Can Cal Resources (CCRE) 10-Q 2009 Q3 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 September 30, 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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).                   ¨Yes ¨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 November 16, 2009, was 29,647,196.

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		18
	Item 3. Quantitative and Qualitative Disclosures about Market Risk		25
	Item 4T. Controls and Procedures		25
PART II – OTHER INFORMATION			26
	Item 1. Legal Proceedings		26
	Item 1A. Risk Factors		26
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		27
	Item 3. Defaults Upon Senior Securities		27
	Item 4. Submission of Matters to a Vote of Security Holders		28
	Item 5. Other Information		28
	Item 6. Exhibits		29

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Can-Cal Resources Ltd.

(an Exploration Stage Company)

Condensed Balance Sheets

	September 30,			December 31,
	2009			2008
	(Unaudited)
Assets
Current assets:
Cash	$	7,832		$	45,848
Other current assets		-			100
Total current assets		7,832			45,948
Property, plant and equipment (net accumulated depreciation of $144,186 and $136,347)		49,657			57,496
Other assets:
Capitalized mineral rights		1,248			1,248
Deposits		1,895			1,895
		3,143			3,143
Total assets	$	60,632		$	106,587
Liabilities and Stockholders’ (Deficit)
Current liabilities:
Accounts payable and accrued liabilities	$	53,675		$	33,356
Accrued interest – related parties		403,797			376,118
Accrued officer salary		286,338			211,689
Rescission liability		1,413			-
Notes payable - related parties		367,350			705,050
Unearned revenues		18,333			11,458
Total current liabilities		1,130,906			1,337,671
Commitments and contingencies
Stockholders’ (deficit):
Preferred stock, $0.001par value, 10,000,000 shares
authorized, no shares issued and outstanding		-			-
Common stock, $0.001 par value, 100,000,000 shares
authorized, 29,647,196 and 24,587,753 shares issued and outstanding
as of September 30, 2009 and December 31, 2008, respectively		26,443			24,588
Common stock, authorized and unissued		3,204			-
Additional paid in capital		8,487,210			7,831,502
Accumulated (deficit)		(9,587,131	)		(9,087,174	)
Total stockholders’ (deficit)		(1,070,274	)		(1,231,084	)
Total liabilities and stockholders’ (deficit)	$	60,632		$	106,587

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

1

Can-Cal Resources, Ltd.

(an Exploration Stage Company)

Condensed Statements of Operations

(Unaudited)

													March 22, 1995
	Three Months Ended						Nine Months Ended						(inception) to
	September 30,						September 30,						September 30,
	2009			2008			2009			2008			2009
Material sales	$	-		$	-		$	-		$	-		$	245,500
Cost of sales		-			-			-			-			263,400
Gross profit		-			-			-			-			(17,900	)
Expenses:
Exploration costs		13,239			45,622			31,900			84,527			524,225
Depreciation		2,613			2,998			7,839			8,993			238,616
General and administrative		87,196			108,446			254,957			251,086			6,328,193
Executive compensation		30,000			30,000			90,000			90,000			821,176
Impairment of assets		-			-			-			-			442,524
Total operating expenses		133,048			187,066			384,696			434,606			8,354,734
Loss from operations		(133,048	)		(187,066	)		(384,696	)		(434,606	)		(8,372,634	)
Other income (expense)
Interest expense		(93,000	)		(18,337	)		(137,658	)		(47,601	)		(1,184,426	)
Interest income		-			12			8			114			52,922
Rental income		10,875			31,019			25,025			57,633			319,242
Foreign currency gain (loss)		(7,213	)		-			(2,636	)		-			(2,636	)
Income from legal judgment		-			-			-			-			47,200
Gain on sale of fixed assets		-			-			-			-			26,801
Total other		(89,338	)		12,694			(115,261	)		10,146			(740,897	)
Loss before tax provision		(222,386	)		(174,372	)		(499,957	)		(424,460	)		(9,113,531	)
Provision for income taxes		-			-			-			-			-
Net loss-continuing operations		(222,386	)		(174,372	)		(499,957	)		(424,460	)		(9,113,531	)
Discontinued operations:
Income from discontinued operations		-			-			-			-			116,400
(Loss) on disposal of
Operations, net of tax		-			-			-			-			(590,000	)
Net (loss)	$	(222,386	)	$	(174,372	)	$	(499,957	)	$	(424,460	)	$	(9,587,131	)
Loss per common share -
Basic and fully diluted	$	(0.01	)	$	(0.01	)	$	(0.02	)	$	(0.02	)
Weighted average common
Shares outstanding -
Basic and fully diluted		29,483,306			24,587,753			26,472,332			24,585,844

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

2

Can-Cal Resources Ltd.

(an Exploration Stage Company)

Condensed Statements of Cash Flows

(Unaudited)

	Nine Months Ended						March 22, 1995 (Inception) to
	September 30,			September 30,			September 30,
	2009			2008			2009
Cash flows from operating activities:
Net (loss)	$	(499,957	)	$	(424,460	)	$	(9,587,131	)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation and amortization		7,839			8,993			255,616
Bad debts		-			-			207,100
(Gain) loss on sale of fixed assets		-			-			(6,501	)
Stock based compensation		13,300			-			546,114
Stock and warrants issued for financing and interest		78,961			-			602,161
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	)
Gain (loss) on foreign currency translation		-			-			8,500
Impairment of operating assets		-			-			442,524
Decrease (increase) in assets:
Accounts receivable		100			-			-
Other current assets		-			(12,095	)		(90,700	)
Other assets		-			-			(1,895	)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses		(46,181	)		(17,355	)		(12,825	)
Accrued interest – related parties		56,773			45,923			432,891
Accrued officer salary		74,649			71,037			286,337
Unearned revenues		6,875			6,667			18,333
Net cash used by operating activities		(307,641	)		(321,290	)		(6,226,376	)
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		-			258,500			948,400
Principal payments on notes payable		-			-			(689,900	)
Proceeds from notes payable, related parties		31,800			40,000			845,600
Principal payment on notes payable, related parties		-			(40,000	)		(367,250	)
Proceeds from issuance of common stock		237,825			8,125			7,004,202
Net cash provided by financing activities		269,625			266,625			7,741,052
Net increase (decrease) in cash		(38,016	)		(54,665	)		7,832
Cash, beginning of period		45,848			105,987			-
Cash, end of period	$	7,832		$	51,322		$	7,832
Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	-		$	-		$	-
Cash paid for interest	$	-		$	-		$	-
Shares issued for debt conversion	$	398,594		$	-		$	398,593
Rescission Liability	$	67,913		$	-		$	67,913

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

3

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 September 30, 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 $499,957 for the nine months ended September 30, 2009. In addition, the Company’s current liabilities exceed its current assets by $1,123,074 as of September 30, 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.

4

3. NOTES PAYABLE – RELATED PARTY

Notes payable consisted of the following as of September 30, 2009 and December 31, 2008, respectively:

	September 30, 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, matured November 2005	$	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		-		86,000
Note payable, unsecured, bearing interest at 8.0% per annum, maturing June 2008		-		7,500
Note payable, unsecured, bearing interest at 8.0% per annum, maturing March, 2009		-		24,000
Note payable, unsecured, bearing interest at 8.0% per annum, maturing June 2009		-		30,000
Note payable, unsecured, bearing interest at 8.0% per annum, maturing June 2009		-		50,000
Note payable, unsecured, bearing interest at 8.0% per annum, maturing June 2009		-		75,000
Note payable, unsecured, bearing interest at 8.0% per annum, maturing June 2009		-		72,000
Note payable, unsecured, non-interest bearing and due on demand		6,800		-
Total notes payable		367,350		705,050
Less current portion		367,350		705,050
Long-term notes payable, less current portion	$	-	$	-

5

3. NOTES PAYABLE (cont.)

We have recorded interest expense related to these notes in the amounts of $56,773 and $47,601 during the nine months ended September 30, 2009 and 2008, respectively.

4. RELATED PARTY TRANSACTIONS

In 2006, the Company agreed to pay its CEO an annual salary of $120,000. As of September 30, 2009 and December 31, 2008, the accrued salary due to its CEO was $286,338 and $211,689, respectively.

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 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.

6

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.

7

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.

8

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.

9

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.

10

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 June 30, 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.

11

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%.

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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.

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2008

During the nine months ended September 30, 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 nine months ended September 30, 2009, the company issued 1,902,600 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 $237,825.

On June 30, 2009, certain note holders elected to convert the principal balance of their notes together with accrued interest into shares of the Company’s common stock at a rate of $0.125 per share. In addition, the Company agreed to issue a warrant to purchase two shares of the Company’s common stock for each dollar converted (see Note 6). The total principal balance converted was $369,500 and was converted into 2,956,000 common shares. Total accrued interest converted was $29,094 or 232,741 common shares.   As of the date of this filing the shares remain unissued.

During the nine months ended September 30, 2009, the Company issued 95,000 shares to three individuals for services rendered. The Company recorded and expense of $13,300 representing the fair value of the grant.

6. OPTIONS AND WARRANTS

Options

The 2003 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. As of September 30, 2009 a total of 1,400,000 options have been issued under this plan of which 800,000 have expired, 500,000 were cancelled, and 100,000 were exercised.

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. As of September 30, 2009 a total of 500,000 options have been issued under this plan all of which remain outstanding and will expire on October 1, 2013.

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

	Options Outstanding		Weighted Average Exercise Price
Balance, January 1, 2008		500,000	$	0.20
Granted		-
Exercised		-
Expired		-
Balance, December 31, 2008		500,000		0.20
Granted		-		-
Exercised		-		-
Expired		-
Balance, September 30, 2009		500,000	$	0.20

Warrants

During the period ended September 30, 2009, the Company granted 1,902,600 warrants in connection with its unit offering.

During the nine months ended September 30, 2009 certain shareholders elected to convert principal and accrued interest of their outstanding notes (see Note 5). Pursuant to the conversion election, the Company agreed to grant warrants to purchase up to two shares of common stock for each dollar the note holder elected to convert. The warrants are exercisable at a price of $0.15 per share for a period of two years. The conversion amount totaled $398,593 and caused the issuance of 797,185 common stock purchase warrants. The Company has recorded interest expense of $78,981 representing the Black-Scholes value of the grant.

The following table summarizes the Company’s warrant activity as of September 30, 2009:

	Warrants Outstanding			Weighted Average Exercise Price
Balance, January 1, 2008		3,261,543		$	0.40
Granted		32,500			0.35
Exercised		-			-
Expired		(2,768,748	)		0.33
Balance, December 31, 2008		525,295			0.50
Granted		2,699,806			0.15
Exercised		-			-
Expired		(298,083	)		0.61
Balance, September 30, 2009		2,927,018		$	0.17

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7. COMMITMENTS AND CONTINGENCIES

Mining claims - The Company has a lease and purchase option agreement covering 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. As of September 30, 2009, the Company has paid $66,500 of this liability and 126,898 shares have been cancelled.

8. SUBSEQUENT EVENTS

The Company authorized the issuance of approximately 2,768,748 warrants to purchase the Company’s common stock at exercise prices ranging from $0.25 to $0.65 per share. The grant was made in an effort to provide goodwill to the Company’s warrant holders impacted by the cease trade order (“CTO”) imposed by the British Columbia Securities Commission.  As a result of the CTO, the aforementioned warrant holder’s were unable to exercise their right to purchase shares of the Company’s common stock.   The fair value of warrants granted is estimated to be approximately $68,000 utilizing the Black-Scholes pricing model.

Pursuant to Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 855 165, management has evaluated all events and transactions that have occurred subsequent to the balance sheet date and have determined that there are no additional material events which have occurred as of November 16, 2009, that would be deemed significant or require recognition or additional disclosure.

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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.

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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 September 30, 2009, we had approximately $50,376 in cash available to sustain operations. Accordingly we are uncertain as to whether the Company may continue as a going concern. While we may seek additional investment capital, or possible funding or joint venture arrangements with other mining companies, we have no assurance that that such investment capital or additional funding and joint venture arrangements will be available to the Company.

(B) RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008.

The following table summarizes selected items from the statement of operations for the three months ended September 30, 2009 compared to September 30, 2008.

EXPENSES:

	Three Months Ended
	September 30,						Increase/(Decrease)
	2009			2008			$			%
Expenses:
Exploration costs	$	13,239		$	45,622		$	(32,383	)		(71	)%
Depreciation		2,613			2,998			(385	)		(13	)%
General & administrative		87,196			108,446			(21,250	)		(20	)%
Officer compensation		30,000			30,000			-			-
Total operating expenses		133,048			187,066			(54,018	)		(29	)%
Other income (expense)
Interest income		-			12			(12	)		-
Interest expense		(93,000	)		(18,337	)		74,663			407	%
Rental revenue		10,875			31,019			(20,144	)		(65	)%
Foreign currency gain		(7,213	)		-			7,213			-
Total other		(89,338	)		12,694			102,032			804	%
Net (loss)	$	(222,386	)	$	(174,372	)	$	48,014			28	%

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EXPLORATION COSTS

Exploration costs for the three months ended September 30, 2009 decreased by $32,383 or 71% from $45,622 for the three months ended September 30, 2008 to $13,239 for the three months ended September 30, 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. The Cease Trade Order was lifted mid quarter and it is our expectation that our exploration costs will resume through out the remainder of the year.

DEPRECIATION

Depreciation for the three months ended September 30, 2009 remained consistent with the comparable period as expected.

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses for the three months ended September 30, 2009 decreased by $21,250 or 20% from $108,446 for the three months ended September 30, 2008 to $117,269 for the three months ended September 30, 2009. The decrease experienced in this quarter is the result of a decrease in legal fee since resolving the Cease Trade Order from the British Columbia Securities Commission.

OFFICER COMPENSATION

We did not experience a material change in compensation to our CEO. Pursuant to the board of director’s 2006 resolution, our CEO will continue to receive quarterly compensation in the amount of $30,000.

TOTAL OPERATING EXPENSES

Total operating expenses for the three months ended September 30, 2009 decreased by $54,018 or 29% from $187,066 for the three months ended September 30, 2008 to $133,048 for the three months ended September 30, 2009. The increase in total operating expenses was directly related to the legal expenses incurred as a result of our Canadian securities activities.

OTHER INCOME (EXPENSE)

We experienced a decline in rental revenue for the three months ended September 30, 2009 due to the elimination of our 2008 Toyota Commercial lease which expired on August 21, 2008. During the quarter we renewed our lease with Rinker Materials for an additional one year period at an annual rate of $27,500. The rental agreement has been paid in full and we expect to recognize $6,775 in rental revenue per quarter through May 2010.

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Our interest expense increased during the three month period ended September 30, 2009 compared to the same period in the previous year due to the additional promissory notes entered into in the latter half of 2008 and warrants issued in connection with the conversion of debt.

NET (LOSS)

We incurred a net (loss) of $222,386 for the three month period which is an increase of $48,014 over the comparable period. Our extensive legal fees in connection with the cease trade order and our increase in interest expense from our financing activities resulted in the increase in net (loss).

(C) RESULTS OF OPERATIONS FOR THE NINEMONTHS ENDED SEPTEMBER 30, 2009 AND 2008.

The following table summarizes selected items from the statement of operations for the Nine months ended September 30, 2009 compared to September 30, 2008.

EXPENSES:

	Nine Months Ended
	September 30,						Increase/(Decrease)
	2009			2008			$			%
Expenses:
Exploration costs	$	31,900		$	84,527		$	(52,627	)		(62	)%
Depreciation		7,839			8,993			(1,154	)		(13	)%
General & administrative		254,957			251,086			3,871			2	%
Officer compensation		90,000			90,000			-			-
Total operating expenses		384,696			434,606			(49,910	)		(11	)%
Other income (expense)
Interest income		8			114			(106	)		(93	)%
Interest expense		(137,658	)		(47,601	)		90,057			189	%
Rental revenue		25,025			57,633			(32,608	)		(57	)%
Foreign currency gain		(2,636	)		-			2,636			-
Total other		(115,261	)		10,146			125,407			1236	%
Net (loss)	$	(499,957	)	$	(424,460	)	$	75,497			18	%

EXPLORATION COSTS

We experienced a significant decline in our exploration costs for the nine month period ending September 30, 2009 as a result of our inability to raise the necessary capital. This was the direct result of the Cease Trade Oder put in place by the British Columbia Securities Commission (“BCSC”) on February 4, 2008. This order was partially lifted by the BCSC on April 24, 2009 whereby enabling us to raise additional capital to continue our exploration endeavors.

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DEPRECIATION

We have not made any capital purchases during the nine months ending September 30, 2009 and therefore have experienced no material change in our depreciation expense. As of the date of this filing, we do not anticipate incurring any capital expenditure for the remainder of the year. As a result, our depreciation expense will remain consistent as expected under a straight line method.

GENERAL AND ADMINISTRATIVE EXPENSES

We experienced a 2% increase in our general and administrative expenses for the nine months ended September 30, 2009 compared to the same period in the previous year. The increase was expected by management due to our increase in professional fees resulting from the regulatory issues in British Columbia. As of September 30, 2009, the majority of these issues have reached resolution and we therefore expect to see these costs to be more comparable to the previous year in the third and fourth quarter.

OFFICER COMPENSATION

In 2006, our board of director’s agreed to pay annual compensation of $120,000 to our CEO. Until such time this is adjusted by our board of directors, we expect no significant changes in our periodic or annual expense.

TOTAL OPERATING EXPENSES

Our overall operating expenses remained consistent with the previous nine month period despite our significant increase in legal fees. We achieve the minimal increase through management’s efforts to lower or eliminate any unnecessary expenses. We anticipate our overall all expenses to increase slightly and in direct relation to our successful financing efforts through the remainder of the year.

OTHER INCOME (EXPENSE)

During the second quarter of 2008, we entered into a short term lease agreement with Toyota Commercial whereby we allowed Toyota use of certain land for a period of two months in exchange for a rental fee of $32,500. This was an isolated and non-recurring event in 2008. As a result of this single transaction, we experienced a decline in rental revenue for the nine month period ended September 30, 2009.

Our increase in interest expense for the nine month period ended September 30, 2009 of $90,057 compared to the same period in the previous year is directly related to the additional promissory notes entered into in the latter half of 2008.

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NET LOSS

We incurred a net (loss) of $499,957 for the nine month period ended September 30, 2009. The increase in net loss of $75,497 over the comparable period was a direct result of expenses incurred from debt conversion and interest accrued on new loans subsequent to the previous years quarter end.

(D) LIQUIDITY AND CAPITAL RESOURCES AND RESULTS OF OPERATIONS

The following table summarizes total current assets, total current liabilities and working capital at September 30, 2009 compared to December 31, 2008.

	September 30,			December 31,			Increase / (Decrease)
	2009			2008			$			%
Current assets	$	7,832		$	45,948		$	(38,116	)		(83	)%
Current liabilities		1,130,906			1,337,671			(206,765	)		(16	)%
Working capital (deficit)	$	(1,123,074	)	$	(1,291,723	)	$	168,649			13	%

Internal and External Sources of Liquidity

During the nine months ended September 30, 2009 and 2008, our operating and investing activities used cash of $307,641 and $321,290, respectively, while our financing activities provided cash of $269,625 and $266,625. 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 September 30, 2009, our cash balance was $7,832. 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 September 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.

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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.

Going Concern

The financial statements included in this filing have been prepared in conformity with generally accepted accounting principles that contemplate the continuance of the Company as a going concern. Management intends to use borrowings and security sales to mitigate the effects of its cash position, however no assurance can be given that debt or equity financing, if and when required will be available. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and classification of liabilities that might be necessary should the Company be unable to continue existence.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results or operations, liquidity, capital expenditures or capital resources that is material to investors.

Critical Accounting Policies and Estimates

Related party transactions: In March 1982, the FASB issued ASC 850, “Related Party Disclosure”. This Statement establishes requirements for related party disclosures and provides guidance for the disclosures of transactions between related parties.

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Recent Accounting Developments

In June 2009, the FASB issued ASC 105 “The FASB Accounting Standards Codification™ and the Hierarchy of Generally Accepted Accounting Principles. The FASB Accounting Standards Codification™ (Codification) will become the source of authoritative U.S. generally accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. On the effective date of this Statement, the Codification will supersede all then-existing non-SEC accounting and reporting standards. All other non-grandfathered non-SEC accounting literature not included in the Codification will become non-authoritative. As prescribe by the FASB we have adopted ASC 105, for all interim and annual periods ending after September 15, 2009.

On April 9, 2009, the FASB issued additional guidance intended to provide clarification in application and enhance disclosures regarding fair value measurements and impairments of securities. ASC 820, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly, provides guidelines for making fair value measurements more consistent with the principles presented in ASC 820, Fair Value Measurements. ASC 825, Interim Disclosures about Fair Value of Financial Instruments, enhances consistency in financial reporting by increasing the frequency of fair value disclosures. ASC 320, Recognition and Presentation of Other-Than-Temporary Impairments, provides additional guidance designed to create greater clarity and consistency in accounting for and presenting impairment losses on securities.

ASC 820 relates to determining fair values when there is no active market or where the price inputs being used represent distressed sales. It reaffirms what Statement ASC 820 states is the objective of fair value measurement—to reflect how much an asset would be sold for in an orderly transaction (as opposed to a distressed or forced transaction) at the date of the financial statements under current market conditions. Specifically, it reaffirms the need to use judgment to ascertain if a formerly active market has become inactive and in determining fair values when markets have become inactive.

ASC 825 relates to fair value disclosures for any financial instruments that are not currently reflected on the balance sheet of companies at fair value. Prior to issuing this FSP, fair values for these assets and liabilities were only disclosed once a year. The FSP now requires these disclosures on a quarterly basis, providing qualitative and quantitative information about fair value estimates for all those financial instruments not measured on the balance sheet at fair value.

ASC 320 on other-than-temporary impairments is intended to bring greater consistency to the timing of impairment recognition, and=2 0provide greater clarity to investors about the credit and noncredit components of impaired debt securities that are not expected to be sold. The measure of impairment in comprehensive income remains fair value. The FSP also requires increased and more timely disclosures sought by investors regarding expected cash flows, credit losses, and an aging of securities with unrealized losses.  The FSPs are effective for interim and annual periods ending after June 15, 2009, but entities may early adopt the FSPs for the interim and annual periods ending after March 15, 2009.  The Company has determined that adoption of these pronouncements will not have a material impact on the Company’s financial statements.

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In May 2009, the FASB issued ASC 855, “Subsequent Events”, which establishes general standards of accounting for, and requires disclosure of, events that occur after the balance sheet date but before financial statements are issued or are available to be issued.  The Company adopted the provisions of ASC 855 for the quarter ended September 30, 2009.  The adoption of these provisions did not have a material effect on its consolidated financial statements.

In June 2009, the Financial Accounting Standards Board (FASB) issued ASC 105, “The FASB Accounting Standards CodificationTM and the Hierarchy of Generally Accepted Accounting Principles and establishes the FASB Accounting Standards CodificationTM (Codification) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with GAAP. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. The FASB will no longer issue new standards in the form of Statements, FASB Staff Positions, or Emerging Issues Task Force Abstracts; instead the FASB will issue Accounting Standards Updates. Accounting Standards Updates will not be authoritative in their own right as they will only serve to update the Codification. The issuance of ASC 105 and the Codification does not change GAAP. ASC 105 becomes effective for the Company for the period ending September 30, 2009. Management has determined that the adoption of ASC 105 will not have an impact on its consolidated financial statements.

In June 2009, the FASB issued ASC 860, “Accounting for Transfers of Financial Assets“. ASC 860  removes the concept of a qualifying special-purpose entity and removes the exception from applying ASC 810 to variable interest entities that are qualifying special-purpose entities; limits the circumstances in which a transferor derecognizes a portion or component of a financial asset; defines a participating interest; requires a transferor to recognize and initially measure at fair value all assets obtained and liabilities incurred as a result of a transfer accounted for as a sale; and requires enhanced disclosure; among others. ASC 860 becomes effective for the Company on January 1, 2010. Management does not believe that the adoption of ASC 860 will not have an impact on its consolidated financial statements.

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.

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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. The BCSC order was lifted on or about April 27, 2009.

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.

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

On May 28, 2009, pursuant to private placement exemptions under Section 4(2) and Regulation S of the Securities Act of 1933, the Company sold 1,567,600 units of securities consisting of (i) one share of common stock and (ii) one warrant to purchase one share of common stock (the “Units”) at a price of $0.125 per Unit.  The warrants are exercisable each into one share of common stock at a price of $0.15 per share and have an expiration date of March 31, 2011.  The Company received from the sales total gross proceeds of $199,950.00.

On August 12, 2009, pursuant to private placement exemptions under Section 4(2) and Regulation S of the Securities Act of 1933, the Company sold 255,000 units of securities consisting of (i) one share of common stock and (ii) one warrant to purchase one share of common stock (the “Units”) at a price of $0.125 per Unit.  The warrants are exercisable each into one share of common stock at a price of $0.15 per share and have an expiration date of August 11, 2011.  The Company received from the sales total gross proceeds of $31,875.

The Company has used the proceeds from the financings during the first nine months of 2009 (i) for exploration and development of Can-Cal’s current properties, including ongoing laboratory methodology processing and metallurgy testing in relation to precious metal extraction from Can-Cal’s Pisgah and Wikieup properties; (ii) to fund the rescission of certain prior sales of shares as per the requirements of the British Columbia Securities Commission in connection with April 24, 2009, partial revocation of the Cease Trade Order, and; (iii) for general working capital requirements.

Additionally, during the nine months ended September 30, 2009, the Company issued 95,000 shares of restricted common stock to three individuals in exchange for the provision of services to the Company, which issuance of shares is exempt from the registration and prospectus delivery requirements of Section 4(2) of the Securities Act of 1933. The recipients of the shares were afforded an opportunity for effective access to files and records of the Company that contained the relevant information needed to make their investment decisions, including the Company’s financial statements and 1934 Act reports. The Company reasonably concluded that the recipients, immediately prior to issuing the shares, had such knowledge and experience in our financial and business matters that they were capable of evaluating the merits and risks of their respective investments

Issuer Purchases of Equity Securities

We did not repurchase any of our equity securities during the quarter ended September 30, 2009.

Item 3. Defaults Upon Senior Securities.

See Note 3 to our condensed financial statements included herein.

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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.

On November 13, 2009, Thompson MacDonaldresigned from the Board of Directors.  Mr. MacDonald briefly served on the Board, since August 2009, and resigns in order to focus on other concurrent business obligations.   Mr. MacDonald’s resignation from the Board did not occur in connection with any disagreement on any matter relating to Can-Cal’s operations, policies or practices, nor regarding the general direction of the Company.

On July 31, 2009, Can-Cal appointed William J. Hogan, of Calgary, Alberta, Canada, to the Board of Directors.  Mr. Hogan specializes in business development and has a track record of adding shareholder value to his endeavors in both the public and private sectors, with over 33 years experience in the areas of development, operations, fund raising and strategic planning for startup and growth level companies. Mr. Hogan currently holds the position of Vice Chairman, Founder of Vacci-Test Corporation, a Calgary, Alberta developing food safety pathogen testing company.

The Company also appointed, on July 31, 2009, Thompson MacDonald to the Board to serve as Chairman.  Mr. MacDonald has an extensive background in Strategic Communications and Corporate Governance and is a member of the Canada’s Institute of Corporate Directors (ICD.D).  He currently serves on several boards, including Chairman of ENMAX, an Alberta based electricity utility and Chairman of Walton International, an Alberta land assembly and development company.  Mr. MacDonald previously served as Chairman of Vacci-Test Corporation, a Calgary, Alberta developing food safety pathogen testing company.

Concurrent with the aforementioned appointments, on July 31, 2009 Brian Wolfe and Jim Dacysczn resigned from the Board.  Mr. Wolfe served on the Board since March 22, 1995.  Mr. Dacysczn also joined the Board in May of 1995.  Neither Mr. Wolfe’s nor Mr. Dacysczn’s resignation from the Board occurred in connection with from any disagreement on any matter relating to the Company’s operations, policies or practices, nor regarding the general direction of the Company.

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.

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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
10.1	Unregistered Sales of Equity Securities pursuant to private placement exemptions under Section 4(2) and Regulation S of the Securities Act of 1933		8-K			05/28/09
31.1	Certification of Ronald B. Sloan pursuant to Section 302 of the Sarbanes-Oxley Act	X
31.2	Certification of Ronald B. Sloan pursuant to Section 302 of the Sarbanes-Oxley Act	X
32.1	Certification of Ronald B. Sloan pursuant to Section 906 of the Sarbanes-Oxley Act	X
99.1	Press Release issued April 28, 2009 regarding BCSC CTO		8-K		99.2	04/29/09
99.3	Press Release issued May 28, 2009 regarding Private Placement		8-K		99.2	05/28/09

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

Date: November 15, 2009

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