of
-----------------------
creditors is deemed impaired by the Plan of Reorganization, and the requisite
majorities of such class or classes fail to approve the Plan, then the Debtor
intends to confirm its Plan over the objection of any such dissenting class
by the use of the provisions of the United States Bankruptcy Code, Section
1111, and any other provisions relating to the cram down of dissenting
classes.
ARTICLE X
MODIFICATION OF THE PLAN
1. Modification of the Plan. This Plan may be amended or
----------------------------
modified by the proponents at any time prior to the Confirmation Date upon
such notice as the Court may require. After the Confirmation Date, the
proponents may, with the approval of the Court and so long as it does not
materially and adversely affect the interests of creditors, remedy any defects
or omissions or reconcile any inconsistencies in the Plan or in the
Confirmation Order in such manner as may be necessary to carry out the
purposes and intent of the Plan.
ARTICLE XI
COMPLIANCE WITH SECTION 1123(A)(6)
1. Compliance with Section 1123(a)(6). The Debtor shall within sixty
-----------------------------------
(60) days after the Confirmation Date, cause a provision to be inserted in
its corporate charter prohibiting it from issuing non-voting equity
securities. However, the Debtor may issue a convertible debenture convertible
to Common Stock. which Common Stock bears the right to vote The Debtor
presently has no class of securities possessing voting power other than in
its Common Stock.
ARTICLE XII
ABANDONMENT OF CERTAIN CLAIMS
1. Abandonment of Certain Claims. The Debtor and its successor
------------------------------
after reorganization, will abandon all claims under 11 U.S.C. Section 547
(avoiding preferential transfer) and 11 U.S.C. Section 548 (avoiding
fraudulent transfer), to the extent any such claims exist, and for which an
action was not already pending the time this Plan was filed with the Court.
ARTICLE XIII
VOTING
1. Claimants entitled to vote are those whose claims are "impaired"
by the Plan. A claim to which the legal, equitable or contractual rights are
altered, or an interest that is adversely impaired. Only class 4 Interests
are impaired under the Plan; therefore, it is important that you vote. If
you fail to vote, your rights may be jeopardized.
2. Impaired Claimants may vote to accept or reject the Plan by
indicating their acceptance or rejection on the appropriate ballot.
EXECUTED BALLOTS MUST BE RECEIVED PRIOR TO 5:00 P.M. (EASTERN
DAYLIGHT TIME). Ballots should be mailed to: Clerk of the U. S. Bankruptcy
Court, 100 State Street, Rochester, New York 14614. Any ballots received
after that date may not be included in any calculation to determine whether
the creditors have voted to accept or reject the plan.
1. A Class of Claims will have accepted the Plan if it is accepted by
creditors holding at least two-thirds in amount and more than one-half in
number of the holders of allowed claims that actually vote on the Plan. Only
those votes received will be counted.
ARTICLE XIV
MISCELLANEOUS
1. Notices. All notices required or permitted to be made in
--------
accordance with the Plan shall be in writing and shall be delivered personally
or by fax or other telegraphic means or mailed by registered or certified
mail, return receipt requested;
(a) If to Debtor: Warehouse Auto Centers, Inc., 2452 West Henrietta
Road, Rochester, New York 14623.
(b) With copies to: Leonard Relin, Esq. One East Main Street Rochester,
New York 14614; Albert Solochek, Esq., Attorney for Creditors Committee, and
Howard, Solochek & Weber, S.C., 324 E. Wisconsin Avenue, #1100, Milwaukee, WI
53202.
(c) If a holder of an Allowed Claim or Allowed Interest, at the
address set forth in its allowed proof of claim or proof of interest, or,
if none, at its address set forth in the schedules prepared and filed with
the Court pursuant to Rule 1007(b).
(d) Notice shall be deemed given when received. Any person may
change the address at which it is to receive notices under the Plan by sending
written notice pursuant to the provisions of this Section to the person to be
charged with the knowledge of such change.
2. Effective Date. For purposes of all determinations to be made
---------------
pursuant to the Code in respect of the Plan or any Claims or Interests, the
"Effective Date" of the Plan shall be 10 days (10) after Confirmation of the
Plan.
3. Written Objections. The Debtor or any other party in interest
-------------------
may file with the Court confirmation of the Plan, a written objection to the
allowance of any Claim. This provision is not intended to abridge the right of
the Debtor to modify the Plan pursuant to Bankruptcy Code 1127.
4. Reporting Company Requirements. The Company represents that it
-------------------------------
is a reporting company under Section 13 and 15(d) of the Securities and
Exchange Act of 1934 and will be in continued compliance with the applicable
requirements for the continuing of trading in the security on the date the
Debtor or sells the securities to the investors.
5. Implementation of the Plan. The Plan is to be implemented
------------------------------
consistent with the terms of the Bankruptcy Code. The Plan shall be
implemented beginning on the effective date of the Plan by the distribution of
stock by the Debtor in accordance with the provisions of the Plan. The Debtor
agrees to use its best efforts to fully implement and consummate the Plan.
6. Complete Satisfaction, Discharge, and Release. The payments,
----------------------------------------------
distributions and other treatments provided in respect of each Allowed Claim
in this Article shall be in complete satisfaction, discharge, and release of
such Allowed Claim.
ARTICLE XV
OTHER
1. Certificates of Indebtedness. Prior to the filing of the Plan
-----------------------------
of Reorganization and Disclosure Statement the Debtor moved the Bankruptcy
Court to authorize it to sell $5,000,000 in Code Section 364 Certificates of
Indebtedness ("Debtor Certificates"). The U.S. Bankruptcy Court approved the
Debtor's motion to sell Debtor Certificates in September 1996.
2. Finders Fee. The Debtor has agreed to issue to David Rinker
------------
and Christina Nichols 5,000 shares each of Common Stock in the Reorganized
Debtor as a finder's fee. Additionally, the Debtor has agreed to issue 1,000
shares as a finders fee to Steve Nichols who introduced the parties to the
Debtor and to issue 12,500 shares of Common Stock in the Reorganized Debtor to
Michael J. Morrison, ESQ. as a finder's fee. Said parties were instrumental
in bringing about the transactions involving the assets being merged under the
Plan of Reorganization.
3. Consulting. The Reorganized Debtor has agreed to pay $10,000
-----------
in cash and issue 7,500 shares of the Reorganized Debtor's Common Stock to
Dan-Com, Inc. for consulting services rendered. Dan-Com, Inc. is a firm which
specializes in coordinating mergers of solvent businesses into public
companies which are under protection of Chapter 11 of the Bankruptcy Code.
4. Change of Corporate Name. The Reorganized Debtor will change
-------------------------
its name to Newgold, Inc. and recapitalize at 50,000,000 shares of Common
Stock authorized, .001 par value.
5. Asset Acquisition. The Reorganized Debtor will issue a total
------------------
of 12,000,000 shares of its Common Stock to existing shareholders of Newgold,
Inc. and thereby acquire 100% of the outstanding shares of Newgold, Inc. and
its assets described in the Disclosure Statement. A detailed description of
Newgold, Inc. can be found in the accompanying Disclosure Statement.
6. Other Corporate Matters. The Board of Directors of the
--------------------------
Reorganized Debtor shall take whatever actions are necessary in order to bring
the Reorganized Debtor into conformance with securities laws and regulations
including, but not limited to, amending the Reorganized Debtor's by-laws and
Articles of Incorporation.
Respectfully submitted this 25th day of September, 1996.
/s/ Nathan J. Morton, Chairman, Debtor
-------------------------------------------
/s/ Leonard Relin, Esq., Attorney for Debtor
--------------------------------------------------
<PAGE>
UNITED STATES BANKRUPTCY COURT
WESTERN DISTRICT OF NEW YORK
_______________________________________
In re:
WAREHOUSE AUTO CENTERS, INC.,
Case No. 95-21279
--------
Chapter 11
Debtor
________________________________________
NOTICE OF ENTRY
Take Notice that an ORDER Confirming a Plan of Reorganization was duly
granted in the within entitled matter on the 25th day of November, 1996, and
---- --------- ----
entered in the Clerk's Office of the United States Bankruptcy Court, Western
District of New York, John C. Ninfo, II, United States Bankruptcy Judge, on
the 26th day of November, 1996. The Order is on file with the Court.
Dated this 2nd day of December, 1996
/s/ Carm Capogreco, Deputy Clerk United States Bankruptcy Court
- ------------------------------------
1220 U.S. Courthouse
100 State Street
Rochester, New York 14614
<PAGE>
UNITED STATES BANKRUPTCY COURT WESTERN DISTRICT OF NEW YORK
IN RE:
WAREHOUSE AUTO CENTERS, INC.,
CHAPTER 11
Case No.95-21279
Debtor.
ORDER CONFIRMING PLAN
---------------------
The Plan under Chapter 11 of the Bankruptcy Code filed by Warehouse Auto
Centers, Inc., on November 4, 1996, or a summary thereof, having been
transmitted to creditors and equity security holders; and it having been
determined after hearing on notice that the requirements for confirmation set
forth in 11 U.S.C. Section 1129(a) have been satisfied;
IT IS ORDERED THAT: The plan filed by Warehouse Auto centers, Inc. on
November 4, 1996, is confirmed.
IT IS FURTHER ORDERED that the debtor shall, within 90 days after the
date of the entry of this Order:
(1) file a report of substantial consummation and final
report; or (2) take appropriate action to amend the plan. Failure to
comply with these requirements may result in conversion of the case.
IT IS FURTHER ORDERED that all fees payable to the United States Trustee
pursuant to 28 U.S.C. Section 1930 shall be paid within 10 days of the entry
of this order.
IT IS FURTHER ORDERED that the reorganized debtor or the disbursing
agent under the plan shall be responsible for timely payment of quarterly
fees incurred pursuant to 28 U.S.C. 1930(a) (6) until the case is
dismissed, converted or closed by the court with a final decree
(whichever is first). After confirmation, said party shall file with the
court and serve on the UnitedStates Trustee a monthly financial report for
each month (or portion thereof) the case remains open in a format prescribed
by the UST and provided to the debtor by the UST. Said report shall set forth
all disbursements of the reorganized debtor so that quarterly fee amounts can
be determined.
IT IS FURTHER ORDERED that the proceeds of the Debtor Certificates held
in escrow by Smith & Lyons, Barristers and Solicitors of Toronto, Canada, may
be released to the Debtor in accordance with the terms of the Plan of
Reorganization.
IT IS FURTHER ORDERED that all warrants and options of Warehouse Auto
Service, Inc. are canceled pursuant to the terms of the Plan of
Reorganization.
IT IS FURTHER ORDERED that the Escrow Bank Accounts held by the Debtor at
First National Bank of Rochester may be released to the Debtor to effectuate
the Plan of Reorganization.
IT IS FURTHER ORDERED that pursuant to Bankruptcy Rules 2002(a) (7) and
2002(i) & (m), Notice of Hearings on all applications for approval of
compensation and/or reimbursement of Professional Persons employed under
Bankruptcy Code 327 or 1103, whose retention has been approved by prior
Order of this Court, shall be deemed good and sufficient for all purposes if
served more than 20 days prior to the date of the entry of this Order or the
hearing date set hereafter thereupon, by regular mail by any party upon the
Counsel retained by the Official Unsecured Creditors' Committee appointed
herein pursuant to 11 U.S.C. 1102, on Counsel for the Debtor, on the Office
of the United States Trustee, and on all persons appearing and requesting
service.
IT IS FURTHER ORDERED, that fees and disbursements requested in Lacy,
Katzen, Ryan and Mittleman, LlP's first application filed herein on July 25,
1996, are hereby allowed in the amount of $12,843.25 plus $587.72 in
disbursements and that fees and disbursements requested in its second
application filed herein are hereby allowed in the amount of $8,498 plus the
sum of $600.00 for hours expended by said firm in reviewing the ballots of
Claimants, assisting creditors in voting and appearing at the Confirmation
Hearing herein which were not included in the prior applications pending
before this Court plus $581.71 in disbursements being a total of
$21,941.25 in fees and $1,175.43 in disbursements on all applications for a
total final award $23,110.68.
IT IS FURTHER ORDERED that Howard, Solochek, Nashban and Weber is hereby
allowed, subject to further review On appropriate notice, a fee in the amount
of $17,710.50 together with disbursements in the amount of $1872.59 for acting
as Lead Counsel to the Official Unsecured Creditors' Committee for a total
final award of $19,583.09.
IT IS FURTHER ORDERED, that the Debtor shall forthwith pay or cause to be
paid, in cash all fees and disbursements due Counsel for the Committee
approved in this Order, provided, however, that Howard, Solochek, Nashban and
Weber and Lacy, Katzen, Ryan & Mittleman, LLP shall be liable to disgorge all
or any part of their fees awarded hereby, if upon hearing after notice as
required above, the Court shall for good cause shown, modify this award of
fees and disbursements.
Dated: November 25, 1996
/s/ John C. Ninfo, II, U.S. Bankruptcy Judge
---------------------------------------------------
