Document/Exhibit Description Pages Size
1: 10QSB Form 10-Qsb, Quarter Ended June 30, 2001 17 71K
2: EX-10.19 Forbearance Agreement 3 14K
3: EX-10.20 Forbearance Agreement 3 13K
4: EX-23 Consent of Independent Auditors 1 5K
FORM 10-QSB
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report pursuant to Section 13 or 15(d) of the Securities
X Exchange Act of 1934
------ For the fiscal quarter ended June 30, 2001
Transition Report under Section 13 or 15(d) of the Securities
Exchange Act of 1934.
------- For the transition period from _____ to _____.
Commission File No. 0-26669
Can-Cal Resources, Ltd.
--------------------------------------------------------------------------------
(Name of Small Business Issuer in its charter)
Nevada 88-0336988
----------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
8221 Cretan Blue Lane, Las Vegas, NV 89128
--------------------------------------------------------------------------------
(Address of principal executive offices)
(702) 243-1849
--------------------------------------------------------------------------------
(Issuer's telephone number)
N/A
--------------------------------------------------------------------------------
(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
------- -------
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13, or 15(d) of the Exchange Act after the distribution of
securities under a plan by a court.
Yes No
------- -------
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Class Outstanding on June 30, 2001
----------------------------------- ------------------------------------
Common Stock, Par Value $.001. 9,372,791
Transitional Small Business Disclosure Format (Check one): Yes No X
------ -------
1
FORWARD LOOKING STATEMENTS
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934 provide a "safe harbor" for forward looking
statements that are based on current expectations, estimates and projections,
and management's beliefs and assumptions. Words such as "believes," "expects,"
"intends," "plans," "estimates," "may," "attempt," "will," "goal," "promising,"
or variations of such words and similar expressions are intended to identify
such forward-looking statements. These statements are not guarantees of future
performance and involve certain risks and uncertainties which are difficult or
impossible to predict. Therefore, actual outcomes and results may differ
materially from what is expressed or forecasted in such forward- looking
statements. The Company undertakes no obligation to update publicly any
forward-looking statement whether as a result of new information, future events
or otherwise.
Such risks and uncertainties include, but are not limited to, the
availability of ore, negative test results, the existence of precious metals in
the ore available to the Company in an amount which permits their production on
an economic basis; the Company's ability to drill holes and properly test and
assay samples, and its ability to locate and acquire mineral properties which
contain sufficient grades of precious metals and/or minerals; the Company's
ability to sell a portion or all of any of its properties to larger mining
companies, to enter into agreements with larger mining companies to explore and
possibly develop its properties, to produce precious metals on a commercial
basis, the prices of precious metals, obtaining a mill or refinery to extract
precious metals on an economic basis, the Company's ability to maintain the
facilities it currently utilizes; obtain permitting requirements for any mining
and milling operations and pay the costs thereof; have good title to claims and
equipment, and the Company's ability to obtain financing necessary to maintain
its operations.
2
CONTENTS
PAGE NO.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Independent accountants' report 4
Interim balance sheets 5
Interim statements of operations 6
Interim statements of changes in stockholders' deficit 7
Interim statements of cash flows 8
Notes to interim financial statements 9-13
Supplementary schedule:
Supplemental schedule I--
Operating, general and administrative expenses 14
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 15
PART II. OTHER INFORMATION
ITEM 3. Defaults Upon Senior Securities 16
ITEM 6. Exhibits and Reports on Form 8-K 17
Signatures 18
3
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors and Stockholders
Can-Cal Resources, Ltd.
Las Vegas, Nevada
We have reviewed the accompanying condensed balance sheet of Can-Cal Resources,
Ltd., as of June 30, 2001, and the condensed statements of operations for the
three and six months ended June 30, 2001 and 2000, the condensed statements of
cash flows for the six months ended June 30, 2001 and 2000, and the condensed
statement of changes in stockholders' equity for the six months ended June 30,
2001. These financial statements are the responsibility of the company's
management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements for them to be in conformity
with generally accepted accounting principles.
We previously audited, in accordance with generally accepted auditing standards,
the balance sheet as of December 31, 2000, and the related changes in
stockholders' equity (deficit), and cash flows and statements of operations (not
presented herein); for the year then ended; and in our report dated February 18,
2001, we expressed an unqualified opinion on these financial statements. In our
opinion, the information set forth in the accompanying condensed balance sheet
as of December 31, 2000 and the condensed statement of changes in stockholders'
equity for the year then ended, is fairly stated in all material respects in
relation to the balance sheet and statement of changes in stockholders' equity
from which they have been derived.
MURPHY, BENNINGTON & CO.
/s/ Murphy, Bennington & Co.
Las Vegas, NV
July 31, 2001
4
CAN-CAL RESOURCES, LTD.
BALANCE SHEETS
JUNE 30, 2001
(ROUNDED TO THE NEAREST HUNDRED, EXCEPT SHARE DATA)
[Enlarge/Download Table]
JUNE 30, DECEMBER 31,
2001 2000
------------ ------------
(UNAUDITED) (NOTE)
ASSETS
CURRENT ASSETS:
Cash $ 133,700 $ 510,800
Notes receivable, related parties (note 2) 54,900 48,100
Note receivable 53,000 53,000
----------- -----------
Total current assets 241,600 611,900
PROPERTY AND EQUIPMENT, NET (NOTE 3) 61,900 72,400
OTHER ASSETS (NOTE 4) 57,400 53,700
LONG-TERM INVESTMENTS (NOTE 5) 586,100 586,100
----------- -----------
$ 947,000 $ 1,324,100
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable $ 17,100 $ 51,300
Accrued expenses 59,900 26,300
Checks written against future deposits -- 14,200
Note payable, current portion (note 6) 10,000 32,500
----------- -----------
Total current liabilities 87,000 124,300
NOTE PAYABLE, NET OF CURRENT PORTION (NOTE 6) 300,000 300,000
NOTE PAYABLE - RELATED PARTIES (NOTE 7) 110,500 119,200
----------- -----------
497,500 543,500
----------- -----------
STOCKHOLDERS' DEFICIT:
Common stock, $.001 par value; authorized, 15,000,000
shares; issued and outstanding, 9,372,791 shares 9,400 9,400
Preferred stock, $.001 par value; authorized, 10,000,000
shares; none issued or outstanding -- --
Additional paid-in-capital 3,408,600 3,408,600
Accumulated deficit (2,968,500) (2,637,400)
----------- -----------
449,500 780,600
----------- -----------
$ 947,000 $ 1,324,100
=========== ===========
Note: The balance sheet of December 31, 2000 has been derived from the audited
financial statements at that date.
See accompanying notes and accountant's report.
5
CAN-CAL RESOURCES, LTD.
STATEMENTS OF OPERATIONS
THREE AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000 (ROUNDED TO THE NEAREST
HUNDRED, EXCEPT SHARE DATA)
[Enlarge/Download Table]
THREE MONTHS ENDED SIX MONTHS ENDED
--------------------------- ---------------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
2001 2000 2001 2000
------------ ----------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
SALES
Mining revenue $ 100 $ -- $ 100 $ --
Royalty revenue 22,500 22,500 --
----------- ----------- ----------- -----------
22,600 -- 22,600 --
COST OF GOODS SOLD -- -- -- --
----------- ----------- ----------- -----------
GROSS PROFIT 22,600 -- 22,600 --
OPERATING EXPENSES,
GENERAL AND ADMINISTRATIVE 156,700 148,100 328,400 253,500
----------- ----------- ----------- -----------
LOSS FROM OPERATIONS (134,100) (148,100) (305,800) (253,500)
OTHER INCOME (EXPENSES):
Other income 800 15,100 800 25,500
Interest income 5,200 3,800 8,000 4,800
Interest expense (19,200) (2,700) (34,100) (4,400)
----------- ----------- ----------- -----------
INCOME (LOSS) FROM CONTINUING
OPERATIONS (147,300) (131,900) (331,100) (227,600)
----------- ----------- ----------- -----------
PROVISION FOR INCOME TAXES -- -- -- --
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ (147,300) $ (131,900) $ (331,100) $ (227,600)
=========== =========== =========== ===========
NET INCOME (LOSS) PER SHARE OF
COMMON STOCK AND COMMON STOCK
EQUIVALENTS:
BASIC EPS
Net income (loss) $ (0.02) $ (0.02) $ (0.04) $ (0.03)
=========== =========== =========== ===========
Weighted average shares
outstanding 9,372,791 8,758,782 9,372,791 8,587,115
=========== =========== =========== ===========
DILUTED EPS
Net income (loss) $ (0.02) $ (0.02) $ (0.04) $ (0.03)
=========== =========== =========== ===========
Weighted average shares
outstanding 9,372,791 8,758,782 9,372,791 8,587,115
=========== =========== =========== ===========
See accompanying notes and accountant's report.
6
CAN-CAL RESOURCES, LTD.
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
SIX MONTHS ENDED JUNE 30, 2001
(UNAUDITED)
(ROUNDED TO THE NEAREST HUNDRED, EXCEPT SHARE DATA)
[Enlarge/Download Table]
ADDITIONAL CUMULATIVE TOTAL
PAID-IN ACCUMULATED TRANSLATION STOCKHOLDER
COMMON STOCK CAPITAL DEFICIT ADJUSTMENT EQUITY
-------------------------- ----------- ------------ ------------ --------------
SHARES AMOUNT
----------- -------------
BALANCE, DECEMBER 31, 1998 7,005,161 $ 7,000 $ 1,887,600 $(1,397,800) $ 8,500 $ 505,300
Issuance of common stock 1,248,621 1,200 572,600 -- -- 573,800
Foreign currency translation -- -- -- -- (11,800) (11,800)
Realized foreign currency -- -- -- -- 3,300 3,300
translation loss
Net income (loss) for the year -- -- -- (322,100) -- (322,100)
----------- ----------- ----------- ----------- ----------- -----------
BALANCE, DECEMBER 31, 1999 8,253,782 8,200 2,460,200 (1,719,900) -- 748,500
Issuance of common stock 1,119,009 1,200 948,400 -- -- 949,600
Net income (loss) for the year -- -- -- (917,500) -- (917,500)
----------- ----------- ----------- ----------- ----------- -----------
BALANCE, DECEMBER 31, 2000 9,372,791 9,400 3,408,600 (2,637,400) -- 780,600
Net income (loss) for the period -- -- -- (331,100) -- (331,100)
----------- ----------- ----------- ----------- ----------- -----------
BALANCE, JUNE 30, 2001 9,372,791 $ 9,400 $ 3,408,600 $(2,968,500) $ -- $ 449,500
=========== =========== =========== =========== =========== ===========
See accompanying notes and accountant's report.
7
CAN-CAL RESOURCES, LTD.
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2001 AND 2000
(ROUNDED TO THE NEAREST HUNDRED)
[Download Table]
SIX MONTHS ENDED
------------------------
JUNE 30, JUNE 30,
2001 2000
----------- ----------
(UNAUDITED) (UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
NET LOSS $(331,100) $(227,600)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 13,000 13,200
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (1,800) --
(Increase) decrease in prepaid expenses (2,000)
(Increase) decrease in other assets (3,700) (12,200)
Increase (decrease) in accounts payable and
other current liabilities (14,800) 23,600
--------- ---------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (338,400) (205,000)
--------- ---------
CASH FLOW FROM INVESTING ACTIVITIES:
Other investing activities -- (5,000)
Purchase of property and equipment (2,500) (26,900)
--------- ---------
NET CASH PROVIDED BY INVESTING ACTIVITIES (2,500) (31,900)
CASH FLOW FROM FINANCING ACTIVITIES:
Increase in related party debt (8,600) 107,700
Principal payments on note payable (22,600) (22,600)
Proceeds from issuance of common stock -- 375,000
Proceeds from debt issuance (5,000) --
--------- ---------
NET CASH USED BY FINANCING ACTIVITIES (36,200) 460,100
NET INCREASE (DECREASE) IN CASH (377,100) 223,200
CASH AT BEGINNING OF PERIOD 510,800 51,800
--------- ---------
CASH AT END OF PERIOD $ 133,700 $ 275,000
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
CASH PAID DURING THE YEAR FOR:
Interest $ -- $ --
========= =========
Income taxes $ -- $ --
========= =========
See accompanying notes and accountant's report.
8
CAN-CAL RESOURCES, LTD.
NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2001 AND 2000
1. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS:
These unaudited interim financial statements of Can-Cal Resources, Ltd.
have been prepared in accordance with the rules and regulations of the
Securities and Exchange Commission. Such rules and regulations allow the
omission of certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles as long as the statements are not misleading.
In the opinion of management, all adjustments necessary for a fair
presentation of these interim statements have been included and are of a
normal recurring nature. These interim financial statements should be read
in conjunction with the financial statements of the Company included in its
2000 Annual Report on Form 10-KSB. Interim results are not necessarily
indicative of results for a full year.
In the course of its activities, the Company has sustained continuing
operating losses and expects such losses to continue for the foreseeable
future. The Company plans to continue to finance its operations with stock
sales and, in the longer term, revenues from sales. The Company's ability
to continue as a going concern is dependent upon future obtaining financing
and ultimately upon achieving profitable operations.
2. NOTES RECEIVABLE (RELATED PARTIES):
Notes receivable, related parties, at June 30, 2001 consisted of the
following:
[Enlarge/Download Table]
Note receivable from S&S Mining, Inc., a joint venture partner, unsecured,
interest imputed at 8%, due on demand $ 27,800
Note receivable from an individual, unsecured, interest imputed
at 8%, due on demand 12,000
Note receivable from an individual, unsecured, interest imputed
at 6%, due on demand 5,000
Accrued interest receivable 15,700
---------
60,500
Allowance for uncollectible accounts (5,600)
---------
$ 54,900
=========
9
CAN-CAL RESOURCES, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SIX MONTHS ENDED JUNE 30, 2001 AND 2000
3. PROPERTY AND EQUIPMENT:
Property and equipment at June 30, 2001 consisted of the following:
[Download Table]
Machinery and equipment $ 97,600
Transportation equipment 18,400
Office equipment and furniture 14,200
-----------
130,200
Less accumulated depreciation (68,300)
-----------
$ 61,900
===========
Depreciation expense for the six months ended June 30, 2001 totaled
$13,000.
4. OTHER ASSETS:
Other assets at June 30, 2001 consisted of the following:
[Enlarge/Download Table]
Note receivable from Tyro, Inc., and principals, a corporation, secured by
equipment, interest accrued at 6% per annum, due on demand $ 53,300
Deposits 6,800
Non destructive testing materials 14,200
Mining claims 36,400
-----------
110,700
Allowance for uncollectible notes (53,300)
-----------
$ 57,400
===========
5. LONG-TERM INVESTMENTS:
Long-term investments at June 30, 2001 consisted of the following:
[Download Table]
Pisgah property $ 567,100
Investment in S&S Mining joint venture 19,000
----------
$ 586,100
==========
10
CAN-CAL RESOURCES, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SIX MONTHS ENDED JUNE 30, 2001 AND 2000
6. NOTES PAYABLE:
Note payable at June 30, 2001 consisted of the following:
[Download Table]
Note payable to lender; secured by 1st deed of trust; interest at $ 10,000
8.00% per annum, matures July 31, 2001
Note payable to lender; secured by 2nd deed of trust; interest at
16.00% per annum; matures November 24, 2005 300,000
-----------
310,000
Less current portion (10,000)
-----------
$ 300,000
===========
The Company did not make the interest payment of $24,000 due on May 24,
2001 to the lender which holds the second deed of trust on the Pisgah
property. The Company also did not make the final principal payment of
$10,000 due on July 31, 2001 to the lender which holds the first trust deed
on the Pisgah Property. See Note 8 for further details.
7. NOTE PAYABLE, RELATED PARTIES:
Notes payable, related parties, at June 30, 2001 consisted of the
following:
[Download Table]
Note payable to shareholder; unsecured; interest at prime plus
1.00% per annum; due on demand $ 110,500
=========
8. RELATED PARTY TRANSACTIONS:
The Board of Directors approved a resolution to pay an officer compensation
of $5,000 per month. At June 30, 2001 $15,000 had been paid to this
individual.
9. SUBSEQUENT EVENTS:
On August 7, 2001 the Company entered into a Forbearance agreement with the
lender that holds the 2nd deed of trust. The Forbearance Agreement provides
that the $24,000 interest payment due May 24, 2001 shall be added to the
principal of the loan and paid on or before November 24, 2001. Further, the
lender has the option of purchasing restricted common shares of the company
in lieu of the $24,000. The lender must exercise this option on or before
November 20, 2001.
On August 10, 2001 the Company entered into a Forbearance Agreement with
the lender that holds the 1st deed of trust. The agreement provides that
interest due on the $10,000 principal balance shall be added to the
principal and shall be paid on or before June 1, 2002. An interest payment
is due on December 1, 2001.
11
CAN-CAL RESOURCES, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SIX MONTHS ENDED JUNE 30, 2001 AND 2000
10. FAIR VALUE OF FINANCIAL INSTRUMENTS:
The following table presents the carrying amounts and estimated fair value
of the Company's financial instruments at June 30, 2001:
[Download Table]
CARRYING FAIR
AMOUNT VALUE
----------- ------------
Financial assets:
Notes receivable-related party $ 54,900 $ 54,900
Note receivable 53,000 53,000
Property and equipment 61,900 61,900
Other assets 57,400 57,400
Long-term investments 586,100 586,100
Financial liabilities:
Notes payable, related parties 110,500 110,500
Note payable 310,000 310,000
The carrying amounts of cash, prepaid expenses, accounts payable and
accrued expenses approximate fair value because of the short maturity of
those instruments.
The fair value of note payable is based upon the borrowing rates currently
available to the Company for bank loans with similar terms and average
maturities.
12
CAN-CAL RESOURCES, LTD.
SUPPLEMENTAL SCHEDULE I -
OPERATING, GENERAL AND ADMINISTRATIVE EXPENSES
THREE AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000
(UNAUDITED)
(ROUNDED TO THE NEAREST HUNDRED)
[Enlarge/Download Table]
THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS
ENDED JUNE ENDED JUNE ENDED JUNE ENDED JUNE
30, 2001 30, 2000 30, 2001 30, 2000
------------ ------------ ------------ ------------
OPERATING, GENERAL AND ADMINISTRATIVE
EXPENSES:
Mine exploration $ 21,100 $ 50,900 $ 80,400 $ 82,900
Consulting 57,100 9,300 90,500 14,800
Travel and entertainment 18,100 18,800 41,700 27,000
Accounting and legal 5,000 6,100 8,000 23,300
Insurance 12,500 14,500 20,600 30,200
Office expense 12,400 10,500 30,800 14,000
Office rent 8,000 9,500 15,900 18,800
Depreciation and amortization 6,600 7,300 13,000 13,200
Advertising and promotion 2,100 6,200 3,300 7,000
Lease expense 2,800 6,700 4,400 9,300
Miscellaneous 3,400 2,000 5,100 4,400
Telephone 3,400 4,000 6,100 5,800
Utilities 2,800 900 4,300 1,200
Repairs and maintenance 1,300 1,300 4,200 1,300
Bank charges 100 100 100 300
------------ ------------- ------------ ------------
$ 156,700 $ 148,100 $ 328,400 $ 253,500
============ ============= ============ ============
See accountants' report.
13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION
(A) PLAN OF OPERATION.
During the quarter ended June 30, 2001 and continuing thereafter, the
Company continued utilizing various precious metal extractive techniques,
procedures and methodologies in its program of testing volcanic cinder material
from its patented mineral claims at Pisgah, California. It has dedicated
virtually all its efforts to this testing during the second quarter. It conducts
its operations at the facility in Nye County, Nevada, which it leases. The
purpose of the extractive metallurgical program is to determine the nature and
extent of precious metals contained in the volcanic cinder material and to
determine and verify the feasibility and the possible commercial viability of
the various extractive technologies which it has developed and continues to
develop. The testing is conducted primarily through consultants and independent
contractors who are experienced in testing procedures.
The Company intends to continue and possibly expand further its
extractive testing of volcanic cinders from its property at Pisgah, California
depending on results of its testing and the availability of financing.
Analytical data confirms that precious metals exist in the volcanic cinders and
the Company is presently conducting a commercial viability extraction program.
Can-Cal will hold all of the Company's other properties in abeyance until the
Pisgah program is completed.
It is not anticipated that the Company will purchase (or sell) any
significant amount of equipment or other assets, or experience any significant
change in the number of personnel who perform services for the Company, during
the 12 months ending June 2002. However, this depends on results of its ongoing
testing programs and financing available to it.
(B) LIQUIDITY AND CAPITAL RESOURCES AND RESULTS OF OPERATIONS
As of June 30, 2001, the Company's working capital was $154,600.
Working capital as of March 31, 2001, was $308,900. During the quarter ended
June 30, 2001, the Company did not make an interest payment of $24,000 to the
lender which loaned the Company $300,000 in November, 2000, and which holds a
second deed of trust on its Pisgah Property. The Company also did not make the
final principal payment of $10,000 due on July 31, 2001 to a different lender
which holds the first deed of trust on the Pisgah property. See Item 3, Defaults
Upon Senior Securities.
The Company had no operating income or cash flow from its mineral
operations for the three months ended June 30, 2001 other than the sale of a
small amount of gold it produced for $137 and royalty revenue of $22,500 which
was pledged, and was paid directly, to the lender holding the first deed of
trust. The Company had no revenue during the three months ended June 30, 2000.
The Company sustained a loss from operations of $134,100 for the three month
period ended March 31, 2001, compared to a loss of $148,100 for the three period
ended March 31, 2000. The decreased loss reflect an increase of approximately
$8,000 in operating expenses as a result of the expanded testing program, as
well as royalty revenue of $22,500, which was paid directly to the lender
holding the first deed of trust.
During the three month period ended June 30, 2001, mine exploration
costs decreased to $21,100 from $50,900 for the three month period ended June
30, 2000 and consulting costs
14
increased from $14,800 to $57,100. The decrease in mine exploration and the
increase in consulting costs is accounted for by the Company's focus on its
accelerated testing program on the volcanic cinders, compensation paid to Ronald
D. Sloan, consulting fees paid to Bruce Ballantyne and other consultants, and
assay expenses associated with the testing program. Travel and entertainment
costs decreased to $18,100 from $18,800. Office expense increased from $10,500
to $12,400 as a result of increased activity. Insurance costs decreased from
$14,500 to $12,400. Accounting and legal expenses decreased to $5,000 from
$6,100. Advertising and promotion decreased from $6,200 to $2,100 and lease
expense (equipment rental) decreased from $6,700 to $2,800.
The Company has no material commitments for capital expenditures other
than expenditures it chooses to make with respect to testing and/or exploration
of its mineral properties.
As a result of the Company's expanded and accelerated program for
testing its volcanic cinders material during the quarter ended June 30, 2001,
and continuing thereafter, the Company has expended its funds faster than it had
anticipated. The Company anticipates that, as long as results appear to warrant
it, it will continue its high level of testing and assaying and, if results
warrant it, seek to obtain suitable facilities and equipment to produce precious
metals from its volcanic cinders material. Therefore, the Company requires
additional funds to continue conducting those operations at their level and
possibly expand those operations. In August, 2001 the Company sold 30,000 shares
of its common stock (restricted under Rule 144) to a citizen and resident of
Canada for $.75 per share for proceeds of $22,500. The Company estimates that
its cash will last until about October, 2001. The Company is currently exploring
other financing mechanisms and alternatives although it has not reached any firm
agreement for financing at this time. The Company does not anticipate that it
will attempt to sell any interest in its volcanic cinders material.
PART II - OTHER INFORMATION
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
During the quarter ended June 30, 2001, the Company did not make an
interest payment of $24,000 to the lender which loaned the Company $300,000 and
holds a second deed of trust on the Pisgah Property. The Company also did not
make the final principal payment of $10,000 due on July 31, 2001 to a different
lender which holds the first deed of trust on its Pisgah property.
On August 7, 2001 the Company entered into a Forbearance Agreement with
the lender that loaned the Company $300,000 in November, 2000 secured by a
second deed of trust on the Pisgah property. The Forbearance Agreement provides
that the $24,000 interest payment due May 24, 2001 but not paid shall be added
to the principal of the loan and shall be paid on or before November 24, 2001.
Interest accrues on the principal amount at 16% per year. The lender has the
option of purchasing the number of restricted common shares of the Company
determined by using a purchase price per share equal to 50% of the lowest
trading price published by Yahoo! Finance historical Price Quote during the
period of the Loan Agreement from November 23, 2000 through November 19, 2001,
and dividing the price per share so determined into the total of $24,000 plus
interest through the date of exercise. The lender must exercise this option in
whole by giving written notice to the borrower on or before November 20, 2001.
If the lender exercises this option the principal of the note shall be reduced
by $24,000 and no interest shall be due on the $24,000.
15
The Company has signed a separate Forbearance Agreement dated August
10, 2001 with the lender holding the first deed of trust which provides that
interest due on the $10,000 principal balance shall be added to the principal
and the entire amount shall be paid on or before June 1, 2002. An interest
payment at the rate of 8% per annum is due on December 1, 2001.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
No. Description Page No.
--- ----------- --------
10.19 Forbearance Agreement 18
10.20 Forbearance Agreement 21
23.0 Consent of Independent Accountants 24
(b) Reports on Form 8-K. There were no reports filed by the Company
on Form 8-K during the quarter ended June 30, 2001.
16
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CAN-CAL RESOURCES LTD.
(REGISTRANT)
Date: August 10, 2001 By: / s / Ronald D. Sloan
-------------------------------
RONALD D. SLOAN, President
17
Dates Referenced Herein and Documents Incorporated by Reference
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