1
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 Commission file number
January 31, 1997 0-20217
(Exact name of registrant as appended in its charter)
CONTINENTAL WELL CASINOS, INC.
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) identification No.)
Colorado 84-0687501
(Address of principal executive offices) (Zip Code)
1820 E. Garry St., Ste.# 109
Santa Ana, California 92705
(Registrant's telephone number, including area code)
(714) 477-0370
2
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 1934
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.
[S][C] [C]<TABLE-ONE>
Title of Class January 31, 1997
Common Class "A" 90,028,877
Common Class "B" 3,266,960
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GRAND AMERICAN INTERNATIONAL CORPORATION
Index
Part I 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
Condition and Results of
Operations 11
Part II 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
Form 8-K 15
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PART I - FINANCIAL INFORMATION
ITEM 1. - Financial Statements
5
CONTINENTAL WELL CASINOS, INC.
BALANCE SHEETS
JANUARY 31, 1997 AND 1996
2
1997 1996
(Dollars in Thousands)
ASSETS
Gold in storage 28,028 28,653
Deferred mining exploration
costs 3,253 3,253
31,281 32,906
STOCKHOLDER'S EQUITY
Common stock, Class "A" $0.003
par value 500,000,000 authorized
shares, issued and outstanding-
90,028,877 shares in 1997 and
38,803,405 in 1996 $ 270 $ 116
Common stock, Class "B" no par
value 50,000,000 authorized
shares, issued and outstanding -
3,266,960 shares in 1997 and 1996 33 33
Capital in excess of par 30,978 32,757
$ 31,281 $ 32,906
See accompanying Notes to Financial Statements.
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CONTINENTAL WELL 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 metal like gold and silver.
Currency Transactions - There are no assets and
liabilities of operations outside the United States
which need to be translated into U.S. dollars using
current 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 at NDS,
United States Customs Bonded Warehouse located at
19801 So. Santa Fe Ave., Rancho Dominguez,
California, 90221, six (6) 55 gallon-drum
containers of gold dust (powder form) 999.5 pure
weighing 76,112 ounces with a value of $ 27,316,600
based on the gold floor price of $ 358.90 per troy
ounce. The market values of gold per troy ounce as
of January 31, 1997 and 1996 are $ 368.25 and $
389.60, respectively. At these prices, the gold in
storage would carry fair market values of $
28,028,244 in 1997 and $ 29,653,235 in 1996.
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. On April 13, 1994, the Company
issued shares of stock valued at $ 3,252,669 to pay
for its obligations arising thereto.
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4. RELATED PARTY TRANSACTIONS :
Grand American Bank Trust owns approximately 44 %
of the Company's Class "A" common stock as of
October 31, 1995.
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. 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 required, the variances in the
available data for various reserves, make these
estimates generally less precise than 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 values of
these reserves based on average market prices as of
January 31, 1997 and 1996 are as follows :
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3
01-31-97 01-31-96
(Dollars in Thousands)
Gold:7,000,000 troy
ounces @ $ 368.25 /
troy ounce $2,577,750
@ $ 384.30 / troy
ounce $ 2,690,000
Silver:19,000,000 troy ounces
@ $ 4.78 / troy ounce 90,820
@ $ 5.34 / troy ounce 101,460
___________ __________
$2,668,570 $2,791,560
6. STOCKHOLDERS' EQUITY :
The Company is authorized to issue 50,000,000 shares
of no par value Class "B" shares. The Company gave
authority to the 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 have exercised
the authority granted.
7. CONTINGENCIES :
The Company is not involved in any legal proceeding
which is 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. BUSINESS SEGMENT INFORMATION :
The Company considers its primary business activity
to be comprised of only one segment, the
development of mines for the extraction of gold
and silver and other precious metals.
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CONTINENTAL WELL 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 of Continental Well Casinos, Incorporated,
a Colorado corporation which was incorporated October
29, 1974. The Company is engaged in the discovery and
development of precious metals mining properties
located at 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 permit to
operate in small scale the mines from the United
States Forestry Department, Quincy, California. The
Company intends in going into a big mining venture to
recover the 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, with
the purpose of making 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.
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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 is in
the organization of their Longevity Center, a Welllness
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 Well Resort for Life Extension
will increase sales and resulting cash flow.
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PART II - OTHER INFORMATION
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Item 1. Legal Proceedings
As of January 31, 1997, 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 8-K
(a) Exhibits:
"A" Geological Evaluation of Gold Claims
Reserves.
(b) Reports on Form 8-K
(1). AMENDMENT No. 6 Dated December 31,
1996
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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 its behalf by the undersigned, thereunto duly
authorized.
CONTINENTAL WELL CASINOS, INC.
By (S) FRED CRUZ
Fred Cruz
President and Chief Executive Officer
By (S) FERNANDO JUAN
Fernando Juan
Vice President and Chief Financial
Officer
Dated: March 19, 1997
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Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits :
"A" Geological Evaluation of Gold Claims
Reserves
(b) Reports on Form 8-K
(1). Amendment No. 6 Dated December 31, 1996.
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GEOLOGIC EVALUATION OF GOLD CLAIMS
IN
PLUMAS COUNTY, CALIFORNIA
EXHIBIT "A"
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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, Black-
hawk, Alan, MMC and Dean Lode Claims con-
consisting of 750 acres.
References: 1) Geology of the Pulga and Bucks Lake Quadran-
gles, Butte and Plumas Counties,
California, USGS Prof. Paper 731, date
1973.
2) Examination and Sampling of the Blackhawk
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.
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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 Blackhawk, Alan, MMC, and Dean. The
Blackhawk, Alan and MMC claims lie in the northwest corner of
Section 13, T24N, R8E.
CONSULTANTS IN APPLIED GEOLOGY, GEOPHYSICS AND ENGINEERING
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Letter Report
MM&E Corporation
May 14, 1985
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 - 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 7 Associates warrant that our services are performed
within the limits prescribed by our clients,
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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.
We appreciate the opportunity of presenting this report. If
you have any questions, please contact this office.
Very truly yours,
STICKEL & ASSOCIATES
By (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
By (S) J. F. STICKEL
J. F. STICKEL, RG 2999