SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended Commission File No.
January 31, 1996 0-20722
WAREHOUSE AUTO CENTERS,INC.
---------------------------
(Debtor-in-Possession)
Delaware 16-140047
(State or other jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
NewGold Inc.
5190 Neil Road, Ste. 320
Reno, Nevada 89502
(Address of principal executive offices)
(702) 823-4000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
- ------------------- -----------------------------------------
Units, consisting of one share of Common Stock, OTC Bulletin Board
$.005 par value, one Redeemable Class A Common
Stock Purchase Warrant and one Redeemable Class B
Common Stock Purchase Warrant
Common Stock, $.005 par value OTC Bulletin Board
Redeemable Class A Common Stock Purchase Warrants OTC Bulletin Board
Redeemable Class B Common Stock Purchase Warrants OTC Bulletin Board
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES NO X
------ ------
Indicate by check mark if disclosure of delinquent in response pursuant to Item
405 of Regulation S-B is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. X
-----
Registrant's gross revenues for its most current fiscal year were $2,818,004.
The aggregate market value of voting stock held by non-affiliates of the
Registrant was approximately $197,951 as of November 21, 1996.
As of November 21, 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 Registrant's Registration Statement on Form
SB-2 (File No. 33-49920), and Amendments thereto, declared effective on October
15, 1993.
THIS REPORT WAS ORIGINALLY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
JANUARY 21, 1997, AND IS BEING FILED FOR THE SOLE PURPOSE OF HAVING THE REPORT
FILED ON THE EDGAR SYSTEM. 1
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PART I
ITEM 1: DESCRIPTION OF BUSINESS.
Business of Registrant
Warehouse Auto Centers, Inc. ("Registrant") was incorporated in the State of
Delaware on June 6, 1991 to develop a chain of warehouse-type auto parts and
accessory centers offering a wide selection of quality, brand-name automotive
products at discount prices, primarily to "do it yourself" consumers and
professional mechanics and installers.
Registrant opened its first auto parts store in 1994 in Rochester, New York,
with the intent of developing a chain of Warehouse Automotive Parts and
Accessory Superstores. The Debtor opened its second store in Cleveland, Ohio in
January of 1995.
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
(the "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. On or about August 1, 1996, Registrant determined that it
could no longer operate as a going concern in the auto parts business. On August
28, 1996, pursuant to an Order of the U.S. Bankruptcy Court, Registrant sold all
of its assets to a group of investors led by its former President, for the cash
sum of $375,000.00. The monies were used to pay secured and administrative
claims of creditors under the Chapter 11 proceeding, leaving a balance of
$28,287.65 cash in an escrow account for Registrant.
Because Registrant is a publicly-held corporation with over 300 shareholders and
almost 3 million shares of issued and outstanding stock which is traded on the
NASDAQ Bulletin Board, the group of investors, led by the former President of
Registrant, was able to locate a merger candidate for Registrant and,
subsequently, entered into a Plan of Reorganization, subject to approval of the
U.S. Bankruptcy Court, to merge with Newgold, Inc., a Nevada corporation , which
is engaged in the mining business in the Western U.S. and headquartered in Reno,
Nevada.
As of November 21, 1996, Registrant, as Warehouse Auto Centers, Inc., had
substantially 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.
Outline of Plan of Reorganization.
Pursuant to the terms of the Plan of Reorganization approved by the U.S.
Bankruptcy Court on November 21, 1996, Registrant has:
(1) 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) Filed an Amendment to the 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) Effected a 65:1 reverse split of Registrant's pre-petition Common Stock
and obtained the new CUSIP Number 651362-10-5.
(4) Paid the allowed claims of secured creditors in full in cash upon the
asset sale on August 28, 1996.
(5) Paid or will pay the 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.
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(6) Paid or will pay 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 will offer such 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) Paid or will pay 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) Paid or will pay all Priority Administrative Claims, including, but not
limited to taxes and U.S. Trustee fees in full in cash.
(9) Appointed a new Board of Directors and Management of the Reorganized
Debtor.
(10) Applied for and obtained the new trading symbol , "NGLD" from NASDAQ.
(11) 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) Appointed Oxford Transfer & Registrar, 1130 S.W. Morrison, Suite 250,
Portland, Oregon, as the corporation's new transfer agency.
Business of Reorganized Debtor - Newgold, Inc.
Newgold, Inc. ("Newgold") was incorporated under the laws of the State of Nevada
on September 1, 1993 and in August, 1994, adopted a business plan to review,
acquire and develop mining opportunities available in the U.S. mining industry.
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.
Newgold currently owns a gold mine located in Relief Canyon near Lovelock,
Nevada and is in the process of obtaining the necessary permits to commence
mining operations on the property. Newgold has performed extensive research,
development and drilling on the property and, based thereon, projects the
property could have an annual production of approximately 60,000 troy ounces of
gold by the end of 1997, of which there can be no assurance. Revenue projections
for 1997 are approximately $10.2 million and growth is projected to continue to
be strong throughout the year 2000, assuming the price of gold and operating
expenses remain at current levels, of which there can be no assurance.
Gold Mining Industry Statistics and Economics
In 1995, a total of approximately 73.8 million troy ounces of gold were produced
worldwide. Of this amount, the U.S. produced approximately 10.5 million, or
14.3% of the world's production of gold. Of the 10.5 million, approximately 6.76
million troy ounces were produced in the State of Nevada alone, representing
9.1% of the total world production of gold. The U.S. presently ranks fourth in
gold production behind South Africa, Australia and the Commonwealth of
Independent States (the former Soviet Union).
The Milling Process
The bulk of U.S. gold production is now being conducted using the cyanide heap
leaching technique. Newgold intends to use this process to recover gold from its
properties. The technique recovers disseminated gold which is microscopic in
size and not visible to the naked eye. Ore is blasted, crushed and agglomerated
with cement and lime. The gold-bearing ore is then placed on slightly inclined
plastic-lined pads and leached with a cyanide solution. The cyanide solution
(aqua regia) converts the microscopic gold to a solution which then flows into a
"pregnant pond". The solution from the pregnant pond is then pumped through
carbon columns where the gold is collected on the carbon. The solution, sans the
gold, is then returned to a barren pond where it is reinvigorated and re-pumped
back over the heaps, thus creating a continuous closed leaching circuit.
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The collecting carbon, which is manufactured from coconut shells, has an
affinity for gold similar to steel or iron attaching itself to a magnet. The
carbon columns are then flushed with heated cyanide which returns the gold back
into a solution and which is then pumped into electrowinning cells where the
final gold product is collected on steel wool through electroplating. The gold-
laden steel wool, in turn, is fired in a furnace which converts the microscopic
gold collected into a dore, or miner's, bar. This dore bar is then sold to a
refinery which completes the process of refining the gold into a .999 fine gold
bar.
The current national average cost for heap leach gold recovery is approximately
$220 per troy ounce; gold is currently selling for between $350 and $360 per
troy ounce.
Exploration and Development Programs
A major part of Newgold's business is the exploration of its existing properties
and the evaluation and pursuit of potential new prospects in the exploration
stage. Substantial expenditures may be incurred in an attempt to establish the
economic feasibility of a property by identifying mineral deposits and
establishing reserves through drilling and other techniques, designing
facilities and, overall, estimating and planning mining operations for the
property. The economic feasibility of a project depends on numerous factors,
including the cost of mining and production facilities required to extract the
desired minerals, the total mineral deposits that can be mined using a given
facility, the proximity of the mineral deposits to a user of the minerals, and
the market price of the minerals at the time of sale. There is no assurance that
existing or future exploration and development programs, or acquisitions of
mining properties, will result in the identification of deposits that can be
mined profitably. Newgold, Inc. expended approximately $1,874,834 in research
and development during 1996. Newgold's research and development programs will be
discussed more fully in the Form 10-KSB Report to be filed for the period ended
December 31, 1996.
Competition
Newgold is subject to competition from large, well-established mining companies
which may have substantially greater mining capabilities and greater financial
and technical resources. As a result, Newgold may be unable to successfully
compete for the acquisition of potentially profitable mining properties on terms
it considers acceptable. Newgold is also subject to intense competition with
other mining companies in the recruitment and retention of qualified employees
and geologists. In addition, the continued success of Newgold's business
operations will always be subject to the fluctuation in gold prices, which
cannot be predicted with any degree of accuracy.
Governmental Regulations/Compliance with Environmental Laws/Research and
Development Costs
Newgold is subject to all laws, rules and regulations applicable to business
engaged in the business of mining. Newgold has obtained all licensed and bonds
requisite to conduct its current mining operations and fully intends to comply
with all government and environmental laws, rules and regulations when
conducting operations on its properties. (This item will be discussed more fully
and in detail in the Form 10-K to be filed on behalf of Newgold, Inc. for the
period ended December 31, 1996.)
Risks Associated with Development, Construction and Mining Operations
The mining operations of Newgold are always subject to the ability to meet cost
estimates and construction and production time estimates, of which there can be
no assurance. Technical considerations, delays in obtaining requisite
governmental and/or environmental approvals, the inability to obtain financing,
or other factors could cause unnecessary delays in developing mineral resource
properties. In addition, the business of gold and/or precious minerals mining is
subject to a variety of risks and hazards, including environmental hazards,
industrial accidents, flooding and the discharge of toxic chemicals. Newgold has
insurance in amounts it considers adequate to protect itself against certain of
these risks; however, it may become subject to liability for certain risks
and/or hazards for which it does not have adequate insurance or for which it
cannot obtain insurance against because of premium costs or other reasons.
Supplies and Materials
Newgold uses various mining related supplies and materials; however, it is not
dependent on any one supplier for any of its supplies and materials and,
therefore, does not expect any significant impact on its mining operations in
the event of any shortages or strikes related thereto.
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Patents, Copyrights and Licenses
Newgold does not currently hold and is not a party to any patents, copyrights,
trademarks, franchises or labor contracts.
Employees
Newgold currently has a total of 17 employees, 9 of which are Management and
professional staff. None of Newgold's employees are subject to any collective
bargaining agreements or union affiliations. Relations between management and
employees are considered to be excellent.
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 including
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 2: DESCRIPTION OF PROPERTY
Warehouse Auto Centers, Inc. currently owns no property, however, Newgold, Inc.,
the Reorganized Debtor, owns the following properties:
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 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 3,800,000 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: LEGAL PROCEEDINGS
Any and all pending litigation and/or claims against Warehouse Auto Centers,
Inc. were resolved in the Chapter 11 Plan of Reorganization, approved by the
U.S. Bankruptcy Court on November 21, 1996.
On July 5, 1996, a Complaint was filed against Newgold, Inc., the Reorganized
Debtor, by Roger Primm, an unrelated third party, for repayment of a loan which
Newgold used for development costs on its mining properties. Newgold intends to
repay the loan in full and enter into a stipulation to dismiss the lawsuit.
There is no other pending or threatened litigation against Newgold.
5
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ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters that came before a vote of the security holders in the
fourth quarter of the fiscal year ended January 31, 1996; however, the Chapter
11 Plan of Reorganization was put to a vote of the security holders, along with
the creditors of Registrant, and was approved on November 21, 1996, including
new Directors, Officers and Amendments to the Articles of Incorporation of the
Reorganized Debtor, all as set forth in Item 1 hereof.
PART II
ITEM 5: MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Registrant's Common Stock is publicly traded in the over-the-counter market and
trades under the symbol "WHAC"; however, subsequent to confirmation of
Registrant's Plan of Reorganization by the U.S. Bankruptcy Court on November 21,
1996, the Reorganized Debtor and Registrant, Newgold, Inc., applied for and
received a change of its trading symbol to "NGLD". On November 21, 1996,
Registrant had 3,299,191 shares of Common Stock, par value $.005, outstanding
held by approximately 321 shareholders. All pre-petition warrants, options
and/or grants were canceled in the Plan of Reorganization and, in any event, all
warrants had expired prior to the date of confirmation of the Plan.
The following table sets for the high and low bid prices for the Common Stock,
as reported by the NASD's Electronic Bulletin Board for the periods indicated.
The prices set forth represent quotes between dealers and do not include
commissions, mark-ups or mark-downs, and may not represent actual transactions.
Common Stock
Bid Asked
High Low High Low
Fiscal Quarter Ended:
October 31, 1996 .0625 .0625 .125 .125
July 31, 1996 .15625 .0625 .25 .25
April 30, 1996 .035 .03125 .09375 .08
January 31, 1996 .09375 .0625 .15625 .125
October 31, 1995 .25 .1875 .3125 .25
July 31, 1995 .625 .375 .65625 .46875
April 30, 1995 2.625 1 3.50 2
January 31, 1995 4 12 3 1/2 4 7/16 3
(a) On November 21, 1996, the date of Confirmation of
Registrant's Plan of Reorganization by the U.S. Bankruptcy
Court, the closing bid price of Registrant's Common Stock
was $.06 per share.
(b) Since certain of the shares of Common Stock are held in
street name, it is believed that there are substantial
additional beneficial holders of Common Stock. Holders of
Common Stock are entitled to dividends when as and if
declared by the Board of Directors out of funds legally
available therefor. Newgold, Inc., the Reorganized
Debtor/Registrant intends to retain earnings, if any, to
finance the development and expansion of its business.
ITEM 6: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General
The following discussion should be read in conjunction with this entire Report
on Form 10-KSB, including Registrant's audited financial statements contained
herein.
Results of Operations.
Registrant opened and operated two warehouse automotive parts and accessory
superstores in Rochester, New York and Cleveland, Ohio in 1994 and 1995.
Sales revenues for the year ended January 31, 1996 totaled $2,818,004 and gross
profit totaled $496,972. For the year ended January 31, 1996, selling, general
and administrative expenses totaled $2,444,762.
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The net loss for the year ended January 31, 1996 was $3,017,204, or $.94 per
share, compared to $3,763,779, or $1.40 per share, for the year ended January
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.
Liquidity and Capital Resources
At January 31, 1996, Registrant had current assets of $587,923 and current
liabilities of $419,393, reflecting working capital of $168,530.
On June 25, 1995, Registrant was put into an involuntary Chapter 11 bankruptcy
by a group of its unsecured creditors. At January 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, at January 31, 1996, was $39,645, compared to $342,569 at January 31,
1995, as a result of Registrant's losses from operations and involuntary filing
into Chapter 11 bankruptcy by certain of its unsecured creditors.
Accounts receivable and inventory for the year ended January 31, 1996 decreased
by $15,036 and $1,507,129, respectively. The holders of post-petition accounts
payable , in the amount of $124,901 at January 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
unsecured creditors (subject to settlement) 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.
The accompanying financial statements were prepared in conformity with generally
accepted accounting principles, which contemplate continuation of Registrant as
a going concern. However, Registrant sustained substantial operating losses,
used substantial amounts of its working capital in its operations and, in June,
1995, was forced into Chapter 11 bankruptcy reorganization by certain of its
unsecured creditors. Registrant has ceased doing business as a warehouse auto
parts concern; has merged with a Nevada corporation engaged in the mining
business; has changed its name to Newgold, Inc.; has recapitalized at 50,000,000
shares of Common Stock, par value $.001; and has elected all new officers,
directors and management.
ITEM 7: FINANCIAL STATEMENTS
See the Financial Statements of Registrant at January 31, 1996, filed as part of
this Report, which follow immediately after Item 8 below.
ITEM 8: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
(This space left blank intentionally.)
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ITEM 7: Financial Statements
WAREHOUSE AUTO CENTERS, INC.
(Debtor-in-Possession)
Financial Statements
January 31, 1996 and 1995
F1
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INDEX TO FINANCIAL STATEMENTS
INDEPENDENT AUDITOR'S REPORT...................................... F3
BALANCE SHEET..................................................... F4
STATEMENT OF OPERATIONS........................................... F5
STATEMENT OF STOCKHOLDERS' EQUITY................................. F6
STATEMENT OF CASH FLOWS........................................... F7
NOTES TO FINANCIAL STATEMENTS..................................... F8-F12
F2
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INDEPENDENT AUDITORS' REPORT
To the Stockholders of
Warehouse Auto Centers, Inc.
We have audited the accompanying balance sheet of Warehouse Auto Centers, Inc.
(a Delaware corporation) as of January 31, 1996, and the related statements of
operations, stockholders' equity, and cash flows for the years ending January
31, 1996 and 1995. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits. Except as discussed in the following
paragraph, we conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as, evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion. We were unable to obtain written representation from management of the
Company concerning transactions for the year ended January 31, 1996, which took
place under substantially different management. In our opinion, except for the
effects of such adjustments; if any, as might have been determined to be
necessary had the written representations referred to in the preceding paragraph
been furnished to us by management, the financial statements referred to above
present fairly, in all material respects, the financial position of Warehouse
Auto Centers, Inc. as of January 31, 1996, and the results of its operations and
its cash flows for the years ending January 31, 1996 and 1995 in conformity with
generally accepted accounting principles. 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 a debtor-in-possession, subject
to the control and supervision of the Bankruptcy Court. Those conditions raise
substantial doubt about the Company's ability 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 year end the Company sold
substantially all of its assets and received approval by their creditors on
their Plan of Reorganization. As of the date of this report, the Company had
substantially no assets, had discontinued existing auto parts operations and
merged with another company.
CIACCIA & CATARISANO,LLP
Certified Public Accountants
December 10, 1996
Rochester, New York
F3
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WAREHOUSE AUTO CENTERS, INC.
(Debtor-in-Possession)
BALANCE SHEET
As of January 31, 1996
ASSETS
Current assets:
Cash $ 39,645
Accounts receivable, net of allowance for doubtful
accounts of $18,500
25,278
Inventory, net 523,000
------------
Total current assets $ 587,923
Equipment, furniture and fixtures, net 74,498
------------
$ 662,421
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Debtor-in-possession financing $ 200,000
Liabilities subject to settlement under reorganization
proceedings - Secured 69,326
Accounts payable - post petition 124,901
Accrued expenses 21,755
Accrued franchise taxes 3,411
------------
Total current liabilities $419,393
Liabilities subject to settlement under reorganization
proceedings - Unsecured 2,611,752
------------
Total liabilities $ 3,031,145
------------
Commitments and contingencies
Stockholders' equity:
Common stock, par value $.005; authorized 10,000,000 shares $ 16,496
Additional paid-in-capital 7,206,113
Accumulated deficit (9,591,333)
------------
Total stockholders' equity $(2,368,724)
------------
$ 662,421
============
----------
The accompanying notes are an integral part of these fimancial statements
F4
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WAREHOUSE AUTO CENTERS, INC.
(Debtor-in-Possession)
STATEMENTS OF OPERATIONS
For the years ended January 31, 1996 and 1995
January 31
1996 1995
---- ----
Sales $ 2,818,004 $ 3,748,795
Cost of sales (2,321,032) (2,969,494)
--------------- --------------
Gross profit $ 496,972 $ 779,301
Selling, general and administrative expenses (2,444,762) (3,762,184)
Preopening expenses -0- (685,405)
Depreciation and amortization (117,288) (66,157)
Loss on impairment of assets (502,149) -0-
--------------- --------------
Loss from operations $ (2,567,227) $ (3,734,445)
Interest, net (13,145) (25,376)
Loss on disposal of leasehold improvements (432,036) -0-
-------------- --------------
Loss before provision for franchise taxes $ (3,012,408) $ (3,759,821)
Provision for franchise taxes (4,796) (3,958)
-------------- --------------
Net loss $ (3,017,204) $ (3,763,779)
============== ===============
Net loss per common share $ (.94) $ (1.40)
============== ===============
Weighted average number of common shares 3,224,738 2,691,201
=============== ===============
----------
The accompanying notes are an integral part of these fimancial statements
F5
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<TABLE>
<CAPTION>
WAREHOUSE AUTO CENTERS, INC.
(Debtor-in-Possession)
STATEMENTS OF STOCKHOLDERS' EQUITY
For the years ended January 31, 1996 and 1995
Number of
Common Shares Additional
Issued and Par Paid-In Accumulated
Outstanding Value Capital Deficit
------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
Balance, January 31, 1994 2,459,987 $ 12,300 $ 4,762,068 $(2,810,350)
Stock issued for business services
($2.50 - $6.125/share) 205,680 1,028 927,022
Stock issued for bonuses
($4.38 - $6.125/share) 28,000 140 157,400
Stock issued for cash
($2.50 - $3.00/share) 200,711 1,004 555,319
Stock options exercised
($2.50 - $3.00/share) 140,000 700 414,300
Net loss for the year ended January 31, 1995 (3,763,779)
------------- ------------- ------------ ------------
Balance, January 31, 1995 3,034,378 $ 15,172 $ 6,816,109 $(6,574,129)
Stock issued for cash
($2.38-$2.50/share) 42,000 210 102,040
Stock issued for business services
($2.27-$2.31/share) 106,813 534 251,084
Stock issued for bonus
($2.31/share) 16,000 80 36,880
Stock issued to overseas company (Note 5) 100,000 500
Net loss for the year ended January 31, 1996 (3,017,204)
------------- ------------- ------------ ------------
Balance, January 31, 1996 3,299,191 $ 16,496 $ 7,206,113 $(9,591,333)
============= ============= ============ ============
</TABLE>
----------
The accompanying notes are an integral part of these fimancial statements
F6
12
<PAGE>
<TABLE>
<CAPTION>
WAREHOUSE AUTO CENTERS, INC.
(Debtor-in-Possession)
STATEMENTS OF CASH FLOWS
For the years ended January 31, 1996 and 1995
January 31
-----------------------------
1996 1995
---- ----
<S> <C> <C>
Cash flow from operating activities:
Net loss $ (3,017,204) $ (3,763,779)
Adjustments to reconcile net loss to net cash used in
operating activities:
Net realizable value adjustments 824,060 -0-
Depreciation and amortization 117,288 66,157
Stock issued in exchange for services and bonuses 288,578 1,085,590
Stock issued to overseas company 500 -0-
Loss on disposal of leasehold improvements 432,036 -0-
(Increase) decrease in accounts receivable 15,036 (40,314)
(Increase) decrease in inventory 1,185,218 (2,030,129)
Decrease (increase) in prepaid expenses and other assets 58,207 (56,932)
(Decrease) increase in accounts payable (326,704) 2,565,828
(Decrease) increase in accrued expenses (300,620) 102,161
Increase in accounts payable - post petition 124,901 -0-
------------- -------------
Net cash used in operating activities $ (598,704) $ (2,071,418)
------------- -------------
Cash flow from investing activities:
Purchase of equipment $ (6,470) $ (947,419)
------------- -------------
Net cash flows from investing activities $ (6,470) $ (947,419)
------------- -------------
Cash flow from financing activities:
Proceeds from debtor-in-possession financing $ 200,000 $ -0-
Issuance of common stock, net 102,250 971,323
------------- -------------
Net cash flows from financing activities $ 302,250 $ 971,323
------------ -------------
Net decrease in cash $ (302,924) $ (2,047,514)
Cash, beginning of period 342,569 2,390,083
------------- -------------
Cash, end of period $ 39,645 $ 342,569
============= =============
</TABLE>
----------
The accompanying notes are an integral part of these fimancial statements
F7
13
<PAGE>
WAREHOUSE AUTO CENTERS, INC
(Debtor-in-Possession)
NOTES TO FINANCIAL STATEMENTS
January 31, 1996 and 1995
Note 1:Chapter 11 proceedings and plan of reorganization:
Warehouse Auto Centers, Inc. operated warehouse format auto parts and
accessories superstores. The Company operated its first location in
Rochester, New York for the twelve months ended January 31, 1996 and January
31, 1995 and a second location in Cleveland, Ohio which opened in January,
1995 and closed in June, 1995. On June 25, 1995, Warehouse Auto Centers, Inc.
was filed in an involuntary Chapter 11 bankruptcy by a group of creditors. As
of January 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
it's 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 outstanding
common stock. Newgold, Inc., a gold mining company headquartered 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
opportunity to receive payment or convert their debt to equity in the
reorganized Company's successor as payment on the basis of (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. Has merged 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.
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.
----------
F8
14
<PAGE>
WAREHOUSE AUTO CENTERS, INC
(Debtor-in-Possession)
NOTES TO FINANCIAL STATEMENTS
January 31, 1996 and 1995
Note 1: Chapter 11 proceedings and plan of reorganization:
(cont'd)
The Company has ceased operating its auto parts business and redirected its
business by becoming engaged in the natural resource industry.
Subsequent to year end, based on the approved plan of reorganization, the
Company amended its articles of incorporation to change the name of the
Corporation to Newgold Inc. and further to change the total number of shares
of stock which the Corporation has the authority to issue 50,000,000 shares,
consisting of one class of 50,000,000 shares of common stock at a par value
of $.001 per share.
Note 2: Significant accounting policies:
Equipment, furniture and fixtures
Equipment, furniture and fixtures have been depreciated using the
straight-line basis over the related assets estimated useful lives which
range from five to seven years and the life of the related lease for
leasehold improvements. Equipment, furniture and fixtures was depreciated for
the Cleveland store through the date of its closing, June, 1995. Depreciation
on the property and equipment for the Rochester store was taken throughout
the year.
As of January 31, 1996, an adjustment as made to write the value of the
property and equipment down to its net realizable value as determined by an
independent appraisal and the asset sale which occurred subsequent to year
end. The loss from the writedown was $502,149 which is reflected in the
statement of operations as loss on impairment of assets.
Inventory
Inventory is valued at the lower of cost or market. Cost of inventory is
determined using the first-in, first-out (FIFO) method. As of January 31,
1996, an inventory reserve of $321,911 was recorded to reflect inventory at
its market value based on the value received in the sale of the assets
subsequent to year end. The inventory reserve was included in cost of sales
on the statement of operations.
Loss per share
The computation of loss per share is based upon a weighted average number of
common shares outstanding of 3,149,728 for the year ended January 31, 1996.
The effect of common stock equivalents and the exercise of stock options and
warrants would be antidilutive.
Preopening expenses
Preopening expenses consist of advertising and other expenses incurred in
preparation for the opening of the Cleveland location in fiscal 1995.
----------
F9
15
<PAGE>
WAREHOUSE AUTO CENTERS, INC
(Debtor-in-Possession)
NOTES TO FINANCIAL STATEMENTS
January 31, 1996 and 1995
Note 2: Significant accounting policies:
(cont'd)
Use of estimates
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Cash
The Company maintains primarily all of its cash balances in one institution.
The balances are insured by the Federal Deposit Insurance Corporation up to
$100,000.
Note 3: Income taxes:
The Company has a net operating loss for the year ended January 31, 1996;
therefore, no federal tax provision has been made. A provision for state
franchise taxes (Delaware and New York) has been provided using statutory
rates. The amount paid for state franchise taxes was $4,569 for the year
ended January 31, 1996 and $2,148 for the year ended January 31, 1995.
Cumulative net operating losses, which are approximately $8,600,000 are
available to offset future taxable income through the year 2011. The net
operating losses may be limited or not available in future periods based on
the changes in the entities business activity and ownership.
Deferred income taxes are provided for significant differences between
financial statement and income tax reporting of accruals and net operating
loss carryforwards. The following items gave rise to the deferred tax asset
at January 31, 1996 and 1995:
January 31
1996 1995
---- ----
Allowance for doubtful accounts $ 4,400 $ 6,000
Depreciation 5,300 2,703
Accrued bonuses -0- 22,992
Net operating loss carryforwards 2,064,000 1,577,791
-------------- --------------
$ 2,073,700 $ 1,609,486
Less: valuation allowance (2,073,700) (1,609,486)
-------------- --------------
$ -0- $ -0-
============== ============
----------
F10
16
<PAGE>
WAREHOUSE AUTO CENTERS, INC
(Debtor-in-Possession)
NOTES TO FINANCIAL STATEMENTS
January 31, 1996 and 1995
Note 3: Income taxes:
(cont'd)
Realization of a deferred tax asset is contingent on future taxable income.
The Company has no historical earnings record and it has ceased operations
that gave rise to these operating loss carryforwards. Accordingly, in
accordance with the provisions of SFAS No. 109, a valuation allowance of
$2,073,700 at January 31, 1996 has been provided.
Note 4: Common stock warrants:
As of January 31, 1996, the Company had various common stock warrants
outstanding. In conjunction with the plan of reorganization, all warrants
were canceled.
Note 5: Commitments and contingencies:
Leases
Warehouse - Rochester
The Company opened its first superstore in this location in March, 1994.
The Company leased its Rochester warehouse for a term of five years
expiring November 30, 1996. As of January 31, 1996, the landlord was owed
rent in arrears of $137,291, which is included in liabilities subject to
settlement under reorganization proceedings - unsecured. This lease was
terminated in connection with the asset sale.
Warehouse - Cleveland
The Company's second superstore, located in Cleveland, was closed in June
of 1995.
The Company leased various vehicles and office equipment under operating
leases which either expired or were canceled in connection with the Plan
of Reorganization.
Rent expense for the years ended January 31, 1996 and 1995 was
approximately $176,000 and $165,000 respectively.
Contingencies
The Company was a defendant in various actions filed by vendors. Outside
counsel has advised us that all outstanding lawsuits against the Company
are stayed by Section 362(d) of the Bankruptcy Code when the Company was
filed in the involuntary bankruptcy. The accompanying financial statements
include the maximum liability claimed by the vendors and is included in
liabilities subject to settlement under reorganization.
----------
F11
17
<PAGE>
WAREHOUSE AUTO CENTERS, INC
(Debtor-in-Possession)
NOTES TO FINANCIAL STATEMENTS
January 31, 1996 and 1995
Note 5: Commitments and contingencies:
(cont'd)
Stock
During fiscal 1996, the Company's prior management issued 100,000 shares
to an overseas company. These shares were issued under an exemption for
foreign companies that does not require SEC registration. Subsequent to
year end, at a Board of Directors meeting that was attended by new
management, the Company canceled the shares. These shares have been
included in the statement of stockholders' equity at the par value of
$.005 per share. As represented by legal counsel for the new management,
it is their intention to dispute the issuance of such shares on the basis
of a total failure of consideration.
Note 6: Preferred stock:
The Company is authorized to issue up to 1,000,000 shares of $1 par value
preferred stock. The rights and preferences associated with the stock have
not been determined as of the date of this report nor have any shares been
issued. Subsequent to year end, the Company amended its articles of
incorporation and canceled the preferred stock as disclosed in Footnote 1.
Note 7: Stock options:
The Company has a Stock Option Plan. The plan may grant options to
purchase up to an aggregate of 750,000 shares of common stock. All options
granted under this plan and any other non-qualified options granted by the
Company have been canceled in conjunction with the approval of the plan of
reorganization.
Note 8: Debtor-in-possession financing:
The Company borrowed $200,000 from a group of officers and directors
pursuant to a bankruptcy court order and received a secured position in
the inventory of the Company. The principal of the loan was paid in full
from the proceeds of the asset sale. The notes provided for interest at
12%. No interest was paid through the date of this report.
Note 9: Consulting agreement:
The Company had a consulting agreement with a member of the Company's
Board of Directors which has been canceled. The terms of the agreement
provided for compensation of $75,000, payable in common stock valued at
the average of the bid and asked price at the date of grant. This
compensation has been recorded through June, 1995 when the agreement was
canceled.
----------
F12
18
<PAGE>
PART II
ITEM 9: DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Following confirmation of Registrant's Plan of Reorganization , the officers and
directors of Registrant resigned and the following officers and directors were
elected:
Name and Address Age Position(s) (1)
Arthur Scott Dockter 40 President, Director and CEO
5190 Neil Road #320
Reno, Nevada 89502
Edward Mackay 43 Secretary/Treasurer and Director
5190 Neil Road #320
Reno, Nevada 89502
Michael J. Morrison 51 Director
1025 Ridgeview Drive #400
Reno, Nevada 89509
Robert W. Morris 56 Chief Financial Officer
5190 Neil Road #320
Reno, Nevada 89502
(1) All officers and directors will hold their position until the next
annual meeting of the Shareholders and Board of Directors of
Registrant, or until their successors have been elected and qualified.
Background Information of Officers and Directors
ARTHUR SCOTT DOCKTER has been the founder, Chairman of the Board, CEO and
President of Newgold, Inc., a privately-held Nevada corporation since 1993 and
supervises the acquisition and development of the company's mining properties.
Since 1993, he has also been the and CEO, President and founder of Riverfront
Development Corporation, a privately-held corporation which is currently in the
process of refurbishing a 152,000 sq. ft. manufacturing facility on 71 acres
near Sacramento, California. Prior to 1993, he was a self-employed general
engineering contractor specializing in dams, levies and mining projects. Mr.
Dockter devotes full time to the business of Registrant.
ROBERT W. MORRIS has been a Certified Public Accountant for 30 years with 13
years in public accounting, including 6 years with Arthur Anderson & Co. and 17
years as a treasurer and controller for private corporations. Mr. Morris
graduated from Indiana University in 1961 with a B.S. Degree in Accounting and
devotes full time to the business of Registrant.
EDWARD MACKAY has been an independent real estate developer since 1980. He is a
member of the Rural Builders Council of California and the Council for Rural
Housing and Development. During his many years in the development field, he has
interfaced closely with federal, state and local governmental agencies, as well
as syndicators, tax credit agencies, financial lenders, architects, engineers
and others. He has acquired land, developed, designed, constructed, syndicated
and managed multi-family and elderly housing projects totaling more than
$59,300,000 and successfully syndicated over $30,000,000 through public and
private investment partnerships. Mr. Mackay attended Stanford University at Palo
Alto, California; Oregon State University at Corvallis, Oregon; and graduated
from Eastern Oregon College in 1978 with a B.A. in General Studies. He devotes
his time as required to the business of Registrant.
MICHAEL J. MORRISON has been a licensed practicing attorney in Reno, Nevada for
20 years specializing in the areas of corporate, business and securities law. He
is also admitted to practice in the State of California and the District of
Columbia. He serves as an officer and director of several public and private
corporations. Mr. Morrison graduated from McGeorge School of Law, University of
the Pacific, in 1976, with a J.D. Law Degree and from the U.S. Air Force Academy
in 1968 with a B.S. Degree in Science, Engineering Management. He devotes his
time as required to the business of Registrant.
19
<PAGE>
ITEM 10: EXECUTIVE COMPENSATION
The following table sets forth the annual remuneration which has been paid to
each of the officers and directors of Registrant since confirmation of the Plan
on November 21, 1996. No compensation is currently being paid to non-employee
directors.
Name Position(s) Annual Remuneration
- ---- ----------- -------------------
Arthur Scott Dockter CEO, President and Director $ 90,000
Robert W. Morris Chief Financial Officer and Director $ 50,400
None of the officers or directors hold or have been paid any bonuses, stock
awards or long-term incentive plans. None of the officers or directors of
Registrant are party to any employment contracts, proposed termination of
employment or change-in-control arrangements with Registrant.
ITEM 11: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the Reorganized
Debtor/Registrant's Common Stock which was owned on November 21, 1996, following
entry of the Order confirming the Plan of Reorganization by the U.S. Bankruptcy
Court, by (1) any person (including any "group") who is known by Registrant to
own beneficially more than 5% of its outstanding Common Stock, (2) each officer
and director and (3) the officers and directors as a group:
Name of Shares of Common Stock Percent of Common
Beneficial Owner Beneficially Owned (1) Stock Outstanding (2)
- ---------------- ---------------------- ---------------------
Arthur Scott Dockter 6,701,358 56%
Edward Mackay 2,644,293 22%
Michael J. Morrison 12,500 Less than 1%
- ----------
All Officers and Directors
as a Group 9,358,151 78%
(1) These figures result from the issuance of 12,000,000 shares in
connection with the Plan of Reorganization for Registrant.
(2) These figures reflect the 1:65 reverse split of all outstanding shares
of Registrant, as of November 21, 1996, but do not give effect to the
payment of claims under the Plan of Reorganization.
ITEM 12: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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.
ITEM 13: EXHIBITS, LIST AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No. Description
----------- -----------
2 Plan of Reorganization (1)
3.1 Certificate of Incorporation of Registrant (2)
20
<PAGE>
Exhibit No. Description
----------- -----------
3.1(A) Amendment to Certificate of Incorporation of
Registrant(1)
3.2 By-Laws of Registrant (2)
10.1 Contract of Sale for Relief Canyon Mine (1)
10.2 Agreement for Lease, Purchase and Sale of Property re:
the Mission Mine (1)
10.3 Lease Agreement for Office Space in Reno, Nevada (1)
23 Consent of Ciaccia & Catarisano, LLP, independent
public accountants for the Registrant (1)
- ----------
(1) Incorporated by reference: Exhibits filed with the Registrant's Amendment
No. 1 to its Annual Report for fiscal Year Ended January 31, 1997 on form
10-KSB filed with the Securities and Exchange Commission on June 30, 1997.
(2) Incorporated by reference: Exhibits filed with Registrant's Registration
Statement on Form SB-2 (File No. 33-49920), and Amendments thereto,
declared effective on October 15, 1993.
21
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
NEWGOLD, INC., a Delaware corporation
Date: Jan 21,1997 By: /s/
------------- -----------------------------------
Arthur Scott Dockter, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following persons on behalf of Registrant and in
the capacities and on the dates indicated.
Signature Title Date
/S/ President, Chief Executive Officer and 1/21/97
- -------------------- Director -----------
Arthur Scott Dockter
/S/ Chief Financial Officer and Director Jan 21, 1997
- -------------------- ------------
Robert W. Morris
/S/ Secretary/Treasurer and Director 1/21/97
- -------------------- ------------
Edward Mackay
/S/ Director Jan 21, 1997
- -------------------- ------------
Michael J. Morrison
22
<PAGE>
INDEX TO EXHIBITS
Exhibit
No. Description of Exhibit
- ------- ----------------------
2 Plan of Reorganization (1)
3.1 Certificate of Incorporation of Registrant (2)
3.1(A) Amendment to Certificate of Incorporation of
Registrant (1)
3.2 By-Laws of Registrant (2)
10.1 Contract of Sale for Relief Canyon Mine
10.2 Agreement for Lease, Purchase and Sale of Property re:
the Mission Mine (1)
10.3 Lease Agreement for Office Space in Reno, Nevada (1)
23 Consent of Ciaccia & Catarisano, LLP, independent
public accountants for the Registrant (1)
- ----------
(1) Incorporated by reference: Exhibits filed with the Registrant's Amendment
No. 1 to its Annual Report for fiscal Year Ended January 31, 1997 on form
10-KSB filed with the Securities and Exchange Commission on June 30, 1997.
(2) Incorporated by reference: Exhibits filed with Registrant's Registration
Statement on Form SB-2 (File No. 33-49920), and Amendments thereto,
declared effective on October 15, 1993.
23
<PAGE>
