Document/Exhibit Description Pages Size
1: 10QSB Form 10-Qsb, September 30, 2001 16 69K
2: EX-23.0 Consent of Independent Accountants 1 5K
FORM 10-QSB
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
X Quarterly Report pursuant to Section 13 or 15(d) of the Securities
----- Exchange Act of 1934
For the fiscal quarter ended September 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 Creta 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 X 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 September 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 or inconsistent 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, or 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 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 9-12
Supplementary schedule:
Supplemental schedule I--
Operating, general and administrative expenses 13
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 14-15
PART II. OTHER INFORMATION
ITEM 2. Changes in Securities 15
ITEM 3. Defaults Upon Senior Securities 15
ITEM 6. Exhibits and Reports on Form 8-K 15
Signatures 16
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 September 30, 2001, and the condensed statements of operations for
the three and nine months ended September 30, 2001 and 2000, the condensed
statements of cash flows for the nine months ended September 30, 2001 and 2000,
and the condensed statement of changes in stockholders' equity (deficit) for the
nine months ended September 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
November 2, 2001
4
CAN-CAL RESOURCES, LTD.
BALANCE SHEETS
SEPTEMBER 30, 2001
[Download Table]
SEPTEMBER 30, DECEMBER 31,
2001 2000
------------- ------------
(UNAUDITED) (NOTE)
ASSETS
CURRENT ASSETS:
Cash $ 101,500 $ 510,800
Notes receivable, related parties (note 2) 54,400 48,100
Note receivable 52,500 53,000
----------- -----------
Total current assets 208,400 611,900
PROPERTY AND EQUIPMENT, NET (NOTE 3) 55,200 72,400
OTHER ASSETS (NOTE 4) 57,400 53,700
LONG-TERM INVESTMENTS (NOTE 5) 586,100 586,100
----------- -----------
$ 907,100 $ 1,324,100
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable $ 17,200 $ 51,300
Accrued expenses 60,700 26,300
Checks written against future deposits -- 14,200
Note payable, current portion (note 6) 11,300 32,500
----------- -----------
Total current liabilities 89,200 124,300
NOTE PAYABLE, NET OF CURRENT PORTION (NOTE 6) 324,000 300,000
NOTE PAYABLE - RELATED PARTIES (NOTE 7) 146,400 119,200
----------- -----------
559,600 543,500
----------- -----------
STOCKHOLDERS' DEFICIT:
Common stock, $.001 par value; authorized,
15,000,000 shares; issued and outstanding,
9,430,679 shares 9,500 9,400
Preferred stock, $.001 par value; authorized,
10,000,000 shares; none issued or outstanding -- --
Additional paid-in-capital 3,466,800 3,408,600
Accumulated deficit (3,128,800) (2,637,400)
----------- -----------
347,500 780,600
----------- -----------
$ 907,100 $ 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 NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
[Enlarge/Download Table]
THREE MONTHS ENDED NINE MONTHS ENDED
------------------------------- ----------------------------
SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER
30, 2001 30, 2000 30, 2001 30, 2000
------------- ------------ ----------- ------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
SALES
Mining revenue $ 6,900 $ -- $ 7,000 $ --
Royalty revenue -- -- 22,500 --
----------- ----------- ----------- -----------
6,900 -- 29,500 --
COST OF GOODS SOLD -- -- -- --
----------- ----------- ----------- -----------
GROSS PROFIT 6,900 -- 29,500 --
OPERATION EXPENSES,
GENERAL AND ADMINISTRATIVE 158,500 453,200 486,800 706,200
----------- ----------- ----------- -----------
LOSS FROM OPERATIONS (151,600) (453,200) (457,300) (706,200)
OTHER INCOME (EXPENSES):
Other income -- 4,500 800 30,000
Interest income 1,300 3,200 9,300 8,000
Interest expense (10,100) (3,500) (44,200) (7,900)
----------- ----------- ----------- -----------
INCOME (LOSS) FROM CONTINUING
OPERATIONS (160,400) (449,000) (491,400) (676,100)
----------- ----------- ----------- -----------
PROVISION FOR INCOME TAXES -- -- -- --
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ (160,400) $ (449,000) $ (491,400) $ (676,100)
=========== =========== =========== ===========
NET INCOME (LOSS) PER SHARE OF COMMON STOCK
AND COMMON STOCK EQUIVALENTS:
BASIC EPS
Net income (loss) $ (0.02) $ (0.05) $ (0.05) $ (0.08)
=========== =========== =========== ===========
Weighted average shares 9,402,058 8,484,895 9,394,587 8,719,709
=========== =========== =========== ===========
DILUTED EPS
Net income (loss) $ (0.02) $ (0.05) $ (0.05) $ (0.08)
=========== =========== =========== ===========
Weighted average shares 9,402,058 8,484,895 9,394,587 8,719,709
=========== =========== =========== ===========
See accompanying notes and accountant's report.
6
CAN-CAL RESOURCES, LTD.
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
NINE MONTHS ENDED SEPTEMBER 30, 2001
(UNAUDITED)
[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
translation loss -- -- -- -- 3,300 3,300
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
Issuance of common stock 57,888 100 58,200 -- -- 58,300
Net income (loss) for the period -- -- -- (491,400) -- (491,400)
--------- ----------- ----------- ----------- ----------- -----------
BALANCE, SEPTEMBER 30, 2001 9,430,679 $ 9,500 $ 3,466,800 $(3,128,800) $ -- $ 347,500
========= =========== =========== =========== =========== ===========
See accompanying notes and accountant's report.
7
CAN-CAL RESOURCES, LTD.
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
[Enlarge/Download Table]
NINE MONTHS ENDED
---------------------------------
SEPTEMBER 30, SEPTEMBER 30,
2001 2000
-------------- --------------
(UNAUDITED) (UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
NET LOSS $(491,400) $(676,100)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 19,700 21,100
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (5,800) (7,600)
(Increase) decrease in prepaid expenses -- 1,200
(Increase) decrease in other assets (3,700) (11,800)
Increase (decrease) in accounts payable and
other current liabilities (13,900) 27,700
--------- ---------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (495,100) (645,500)
--------- ---------
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of property and equipment (2,500) (30,000)
--------- ---------
NET CASH PROVIDED BY INVESTING ACTIVITIES (2,500) (30,000)
CASH FLOW FROM FINANCING ACTIVITIES:
Increase in related party debt 27,200 110,300
Principal payments on note payable (22,500) (23,900)
Proceeds from issuance of common stock 58,300 744,800
Proceeds from debt issuance 25,300 --
--------- ---------
NET CASH USED BY FINANCING ACTIVITIES 88,300 831,200
NET INCREASE (DECREASE) IN CASH (409,300) 155,700
CASH AT BEGINNING OF PERIOD 510,800 51,800
--------- ---------
CASH AT END OF PERIOD $ 101,500 $ 207,500
========= =========
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
NINE MONTHS ENDED SEPTEMBER 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 September 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 12,000
at 8%, due on demand
Note receivable from an individual, unsecured, interest imputed 3,500
at 6%, due on demand
Accrued interest receivable 16,700
-----------
60,000
Allowance for uncollectible accounts (5,600)
-----------
$ 54,400
===========
9
CAN-CAL RESOURCES, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
3. PROPERTY AND EQUIPMENT:
Property and equipment at September 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 (75,000)
-----------
$ 55,200
===========
Depreciation expense for the nine months ended September 30, 2001 totaled $
19,700.
4. OTHER ASSETS:
Other assets at September 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 September 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)
NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
6. NOTES PAYABLE:
Note payable at September 30, 2001 consisted of the following:
[Enlarge/Download Table]
Note payable to lender; secured by 1st deed of trust; interest at 8.00%
per annum, matures July 31, 2001 $ 11,300
Note payable to lender; secured by 2nd deed of trust; interest at 16.00%
per annum; matures November 24, 2005 324,000
-----------
335,300
Less current portion (11,300)
-----------
$ 324,000
===========
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.
On August 7, 2001 the Company entered into a Forebearance 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 Forebearance 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.
7. NOTE PAYABLE, RELATED PARTIES:
Notes payable, related parties, at September 30, 2001 consisted of the
following:
[Download Table]
Note payable to shareholder; unsecured; interest at prime plus
1.00% per annum; due on demand $ 146,400
===========
8. RELATED PARTY TRANSACTIONS:
The Board of Directors approved a resolution to pay an officer compensation
of $5,000 per month. At September 30, 2001 $15,000 had been paid to this
individual.
11
CAN-CAL RESOURCES, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
9. SUBSEQUENT EVENTS:
During October, 2001 the company signed an Investment Agreement with two
funds (Dutchess Private Equities Fund LP and DRH Investment Company LLC) to
sell to those funds up to $8,000,000 in common stock of the company, for a
period of three years.
In connection with the Investment Agreement, the company issued 606,059
shares of restricted common stock to Dutchess Fund and its advisor, and to
a broker-dealer firm, for services valued at $400,000, to induce those
entities to enter into the Investment Agreement and perform services
contemplated under such agreement. The company also issued 37,000 shares of
restricted common stock to the attorney for Dutchess Fund.
The company has also signed a consulting agreement with a public relations
firm, and have authorized the issuance and will deliver certificates for up
to 200,000 shares over the next 12 months to pay for services and costs.
Further, the company has issued to the public relations firm options to
purchase another 200,000 at $1.00 per share. These options are to expire in
September 2004.
10. FAIR VALUE OF FINANCIAL INSTRUMENTS:
The following table presents the carrying amounts and estimated fair value
of the Company's financial instruments at September 30, 2001:
CARRYING FAIR
AMOUNT VALUE
-------- --------
Financial assets:
Notes receivable-related party $ 54,400 $ 54,400
Note receivable 52,500 52,500
Property and equipment 55,200 55,200
Other assets 57,400 57,400
Long-term investments 586,100 586,100
Financial liabilities:
Notes payable, related parties 146,400 146,400
Notes payable 335,300 335,300
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 NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
(UNAUDITED)
[Enlarge/Download Table]
Three months Three months Nine months Nine months
ended ended ended ended
September 30, September 30, September 30, September 30,
2001 2000 2001 2000
------------- ------------- ------------- -------------
Operating, general and
administrative expenses:
Mine exploration $ 30,900 $370,800 $111,300 $454,500
Consulting 45,100 7,800 135,500 22,600
Travel and entertainment 15,900 22,200 57,600 58,500
Accounting and legal 9,300 6,900 17,300 30,200
Insurance 3,900 7,900 24,500 38,100
Salaries and wages 15,000 -- 15,000 --
Payroll taxes 1,100 -- 1,100 --
Office expense 13,600 12,200 44,400 26,200
Office rent 7,900 6,400 23,800 25,200
Depreciation and amortization 6,700 7,900 19,700 21,100
Advertising and promotion -- 5,700 3,300 12,700
Lease expense 2,500 -- 6,900 --
Miscellaneous 1,000 1,900 6,100 6,300
Telephone 2,400 1,900 8,500 7,700
Utilities 2,500 1,600 6,800 2,800
Repairs and maintenance 600 -- 4,800 --
Bank charges 100 -- 200 300
-------- -------- -------- --------
$158,500 $453,200 $486,800 $706,200
======== ======== ======== ========
See accountants' report.
13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION
(A) PLAN OF OPERATION.
During the quarter ended September 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 and third quarters.
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.
The Company 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 September 2002. However, this depends on results of its
ongoing testing programs and financing available to it.
In the fourth quarter, the Company intends to build a small production
circuit at its facility in Nye County to run small batches of cinder material
from the Pisgah property. The objective is to determine whether promising
results in the lab can be duplicated on a larger scale.
In the fourth quarter, the Company signed an Investment Agreement (see
the Form 8-K Report on this event, filed in the fourth quarter 2001, to which
report the Investment Agreement is attached as an exhibit). The Company intends
to use proceeds from the financing which will be available under the Investment
Agreement to build a commercial production facility with which to process the
Pisgah materials for precious metals. However, realization of any significant
financing from the Investment Agreement will depend on there being sufficient
price/trading volume in the Company's stock.
At September 30, 2001 and as of the date of this report, the Company
has limited financial resources with which to continue operations. Pending
realization of financing from the Investment Agreement, which is not assured,
the Company continues to explore possible arrangements with larger mining
companies to jointly develop its properties and produce metals from the Pisgah
materials. Until such time as mining company participation and/or Investment
Agreement funding is achieved, the Company will continue to rely on loans from
directors and/or private placements of equity to continue operations. In the
third quarter 2001, the Company sold restricted stock to two purchasers for
approximately $58,000.
14
(B) LIQUIDITY AND CAPITAL RESOURCES AND RESULTS OF OPERATIONS
As of September 30, 2001, the Company's working capital was $119,200.
Working capital as of June 30, 2001 was $154,600. In the fourth quarter, an
interest payment of $24,000 will be due to the lender which loaned the Company
$300,000 in November, 2000, and which holds a second deed of trust on its Pisgah
Property, and an interest payment will be due to another lender in December
2001. See note 6 to the financial statements in this Form 10-QSB and also the
Form 10-QSB for the quarter ended June 30, 2001.
The Company had no operating income or cash flow from its mineral
operations for the three months ended September 30, 2001 other than the sale of
a small amount of silver (for $6,900) produced in the lab facility in the course
of testing. The Company had no revenue during the three months ended September
30, 2000. The Company sustained a loss from operations of $160,400 for the three
month period ended September 30, 2001, compared to a loss of $449,000 for the
three months ended September 30, 2001. The decreased loss reflects the receipt
of $6,900 from sale of silver and greatly reduced mine exploration costs
($30,900 for the third quarter compared to $370,800 for the same period in
2000). Consulting expense increased to $45,000 for the third quarter (compared
to $7,800 for the same period in 2000), and salaries and wages were $16,100 for
the third quarter (none for these items in the same period in 2000). These
increases reflect the increased level of testing work at the Nye County, Nevada
facility. All other operating, and general and administrative expenses, remained
approximately at the same levels in the third quarter compared to the same
period in 2000.
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. However, the Company intends to build a production
facility later in 2001 or in 2002 if funds are realized from the Investment
Agreement (see Plan of Operation, above).
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES.
(c) In the three months ended September 30, 2001 the Company sold
57,888 shares of restricted common stock to two Canadian investors, for proceeds
of $58,333. No broker-dealer was involved in these transactions, and no fees
were paid in connection therewith.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
See Form 10-QSB for quarter ended June 30, 2001.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
23.0 Consent of Independent Accountants
(b) Reports on Form 8-K. On October 10, 2001, the Company filed a
Form 8-K reporting its signing the Investment Agreement (see
note 9 to the financial statements included in this Form
10-QSB).
15
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: November 13, 2001 By: /s/ Ronald D. Sloan
--------------------------------
RONALD D. SLOAN, President
16
Dates Referenced Herein and Documents Incorporated by Reference
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