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| CAN-CAL RESOURCES LTD.                                 |
|--------------------------------------------------------|
| (Exact name of registrant as specified in its charter) |

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

| 8205 Aqua Spray Avenue |
|------------------------|
| Las Vegas, Nevada      |

| (702) 243-1849                                             |
|------------------------------------------------------------|
| (Registrant’s telephone number, including area code) |

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

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|                                        |                                                                                                                                 | Page                                                                 |
|---------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------|
|                                        |                                                                                                                                 |                                                                 |
| PART I – FINANCIAL INFORMATION        |                                                                                                                                 | 1                                                                    |
|          | Item 1. Financial Statements                                                                                                         |                                                                 | 1 |
|                                        |                        | Balance Sheets as of June 30, 2011 (Unaudited) and December 31, 2010 |   | 1 |
|                                        |                                                                                                                                 | Condensed Statements of Operations (Unaudited)                       |   | 2 |
|                                        |                                                                                                                                 | Statement of Stockholders’ Equity (Deficit) (unaudited)        |   | 3 |
|                                        |                                                                                                                                 | Condensed Statements of Cash Flows (unaudited)                       |   | 4 |
|                                        |                                                                                                                                 | Notes to Condensed Financial Statements (Unaudited)                  |   | 5 |
|                                        | Item 2. Management’s Discussion and Analysis                                                                                   |                                                                 | 19 |
|                                        | Item 3. Quantitative and Qualitative Disclosures about Market Risk                                                                   |                                                                 | 25 |
|                                        | Item 4T. Controls and Procedures                                                                                                     |                                                                 | 25 |
|                                        |                                                                                                                                 |                                                                 |   |
| PART II – OTHER INFORMATION           |                                                                                                                                 | 25                                                                   |
|                                        | Item 1. Legal Proceedings                                                                                                            |                                                                 | 25 |
|                                        | Item 1A. Risk Factors                                                                                                                |                                                                 | 26 |
|                                        | Item 2. Unregistered Sales of Equity Securities and Use of Proceeds                                                                  |                                                                 | 26 |
|                                        | Item 3. Defaults Upon Senior Securities                                                                                              |                                                                 | 27 |
|                                        | Item 4. Submission of Matters to a Vote of Security Holders                                                                          |                                                                 | 27 |
|                                        | Item 5. Other Information                                                                                                            |                                                                 | 27 |
|                                        | Item 6. Exhibits                                                                                                                     |                                                                 | 27 |

----

| CAN-CAL RESOURCES LTD.                                         |   |
|----------------------------------------------------------------|--------|
| (AN EXPLORATION STAGE COMPANY)                                 |   |
| CONDENSED BALANCE SHEETS                                       |   |
|                                                           |   |   |   |   |   |   |
|                                                           |   |   |   |   |   |   |
|                                                           |   | June 30, |   |   | December 31, |   |
|                                                           |   | 2011 |   |   | 2010 |   |
| ASSETS                                                         |   | (Unaudited) |   |   |   |   |
|                                                           |   |   |   |   |   |   |
| Current assets:                                                |   |   |   |   |   |   |
| Cash                                                           |   | $ | 144,149 |   |   | $ | 17,202 |   |
| Other current assets                                           |   |   | 13,112 |   |   |   | 18,427 |   |
| Total current assets                                           |   |   | 157,261 |   |   |   | 35,629 |   |
|                                                           |   |   |   |   |   |   |   |   |
| Property and equipment (net of accumulated                     |   |   |   |   |   |   |   |   |
| depreciation of $31,839 and $27,454, respectively)             |   |   | 34,101 |   |   |   | 38,486 |   |
|                                                           |   |   |   |   |   |   |   |   |
| Total assets                                                   |   | $ | 191,362 |   |   | $ | 74,115 |   |
|                                                           |   |   |   |   |   |   |   |   |
|                                                           |   |   |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS' (DEFICIT)                        |   |   |   |   |   |   |   |   |
|                                                           |   |   |   |   |   |   |   |   |
| Current liabilities:                                           |   |   |   |   |   |   |   |   |
| Accounts payable and accrued expenses                          |   | $ | 42,667 |   |   | $ | 98,795 |   |
| Accounts payable, related parties                              |   |   | 90,632 |   |   |   | 60,000 |   |
| Accrued interest                                               |   |   | 496,274 |   |   |   | 469,852 |   |
| Accrued interest, related parties                              |   |   | 1,712 |   |   |   | 680 |   |
| Accrued salaries                                               |   |   | 462,004 |   |   |   | 403,328 |   |
| Notes payable                                                  |   |   | 360,550 |   |   |   | 360,550 |   |
| Notes payable, related parties                                 |   |   | 53,191 |   |   |   | 57,191 |   |
| Unearned rental revenues                                       |   |   | 22,917 |   |   |   | 9,167 |   |
| Total current liabilities                                      |   |   | 1,529,947 |   |   |   | 1,459,563 |   |
|                                                           |   |   |   |   |   |   |   |   |
| Total liabilities                                              |   |   | 1,529,947 |   |   |   | 1,459,563 |   |
|                                                           |   |   |   |   |   |   |   |   |
| Commitments and contingencies                                  |   |   |   |   |   |   |   |   |
|                                                           |   |   |   |   |   |   |   |   |
| Stockholders' (deficit):                                       |   |   |   |   |   |   |   |   |
| Preferred 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, |   |   |   |   |   |   |   |   |
| 37,548,453 and 30,711,203 shares issued and outstanding        |   |   |   |   |   |   |   |   |
| as of June 30, 2011 and December 31, 2010, respectively        |   |   | 37,548 |   |   |   | 30,711 |   |
| Subscriptions payable, 157,893 and 2,193,166 shares at         |   |   |   |   |   |   |   |   |
| June 30, 2011 and December 31, 2010, respectively              |   |   | 9,474 |   |   |   | 131,590 |   |
| Additional paid-in capital                                     |   |   | 9,168,858 |   |   |   | 8,707,834 |   |
| (Deficit) accumulated during exploration stage                 |   |   | (10,554,465 | ) |   |   | (10,255,583 | ) |
| Total stockholders' (deficit)                                  |   |   | (1,338,585 | ) |   |   | (1,385,448 | ) |
|                                                           |   |   |   |   |   |   |   |   |
| Total liabilities and stockholders' (deficit)                  |   | $ | 191,362 |   |   | $ | 74,115 |   |

----

| CAN-CAL RESOURCES LTD.                         |   |
|------------------------------------------------|--------|
| (AN EXPLORATION STAGE COMPANY)                 |   |
| CONDENSED STATEMENTS OF OPERATIONS             |   |
| (Unaudited)                                    |   |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |   | March 22, 1995 |   |
|                                           |   | For the three months ended |   |   | For the six months ended |   |   | (inception) to |   |
|                                           |   | June 30, |   |   | June 30, |   |   | June 30, |   |
|                                           |   | 2011 |   |   | 2010 |   |   | 2011 |   |   | 2010 |   |   | 2011 |   |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Material sales                                 |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 245,500 |   |
| Cost of sales                                  |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 263,400 |   |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross loss                                     |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (17,900 | ) |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating expenses:                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| General and administrative                     |   |   | 85,603 |   |   |   | 68,343 |   |   |   | 147,906 |   |   |   | 158,531 |   |   |   | 6,846,634 |   |
| Exploration costs                              |   |   | 12,158 |   |   |   | 393 |   |   |   | 20,006 |   |   |   | 8,390 |   |   |   | 569,356 |   |
| Depreciation                                   |   |   | 2,192 |   |   |   | 2,442 |   |   |   | 4,385 |   |   |   | 4,937 |   |   |   | 254,939 |   |
| Officer salary                                 |   |   | 30,000 |   |   |   | 30,000 |   |   |   | 60,000 |   |   |   | 60,000 |   |   |   | 1,021,176 |   |
| Impairment of operating assets                 |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 443,772 |   |
| Total operating expenses                       |   |   | 129,953 |   |   |   | 101,178 |   |   |   | 232,297 |   |   |   | 231,858 |   |   |   | 9,135,877 |   |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss from operations                           |   |   | (129,953 | ) |   |   | (101,178 | ) |   |   | (232,297 | ) |   |   | (231,858 | ) |   |   | (9,153,777 | ) |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other income (expense):                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other income                                   |   |   | 3,000 |   |   |   | - |   |   |   | 6,000 |   |   |   | - |   |   |   | 56,798 |   |
| Interest income                                |   |   | - |   |   |   | 8 |   |   |   | - |   |   |   | 23 |   |   |   | 52,945 |   |
| Rental revenue                                 |   |   | 7,375 |   |   |   | 9,166 |   |   |   | 24,250 |   |   |   | 16,041 |   |   |   | 380,158 |   |
| Gain on sale of fixed assets                   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 26,801 |   |
| Interest expense                               |   |   | (76,671 | ) |   |   | (19,041 | ) |   |   | (96,835 | ) |   |   | (34,278 | ) |   |   | (1,443,790 | ) |
| Total other income (expense)                   |   |   | (66,296 | ) |   |   | (9,867 | ) |   |   | (66,585 | ) |   |   | (18,214 | ) |   |   | (927,088 | ) |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss before provision for income taxes         |   |   | (196,249 | ) |   |   | (111,045 | ) |   |   | (298,882 | ) |   |   | (250,072 | ) |   |   | (10,080,865 | ) |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Provision for income taxes                     |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss from continuing operations            |   |   | (196,249 | ) |   |   | (111,045 | ) |   |   | (298,882 | ) |   |   | (250,072 | ) |   |   | (10,080,865 | ) |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income from discontinued operations            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income from discontinued operations            |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 116,400 |   |
| Loss on disposal of operations (net of taxes)  |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (590,000 | ) |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net (loss)                                     |   | $ | (196,249 | ) |   | $ | (111,045 | ) |   | $ | (298,882 | ) |   | $ | (250,072 | ) |   | $ | (10,554,465 | ) |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of common shares       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| outstanding - basic and fully diluted          |   |   | 35,260,847 |   |   |   | 30,738,196 |   |   |   | 34,470,674 |   |   |   | 30,733,555 |   |   |   |   |   |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net (loss) per share - basic and fully diluted |   | $ | (0.01 | ) |   | $ | - |   |   | $ | (0.01 | ) |   | $ | (0.01 | ) |   |   |   |   |

----

| CAN-CAL RESOURCES LTD.                      |
|---------------------------------------------|
| (AN EXPLORATION STAGE COMPANY)              |
| STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) |

|                                                                |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |
|---------------------------------------------------------------------|--------|--------------|------------|--------|--------|--------|--------|--------------|--------|--------|--------------|--------|--------|------------|----------|--------|---------------|--------|---------|-------------|--------|--------|---------|--------|--------|-------------|---------|--------|------------------|--------|
|                                                                |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   | (Deficit)   |    |   |             |   |
|                                                                |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    | Foreign     |   |   |    |   |   | accumulated |    |   |             |   |
|                                                                |   | Common stock |       |   |   |   |   |         |   |   | Rescission   |   |   |       |     |   | currency      |   |    | Additional  |   |   | during  |   |   | Total       |    |
|                                                                |   | Number of    |       |   |   |   |   | Subscription |   |   | Subscription |   |   | liability  |     |   | Unamortized   |   |    | translation |   |   | paid-in |   |   | exploration |    |   | stockholders'    |   |
|                                                                |   | shares       |       |   | Amount |   |   | receivable   |   |   | payable      |   |   | receivable |     |   | equity grants |   |    | adjustment  |   |   | capital |   |   | stage       |    |   | equity (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 |   |   |   | - |   |   |   | 628,400 |   |
| Prior period adjustment, investment in joint venture                |   |         | -          |   |   |   | -      |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | - |   |   |   | 497,900 |   |   |   | 497,900 |   |
| Net loss                                                            |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   | (497,000 | ) |   |   | (497,000 | ) |
|                                                                |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 1996                                          |   |         | 3,441,217  |   |   |   | 3,400  |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 625,000 |   |   |   | (100 | ) |   |   | 628,300 |   |
|                                                                |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Common shares issued for services                                   |   |         | 3,006,435  |   |   |   | 3,000  |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 1,051,400 |   |   |   | - |   |   |   | 1,054,400 |   |
| Net loss                                                            |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   | (1,044,700 | ) |   |   | (1,044,700 | ) |
|                                                                |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 1997                                          |   |         | 6,447,652  |   |   |   | 6,400  |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 1,676,400 |   |   |   | (1,044,800 | ) |   |   | 638,000 |   |
|                                                                |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Common shares issued for cash                                       |   |         | 557,509    |   |   |   | 600    |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 211,200 |   |   |   | - |   |   |   | 211,800 |   |
| Foreign currency translation adjustment                             |   |         | -          |   |   |   | -      |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | 8,500   |   |             |   | - |   |   |   | - |   |   |   | 8,500 |   |
| Net loss                                                            |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   | (353,000 | ) |   |   | (353,000 | ) |
|                                                                |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 1998                                          |   |         | 7,005,161  |   |   |   | 7,000  |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | 8,500   |   |             |   | 1,887,600 |   |   |   | (1,397,800 | ) |   |   | 505,300 |   |
|                                                                |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Common shares issued for cash                                       |   |         | 1,248,621  |   |   |   | 1,200  |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 572,600 |   |   |   | - |   |   |   | 573,800 |   |
| Foreign currency translation adjustment                             |   |         | -          |   |   |   | -      |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | (11,800 | )      |             |   | - |   |   |   | - |   |   |   | (11,800 | ) |
| Realized foreign currency translation loss                          |   |         | -          |   |   |   | -      |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | 3,300   |   |             |   | - |   |   |   | - |   |   |   | 3,300 |   |
| Prior period Adjustment                                             |   |         | -          |   |   |   | -      |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | - |   |   |   | 15,000 |   |   |   | 15,000 |   |
| Elimination of subsidiary upon disposal                             |   |         | -          |   |   |   | -      |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | - |   |   |   | 116,400 |   |   |   | 116,400 |   |
| Net loss                                                            |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   | (1,038,500 | ) |   |   | (1,038,500 | ) |
|                                                                |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 1999                                          |   |         | 8,253,782  |   |   |   | 8,200  |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 2,460,200 |   |   |   | (2,304,900 | ) |   |   | 163,500 |   |
|                                                                |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Common shares issued for cash                                       |   |         | 1,119,009  |   |   |   | 1,200  |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 948,400 |   |   |   | - |   |   |   | 949,600 |   |
| Net loss                                                            |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   | (962,500 | ) |   |   | (962,500 | ) |
|                                                                |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2000                                          |   |         | 9,372,791  |   |   |   | 9,400  |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 3,408,600 |   |   |   | (3,267,400 | ) |   |   | 150,600 |   |
|                                                                |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Common shares issued for cash                                       |   |         | 785,947    |   |   |   | 800    |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 81,500 |   |   |   | - |   |   |   | 82,300 |   |
| Net 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 |   |   |   | - |   |   |   | 271,000 |   |
| Common shares issued for services                                   |   |         | 92,292     |   |   |   | 100    |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 23,800 |   |   |   | - |   |   |   | 23,900 |   |
| Options granted for services                                        |   |         | -          |   |   |   | -      |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 7,100 |   |   |   | - |   |   |   | 7,100 |   |
| Common shares issued for repayment of note                          |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| payable, related party in the amount of                             |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| $119,800, including accrued interest of $71,800                     |   |         | 309,677    |   |   |   | 300    |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 119,500 |   |   |   | - |   |   |   | 119,800 |   |
| Warrants granted for loan fees on                                   |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| convertible notes payable, related party                            |   |         | -          |   |   |   | -      |         |   |   | (16,700      | )      |   |       | -        |   |          |   | (16,700 | )           |   |   | (16,700 | )      |   |        | -       |   |             |   | 16,700 |   |   |   | - |   |   |   | (33,400 | ) |
| Common shares issued for loan fees on                               |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| convertible notes payable, related party                            |   |         | 30,000     |   |   |   | -      |         |   |   | (13,500      | )      |   |       | -        |   |          |   | (13,500 | )           |   |   | (13,500 | )      |   |        | -       |   |             |   | 13,500 |   |   |   | - |   |   |   | (27,000 | ) |
| Deemed interest on beneficial conversion                            |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| feature of notes payable, related party                             |   |         | -          |   |   |   | -      |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 20,500 |   |   |   | - |   |   |   | 20,500 |   |
| Amortization of loan fees                                           |   |         | -          |   |   |   | -      |         |   |   | 8,200        |   |   |       | -        |   |          |   | 8,200   |        |   |   | 8,200   |   |   |        | -       |   |             |   | - |   |   |   | - |   |   |   | 24,600 |   |
| Net loss                                                            |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   | (709,300 | ) |   |   | (709,300 | ) |
|                                                                |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2002                                          |   |         | 11,683,987 |   |   |   | 11,700 |         |   |   | (22,000      | )      |   |       | -        |   |          |   | (22,000 | )           |   |   | (22,000 | )      |   |        | -       |   |             |   | 3,961,100 |   |   |   | (4,681,200 | ) |   |   | (774,400 | ) |
|                                                                |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Common shares issued for cash                                       |   |         | 823,410    |   |   |   | 800    |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 163,900 |   |   |   | - |   |   |   | 164,700 |   |
| Common shares issued for services                                   |   |         | 381,260    |   |   |   | 400    |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 63,800 |   |   |   | - |   |   |   | 64,200 |   |
| Options granted for services                                        |   |         | -          |   |   |   | -      |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 61,300 |   |   |   | - |   |   |   | 61,300 |   |
| Common shares issued for repayment of note payable,                 |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| related party common shares issued for repayment of                 |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| note payable, related party in the amount of $78,300,               |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| including accrued interest of $43,300                               |   |         | 364,305    |   |   |   | 400    |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 77,900 |   |   |   | - |   |   |   | 78,300 |   |
| Deemed interest on beneficial conversion                            |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| feature of notes payable, related party                             |   |         | -          |   |   |   | -      |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 38,300 |   |   |   | - |   |   |   | 38,300 |   |
| Amortization of loan fees                                           |   |         | -          |   |   |   | -      |         |   |   | 15,000       |   |   |       | -        |   |          |   | 15,000  |        |   |   | 15,000  |   |   |        | -       |   |             |   | - |   |   |   | - |   |   |   | 45,000 |   |
| Net loss                                                            |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   | (711,100 | ) |   |   | (711,100 | ) |
|                                                                |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2003                                          |   |         | 13,252,962 |   |   |   | 13,300 |         |   |   | (7,000       | )      |   |       | -        |   |          |   | (7,000  | )           |   |   | (7,000  | )      |   |        | -       |   |             |   | 4,366,300 |   |   |   | (5,392,300 | ) |   |   | (1,033,700 | ) |
|                                                                |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Common shares issued for cash                                       |   |         | 1,564,311  |   |   |   | 1,600  |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 306,400 |   |   |   | - |   |   |   | 308,000 |   |
| Common shares issued for exercise of warrants                       |   |         | 701,275    |   |   |   | 700    |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 124,900 |   |   |   | - |   |   |   | 125,600 |   |
| Common shares issued for services                                   |   |         | 390,224    |   |   |   | 400    |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 73,800 |   |   |   | - |   |   |   | 74,200 |   |
| Warrants granted for services                                       |   |         | -          |   |   |   | -      |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 12,200 |   |   |   | - |   |   |   | 12,200 |   |
| Interest expense for warrants granted                               |   |         | -          |   |   |   | -      |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   |   |   |   |   | - |   |   |   | 280,200 |   |
| Common shares issued in satisfaction of accounts payable            |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| and accrued liabilities in the amount of $229,400                   |   |         | 917,747    |   |   |   | 900    |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 228,500 |   |   |   | - |   |   |   | 229,400 |   |
| Common shares issued for repayment of note payable in the           |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| amount of $99,700, including accrued interest of $14,700            |   |         | 702,760    |   |   |   | 700    |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 99,000 |   |   |   | - |   |   |   | 99,700 |   |
| Common shares issued for repayment of note payable,                 |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| related party in the amount of $82,700                              |   |         | 330,747    |   |   |   | 300    |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 82,400 |   |   |   | - |   |   |   | 82,700 |   |
| Deemed interest on beneficial conversion                            |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| feature of notes payable, related party                             |   |         | -          |   |   |   | -      |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 17,600 |   |   |   | - |   |   |   | 17,600 |   |
| Amortization of loan fees                                           |   |         | -          |   |   |   | -      |         |   |   | 7,000        |   |   |       | -        |   |          |   | 7,000   |        |   |   | 7,000   |   |   |        | -       |   |             |   | - |   |   |   | - |   |   |   | 21,000 |   |
| Net 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 |   |   |   | - |   |   |   | 153,500 |   |
| Common shares issued for exercise of warrants                       |   |         | 349,545    |   |   |   | 300    |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 69,500 |   |   |   | - |   |   |   | 69,800 |   |
| Net 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 |   |   |   | - |   |   |   | 644,500 |   |
| Common warrants exercised for cash                                  |   |         | 174,000    |   |   |   | 200    |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 43,300 |   |   |   | - |   |   |   | 43,500 |   |
| Common shares issued for services                                   |   |         | 19,500     |   |   |   | -      |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 5,000 |   |   |   | - |   |   |   | 5,000 |   |
| Common shares issued in satisfaction of accounts                    |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
|    payable and accrued liabilities                   |   |         | 385,714    |   |   |   | 400    |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 80,600 |   |   |   | - |   |   |   | 81,000 |   |
| Common shares issued in satisfaction of notes                       |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
|    payable-related parties                           |   |         | 56,821     |   |   |   | 100    |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 11,800 |   |   |   | - |   |   |   | 11,900 |   |
| Common shares issued in satisfaction of convertible                 |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
|    debenture, (including accrued interest of $1,895) |   |         | 206,767    |   |   |   | 200    |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 41,700 |   |   |   | - |   |   |   | 41,900 |   |
| Common shares issued for asset acquisition                          |   |         | 1,000,000  |   |   |   | 1,000  |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 399,000 |   |   |   | - |   |   |   | 400,000 |   |
| Option granted to officers and directors                            |   |         | -          |   |   |   | -      |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 123,500 |   |   |   | - |   |   |   | 123,500 |   |
| Warrants granted for services                                       |   |         | -          |   |   |   | -      |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 2,200 |   |   |   | - |   |   |   | 2,200 |   |
| Warrants granted in satisfaction of accounts                        |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
|    payable and accrued liabilities                   |   |         | -          |   |   |   | -      |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 65,400 |   |   |   | - |   |   |   | 65,400 |   |
| Warrants granted in satisfaction of notes                           |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
|    payable-related parties                           |   |         | -          |   |   |   | -      |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 9,600 |   |   |   | - |   |   |   | 9,600 |   |
| Warrants granted in satisfaction of convertible                     |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
|    debenture                                         |   |         | -          |   |   |   | -      |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 40,000 |   |   |   | - |   |   |   | 40,000 |   |
| Net loss                                                            |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   | (621,000 | ) |   |   | (621,000 | ) |
|                                                                |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2006 (Restated)                               |   |         | 23,263,086 |   |   |   | 23,264 |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 7,277,736 |   |   |   | (7,465,600 | ) |   |   | (164,600 | ) |
|                                                                |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Common shares issued for cash                                       |   |         | 492,795    |   |   |   | 492    |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 188,698 |   |   |   | - |   |   |   | 189,190 |   |
| Common warrants exercised for cash                                  |   |         | 745,372    |   |   |   | 745    |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 185,598 |   |   |   | - |   |   |   | 186,343 |   |
| Common shares issued for services                                   |   |         | 4,000      |   |   |   | 4      |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 2,010 |   |   |   | - |   |   |   | 2,014 |   |
| Common shares issued in satisfaction of                             |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| accrued wages of $22,000, related party                             |   |         | 50,000     |   |   |   | 50     |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 21,950 |   |   |   | - |   |   |   | 22,000 |   |
| Debt forgiveness, related party                                     |   |         | -          |   |   |   | -      |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 147,419 |   |   |   | - |   |   |   | 147,419 |   |
| Net loss                                                            |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   | (604,913 | ) |   |   | (604,913 | ) |
|                                                                |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2007 (Restated)                               |   |         | 24,555,253 |   |   |   | 24,555 |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 7,823,411 |   |   |   | (8,070,513 | ) |   |   | (222,547 | ) |
|                                                                |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Common shares issued for cash                                       |   |         | 32,500     |   |   |   | 33     |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 8,091 |   |   |   | - |   |   |   | 8,124 |   |
| Net loss                                                            |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   | (1,016,661 | ) |   |   | (1,016,661 | ) |
|                                                                |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2008                                          |   |         | 24,587,753 |   |   |   | 24,588 |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 7,831,502 |   |   |   | (9,087,174 | ) |   |   | (1,231,084 | ) |
|                                                                |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Common shares issued for cash                                       |   |         | 2,926,600  |   |   |   | 2,926  |         |   |   | (25,000      | )      |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 362,899 |   |   |   | - |   |   |   | 340,825 |   |
| Common shares issued for debt conversion to related parties         |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| of $398,593, including accrued interest of $29,093                  |   |         | 3,188,741  |   |   |   | 3,189  |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 395,404 |   |   |   | - |   |   |   | 398,593 |   |
| Warrants granted in connection with debt conversion                 |   |         | -          |   |   |   | -      |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 78,961 |   |   |   | - |   |   |   | 78,961 |   |
| Common shares issued for services                                   |   |         | 122,000    |   |   |   | 122    |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 15,338 |   |   |   | - |   |   |   | 15,460 |   |
| Common shares cancelled per rescission order                        |   |         | (126,898   | )      |   |   | (127   | )            |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | (55,660 | ) |   |   | - |   |   |   | (55,787 | ) |
| Rescission liability receivable                                     |   |         | -          |   |   |   | -      |         |   |   | -            |   |   |       | -        |   |          |   | (12,125 | )           |   |   | -       |   |   |        | -       |   |             |   | - |   |   |   | - |   |   |   | (12,125 | ) |
| Net loss                                                            |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   | - |   |   |   | (595,554 | ) |   |   | (595,554 | ) |
|                                                                |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2009                                          |   |         | 30,698,196 |   |   |   | 30,698 |         |   |   | (25,000      | )      |   |       | -        |   |          |   | (12,125 | )           |   |   | -       |   |   |        | -       |   |             |   | 8,628,444 |   |   |   | (9,682,728 | ) |   |   | (1,060,711 | ) |
|                                                                |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Common shares issued for cash                                       |   |         | 40,000     |   |   |   | 40     |         |   |   | 25,000       |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 4,960 |   |   |   | - |   |   |   | 30,000 |   |
| Receipt of payment on rescission liability receivable               |   |         | -          |   |   |   | -      |         |   |   | -            |   |   |       | -        |   |          |   | 12,125  |        |   |   | -       |   |   |        | -       |   |             |   | - |   |   |   | - |   |   |   | 12,125 |   |
| Common shares awarded for debt conversion, 2,146,666 shares         |   |         | -          |   |   |   | -      |         |   |   | -            |   |   |       | 128,800  |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | - |   |   |   | - |   |   |   | 128,800 |   |
| Finance costs on inducement of conversion, 2,146,666 warrants       |   |         | -          |   |   |   | -      |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 74,403 |   |   |   | - |   |   |   | 74,403 |   |
| Common shares awarded for commissions, 46,500 shares                |   |         | -          |   |   |   | -      |         |   |   | -            |   |   |       | 2,790    |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | - |   |   |   | - |   |   |   | 2,790 |   |
| Common shares cancelled                                             |   |         | (26,993    | )      |   |   | (27    | )            |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 27 |   |   |   | - |   |   |   | - |   |
| Net loss                                                            |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   | (572,855 | ) |   |   | (572,855 | ) |
|                                                                |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2010                                          |   |         | 30,711,203 |   |   |   | 30,711 |         |   |   | -            |   |   |       | 131,590  |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 8,707,834 |   |   |   | (10,255,583 | ) |   |   | (1,385,448 | ) |
|                                                                |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Common shares issued for cash                                       |   |         | 4,690,584  |   |   |   | 4,691  |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 276,744 |   |   |   | - |   |   |   | 281,435 |   |
| Common shares issued for debt conversion                            |   |         | 2,146,666  |   |   |   | 2,146  |         |   |   |         |   |   |       | (128,800 | )      |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | 126,654 |   |   |   | - |   |   |   | - |   |
| Common shares awarded for commissions, 51,917 shares                |   |         | -          |   |   |   | -      |         |   |   | -            |   |   |       | 6,684    |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | - |   |   |   | - |   |   |   | 6,684 |   |
| Extension of previously granted warrants, 6,377,496 warrants        |   |         | -          |   |   |   | -      |         |   |   | -            |   |   |       | -        |   |          |   | -       |        |   |   | -       |   |   |        | -       |   |             |   | - |   |   |   | - |   |   |   | 57,626 |   |
| Net loss                                                            |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   | (298,882 | ) |   |   | (298,882 | ) |
|                                                                |   |         |       |   |   |   |   |         |   |   |         |   |   |       |     |   |          |   |    |        |   |   |    |   |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Balance, June 30, 2011 (Unaudited)                                  |   |         | 37,548,453 |   |   | $      | 37,548 |         |   | $      | -            |   |   | $          | 9,474    |   |          | $      | -       |        |   | $      | -       |   |   | $           | -       |   |             | $      | 9,168,858 |   |   | $ | (10,554,465 | ) |   | $ | (1,338,585 | ) |

----

| CAN-CAL RESOURCES LTD.             |
|------------------------------------|
| (AN EXPLORATION STAGE COMPANY)     |
| CONDENSED STATEMENTS OF CASH FLOWS |
| (Unaudited)                        |

|                                                        |   |                     |     |   |           |   |     |           |   |
|-------------------------------------------------------------|--------|--------------------------|----------|--------|----------------|--------|----------|----------------|--------|
|                                                        |   |                     |     |   |           |   |     | March 22, 1995 |   |
|                                                        |   | For the six months ended |     |   | (inception) to |   |
|                                                        |   | June 30,                 |     |   | June 30,       |   |
|                                                        |   | 2011                     |     |   | 2010           |   |     | 2011           |   |
| CASH FLOWS FROM OPERATING ACTIVITIES                        |   |                     |     |   |           |   |     |           |   |
| Net loss                                                    |   | $                        | (298,882 | )      |           | $      | (250,072 | )              |   | $ | (10,554,465 | ) |
| Adjustments to reconcile net loss                           |   |                     |     |   |           |   |     |           |   |   |   |   |
| to net cash used in operating activities:                   |   |                     |     |   |           |   |     |           |   |   |   |   |
| Depreciation and amortization                               |   |                     | 4,385    |   |           |   | 4,937    |           |   |   | 271,939 |   |
| Bad debts                                                   |   |                     | -        |   |           |   | -        |           |   |   | 207,100 |   |
| Gain on sale of fixed assets                                |   |                     | -        |   |           |   | -        |           |   |   | (6,501 | ) |
| Stock based compensation granted for services               |   |                     | 6,684    |   |           |   | -        |           |   |   | 557,748 |   |
| Stock based compensation granted for financing and interest |   |                     | 57,626   |   |           |   | -        |           |   |   | 734,190 |   |
| Beneficial conversion feature on convertible debenture      |   |                     | -        |   |           |   | -        |           |   |   | 25,200 |   |
| Loss on disposal of investment property                     |   |                     | -        |   |           |   | -        |           |   |   | 938,600 |   |
| Undistributed earnings of affiliate                         |   |                     | -        |   |           |   | -        |           |   |   | (174,300 | ) |
| Gain on discontinued operations                             |   |                     | -        |   |           |   | -        |           |   |   | (116,400 | ) |
| Loss on foreign currency translation                        |   |                     | -        |   |           |   | -        |           |   |   | 8,500 |   |
| Impairment of operating assets                              |   |                     | -        |   |           |   | -        |           |   |   | 445,667 |   |
| Decrease (increase) in assets:                              |   |                     |     |   |           |   |     |           |   |   |   |   |
| Other current assets                                        |   |                     | 5,315    |   |           |   | 1,300    |           |   |   | (105,707 | ) |
| Increase (decrease) in liabilities:                         |   |                     |     |   |           |   |     |           |   |   |   |   |
| Accounts payable and accrued expenses                       |   |                     | (56,128  | )      |           |   | 53,464   |           |   |   | (25,245 | ) |
| Accounts payable and accrued expenses, related parties      |   |                     | 30,632   |   |           |   | -        |           |   |   | 90,632 |   |
| Accrued interest                                            |   |                     | 26,422   |   |           |   | 26,587   |           |   |   | 525,367 |   |
| Accrued interest, related parties                           |   |                     | 1,032    |   |           |   | -        |           |   |   | 1,712 |   |
| Accrued salaries                                            |   |                     | 58,676   |   |           |   | 62,616   |           |   |   | 462,004 |   |
| Unearned revenues                                           |   |                     | 13,750   |   |           |   | 11,459   |           |   |   | 22,917 |   |
| Net cash used in operating activities                       |   |                     | (150,488 | )      |           |   | (89,709  | )              |   |   | (6,691,042 | ) |
|                                                        |   |                     |     |   |           |   |     |           |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES                        |   |                     |     |   |           |   |     |           |   |   |   |   |
| Purchase of investment property                             |   |                     | -        |   |           |   | -        |           |   |   | (1,083,600 | ) |
| Proceeds from sale of investment property                   |   |                     | -        |   |           |   | -        |           |   |   | 319,300 |   |
| Purchase of property and equipment                          |   |                     | -        |   |           |   | (767     | )              |   |   | (769,411 | ) |
| Proceeds from sale of property and equipment                |   |                     | -        |   |           |   | -        |           |   |   | 26,100 |   |
| Net cash used in investing activities                       |   |                     | -        |   |           |   | (767     | )              |   |   | (1,507,611 | ) |
|                                                        |   |                     |     |   |           |   |     |           |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES                        |   |                     |     |   |           |   |     |           |   |   |   |   |
| Proceeds from convertible debentures                        |   |                     | -        |   |           |   | -        |           |   |   | 128,800 |   |
| Proceeds from notes payable                                 |   |                     | -        |   |           |   | -        |           |   |   | 948,400 |   |
| Principal payments on notes payable                         |   |                     | -        |   |           |   | -        |           |   |   | (689,900 | ) |
| Proceeds from notes payable, related parties                |   |                     | -        |   |           |   | 32,125   |           |   |   | 907,791 |   |
| Principal payments on notes payable, related parties        |   |                     | (4,000   | )      |           |   | -        |           |   |   | (383,050 | ) |
| Proceeds from the issuance of common stock                  |   |                     | 281,435  |   |           |   | 42,125   |           |   |   | 7,430,761 |   |
| Net cash provided by financing activities                   |   |                     | 277,435  |   |           |   | 74,250   |           |   |   | 8,342,802 |   |
|                                                        |   |                     |     |   |           |   |     |           |   |   |   |   |
| Net increase in cash                                        |   |                     | 126,947  |   |           |   | (16,226  | )              |   |   | 144,149 |   |
| Cash, beginning of period                                   |   |                     | 17,202   |   |           |   | 17,507   |           |   |   | - |   |
| Cash, end of period                                         |   | $                        | 144,149  |   |           | $      | 1,281    |           |   | $ | 144,149 |   |
|                                                        |   |                     |     |   |           |   |     |           |   |   |   |   |
| Supplemental disclosures:                                   |   |                     |     |   |           |   |     |           |   |   |   |   |
| Interest paid                                               |   | $                        | -        |   |           | $      | -        |           |   |   |   |   |
| Income taxes paid                                           |   | $                        | -        |   |           | $      | -        |           |   |   |   |   |

| See accompanying notes to financial statements. |   |
|-------------------------------------------------|--------|

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|                                                                                                                                                                                                                                                                                          |   |   | June 30, |   |   |   | December 31, |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|--------------|--------|
|                                                                                                                                                                                                                                                                                          |   |   | 2011     |   |   |   | 2010         |   |
|                                                                                                                                                                                                                                                                                          |   |   |     |   |   |   |         |   |
| Note payable to a stockholder, secured by real property, bearing interest at 16.0% per annum, interest only payments payable in semi-annual payments, matured November 2005 (Note: The Company is in default of interest payments totaling $460,000 and $436,000 of principal, respectively). |   | $      | 300,000  |   |   | $      | 300,000      |   |
|                                                                                                                                                                                                                                                                                          |   |   |     |   |   |   |         |   |
| Note payable to a stockholder, secured by real property, bearing interest at 8.0% per annum, matured July 2008, and is currently in default.                                                                                                                                                  |   |   | 25,114   |   |   |   | 25,114       |   |
|                                                                                                                                                                                                                                                                                          |   |   |     |   |   |   |         |   |
| Note payable to a stockholder, secured by real property, bearing interest at 8.0% per annum, matured June 2008, and is currently in default.                                                                                                                                                  |   |   | 35,436   |   |   |   | 35,436       |   |
|                                                                                                                                                                                                                                                                                          |   |   |     |   |   |   |         |   |
| Note payable, unsecured, non-interest bearing note to an employee due on demand, related party.                                                                                                                                                                                               |   |   | -        |   |   |   | 4,000        |   |
|                                                                                                                                                                                                                                                                                          |   |   |     |   |   |   |         |   |
| Note payable to a member of the Board of Directors, unsecured, due on demand, bearing interest at 8.25%, related party.                                                                                                                                                                       |   |   | 25,000   |   |   |   | 25,000       |   |
|                                                                                                                                                                                                                                                                                          |   |   |     |   |   |   |         |   |
| Note payable to the CEO, unsecured, non-interest bearing, due on demand, related party.                                                                                                                                                                                                       |   |   | 28,191   |   |   |   | 28,191       |   |
|                                                                                                                                                                                                                                                                                          |   |   |     |   |   |   |         |   |
| Total notes payable                                                                                                                                                                                                                                                                           |   |   | 413,741  |   |   |   | 417,741      |   |
|                                                                                                                                                                                                                                                                                          |   |   |     |   |   |   |         |   |
|    Less: current portion                                                                                                                                                                                                                                                       |   |   | 413,741  |   |   |   | 417,741      |   |
|                                                                                                                                                                                                                                                                                          |   |   |     |   |   |   |         |   |
| Notes payable, less current portion                                                                                                                                                                                                                                                           |   | $      | -        |   |   | $      | -            |   |

----

| 2011       |   | $      | 413,741 |   |
|------------|--------|--------|---------|--------|
| 2012       |   |   | -       |   |
| 2013       |   |   | -       |   |
| 2014       |   |   | -       |   |
| Thereafter |   |   | -       |   |
|       |   | $      | 413,741 |   |

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|                       |   | Options Outstanding |      |   | Weighted AverageExercise Price |   |
|----------------------------|--------|---------------------|-----------|--------|--------------------------------|--------|
|                       |   |                |      |   |                           |   |
| Balance, January 1, 2010   |   |                | 1,000,000 |   |                           | $      | 0.18 |   |
|   Granted        |   |                | -         |   |                           |   | - |   |
|   Cancelled      |   |                | -         |   |                           |   | - |   |
|   Exercised      |   |                | -         |   |                           |   | - |   |
|   Expired        |   |                | -         |   |                           |   | 0.18 |   |
| Balance, December 31, 2010 |   |                | 1,000,000 |   |                           |   | 0.18 |   |
|   Granted        |   |                | -         |   |                           |   | - |   |
|   Cancelled      |   |                | -         |   |                           |   | - |   |
|   Exercised      |   |                | -         |   |                           |   | - |   |
|   Expired        |   |                | (500,000  | )      |                           |   | (0.16 | ) |
| Balance, June 30, 2011     |   |                | 500,000   |   |                           | $      | 0.20 |   |

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|                       |   | Warrants Outstanding |       |   | Weighted Average Exercise Price |   |
|----------------------------|--------|----------------------|------------|--------|---------------------------------|--------|
|                       |   |                 |       |   |                            |   |
| Balance, January 1, 2010   |   |                 | 9,336,596  |   |                            | $      | 0.15 |   |
|   Granted        |   |                 | 2,186,666  |   |                            |   | 0.08 |   |
|   Cancelled      |   |                 | -          |   |                            |   | - |   |
|   Exercised      |   |                 | -          |   |                            |   | - |   |
|   Expired        |   |                 | (1,935,100 | )      |                            |   | (0.17 | ) |
| Balance, December 31, 2010 |   |                 | 9,588,162  |   |                            |   | 0.13 |   |
|   Granted        |   |                 | 4,690,584  |   |                            |   | 0.08 |   |
|   Cancelled      |   |                 | -          |   |                            |   | - |   |
|   Exercised      |   |                 | -          |   |                            |   | - |   |
|   Expired        |   |                 | (1,064,000 | )      |                            |   | (0.15 | ) |
| Balance, June 30, 2011     |   |                 | 13,214,746 |   |                            | $      | 0.11 |   |

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|                                                 |   | Three Months EndedJune 30, |     |   |   |   |
|------------------------------------------------------|--------|----------------------------|----------|--------|--------|--------|
|                                                 |   | 2011                       |     |   | 2010   |   |   | Increase / (Decrease) |   |
|                                                 |   | Amount                     |     |   | Amount |   |   | $ |   |   | %  |   |
| Expenses:                                            |   |                       |     |   |   |   |   |   |   |   |   |   |   |
|   General & administrative             |   | $                          | 85,603   |   |   | $      | 68,343 |   |   | $ | 17,260 |   |   |   | 25 | % |
|   Exploration costs                        |   |                       | 12,158   |   |   |   | 393 |   |   |   | 11,765 |   |   |   | 2,994 | % |
|   Depreciation                             |   |                       | 2,192    |   |   |   | 2,442 |   |   |   | (250 | ) |   |   | (10 | %) |
|   Officer salary                           |   |                       | 30,000   |   |   |   | 30,000 |   |   |   | - |   |   |   | - |   |
|     Total operating expenses     |   |                       | 129,953  |   |   |   | 101,178 |   |   |   | 28,775 |   |   |   | 28 | % |
|                                                 |   |                       |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss from operations                                 |   |                       | (129,953 | )      |   |   | (101,178 | ) |   |   | 28,775 |   |   |   | 28 | % |
|                                                 |   |                       |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other income (expense):                              |   |                       |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Other income                             |   |                       | 3,000    |   |   |   | - |   |   |   | 3,000 |   |   |   | 100 | % |
|   Interest income                          |   |                       | -        |   |   |   | 8 |   |   |   | (8 | ) |   |   | (100 | %) |
|   Rental revenue                           |   |                       | 7,375    |   |   |   | 9,166 |   |   |   | (1,791 | ) |   |   | (20 | %) |
|   Interest expense                         |   |                       | (76,671  | )      |   |   | (19,041 | ) |   |   | 57,630 |   |   |   | 303 | % |
|     Total other income (expense) |   |                       | (66,296  | )      |   |   | (9,867 | ) |   |   | 56,429 |   |   |   | 572 | % |
|                                                 |   |                       |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                             |   | $                          | (196,249 | )      |   | $      | (111,045 | ) |   | $ | 85,204 |   |   |   | 77 | % |

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|                                                 |   | Six Months EndedJune 30, |     |   |   |   |
|------------------------------------------------------|--------|--------------------------|----------|--------|--------|--------|
|                                                 |   | 2011                     |     |   | 2010   |   |   | Increase / (Decrease) |   |
|                                                 |   | Amount                   |     |   | Amount |   |   | $ |   |   | % |   |
| Expenses:                                            |   |                     |     |   |   |   |   |   |   |   |   |   |   |
|   General & administrative             |   | $                        | 147,906  |   |   | $      | 158,531 |   |   | $ | (10,625 | ) |   |   | (7%) |   |
|   Exploration costs                        |   |                     | 20,006   |   |   |   | 8,390 |   |   |   | 11,616 |   |   |   | 138% |   |
|   Depreciation                             |   |                     | 4,385    |   |   |   | 4,937 |   |   |   | (552 | ) |   |   | (11%) |   |
|   Officer salary                           |   |                     | 60,000   |   |   |   | 60,000 |   |   |   | - |   |   |   | - |   |
|     Total operating expenses     |   |                     | 232,297  |   |   |   | 231,858 |   |   |   | 439 |   |   |   | - |   |
|                                                 |   |                     |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss from operations                                 |   |                     | (232,297 | )      |   |   | (231,858 | ) |   |   | 439 |   |   |   | - |   |
|                                                 |   |                     |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other income (expense):                              |   |                     |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Other income                             |   |                     | 6,000    |   |   |   | - |   |   |   | 6,000 |   |   |   | 100% |   |
|   Interest income                          |   |                     | -        |   |   |   | 23 |   |   |   | (23 | ) |   |   | (100%) |   |
|   Rental revenue                           |   |                     | 24,250   |   |   |   | 16,041 |   |   |   | 8,209 |   |   |   | 51% |   |
|   Interest expense                         |   |                     | (96,835  | )      |   |   | (34,278 | ) |   |   | 62,557 |   |   |   | 182% |   |
|     Total other income (expense) |   |                     | (66,585  | )      |   |   | (18,214 | ) |   |   | 48,371 |   |   |   | 266% |   |
|                                                 |   |                     |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                             |   | $                        | (298,882 | )      |   | $      | (250,072 | ) |   | $ | 48,810 |   |   |   | 20% |   |

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|                      |   | June 30, |       |   | December 31, |   |       | Increase / (Decrease) |   |
|---------------------------|--------|----------|------------|--------|--------------|--------|------------|-----------------------|--------|
|                      |   | 2011     |       |   | 2010         |   |       | $                     |   |   | % |   |
|                      |   |     |       |   |         |   |       |                  |   |   |   |   |
| Current Assets            |   | $        | 157,261    |   |         | $      | 35,629     |                  |   | $ | 121,632 |   |   |   | 341% |   |
|                      |   |     |       |   |         |   |       |                  |   |   |   |   |   |   |   |   |
| Current Liabilities       |   | $        | 1,529,947  |   |         | $      | 1,459,563  |                  |   | $ | 70,384 |   |   |   | 5% |   |
|                      |   |     |       |   |         |   |       |                  |   |   |   |   |   |   |   |   |
| Working Capital (deficit) |   | $        | (1,372,686 | )      |         | $      | (1,423,934 | )                     |   | $ | 51,248 |   |   |   | (4%) |   |

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|    |                                                                             |           | Incorporated by reference |
|---------|----------------------------------------------------------------------------------|----------------|---------------------------|
| Exhibit | Exhibit Description                                                              | Filed herewith | Form                      | Period ending | Exhibit | Filing date |
|    |                                                                             |           |                      |   |   |   |
| 31.1    | Certification of Michael Hogan pursuant to Section 302 of the Sarbanes-Oxley Act | X              |                      |   |   |   |
| 31.2    | Certification of Michael Hogan pursuant to Section 302 of the Sarbanes-Oxley Act | X              |                      |   |   |   |
| 32.1    | Certification of Michael Hogan pursuant to Section 906 of the Sarbanes-Oxley Act | X              |                      |   |   |   |

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|   |        /s/ Michael Hogan  |   |
|--------|---------------------------------------------------------|--------|
| By:    |                                                    |   |
|   | Michael Hogan, President and Chief Executive Officer    |   |
|   | (On behalf of the Registrant and as Principal Financial |   |
|   | Officer)                                                |   |

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