UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C.  20549





FORM
10-Q





x           QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES


EXCHANGE
ACT OF 1934





For the
quarterly period ended June 30,
2009





 ̈         TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES


EXCHANGE
ACT OF 1934





Commission
file number 000-26669





CAN-CAL
RESOURCES LTD.


(Exact
name of registrant as specified in its charter)





Nevada
            
            88-0336988(State
      or other jurisdiction of incorporation or organization)
            
            (I.R.S.
      Employer Identification No.)





2500
Vista Mar Drive


Las
Vegas, Nevada  89128


(Address
of principal executive offices)





(702)
243-1849


(Registrant’s
telephone number, including area code)





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 o





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files). o Yes o No





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




Large
      accelerated filer  ̈
              
              Accelerated
      filer  ̈Non-accelerated
      filer  ̈  (Do
      not check if a smaller reporting company)
              
              Smaller reporting companyx





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


Yes  ̈ No
x





The
number of shares of Common Stock, $0.001 par value, outstanding on August 14,
2009, was 26,155,353.









CAN-CAL
RESOURCES LTD.


FORM
10-Q


TABLE
OF CONTENTS





PagePART
      I – FINANCIAL INFORMATION
            
            
            1Item
      1. Financial Statements
            
            
            1Condensed
      Balance Sheets
            
            
            1Condensed
      Statements Of Operations
            
            
            2Condensed
      Statements Of Cash Flows
            
            
            3Notes
      To Condensed Financial Statements
            
            
            4Item
      2. Management’s Discussion and Analysis
            
            
            18Item
      3. Quantitative and Qualitative Disclosures about Market
    Risk
            
            
            25Item
      4T. Controls and Procedures
            
            
            25PART
      II – OTHER INFORMATION
            
            
            25Item
      1. Legal Proceedings
            
            
            25Item
      1A. Risk Factors
            
            
            26Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
            
            
            26Item
      3. Defaults Upon Senior Securities
            
            
            26Item
      4. Submission of Matters to a Vote of Security Holders
            
            
            26Item
      5. Other Information
            
            
            26Item
      6. Exhibits
            
            
            27








PART
I – FINANCIAL INFORMATION




Item
1. Financial Statements




Can-Cal
Resources Ltd.


(an
Exploration Stage Company)
 Condensed
Balance Sheets




June
      30,
            
            
            December
      31,2009
            
            
            2008(Unaudited)AssetsCurrent
      assets:Cash
            
            $
            50,376
            
            
            $
            45,848Other
      current assets
            
            
            1,495
            
            
            
            100Total
      current assets
            
            
            51,871
            
            
            
            45,948Property,
      plant and equipment (net accumulated depreciationof
      $141,573 and $136,347)
            
            
            52,270
            
            
            
            57,496Other
      assets:Capitalized
      mineral rights
            
            
            1,248
            
            
            
            1,248Deposits
            
            
            1,895
            
            
            
            1,8953,143
            
            
            
            3,143Total
      assets
            
            $
            107,284
            
            
            $
            106,587Liabilities
      and Stockholders’ (Deficit)Current
      liabilities:Accounts
      payable and accrued liabilities
            
            $
            47,953
            
            
            $
            33,356Accrued
      interest – related parties
            
            
            419,680
            
            
            
            376,118Accrued
      officer salary
            
            
            263,828
            
            
            
            211,689Rescission
      liability
            
            
            1,413
            
            
            
            -Notes
      payable - related parties
            
            
            730,050
            
            
            
            705,050Unearned
      revenues
            
            
            25,208
            
            
            
            11,458Total
      current liabilities
            
            
            1,488,132
            
            
            
            1,337,671Commitments
      and contingenciesStockholders’
      (deficit):Preferred
      stock, $0.001par value, 10,000,000 sharesauthorized,
      no shares issued and outstanding
            
            
            -
            
            
            
            -Common
      stock, $0.001 par value, 100,000,000 sharesauthorized,
      26,155,353 and 24,587,753 shares issued and outstandingas
      of June 30, 2009 and December 31, 2008, respectively
            
            
            26,156
            
            
            
            24,588Additional
      paid in capital
            
            
            7,957,972
            
            
            
            7,831,502Foreign
      currency translation adjustment
            
            
            (231
            )
            
            
            -Accumulated
      (deficit)
            
            
            (9,364,745
            )
            
            
            (9,087,174
            )Total
      stockholders’ (deficit)
            
            
            (1,380,848
            )
            
            
            (1,231,084
            )Total
      liabilities and stockholders’ (deficit)
            
            $
            107,284
            
            
            $
            106,587





The
accompanying notes are an integral part of the condensed financial
statements.




1




Can-Cal
Resources, Ltd.


(an
exploration Stage Company)
 Condensed
Statements of Operations
 (Unaudited)




For
      the Three Months Ended
            
            
            For
      the Six Months Ended
            
            
            March
      22, 1995
              (inception)
      toJune
      30,
            
            
            June
      30,
            
            
            June
      30,2009
            
            
            2008
            
            
            2009
            
            
            2008
            
            
            2009Material
      sales
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            245,500Cost
      of sales
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            263,400Gross
      profit
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (17,900
            )Expenses:Exploration
      costs
            
            
            15,258
            
            
            
            20,991
            
            
            
            18,661
            
            
            
            38,905
            
            
            
            510,986Depreciation
            
            
            2,613
            
            
            
            2,998
            
            
            
            5,226
            
            
            
            5,995
            
            
            
            236,003General
      and administrative
            
            
            117,269
            
            
            
            85,646
            
            
            
            167,761
            
            
            
            142,640
            
            
            
            6,240,997Executive
      compensation
            
            
            30,000
            
            
            
            29,008
            
            
            
            60,000
            
            
            
            60,000
            
            
            
            791,176Impairment
      of assets
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            442,524Total
      operating expenses
            
            
            165,140
            
            
            
            138,642
            
            
            
            251,648
            
            
            
            247,540
            
            
            
            8,221,686Loss
      from operations
            
            
            (165,140
            )
            
            
            (138,642
            )
            
            
            (251,648
            )
            
            
            (247,540
            )
            
            
            (8,239,586
            )Other
      income (expense)Interest
      expense
            
            
            (22,276
            )
            
            
            (15,460
            )
            
            
            (44,658
            )
            
            
            (29,264
            )
            
            
            (1,091,426
            )Interest
      income
            
            
            -
            
            
            
            4
            
            
            
            8
            
            
            
            102
            
            
            
            52,922Rental
      income
            
            
            6,775
            
            
            
            16,689
            
            
            
            14,150
            
            
            
            26,614
            
            
            
            308,367Foreign
      currency gain (loss)
            
            
            4,577
            
            
            
            -
            
            
            
            4,577
            
            
            
            -
            
            
            
            4,577Income
      from legal judgment
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            47,200Gain
      on sale of fixed assets
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            26,801Total
      other
            
            
            (11,374
            )
            
            
            1.233
            
            
            
            (25,923
            )
            
            
            (2,548
            )
            
            
            (651,559
            )Loss
      before tax provision
            
            
            (176,514
            )
            
            
            (137,409
            )
            
            
            (277,571
            )
            
            
            (250,088
            )
            
            
            (8,891,145
            )Provision
      for income taxes
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Net
      loss-continuing operations
            
            
            (176,514
            )
            
            
            (137,409
            )
            
            
            (277,571
            )
            
            
            (250,088
            )
            
            
            (8,891,145
            )Discontinued
      operations:Income
      from discontinuedoperations
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            116,400(Loss)
      on disposal ofOperations,
      net of tax
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (590,000
            )Net
      (loss)
            
            $
            (176,514
            )
            
            $
            (137,409
            )
            
            $
            (277,571
            )
            
            $
            (250,088
            )
            
            $
            (9,364,745
            )Loss
      per common share -Basic
      and fully diluted
            
            $
            (0.01
            )
            
            $
            (0.01
            )
            
            $
            (0.01
            )
            
            $
            (0.01
            )Weighted
      average commonShares
      outstanding -Basic
      and fully diluted
            
            
            25,292,140
            
            
            
            24,587,753
            
            
            
            24,941,892
            
            
            
            24,584,884




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




2




Can-Cal
Resources Ltd.


(an
Exploration Stage Company)


Condensed
Statements of Cash Flows


(Unaudited)


For
      the six months ended
            
            
            March
      22, 1995
              (Inception)
      toJune
      30,
            
            June
      30,
            
            
            June
      30,2009
            
            2008
            
            
            2009Cash
      flows from operating activities:Net
      (loss)
            
            $
            (277,571
            )
            
            $
            (250,088
            )
            
            $
            (9,364,745
            )Adjustments
      to reconcile net loss tonet
      cash used by operating activities:Depreciation
      and amortization
            
            
            5,226
            
            
            
            5,995
            
            
            
            253.003Bad
      debts
            
            
            -
            
            
            
            -
            
            
            
            207.100(Gain)
      loss on sale of fixed assets
            
            
            -
            
            
            
            -
            
            
            
            (6,501
            )Stock
      based compensation
            
            
            -
            
            
            
            -
            
            
            
            532,814Stock
      and warrants issued for financing and interest
            
            
            -
            
            
            
            -
            
            
            
            523,200Beneficial
      conversion feature on convertible debenture
            
            
            -
            
            
            
            -
            
            
            
            25,200Loss
      on disposal of investment property
            
            
            -
            
            
            
            -
            
            
            
            938,600Undistributed
      earnings of affiliate
            
            
            -
            
            
            
            -
            
            
            
            (174,300
            )Gain
      on discontinued operations
            
            
            -
            
            
            
            -
            
            
            
            (116,400
            )Gain
      (loss) on foreign currency translation
            
            
            (231
            )
            
            
            -
            
            
            
            8,269Impairment
      of operating assets
            
            
            -
            
            
            
            -
            
            
            
            442,524Decrease
      (increase) in assets:Accounts
      receivable
            
            
            -
            
            
            
            -
            
            
            
            (100
            )Other
      current assets
            
            
            (1,395
            )
            
            
            5,100
            
            
            
            (92,095
            )Other
      assets
            
            
            -
            
            
            
            -
            
            
            
            (1,895
            )Increase
      (decrease) in liabilities:Accounts
      payable and accrued expenses
            
            
            14,598
            
            
            
            (25,926
            )
            
            
            47,954Accrued
      interest – related parties
            
            
            43,562
            
            
            
            28,071
            
            
            
            419,680Accrued
      officer salary
            
            
            52,139
            
            
            
            49,497
            
            
            
            263,827Unearned
      revenues
            
            
            13,750
            
            
            
            37,686
            
            
            
            25,208Net
      cash used by operating activities
            
            
            (149,922
            )
            
            
            (159,865
            )
            
            
            (6,068,657
            )Cash
      flows from investing activities:Purchase
      of investment property
            
            
            -
            
            
            
            -
            
            
            
            (1,083,600
            )Proceeds
      from sale of investment property
            
            
            -
            
            
            
            -
            
            
            
            319,300Purchase
      of property, equipment and mineral interests
            
            
            -
            
            
            
            -
            
            
            
            (768,644
            )Proceeds
      from sale of property, equipment and mineral interests
            
            
            -
            
            
            
            -
            
            
            
            26,100Net
      cash used by investing activities
            
            
            -
            
            
            
            -
            
            
            
            (1,506,844
            )Cash
      flows from financing activities:Rescission
      liability
            
            
            (66,500
            )
            
            
            -
            
            
            
            (66,500
            )Proceeds
      from notes payable
            
            
            -
            
            
            
            83,500
            
            
            
            948,400Principal
      payments on notes payable
            
            
            -
            
            
            
            -
            
            
            
            (689,900
            )Proceeds
      from notes payable, related parties
            
            
            25,000
            
            
            
            40,000
            
            
            
            838,800Principal
      payment on notes payable, related parties
            
            
            -
            
            
            
            (4,920
            )
            
            
            (367,250
            )Proceeds
      from issuance of common stock
            
            
            195,950
            
            
            
            8,125
            
            
            
            6,962,327Net
      cash provided by financing activities
            
            
            154,450
            
            
            
            126,705
            
            
            
            7,625,877Net
      increase (decrease) in cash
            
            
            4,528
            
            
            
            (33,160
            )
            
            
            50,376Cash,
      beginning of period
            
            
            45,848
            
            
            
            105,987
            
            
            
            -Cash,
      end of period
            
            $
            50,376
            
            
            $
            72,827
            
            
            $
            50,376Supplemental
      disclosure of cash flow information:Cash
      paid for income taxes
            
            $
            -
            
            
            $
            -
            
            
            $
            -Cash
      paid for interest
            
            $
            -
            
            
            $
            -
            
            
            $
            -Rescission
      Liability
            
            $
            67,913
            
            
            $
            -
            
            
            $
            67,913




The
accompanying notes are an integral part of the condensed financial
statements.




3


Can-Cal
Resources Ltd.
 (an
Exploration Stage Company)
 Notes
to Condensed Financial Statements
 (Unaudited)
 
 1.
              BASIS OF
      PRESENTATION
 
 The
accompanying unaudited condensed financial statements have been prepared in
accordance with Securities and Exchange Commission requirements for interim
financial statements. Therefore, they do not include all of the information and
footnotes required by accounting principles generally accepted in the United
States for complete financial statements. The financial statements should be
read in conjunction with the Form 10-K for the year ended December 31, 2008 of
Can-Cal Resources Ltd. (the “Company”).
 
 The
interim condensed financial statements present the balance sheet, statements of
operations, and cash flows of Can-Cal Resources Ltd. The financial statements
have been prepared in accordance with accounting principles generally accepted
in the United States.
 
 The
interim financial information is unaudited. In the opinion of management, all
adjustments (which include normal recurring adjustments) necessary to present
fairly the financial position as of June 30, 2009 and the results of operations
and cash flows presented herein have been included in the financial statements.
Interim results are not necessarily indicative of results of operations for the
full year.
 
 The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States 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 amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
 2.
              GOING
      CONCERN
 
 The
Company incurred a net loss of $277,571 for the six months ended June 30, 2009.
Also, the Company’s current liabilities exceed its current assets by $1,436,261
as of June 30, 2009. These factors create substantial doubt about the Company’s
ability to continue as a going concern. The Company’s management plans to
continue to fund its operations in the short term with a combination of debt and
equity financing, as well as revenue from operations in the long
term.
 
 The
ability of the Company to continue as a going concern is dependent on 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.
 
 4
  3.
              NOTES PAYABLE –
      RELATED PARTY
 
 Notes
payable consisted of the following as of June 30, 2009 and December 31, 2008,
respectively:
  June
      30,
                2009
              
              
              December
      31,
                2008Note
      payable to a stockholder, secured by real property, bearing interest at
      16.0% per annum, interest only payments payable in semi-annual payments,
      matured November 2005
              
              $
              300,000
              
              
              $
              300,000Note
      payable to a stockholder, secured by real property, bearing interest at
      8.0% per annum, maturing July 2008
              
              
              25,114
              
              
              
              25,114Note
      payable to a stockholder, secured by real property, bearing interest at
      8.0% per annum, maturing June 2008
              
              
              35,436
              
              
              
              35,436Note
      payable to an officer, unsecured bearing interest at 8.0% per annum,
      maturing December 2009
              
              
              111,000
              
              
              
              86,000Note
      payable, unsecured, bearing interest at 8.0% per annum, maturing June
      2008
              
              
              7,500
              
              
              
              7,500Note
      payable, unsecured, bearing interest at 8.0% per annum, maturing March,
      2009
              
              
              24,000
              
              
              
              24,000Note
      payable, unsecured, bearing interest at 8.0% per annum, maturing June
      2009
              
              
              30,000
              
              
              
              30,000Note
      payable, unsecured, bearing interest at 8.0% per annum, maturing June
      2009
              
              
              50,000
              
              
              
              50,000Note
      payable, unsecured, bearing interest at 8.0% per annum, maturing June
      2009
              
              
              75,000
              
              
              
              75,000Note
      payable, unsecured, bearing interest at 8.0% per annum, maturing June
      2009
              
              
              72,000
              
              
              
              72,000Total
      notes payable
              
              
              730,050
              
              
              
              705,050Less
      current portion
              
              
              730,050
              
              
              
              705,050Long-term
      notes payable, less current portion
              
              $
              -
              
              
              $
              -
  5
  3.
              NOTES PAYABLE
      (cont.)
 
 We have
recorded interest expense related to these notes in the amounts of $43,562 and
$29,264 during the six months ended June 30, 2009 and 2008,
respectively.
 
 4.
              RELATED PARTY
      TRANSACTIONS
 
 In 2006,
the Company agreed to pay its CEO an annual salary of $120,000. As of June 30,
2009 and December 31, 2008, the accrued salary due to its CEO was $263,828 and
$211,689, respectively.
 
 5.
              CHANGES IN
      SECURITIES
  1996
  During
1996 the Company issued 3,441,217 shares of Can-Cal common stock to various
investors resulting in cash proceeds of $628,400.
  1997
  On
January 15, 1997 the Company issued 500,000 shares of Can-Cal common stock along
with a cash payment of $100,000 in exchange for a 50% interest in S&S Joint
Venture. Additionally, the Company agreed to loan the joint venture up to
$48,000.
 
 On
February 13, 1997 the Board approved the acquisition of Scotmar Industries, Inc.
200,000 shares of Can-Cal common stock were issued in return for all of the
issued and outstanding stock of the acquired company.
 
 On
October 27, 1997 the Board approved the issuance of 2,181,752 restricted common
shares to ARUM, LLC to repay an existing debt of approximately $315,045.98 and
to purchase a property located in San Bernadino County, California, known as the
Pisgah property.
 
 During
November, 1997 the Board approved the sale of 124,683 restricted common shares
to various investors.
 
 During
December, 1997 the Board approved the issuance of 42,000 restricted common
shares in return for services rendered.
 
 1998
  In July,
1998 the Board approved the issuance 122,000 restricted common shares to various
investors.
 
 In
October, 1998 the Board approved the sale of 172,450 restricted common shares to
various investors.
 
 During
December, 1998 the Board approved the sale of 263,059 restricted common shares
to various investors.
  6
  1999
  On
February 1, 1999, the Board of Directors approved the Sale of 62,500 shares of
Can-Cal common stock to a Board member.
 
 On
February 8, 1999 the Board approved the sale of 70,000 shares of Can-Cal common
stock to a Board member.
 
 On March
1, 1999 the Board approved the issuance of 32,121 shares of Can-Cal common stock
in return for services rendered.
 
 On March
15, 1999 the Board approved the sale of 86,000 shares of Can-Cal common stock to
various investors.
 
 On March
17, 1999 the Board approved the issuance of 40,000 shares of Can-Cal common
stock in return for equipment.
 
 On March
10, 1999 the Board approved the sale of 295,500 shares of Can-Cal common stock
to various investors.
 
 On April
1, 1999 the Board approved the sale of 1,000 restricted common stock in return
for equipment.
 
 On July
21, 1999 the Board approved the sale of 357,500 shares of common stock to
various investors.
 
 On August
24, 1999 the Board approved the sale of 274,000 shares of common stock to
various investors.
 
 On
September 7, 1999 the Board approved the sale of 20,000 shares of common stock
to an investor.
 
 On
November 9, 1999 the board approved the issuance of 10,000 shares of common
stock to an investor.
 
 2000
  On
February 27, 2000, the Board of Directors approved the sale of 500,000 shares of
common stock to three of its directors (all of whom reside in Canada), an
offshore trust and another person affiliated with the Company.
 
 On July
3, 2000, the Board of Directors exercised the option to acquire technology
related to the extraction and processing of ore and, in accordance with the
agreement with the two owners of that technology, issued 200,000 shares of
Can-Cal’s common stock to them.
 
 On
November 24, 2000, the Company borrowed $300,000 from a lender. As part of the
transaction, the Company issued 45,000 shares of its common stock as a loan
placement fee and granted the lender an option to purchase up to 300,000 shares
of its common stock. On November 24, 2000, the lender exercised its option in
full and purchased 300,000 shares of Can-Cal’s common stock.
  7
 
 In July
2000 the Board of Directors authorized the sale of 74,009 shares of its common
stock to eight persons, all of whom reside outside the United States. During the
third quarter 46,670 shares were sold and the remaining 27,339 shares were sold
during the fourth quarter. All of those shares were issued on December 15,
2000.
 
 2001
  In
September, 2001, the Board of Directors authorized the sale of 20,000 shares of
its common stock to an individual.
 
 During
October, 2001 the company signed an Investment Agreement with two funds
(Dutchess Private Equities Fund LP and DRH Investment Company LLC) to sell to
those funds up to $8,000,000 in common stock of the company, for a period of
three years. In connection with the Investment Agreement, the company issued
606,059 shares of restricted common stock to Dutchess Fund and its advisor, and
to a broker-dealer firm, for services valued at $400,000, to induce those
entities to enter into the Investment Agreement and perform services
contemplated under such agreement. The company also issued 37,000 shares of
restricted common stock to the attorney for Dutchess Fund.
 
 On
November 2, 2001 the Board of Directors approved the sale of 82,888 shares of
restricted common stock.
 
 On
December 12, 2001 the Board of Directors approved the sale of 40,000 shares of
restricted common stock.
  2002
  On
January 8, 2002, we sold 36,000 restricted common shares to three investors (one
Canadian resident, and two private companies controlled and owned by Canadian
residents) for $12,600 cash ($0.35 per share, representing a discount of
approximately 50% from market price). These investors also were issued warrants
to purchase 36,000 additional restricted shares, at a price of $0.35 per share;
the warrants will expire January 8, 2004.
 
 On
February 11, 2002, 10,000 restricted common shares were sold to one investor (a
Canadian resident) for $3,500 cash ($0.35 per share, representing a discount of
approximately 50% from market price). This investor also was issued warrants to
purchase 10,000 additional restricted shares, at a price of $0.35 per share; the
warrants will expire February 11, 2004. Complete information about the company
was provided to these investors. These shares and warrants were sold pursuant to
the exemption provided by Regulation S of the 1933 Act. No commissions were
paid.
 
 On
January 31, 2002, we issued 309,677 restricted common shares to a lender (First
Colony Merchant) for payment of past due and current interest on debt, $119,800.
No commissions were paid.
  8
 
 From
March 1, 2002 through June 3, 2002, 369,600 restricted common shares were issued
to 48 investors (all Canadian residents or companies controlled and owned by
Canadian residents) for $92,400 cash ($0.25 per share, representing discounts
ranging from 0% to approximately 50% from market prices at the time of
issuance). These investors also were issued warrants to purchase 369,600
additional restricted shares, at a price of $0.25 per share; the warrants will
expire two years from the date of issuance. No commissions were
paid.
 
 On June
21, 2002, 40,000 restricted common shares were issued to Financial
Communications Corp. for public relations services, valued at approximately
$14,000.
 
 From July
1, 2002 through December 24, 2002, 609,720 restricted common shares were issued
to 20 investors (19 whom are Canadian residents or companies controlled and
owned by Canadian residents, and one who is a resident of Great Britain) for
$152,400 cash ($0.25 per share, representing prices that ranged from 22% over
market to approximately 40% below market prices at the time of issuance). The
investors also were issued warrants to purchase a total of 609,720 additional
restricted shares, at a price of $0.25 per share; the warrants will expire two
years from the date of issuance. No commissions were paid.
 
 During
September 2002, the Company issued 32,281 shares of the Company’s common stock
for $5,500 in cash related to the Dutchess Private Equities Fund, net of
offering costs of $200, and issued 30,000 shares to Joseph B. LaRocco, attorney
for Dutchess Fund and DRH Investment Company, LLC for legal services to such
entities.
 
 During
October 2002, the Company issued 35,679 shares of the Company’s common stock for
$4,600 in cash related to the Dutchess Private Equities Fund, net of offering
costs of $700.
 
 In
November 2002, the Company issued 52,292 restricted common shares to four
individuals in exchange for various services, valued at approximately
$9,900.
 
 2003
  During
2003, 673,410 restricted common shares were issued to 19 Canadian residents or
companies controlled and owned by Canadian resident investors for $134,682 and
150,000 restricted common shares were issued to 12 U.S. resident investors for
$30,000 (all shares were priced at $0.20 per share, representing premiums of up
to 25% and discounts ranging from 0% to approximately 25% from market prices at
the time of issuance). With respect to 237,410 restricted common shares, the
investors were also issued warrants to purchase 474,820 additional restricted
common shares and with respect to 473,500 restricted common shares, the
investors were also issued warrants to purchase 473,500 additional restricted
common shares; all warrants were priced at $0.20 per share and will expire two
years from the date of issuance. With respect to 112,500 restricted common
shares, the investors were also issued 112,500 warrants to purchase additional
restricted common shares, at a price of $0.25 per share for a period of two
years from the date of issuance.
 
 During
2003, 364,305 restricted common shares were issued in conversion of $35,000
principal and interest on a debenture held by Dutchess Fund. The conversion
prices were $0.099 for 50,710 shares ($5,000 of the debenture); $0.112 for
44,643 shares ($5,000 of the debenture); $0.061 for 81,433 shares ($5,000 of the
debenture); $0.067 for 75,075 shares ($5,000 of the debenture); and $0.1334 for
112,444 shares ($15,000 of the debenture). All of the prices were determined by
the conversion formula in the debenture (80% of the average bid prices for the
three lowest (out of 15) trading days before conversion.
  9
 
 During
2003, 205,166 restricted common shares in payment of $31,500 of services by Luis
Vega, consulting geologist. The per share price was determined by dividing the
amount owed by the average closing price of the company’s stock for each day’s
service.
 
 On March
14, 2003, 24,960 restricted common shares were issued to Catherine Nichols, a
Canadian resident, for marketing services amounting to $5,000. The price per
share was based on the average closing share price for the period during which
the services were rendered.
 
 During
the period from July 15 to December 31, 2003, 112,326 restricted common shares
in payment of $22,250 of investor relations services by Jeffrey Whitford, a
Canadian resident who is a consultant to the company. The price per share was
based on the average monthly closing share prices for the period.
 
 33,600
restricted common shares were issued to pay $4,200 of legal services provided by
Stephen E. Rounds, outside company counsel. The price per share was based on the
average closing share price for the period during which the services were
rendered.
 
 On
December 30, 2003, 5,208 restricted common shares were issued to Terry Brown, a
Mexican resident, for technical consulting services amounting to $1,250. The
price per share was based on the average closing share price for the period
during which the services were rendered.
 
 2004
  During
2004, 2,255,586 restricted common shares were issued to 107 Canadian residents
or companies controlled and owned by Canadian resident investors for $431,425
and 10,000 restricted common shares were issued to one U.S. resident investor
for $2,000 (245,000 shares were priced at $0.18 per share, 1,620,131 shares were
priced at $0.20 per share, 261,200 shares were priced at $0.25 per share, and
139,255 shares were issued as a 25% premium on the conversion of warrants,
representing premiums of up to 25% and discounts ranging from 0% to
approximately 25% from market prices at the time of issuance). With respect to
1,319,308 of these restricted common shares, the investors were also issued
warrants to purchase 1,259,308 additional restricted common shares at $0.25 per
share and 60,000 additional restricted common shares at $0.20 per share. With
respect to 245,000 restricted common shares, the investors were also issued
warrants to purchase 245,000 additional restricted common shares at $0.25, and
with respect to another 245,000 restricted common shares, the investors were
also issued warrants to purchase 245,000 additional restricted common shares at
$0.50 per share. Of these, we also sold 5,000 shares to a director of the
Company for proceeds of $1,000 and issued warrants to purchase 5,000 restricted
common shares, exercisable at $0.25 per share for a two year period. All
warrants will expire two years from the date of issuance.
  10
 
 During
2004, 702,760 restricted common shares were issued in conversion of $99,657
principal and interest on a debenture held by Dutchess Fund. The conversion
prices were $0.216 for 92,593 shares ($20,000 of the debenture); $0.160 for
31,250 shares ($5,000 of the debenture); $0.144 for 34,722 shares ($5,000 of the
debenture); $0.128 for 544,195 shares ($69,657 of the debenture). All of the
prices were determined by the conversion formula in the debenture (80% of the
average bid prices for the three lowest (out of 15) trading days before
conversion).
 
 During
2004, 215,336 restricted common shares were issued in payment of $40,932 of
services by Luis Vega, consulting geologist. The price per share was determined
by dividing the amount owed by the average closing price of the company’s stock
for each day’s service.
 
 On
February 4, 2004, 10,000 restricted common shares were issued to Yvonne St.
Pierre, a Canadian resident, for computer-related services, in the amount of
$2,500.
 
 Between
February 10 and June 30, 2004, 75,000 restricted common shares were issued to
Jeff Whitford, a Canadian resident, for investor relation services, in the
amount of $15,000. In addition, Mr. Whitford received 50,000 warrants at an
exercise price of $0.20 per share; the warrants will expire between February
2006 and March 2006. The warrants were valued at $12,200 utilizing the Black
Scholes model.
 
 On
December 22, 2004, 2,500 restricted common shares were issued to Karen Barra, a
U.S. resident, for services amounting to $500. The price per share was $0.20
based on private placement offering for the period during which the services
were rendered.
 
 During
2004, 15,367 restricted common shares were issued in payment of accounts payable
amounting to $3,842. The price per share was based on the average closing share
price for the period during which the services were rendered.
 
 During
2004, 87,388 restricted common shares were issued to Terry Brown, a Mexican
resident, for technical consulting services amounting to $15,247. The price per
share was based on the average closing share price for the period during which
the services were rendered.
 
 On March
1, 2004, in connection with the conversion of $82,687 in notes payable and
$225,595 in accrued officers’ salary payable, we issued 1,233,127 restricted
common shares at $0.25 per share and 1,233,127 warrants, with an exercise price
of $0.30 and expiring on March 1, 2006, to two officers, two directors, and a
former director and his insurance agency. These persons and the insurance agency
are accredited investors.
 
 2005
  During
the twelve months ended December 31, 2005, we sold 712,500 restricted common
shares to 21 Canadian residents for a total of $142,500, and issued warrants to
purchase 712,500 restricted common shares, exercisable at $0.25 per
share.
  11
 
 A prior
U.S. shareholder exercised other warrants, at exercise prices ranging from
$0.22, for proceeds of $11,000, which resulted in the issuance of 50,000
restricted common shares.
 
 We also
issued, for services, 349,545 restricted common shares for a total value of
$69,800 valued at fair market value at date of issuance and granted 13,575
warrants (exercisable for two years at $0.25 per share) valued at fair market
value at date of issuance. These securities were issued to two Canadian
residents, and one Mexican Corporation.
 
 2006
  During
the twelve months ended December 31, 2006, we sold 2,622,213 restricted common
shares to 76 Canadian residents, 8 US residents, 5 Israeli Nationals and 1 Swiss
National for a total of $688,000, and issued warrants to purchase 2,348,213
restricted common shares, exercisable between $0.25 to $.45 per share. We also
issued, for services, 8,500 restricted common shares for a total value of
$2,325.
 
 On July
3, 2006, the Company issued 2,200 shares of its par value common stock for
services received by an individual. As of September 30, 2006, the Company
recorded consulting expense in the amount of $462, the fair value of the shares
issued on the date of grant. Additionally, the Company granted a warrant to
purchase 2,200 shares of the Company’s common stock at an exercise price of
$0.25 for a period of 2 years. The Company recorded an expense in the amount of
$373, the fair value of the warrant on the date of grant. Fair value was
determined using the Black Scholes option pricing model based on the following
assumptions: expected dividends: $-0-; volatility: 187%; risk free interest
rate: 5.12%.
 
 On July
3, 2006, the Company issued 8,800 shares of its par value common stock for
services received from an individual. As of September 30, 2006, the Company
recorded consulting expense in the amount of $2,200, the fair value of the
shares issued on the date of grant. Additionally, the Company granted a warrant
to purchase up to 8,800 shares of the Company’s common stock at an exercise
price of $0.25 for a period of 2 years. The Company recorded an expense in the
amount of $1,812, the fair value of the warrant on the date of grant. Fair value
was determined using the Black Scholes option pricing model based on the
following assumptions: expected dividends: $-0-; volatility: 187%; risk free
interest rate: 5.12%.
 
 On July
3, 2006, an officer of the Company elected to convert half of his accrued salary
in exchange for 385,714 shares of common stock valued at $81,000, the fair value
of the shares issued on the date of grant. Additionally, the Company granted a
warrant to purchase up to 385,714 shares of the Company’s common stock at an
exercise price of $0.25 for a period of two years. The Company recorded an
expense in the amount of $65,418, the fair value of the warrant on the date of
grant. Fair value was determined using the Black Scholes option pricing model
based on the following assumptions: expected dividends: $-0-; volatility: 187%;
risk free interest rate: 5.12%.
  12
 
 On July
3, 2006, the Company issued 56,821 shares of its common stock for conversion of
a note in the amount of $11,932 from a shareholder of the Company. Additionally,
the Company granted a warrant to purchase up to 56,821 shares of the Company’s
common stock at an exercise price of $0.25 for a period of two years. The
Company recorded an expense in the amount of $9,637, the fair value of the
warrant on the date of grant. Fair value was determined using the Black Scholes
option pricing model based on the following assumptions: expected dividends:
$-0-; volatility: 187%; risk free interest rate: 5.12%.
 
 On July
11, 2006, the Company issued 206,767 shares of its par value common stock
pursuant to the convertible debenture agreement entered into on January 24, 2006
whereby the Company received a $40,000 convertible at a rate of $0.20 per share
bearing interest of 10% per annum. The note holder elected to convert all
accrued interest totaling $1,895 into 6,767 shares of the Company’s par value
common stock.
 
 On August
22, 2006, the Company entered into an agreement to purchase mining claims
located in Mohave County, Arizona in exchange for 1,000,000 shares of the
Company’s par value common stock. The Company recorded an asset totaling
$400,000, the fair value of the underlying shares.
 
 2007
  During
the twelve months ended December 31, 2007, we sold 1,238,167 restricted common
shares to 72 Canadian residents and 4 US residents for a total of $375,534 and
issued warrants to purchase 492,795 restricted common shares, exercisable
between $0.35 to $.65 per share.
 
 On April
30, 2007, the Company also issued 50,000 shares of restricted common stock as
part of a settlement agreement with a former officer of the Company for
compensation of accrued salaries. The common stock was rendered to a U.S.
citizen, in reliance on the exemption available under Section 4(2) of the 1933
Act. The shares were valued at a total of $22,000. In addition to monthly cash
payments of $3,500 per month the Company has recorded debt forgiveness of
$147,419 in accordance with the terms of the settlement agreement. Due to the
related party nature of the transaction the gain has been recorded to additional
paid in capital, therefore there has been no impact on the Company’s net
loss.
 
 On June
29, 2007, the Company also issued 4,000 shares of restricted common stock for
services rendered to a U.S. citizen. The shares were valued at a total of
$2,000.
  2008
  During
the six months ended June 30, 2008, the Company issued 32,500 shares of common
stock and warrants to purchase 32,500 shares common stock for cash totaling
$8,124. The warrants are fully vested upon grant, expire in two years and have
an exercise price of $0.35 per share.
  13
  2009
  During
the three months ended June 30, 2009, the company issued 1,567,600 shares of its
common stock and an equal number of warrants pursuant to a unit offering whereby
each recipient received one share of common stock and one warrant certificate
for a unit price of $0.125. The Company recorded proceeds from the offering of
$195,950.
 
 6.
              OPTIONS AND
      WARRANTS
 
 Options
  The 2003
Qualified Option Plan was established by the Board of Directors in June 2003 and
approved by shareholders in October 2003. A total of 1,500,000 shares of common
stock are reserved for issuance under this plan. As of June 30, 2009 a total of
1,400,000 options have been issued under this plan of which 800,000 have
expired, 500,000 were cancelled, and 100,000 were exercised.
 
 The 2003
Non-Qualified Option Plan was established by the Board of Directors in June 2003
and approved by shareholders in October 2003. A total of 1,500,000 shares of
common stock are reserved for issuance under this plan. As of June 30, 2009 a
total of 500,000 options have been issued under this plan all of which remain
outstanding and will expire on October 1, 2013.
 
 The
following table summarizes the Company’s option activity related to employees
and consultants:
  Options
      Outstanding
              
              
              Weighted
      Average Exercise PriceBalance,
      January 1, 2008
              
              
              500,000
              
              
              $
              0.20Granted
              
              
              -Cancelled
              
              
              -Exercised
              
              
              -Expired
              
              
              -Balance,
      December 31, 2008
              
              
              500,000
              
              
              
              0.20Granted
              
              
              -
              
              
              
              -Cancelled
              
              
              -
              
              
              
              -Exercised
              
              
              -
              
              
              
              -Expired
              
              
              -Balance,
      June 30, 2009
              
              
              500,000
              
              
              $
              0.20
 
 Warrants
  During
the period ended June 30, 2009, the Company granted 1,567,600 warrants in
connection with its unit offering.
  14
 
 The
following table summarizes the Company’s warrant activity as of June 30,
2009:
 
 Warrants
      Outstanding
              
              
              Weighted
      Average Exercise PriceBalance,
      January 1, 2008
              
              
              3,261,543
              
              
              $
              0.40Granted
              
              
              32,500
              
              
              
              0.35Cancelled
              
              
              -
              
              
              
              -Exercised
              
              
              -
              
              
              
              -Expired
              
              
              (2,768,748
              )
              
              
              0.33Balance,
      December 31, 2008
              
              
              525,295
              
              
              
              0.50Granted
              
              
              1,567,600
              
              
              
              0.15Cancelled
              
              
              -
              
              
              
              -Exercised
              
              
              -
              
              
              
              -Expired
              
              
              (246,137
              )
              
              
              0.61Balance,
      June 30, 2009
              
              
              1,846,758
              
              
              $
              0.19
  7.
              COMMITMENTS AND
      CONTINGENCIES
  Mining
claims - The Company has a lease and purchase option agreement covering six
patented claims in the Cerbat Mountains, Hualapai Mining District and Mohave
County Arizona. The Company pays $1,500 per quarter as minimum advance
royalties. The Company has the option to purchase the property for $250,000 plus
interest at a rate of 8% compounded annually from and after the date of its
exercise of the option to purchase the property. If the Lessee exercises its
option to purchase, all funds paid to Lessors shall be credited toward the
purchase price as of the date the payments were made.
 
 Operating
lease - The Company operates from a leased facility in Nevada under a month to
month basis. The lease calls for monthly base rent of approximately
$1,500.
 
 Revocation
order – On April 24, 2009 the Company received a Partial Revocation Order from
the British Columbia Securities Commission. Pursuant to the order, the Company
has agreed to offer a full rescission for shares purchased or warrants
exercised, during the period of October 2004 to December 2007. The Company has
recorded a rescission liability totaling $67,913 representing the total amount
of cash required to repurchase 263,748 shares in accordance with the order. As
of June 30, 2009, the Company has paid $66,500 of this liability.
 
 8.
              SUBSEQUENT
      EVENTS
 
 On June
30, 2009, certain note holder’s elected to convert the principal amount plus all
accrued interest into shares of the Company’s common stock at a conversion rate
of $0.125 per share. The board of director’s approved the conversion on June 30,
2009 and further agreed to issue two common stock warrants for each dollar
converted. The estimated shares to be issued for the conversion is 3,188,747
whereby relieving $398,593 in principal and accrued interest. The fair value of
warrants issued in connection with the conversion is estimated at $316,000
utilizing the Black-Scholes pricing model. As of the date of this filing, the
shares and warrants remain unissued.
  15
 
 In August
2009, the Company authorized the issuance of approximately 2,768,748 warrants to
purchase the Company’s common stock at exercise prices ranging from $0.25 to
$0.65 per share. The grant was made in an effort to provide goodwill to the
Company’s warrant holders impacted by the cease trade order (“CTO”) imposed by
the British Columbia Securities Commission.  As a result of the CTO,
the aforementioned warrant holder’s were unable to exercise their right to
purchase shares of the Company’s common stock.   The fair value
of warrants granted is estimated to be approximately $68,000 utilizing the
Black-Scholes pricing model.
 
 Pursuant
to FAS 165, management has evaluated all events and transactions that have
occurred subsequent to the balance sheet date and have determined that there are
no additional material events which have occurred as of August 14, 2009, that
would be deemed significant or require recognition or additional
disclosure.
  16
  FORWARD-LOOKING
STATEMENTS
 
 This
document contains “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. 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, any projections of
earnings, revenue or other financial items; any statements of the plans,
strategies and objections of management for future operations; any statements
concerning proposed new services or developments; any statements regarding
future economic conditions or performance; any statements or belief; 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. We do not undertake to update forward-looking statements to
reflect the impact of circumstances or events that arise after the dates they
are made. You should, however, consult further disclosures we make in this
Quarterly Report on Form 10-Q, Annual Report on Form 10-K and Current Reports on
Form 8-K.
 
 Although
we believe that the expectations reflected in any of our forward-looking
statements are reasonable, actual results could differ materially from those
projected or assumed in any of our forward-looking statements. Our future
financial condition and results of operations, as well as any 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:
 
 ·
              deterioration
      in general or regional economic, market and political
      conditions;
 ·
              our
      ability to diversify our
operations;
 ·
              actions
      and initiatives taken by both current and potential
      competitors;
 ·
              inability
      to raise additional financing for working
  capital;
 ·
              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 management to make estimates about matters that are inherently
      uncertain;
 ·
              adverse
      state or federal legislation or regulation that increases the costs of
      compliance, or adverse findings by a regulator with respect to existing
      operations;
 ·
              changes
      in U.S. GAAP or in the legal, regulatory and legislative environments in
      the markets in which we operate;
 ·
              inability
      to efficiently manage our
operations;
 ·
              inability
      to achieve future operating
results;
 ·
              the
      unavailability of funds for capital
  expenditures;
 ·
              our
      ability to recruit and hire key
employees;
 ·
              the
      inability of management to effectively implement our strategies and
      business plans; and
 ·
              the
      other risks and uncertainties detailed in this
  report.
 
 17
  For a
detailed description of these and other factors that could cause actual results
to differ materially from those expressed in any forward-looking statement,
please see “Risk Factors” in this document and in our Annual Report on Form 10-K
for the year ended December 31, 2008.
 
 In this
form 10-Q references to “Can-Cal”, “the Company”, “we,” “us,” “our” and similar
terms refer to Can-Cal Resources Ltd.
 
 Item
2. Management’s Discussion and Analysis.
 
 (A) PLAN
OF OPERATION.
 
 Can-Cal
Resources Ltd. is a public 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 Wikieup, Arizona
property.
  The
Company has discontinued all industrial sales for the volcanic materials located
on the Pisgah property in California subject to the finalization of the current
analytical program.
 
 At June
30, 2009, we had approximately $50,376 in cash available to sustain operations.
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 that such investment capital or additional funding and joint venture
arrangements will be available to the Company.
 
 (B)
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2009 AND
2008.
 
 The
following table summarizes selected items from the statement of operations for
the three months ended June 30, 2009 compared to June 30, 2008.
 
 EXPENSES:
  Three
      Months EndedJune
      30,
                
                
                Increase/(Decrease)2009
                
                
                2008
                
                
                $
                
                
                %Expenses:Exploration
      costs
                
                $
                15,258
                
                
                
                20,991
                
                
                
                (5,733
                )
                
                
                (28
                %)Depreciation
                
                
                2,613
                
                
                
                2,998
                
                
                
                (385
                )
                
                
                (13
                %)General
      & administrative
                
                
                117,269
                
                
                
                85,645
                
                
                
                31,624
                
                
                
                37
                %Officer
      compensation
                
                
                30,000
                
                
                
                29,008
                
                
                
                992
                
                
                
                4
                %Total
      operating expenses
                
                
                165,140
                
                
                
                138,642
                
                
                
                26,498
                
                
                
                20
                %Other
      income (expense)Interest
      income
                
                
                -
                
                
                
                4
                
                
                
                (4
                )
                
                
                -Interest
      expense
                
                
                (22,726
                )
                
                
                (15,460
                )
                
                
                7,266
                
                
                
                47
                %Rental
      revenue
                
                
                6,775
                
                
                
                16,689
                
                
                
                (9,914
                )
                
                
                (60
                %)Foreign
      currency gain
                
                
                4,577
                
                
                
                -
                
                
                
                4,577
                
                
                
                -Total
      other
                
                
                (11,374
                )
                
                
                1,233
                
                
                
                12,607
                
                
                
                102
                %Net
      (loss)
                
                $
                (176,514
                )
                
                $
                (137,409
                )
                
                $
                39,105
                
                
                
                29
                %
  18
 EXPLORATION
COSTS
 
 Exploration
costs for the three months ended June 30, 2009 decreased by $5,733 or 28% from
$20,991 for the three months ended June 30, 2008 to $15,258 for the three months
ended June 30, 2009. The decrease is due to our efforts to scale back on further
research as a result of the Cease Trade Order issued by the British Columbia
Securities Commission and therefore causing the inability to provide Private
Placement funding necessary to maintain operations. The Cease Trade Order was
lifted mid quarter and it is our expectation that our exploration costs will
resume through out the remainder of the year.
 
 DEPRECIATION
 
 Depreciation
for the three months ended June 30, 2009 remained consistent with the comparable
period as expected.
  GENERAL
AND ADMINISTRATIVE EXPENSES
 
 General
and administrative expenses for the three months ended June 30, 2009 increased
by $31,624 or 37% from $85,645 for the three months ended June 30, 2008 to
$117,269 for the three months ended June 30, 2009. The increase is directly
related to legal fees incurred as a result of the Cease Trade Order from the
British Columbia Securities Commission.
  OFFICER
COMPENSATION
 
 We did
not experience a material change in compensation to our CEO. Pursuant to the
board of director’s 2006 resolution, our CEO will continue to receive quarterly
compensation in the amount of $30,000.
 
 TOTAL
OPERATING EXPENSES
 
 Total
operating expenses for the three months ended June 30, 2009 increased by $26,498
or 20% from $138,642 for the three months ended June 30, 2008 to $165,140 for
the three months ended June 30, 2009. The increase in total operating expenses
was directly related to the legal expenses incurred as a result of our Canadian
securities activities.
  OTHER
INCOME (EXPENSE)
 
 We
experienced a decline in rental revenue for the three months ended June 30, 2009
due to the elimination of our 2008 Toyota Commercial lease which expired on
August 21, 2008. During the quarter we renewed our lease with Rinker Materials
for an additional one year period at an annual rate of $27,500. The rental
agreement has been paid in full and we expect to recognize $6,775 in rental
revenue per quarter through May 2010.
 19
 
 Our
interest expense increased during the three month period ended June 30, 2009
compared to the same period in the previous year due to the additional
promissory notes entered into in the latter half of 2008.
 
 NET
(LOSS)
 
 We
incurred a net (loss) of $176,514 for the three month period which is an
increase of $39,105 over the comparable period. Our extensive legal fees in
connection with the cease trade order and our increase in interest expense from
our financing activities resulted in the increase in net (loss).
 
 (C)
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2009 AND
2008.
 
 The
following table summarizes selected items from the statement of operations for
the Six months ended June 30, 2009 compared to June 30, 2008.
 
 EXPENSES:
  Six
      Months EndedJune
      30,
                
                
                Increase/(Decrease)2009
                
                
                2008
                
                
                $
                
                
                %Expenses:Exploration
      costs
                
                $
                18,661
                
                
                
                38,905
                
                
                
                (20,244
                )
                
                
                (52
                %)Depreciation
                
                
                5,226
                
                
                
                5,995
                
                
                
                (769
                )
                
                
                (13
                %)General
      & administrative
                
                
                167,761
                
                
                
                142,640
                
                
                
                25,121
                
                
                
                18
                %Officer
      compensation
                
                
                60,000
                
                
                
                60,000
                
                
                
                -
                
                
                
                -Total
      operating expenses
                
                
                251,648
                
                
                
                247,540
                
                
                
                4,108
                
                
                
                2
                %Other
      income (expense)Interest
      income
                
                
                8
                
                
                
                102
                
                
                
                (94
                )
                
                
                (93
                %)Interest
      expense
                
                
                (44,648
                )
                
                
                (29,264
                )
                
                
                15,384
                
                
                
                53
                %Rental
      revenue
                
                
                14,150
                
                
                
                26,614
                
                
                
                (12,464
                )
                
                
                (47
                %)Foreign
      currency gain
                
                
                4,577
                
                
                
                -
                
                
                
                4,577
                
                
                
                -Total
      other
                
                
                (25,923
                )
                
                
                (2,548
                )
                
                
                23,375
                
                
                
                917
                %Net
      (loss)
                
                $
                (277,571
                )
                
                $
                (250,088
                )
                
                $
                27,483
                
                
                
                11
                %
  EXPLORATION
COSTS
 
 We experienced a significant decline in
our exploration costs for the six month period ending June 30, 2009 as a result
of our inability to raise the necessary capital. This was the direct result of
the Cease Trade Oder put in place by the British Columbia Securities Commission
(“BCSC”) on February 4, 2008. This order was partially lifted by the BCSC on
April 24, 2009 whereby enabling us to raise additional capital to continue our
exploration endeavors.
  20
 
 DEPRECIATION
 
 We have
not made any capital purchases during the six months ending June 30, 2009 and
therefore have experienced no material change in our depreciation expense. As of
the date of this filing, we do not anticipate incurring any capital expenditure
for the remainder of the year. As a result, our depreciation expense will remain
consistent as expected under a straight line method.
 
 GENERAL
AND ADMINISTRATIVE EXPENSES
 
 We
experienced an 18% increase in our general and administrative expenses for the
Six months ended June 30, 2009 compared to the same period in the previous year.
The increase was expected by management due to our increase in professional fees
resulting from the regulatory issues in British Columbia. As of June 30, 2009,
the majority of these issues have reached resolution and we therefore expect to
see these costs to be more comparable to the previous year in the third and
fourth quarter.
  OFFICER
COMPENSATION
 
 In 2006, our board of director’s agreed
to pay annual compensation of $120,000 to our CEO. Until such time this is
adjusted by our board of directors, we expect no significant changes in our
periodic or annual expense.
 
 TOTAL
OPERATING EXPENSES
 
 Our
overall operating expenses remained consistent with the previous six month
period despite our significant increase in legal fees. We achieve the minimal
increase through management’s efforts to lower or eliminate any unnecessary
expenses. We anticipate our overall all expenses to increase slightly and in
direct relation to our successful financing efforts through the remainder of the
year.
 
 OTHER
INCOME (EXPENSE)
 
 During
the second quarter of 2008, we entered into a short term lease agreement with
Toyota Commercial whereby we allowed Toyota use of certain land for a period of
two months in exchange for a rental fee of $32,500. This was an isolated and
non-recurring event in 2008. As a result of this single transaction, we
experienced a decline in rental revenue for the six month period ended June 30,
2009.
 
 Our
increase in interest expense for the six month period ended June 30, 2009 of
$15,384 compared to the same period in the previous year is directly related to
the additional promissory notes entered into in the latter half of
2008.
 
 21
  NET
LOSS
 
 We
incurred a net (loss) of $277,571 for the six month period ended June 30, 2009.
The increase of $27,483 over the comparable period was a direct result of an
increase in legal fees and interest expense.
 
 (D)
LIQUIDITY AND CAPITAL RESOURCES AND RESULTS OF OPERATIONS
 
 The
following table summarizes total current assets, total current liabilities and
working capital at June 30, 2009 compared to December 31, 2008.
 
 June
      30,
              
              
              December
      31,
              
              
              Increase
      / (Decrease)2009
              
              
              2008
              
              
              $
              
              
              %Current
      assets
              
              $
              51,871
              
              
              $
              45,948
              
              
              $
              5,923
              
              
              
              13
              %Current
      liabilities
              
              
              1,488,132
              
              
              
              1,337,671
              
              
              
              150,461
              
              
              
              11
              %Working
      capital (deficit)
              
              $
              (1,436,261
              )
              
              $
              (1,291,723
              )
              
              $
              144,538
              
              
              
              11
              %
 
 Internal
and External Sources of Liquidity
 
 During
the Six months ended June 30, 2009 and 2008, our operating and investing
activities used cash of $216,422 and $159,865, respectively, while our financing
activities provided cash of $154,450. The cash used in operating activities was
principally a result of the net loss we incurred.
 
 Cash Flow. Since inception,
we have primarily financed our cash flow requirements through the issuance of
common stock and the issuance of notes. With the growth of our current business
we may, during our normal course of business, experience net negative cash flows
from operations until some of our mining activities begin to produce revenues.
Further, we may be required to obtain financing to fund operations through
additional common stock offerings and bank or other debt borrowings, to the
extent available, or to obtain additional financing to the extent necessary to
augment our available working capital.
 
 SATISFACTION
OF OUR CASH OBLIGATIONS FOR THE NEXT TWELVE MONTHS.
 
 As of
June 30, 2009, our cash balance was $50,376. Our plan for satisfying our cash
requirements for the next twelve months is through additional equity, third
party financing, and/or debt financing. Our current cash reserves will not be
sufficient to support operations through June 30, 2009, and do not anticipate
generating sufficient amounts of positive cash flow to meet our working capital
requirements. Consequently, we intend to make appropriate plans to ensure
sources of additional capital in the future to fund growth and expansion through
additional equity or debt financing or credit facilities. We also are
considering possible funding through joint venture arrangements with other
mining companies. There can be no assurance that we will raise capital through
any of these means.
  As we
expand operational activities, we may continue to experience net negative cash
flows from operations, pending receipt of sales and will be required to obtain
additional financing to fund operations through common stock offerings and debt
borrowings to the extent necessary to provide working capital.
  22
 
 We
anticipate incurring operating losses until we build our capital base. Our
recent operating history makes predictions of future operating results difficult
to ascertain. In addition, since our cash position has fallen we are finding it
increasingly difficult to expand our operations. Thus, our prospects must be
considered in light of the risks, expenses and difficulties frequently
encountered by companies in their early stages of commercial viability,
particularly companies in rapidly evolving energy markets. Such risks include,
but are not limited to, an evolving and unpredictable business model and the
management of growth. To address these risks we must, among other things,
implement and successfully execute our business and marketing strategy, continue
to develop and upgrade technology and products, respond to competitive
developments, and continue to attract, retain and motivate qualified personnel.
There can be no assurance that we will be successful in addressing such risks,
and the failure to do so can have a material adverse effect on our business
prospects, financial condition and results of operations.
 
 Going
Concern
 
 The
financial statements included in this filing have been prepared in conformity
with generally accepted accounting principles that contemplate the continuance
of the Company as a going concern. Management intends to use borrowings and
security sales to mitigate the effects of its cash position, however no
assurance can be given that debt or equity financing, if and when required will
be available. The financial statements do not include any adjustments relating
to the recoverability and classification of recorded assets and classification
of liabilities that might be necessary should the Company be unable to continue
existence.
 
 Off-Balance
Sheet Arrangements
 
 We do not have any off-balance sheet
arrangements that have or are reasonably likely to have a current or future
effect on our financial condition, changes in financial condition, revenues or
expenses, results or operations, liquidity, capital expenditures or capital
resources that is material to investors.
 
 Critical
Accounting Policies and Estimates
 
 Related party transactions:
In March 1982, the FASB issued Statement of Financial Accounting Standard 57
(“57”)“Related Party
Disclosure”. This Statement establishes requirements for related party
disclosures and provides guidance for the disclosures of transactions between
related parties.
 
 Recent
Accounting Developments
 
 In June 2009, the FASB issued SFAS No.
168 (“FAS 168”), “The FASB
Accounting Standards CodificationTM and the Hierarchy of Generally Accepted
Accounting Principles – a replacement of FASB Statement No. 162”.The
FASB Accounting Standards
CodificationTM (Codification) will become the source of authoritative U.S.
generally accepted accounting principles (GAAP) recognized by the FASB to be
applied by nongovernmental entities. Rules and interpretive releases of the
Securities and Exchange Commission (SEC) under authority of federal securities
laws are also sources of authoritative GAAP for SEC registrants. On the
effective date of this Statement, the Codification will supersede all
then-existing non-SEC accounting and reporting standards. All other
non-grandfathered non-SEC accounting literature not included in the Codification
will become non-authoritative. As prescribe by the FASB we anticipate adopting
FAS 168, for all interim and annual periods ending after September 15,
2009.
  23
 
 In June 2009, the FASB issued SFAS No.
167 (“FAS 167”), “Amendments
to FASB Interpretation No. 46(R)”. The Board’s objective in issuing this
Statement is to improve financial reporting by enterprises involved with
variable interest entities. The Board undertook this project to address (1) the
effects on certain provisions of FASB Interpretation No. 46 (revised December
2003), Consolidation of
Variable Interest Entities,as a result of the elimination of the
qualifying special-purpose entity concept in FASB Statement No. 166, Accounting for Transfers of
Financial Assets,and (2) constituent concerns about the application of
certain key provisions of Interpretation 46(R), including those in which the
accounting and disclosures under the Interpretation do not always provide timely
and useful information about an enterprise’s involvement in a variable interest
entity. This Statement shall be effective as of the beginning of each reporting
entity’s first annual reporting period that begins after November 15, 2009, for
interim periods within that first annual reporting period, and for interim and
annual reporting periods thereafter. As prescribe by the FASB we anticipate
adopting FAS 167, for all interim and annual reports subsequent to November 15,
2009.
 
 In June 2009, the FASB issued SFAS No.
166 (“FAS 166”), “Accounting
for Transfers of Financial Assets - an amendment to FASB Statement No.
140”. The Board’s objective in issuing this Statement is to improve the
relevance, representational faithfulness, and comparability of the information
that a reporting entity provides in its financial statements about a transfer of
financial assets; the effects of a transfer on its financial position, financial
performance, and cash flows; and a transferor’s continuing involvement, if any,
in transferred financial assets. The Board undertook this project to address (1)
practices that have developed since the issuance of FASB Statement No. 140,
Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities,that
are not consistent with the original intent and key requirements of that
Statement and (2) concerns of financial statement users that many
of the financial assets (and related obligations) that have been derecognized
should continue to be reported in the financial statements of transferors. As
prescribe by the FASB we  apply the guidance of FAS 166, where
applicable effective after our first annual reporting period that begins after
November 15, 2009, and to interim periods within that first annual reporting
period and for interim and annual reporting periods thereafter.
 
 In May 2009, the FASB issued SFAS No.
165 (“FAS 165”) “Subsequent
Events”. The objective of this Statement is to establish general
standards of accounting for and disclosure of, events that occur after the
balance sheet date but before financial statements are issued or are available
to be issued. In particular, this Statement sets forth: 1) The period after the
balance sheet date during which management of a reporting entity should evaluate
events or transactions that may occur for potential recognition or disclosure in
the financial statements, 2) The circumstances under which an entity should
recognize events or transactions occurring after the balance sheet date in its
financial statements 3) The disclosures that an entity should make about events
or transactions that occurred after the balance sheet date. We have adopted FAS
165 as of June 15, 2009.
  24
 
 Item
3.Quantitative
and Qualitative Disclosures about Market Risk.
 
 Not
applicable.
  Item
4T. Controls and Procedures.
 
 The
Company maintains disclosure controls and procedures that are designed to ensure
that information required to be disclosed in the Company’s Exchange Act reports
is recorded, processed, summarized and reported within the time periods
specified in the SEC’s rules and forms, and that such information is accumulated
and communicated to the Company’s management, including its Chief Executive
Officer and Chief Financial Officer, as appropriate, to allow timely decisions
in accordance with the required "disclosure controls and procedures" as defined
in Rule 13a-15(e). The Company’s disclosure and control procedures are designed
to provide reasonable assurance of achieving their objectives, and the principal
executive officer and principal financial officer of the Company concluded that
the Company’s disclosure controls and procedures were effective at the
reasonable assurance level.
 
 At the
end of the period covered by this Quarterly Report, the Company carried out an
evaluation, under the supervision and with the participation of the Company's
management, including the Company's principal executive officer and principal
financial officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures. Based on the foregoing, the
principal executive officer and principal financial officer of the Company
concluded that the Company’s disclosure controls and procedures were effective
to ensure that the information required to be disclosed in the Company’s
Exchange Act reports is recorded, processed, summarized and reported within the
time periods specified in the SEC’s rules and forms, and that such information
is accumulated and communicated to the Company’s management including the
Company’s principal executive officer and principal financial officer to allow
timely decisions regarding required disclosure.
 
 Changes
in Internal Control over Financial Reporting
  There
were no changes in our internal control over financial reporting, as defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently
completed fiscal quarter that have materially affected, or are reasonably likely
to materially affect, our internal control over financial
reporting.
 
 PART
II--OTHER INFORMATION
 
 Item
1.  Legal Proceedings.
 
 The
Company is not currently a party to litigation. The British Columbia Securities
Commission previously required the Company to obtain a report by an independent
consultant qualified under the standards of the BCSC. Under British Columbia
securities laws, all disclosure of scientific or technical information,
including disclosure of a mineral resource or mineral reserve must be based on
information prepared by or under the supervision of an independent third party
who is “qualified” under the terms of that law. The Company is under order to
supply such verification by a “qualified” third party consultant, and its stock
may not trade in British Columbia until such verification is accepted by the
BCSC. The BCSC has also requested documentation regarding all subscribers to the
Company stock who are resident in British Columbia. The Company retained such a
“qualified” third party consultant who prepared and filed the necessary reports
with the BCSC. The BCSC order was lifted on or about April 27,
2009.
  25
  Item
1A. Risk Factors.
 
 Our
significant business risks are described in Item 1A to Form 10-K for the
year ended December 31, 2008 to which reference is made
herein.
 
 Item
2.  Unregistered Sales of Equity Securities and Use of
Proceeds.
 
 On May 28, 2009, pursuant
to private placement exemptions under Section 4(2) and Regulation S of the
Securities Act of 1933, the Company sold 1,567,600 units of securities
consisting of (i) one share of common stock and (ii) one warrant to purchase one
share of common stock (the “Units”) at a price of $0.125
per Unit.  The warrants are exercisable each into one share of common
stock at a price of $0.15 per share and have an expiration date of March 31,
2011.  The Company received from the sales total gross proceeds of
$199,950.00.
 
 The
Company plans to use the proceeds of the sale (i) for exploration and
development of Can-Cal’s current properties, including ongoing laboratory
methodology processing and metallurgy testing in relation to precious metal
extraction from Can-Cal’s Pisgah and Wikieup properties; (ii) to fund the
rescission of certain prior sales of shares as per the requirements of the
British Columbia Securities Commission in connection with April 24, 2009,
partial revocation of the Cease Trade Order, and; (iii) for general working
capital requirements.
 
 Issuer
Purchases of Equity Securities
 
 We did not repurchase any of our equity
securities during the quarter ended June 30, 2009.
 
 Item
3. Defaults Upon Senior Securities.
 
 See Note
3 to our condensed financial statements included herein.
 
 Item
4. Submission of Matters to a Vote of Security Holders.
 
 We did not submit any matters to a vote
of our security holders during the first quarter of 2009.
  26
 
 Item
5. Other Information.
 
 On April
24, 2009, the British Columbia Securities Commission (“BCSC”) notified Can-Cal
Resources, Ltd. (“Can-Cal” or the Company”) of its decision to partially revoke
the cease trade order (the “CTO”) that the BCSC issued on February 4, 2008, as
to all outstanding shares of Can-Cal, conditioned upon Can-Cal’s agreement to
rescind the prior sale of certain securities, which sales were in part the
subject of the CTO.   The partial revocation of the CTO was
effective April 24, 2009.
  The BCSC
had previously determined the Company engaged in the sale on securities to
various individuals and entities during the period between October 2004 through
December 2007, and that a portion of these sales were sold without an exemption
to the British Columbia, Canada, securities laws that require the delivery of a
prospectus in connection with the sale of securities.
  In
revoking the CTO, the BSCS required that Can-Cal rescind all sales to British
Columbia residents who purchased the securities of Can-Cal without the required
exemptions (“Non-accredited Purchasers”).  In meeting this condition,
Can-Cal will rescind the sale of an approximate total of 263,748 shares of
common stock of the Company and return a total of approximately $67,913 of
investment funds to the Non-accredited Purchasers.  The CTO will
remain on all shares sold to Non-accredited Purchasers.
 
 Item
6.  Exhibits.
 
 Incorporated
      by referenceExhibit
              
              Exhibit
      Description
              
              Filed
      herewith
              
              Form
              
              Period
      ending
              
              Exhibit
              
              Filing
      date10.1
              
              Unregistered
      Sales of Equity Securities pursuant to private placement exemptions under
      Section 4(2) and Regulation S of the Securities Act of
1933
              
              
              
              8-K
              
              
              
              
              
              05/28/0931.1
              
              Certification
      of Ronald B. Sloan pursuant to Section 302 of the Sarbanes-Oxley
      Act
              
              X31.2
              
              Certification
      of Ronald B. Sloan pursuant to Section 302 of the Sarbanes-Oxley
      Act
              
              X32.1
              
              Certification
      of Ronald B. Sloan pursuant to Section 906 of the Sarbanes-Oxley
      Act
              
              X99.1
              
              Press
      Release issued April 28, 2009 regarding BCSC CTO
              
              
              
              8-K
              
              
              
              99.2
              
              04/29/0999.3
              
              Press
      Release issued May 28, 2009 regarding Private Placement
              
              
              
              8-K
              
              
              
              99.2
              
              05/28/09
  27
  SIGNATURES
 
 In accordance with the requirements of
the Exchange Act, the registrant caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
 
 CAN-CAL
RESOURCES LTD.
 (Registrant)
 
 By:   /s/
Ronald D. Sloan
 
 Ronald D.
Sloan, President and Chief Executive Officer
 (On
behalf of the Registrant and
 as
Principal Financial Officer)
  Date:
August 14, 2009
  28