UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C.  20549





FORM
10-Q





x           QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934





For the
quarterly period ended March 31,
2010





 ̈         TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934





Commission
file number 000-26669





CAN-CAL
RESOURCES LTD.


(Exact
name of registrant as specified in its charter)





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





8205
      Aqua SprayLas
      Vegas, Nevada


(Address
of principal executive offices)





(702)
243-1849


(Registrant’s
telephone number, including area code)





Indicate
by checkmark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.    xYes    ̈No





Indicate
by checkmark whether the registrant has submitted electronically and posted on
its corporate Website, if any, every Interactive Data Filed required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period the
registrant was requires to submit and post such
files)           xYes    ̈No




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


Non-accelerated
filer  ̈


(Do not
check if a smaller reporting
company)                                                                      Smaller
reporting company x


Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange
Act).          Yes  ̈       No
x





The
number of shares of Common Stock, $0.001 par value, outstanding on May 14, 2010
was 29,647,196.









CAN-CAL
RESOURCES LTD.


FORM
10-Q


TABLE
OF CONTENTS





PagePART
      I – FINANCIAL INFORMATIONItem
      1. Financial Statements
            
            3Condensed
      Balance Sheets
            
            3Condensed
      Statements Of Operations
            
            4Condensed
      Statements Of Cash Flows
            
            11Notes
      To Condensed Financial Statements
            
            12Item
      2. Management’s Discussion and Analysis
            
            29Item
      3. Quantitative and Qualitative Disclosures about Market
    Risk
            
            32Item
      4T. Controls and Procedures
            
            32PART
      II – OTHER INFORMATIONItem
      1. Legal Proceedings
            
            33Item
      1A. Risk Factors
            
            34Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
            
            34Item
      3. Defaults Upon Senior Securities
            
            35Item
      4. Submission of Matters to a Vote of Security Holders
            
            35Item
      5. Other Information
            
            35Item
      6. Exhibits
            
            35





2





PART
I – FINANCIAL INFORMATION


Item
1. Financial Statements





CAN-CAL
      RESOURCES LTD.(AN
      EXPLORATION STAGE COMPANY)BALANCE
      SHEETSMarch
      31,
            
            
            December
      31,2010
            
            
            2009ASSETS
            
            (Unaudited)Current
      assets:Cash
            
            $
            18,580
            
            
            $
            17,507Other
      current assets
            
            
            1,016
            
            
            
            1,300Total
      current assets
            
            
            19,596
            
            
            
            18,807Fixed
      assets (net of accumulated depreciation of $149,238 and
      $146,743)
            
            
            45,372
            
            
            
            47,100Total
      assets
            
            $
            64,968
            
            
            $
            65,907LIABILITIES
      AND STOCKHOLDERS' (DEFICIT)Current
      liabilities:Accounts
      payable and accrued expenses
            
            $
            88,225
            
            
            $
            55,598Accrued
      interest
            
            
            430,219
            
            
            
            417,008Accrued
      officer salary
            
            
            311,504
            
            
            
            282,004Notes
      payable, related parties
            
            
            360,550
            
            
            
            360,550Unearned
      revenues
            
            
            32,083
            
            
            
            11,458Total
      current liabilities
            
            
            1,222,581
            
            
            
            1,126,618Commitments
      and contingenciesStockholders'
      equity (deficit):Preferred
      stock, $0.001 par value, 10,000,000 sharesauthorized,
      no shares issued and outstanding
            
            
            -
            
            
            
            -Common
      stock, $0.001 par value, 100,000,000 shares authorized,30,738,196
      and 30,698,196 shares issued and outstandingas
      of March 31, 2010 and December 31, 2009, respectively
            
            
            30,738
            
            
            
            30,698Subscription
      receivable
            
            
            -
            
            
            
            (25,000
            )Recission
      liability receivable
            
            
            -
            
            
            
            (12,125
            )Additional
      paid-in capital
            
            
            8,633,404
            
            
            
            8,628,444(Deficit)
      accumulated during exploration stage
            
            
            (9,821,755
            )
            
            
            (9,682,728
            )Total
      stockholders' (deficit)
            
            
            (1,157,613
            )
            
            
            (1,060,711
            )Total
      liabilities and stockholders' (deficit)
            
            $
            64,968
            
            
            $
            65,907The
      accompanying notes are an integral part of the financial
      statements.




3




CAN-CAL
      RESOURCES LTD.(AN
      EXPLORATION STAGE COMPANY)CONDENSED
      STATEMENTS OF OPERATIONS(Unaudited)For
      the three
            
            
            For
      the three
            
            
            March
      22, 1995months
      ended
            
            
            months
      ended
            
            
            (inception)
      toMarch
      31,
            
            
            March
      31,
            
            
            March
      31,2010
            
            
            2009
            
            
            2010Material
      sales
            
            $
            -
            
            
            $
            -
            
            
            $
            245,500Cost
      of sales
            
            
            -
            
            
            
            -
            
            
            
            263,400Gross
      profit
            
            
            -
            
            
            
            -
            
            
            
            (17,900
            )Operating
      expenses:General
      and administrative
            
            
            90,188
            
            
            
            50,492
            
            
            
            6,473,814Exploration
      costs
            
            
            7,997
            
            
            
            3,403
            
            
            
            544,366Depreciation
            
            
            2,495
            
            
            
            2,613
            
            
            
            243,668Officer
      salary
            
            
            30,000
            
            
            
            30,000
            
            
            
            871,176Impairment
      of operating assets
            
            
            -
            
            
            
            -
            
            
            
            443,772Total
      operating expenses
            
            
            130,680
            
            
            
            86,508
            
            
            
            8,576,796Net
      operating loss
            
            
            (130,680
            )
            
            
            (86,508
            )
            
            
            (8,594,696
            )Other
      income (expense):Other
      income from legal judgment
            
            
            -
            
            
            
            -
            
            
            
            47,200Interest
      income
            
            
            15
            
            
            
            8
            
            
            
            52,937Rental
      revenue
            
            
            6,875
            
            
            
            7,375
            
            
            
            332,992Gain
      on sale of fixed assets
            
            
            -
            
            
            
            -
            
            
            
            26,801Interest
      expense
            
            
            (15,237
            )
            
            
            (21,932
            )
            
            
            (1,213,389
            )Total
      other income (expense)
            
            
            (8,347
            )
            
            
            (14,549
            )
            
            
            (753,459
            )Loss
      before provision for income taxes
            
            
            (139,027
            )
            
            
            (101,057
            )
            
            
            (9,348,155
            )Provision
      for income taxes
            
            
            -
            
            
            
            -
            
            
            
            -Net
      loss from continuing operations
            
            
            (139,027
            )
            
            
            (101,057
            )
            
            
            (9,348,155
            )Income
      from discontinued operationsIncome
      from discontinued operations
            
            
            -
            
            
            
            -
            
            
            
            116,400Loss
      on disposal of operations (net of taxes)
            
            
            -
            
            
            
            -
            
            
            
            (590,000
            )Net
      (loss)
            
            $
            (139,027
            )
            
            $
            (101,057
            )
            
            $
            (9,821,755
            )Weighted
      average number of common sharesoutstanding
      - basic and fully diluted
            
            
            30,728,863
            
            
            
            24,587,753Net
      (loss) per share - basic and fully diluted
            
            $
            -
            
            
            $
            -The
      accompanying notes are an integral part of the financial
      statements.




4




CAN-CAL
      RESOURCES LTD.(AN
      EXPLORATION STAGE COMPANY)STATEMENT
      OF STOCKHOLDERS' EQUITY (DEFICIT)
  (Deficit)Foreign
              
              
              
              
              
              accumulated
              
              
              TotalCommon
      stock
              
              
              
              
              
              Recission
              
              
              Unamortized
              
              
              currency
              
              
              Additional
              
              
              during
              
              
              stockholders'Number
              
              
              
              
              
              Subscription
              
              
              liability
              
              
              equity
              
              
              translation
              
              
              paid-in
              
              
              exploration
              
              
              equityof
      shares
              
              
              Amount
              
              
              receivable
              
              
              receivable
              
              
              grants
              
              
              adjustment
              
              
              capital
              
              
              stage
              
              
              (deficit)Balance,
      March 22, 1995
              
              
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -Common
      shares issued for services
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Net
      loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (1,000
              )
              
              
              (1,000
              )Balance,
      December 31, 1995
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (1,000
              )
              
              
              (1,000
              )Common
      shares issued for services
              
              
              3,441,217
              
              
              
              3,400
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              625,000
              
              
              
              -
              
              
              
              628,400Prior
      period adjustment, investment in joint venture
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              497,900
              
              
              
              497,900Net
      loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (497,000
              )
              
              
              (497,000
              )Balance,
      December 31, 1996
              
              
              3,441,217
              
              
              
              3,400
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              625,000
              
              
              
              (100
              )
              
              
              628,300Common
      shares issued for services
              
              
              3,006,435
              
              
              
              3,000
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              1,051,400
              
              
              
              -
              
              
              
              1,054,400Net
      loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (1,044,700
              )
              
              
              (1,044,700
              )Balance,
      December 31, 1997
              
              
              6,447,652
              
              
              
              6,400
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              1,676,400
              
              
              
              (1,044,800
              )
              
              
              638,000Common
      shares issued for cash
              
              
              557,509
              
              
              
              600
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              211,200
              
              
              
              -
              
              
              
              211,800
  5
  Foreign
      currency translation adjustment
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              8,500
              
              
              
              -
              
              
              
              -
              
              
              
              8,500Net
      loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (353,000
              )
              
              
              (353,000
              )Balance,
      December 31, 1998
              
              
              7,005,161
              
              
              
              7,000
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              8,500
              
              
              
              1,887,600
              
              
              
              (1,397,800
              )
              
              
              505,300Common
      shares issued for cash
              
              
              1,248,621
              
              
              
              1,200
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              572,600
              
              
              
              -
              
              
              
              573,800Foreign
      currency translation adjustment
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (11,800
              )
              
              
              -
              
              
              
              -
              
              
              
              (11,800
              )Realized
      foreign currency translation loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              3,300
              
              
              
              -
              
              
              
              -
              
              
              
              3,300Prior
      period Adjustment
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              15,000
              
              
              
              15,000Elimination
      of subsidiary upon disposal
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              116,400
              
              
              
              116,400Net
      loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (1,038,500
              )
              
              
              (1,038,500
              )Balance,
      December 31, 1999
              
              
              8,253,782
              
              
              
              8,200
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              2,460,200
              
              
              
              (2,304,900
              )
              
              
              163,500Common
      shares issued for cash
              
              
              1,119,009
              
              
              
              1,200
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              948,400
              
              
              
              -
              
              
              
              949,600Net
      loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (962,500
              )
              
              
              (962,500
              )Balance,
      December 31, 2000
              
              
              9,372,791
              
              
              
              9,400
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              3,408,600
              
              
              
              (3,267,400
              )
              
              
              150,600Common
      shares issued for cash
              
              
              785,947
              
              
              
              800
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              81,500
              
              
              
              -
              
              
              
              82,300Net
      loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (704,500
              )
              
              
              (704,500
              )Balance,
      December 31, 2001
              
              
              10,158,738
              
              
              
              10,200
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              3,490,100
              
              
              
              (3,971,900
              )
              
              
              (471,600
              )Common
      shares issued for cash
              
              
              1,093,280
              
              
              
              1,100
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              269,900
              
              
              
              -
              
              
              
              271,000Common
      shares issued for services
              
              
              92,292
              
              
              
              100
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              23,800
              
              
              
              -
              
              
              
              23,900Options
      granted for services
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              7,100
              
              
              
              -
              
              
              
              7,100Common
      shares issued for repayment of notepayable, related party in the
      amount of $119,800, including accrued interest of
      $71,800
              
              
              309,677
              
              
              
              300
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              119,500
              
              
              
              -
              
              
              
              119,800
  6
  Warrants
      granted for loan fees onconvertible notes payable, related
      party
              
              
              -
              
              
              
              -
              
              
              
              (16,700
              )
              
              
              (16,700
              )
              
              
              (16,700
              )
              
              
              -
              
              
              
              16,700
              
              
              
              -
              
              
              
              (33,400
              )Common
      shares issued for loan fees onconvertible notes payable, related
      party
              
              
              30,000
              
              
              
              -
              
              
              
              (13,500
              )
              
              
              (13,500
              )
              
              
              (13,500
              )
              
              
              -
              
              
              
              13,500
              
              
              
              -
              
              
              
              (27,000
              )Deemed
      interest on beneficial conversionfeature of notes payable, related
      party
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              20,500
              
              
              
              -
              
              
              
              20,500Amortization
      of loan fees
              
              
              -
              
              
              
              -
              
              
              
              8,200
              
              
              
              8,200
              
              
              
              8,200
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              24,600Net
      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
              
              
              
              -
              
              
              
              164,700Common
      shares issued for services
              
              
              381,260
              
              
              
              400
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              63,800
              
              
              
              -
              
              
              
              64,200Options
      granted for services
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              61,300
              
              
              
              -
              
              
              
              61,300Common
      shares issued for repayment of note payable,related 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
              
              
              
              -
              
              
              
              78,300Deemed
      interest on beneficial conversionfeature of notes payable, related
      party
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              38,300
              
              
              
              -
              
              
              
              38,300Amortization
      of loan fees
              
              
              -
              
              
              
              -
              
              
              
              15,000
              
              
              
              15,000
              
              
              
              15,000
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              45,000Net
      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
              
              
              
              -
              
              
              
              308,000Common
      shares issued for exercise of warrants
              
              
              701,275
              
              
              
              700
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              124,900
              
              
              
              -
              
              
              
              125,600Common
      shares issued for services
              
              
              390,224
              
              
              
              400
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              73,800
              
              
              
              -
              
              
              
              74,200Warrants
      granted for services
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              12,200
              
              
              
              -
              
              
              
              12,200Interest
      expense for warrants granted
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              280,200
              
              
              
              -
              
              
              
              280,200Common
      shares issued in satisfaction of accounts payableand accrued
      liabilities in the amount of $229,400
              
              
              917,747
              
              
              
              900
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              228,500
              
              
              
              -
              
              
              
              229,400
  7
  Common
      shares issued for repayment of note payable in theamount of
      $99,700, including accrued interest of $14,700
              
              
              702,760
              
              
              
              700
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              99,000
              
              
              
              -
              
              
              
              99,700Common
      shares issued for repayment of note payable,related party in the
      amount of $82,700
              
              
              330,747
              
              
              
              300
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              82,400
              
              
              
              -
              
              
              
              82,700Deemed
      interest on beneficial conversionfeature of notes payable, related
      party
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              17,600
              
              
              
              -
              
              
              
              17,600Amortization
      of loan fees
              
              
              -
              
              
              
              -
              
              
              
              7,000
              
              
              
              7,000
              
              
              
              7,000
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              21,000Net
      loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (1,030,500
              )
              
              
              (1,030,500
              )Balance,
      December 31, 2004
              
              
              17,860,026
              
              
              
              17,900
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              5,591,300
              
              
              
              (6,422,800
              )
              
              
              (813,600
              )Common
      shares issued for cash
              
              
              762,500
              
              
              
              800
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              152,700
              
              
              
              -
              
              
              
              153,500Common
      shares issued for exercise of warrants
              
              
              349,545
              
              
              
              300
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              69,500
              
              
              
              -
              
              
              
              69,800Net
      loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (421,800
              )
              
              
              (421,800
              )Balance,
      December 31, 2005
              
              
              18,972,071
              
              
              
              19,000
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              5,813,500
              
              
              
              (6,844,600
              )
              
              
              (1,012,100
              )Common
      shares issued for cash
              
              
              2,448,213
              
              
              
              2,400
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              642,100
              
              
              
              -
              
              
              
              644,500Common
      warrants exercised for cash
              
              
              174,000
              
              
              
              200
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              43,300
              
              
              
              -
              
              
              
              43,500Common
      shares issued for services
              
              
              19,500
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              5,000
              
              
              
              -
              
              
              
              5,000Common
      shares issued in satisfaction of accountspayable and accrued
      liabilities
              
              
              385,714
              
              
              
              400
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              80,600
              
              
              
              -
              
              
              
              81,000Common
      shares issued in satisfaction of notespayable-related
      parties
              
              
              56,821
              
              
              
              100
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              11,800
              
              
              
              -
              
              
              
              11,900Common
      shares issued in satisfaction of convertibledebenture, (including
      accrued interest of $1,895)
              
              
              206,767
              
              
              
              200
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              41,700
              
              
              
              -
              
              
              
              41,900Common
      shares issued for asset acquisition
              
              
              1,000,000
              
              
              
              1,000
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              399,000
              
              
              
              -
              
              
              
              400,000Option
      granted to officers and directors
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              123,500
              
              
              
              -
              
              
              
              123,500Warrants
      granted for services
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              2,200
              
              
              
              -
              
              
              
              2,200Warrants
      granted in satisfaction of accountspayable and accrued
      liabilities
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              65,400
              
              
              
              -
              
              
              
              65,400
  8
  Warrants
      granted in satisfaction of notespayable-related
      parties
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              9,600
              
              
              
              -
              
              
              
              9,600Warrants
      granted in satisfaction of convertibledebenture
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              40,000
              
              
              
              -
              
              
              
              40,000Net
      loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (621,000
              )
              
              
              (621,000
              )Balance,
      December 31, 2006 (Restated)
              
              
              23,263,086
              
              
              
              23,264
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              7,277,736
              
              
              
              (7,465,600
              )
              
              
              (164,600
              )Common
      shares issued for cash
              
              
              492,795
              
              
              
              492
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              188,698
              
              
              
              -
              
              
              
              189,190Common
      warrants exercised for cash
              
              
              745,372
              
              
              
              745
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              185,598
              
              
              
              -
              
              
              
              186,343Common
      shares issued for services
              
              
              4,000
              
              
              
              4
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              2,010
              
              
              
              -
              
              
              
              2,014Common
      shares issued in satisfaction ofaccrued wages of $22,000, related
      party
              
              
              50,000
              
              
              
              50
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              21,950
              
              
              
              -
              
              
              
              22,000Debt
      forgiveness, related party
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              147,419
              
              
              
              -
              
              
              
              147,419Net
      loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (604,913
              )
              
              
              (604,913
              )Balance,
      December 31, 2007 (Restated)
              
              
              24,555,253
              
              
              
              24,555
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              7,823,411
              
              
              
              (8,070,513
              )
              
              
              (222,547
              )Common
      shares issued for cash
              
              
              32,500
              
              
              
              33
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              8,091
              
              
              
              -
              
              
              
              8,124Net
      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
              
              
              
              -
              
              
              
              340,825Common
      shares issued for debt conversion to related partiesof $398,593,
      including accrued interest of $29,093
              
              
              3,188,741
              
              
              
              3,189
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              395,404
              
              
              
              -
              
              
              
              398,593Warrants
      granted in connection with debt conversion
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              78,961
              
              
              
              -
              
              
              
              78,961Common
      shares issued for services
              
              
              122,000
              
              
              
              122
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              15,338
              
              
              
              -
              
              
              
              15,460Common
      shares cancelled per recission order
              
              
              (126,898
              )
              
              
              (127
              )
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (55,660
              )
              
              
              -
              
              
              
              (55,787
              )Recission
      liability receivable
              
              
              
              
              
              
              
              
              
              
              -
              
              
              
              (12,125
              )
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (12,125
              )
  9
  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
              
              
              
              -
              
              
              
              30,000Receipt
      of payment on recission liability receivable
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              12,125
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              12,125Net
      loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (139,027
              )
              
              
              (139,027
              )Balance
      March 31, 2010 (Unaudited)
              
              
              30,738,196
              
              
              $
              30,738
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              8,633,404
              
              
              $
              (9,821,755
              )
              
              $
              (1,157,613
              )The
      accompanying notes are an integral part of the financial
      statements.




10




CAN-CAL
      RESOURCES LTD.(AN
      EXPLORATION STAGE COMPANY)CONDENSED
      STATEMENTS OF CASH FLOWS(Unaudited)March
      22, 1995For
      the three months ended
            
            
            (inception)
      toMarch
      31,
            
            
            March
      31,2010
            
            
            2009
            
            
            2010CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      loss
            
            $
            (139,027
            )
            
            $
            (101,057
            )
            
            $
            (9,821,755
            )Adjustments
      to reconcile net lossto
      net cash used in operating activities:Depreciation
      and amortization
            
            
            2,495
            
            
            
            2,613
            
            
            
            260,668Bad
      debts
            
            
            -
            
            
            
            -
            
            
            
            207,100Gain
      on sale of fixed assets
            
            
            -
            
            
            
            -
            
            
            
            (6,501
            )Stock
      based compensation
            
            
            -
            
            
            
            -
            
            
            
            548,274Stock
      issued for financing and interest
            
            
            -
            
            
            
            -
            
            
            
            602,161Beneficial
      conversion feature on convertible debenture
            
            
            -
            
            
            
            -
            
            
            
            25,200Loss
      on disposal of investment property
            
            
            -
            
            
            
            -
            
            
            
            938,600Undistributed
      earnings of affiliate
            
            
            -
            
            
            
            -
            
            
            
            (174,300
            )Gain
      on discontinued operations
            
            
            -
            
            
            
            -
            
            
            
            (116,400
            )Loss
      on foreign currency translation
            
            
            -
            
            
            
            -
            
            
            
            8,500Impairment
      of operating assets
            
            
            -
            
            
            
            -
            
            
            
            445,667Decrease
      (increase) in assets:Accounts
      receivable
            
            
            1,300
            
            
            
            -
            
            
            
            -Other
      current assets
            
            
            (1,016
            )
            
            
            -
            
            
            
            (93,611
            )Increase
      (decrease) in liabilities:Accounts
      payable and accrued expenses
            
            
            32,627
            
            
            
            (9,505
            )
            
            
            20,313Accrued
      interest
            
            
            13,211
            
            
            
            21,577
            
            
            
            459,312Accrued
      officer salary
            
            
            29,500
            
            
            
            25,793
            
            
            
            311,504Unearned
      revenues
            
            
            20,625
            
            
            
            (6,875
            )
            
            
            32,083Net
      cash used in operating activities
            
            
            (40,285
            )
            
            
            (67,454
            )
            
            
            (6,353,185
            )




11




CASH
      FLOWS FROM INVESTING ACTIVITIESPurchase
      of investment property
            
            
            -
            
            
            
            -
            
            
            
            (1,083,600
            )Proceeds
      from sale of investment property
            
            
            -
            
            
            
            -
            
            
            
            319,300Puchase
      of fixed assets
            
            
            (767
            )
            
            
            -
            
            
            
            (769,411
            )Proceeds
      from sale of fixed assets
            
            
            -
            
            
            
            -
            
            
            
            26,100Net
      cash used in investing activities
            
            
            (767
            )
            
            
            -
            
            
            
            (1,507,611
            )CASH
      FLOWS FROM FINANCING ACTIVITIESProceeds
      from notes payable
            
            
            -
            
            
            
            -
            
            
            
            948,400Principal
      payments on notes payable
            
            
            -
            
            
            
            -
            
            
            
            (689,900
            )Proceeds
      from notes payable, related parties
            
            
            -
            
            
            
            25,000
            
            
            
            845,600Principal
      payments on notes payable, related parties
            
            
            -
            
            
            
            -
            
            
            
            (374,050
            )Proceeds
      from the issuance of common stock
            
            
            42,125
            
            
            
            -
            
            
            
            7,149,326Net
      cash provided by financing activities
            
            
            42,125
            
            
            
            25,000
            
            
            
            7,879,376Net
      increase (decrease) in cash
            
            
            1,073
            
            
            
            (42,454
            )
            
            
            18,580Cash,
      beginning of period
            
            
            17,507
            
            
            
            45,848
            
            
            
            -Cash,
      end of period
            
            $
            18,580
            
            
            $
            3,394
            
            
            $
            18,580Supplemental
      disclosures:Interest
      paid
            
            $
            -
            
            
            $
            -Income
      taxes paid
            
            $
            -
            
            
            $
            -Non-cash
      investing and financing activities:Shares
      issued for services
            
            $
            -
            
            
            $
            67,913The
      accompanying notes are an integral part of the financial
      statements.




12


CAN-CAL
RESOURCES LTD.
 (An
Exploration Stage Company)
 NOTES TO
CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)




Note
1 – Basis of Presentation




The
accompanying unaudited condensed financial statements have been prepared in
accordance with Securities and Exchange Commission requirements for interim
financial statements. Therefore, they do not include all of the information and
footnotes required by accounting principles generally accepted in the United
States for complete financial statements. The financial statements should be
read in conjunction with the Form 10-K for the year ended December 31, 2009 of
Can-Cal Resources Ltd. (“the Company”).




The
interim condensed financial statements present the balance sheets, statements of
operations, and cash flows of Can-Cal Resources Ltd. The financial statements
have been prepared in accordance with accounting principles generally accepted
in the United States.




The
interim financial information is unaudited. In the opinion of management, all
adjustments (which include normal recurring adjustments) necessary to present
fairly the financial position as of March 31, 2009 and the results of operations
and cash flows presented herein have been included in the financial statements.
Interim results are not necessarily indicative of results of operations for the
full year.




The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.




Certain
amounts in the prior periods presented have been reclassified to conform to the
current period financial statement presentation.




Exploration Stage
Company


The
Company is currently an exploration stage company. As an exploration stage
enterprise, the Company discloses the deficit accumulated during the exploration
stage and the cumulative statements of operations and cash flows from inception
to the current balance sheet date. The Company has incurred net losses of
$9,821,755 and used net cash in operations of $6,353,185 for the period from
inception (March 22, 1995) through March 31, 2010. An entity remains in the
exploration stage until such time as proven or probable reserves have been
established for its deposits. Upon the location of commercially mineable
reserves, the Company plans to prepare for mineral extraction and enter the
development stage. To date, the exploration stage of the Company’s operations
consists of contracting with geologists who sample and assess the mining
viability of the Company’s claims.




Recent Accounting
Pronouncements


In
January 2010, the FASB issued ASU No. 2010-06 regarding fair value measurements
and disclosures and improvement in the disclosure about fair value
measurements.  This ASU requires additional disclosures regarding
significant transfers in and out of Levels 1 and 2 of fair value measurements,
including a description of the reasons for the transfers.  Further,
this ASU requires additional disclosures for the activity in Level 3 fair value
measurements, requiring presentation of information about purchases, sales,
issuances, and settlements in the reconciliation for fair value
measurements.  This ASU is effective for fiscal years beginning after
December 15, 2010, and for interim periods within those fiscal
years.  We are currently evaluating the impact of this ASU; however,
we do not expect the adoption of this ASU to have a material impact on our
financial statements.




13


CAN-CAL
RESOURCES LTD.
 (An
Exploration Stage Company)
 NOTES TO
CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)




In
February 2010, the FASB issued ASU No. 2010-09 regarding subsequent events and
amendments to certain recognition and disclosure requirements.  Under
this ASU, a public company that is a SEC filer, as defined, is not required to
disclose the date through which subsequent events have been
evaluated.  This ASU is effective upon the issuance of this
ASU.  The adoption of this ASU did not have a material impact on our
financial statements.




In April
2010, the FASB issued ASU No. 2010-18 regarding improving comparability by
eliminating diversity in practice about the treatment of modifications of loans
accounted for within pools under Subtopic 310-30 – Receivable – Loans and Debt
Securities Acquired with Deteriorated Credit Quality (“Subtopic
310-30”).  Furthermore, the amendments clarify guidance about
maintaining the integrity of a pool as the unit of accounting for acquired loans
with credit deterioration.  Loans accounted for individually under
Subtopic 310-30 continue to be subject to the troubled debt restructuring
accounting provisions within Subtopic 310-40, Receivables—Troubled Debt
Restructurings by Creditors.  The amendments in this Update are
effective for modifications of loans accounted for within pools under Subtopic
310-30 occurring in the first interim or annual period ending on or after July
15, 2010.  The amendments are to be applied
prospectively.  Early adoption is permitted.  We are
currently evaluating the impact of this ASU; however, we do not expect the
adoption of this ASU to have a material impact on our financial
statements.




Note
2 – Going Concern




The
Company incurred a net loss of $139,027 for the three months ended March 31,
2010. Also, the Company’s current liabilities exceed its current assets by
$1,202,985 as of March 31, 2010. These factors create substantial doubt about
the Company’s ability to continue as a going concern. The Company’s management
plans to continue to fund its operations in the short term with a combination of
debt and equity financing and with revenue from operations in the long
term.




The
ability of the Company to continue as a going concern is dependent on securing
additional sources of capital and the success of the Company’s plan. The
financial statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern.




14


CAN-CAL
RESOURCES LTD.
 (An
Exploration Stage Company)
 NOTES TO
CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)




Note
3 – Notes Payable and Accrued Officer Salary, Related Parties




Notes
payable consisted of the following as of March 31, 2010 and December 31, 2009,
respectively:






March
      31, 2010
            
            
            December
      31, 2009Note
      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 $340,000 and $300,000 of principal, but is currently
      negotiating forbearance on the collection of interest)
            
            $
            300,000
            
            
            $
            300,000Note
      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
            
            
            
            25,114Note
      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
            
            
            
            35,436Current
      portion of notes payable
            
            $
            360,550
            
            
            $
            360,550




The
Company is in default of its semi-annual interest payments of $24,000 from 2002
through 2009 (total of $400,000 as of March 31, 2009), in addition to the total
principal of $300,000. The Company is currently negotiating forbearance on
collection of the principle and interest.




As of
March 31, 2010 and as of December 31, 2009 we owed $282,004 and $282,004 of
accrued salaries to our former CEO, on such respective dates. In addition, we
owed $29,500 of accrued salaries to our current CEO as of March 31,
2010.




Note
4 – Changes in Securities




1996




During
1996 the Company issued 3,441,217 shares of Can-Cal common stock to various
investors resulting in cash proceeds of $628,400.




1997




On
January 15, 1997 the Company issued 500,000 shares of Can-Cal common stock along
with a cash payment of $100,000 in exchange for a 50% interest in S&S Joint
Venture. Additionally, the Company agreed to loan the joint venture up to
$48,000.




15


CAN-CAL
RESOURCES LTD.
 (An
Exploration Stage Company)
 NOTES TO
CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)


On
February 13, 1997 the Board approved the acquisition of Scotmar Industries, Inc.
200,000 shares of Can-Cal common stock were issued in return for all of the
issued and outstanding stock of the acquired company.




On
October 27, 1997 the Board approved the issuance of 2,181,752 restricted common
shares to ARUM, LLC to repay an existing debt of $315,046 and to purchase a
property located in San Bernadino County, California, known as the Pisgah
property.




During
November, 1997 the Board approved the sale of 124,683 restricted common shares
to various investors.




During
December, 1997 the Board approved the issuance of 42,000 restricted common
shares in return for services rendered.




1998




In July,
1998 the Board approved the issuance 122,000 restricted common shares to various
investors.




In
October, 1998 the Board approved the sale of 172,450 restricted common shares to
various investors.




During
December, 1998 the Board approved the sale of 263,059 restricted common shares
to various investors.




1999




On
February 1, 1999, the Board of Directors approved the Sale of 62,500 shares of
Can-Cal common stock to a Board member.




On
February 8, 1999 the Board approved the sale of 70,000 shares of Can-Cal common
stock to a Board member.




On March
1, 1999 the Board approved the issuance of 32,121 shares of Can-Cal common stock
in return for services rendered.




On March
15, 1999 the Board approved the sale of 86,000 shares of Can-Cal common stock to
various investors.




On March
17, 1999 the Board approved the issuance of 40,000 shares of Can-Cal common
stock in return for equipment.




16




CAN-CAL
RESOURCES LTD.


(An
Exploration Stage Company)


NOTES TO
CONDENSED FINANCIAL STATEMENTS


(UNAUDITED)




On March
10, 1999 the Board approved the sale of 295,500 shares of Can-Cal common stock
to various investors.




On April
1, 1999 the Board approved the sale of 1,000 shares of restricted common stock
in return for equipment.




On July
21, 1999 the Board approved the sale of 357,500 shares of common stock to
various investors.




On August
24, 1999 the Board approved the sale of 274,000 shares of common stock to
various investors.




On
September 7, 1999 the Board approved the sale of 20,000 shares of common stock
to an investor.




On
November 9, 1999 the board approved the issuance of 10,000 shares of common
stock to an investor.




2000




On
February 27, 2000, the Board of Directors approved the sale of 500,000 shares of
common stock to three of its directors (all of whom reside in Canada), an
offshore trust and another person affiliated with the Company.




On July
3, 2000, the Board of Directors exercised the option to acquire technology
related to the extraction and processing of ore and, in accordance with the
agreement with the two owners of that technology, issued 200,000 shares of
Can-Cal’s common stock to them.




On
November 24, 2000, the Company borrowed $300,000 from a lender. As part of the
transaction, the Company issued 45,000 shares of its common stock as a loan
placement fee and granted the lender an option to purchase up to 300,000 shares
of its common stock. On November 24, 2000, the lender exercised its option in
full and purchased 300,000 shares of Can-Cal’s common stock.




In July
2000 the Board of Directors authorized the sale of 74,009 shares of its common
stock to eight persons, all of whom reside outside the United States. During the
third quarter 46,670 shares were sold and the remaining 27,339 shares were sold
during the fourth quarter. All of those shares were issued on December 15,
2000.




2001




In
September, 2001, the Board of Directors authorized the sale of 20,000 shares of
its common stock to an individual.




17


CAN-CAL
RESOURCES LTD.
 (An
Exploration Stage Company)
 NOTES TO
CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)


During
October, 2001 the company signed an Investment Agreement with two funds
(Dutchess Private Equities Fund LP and DRH Investment Company LLC) to sell to
those funds up to $8,000,000 in common stock of the company, for a period of
three years. In connection with the Investment Agreement, the company issued
606,059 shares of restricted common stock to Dutchess Fund and its advisor, and
to a broker-dealer firm, for services valued at $400,000, to induce those
entities to enter into the Investment Agreement and perform services
contemplated under such agreement. The company also issued 37,000 shares of
restricted common stock to the attorney for Dutchess Fund.




On
November 2, 2001 the Board of Directors approved the sale of 82,888 shares of
restricted common stock.




On
December 12, 2001 the Board of Directors approved the sale of 40,000 shares of
restricted common stock.




2002




On
January 8, 2002, we sold 36,000 restricted common shares to three investors (one
Canadian resident, and two private companies controlled and owned by Canadian
residents) for $12,600 cash ($0.35 per share, representing a discount of
approximately 50% from market price). These investors also were issued warrants
to purchase 36,000 additional restricted shares, at a price of $0.35 per share;
the warrants will expire January 8, 2004.




On
February 11, 2002, 10,000 restricted common shares were sold to one investor (a
Canadian resident) for $3,500 cash ($0.35 per share, representing a discount of
approximately 50% from market price). This investor also was issued warrants to
purchase 10,000 additional restricted shares, at a price of $0.35 per share; the
warrants will expire February 11, 2004. Complete information about the company
was provided to these investors. These shares and warrants were sold pursuant to
the exemption provided by Regulation S of the 1933 Act. No commissions were
paid.




On
January 31, 2002, we issued 309,677 restricted common shares to a lender (First
Colony Merchant) for payment of past due and current interest on debt, $119,800.
No commissions were paid.




From
March 1, 2002 through June 3, 2002, 369,600 restricted common shares were issued
to 48 investors (all Canadian residents or companies controlled and owned by
Canadian residents) for $92,400 cash ($0.25 per share, representing discounts
ranging from 0% to approximately 50% from market prices at the time of
issuance). These investors also were issued warrants to purchase 369,600
additional restricted shares, at a price of $0.25 per share; the warrants will
expire two years from the date of issuance. No commissions were
paid.




18




CAN-CAL
RESOURCES LTD.


(An
Exploration Stage Company)


NOTES TO
CONDENSED FINANCIAL STATEMENTS


(UNAUDITED)




On June
21, 2002, 40,000 restricted common shares were issued to Financial
Communications Corp. for public relations services, valued at approximately
$14,000.




From July
1, 2002 through December 24, 2002, 609,720 restricted common shares were issued
to 20 investors (19 whom are Canadian residents or companies controlled and
owned by Canadian residents, and one who is a resident of Great Britain) for
$152,400 cash ($0.25 per share, representing prices that ranged from 22% over
market to approximately 40% below market prices at the time of issuance). The
investors also were issued warrants to purchase a total of 609,720 additional
restricted shares, at a price of $0.25 per share; the warrants will expire two
years from the date of issuance. No commissions were paid.




During
September 2002, the Company issued 32,281 shares of the Company’s common stock
for $5,500 in cash related to the Dutchess Private Equities Fund, net of
offering costs of $200, and issued 30,000 shares to Joseph B. LaRocco, attorney
for Dutchess Fund and DRH Investment Company, LLC for legal services to such
entities.




During
October 2002, the Company issued 35,679 shares of the Company’s common stock for
$4,600 in cash related to the Dutchess Private Equities Fund, net of offering
costs of $700.




In
November 2002, the Company issued 52,292 restricted common shares to four
individuals in exchange for various services, valued at approximately
$9,900.




2003




During
2003, 673,410 restricted common shares were issued to 19 Canadian residents or
companies controlled and owned by Canadian resident investors for $134,682 and
150,000 restricted common shares were issued to 12 U.S. resident investors for
$30,000 (all shares were priced at $0.20 per share, representing premiums of up
to 25% and discounts ranging from 0% to approximately 25% from market prices at
the time of issuance). With respect to 237,410 restricted common shares, the
investors were also issued warrants to purchase 474,820 additional restricted
common shares and with respect to 473,500 restricted common shares, the
investors were also issued warrants to purchase 473,500 additional restricted
common shares; all warrants were priced at $0.20 per share and will expire two
years from the date of issuance. With respect to 112,500 restricted common
shares, the investors were also issued 112,500 warrants to purchase additional
restricted common shares, at a price of $0.25 per share for a period of two
years from the date of issuance. The shares and warrants were sold to Canadian
investors pursuant to the exemption provided by Regulation S of the 1933 Act,
and the shares and warrants sold to U.S. investors were sold pursuant to the
exemption provided by section 4(2) of the 1933 Act.




During
2003, 364,305 restricted common shares were issued in conversion of $35,000
principal and interest on a debenture held by Dutchess Fund. The conversion
prices were $0.099 for 50,710 shares ($5,000 of the debenture); $0.112 for
44,643 shares ($5,000 of the debenture); $0.061 for 81,433 shares ($5,000 of the
debenture); $0.067 for 75,075 shares ($5,000 of the debenture); and $0.1334 for
112,444 shares ($15,000 of the debenture). All of the prices were determined by
the conversion formula in the debenture (80% of the average bid prices for the
three lowest (out of 15) trading days before conversion. These shares were sold
pursuant to the exemption provided by section 4(2) of the 1933 Act.




19


CAN-CAL
RESOURCES LTD.
 (An
Exploration Stage Company)
 NOTES TO
CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)


During
2003, 205,166 restricted common shares in payment of $31,500 of services by Luis
Vega, consulting geologist. The price per share was determined by dividing the
amount owed by the average closing price of the company’s stock for each day’s
service. These shares were sold pursuant to the exemption provided by section
4(2) of the 1933 Act.




On March
14, 2003, 24,960 restricted common shares were issued to Catherine Nichols, a
Canadian resident, for marketing services amounting to $5,000. The price per
share was based on the average closing share price for the period during which
the services were rendered. These shares were sold pursuant to the exemption
provided by Regulation S of the 1933 Act.




During
the period from July 15 to December 31, 2003, 112,326 restricted common shares
in payment of $22,250 of investor relations services by Jeffrey Whitford, a
Canadian resident who is a consultant to the company. The price per share was
based on the average monthly closing share prices for the period. These shares
were sold pursuant to the exemption provided by Regulation S of the 1933
Act.




33,600
restricted common shares were issued to pay $4,200 of legal services provided by
Stephen E. Rounds, outside company counsel. The price per share was based on the
average closing share price for the period during which the services were
rendered. These shares were sold pursuant to the exemption provided by section
4(2) of the 1933 Act.




On
December 30, 2003, 5,208 restricted common shares were issued to Terry Brown, a
Mexican resident, for technical consulting services amounting to $1,250. The
price per share was based on the average closing share price for the period
during which the services were rendered. These shares were sold pursuant to the
exemption provided by Regulation S of the 1933 Act.




2004




During
2004, 2,255,586 restricted common shares were issued to 107 Canadian residents
or companies controlled and owned by Canadian resident investors for $431,425
and 10,000 restricted common shares were issued to one U.S. resident investor
for $2,000 (245,000 shares were priced at $0.18 per share, 1,620,131 shares were
priced at $0.20 per share, 261,200 shares were priced at $0.25 per share, and
139,255 shares were issued as a 25% premium on the conversion of warrants,
representing premiums of up to 25% and discounts ranging from 0% to
approximately 25% from market prices at the time of issuance). With respect to
1,319,308 of these restricted common shares, the investors were also issued
warrants to purchase 1,259,308 additional restricted common shares at $0.25 per
share and 60,000 additional restricted common shares at $0.20 per share. With
respect to 245,000 restricted common shares, the investors were also issued
warrants to purchase 245,000 additional restricted common shares at $0.25, and
with respect to another 245,000 restricted common shares, the investors were
also issued warrants to purchase 245,000 additional restricted common shares at
$0.50 per share. Of these, we also sold 5,000 shares to a director of the
Company for proceeds of $1,000 and issued warrants to purchase 5,000 restricted
common shares, exercisable at $0.25 per share for a two year period. All
warrants will expire two years from the date of issuance. The shares and
warrants were sold to Canadian investors pursuant to the exemption provided by
Regulation S of the 1933 Act, and the shares and warrants sold to U.S. investors
were sold pursuant to the exemption provided by section 4(2) of the 1933
Act.




20




CAN-CAL
RESOURCES LTD.


(An
Exploration Stage Company)


NOTES TO
CONDENSED FINANCIAL STATEMENTS


(UNAUDITED)




During
2004, 702,760 restricted common shares were issued in conversion of $99,657
principal and interest on a debenture held by Dutchess Fund. The conversion
prices were $0.216 for 92,593 shares ($20,000 of the debenture); $0.160 for
31,250 shares ($5,000 of the debenture); $0.144 for 34,722 shares ($5,000 of the
debenture); $0.128 for 544,195 shares ($69,657 of the debenture). All of the
prices were determined by the conversion formula in the debenture (80% of the
average bid prices for the three lowest (out of 15) trading days before
conversion). These shares were sold pursuant to the exemption provided by
section 4(2) of the 1933 Act.




During
2004, 215,336 restricted common shares were issued in payment of $40,932 of
services by Luis Vega, consulting geologist. The price per share was determined
by dividing the amount owed by the average closing price of the company’s stock
for each day’s service. These shares were sold pursuant to the exemption
provided by section 4(2) of the 1933 Act.




On
February 4, 2004, 10,000 restricted common shares were issued to Yvonne St.
Pierre, a Canadian resident, for computer-related services, in the amount of
$2,500. These shares were issued pursuant to the exemption provided by
Regulation S of the 1933 Act.




Between
February 10 and March 31, 2004, 75,000 restricted common shares were issued to
Jeff Whitford, a Canadian resident, for investor relation services, in the
amount of $15,000. In addition, Mr. Whitford received 50,000 warrants at an
exercise price of $0.20 per share; the warrants will expire between February
2006 and March 2006. The warrants were valued at $12,200 utilizing the Black
Scholes model. These shares were issued pursuant to the exemption provided by
Regulation S of the 1933 Act.




On
December 22, 2004, 2,500 restricted common shares were issued to Karen Barra, a
U.S. resident, for services amounting to $500. The price per share was $0.20
based on private placement offering for the period during which the services
were rendered. These shares were sold pursuant to the exemption provided by
Regulation S of the 1933 Act.




During
2004, 15,367 restricted common shares were issued in payment of accounts payable
amounting to $3,842. The price per share was based on the average closing share
price for the period during which the services were rendered. These shares were
sold pursuant to the exemption provided by Regulation S of the 1933
Act.




During
2004, 87,388 restricted common shares were issued to Terry Brown, a Mexican
resident, for technical consulting services amounting to $15,247. The price per
share was based on the average closing share price for the period during which
the services were rendered. These shares were sold pursuant to the exemption
provided by Regulation S of the 1933 Act.




21




CAN-CAL
RESOURCES LTD.


(An
Exploration Stage Company)


NOTES TO
CONDENSED FINANCIAL STATEMENTS


(UNAUDITED)




On March
1, 2004, in connection with the conversion of $82,687 in notes payable and
$225,595 in accrued officers’ salary payable, we issued 1,233,127 restricted
common shares at $0.25 per share and 1,233,127 warrants, with an exercise price
of $0.30 and expiring on March 1, 2006, to two officers, two directors, and a
former director and his insurance agency. These persons and the insurance agency
are accredited investors.




2005




During
the twelve months ended December 31, 2005, we sold 712,500 restricted common
shares to 21 Canadian residents for a total of $142,500, and issued warrants to
purchase 712,500 restricted common shares, exercisable at $0.25 per share. These
securities were issued in private transactions in reliance on the exemption from
registration with the SEC provided by Regulation S.




A prior
U.S. shareholder exercised other warrants, at exercise prices ranging from
$0.22, for proceeds of $11,000, which resulted in the issuance of 50,000
restricted common shares. These securities were issued in private transactions
in reliance on the exemption available under Section 4(2) of the 1933
Act.




We also
issued, for services, 349,545 restricted common shares for a total value of
$69,800 valued at fair market value at date of issuance and granted 13,575
warrants (exercisable for two years at $0.25 per share) valued at fair market
value at date of issuance. These securities were issued to two Canadian
residents, and one Mexican Corporation in reliance on the exemption from
registration available under Regulation S, and one U.S. resident, in reliance on
the exemption provided by Section 4(2) of the 1933 Act.




2006




During
the twelve months ended December 31, 2006, we sold 2,622,213 restricted common
shares to 76 Canadian residents, 8 US residents, 5 Israeli Nationals and 1 Swiss
National for a total of $688,000, and issued warrants to purchase 2,348,213
restricted common shares, exercisable between $0.25 to $.45 per share. These
securities were issued in private transactions, with respect to the Canadian
residents, in reliance on the exemption from registration with the SEC provided
by Regulation S, and with respect to the U.S. citizen, in reliance on the
exemption available under Section 4(2) of the 1933 Act.




We also
issued, for services, 8,500 restricted common shares for a total value of $2,325
and these securities were issued to one U.S. resident in reliance on the
exemption provided by Section 4(2) of the 1933 Act.




22


CAN-CAL
RESOURCES LTD.
 (An
Exploration Stage Company)
 NOTES TO
CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)


On July
3, 2006, the Company issued 2,200 shares of its par value common stock for
services received by an individual. As of September 30, 2006, the Company
recorded consulting expense in the amount of $462, the fair value of the shares
issued on the date of grant. Additionally, the Company granted a warrant to
purchase 2,200 shares of the Company’s common stock at an exercise price of
$0.25 for a period of 2 years. The Company recorded an expense in the amount of
$373, the fair value of the warrant on the date of grant. Fair value was
determined using the Black Scholes option pricing model based on the following
assumptions: expected dividends: $-0-; volatility: 187%; risk free interest
rate: 5.12%.




On July
3, 2006, the Company issued 8,800 shares of its par value common stock for
services received from an individual. As of September 30, 2006, the Company
recorded consulting expense in the amount of $2,200, the fair value of the
shares issued on the date of grant. Additionally, the Company granted a warrant
to purchase up to 8,800 shares of the Company’s common stock at an exercise
price of $0.25 for a period of 2 years. The Company recorded an expense in the
amount of $1,812, the fair value of the warrant on the date of grant. Fair value
was determined using the Black Scholes option pricing model based on the
following assumptions: expected dividends: $-0-; volatility: 187%; risk free
interest rate: 5.12%.




On July
3, 2006, an officer of the Company elected to convert half of his accrued salary
in exchange for 385,714 shares of common stock valued at $81,000, the fair value
of the shares issued on the date of grant. Additionally, the Company granted a
warrant to purchase up to 385,714 shares of the Company’s common stock at an
exercise price of $0.25 for a period of two years. The Company recorded an
expense in the amount of $65,418, the fair value of the warrant on the date of
grant. Fair value was determined using the Black Scholes option pricing model
based on the following assumptions: expected dividends: $-0-; volatility: 187%;
risk free interest rate: 5.12%.




On July
3, 2006, the Company issued 56,821 shares of its common stock for conversion of
a note in the amount of $11,932 from a shareholder of the Company. Additionally,
the Company granted a warrant to purchase up to 56,821 shares of the Company’s
common stock at an exercise price of $0.25 for a period of two years. The
Company recorded an expense in the amount of $9,637, the fair value of the
warrant on the date of grant. Fair value was determined using the Black Scholes
option pricing model based on the following assumptions: expected dividends:
$-0-; volatility: 187%; risk free interest rate: 5.12%.




On July
11, 2006, the Company issued 206,767 shares of its par value common stock
pursuant to the convertible debenture agreement entered into on January 24, 2006
whereby the Company received a $40,000 convertible at a rate of $0.20 per share
bearing interest of 10% per annum. The note holder elected to convert all
accrued interest totaling $1,895 into 6,767 shares of the Company’s par value
common stock.




On August
22, 2006, the Company entered into an agreement to purchase mining claims
located in Mohave County, Arizona in exchange for 1,000,000 shares of the
Company’s par value common stock. The Company recorded an asset totaling
$400,000, the fair value of the underlying shares.




23


CAN-CAL
RESOURCES LTD.
 (An
Exploration Stage Company)
 NOTES TO
CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)


2007




During
the twelve months ended December 31, 2007, we sold 1,238,167 restricted common
shares to 72 Canadian residents and 4 US residents for a total of $375,534 and
issued warrants to purchase 492,795 restricted common shares, exercisable
between $0.35 and $.65 per share. These securities were issued in private
transactions, with respect to the Canadian residents, in reliance on the
exemption from registration with the SEC provided by Regulation S, and with
respect to the U.S. citizen, in reliance on the exemption available under
Section 4(2) of the 1933 Act.




On April
30, 2007, the Company also issued 50,000 shares of restricted common stock as
part of a settlement agreement with a former officer of the Company for
compensation of accrued salaries. The common stock was rendered to a U.S.
citizen, in reliance on the exemption available under Section 4(2) of the 1933
Act. The shares were valued at a total of $22,000. In addition to monthly cash
payments of $3,500 per month the Company has recorded debt forgiveness of
$147,419 in accordance with the terms of the settlement agreement. Due to the
related party nature of the transaction the gain has been recorded to additional
paid in capital, therefore there has been no impact on the Company’s net
loss.




On June
29, 2007, the Company also issued 4,000 shares of restricted common stock for
services rendered to a U.S. citizen, in reliance on the exemption available
under Section 4(2) of the 1933 Act. The shares were valued at a total of
$2,000.




2008




During
the year ended December 31, 2008, the Company issued 32,500 shares of common
stock and warrants to purchase 32,500 shares common stock for cash totaling
$8,124. The warrants are fully vested upon grant, expire in two years and have
an exercise price of $0.35 per share.




2009




During
the year ended December 31, 2009, the company issued 2,926,600 shares of its
common stock and an equal number of warrants pursuant to a unit offering whereby
each recipient received one share of common stock and one warrant certificate
for a unit price of $0.125. The Company recorded proceeds from the offering of
$340,825 and a subscription receivable in the amount of $25,000, subsequently
paid in January 2010.




On June
30, 2009, certain note holders elected to convert the principal balance of their
notes together with accrued interest into shares of the Company’s common stock
at a rate of $0.125 per share. In addition, the Company agreed to issue a
warrant to purchase two shares of the Company’s common stock for each dollar
converted (see Note 6). The total principal balance converted was $369,500 and
was converted into 2,956,000 common shares. Total accrued interest converted was
$29,093 or 232,741 common shares.  As of the date of this filing the
shares remain unissued.




24


CAN-CAL
RESOURCES LTD.
 (An
Exploration Stage Company)
 NOTES TO
CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)


During
the year ended December 31, 2009, the Company issued a total of 107,000 shares
of its restricted common stock to individuals for services rendered to the
Company. As of December 31, 2009, the Company recorded an expense of $14,260
representing the fair value of the grant.




On
December 31, 2009, the Company authorized the issuance of 9,000 and 6,000 shares
of its restricted common stock to a director and officer of the Company,
respectively for services performed for the Company. As of December 31, 2009, we
recorded an expense of $1,200, representing the fair value of the issuance on
the date of grant.  As of the date of this filing the shares remain
unissued.




2010




On
January 20, 2010, the company issued 40,000 shares of its common stock and an
equal number of warrants pursuant to a unit offering whereby each recipient
received one share of common stock and one warrant certificate for a unit price
of $0.125. The Company recorded proceeds from the sale of $5,000.




On
January 20, 2010, the Company received $25,000 in payment on a subscription
receivable outstanding at December 31, 2009.




On March
17, 2010, the Company received $12,125 in payment on a rescission receivable
outstanding at December 31, 2009.




Note
5 – Options and Warrants




Options




Options
granted for employee and consulting services - The 2003 Non-Qualified Option
Plan was established by the Board of Directors in June 2003 and approved by
shareholders in October 2003. A total of 1,500,000 shares of common stock are
reserved for issuance under this plan.




In June
2006, the Company granted options to buy 750,000 shares of the Company’s common
stock at an exercise price of $0.20 with terms ranging from two to five years
from the date of issuance to the Directors of the Company, of these options,
250,000 expired in June 2008. Additionally, the Company granted options to
purchase 250,000 shares of the Company’s common stock at an exercise price of
$0.20 with a term of three years from the date of issuance to an unrelated
consultant. On June 19, 2006, the consultant exercised 100,000 options in
exchange for cash of $20,000. In June of 2009, the remaining 150,000 options
expired.




25




CAN-CAL
RESOURCES LTD.
 (An
Exploration Stage Company)
 NOTES TO
CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)


In
accordance with ASC 505, Share-Based Payment”; the Company recognized the fair
value of the options in the statement of operations on the date of grant. There
were no options issued during the three months ended March 31,
2010.




The
following table summarizes the Company’s option activity related to employees
and consultants:




Options
      Outstanding
            
            
            Weighted
      Average Exercise PriceBalance,
      January 1, 2009
            
            
            1,150,000
            
            
            $
            0.20Granted
            
            
            -
            
            
            
            -Cancelled
            
            
            -
            
            
            
            -Exercised
            
            
            -
            
            
            
            -Expired
            
            
            150,000
            
            
            
            0.20Balance,
      December 31, 2009
            
            
            1,000,000
            
            
            
            0.20Granted
            
            
            -
            
            
            
            -Cancelled
            
            
            -
            
            
            
            -Exercised
            
            
            -
            
            
            
            -Expired
            
            
            -
            
            
            
            -Balance,
      March 31, 2010
            
            
            1,000,000
            
            
            $
            0.20




Warrants




During
the period ended March 31, 2010, the Company granted 40,000 stock warrants with
an exercise price of $0.15 per share for its common stock. These stock warrants
were granted in connection with financing activities and stock sold during the
three months ended March 31, 2010. These warrants were exercisable upon issuance
and expire on March 31, 2011. The following table summarizes the Company’s
warrant activities:




Warrants
      Outstanding
            
            
            Weighted
      Average Exercise PriceBalance,
      January 1, 2009
            
            
            525,295
            
            
            $
            0.50Granted
            
            
            3,723,806
            
            
            
            0.15Cancelled
            
            
            (298,083
            )
            
            
            0.61Exercised
            
            
            -
            
            
            
            -Expired
            
            
            -
            
            
            
            0.20Balance,
      December 31, 2009
            
            
            3,951,018
            
            
            
            0.16Granted
            
            
            40,000
            
            
            
            0.15Cancelled
            
            
            -
            
            
            
            -Exercised
            
            
            -
            
            
            
            -Expired
            
            
            (32,500
            )
            
            
            0.35Balance,
      March 31, 2010
            
            
            3,958,518
            
            
            $
            0.16




26




CAN-CAL
RESOURCES LTD.
 (An
Exploration Stage Company)
 NOTES TO
CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)


Note
6 – Commitments and Contingencies




Mining
claims - The Company has a lease and purchase option agreement covering six
patented claims in the Cerbat Mountains, Hualapai Mining District and Mohave
County Arizona. The Company pays $1,500 per quarter as minimum advance
royalties. The Company has the option to purchase the property for $250,000 plus
interest at a rate of 8% compounded annually from and after the date of its
exercise of the option to purchase the property. If the Lessee exercises its
option to purchase, all funds paid to Lessors shall be credited toward the
purchase price as of the date the payments were made.




Revocation
order – On April 24, 2009 the Company received a Partial Revocation Order from
the British Columbia Securities Commission. Pursuant to the order, the Company
agreed to offer a full rescission for shares purchased or warrants exercised
during the period of October 2004 to December 2007. The Company had recorded a
rescission liability totaling $67,913, representing the total amount of cash
required to repurchase 263,748 shares in accordance with the order. During 2009,
we cancelled 126,698 shares and refunded $55,787 for previously issued common
stock pursuant to this order. The remaining balance of the amount reserved to
repurchase these shares of $12,125 was returned to the Company on March 17,
2010. No liability has been recorded for shareholders that did not elect to
exercise their right to a refund of their original investment.




Rental
payments - The Company operates a leased facility in Nevada under a month to
month operating lease. The lease calls for a monthly base rent of approximately
$1,695.




Note
7 – Subsequent Events




The
Company concluded that no subsequent events have occurred that would require
recognition or disclosure in the financial statements.




27




FORWARD-LOOKING
STATEMENTS





This
document contains “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. All statements other than statements
of historical fact are “forward-looking statements” for purposes of federal and
state securities laws, including, but not limited to, any projections of
earnings, revenue or other financial items; any statements of the plans,
strategies and objections of management for future operations; any statements
concerning proposed new services or developments; any statements regarding
future economic conditions or performance; any statements or belief; and any
statements of assumptions underlying any of the foregoing.





Forward-looking
statements may include the words “may,” “could,” “estimate,” “intend,”
“continue,” “believe,” “expect” or “anticipate” or other similar words. These
forward-looking statements present our estimates and assumptions only as of the
date of this report. Accordingly, readers are cautioned not to place undue
reliance on forward-looking statements, which speak only as of the dates on
which they are made. We do not undertake to update forward-looking statements to
reflect the impact of circumstances or events that arise after the dates they
are made. You should, however, consult further disclosures we make in this
Quarterly Report on Form 10-Q, Annual Report on Form 10-K and Current Reports on
Form 8-K.





Although
we believe that the expectations reflected in any of our forward-looking
statements are reasonable, actual results could differ materially from those
projected or assumed in any of our forward-looking statements. Our future
financial condition and results of operations, as well as any forward-looking
statements, are subject to change and inherent risks and uncertainties. The
factors impacting these risks and uncertainties include, but are not limited
to:





·
            deterioration
      in general or regional economic, market and political
      conditions;


·
            our
      ability to diversify our
operations;


·
            actions
      and initiatives taken by both current and potential
      competitors;


·
            inability
      to raise additional financing for working
  capital;


·
            the
      fact that our accounting policies and methods are fundamental to how we
      report our financial condition and results of operations, and they may
      require management to make estimates about matters that are inherently
      uncertain;


·
            adverse
      state or federal legislation or regulation that increases the costs of
      compliance, or adverse findings by a regulator with respect to existing
      operations;


·
            changes
      in U.S. GAAP or in the legal, regulatory and legislative environments in
      the markets in which we operate;


·
            inability
      to efficiently manage our
operations;


·
            inability
      to achieve future operating
results;


·
            the
      unavailability of funds for capital
  expenditures;


·
            our
      ability to recruit and hire key
employees;


·
            the
      inability of management to effectively implement our strategies and
      business plans; and


·
            the
      other risks and uncertainties detailed in this
  report.





28




For a
detailed description of these and other factors that could cause actual results
to differ materially from those expressed in any forward-looking statement,
please see “Risk Factors” in this document and in our Annual Report on Form 10-K
for the year ended December 31, 2008.





In this
form 10-Q references to “Can-Cal”, “the Company”, “we,” “us,” “our” and similar
terms refer to Can-Cal Resources Ltd.





ITEM
2. MANAGEMENT'S DISCUSSION AND ANALYSIS





OVERVIEW
AND OUTLOOK





Can-Cal
Resources Ltd. is a public company engaged in the exploration and potential
acquisition of precious metals.  As part of its growth strategy, the
Company will focus its future activities in the United States, with an emphasis
on the Pisgah Mountain, California property and the Wikieup, Arizona
property.





The
Company has discontinued all industrial sales for the volcanic materials located
on the Pisgah property in California, in accordance with certain terms within a
non-compete agreement with one of our customers that extends until
2018.





At March
31, 2010, we had approximately $18,500 cash available to sustain operations.
Accordingly, we are uncertain as to whether the Company may continue as a going
concern. While we intend to seek additional investment capital, or possible
funding or joint venture arrangements with other mining companies, we have no
assurance that that such investment capital or additional funding and joint
venture arrangements will be available to the Company.





Results
of Operations for the Three Months Ended March 31, 2010 and 2009:





Three
      Months Ended
              March
      31,2010
            
            
            2009
            
            
            Increase
      / (Decrease)Amount
            
            
            Amount
            
            
            $
            
            
            %Expenses:General
      & administrative
            
            $
            90,188
            
            
            $
            50,492
            
            
            $
            39,696
            
            
            
            79
            %Exploration
      costs
            
            
            7,997
            
            
            
            3,403
            
            
            
            4,594
            
            
            
            135
            %Depreciation
            
            
            2,495
            
            
            
            2,613
            
            
            
            (118
            )
            
            
            (5
            %)Officer
      compensation
            
            
            30,000
            
            
            
            30,000
            
            
            
            -
            
            
            
            -Total
      operating expenses
            
            
            130,680
            
            
            
            86,508
            
            
            
            44,172
            
            
            
            51
            %Net
      operating loss
            
            
            (130,680
            )
            
            
            (86,508
            )
            
            
            44,172
            
            
            
            51
            %Other
      income (expense):Interest
      income
            
            
            15
            
            
            
            8
            
            
            
            7
            
            
            
            88
            %Rental
      revenue
            
            
            6,875
            
            
            
            7,375
            
            
            
            (500
            )
            
            
            (7
            %)Interest
      expense
            
            
            (15,237
            )
            
            
            (21,932
            )
            
            
            (6,695
            )
            
            
            (31
            %)Total
      other income (expense)
            
            
            (8,347
            )
            
            
            (14,549
            )
            
            
            (6,202
            )
            
            
            (43
            %)Net
      loss
            
            $
            (139,027
            )
            
            $
            (101,057
            )
            
            $
            37,970
            
            
            
            38
            %





29




General
and administrative expenses





General
and administrative expenses for the three months ended March 31, 2010 increased
by $39,696 (or 79%) from $50,492 for the three months ended March 31, 2009 to
$90,188 for the three months ended March 31, 2010. The increase is principally
due to increased legal and professional fees associated with our SEC
filings.





Exploration
costs





Exploration
costs for the three months ended March 31, 2010 increased by $4,594 (or 135%)
from $3,403 for the three months ended March 31, 2009 to $7,997 for the three
months ended March 31, 2010. The increase is due to continuing and further
exploration costs at our Pisgah and Wikieup locations.





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





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





Depreciation





Depreciation
for the three months ended March 31, 2010 decreased by $118 (or 5%) from $2,613
for the three months ended March 31, 2009 to $2,495 for the three months ended
March 31, 2009. The decrease is principally due to certain assets reaching the
end of their depreciable life cycle. We anticipate the replacement of these
assets in the near future.





Officer
salary





Officer
salary for the three months ended March 31, 2010 and 2009 was $30,000 in
accordance with the annual compensation of $120,000. No bonuses or stock awards
were granted.





Total
operating expenses





Total
operating expenses for the three months ended March 31, 2010 increased by
$44,172 (or 51%) from $86,508 for the three months ended March 31, 2009 to
$130,680 for the three months ended March 31, 2010. The increase in total
operating expenses was mainly a result of increased legal and professional fees
related to our compliance efforts, and additional exploration costs
incurred.





Other
income (expense)





Interest
income for the three months ended March 31, 2010 increased by $7 (or 88%) from
$8 for the three months ended March 31, 2009 to $15 for the three months ended
March 31, 2010. Interest income relates to interest earned on cash received as a
result of financing activities, of which more was on hand during the three
months ended March 31, 2010 compared to the same period in 2009.




30





Rental
revenue for the three months ended March 31, 2010 decreased by $500 (or 7%) from
$7,375 for the three months ended March 31, 2009 to $6,875 for the three months
ended March 31, 2010. Rental revenue relates to income derived from the rental
of the Company’s land for the purposes of filming movies or photo shoots. These
activities were comparable during the three months ended March 31, 2010 compared
to the same period in 2009.





Interest
expense for the three months ended March 31, 2010 decreased by $6,695 (or 31%)
from $21,932 for the three months ended March 31, 2009 compared to $15,237 for
the three months ended March 31, 2010. The decrease in interest expense was a
result of debt conversions subsequent to March 31, 2009 that alleviated certain
interest accruals during the three months ended March 31, 2010.





Net
loss





Our net
loss was $139,027 for the three months ended March 31, 2010 compared to a net
loss of $101,057 for the three months ended March 31, 2009. We expect to improve
our results of operations through the attainment of sufficient working capital
and a focus on generating revenues from the subcontracting of mining activities,
and a reduction of general and administrative expenses.





LIQUIDITY
AND CAPITAL RESOURCES





The
following table summarizes total current assets, total current liabilities and
working capital at March 31, 2010 compared to December 31, 2009.




December
      31,
            
            
            
            Increase
      / (Decrease)March
      31, 2010
            
            
            2009
            
            
            
            $
            
            
            
            %Current
      Assets
            
            $
            19,596
            
            
            $
            18,807
            
            
            $
            789
            
            
            
            4
            %Current
      Liabilities
            
            $
            1,222,581
            
            
            $
            1,126,618
            
            
            $
            95,963
            
            
            
            9
            %Working
      Capital (deficit)
            
            $
            (1,202,985
            )
            
            $
            (1,107,811
            )
            
            $
            95,174
            
            
            
            9
            %





Internal
and External Sources of Liquidity





During
the three months ended March 31, 2010 and 2009, our operating and investing
activities used cash of $41,052 and $67,454, respectively, while our financing
activities provided cash of $42,125 and $25,000, respectively. The cash used in
operating activities was principally a result of the net loss we
incurred.




31





Cash Flow.Since inception,
we have primarily financed our cash flow requirements through the issuance of
common stock and the issuance of notes. With the growth of our current business
we may, during our normal course of business, experience net negative cash flows
from operations until some of our mining activities begin to produce revenues.
Further, we may be required to obtain financing to fund operations through
additional common stock offerings and bank or other debt borrowings, to the
extent available, or to obtain additional financing to the extent necessary to
augment our available working capital.





Satisfaction
of our cash obligations for the next twelve months.





As of
March 31, 2010, our cash balance was $18,580. Our plan for satisfying our cash
requirements for the next twelve months is through additional and/or debt or
credit financing.  We anticipate our current cash reserves will be
sufficient to support operations through June 30, 2010, but do not anticipate
generating sufficient amounts of positive cash flow to meet our working capital
requirements. Consequently, we intend to make appropriate plans in order to
obtain sources of additional capital in the future to fund growth and expansion
through additional equity or debt financing or credit facilities. We also are
considering possible funding through joint venture arrangements with other
mining companies. However, there can be no assurance that we will raise capital
through any of these means.




As we
expand operational activities, we may continue to experience net negative cash
flows from operations, pending receipt of sales and will be required to obtain
additional financing to fund operations through common stock offerings and debt
borrowings to the extent necessary to provide working capital.




We
anticipate incurring operating losses until we build our capital base. Our
recent operating history makes predictions of future operating results difficult
to ascertain and unreliable. In addition, since our cash position has fallen we
are finding it increasingly difficult to expand our operations.  Thus,
our prospects must be considered in light of the risks, expenses and
difficulties frequently encountered by companies in their early stages of
commercial viability. Such risks include, but are not limited to, an evolving
and unpredictable business model and the management of growth. To address these
risks we must, among other things, implement and successfully execute our
business and marketing strategy, continue to develop and upgrade technology and
products, respond to competitive developments, and continue to attract, retain
and motivate qualified personnel. There can be no assurance that we will be
successful in addressing such risks, and the failure to do so can have a
material adverse effect on our business prospects, financial condition and
results of operations.





Item
3.Quantitative
and Qualitative Disclosures about Market Risk.





Not
applicable.




Item
4T. Controls and Procedures.





The
Company maintains disclosure controls and procedures that are designed to ensure
that information required to be disclosed in the Company’s Exchange Act reports
is recorded, processed, summarized and reported within the time periods
specified in the SEC’s rules and forms, and that such information is accumulated
and communicated to the Company’s management, including its Chief Executive
Officer and Chief Financial Officer, as appropriate, to allow timely decisions
in accordance with the required "disclosure controls and procedures" as defined
in Rule 13a-15(e). The Company’s disclosure and control procedures are designed
to provide reasonable assurance of achieving their objectives, and the principal
executive officer and principal financial officer of the Company concluded that
the Company’s disclosure controls and procedures were effective at the
reasonable assurance level.




32





At the
end of the period covered by this Quarterly Report, the Company carried out an
evaluation, under the supervision and with the participation of the Company's
management, including the Company's principal executive officer and principal
financial officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures. Based on the foregoing, the
principal executive officer and principal financial officer of the Company
concluded that the Company’s disclosure controls and procedures were effective
to ensure that the information required to be disclosed in the Company’s
Exchange Act reports is recorded, processed, summarized and reported within the
time periods specified in the SEC’s rules and forms, and that such information
is accumulated and communicated to the Company’s management including the
Company’s principal executive officer and principal financial officer to allow
timely decisions regarding required disclosure.





Changes
in Internal Control over Financial Reporting




There
were no changes in our internal control over financial reporting, as defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently
completed fiscal quarter that have materially affected, or are reasonably likely
to materially affect, our internal control over financial
reporting.





PART
II--OTHER INFORMATION





Item
1.  Legal Proceedings.





The
Company is not currently a party to litigation. The British Columbia Securities
Commission previously required the Company to obtain a report by an independent
consultant qualified under the standards of the BCSC. Under British Columbia
securities laws, all disclosure of scientific or technical information,
including disclosure of a mineral resource or mineral reserve must be based on
information prepared by or under the supervision of an independent third party
who is “qualified” under the terms of that law. The Company is under order to
supply such verification by a “qualified” third party consultant, and its stock
may not trade in British Columbia until such verification is accepted by the
BCSC. The BCSC has also requested documentation regarding all subscribers to the
Company stock who are resident in British Columbia. The Company retained such a
“qualified” third party consultant who prepared and filed the necessary reports
with the BCSC.





On April
24, 2009, the BCSC notified the Company of its decision to partially revoke the
cease trade order (the “CTO”) that the BCSC issued on February 4, 2008, as to
all outstanding shares of the Company trading to, from or within British
Columbia.  The BCSC had previously determined that the Company engaged
in the sale on securities to various individuals and entities during the period
between October 2004 through December 2007, and that a portion of these sales
were sold without an exemption to the British Columbia, Canada, securities laws
that require the delivery of a prospectus in connection with the sale of
securities.




33





In
revoking the CTO, the BSCS required that Can-Cal rescind all sales to British
Columbia residents who purchased the securities of Can-Cal without the required
exemptions (“Non-accredited Purchasers”).  In meeting this condition,
Can-Cal will rescind the sale of an approximate total of 263,748 shares of
common stock of the Company and return a total of approximately $67,913 of
investment funds to the Non-accredited Purchasers.  Through the date
of this Quarterly Report, Can-Cal has rescinded of $55,789 if these
investments.  The Company continues to affect the rescission of the
remaining outstanding shares.




Item
1A. Risk Factors.





Our
significant business risks are described in Item 1A to Form 10-K for the
year ended December 31, 2009 to which reference is made
herein.





Item
2.  Unregistered Sales of Equity Securities and Use of
Proceeds.





On
February 19, 2010, pursuant to a private placement exemptions under Section 4(2)
and Regulation S of the Securities Act of 1933, completed the final tranche of
is US$350,000 non-brokered private placement, which was
oversubscribed.  The final tranche consisted of 1,144,000 units
("Units") at a price of US$0.125 per Unit for gross proceeds of US$143,000. Each
Unit consists of one common share and one warrant to purchase one share of
common stock of the Company ("Warrant"). Each Warrant is exercisable into one
Common Share at US$0.15 per share until March 31, 2011.  Including
this trance, the total gross proceeds that the Company received from the private
placement, which commenced in May 2009 and ended February 19, 2010, was $370,825
in exchange for which the Company issued of a total of 2,966,600 shares of
common stock and an equal number of Warrants.




The
Company used the proceeds of the sale (i) for exploration and development of
Can-Cal’s current properties, including ongoing laboratory processing and
metallurgy testing in relation to precious metal extraction from Can-Cal’s
Pisgah and Wikieup properties; (ii) to fund the rescission of certain prior
sales of shares as detailed in Item 1 of this Quarterly Report, and; (iii) for
general working capital requirements.




The
recipients of the shares were afforded an opportunity for effective access to
files and records of the Company that contained the relevant information needed
to make their investment decisions, including the Company’s financial statements
and 1934 Act reports. The Company reasonably concluded that the recipients,
immediately prior to issuing the shares, had such knowledge and experience in
our financial and business matters that they were capable of evaluating the
merits and risks of their respective investments.





Issuer
Purchases of Equity Securities





We did
not repurchase any of our equity securities during the quarter ended March 31,
2010.




34





Item
3. Defaults Upon Senior Securities.





See Note
3 to our condensed financial statements included herein.





Item
4. Submission of Matters to a Vote of Security Holders.





We did
not submit any matters to a vote of our security holders during the first
quarter of 2010.





Item
5. Other Information.





None.





Item
6.  Exhibits.





Incorporated
      by referenceExhibit
            
            Exhibit
      Description
            
            Filed
      herewith
            
            Form
            
            Period
      ending
            
            Exhibit
            
            Filing
      date31.1
            
            Certification
      of Michael Hogan pursuant to Section 302 of the Sarbanes-Oxley
      Act
            
            X31.2
            
            Certification
      of Michael Hogan pursuant to Section 302 of the Sarbanes-Oxley
      Act
            
            X32.1
            
            Certification
      of Michael Hogan pursuant to Section 906 of the Sarbanes-Oxley
      Act
            
            X99.7
            
            Press
      Release issued February 19, 2010 regarding Private
    Placement
            
            
            
            8-K
            
            
            
            99.7
            
            02/25/10




35




SIGNATURES





In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.





CAN-CAL
RESOURCES LTD.


(Registrant)








By:  /s/
Michael
Hogan





Michael
Hogan, President and Chief Executive Officer


(On
behalf of the Registrant and as Principal Financial


Officer)








Date: May
17, 2010




36