SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 and 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): July 30, 2002 (June 14, 2002)
CAN-CAL RESOURCES LTD.
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Exact Name of Registrant as Specified in its Charter)
Nevada 0-26669 88-0336988
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(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation) Identification No.)
8221 Cretan Blue Lane
Las Vegas, Nevada 89128
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (702) 243-1849
Not Applicable
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(Former Name, Former Address or Former Fiscal Year,
if Changed From Last Report)
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ITEM 5. OTHER EVENTS
A. ISSUANCE OF $120,000 DEBENTURE. The company has issued an unsecured
convertible debenture to Dutchess Private Equities Fund, L.P. (a Delaware
limited partnership). The principal amount of the debenture is $120,000; all or
part of the principal amount of the debenture, plus accrued interest at 8%
annually, is convertible at Dutchess Fund's discretion into restricted shares of
common stock, at a per share price equal to the lesser of: (1) $0.41; (2) 100%
of the average of the five lowest closing bid prices in the 15 trading days
preceding notice of conversion; or (3) 80% of the average of the three lowest
closing bid prices in the 15 trading days preceding notice of conversion. To the
extent not prepaid or converted, outstanding principal and accrued interest will
be converted automatically to restricted shares of common stock, at the lesser
of the conversion prices stated above, on the maturity date of the debenture
(June 14, 2005).
The company has paid Dutchess Advisors, LLC a $12,000 cash fee for advisory
services provided to Dutchess Fund by Dutchess Advisors. Dutchess Advisors is an
affiliate of and an advisor to Dutchess Fund. This cash fee was paid by the
company as required by the terms of the subscription agreement for the
transaction.
If the $120,000 principal amount of the debenture is converted at the $0.41
price, the company would issue 292,683 shares of restricted common stock to
Dutchess. The company will file a registration statement with the Securities and
Exchange Commission on Form S-3. At such time as the Form S-3 registration
statement is declared effective by the Securities and Exchange Commission, the
registration statement will cover Dutchess' offer and sale to the public of such
shares as are issued on conversion of the debenture. The registration statement
will cover 950,000 shares for debenture conversion (plus more shares for
possible exercise of the warrant and for shares issued for services, see below).
The number of shares issued on conversion of the debenture will depend on the
market price (for example, the full 950,000 shares would be issued on conversion
of the debenture if the market price ($0.32 on July 26, 2002) drops to the point
where the conversion price is calculated to be $0.126 per share under the terms
of the debenture.
Also in connection with the debenture transaction, the company issued to
Dutchess Fund a warrant to purchase 50,000 shares of restricted common stock, at
an exercise price per share equal to the lesser of (1) $0.36 (110% of the five
day average closing bid price for the five trading days before June 14, 2002,
which was the issue date for the warrant); or (2) 110% of the five day average
closing bid price for the five trading days after December 12, 2002. Resale to
the public of shares issued on exercise of the warrant will be covered by the
Form S-3 registration statement, at such time as that registration statement is
declared effective by the Securities and Exchange Commission.
Also in connection with the debenture transaction, the company issued to
Joseph B. LaRocco (attorney for Dutchess Fund, L.P.) 30,000 shares of restricted
common stock. These shares were issued to him for legal services provided by him
to Dutchess Fund in connection with the debenture transaction, which services
have been valued by the company at $6,750. The value of his services was
determined by his client Dutchess Fund The issuance of these shares in payment
of Mr. LaRocco's services was required by the terms of the registration rights
agreement between Dutchess and the company, which agreement was part of the
debenture transaction with Dutchess Fund. The per share price for his services
was negotiated and agreed to between Mr. LaRocco and the company, as the company
did not have the funds to pay Mr. LaRocco in cash, using a per share price of
$0.225 (a 50% discount (because the shares were issued as restricted) from the
market price on June 13, 2002). Resale to the public of shares issued Mr.
LaRocco will be covered by the Form S-3
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registration statement, at such time as that registration statement is declared
effective by the Securities and Exchange Commission.
The debenture and warrant transaction is separate from the investment
agreement (credit line agreement) between the company, and Dutchess Fund and DRH
Investment LLC. Resale of shares of common stock to the public (which shares may
be sold to Dutchess Fund and DRH under the investment agreement (credit line
agreement)) is covered by a separate registration statement filed with the
Securities and Exchange Commission on Form SB-2.
B. USE OF DEBENTURE PROCEEDS - CERBAT PROPERTY.
TESTING PROGRAM. The $106,604 net proceeds (after payment of the cash fee
to Dutchess Advisors and reimbursement of $1,396 of travel expenses) will be
used to evaluate the company's Cerbat property in Arizona, to determine if gold
and silver is recoverable from selected materials located on the property. Small
amounts of material from old mine dumps (remains from mining operations by other
companies in the past), and possibly some material from existing mine shafts
(from mining operations by other companies in the past), will be run through a
portable concentrator using only water available on site. No chemicals will be
used in the process. Concentrate will be sold to refiners for recovery of gold
and silver off site at their locations. We have conducted only a limited amount
of testing on the materials to be concentrated. No permits are required for
these very limited operations.
If the concentrator tests indicate that the process may be effective for
these materials, i.e., yielding concentrated material containing gold and silver
which we can sell to refiners, we will apply for a permit for a large
concentrator-processing facility, possibly to include a chemical flotation
circuit to improve recovery rates. Funding is not presently available for this
future project.
The company is an exploration stage company. Since 1996, the company has
examined various mineral properties prospective for precious metals and
minerals, and have acquired those we believe may contain precious metals and
minerals. Our properties are located in California and Arizona. We have not
established that any of the properties contain reserves (a reserve is that part
of a mineral deposit which could be economically and legally extracted or
produced at the time of the reserve determination). Further exploration will be
needed before a final determination can be made whether any property is
economically and legally feasible. Therefore, we presently have no reserves.
CERBAT PROPERTY. On March 12, 1998, we signed a Lease and Purchase Option
Agreement covering six patented mining claims in the Cerbat Mountains, Hualapai
Mining District, Mohave County, Arizona. The patented claims cover approximately
120 acres. We paid $10,000 as the initial lease payment and are obligated to pay
$1,500 per quarter as minimum advance royalties. The company has the option to
purchase the property for $250,000, less payments already made. In the event of
production before purchase, we will pay the lessor a production royalty of 5% of
the gross returns received from the sale or other disposition of metals
produced. Except for limited testing of materials in mine dumps and in a few of
the mine shafts, no work has been performed on this property since 1999. Access
is north 15 miles from Kingman, Arizona on Highway 93, east from the historical
market to Mill Ranch, then left three miles to a locked gate.
The country rock is pre-Cambrian granite, gneiss and schist complex. It is
intruded by dikes of minette, granite porphyry, diabase, rhyolite, basalt and
other rocks, some of which are associated with workable veins and are too
greatly serieitized for determination. The complex is also flanked on the west
by
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masses of tertiary volcanic rocks, principally rhyolite. The mineralized body
contains principally gold, silver and lead. They occur in fissure veins, which
generally have a north-easterly trend and a steep north-easterly or
south-westerly dip. Those situated north of Cerbat wash are chiefly gold bearing
while those to the south principally contain silver and lead. The gangue is
mainly quartz and the values usually favor the hanging wall. The company has
been informed by the owner that the property contains several mine shafts of up
to several hundred feet in depth and tailings piles (mine dumps) containing
thousands of tons of tailings from prior operations. The property has not
produced since the late 1800's.
The buildings on the property are practically valueless, owing to being in
disuse for so many years.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits.
Exhibit No. Description
10.26 Form of Debenture *
10.27 Debenture Warrant *
10.28 Registration Rights Agreement *
* Incorporated by reference from the like-numbered exhibit filed with the
company's Form 8-K, filed July 29, 2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CAN-CAL RESOURCES LTD.
Dated: July 30, 2002 By: /s/ Ronald D. Sloan
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RONALD D. SLOAN, President
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