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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, 2001
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.)
1515 South Tejon, Suite 201,
Colorado Springs, Colorado 80906
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (719) 471-9013
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(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 X NO
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Number of Shares outstanding at March 31, 2001: 1,888,450
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PART I. - FINANCIAL INFORMATION
GOLDEN CYCLE GOLD CORPORATION
BALANCE SHEETS
March 31, December 31,
2001 2000
(Unaudited)
--------- ---------
Assets
- -----------------------------------------
Current assets:
Cash and cash equivalents $ 178,351 $ 91,591
Short-term investments 1,323,164 1,226,100
Interest receivable and other
current assets 61,811 72,853
Note receivable from sale
of water rights 190,156 190,156
--------- ---------
Total current assets 1,753,482 1,580,700
Assets held for sale (net) 132,680 132,680
Property and equipment, at cost:
Land 2,025 2,025
Furniture and fixtures 8,014 8,014
Machinery and equipment 33,225 33,225
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43,264 43,264
Less accumulated depreciation (30,741) (30,114)
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12,523 13,150
Investment in mining joint venture (Note 2) - -
--------- ---------
Total assets $ 1,898,685 $ 1,726,530
Liabilities and Shareholders' Equity
- -----------------------------------------
Accounts payable and accrued liabilities $ 455 $ 9,790
Shareholders' equity:
Common Stock - no par value.
Authorized 3,500,000 shares;
issued and outstanding
1,888,450 shares 7,116,604 7,116,604
Additional paid-in capital 1,927,736 1,927,736
Accumulated deficit (7,115,677) (7,297,167)
Accumulated comprehensive loss (30,433) (30,433)
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Total shareholders' equity 1,898,230 1,716,740
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$ 1,898,685 $ 1,726,530
See Accompanying Notes to Financial Statements
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GOLDEN CYCLE GOLD CORPORATION
CONSOLIDATED
STATEMENTS OF OPERATIONS, COMPREHENSIVE LOSS
AND ACCUMULATED DEFICIT
FOR THE THREE MONTHS ENDED
March 31, 2001 and 2000
(Unaudited)
Three Months Ended
March 31,
--------------------
2001 2000
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Revenue:
Distribution from mining joint
venture in excess of
carrying value $ 250,000 $ 250,000
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Total operating revenue 250,000 250,000
Expenses:
General and administrative (92,018) (69,064)
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Operating income 157,982 180,936
Other income-
Interest and other income 23,508 18,715
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Net income $ 181,490 $ 199,651
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Income per share $ 0.10 $ 0.11
Weighted average common
shares outstanding 1,888,450 1,888,450
ACCUMULATED DEFICIT:
Beginning of period $(7,297,167) $(7,331,499)
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End of Period (7,115,677) (7,131,848)
See Accompanying Notes to Financial Statements
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GOLDEN CYCLE GOLD CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
March 31, 2001 and 2000
(Unaudited)
2001 2000
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Cash flows from operating activities:
Net Income $ 181,490 $ 199,651
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation expense 627 627
Decrease (increase) in interest
receivable and other current
assets 13,542 (486)
Decrease in accounts payable
and accrued liabilities (11,835) (14,787)
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Net cash provided by
operating activities 183,824 185,005
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Net cash provided by investing activities:
Increase in short-term
investments, net (97,064) (303,299)
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Net increase (decrease) in
cash and cash equivalents 86,760 (118,294)
Cash and cash equivalents, beginning of period 91,591 152,581
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Cash and cash equivalents, end of period $ 178,351 $ 34,287
See Accompanying Notes to Financial Statements
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GOLDEN CYCLE GOLD CORPORATION
NOTES TO FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements 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, 2000. 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, 2001, the Company's share of accumulated unrecorded
losses from the Joint Venture was $13,518,258.
(3) EARNINGS PER SHARE
Earnings per share are computed by dividing net earnings by the weighted
average number of shares of common stock outstanding during each period. There
are no dilutive securities outstanding in either period.
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. The Joint Venture engages in gold mining
activity in the Cripple Creek area of Colorado. The Company's Joint Venture
co-venturer is AngloGold Colorado ("AngloGold", formerly Pikes Peak Mining
Company), a wholly-owned subsidiary of AngloGold North America Inc., which is a
wholly owned subsidiary of AngloGold Ltd.
The Company's rights and obligations relating to its Joint Venture interest
are governed by the Joint Venture Agreement. The Joint Venture is currently, and
for the foreseeable future will be, operating in the Initial Phase, as defined.
In accordance with the Joint Venture Agreement, AngloGold 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 AngloGold's administrative fees) of $58 million have been
distributed to the venture participants in the proportion of 80% to AngloGold
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 AngloGold or third-party financial institutions and are repayable
prior to distributions to the venture participants. AngloGold (the "Manager")
reported that Initial Loans, payable to AngloGold, of approximately $201 million
were outstanding at March 31, 2001. Under the Agreement as amended, 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 AngloGold 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 $184,000 and $185,000 in the
2001 and 2000 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". The Minimum Annual
Distribution was received from the Joint Venture January 15, 2001. No further
distributions are expected from the Joint Venture during the remainder of 2001.
The Company's working capital was approximately $1,753,000 at March 31, 2001
compared to $1,571,000 at December 31, 2000. Working capital increased by
approximately $2,000 at March 31, 2001 compared to December 31, 2000.
Management believes that the Company's working capital, augmented by the
Minimum Annual Distribution, is adequate to support operations at the current
level for the coming year, barring unforeseen events. Although there can be no
assurance, the Company anticipates the closure of its sale of certain Water
Rights to the City of Cripple Creek during the year 2001 which will provide
additional working capital. The Company anticipates that its Philippine
subsidiary will hold all work on a standby basis until the MPSA is awarded to
the claim owner. If opportunities to economically pursue or expand Philippine
operations, or any other opportunity are available, and the Company elects to
pursue them, additional working capital may also be required. There is no
assurance that the Company will be able to obtain such additional capital, if
required, or that such capital would be available to the Company on terms that
would be acceptable. Furthermore, if any such operations are commenced, it is
not presently known when or if a positive cash flow could be derived from the
properties.
Results of Operations
The Company had net income, for the three months ended March 31, of
approximately $181,000 in 2001, compared to net income of approximately $200,000
in the 2000 period.
The decrease in net income for the first three months of 2001 compared with
the corresponding period in 2000 was due to increased general and administrative
expenses.
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 received, 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,
2001, the Company's share of accumulated unrecorded losses from the Joint
Venture was $13,518,258.
The Joint Venture incurred a net loss of approximately $4.3 million for the
three months ended March 31, 2001 as compared to a net loss of $2.7 million for
the corresponding period in 2000. The Joint Venture recorded a net loss of $13.1
million for the year ended December 31, 2000 compared to net losses of $7.4
million and $11.8 million for the years ended December 31, 1999 and 1998
respectively. There is no assurance that the Joint Venture will be able to
achieve profitability in any subsequent period or to sustain profitability for
an extended period. The ability of the Joint Venture to sustain profitability is
dependent upon a number of factors, including without limitation, the market
price of gold, which is currently near recent historically low levels, volatile
and subject to speculative movement, a variety of factors beyond the Joint
Venture's control, and the efficiency of the Cresson mining operation.
Whether future gold prices and the results of the Joint Venture's operations
will reach and maintain a level necessary to repay the Initial Loans, complete
the Initial Phase, and thereafter generate net income cannot be assured. Based
on the amount of Initial Loans payable to the Manager and the uncertainty of
future operating revenues, management of the Company believes that, without a
significant and sustained increase in the prevailing market price for gold, it
is unlikely that the Company will receive more than the Minimum Annual
Distribution from the Joint Venture in the foreseeable future.
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.
a. Exhibits: None
b. 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/ R. Herbert Hampton
R. Herbert Hampton
President, C.E.O. and Treasurer
(as both a duly authorized officer of Registrant and
as principal financial officer of Registrant)
May 13, 2001