UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ 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
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________________
Commission file number 0-11226
GOLDEN CYCLE GOLD CORPORATION
(Exact name of registrant as specified in its charter)
COLORADO 84-0630963
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2340 Robinson Street, Suite 209,
Colorado Springs, Colorado 80904
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (719) 471-9013
_____________________________________________________________________
(Former name, former address and former fiscal year, if changed since last
report)
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 the filing
requirements for the past 90 days. YES XX NO
Number of Shares outstanding at May 9, 1997: 1,870,050
PART I. - FINANCIAL INFORMATION
GOLDEN CYCLE GOLD CORPORATION
BALANCE SHEETS
March 31, December 31,
1997 1996
(Unaudited)
_________ _________
Assets
_________________________________________
Current assets:
Cash and cash equivalents $ 15,530 $ 36,268
Short-term investments 2,380,073 2,305,866
Interest receivable and other
current assets 20,244 9,876
_________ _________
Total current assets
2,415,847 2,352,010
Investment & other assets
Note receivable 242,500
242,500
Assets held for sale (net)
132,680 132,680
Investment in mining joint venture (Note 2) - -
_________ _________
Total investment & other assets 375,180 375,180
Property and equipment 54,242 15,881
_________ _________
Total assets $ 2,845,269 $ 2,743,071
Liabilities and Shareholders' Equity
_________________________________________
Accounts payable and accrued liabilities $ 15,175 $ 18,710
Shareholders' equity:
Common Stock - no par value.
Authorized 3,500,000 shares;
issued and outstanding
1,870,050 shares 7,054,562
7,054,562
Additional paid-in capital 1,927,736 1,927,736
Accumulated deficit (6,152,970) (6,258,703)
Foreign currency translation 766 766
_________ _________
Total shareholders' equity 2,830,094 2,724,361
_________ _________
$ 2,845,269 $ 2,743,071
<FN>
See Accompanying Notes to Financial Statements
GOLDEN CYCLE GOLD CORPORATION
STATEMENTS OF OPERATION AND ACCUMULATED DEFICIT
FOR THE THREE MONTHS ENDED
March 31, 1997 and 1996
(Unaudited)
Three Months Ended
March 31,
____________________
1997
1996
_________ _________
Revenue:
Distribution from mining joint
venture in excess of
carrying value $ 250,000 $ 250,000
Other, consulting fees - 13,602
_________ _________
Total operating revenue 250,000 263,602
Expenses:
General and administrative (172,802) (61,592)
_________ _________
Operating income 77,198 202,010
Other income:
Interest and other income 28,536 6,073
_________ _________
Net income $ 105,733 $ 208,083
_________ _________
Income (loss) per share $ 0.06 $ 0.13
Weighted average common
shares outstanding 1,870,050 1,573,050
ACCUMULATED DEFICIT:
Beginning of period $(6,258,703) $(6,403,139)
_________ _________
End of Period (6,152,970) (6,195,056)
<FN>
See Accompanying Notes to Financial Statements
GOLDEN CYCLE GOLD CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
March 31, 1997 and 1996
(Unaudited)
1997 1996
__________ __________
Cash flows from operating activities:
Net Income $ 105,733 $ 208,083
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation expense 2,344 1,013
Increase in interest receivable
and other current assets (10,367) (14,805)
Decrease in accounts payable
and accrued liabilities (3,537) (6,595)
__________ __________
Net cash provided by
operating activities 94,174 187,696
__________ __________
Cash flows from investing activities:
Increase in short-term investments, net (74,207) (138,308)
Purchases of property and equipment (40,705) -
__________ __________
Net cash used by investing
activities (114,912) (138,308)
__________ __________
Net increase (decrease) in
cash and cash equivalents (20,738) 49,388
Cash and cash equivalents, beginning of nine months 36,268 9,840
__________ __________
Cash and cash equivalents, end of nine months $ 15,530 $ 59,228
<FN>
See Accompanying Notes to Financial Statements
GOLDEN CYCLE GOLD CORPORATION
NOTES TO FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements (other than the Balance Sheet at
December 31, 1996) are unaudited but, in the opinion of management,
include all adjustments, consisting solely of normal recurring items,
necessary for a fair presentation. Interim results are not necessarily
indicative of results for a full year.
These financial statements should be read in conjunction with the financial
statements and notes thereto which are included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996. The accounting
policies set forth in those annual financial statements are the same as the
accounting policies utilized in the preparation of these financial statements,
except as modified for appropriate interim financial statement presentation.
(2) INVESTMENT IN JOINT VENTURE
The Company accounts for its investment in the Cripple Creek & Victor Gold
Mining Company (the "Joint Venture") on the equity method. During 1992, the
Company's investment balance in the Joint Venture was reduced to zero.
Joint Venture distributions in excess of the investment carrying value are
recorded as income, as the Company is not required to finance the Joint
Venture's operating losses or capital expenditures. Correspondingly, the
Company does not record its share of Joint Venture losses incurred subsequent
to the reduction of its investment balance to zero. To the extent the Joint
Venture is subsequently profitable, the Company will not record its share of
equity income until the cumulative amount of previously unrecorded Joint
Venture losses has been recouped. As of March 31, 1997, the Company's share
of accumulated unrecorded losses from the Joint Venture was $4,351,058.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Company's principal mining investment and source of cash flows has been
its interest in the Joint Venture, and in 1996 proceeds from the sale of
Common Stock (see discussion below). The Joint Venture engages in gold
mining activity in the Cripple Creek area of Colorado. The Company's Joint
Venture co-venturer is Pikes Peak Mining Company ("Pikes Peak"), a
wholly-owned subsidiary of Independence Mining Company.
The Company's rights and obligations relating to its Joint Venture
interest are governed by the Joint Venture Agreement. The Joint Venture is
currently operating in the Initial Phase, as defined. In accordance with the
Joint Venture Agreement, Pikes Peak manages the Joint Venture, and is required
to finance all operations and capital expenditures during the Initial Phase.
The Initial Phase will terminate after Initial Loans, as defined, have
been repaid and Net Proceeds (defined generally as gross revenues less
operating costs including Pikes Peak's administrative fees) of $58 million
have been distributed to the venture participants in the proportion of 80%
to Pikes Peak and 20% to the Company. Initial Loans generally constitute
funds loaned to the Joint Venture, and interest thereon, to finance operations
and mine development by either Pikes Peak or third-party financial institutions
and are repayable prior to distributions to the venture participants. The
Manager reported that Initial Loans, payable to Pikes Peak, of approximately
$155.4 million were outstanding at March 31, 1997. Under the Agreement as
amended in 1991, the Joint Venture has not earned or distributed any Net
Proceeds.
After the Initial Phase, the Joint Venture will distribute metal in
kind
in the proportion of 67% to Pikes Peak and 33% to the Company, and the venture
participants will be responsible for their proportionate share of the Joint
Venture costs.
During the Initial Phase, the Company is entitled to receive a Minimum
Annual Distribution of $250,000. Minimum Annual Distributions received after
1993 constitute an advance of Net Proceeds. Accordingly, such Net Proceeds
advances will be recouped from future Net Proceeds distributions allocable
to the Company. Based on the amount of Initial Loans payable to the Manager
and the recurring operating losses incurred by the Joint Venture, management
of the Company believes that, absent a significant and sustained increase in
the prevailing market prices for gold, it is unlikely that the Company will
receive more than the Minimum Annual Distribution from the Joint Venture in
the foreseeable future.
Cash provided by operations was approximately $94,000 and $188,000 in
the 1997 and 1996 periods respectively. Prior to 1993, the $250,000 Minimum
Annual Distribution was classified as an investing cash flow; beginning in
1993, the Minimum Annual Distribution was reflected as an operating cash flow
by reason of the fact that the Joint Venture investment balance was reduced
to zero during 1992, as discussed below under "Results of Operations".
Cash provided by operations during the 1997 period decreased from the
1996 period by approximately $94,000 primarily due to commencement of
operations in the Philippines by the Company's Philippine subsidiary, Golden
Cycle Philippines, Inc. ("GCPI") and increased salary expense.
The Company's working capital was approximately $2,401,000 at March 31,
1997 compared to $559,000 at March 31, 1996. Working capital increased by
approximately $1,842,000 at March 31, 1997 compared to March 31, 1996. The
increase resulted primarily from two separate sales of the Company's common
stock during 1996: (i) an aggregate of 170,000 shares were sold to two
mutual funds which are part of the Bull & Bear Mutual Fund group for
aggregate gross proceeds of $1,020,000 in May 1996, and (ii) 100,000 shares
were sold to one of the same mutual funds for aggregate gross proceeds of
$1,000,000 in December 1996. The shares are "restricted" under the federal
securities laws, although the Company has registered for public resale the
170,000 shares sold in May 1996, and has agreed to register for public resale
the 100,000 shares sold in December 1996. The exercise of options for an
aggregate of 27,000 shares of the Company's common stock by two Directors of
the Company during 1996 provided an additional $132,000.
The Company anticipates that GCPI will begin exploration and
development
activities in the Philippines in 1997. During 1997, the Company has budgeted
approximately $240,000 to support GCPI in its search for gold and copper
mining opportunities in the Philippines. If opportunities to economically
expand the Philippine operations are available and the Company elects to
pursue them, the Company may be required to allocate a significant portion of
its existing working capital to fund such activities and additional working
capital not currently on hand may also be required. There is no assurance
that the Company will be able to obtain such additional capital, if required.
Furthermore, if such operations are commenced, it is unlikely they would
generate positive cash flow and/or profit for several years.
Results of Operations
The Company had net income, for the three months ended March 31, of
approximately $106,000 in 1997, compared to net income of approximately
$208,000 in the 1996 period.
The decrease in net income for the first three months of 1997 compared
with the corresponding period in 1996 was due to an increase of approximately
$111,000 in general and administrative expenses during the 1997 period, which
increase primarily related to commencement of Philippine operations and, to a
lesser extent, increases in salaries. The increase in expenses was partially
offset by increased interest income in the 1997 period.
The Company accounts for its investment in the Joint Venture on the
equity method. During 1992, the Company's investment balance in the Joint
Venture was reduced to zero. Joint Venture distributions in excess of the
investment carrying value are recorded as income, as the Company is not
required to finance the Joint Venture's operating losses or capital
expenditures. Correspondingly, the Company does not record its share of
Joint Venture losses incurred subsequent to the reduction of its investment
balance to zero. To the extent the Joint Venture is subsequently profitable,
the Company will not record its share of equity income until the cumulative
amount of previously unrecorded Joint Venture losses has been recouped. As
of March 31, 1997, the Company's share of accumulated unrecorded losses from
the Joint Venture was $4,351,058.
The Joint Venture incurred a net loss of $1.616 million for the three
months ended March 31, 1997. The Joint Venture recorded net income of
$1.93 million for the year ended December 31, 1996. The Joint Venture
incurred net losses of $3.654 million and $9.350 million in 1995 and 1994,
respectively.
PART II - OTHER INFORMATION
Item 1 through 4 are not being reported due to a lack of circumstances
that require a response.
Item 5. Other Information. None.
Item 6. Exhibits and Reports on Form 8-K.
None.
SIGNATURES
Pursuant to requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE GOLDEN CYCLE GOLD CORPORATION
(Registrant)
/s/ Birl W. Worley Jr.
Birl W. Worley Jr.
President & C.E.O.
/s/ R. Herbert Hampton
R. Herbert Hampton,
Vice President, Finance
May 14, 1997