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
September 30, 1998 0-2 0217
(Exact name of registrant as appended in its charter)
CONTINENTAL WELLNESS CASINOS TRUST
(State or other jurisdiction of
incorporation or organization) (I.R.S. Employer identification No.)
Nevada 84-068750
(Address of principal executive offices) (Zip Code)
2205 Purple Majesty Court
Las Vegas, Nevada 89117
(Registrant's telephone number, including area code)
(702) 240-4408
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.
Title of Class September 30, 1998
Common Class "A" 90, 250,877
Common Class "B" 5,266,960
3
CONTINENTAL WELLNESS CASINOS TRUST
Index
Part I FINANCIAL INFORMATION Page
Item 1 Financial Statements
Consolidated Balance Sheets 4
Consolidated Statements of Operations 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Part II OTHER INFORMATION
Item 1 Legal Proceedings 11
Item 2 Changes in Securities 11
Item 3 Defaults upon Senior Securities 11
Item 4 Submission of Matters to a Vote of Security Holders 11
Item 5 Other Information 11
Item 6 Exhibits and Reports on Form 8-K 11
4
CONTINENTAL WELLNESS CASINOS TRUST
A
REALESTATE INVESTMENT TRUST
BALANCE SHEETS
September 30, 1998 and September 30, 1997
September 30, September 30,
1998 1997
(Dollars In Thousands)
ASSETS
Gold in storage (Note 2) $ 27,317 $27,317
Investment in stocks 0 0
Deferred charges and other assets (Note 3)
Deferred mining exploration costs and
Deferred operating expenses 5,534 3,365
Proven reserves (Note 5)
Gold 2,074,800 2,335,200
Silver 101,080 98,800
Total assets $ 2,208,731 $2,464,682
Loans payable (Note 12) 0 31
STOCKHOLDERS' EQUITY
Common stock, Class "A" $0.003 par value
Authorized shares-500,000,000
Issued and outstanding-90,250,877 271 270
Common stock, Class "B" no par value,
with a stated value of $1.00 per share.
Authorized shares-50,000,000 in 1998
and 1997. Issued and outstanding-
5,266,960 in 1998 and 1997 5,266 5,266
Capital in excess of par (Note 14) 2,203,194 2,459,146
Total Liabilities and Stockholders'
Equity $ 2,208,731 $ 2,464,682
See accompanying notes to Financial Statements.
September 30, 1998
5
CONTINENTAL WELLNESS CASINOS TRUST
A
REAL ESTATE INVESTMENT TRUST
Statement of Cash Flows
For the quarter ended September 30, 1998
(Dollars in Thousands)
Cash and cash equivalents at beginning of year $ -
Cash flows from operating activities
Payment of accrued payroll (594)
Payments to suppliers (280)
Net cash provided by operating activities (874)
Cash flows from financing activities
Proceeds from sale of common stocks 1,480
Attorney's fees (100)
Commission to stock broker (486)
SEC fee (20)
Net cash flows from financing activities 874
Cash and cash equivalents at end of year $ -
See accompanying notes to Financial Statements
September 30, 1998
6
CONTINENTAL WELLNESS CASINOS TRUST
A
REAL ESTATE INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business - The Company was 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 engaged in the exploration of said mines for the
production of precious metals like gold and silver. More recently, the
Company has 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.There are no plans currently in effect to re-open mining
operations.
2. GOLD IN STORAGE AT BONDED WAREHOUSE
On October 9, 1990, the Company deposited at NDS, United States Customs
Bonded Warehouse currently 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 troy ounces with a value
of $27,316,600 based on a gold floor price of $358.90 per troy ounce.
The market values of gold per troy ounce as of September 30, 1998 and
September 30, 1997 are $296.40 and $333.60, respectively. At these prices
the gold in storage would carry fair market values of $22,559,596 on
September 30, 1998 and $25,390,963 on September 30, 1997.
7
3. DEFERRED CHARGES AND OTHER ASSETS
In Thousand Dollars
Deferred Mining Exploration Costs $ 3,253
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, 1996, the Company
issued shares of stocks valued at $3,252,669 to
pay for its obligation arising thereto.
Deferred Operating Expenses
Related to additional sale of Common "A" shares
(See Statement of Cash Flows) $ 1,480
Prior years expenses 801
Total Operating Expenses 2281
Total Deferred Charges and Other Assets $ 5,534
4. DEFERRED MINING EXPLORATION COSTS
Deferred mining exploration costs were incurred in prior years
with the amounts being estimate 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.
5. RELATED PARTY TRANSACTIONS
The Company is not 50% owned by 5 or fewer individuals.
6. PROVEN GOLD AND SILVER RESERVE
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 ubjective
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 future years from known reserves under existing
economic and operating conditions.
8
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 September 30, 1997 and
September 30, 1998 are as follows;
9/30/98 9/30/97
(Dollars in Thousands)
Gold 7,000,000 troy ounces
@$296.40/troy ounce $2,074,800
@$3333.60/troy ounce $2,335,200
Silver 19,000,000 troy ounces
@$5.320/troy ounce 101,080
@$5.200/troy ounce _____________ 98,800
$2,175,880 $2,434,000
7. STOCKHOLDERS' 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.
8. CONTINGENCIES.
The Company is not involved in any legal proceeding which is considered
to be ordinary routine litigation incident to its business.
9. TAXES.
The Company has not filed a federal income tax return because there are
no earnings to report.
10. The Secretary of the 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.
9
11. ACQUISITION OF A HOTEL AND CASINO IN LAS VEGAS, NEVADA
The Company is in the process of purchasing a hotel and casino in
Las Vegas, Nevada, with at least 800 rooms.
12. 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.
47,958,512 Class "A" shares were issued to Gand American Bank Trust
in April 1996 by American Securities Transfer, Inc., the Company's
transfer agent. Grand American Bank Trust has since distributed the
shares to its Beneficiaries.
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.
13. Unsecured and unrecorded personal loans of prior years were paid in the
year ended December 31, 1997. These accounts were charged to Deferred
Charges and Other Assets.
14. CAPITAL IN EXCESS OF PAR- It is the excess of Total Assets over
Liabilities and Common Stock "A" and "B".
15. CHANGE OF NAME OF END OF ACCOUNTING YEAR
The Board of Directors adopted on December 22, 1997 the following
resolutions:
a) The name of the Company was changed to Continental Wellness Casinos
Trust.
b) The accounting year was changed from October 31 to December 31.
16. The September 30, 1998 quarterly balance sheet is per an unaudited
report.
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CONTINENTAL WELLNESS CASINOS TRUST
ITEM 2 Management's Discussion and Analysis ofFinancial Condition and
Results of Operations
Results of Operations
Summary of significant Accounting Policies
Nature of the Business: Continental Well Casinos Trust, a Nevada real estate
investment trust was originally incorporated in Colorado on October 29, 1974,
as Minerals Mining Corporation. The name was first changed to Grand American
International Corporation, then Continental Wellness Casinos Corp., and then
the form of the Company was changed to a real estate investment trust in Nevada
December 22, 1997, and the present name was adopted. The Company had been
engaged in the discovery and development of precious metals with mining
properties located at Quincy, Plumas County, California. The Company has 750
acres of land where 39 unpatented mineing claims are located. All assessment
work has been done at the mines and all reports have 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 permits to
operate the mines from the United States Forestry Department, Quincy,
California. The Company presently does not intend to re-open mining operations
to recover the gold and silver in the proven reserves, and will not do so until
the price of gold increases significantly.
The Company is in the process of getting its live longer center, a longevity
members association, with the purpose of making people live longer by using
preventive medicine with genes testing for discovery of predominant illness
in the different subjects and repair defective genes by genetic engineering
followed with a program of exercise and nutrition. The hotel's guests sign a
long term rental agreement for a room or suite at the Company's resort hotel
and casino for a week or two per year for a period of ten years, payable in
advance, and also receive one week of care at the center. The rental cost is
$ 1,000.00 per week per year per guest.
11
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 organizing its 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 program of long term room rentals in a resort hotel and casino
in conjunction with a longevity center, will increase sales and produce
a positive cash flow.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
As of September 30, 1998 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. 7, dated March 26, 1998
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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 WELLNESS CASINOS, INC.
By (S) FRED CRUZ DATED: October 8, 1998
Fred Cruz
President and Chief Executive Officer
By (S) FERNANDO JUAN DATED: October 8, 1998
Fernando Juan
Vice President and Chief Financial
13
GEOLOGIC EVALUATION OF GOLD CLAIMS
IN
PLUMAS COUNTY, CALIFORNIA
EXHIBIT "A"
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
conconsisting of 750 acres.
References: 1) Geology of the Pulga and Bucks Lake Quadrangles, 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 Win. H. Bird, date
June 1, 1976.
3) Bucks Lake Quadrangle, Map, USGS, 1:62,500, DATE 1950.
14
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 Blackhawk, Alan, MMC, and Dean. The Blackhawk, Alan and
MMC claims lie in the northwest corner of Section 13, T24N, R8E.
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.
15
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, 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
16
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