FORM 10-QSB
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE EXCHANGE ACT
For the transition period from to
-------------- ---------------
Commission file number 0-24610
GOLD CAPITAL CORPORATION
---------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
COLORADO 84-1251798
- --------------------------------------------- ------------------
(State or other jurisdiction of incorporation (I.R.S. Employer
or organiza Identification No.)
5525 Erindale Drive, Suite 201
Colorado Springs, Colorado 80918
--------------------------------------
(Address of principal executive offices)
(719) 260-8509
------------------------
(Issuer's telephone number)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the 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 such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Class Outstanding as of May 12, 1997
------------------------------ -------------------------------
Common Stock, $0.0001 par value 9,073,653
<PAGE>
GOLD CAPITAL CORPORATION AND SUBSIDIARY
(A Development Stage Company)
Consolidated Balance Sheet
March 31, 1997 (unaudited)
ASSETS
CURRENT ASSETS, Cash $ 100,669
PROPERTY, PLANT AND EQUIPMENT
Milling, plant and production equipment 7,234,110
Buildings 2,232,963
Vehicles and trailers, net of depreciation 148,560
Property development and mineral claim costs 3,176,369
------------
12,792,002
------------
OTHER ASSETS
Prepaid royalties 694,604
Deposits 42,097
------------
736,701
------------
$ 13,629,372
============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 580,448
Accrued interest-TSVLP 28,065
Note payable-TSVLP, current portion 550,000
Advances payable-Royalstar Resources 874,796
Note payable-Globex 836,664
Other obligations, net 135,864
------------
3,005,837
NOTE PAYABLE-TSVLP, LONG-TERM 789,644
RECLAMATION RESERVE 1,469,900
MINORITY INTEREST IN JOINT VENTURE 2,435,178
------------
7,700,554
------------
STOCKHOLDERS' EQUITY
Common stock $.0001 par value; 25,000,000 shares
authorized; 9,073,653 shares issued and
outstanding 922
Additional paid-in capital 9,973,741
Deficit accumulated during development stage (4,045,850)
------------
5,928,813
------------
$ 13,629,372
============
See accompanying notes to consolidated financial statements.
2
<PAGE>
GOLD CAPITAL CORPORATION AND SUBSIDIARY
(A Development Stage Company)
Consolidated Statement of Operations for the Three Month Periods Ended March 31,
1997 and 1996, and December 10, 1993 (inception) to March 31, 1997 (unaudited)
<TABLE>
<CAPTION>
For the Period
Three Months Three Months from December
Ended Ended 10, 1993
March 31, 1997 March 31, 1996 (Inception) to
-------------- -------------- March 31, 1997
--------------
Costs and expenses:
<S> <C> <C> <C>
General and administrative $ 69,022 $ 111,703 $ 1,597,130
Property maintenance 107,251 212,072 1,560,808
Write off of Argentina
Mineral Claims -- -- 167,077
Interest expense, net 68,054 56,358 720,835
----------- ----------- -----------
Net loss (244,327) (380,133) (4,045,850
Preferred stock dividend -- -- 517,500
----------- ----------- -----------
Net loss applicable to
common shareholders $ (244,327) $ (380,133) $(4,563,350)
=========== =========== ===========
Net loss per common share $ (0.03) $ (0.08)
=========== ===========
Weighted average of
common shares outstanding 9,073,653 5,042,514
=========== ===========
See accompanying notes to consolidated financial statements.
3
</TABLE>
<PAGE>
GOLD CAPITAL CORPORATION AND SUBSIDIARY
(A Development Stage Company)
Consolidated Statement of Stockholders' Equity
From December 10, 1993 (Inception) to March 31, 1997 (unaudited)
<TABLE>
<CAPTION>
Deficit
Common Accumulated
Stock Subscribed Preferred Stock Common Stock Additional During
----- ---------- --------- ----- ------ ----- Paid-In Development
Shares Amount Shares Amount Shares Amount Capital Stage
------ ------ ------ ------ ------ ------ ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
December 10, 1993
(Inception) - $ - - $ - - $ - $ - $ -
Issuance of stock to
officers for cash,
December 22, 1993,
$.04/share - - - - 300,000 30 11,970 -
Issuance of Series A
Convertible Preferred
Stock for mining
properties, at
$10.00/share - - 300,000 3,000 - - 2,997,000 -
Common stock subscribed
by officers and affiliates,
$1.00/share 200,000 20 - - - - 199,980 -
-------- ------- -------- ----- --------- --- --------- --------
December 31, 1993 200,000 20 300,000 3,000 300,000 30 3,208,950 0
Issuance of stock for cash,
$1.00/share (200,000) (20) - - 1,350,000 135 1,134,285 -
Issuance of stock for cash,
$2.00/share - - - - 248,396 25 483,499 -
Issuance of stock as dividend
on Series A Convertible
Preferred Stock, $2.11/share - - - - 127,702 13 (13) -
Net loss - - - - - - - (556,360)
-------- ------- -------- ----- ---------- --- --------- --------
December 31, 1994 0 0 300,000 3,000 2,026,098 203 4,826,721 (556,360)
</TABLE>
continued on next page
4
<PAGE>
GOLD CAPITAL CORPORATION AND SUBSIDIARY
(A Development Stage Company)
Consolidated Statement of Stockholders' Equity
From December 10, 1993 (Inception) to March 31, 1997, continued
<TABLE>
<CAPTION>
Deficit
Common Accumulated
Stock Subscribed Preferred Stock Common Stock Additional During
----- ---------- --------- ----- ------ ----- Paid-In Development
Shares Amount Shares Amount Shares Amount Capital Stage
------ ------ ------ ------ ------ ------ ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994 0 0 300,000 3,000 2,026,098 203 4,826,721 (556,360)
Issuance of stock for cash,
$1.00/share (net of
issuance cost) - - - - 2,776,100 278 2,770,822 -
Issuance of stock to short-term
lender, $1.00/share - - - - 2,500 - 2,500 -
Exercise of stock option for
cash, $1.00/share - - - - 75,000 8 74,992 -
Issuance of stock for legal fees,
$1.00/share - - - - 15,000 1 14,999 -
Issuance of stock as dividend
on Series A Convertible
Preferred Stock, $1.67/share - - - - 147,816 15 (15) -
Net loss - - - - - - - (1,638,830)
------ ------ ------- ------ --------- ---- ---------- -----------
December 31, 1995 0 0 300,000 $3,000 5,042,514 $505 $7,690,019 $(2,195,190)
Issuance of stock in
conversion of accounts
payable to affiliates,
$1.00/share - - - - 2,281,139 242 2,280,897 -
Conversion of Preferred Stock
into Common Stock, $1.72/share - - (300,000) (3,000) 1,750,000 175 2,825 -
Net loss - - - - - - - (1,606,332)
------ ------ ------- ------ --------- ---- ---------- -----------
December 31, 1996 - $ 0 0 $ 0 9,073,653 $922 $9,973,741 $(3,801,522)
continued on next page
5
</TABLE>
<PAGE>
GOLD CAPITAL CORPORATION AND SUBSIDIARY
(A Development Stage Company)
Consolidated Statement of Stockholders' Equity
From December 10, 1993 (Inception) to March 31, 1997, continued
<TABLE>
<CAPTION>
Deficit
Common Accumulated
Stock Subscribed Preferred Stock Common Stock Additional During
----- ---------- --------- ----- ------ ----- Paid-In Development
Shares Amount Shares Amount Shares Amount Capital Stage
------ ------ ------ ------ ------ ------ ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1996 - - - $ - 9,073,653 $175 $9,973,741 $(3,801,522)
Net loss - - - - - - - (244,327)
------ ------ ----- ------ --------- ---- ---------- -----------
Balance, March 31, 1997 - $ - - $ - 9,073,653 $175 $9,973,741 $ 4,045,850
====== ======= ===== ====== ========= ==== ========== ===========
See accompanying notes to consolidated financial statements.
6
</TABLE>
<PAGE>
GOLD CAPITAL CORPORATION AND SUBSIDIARY
(A Development Stage Company)
Consolidated Statements of Cash Flows (unaudited)
<TABLE>
<CAPTION>
For the Period from
For The Three For The Three December 10, 1993
Months Ended Months Ended (Inception) to
March 31, March 31, March 31,
1997 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Interest income $ 434 $ 534 $ 17,765
Cash paid to suppliers (537,789) (534,989) (2,787,037)
----------- ----------- -----------
Cash used in operating activities (537,355) (534,446) (2,769,272)
Cash flows from investing activities:
Capital expenditures (6,168) (304,533) (2,700,157)
Sale of surplus equipment, net -- -- 630,000
Investment in Argentina claims -- -- (167,077)
----------- ----------- -----------
Cash used in investing activities (6,168) (304,533) (2,237,234)
Cash flow from financing activities:
Net advances from Royalstar -- 991,669 2,494,583
Borrowings 803,709 -- 958,003
Funding of bank overdraft -- -- (138,000)
Cash received from sale of common stock -- -- 4,676,024)
Obligations paid with common stock -- -- (423,080)
Principal payments on note payable (161,431) (76,844) (2,460,355)
----------- ----------- -----------
Cash provided by financing activities 642,278 914,825 5,107,175
Increase (decrease) in cash 98,755 (75,846) 100,669
Cash, beginning 1,914 11,028 --
----------- ----------- -----------
Cash, ending $ 100,669 $ 86,874 $ 100,669
=========== =========== ===========
Reconciliation of net loss to cash used
in operating activities:
Net loss $ (244,327) $ (380,132) $(4,045,849)
Adjustments to reconcile net loss to net cash
used in operating activities:
Amortization and depreciation 4,641 4,741 33,283
Interest expense 63,629 36,118 724,780
Expenses paid with common stock -- -- 514,293
Write-off of investment in mineral claims -- -- 70,789
(Increase) decrease in other assets (166,780) 2,251 (765,143)
Increase (decrease) in current liabilities (44,518) (699) 388,173
related to operations
Increase (decrease) in liabilities, long-term (150,000) (196,725) 310,402
----------- ----------- -----------
Net cash used in operating activities $ (537,355) $ (534,446) $(2,769,272)
=========== =========== ===========
See accompanying notes to consolidated financial statements.
7
</TABLE>
<PAGE>
GOLD CAPITAL CORPORATION AND SUBSIDIARY
(A Development Stage Company)
GOLD CAPITAL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements (Unaudited)
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- --------- ------------------------------------------
Gold Capital Corporation (the "Company") was incorporated under the laws of the
state of Colorado on December 10, 1993 to engage in development of gold mining
projects. The Company's activities have been primarily limited to its formation,
obtaining financing, acquisition of certain interests in mining properties and
management of a mining joint venture. For the period from inception to March 31,
1997, the Company had no operations.
The balance sheet of the Company as of March 31, 1997, results of operations and
the cash flows for the three month periods ended March 31, 1997 and 1996, and
inception to March 31, 1997, and statement of stockholders' equity for the
period from inception to March 31, 1997, have not been examined by independent
certified public accountants. However, in the opinion of management, the
accompanying unaudited financial statements contain all necessary adjustments
consisting only of normal accruals in order to make the financial statements not
misleading.
The results of operations for the three month period ended March 31, 1997 are
not necessarily indicative of the results to be expected for the full year.
These financial statements should be read in conjunction with the Company's
consolidated financial statements for the period ended December 31, 1996
included in the Company's annual report on Form 10-KSB filed with the Securities
and Exchange Commission, as these financial statements omit certain information
required by generally accepted accounting principles.
The preparation of the Company's consolidated financial statements in conformity
with generally accepted accounting principles requires the Company's management
to make estimates and assumptions that affect the amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
NOTE B - CONTINUED OPERATIONS AND RECOVERABILITY OF MINING PROPERTIES AND
EQUIPMENT
- --------------------------------------------------------------------------------
In connection with the merger agreement with Globex Mining Enterprises Inc.
("Globex"), a publicly traded corporation organized and existing under the laws
of the Province of Quebec, Canada, discussed further below, Globex has agreed to
fund the financial obligations of the Company pending completion of the Merger
(the "Globex Loan"). Subject to the terms and conditions of the Globex Loan
agreement between the parties, Globex has agreed to make advances to the Company
to maintain, preserve and protect the assets of the Tonkin Springs Project,
service the promissory note payable to U.S. Gold Corporation ("U.S. Gold") and
pay other necessary and proper obligations and commitments of the Company. The
Globex Loan accrues interest at 2% over prime, is secured by all the assets of
the Company and is due on or before August 30, 1997. Continued funding under the
Globex Loan is subject to the right of Globex to accept or reject each funding
request made by the Company, as well as the right of Globex to discontinue
funding altogether. In that event, the Company has the right to terminate the
Merger Agreement. Without continued funding from the Globex Loan or finding
other sources of funding, the Company is not able to meet its current
obligations nor to provide for development costs associated with future
obligations and operations relating to the Venture and other corporate
objectives. Through March 31, 1997, the balance of borrowings and accrued
interest under the Globex Loan is $836,664, including accrued interest of
$12,995. As of May 5, 1997, the principal and accrued interest balance of the
Globex Loan is approximately $955,864.
Note C - PROPOSED MERGER
- ------ - ---------------
On December 20, 1996, the Company and Globex entered into an agreement in
principal regarding a conditional offer by Globex to finance the Company and
merge it with a subsidiary of Globex. Effective March 13, 1997, the Company and
Globex executed an agreement (the "Merger Agreement" or "Merger") to merge with
Globex. By virtue of the Merger, and subject to certain conditions, the Company
would become a wholly-owned subsidiary of Globex.
8
<PAGE>
GOLD CAPITAL CORPORATION AND SUBSIDIARY
(A Development Stage Company)
Note C - PROPOSED MERGER (cont.)
- --------------------------------
The Merger is part of two separate, but related, transactions pursuant to which
Globex proposes to acquire 100% of the Company's issued and outstanding Common
Stock. Pursuant to the terms of the Merger Agreement, GME Merger Corporation, a
Colorado corporation wholly owned by Globex, would be merged with and into the
Company (the "Surviving Corporation"), which corporation would survive the
Merger. The 4,654,543 shares of the Company's Common Stock issued and
outstanding prior to the Merger and not owned by Royalstar Resources Ltd.
("Royalstar") would be converted into the right to receive 1,285,067 shares of
Globex Common Stock. The shares proposed to be issued by Globex would be
registered under relevant provisions of the Securities Act of 1933, as amended,
and qualified under applicable state Blue Sky laws. The Common Stock owned by
Royalstar, the Company's single largest shareholder, would be acquired by Globex
in a separate transaction (the "Acquisition"), anticipated to be completed
contemporaneously with the Merger. When both transactions are completed, Globex
would own 100% of the issued and outstanding shares of Common Stock of the
Company.
Both the Merger and Acquisition are subject to certain conditions. Prior to
consummation of the Merger, the following conditions, among others, must be
satisfied: i) receipt of an effective date by Globex for a registration
statement covering its stock proposed to be issued in connection with the
Merger; ii) receipt of financing by Globex; iii) approval of the Merger by the
Company's shareholders; and (iv) approval of various regulatory agencies. The
consummation of the Acquisition is subject to shareholder approval and other
conditions precedent. The respective Boards of Directors of the Company and
Globex intend to proceed promptly and use their reasonable best efforts to
complete the Merger and Acquisition.
NOTE D - NOTE PAYABLE
- ------ ------------
At March 31, 1997 the Company has a $1,339,644 amended note payable (the "Note)
to TSVLP as a result of its purchase of a 60% interest in the Properties. The
Note is collateralized by the Company's 60% interest in the Properties and the
Venture and accrues interest at a fixed rate of 7.5% on the unpaid principal
balance, with interest payments due at the end of each calendar year. Accrued
interest for 1996 of $129,569 was paid January 16, 1997. Interest expense
accrued related to the Note for the three months ended March 31, 1997 and 1996
were $28,065 and $36,118, respectively. TSVLP has agreed in conjunction with the
Globex Loan, that monthly note payments commencing February 1, 1997 would
continue at $50,000 per month until the earlier of August 1, 1997, or the
completion of the Globex Merger, after which monthly payments under the Note
would be subject to the existing terms of the Note.
The principal balance of $1,339,644 is payable as follows:
(1) Monthly installments of $50,000 per month until the Company has raised an
aggregate of $4,000,000 in financing subsequent to June 22, 1995, or until the
Note is paid in full.
(2) Monthly installments of $75,000 subsequent to the Company raising an
aggregate of $4,000,000 in new financing (approximately $3.8 million in new
financing has been arranged through March 31, 1997).
The Company's obligations under the promissory note and certain of the Company's
obligations under the Venture agreement are subject to a Security Agreement in
favor of TSVLP, pursuant to which the Company has granted a security interest in
the assets constituting its interest in the Project. The Company is in technical
default in its performance as manager of the Venture. The inability of the
Company to satisfy the terms of the promissory note and the Venture agreement in
the future could, if not cured subsequent to written notice, cause the Company
to forfeit its interest in the Project.
The future annual minimum principal payments as of December 31, 1996 are as
follows:
1997 $ 400,000
1998 600,000
1999 339,644
----------
$1,339,644
==========
9
<PAGE>
Note E - OTHER OBLIGATIONS
- ------ -----------------
On November 1, 1996, the Company received funds in the amount of $185,350
(Canadian $250,000) from Sea Gull Leasing Ltd., a private company (the "Sea Gull
Obligation"). This transaction with Sea Gull was arranged on behalf of the
Company by its former president and chief executive officer, Mr. John Young, who
resigned all his positions with the Company effective December 4, 1996. On
November 1, 1996, the Company disbursed $74,140 (Canadian $100,000) of the Sea
Gull proceeds directly to Attwood Gold Corporation ("Attwood"). In addition to
the funds directly received by the Company from Sea Gull, a payment of $20,284
by Sea Gull directly to a vendor of the Venture was made on behalf of the
Company. No note or other documentation exists related to the Sea Gull
Obligation. Sea Gull has initiated legal actions to recover $205,634 plus
interest and costs from the Company. Royalstar provided the Company a written
but conditional commitment of indemnity dated January 14, 1997, concerning and
related to the Sea Gull Obligation (the "Indemnity"). The Company has given
Royalstar notice that it intends to invoke the Indemnity with regard to the
legal action initiated by Sea Gull and has further requested Royalstar and
Attwood to resolve the claim. The Company intends to defend this action
vigorously but has included the Sea Gull Obligation, reduced by the claim of the
Company against Attwood, on the balance sheet as of March 31, 1997 in Other
obligations, net.
In addition, there are a number of creditors who are owned monies by the Company
which creditors could bring various legal actions against the Company and the
Tonkin Springs Project Joint Venture, some of which could involve the filing of
liens.
10
<PAGE>
GOLD CAPITAL CORPORATION AND SUBSIDIARY
(A Development Stage Company)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION,
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
Plan of Operation. The plan of operation of Gold Capital Corporation (the
"Company") for the current year is to obtain sufficient capital to recommence
production of gold at its Tonkin Springs Project. Management believes that the
Company has conducted sufficient testing to warrant commencement of efforts to
produce gold at the Project. To that end, efforts were undertaken during late
1996 to commence construction of the asphalt pad necessary to begin
bio-oxidation of the sulfide ore. The Company also commissioned preparation of a
technical audit of plans to commence production. However, the Company's
immediate efforts to commence production were curtailed in late 1996, with the
cessation of funding from its largest shareholder, Royalstar Resources Ltd.
Further efforts to commence production may be modified as the result of the
proposed Merger with Globex.
Effective March 13, 1997, the Company and Globex executed the Merger
Agreement which, if successfully concluded, would result in the Company becoming
a wholly-owned subsidiary of Globex. The Merger is subject to a number of
contingencies, including approval by the Company's shareholders and continuing
due diligence. Pending completion of the Merger, management is unable to predict
with any degree of certainty a specific plan with regard to development of the
Project.
Management of the Company has been advised that if the Merger is completed,
Globex intends to conduct additional development at the Project prior to further
efforts to commence production. Due to a lack of available working capital, the
Company has been unable to continue efforts directed to commencement of
production. As a consequence, all efforts are currently directed to completion
of the Merger.
Liquidity and Capital Resources. During the three (3) months ended March
31, 1997, the Company relied entirely upon advances from Globex for necessary
working capital. Under a Loan Agreement dated January 16, 1997 executed in
connection with the Merger negotiations, Globex has agreed to make advances to
the Company to maintain, preserve and protect the assets of the Project, service
the promissory note payable to TSVLP and pay other necessary and proper
obligations and commitments of the Company. As of March 31, 1997, the Company
had borrowed $836,664 from Globex under this arrangement. As of May 5, 1997,
such amount has increased to $955,864, including all accrued interest. The
Globex loan accrues interest at two percent (2%) over prime, is due and payable
on or before August 30, 1997 and is secured by all of the assets of the Company.
Continued funding under the Globex Loan is subject to the right of Globex to
accept or reject each funding request made by the Company, as well as the right
of Globex to discontinue funding altogether. In that event, the Company has the
right to terminate the Merger Agreement.
On March 31, 1997, the Company had negative working capital of
approximately $2,905,168, consisting of current assets of $100,669 and current
liabilities of $3,005,837. The primary components of the Company's current
liabilities are the promissory note and accrued interest payable to TSVLP
($550,000), accounts payable to creditors ($608,513, primarily related to
vendors and contractors for the Project), advances from Royalstar ($874,796) and
the Globex Loan with a balance of $836,664 at March 31, 1997. If the Merger is
completed, it is anticipated such obligations will be funded by Globex. If the
Merger is not completed or Globex decides to terminate funding under the Loan
Agreement, the Company would be forced to pursue other sources of financing, of
which there is no assurance. Historically, the Company has relied on private and
public equity financings and advances from Royalstar for its working capital.
Until efforts to complete the Merger are completed, it is unlikely that any
additional sources of financing will be available.
In addition to start-up and other capital costs associated with
recommencement of operations at the Project, the Company will require capital
for ongoing operating expenses, debt service and general administrative
expenses. Total capital required including recommencement of operations at the
Project, debt repayment and additional working capital needs total approximately
$10,000,000. The ability of the Company to continue operations as a going
concern is dependent upon its success in competing the Merger or obtaining
additional capital to pay its obligations and develop its properties to commence
production and ultimately, achieving profitable operations.
Under the Mining Venture Agreement between the Company and TSVLP, the
Company is responsible for funding of all holding, administrative, development
and other costs associated with the Venture until commencement of commercial
production is achieved. The Company is entitled to recoup such costs, up to a
maximum of $6,000,000, from a preferential distributions from net cash flow,
entitling the Company to receive eighty four percent (84%) of net cash flow from
11
<PAGE>
GOLD CAPITAL CORPORATION AND SUBSIDIARY
(A Development Stage Company)
the Venture prior to payback. Through March 31, 1997, the Company has advanced
approximately $4,069,000 of recoupable costs to the Venture. After recovery of
recoupable costs, cash flow will be distributed to the Company and TSVLP in
proportion to their interest in the Venture.
Subject to the completion of the Merger, TSVLP and the Company have agreed
to modify the Joint Venture Agreement. These proposed modifications include, but
are not limited to, an increase in the recoupable amount to $8,050,000.
Results of Operations. For the three month period ended March 31, 1997, the
Company recorded a net loss of $244,327 or $(0.03) per share, compared to a net
loss of $380,133 or $0.08 per share for the corresponding three month period of
1996. The Company had no operating revenues as the Tonkin Springs Properties are
not in production. General and administrative expenses totaled $69,022 for 1997
compared with $111,703 in 1996, reflecting lower levels of allocated staff costs
from Royalstar. Interest expense for 1997 totaled $68,054 compared to $56,358
for 1996, reflecting increased debt under the Royalstar Advances and the Globex
Loan, partially offset by the reduced balance outstanding under the TSVLP Note
during the 1997 period. During the three months ended March 31, 1997, $107,251
in property maintenance costs at the Tonkin Springs Project were expensed
compared to $212,072 for the corresponding three month period of 1996,
reflecting lower levels of activity during the 1997 period as a result of
limited financial resources available. Since inception (December 10, 1993), the
Company has incurred $4,045,849 in losses.
The Company was also credited with approximately $344,000 of Tonkin Springs
net recoupable costs for the three months ended March 31, 1997 bringing the
balance of net recoupable costs total approximately $4,045,849 as of that date.
The Company anticipates that it will continue to incur losses until such time,
if ever, that it obtains sufficient working capital to commence operations of
the Tonkin Springs Project. Net cash used in operations amounted to $537,355 for
the three month period ended March 31, 1997, compared to $534,446 for the same
period of 1996.
PART II
ITEM 1. LEGAL PROCEEDINGS
In certain legal proceedings first reported in the Company's Annual Report
on Form 10-KSB for the year ended December 31, 1996, the Company filed an Answer
to a Complaint commencing a civil action. Sea Gull Leasing Ltd. and Budget
Rent-A-Car Ltd. v. Gold Capital Corporation is a civil action currently pending
in the Arapahoe County District Court, State of Colorado, Case No. 97CV921. The
Complaint seeks damages from the Company for money allegedly advanced under a
loan agreement with the two Plaintiff entities. On May 8, 1997, the Company
filed an Answer to the Complaint, denying the material allegations thereof and
raising certain affirmative defenses. The Company intends to vigorously defend
this action and may file claims against third parties which the Company believes
may be responsible for all or a portion of the damages claimed by the
Plaintiffs.
ITEM 2. No report required.
ITEM 3. No report required.
ITEM 4. No report required.
ITEM 5. No report required.
ITEM 6.a Exhibits:
(i) Exhibit 11 - Statement of Computation of Weighted
Average Shares Outstanding.
ITEM 6.b Reports on Form 8-K. Effective March 13, 1997, Item 1.
Change in Control of Registrant reporting the execution by the
Company of the merger agreement with Globex Mining Enterprises
Inc.
12
<PAGE>
GOLD CAPITAL CORPORATION AND SUBSIDIARY
(A Development Stage Company)
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act of 1934, the Company
caused this Report to be signed on its behalf by the undersigned, thereunto duly
authorized.
GOLD CAPITAL CORPORATION
May 15, 1997 By /s/ Bill M. Conrad
-----------------------------
Bill M. Conrad, President and
Chief Financial Officer
13
EXHIBIT 11
GOLD CAPITAL CORPORATION
EXHIBIT TO FORM 10-QSB
Computation of Weighted Average Shares Outstanding
Used in Earnings Per Share
Calculations for the three month periods ended March 31, 1997 and 1996
Shares issued at beginning of period 9,073,653 5,042,514
Total weighted average shares outstanding 9,073,653 5,042,514
========= =========
Fully diluted computation not made as effect would be antidilutive in all
periods.
14
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 100,669
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 100,669
<PP&E> 12,792,002
<DEPRECIATION> 0
<TOTAL-ASSETS> 13,629,372
<CURRENT-LIABILITIES> 3,005,837
<BONDS> 0
0
0
<COMMON> 922
<OTHER-SE> 5,927,891
<TOTAL-LIABILITY-AND-EQUITY> 13,629,372
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 244,327
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 68,054
<INCOME-PRETAX> (244,327)
<INCOME-TAX> 0
<INCOME-CONTINUING> (244,327)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (244,327)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> 0
</TABLE>
