UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C.  20549





FORM
10-Q





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





For the
quarterly period ended September 30,
2010





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





Commission
file number 000-26669





CAN-CAL
RESOURCES LTD.


(Exact
name of registrant as specified in its charter)





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





8205
      Aqua Spray AvenueLas
      Vegas, Nevada


(Address
of principal executive offices)





(702)
243-1849


(Registrant’s
telephone number, including area code)





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





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





Large
accelerated filer  ̈                                                                                      Accelerated
filer  ̈





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





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


Yes  ̈       No
x





The
number of shares of Common Stock, $0.001 par value, outstanding on November 12,
2010 was 30,738,196.











CAN-CAL
RESOURCES LTD.


FORM
10-Q


TABLE
OF CONTENTS





PagePART
      I – FINANCIAL INFORMATION
            
            1Item
      1. Financial Statements
            
            1Balance
      Sheets as of September 30, 2010 (Unaudited) and December 31,
      2009
            
            1Condensed
      Statements of Operations (Unaudited)
            
            2Statement
      of Stockholders’ Equity (Deficit) (unaudited)
            
            3Condensed
      Statements of Cash Flows (unaudited)
            
            7Notes
      to Condensed Financial Statements (Unaudited)
            
            8Item
      2. Management’s Discussion and Analysis
            
            37Item
      3. Quantitative and Qualitative Disclosures about Market
    Risk
            
            33Item
      4T. Controls and Procedures
            
            33PART
      II – OTHER INFORMATION
            
            34Item
      1. Legal Proceedings
            
            34Item
      1A. Risk Factors
            
            34Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
            
            35Item
      3. Defaults Upon Senior Securities
            
            36Item
      4. Submission of Matters to a Vote of Security Holders
            
            36Item
      5. Other Information
            
            36Item
      6. Exhibits
            
            37











PART
I – FINANCIAL INFORMATION





Item
1. Financial Statements





CAN-CAL
      RESOURCES LTD.(AN
      EXPLORATION STAGE COMPANY)BALANCE
      SHEETSSeptember
      30,
            
            
            December
      31,2010
            
            
            2009ASSETS
            
            (Unaudited)Current
      assets:Cash
            
            $
            1,162
            
            
            $
            17,507Other
      current assets
            
            
            13,035
            
            
            
            1,300Total
      current assets
            
            
            14,197
            
            
            
            18,807Other
      assets
            
            
            4,345
            
            
            
            -Fixed
      assets (net of accumulated depreciation of $153,932 and
      $146,743)
            
            
            40,678
            
            
            
            47,100Total
      assets
            
            $
            59,220
            
            
            $
            65,907LIABILITIES
      AND STOCKHOLDERS' (DEFICIT)Current
      liabilities:Accounts
      payable and accrued expenses
            
            $
            114,776
            
            
            $
            55,598Accounts
      payable, related parties
            
            
            45,000
            
            
            
            -Accrued
      interest
            
            
            458,110
            
            
            
            417,008Accrued
      salaries
            
            
            374,004
            
            
            
            282,004Current
      portion of notes payable, related parties
            
            
            40,891
            
            
            
            -Current
      portion of notes payable
            
            
            360,550
            
            
            
            360,550Unearned
      revenues
            
            
            16,042
            
            
            
            11,458Total
      current liabilities
            
            
            1,409,373
            
            
            
            1,126,618Notes
      payable, net of current portion
            
            
            60,000
            
            
            
            -Total
      liabilities
            
            
            1,469,373
            
            
            
            1,126,618Commitments
      and contingenciesStockholders'
      equity (deficit):Preferred
      stock, $0.001 par value, 10,000,000 sharesauthorized,
      no shares issued and outstanding
            
            
            -
            
            
            
            -Common
      stock, $0.001 par value, 100,000,000 shares authorized,30,738,196
      and 30,698,196 shares issued and outstandingas
      of September 30, 2010 and December 31, 2009, respectively
            
            
            30,738
            
            
            
            30,698Subscription
      receivable
            
            
            -
            
            
            
            (25,000
            )Rescission
      liability receivable
            
            
            -
            
            
            
            (12,125
            )Additional
      paid-in capital
            
            
            8,633,404
            
            
            
            8,628,444(Deficit)
      accumulated during exploration stage
            
            
            (10,074,295
            )
            
            
            (9,682,728
            )Total
      stockholders' (deficit)
            
            
            (1,410,153
            )
            
            
            (1,060,711
            )Total
      liabilities and stockholders' (deficit)
            
            $
            59,220
            
            
            $
            65,907The
      accompanying notes are an integral part of the financial
      statements.




1




CAN-CAL
      RESOURCES LTD.(AN
      EXPLORATION STAGE COMPANY)CONDENSED
      STATEMENTS OF OPERATIONS(Unaudited)March
      22, 1995For
      the three months ended
            
            
            For
      the nine months ended
            
            
            (inception)
      toSeptember
      30,
            
            
            September
      30,
            
            
            September2010
            
            
            2009
            
            
            2010
            
            
            2009
            
            
            30,
      2010Material
      sales
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            245,500Cost
      of sales
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            263,400Gross
      profit
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (17,900
            )Operating
      expenses:General
      and administrative
            
            
            98,035
            
            
            
            87,196
            
            
            
            256,566
            
            
            
            254,957
            
            
            
            6,640,192Exploration
      costs
            
            
            -
            
            
            
            13,239
            
            
            
            8,390
            
            
            
            31,900
            
            
            
            544,759Depreciation
            
            
            2,252
            
            
            
            2,613
            
            
            
            7,189
            
            
            
            7,839
            
            
            
            248,362Officer
      salary
            
            
            30,000
            
            
            
            30,000
            
            
            
            90,000
            
            
            
            90,000
            
            
            
            931,176Impairment
      of operating assets
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            443,772Total
      operating expenses
            
            
            130,287
            
            
            
            133,048
            
            
            
            362,145
            
            
            
            384,696
            
            
            
            8,808,261Net
      operating loss
            
            
            (130,287
            )
            
            
            (133,048
            )
            
            
            (362,145
            )
            
            
            (384,696
            )
            
            
            (8,826,161
            )Other
      income (expense):Other
      income from legal judgment
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            47,200Interest
      income
            
            
            -
            
            
            
            -
            
            
            
            23
            
            
            
            8
            
            
            
            52,945Rental
      revenue
            
            
            6,876
            
            
            
            3,662
            
            
            
            22,917
            
            
            
            22,389
            
            
            
            349,034Gain
      on sale of fixed assets
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            26,801Interest
      expense
            
            
            (18,084
            )
            
            
            (93,000
            )
            
            
            (52,362
            )
            
            
            (137,658
            )
            
            
            (1,250,514
            )Total
      other income (expense)
            
            
            (11,208
            )
            
            
            (89,338
            )
            
            
            (29,422
            )
            
            
            (115,261
            )
            
            
            (774,534
            )Loss
      before provision for income taxes
            
            
            (141,495
            )
            
            
            (222,386
            )
            
            
            (391,567
            )
            
            
            (499,957
            )
            
            
            (9,600,695
            )Provision
      for income taxes
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Net
      loss from continuing operations
            
            
            (141,495
            )
            
            
            (222,386
            )
            
            
            (391,567
            )
            
            
            (499,957
            )
            
            
            (9,600,695
            )Income
      from discontinued operationsIncome
      from discontinued operations
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            116,400Loss
      on disposal of operations (net of taxes)
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (590,000
            )Net
      (loss)
            
            $
            (141,495
            )
            
            $
            (222,386
            )
            
            $
            (391,567
            )
            
            $
            (499,957
            )
            
            $
            (10,074,295
            )Weighted
      average number of common sharesoutstanding
      - basic and fully diluted
            
            
            30,738,196
            
            
            
            29,483,306
            
            
            
            30,735,119
            
            
            
            26,472,332Net
      (loss) per share - basic and fully diluted
            
            $
            (0.00
            )
            
            $
            (0.01
            )
            
            $
            (0.01
            )
            
            $
            (0.02
            )The
      accompanying notes are an integral part of the financial
      statements.





2





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




Common
      stockNumber
      of shares
            
            
            Amount
            
            
            Subscriptionreceivable
            
            
            Rescissionliabilityreceivable
            
            
            Unamortizedequitygrants
            
            
            Foreigncurrencytranslationadjustment
            
            
            Additionalpaid-incapital
            
            
            (Deficit)accumulatedduringexplorationstage
            
            
            Totalstockholders'equity
      (deficit)Balance,
      March 22, 1995
            
            
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -Common
      shares issued for services
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Net
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (1,000
            )
            
            
            (1,000
            )Balance,
      December 31, 1995
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (1,000
            )
            
            
            (1,000
            )Common
      shares issued for services
            
            
            3,441,217
            
            
            
            3,400
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            625,000
            
            
            
            -
            
            
            
            628,400Prior
      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
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            8,500
            
            
            
            1,887,600
            
            
            
            (1,397,800
            )
            
            
            505,300




3




Common
      shares issued for cash
            
            
            1,248,621
            
            
            
            1,200
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            572,600
            
            
            
            -
            
            
            
            573,800Foreign
      currency translation adjustment
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (11,800
            )
            
            
            -
            
            
            
            -
            
            
            
            (11,800
            )Realized
      foreign currency translation loss
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            3,300
            
            
            
            -
            
            
            
            -
            
            
            
            3,300Prior
      period Adjustment
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            15,000
            
            
            
            15,000Elimination
      of subsidiary upon disposal
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            116,400
            
            
            
            116,400Net
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (1,038,500
            )
            
            
            (1,038,500
            )Balance,
      December 31, 1999
            
            
            8,253,782
            
            
            
            8,200
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            2,460,200
            
            
            
            (2,304,900
            )
            
            
            163,500Common
      shares issued for cash
            
            
            1,119,009
            
            
            
            1,200
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            948,400
            
            
            
            -
            
            
            
            949,600Net
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (962,500
            )
            
            
            (962,500
            )Balance,
      December 31, 2000
            
            
            9,372,791
            
            
            
            9,400
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            3,408,600
            
            
            
            (3,267,400
            )
            
            
            150,600Common
      shares issued for cash
            
            
            785,947
            
            
            
            800
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            81,500
            
            
            
            -
            
            
            
            82,300Net
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (704,500
            )
            
            
            (704,500
            )Balance,
      December 31, 2001
            
            
            10,158,738
            
            
            
            10,200
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            3,490,100
            
            
            
            (3,971,900
            )
            
            
            (471,600
            )Common
      shares issued for cash
            
            
            1,093,280
            
            
            
            1,100
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            269,900
            
            
            
            -
            
            
            
            271,000Common
      shares issued for services
            
            
            92,292
            
            
            
            100
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            23,800
            
            
            
            -
            
            
            
            23,900Options
      granted for services
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            7,100
            
            
            
            -
            
            
            
            7,100Common
      shares issued for repayment of notepayable,
      related party in the amount of$119,800,
      including accrued interest of $71,800
            
            
            309,677
            
            
            
            300
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            119,500
            
            
            
            -
            
            
            
            119,800Warrants
      granted for loan fees onconvertible
      notes payable, related party
            
            
            -
            
            
            
            -
            
            
            
            (16,700
            )
            
            
            (16,700
            )
            
            
            (16,700
            )
            
            
            -
            
            
            
            16,700
            
            
            
            -
            
            
            
            (33,400
            )Common
      shares issued for loan fees onconvertible
      notes payable, related party
            
            
            30,000
            
            
            
            -
            
            
            
            (13,500
            )
            
            
            (13,500
            )
            
            
            (13,500
            )
            
            
            -
            
            
            
            13,500
            
            
            
            -
            
            
            
            (27,000
            )Deemed
      interest on beneficial conversionfeature
      of notes payable, related party
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            20,500
            
            
            
            -
            
            
            
            20,500Amortization
      of loan fees
            
            
            -
            
            
            
            -
            
            
            
            8,200
            
            
            
            8,200
            
            
            
            8,200
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            24,600Net
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (709,300
            )
            
            
            (709,300
            )Balance,
      December 31, 2002
            
            
            11,683,987
            
            
            
            11,700
            
            
            
            (22,000
            )
            
            
            (22,000
            )
            
            
            (22,000
            )
            
            
            -
            
            
            
            3,961,100
            
            
            
            (4,681,200
            )
            
            
            (774,400
            )




4




Common
      shares issued for cash
            
            
            823,410
            
            
            
            800
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            163,900
            
            
            
            -
            
            
            
            164,700Common
      shares issued for services
            
            
            381,260
            
            
            
            400
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            63,800
            
            
            
            -
            
            
            
            64,200Options
      granted for services
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            61,300
            
            
            
            -
            
            
            
            61,300Common
      shares issued for repayment of note payable,related
      party common shares issued for repayment ofnote
      payable, related party in the amount of $78,300,including
      accrued interest of $43,300
            
            
            364,305
            
            
            
            400
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            77,900
            
            
            
            -
            
            
            
            78,300Deemed
      interest on beneficial conversionfeature
      of notes payable, related party
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            38,300
            
            
            
            -
            
            
            
            38,300Amortization
      of loan fees
            
            
            -
            
            
            
            -
            
            
            
            15,000
            
            
            
            15,000
            
            
            
            15,000
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            45,000Net
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (711,100
            )
            
            
            (711,100
            )Balance,
      December 31, 2003
            
            
            13,252,962
            
            
            
            13,300
            
            
            
            (7,000
            )
            
            
            (7,000
            )
            
            
            (7,000
            )
            
            
            -
            
            
            
            4,366,300
            
            
            
            (5,392,300
            )
            
            
            (1,033,700
            )Common
      shares issued for cash
            
            
            1,564,311
            
            
            
            1,600
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            306,400
            
            
            
            -
            
            
            
            308,000Common
      shares issued for exercise of warrants
            
            
            701,275
            
            
            
            700
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            124,900
            
            
            
            -
            
            
            
            125,600Common
      shares issued for services
            
            
            390,224
            
            
            
            400
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            73,800
            
            
            
            -
            
            
            
            74,200Warrants
      granted for services
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            12,200
            
            
            
            -
            
            
            
            12,200Interest
      expense for warrants granted
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            280,200
            
            
            
            -
            
            
            
            280,200Common
      shares issued in satisfaction of accounts payableand
      accrued liabilities in the amount of $229,400
            
            
            917,747
            
            
            
            900
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            228,500
            
            
            
            -
            
            
            
            229,400Common
      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
            
            
            
            7,000
            
            
            
            7,000
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            21,000Net
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (1,030,500
            )
            
            
            (1,030,500
            )Balance,
      December 31, 2004
            
            
            17,860,026
            
            
            
            17,900
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            5,591,300
            
            
            
            (6,422,800
            )
            
            
            (813,600
            )Common
      shares issued for cash
            
            
            762,500
            
            
            
            800
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            152,700
            
            
            
            -
            
            
            
            153,500Common
      shares issued for exercise of warrants
            
            
            349,545
            
            
            
            300
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            69,500
            
            
            
            -
            
            
            
            69,800Net
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (421,800
            )
            
            
            (421,800
            )




5




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 (Restated)
            
            
            23,263,086
            
            
            
            23,264
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            7,277,736
            
            
            
            (7,465,600
            )
            
            
            (164,600
            )Common
      shares issued for cash
            
            
            492,795
            
            
            
            492
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            188,698
            
            
            
            -
            
            
            
            189,190Common
      warrants exercised for cash
            
            
            745,372
            
            
            
            745
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            185,598
            
            
            
            -
            
            
            
            186,343Common
      shares issued for services
            
            
            4,000
            
            
            
            4
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            2,010
            
            
            
            -
            
            
            
            2,014Common
      shares issued in satisfaction ofaccrued
      wages of $22,000, related party
            
            
            50,000
            
            
            
            50
            
            
            
            -
            
            
            
            -
            
            
            
            
            
            
            
            -
            
            
            
            21,950
            
            
            
            -
            
            
            
            22,000Debt
      forgiveness, related party
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            147,419
            
            
            
            -
            
            
            
            147,419Net
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (604,913
            )
            
            
            (604,913
            )Balance,
      December 31, 2007 (Restated)
            
            
            24,555,253
            
            
            
            24,555
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            7,823,411
            
            
            
            (8,070,513
            )
            
            
            (222,547
            )Common
      shares issued for cash
            
            
            32,500
            
            
            
            33
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            8,091
            
            
            
            -
            
            
            
            8,124Net
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (1,016,661
            )
            
            
            (1,016,661
            )




6




Balance,
      December 31, 2008
            
            
            24,587,753
            
            
            
            24,588
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            7,831,502
            
            
            
            (9,087,174
            )
            
            
            (1,231,084
            )Common
      shares issued for cash
            
            
            2,926,600
            
            
            
            2,926
            
            
            
            (25,000
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            362,899
            
            
            
            -
            
            
            
            340,825Common
      shares issued for debt conversion to related partiesof
      $398,593, including accrued interest of $29,093
            
            
            3,188,741
            
            
            
            3,189
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            395,404
            
            
            
            -
            
            
            
            398,593Warrants
      granted in connection with debt conversion
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            78,961
            
            
            
            -
            
            
            
            78,961Common
      shares issued for services
            
            
            122,000
            
            
            
            122
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            15,338
            
            
            
            -
            
            
            
            15,460Common
      shares cancelled per rescission order
            
            
            (126,898
            )
            
            
            (127
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (55,660
            )
            
            
            -
            
            
            
            (55,787
            )Rescission
      liability receivable
            
            
            
            
            
            
            
            
            
            
            -
            
            
            
            (12,125
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (12,125
            )Net
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            -
            
            
            
            (595,554
            )
            
            
            (595,554
            )Balance
      December 31, 2009
            
            
            30,698,196
            
            
            
            30,698
            
            
            
            (25,000
            )
            
            
            (12,125
            )
            
            
            -
            
            
            
            -
            
            
            
            8,628,444
            
            
            
            (9,682,728
            )
            
            
            (1,060,711
            )Common
      shares issued for cash
            
            
            40,000
            
            
            
            40
            
            
            
            25,000
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            4,960
            
            
            
            -
            
            
            
            30,000Receipt
      of payment on rescission liability receivable
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            12,125
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            12,125Net
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (391,567
            )
            
            
            (391,567
            )Balance
      September 30, 2010 (Unaudited)
            
            
            30,738,196
            
            
            $
            30,738
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            8,633,404
            
            
            $
            (10,074,295
            )
            
            $
            (1,410,153
            )




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




7




CAN-CAL
      RESOURCES LTD.(AN
      EXPLORATION STAGE COMPANY)CONDENSED
      STATEMENTS OF CASH FLOWS(Unaudited)March
      22, 1995For
      the nine months ended
            
            
            (inception)
      toSeptember
      30,
            
            
            September
      30,2010
            
            
            2009
            
            
            2010CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      loss
            
            $
            (391,567
            )
            
            $
            (499,957
            )
            
            $
            (10,074,295
            )Adjustments
      to reconcile net lossto
      net cash used in operating activities:Depreciation
      and amortization
            
            
            7,189
            
            
            
            7,839
            
            
            
            265,362Bad
      debts
            
            
            -
            
            
            
            -
            
            
            
            207,100Gain
      on sale of fixed assets
            
            
            -
            
            
            
            -
            
            
            
            (6,501
            )Stock
      based compensation
            
            
            -
            
            
            
            13,300
            
            
            
            548,274Stock
      issued for financing and interest
            
            
            -
            
            
            
            78,961
            
            
            
            602,161Beneficial
      conversion feature on convertible debenture
            
            
            -
            
            
            
            -
            
            
            
            25,200Loss
      on disposal of investment property
            
            
            -
            
            
            
            -
            
            
            
            938,600Undistributed
      earnings of affiliate
            
            
            -
            
            
            
            -
            
            
            
            (174,300
            )Gain
      on discontinued operations
            
            
            -
            
            
            
            -
            
            
            
            (116,400
            )Loss
      on foreign currency translation
            
            
            -
            
            
            
            -
            
            
            
            8,500Impairment
      of operating assets
            
            
            -
            
            
            
            -
            
            
            
            445,667Decrease
      (increase) in assets:Other
      current assets
            
            
            (11,735
            )
            
            
            -
            
            
            
            (11,735
            )Other
      assets
            
            
            (4,345
            )
            
            
            100
            
            
            
            (98,240
            )Increase
      (decrease) in liabilities:Accounts
      payable and accrued expenses
            
            
            59,178
            
            
            
            (46,181
            )
            
            
            46,864Accounts
      payable, related parties
            
            
            45,000
            
            
            
            -
            
            
            
            45,000Accrued
      interest
            
            
            41,102
            
            
            
            56,773
            
            
            
            487,203Accrued
      salaries
            
            
            92,000
            
            
            
            74,649
            
            
            
            374,004Unearned
      revenues
            
            
            4,584
            
            
            
            6,875
            
            
            
            16,042Net
      cash used in operating activities
            
            
            (158,594
            )
            
            
            (307,641
            )
            
            
            (6,471,494
            )CASH
      FLOWS FROM INVESTING ACTIVITIESPurchase
      of investment property
            
            
            -
            
            
            
            -
            
            
            
            (1,083,600
            )Proceeds
      from sale of investment property
            
            
            -
            
            
            
            -
            
            
            
            319,300Puchase
      of fixed assets
            
            
            (767
            )
            
            
            -
            
            
            
            (769,411
            )Proceeds
      from sale of fixed assets
            
            
            -
            
            
            
            -
            
            
            
            26,100Net
      cash used in investing activities
            
            
            (767
            )
            
            
            -
            
            
            
            (1,507,611
            )CASH
      FLOWS FROM FINANCING ACTIVITIESProceeds
      from notes payable
            
            
            60,000
            
            
            
            -
            
            
            
            1,008,400Principal
      payments on notes payable
            
            
            -
            
            
            
            -
            
            
            
            (689,900
            )Proceeds
      from notes payable, related parties
            
            
            40,891
            
            
            
            31,800
            
            
            
            886,491Principal
      payments on notes payable, related parties
            
            
            -
            
            
            
            -
            
            
            
            (374,050
            )Proceeds
      from the issuance of common stock
            
            
            42,125
            
            
            
            237,825
            
            
            
            7,149,326Net
      cash provided by financing activities
            
            
            143,016
            
            
            
            269,625
            
            
            
            7,980,267Net
      increase (decrease) in cash
            
            
            (16,345
            )
            
            
            (38,016
            )
            
            
            1,162Cash,
      beginning of period
            
            
            17,507
            
            
            
            45,848
            
            
            
            -Cash,
      end of period
            
            $
            1,162
            
            
            $
            7,832
            
            
            $
            1,162Supplemental
      disclosures:Interest
      paid
            
            $
            -
            
            
            $
            -Income
      taxes paid
            
            $
            -
            
            
            $
            -Non-cash
      investing and financing activities:Shares
      issued for debt conversion
            
            $
            -
            
            
            $
            398,594Shares
      issued for services
            
            $
            -
            
            
            $
            67,913The
      accompanying notes are an integral part of the financial
      statements.




8


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


Note
1 – Basis of Presentation





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





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





The
interim financial information is unaudited. In the opinion of management, all
adjustments (which include normal recurring adjustments) necessary to present
fairly the financial position as of September 30, 2010 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
$10,074,295 and used net cash in operations of $6,471,494 for the period from
inception (March 22, 1995) through September 30, 2010. An entity remains in the
exploration stage until such time as proven or probable reserves have been
established for its deposits. Upon the location of commercially mineable
reserves, the Company plans to prepare for mineral extraction and enter the
development stage. To date, the exploration stage of the Company’s operations
consists of contracting with geologists who sample and assess the mining
viability of the Company’s claims.





Recent Accounting
Pronouncements


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




9


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


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





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





Note
2 – Going Concern





The
Company incurred a net loss of $391,567 for the nine months ended September 30,
2010. Also, the Company’s current liabilities exceed its current assets by
$1,395,176 as of September 30, 2010. These factors create substantial doubt
about the Company’s ability to continue as a going concern. The Company’s
management plans to continue to fund its operations in the short term with a
combination of debt and equity financing and with revenue from operations in the
long term.





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





Note
3 – Related Party





On July
1, 2010, the Company entered into a twelve month employment agreement, subject
to automatic monthly renewals, with the Company’s CEO, G. Michael Hogan. The
terms of the agreement include a fixed annual salary of $120,000. The Company
may elect to satisfy payment in shares of common stock in lieu of cash at a
market value equal to $0.10 above the average closing trading price of the
common stock for the preceding five (5) days from the date of such election. No
payments have been made in cash or stock as of September 30, 2010.




10


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


As of
September 30, 2010 and December 31, 2009 we owed $282,004 and $282,004 of
accrued salaries to our former CEO, respectively. In addition, we owed $90,000
of accrued salaries to our current CEO, G. Michael Hogan, as of September 30,
2010.





On June
30, 2010, the Company entered into a twelve month consulting agreement, with a
Board of Director’s consulting firm, Futureworth Capital Corp. The terms of the
agreement include annual compensation of $60,000, payable monthly. The Company
may elect to satisfy payment in shares of common stock in lieu of cash at a
market value equal to $0.10 above the average closing trading price of the
common stock for the preceding five (5) days from the date of such election. No
payments have been made in cash or stock as of September 30, 2010. As of
September 30, 2010 we owed Futureworth Capital Corp. $45,000, as included in
accounts payable, for service prior to, and during the service period under the
consulting agreement.





Note
4 – Notes Payable





Notes
payable consisted of the following as of September 30, 2010 and December 31,
2009, respectively:




11


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





September
      30,
              2010
            
            
            December
      31, 2009Note
      payable to a stockholder, secured by real property, bearing interest at
      16.0% per annum, interest only payments payable in semi-annual payments,
      matured November 2005 (Note: The Company is in default of interest
      payments totaling $424,000 and $388,000 of principal,
      respectively).
            
            $
            300,000
            
            
            $
            300,000Note
      payable to a stockholder, secured by real property, bearing interest at
      8.0% per annum, matured July 2008, and is currently in
      default.
            
            
            25,114
            
            
            
            25,114Note
      payable to a stockholder, secured by real property, bearing interest at
      8.0% per annum, matured June 2008, and is currently in
      default.
            
            
            35,436
            
            
            
            35,436Convertible
      note payable, unsecured, bearing interest at 12.0% compounded quarterly,
      matures June 2013, convertible at $0.25 per share at the discretion of the
      note holder. Principal was convertible into 100,000 shares of common stock
      at September 30, 2010.
            
            
            25,000
            
            
            
            -Convertible
      note payable, unsecured, bearing interest at 12.0% compounded quarterly,
      matures August 2013, convertible at $0.25 per share at the discretion of
      the note holder. Principal was convertible into 40,000 shares of common
      stock at September 30, 2010.
            
            
            10,000
            
            
            
            -Convertible
      note payable, unsecured, bearing interest at 12.0% compounded quarterly,
      matures August 2013, convertible at $0.25 per share at the discretion of
      the note holder. Principal was convertible into 40,000 shares of common
      stock at September 30, 2010.
            
            
            10,000
            
            
            
            -Convertible
      note payable, unsecured, bearing interest at 12.0% compounded quarterly,
      matures September 2013, convertible at $0.25 per share at the discretion
      of the note holder. Principal was convertible into 40,000 shares of common
      stock at September 30, 2010.
            
            
            10,000
            
            
            
            -Convertible
      note payable, unsecured, bearing interest at 12.0% compounded quarterly,
      matures August 2013, convertible at $0.25 per share at the discretion of
      the note holder. Principal was convertible into 20,000 shares of common
      stock at September 30, 2010.
            
            
            5,000
            
            
            
            -Note
      payable to a member of the Board of Directors, unsecured, due on demand,
      bearing interest at 8.25%.
            
            
            25,000
            
            
            
            -Note
      payable to the CEO, unsecured, non-interest bearing, due on
      demand.
            
            
            15,891
            
            
            
            -Total
      notes payable
            
            
            461,441
            
            
            
            360,550Less:
      current portion
            
            
            401,441
            
            
            
            360,550Notes
      payable, less current portion
            
            $
            60,000
            
            
            $
            -




Future
maturities of long-term debt are as follows as of September 30,
2010:





2010
            
            $
            401,4412011
            
            
            -2012
            
            
            -2013
            
            
            60,000Thereafter
            
            
            -$
            461,441




12


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




Interest
expense totaled $52,362 and $137,658 for the nine months ending September 30,
2010 and 2009, respectively.





Note
5 – Changes in Securities





1996





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





1997





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





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





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





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





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





1998





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





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





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




13


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


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 shares of restricted common stock
in return for equipment.





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





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





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





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





2000





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





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




14


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.




15


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.




16


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 price per share was determined by dividing the
amount owed by the average closing price of the company’s stock for each day’s
service. These shares were sold pursuant to the exemption provided by section
4(2) of the 1933 Act.





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





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





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





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




17


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.




18


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





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





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





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





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.




19


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


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.





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%.




20


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





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





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





2007





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





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





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





2008





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





2009





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




21


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


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





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





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





2010





On
January 20, 2010, the company issued 40,000 shares of its common stock and an
equal number of warrants pursuant to a unit offering in exchange for proceeds of
$5,000. The warrants are exercisable over fifteen months at an exercise price of
$0.15 per share.





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





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





Note
6 – Options and Warrants





Options





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





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




22


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





In
accordance with ASC 505, “Share-Based Payment”; the Company recognized the fair
value of the options in the statement of operations on the date of grant. The
following is a summary of information about the stock options outstanding at
September 30, 2010.




Shares
      Underlying Options Outstanding
              
              Shares
      UnderlyingOptions
      ExercisableRange
      of Exercise Prices
              
              Shares
      Underlying Options Outstanding
              
              Weighted
      Average Remaining Contractual Life
              
              Weighted
      Average Exercise Price
              
              Shares
      Underlying Options Exercisable
              
              Weighted
      Average Exercise Price$
              0.16
      – $0.20
              
              1,000,000
              
              2.09
      years
              
              $
              
              
              0.18
              
              
              1,000,000
              
              $
              0.18




The fair
value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted-average
assumptions used for grants under the fixed option plan:





September
      30,
              2010
            
            September
      30,
              2009Average
      risk-free interest rates
            
            
            4.97
            %
            
            
            4.97
            %Average
      expected life (in years)
            
            
            7.5
            
            
            
            7.5Volatility
            
            
            86
            %
            
            
            86
            %





The
Black-Scholes option valuation model was developed for use in estimating the
fair value of short-term traded options that have no vesting restrictions and
are fully transferable. In addition, option valuation models require the input
of highly subjective assumptions including expected stock price volatility.
Because the Company’s employee stock options have characteristics significantly
different from those of traded options and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management’s
opinion the existing models do not necessarily provide a reliable single measure
of the fair value of its employee stock options. During 2010 and 2009, there
were no options granted with an exercise price below the fair value of the
underlying stock at the grant date.





There
were no options issued during the nine months ended September 30, 2010 and 2009,
respectively.





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




23


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





Options
      Outstanding
            
            
            Weighted
      Average Exercise PriceBalance,
      January 1, 2009
            
            
            1,150,000
            
            
            $
            0.18Granted
            
            
            -
            
            
            
            -Cancelled
            
            
            -
            
            
            
            -Exercised
            
            
            -
            
            
            
            -Expired
            
            
            150,000
            
            
            
            0.20Balance,
      December 31, 2009
            
            
            1,000,000
            
            
            
            0.18Granted
            
            
            -
            
            
            
            -Cancelled
            
            
            -
            
            
            
            -Exercised
            
            
            -
            
            
            
            -Expired
            
            
            -
            
            
            
            -Balance,
      September 30, 2010
            
            
            1,000,000
            
            
            $
            0.18





Warrants





During
the period ended September 30, 2010, the Company granted 40,000 stock warrants
with an exercise price of $0.15 per share for its common stock. These stock
warrants were granted in connection with financing activities relating to stock
sold during the nine months ended September 30, 2010. These warrants were
exercisable upon issuance and expire on March 31, 2011. The following table
summarizes the Company’s warrant activities:





The
following is a summary of information about the common stock warrants
outstanding at September 30, 2010:


Shares
      Underlying Options Outstanding
                
                Shares
      UnderlyingOptions
      ExercisableRange
      of Exercise Prices
                
                Shares
      Underlying Options Outstanding
                
                Weighted
      Average Remaining Contractual Life
                
                Weighted
      Average Exercise Price
                
                Shares
      Underlying Options Exercisable
                
                Weighted
      Average Exercise Price$
                0.15
      – $0.15
                
                7,776,496
                
                0.67
      years
                
                $
                
                
                0.15
                
                
                7,776,496
                
                $
                0.15


The
following is a summary of the common stock warrant activity as of September 30,
2010.





Warrants
      Outstanding
            
            
            Weighted
      Average Exercise PriceBalance,
      January 1, 2009
            
            
            525,295
            
            
            $
            0.50Granted
            
            
            9,304,096
            
            
            
            0.15Cancelled
            
            
            (492,795
            )
            
            
            0.61Exercised
            
            
            -
            
            
            
            -Expired
            
            
            -
            
            
            
            0.20Balance,
      December 31, 2009
            
            
            9,336,596
            
            
            
            0.15Granted
            
            
            40,000
            
            
            
            0.15Cancelled
            
            
            -
            
            
            
            -Exercised
            
            
            -
            
            
            
            -Expired
            
            
            (1,600,100
            )
            
            
            0.15Balance,
      September 30, 2010
            
            
            7,776,496
            
            
            $
            0.15





24


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





Note
7 – Commitments and Contingencies





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





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





The
Company is a defendant in a lawsuit, filed by an affiliate of a former note
holder. The Company believes that the claims are without merit and intends to
vigorously defend its position. The ultimate outcome of this litigation cannot
presently be determined, however, in management’s opinion, the likelihood of a
material adverse outcome is remote and the liability booked to the former note
holder is sufficient to account for the potential liability.





Note
8 – Subsequent Events





On
October 5, 2010, the Company received $2,500 in exchange for an unsecured
convertible note payable, bearing interest at 12.0% compounded quarterly, with
an October 2013 maturity date, convertible at $0.25 per share at the discretion
of the note holder.





On
October 6, 2010, the Company received $5,000 in exchange for an unsecured
convertible note payable, bearing interest at 12.0% compounded quarterly, with
an October 2013 maturity date, convertible at $0.25 per share at the discretion
of the note holder.





In
accordance with ASC 855, all subsequent events have been reported through the
filing date.




25




FORWARD-LOOKING
STATEMENTS





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





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





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





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


·
            inability
      to raise additional financing for operations and working
      capital;


·
            the
      unavailability of funds for capital expenditures;


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


·
            inability
      to efficiently manage our operations;


·
            inability
      to achieve future operating results;


·
            our
      ability to diversify our operations;


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


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


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


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


·
            our
      ability to recruit and hire key employees; and


·
            the
      other risks and uncertainties detailed in this
  report.




26


For a
detailed description of these and other factors that could cause actual results
to differ materially from those expressed in any forward-looking statement,
please see “Risk Factors” in this document and in our Annual Report on Form 10-K
for the year ended December 31, 2009.





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





ITEM
2.                      MANAGEMENT'S
DISCUSSION AND ANALYSIS





OVERVIEW
AND OUTLOOK





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





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





The
Company is currently working towards the implementation of a new series of
programs to explore and define the potential extent of precious and base metals
underlying Can-Cal’s various mineral properties.





At
September 30, 2010, we had $1,162 cash available to sustain operations.
Accordingly, we are uncertain as to whether the Company may continue as a going
concern. While we intend to seek additional investment capital, or possible
funding or joint venture arrangements with other mining companies, we have no
assurance that that such investment capital or additional funding and joint
venture arrangements will be available to the Company.





Results
of Operations for the Three Months Ended September 30, 2010 and
2009:





Three
      Months Ended
              September
      30,2010
            
            
            2009
            
            
            Increase
      / (Decrease)Amount
            
            
            Amount
            
            
            $
            
            
            
            %Expenses:General
      & administrative
            
            $
            98,035
            
            
            $
            87,196
            
            
            $
            10,839
            
            
            
            12
            %Exploration
      costs
            
            
            -
            
            
            
            13,239
            
            
            
            (13,239
            )
            
            
            (100
            %)Depreciation
            
            
            2,252
            
            
            
            2,613
            
            
            
            (361
            )
            
            
            (14
            %)Officer
      salary
            
            
            30,000
            
            
            
            30,000
            
            
            
            -
            
            
            
            -Total
      operating expenses
            
            
            130,287
            
            
            
            133,048
            
            
            
            (2,761
            )
            
            
            (2
            %)Net
      operating loss
            
            
            (130,287
            )
            
            
            (133,048
            )
            
            
            (2,761
            )
            
            
            (2
            %)Other
      income (expense):Interest
      income
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Rental
      revenue
            
            
            6,876
            
            
            
            3,662
            
            
            
            3,214
            
            
            
            88
            %Interest
      expense
            
            
            (18,087
            )
            
            
            (93,000
            )
            
            
            74,916
            
            
            
            (81
            %)Total
      other income (expense)
            
            
            (11,208
            )
            
            
            (89,338
            )
            
            
            78,130
            
            
            
            (87
            %)Net
      loss
            
            $
            (141,495
            )
            
            $
            (222,386
            )
            
            $
            (80,891
            )
            
            
            (90
            %)





27




General
and administrative expenses





General
and administrative expenses for the three months ended September 30, 2010
increased by $10,839 (or 12%) from $87,196 for the three months ended September
30, 2009 to $98,035 for the three months ended September 30, 2010. The increase
is principally due to increased legal and professional fees associated with our
securities offerings with the British Columbia Securities Commission
(“BCSC”).





Exploration
costs





Exploration
costs for the three months ended September 30, 2010 decreased by $13,239 (or
100%) from $13,239 for the three months ended September 30, 2009 to $-0- for the
three months ended September 30, 2010. The decrease is due to reductions in
exploration activities at our Pisgah and Wikieup locations; however, we expect
to significantly increase our exploration activities over the next 12
months.





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





The
Company has no material commitments for capital expenditures other than
expenditures it chooses or may choose to make, if funds are available, with
respect to testing and or exploration of its mineral properties.





Depreciation





Depreciation
for the three months ended September 30, 2010 decreased by $361 (or 14%) from
$2,613 for the three months ended September 30, 2009 to $2,252 for the three
months ended September 30, 2010. The decrease is principally due to certain
assets reaching the end of their depreciable life cycle. We anticipate the
replacement of these assets in the near future.





Officer
salary





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





Total
operating expenses





Total
operating expenses for the three months ended September 30, 2010 decreased by
$2,761 (or 2%) from $133,048 for the three months ended September 30, 2009 to
$130,287 for the three months ended September 30, 2010. The decrease in total
operating expenses was mainly a result of decreased exploration costs as we
temporarily abridged our exploration activities and focused our resources on
addressing our compliance efforts with respect to the BCSC, which led to
increased legal and professional fees.




28





Other
income (expense)





Interest
income for the three months ended September 30, 2010 and 2009 was $-0- due to
the lack of interest bearing assets on hand during the respective
periods.





Rental
revenue for the three months ended September 30, 2010 increased by $3,214 (or
88%) from $3,662 for the three months ended September 30, 2009 to $6,876 for the
three months ended September 30, 2010. Rental revenue relates to income derived
from the rental of the Company’s land for the purposes of mineral extraction,
filming movies or conducting photo shoots. Rental revenue increased during the
three months ended September 30, 2010 compared to the same period in 2009 due to
increased annual rates for mineral extraction.





Interest
expense for the three months ended September 30, 2010 decreased by $74,916 (or
81%) from $93,000 for the three months ended September 30, 2009 compared to
$18,084 for the three months ended September 30, 2010. The decrease in interest
expense was a result of debt conversions on June 30, 2009 that alleviated
certain interest accruals during the three months ended September 30,
2010.





Net
loss





Our net
loss was $141,495 for the three months ended September 30, 2010 compared to a
net loss of $222,386 for the three months ended September 30, 2009. We expect to
continue 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. Our improved net loss for the three months ended
September 30, 2010 was primarily a result of interest expense not incurred
relative to the same period in the previous year.





Results
of Operations for the Nine Months Ended September 30, 2010 and
2009:





Nine
      Months Ended
              September
      30,2010
            
            
            2009
            
            
            Increase
      / (Decrease)Amount
            
            
            Amount
            
            
            $
            
            
            
            %Expenses:General
      & administrative
            
            $
            256,566
            
            
            $
            254,957
            
            
            $
            1,609
            
            
            
            1
            %Exploration
      costs
            
            
            8,390
            
            
            
            31,900
            
            
            
            (23,510
            )
            
            
            (74
            %)Depreciation
            
            
            7,189
            
            
            
            7,839
            
            
            
            (650
            )
            
            
            (8
            %)Officer
      compensation
            
            
            90,000
            
            
            
            90,000
            
            
            
            -
            
            
            
            -Total
      operating expenses
            
            
            362,145
            
            
            
            384,696
            
            
            
            (22,551
            )
            
            
            (6
            %)Net
      operating loss
            
            
            (362,145
            )
            
            
            (384,696
            )
            
            
            (22,551
            )
            
            
            (6
            %)Other
      income (expense):Interest
      income
            
            
            23
            
            
            
            8
            
            
            
            15
            
            
            
            188
            %Rental
      revenue
            
            
            22,917
            
            
            
            22,389
            
            
            
            528
            
            
            
            2
            %Interest
      expense
            
            
            (52,362
            )
            
            
            (137,658
            )
            
            
            (85,296
            )
            
            
            (62
            %)Total
      other income (expense)
            
            
            (29,422
            )
            
            
            (115,261
            )
            
            
            (85,839
            )
            
            
            (74
            %)Net
      loss
            
            $
            (391,567
            )
            
            $
            (499,957
            )
            
            $
            (108,390
            )
            
            
            (80
            %)




29




General
and administrative expenses





General
and administrative expenses for the nine months ended September 30, 2010
increased by $1,609 (or 1%) from $254,957 for the nine months ended September
30, 2009 to $256,566 for the nine months ended September 30, 2010. The increase
is principally due to increased legal and professional fees associated with our
securities offerings with the BCSC.





Exploration
costs





Exploration
costs for the nine months ended September 30, 2010 decreased by $23,510 (or 74%)
from $31,900 for the nine months ended September 30, 2009 to $8,390 for the nine
months ended September 30, 2010. The decrease is due to reductions in
exploration activities at our Pisgah and Wikieup locations, however, we expect
to significantly increase our exploration activities over the next 12
months.





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





The
Company has no material commitments for capital expenditures other than
expenditures it chooses or may choose to make, if funds are available, with
respect to testing and or exploration of its mineral properties.





Depreciation





Depreciation
for the nine months ended September 30, 2010 decreased by $650 (or 8%) from
$7,839 for the nine months ended September 30, 2009 to $7,189 for the nine
months ended September 30, 2010. The decrease is principally due to certain
assets reaching the end of their depreciable life cycle. We anticipate the
replacement of these assets in the near future.





Officer
salary





Officer
salary for the nine months ended September 30, 2010 and 2009 was $90,000 in
accordance with the annual compensation of $120,000 to our Chief Executive
Officer. No bonuses or stock awards were granted.




30





Total
operating expenses





Total
operating expenses for the nine months ended September 30, 2010 decreased by
$22,551 (or 6%) from $384,696 for the nine months ended September 30, 2009 to
$362,145 for the nine months ended September 30, 2010. The decrease in total
operating expenses was mainly a result of reductions in exploration activities
at our Pisgah and Wikieup locations as we temporarily abridged our exploration
activities.  We expect to significantly increase our exploration
activities in the near term.





Other
income (expense)





Interest
income for the nine months ended September 30, 2010 increased by $15 (or 188%)
from $8 for the nine months ended September 30, 2009 to $23 for the nine months
ended September 30, 2010. Interest income relates to interest earned on cash
received as a result of financing activities, of which more was on hand during
the nine months ended September 30, 2010 compared to the same period in
2009.





Rental
revenue for the nine months ended September 30, 2010 increased by $528 (or 2%)
from $22,389 for the nine months ended September 30, 2009 to $22,917 for the
nine months ended September 30, 2010. Rental revenue relates to income derived
from the rental of the Company’s land for the purposes of mineral extraction,
filming movies or conducting photo shoots. Rental revenue increased during the
nine months ended September 30, 2010 compared to the same period in 2009 due to
increased annual rates for mineral extraction.





Interest
expense for the nine months ended September 30, 2010 decreased by $85,296 (or
62%) from $137,658 for the nine months ended September 30, 2009 compared to
$52,362 for the nine months ended September 30, 2010. The decrease in interest
expense was a result of debt conversions on June 30, 2009 that alleviated
certain interest accruals during the nine months ended September 30,
2010.





Net
loss





Our net
loss was $391,567 for the nine months ended September 30, 2010 compared to a net
loss of $499,957 for the nine months ended September 30, 2009. We expect to
continue 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. Our improved net loss for the nine months ended
September 30, 2010 was primarily a result of interest expense and exploration
costs not incurred relative to the same period in the previous
year.




31





LIQUIDITY
AND CAPITAL RESOURCES





The
following table summarizes total current assets, total current liabilities and
working capital at September 30, 2010 compared to December 31,
2009.




Increase
      / (Decrease)September
      30,
              2010
            
            
            December
      31,
              2009
            
            
            $
            
            
            %Current
      Assets
            
            $
            14,197
            
            
            $
            18,807
            
            
            $
            (4,610
            )
            
            
            (25
            %)Current
      Liabilities
            
            $
            1,409,373
            
            
            $
            1,126,618
            
            
            $
            282,755
            
            
            
            25
            %Working
      Capital (deficit)
            
            $
            (1,395,176
            )
            
            $
            (1,107,811
            )
            
            $
            287,365
            
            
            
            26
            %





Internal
and External Sources of Liquidity





During
the nine months ended September 30, 2010 and 2009, our operating and investing
activities used cash of $158,594 and $307,641, respectively, while our financing
activities provided cash of $143,016 and $269,625, respectively. The cash used
in operating activities was principally a result of the net loss we
incurred.





Investing Activities.During
the nine months ended September 30, 2010 we have raised a total of $60,000
through the sale of convertible debentures to a total of five accredited
investors under a private placement offering. The terms of the private placement
allow us to raise up to $1,000,000 through the sale of convertible debentures
that carry a 12% interest rate, with the interest only payable quarterly. The
debentures mature three years from the purchase date and are convertible into
shares of common stock at $0.25 per share. In the event that the 15 day volume
weighted average trading price of the Company’s common shares on the OTC
Bulletin Board is at least US$0.40, the Company has the right to require the
holder of the debentures to convert the debentures at the conversion price of
US$0.25 per common share upon 5 days prior written notice given by the Company
to the holder at any time during the term of the debentures.





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 expected 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,
both during periods of growth and/or contraction, through additional common
stock offerings and bank or other debt borrowings, to the extent available, or
to obtain additional financing to the extent necessary to augment our available
working capital.





Satisfaction
of our cash obligations for the next twelve months.





As of
September 30, 2010, our cash balance was $1,162. Our plan for satisfying our
cash requirements for the next twelve months is through additional and/or debt
or credit financing.  We anticipate our current cash reserves will be
sufficient to support operations through November 30, 2010, but do not
anticipate generating sufficient amounts of positive cash flow to meet our
working capital requirements. Consequently, we intend to make appropriate plans
in order to obtain sources of additional capital in the future to fund growth
and expansion through the issuance of 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.




32





As we
maintain or expand our current operational activities, we may continue to
experience net negative cash flows from operations, and unless we generate
sufficient sales through our operations, 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
operating history makes predictions of future operating results difficult to
ascertain and unreliable. In addition, since our cash position has fallen we are
finding it increasingly difficult to support and expand our
operations.  Thus, our prospects must be considered in light of the
risks, expenses and difficulties frequently encountered by companies in their
early stages of commercial viability. Such risks include, but are not limited
to, an evolving and unpredictable business model and the management of growth.
To address these risks we must, among other things, implement and successfully
execute our business and marketing strategy, continuously develop and upgrade
technology and products, respond to competitive developments, and continue to
attract, retain and motivate qualified personnel. There can be no assurance that
we will be successful in addressing such risks, and the failure to do so can
have a material adverse effect on our business prospects, financial condition
and results of operations.





Item
3.Quantitative
and Qualitative Disclosures about Market Risk.





Not
applicable.




Item
4T. Controls and Procedures.





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





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.




33





Changes
in Internal Control over Financial Reporting





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





PART
II--OTHER INFORMATION





Item
1.  Legal Proceedings.





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





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





In
revoking the CTO, the BSCS required that Can-Cal rescind all sales to British
Columbia residents who purchased the securities of Can-Cal without the required
exemptions (“Non-accredited Purchasers”). In meeting this condition, Can-Cal
rescinded the sale of an approximate total of 263,748 shares of common stock of
the Company and returned a total of approximately $67,913 of investment funds to
the Non-accredited Purchasers. Through the date of this Quarterly Report,
Can-Cal has rescinded of $55,788 of these investments. The Company continues to
affect the rescission of the remaining outstanding shares.





Item
1A. Risk Factors.





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




34





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





On
October 5, 2010, pursuant to a private placement exemption under Section 4(2)
and Regulation S of the Securities Act of 1933, the Company sold a 12%
convertible debenture (the “Debenture”) under a private placement offering to
accredited investors. The Debenture is unsecured and matures three years
following the date of its sale, on or about October 4, 2013 (the “Maturity
Date”). Interest 12% per annum is compounded and payable quarterly. The $5,000
principal amount of the Debenture, but not the accrued interest shall be
convertible in whole or in part into common stock of the Company at any time at
the option of the holder at a conversion price of twenty-five cents ($0.25) per
share.





On
October 4, 2010, pursuant to a private placement exemption under Section 4(2)
and Regulation S of the Securities Act of 1933, the Company sold a 12%
convertible debenture (the “Debenture”) under a private placement offering to
accredited investors. The Debenture is unsecured and matures three years
following the date of its sale, on or about October 3, 2013 (the “Maturity
Date”). Interest 12% per annum is compounded and payable quarterly. The $2,500
principal amount of the Debenture, but not the accrued interest shall be
convertible in whole or in part into common stock of the Company at any time at
the option of the holder at a conversion price of twenty-five cents ($0.25) per
share.





On
September 2, 2010, pursuant to a private placement exemption under Section 4(2)
and Regulation S of the Securities Act of 1933, the Company sold a 12%
convertible debenture (the “Debenture”) under a private placement offering to
accredited investors. The Debenture is unsecured and matures three years
following the date of its sale, on or about September 1, 2013 (the “Maturity
Date”). Interest 12% per annum is compounded and payable quarterly. The $10,000
principal amount of the Debenture, but not the accrued interest shall be
convertible in whole or in part into common stock of the Company at any time at
the option of the holder at a conversion price of twenty-five cents ($0.25) per
share.





On August
30, 2010, pursuant to a private placement exemption under Section 4(2) and
Regulation S of the Securities Act of 1933, the Company sold a 12% convertible
debenture (the “Debenture”) under a private placement offering to accredited
investors. The Debenture is unsecured and matures three years following the date
of its sale, on or about August 29, 2013 (the “Maturity Date”). Interest 12% per
annum is compounded and payable quarterly. The $10,000 principal amount of the
Debenture, but not the accrued interest shall be convertible in whole or in part
into common stock of the Company at any time at the option of the holder at a
conversion price of twenty-five cents ($0.25) per share.





On August
30, 2010, pursuant to a private placement exemption under Section 4(2) and
Regulation S of the Securities Act of 1933, the Company sold a 12% convertible
debenture (the “Debenture”) under a private placement offering to accredited
investors. The Debenture is unsecured and matures three years following the date
of its sale, on or about August 29, 2013 (the “Maturity Date”). Interest 12% per
annum is compounded and payable quarterly. The $10,000 principal amount of the
Debenture, but not the accrued interest shall be convertible in whole or in part
into common stock of the Company at any time at the option of the holder at a
conversion price of twenty-five cents ($0.25) per share.




35





On August
10, 2010, pursuant to a private placement exemption under Section 4(2) and
Regulation S of the Securities Act of 1933, the Company sold a 12% convertible
debenture (the “Debenture”) under a private placement offering to accredited
investors. The Debenture is unsecured and matures three years following the date
of its sale, on or about August 09, 2013 (the “Maturity Date”). Interest 12% per
annum is compounded and payable quarterly. The $5,000 principal amount of the
Debenture, but not the accrued interest shall be convertible in whole or in part
into common stock of the Company at any time at the option of the holder at a
conversion price of twenty-five cents ($0.25) per share.





In the
event that the 15-day volume weighted average trading price of the Company’s
common stock as quoted on the OTC Bulletin Board is at least forty cents
($0.40), the Company has the right to require the holder of the Debenture to
convert the Debentures listed above at the conversion price of twenty-five cents
($0.25) per share at any time prior to the Maturity Date.





Subject
to additional availability of funding, the Company will use proceeds of the sale
(i) toward a work-up of the 3 potential extraction processes to potentially able
to prove up any precious metals, platinum groups elements and/or other base
metals on the Pisgah, California property and the Wikieup, Arizona property;
(ii) to conduct a drill program to potentially prove up the potential tonnages
and subsequently any precious metals and/or other base metals on the Wikieup,
Arizona property; (iii) to conduct a comprehensive research and development
program to ascertain the potential for any rare earth elements on the Owl
Canyon, California property (iv) to determine and engage a qualified and
comprehensive US and Canadian investor relations and shareholder communications
group; and v) for strategic working capital reserve.





Issuer
Purchases of Equity Securities





We did
not repurchase any of our equity securities during the nine month period ended
September 30, 2010.





Item
3. Defaults Upon Senior Securities.





See Note
4 to our condensed financial statements included herein.





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





We did
not submit any matters to a vote of our security holders during the nine month
period ending September 30, 2010.





Item
5. Other Information.





None.





36




Item
6.  Exhibits.




Incorporated
      by referenceExhibit
            
            Exhibit
      Description
            
            Filed
      herewith
            
            Form
            
            Period
      ending
            
            Exhibit
            
            Filing
      date31.1
            
            Certification
      of Michael Hogan pursuant to Section 302 of the Sarbanes-Oxley
      Act
            
            X31.2
            
            Certification
      of Michael Hogan pursuant to Section 302 of the Sarbanes-Oxley
      Act
            
            X32.1
            
            Certification
      of Michael Hogan pursuant to Section 906 of the Sarbanes-Oxley
      Act
            
            X


37




SIGNATURES


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





CAN-CAL
RESOURCES LTD.


(Registrant)








By:  /s/
Michael Hogan


Michael
Hogan, President and Chief Executive Officer


(On
behalf of the Registrant and as Principal Financial


Officer)








Date:
November 12, 2010




38