UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-Q





x  Quarterly Report
pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934.




For the
fiscal quarter ended September 30, 2008





o  Transition Report
under Section 13 or 15(d) of the Securities Exchange Act of 1934.




For the
transition period from _____ to _____.





Commission
File No. 0-26669





Can-Cal Resources
Ltd.


(Name of
Small Business Issuer 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, NV 89128


(Address
of principal executive offices)





(702)
243-1849


(Issuer's
telephone number)





N/A


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





Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 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 xNo o





State the
number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:


Class
              Outstanding on
      November 14, 2008Common
      Stock, Par Value $.001
              24,587,753





Transitional
Small Business Disclosure Format (Check one): Yes o No x








CAN CAL
RESOURCES, LTD.


SEPTEMBER
30, 2008 QUARTERLY REPORT ON FORM 10-Q


TABLE OF
CONTENTS





PAGE
      NO.PART
      I. FINANCIAL INFORMATIONITEM
      1. FINANCIAL STATEMENTSBalance
      Sheets
            
            4Statements
      of Operations
            
            5Statement
      of Stockholders’ Equity (Deficit)
            
            6Statements
      of Cash Flows
            
            7Notes
      to Financial Statements
            
            8ITEM
      2. Management's Discussion and Analysis of Financial
    Condition
            
            20ITEM
      3. Quantitative and Qualitative Disclosures about Market
    Risk
            
            26ITEM
      4. Controls and Procedures
            
            27PART
      II. OTHER INFORMATION
            
            27ITEM
      1. Legal Proceedings
            
            27ITEM
      2. Changes in Securities
            
            28ITEM
      3. Defaults upon Senior Securities
            
            28ITEM
      4. Submission of Matters to a Vote of Security Holders
            
            28ITEM
      5. Other information
            
            28ITEM
      6. Exhibits and Reports on Form 8-K
            
            28SignaturesCertifications








FORWARD
LOOKING STATEMENTS





Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934 provide a "safe harbor" for forward looking statements that are based on
current expectations, estimates and projections, and management's beliefs and
assumptions. Words such as "believes," "expects," "intends," "plans,"
"estimates," "may," "attempt," "will," "goal," "promising," or variations of
such words and similar expressions are intended to identify such forward-looking
statements. These statements are not guarantees of future performance and
involve certain risks and uncertainties which are difficult or impossible to
predict. Therefore, actual outcomes and results may differ materially from what
is expressed or forecasted in such forward-looking statements. The Company
undertakes no obligation to update publicly any forward-looking statement
whether as a result of new information, future events or otherwise.





Such
risks and uncertainties include, but are not limited to, the availability of
metal ore; negative or inconsistent test results, the existence of precious
metals in the metal ore available to the Company in an amount which permits
their production on an economic basis; the Company's ability to drill holes and
properly test and assay samples, and its ability to locate and acquire mineral
properties which contain sufficient grades of precious metals and/or minerals;
the Company's ability to sell a portion or all of any of its properties to
larger mining companies, or to enter into agreements with larger mining
companies to explore and possibly develop its properties; to produce precious
metals on a commercial basis, the prices of precious metals; obtaining a mill or
refinery to extract precious metals on an economic basis; the ability to
maintain the facilities it currently utilizes; obtain permitting requirements
for any mining and milling operations and pay the costs thereof; have good title
to claims and equipment; and the Company's ability to obtain financing necessary
to maintain its operations.








PART I.   FINANCIAL
INFORMATION


Can-Cal Resources
Ltd.
 (An Exploration Stage
Company)
 Condensed Balance
Sheets
 September
      30, 2008
                  
                  December 31, 2007(Unaudited)
                  
                  (Audited)ASSETSCurrent
      assetsCash
                  
                  $
                  51,322
                  
                  $
                  105,987Other
      current assets
                  
                  
                  12,095
                  
                  
                  —Total
      current assets
                  
                  
                  63,417
                  
                  
                  105,987Property,
      equipment and mineral interests (net of accumulated depreciation of
      $134,888 and $125,894)
                  
                  
                  502,727
                  
                  
                  511,720Other
      assets, net
                  
                  
                  1,895
                  
                  
                  1,895Total
      assets
                  
                  $
                  568,039
                  
                  $
                  619,602LIABILITIES
      AND STOCKHOLDERS' DEFICITCurrent
      liabilitiesAccounts
      payable
                  
                  $
                  31,617
                  
                  $
                  28,399Accrued
      interest
                  
                  
                  357,243
                  
                  
                  311,320Accrued
      officer salary
                  
                  
                  181,689
                  
                  
                  110,652Accrued
      payroll taxes
                  
                  
                  1,280
                  
                  
                  21,853Notes
      payable, related parties
                  
                  
                  360,550
                  
                  
                  360,550Notes
      payable
                  
                  
                  258,500
                  
                  
                  —Unearned
      revenues
                  
                  
                  16,042
                  
                  
                  9,375Total
      current liabilities
                  
                  
                  1,206,921
                  
                  
                  842,149Total
      liabilities
                  
                  
                  1,206,921
                  
                  
                  842,149Stockholders'
      deficitPreferred
      stock; $0.001 par value; 10,000,000 shares authorized,
      no shares issued and outstanding
                  
                  
                  —
                  
                  
                  —Common
      stock; $0.001 par value; 100,000,000 shares authorized, 24,587,753 and
      24,555,253 shares issued and outstanding, respectively
                  
                  
                  24,588
                  
                  
                  24,555Additional
      paid-in capital
                  
                  
                  7,831,503
                  
                  
                  7,823,411Accumulated
      deficit
                  
                  
                  (8,494,973
                  )
                  
                  (8,070,513
                  )Total
      stockholders' deficit
                  
                  
                  (638,882
                  )
                  
                  (222,547
                  )Total
      liabilities and stockholders' deficit
                  
                  $
                  568,039
                  
                  $
                  619,602
 See
Accompanying Notes to Financial Statements
  4


Can-Cal Resources
      Ltd.(An Exploration Stage
      Company)Condensed Statements of
      Operations(Unaudited)
  For
      the Three Months Ended
              
              For
      the Nine Months Ended
              
              March
      22, 1995 (Inception) toSeptember
      30,
              
              September
      30,
              
              September 30,2008
              
              2007
              
              2008
              
              2007
              
              2008Material
      sales
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              245,500Cost
      of sales
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              263,400Gross
      profit
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (17,900
              )Operating
      expensesExploration
      costs
              
              
              45,622
              
              
              46,588
              
              
              84,527
              
              
              149,532
              
              
              453,054Depreciation
              
              
              2,998
              
              
              1,277
              
              
              8,993
              
              
              7,297
              
              
              229,318General
      and administrative
              
              
              108,446
              
              
              64,631
              
              
              251,086
              
              
              173,375
              
              
              6,008,112Officer
      compensation
              
              
              30,000
              
              
              30,942
              
              
              90,000
              
              
              92,994
              
              
              701,176Total
      operating expenses
              
              
              187,066
              
              
              143,438
              
              
              434,606
              
              
              423,198
              
              
              7,391,660Loss
      from operations
              
              
              (187,066
              )
              
              (143,438
              )
              
              (434,606
              )
              
              (423,198
              )
              
              (7,409,560
              )Other
      income (expense)Other
      income from legal judgement
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              47,200Interest
      income
              
              
              12
              
              
              2,387
              
              
              114
              
              
              9,346
              
              
              52,902Rental
      revenue
              
              
              31,019
              
              
              5,625
              
              
              57,633
              
              
              16,875
              
              
              289,633Gain
      (loss) on sale of fixed assets
              
              
              —
              
              
              —
              
              
              —
              
              
              3,701
              
              
              26,801Interest
      expense
              
              
              (18,337
              )
              
              (14,169
              )
              
              (47,601
              )
              
              (43,057
              )
              
              (1,028,349
              )Total
      other income (expense)
              
              
              12,694
              
              
              (6,157
              )
              
              10,146
              
              
              (13,135
              )
              
              (611,813
              )Loss
      before provision for income taxes
              
              
              (174,372
              )
              
              (149,595
              )
              
              (424,460
              )
              
              (436,333
              )
              
              (8,021,373
              )Provision
      for income taxes
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —Net
      loss from continuing operations
              
              
              (174,372
              )
              
              (149,595
              )
              
              (424,460
              )
              $
              (436,333
              )
              
              (8,021,373
              )Income
      from discontinued operationsIncome
      (loss) from discontinued operations
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              116,400Gain
      (loss) on disposal of operations (net of taxes)
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (590,000
              )Net
      loss
              
              $
              (174,372
              )
              $
              (149,595
              )
              $
              (424,460
              )
              $
              (436,333
              )
              $
              (8,494,973
              )Basic
      loss per common share
              
              $
              (0.01
              )
              $
              (0.01
              )
              $
              (0.02
              )
              $
              (0.02
              )Basic
      weighted average common shares outstanding
              
              
              24,587,753
              
              
              24,337,458
              
              
              24,585,844
              
              
              24,093,492 See
Accompanying Notes to Financial Statements




5




Can-Cal Resources
Ltd.


(An Exploration Stage
Company)


Condensed Statement of Stockholders'
Equity (Deficit)


(Unaudited)




ForeignCommon
      Stock
            
            Additional
            
            
            
            Currency
            
            
            
            TotalNumber
      of
            
            
            
            Paid-in
            
            
            
            Translation
            
            Accumulated
            
            Stockholders'Shares
            
            Amount
            
            Capital
            
            Unamortized
            
            Adjustment
            
            (Deficit)
            
            (Deficit)Balance
      March 22, 1995
            
            
            —
            
            $
            —
            
            $
            —
            
            $
            —
            
            $
            —
            
            $
            —
            
            $
            —Common
      shares issued for services
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —Net
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (1,000
            )
            
            (1,000
            )Balance
      December 31, 1995
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (1,000
            )
            
            (1,000
            )Common
      shares issued for services
            
            
            3,441,217
            
            
            3,400
            
            
            625,000
            
            
            —
            
            
            —
            
            
            —
            
            
            628,400Prior
      period adjustment, investment in joint venture
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            497,900
            
            
            497,900Net
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (497,000
            )
            
            (497,000
            )Balance
      December 31, 1996
            
            
            3,441,217
            
            
            3,400
            
            
            625,000
            
            
            —
            
            
            —
            
            
            (100
            )
            
            628,300Common
      shares issued for services
            
            
            3,006,435
            
            
            3,000
            
            
            1,051,400
            
            
            —
            
            
            —
            
            
            —
            
            
            1,054,400Net
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (1,044,700
            )
            
            (1,044,700
            )Balance
      December 31, 1997
            
            
            6,447,652
            
            
            6,400
            
            
            1,676,400
            
            
            —
            
            
            —
            
            
            (1,044,800
            )
            
            638,000Common
      shares issued for cash
            
            
            557,509
            
            
            600
            
            
            211,200
            
            
            —
            
            
            —
            
            
            —
            
            
            211,800Foreign
      currency translation adjustment
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            8,500
            
            
            —
            
            
            8,500Net
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (353,000
            )
            
            (353,000
            )Balance
      December 31, 1998
            
            
            7,005,161
            
            
            7,000
            
            
            1,887,600
            
            
            —
            
            
            8,500
            
            
            (1,397,800
            )
            
            505,300Common
      shares issued for cash
            
            
            1,248,621
            
            
            1,200
            
            
            572,600
            
            
            —
            
            
            —
            
            
            —
            
            
            573,800Foreign
      currency translation adjustment
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (11,800
            )
            
            —
            
            
            (11,800
            )Realized
      foreign currency translation loss
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            3,300
            
            
            —
            
            
            3,300Prior
      period Adjustment
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            15,000
            
            
            15,000Elimination
      of subsidiary upon disposal
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            116,400
            
            
            116,400Net
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (1,038,500
            )
            
            (1,038,500
            )Balance
      December 31, 1999
            
            
            8,253,782
            
            
            8,200
            
            
            2,460,200
            
            
            —
            
            
            —
            
            
            (2,304,900
            )
            
            163,500Common
      shares issued for cash
            
            
            1,119,009
            
            
            1,200
            
            
            948,400
            
            
            —
            
            
            —
            
            
            —
            
            
            949,600Net
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (962,500
            )
            
            (962,500
            )Balance
      December 31, 2000
            
            
            9,372,791
            
            
            9,400
            
            
            3,408,600
            
            
            —
            
            
            —
            
            
            (3,267,400
            )
            
            150,600Common
      shares issued for cash
            
            
            785,947
            
            
            800
            
            
            81,500
            
            
            —
            
            
            —
            
            
            —
            
            
            82,300Net
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (704,500
            )
            
            (704,500
            )Balance
      December 31, 2001
            
            
            10,158,738
            
            
            10,200
            
            
            3,490,100
            
            
            —
            
            
            —
            
            
            (3,971,900
            )
            
            (471,600
            )Common
      shares issued for cash
            
            
            1,093,280
            
            
            1,100
            
            
            269,900
            
            
            —
            
            
            —
            
            
            —
            
            
            271,000Common
      shares issued for services
            
            
            92,292
            
            
            100
            
            
            23,800
            
            
            —
            
            
            —
            
            
            —
            
            
            23,900Options
      granted for services
            
            
            —
            
            
            —
            
            
            7,100
            
            
            —
            
            
            —
            
            
            —
            
            
            7,100Common
      shares issued for repayment of note payable, related partyin
      the amount of $119,800, including accrued interest of $71,800
            
            
            309,677
            
            
            300
            
            
            119,500
            
            
            —
            
            
            —
            
            
            —
            
            
            119,800Warrants
      granted for loan fees onconvertible
      notes payable, related party
            
            
            —
            
            
            —
            
            
            16,700
            
            
            (16,700
            )
            
            —
            
            
            —
            
            
            —Common
      shares issued for loan fees onconvertible
      notes payable, related party
            
            
            30,000
            
            
            —
            
            
            13,500
            
            
            (13,500
            )
            
            —
            
            
            —
            
            
            —Deemed
      interest on beneficial conversionfeature
      of notes payable, related party
            
            
            —
            
            
            —
            
            
            20,500
            
            
            —
            
            
            —
            
            
            —
            
            
            20,500Amortization
      of loan fees
            
            
            —
            
            
            —
            
            
            —
            
            
            8,200
            
            
            —
            
            
            —
            
            
            8,200Net
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (709,300
            )
            
            (709,300
            )Balance
      December 31, 2002
            
            
            11,683,987
            
            
            11,700
            
            
            3,961,100
            
            
            (22,000
            )
            
            —
            
            
            (4,681,200
            )
            
            (730,400
            )Common
      shares issued for cash
            
            
            823,410
            
            
            800
            
            
            163,900
            
            
            —
            
            
            —
            
            
            —
            
            
            164,700Common
      shares issued for services
            
            
            381,260
            
            
            400
            
            
            63,800
            
            
            —
            
            
            —
            
            
            —
            
            
            64,200Options
      granted for services
            
            
            —
            
            
            —
            
            
            61,300
            
            
            —
            
            
            —
            
            
            —
            
            
            61,300Common
      shares issued for repayment of note payable, related partyin
      the amount of $78,300, including accrued interest of $43,300
            
            
            364,305
            
            
            400
            
            
            77,900
            
            
            —
            
            
            —
            
            
            —
            
            
            78,300Deemed
      interest on beneficial conversionfeature
      of notes payable, related party
            
            
            —
            
            
            —
            
            
            38,300
            
            
            —
            
            
            —
            
            
            —
            
            
            38,300Amortization
      of loan fees
            
            
            —
            
            
            —
            
            
            —
            
            
            15,000
            
            
            —
            
            
            —
            
            
            15,000Net
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (711,100
            )
            
            (711,100
            )Balance
      December 31, 2003
            
            
            13,252,962
            
            
            13,300
            
            
            4,366,300
            
            
            (7,000
            )
            
            —
            
            
            (5,392,300
            )
            
            (1,019,700
            )Common
      shares issued for cash
            
            
            1,564,311
            
            
            1,600
            
            
            306,400
            
            
            —
            
            
            —
            
            
            —
            
            
            308,000Common
      shares issued for exercise of warrants
            
            
            701,275
            
            
            700
            
            
            124,900
            
            
            —
            
            
            —
            
            
            —
            
            
            125,600Common
      shares issued for services
            
            
            390,224
            
            
            400
            
            
            73,800
            
            
            —
            
            
            —
            
            
            —
            
            
            74,200Warrants
      granted for services
            
            
            —
            
            
            —
            
            
            12,200
            
            
            —
            
            
            —
            
            
            —
            
            
            12,200Interest
      expense for warrants granted
            
            
            —
            
            
            —
            
            
            280,200
            
            
            —
            
            
            —
            
            
            —
            
            
            280,200Common
      shares issued in satisfaction of accounts payableand
      accrued liabilities in the amount of $229,400
            
            
            917,747
            
            
            900
            
            
            228,500
            
            
            —
            
            
            —
            
            
            —
            
            
            229,400Common
      shares issued for repayment of note payable in theamount
      of $99,700, including accrued interest of $14,700
            
            
            702,760
            
            
            700
            
            
            99,000
            
            
            —
            
            
            —
            
            
            —
            
            
            99,700Common
      shares issued for repayment of note payable,related
      party in the amount of $82,700
            
            
            330,747
            
            
            300
            
            
            82,400
            
            
            —
            
            
            —
            
            
            —
            
            
            82,700Deemed
      interest on beneficial conversionfeature
      of notes payable, related party
            
            
            —
            
            
            —
            
            
            17,600
            
            
            —
            
            
            —
            
            
            —
            
            
            17,600Amortization
      of loan fees
            
            
            —
            
            
            —
            
            
            —
            
            
            7,000
            
            
            —
            
            
            —
            
            
            7,000Net
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (1,030,500
            )
            
            (1,030,500
            )Balance
      December 31, 2004
            
            
            17,860,026
            
            
            17,900
            
            
            5,591,300
            
            
            —
            
            
            —
            
            
            (6,422,800
            )
            
            (813,600
            )Common
      shares issued for cash
            
            
            762,500
            
            
            800
            
            
            152,700
            
            
            —
            
            
            —
            
            
            —
            
            
            153,500Common
      shares issued for exercise of warrants
            
            
            349,545
            
            
            300
            
            
            69,500
            
            
            —
            
            
            —
            
            
            —
            
            
            69,800Net
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (421,800
            )
            
            (421,800
            )Balance
      December 31, 2005
            
            
            18,972,071
            
            
            19,000
            
            
            5,813,500
            
            
            —
            
            
            —
            
            
            (6,844,600
            )
            
            (1,012,100
            )Common
      shares issued for cash
            
            
            2,448,213
            
            
            2,400
            
            
            642,100
            
            
            —
            
            
            —
            
            
            —
            
            
            644,500Common
      warrants exercised for cash
            
            
            174,000
            
            
            200
            
            
            43,300
            
            
            —
            
            
            —
            
            
            —
            
            
            43,500Common
      shares issued for services
            
            
            19,500
            
            
            —
            
            
            5,000
            
            
            —
            
            
            —
            
            
            —
            
            
            5,000Common
      shares issued in satisfaction of accountspayable
      and accrued liabilities
            
            
            385,714
            
            
            400
            
            
            80,600
            
            
            —
            
            
            —
            
            
            —
            
            
            81,000Common
      shares issued in satisfaction of notespayable-related
      parties
            
            
            56,821
            
            
            100
            
            
            11,800
            
            
            —
            
            
            —
            
            
            —
            
            
            11,900Common
      shares issued in satisfaction of convertibledebenture,
      (including accrued interest of $1,895)
            
            
            206,767
            
            
            200
            
            
            41,700
            
            
            —
            
            
            —
            
            
            —
            
            
            41,900Common
      shares issued for asset acquisition
            
            
            1,000,000
            
            
            1,000
            
            
            399,000
            
            
            —
            
            
            —
            
            
            —
            
            
            400,000Option
      granted to officers and directors
            
            
            —
            
            
            —
            
            
            123,500
            
            
            —
            
            
            —
            
            
            —
            
            
            123,500Warrants
      granted for services
            
            
            —
            
            
            —
            
            
            2,200
            
            
            —
            
            
            —
            
            
            —
            
            
            2,200Warrants
      granted in satisfaction of accountspayable
      and accrued liabilities
            
            
            —
            
            
            —
            
            
            65,400
            
            
            —
            
            
            —
            
            
            —
            
            
            65,400Warrants
      granted in satisfaction of notespayable-related
      parties
            
            
            —
            
            
            —
            
            
            9,600
            
            
            —
            
            
            —
            
            
            —
            
            
            9,600Warrants
      granted in satisfaction of convertibledebenture
            
            
            —
            
            
            —
            
            
            40,000
            
            
            —
            
            
            —
            
            
            —
            
            
            40,000Net
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (621,000
            )
            
            (621,000
            )Balance
      December 31, 2006
            
            
            23,263,086
            
            
            23,264
            
            
            7,277,736
            
            
            —
            
            
            —
            
            
            (7,465,600
            )
            
            (164,600
            )Common
      shares issued for cash
            
            
            492,795
            
            
            492
            
            
            188,698
            
            
            —
            
            
            —
            
            
            —
            
            
            189,190Common
      warrants exercised for cash
            
            
            745,372
            
            
            745
            
            
            185,598
            
            
            —
            
            
            —
            
            
            —
            
            
            186,343Common
      shares issued for services
            
            
            4,000
            
            
            4
            
            
            2,010
            
            
            —
            
            
            —
            
            
            —
            
            
            2,014Common
      shares issued in satisfaction ofaccrued
      wages of $22,000, related party
            
            
            50,000
            
            
            50
            
            
            21,950
            
            
            —
            
            
            —
            
            
            —
            
            
            22,000Debt
      forgiveness, related party
            
            
            —
            
            
            —
            
            
            147,419
            
            
            —
            
            
            —
            
            
            —
            
            
            147,419Net
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (604,913
            )
            
            (604,913
            )Balance
      December 31, 2007
            
            
            24,555,253
            
            
            24,555
            
            
            7,823,411
            
            
            —
            
            
            —
            
            
            (8,070,513
            )
            
            (222,547
            )Common
      shares issued for cash
            
            
            32,500
            
            
            33
            
            
            8,092
            
            
            —
            
            
            —
            
            
            —
            
            
            8,125Net
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (424,460
            )
            
            (424,460
            )Balance,
      September 30, 2008
            
            
            24,587,753
            
            $
            24,588
            
            $
            7,831,503
            
            $
            —
            
            $
            —
            
            $
            (8,494,973
            )
            $
            (638,882
            )




See
Accompanying Notes to Financial Statements




6





Can-Cal Resources
Ltd.


(An Exploration Stage
Company)


Condensed Statements of Cash
Flows


(Unaudited)


For
      the Nine Months
                  EndedSeptember
      30,
              
              March
      22, 1995(Inception)
      to September 30,2008
              
              2007
              
              2008Cash
      flows from operating activities:Net
      loss
              
              $
              (424,460
              )
              $
              (436,333
              )
              $
              (8,494,973
              )Adjustments
      to reconcile net loss to netcash
      used by operating activities:Depreciation
      and amortization
              
              
              8,993
              
              
              7,297
              
              
              246,318Bad
      debts
              
              
              —
              
              
              —
              
              
              207,100(Gain)
      loss on sale of fixed assets
              
              
              —
              
              
              (3,701
              )
              
              (6,501
              )Stock
      based compensation
              
              
              —
              
              
              24,000
              
              
              532,814Stock
      issued for financing and interest
              
              
              —
              
              
              —
              
              
              523,200Beneficial
      conversion feature on convertible debts
              
              
              —
              
              
              —
              
              
              25,200Loss
      on disposal of investment property
              
              
              —
              
              
              —
              
              
              938,600Undistributed
      earnings of affiliate
              
              
              —
              
              
              —
              
              
              (174,300
              )Gain
      on discontinued operations
              
              
              —
              
              
              —
              
              
              (116,400
              )Loss
      on foreign currency translation
              
              
              —
              
              
              —
              
              
              8,500Decrease
      (increase) in assets:Accounts
      receivable
              
              
              —
              
              
              3,600
              
              
              —Other
      current assets
              
              
              (12,095
              )
              
              —
              
              
              (102,795
              )Other
      assets
              
              
              —
              
              
              (10,000
              )
              
              (1,895
              )Increase
      (decrease) in liabilities:Accounts
      payable
              
              
              3,218
              
              
              (11,973
              )
              
              31,617Accrued
      interest
              
              
              45,923
              
              
              35,310
              
              
              357,243Accrued
      officer salary
              
              
              71,037
              
              
              (68,331
              )
              
              181,689Accrued
      payroll taxes
              
              
              (20,573
              )
              
              —
              
              
              1,280Unearned
      revenues
              
              
              6,667
              
              
              5,600
              
              
              16,042Net
      cash used by operating activities
              
              
              (321,290
              )
              
              (454,531
              )
              
              (5,827,261
              )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
              
              
              —
              
              
              (46,842
              )
              
              (768,644
              )Proceeds
      from sale of property, equipment and mineral interests
              
              
              —
              
              
              7,000
              
              
              26,100Net
      cash used in investing activities
              
              
              —
              
              
              (39,842
              )
              
              (1,506,844
              )Cash
      flows from financing activities:Proceeds
      from notes payable
              
              
              258,500
              
              
              —
              
              
              948,400Principal
      payments on notes payable
              
              
              —
              
              
              —
              
              
              (689,900
              )Proceeds
      from notes payable, related parties
              
              
              40,000
              
              
              —
              
              
              727,800Principal
      payments on notes payable, related parties
              
              
              (40,000
              )
              
              (20,750
              )
              
              (367,250
              )Proceeds
      from issuance of common stock
              
              
              8,125
              
              
              326,355
              
              
              6,766,377Net
      cash provided by financing activities
              
              
              266,625
              
              
              305,605
              
              
              7,385,427Net
      increase (decrease) in cash
              
              
              (54,665
              )
              
              (188,768
              )
              
              51,322Cash,
      beginning of period
              
              
              105,987
              
              
              419,700
              
              
              —Cash,
      end of period
              
              $
              51,322
              
              $
              230,932
              
              $
              51,322Supplemental
      disclosure of cash flow information:Cash
      paid for income taxes
              
              $
              —
              
              $
              —
              
              $
              —Cash
      paid for interest
              
              $
              —
              
              $
              —
              
              $
              —
  See
Accompanying Notes to Financial Statements




7




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-KSB/A for the year ended December 31, 2007
of Can-Cal Resources Ltd (“the Company”).
 
 The
interim condensed financial statements present the balance sheets, 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 September 30, 2008 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.
 
 Certain
amounts in the prior periods presented have been reclassified to conform to the
current period financial statement presentation.
 
 Exploration Stage
Company
  The
Company is currently an exploration stage company. As an exploration stage
enterprise, the Company discloses the deficit accumulated during the exploration
stage and the cumulative statements of operations and cash flows from inception
to the current balance sheet date. The Company has incurred net losses of
$8,494,973 and used net cash in operations of $5,827,261 for the period from
inception (March 22, 1995) through September 30, 2008. An entity remains in the
exploration stage until such time as proven or probable reserves have been
established for its deposits. Upon the location of commercially mineable
reserves, the Company plans to prepare for mineral extraction and enter the
development stage. To date, the exploration stage of the Company’s operations
consists of contracting with geologists who sample and assess the mining
viability of the Company’s claims.
  2.
              GOING
      CONCERN
 
 The
Company incurred a net loss of $424,460 for the nine months ending September 30,
2008. Also, the Company’s current liabilities exceed its current assets by
$1,143,504 as of September 30, 2008. 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 and with revenue from operations in the
long term.
  8
  CAN-CAL
RESOURCES LTD.
 (An
Exploration Stage Company)
 NOTES TO
CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)
  The
ability of the Company to continue as a going concern is dependent on securing
additional sources of capital and the success of the Company’s plan. The
financial statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern.
  3.
              NOTES PAYABLE, RELATED
      PARTIES
 
 Notes
payable, related parties consisted of the following as of September 30,
2008:
  Note
      payable to a stockholder, secured by real property, bearing interest at
      16.0% per annum, semi-annual interest only payments,matured
      November 2005 (currently in default)
                
                $
                300,000Note
      payable to a stockholder, secured by real property, bearing interest at
      8.0% per annum, matured February 2008 (currently in
    default)
                
                
                25,114Note
      payable to a stockholder, secured by real property, bearing interest at
      8.0% per annum, matured January 2008 (currently in
default)
                
                
                35,436Current
      portion (amounts due within one year)
                
                $
                360,550
  The
Company is in default of its semi-annual interest payments in the total amount
of $328,000 from 2002 through the present on a note payable of $300,000. The
Company is currently negotiating forbearance on collection of the principle and
interest. Interest expense was $47,601 and $43,057 for the nine months ending
September 30, 2008 and 2007, respectively.
  4.
              NOTES
      PAYABLE
 
 Notes
payable consisted of the following as of September 30, 2008:
  Unsecured
      promissory note payable, bearing interest at 8.0% per annum, and a default
      interest rate of 12.0% per annum, maturing June 25, 2009
                
                $
                50,000Unsecured
      promissory note payable, bearing interest at 8.0% per annum, and a default
      interest rate of 12.0% per annum, maturing June 26, 2009
                
                
                75,000Unsecured
      promissory note payable, bearing interest at 8.0% per annum, and a default
      interest rate of 12.0% per annum, maturing July 8, 2009
                
                
                50,000Unsecured
      promissory note payable, bearing interest at 8.0% per annum, and a default
      interest rate of 12.0% per annum, maturing March 10, 2009
                
                
                22,000Unsecured
      promissory note payable, bearing interest at 8.0% per annum, and a default
      interest rate of 12.0% per annum, maturing April 7, 2009
                
                
                7,500Unsecured
      promissory note payable, bearing interest at 8.0% per annum, and a default
      interest rate of 12.0% per annum, maturing March 10, 2009
                
                
                12,000Unsecured
      promissory note payable, bearing interest at 8.0% per annum, and a default
      interest rate of 12.0% per annum, maturing June 2, 2009
                
                
                12,000Unsecured
      promissory note payable, bearing interest at 8.0% per annum, and a default
      interest rate of 12.0% per annum, maturing June 6, 2009
                
                
                30,000Current
      portion (amounts due within one year)
                
                $
                258,500
  9
  CAN-CAL
RESOURCES LTD.
 (An
Exploration Stage Company)
 NOTES TO
CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)
  5.
              ACCOUNTING
      PRONOUCEMENTS
 
 In
December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51” which applies to
all entities that prepare consolidated financial statements, except
not-for-profit organizations, but will affect only those entities that have an
outstanding non-controlling interest in one or more subsidiaries or that
deconsolidate a subsidiary. The statement is effective for annual periods
beginning after December 15, 2008. The adoption of this statement is not
expected to have a material effect on the Company’s financial statements.
 
 In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities - an amendment of FASB Statement No. 133,”
(SFAS “161”) as amended and interpreted, which requires enhanced disclosures
about an entity’s derivative and hedging activities and thereby improves the
transparency of financial reporting. Disclosing the fair values of derivative
instruments and their gains and losses in a tabular format provides a more
complete picture of the location in an entity’s financial statements of both the
derivative positions existing at period end and the effect of using derivatives
during the reporting period. Entities are required to provide enhanced
disclosures about (a) how and why an entity uses derivative instruments, (b) how
derivative instruments and related hedged items are accounted for under
Statement 133 and its related interpretations, and (c) how derivative
instruments and related hedged items affect an entity’s financial position,
financial performance, and cash flows. SFAS No. 161 is effective for financial
statements issued for fiscal years and interim periods beginning after November
15, 2008. Early adoption is permitted, but not expected.
 
 In May
2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 163,
“Accounting for Financial Guarantee Insurance Contracts - An interpretation of
FASB Statement No. 60”. SFAS 163 requires that an insurance enterprise recognize
a claim liability prior to an event of default when there is evidence that
credit deterioration has occurred in an insured financial obligation. It also
clarifies how Statement 60 applies to financial guarantee insurance contracts,
including the recognition and measurement to be used to account for premium
revenue and claim liabilities, and requires expanded disclosures about financial
guarantee insurance contracts. It is effective for financial statements issued
for fiscal years beginning after December 15, 2008, except for some disclosures
about the insurance enterprise’s risk-management activities. SFAS 163 requires
that disclosures about the risk-management activities of the insurance
enterprise be effective for the first period beginning after issuance. Except
for those disclosures, earlier application is not permitted. The adoption of
this statement is not expected to have a material effect on the Company’s
financial statements.
  10
  CAN-CAL
RESOURCES LTD.
 (An
Exploration Stage Company)
 NOTES TO
CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)
  6.
              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 $315,046 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.
  11
  CAN-CAL
RESOURCES LTD.
 (An
Exploration Stage Company)
 NOTES TO
CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)
  During
December, 1998 the Board approved the sale of 263,059 restricted common shares
to various investors.
 
 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.
  12
  CAN-CAL
RESOURCES LTD.
 (An
Exploration Stage Company)
 NOTES TO
CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)
  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.
 
 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.
  13
 CAN-CAL
RESOURCES LTD.
 (An
Exploration Stage Company)
 NOTES TO
CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)
  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.
 
 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. The shares and warrants were sold to Canadian
investors pursuant to the exemption provided by Regulation S of the 1933 Act,
and the shares and warrants sold to U.S. investors were sold pursuant to the
exemption provided by section 4(2) of the 1933 Act.
  14
 CAN-CAL
RESOURCES LTD.
 (An
Exploration Stage Company)
 NOTES TO
CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)
 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. These shares were sold
pursuant to the exemption provided by section 4(2) of the 1933 Act.
 
 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. These shares were sold pursuant to the exemption provided by section
4(2) of the 1933 Act.
 
 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. These shares were sold pursuant to the exemption
provided by Regulation S of the 1933 Act.
 
 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. These shares
were sold pursuant to the exemption provided by Regulation S of the 1933
Act.
 
 During
the period from July 5 to December 31, 2003, 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. These shares
were sold pursuant to the exemption provided by section 4(2) of the 1933
Act.
 
 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. These shares were sold pursuant to the
exemption provided by Regulation S of the 1933 Act.
  15
 CAN-CAL
RESOURCES LTD.
 (An
Exploration Stage Company)
 NOTES TO
CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 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. The shares and
warrants were sold to Canadian investors pursuant to the exemption provided by
Regulation S of the 1933 Act, and the shares and warrants sold to U.S. investors
were sold pursuant to the exemption provided by section 4(2) of the 1933
Act.
 
 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). These shares were sold pursuant to the exemption provided by
section 4(2) of the 1933 Act.
 
 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. These shares were sold pursuant to the exemption
provided by section 4(2) of the 1933 Act.
 
 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. These shares were issued pursuant to the exemption provided by
Regulation S of the 1933 Act.
 
 Between
February 10 and March 31, 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. These shares were issued pursuant to the exemption provided by
Regulation S of the 1933 Act.
 
 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. These shares were sold pursuant to the exemption provided by
Regulation S of the 1933 Act.
  16
  CAN-CAL
RESOURCES LTD.
 (An
Exploration Stage Company)
 NOTES TO
CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)
  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. These shares were
sold pursuant to the exemption provided by Regulation S of the 1933
Act.
 
 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. These shares were sold pursuant to the exemption
provided by Regulation S of the 1933 Act.
 
 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. These
securities were issued in private transactions in reliance on the exemption from
registration with the SEC provided by Regulation S.
 
 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. These securities were issued in private transactions
in reliance on the exemption available under Section 4(2) of the 1933
Act.
 
 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 in reliance on the exemption from
registration available under Regulation S, and one U.S. resident, in reliance on
the exemption provided by Section 4(2) of the 1933 Act.
 
 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. These
securities were issued in private transactions, with respect to the Canadian
residents, in reliance on the exemption from registration with the SEC provided
by Regulation S, and with respect to the U.S. citizen, in reliance on the
exemption available under Section 4(2) of the 1933 Act.
 
 We also
issued, for services, 8,500 restricted common shares for a total value of $2,325
and these securities were issued to one U.S. resident in reliance on the
exemption provided by Section 4(2) of the 1933 Act.
  17
 CAN-CAL
RESOURCES LTD.
 (An
Exploration Stage Company)
 NOTES TO
CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)
  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%.
 
 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.
  18
 CAN-CAL
RESOURCES LTD.
 (An
Exploration Stage Company)
 NOTES TO
CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)
  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. These securities were issued in private
transactions, with respect to the Canadian residents, in reliance on the
exemption from registration with the SEC provided by Regulation S, and with
respect to the U.S. citizen, in reliance on the exemption available under
Section 4(2) of the 1933 Act.
 
 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, in reliance on the exemption available
under Section 4(2) of the 1933 Act. The shares were valued at a total of
$2,000.
 
 2008
 
 During
the three months ending March 31, 2008, the Company sold 32,500 restricted
shares of common stock along with warrants to purchase an additional 32,500
shares of the Company’s common stock to various accredited Canadian and US
citizens for total proceeds of $8,125. The warrants were fully vested, are
exercisable at $0.35 per share, and expire two years from the date of issuance.
These securities were issued in private transactions, with respect to the
Canadian resident, in reliance on the exemption from registration with the SEC
provided by Regulation S, and with respect to the U.S. citizen, in reliance on
the exemption available under Section 4(2) of the Securities Act of 1933 (the
“Securities Act”).
 
 Previously
issued warrants to purchase 2,309,535 shares of the Company’s common stock
expired during the nine months ending, September 30, 2008.
 
 7.
              COMMITMENTS AND
      CONTINGENCIES
 
 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.
 
 8.
              SUBSEQUENT
      EVENTS
 
 On
November 5, 2008, an Officer advanced the Company $40,000. The unsecured advance
is due on demand and carries no interest rate.
  19




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
November 10, 2008, we had approximately $48,815 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 September 30, 2008 and 2007.




The
following table summarizes selected items from the statement of operations for
the three months ended September 30, 2008 compared to September 30,
2007.




EXPENSES:




Three
      Months Ended
              September
      30,2008
            
            2007
            
            Increase
      / (Decrease)Amount
            
            Amount
            
            $
            
            %Expenses:Exploration
      costs
            
            $
            45,622
            
            $
            46,588
            
            $
            (966
            )
            
            (2
            %)Depreciation
            
            
            2,998
            
            
            1,277
            
            
            1,721
            
            
            135
            %General
      & administrative expenses
            
            
            108,446
            
            
            64,631
            
            
            43,815
            
            
            68
            %Officer
      compensation
            
            
            30,000
            
            
            30,942
            
            
            (942
            )
            
            (3
            %)Total operating expenses
            
            
            187,066
            
            
            143,438
            
            
            43,628
            
            
            30
            %Loss
      from operations
            
            
            (187,066
            )
            
            (143,438
            )
            
            43,628
            
            
            30
            %Other
      income (expense):Interest
      income
            
            
            12
            
            
            2,387
            
            
            (2,375
            )
            
            (99
            %)Rental
      revenue
            
            
            31,019
            
            
            5,625
            
            
            25,394
            
            
            451
            %Interest
      expense
            
            
            (18,337
            )
            
            (14,169
            )
            
            4,168
            
            
            29
            %Total other income (expense)
            
            
            12,694
            
            
            (6,157
            )
            
            18,851
            
            
            (306
            %)Net
      loss
            
            $
            (174,372
            )
            $
            (149,595
            )
            $
            24,777
            
            
            17
            %




20




Exploration costs




Exploration
costs for the three months ended September 30, 2008 decreased by $966 or 2% from
$46,588 for the three months ended September 30, 2007 to $45,622 for the three
months ended September 30, 2008. 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, which has hindered our ability to raise
capital. Once the Cease Trade Order is lifted we plan to seek the funding
necessary to expand our exploration activities.




Unless
the Company is able to establish the economic viability of its mining
properties, the Company will continue writing off its expenses of exploration
and testing of its properties. Losses will continue unless the Company sells one
or more of its properties or locates and delineates reserves and initiates
mining operations. If that occurs, the Company may capitalize certain of these
aforementioned expenses.




The
Company has no material commitments for capital expenditures other than
expenditures it chooses to make with respect to testing and or exploration of
its mineral properties.




Depreciation




Depreciation
for the three months ended September 30, 2008 increased by $1,721 or 135% from
$1,277 for the three months ended September 30, 2008 to $2,998 for the three
months ended September 30, 2008. The increase is due to the additional
depreciation on equipment purchased after September 30, 2007.




General and administrative
expenses




General
and administrative expenses for the three months ended September 30, 2008
increased by $43,815 or 68% from $64,631 for the three months ended September
30, 2007 to $108,466 for the three months ended September 30, 2008. The increase
is principally due to increased costs to maintain the office, including
increased utility costs, payroll and payroll taxes associated with moving some
of the administrative functions in house, as well as increased legal costs
associated with the Cease Trade Order.




21




Officer
compensation




Officer
compensation for the three months ended September 30, 2008 decreased by $942 or
3% from $30,942 for the three months ended September 30, 2007 to $30,000 for the
three months ended September 30, 2008.




Total operating
expenses





Total
operating expenses for the three months ended September 30, 2008 increased by
$43,628 or 30% from $143,438 for the three months ended September 30, 2007 to
$187,066 for the three months ended September 30, 2008. The increase in total
operating expenses was mainly a result of increased costs associated with the
Cease Trade Order, including administrative and legal fees.





Other income (expense)





Interest
income for the three months ended September 30, 2008 decreased by $2,375 or 99%
from $2,387 for the three months ended September 30, 2007 to $12 for the three
months ended September 30, 2008. Interest income relates to interest earned on
cash received as a result of financing activities, of which less was on hand
during the three months ended September 30, 2008 compared to the same period in
2007.




Rental
revenue for the three months ended September 30, 2008 increased by $25,394 or
451% from $5,625 for the three months ended September 30, 2007 to $31,019 for
the three months ended September 30, 2008. Rental revenue relates to income
derived from rental of the Company’s land for the purposes of filming movies or
photo shoots. More photo shoots, including a television commercial, were
performed during the three months ended September 30, 2008 compared to the same
period in 2007.




Interest
expense for the three months ended September 30, 2008 increased by $4,168 or 29%
from $14,169 for the three months ended September 30, 2007 compared to $18,377
for the three months ended September 30, 2008 due to increased
debts.




Net loss





Our net
loss was $174,372 for the three months ended September 30, 2008 compared to a
net loss of $149,595 for the three months ended September 30, 2007. We expect to
improve our results of operations through the attainment of sufficient working
capital and a focus on generating revenues from the subcontracting of mining
activities, and a reduction of general and administrative expenses.




22





(c)  Results of Operations for the Nine
Months Ended September 30, 2008 and 2007.




The
following table summarizes selected items from the statement of operations for
the six months ended September 30, 2008 compared to September 30,
2007.




EXPENSES:




Nine
      Months Ended
              September
      30,2008
            
            2007
            
            Increase
      / (Decrease)Amount
            
            Amount
            
            $
            
            %Expenses:Exploration
      costs
            
            $
            84,527
            
            $
            149,532
            
            $
            (65,005
            )
            
            (43
            %)Depreciation
            
            
            8,993
            
            
            7,297
            
            
            1,696
            
            
            23
            %General
      & administrative expenses
            
            
            251,086
            
            
            173,375
            
            
            77,711
            
            
            45
            %Officer
      compensation
            
            
            90,000
            
            
            92,994
            
            
            (2,994
            )
            
            (3
            %)Total
      operating expenses
            
            
            434,606
            
            
            423,198
            
            
            11,408
            
            
            3
            %Loss
      from operations
            
            
            (434,606
            )
            
            (423,198
            )
            
            11,408
            
            
            3
            %Other
      income (expense):Interest
      income
            
            
            114
            
            
            9,346
            
            
            (9,232
            )
            
            (99
            %)Rental
      revenue
            
            
            57,633
            
            
            16,875
            
            
            40,758
            
            
            242
            %Loss
      on sale of equipment
            
            
            —
            
            
            3,701
            
            
            (3,701
            )
            
            (100
            %)Interest
      expense
            
            
            (47,601
            )
            
            (43,057
            )
            
            4,544
            
            
            11
            %Total
      other income (expense)
            
            
            (10,146
            )
            
            (13,135
            )
            
            2,989
            
            
            (23
            %)Net
      loss
            
            $
            (424,460
            )
            $
            (436,333
            )
            $
            11,873
            
            
            (3
            %)





Exploration costs




Exploration
costs for the nine months ended September 30, 2008 decreased by $65,005 or 43%
from $149,532 for the nine months ended September 30, 2007 to $84,527 for the
nine months ended September 30, 2008. 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, which has hindered our ability to
raise capital. Once the Cease Trade Order is lifted we plan to seek the funding
necessary to expand our exploration activities.




23




Unless
the Company is able to establish the economic viability of its mining
properties, the Company will continue writing off its expenses of exploration
and testing of its properties. Losses will continue unless the Company sells one
or more of its properties or locates and delineates reserves and initiates
mining operations. If that occurs, the Company may capitalize certain of these
aforementioned expenses.




The
Company has no material commitments for capital expenditures other than
expenditures it chooses to make with respect to testing and or exploration of
its mineral properties.




Depreciation




Depreciation
for the nine months ended September 30, 2008 increased by $1,696 or 23% from
$7,297 for the nine months ended September 30, 2008 to $8,993 for the nine
months ended September 30, 2008. The increase is due to the additional
depreciation on equipment purchased after September 30, 2007.




General and administrative
expenses




General
and administrative expenses for the nine months ended September 30, 2008
increased by $77,711 or 45% from $173,375 for the nine months ended September
30, 2007 to $251,086 for the nine months ended September 30, 2008. The increase
is principally due to increased costs to maintain the office, including
increased utility costs and payroll and payroll taxes associated with moving
some of the administrative functions in house, as well as, increased legal costs
associated with the Cease Trade Order.




Officer
compensation




Officer
compensation for the nine months ended September 30, 2008 decreased by $2,994 or
3% from $92,994 for the nine months ended September 30, 2007 to $90,000 for the
nine months ended September 30, 2008.




Total operating
expenses





Total
operating expenses for the nine months ended September 30, 2008 increased by
$11,408 or 3% from $423,198 for the nine months ended September 30, 2007 to
$434,606 for the nine months ended September 30, 2008. The increase is
principally due to increased costs to maintain the office, including increased
utility costs and payroll and payroll taxes associated with moving some of the
administrative functions in house, as well as, increased legal costs associated
with the Cease Trade Order.





Other income (expense)





Interest
income for the nine months ended September 30, 2008 decreased by $9,232 or 99%
from $9,346 for the nine months ended September 30, 2007 to $114 for the nine
months ended September 30, 2008. Interest income relates to interest earned on
cash received as a result of financing activities, of which less was on hand
during the nine months ended September 30, 2008 compared to the same period in
2007.




24




Rental
revenue for the nine months ended September 30, 2008 increased by $40,758 or
242% from $16,875 for the nine months ended September 30, 2007 to $57,633 for
the nine months ended September 30, 2008. Rental revenue relates to income
derived from rental of the Company’s land for the purposes of filming movies or
photo shoots. More photo shoots, as well as, television commercials were
performed during the nine months ended September 30, 2008 compared to the same
period in 2007.




Interest
expense for the nine months ended September 30, 2008 increased by $4,544 or 11%
from $43,057 for the nine months ended September 30, 2007 compared to $47,601
for the nine months ended September 30, 2008 due to increased
debts.




Net loss





Our net
loss was $424,460 for the nine months ended September 30, 2008 compared to a net
loss of $436,333 for the nine months ended September 30, 2007. We expect to
improve our results of operations through the attainment of sufficient working
capital and a focus on generating revenues from the subcontracting of mining
activities, and a reduction of general and administrative expenses.




(d)  Liquidity and Capital Resources and
Results of Operations




The
following table summarizes total current assets, total current liabilities and
working capital at September 30, 2008 compared to December 31,
2007.


September 30,
              
              December 31,
              
              Increase /
      (Decrease)2008
              
              2007
              
              $
              
              %Current
      Assets
              
              $
              63,417
              
              $
              105,987
              
              $
              (42,570
              )
              
              (40
              %)Current
      Liabilities
              
              $
              1,206,921
              
              $
              842,149
              
              $
              364,772
              
              
              43
              %Working
      Capital (deficit)
              
              $
              (1,143,504
              )
              $
              (736,162
              )
              $
              407,342
              
              
              55
              %




Internal and External Sources of
Liquidity




During
the nine months ended September 30, 2008 and 2007, our operating and investing
activities used cash of $321,290 and $454,531, respectively, while our financing
activities provided cash of $266,625 and $305,605, respectively. We also used
cash of $39,842 in investing activities during the nine months ended September
30, 2007. The cash used in operating activities was principally a result of the
net loss we incurred.




25




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.




Our plan
for satisfying our cash requirements for the next twelve months is through
additional equity, third party financing, and/or debt financing. We anticipate
our current cash reserves will be sufficient to support operations through
December 31, 2008, but 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. However, there can be no
assurance that we will raise capital through any of these means.




Even if
we are able to 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.





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 mining markets. Such risks include,
but are not limited to, an evolving and untested 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.




ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.





Not
applicable.




26




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.





In
connection with the British Columbia Securities Commission (BCSC) February 4,
2008 Cease Trade Order (“CTO”), the BCSC requested, and in July 2008 the Company
obtained, technical reports prepared by a Qualified Person under National
Instrument 43-01 “Standards of Disclosure for Mineral Projects” (“NI 43-101”).
As a result of the tests, the Company withdraws its previously announced results
in a press release dated August 28, 2006 and in its Company Newsletter of
November 21, 2006 for its Wikieup and Pisgah projects, retracting its previous
disclosure of mineral reserves, mineral resources, other estimates of tons and
grade, and any other economic analyses of each of its mineral properties,
including Wikieup and Pisgah.





Additionally,
the BCSC has also requested documentation regarding all subscribers to the
Company stock who are resident in British Columbia. The Company is cooperating
with the requested production.





The BCSC,
at the time of the BCSC order requiring the Company’s production of the NI
43-101 report, suspended trading of the Company’s stock in British Columbia
until satisfactory completion of the 43-101 reports. The Company has met its
obligations as to the technical reports under the BCSC order and is in the
process of providing the information that the BSCS requested as it pertains to
British Columbia investors of the Company, which the Company anticipates will
result in the BCSC lifting the suspension of the trading of its
stock.




27





ITEM 2.
CHANGES IN SECURITIES.





The
Company neither sold nor issued securities during the quarter ended September
30, 2008.





During
the three months ended March 31, 2008, and prior to February 7, 2008, the
Company sold 32,500 shares of restricted common stock and 32,500 warrants to
purchase 32,500 shares of common stock to an accredited Canadian investor and
one United States investor for a total of $8,125. The warrants are exercisable
at a price of $0.35 per share and expire two years from the date of issuance.
These securities were issued in private transactions, with respect to the
Canadian resident, in reliance on the exemption from registration with the SEC
provided by Regulation S and with respect to the United States investor, in
reliance upon the exemption from registration provided under Section 4(2) of the
1933 Securities Act.





Previously
issued warrants to purchase 2,309,535 shares of the Company's common stock
expired during the three months ending September 30, 2008.




ITEM 3.
DEFAULTS UPON SENIOR SECURITIES





The
Company is in default on a note payable for $300,000 and its semi-annual
interest payments of $328,000 for the years ended 2002 - 2007, and the nine
months ended September 30, 2008. The Company is currently negotiating
forbearance on collection of the principal and interest.





The
Company is also in default on two notes payable to a stockholder, which matured
in January 2008 and February 2008, respectively. The principal amount of each
note is $25,114 and $35,436, with accrued interest of $2,367 and $3,339,
respectively. Each note bears interest at 8.0% per annum and is secured by real
property. The Company is currently negotiating forbearance on collection of the
principal and interest of each note.




ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS





None.




ITEM 5.
OTHER INFORMATION





N/A




ITEM 6.
EXHIBITS AND REPORTS ON FORM 8-K





None.





31.1  Certification
under Rule 13a-14(a)





32.1  Certification
under Rule 13a-14(b)




28




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)Date:
      November 14, 2008
            By:
            /s/
      Ronald D. SloanRONALD
      D. SLOAN,
              Chief
      Executive Officer and
              President




29