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Can Cal Resources Ltd – ‘10QSB’ for 9/30/01

On:  Wednesday, 11/14/01   ·   For:  9/30/01   ·   Accession #:  1028269-1-500136   ·   File #:  0-26669

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

11/14/01  Can Cal Resources Ltd             10QSB       9/30/01    2:31K                                    Adamson Sharon R/FA

Quarterly Report — Small Business   —   Form 10-QSB
Filing Table of Contents

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 


10QSB   —   Form 10-Qsb, September 30, 2001
Document Table of Contents

Page (sequential) | (alphabetic) Top
 
11st Page   -   Filing Submission
3Item 1. Financial Statements
"Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 14-15
14Item 2. Management's Discussion and Analysis or Plan of Operation
15Item 2. Changes in Securities
"Item 3. Defaults Upon Senior Securities
"Item 6. Exhibits and Reports on Form 8-K
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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(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
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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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6/1/0211
12/1/0111
11/24/0111
11/20/0111
Filed on:11/14/01
11/13/0116
11/2/014
10/10/01158-K,  8-K/A
For Period End:9/30/01115
8/10/0111
8/7/0111
7/31/0111
6/30/011510QSB
5/24/0111
2/18/014
12/31/004510KSB
9/30/0041510QSB
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