UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


WASHINGTON,
      D.C. 20549





FORM
      10-Q





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




For
      the
      fiscal quarter ended September 30, 2008





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




For
      the
      transition period from _____ to _____.





Commission
      File No. 0-26669





Can-Cal
      Resources Ltd.


(Name
      of
      Small Business Issuer in its charter)


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





2500
      Vista Mar Drive, Las Vegas, NV 89128


(Address
      of principal executive offices)





(702)
      243-1849


(Issuer's
      telephone number)





N/A


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





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days. Yes xNo
o





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


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





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








CAN
      CAL
      RESOURCES, LTD.


SEPTEMBER
      30, 2008 QUARTERLY REPORT ON FORM 10-Q


TABLE
      OF
      CONTENTS





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








FORWARD
      LOOKING STATEMENTS





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





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








**PART
      I.**   **FINANCIAL
      INFORMATION**


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


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




5




**Can-Cal
      Resources Ltd.**


**(An
      Exploration Stage Company)**


**Condensed
      Statement of Stockholders' Equity (Deficit)**


**(Unaudited)**




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




See
      Accompanying Notes to Financial Statements




6





**Can-Cal
      Resources Ltd.**


**(An
      Exploration Stage Company)**


**Condensed
      Statements of Cash Flows**


**(Unaudited)**


For
                    the Nine Months
                  EndedSeptember
                    30,
              
              March
                    22, 1995(Inception)
                  to September 30,2008
              
              2007
              
              2008Cash
                  flows from operating activities:Net
                  loss
              
              $
              (424,460
              )
              $
              (436,333
              )
              $
              (8,494,973
              )Adjustments
                  to reconcile net loss to netcash
                  used by operating activities:Depreciation
                  and amortization
              
              
              8,993
              
              
              7,297
              
              
              246,318Bad
                  debts
              
              
              —
              
              
              —
              
              
              207,100(Gain)
                  loss on sale of fixed assets
              
              
              —
              
              
              (3,701
              )
              
              (6,501
              )Stock
                  based compensation
              
              
              —
              
              
              24,000
              
              
              532,814Stock
                  issued for financing and interest
              
              
              —
              
              
              —
              
              
              523,200Beneficial
                  conversion feature on convertible debts
              
              
              —
              
              
              —
              
              
              25,200Loss
                  on disposal of investment property
              
              
              —
              
              
              —
              
              
              938,600Undistributed
                  earnings of affiliate
              
              
              —
              
              
              —
              
              
              (174,300
              )Gain
                  on discontinued operations
              
              
              —
              
              
              —
              
              
              (116,400
              )Loss
                  on foreign currency translation
              
              
              —
              
              
              —
              
              
              8,500Decrease
                  (increase) in assets:Accounts
                  receivable
              
              
              —
              
              
              3,600
              
              
              —Other
                  current assets
              
              
              (12,095
              )
              
              —
              
              
              (102,795
              )Other
                  assets
              
              
              —
              
              
              (10,000
              )
              
              (1,895
              )Increase
                  (decrease) in liabilities:Accounts
                  payable
              
              
              3,218
              
              
              (11,973
              )
              
              31,617Accrued
                  interest
              
              
              45,923
              
              
              35,310
              
              
              357,243Accrued
                  officer salary
              
              
              71,037
              
              
              (68,331
              )
              
              181,689Accrued
                  payroll taxes
              
              
              (20,573
              )
              
              —
              
              
              1,280Unearned
                  revenues
              
              
              6,667
              
              
              5,600
              
              
              16,042Net
                  cash used by operating activities
              
              
              (321,290
              )
              
              (454,531
              )
              
              (5,827,261
              )Cash
                  flows from investing activities:Purchase
                  of investment property
              
              
              —
              
              
              —
              
              
              (1,083,600
              )Proceeds
                  from sale of investment property
              
              
              —
              
              
              —
              
              
              319,300Purchase
                  of property, equipment and mineral interests
              
              
              —
              
              
              (46,842
              )
              
              (768,644
              )Proceeds
                  from sale of property, equipment and mineral interests
              
              
              —
              
              
              7,000
              
              
              26,100Net
                  cash used in investing activities
              
              
              —
              
              
              (39,842
              )
              
              (1,506,844
              )Cash
                  flows from financing activities:Proceeds
                  from notes payable
              
              
              258,500
              
              
              —
              
              
              948,400Principal
                  payments on notes payable
              
              
              —
              
              
              —
              
              
              (689,900
              )Proceeds
                  from notes payable, related parties
              
              
              40,000
              
              
              —
              
              
              727,800Principal
                  payments on notes payable, related parties
              
              
              (40,000
              )
              
              (20,750
              )
              
              (367,250
              )Proceeds
                  from issuance of common stock
              
              
              8,125
              
              
              326,355
              
              
              6,766,377Net
                  cash provided by financing activities
              
              
              266,625
              
              
              305,605
              
              
              7,385,427Net
                  increase (decrease) in cash
              
              
              (54,665
              )
              
              (188,768
              )
              
              51,322Cash,
                  beginning of period
              
              
              105,987
              
              
              419,700
              
              
              —Cash,
                  end of period
              
              $
              51,322
              
              $
              230,932
              
              $
              51,322Supplemental
                  disclosure of cash flow information:Cash
                  paid for income taxes
              
              $
              —
              
              $
              —
              
              $
              —Cash
                  paid for interest
              
              $
              —
              
              $
              —
              
              $
              —
  See
        Accompanying Notes to Financial Statements




7




CAN-CAL
          RESOURCES LTD.
 (An
          Exploration Stage Company)
 NOTES
          TO
          CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)
  1.
              BASIS
                  OF PRESENTATION
 
 The
        accompanying unaudited condensed financial statements have been prepared
        in
        accordance with Securities and Exchange Commission requirements for interim
        financial statements. Therefore, they do not include all of the information
        and
        footnotes required by accounting principles generally accepted in the United
        States for complete financial statements. The financial statements should
        be
        read in conjunction with the Form 10-KSB/A for the year ended December 31,
        2007
        of Can-Cal Resources Ltd (“the Company”).
 
 The
        interim condensed financial statements present the balance sheets, statements
        of
        operations, and cash flows of Can-Cal Resources Ltd. The financial statements
        have been prepared in accordance with accounting principles generally accepted
        in the United States.
 
 The
        interim financial information is unaudited. In the opinion of management,
        all
        adjustments (which include normal recurring adjustments) necessary to present
        fairly the financial position as of September 30, 2008 and the results of
        operations and cash flows presented herein have been included in the financial
        statements. Interim results are not necessarily indicative of results of
        operations for the full year.
 
 The
        preparation of financial statements in conformity with accounting principles
        generally accepted in the United States requires management to make estimates
        and assumptions that affect the reported amounts of assets and liabilities
        and
        disclosure of contingent assets and liabilities at the date of the financial
        statements and the reported amounts of revenues and expenses during the
        reporting period. Actual results could differ from those estimates.
 
 Certain
        amounts in the prior periods presented have been reclassified to conform
        to the
        current period financial statement presentation.
 
 **Exploration
        Stage Company**
  The
        Company is currently an exploration stage company. As an exploration stage
        enterprise, the Company discloses the deficit accumulated during the exploration
        stage and the cumulative statements of operations and cash flows from inception
        to the current balance sheet date. The Company has incurred net losses of
        $8,494,973 and used net cash in operations of $5,827,261 for the period from
        inception (March 22, 1995) through September 30, 2008. An entity remains
        in the
        exploration stage until such time as proven or probable reserves have been
        established for its deposits. Upon the location of commercially mineable
        reserves, the Company plans to prepare for mineral extraction and enter the
        development stage. To date, the exploration stage of the Company’s operations
        consists of contracting with geologists who sample and assess the mining
        viability of the Company’s claims.
  2.
              GOING
                  CONCERN
 
 The
        Company incurred a net loss of $424,460 for the nine months ending September
        30,
        2008. Also, the Company’s current liabilities exceed its current assets by
        $1,143,504 as of September 30, 2008. These factors create substantial doubt
        about the Company’s ability to continue as a going concern. The Company’s
        management plans to continue to fund its operations in the short term with
        a
        combination of debt and equity financing and with revenue from operations
        in the
        long term.
  8
  CAN-CAL
          RESOURCES LTD.
 (An
          Exploration Stage Company)
 NOTES
          TO
          CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)
  The
        ability of the Company to continue as a going concern is dependent on securing
        additional sources of capital and the success of the Company’s plan. The
        financial statements do not include any adjustments that might be necessary
        if
        the Company is unable to continue as a going concern.
  3.
              NOTES
                  PAYABLE, RELATED PARTIES
 
 Notes
        payable, related parties consisted of the following as of September 30,
        2008:
  Note
                    payable to a stockholder, secured by real property, bearing interest
                    at
                    16.0% per annum, semi-annual interest only payments,matured
                    November 2005 (currently in default)
                
                $
                300,000Note
                    payable to a stockholder, secured by real property, bearing interest
                    at
                    8.0% per annum, matured February 2008 (currently in
                    default)
                
                
                25,114Note
                    payable to a stockholder, secured by real property, bearing interest
                    at
                    8.0% per annum, matured January 2008 (currently in
                    default)
                
                
                35,436Current
                    portion (amounts due within one year)
                
                $
                360,550
  The
        Company is in default of its semi-annual interest payments in the total amount
        of $328,000 from 2002 through the present on a note payable of $300,000.
        The
        Company is currently negotiating forbearance on collection of the principle
        and
        interest. Interest expense was $47,601 and $43,057 for the nine months ending
        September 30, 2008 and 2007, respectively.
  4.
              NOTES
                  PAYABLE
 
 Notes
        payable consisted of the following as of September 30, 2008:
  Unsecured
                    promissory note payable, bearing interest at 8.0% per annum,
                    and a default
                    interest rate of 12.0% per annum, maturing June 25, 2009
                
                $
                50,000Unsecured
                    promissory note payable, bearing interest at 8.0% per annum,
                    and a default
                    interest rate of 12.0% per annum, maturing June 26, 2009
                
                
                75,000Unsecured
                    promissory note payable, bearing interest at 8.0% per annum,
                    and a default
                    interest rate of 12.0% per annum, maturing July 8, 2009
                
                
                50,000Unsecured
                    promissory note payable, bearing interest at 8.0% per annum,
                    and a default
                    interest rate of 12.0% per annum, maturing March 10, 2009
                
                
                22,000Unsecured
                    promissory note payable, bearing interest at 8.0% per annum,
                    and a default
                    interest rate of 12.0% per annum, maturing April 7, 2009
                
                
                7,500Unsecured
                    promissory note payable, bearing interest at 8.0% per annum,
                    and a default
                    interest rate of 12.0% per annum, maturing March 10, 2009
                
                
                12,000Unsecured
                    promissory note payable, bearing interest at 8.0% per annum,
                    and a default
                    interest rate of 12.0% per annum, maturing June 2, 2009
                
                
                12,000Unsecured
                    promissory note payable, bearing interest at 8.0% per annum,
                    and a default
                    interest rate of 12.0% per annum, maturing June 6, 2009
                
                
                30,000Current
                    portion (amounts due within one year)
                
                $
                258,500
  9
  CAN-CAL
            RESOURCES LTD.
 (An
            Exploration Stage Company)
 NOTES
            TO
            CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)
  5.
              ACCOUNTING
                  PRONOUCEMENTS
 
 In
        December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in
        Consolidated Financial Statements, an amendment of ARB No. 51” which applies to
        all entities that prepare consolidated financial statements, except
        not-for-profit organizations, but will affect only those entities that have
        an
        outstanding non-controlling interest in one or more subsidiaries or that
        deconsolidate a subsidiary. The statement is effective for annual periods
        beginning after December 15, 2008. The adoption of this statement is not
        expected to have a material effect on the Company’s financial statements.
 
 In
        March
        2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
        Instruments and Hedging Activities - an amendment of FASB Statement No. 133,”
(SFAS “161”) as amended and interpreted, which requires enhanced disclosures
        about an entity’s derivative and hedging activities and thereby improves the
        transparency of financial reporting. Disclosing the fair values of derivative
        instruments and their gains and losses in a tabular format provides a more
        complete picture of the location in an entity’s financial statements of both the
        derivative positions existing at period end and the effect of using derivatives
        during the reporting period. Entities are required to provide enhanced
        disclosures about (a) how and why an entity uses derivative instruments,
        (b) how
        derivative instruments and related hedged items are accounted for under
        Statement 133 and its related interpretations, and (c) how derivative
        instruments and related hedged items affect an entity’s financial position,
        financial performance, and cash flows. SFAS No. 161 is effective for financial
        statements issued for fiscal years and interim periods beginning after November
        15, 2008. Early adoption is permitted, but not expected.
 
 In
        May
        2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 163,
“Accounting for Financial Guarantee Insurance Contracts - An interpretation
        of
        FASB Statement No. 60”. SFAS 163 requires that an insurance enterprise recognize
        a claim liability prior to an event of default when there is evidence that
        credit deterioration has occurred in an insured financial obligation. It
        also
        clarifies how Statement 60 applies to financial guarantee insurance contracts,
        including the recognition and measurement to be used to account for premium
        revenue and claim liabilities, and requires expanded disclosures about financial
        guarantee insurance contracts. It is effective for financial statements issued
        for fiscal years beginning after December 15, 2008, except for some disclosures
        about the insurance enterprise’s risk-management activities. SFAS 163 requires
        that disclosures about the risk-management activities of the insurance
        enterprise be effective for the first period beginning after issuance. Except
        for those disclosures, earlier application is not permitted. The adoption
        of
        this statement is not expected to have a material effect on the Company’s
        financial statements.
  10
  CAN-CAL
            RESOURCES LTD.
 (An
            Exploration Stage Company)
 NOTES
            TO
            CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)
  6.
              CHANGES
                  IN SECURITIES
 
 1996
 
 During
        1996 the Company issued 3,441,217 shares of Can-Cal common stock to various
        investors resulting in cash proceeds of $628,400.
 
 1997
 
 On
        January 15, 1997 the Company issued 500,000 shares of Can-Cal common stock
        along
        with a cash payment of $100,000 in exchange for a 50% interest in S&S Joint
        Venture. Additionally, the Company agreed to loan the joint venture up to
        $48,000.
 
 On
        February 13, 1997 the Board approved the acquisition of Scotmar Industries,
        Inc.
        200,000 shares of Can-Cal common stock were issued in return for all of the
        issued and outstanding stock of the acquired company.
 
 On
        October 27, 1997 the Board approved the issuance of 2,181,752 restricted
        common
        shares to ARUM, LLC to repay an existing debt of approximately $315,046 and
        to
        purchase a property located in San Bernadino County, California, known as
        the
        Pisgah property.
 
 During
        November, 1997 the Board approved the sale of 124,683 restricted common shares
        to various investors.
 
 During
        December, 1997 the Board approved the issuance of 42,000 restricted common
        shares in return for services rendered.
 
 1998
 
 In
        July,
        1998 the Board approved the issuance 122,000 restricted common shares to
        various
        investors.
 
 In
        October, 1998 the Board approved the sale of 172,450 restricted common shares
        to
        various investors.
  11
  CAN-CAL
            RESOURCES LTD.
 (An
            Exploration Stage Company)
 NOTES
            TO
            CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)
  During
        December, 1998 the Board approved the sale of 263,059 restricted common shares
        to various investors.
 
 1999
 
 On
        February 1, 1999, the Board of Directors approved the Sale of 62,500 shares
        of
        Can-Cal common stock to a Board member.
 
 On
        February 8, 1999 the Board approved the sale of 70,000 shares of Can-Cal
        common
        stock to a Board member.
 
 On
        March
        1, 1999 the Board approved the issuance of 32,121 shares of Can-Cal common
        stock
        in return for services rendered.
 
 On
        March
        15, 1999 the Board approved the sale of 86,000 shares of Can-Cal common stock
        to
        various investors.
 
 On
        March
        17, 1999 the Board approved the issuance of 40,000 shares of Can-Cal common
        stock in return for equipment.
 
 On
        March
        10, 1999 the Board approved the sale of 295,500 shares of Can-Cal common
        stock
        to various investors.
 
 On
        April
        1, 1999 the Board approved the sale of 1,000 restricted common stock in return
        for equipment.
 
 On
        July
        21, 1999 the Board approved the sale of 357,500 shares of common stock to
        various investors.
 
 On
        August
        24, 1999 the Board approved the sale of 274,000 shares of common stock to
        various investors.
 
 On
        September 7, 1999 the Board approved the sale of 20,000 shares of common
        stock
        to an investor.
 
 On
        November 9, 1999 the board approved the issuance of 10,000 shares of common
        stock to an investor.
 
 2000
 
 On
        February 27, 2000, the Board of Directors approved the sale of 500,000 shares
        of
        common stock to three of its directors (all of whom reside in Canada), an
        offshore trust and another person affiliated with the Company.
 
 On
        July
        3, 2000, the Board of Directors exercised the option to acquire technology
        related to the extraction and processing of ore and, in accordance with the
        agreement with the two owners of that technology, issued 200,000 shares of
        Can-Cal's common stock to them.
  12
  CAN-CAL
            RESOURCES LTD.
 (An
            Exploration Stage Company)
 NOTES
            TO
            CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)
  On
        November 24, 2000, the Company borrowed $300,000 from a lender. As part of
        the
        transaction, the Company issued 45,000 shares of its common stock as a loan
        placement fee and granted the lender an option to purchase up to 300,000
        shares
        of its common stock. On November 24, 2000, the lender exercised its option
        in
        full and purchased 300,000 shares of Can-Cal's common stock.
 
 In
        July
        2000 the Board of Directors authorized the sale of 74,009 shares of its common
        stock to eight persons, all of whom reside outside the United States. During
        the
        third quarter 46,670 shares were sold and the remaining 27,339 shares were
        sold
        during the fourth quarter. All of those shares were issued on December 15,
        2000.
 
 2001
 
 In
        September, 2001, the Board of Directors authorized the sale of 20,000 shares
        of
        its common stock to an individual.
 
 During
        October, 2001 the company signed an Investment Agreement with two funds
        (Dutchess Private Equities Fund LP and DRH Investment Company LLC) to sell
        to
        those funds up to $8,000,000 in common stock of the company, for a period
        of
        three years. In connection with the Investment Agreement, the company issued
        606,059 shares of restricted common stock to Dutchess Fund and its advisor,
        and
        to a broker-dealer firm, for services valued at $400,000, to induce those
        entities to enter into the Investment Agreement and perform services
        contemplated under such agreement. The company also issued 37,000 shares
        of
        restricted common stock to the attorney for Dutchess Fund.
 
 On
        November 2, 2001 the Board of Directors approved the sale of 82,888 shares
        of
        restricted common stock.
 
 On
        December 12, 2001 the Board of Directors approved the sale of 40,000 shares
        of
        restricted common stock.
 
 2002
 
 On
        January 8, 2002, we sold 36,000 restricted common shares to three investors
        (one
        Canadian resident, and two private companies controlled and owned by Canadian
        residents) for $12,600 cash ($0.35 per share, representing a discount of
        approximately 50% from market price). These investors also were issued warrants
        to purchase 36,000 additional restricted shares, at a price of $0.35 per
        share;
        the warrants will expire January 8, 2004.
 
 On
        February 11, 2002, 10,000 restricted common shares were sold to one investor
        (a
        Canadian resident) for $3,500 cash ($0.35 per share, representing a discount
        of
        approximately 50% from market price). This investor also was issued warrants
        to
        purchase 10,000 additional restricted shares, at a price of $0.35 per share;
        the
        warrants will expire February 11, 2004. Complete information about the company
        was provided to these investors. These shares and warrants were sold pursuant
        to
        the exemption provided by Regulation S of the 1933 Act. No commissions were
        paid.
  13
 CAN-CAL
            RESOURCES LTD.
 (An
            Exploration Stage Company)
 NOTES
            TO
            CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)
  On
        January 31, 2002, we issued 309,677 restricted common shares to a lender
        (First
        Colony Merchant) for payment of past due and current interest on debt, $119,800.
        No commissions were paid.
 
 From
        March 1, 2002 through June 3, 2002, 369,600 restricted common shares were
        issued
        to 48 investors (all Canadian residents or companies controlled and owned
        by
        Canadian residents) for $92,400 cash ($0.25 per share, representing discounts
        ranging from 0% to approximately 50% from market prices at the time of
        issuance). These investors also were issued warrants to purchase 369,600
        additional restricted shares, at a price of $0.25 per share; the warrants
        will
        expire two years from the date of issuance. No commissions were
        paid.
 
 On
        June
        21, 2002, 40,000 restricted common shares were issued to Financial
        Communications Corp. for public relations services, valued at approximately
        $14,000.
 
 From
        July
        1, 2002 through December 24, 2002, 609,720 restricted common shares were
        issued
        to 20 investors (19 whom are Canadian residents or companies controlled and
        owned by Canadian residents, and one who is a resident of Great Britain)
        for
        $152,400 cash ($0.25 per share, representing prices that ranged from 22%
        over
        market to approximately 40% below market prices at the time of issuance).
        The
        investors also were issued warrants to purchase a total of 609,720 additional
        restricted shares, at a price of $0.25 per share; the warrants will expire
        two
        years from the date of issuance. No commissions were paid.
 
 During
        September 2002, the Company issued 32,281 shares of the Company's common
        stock
        for $5,500 in cash related to the Dutchess Private Equities Fund, net of
        offering costs of $200, and issued 30,000 shares to Joseph B. LaRocco, attorney
        for Dutchess Fund and DRH Investment Company, LLC for legal services to such
        entities.
 
 During
        October 2002, the Company issued 35,679 shares of the Company's common stock
        for
        $4,600 in cash related to the Dutchess Private Equities Fund, net of offering
        costs of $700.
 
 In
        November 2002, the Company issued 52,292 restricted common shares to four
        individuals in exchange for various services, valued at approximately
        $9,900.
 
 2003
 
 During
        2003, 673,410 restricted common shares were issued to 19 Canadian residents
        or
        companies controlled and owned by Canadian resident investors for $134,682
        and
        150,000 restricted common shares were issued to 12 U.S. resident investors
        for
        $30,000 (all shares were priced at $0.20 per share, representing premiums
        of up
        to 25% and discounts ranging from 0% to approximately 25% from market prices
        at
        the time of issuance). With respect to 237,410 restricted common shares,
        the
        investors were also issued warrants to purchase 474,820 additional restricted
        common shares and with respect to 473,500 restricted common shares, the
        investors were also issued warrants to purchase 473,500 additional restricted
        common shares; all warrants were priced at $0.20 per share and will expire
        two
        years from the date of issuance. With respect to 112,500 restricted common
        shares, the investors were also issued 112,500 warrants to purchase additional
        restricted common shares, at a price of $0.25 per share for a period of two
        years from the date of issuance. The shares and warrants were sold to Canadian
        investors pursuant to the exemption provided by Regulation S of the 1933
        Act,
        and the shares and warrants sold to U.S. investors were sold pursuant to
        the
        exemption provided by section 4(2) of the 1933 Act.
  14
 CAN-CAL
            RESOURCES LTD.
 (An
            Exploration Stage Company)
 NOTES
            TO
            CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)
 During
        2003, 364,305 restricted common shares were issued in conversion of $35,000
        principal and interest on a debenture held by Dutchess Fund. The conversion
        prices were $0.099 for 50,710 shares ($5,000 of the debenture); $0.112 for
        44,643 shares ($5,000 of the debenture); $0.061 for 81,433 shares ($5,000
        of the
        debenture); $0.067 for 75,075 shares ($5,000 of the debenture); and $0.1334
        for
        112,444 shares ($15,000 of the debenture). All of the prices were determined
        by
        the conversion formula in the debenture (80% of the average bid prices for
        the
        three lowest (out of 15) trading days before conversion. These shares were
        sold
        pursuant to the exemption provided by section 4(2) of the 1933 Act.
 
 During
        2003, 205,166 restricted common shares in payment of $31,500 of services
        by Luis
        Vega, consulting geologist. The per share price was determined by dividing
        the
        amount owed by the average closing price of the company's stock for each
        day's
        service. These shares were sold pursuant to the exemption provided by section
        4(2) of the 1933 Act.
 
 On
        March
        14, 2003, 24,960 restricted common shares were issued to Catherine Nichols,
        a
        Canadian resident, for marketing services amounting to $5,000. The price
        per
        share was based on the average closing share price for the period during
        which
        the services were rendered. These shares were sold pursuant to the exemption
        provided by Regulation S of the 1933 Act.
 
 During
        the period from July 15 to December 31, 2003, 112,326 restricted common shares
        in payment of $22,250 of investor relations services by Jeffrey Whitford,
        a
        Canadian resident who is a consultant to the company. The price per share
        was
        based on the average monthly closing share prices for the period. These shares
        were sold pursuant to the exemption provided by Regulation S of the 1933
        Act.
 
 During
        the period from July 5 to December 31, 2003, 33,600 restricted common shares
        were issued to pay $4,200 of legal services provided by Stephen E. Rounds,
        outside company counsel. The price per share was based on the average closing
        share price for the period during which the services were rendered. These
        shares
        were sold pursuant to the exemption provided by section 4(2) of the 1933
        Act.
 
 On
        December 30, 2003, 5,208 restricted common shares were issued to Terry Brown,
        a
        Mexican resident, for technical consulting services amounting to $1,250.
        The
        price per share was based on the average closing share price for the period
        during which the services were rendered. These shares were sold pursuant
        to the
        exemption provided by Regulation S of the 1933 Act.
  15
 CAN-CAL
            RESOURCES LTD.
 (An
            Exploration Stage Company)
 NOTES
            TO
            CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 2004
 
 During
        2004, 2,255,586 restricted common shares were issued to 107 Canadian residents
        or companies controlled and owned by Canadian resident investors for $431,425
        and 10,000 restricted common shares were issued to one U.S. resident investor
        for $2,000 (245,000 shares were priced at $0.18 per share, 1,620,131 shares
        were
        priced at $0.20 per share, 261,200 shares were priced at $0.25 per share,
        and
        139,255 shares were issued as a 25% premium on the conversion of warrants,
        representing premiums of up to 25% and discounts ranging from 0% to
        approximately 25% from market prices at the time of issuance). With respect
        to
        1,319,308 of these restricted common shares, the investors were also issued
        warrants to purchase 1,259,308 additional restricted common shares at $0.25
        per
        share and 60,000 additional restricted common shares at $0.20 per share.
        With
        respect to 245,000 restricted common shares, the investors were also issued
        warrants to purchase 245,000 additional restricted common shares at $0.25,
        and
        with respect to another 245,000 restricted common shares, the investors were
        also issued warrants to purchase 245,000 additional restricted common shares
        at
        $0.50 per share. Of these, we also sold 5,000 shares to a director of the
        Company for proceeds of $1,000 and issued warrants to purchase 5,000 restricted
        common shares, exercisable at $0.25 per share for a two year period. All
        warrants will expire two years from the date of issuance. The shares and
        warrants were sold to Canadian investors pursuant to the exemption provided
        by
        Regulation S of the 1933 Act, and the shares and warrants sold to U.S. investors
        were sold pursuant to the exemption provided by section 4(2) of the 1933
        Act.
 
 During
        2004, 702,760 restricted common shares were issued in conversion of $99,657
        principal and interest on a debenture held by Dutchess Fund. The conversion
        prices were $0.216 for 92,593 shares ($20,000 of the debenture); $0.160 for
        31,250 shares ($5,000 of the debenture); $0.144 for 34,722 shares ($5,000
        of the
        debenture); $0.128 for 544,195 shares ($69,657 of the debenture). All of
        the
        prices were determined by the conversion formula in the debenture (80% of
        the
        average bid prices for the three lowest (out of 15) trading days before
        conversion). These shares were sold pursuant to the exemption provided by
        section 4(2) of the 1933 Act.
 
 During
        2004, 215,336 restricted common shares were issued in payment of $40,932
        of
        services by Luis Vega, consulting geologist. The price per share was determined
        by dividing the amount owed by the average closing price of the company's
        stock
        for each day's service. These shares were sold pursuant to the exemption
        provided by section 4(2) of the 1933 Act.
 
 On
        February 4, 2004, 10,000 restricted common shares were issued to Yvonne St.
        Pierre, a Canadian resident, for computer-related services, in the amount
        of
        $2,500. These shares were issued pursuant to the exemption provided by
        Regulation S of the 1933 Act.
 
 Between
        February 10 and March 31, 2004, 75,000 restricted common shares were issued
        to
        Jeff Whitford, a Canadian resident, for investor relation services, in the
        amount of $15,000. In addition, Mr. Whitford received 50,000 warrants at
        an
        exercise price of $0.20 per share; the warrants will expire between February
        2006 and March 2006. The warrants were valued at $12,200 utilizing the Black
        Scholes model. These shares were issued pursuant to the exemption provided
        by
        Regulation S of the 1933 Act.
 
 On
        December 22, 2004, 2,500 restricted common shares were issued to Karen Barra,
        a
        U.S. resident, for services amounting to $500. The price per share was $0.20
        based on private placement offering for the period during which the services
        were rendered. These shares were sold pursuant to the exemption provided
        by
        Regulation S of the 1933 Act.
  16
  CAN-CAL
            RESOURCES LTD.
 (An
            Exploration Stage Company)
 NOTES
            TO
            CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)
  During
        2004, 15,367 restricted common shares were issued in payment of accounts
        payable
        amounting to $3,842. The price per share was based on the average closing
        share
        price for the period during which the services were rendered. These shares
        were
        sold pursuant to the exemption provided by Regulation S of the 1933
        Act.
 
 During
        2004, 87,388 restricted common shares were issued to Terry Brown, a Mexican
        resident, for technical consulting services amounting to $15,247. The price
        per
        share was based on the average closing share price for the period during
        which
        the services were rendered. These shares were sold pursuant to the exemption
        provided by Regulation S of the 1933 Act.
 
 On
        March
        1, 2004, in connection with the conversion of $82,687 in notes payable and
        $225,595 in accrued officers' salary payable, we issued 1,233,127 restricted
        common shares at $0.25 per share and 1,233,127 warrants, with an exercise
        price
        of $0.30 and expiring on March 1, 2006, to two officers, two directors, and
        a
        former director and his insurance agency. These persons and the insurance
        agency
        are accredited investors.
 
 2005
 
 During
        the twelve months ended December 31, 2005, we sold 712,500 restricted common
        shares to 21 Canadian residents for a total of $142,500, and issued warrants
        to
        purchase 712,500 restricted common shares, exercisable at $0.25 per share.
        These
        securities were issued in private transactions in reliance on the exemption
        from
        registration with the SEC provided by Regulation S.
 
 A
        prior
        U.S. shareholder exercised other warrants, at exercise prices ranging from
        $0.22, for proceeds of $11,000, which resulted in the issuance of 50,000
        restricted common shares. These securities were issued in private transactions
        in reliance on the exemption available under Section 4(2) of the 1933
        Act.
 
 We
        also
        issued, for services, 349,545 restricted common shares for a total value
        of
        $69,800 valued at fair market value at date of issuance and granted 13,575
        warrants (exercisable for two years at $0.25 per share) valued at fair market
        value at date of issuance. These securities were issued to two Canadian
        residents, and one Mexican Corporation in reliance on the exemption from
        registration available under Regulation S, and one U.S. resident, in reliance
        on
        the exemption provided by Section 4(2) of the 1933 Act.
 
 2006
 
 During
        the twelve months ended December 31, 2006, we sold 2,622,213 restricted common
        shares to 76 Canadian residents, 8 US residents, 5 Israeli Nationals and
        1 Swiss
        National for a total of $688,000, and issued warrants to purchase 2,348,213
        restricted common shares, exercisable between $0.25 to $.45 per share. These
        securities were issued in private transactions, with respect to the Canadian
        residents, in reliance on the exemption from registration with the SEC provided
        by Regulation S, and with respect to the U.S. citizen, in reliance on the
        exemption available under Section 4(2) of the 1933 Act.
 
 We
        also
        issued, for services, 8,500 restricted common shares for a total value of
        $2,325
        and these securities were issued to one U.S. resident in reliance on the
        exemption provided by Section 4(2) of the 1933 Act.
  17
 CAN-CAL
            RESOURCES LTD.
 (An
            Exploration Stage Company)
 NOTES
            TO
            CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)
  On
        July
        3, 2006, the Company issued 2,200 shares of its par value common stock for
        services received by an individual. As of September 30, 2006, the Company
        recorded consulting expense in the amount of $462, the fair value of the
        shares
        issued on the date of grant. Additionally, the Company granted a warrant
        to
        purchase 2,200 shares of the Company's common stock at an exercise price
        of
        $0.25 for a period of 2 years. The Company recorded an expense in the amount
        of
        $373, the fair value of the warrant on the date of grant. Fair value was
        determined using the Black Scholes option pricing model based on the following
        assumptions: expected dividends: $-0-; volatility: 187%; risk free interest
        rate: 5.12%.
 
 On
        July
        3, 2006, the Company issued 8,800 shares of its par value common stock for
        services received from an individual. As of September 30, 2006, the Company
        recorded consulting expense in the amount of $2,200, the fair value of the
        shares issued on the date of grant. Additionally, the Company granted a warrant
        to purchase up to 8,800 shares of the Company's common stock at an exercise
        price of $0.25 for a period of 2 years. The Company recorded an expense in
        the
        amount of $1,812, the fair value of the warrant on the date of grant. Fair
        value
        was determined using the Black Scholes option pricing model based on the
        following assumptions: expected dividends: $-0-; volatility: 187%; risk free
        interest rate: 5.12%.
 
 On
        July
        3, 2006, an officer of the Company elected to convert half of his accrued
        salary
        in exchange for 385,714 shares of common stock valued at $81,000, the fair
        value
        of the shares issued on the date of grant. Additionally, the Company granted a
        warrant to purchase up to 385,714 shares of the Company's common stock at
        an
        exercise price of $0.25 for a period of two years. The Company recorded an
        expense in the amount of $65,418, the fair value of the warrant on the date
        of
        grant. Fair value was determined using the Black Scholes option pricing model
        based on the following assumptions: expected dividends: $-0-; volatility:
        187%;
        risk free interest rate: 5.12%.
 
 On
        July
        3, 2006, the Company issued 56,821 shares of its common stock for conversion
        of
        a note in the amount of $11,932 from a shareholder of the Company. Additionally,
        the Company granted a warrant to purchase up to 56,821 shares of the Company's
        common stock at an exercise price of $0.25 for a period of two years. The
        Company recorded an expense in the amount of $9,637, the fair value of the
        warrant on the date of grant. Fair value was determined using the Black Scholes
        option pricing model based on the following assumptions: expected dividends:
        $-0-; volatility: 187%; risk free interest rate: 5.12%.
 
 On
        July
        11, 2006, the Company issued 206,767 shares of its par value common stock
        pursuant to the convertible debenture agreement entered into on January 24,
        2006
        whereby the Company received a $40,000 convertible at a rate of $0.20 per
        share
        bearing interest of 10% per annum. The note holder elected to convert all
        accrued interest totaling $1,895 into 6,767 shares of the Company's par value
        common stock.
 
 On
        August
        22, 2006, the Company entered into an agreement to purchase mining claims
        located in Mohave County, Arizona in exchange for 1,000,000 shares of the
        Company's par value common stock. The Company recorded an asset totaling
        $18,500, the actual cost to maintain the claims per year.
  18
 CAN-CAL
            RESOURCES LTD.
 (An
            Exploration Stage Company)
 NOTES
            TO
            CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)
  2007
 
 During
        the twelve months ended December 31, 2007, we sold 1,238,167 restricted common
        shares to 72 Canadian residents and 4 US residents for a total of $375,534
        and
        issued warrants to purchase 492,795 restricted common shares, exercisable
        between $0.35 to $.65 per share. These securities were issued in private
        transactions, with respect to the Canadian residents, in reliance on the
        exemption from registration with the SEC provided by Regulation S, and with
        respect to the U.S. citizen, in reliance on the exemption available under
        Section 4(2) of the 1933 Act.
 
 On
        April
        30, 2007, the Company also issued 50,000 shares of restricted common stock
        as
        part of a settlement agreement with a former officer of the Company for
        compensation of accrued salaries. The common stock was rendered to a U.S.
        citizen, in reliance on the exemption available under Section 4(2) of the
        1933
        Act. The shares were valued at a total of $22,000. In addition to monthly
        cash
        payments of $3,500 per month the Company has recorded debt forgiveness of
        $147,419 in accordance with the terms of the settlement agreement. Due to
        the
        related party nature of the transaction the gain has been recorded to additional
        paid in capital, therefore there has been no impact on the Company’s net
        loss.
 
 On
        June
        29, 2007, the Company also issued 4,000 shares of restricted common stock
        for
        services rendered to a U.S. citizen, in reliance on the exemption available
        under Section 4(2) of the 1933 Act. The shares were valued at a total of
        $2,000.
 
 2008
 
 During
        the three months ending March 31, 2008, the Company sold 32,500 restricted
        shares of common stock along with warrants to purchase an additional 32,500
        shares of the Company’s common stock to various accredited Canadian and US
        citizens for total proceeds of $8,125. The warrants were fully vested, are
        exercisable at $0.35 per share, and expire two years from the date of issuance.
        These securities were issued in private transactions, with respect to the
        Canadian resident, in reliance on the exemption from registration with the
        SEC
        provided by Regulation S, and with respect to the U.S. citizen, in reliance
        on
        the exemption available under Section 4(2) of the Securities Act of 1933
        (the
“Securities Act”).
 
 Previously
        issued warrants to purchase 2,309,535 shares of the Company’s common stock
        expired during the nine months ending, September 30, 2008.
 
 7.
              COMMITMENTS
                  AND CONTINGENCIES
 
 Operating
        lease - The Company operates from a leased facility in Nevada under a month
        to
        month basis. The lease calls for monthly base rent of approximately $1,500.
 
 8.
              SUBSEQUENT
                  EVENTS
 
 On
        November 5, 2008, an Officer advanced the Company $40,000. The unsecured
        advance
        is due on demand and carries no interest rate.
  19




**ITEM
      2.**  **MANAGEMENT'S
      DISCUSSION AND ANALYSIS**




**(a)**  **Plan
      of Operation.**




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




The
      Company has discontinued all industrial sales for the volcanic materials located
      on the Pisgah property in California, subject to the finalization of the current
      analytical program.




At
      November 10, 2008, we had approximately $48,815 cash available to sustain
      operations. Accordingly, we are uncertain as to whether the Company may continue
      as a going concern. While we may seek additional investment capital, or possible
      funding or joint venture arrangements with other mining companies, we have
      no
      assurance that that such investment capital or additional funding and joint
      venture arrangements will be available to the Company.




**(b)**  **Results
      of Operations for the Three Months Ended September 30, 2008 and
      2007.**




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




**EXPENSES:**




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




20




**Exploration
      costs**




Exploration
      costs for the three months ended September 30, 2008 decreased by $966 or 2%
      from
      $46,588 for the three months ended September 30, 2007 to $45,622 for the three
      months ended September 30, 2008. The decrease is due to our efforts to scale
      back on further research as a result of the Cease Trade Order issued by the
      British Columbia Securities Commission, which has hindered our ability to raise
      capital. Once the Cease Trade Order is lifted we plan to seek the funding
      necessary to expand our exploration activities.




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




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




**Depreciation**




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




**General
      and administrative expenses**




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




21




**Officer
      compensation**




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




**Total
      operating expenses**





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





**Other
      income (expense)**





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




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




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




**Net
      loss**





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




22





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




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




**EXPENSES:**




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





**Exploration
      costs**




Exploration
      costs for the nine months ended September 30, 2008 decreased by $65,005 or
      43%
      from $149,532 for the nine months ended September 30, 2007 to $84,527 for the
      nine months ended September 30, 2008. The decrease is due to our efforts to
      scale back on further research as a result of the Cease Trade Order issued
      by
      the British Columbia Securities Commission, which has hindered our ability
      to
      raise capital. Once the Cease Trade Order is lifted we plan to seek the funding
      necessary to expand our exploration activities.




23




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




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




**Depreciation**




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




**General
      and administrative expenses**




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




**Officer
      compensation**




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




**Total
      operating expenses**





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





**Other
      income (expense)**





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




24




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




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




**Net
      loss**





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




**(d)**  **Liquidity
      and Capital Resources and Results of Operations**




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


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




*Internal
      and External Sources of Liquidity*




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




25




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




***Satisfaction
      of our cash obligations for the next twelve months.***




Our
      plan
      for satisfying our cash requirements for the next twelve months is through
      additional equity, third party financing, and/or debt financing. We anticipate
      our current cash reserves will be sufficient to support operations through
      December 31, 2008, but do not anticipate generating sufficient amounts of
      positive cash flow to meet our working capital requirements. Consequently,
      we
      intend to make appropriate plans to ensure sources of additional capital in
      the
      future to fund growth and expansion through additional equity or debt financing
      or credit facilities. We also are considering possible funding through joint
      venture arrangements with other mining companies. However, there can be no
      assurance that we will raise capital through any of these means.




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





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




ITEM
      3.
      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.





Not
      applicable.




26




ITEM
      4T.
      CONTROLS AND PROCEDURES





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





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





Changes
      in Internal Control over Financial Reporting





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




PART
      II -
      OTHER INFORMATION





ITEM
      1.
      LEGAL PROCEEDINGS





The
      Company is not currently a party to litigation.





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





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





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




27





ITEM
      2.
      CHANGES IN SECURITIES.





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





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





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




ITEM
      3.
      DEFAULTS UPON SENIOR SECURITIES





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





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




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





None.




ITEM
      5.
      OTHER INFORMATION





N/A




ITEM
      6.
      EXHIBITS AND REPORTS ON FORM 8-K





None.





31.1  Certification
      under Rule 13a-14(a)





32.1  Certification
      under Rule 13a-14(b)




28




SIGNATURES





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


CAN-CAL
                RESOURCES LTD.
              (REGISTRANT)Date:
              November 14, 2008
            By:
            /s/
              Ronald D. SloanRONALD
                D. SLOAN,
              Chief
                Executive Officer and
              President




29