SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 10549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended Form 10-Q Commission file number
September 30, 1996 0-20217
CONTINENTAL WELLNESS CASINOS, INC.
(Exact name of registrant as appended in its charter)
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
Colorado 84-0687501
(Address of principal executive offices) (Zip Code)
1820 E. Garry Avenue, Santa Ana, California 92705
(Registrant's telephone number, including area code)
(714) 477-0350
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 of 15(d) of the Securities Exchange Act of
1914 during the preceding 12 months (or for such shorter period that the
registrant was required to file such report), and (2) has been subject to such
filing requirements for the past 90 days.
Yes __X___ No ______
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
<TABLE>
<CAPTION>
Title of Class September 30, 1996
<S> <C>
Common Class "A" 90,028,877
Common Class "B" 3,266,960
</TABLE>
<PAGE>
CONTINENTAL WELLNESS CASINOS, INC.
INDEX
<TABLE>
<CAPTION>
<S> <C> <C>
Part 1 FINANCIAL INFORMATION PAGE
Item 1 Financial Statements
Consolidated Balance Sheets 2
Consolidated Statements of Operations 4
Consolidated Statements of Cash Flows 5
Notes to consolidated Financial Statements 7
Item 2 Management's Discussion and
Analysis of financial
Conditions and Results of Operations 11
Part 11 OTHER INFORMATION
Item 1 Legal Proceedings 14
Item 2 Changes in Securities 14
Item 3 Defaults upon Senior Securities 14
Item 4 Submission of Matters to a
Vote of Security Holders 14
Item 5 Other Information 14
Item 6 Exhibits and Reports on B-K 15
</TABLE>
<PAGE>
PART 1 FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<PAGE>
CONTINENTAL WELLNESS CASINO, INC.
<TABLE>
<CAPTION> BALANCE SHEETS
THIRD QUARTER ENDING SEPTEMBER 30, 1966 AND 1995
1996 1995
(Dollars In Thousands)
<S> <C> <C>
ASSETS
Gold in storage (Note 2) $ 27,317 $ 27,317
Deferred charges and other assets
Deferred mining exploration costs (Note 3) 3,253 3,253
Deferred promotion and operating expenses 81 -
Total Assets $ 30,651 $ 30,570
STOCKHOLDERS EQUITY
Common Stock, Class "A" $0.003 par value
Authorized shares-500,000,000 in 1996;
100,000,000 in 1995
Issued and outstanding-90,028,877 in 1996;
38,803,405 in 1995 $ 270 $ 116
Common Stock, Class "B" no par value
Authorized shares-50,000,000 in 1996 and 1995.
Issued and outstanding-3,266,960 in 1996 and 1995 33 33
Capital in excess of par 30,348 30,421
Total stockbrokers' equity $ 30,651 $ 30,570
</TABLE>
See accompanying notes to Financial Statements.
This report supersedes my report dated July 5, 1996
<PAGE>
CONTINENTAL WELLNESS CASINOS, INC
NOTES TO FINANCIAL STATEMENTS
1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Description of Business - The Company is engaged in the mining development
industry. Since October 22, 1974, the company has owned and operated thirty-
nine (39) mines and one (1) mill site at Quincy, Plumas County, California,
and is engaged in the exploration of said mines for the production of
precious metals like gold and silver. The Company also applied for a license
in Las Vegas, Nevada to conduct Life Extension programs and to operate hotels
and casinos.
Currency Transactions - There are no assets and liabilities of operations
outside the United States which need to be translated into U.S. dollars using
exchange rates.
Development costs - The Company will not capitalize property taxes on its
mining properties until the mines are ready for operation and development.
2.GOLD IN STORAGE AT BONDED WAREHOUSE:
On October 9, 1990, the Company deposited NDS, United States Custom Bonded
Warehouse located at 19801 So. Santa Fe Ave., Rancho Dominquez, California,
90221, six (6) 55 gallon drum containers of gold dust (powder form) 999.5
pure weighing 76,112 troy ounces with a value of $27,316,600 based on the
gold floor price of $358.90 per troy ounce. The market value of gold per
troy ounce as of June 15, 1996 and October 31,1995 are $384.70 and $384.30
respectively. At these prices, the gold in storage would carry fair market
values of $29,280,286 in 1996 and $29,249,841 in 1995.
3.DEFERRED MINING EXPLORATION COSTS
Deferred mining exploration costs were incurred in prior years with the
amounts being estimated based on the prevailing costs of mining exploration
at that time due to the absence of supporting documentation. In On April 13,
1996, the Company issued shares of stocks valued at $3,252,669 to pay for its
obligation arising thereto.
4.RELATED PARTY TRANSACTIONS
Grand American Bank Trust owns approximately 71% of the Company's Class
"A" common stock as of June 15, 1996.
5.PROVEN GOLD AND SILVER RESERVES
The process of estimating mineral reserves is very complex, requiring
significant subjective decision in the evaluation of available geological,
engineering, and economic data for each reserve. The data for a given
reserve may change substantially over time as a result of additional
development activity, production under varying economic conditions, etc.
This report supersedes my report dated July 5, 1996
<PAGE>
Consequently, material revision to the existing reserve estimates may
occur in the future. Although, every reasonable effort was made to ensure
that the reserve estimates reported represent the most accurate assessment
possible, the significance of the subjective decision require, the variances
in the available data for various reserves, makes these estimates generally
less precise than the other estimates in connection with financial disclosure.
Proven reserves are estimated quantities of gold and silver which geological
and engineering data demonstrate, with reasonable certainty, to be
recoverable in the future years from known reserves under existing economic
and operating conditions.
Stickel and Associates, independent consultants in applied geology,
geophysics and engineering, has estimated 7,000,000 troy ounces of gold and
19.000.000 troy ounces of silver. The value of these reserves based on
average market prices as of June 15, 1996 and October 31, 1995, are as follows:
<TABLE>
<CAPTION>
9-30-96 9-30-95
(Dollars in Thousands)
<S> <C> <C>
Gold 7,000,000 troy ounces
@$384.70/troy ounce $2,692,906
@$384.30/troy ounce $2,690,100
Silver 19,000,000 troy ounces
@$5.05/ troy ounce 95,950
@$5.34/troy ounce __________ __101,460
$2,788,856 $2,791,560
</TABLE>
6. STOCKBROKER'S EQUITY
The Company is authorized to issue 50,000,000 shares of no par value
Class "B" shares. The Company gave authority to its Board of Directors to
issue such Class "B" stock in one or more series, and to fix the number of
shares in each series, and all designations, relative rights, preferences and
limitations of the stock issued in each series. As of April 13, 1994, the
Board of Directors had exercised the authority granted.
7.CONTINGENCIES
The Company is not involved in any legal proceedings which considered to
be ordinary routine litigation incident to its business.
8.TAXES
The Company has not filed a federal income tax return because there are no
earnings to report.
9.The Secretary of State of Colorado Corporation Office approved the
following on June 6, 1996:
a) The name Grand American International Corporation be changed to
Continental Wellness Casinos, Inc.
b) The authorized capital stock, common shares Class
"A" of the Company be increased from 100,000,000
shares to 500,000,000 shares with a $0.003 par value per share.
<PAGE>
10.ACQUISITION OF THE MAXIM HOTEL AND CASINO LAS VEGAS, NEVADA
The Company is in the process of concluding the purchase of the Maxim Hotel and
Casino Las Vegas, Nevada, an 800 rooms hotel and casino.
11.THE INCREASE OF THE ISSUED AND OUTSTANDING CLASS
"A" COMMON SHARES
The Company on December 6, 1995 by Company Resolution approved the
issuance of 47,958,512 common "A" shares to pay the
mining exploration cost of $3,252,669 that was paid by the Grand American
Bank Trust.
The Grand American Bank Trust could not accept the shares until a legal
opinion is given by the Regulators.
The Legal opinion was given on February 15, 1996 and the 47,958,512 Class
"A" shares were issued to Grand American Bank Trust in April 1996 by American
Securities Transfer, Inc., transfer agent. The Company by Certificate of
Resolution that was approved on March 22, 1996 issued 3,266,960 Class,"A"
restricted common shares to Joseph Witzman in payment of the Company's
obligation to him of $180,953.75.
The outstanding shares in 1996 of 90,028,877 and 38,803,405 in 1995
consist of:
<TABLE>
<CAPTION)
<S> <C>
Balance 1/31/94 21,803,405
Issued to Grand American Bank Trust 17,000,000
Balance 10/31/95 38,803,405
Issued to Grand American Bank Trust 47,958,512
Issued to Joseph Witzman 3,266,960
Balance 10/31/96 90,028,877
</TABLE>
This report supersedes my report dated July 5, 1996
<PAGE>
CONTINENTAL WELLNESS CASINOS, INC.
ITEM 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Summary of significant Accounting Policies Nature of the Business -
CONTINENTAL WELLNESS CASINOS, INCORPORATED, A Colorado corporation was
incorporated October 29, 1974. The Company is engaged in the discovery and
development of precious metals mining properties located in Quincy, Plumas
County, California which consists of 750 acres of land where 39 unpatented
mines claims are located. All assessment work has been done at the mines and
all the reports had been filed with the Bureau of Land Management, Sacramento,
California and the county of Plumas in accordance with the mining rules and
regulations. The Company has permitted to operate in small scale the mines
from the United States Forestry Department, Quincy, California. The Company
intent in going in a big mining venture to recover gold and silver in the
proven reserves as soon as the price of gold increases in value.
The Company is in the process of getting their Live Longer Center, a
Longevity Members Association which the purpose is to make people live longer
by using Preventive Medicine with the genes testing for discovery of
predominant illness in the different subjects and repair said genes by
genetic engineering followed with a program of exercise and nutrition. The
member signs for a period of ten years and receives one week of care at the
center. The cost for this program is $1,000.00 per year per member and the
fee is refundable by the member group insurance and it is also tax deductible
making it a good way to slow down the cost of medical treatments that are out
of control. For the starting of this program the company is using the real
estate that was acquired.
Liquidity and Capital Resources
The expansion and diversification of the Registrant's business has
occurred selectively for the past two years through the development of the
Registrant's mines for the production of gold and silver and other precious
metals. The Registrant's is in the organization of their Longevity Center,
a Wellness Resort for Life Extension. The strategic and aggressive growth
program enables the Registrant to provide future earnings for the company.
The Registrant is confident that the organization program of the Longevity
Center, a Wellness Resort for Life Extension will increase sales resulting
cash flow.
<PAGE>
PART 11 - OTHER INFORMATION
<PAGE>
Item 1. Legal Proceedings
As of September 30, the Company was not a party to any material legal
proceedings other than ordinary routine litigations incidental to its business.
Item 2. Changes in Securities
Not Applicable
Item 3. Defaults Upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable
Item 5. Other Information
Not Applicable
Item 6. Exhibits and Reports on Form U-K
(a) Exhibits:
A - Geological Evaluation of Gold Claims Reserves
B - Maxim Financials
(b) Reports on Form B-K:
(1). Amendment No. 3 dated July 23, 1996
(2). Amendment No. 4 dated July 25, 1996
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 of 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on it's behalf by the undersigned, thereunto duly authorized.
GRAND AMERICAN INTERNATIONAL CORPORATION
s/Fred Cruz
By:___________________________
Fred Cruz
President and Chief Executive Officer
s/Kari Cruz
By:___________________________
Kari Cruz
Vice President and Chief Financial Officer
<PAGE>
Item 6. Exhibits and Reports on U-K
(a) Exhibits:
A - Geological Evaluation of Gold Claims Reserves
B - Maxim's Financials
(b) Reports on Form B-K:
(1).Amendment No. 3 dated July 23, 1996
(2).Amendment No. 4 dated July 25, 1996
GEOLOGICAL EVALUATION OF GOLD CLAIMS
IN
PLUMAS COUNTY, CALIFORNIA
EXHIBIT A
<PAGE>
Stickel & Associates
P.O. Box 91, Tustin, CA 92681 (714) 751-4742
May 14, 1985
Minerals, Mining and Energy Corp.
7750 El Camino Real, Suite K
Rancho La Costa, California 92008
Attention: Stewart Douglas, President:
Subject: Review of Literature and Inspection
Of Gold Claims in Plumas County,
California, Blackhawk, Alan, MMC
And Dean Lode Claims Consisting of
750 Acres.
References: 1) Geology of the Pulga and Bucks Lake
Quadrangles, Butte and Plumas Counties,
California, USGC Prof. Paper 731,
Date 1973.
2) Examination and Sampling of the Black-
hawk and Section 13 Claims, Plumas
County, California, by Wm. H. Bird,
Date June 1, 1976.
3) Bucks Lake Quadrangle, Map, USGS,
1:62,500, date 1950.
Gentlemen:
This letter presents our present geological engineering evaluation of the
subject gold and silver claims that are located in Plumas County, California.
We visited and inspected the property on April 19 and 20, 1985. The property
consists of approximately 750 acres of lode claims with a reported overlying
of a few placer claims. The properties lie about 5 and 11 miles directly
west of Quincy on the Bucks Lake Road.
The claims are named Blackhwk, Alan, MMC, Dean. The Blackhawk, Alan, and
MMC lie in Section 21, 22 and 27 of T2411, R8E. The Dean claims lie in the
northwest corner of Section 13, T2411, R8E.
<PAGE>
Letter Report
MM&E Corporation
May 14, 1985
Page 2
GEOLOGY
These claims lie along the southwest and northwest borders of a northwest
trending zone or band of highly fractured peridotite altered to serpentine.
Broad fault zones bound the peridotite bodies or bands and there are no
indications of heat alteration. There has been no production from hard rock
mining, however, significant placer hydraulicking and sluicing has occurred.
The placer deposits occur in two periods of erosion, the Present and the
Tertiary. Although concentrations of gold have only been found in the
Blackhawk and Dean claims, it does occur scattered throughout the peridotite.
PRESENCE OF GOLD AND SILVER
Reference 2 indicates that there is a conservative 10,000,000 tons of hard rock
ore reserves. Rock chip and channel samples were obtained from 10 to 50 foot
sections of road cuts and outcrops on these claims and it is reported
"consistently assayed high in gold (Au)." The highest gold value was
2.80 oz/ton, however, the overall average was .7 oz/
ton. Silver (Ag) ranged from a trace to 2.62 oz/ton. These values varied
greatly, depending upon the freshness of the outcrop. Assays also indicated
the presence of platinoid metals.
Total amount of gold and silver in these claims is 7,000,000 oz. of gold and
19,000,000 oz. of silver. These figures were compiled from data presented
in Reference 2.
It is reported that during the summer of 1983, approximately $30,000 worth of
placer gold was dredged from one of the creeks flowing through the Blackhawk
claims. This gold was dredged from an area of the creek about 100 yards long.
Stickel & Associates warrant that our services are performed, within the
limits described by our clients, with the usual thoroughness and competence
of the geological engineering profession. No other warranty or
representation, either expressed or implied, is included or intended in our
proposals or reports or contracts.
<PAGE>
Letter Report
MM&E Corporation
May 14, 1985
Page 3
We appreciate the opportunity of presenting this report. If you have any
questions, please contact this office.
Very truly yours,
STICKEL & ASSOCIATES
s/J.F. Stickel
___________________
J.F. Stickel, RG 2999
JFS/hr
April 25, 1986
It is our opinion that the described and proven "indicated" ore reserves are
based on data as described above.
STICKEL & ASSOCIATES
s/J.F. Stickel
___________________
J.F. Stickel, RG 2999
