CAN CAL RESOURCES LTD - FORM 10-Q

Attached files

file	filename
EX-32 - CAN CAL RESOURCES LTD	v223259_ex32.htm
EX-31.2 - CAN CAL RESOURCES LTD	v223259_ex31-2.htm
EX-31.1 - CAN CAL RESOURCES LTD	v223259_ex31-1.htm

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, 2011

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

Commission file number 000-26669

CAN-CAL RESOURCES LTD.

(Exact name of registrant as specified in its charter)

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

8205 Aqua Spray Avenue

Las Vegas, Nevada

(Address of principal executive offices)

(702) 243-1849

(Registrant’s telephone number, including area code)

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

Indicate by checkmark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data Filed required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period the registrant was requires to submit and post such files)

x Yes ¨ No

Large accelerated filer ¨	Accelerated filer ¨

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

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

Yes ¨ No x

The number of shares of Common Stock, $0.001 par value, outstanding on May 18, 2011 was 35,066,203.

CAN-CAL RESOURCES LTD.

FORM 10-Q

TABLE OF CONTENTS

			Page

PART I – FINANCIAL INFORMATION			3
	Item 1. Financial Statements		3
		Balance Sheets as of March 31, 2011 (Unaudited) and December 31, 2010	3
		Condensed Statements of Operations (Unaudited)	4
		Statement of Stockholders’ Equity (Deficit) (unaudited)	5
		Condensed Statements of Cash Flows (unaudited)	6
		Notes to Condensed Financial Statements (Unaudited)	7
	Item 2. Management’s Discussion and Analysis		21
	Item 3. Quantitative and Qualitative Disclosures about Market Risk		25
	Item 4T. Controls and Procedures		25

PART II – OTHER INFORMATION			25
	Item 1. Legal Proceedings		25
	Item 1A. Risk Factors		26
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		26
	Item 3. Defaults Upon Senior Securities		26
	Item 4. Submission of Matters to a Vote of Security Holders		26
	Item 5. Other Information		26
	Item 6. Exhibits		27

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

CAN-CAL RESOURCES LTD.

(AN EXPLORATION STAGE COMPANY)

CONDENSED BALANCE SHEETS

	March 31,			December 31,
	2011			2010
	(Unaudited)
ASSETS

Current assets:
Cash	$	53,704		$	17,202
Other current assets		13,535			18,427
Total current assets		67,239			35,629

Property and equipment (net of accumulated depreciation of $29,647 and $27,454, respectively)		36,293			38,486

Total assets	$	103,532		$	74,115

LIABILITIES AND STOCKHOLDERS' (DEFICIT)

Current liabilities:
Accounts payable	$	38,402		$	98,795
Accounts payable, related parties		75,000			60,000
Accrued interest		483,063			469,852
Accrued interest, related parties		1,196			680
Accrued salaries		434,004			403,328
Notes payable, including related party amounts of $53,191 and $57,191 at March 31, 2011 and December 31, 2010, respectively		413,741			417,741
Unearned rental revenues		29,792			9,167
Total current liabilities		1,475,198			1,459,563

Total liabilities		1,475,198			1,459,563

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, 33,877,869 and 30,711,203 shares issued and outstanding as of March 31, 2011 and December 31, 2010, respectively		33,877			30,711
Subscriptions payable, 966,751 and 2,193,166 shares at March 31, 2011 and December 31, 2010, respectively		58,005			131,590
Additional paid-in capital		8,894,668			8,707,834
(Deficit) accumulated during exploration stage		(10,358,216	)		(10,255,583	)
Total stockholders' (deficit)		(1,371,666	)		(1,385,448	)

Total liabilities and stockholders' (deficit)	$	103,532		$	74,115

See accompanying notes to financial statements.

CAN-CAL RESOURCES LTD.

(AN EXPLORATION STAGE COMPANY)

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

							March 22, 1995
	For the three months ended						(inception) to
	March 31,						March 31,
	2011			2010			2011

Material sales	$	-		$	-		$	245,500
Cost of sales		-			-			263,400

Gross loss		-			-			(17,900	)

Operating expenses:
General and administrative		62,303			90,188			6,761,031
Exploration costs		7,848			7,997			557,198
Depreciation		2,193			2,495			252,747
Officer salary		30,000			30,000			991,176
Impairment of operating assets		-			-			443,772
Total operating expenses		102,344			130,680			9,005,924

Loss from operations		(102,344	)		(130,680	)		(9,023,824	)

Other income (expense):
Other income		3,000			-			53,798
Interest income		-			15			52,945
Rental revenue		16,875			6,875			372,783
Gain on sale of fixed assets		-			-			26,801
Interest expense		(20,164	)		(15,237	)		(1,367,119	)
Total other income (expense)		(289	)		(8,347	)		(860,792	)

Loss before provision for income taxes		(102,633	)		(139,027	)		(9,884,616	)

Provision for income taxes		-			-			-

Net loss from continuing operations		(102,633	)		(139,027	)		(9,884,616	)

Income from discontinued operations
Income from discontinued operations		-			-			116,400
Loss on disposal of operations (net of taxes)		-			-			(590,000	)

Net (loss)	$	(102,633	)	$	(139,027	)	$	(10,358,216	)

Weighted average number of common shares outstanding - basic and fully diluted		33,671,721			30,728,863

Net (loss) per share - basic and fully diluted	$	(0.00	)	$	(0.00	)

See accompanying notes to financial statements.

CAN-CAL RESOURCES LTD.

(AN EXPLORATION STAGE COMPANY)

STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)

																									(Deficit)
																			Foreign						accumulated
	Common stock												Rescission						currency			Additional			during			Total
	Number of						Subscription			Subscription			liability			Unamortized			translation			paid-in			exploration			stockholders'
	shares			Amount			receivable			payable			receivable			equity grants			adjustment			capital			stage			equity (deficit)

Balance, March 22, 1995		-		$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	-

Common shares issued for services		-			-			-			-			-			-			-			-			-			-
Net loss																										(1,000	)		(1,000	)

Balance, December 31, 1995		-			-			-			-			-			-			-			-			(1,000	)		(1,000	)

Common shares issued for services		3,441,217			3,400			-			-			-			-			-			625,000			-			628,400
Prior period adjustment, investment in joint venture		-			-			-			-			-			-			-			-			497,900			497,900
Net loss																										(497,000	)		(497,000	)

Balance, December 31, 1996		3,441,217			3,400			-			-			-			-			-			625,000			(100	)		628,300

Common shares issued for services		3,006,435			3,000			-			-			-			-			-			1,051,400			-			1,054,400
Net loss																										(1,044,700	)		(1,044,700	)

Balance, December 31, 1997		6,447,652			6,400			-			-			-			-			-			1,676,400			(1,044,800	)		638,000

Common shares issued for cash		557,509			600			-			-			-			-			-			211,200			-			211,800
Foreign currency translation adjustment		-			-			-			-			-			-			8,500			-			-			8,500
Net loss																										(353,000	)		(353,000	)

Balance, December 31, 1998		7,005,161			7,000			-			-			-			-			8,500			1,887,600			(1,397,800	)		505,300

Common shares issued for cash		1,248,621			1,200			-			-			-			-			-			572,600			-			573,800
Foreign currency translation adjustment		-			-			-			-			-			-			(11,800	)		-			-			(11,800	)
Realized foreign currency translation loss		-			-			-			-			-			-			3,300			-			-			3,300
Prior period Adjustment		-			-			-			-			-			-			-			-			15,000			15,000
Elimination of subsidiary upon disposal		-			-			-			-			-			-			-			-			116,400			116,400
Net loss																										(1,038,500	)		(1,038,500	)

Balance, December 31, 1999		8,253,782			8,200			-			-			-			-			-			2,460,200			(2,304,900	)		163,500

Common shares issued for cash		1,119,009			1,200			-			-			-			-			-			948,400			-			949,600
Net loss																										(962,500	)		(962,500	)

Balance, December 31, 2000		9,372,791			9,400			-			-			-			-			-			3,408,600			(3,267,400	)		150,600

Common shares issued for cash		785,947			800			-			-			-			-			-			81,500			-			82,300
Net loss																										(704,500	)		(704,500	)

Balance, December 31, 2001		10,158,738			10,200			-			-			-			-			-			3,490,100			(3,971,900	)		(471,600	)

Common shares issued for cash		1,093,280			1,100			-			-			-			-			-			269,900			-			271,000
Common shares issued for services		92,292			100			-			-			-			-			-			23,800			-			23,900
Options granted for services		-			-			-			-			-			-			-			7,100			-			7,100
Common shares issued for repayment of note payable, related party in the amount of $119,800, including accrued interest of $71,800		309,677			300			-			-			-			-			-			119,500			-			119,800
Warrants granted for loan fees on convertible notes payable, related party		-			-			(16,700	)		-			(16,700	)		(16,700	)		-			16,700			-			(33,400	)
Common shares issued for loan fees on convertible notes payable, related party		30,000			-			(13,500	)		-			(13,500	)		(13,500	)		-			13,500			-			(27,000	)
Deemed interest on beneficial conversion feature of notes payable, related party		-			-			-			-			-			-			-			20,500			-			20,500
Amortization of loan fees		-			-			8,200			-			8,200			8,200			-			-			-			24,600
Net loss																										(709,300	)		(709,300	)

Balance, December 31, 2002		11,683,987			11,700			(22,000	)		-			(22,000	)		(22,000	)		-			3,961,100			(4,681,200	)		(774,400	)

Common shares issued for cash		823,410			800			-			-			-			-			-			163,900			-			164,700
Common shares issued for services		381,260			400			-			-			-			-			-			63,800			-			64,200
Options granted for services		-			-			-			-			-			-			-			61,300			-			61,300
Common shares issued for repayment of note payable, related party common shares issued for repayment of note payable, related party in the amount of $78,300, including accrued interest of $43,300		364,305			400			-			-			-			-			-			77,900			-			78,300
Deemed interest on beneficial conversion feature of notes payable, related party		-			-			-			-			-			-			-			38,300			-			38,300
Amortization of loan fees		-			-			15,000			-			15,000			15,000			-			-			-			45,000
Net loss																										(711,100	)		(711,100	)

Balance, December 31, 2003		13,252,962			13,300			(7,000	)		-			(7,000	)		(7,000	)		-			4,366,300			(5,392,300	)		(1,033,700	)

Common shares issued for cash		1,564,311			1,600			-			-			-			-			-			306,400			-			308,000
Common shares issued for exercise of warrants		701,275			700			-			-			-			-			-			124,900			-			125,600
Common shares issued for services		390,224			400			-			-			-			-			-			73,800			-			74,200
Warrants granted for services		-			-			-			-			-			-			-			12,200			-			12,200
Interest expense for warrants granted		-			-			-			-			-			-			-						-			280,200
Common shares issued in satisfaction of accounts payable and accrued liabilities in the amount of $229,400		917,747			900			-			-			-			-			-			228,500			-			229,400
Common shares issued for repayment of note payable in the amount of $99,700, including accrued interest of $14,700		702,760			700			-			-			-			-			-			99,000			-			99,700
Common shares issued for repayment of note payable, related party in the amount of $82,700		330,747			300			-			-			-			-			-			82,400			-			82,700
Deemed interest on beneficial conversion feature of notes payable, related party		-			-			-			-			-			-			-			17,600			-			17,600
Amortization of loan fees		-			-			7,000			-			7,000			7,000			-			-			-			21,000
Net loss																										(1,030,500	)		(1,030,500	)

Balance, December 31, 2004		17,860,026			17,900			-			-			-			-			-			5,591,300			(6,422,800	)		(813,600	)

Common shares issued for cash		762,500			800			-			-			-			-			-			152,700			-			153,500
Common shares issued for exercise of warrants		349,545			300			-			-			-			-			-			69,500			-			69,800
Net loss																										(421,800	)		(421,800	)

Balance, December 31, 2005		18,972,071			19,000			-			-			-			-			-			5,813,500			(6,844,600	)		(1,012,100	)

Common shares issued for cash		2,448,213			2,400			-			-			-			-			-			642,100			-			644,500
Common warrants exercised for cash		174,000			200			-			-			-			-			-			43,300			-			43,500
Common shares issued for services		19,500			-			-			-			-			-			-			5,000			-			5,000
Common shares issued in satisfaction of accounts payable and accrued liabilities		385,714			400			-			-			-			-			-			80,600			-			81,000
Common shares issued in satisfaction of notes payable-related parties		56,821			100			-			-			-			-			-			11,800			-			11,900
Common shares issued in satisfaction of convertible debenture, (including accrued interest of $1,895)		206,767			200			-			-			-			-			-			41,700			-			41,900
Common shares issued for asset acquisition		1,000,000			1,000			-			-			-			-			-			399,000			-			400,000
Option granted to officers and directors		-			-			-			-			-			-			-			123,500			-			123,500
Warrants granted for services		-			-			-			-			-			-			-			2,200			-			2,200
Warrants granted in satisfaction of accounts payable and accrued liabilities		-			-			-			-			-			-			-			65,400			-			65,400
Warrants granted in satisfaction of notes payable-related parties		-			-			-			-			-			-			-			9,600			-			9,600
Warrants granted in satisfaction of convertible debenture		-			-			-			-			-			-			-			40,000			-			40,000
Net loss																										(621,000	)		(621,000	)

Balance, December 31, 2006 (Restated)		23,263,086			23,264			-			-			-			-			-			7,277,736			(7,465,600	)		(164,600	)

Common shares issued for cash		492,795			492			-			-			-			-			-			188,698			-			189,190
Common warrants exercised for cash		745,372			745			-			-			-			-			-			185,598			-			186,343
Common shares issued for services		4,000			4			-			-			-			-			-			2,010			-			2,014
Common shares issued in satisfaction of accrued wages of $22,000, related party		50,000			50			-			-			-			-			-			21,950			-			22,000
Debt forgiveness, related party		-			-			-			-			-			-			-			147,419			-			147,419
Net loss																										(604,913	)		(604,913	)

Balance, December 31, 2007 (Restated)		24,555,253			24,555			-			-			-			-			-			7,823,411			(8,070,513	)		(222,547	)

Common shares issued for cash		32,500			33			-			-			-			-			-			8,091			-			8,124
Net loss																										(1,016,661	)		(1,016,661	)

Balance, December 31, 2008		24,587,753			24,588			-			-			-			-			-			7,831,502			(9,087,174	)		(1,231,084	)

Common shares issued for cash		2,926,600			2,926			(25,000	)		-			-			-			-			362,899			-			340,825
Common shares issued for debt conversion to related parties of $398,593, including accrued interest of $29,093		3,188,741			3,189			-			-			-			-			-			395,404			-			398,593
Warrants granted in connection with debt conversion		-			-			-			-			-			-			-			78,961			-			78,961
Common shares issued for services		122,000			122			-			-			-			-			-			15,338			-			15,460
Common shares cancelled per rescission order		(126,898	)		(127	)		-			-			-			-			-			(55,660	)		-			(55,787	)
Rescission liability receivable		-			-			-			-			(12,125	)		-			-			-			-			(12,125	)
Net loss																							-			(595,554	)		(595,554	)

Balance, December 31, 2009		30,698,196			30,698			(25,000	)		-			(12,125	)		-			-			8,628,444			(9,682,728	)		(1,060,711	)

Common shares issued for cash		40,000			40			25,000			-			-			-			-			4,960			-			30,000
Receipt of payment on rescission liability receivable		-			-			-			-			12,125			-			-			-			-			12,125
Common shares awarded for debt conversion, 2,146,666 shares		-			-			-			128,800			-			-			-			-			-			128,800
Finance costs on inducement of conversion, 2,146,666 warrants		-			-			-			-			-			-			-			74,403			-			74,403
Common shares awarded for commissions, 46,500 shares		-			-			-			2,790			-			-			-			-			-			2,790
Common shares cancelled		(26,993	)		(27	)		-			-			-			-			-			27			-			-
Net loss																										(572,855	)		(572,855	)

Balance, December 31, 2010		30,711,203			30,711			-			131,590			-			-			-			8,707,834			(10,255,583	)		(1,385,448	)

Common shares issued for cash		3,166,666			3,166			-			(76,700	)		-			-			-			186,834			-			113,300
Common shares awarded for commissions, 51,917 shares		-			-			-			3,115			-			-			-			-			-			3,115
Net loss																										(102,633	)		(102,633	)

Balance, March 31, 2011 (Unaudited)		33,877,869		$	33,877		$	-		$	58,005		$	-		$	-		$	-		$	8,894,668		$	(10,358,216	)	$	(1,371,666	)

See accompanying notes to financial statements.

CAN-CAL RESOURCES LTD.

(AN EXPLORATION STAGE COMPANY)

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

							March 22, 1995
	For the three months ended						(inception) to
	March 31,						March 31,
	2011			2010			2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(102,633	)	$	(139,027	)	$	(10,358,216	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		2,193			2,495			269,747
Bad debts		-			-			207,100
Gain on sale of fixed assets		-			-			(6,501	)
Stock based compensation granted for services		3,115			-			554,179
Stock based compensation granted for financing and interest		-			-			676,564
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		-			-			445,667
Decrease (increase) in assets:
Other current assets		4,892			284			(106,130	)
Increase (decrease) in liabilities:
Accounts payable		(60,393	)		17,627			(29,510	)
Accounts payable, related parties		15,000			15,000			75,000
Accrued interest		13,211			12,531			512,156
Accrued interest, related parties		516			680			1,196
Accrued salaries		30,676			29,500			434,004
Unearned revenues		20,625			20,625			29,792
Net cash used in operating activities		(72,798	)		(40,285	)		(6,613,352	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investment property		-			-			(1,083,600	)
Proceeds from sale of investment property		-			-			319,300
Purchase of property and equipment		-			(767	)		(769,411	)
Proceeds from sale of property and equipment		-			-			26,100
Net cash used in investing activities		-			(767	)		(1,507,611	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from convertible debentures		-			-			128,800
Proceeds from notes payable		-			-			948,400
Principal payments on notes payable		-			-			(689,900	)
Proceeds from notes payable, related parties		-			-			907,791
Principal payments on notes payable, related parties		(4,000	)		-			(383,050	)
Proceeds from the issuance of common stock		113,300			42,125			7,262,626
Net cash provided by financing activities		109,300			42,125			8,174,667

Net increase in cash		36,502			1,073			53,704
Cash, beginning of period		17,202			17,507			-
Cash, end of period	$	53,704		$	18,580		$	53,704

Supplemental disclosures:
Interest paid	$	-		$	-
Income taxes paid	$	-		$	-

See accompanying notes to financial statements.

CAN-CAL RESOURCES LTD.

(An Exploration Stage Company)

NOTES TO CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

Note 1 – Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with Securities and Exchange Commission requirements for interim financial statements. Therefore, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The financial statements should be read in conjunction with the Form 10-K for the year ended December 31, 2010 of Can-Cal Resources Ltd. (the “Company”).

The interim condensed financial statements present the balance sheets, statements of operations, stockholders’ equity (deficit) 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, 2011 and the results of operations and cash flows presented herein have been included in the financial statements. Interim results are not necessarily indicative of results of operations for the full year.

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

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

Exploration Stage Company

The Company is currently an exploration stage company. As an exploration stage enterprise, the Company discloses the deficit accumulated during the exploration stage and the cumulative statements of operations and cash flows from inception to the current balance sheet date. The Company has incurred net losses of $10,358,216 and used net cash in operations of $6,613,352 for the period from inception (March 22, 1995) through March 31, 2011. An entity remains in the exploration stage until such time as proven or probable reserves have been established for its deposits. Upon the location of commercially mineable reserves, the Company plans to prepare for mineral extraction and enter the development stage. To date, the exploration stage of the Company’s operations consists of contracting with geologists who sample and assess the mining viability of the Company’s claims.

Recent Accounting Pronouncements

In December 2010, the FASB issued ASU 2010-29, “Business Combinations (Topic 805): Disclosure of supplementary pro forma information for business combinations.” This update changes the disclosure of pro forma information for business combinations. These changes clarify that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. Also, the existing supplemental pro forma disclosures were expanded to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. These changes become effective for the Company beginning January 1, 2011. The Company’s adoption of this update did not have an impact on the Company’s financial condition or results of operations.

In December 2010, the FASB issued ASU 2010-28, “Intangible –Goodwill and Other (Topic 350): When to perform Step 2 of the goodwill impairment test for reporting units with zero or negative carrying amounts.” This update requires an entity to perform all steps in the test for a reporting unit whose carrying value is zero or negative if it is more likely than not (more than 50%) that a goodwill impairment exists based on qualitative factors, resulting in the elimination of an entity’s ability to assert that such a reporting unit’s goodwill is not impaired and additional testing is not necessary despite the existence of qualitative factors that indicate otherwise. These changes become effective for the Company beginning January 1, 2011. The adoption of this ASU did not have a material impact on our financial statements.

CAN-CAL RESOURCES LTD.

(An Exploration Stage Company)

NOTES TO CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

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

In April 2010, the FASB issued ASU 2010-13, "Compensation—Stock Compensation (Topic 718) - Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades (A consensus of the FASB Emerging Issues Task Force)" (“ASU 2010-13”). ASU 2010-13 clarifies that a share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity securities trades should not be considered to contain a condition that is not a market, performance, or service condition. Therefore, such an award should not be classified as a liability if it otherwise qualifies as equity. This clarification of existing practice is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010, with early application permitted. The Company’s adoption of this update did not have an impact on the Company’s financial condition or results of operations.

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

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

Note 2 – Going Concern

The Company incurred a net loss of $102,633 for the three months ended March 31, 2011. Also, the Company’s current liabilities exceed its current assets by $1,407,959 as of March 31, 2011. These factors create substantial doubt about the Company’s ability to continue as a going concern. The Company’s management plans to continue to fund its operations in the short term with a combination of debt and equity financing and with revenue from operations in the long term.

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

CAN-CAL RESOURCES LTD.

(An Exploration Stage Company)

NOTES TO CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

Note 3 – Related Party

During the year ended December 31, 2010, we received a total of $28,191 in exchange for an unsecured note payable to our CEO, G. Michael Hogan, due on demand, bearing interest at 8.00%.

On November 12, 2010, we received a short term loan of $9,000 in exchange for a non-interest bearing, unsecured note payable to an employee, due on demand. On December 30, 2010 the Company repaid $5,000, and the remaining $4,000 was repaid in February of 2011.

On July 1, 2010, the Company entered into a twelve month employment agreement, subject to automatic monthly renewals, with the Company’s CEO, G. Michael Hogan. The terms of the agreement include a fixed annual salary of $120,000. The Company may elect to satisfy payment in shares of common stock in lieu of cash at a market value equal to $0.10 above the average closing trading price of the common stock for the preceding five (5) days from the date of such election. No payments have been made in cash or stock as of March 31, 2011.

As of March 31, 2011 and December 31, 2010 we owed $282,004 and $282,004 of accrued salaries to our former CEO, respectively. In addition, we owed $150,000 of accrued salaries to our current CEO as of March 31, 2011.

On June 30, 2010, the Company entered into a twelve month consulting agreement, with a Board of Director’s consulting firm, Futureworth Capital Corp. The terms of the agreement include annual compensation of $60,000, payable monthly. The Company may elect to satisfy payment in shares of common stock in lieu of cash at a market value equal to $0.10 above the average closing trading price of the common stock for the preceding five (5) days from the date of such election. No payments have been made in cash or stock as of March 31, 2011. As of March 31, 2011 we owed Futureworth Capital Corp. $75,000, as included in accounts payable, related parties, for service prior to, and during the service period under the consulting agreement.

On September 1, 2010, we received $25,000 in exchange for an unsecured note payable to a Board of Director’s consulting firm, Futureworth Capital Corp, due on demand, bearing interest at 8.25%.

Note 4 – Notes Payable

Notes payable consisted of the following as of March 31, 2011 and December 31, 2010, respectively:

	March 31,		December 31,
	2011		2010

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 (Note: The Company is in default of interest payments totaling $448,000 and $436,000 of principal, respectively).	$	300,000	$	300,000

Note payable to a stockholder, secured by real property, bearing interest at 8.0% per annum, matured July 2008, and is currently in default.		25,114		25,114

Note payable to a stockholder, secured by real property, bearing interest at 8.0% per annum, matured June 2008, and is currently in default.		35,436		35,436

Note payable, unsecured, non-interest bearing note to an employee due on demand, related party.		-		4,000

Note payable to a member of the Board of Directors, unsecured, due on demand, bearing interest at 8.25%, related party.		25,000		25,000

Note payable to the CEO, unsecured, non-interest bearing, due on demand, related party.		28,191		28,191

Total notes payable		413,741		417,741

Less: current portion		413,741		417,741

Notes payable, less current portion	$	-	$	-

CAN-CAL RESOURCES LTD.

(An Exploration Stage Company)

NOTES TO CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

Future maturities of long-term debt are as follows as of March 31, 2011:

2011	$	413,741
2012		-
2013		-
2014		-
Thereafter		-
	$	413,741

Interest expense totaled $20,164 and $15,237 for the three months ended March 31, 2011 and 2010, respectively.

The Company is in default of its semi-annual interest payment of $24,000 for 2002 through March 31, 2011 (a total of $448,000) and the principal on a note payable of $300,000.

Note 5 – Changes in Securities

1996

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

1997

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

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

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

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

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

CAN-CAL RESOURCES LTD.

(An Exploration Stage Company)

NOTES TO CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

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 shares of restricted common stock in return for equipment.

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

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

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

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

2000

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

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

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

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

CAN-CAL RESOURCES LTD.

(An Exploration Stage Company)

NOTES TO CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

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.

CAN-CAL RESOURCES LTD.

(An Exploration Stage Company)

NOTES TO CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

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

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

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

2003

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

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

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

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

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

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

CAN-CAL RESOURCES LTD.

(An Exploration Stage Company)

NOTES TO CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

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

2004

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

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

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

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

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

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

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

CAN-CAL RESOURCES LTD.

(An Exploration Stage Company)

NOTES TO CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

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

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

2005

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

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

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

2006

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

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

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%.

CAN-CAL RESOURCES LTD.

(An Exploration Stage Company)

NOTES TO CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

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 and $.65 per share. These securities were issued in private transactions, with respect to the Canadian residents, in reliance on the exemption from registration with the SEC provided by Regulation S, and with respect to the U.S. citizen, in reliance on the exemption available under Section 4(2) of the 1933 Act.

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

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

2008

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

CAN-CAL RESOURCES LTD.

(An Exploration Stage Company)

NOTES TO CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

2009

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

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

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

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

2010

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

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

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

On December 31, 2010, the Company cancelled 26,993 previously granted shares to related parties.

On December 31, 2010, the Company converted $128,800 of previously issued convertible debentures to a total of nine investors in exchange for a total of 2,146,666 shares, at $0.06 per share, and a total of 2,146,666 warrants exercisable at $0.08 per share over a two year term, that were not issued until January 5, 2011. The shares were presented as a subscription payable of $128,800 at December 31, 2010. A total of $3,598 of accrued interest was forgiven by the note holders, as presented in other income. The total estimated value of the warrants granted as an inducement for conversion using the Black-Scholes Pricing Model, based on a volatility rate of 179% and a call option value of $0.0347, was $74,403, as presented in the income statement as interest expense.

Finders acting in connection with the conversion are entitled to receive aggregate fees of $2,790 and 46,500 shares of common stock. The fair market value of the common stock payable based on the closing stock price at the grant date was $2,790.

2011

On January 4, 2011, the Company issued 680,000 shares of its common stock and an equal number of warrants pursuant to a unit offering in exchange for proceeds of $40,800. The warrants are exercisable over two years at an exercise price of $0.08 per share.

CAN-CAL RESOURCES LTD.

(An Exploration Stage Company)

NOTES TO CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

On January 4, 2011, the Company issued 170,000 shares of its common stock and an equal number of warrants pursuant to a unit offering in exchange for proceeds of $10,200. The warrants are exercisable over two years at an exercise price of $0.08 per share.

On January 5, 2011, the Company issued 2,146,666 shares of its common stock to a total of nine investors in satisfaction for subscriptions payable on a total of $128,800 of previously converted debentures.

On January 26, 2011, the Company issued 85,000 shares of its common stock and an equal number of warrants pursuant to a unit offering in exchange for proceeds of $5,100. The warrants are exercisable over two years at an exercise price of $0.08 per share.

On February 25, 2011, the Company sold 170,000 shares of its common stock and an equal number of warrants pursuant to a unit offering in exchange for proceeds of $10,200. The warrants are exercisable over two years at an exercise price of $0.08 per share. The shares were not issued until April 12, 2010, accordingly, they are presented as a subscription payable as of March 31, 2011 in the amount of $10,200.

On March 16, 2011, the Company sold 100,000 shares of its common stock and an equal number of warrants pursuant to a unit offering in exchange for proceeds of $6,000. The warrants are exercisable over two years at an exercise price of $0.08 per share. The shares were not issued until April 12, 2010, accordingly, they are presented as a subscription payable as of March 31, 2011 in the amount of $6,000.

On March 16, 2011, the Company sold 85,000 shares of its common stock and an equal number of warrants pursuant to a unit offering in exchange for proceeds of $5,100. The warrants are exercisable over two years at an exercise price of $0.08 per share. The shares were not issued until April 12, 2010, accordingly, they are presented as a subscription payable as of March 31, 2011 in the amount of $5,100.

On March 16, 2011, the Company sold 170,000 shares of its common stock and an equal number of warrants pursuant to a unit offering in exchange for proceeds of $10,200. The warrants are exercisable over two years at an exercise price of $0.08 per share. The shares were not issued until April 12, 2010, accordingly, they are presented as a subscription payable as of March 31, 2011 in the amount of $10,200.

On March 16, 2011, the Company sold 343,334 shares of its common stock and an equal number of warrants pursuant to a unit offering in exchange for proceeds of $20,600. The warrants are exercisable over two years at an exercise price of $0.08 per share. The shares were not issued until April 12, 2010, accordingly, they are presented as a subscription payable as of March 31, 2011 in the amount of $20,600.

Finders acting in connection with the conversion are entitled to receive aggregate fees of $3,115 and 51,917 shares of common stock. The fair market value of the common stock payable based on the closing stock price at the grant date was $3,115.

Note 6 – Options and Warrants

Options

There were no options issued during the three months ended March 31, 2011 and 2010, respectively.

CAN-CAL RESOURCES LTD.

(An Exploration Stage Company)

NOTES TO CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

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

	Options Outstanding		Weighted Average Exercise Price

Balance, January 1, 2010		1,000,000	$	0.18
Granted		-		-
Cancelled		-		-
Exercised		-		-
Expired		-		0.18
Balance, December 31, 2010		1,000,000		0.18
Granted		-		-
Cancelled		-		-
Exercised		-		-
Expired		-		-
Balance, March 31, 2011		1,000,000	$	0.18

Warrants

On January 22, 2010, the Company granted 40,000 stock warrants with an exercise price of $0.15 per share for its common stock. These stock warrants were granted in connection with financing activities relating to stock sold on January 22, 2010. These warrants were exercisable upon issuance and expire on March 31, 2011.

On December 31, 2010, the Company granted 2,146,666 stock warrants with an exercise price of $0.08 per share for its common stock. These stock warrants were granted in connection with the conversion of $128,800 of previously issued convertible debentures on December 31, 2010 to a total of nine investors in exchange for a total of 2,146,666 shares. These warrants were exercisable upon issuance and expire on December 31, 2012.

A total of 1,024,000 and 1,935,100 warrants expired during the three months ended March 31, 2011 and the year ended December 31, 2010, respectively.

The following table summarizes the Company’s warrant activities:

	Warrants Outstanding			Weighted Average Exercise Price

Balance, January 1, 2010		9,336,596		$	0.15
Granted		2,186,666			0.08
Cancelled		-			-
Exercised		-			-
Expired		(1,935,100	)		(0.17	)
Balance, December 31, 2010		9,588,162			0.13
Granted		1,888,334			0.08
Cancelled		-			-
Exercised		-			-
Expired		(1,024,000	)		(0.15	)
Balance, March 31, 2011		10,452,496		$	0.12

Note 7 – Commitments and Contingencies

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

CAN-CAL RESOURCES LTD.

(An Exploration Stage Company)

NOTES TO CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

Note 8 – Subsequent Events

On April 1, 2011, the Company issued 85,000 shares of its common stock and an equal number of warrants pursuant to a unit offering in exchange for proceeds of $5,100. The warrants are exercisable over two years at an exercise price of $0.08 per share.

On April 1, 2011, the Company issued 150,000 shares of its common stock and an equal number of warrants pursuant to a unit offering in exchange for proceeds of $9,000. The warrants are exercisable over two years at an exercise price of $0.08 per share.

On April 12, 2011, the Company issued a total of 868,334 shares of its common stock to a total of five investors in satisfaction for subscriptions payable on a total of $52,100 of previously converted debentures.

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

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS

OVERVIEW AND OUTLOOK

The following discussion of the business, financial condition and results of operation of the Company should be read in conjunction with the financial statements of the Company for the years ended December 31, 2010 and 2009 and the and the notes to those statements that are included their respective Annual Reports on Form 10-K, as well as the financial statements and notes the financial statements included in this Form 10-Q. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statement, including, but not limited to, the risk factors described in this Form 10-Q and in Item 1A of our Form 10-K for the year ended December 31, 2010 to which reference is made herein.

Overview

Can-Cal Resources Ltd. is a publicly traded exploration stage 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.

At March 31, 2011, we had cash on hand of approximately $54,000 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 such investment capital or additional funding and joint venture arrangements will be available to the Company.

We expect in the near term to continue to rely on outside financing activities to finance our operations. We used investment proceeds realized during 2010 for (i) completion of work-up of two potential extraction processes to determine which process we will employ to potentially prove up any precious metals, platinum groups elements and/or other base metals on the Pisgah, California property and the Wikieup, Arizona property, if any; (ii) the development of a drill program to potentially prove up any tonnages and precious metals and/or other base metals on the Wikieup, Arizona property, if any; (iii) the continued development a comprehensive research and development program to ascertain the potential for any rare earth elements on the Owl Canyon, California property; (iv) strategic working capital reserve and (v) to finance our operations. We expect that any additional funds received from financing activities that may occur in 2011 will be similarly deployed.

In addition to our historic exploration activities, we are currently analyzing potential, alternative revenue producing opportunities at our properties. The nature of such opportunities, if available, we hope would provide relatively short term revenue to sustain our operating costs and supplement the costs of testing to potentially prove tonnages and precious metals the Pisgah, California property and the Wikieup, Arizona property, if any. At Pisgah, for example, we are evaluating surface material that may have commercial use in connection with environmentally favorable agricultural applications. We are currently advancing discussions with a potential partner for the production and sale of these materials.

Results of Operations for the Three Months Ended March 31, 2011 and 2010:

	Three Months Ended March 31,
	2011			2010			Increase / (Decrease)
	Amount			Amount			$			%
Expenses:
General & administrative	$	62,303		$	90,188		$	(27,885	)		(31	)%
Exploration costs		7,848			7,997			(149	)		(2	)%
Depreciation		2,193			2,495			(302	)		(12	)%
Officer salary		30,000			30,000			-			-
Total operating expenses		102,344			130,680			(28,336	)		(22	)%

Loss from operations		(102,344	)		(130,680	)		(28,336	)		(22	)%

Other income (expense):
Other income		3,000			-			3,000			100	%
Interest income		-			15			(15	)		(100	)%
Rental revenue		16,875			6,875			10,000			145	%
Interest expense		(20,164	)		(15,237	)		4,927			32	%
Total other income (expense)		(289	)		(8,347	)		(8,058	)		(97	)%

Net loss	$	(102,633	)	$	(139,027	)	$	(36,394	)		(26	)%

General and administrative expenses

General and administrative expenses for the three months ended March 31, 2011 decreased by $27,885 (or 31%) from $90,188 for the three months ended March 31, 2010 to $62,303 for the three months ended March 31, 2011. The decrease is principally due to decreased professional fees associated with our securities offerings with the British Columbia Securities Commission (“BCSC”), and better controls over our office expenditures in 2011, compared to the same period in 2010.

Exploration costs

Exploration costs for the three months ended March 31, 2011 decreased by $149 (or 2%) from $7,997 for the three months ended March 31, 2010 to $7,848 for the three months ended March 31, 2011. The decrease is due to minimal reductions in exploration activities at our Pisgah and Wikieup locations; however, we expect to significantly increase our exploration activities over the next 12 months.

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

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

Depreciation

Depreciation for the three months ended March 31, 2011 decreased by $302 (or 12%) from $2,495 for the three months ended March 31, 2010 to $2,193 for the three months ended March 31, 2011. The decrease is principally due to certain assets reaching the end of their depreciable life cycle. We anticipate the replacement of these assets in the near future.

Officer salary

Officer salary for the three months ended March 31, 2011 and 2010 was $30,000 in accordance with the annual compensation of $120,000 to our Chief Executive Officer. No bonuses or stock awards were granted, and all compensation was accrued. No payments have been made in either cash or shares of the Company’s stock in either period.

Total operating expenses

Total operating expenses for the three months ended March 31, 2011 decreased by $28,336 (or 22%) from $130,680 for the three months ended March 31, 2010 to $102,344 for the three months ended March 31, 2011. The decrease in total operating expenses was mainly a result of decreased professional fees associated with our securities offerings with the British Columbia Securities Commission (“BCSC”), and better controls over our office expenditures in 2011, compared to the same period in 2010.

Other income (expense)

Other income for the three months ended March 31, 2011 increased by $3,000 (or 100%) from $-0- for the three months ended March 31, 2010 to $3,000 for the three months ended March 31, 2011 due to the collection of proceeds received in settlement of misappropriated funds by our former bookkeeper that were not recognized in the previous comparative period.

Interest income for the three months ended March 31, 2011 and 2010 was $-0- and $15, respectively, due to the lack of interest bearing assets on hand during the respective periods.

Rental revenue for the three months ended March 31, 2011 increased by $10,000 (or 145%) from $6,875 for the three months ended March 31, 2010 to $16,875 for the three months ended March 31, 2011. Rental revenue relates to income derived from the rental of the Company’s land for the purposes of mineral extraction, filming movies or conducting photo shoots. Rental revenue increased during the three months ended March 31, 2011 compared to the same period in 2010 due to the receipt of $10,000 received in exchange for leasing our land for a photo shoot on our Pisgah property in March of 2011.

Interest expense for the three months ended March 31, 2011 increased by $4,927 (or 32%) from $15,237 for the three months ended March 31, 2010 compared to $20,164 for the three months ended March 31, 2011. The increase in interest expense was a result of debt conversions on December 31, 2010 that alleviated certain interest accruals during the three months ended March 31, 2011, combined with finance charges of $6,230, consisting of $3,115 of cash and $3,115 of common stock subscriptions payable, related to commissions on stock sales during the three months ended March 31, 2011 that were not present in the comparative three month period ending March 31, 2010.

Net loss

Our net loss was $102,633 for the three months ended March 31, 2011 compared to a net loss of $139,027 for the three months ended March 31, 2010. We expect to continue to improve our results of operations through the attainment of sufficient working capital and a focus on generating revenues from the subcontracting of mining activities, and a reduction of general and administrative expenses. Our improved net loss for the three months ended March 31, 2011 was primarily a result of decreased professional fees associated with our securities offerings with the British Columbia Securities Commission (“BCSC”), and better controls over our office expenditures in 2011, compared to the same period in 2010, as well as, the receipt of $10,000 received in exchange for leasing our land for a photo shoot on our Pisgah property in March of 2011.

LIQUIDITY AND CAPITAL RESOURCES

The following table summarizes total current assets, total current liabilities and working capital at March 31, 2011 compared to December 31, 2010.

	March 31,			December 31,			Increase / (Decrease)
	2011			2010			$		%

Current Assets	$	67,239		$	35,629		$	31,610		89	%

Current Liabilities	$	1,475,198		$	1,459,563		$	15,635		1	%

Working Capital (deficit)	$	(1,407,959	)	$	(1,423,934	)	$	15,975		(1	)%

Internal and External Sources of Liquidity

During the three months ended March 31, 2011 and 2010, our operating and investing activities used cash of $72,798 and $40,285, respectively, while our financing activities provided cash of $109,300 and $42,125, respectively. The cash used in operating activities was principally a result of the net loss we incurred.

Investing Activities. During the three months ended March 31, 2011 we have raised a total of $113,300 through the sale of common stock to a total of nine accredited investors under a private placement offering. The terms of the private placement allow us to raise up to $1,000,000 through a private placement of units of securities (each, a “Unit”) of the Company, at a price of US$0.06 per Unit. Each Unit consists of one share of common stock (“Common Share”) and one Common Share purchase warrant (“Warrant”). Finders acting in connection with the private placement are entitled to receive aggregate fees of $3,115 and 51,917 Common Shares. The shares have not yet been issued and were recorded as subscriptions payable in the amount of $3,115 at March 31, 2011. During the three months ended March 31, 2011, Can-Cal completed the sales of a second and third tranche of the private placement, including 1,888,334 Units of the Company at a price of US$0.06 per Unit, under the terms detailed, above. The Company received total aggregate gross proceeds of US$113,300 in the sale, of which, 1,020,000 shares were issued during the three months ended March 31, 2011 and 868,334 shares were issued on April 12, 2011, as recorded under a subscriptions payable of $52,100 at March 31, 2011.

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

Satisfaction of our cash obligations for the next twelve months.

As of March 31, 2011, our cash balance was $53,704. Our plan for satisfying our cash requirements for the next twelve months is through additional debt and/or equity financing. We anticipate our current cash reserves will be sufficient to support operations through May 31, 2011, but do not anticipate generating sufficient amounts of positive cash flow to meet our working capital requirements. Consequently, we intend to make appropriate plans in order to obtain sources of additional capital in the future to fund growth and expansion through the issuance of additional equity or debt financing or credit facilities. We also are considering possible funding through joint venture arrangements with other mining companies or other natural resource companies. However, there can be no assurance that we will raise capital through any of these means.

As we maintain or expand our current operational activities, we may continue to experience net negative cash flows from operations, and unless we generate sufficient sales through our operations, will be required to obtain additional financing to fund operations through common stock offerings and debt borrowings to the extent necessary to provide working capital.

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

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Not applicable.

Item 4T. Controls and Procedures.

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

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

Changes in Internal Control over Financial Reporting

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

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

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

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

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

Item 1A. Risk Factors.

Our significant business risks are described in Item 1A of Form 10-K for the year ended December 31, 2010 to which reference is made herein.

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

On February 23, 2011, Can-Cal completed the sale of a second tranche of a private placement, which private placement commenced on December 31, 2010. The February sale, pursuant to exemptions under Section 4(2) and Regulation S of the Securities Act of 1933, included 1,020,000 Units of the Company at a price of US$0.06 per Unit. Each Unit consisted of one share of common stock (“Common Share”) and one Common Share purchase warrant, exercisable at the warrant holders’ option any time within two years of the date of issuance of such warrant at a price of $0.08 per Common Share (“Warrant”). The Company received total aggregate gross proceeds of US$61,200 in the February 2011 sale. Finders acting in connection with the private placement are entitled to receive aggregate fees of $510 and 8,500 Common Shares. The shares have not yet been issued and were recorded as subscriptions payable in the amount of $510 at March 31, 2011.

On March 31, 2011, Can-Cal completed the sale of a third tranche of a private placement, which private placement commenced on December 31, 2010. The March sale, pursuant to exemptions under Section 4(2) and Regulation S of the Securities Act of 1933, included 868,334 Units of the Company at a price of US$0.06 per Unit. Each Unit consisted of one share of common stock (“Common Share”) and one Common Share purchase warrant, exercisable at the warrant holders’ option any time within two years of the date of issuance of such warrant at a price of $0.08 per Common Share (“Warrant”). The Company received total aggregate gross proceeds of US$52,100 in the March 2011 sale. The shares were not issued until April 12, 2011. Accordingly, the $52,100 was recorded as a subscription payable at March 31, 2011. Finders acting in connection with the private placement are entitled to receive aggregate fees of $2,605 and 43,417 Common Shares. The shares have not yet been issued and were recorded as a subscriptions payable in the amount of $2,605 at March 31, 2011.

The Company plans to use the proceeds of the sale for: ( i) the completion of its work-up of two extraction processes to determine which process, if either, will be used in the Company’s efforts to potentially prove up any precious metals, platinum groups elements and/or other base metals on the Company’s Pisgah, California site and Wikieup, Arizona site; (ii) conducting a drill program to potentially prove up potential tonnages and subsequently any precious metals and/or other base metals on the Wikieup, Arizona property; (iii) the undertaking of a comprehensive research and development program to ascertain the potential for any rare earth elements on the Owl Canyon, California site; (iv) the potential engagement of a qualified and comprehensive US and Canadian investor relations and shareholder communications group, and; (v) strategic working capital reserve.

Issuer Purchases of Equity Securities

We did not repurchase any of our equity securities during the three month period ended March 31, 2011.

Item 3. Defaults Upon Senior Securities.

See Note 4 to our condensed financial statements included herein.

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

We did not submit any matters to a vote of our security holders during the three month period ending March 31, 2011.

Item 5. Other Information.

None.

Item 6. Exhibits.

Incorporated by reference

Exhibit

Exhibit Description

Filed

herewith

Form

Period

ending

Exhibit

Filing

date

31.1

Certification of Michael Hogan pursuant to Section 302 of the Sarbanes-Oxley Act

31.2

Certification of Michael Hogan pursuant to Section 302 of the Sarbanes-Oxley Act

32.1

Certification of Michael Hogan pursuant to Section 906 of the Sarbanes-Oxley Act

99.8

Press Release stated January 4, 2011

8-K

01/04/11

99.9

Press Release stated February 23, 2011

8-K

03/03/11

SIGNATURES

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

CAN-CAL RESOURCES LTD.
(Registrant)

By:	/s/ Michael Hogan
	Michael Hogan, President and Chief Executive Officer
	(On behalf of the Registrant and as Principal Financial Officer)

Date: May 18, 2011

CAN CAL RESOURCES LTD - FORM 10-Q - May 18, 2011

Attached files

CAN CAL RESOURCES LTD Reports