Can Cal Resources 10Q 2009 Q1 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2009

¨ 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.)

2500 Vista Mar Drive

Las Vegas, Nevada 89128

(Address of principal executive offices)

(702) 243-1849

(Registrant’s telephone number, including area code)

Indicate by check mark 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. Yes x No ¨

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

Large accelerated filer ¨	Accelerated filer ¨

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

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

The number of shares of Common Stock, $0.001 par value, outstanding on May 12, 2009, was 24,587,753.

CAN-CAL RESOURCES LTD.

FORM 10-Q

TABLE OF CONTENTS

			Page

PART I – FINANCIAL INFORMATION			1
	Item 1. Financial Statements		1
		Condensed Balance Sheets	1
		Condensed Statements Of Operations	2
		Condensed Statements Of Cash Flows	3
		Notes To Condensed Financial Statements	4
	Item 2. Management’s Discussion and Analysis		17
	Item 3. Quantitative and Qualitative Disclosures about Market Risk		21
	Item 4T. Controls and Procedures		21

PART II – OTHER INFORMATION			21
	Item 1. Legal Proceedings		21
	Item 1A. Risk Factors		22
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		22
	Item 3. Defaults Upon Senior Securities		22
	Item 4. Submission of Matters to a Vote of Security Holders		22
	Item 5. Other Information		22
	Item 6. Exhibits		23

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Can-Cal Resources Ltd.

(an Exploration Stage Company)

Condensed Balance Sheets

	March 31,			December 31,
	2009			2008
	(Unaudited)
Assets
Current assets:
Cash	$	3,394		$	45,848
Other current assets		100			100
Total current assets		3,494			45,948

Property, plant and equipment (net accumulated depreciation of $138,960 and $136,347)		54,883			57,496

Other assets:
Capitalized mineral rights		1,248			1,248
Deposits		1,895			1,895
		3,143			3,143

Total assets	$	61,520		$	106,587

Liabilities and Stockholders’ (Deficit)

Current liabilities:
Accounts payable and accrued liabilities	$	23,851		$	33,356
Accrued interest		397,695			376,118
Accrued officer salary		237,482			211,689
Rescission liability		67,913			-
Notes payable - related parties		471,550			446,550
Notes payable		258,500			258,500
Unearned revenues		4,583			11,458
Total current liabilities		1,461,574			1,337,671

Commitments and contingencies

Stockholders’ (deficit):
Preferred stock, $0.001 par value, 10,000,000 shares authorized, no shares issued and outstanding		-			-
Common stock, $0.001 par value, 100,000,000 shares authorized, 24,587,753 and 24,587,753 shares issued and outstanding as of March 31, 2009 and December 31, 2008, respectively		24,588			24,588
Additional paid in capital		7,763,589			7,831,502
Accumulated (deficit)		(9,188,231	)		(9,087,174	)
Total stockholders’ (deficit)		(1,400,054	)		(1,231,084	)

Total liabilities and stockholders’ (deficit)	$	61,520		$	106,587

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

Can-Cal Resources Ltd.

(an Exploration Stage Company)

Condensed Statements of Operations

(Unaudited)

	For the three months ended						March 22, 1995 (Inception) to
	March 31,			March 31,			March 31,
	2009			2008			2009

Material sales	$	-		$	-		$	245,500

Cost of sales		-			-			263,400

Gross profit		-			-			(17,900	)

Expenses:
Exploration costs		3,403			17,914			495,728
Depreciation		2,613			2,997			233,390
General and administrative expenses		50,492			56,995			6,123,728
Officer compensation		30,000			30,992			761,176
Impairment of operating assets		-			-			442,524
Total operating expenses		86,508			108,898			8,056,546

Loss from operations		(86,508	)		(108,898	)		(8,074,446	)

Other income (expense):
Other income from legal judgment		-			-			47,200
Interest income		8			98			52,922
Rental revenue		7,375			9,925			301,592
Gain (loss) on sale of fixed assets		-			-			26,801
Interest expense		(21,932	)		(13,804	)		(1,068,700	)
Total other income (expense)		(14,549	)		(3,781	)		(640,185	)

Loss before provision for income taxes		(101,057	)		(112,679	)		(8,714,631	)

Provision for income taxes		-			-

Net loss from continuing operations		(101,057	)		(112,679	)		(8,714,631	)

Income from discontinued operations
Income (loss) from discontinued operations		-			-			116,400
Gain (loss) on disposal of operations (net of taxes)		-			-			(590,000	)
Net loss	$	(101,057	)	$	(112,679	)	$	(9,188,231	)

Basic loss per common share	$	(0.00	)	$	(0.00	)

Basic weighted average common shares outstanding		24,587,753			24,581,984

The accompanying notes are an integral part of these condensed financial statements.

Can-Cal Resources Ltd.

(an Exploration Stage Company)

Condensed Statements of Cash Flows

(Unaudited)

	For the three months ended						March 22, 1995 (Inception) to
	March 31,			March 31,			March 31,
	2009			2008			2009
Cash flows from operating activities:
Net loss	$	(101,057	)	$	(112,679	)	$	(9,188,231	)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization		2,613			2,997			250,390
Bad debts		-			-			207,100
(Gain) loss on sale of fixed assets		-			-			(6,501	)
Stock based compensation		-			-			532,814
Stock issued for financing and interest		-			-			523,200
Beneficial conversion feature on convertible debenture		-			-			25,200
Loss on disposal of investment property		-			-			938,600
Undistributed earnings of affiliate		-			-			(174,300	)
Gain on discontinued operations		-			-			(116,400	)
Loss on foreign currency translation		-			-			8,500
Impairment of operating assets		-			-			442,524
Decrease (increase) in assets:
Accounts receivable		-			-			(100	)
Other current assets		-			(1,995	)		(90,700	)
Other assets		-			(1,248	)		(1,895	)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses		(9,505	)		(29,309	)		23,851
Accrued interest		21,577			13,510			397,695
Accrued officer salary		25,793			19,497			237,482
Unearned revenues		(6,875	)		(5,625	)		4,583
Net cash used by operating activities		(67,454	)		(114,852	)		(5,986,188	)

Cash flows from investing activities:
Purchase of investment property		-			-			(1,083,600	)
Proceeds from sale of investment property		-			-			319,300
Purchase of property, equipment and mineral interests		-			-			(768,644	)
Proceeds from sale of property, equipment and mineral interests		-			-			26,100
Net cash used by investing activities		-			-			(1,506,844	)

Cash flows from financing activities:
Proceeds from notes payable		-			-			948,400
Principal payments on notes payable		-			-			(689,900	)
Proceeds from notes payable, related parties		25,000			22,000			838,800
Principal payment on notes payable, related parties		-			-			(367,250	)
Proceeds from issuance of common stock		-			8,125			6,766,376
Net cash provided by financing activities		25,000			30,125			7,496,426

Net increase (decrease) in cash		(42,454	)		(84,727	)		3,394
Cash, beginning of period		45,848			105,987			-
Cash, end of period	$	3,394		$	21,260		$	3,394

Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	-		$	-		$	-
Cash paid for interest	$	-		$	-		$	-
Rescission Liability	$	67,913		$	-		$	-

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

Can-Cal Resources Ltd.

(an Exploration Stage Company)

Notes to Condensed Financial Statements

(Unaudited)

1.	BASIS OF PRESENTATION

The accompanying unaudited condensed financial statements have been prepared in accordance with Securities and Exchange Commission requirements for interim financial statements. Therefore, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The financial statements should be read in conjunction with the Form 10-K for the year ended December 31, 2008 of Can-Cal Resources Ltd. (the “Company”).

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

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

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

2.	GOING CONCERN

The Company incurred a net loss of $101,057 for the three months ended March 31, 2009. Also, the Company’s current liabilities exceed its current assets by $1,458,080 as of March 31, 2009. 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, as well as revenue from operations in the long term.

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

3.	NOTES PAYABLE, RELATED PARTIES

Notes payable consisted of the following as of March 31, 2009 and December 31, 2008, respectively:

	March 31, 2009		December 31, 2008
Note payable to a stockholder, secured by real property, bearing interest at 16.0% per annum, interest only payments payable in semi-annual payments, maturing November 2005 (Note: The Company is in default of interest payments totaling $340,000 and principal total of $ 300,000 but is currently negotiating forbearance on collection of the interest)	$	300,000	$	300,000

Note payable to a stockholder, secured by real property, bearing interest at 8.0% per annum, maturing July 2008		25,114		25,114

Note payable to a stockholder, secured by real property, bearing interest at 8.0% per annum, maturing June 2008		35,436		35,436

Note payable to an officer, unsecured bearing interest at 8.0% per annum, maturing December 2009		111,000		86,000

Note payable, unsecured, bearing interest at 8.0% per annum, maturing June 2008		7,500		7,500

Note payable, unsecured, bearing interest at 8.0% per annum, maturing March, 2009		24,000		24,000

Note payable, unsecured, bearing interest at 8.0% per annum, maturing June 2009		30,000		30,000

Note payable, unsecured, bearing interest at 8.0% per annum, maturing June 2009		50,000		50,000

Note payable, unsecured, bearing interest at 8.0% per annum, maturing June 2009		75,000		75,000

Note payable, unsecured, bearing interest at 8.0% per annum, maturing June 2009		72,000		72,000

Current portion (amounts due within one year)	$	730,050	$	705,050

In 2006, the Company agreed to pay its CEO an annual salary of $120,000. As of March 31, 2009, the Company accrued salary due to its CEO in the amount of $237,482.

4.	CHANGES IN SECURITIES

1996

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

1997

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

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

On October 27, 1997 the Board approved the issuance of 2,181,752 restricted common shares to ARUM, LLC to repay an existing debt of approximately $315,045.98 and to purchase a property located in San Bernadino County, California, known as the Pisgah property.

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

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

1998

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

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

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

1999

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

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

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

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

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

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

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

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

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

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

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

2000

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

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

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.

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.

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.

During 2003, 205,166 restricted common shares in payment of $31,500 of services by Luis Vega, consulting geologist. The per share price was determined by dividing the amount owed by the average closing price of the company’s stock for each day’s service.

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.

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.

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.

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.

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.

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).

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.

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.

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.

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.

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.

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.

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.

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.

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.

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. We also issued, for services, 8,500 restricted common shares for a total value of $2,325.

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

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

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

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

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

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

2007

During the twelve months ended December 31, 2007, we sold 1,238,167 restricted common shares to 72 Canadian residents and 4 US residents for a total of $375,534 and issued warrants to purchase 492,795 restricted common shares, exercisable between $0.35 to $.65 per share.

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. The shares were valued at a total of $2,000.

2008

During the three months ended March 31, 2009, 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.

5. OPTIONS AND WARRANTS

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. 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.

In accordance with FASB 123R (revised 2004) “Share-based Payment”, the Company recognized the fair value of the options in the statement of operations 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: 86%; risk free interest rate: 4.92% to 5.16%.

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

	Options Outstanding		Weighted Average Exercise Price
Balance, January 1, 2008		1,000,000	$	0.20
Granted		-
Cancelled		-
Exercised		-
Expired		-
Balance, December 31, 2008		1,000,000		0.20
Granted		-		-
Cancelled		-		-
Exercised		-		-
Expired		-
Balance, March 31, 2009		1,000,000	$	0.20

Warrants related to the sale of common stock - the following table summarizes the Company’s warrant activity related to the sale of common stock as of March 31, 2009:

	Warrants Outstanding		Weighted Average Exercise Price
Balance, January 1, 2008		2,758,136	$	0.31
Granted		32,500		0.35
Cancelled		-		-
Exercised		-		-
Expired		-		-
Balance, December 31, 2007		2,790,636		0.31
Granted		-		-
Cancelled		-		-
Exercised		-		-
Expired		-		-
Balance, March 31, 2009		2,790,636	$	0.31

The following table summarizes the Company’s warrant activity not related to the sale of common stock:

	Warrants Outstanding		Weighted Average Exercise Price
Balance, January 1, 2008		453,535	$	0.25
Granted		-		-
Cancelled		-		-
Exercised		-		-
Expired		-		-
Balance, December 31, 2008		453,535		0.25
Granted		-		-
Cancelled		-		-
Exercised		-		-
Expired		-		-
Balance, March 31, 2009		453,535	$	0.25

4.	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.

Operating lease - The Company operates from a leased facility in Nevada under a month to month basis. The lease calls for monthly base rent of approximately $1,500.

Revocation order – On April 24, 2009 the Company received a Partial Revocation Order from the British Columbia Securities Commission. Pursuant to the order, the Company has agreed to offer a full rescission for shares purchased or warrants exercised, during the period of October 2004 to December 2007. The Company has recorded a rescission liability totaling $67,913 representing the total amount of cash required to repurchase 263,748 shares in accordance with the order.

FORWARD-LOOKING STATEMENTS

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

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

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

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

our ability to diversify our operations;

actions and initiatives taken by both current and potential competitors;

inability to raise additional financing for working capital;

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

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

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

inability to efficiently manage our operations;

inability to achieve future operating results;

the unavailability of funds for capital expenditures;

our ability to recruit and hire key employees;

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

the other risks and uncertainties detailed in this report.

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

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

Item 2. Management’s Discussion and Analysis.

(A) PLAN OF OPERATION.

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

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

At March 31, 2009, we had approximately $3,400 cash available to sustain operations. Accordingly we are uncertain as to whether the Company may continue as a going concern. While we may seek additional investment capital, or possible funding or joint venture arrangements with other mining companies, we have no assurance that that such investment capital or additional funding and joint venture arrangements will be available to the Company.

(B) RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008.

The following table summarizes selected items from the statement of operations for the three months ended March 31, 2009 compared to March 31, 2008.

EXPENSES:

	Three Months Ended
	March 31,
	2009			2008			Increase / (Decrease)
	Amount			Amount			$			%
Expenses:
Exploration costs	$	3,403		$	17,914		$	(14,511	)	(81	)%
Depreciation		2,613			2,997			(384	)	(13	)%
General & administrative expenses		50,492			56,995			(6,503	)	(12	)%
Officer compensation		30,000			30,992			(992	)	(3	)%
Total operating expenses		86,508			108,898			(22,390	)	(21	)%
Loss from operations		(86,508	)		(108,898	)		(22,390	)	(21	)%

Other income (expense):
Interest income		8			98			(90	)	(92	)%
Rental revenue		7,375			9,925			(2,550	)	(26	)%
Interest expense		(21,932	)		(13,804	)		8,128		59	%
Total other income (expense)		(14,549	)		(3,781	)		10,768		285	%
Net loss	$	(101,057	)	$	(112,679	)	$	(11,622	)	(10	)%

EXPLORATION COSTS

Exploration costs for the three months ended March 31, 2009 decreased by $14,511 or 81% from $17,914 for the three months ended March 31, 2008 to $3,403 for the three months ended March 31, 2009. The decrease is due to our efforts to scale back on further research as a result of the Cease Trade Order issued by the British Columbia Securities Commission and therefore causing the inability to provide Private Placement funding necessary to maintain operations.

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

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

DEPRECIATION

Depreciation for the three months ended March 31, 2009 decreased by $384 or 13% from $2,997 for the three months ended March 31, 2008 to $2,613 for the three months ended March 31, 2009. The decrease is principally due to less depreciation on equipment that was purchased after March 31, 2008.

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses for the three months ended March 31, 2009 decreased by $6,503 or 12% from $56,995 for the three months ended March 31, 2008 to $50,492 for the three months ended March 31, 2009. The decrease is principally due to decreased costs to maintain the office, including decreased utility costs and payroll taxes associated with moving some of the administrative functions in house.

OFFICER COMPENSATION

Officer Compensation for the three months ended March 31, 2009 decreased by $992 or 3% from $30,992 for the three months ended March 31, 2008 to $30,000 for the three months ended March 31, 2009.

TOTAL OPERATING EXPENSES

Total operating expenses for the three months ended March 31, 2009 decreased by $22,390 or 21% from $108,898 for the three months ended March 31, 2008 to $85,508 for the three months ended March 31, 2009. The decrease in total operating expenses was mainly a result of management's efforts to scale back exploration costs until the Company has the resources to effectively explore the claims that have been obtained.

OTHER INCOME (EXPENSE)

Interest income for the three months ended March 31, 2009 decreased by $90 or 92% from $98 for the three months ended March 31, 2008 to $8 for the three months ended March 31, 2009. Interest income relates to interest earned on cash received as a result of financing activities, of which less was on hand during the three months ended March 31, 2009 compared to the same period in 2008.

Rental revenue for the three months ended March 31, 2009 decreased by $2,550 or 26% from $9,925 for the three months ended March 31, 2008 to $7,375 for the three months ended March 31, 2009. Rental revenue relates to income derived from the rental of the Company's land for the purposes of filming movies or photo shoots. Less photo shoots were performed during the three months ended March 31, 2009 compared to the same period in 2008.

Interest expense for the three months ended March 31, 2009 increased by $8,128 or 59% from $13,804 for the three months ended March 31, 2008 compared to $21,932 for the three months ended March 31, 2009 due to additional loans entered into during the third and fourth quarters of 2008.

NET LOSS

Our net loss was $101,057 for the three months ended March 31, 2009 compared to a net loss of $112,679 for the three months ended March 31, 2008. We expect to improve our results of operations through the attainment of sufficient working capital and a focus on generating revenues from the subcontracting of mining activities, and a reduction of general and administrative expenses.

(D) LIQUIDITY AND CAPITAL RESOURCES AND RESULTS OF OPERATIONS

The following table summarizes total current assets, total current liabilities and working capital at March 31, 2009 compared to December 31, 2008.

	March 31,			December 31,			Increase / (Decrease)
	2009			2008			$			%
Current Assets	$	3,494		$	45,948		$	(42,454	)	(92	)%
Current Liabilities	$	1,461,574		$	1,337,671		$	123,903		10	%
Working Capital (deficit)	$	(1,458,080	)	$	(1,291,723	)	$	166,357		13	%

Internal and External Sources of Liquidity

During the three months ended March 31, 2009 and 2008, our operating and investing activities used cash of $67,454 and $114,852, respectively, while our financing activities provided cash of $25,000 and $30,125, respectively. The cash used in operating activities was principally a result of the net loss we incurred.

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

SATISFACTION OF OUR CASH OBLIGATIONS FOR THE NEXT TWELVE MONTHS.

As of March 31, 2009, our cash balance was $3,394. Our plan for satisfying our cash requirements for the next twelve months is through additional equity, third party financing, and/or debt financing. Our current cash reserves will not be sufficient to support operations through June 30, 2009, and do not anticipate generating sufficient amounts of positive cash flow to meet our working capital requirements. Consequently, we intend to make appropriate plans to ensure sources of additional capital in the future to fund growth and expansion through additional equity or debt financing or credit facilities. We also are considering possible funding through joint venture arrangements with other mining companies. There can be no assurance that we will raise capital through any of these means.

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

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

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Not applicable.

Item 4T. Controls and Procedures.

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

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

Changes in Internal Control over Financial Reporting

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

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

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

On April 24, 2009, the British Columbia Securities Commission (“BCSC”) notified Can-Cal Resources, Ltd. (“Can-Cal” or 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 Can-Cal, conditioned upon Can-Cal’s agreement to rescind the prior sale of certain securities, which sales were in part the subject of the CTO. The partial revocation of the CTO was effective April 24, 2009.

The BCSC had previously determined 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 will rescind the sale of an approximate total of 263,748 shares of common stock of the Company and return a total of $67,913 of investment funds to the Non-accredited Purchasers. The CTO will remain on all shares sold to Non-accredited Purchasers.

Item 1A. Risk Factors.

Our significant business risks are described in Item 1A to Form 10-K for the year ended December 31, 2008 to which reference is made herein.

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

We did not issue or sell any unregistered equity securities during the quarter ended March 31, 2009.

Issuer Purchases of Equity Securities

We did not repurchase any of our equity securities during the quarter ended March 31, 2009.

Item 3. Defaults Upon Senior Securities.

See Note 3 to our condensed financial statements included herein.

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

We did not submit any matters to a vote of our security holders during the first quarter of 2009.

Item 5. Other Information.

In revoking the CTO, the BSCS required that Can-Cal rescind all sales to British Columbia residents who purchased the securities of Can-Cal without the required exemptions (“Non-accredited Purchasers”). In meeting this condition, Can-Cal will rescind the sale of an approximate total of 263,748 shares of common stock of the Company and return a total of approximately $67,913 of investment funds to the Non-accredited Purchasers. The CTO will remain on all shares sold to Non-accredited Purchasers.

Item 6. Exhibits.

Incorporated by reference

Exhibit

Exhibit Description

Filed

herewith

Form

Period

Ending

Exhibit

Filing

date

31.1

Certification of Ronald B. Sloan pursuant to Section 302 of the Sarbanes-Oxley Act

31.2

Certification of Ronald B. Sloan pursuant to Section 302 of the Sarbanes-Oxley Act

32.1

Certification of Ronald B. Sloan pursuant to Section 906 of the Sarbanes-Oxley Act

99.1

Press Release issued April 28, 2009 regarding BCSC CTO

8-K

99.2

04/29/09

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/ Ronald Sloan
	Ronald D. Sloan, President and Chief Executive Officer
	(On behalf of the Registrant and as Principal Financial
	Officer)

Date: May 13, 2009

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Can Cal Resources (CCRE) 10-Q2009 Q1 Quarterly report

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