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
June 30, 2000.
_____ 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) (Zip Code)
Issuer's telephone number, ( 702 ) 243 - 1849
--------- --------------- ------------------------
--------------------------------------------------------------------------------
(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 June 30, 2000
---------------------------------- -----------------------------------------
Common Stock, Par Value $.001. 8,753,782
Transitional Small Business Disclosure Format (Check one): Yes_____ No X
---------
1
<PAGE>
CAN-CAL RESOURCES, LTD.
FOR THE THREE MONTHS ENDED JUNE 30, 2000 AND 1999
CONTENTS
PAGE
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
Independent accountants' report 4
FINANCIAL STATEMENTS:
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 OR PLAN OF OPERATIONS 14-16
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES 16
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 16
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 17
Signatures 17
2
<PAGE>
PART I - FINANCIAL INFORMATION
In the opinion of the management of the Company, the following
condensed financial information as of March 31, 2000 and 1999, and for the three
month 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, 1999, has been taken from the Company's audited financial
statements included in its Form 10-KSB.
3
<PAGE>
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, 2000, and the condensed statements of operations for the
three and six months ended June 30, 2000 and 1999, the condensed statements of
cash flows for the six months ended June 30, 2000 and 1999, and the condensed
statement of changes in stockholders' equity for the six months ended June 30,
2000. 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, 1999, 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 March 2,
2000, 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, 1999 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
August 7, 2000
4
<PAGE>
CAN-CAL RESOURCES, LTD.
BALANCE SHEETS
JUNE 30, 2000
(ROUNDED TO THE NEAREST HUNDRED, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
2000 1999
--------------- ----------------
(UNAUDITED) (NOTE)
ASSETS
CURRENT ASSETS:
<S> <C> <C>
Cash $ 274,200 $ 51,800
Accounts receivable -
Notes receivable, related parties - 44,700
Prepaid expenses 3,200 1,200
Note receivable 53,000 48,000
------------- --------------
Total current assets 330,400 145,700
PROPERTY AND EQUIPMENT, NET (NOTE 4) 75,100 61,400
OTHER ASSETS (NOTE 5) 107,200 95,300
NOTES RECEIVABLE, RELATED PARTY (NOTE 6) 46,400 -
LONG-TERM INVESTMENTS (NOTE 7) 586,100 586,100
------------- --------------
$ 1,145,200 $ 888,500
============= ==============
<CAPTION>
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
<S> <C> <C>
Accounts payable $ 8,400 $ 7,100
Accrued expenses 83,100 56,300
Note payable, related party (note 8) 122,500 14,800
Note payable, current portion (note 9) 2,500 6,800
------------- --------------
Total current liabilities 216,500 85,000
NOTE PAYABLE, NET OF CURRENT PORTION 32,500 55,000
------------- --------------
249,000 140,000
------------- --------------
STOCKHOLDERS' DEFICIT:
Common stock, $.001 par value; authorized, 15,000,000
shares; issued and outstanding, 8,753,782 shares 8,800 8,200
Preferred stock, $.001 par value; authorized, 10,000,000
shares; none issued or outstanding - -
Additional paid-in-capital 2,834,900 2,460,200
Accumulated deficit (1,947,500) (1,719,900)
------------- --------------
896,200 748,500
------------- --------------
$ 1,145,200 $ 888,500
============= ==============
<FN>
Note: The balance sheet of December 31, 1999 has been derived from the audited
financial statements at that date.
</FN>
</TABLE>
See accompanying notes and accountant's report.
5
<PAGE>
CAN-CAL RESOURCES, LTD.
STATEMENTS OF OPERATIONS
THREE AND SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(ROUNDED TO THE NEAREST EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
--------------------------------- ---------------------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
2000 1999 2000 1999
--------------- --------------- --------------- ---------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
SALES $ - $ 3,700 $ - $ 3,700
COST OF GOODS SOLD - - - -
--------------- --------------- --------------- ---------------
GROSS PROFIT - 3,700 - 3,700
OPERATING EXPENSES, 336,200
GENERAL AND ADMINISTRATIVE 148,100 81,200 253,500
--------------- --------------- ---------------
LOSS FROM OPERATIONS (148,100) (77,500) (253,500) (332,500)
OTHER INCOME (EXPENSES):
Other income 15,100 - 25,500 -
Interest income 3,800 3,300 4,800 3,600
Interest expense (2,700) (2,700) (4,400) (5,100)
--------------- --------------- --------------- ---------------
INCOME(LOSS) FROM CONTINUING OPERATIONS (131,900) (76,900) (227,600) (334,000)
--------------- --------------- --------------- ---------------
INCOME (LOSS) FROM DISCONTINUED OPERATIONS:
Income (loss) from discontinued
automobile salvage division - - - 174,300
Gain on disposal of automobile salvage
division (net of taxes) - 116,400 - 116,400
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ (131,900) $ 39,500 $ (227,600) $ (43,300)
=============== =============== =============== ===============
<CAPTION>
NET INCOME (LOSS) PER SHARE OF COMMON STOCK AND COMMON STOCK EQUIVALENTS:
BASIC EPS
<S> <C> <C> <C> <C>
Net income (loss) $ (0.02) $ 0.01 $ (0.03) $ (0.01)
=============== =============== =============== ===============
Weighted average shares outstanding 8,753,782 6,514,318 8,587,115 7,242,805
=============== =============== =============== ===============
DILUTED EPS
Net income (loss) $ (0.02) $ 0.01 $ (0.03) $ (0.01)
=============== =============== =============== ===============
Weighted average shares outstanding 8,753,782 6,514,318 8,587,115 7,242,805
=============== =============== =============== ===============
</TABLE>
See accompanying notes and accountant's report.
6
<PAGE>
CAN-CAL RESOURCES, LTD.
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
SIX MONTHS ENDED JUNE 30,2000
(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, 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 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 500,000 600 374,700 - - 375,300
Net income (loss) for the period - - - (227,600) (227,600)
---------- ---------- ------------ -------------- ---------- ------------
Balance, June 30, 2000 8,753,782 $ 8,800 $ 2,834,900 $ (1,947,500) $ - $ 896,200
========== ========== ============ ============== ========== ============
</TABLE>
See accompanying notes and accountant's report.
7
<PAGE>
CAN-CAL RESOURCES, LTD.
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(ROUNDED TO THE NEAREST HUNDRED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
------------------------------
JUNE 30, JUNE 30,
2000 1999
-------------- --------------
(UNAUDITED) (UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
NET LOSS $ (227,600) $ (43,300)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 13,200 7,300
Gain - (116,400)
Loss on foreign currency translation - 3,300
Bad debt expense - 150,100
Undistributed earnings of affiliate - (174,300)
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable - (3,300)
(Increase) decrease in prepaid expenses (2,000) 500
(Increase) decrease in other assets (12,200) (3,400)
Increase (decrease) in accounts payable and
other current liabilities 23,600 33,000
------------ -------------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (205,000) (146,500)
------------ -------------
CASH FLOW FROM INVESTING ACTIVITIES:
Other investing activities (5,000) -
Purchase of property and equipment (26,900) (57,400)
Proceeds from sale of facility - 65,300
------------ -------------
NET CASH PROVIDED BY INVESTING ACTIVITIES (31,900) 7,900
CASH FLOW FROM FINANCING ACTIVITIES:
Increase in related party debt 107,700 (65,300)
Principal payments on note payable (22,600) (39,000)
Proceeds from issuance of common stock 375,000 359,300
Proceeds from debt issuance - 25,800
------------ -------------
NET CASH USED BY FINANCING ACTIVITIES 460,100 280,800
NET INCREASE (DECREASE) IN CASH 223,200 142,200
CASH AT BEGINNING OF PERIOD 51,800 41,600
------------ -------------
CASH AT END OF PERIOD $ 275,000 $ 183,800
============ =============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
CASH PAID DURING THE YEAR FOR:
Interest $ - $ -
============ =============
Income taxes $ - $ -
============ =============
</TABLE>
See accompanying notes and accountant's report.
8
<PAGE>
CAN-CAL RESOURCES, LTD.
NOTES TO FINANCIAL STATEMENTS
THREE AND SIX MONTHS ENDED JUNE 30, 2000 AND 1999
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 1999 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 stock
sales and ultimately upon achieving profitable operations.
2. BUSINESS ACQUISITIONS:
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.
9
<PAGE>
CAN-CAL RESOURCES, LTD.
NOTES TO FINANCIAL STATEMENTS
THREE AND SIX MONTHS ENDED JUNE 30, 2000 AND 1999
4. PROPERTY AND EQUIPMENT:
Property and equipment at June 30, 2000 consisted of the following:
<TABLE>
<S> <C>
Machinery and equipment $ 81,700
Transportation equipment 18,500
Office equipment and furniture 12,400
----------------
112,600
Less accumulated depreciation (37,500)
----------------
$ 75,100
================
</TABLE>
Depreciation expense for the six months ended June 30,2000 totaled
$13,200.
5. OTHER ASSETS:
Other assets at June 30, 2000 consisted of the following:
<TABLE>
<S> <C>
Note receivable from Tyro, Inc., and principals, a corporation, secured by
equipment, interest accrued at 6% per annum, due on demand $ 53,300
Mining claims 36,400
Non destructive testing materials 10,500
Deposits 7,000
----------------
$ 107,200
================
</TABLE>
6. NOTES RECEIVABLE (RELATED PARTIES):
Notes receivable, related parties, at June 30, 2000 consisted of the
following:
<TABLE>
<S> <C>
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 12,200
----------------
52,000
Allowance for uncollectible accounts 5,600
----------------
$ 46,400
================
</TABLE>
10
<PAGE>
CAN-CAL RESOURCES, LTD.
NOTES TO FINANCIAL STATEMENTS
THREE AND SIX MONTHS ENDED JUNE 30, 2000 AND 1999
7. LONG-TERM INVESTMENTS:
Long-term investments at June 30, 2000 consisted of the following:
<TABLE>
<S> <C>
Pisgah property $ 567,100
Investment in S&S Mining joint venture 19,000
---------------
$ 586,100
===============
</TABLE>
8. NOTE PAYABLE, RELATED PARTIES:
Note payable at June 30, 2000 consisted of the following:
<TABLE>
<S> <C>
Note payable to shareholder; unsecured; interest
at prime plus 1.00% per annum, due on demand $ 122,500
===============
</TABLE>
9. NOTE PAYABLE:
Notes payable, related parties, at June 30, 2000 consisted of the
following:
<TABLE>
<S> <C>
Note payable to lender; secured by 1st deed of trust; interest at
8% per annum; matures July 31, 2001 $ 32,500
===============
</TABLE>
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.
11
<PAGE>
CAN-CAL RESOURCES, LTD.
NOTES TO FINANCIAL STATEMENTS
THREE AND SIX MONTHS ENDED JUNE 30, 2000 AND 1999
10. STOCKHOLDERS' EQUITY (CONTINUED):
COMMON STOCK (CONTINUED):
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.
On November 9, 1999 the board approved the issuance of 10,000 shares of
common stock to an investor.
On February 27, 2000, the Board of Directors approved the Sale of 500,000
shares of Can-Cal common stock to various investors.
11. 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, 2000:
CARRYING FAIR
AMOUNT VALUE
----------- -----------
Financial assets:
Notes receivable-related party $ 46,400 $ 46,400
Property and equipment 75,100 75,100
Other assets 107,200 107,200
Long-term investments 586,100 586,100
Financial liabilities:
Notes payable, related parties 122,500 122,500
Note payable 35,000 35,000
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 notes payable is based upon the borrowing rates
currently available to the Company for bank loans with similar terms and
average maturities.
12
<PAGE>
CAN-CAL RESOURCES, LTD.
SUPPLEMENTAL SCHEDULE I --
OPERATING, GENERAL AND ADMINISTRATIVE EXPENSES
THREE MONTHS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
(ROUNDED TO THE NEAREST HUNDRED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED JUNE 30, ENDED JUNE 30,
2000 1999
------------- --------------
OPERATING, GENERAL AND ADMINISTRATIVE EXPENSES:
<S> <C> <C>
Mine exploration $ 50,900 $ 16,700
Travel and entertainment 18,800 4,200
Insurance 14,500 600
Office expense 10,500 (300)
Office rent 9,500 3,100
Consulting 9,300 33,300
Depreciation and amortization 7,300 5,600
Equipment rental 6,700 -
Advertising and promotion 6,200 500
Accounting and legal 6,100 11,600
Telephone 4,000 1,600
Miscellaneous 2,000 -
Maintenance and repairs 1,300 500
Utilities 900 100
Bank charges 100 200
Bad debt expense - 3,500
------------- -------------
$ 148,100 $ 81,200
============= =============
</TABLE>
See accountants' report.
13
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
(A) PLAN OF OPERATION
During the quarter ended June 30, 2000 and continuing thereafter, the Company
expanded its program of testing volcanic cinders from its property at Pisgah,
California to determine the extent of precious metals contained in the material
and to verify the commercial viability of the extraction technology.
In addition to its testing program pursuant to its December 6, 1999 Agreement,
the Company has entered into another Agreement with two other individuals and an
entity that they control, utilizing proprietary processes developed by those
persons for the extractions of precious metals. The testing programs are carried
out on behalf of the Company pursuant to a "Care and Custody" program by Bruce
Ballantyne, the Company's independent geologist and geochemist consultant. Under
this program, the material being tested is selected by Mr. Ballantyne and is in
his care, custody, and control at all times. The material obtained from the
testing procedures is sent by Mr. Ballantyne to recognized laboratories for
assaying. Results obtained from independent laboratories to date have indicated
the presence of precious metals in its volcanic cinders material. Consequently,
the Company has significantly expanded its testing program and, as a result, the
assaying of the results by independent laboratories. The Company has tested in
excess of 100 samples of its volcanic cinder material and, as long as it
believes the results warrant it, it intends to continue that testing process.
The Company has also begun testing extractive processes. The Company anticipates
at the present time that it will dedicate virtually all its efforts toward
additional testing on the volcanic cinders and, if warranted, limited
production. The Company has begun looking into suitable facilities in the event
production is possible and economically feasible. The Company has not yet tested
volcanic cinders in sufficient amount to determine whether the precious metals
that are indicated to exist in the volcanic cinders exist in commercial
quantities or, if they do, whether they can be profitably extracted. However,
the Company has obtained an option to acquire the proprietary processes
developed by those persons.
As a result of the Company dedicating virtually all its efforts to its volcanic
cinder property, it has taken no material actions with respect to its other
properties. The status of the other properties is as follows:
The Company has completed the blasting and trenching programs at the Owl canyon
Joint Venture's property with S&S Mining. Can-Cal owns a fifty-percent interest
in the Joint Venture. The Company has received a report from its consulting
geologist S. Bruce Ballantyne from analytical data received from several
hundreds of assays conducted on the samples shipped to professional independent
laboratories. The assay results have provided the Board of Directors with
positive information and encouragement to review a drilling program beginning at
the epithermal mineralogy location known as Papa Hill. The estimated cost to
complete the first phase of the drilling program is estimated at $70,000. The
Company was originally looking for a third party mining company as a potential
partner to initiate the drilling program. However, the Board has now decided to
finance the project without involving another company.
14
<PAGE>
Work on the Cerbat and Erosion properties has been delayed as a result of the
expanded testing programs on the Pisgah property. The Company intends to
initiate a sampling program on the Cerbat patented property this year. The
Company has a lease with option to purchase the Cerbat property in Arizona. The
Company does not intend to conduct further exploration on the Erosion property
until 2001.
Subject to the expanded testing program on its volcanic cinders and the
determination of a course of action on the Owl Canyon property, the Company also
intends to concentrate various placer material available to utilize the
Company's "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 that
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.
(B) LIQUIDITY AND CAPITAL RESOURCES AND RESULTS OF OPERATIONS
As of June 30, 2000, the Company's working capital was $113,900. Working capital
as of March 31, 2000, was $340,100. As part of reduction in working capital,
notes receivable of $44,700 from related parties were reclassified from "Current
Assets" to "Other Assets", a non-current asset account.
The Company had no operating income or cash flow from its mineral operations for
the three months ended June 30, 2000 or the three months ended June 30, 1999.
The Company did realize income from the sale of a vehicle. The Company sustained
a loss from operations of $129,100 for the three month period ended June 30,
2000, compared to a loss of $76,900 for the three period ended June 30, 1999.
During the three month period ended June 30, 2000, mine exploration costs
increased from $16,700 for the three month period ended June 30, 1999, to
$50,900 largely as a result of the accelerated testing program on the volcanic
cinders, consulting fees paid to Bruce Ballantyne, and assay expenses associated
with the testing program. Accounting and legal expenses decreased to $6,100 from
$11,600. Other consulting costs decreased to $9,300 from $33,300. Travel and
entertainment costs increased to $18,800 from $4,200. Those costs include the
costs of the Company's annual meeting which was held on June 5, 2000 and
increased travel relating to the existing program on the volcanic cinders.
Insurance costs increased from $600 to $14,500 as a result of additional
insurance coverage obtained by the Company. Office rent increased from $3,100 to
$9,500 as a result of acquiring an additional office facility to accommodate the
increased activity and office expense increased from ($300) to $10,500 as a
result of that increased activity.
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.
15
<PAGE>
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 greatly expanded and accelerated program for
testing its volcanic cinders material during the quarter ended June 30, 2000,
and continuing thereafter, the Company has expended its funds much 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
believes it requires additional funds to continue conducting those operations at
their level and possibly expand those operations. The Company is contemplating a
private sale of equity in the near future. No such transaction occurred in the
quarter ended June 30, 2000. Other financing mechanisms may be explored as well,
as an alternative to a private equity transaction. The Company does not
anticipate that it will attempt to sell any interest in its volcanic cinders
material, although it believes it may be possible for it to borrow additional
funds using its volcanic cinders property as collateral. There are no loan
facilities in place to date.
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
(a) None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting was held on June 5, 2000 at which the
following persons were elected directors: Ronald D. Sloan, James Dacyszyn, Barry
Amies, Josef Reschreiter, and John Brian Wolfe. No other matter was voted on at
the meeting. The number of votes cast were as follows:
NAME FOR AGAINST WITHHELD
--------------------------------------------------------------------------------
Ronald D. Sloan 4,648,348 -- 0 -- -- 0 -
James Dacyszyn 4,648,348 -- 0 -- -- 0 -
Barry Amies 4,648,348 -- 0 -- -- 0 -
Josef Reschreiter 4,648,348 -- 0 -- -- 0 -
John Brian Wolfe 4,648,348 -- 0 -- -- 0 -
There were no abstentions, and there were 4,105,434 broker non-votes.
16
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
No. Description Page No.
--- ----------- -------
11 Computation of Earnings Per Share................19
23 Consent of Independent Accountants'..............20
27 Financial Data Schedule..........................21
(b) Reports on Form 8-K.There were no reports filed by the Company
on Form 8-K during the quarter ended June 30, 2000.
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 9, 2000 /s/ Ronald D. Sloan
------------------------------------
RONALD D. SLOAN, President
17
