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, 1999.
_____ 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)
1505 Blackcombe St., Bldg. 2, Unit #203, Las Vegas, NV 89128
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, ( 702 ) 240 - 6565
--------- -------------------- -------------------
None
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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 September 30, 1999
- ---------------------------------- -----------------------------------------
Common Stock, Par Value $.001. 8,243,782
Transitional Small Business Disclosure Format (Check one): Yes_____ No X
<PAGE>
PART I - FINANCIAL INFORMATION
In the opinion of the management of the Company, the following
condensed financial information as of September 30, 1999 and 1998, and for the
three and nine months periods then ended, contain all adjustments (consisting
only of normal recurring accruals) necessary to present fairly the financial
condition of the Company at these dates and for those periods. The balance sheet
information as of December 31, 1998, has been taken from the Company's audited
financial statements included in its Form 10-SB (effective in October 1999).
2
<PAGE>
CAN-CAL RESOURCES, LTD.
BALANCE SHEETS
SEPTEMBER 30, 1999
(ROUNDED TO THE NEAREST HUNDRED, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
-------------- -------------
(UNAUDITED) (NOTE)
ASSETS
CURRENT ASSETS:
<S> <C> <C>
Cash $ 253,100 $ 41,600
Accounts receivable -- 6,900
Notes receivable, related parties 46,200 41,600
Inventory -- 72,500
Prepaid expenses 800 6,600
Other current assets -- 100
----------- -----------
Total current assets 300,100 169,300
PROPERTY AND EQUIPMENT, NET 67,400 27,000
OTHER ASSETS 95,300 95,300
LONG-TERM INVESTMENTS 586,100 586,100
----------- -----------
$ 1,048,900 $ 877,700
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Bank line of credit $ - $ 12,400
Accounts payable 6,300 12,800
Accrued expenses 59,800 26,200
Note payable, current portion 43,500 --
----------- -----------
Total current liabilities 109,600 51,400
NOTE PAYABLE, NET OF CURRENT PORTION 22,500 77,500
NOTES PAYABLE, RELATED PARTIES 39,700 243,500
----------- -----------
171,800 372,400
----------- -----------
STOCKHOLDERS' DEFICIT:
Common stock, $.001 par value; authorized, 15,000,000
shares; issued and outstanding, 8,243,782 shares 8,200 7,000
Preferred stock, $.001 par value; authorized, 10,000,000
shares; none issued or outstanding -- --
Additional paid-in-capital 2,460,300 1,887,600
Cumulative translation adjustment -- 8,500
Accumulated deficit (1,591,400) (1,397,800)
----------- -----------
877,100 505,300
----------- -----------
$ 1,048,900 $ 877,700
=========== ===========
<FN>
Note: The balance sheet of December 31, 1998 has been derived from the audited
financial statements at that date.
</FN>
</TABLE>
See accompanying notes.
3
<PAGE>
CAN-CAL RESOURCES, LTD.
STATEMENTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
ROUNDED TO THE NEAREST HUNDRED, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
--------------------------------- ---------------------------------
SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER
30, 1999 30, 1998 30, 1999 30,1998
--------------- --------------- --------------- ---------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
SALES $ - $ - $ 3,700 $ -
COST OF GOODS SOLD - - - -
--------------- --------------- --------------- ---------------
GROSS PROFIT - - 3,700 -
OPERATING EXPENSES,
GENERAL AND ADMINISTRATIVE 151,800 82,700 488,000 154,900
--------------- --------------- --------------- ---------------
LOSS FROM OPERATIONS (151,800) (82,700) (484,300) (154,900)
OTHER INCOME (EXPENSES):
Other income - - - -
Interest income 3,600 800 7,300 4,100
Interest expense (2,200) (2,200) (7,300) (4,100)
--------------- --------------- --------------- ---------------
INCOME(LOSS) FROM CONTINUING OPERATIONS (150,400) (84,100) (484,300) (154,900)
--------------- --------------- --------------- ---------------
INCOME (LOSS) FROM DISCONTINUED OPERATIONS:
Income (loss) from discontinued
automobile salvage division - (26,800) 174,300 (57,000)
Gain on disposal of automobile
salvage division (net of taxes) - - 116,400 -
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ (150,400) $ (110,900) $ (193,600) $ (211,900)
=============== =============== =============== ===============
NET INCOME (LOSS) PER SHARE OF COMMON STOCK AND COMMON STOCK EQUIVALENTS:
BASIC EPS
Net loss from continuing operations $ (0.02) $ (0.02) $ (0.03) $ (0.03)
=============== =============== =============== ===============
Weighted average shares outstanding 7,928,616 6,569,652 7,567,464 6,510,541
=============== =============== =============== ===============
DILUTED EPS
Net loss from continuing operations $ (0.02) $ (0.02) $ (0.03) $ (0.03)
=============== =============== =============== ===============
Weighted average shares outstanding 7,928,616 6,569,652 7,567,464 6,510,541
=============== =============== =============== ===============
</TABLE>
See accompanying notes.
4
<PAGE>
CAN-CAL RESOURCES, LTD.
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
NINE MONTHS ENDED SEPTEMBER 30,1999
(UNAUDITED)
(ROUNDED TO THE NEAREST HUNDRED, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
ADDITIONAL CUMULATIVE TOTAL
PAID-IN ACCUMULATED TRANSLATION STOCKHOLDERS'
COMMON STOCK CAPITAL DEFICIT ADJUSTMENT EQUITY
----------------------- ------------ ------------ ------------ -------------
SHARES AMOUNT
----------- ---------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1996 3,441,217 $ 3,400 $ 625,000 $ (498,000) $ - $ 130,400
Adjustment of accumulated deficit - - - 497,900 - 497,900
----------- --------- ------------ ------------ ---------- -------------
BALANCE DECEMBER 31, 1996, AS RESTATED 3,441,217 3,400 625,000 (100) - 628,300
Issuance of common stock 500,000 500 18,500 - - 19,000
Issuance of common stock 200,000 200 81,800 - - 82,000
Issuance of common stock 2,181,752 2,200 892,300 - - 894,500
Issuance of common stock 124,683 100 58,800 - - 58,900
Net income (loss) for the year -- - - (1,044,700) - (1,044,700)
----------- --------- ------------ ------------ ---------- -------------
BALANCE, DECEMBER 31, 1997 6,447,652 6,400 1,676,400 (1,044,800) - 638,000
Issuance of common stock 557,509 600 211,200 - - 211,800
Foreign currency translation adjustment - - - - 8,500 8,500
Net income (loss) for the year - - - (353,000) - (353,000)
----------- --------- ------------ ------------ ---------- -------------
BALANCE, DECEMBER 31, 1998 7,005,161 7,000 1,887,600 (1,397,800) 8,500 505,300
Issuance of common stock (Note 9) 1,238,621 1,200 572,700 - - 573,900
Foreign currency translation adjustment - - - - (11,800) (11,800)
Realized foreign currency translation loss - - - 3,300 3,300
Net income (loss) for the period - - - (193,600) - (193,600)
----------- --------- ------------ ------------ ---------- -------------
BALANCE, SEPTEMBER 30, 1999 8,243,782 $ 8,200 $ 2,460,300 $(1,591,400) $ - $ 877,100
=========== ========= ============ ============ ========== =============
</TABLE>
See accompanying notes.
5
<PAGE>
CAN-CAL RESOURCES, LTD.
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(ROUNDED TO THE NEAREST HUNDRED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
----------------------------
SEPTEMBER 30, SEPTEMBER 30,
1999 1998
------------- -------------
(UNAUDITED) (UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
NET LOSS $(193,600) $(211,900)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 12,700 2,500
Gain on disposal of facility (116,400) --
Gain on foreign currency translation (3,300) --
Bad debt expense 152,100 --
Undistributed earnings of affiliate (174,300) --
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (5,500) (6,600)
(Increase) decrease in prepaid expenses 500 --
(Increase) decrease in other assets 100 26,800
Increase (decrease) in accounts payable and
other current liabilities 32,300 32,900
--------- ---------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (295,400) (156,300)
--------- ---------
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of property and equipment (57,400) (13,500)
Proceeds from sale of facility 65,300 --
--------- ---------
NET CASH PROVIDED BY INVESTING ACTIVITIES 7,900 (13,500)
--------- ---------
CASH FLOW FROM FINANCING ACTIVITIES:
Increase in related party debt (65,300) (14,700)
Principal payments on note payable (40,600) (18,600)
Proceeds from issuance of common stock 573,300 152,700
Proceeds from debt issuance 25,800 77,000
--------- ---------
NET CASH USED BY FINANCING ACTIVITIES 493,200 196,400
--------- ---------
NET CHANGE IN CUMULATIVE TRANSLATION ADJUSTMENT 5,800 (7,400)
NET INCREASE (DECREASE) IN CASH 211,500 19,200
CASH AT BEGINNING OF PERIOD 41,600 14,200
--------- ---------
CASH AT END OF PERIOD $ 253,100 $ 33,400
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
CASH PAID DURING THE YEAR FOR:
Interest $ 3,000 $ --
========= =========
Income taxes $ -- $ --
========= =========
</TABLE>
See accompanying notes.
6
<PAGE>
CAN-CAL RESOURCES, LTD.
NOTES TO FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
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 1998 Annual Report on Form 10-SB. Interim results are
not necessarily indicative of results for a full year.
2. BUSINESS ACQUISITIONS:
In accordance with accounting principles associated with a transaction
where the acquired company has been acquired by a development stage
company and the acquired company is considered a promoter in founding
and organizing the business, the acquired business assets will be
recorded at the historical cost basis of the predecessor. If the
transaction is accounted for in a manner similar to a pooling of
interest, the accompanying financial statements have been restated to
include the accounts of the pooled companies as if they had always been
combined. If the transaction is accounted for in a manner similar to a
purchase, the net assets of the acquired company have been recorded as
net proceeds from an issuance of stock, and the results of operations
will be included with the results of the Company following the date of
acquisition.
Scotmar Industries, Inc.
On February 13, 1997 the Company issued 200,000 shares of common stock,
in exchange for all of the issued and outstanding common stock of
Scotmar Industries, Inc.
3. DISCONTINUED OPERATIONS:
In January 1999, the Company adopted a plan to discontinue the operations
of Scotmar Industries, Inc.("Scotmar"). The disposition of Scotmar was
substantially completed by January 31, 1999. Net assets of the
discontinued operation at December 31, 1998 were $88,922. The income
from discontinued operations for the one month ended January 31, 1999
includes forgiveness of debt of $152,100 and loss from operations of
$27,800.
7
<PAGE>
CAN-CAL RESOURCES, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
4. NOTES RECEIVABLE (RELATED PARTIES):
Notes receivable, related parties, at September 30, 1999 consisted of the
following:
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
Accrued interest receivable 12,100
------------
51,900
Allowance for uncollectible accounts 5,700
------------
$ 46,200
============
5. PROPERTY AND EQUIPMENT:
Property and equipment at September 30, 1999 consisted of the following:
Machinery and equipment $ 81,700
Office equipment and furniture 4,000
------------
85,700
Less accumulated depreciation (18,300)
------------
$ 67,400
============
Depreciation expense for the nine months ended September 30,1999 totaled
$12,700.
6. OTHER ASSETS:
Other assets at September 30, 1999 consisted of the following:
Note receivable from Tyro, Inc.,
and principals, a corporation, secured by
equipment, interest accrued
at 6% per annum, due on demand $ 53,300
Deposits 5,600
Mining claims 36,400
------------
$ 95,300
============
8
<PAGE>
CAN-CAL RESOURCES, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
7. LONG-TERM INVESTMENTS:
Long-term investments at September 30, 1999 consisted of the following:
Pisgah property $ 567,100
Investment in S&S Mining joint venture 19,000
-------------
$ 586,100
=============
8. NOTE PAYABLE:
Note payable at September 30, 1999 consisted of the following:
Note payable to lender; secured
by 1st deed of trust; interest $ 50,000
at 8.00% per annum, matures July 31, 2001
Note payable to lender; unsecured;
interest at prime plus 1.00% per annum, 6,800
matures September, 2000
Note payable to lender; unsecured; 6,800
interest at prime plus 1.00% per
annum, matures December, 1999
Note payable to lender; unsecured;
interest at prime plus 1.00% per annum;
matures October, 1999 2,400
----------
66,000
Less current portion 43,500
----------
$ 22,500
==========
9. NOTE PAYABLE, RELATED PARTIES:
Note payable, related parties, at September 30, 1999 consisted of the
following:
Note payable to shareholder; unsecured; interest
at prime plus 1.00% per annum, due on demand $ 39,700
===========
9
<PAGE>
CAN-CAL RESOURCES, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1999 AND 1998
10. STOCKHOLDERS' EQUITY:
COMMON STOCK:
On February 1, 1999, the Board of Directors approved the Sale of 62,500
shares of Can-Cal common stock to a Board member.
On February 8, 1999 the Board approved the sale of 70,000 shares of
Can-Cal common stock to a Board member.
On March 1, 1999 the Board approved the issuance of 32,121 shares of
Can-Cal common stock in return for services rendered.
On March 15, 1999 the Board approved the sale of 86,000 shares of Can-Cal
common stock to various investors.
On March 17, 1999 the Board approved the issuance of 40,000 shares of
Can-Cal common stock in return for equipment.
On March 10, 1999 the Board approved the sale 295,500 shares of Can-Cal
common stock to various investors.
On April 1, 1999 the Board approved the sale of 1,000 restricted common
stock in return for equipment.
On July 21, 1999 the Board approved the sale of 357,500 shares of common
stock to various investors.
On August 24, 1999 the Board approved the sale of 274,000 shares of
common stock to various investors.
On September 7, 1999 the Board approved the sale of 20,000 shares of
common stock to an investor.
11. New accounting standard:
On January 1,1998, the Company adopted Statement of Financial Accounting
Standards No. 130 ("SFAS 130") "Reporting Comprehensive Income", which
requires companies to report all changes in equity during a period,
except those resulting from investment by owners and distribution to
owners. The components for comprehensive income are as follows:
10
<PAGE>
CAN-CAL RESOURCES, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
11. NEW ACCOUNTING STANDARD (CONTINUED):
SEPTEMBER
30, 1999
--------------
Net income (loss) $ (193,600)
Translation adjustment 8,500
--------------
Comprehensive income $ (185,100)
==============
12. TRANSLATION ADJUSTMENT:
Balance, Beginning of year $ 8,500
Aggregate adjustment resulting from translation of
financial statements into U.S. Dollars
and gains and losses on certain hedge
transactions and intercompany balances (11,800)
Realized loss on foreign currency translation 3,300
--------------
$ 0
==============
13. 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, 1999:
CARRYING FAIR
AMOUNT VALUE
----------- -----------
Financial assets:
Note receivable-related party $ 46,200 $ 46,200
Property and equipment 67,400 67,400
Other assets 95,300 95,300
Long-term investments 586,100 586,100
Financial liabilities:
Note payable, related parties 39,700 39,700
Note payable 66,000 66,000
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 bank line of credit is based upon the borrowing rates
currently available to the Company for bank loans with similar terms and
average maturities.
11
<PAGE>
CAN-CAL RESOURCES, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
14. YEAR 2000 COMPLIANCE:
Historically. certain computerized systems have had two digits rather
than four digits to define the applicable year, which could result in
recognizing a date using "00" as the year 1900 rather than the year
2000. This could result in major failures or miscalculations and is
generally referred to as the "Year 2000 issue."
The Company has reviewed, and continues to review, possible effects of
this issue on its financial and operating systems. Review of external
dependencies has revealed that the Company will be exposed to
disruption if there is widespread and prolonged interruption of
electricity, water, and telecommunications services.
The total cost to the Company of these Year 2000 problem related
activities is not anticipated to be material. The costs the Company may
incur to solve the Year 2000 problem are based on management's
estimates. However, there can be no assurance that these estimates will
be achieved and the costs of solving the Year 2000 problem could differ
significantly from management's estimates.
12
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
a) Plan of Operation
The Company's plan of operation through September, 2000 includes completing
the drilling and trenching programs at the S & S Joint Venture's Owl Canyon
properties, in which it owns a 50% interest, determining whether those
properties contain precious metals, and if so, determining whether the property
contains a sufficient amount of precious metal which can be mined at a profit so
as to constitute "reserves" and, if so, the amount of those reserves. The
Company anticipates that the drilling and trenching program will be completed
before mid-December 1999. If that program yields results which indicates the
presence of precious metals, the Company will then determine whether or not to
continue with that program by itself or seek third party participation. Reserves
are that part of a mineral deposit which could be economically and legally
extracted or produced at the time of the reserve determination. If the property
contains "reserves" in an amount sufficient to justify development, the Company
intends to attempt to joint venture or sell an interest in the property to a
larger mining company, on the condition that the larger mining company will
develop the property.
Following completion of the drilling and trenching programs at the Owl
Canyon properties, the Company intends to conduct a drilling program on its
Cerbat properties, which it leases with an option to purchase, to determine the
nature and extent of mineralization existing on the property. Since the Company
has not performed any drilling operations on that property, it is as yet unable
to state the nature and extent or cost of the drilling it will undertake. This
drilling program is expected to begin in the early part of 2000, depending upon
the results of the drilling and trenching program on this Owl Canyon property.
The Company also intends to concentrate various placer material available
to it using its "concentrator." The Company has conducted a significant number
of "in-house" assays on various placer materials available to it and, based upon
those assays, believes that the placer material contains precious metals which
the Company believes may exist in sufficient amounts to be mined commercially.
If the testing continues to be promising, the Company may seek to claim other
placer properties. However, since its concentrating activities have only
recently been initiated, there is no assurance that precious metals exist in the
placer material in commercial quantities, or that the Company can produce it at
a profit.
In addition, the Company intends to continue its current program of testing
Volcanic Cinders from its property at Pisgah, California, to determine whether
they contain any precious metals. It is working with third parties who are
currently performing tests on that material.
The Company has discontinued utilizing the Tyro Mill for testing. All
assays are performed by independent assayers.
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 July 2000.
13
<PAGE>
(b) LIQUIDITY AND CAPITAL RESOURCES AND RESULTS OF OPERATIONS
The Company's working capital increased to $190,500 as of September 30,
1999, as a result of the sale of 651,500 restricted shares of its common stock
for proceeds of $325,750 in that quarter. Working capital was $117,900 at
December 31, 1998.
The Company had no operating income or cash flow from its mineral
operations for the nine months ended September 30, 1998 and had only $3,700 in
income from its mineral operations during the nine months ended September 30,
1999. The Company sustained a loss from continuing operations of $484,300 for
the nine month period ended September 30, 1999, compared to a loss from
continuing operations of $154,900 for the nine month period ended September 30,
1998. The increase in loss was accounted for by a bad debt expense of $152,100
resulting from the sale of Scotmar Industries, Inc., a subsidiary, and an
increase of mine exploration expense from $20,200 to $133,100. Consulting
expenses increased from $79,800 to $89,200 and accounting and legal expenses
increased from $15,000 to $31,900 during that period.
For the three month period ended September 30, 1999, the Company's loss
from continuing operations increased from $84,100 for the three months ended
September 30, 1998 to $150,400. That increase was principally due to an increase
in the mine exploration expense to $68,500 which was largely the result of the
Company's trenching and blasting program at its Owl Canyon property and the
testing of materials, an increase of approximately $18,000 in expenses in
testing volcanic cinders from its property at Pisgah California and consulting
fees of $21,800. The Company anticipates that the trenching and blasting program
will be completed within a matter of weeks and, as a result, its mine
exploration expenditures should be significantly reduced. In addition, the
Company has eliminated utilizing the Tyro Mill facility for testing and, as a
result, the expenses associated with testing will be reduced significantly.
Unless the Company is able to establish the economic viability of its mining
properties, the Company will continue writing off its expenses of exploration
and testing of its properties. Therefore, losses will continue unless the
Company locates and delineates reserves. If that occurs, the Company may
capitalize certain of those expenses. There is no assurance that this will
occur.
The Company has no material commitments for capital expenditures other than
expenditures it chooses to make with respect to exploration of its mineral
properties.
The Company believes it has sufficient funds to satisfy its cash
requirements through August 2000. Should it be necessary for the Company to
obtain additional funds, the Company may attempt to sell an interest in one or
more of its properties or borrow funds from outside sources. The Company
believes that it may be possible for it to borrow additional funds, using its
Volcanic Cinders property as collateral, but there are no loan facilities in
place to date.
14
<PAGE>
Part II - Other Information
Item 2.
(c) Changes in Securities
During the three months ended September 30, 1999, the Company sold an
aggregate of 651,500 shares of its common stock in Canada to its citizens and
residents of Canada for proceeds of $325,750. The stock was sold at $0.50 per
share, which reflects a discount from market prices at the time, due to the
restricted status of the shares sold (see below). All purchasers are citizens
and residents of Canada and the offers and sales were made in Canada. All the
purchasers were relatives, friends, and/or business associates of officers and
directors of the Company. No underwriter was involved in these transactions.
For those sales, the Company relied on the exemption from 1933 Act provided
by Regulation S promulgated pursuant to the 1933 Act. All shares are subject to
the investment restrictions of Rule 144 and the provisions of Regulation S. The
certificates are legended and appropriate instructions have been issued to the
Company's transfer agent. Theses shares may be resold only pursuant to an
effective registration statement under the 1933 Act or pursuant to an exemption
from registration.
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 8, 1999 /s/ Ronald D. Sloan
---------------------------- -----------------------------------
RONALD D. SLOAN, President
15
<PAGE>
