U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
X Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the quarterly period ended October 31, 1996.
Commission File Number: 0-20722
WAREHOUSE AUTO CENTERS, INC.
(Debtor-in-Possession)
(Exact Name of Small Business Issuer as Specified in Charter)
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
16-1400479
(IRS Employer Identification No.)
5190 Neil Road, Suite 320
Reno, Nevada 89502
(Address of Principal Executive Offices)
(702) 823-4000
(Issuer's Telephone Number)
Check whether Issuer: (1) filed all reports required to be filed by Section 13
or 15(d) of the Exchange Act during the past 12 months (or for shorter period
that registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days.) Yes x No
Check whether registrant filed all documents and reports required to be filed
by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes x No
As of October 31, 1996, Registrant had 3,299,191 shares of Common Stock par
value $.005, issued and outstanding.
Documents Incorporated by Reference: Parts of the Exhibits filed with Regis-
trant's Registration Statement on Form SB-2 (File No. 33-49920) and Amendments
thereto, declared effective on October 15, 1993, and the Exhibits filed with
Registrant's Form 10-KSB for the period ended January 31, 1996.
Transitional Small Business Disclosure Format - Yes No x
<PAGE>
WAREHOUSE AUTO CENTERS, INC.
FORM 10-QSB
INDEX
Page
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements 3
Balance Sheet - October 31, 1996 4
Statements of Operations - Three months ended
October 31, 1996 and 1995 and nine months
ended October 31, 1996 and 1995 5
Statements of cash flows - Three months ended
October 31, 1996 and 1995 and nine months
ended October 31, 1996 and 1995 6
Notes to condensed financial statements 7
ITEM 2. Management's Discussion and Analysis or Plan
of Operation 9
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings 9
ITEM 5. Other Information 9
ITEM 6. Exhibits and Reports on Form 8-K 10
Signatures 11
<PAGE>
AUDITORS' COMPILATION REPORT
To the Shareholders of
Warehouse Auto Centers, Inc.
We have compiled the accompanying balance sheet of Warehouse Auto Centers,
Inc., a Delaware Corporation, as of October 31,1996. and the related state-
ments of operations and cash flows for the three months ended October 31,
1996 and October 31, 1995 and for the nine months ended October 31, 1996 and
1995, in accordance with Statements on Standards for Accounting and
Review Services issued by the American Institute of Certified Public
Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of inanagemeut. We have not audited
or reviewed the accompanying financial statements and, accordingly, do not
express an opinion or any other form of assurance on them.
Management has elected to omit substantially all of the disclosures required by
generally accepted accounting principles. If the omitted disclosures were
included in the financial statements, they might influence the user's con-
clusions about the Company's financial position, results of operations and
cash flows. Accordingly, these financial statements are not designated for
those who are not informed about such matters.
The Company measures inventory and cost of goods sold for interim financial
statements by use of historically developed gross profit percentages.
Annually, the Company adjusts inventories to agree with the results of a
physical count.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As described in Note 1, the
Company was forced into involuntary bankruptcy under Chapter 11 of the
Federal Bankruptcy Code in June, 1995, and was authorized to continue
managing and operating the business as debtor-in-possession subject to the
control and supervision of the bankruptcy court. Those conditions indicate
that the Company may be unable to continue as a going concern. The financial
statements do not include any adjustments that might result from the outcome
of this uncertainty. Subsequent to the end of the quarter, the Company sold
substantially all of its assets and received approval by their creditors on
a plan of reorganization. As of the date of this report, the Company had
substantially no assets, had discontinued existing auto parts operations and
entered into a plan of merger with another company.
CIACCIA & CATARISANO LLP
Certified Public Accountants
December 10, 1996
Rochester, New York
<PAGE>
WAREHOUSE AUTO CENTERS, INC.
<TABLE>
BALANCE SHEET
As of October 31, 1996
ASSETS
<S> <C>
Current assets:
Cash $ 31,709
Total current assets $ 31,709
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable - post petition $ 275,861
Accrued expense 22,970
Accrued franchise taxes 7,011
Total current Liabilities $ 305,842
Liabilities subject to settlement under reorganization
proceedings - Unsecured 2,611,752
Total liabilities $ 2,917,594
Stockholders' equity:
Common stock, par value $.005; authorized
10,000,000 shares $ 16,496
Additional paid-in capital 7,206,113
Accumulated deficit (10,108,494)
Total stockholders' equity $ (2,885,885)
$ 31,709
<FN>
See Accountants' compilation report
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
WAREHOUSE AUTO CENTERS, INC.
STATEMENTS OF OPERATIONS
For the periods ended October 31, 1996 and 1995
<CAPTION>
Three Months Ended Nine Months Ended
October 31 October 31
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Sales $ 67,993 $ 453,548 $ 822,196 $2,371,435
Cost of Sales (47,532) (315,000) (572,676) (1,660,000)
Gross Profit $ 20,461 $ 138,548 $ 249,520 $ 711,435
Selling, general and
administrative expenses $ (148,285) $ (581,360) $ (744,604) $(3,044,807)
Depreciation and
amortization 0 (13,818) 0 (59,076)
Loss from operations $(127,824) $ (456,630) $ (495,084) $(2,392,448)
Interest expense, net (4,000) 0 (16,000) (6,857)
Loss before provision
for franchise taxes $(131,824) $ (456,630) $ (511,084) $(2,399,305)
Provision for franchise
taxes (1,200) (3,500) (3,600) (10,500)
Net loss $(133,024) $ (460,130) $ (514,684) $(2,409,805)
Net loss per
common share $ (.04) $ (.17) $ (.16) $ (.93)
Weighted average
number of common
shares outstanding 3,299,191 2,675,274 3,299,191 2,598,638
<FN>
See Accountants' compilation report
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
WAREHOUSE AUTO CENTERS, INC.
STATEMENTS OF CASH FLOWS
For the periods ended October 31, 1996 and 1995
<CAPTION>
Three Months Ended Nine Months Ended
October 31 October 31
1996 1995 1996 1995
<S>
Cash flow from
operating activities: <C> <C> <C> <C>
Net loss $(133,024) $(460,130) $(517,161)$(2,409,805)
Adjustments to reconcile
net loss to net cash used
in operating activities:
Depreciation and amortization 0 3,818 0 59,076
Proceeds from the sale of
accounts receivable and
inventory 300,502 0 300,502 0
Decrease in accounts
receivable 0 10,284 3,607 6,474
Decrease in inventory 14,747 169,988 244,169 1,138,801
Stock Issued in
exchange for services 0 0 0 273,273
Decrease in liabilities
subject to settlement
under reorganization
proceedings-Secured (69,326) 0 (69,326) 0
Decrease in prepaid
expenses and other assets 0 0 0 55,857
Increase (decrease) in
accounts payable 20,322 173,916 150,960 (78,251)
Increase (decrease) in
accrued expenses 5,200 81,153 4,815 (197,491)
Net cash used in
operating activities $ 138,421 $ (10,971) $ (117,566) $(1,142,066)
Cash flow from investing
activities: Purchase of
equipment and leasehold
improvements, net $ 0 $ 0 $ 0 $ 671,861
Sale of equipment 74,498 0 74,498 0
Net cash flows from
investing activities $ 74,498 $ 0 $ 74,498 $ 671,861
Cash flow from financing
activities: Payments on
notes payable $ (200,000)$ 0 $ (200,000)$ 0
Issuance of common
stock, net 0 0 0 102,250
Net cash flows from
financing activities $ (200,000) $ 0 $ (200,000)$ 102,250
Net increase (decrease)
in cash $ 12,919 $ (10,971) $ (7,936)$ (367,955)
Cash, beginning of period 18,790 (14,415) 39,645 342,569
Cash, end of period $ 31,709 $ (25,386) $ 31,709 $ (25,386)
</TABLE>
<PAGE>
WAREHOUSE AUTO CENTERS, INC
NOTES TO FINANCIAL STATEMENTS
October 31, 1996
Note 1: Chapter 11 proceedings and plan of reorganization:
Warehouse Auto Centers, Inc. operated warehouse format auto parts and
accessories superstores. On June 25, 1995, Warehouse Auto Centers, Inc.
was forced into involuntary Chapter 11 bankruptcy by a group of creditors.
As ofJanuary 31, 1996, the Company was operating its business as a debtor-
in-possession under the jurisdiction of the United States Bankruptcy Court.
The Company tried unsuccessfully to reorganize itself. On August 28, 1996,
the Company sold its remaining assets to a group of investors led by its
former President for $375,000 cash.
Warehouse Auto Centers, Inc. is a publicly traded corporation with over
300 shareholders and in excess of 3 million shares of issued and out-
standing common stock. Newgold, Inc., a gold mining company head-
quartered in Reno, Nevada, was seeking a publicly traded shell. Newgold
Inc. and Warehouse Auto Centers, Inc. entered into a merger agreement
to take the company out of bankruptcy. The Plan of Reorganization,
which was approved by the creditors on November 21, 1996, is summarized
as follows:
1. Previously paid its secured creditors in full from the asset sale
proceeds.
2. Will pay its liabilities subject to settlement - unsecured creditors
in full with stock in the reorganized company's successor on the
basis of one (1) share of stock for each $42 of debt.
3. Will offer the accounts payable - post-petition creditors the oppor-
tunity to receive payment or convert their debt to equity in the
reorganized company's successor as payment on the basis of one (1)
share of stock for each $1 of debt.
4. Will pay Administrative Claims incurred during the Bankruptcy
proceedings in cash or in stock; one share of stock for each $1 of
debt.
5. Will merge with Newgold, Inc., a gold mining company, by acquiring
100% of the outstanding shares of Newgold's stock in exchange for
shares of stock in the reorganized company.
[FN]
See Accountants' compilation report
<PAGE>
6. Will dilute existing Warehouse Auto Centers, Inc.'s shareholders by a
1:65 reverse split of their pre-petition stock.
7. Has canceled all warrants, options and other employee benefits.
8. Has appointed a new Board of Directors and management in the
reorganized company.
The Company has ceased operating its auto parts business and redirected is
business by becoming engaged in the natural resource industry.
Note 2: Basis of presentation.
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and article
10 of Regulation S-X. Accordingly, they do not include all of the informa-
tion and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (including normal recurring accruals) considered necessary
for a fair presentation have been included. The condensed financial
statements should be read in conjunction with the financial statements
for the fiscal year ended January 31, 1996, contained in the Company's
Form 10-KSB for the fiscal year ended January 31, 1996.
[FN]
See Accountants' compilation report
<PAGE>
Item 2. Managements Discussion and Analysis or Plan of Operations.
General
As a result of its inability to timely meet its financial obligations, on
June 29, 1995, Registrant was involuntarily placed into Chapter 11
Bankruptcy by certain of its unsecured creditors, all pursuant to the U.S.
Bankruptcy Code. Registrant attempted to continue its business operations
in the normal course of business, but steadily experienced a serious decline
in its cash flow and suffered substantial losses over the year it was under
protection of the U.S. Bankruptcy Court.
Results of Operations.
Sales revenues for the three months ended October 31, 1996 totaled $67,993
and gross profit totaled $20,461, compared to sales revenues of $453,548 and
gross profits of $138,548 for the three months ended October 31, 1995. For
the three months ended October 31, 1996, selling, general and administrative
expenses totaled $148,285 compared to $581,360 for the three months ended
October 31, 1995.
Sales revenues for the six months ended October 31, 1996 totaled $822,196 and
gross profit totaled $249,520, compared to sales revenues of $2,371,435 and
gross profits of $711,435 for the six months ended October 31, 1995. For
the six months ended October 31, 1996, selling, general and administrative
expenses totaled $744,604 compared to $3,044,807 for the six months ended
October 31, 1995.
The net loss for the three months ended October 31, 1996 was $133,024, or $.04
per share, compared to $460,130, or $.17 per share, for the three months ended
October 31, 1995, reflecting losses as a result of Registrant's inability to
timely meet its financial obligations and involuntary placement into Chapter
11 bankruptcy by certain of its unsecured creditors.
<PAGE>
Liquidity and Capital Resources
At October 31, 1996, Registrant had current assets of $31,709 and current
liabilities of $305,842, reflecting working capital of $(274,133).
At October 31, 1996, Registrant was operating its business as a debtor-in-
possession under the jurisdiction of the U.S. Bankruptcy Court. Unable to
successfully reorganize, on August 28, 1996, Registrant sold its remaining
assets to a group of investors led by its former President for $375,000 cash
which was used to pay its secured creditors in full.
Cash in the bank at October 31, 1996 was $31,709 as a result of Registrant's
losses from operations and involuntary filing into Chapter 11 bankruptcy by
certain of its unsecured creditors.
On or about August 1, 1996, Registrant determined that it could no longer
operate as a going concern in the auto parts business and on August 28, 1996
pursuant to an Order of the U.S.Bankruptcy Court, sold all of its assets to
a group of investors led by its former President for the cash sum of
$375,000. The monies were used to pay secured and administrative claims of
creditors under the Chapter 11 bankruptcy proceeding, leaving a balance of
$28,287.65 in cash in an escrow account for Registrant.
The holders of post-petition accounts payable, in the amount of $275,861 at
October 31, 1996, will be allowed the opportunity to receive payment in full
or convert their debt to equity in the Reorganized Debtor (Newgold, Inc.) on
the basis of one share of Common Stock for each $1.00 of debt. Total
liabilities subject to settlement under the terms of the Plan of
Reorganization payable to unsecured creditors are $2,611,752. The Allowed
Claims of Unsecured Creditors will be paid in full with Common Stock in the
Reorganized Debtor on the basis of one share of Common Stock for each $42.00
of debt. All Allowed Administrative Claims incurred during the bankruptcy
proceedings will be paid in cash or in stock, at the option of the claimant/
holder, in the amount of one share of Common Stock for each $1.00 of debt.
All pre-petition warrants, options and employee benefits of whatsoever nature
have been canceled under the Plan of Reorganization and all outstanding
Common Stock of Registrant at the time of entry of the Order Confirming the
Plan of Reorganization has been reverse split on the basis of one share of
the Reorganized Debtor (Newgold, Inc.) for 65 shares of Registrant.
<PAGE>
Subsequent to the date of this report, on November 21, 1996, the U.S.
Bankruptcy Court approved a Plan of Reorganization for Registrant wherein
Registrant acquired 100% of the outstanding shares of Common Stock of
Newgold, Inc., a Nevada corporation engaged in the mining business in
exchange for 12,000,000 restricted shares of Common Stock of the reorganized
company. Under the terms of the Plan of Reorganization, the name of
Registrant was changed to Newgold, Inc.
As of November 21, 1996, Registrant, as Warehouse Auto Centers, Inc., had
substantially no assets, employees or properties.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
Registrant continues to operate as a Debtor-in-Possession under the U.S.
Bankruptcy Code, pursuant to the involuntary filing of a Chapter 11
bankruptcy by certain of its creditors in June,1995. On November 21, 1995,
Registrant's Plan of Reorganization was approved by the U.S. Bankruptcy
Court and, pursuant thereto, Registrant merged with Newgold, Inc., a Nevada
corporation engaged in the mining business. The reorganized company is in
the process ofimplementing the requirements and terms of said Plan of
Reorganization, including filing current reports and financial information
for Registrant. Any and all pending litigation and/or claims against
Registrant were resolved in the Chapter 11 Plan.
Item 5. Other Information
As of November 21, 1996, Registrant, as Warehouse Auto Centers, Inc., had sub-
stantially no assets, no employees or properties and any and all liabilities
and/or pending litigation was resolved in the Order approving the Chapter 11
Plan of Reorganization, merging Newgold, Inc. into Warehouse Auto Centers, Inc.
<PAGE>
SEC Reporting Requirements
Registrant has not been current in its reporting with the Securities and
Exchange Commission; however, the Reorganized Debtor, Newgold, Inc., has
agreed to compensate the accounting firm of Ciaccia & Catarisano, LLP to bring
Registrant's books and records current and to complete the 10-KSB for the year
ending January 31, 1996, as well as the requisite 10-QSB's and federal, state
and local tax returns for 1996, which are due or will be due up to and includ-
ing the date hereof. Additionally, Newgold has commissioned its independent
accountants, Burnett Umphress & Kilgur, to audit and certify its books and
records. It is anticipated that by the due date for the Form 10-KSB for the
period ended December 31, 1996, the Reorganized Debtor's books and records
(i.e. for both Warehouse Auto Centers, Inc. and Newgold, Inc.) will be
completed and certified so as to facilitate the accounting merger of the
two entities for SEC and NASDAQ purposes.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibit 27. Financial Data Schedule
And parts of Exhibits previously filed as (a) Exhibits with Registrant's
Registration Statement on Form SB-2 (File No. 33-49920), and Amendments
thereto, declared effective on October 15, 1993, and (b) as Exhibits to
Registrant's Form 10-KSB for the period ended January 31, 1996, filed
January 23, 1997.
b. No reports have been filed on Form 8-K during this reporting period.
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.
WAREHOUSE AUTO CENTERS, INC.
(now NEWGOLD, INC.)
January 23, 1997 By: /s/ Arthur Scott Dockter, President
January 23, 1997 By: /s/ Robert W. Morris, Chief Financial
Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-END> OCT-31-1996
<CASH> 31,709
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 31,709
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 31,709
<CURRENT-LIABILITIES> 305,842
<BONDS> 0
0
0
<COMMON> 16,496
<OTHER-SE> 7,206,113
<TOTAL-LIABILITY-AND-EQUITY> 31,709
<SALES> 67,993
<TOTAL-REVENUES> 67,993
<CGS> (47,532)
<TOTAL-COSTS> (47,532)
<OTHER-EXPENSES> (142,285)
<LOSS-PROVISION> (1,200)
<INTEREST-EXPENSE> (4,000)
<INCOME-PRETAX> (133,024)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (133,024)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> (.04)
</TABLE>
