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Can Cal Resources
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
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10-K 2016-12-31 Annual: 2016-12-31
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10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-10-09 Other Events, Exhibits
8-K 2019-02-06 Sale of Shares, Officers, Other Events
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CCRE 2018-09-30
Part I - Financial Information
Item 1. Financial Statements.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Item 4. Controls and Procedures.
Part II - Other Information
Item 1. Legal Proceedings.
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 3. Defaults Upon Senior Securities.
Item 4. Mine Safety Disclosures.
Item 5. Other Information.
Item 6. Exhibits.
EX-31.1 cancal_10q-ex3101.htm
EX-32.1 cancal_10q-ex3201.htm

Can Cal Resources Earnings 2018-09-30

CCRE 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 cancal_10q-093018.htm FORM 10-Q

Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2018

 

[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from __________ to ____________

 

Commission file number 000-26669

 

CAN-CAL RESOURCES LTD.

(Exact name of registrant as specified in its charter)

 

Nevada   86-0865852
(State or other jurisdiction   (I.R.S. Employer
of incorporation or organization)   Identification No.

 

42 Springfield Avenue, Red Deer, Alberta, Canada, T4N 0C7

(Address of principal executive offices) (Zip Code)

 

403.342.6221

(Registrant’s telephone number, including area code)

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 [_]
   
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] No [_]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer [_]   Accelerated filer [_]
Non-accelerated filer [_] (Do not check if a smaller reporting company) Smaller reporting company [X]
      Emerging growth company [_]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes [_] No [_]
   

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [_] No [X]
   

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 43,667,060 common shares issued and outstanding as at November 13, 2018.

 

 

 

 

 

   

 

 

 

CAN-CAL RESOURCES LTD.

FORM 10-Q

 

TABLE OF CONTENTS

 

    Page
     
PART I – FINANCIAL INFORMATION   3
  Item 1. Financial Statements   3
    Balance Sheets as of September 30, 2018 and December 31, 2017 (Unaudited)   3
    Statements of Operations for the three and nine months ended September 30, 2018 and 2017 (Unaudited)   4
    Statements of Cash Flows for the nine months ended September 30, 2018 and 2017 (Unaudited)   5
    Notes to Financial Statements (Unaudited)   6
  Item 2. Management’s Discussion and Analysis   11
  Item 3. Quantitative and Qualitative Disclosures about Market Risk   16
  Item 4. Controls and Procedures   16
       
PART II – OTHER INFORMATION   18
  Item 1. Legal Proceedings   18
  Item 1A. Risk Factors   19
  Item 2. Unregistered Sales of Equity Securities and Use of Proceeds   19
  Item 3. Defaults Upon Senior Securities   20
  Item 4. Mine Safety Disclosures   20
  Item 5. Other Information   20
  Item 6. Exhibits   20
SIGNATURES 21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 1 
 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

Our unaudited interim financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.

 

It is the opinion of management that the unaudited interim financial statements for the quarter ended September 30, 2018 include all adjustments necessary in order to ensure that the unaudited interim financial statements are not misleading.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 2 

 

 

Can-Cal Resources Ltd.

(An Exploration Company)

Balance Sheets

(Unaudited)

 

   September 30, 2018   December 31, 2017 
Assets          
           
Current Assets          
Cash  $9,877   $769 
Other current assets   5,790    5,790 
Total Current Assets   15,667    6,559 
           
Total Assets  $15,667   $6,559 
           
Liabilities and Stockholders’ Deficit          
           
Current Liabilities          
Accounts payable  $301,041   $310,817 
Accounts payable, related party   6,759    506 
Accrued expenses   6,999    8,679 
Accrued expenses, related party   102,805    117,913 
Unearned revenues, related party   557,500    402,438 
Notes payable, related parties   146,885    139,871 
Total Current Liabilities   1,121,989    980,224 
           
Total Liabilities   1,121,989    980,224 
           
Commitments and Contingencies          
           
Stockholders’ Equity (Deficit)          
Preferred stock, $0.001 par value, 10,000,000 shares authorized; no shares issued and outstanding        
Common stock, $0.001 par value, 100,000,000 shares authorized; 43,667,060 shares issued and outstanding as at September 30, 2018 and December 31, 2017   43,667    43,667 
Additional paid-in-capital   10,595,697    10,595,697 
Accumulated deficit   (11,745,686)   (11,613,029)
Total Stockholders’ Equity (Deficit)   (1,106,322)   (973,665)
           
Total Liabilities and Stockholders’ Equity (Deficit)  $15,667   $6,559 

 

The accompanying notes are an integral part of these unaudited interim financial statements.

 

 

 

 3 

 

 

Can-Cal Resources Ltd.

(An Exploration Company)

Statement of Operations

(Unaudited)

 

  

Three Months Ended

September 30,

2018

  

Three Months Ended

September 30,

2017

  

Nine Months

Ended

September 30,

2018

  

Nine Months

Ended

September 30,

2017

 
                 
Operating expenses                    
Exploration costs  $   $   $1,251   $4,953 
General and administrative expense   28,374    7,392    142,947    74,586 
Director fees   18,750        56,250     
Total operating expenses   47,124    7,392    200,448    79,539 
                     
Net loss from operations   (47,124)   (7,392)   (200,448)   (79,539)
                     
Other income (expense)                    
Interest expense, related party   (2,283)   (2,891)   8,943    (8,579)
Gain from sale of assets               9,000 
Other income               700 
Foreign exchange loss   (528)   (1,521)   (137)   (3,042)
AP write-off           58,985     
Total other income (expense)   (2,811)   (4,412)   67,791    (1,921)
                     
Loss before provision for income taxes   (49,935)   (11,804)   (132,657)   (81,460)
Provision for taxes                
                     
Net loss  $(49,935)  $(11,804)  $(132,657)  $(81,460)
                     
Loss per common share – Basic and diluted  $(0.00)  $(0.00)  $(0.00)  $(0.00)
                    
Weighted average number of common shares outstanding, basic and diluted   43,667,060    42,867,060    43,667,060    42,867,060 

 

 

 

 

The accompanying notes are an integral part of these unaudited interim financial statements.

 

 

 

 4 

 

 


Can-Cal Resources Ltd.

(An Exploration Company)

Statements of Cash Flows

(Unaudited)

 

 

   Nine Months Ended
September 30, 2018
   Nine Months Ended
September 30, 2017
 
Operating activities          
Net loss for the year  $(132,657)  $(81,460)
Adjustments to reconcile net loss to net cash used in operating activities          
Changes in operating assets and liabilities          
Accounts payable and accrued expenses   (5,203)   (5,031)
Accounts payable and accrued expenses, related party   (15,108)   8,579 
Gain on debt forgiveness   (58,985)    
Unearned revenues, related party   155,062    73,584 
Net cash (used in) operating activities   (56,891)   (4,328)
Liquidation of AP   58,985     
Sub-total   2,094     
           
Financing activities          
Proceeds from issuance of loans payable , related party   7,014    6,052 
Net cash provided by financing activities   7,014    6,052 
           
Net changes in cash and equivalents   9,108    1,724 
           
Cash and equivalents at beginning of the period   769     
           
Cash and equivalents at end of the period  $9,877   $1,724 
           
SUPPLEMENTAL CASH FLOW INFORMATION          
Cash paid in interest  $   $ 
Cash paid for income taxes  $   $ 
Non-cash gain on elimination of payables  $58,895   $ 

 

 

The accompanying notes are an integral part of these unaudited interim financial statements.

 

 

 

 5 

 

 

Can-Cal Resources Ltd.

(An Exploration Company)

Notes to Unaudited Financial Statements

For the three and nine months ended September 30, 2018 and 2017

 

1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Nature of Business

 

Can-Cal Resources Ltd. (“Can-Cal” or the “Company”) is a Nevada corporation incorporated on March 22, 1995.

 

The Company is an exploration company engaged in the exploration for precious metals, specifically focused on mineral exploration projects. We have examined various prospective mineral properties for precious metals and acquired those deemed promising. We currently own, lease or have mining interest in two mineral properties in the southwestern United States (California and Arizona, as follows: Cerbat, Arizona and Pisgah, California). The Company previously had mineral rights in Owl Canyon, California and Wikieup, Arizona, which have now been abandoned.

 

As an exploration stage enterprise, the Company discloses the deficit accumulated during the exploration stage. An entity remains in the exploration stage until such time as proven or probable reserves have been established for its deposits. Upon the location of commercially mineable reserves, the Company plans to prepare for mineral extraction and enter the development stage. To date, the exploration stage of the Company’s operations consists of contracting with geologists who sample and assess the mining viability of the Company’s claims.

 

Summary of Significant Accounting Policies

 

Basis of Presentation

 

The accompanying unaudited interim financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission set forth in Article 8 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.  The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented.  Unaudited interim results are not necessarily indicative of the results for the full fiscal year.  These financial statements should be read in conjunction with the financial statements of the Company for the fiscal year ended December 31, 2017 and notes thereto contained in the Company’s Annual Report on Form 10-K.

 

The Company’s functional and reporting currency is the United States dollar (USD). Monetary assets and liabilities denominated in foreign currencies are translated in accordance with ASC 820, using the exchange rate prevailing at the balance sheet date. Gains and losses arising on settlement of foreign currency denominated transactions or balances are included in the determination of income. Foreign currency transactions are primarily undertaken in the Canadian dollar (CDN). The Company has not, to the date of these financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

 

Certain amounts in the prior periods presented have been reclassified to conform to the current period financial statement presentation.

 

Exploration Stage Company

 

The Company is currently an exploration stage company. As an exploration stage enterprise, the Company discloses the deficit accumulated during the exploration stage and the cumulative statements of operations and cash flows from inception to the current balance sheet date. The Company has incurred an accumulated deficit of $11,613,029 for the period from inception (March 22, 1995) through December 31, 2017. An entity remains in the exploration stage until such time as proven or probable reserves have been established for its deposits. Upon the location of commercially mineable reserves, the Company plans to prepare for mineral extraction and enter the development stage. To date, the exploration stage of the Company’s operations consists of contracting with geologists who sample and assess the mining viability of the Company’s claims.

 

 

 

 6 

 

 

Use of Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Gains and Losses from Debt Extinguishment

 

Gain from extinguishment of debt. The Company reflects gain on extinguishment of debt as a credit to earnings from operations in the period in which it is determined that the liability has been forgiven either by the vendor, judicial authority, or the passing of the stature of limitations. Gains from related parties are credited to paid in capital.

 

Basic and Diluted Loss per Share

 

The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss adjusted on an “as if converted” basis, by the weighted average number of common shares outstanding plus potential dilutive securities. For 2018 and 2017 potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share.

 

2. GOING CONCERN

 

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As shown in the accompanying financial statements, the Company had a net loss of $49,935 and $132,657 for the three and nine months ended September 30, 2018, respectively, has used net cash in operating activities of $8,066,726 from inception and had a working capital deficit of $1,106,322 at September 30, 2018. The future of the Company is dependent upon its ability to obtain financing and upon future profitable operations from the development of its new business opportunities. Management has plans to seek additional capital through private placements and public offerings of its common stock. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

 

The ability of the Company to continue as a going concern is dependent on securing additional sources of capital and the success of the Company’s plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

3. RELATED PARTY TRANSACTIONS

 

Material Supply Agreement

 

On April 9, 2013, the Company entered into a material supply agreement (“Original MSA”) with Candeo. On March 3, 2014, the Company entered into an amended material supply agreement (“Amended MSA”). Pursuant to the Amended MSA, Candeo is entitled to purchase Material from the Pisgah Property at a price equal to the greater of $15 per ton and the net sales margin per ton removed from the Pisgah Property realized as follows: (i) 35% of the net sales margins during the first year of mining; and (ii) 50% of the net sales margins for the subsequent years during the term of the Amended MSA. Under the Amended MSA, Candeo has the right to remove an Initial Amount of up to 1,000,000 tons of Material from the Pisgah Property and Additional Amounts of 1,000,000 tons each, upon the successful removal of the Initial Amount from the Pisgah Property. Candeo’s right to remove the Additional Amounts from the Pisgah Property is on the basis that once Candeo has removed the first Additional Amount of the Material from the Pisgah Property, it shall have the right to remove subsequent Additional Amounts of Material from the Property, so long as it removes its then current Additional Amount. As such, Candeo’s right to extend the term of the Amended MSA is entirely based on Candeo’s successful performance of its Material removal commitments under the terms of the Amended MSA.

 

 

 

 7 

 

 

Under the Amended MSA, Candeo was required to purchase a minimum of ten thousand (10,000) tons of Material during each of the first three years of the term of the agreement, all at a purchase price of $15.00 per ton, for a total payment of $150,000 per year in each of the first three years of the Term, with credit being given by the Company to Candeo for all pre-paid tons of Material that have already been purchased and paid for under the Original MSA. The Pre-Purchased Material will remain on the Pisgah Property until Candeo commences its production operations or engages the Company to mine and remove Material on Candeo’s behalf.

 

The term of the Amended MSA was extended from an initial term of ten (10) years to twenty (20) years (the “Primary Term”) and Candeo has the option to extend the term for an additional thirty (30) years exercisable at any time with no less than three (3) months written notice prior to the expiration of the Primary Term, provided that Candeo is not in default under any of the provisions of the Amended MSA and that the whole of the Initial Amount has been removed from the Property.

 

The Court decision rendered on July 9, 2018 incorporated the Terms of the “Stipulation and Agreement of Settlement” and set the terms of the second amended material supply agreement (“Second Amended MSA”). The terms thereof include the following:

 

PURCHASE PAYMENT. The price that Candeo shall pay to Can-Cal per ton of Material (“Purchase Payment”) purchased by Candeo (or its assign or assigns) following the date hereof, shall be as follows:

 

(a)With respect to the sale of Material that is not a Minimum Purchase (as hereafter defined), 20% of the Gross Sale Revenue; and
(b)With respect to the sale of Material that is a Minimum Purchase, fifteen U.S. dollars (US$15.00) per ton; and
(c)In respect of Minimum Purchases referred to in section 7(b) and (c) below only, in the event that the Gross Sale Revenue per ton is greater than U.S.$15.00 per ton, an amount equal to 20% of the amount that the Gross Sale Revenue per ton exceeds US$15.00 per ton.

 

Candeo (or its assign or assigns) shall pay such Purchase Payment to Can-Cal quarterly, with each Purchase Payment being made on or before the January 15, April 15, July 15 or October 15 immediately following the date the subject Material has been purchased by Candeo, except where a more specific date for payment is set forth in Paragraph 7 below.

 

MINIMUM PURCHASES OF MATERIAL. Candeo will purchase a minimum amount of Material (the “Minimum Purchases”) as follows:

 

(a)twenty-five thousand (25,000) tons of Material shall be paid for within five (5) days following the Start Date, with an option of Candeo to purchase an additional twenty thousand (20,000) tons of Material exercisable and payable by Candeo within 180 days following the Start Date (“Option 1”), and only upon the prior exercise and payment in full under Option 1, then Candeo shall be granted the right to purchase an additional forty thousand (40,000) tons of Material exercisable and payable by Candeo within 365 days following the Start Date (“Option 2”);

 

(b)ten thousand (10,000) tons of Material during each of the first three years following the first anniversary of the Start Date, unless Option 1 has not been exercised and paid in full by Candeo, in which case this Minimum Purchase obligation (10,000 tons per year) commences upon the Start Date and payment in full for the first year ($150,000) thereunder must be made within 180 days following the Start Date; and

 

(c)in each year following the three year period referred to in section 7(b) above, the Minimum Purchase amount will increase (or decrease) from ten thousand (10,000) tons of Material by an amount equal to the increase (or decrease) in the Consumer Price Index for the calendar year ended immediately prior to the calculation (“the CPI adjustment”).

 

 

 

 

 8 
 

 

For greater clarity, only in respect of the Minimum Purchases referenced in section 7(a) above, the Purchase Payment shall be limited to and shall not exceed the amount of US$15.00 per ton. The Material purchased as part of the Minimum Purchases by Candeo may remain on the Property until Candeo commences its production operations, which will be subject to all necessary regulatory and other approvals required to remove Material from the Property, such as permits, certified weigh scale, productions plan, environmental reclamation plan (if applicable) and insurance all of which shall be the responsibility and at the sole cost of Candeo. Candeo hereby agrees that it will provide thirty (30) days prior written notice to Can-Cal of the commencement of the operations on the Property, which notice will state the anticipated amount of Material to be removed, the period of time during which the removal will occur and the means that will be used to effect such removal. A separate License Agreement shall secure Candeo’s irrevocable right to access and remove Material purchased and paid for, but not removed from the Property.

 

Pursuant to the Stipulation & Settlement Agreement, Can-Cal must also restructure its Board of Directors and amend its Articles of Incorporation, at shareholder meeting to be held this December or January, by adding a new Article 14 to read as follows:

 

“FOURTEENTH: Notwithstanding any other provision of this Certificate of Amendment of Articles of Incorporation or the By-laws of the corporation, and in addition to any affirmative vote of the holders of any particular class of stock of the corporation required by applicable law, the Articles of Incorporation or the By-laws of the corporation, the affirmative vote of the holders of at least 90% of the voting power of the shares of the then outstanding voting stock of the corporation, voting together as a single class, shall be required to authorize any of the Supermajority Matters. For purposes hereof, the “Supermajority Matters” are: (i) authorization of the corporation to file a voluntary petition for relief under the provisions of Chapter 11 of Title 11 of the United States Code (i.e., the U.S. Bankruptcy Code); (ii) modification of that certain Second Amended Material Supply Agreement by and between the corporation and Candeo Lava Products, Inc.; (iii) increase to the corporation’s outstanding voting capital securities to more than 100 million outstanding votes, in the aggregate; and (iv) the Amendment or repeal of any provisions of this Article FOURTEENTH or the adoption of any provisions inconsistent with this Article FOURTEENTH.”

 

Unearned revenues as reflected on the Balance Sheet are a reflection of amounts received from Candeo based on the Amended MSA. Balances as at September 30, 2018 and December 31, 2017 were $557,500 and $402,438, respectively.

 

Compensation

 

On June 30, 2010, the Company entered into a consulting agreement, with a Board of Director’s consulting firm, FutureWorth Capital Corp. The terms of the agreement include annual compensation of $60,000, payable monthly. The Company may elect to satisfy payment in shares of common stock in lieu of cash at a market value equal to $0.10 above the average closing trading price of the common stock for the preceding five (5) days from the date of such election. No payments have been made in cash or stock to date. As of December 31, 2017, the Company owed FutureWorth Capital Corp. $506 (2016 - $506) as included in accounts payable, related parties, for service prior to, and during the service period under the consulting agreement. The consulting agreement was terminated on February 27, 2013 with Mr. William Hogan’s resignation from the Board of Directors.

 

On June 10, 2016, the Company entered into a consulting agreement, with a Board of Director’s consulting firm, For Life Financial. The terms of the agreement include monthly compensation of $2,100 CAD for managing the Company. On September 10, 2016, the Company amended the agreement to include additional annual compensation $50,000 USD, payable monthly as the scope of work increased.

 

Stock-Based Compensation

 

All warrants previously issued by the Company have expired as of the fiscal year ending December 31, 2014. No new warrants have been issued as of September 30, 2018.

 

On December 31, 2017, 650,000 Stock Options and 800,000 shares were issued as compensation for work done by consultants and directors of the Company. No new stock options have been issued as of September 30, 2018. (Note 9)

 

 

 

 9 

 

 

4. NOTES PAYABLE, RELATED PARTIES

 

Notes payable, related parties consisted of the following as of September 30, 2018 and December 31, 2017, respectively:

 

  

September 30,

2018

  

December 31,

2017

 
Note payable (1)  $146,885   $129,871 
Promissory note payable (2)       10,000 
Promissory note payable (3)        
Total related party notes payable  $146,885   $139,871 

 

(1)Note payable to the former CEO, unsecured, bearing interest at 10% and due on demand. Per the settlement of a lawsuit, the terms of this note were adjusted. Legal expenses incurred as a result of the lawsuit would bear interest at 10%, however, all other expenses would bear interest at 5%.
(2)Promissory note payable originated on November 30, 2012 with FutureWorth Capital Corp., a consulting firm owned by our former Chairman of the Board of Directors, unsecured, bearing interest at 10%, matures on November 29, 2013. In connection with the promissory note, the Company granted warrants to purchase 20,000 shares of the Company’s common stock at an exercise price of $0.10. The warrants expired on November 29, 2014. Repaid on January 4, 2018.
(3)Promissory note payable originated on February 1, 2018 with Candeo, a company in which the former CEO is a director. The note bears an interest rate of 10% per annum and is payable on or before December 31, 2018. On July 9, 2018, the principal and accrued interest was converted to a material purchase for inventory.

 

The following presents components of interest expense by instrument type:

 

   Three Months Ended
September 30,
2018
   Three Months Ended
September 30,
2017
   Nine Months Ended
September 30,
2018
   Nine Months Ended
September 30,
2017
 
Interest on notes payable, related parties  $(2,283)  $(2,891)  $8,943   $(8,579)
Total interest expense  $(2,283)  $(2,891)  $8,943   $(8,579)

 

The negative interest recognized in the nine months ended September 30, 2018 is due to a recalculation on the loan per revisions to the agreement from the lawyers of the lawsuit recognized in the first three months of 2018. Previously omitted costs were added to the outstanding loan and the interest rate was left at 10% for legal expenses incurred but adjusted to 5% for all other expenses.

 

 

 

 10 

 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

Forward-Looking Statements

 

This quarterly report contains “forward-looking statements”. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, statements regarding: the plans, strategies and objections of management for future operations; the future plans or business of our company; future economic conditions or performance; and any statements of assumptions underlying any of the foregoing.

 

Forward-looking statements may include the words “may,” “could,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this report. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the dates on which they are made. Except as required by applicable law, we do not intend, and undertake no obligation, to update any forward-looking statement.

 

Although we believe the expectations reflected in the forward-looking statements in this report are reasonable, actual results could differ materially from those projected or assumed in any forward-looking statements. All forward-looking statements are subject to change and inherent risks and uncertainties. The factors impacting these risks and uncertainties include, but are not limited to:

 

  · our current lack of working capital;
     
  · a possible inability to raise additional financing;
     
  · the fact that our accounting policies and methods are fundamental to how we report our financial condition and results of operations, and they may require our management to make estimates about matters that are inherently uncertain;
     
  · deterioration in general or regional economic conditions;
     
  · adverse state or federal legislation or regulations that increase the costs of compliance;
     
  · inability to efficiently manage our operations; and
     
  · the unavailability of funds for capital expenditures.

 

All financial information contained herein is shown in United States dollars unless otherwise stated. Our financial statements are prepared in accordance with United States generally accepted accounting principles.

 

In this quarterly report, unless otherwise specified, all references to “shares” refer to shares of common stock in the capital of our company.

 

As used in this quarterly report on Form 10-Q, the terms “we”, “us” “our” and “Can-Cal” refer to Can-Cal Resources Ltd., a Nevada corporation, unless otherwise specified.

 

 

 

 11 

 

 

Corporate Overview

 

Can-Cal Resources Ltd. is a publicly traded exploration stage company engaged in seeking the acquisition and exploration of metals mineral properties. As part of its growth strategy, the Company will focus its future activities in the USA, with an emphasis on the Pisgah Mountain, California property and the Cerbat, Arizona property.

 

At September 30, 2018, we had cash on hand of approximately $9,877 available to sustain operations. At December 31, 2017, cash on hand was $769. Accordingly, we are uncertain as to whether the Company may continue as a going concern. While we may seek additional investment capital, or possible funding or joint venture arrangements with other mining companies, we have no assurance that such investment capital or additional funding and joint venture arrangements will be available to the Company.

 

On April 9, 2013, the Company entered into a material supply agreement (“Original MSA”) with Candeo. On March 3, 2014, the Company entered into an amended material supply agreement (“Amended MSA”). Pursuant to the Amended MSA, Candeo is entitled to purchase Material from the Pisgah Property at a price equal to the greater of $15 per ton and the net sales margin per ton removed from the Pisgah Property realized as follows: (i) 35% of the net sales margins during the first year of mining; and (ii) 50% of the net sales margins for the subsequent years during the term of the Amended MSA. Under the Amended MSA, Candeo has the right to remove an Initial Amount of up to 1,000,000 tons of Material from the Pisgah Property and Additional Amounts of 1,000,000 tons each, upon the successful removal of the Initial Amount from the Pisgah Property. Candeo’s right to remove the Additional Amounts from the Pisgah Property is on the basis that once Candeo has removed the first Additional Amount of the Material from the Pisgah Property, it shall have the right to remove subsequent Additional Amounts of Material from the Property, so long as it removes its then current Additional Amount. As such, Candeo’s right to extend the term of the Amended MSA is entirely based on Candeo’s successful performance of its Material removal commitments under the terms of the Amended MSA.

 

Under the Amended MSA, Candeo was required to purchase a minimum of ten thousand (10,000) tons of Material during each of the first three years of the term of the agreement, all at a purchase price of $15.00 per ton, for a total payment of $150,000 per year in each of the first three years of the Term, with credit being given by the Company to Candeo for all pre-paid tons of Material that have already been purchased and paid for under the Original MSA. The Pre-Purchased Material will remain on the Pisgah Property until Candeo commences its production operations or engages the Company to mine and remove Material on Candeo’s behalf.

 

The term of the Amended MSA was extended from an initial term of ten (10) years to twenty (20) years (the “Primary Term”) and Candeo has the option to extend the term for an additional thirty (30) years exercisable at any time with no less than three (3) months written notice prior to the expiration of the Primary Term, provided that Candeo is not in default under any of the provisions of the Amended MSA and that the whole of the Initial Amount has been removed from the Property.

 

The Court decision rendered on July 9, 2018 incorporated the Terms of the “Stipulation and Agreement of Settlement” and set the terms of the second amended material supply agreement (“Second Amended MSA”). The terms thereof include the following:

 

PURCHASE PAYMENT. The price that Candeo shall pay to Can-Cal per ton of Material (“Purchase Payment”) purchased by Candeo (or its assign or assigns) following the date hereof, shall be as follows:

 

(a)With respect to the sale of Material that is not a Minimum Purchase (as hereafter defined), 20% of the Gross Sale Revenue; and
(b)With respect to the sale of Material that is a Minimum Purchase, fifteen U.S. dollars (US$15.00) per ton; and
(c)In respect of Minimum Purchases referred to in section 7(b) and (c) below only, in the event that the Gross Sale Revenue per ton is greater than U.S.$15.00 per ton, an amount equal to 20% of the amount that the Gross Sale Revenue per ton exceeds US$15.00 per ton.

 

Candeo (or its assign or assigns) shall pay such Purchase Payment to Can-Cal quarterly, with each Purchase Payment being made on or before the January 15, April 15, July 15 or October 15 immediately following the date the subject Material has been purchased by Candeo, except where a more specific date for payment is set forth in Paragraph 7 below.

 

 

 

 

 12 
 

 

MINIMUM PURCHASES OF MATERIAL. Candeo will purchase a minimum amount of Material (the “Minimum Purchases”) as follows:

 

(a)twenty-five thousand (25,000) tons of Material shall be paid for within five (5) days following the Start Date, with an option of Candeo to purchase an additional twenty thousand (20,000) tons of Material exercisable and payable by Candeo within 180 days following the Start Date (“Option 1”), and only upon the prior exercise and payment in full under Option 1, then Candeo shall be granted the right to purchase an additional forty thousand (40,000) tons of Material exercisable and payable by Candeo within 365 days following the Start Date (“Option 2”);

 

(b)ten thousand (10,000) tons of Material during each of the first three years following the first anniversary of the Start Date, unless Option 1 has not been exercised and paid in full by Candeo, in which case this Minimum Purchase obligation (10,000 tons per year) commences upon the Start Date and payment in full for the first year ($150,000) thereunder must be made within 180 days following the Start Date; and

 

(c)in each year following the three year period referred to in section 7(b) above, the Minimum Purchase amount will increase (or decrease) from ten thousand (10,000) tons of Material by an amount equal to the increase (or decrease) in the Consumer Price Index for the calendar year ended immediately prior to the calculation (“the CPI adjustment”).

 

For greater clarity, only in respect of the Minimum Purchases referenced in section 7(a) above, the Purchase Payment shall be limited to and shall not exceed the amount of US$15.00 per ton. The Material purchased as part of the Minimum Purchases by Candeo may remain on the Property until Candeo commences its production operations, which will be subject to all necessary regulatory and other approvals required to remove Material from the Property, such as permits, certified weigh scale, productions plan, environmental reclamation plan (if applicable) and insurance all of which shall be the responsibility and at the sole cost of Candeo. Candeo hereby agrees that it will provide thirty (30) days prior written notice to Can-Cal of the commencement of the operations on the Property, which notice will state the anticipated amount of Material to be removed, the period of time during which the removal will occur and the means that will be used to effect such removal. A separate License Agreement shall secure Candeo’s irrevocable right to access and remove Material purchased and paid for, but not removed from the Property.

 

Pursuant to the Stipulation & Settlement Agreement, Can-Cal must also restructure its Board of Directors and amend its Articles of Incorporation, at shareholder meeting to be held this December or January, by adding a new Article 14 to read as follows:

 

“FOURTEENTH: Notwithstanding any other provision of this Certificate of Amendment of Articles of Incorporation or the By-laws of the corporation, and in addition to any affirmative vote of the holders of any particular class of stock of the corporation required by applicable law, the Articles of Incorporation or the By-laws of the corporation, the affirmative vote of the holders of at least 90% of the voting power of the shares of the then outstanding voting stock of the corporation, voting together as a single class, shall be required to authorize any of the Supermajority Matters. For purposes hereof, the “Supermajority Matters” are: (i) authorization of the corporation to file a voluntary petition for relief under the provisions of Chapter 11 of Title 11 of the United States Code (i.e., the U.S. Bankruptcy Code); (ii) modification of that certain Second Amended Material Supply Agreement by and between the corporation and Candeo Lava Products, Inc.; (iii) increase to the corporation’s outstanding voting capital securities to more than 100 million outstanding votes, in the aggregate; and (iv) the Amendment or repeal of any provisions of this Article FOURTEENTH or the adoption of any provisions inconsistent with this Article FOURTEENTH.”

 

 

 

 

 

 

 

 13 

 

 

Results of Operations

 

Three and Nine Months Ended September 30, 2018 Compared to the Three and Nine Months Ended September 30, 2017

 

Results of Operations for the Three and Nine Months Ended September 30, 2018 and 2017:

 

   Three Months Ended September 30, 2018   Three Months Ended September 30, 2017   Nine Months Ended September 30, 2018   Nine Months Ended September 30, 2017 
                 
Operating expenses                    
Exploration costs  $   $   $1,251   $4,953 
General and administrative expense   28,374    7,392    142,947    74,586 
Director fees   18,750        56,250     
Total operating expenses   47,124    7,392    200,448    79,539 
                     
Net loss from operations   (47,124)   (7,392)   (200,448)   (79,539)
                     
Other income (expense)                    
Interest expense, related party   (2,283)   (2,891)   8,943    (8,579)
Gain from sale of assets               9,000 
Other income               700 
Foreign exchange gain (loss)   (528)   (1,521)   (137)   (3,042)
Liability write-off           58,985     
Total other income (expense)   (2,811)   (4,412)   67,791    (1,921)
                     
Loss before provision for income taxes   (49,935)   (11,804)   (132,657)   (81,460)
Provision for taxes                
                     
Net loss  $(49,935)  $(11,804)  $(132,657)  $(81,460)

 

Exploration Costs:

 

Exploration costs were $Nil and $1,251 for the three and nine months ended September 30, 2018, respectively, and $Nil and $4,953 for the three and nine months ended September 30, 2017, respectively. The costs in both years were related to property taxes.

 

General and Administrative:

 

General and administrative expenses were $28,374 and $142,947 for the three and nine months ended September 30, 2018, respectively, and $7,392 and $74,586 for 2017, respectively. The increase in costs from 2018 compared to 2017 is from the overall increase in general and administrative expense in due to management fees and filing fees.

 

 

 

 14 

 

 

Director Fees:

 

Director fees were $18,750 and $56,250 for the three and nine months ended September 30, 2018, respectively, and $Nil and $Nil for the three and nine months ended September 30, 2017, respectively. During the settlement of a lawsuit from the shareholders, it was deemed that the three directors of the Company would each be compensated $25,000 per year starting January 1, 2017, however, the entirety of the 2017 amounts were recorded in the fourth quarter of 2017.

 

Net Operating Gain or Loss:

 

Net operating loss for the three and nine months ended September 30, 2018 was $49,935 or $0.00 per share and $132,657 or $0.00 per share, respectively, there was a net operating loss of $11,804 or $0.00 per share and $81,460 or $0.00 for the three and nine months ended September 30, 2017, respectively. This operating loss increase is primarily due to higher General and Administrative expense and Director fees as explained above.

 

Interest Expense:

 

Interest expense for the three and nine months ended September 30, 2018 was an expense of $2,283 and a recovery of $8,943, respectively, and a $2,891 and $8,579 expense for 2017, respectively. The recovery in the nine months ended September 30, 2018 was due to a recalculation of the related party loan outstanding with G. Michael Hogan that was recognized in the first three months of the year. After being reviewed by the lawyers involved in the lawsuit, it was determined that previously omitted expenses would be included and that legal expenses would remain bearing an interest rate of 10%, but all other expenses would bear an interest rate of 5%.

 

Gain on Sale of Assets:

 

Gain on sale of assets in 2017 occurred due to the sale of a truck that had been wholly depreciated on the books.

 

Other Income

 

Other income in 2017 was $700 received for a movie shoot on Can-Cal’s property in May 2017.

 

Liability Write-off:

 

Certain liabilities were written off in the year as backup was provided showing that vendors had acknowledged a zero balance. Expense and payment transactions for these would have occurred during the period that the comprehensive Form 10-K had covered from October 1, 2015 to September 30, 2017 when backup for these payments had not previously been received.

 

Net Loss:

 

For the three months ended September 30, 2018, net loss was largely impacted by the general and administrative expense and director fees while the nine months ended September 30, 2018 was also impacted from the liability write-off in the first three months of 2018. The nine months ended September 30, 2017 saw a $9,700 positive impact from the gain on sale of assets and other income.

 

 

 

 15 

 

 

LIQUIDITY AND CAPITAL RESOURCES

 

The following table summarizes total assets, accumulated deficit, stockholders’ equity (deficit) and working capital at September 30, 2018 and December 31, 2017.

 

  

September 30,

2018

  

December 31,

2017

 
Total Assets  $15,667   $6,559 
Accumulated (Deficit)   (11,745,686)   (11,613,029)
Stockholders’ Equity (Deficit)   (1,106,322)   (973,665)
Working Capital (Deficit)  $(1,106,322)  $(973,665)

 

At September 30, 2018, the Company had total assets of $15,667, consisting of prepaid expenses and cash, compared to assets of $6,559 at December 31, 2017. The Company has implemented financial controls in the business to ensure each expense is warranted and needed. The Company had $9,877 of cash on hand at September 30, 2018.

 

Off Balance Sheet Arrangements

 

The Company does not have any off-balance sheet arrangements of any kind.

 

Contractual Obligations

 

An agreement was signed effective June 10, 2016 with For Life Financial for the office administration of the Company and can be terminated by either party with one month’s written notice. An agreement was signed effective September 10, 2016 to manage the Company. The contract is effective until December 31, 2018 and will continue until the earlier of the completion of the services or the termination of the agreement. Termination of the agreement may be for any or no reason upon four months written notice. The Company may, in its sole discretion, request For Life Financial to cease performing services during the four-month period. For Life Financial may terminate this agreement for any or no reason upon two months written notice.

 

On September 1, 2017, an agreement was signed with Red to Black Inc. to perform the accounting for the Company. The contract is effective until December 31, 2017 and will automatically renew and can be terminated by either party with thirty days notice. No new contract has been signed and the automatic renewal has been continuing.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and are not required to provide the information under this item.

 

ITEM 4. CONTROLS AND PROCEDURES.

 

Disclosure Controls and Procedures

 

We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) and 15d-15(f) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. We conducted an evaluation (the “Evaluation”), under the supervision and with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures (“Disclosure Controls”) as of the end of the period covered by this report pursuant to Rule 13a-15 of the Exchange Act. Based on this Evaluation, our Chief Executive Officer has concluded that the Company’s disclosure controls and procedures were not effective because of the identification of a material weakness in our internal control over financial reporting which is identified below in Management’s Annual Report on Internal Control over Financial Reporting, which we view as an integral part of our disclosure controls and procedures.

 

 

 

 16 

 

 

Changes in Internal Control

 

We have also evaluated our internal control over financial reporting, and there have been no significant changes in our internal controls or in other factors that could significantly affect those controls as of September 30, 2018.

 

Limitations on the Effectiveness of Controls

 

Our management, including our CEO, does not expect that our Disclosure Controls and internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management or board override of the control.

 

The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

 

CEO Certification

 

Appearing immediately following the Signatures section of this report there are Certifications of the CEO. The Company currently has no CFO. The Certification are required in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 (the Section 302 Certifications). This Item of this report, which you are currently reading is the information concerning the Evaluation referred to in the Section 302 Certifications and this information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.

 

 

 

 17 

 

 

PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS.

 

On June 3, 2014, a group of Company shareholders under the direction of Ronald D. Sloan (a former Chief Executive Officer and director of the Company) (collectively the “Plaintiffs”) filed a shareholder derivative complaint in Nevada State Court against the Company, as well as its then current directors (Thompson MacDonald, G. Michael Hogan, and Ron Schinnour), William Hogan, FutureWorth Capital Corp. and Candeo (collectively the “Defendants”). The Plaintiffs are alleging, among other things, that the Defendants caused the Company to enter into a transaction with Candeo involving the Pisgah Property that was not in the best interests of the Company. However, the transaction with Candeo is in the best interests of the Company (see "Note 3 – Related Party Transactions - Material Supply Agreement” in the attached financial statements).

 

There are many other allegations made by the Plaintiffs, all of which are considered by the Defendants to be frivolous with no basis in fact. In fact, due to the actions of the prior management of the Company, the Company would not have been able to continue operations and would have failed without the intervention of new management, including certain of the Defendants, and without entering into the transaction with Candeo. Accordingly, no provision has been recorded in the financial statements of the Company for any payment to the Plaintiffs pursuant to the claim or otherwise. Legal counsel for the Company is Justin Jones, Esq. of Jones Lovelock, LLP of Las Vegas, Nevada.

 

In the ordinary course of business, we are from time to time involved in various pending or threatened legal actions. The litigation process is inherently uncertain and it is possible that the resolution of such matters might have a material adverse effect upon our financial condition and/or results of operations. However, in the opinion of our Board of Directors, matters currently pending or threatened against us are not expected to have a material adverse effect on our financial position or results of operations.     

 

As was press released, published as legal notice in several newspapers, mailed out to shareholders and made available for viewing on Defendants’ Counsel’s websites (www.hollandandhart.com andwww.joneslovelock.com) as well as on Plaintiffs’ Counsel’s website (www.sklarlaw.com/notices/Can-Cal), a Settlement Hearing was held in the Eighth Judicial District Court of the State of Nevada in and for Clark County in Las Vegas, Nevada on July 9, 2018, before the Honorable Elizabeth Goff Gonzalez. The terms of the “Stipulation and Agreement of Settlement” were generally upheld and confirmed, except that a stock award was not granted to the Plaintiffs’ Counsel. The settlement allow for:

 

-the end of the current litigation
-the ratification of the Second Amended and Restated Material Supply Agreement with Candeo Lava Products Inc., which sets out immediate and future lava product sales to it, the receipts of which will cover accounts payables as well as near term basic operating costs
-the creation of a new board of directors

 

The Court decision rendered on July 9, 2018 incorporated the Terms of the “Stipulation and Agreement of Settlement” and set the terms of the second amended material supply agreement (“Second Amended MSA”). The terms thereof include the following:

 

PURCHASE PAYMENT. The price that Candeo shall pay to Can-Cal per ton of Material (“Purchase Payment”) purchased by Candeo (or its assign or assigns) following the date hereof, shall be as follows:

 

(a)With respect to the sale of Material that is not a Minimum Purchase (as hereafter defined), 20% of the Gross Sale Revenue; and
(b)With respect to the sale of Material that is a Minimum Purchase, fifteen U.S. dollars (US$15.00) per ton; and
(c)In respect of Minimum Purchases referred to in section 7(b) and (c) below only, in the event that the Gross Sale Revenue per ton is greater than U.S.$15.00 per ton, an amount equal to 20% of the amount that the Gross Sale Revenue per ton exceeds US$15.00 per ton.

 

Candeo (or its assign or assigns) shall pay such Purchase Payment to Can-Cal quarterly, with each Purchase Payment being made on or before the January 15, April 15, July 15 or October 15 immediately following the date the subject Material has been purchased by Candeo, except where a more specific date for payment is set forth in Paragraph 7 below.

 

 

 

 

 18 
 

 

MINIMUM PURCHASES OF MATERIAL. Candeo will purchase a minimum amount of Material (the “Minimum Purchases”) as follows:

 

(a)twenty-five thousand (25,000) tons of Material shall be paid for within five (5) days following the Start Date, with an option of Candeo to purchase an additional twenty thousand (20,000) tons of Material exercisable and payable by Candeo within 180 days following the Start Date (“Option 1”), and only upon the prior exercise and payment in full under Option 1, then Candeo shall be granted the right to purchase an additional forty thousand (40,000) tons of Material exercisable and payable by Candeo within 365 days following the Start Date (“Option 2”);

 

(b)ten thousand (10,000) tons of Material during each of the first three years following the first anniversary of the Start Date, unless Option 1 has not been exercised and paid in full by Candeo, in which case this Minimum Purchase obligation (10,000 tons per year) commences upon the Start Date and payment in full for the first year ($150,000) thereunder must be made within 180 days following the Start Date; and

 

(c)in each year following the three year period referred to in section 7(b) above, the Minimum Purchase amount will increase (or decrease) from ten thousand (10,000) tons of Material by an amount equal to the increase (or decrease) in the Consumer Price Index for the calendar year ended immediately prior to the calculation (“the CPI adjustment”).

 

For greater clarity, only in respect of the Minimum Purchases referenced in section 7(a) above, the Purchase Payment shall be limited to and shall not exceed the amount of US$15.00 per ton. The Material purchased as part of the Minimum Purchases by Candeo may remain on the Property until Candeo commences its production operations, which will be subject to all necessary regulatory and other approvals required to remove Material from the Property, such as permits, certified weigh scale, productions plan, environmental reclamation plan (if applicable) and insurance all of which shall be the responsibility and at the sole cost of Candeo. Candeo hereby agrees that it will provide thirty (30) days prior written notice to Can-Cal of the commencement of the operations on the Property, which notice will state the anticipated amount of Material to be removed, the period of time during which the removal will occur and the means that will be used to effect such removal. A separate License Agreement shall secure Candeo’s irrevocable right to access and remove Material purchased and paid for, but not removed from the Property.

 

Pursuant to the Stipulation & Settlement Agreement, Can-Cal must also restructure its Board of Directors and amend its Articles of Incorporation, at shareholder meeting to be held this December or January, by adding a new Article 14 to read as follows:

 

“FOURTEENTH: Notwithstanding any other provision of this Certificate of Amendment of Articles of Incorporation or the By-laws of the corporation, and in addition to any affirmative vote of the holders of any particular class of stock of the corporation required by applicable law, the Articles of Incorporation or the By-laws of the corporation, the affirmative vote of the holders of at least 90% of the voting power of the shares of the then outstanding voting stock of the corporation, voting together as a single class, shall be required to authorize any of the Supermajority Matters. For purposes hereof, the “Supermajority Matters” are: (i) authorization of the corporation to file a voluntary petition for relief under the provisions of Chapter 11 of Title 11 of the United States Code (i.e., the U.S. Bankruptcy Code); (ii) modification of that certain Second Amended Material Supply Agreement by and between the corporation and Candeo Lava Products, Inc.; (iii) increase to the corporation’s outstanding voting capital securities to more than 100 million outstanding votes, in the aggregate; and (iv) the Amendment or repeal of any provisions of this Article FOURTEENTH or the adoption of any provisions inconsistent with this Article FOURTEENTH.”

 

ITEM 1A. RISK FACTORS.

 

As we are a smaller reporting company, we are not required to provide the information required by this item.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

 

Since the beginning of the fiscal quarter ended September 30, 2018, we have not sold any equity securities that were not registered under the Securities Act of 1933, as amended, that were not previously reported in a quarterly report on Form 10-Q or a current report on Form 8-K.

 

 

 

 19 
 

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

 

Since the beginning of the fiscal quarter ended September 30, 2018, we have had no senior securities issued and outstanding.

 

ITEM 4. MINE SAFETY DISCLOSURES.

 

Not applicable.

 

ITEM 5. OTHER INFORMATION.

 

None.

 

ITEM 6. EXHIBITS.

 

      Incorporated by reference

Exhibit

Exhibit Description

Filed herewith

Form

Period  ending

Exhibit

Filing date

3.1 Articles of Incorporation   Form 10-SB N/A 3.0 7/9/1999
3.2 Amendment to the Articles of Incorporation   Form 10-SB N/A 3.1 7/9/1999
3.3 By-Laws   Form 10-SB N/A 3.2 7/9/1999
10.1 Form of Mineral Lease Agreement   10-K 12/31/2014 10.1 1/7/2016
10.2 Form of Promissory Note with FutureWorth Capital   10-K 12/31/2014 10.2 1/7/2016
10.3 Form of Subscription Agreement for Promissory Note with FutureWorth Capital   10-K 12/31/2014 10.3 1/7/2016
10.4 Form of Warrant Certificate with FutureWorth Capital   10-K 12/31/2014 10.4 1/7/2016
31.1 Certification of Principal Executive Officer/Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act X        
32.1 Certification of Principal Executive Officer/Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act X        
99.1 Summary of Significant Details Regarding Pisgah, Wikieup, Cerbat and the Owl Canyon Properties   10-KSB/A 12/31/07 99.1 03/11/09
101.INS XBRL Instance Document X        
101.SCH XBRL Schema Document X        
101.CAL XBRL Calculation Linkbase Document X        
101.DEF XBRL Definition Linkbase Document X        
101.LAB XBRL Labels Linkbase Document X        
101.PRE XBRL Presentation Linkbase Document X        

 

 

 

 

 20 

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

CAN-CAL RESOURCES LTD.

 

By: /s/ Casey Douglass                 

Casey Douglass, Chairman of the Board of Directors

 

Date: November 14, 2018

 

 

POWER OF ATTORNEY

 

Pursuant to the requirements of the Securities Act of 1933, as amended, and Exchange Act of 1934, as amended, this Quarterly Report on Form 10-Q has been signed by the following persons in the capacities indicated on the dates indicated.

 

/s/ Gary Oosterhoff                     

Gary Oosterhoff, Director

Date: November 14, 2018

 

 

/s/ Cornelus Korver                   

Cornelus Korver, Director

Date: November 14, 2018

 

 

 

 

 

 

 

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