UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to ____________

Commission file number 000-26669

CAN-CAL RESOURCES LTD.

(Exact name of registrant as specified in its charter)

Nevada		86-0865852
(State or other jurisdiction		(I.R.S. Employer
of incorporation or organization)		Identification No.

42 Springfield Avenue, Red Deer, Alberta, Canada, T4N 0C7

(Address of principal executive offices) (Zip Code)

403.342.6221

(Registrant’s telephone number, including area code)

N/A

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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
N/A	N/A	N/A

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] No [_]

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

Large accelerated filer	[_]	Accelerated filer	[_]
Non-accelerated filer	[_]	Smaller reporting company	[X]
		Emerging growth company	[_]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes [_] No [_]

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 43,667,060 common shares issued and outstanding as at August 5, 2020.

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 September 30, 2019 and December 31, 2018 (Unaudited)	4
		Statements of Operations for the three and nine months ended September 30, 2019 and 2018 (Unaudited)	5
		Statements of Changes in Shareholder’s Deficit for the three and nine months ended September 30, 2019 and 2018 (Unaudited)	6
		Statements of Cash Flows for the nine months ended September 30, 2019 and 2018 (Unaudited)	7
		Notes to Financial Statements (Unaudited)	8
	Item 2. Management’s Discussion and Analysis		17
	Item 3. Quantitative and Qualitative Disclosures about Market Risk		22
	Item 4. Controls and Procedures		22

PART II – OTHER INFORMATION			24
	Item 1. Legal Proceedings		24
	Item 1A. Risk Factors		25
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		25
	Item 3. Defaults Upon Senior Securities		25
	Item 4. Mine Safety Disclosures		25
	Item 5. Other Information		25
	Item 6. Exhibits		26
SIGNATURES			27

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

Our unaudited interim financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.

It is the opinion of management that the unaudited interim financial statements for the quarter ended September 30, 2019 include all adjustments necessary in order to ensure that the unaudited interim financial statements are not misleading.

Can-Cal Resources Ltd.

(An Exploration Company)

Balance Sheets

(Unaudited)

	September 30, 2019			December 31, 2018
Assets

Current Assets
Cash	$	59,764		$	54
Prepaids & Deposits		10,431			–
Total Current Assets		70,195			54

Total Assets	$	70,195		$	54

Liabilities and Stockholders’ Deficit

Current Liabilities
Accounts payable	$	316,657		$	258,029
Accounts payable, related party		102,025			62,673
Accrued expenses		19,930			19,930
Accrued expenses, related party		107,403			101,122
Unearned revenues		100,123			–
Unearned revenues, related party		583,066			583,066
Notes payable, related parties		149,078			149,078
Total Current Liabilities		1,378,282			1,173,898

Total Liabilities		1,378,282			1,173,898

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; 43,667,060 shares issued and outstanding as at September 30, 2019 and December 31, 2018		43,667			43,667
Additional paid-in-capital		10,595,697			10,595,697
Accumulated deficit		(11,947,451	)		(11,813,208	)
Total Stockholders’ Deficit		(1,308,087	)		(1,173,844	)

Total Liabilities and Stockholders’ Deficit	$	70,195		$	54

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

Can-Cal Resources Ltd.

(An Exploration Company)

Statement of Operations

(Unaudited)

	Three Months Ended September 30, 2019			Three Months Ended September 30, 2018			Nine Months Ended September 30, 2019			Nine Months Ended September 30, 2018

Revenue
Sales revenue	$	–		$	–		$	29,992		$	–
Total revenues	$	–		$	–		$	29,992		$	–

Operating expenses
Exploration costs	$	–		$	–		$	–		$	1,251
General and administrative expense		28,581			28,374			99,587			142,947
Director fees		18,750			18,750			56,250			56,250
Total operating expenses		47,331			47,124			155,837			200,448

Net loss from operations		(47, 331	)		(47,124	)		(125,845	)		(200,448	)

Other income (expense)
Interest (expense) income, related party		(2,116	)		(2,283	)		(6,280	)		8,943
Gain from sale of assets		–			–			–			–
Other income		–			–			–			–
Foreign exchange loss		(3,158	)		(528	)		(2,118	)		(137	)
Liability write-off		–			–			–			58,985
Total other income (expense)		(5,274	)		(2,811	)		(8,398	)		67,791

Loss before provision for income taxes		(52,605	)		(49,935	)		(134,243	)		(132,657	)
Provision for taxes		–			–			–			–

Net loss	$	(52,605	)	$	(49,935	)	$	(134,243	)	$	(132,657	)

Loss per common share – Basic and diluted	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)

Weighted average number of common shares outstanding, basic and diluted		43,667,060			43,667,060			43,667,060			43,667,060

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

Can-Cal Resources Ltd.

(An Exploration Company)

Statements of Changes in Stockholders’ Deficit

(Unaudited)

	Common Stock
		Number of Shares	Amount		Additional Paid-in Capital		Accumulated Deficit			Total Stockholders’ Deficit
Balance, June 30, 2018		43,667,060	$	43,667	$	10,595,697	$	(11,695,751	)	$	(1,056,386	)
Net loss for the period								(49,898	)		(49,898	)
Balance, September 30, 2018		43,667,060	$	43,667	$	10,595,697	$	(11,745,648	)	$	(1,106,284	)

	Common Stock
		Number of Shares	Amount		Additional Paid-in Capital		Accumulated Deficit			Total Stockholders’ Deficit
Balance, June 30, 2019		43,667,060	$	43,667	$	10,595,697	$	(11,894,846	)	$	(1,255,482	)
Net loss for the period								(52,605	)		(52,605	)
Balance, September 30, 2019		43,667,060	$	43,667	$	10,595,697	$	(11,947,451	)	$	(1,308,087	)

	Common Stock
		Number of Shares	Amount		Additional Paid-in Capital		Accumulated Deficit			Total Stockholders’ Deficit
Balance, January 1, 2018		43,667,060	$	43,667	$	10,595,697	$	(11,613,028	)	$	(973,664	)
Net loss for the period		–		–		–		(132,620	)		(132,620	)
Balance, September 30, 2018		43,667,060	$	43,667	$	10,595,697	$	(11,745,648	)	$	(1,106,284	)

	Common Stock
		Number of Shares	Amount		Additional Paid-in Capital		Accumulated Deficit			Total Stockholders’ Deficit
Balance, December 31, 2018		43,667,060	$	43,667	$	10,595,697	$	(11,813,208	)	$	(1,173,844	)
Net loss for the period		–		–		–		(134,243	)		(134,243	)
Balance, September 30, 2019		43,667,060	$	43,667	$	10,595,697	$	(11,947,451	)	$	(1,308,087	)

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

Can-Cal Resources Ltd.

(An Exploration Company)

Statements of Cash Flows

(Unaudited)

	Nine Months Ended September 30, 2019			Nine Months Ended September 30, 2018
Operating activities
Net loss	$	(134,243	)	$	(132,657	)
Adjustments to reconcile net loss to net cash used in operating activities
Changes in operating assets and liabilities
Other receivables		(10,431	)		–
Accounts payable and accrued expenses		97,981			(5,203	)
Accounts payable and accrued expenses, related party		–			(15,108	)
Gain on debt forgiveness		–			(58,895	)
Unearned revenues, related party		100,123			155,062
Net cash (used in) operating activities		53,430			(56,801	)
Liquidation of AP		–			58,895
Sub-total		53,430			2,094

Financing activities
Proceeds from issuance of loans payable , related party		6,281			7,014
Net cash provided by financing activities		6,281			7,014

Net changes in cash and equivalents		59,711			9,108

Cash and equivalents at beginning of the period		54			769

Cash and equivalents at end of the period	$	59,765		$	9,877

SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid in interest	$	–		$	–
Cash paid for income taxes	$	–		$	–
Non-cash gain on elimination of payables	$	–		$	58,895

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

Can-Cal Resources Ltd.

(An Exploration Company)

Notes to Unaudited Financial Statements

For the three and nine months ended September 30, 2019 and 2018

1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

Can-Cal Resources Ltd. (“Can-Cal” or the “Company”) is a Nevada corporation incorporated on March 22, 1995.

The Company is an exploration company engaged in the exploration for precious metals, specifically focused on mineral exploration projects. We have examined various prospective mineral properties for precious metals and acquired those deemed promising. We currenty own, lease or have mining interest in one mineral property in California, United States. The Company previously had mineral rights in Owl Canyon, California as well as Cerbat and Wikieup, Arizona, which have now been abandoned.

As an exploration stage enterprise, the Company discloses the deficit accumulated during the exploration stage. 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.

Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited interim financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission set forth in Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Unaudited interim results are not necessarily indicative of the results for the full fiscal year. These financial statements should be read in conjunction with the financial statements of the Company for the fiscal year ended December 31, 2017 and notes thereto contained in the Company’s Annual Report on Form 10-K.

The Company’s functional and reporting currency is the United States dollar (USD). Monetary assets and liabilities denominated in foreign currencies are translated in accordance with ASC 820, using the exchange rate prevailing at the balance sheet date. Gains and losses arising on settlement of foreign currency denominated transactions or balances are included in the determination of income. Foreign currency transactions are primarily undertaken in the Canadian dollar (CDN). The Company has not, to the date of these financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

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

In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (ASU 2019-12), which simplifies the accounting for income taxes. This guidance will be effective for entities for the fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020 on a prospective basis, with early adoption permitted. We will adopt the new standard effective January 1, 2021 and do not expect the adoption of this guidance to have a material impact on our financial statements.

1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

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 an accumulated deficit of $11,947,451 for the period from inception (March 22, 1995) through September 30, 2019. 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.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles 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 amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition Policy

The Company adopted ASC 606, Revenue from Contracts with Customers (Topic 606). Under this standard the Company will account for revenue from contracts with customers by evaluating the five steps of Topic 606, which are as follows: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations; and (5) recognize revenue when (or as) performance obligations are satisfied. The adoption of this standard does not have a material impact on the financial statements.

Gains and Losses from Debt Extinguishment

Gain from extinguishment of debt. The Company reflects gain on extinguishment of debt as a credit to earnings from operations in the period in which it is determined that the liability has been forgiven either by the vendor, judicial authority, or the passing of the stature of limitations. Gains from related parties are credited to paid in capital.

Basic and Diluted Loss per Share

The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss adjusted on an “as if converted” basis, by the weighted average number of common shares outstanding plus potential dilutive securities. For 2019 and 2018 potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share.

2. GOING CONCERN

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As shown in the accompanying financial statements, the Company had a net loss of $52,605 and $134,243 for the three and nine months ended September 30, 2019, respectively, and had a working capital deficit of $1,308,087 as at September 30, 2019. The future of the Company is dependent upon its ability to obtain financing and upon future profitable operations from the development of its new business opportunities. Management may seek additional capital through private placements and public offerings of its common stock. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

2. GOING CONCERN (CONT’D)

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

3. RELATED PARTY TRANSACTIONS

Material Supply Agreement

On April 9, 2013, the Company entered into a material supply agreement (the “the Original MSA”) with Candeo Lava Products Inc. (“Candeo”), which was amended on March 3, 2014 (the “Amended MSA”). Pursuant to the Amended MSA, Candeo is entitled to purchase material (“Material”) from the Pisgah Property at a price equal to the greater of $15 per ton and the net sales margin per ton removed from the Pisgah Property realized as follows: (i) 35% of the net sales margins during the first year of mining; and (ii) 50% of the net sales margins for the subsequent years during the term of the Amended MSA. Under the Amended MSA, Candeo has the right to remove an Initial Amount of up to 1,000,000 tons of Material from the Pisgah Property and Additional Amounts of 1,000,000 tons each, upon the successful removal of the Initial Amount from the Pisgah Property. Candeo’s right to remove the Additional Amounts from the Pisgah Property is on the basis that once Candeo has removed the first Additional Amount of the Material from the Pisgah Property, it shall have the right to remove subsequent Additional Amounts of Material from the Property, so long as it removes its then current Additional Amount. As such, Candeo’s right to extend the term of the Amended MSA is entirely based on Candeo’s successful performance of its Material removal commitments under the terms of the Amended MSA.

Under the Amended MSA, Candeo is required to purchase a minimum of ten thousand (10,000) tons of Material during each of the first three years of the term of the agreement, all at a purchase price of $15.00 per ton, for a total payment of $150,000 per year in each of the first three years of the Term, with credit being given by the Company to Candeo for all pre-paid tons of Material that have already been purchased and paid for under the Original MSA. The Pre-Purchased Material will remain on the Pisgah Property until Candeo commences its production operations or engages the Company to mine and remove Material on Candeo’s behalf. In the event that Candeo engages the Company to mine and remove any of the Material, Candeo shall pay all of the Company’s reasonable costs and expenses in conducting such mining and removal operations plus a fee of 15%. All mining and removal operations on the Pisgah Property will be subject to all necessary regulatory and other third-party approvals being obtained. The Pre-Purchased Payments will not be refundable to Candeo but shall be credited against the first Production Payments.

The term of the Amended MSA has been extended from an initial term of ten (10) years to twenty (20) years (the “Primary Term”) and Candeo has the option to extend the term for an additional thirty (30) years exercisable at any time with no less than three (3) months written notice prior to the expiration of the Primary Term, provided that Candeo is not in default under any of the provisions of the Amended MSA and that the whole of the Initial Amount has been removed from the Property.

Unearned revenues as reflected on the Balance Sheet are a reflection of amounts received from Candeo based on the Amended MSA.

Subsequently, a Court decision rendered on July 9, 2018 incorporated the Terms of the “Stipulation and Agreement of Settlement” and set the terms of the second amended material supply agreement (“Second Amended MSA”). The terms thereof include the following:

PURCHASE PAYMENT. The price or ‘royalty advance’, that Candeo shall pay to Can-Cal per ton of Material (“Purchase Payment”) purchased by Candeo (or its assign or assigns) following the date hereof, shall be as follows:

(a)

With respect to the sale of Material that is not a Minimum Purchase (as hereafter defined), 20% of the Gross Sale Revenue; and

(b)

With respect to the sale of Material that is a Minimum Purchase, fifteen U.S. dollars (US$15.00) per ton ‘royalty advance’; and

(c)

In respect of Minimum Purchases referred to in section 7(b) and (c) below only, in the event that the Gross Sale Revenue per ton is greater than U.S.$15.00 per ton, an amount equal to 20% of the amount that the Gross Sale Revenue per ton exceeds US$15.00 per ton.

3. RELATED PARTY TRANSACTIONS (CONT’D)

Candeo (or its assign or assigns) shall pay such Purchase Payment to Can-Cal quarterly, with each Purchase Payment being made on or before the January 15, April 15, July 15 or October 15 immediately following the date the subject Material has been purchased by Candeo, except where a more specific date for payment is set forth in Paragraph 7 below.

MINIMUM PURCHASES OF MATERIAL. Candeo will purchase a minimum amount of Material (the “Minimum Purchases”) as follows:

(a)

twenty-five thousand (25,000) tons of Material shall be paid for within five (5) days following the Start Date, with an option of Candeo to purchase an additional twenty thousand (20,000) tons of Material exercisable and payable by Candeo within 180 days following the Start Date (“Option 1”), and only upon the prior exercise and payment in full under Option 1, then Candeo shall be granted the right to purchase an additional forty thousand (40,000) tons of Material exercisable and payable by Candeo within 365 days following the Start Date (“Option 2”);

(b)

ten thousand (10,000) tons of Material during each of the first three years following the first anniversary of the Start Date, unless Option 1 has not been exercised and paid in full by Candeo, in which case this Minimum Purchase obligation (10,000 tons per year) commences upon the Start Date and payment in full for the first year ($150,000) thereunder must be made within 180 days following the Start Date; and

(c)

in each year following the three year period referred to in section 7(b) above, the Minimum Purchase amount will increase (or decrease) from ten thousand (10,000) tons of Material by an amount equal to the increase (or decrease) in the Consumer Price Index for the calendar year ended immediately prior to the calculation (“the CPI adjustment”).

For greater clarity, only in respect of the Minimum Purchases referenced in section 7(a) above, the Purchase Payment shall be limited to and shall not exceed the amount of US$15.00 per ton. The Material purchased as part of the Minimum Purchases by Candeo currently remain on the Property until Candeo commences its production operations, which will be subject to all necessary regulatory and other approvals required to remove Material from the Property, such as permits, certified weigh scale, productions plan, environmental reclamation plan (if applicable) and insurance all of which shall be the responsibility and at the sole cost of Candeo. Candeo hereby agrees that it will provide thirty (30) days prior written notice to Can-Cal of the commencement of the operations on the Property, which notice will state the anticipated amount of Material to be removed, the period of time during which the removal will occur and the means that will be used to effect such removal. A separate License Agreement shall secure Candeo’s irrevocable right to access and remove Material purchased and paid for, but not removed from the Property.

Pursuant to the Stipulation & Settlement Agreement, Can-Cal must also restructure its Board of Directors and amend its Articles of Incorporation, at shareholder meeting to be held in the foreseeable future, by adding a new Article 14 to read as follows:

3. RELATED PARTY TRANSACTIONS (CONT’D)

“FOURTEENTH: Notwithstanding any other provision of this Certificate of Amendment of Articles of Incorporation or the By-laws of the corporation, and in addition to any affirmative vote of the holders of any particular class of stock of the corporation required by applicable law, the Articles of Incorporation or the By-laws of the corporation, the affirmative vote of the holders of at least 90% of the voting power of the shares of the then outstanding voting stock of the corporation, voting together as a single class, shall be required to authorize any of the Supermajority Matters. For purposes hereof, the “Supermajority Matters” are: (i) authorization of the corporation to file a voluntary petition for relief under the provisions of Chapter 11 of Title 11 of the United States Code (i.e., the U.S. Bankruptcy Code); (ii) modification of that certain Second Amended Material Supply Agreement by and between the corporation and Candeo Lava Products, Inc.; (iii) increase to the corporation’s outstanding voting capital securities to more than 100 million outstanding votes, in the aggregate; and (iv) the Amendment or repeal of any provisions of this Article FOURTEENTH or the adoption of any provisions inconsistent with this Article FOURTEENTH.”

Unearned revenues as reflected on the Balance Sheet are a reflection of amounts received from Candeo based on the Amended MSA. Balances as at September 30, 2019 and December 31, 2018 were $583,066 and $583,066, respectively.

Compensation

On June 30, 2010, the Company entered into a 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 to date. As of December 31, 2017, the Company owed FutureWorth Capital Corp. $506 (2016 - $506) as included in accounts payable, related parties, for service prior to, and during the service period under the consulting agreement. The consulting agreement was terminated on February 27, 2013 with Mr. William Hogan’s resignation from the Board of Directors.

On June 10, 2016, the Company entered into an office rental & administration agreement, with a Board of Director’s consulting firm, For Life Financial. For Life Financial is owned by Mr. Casey Douglass, the terms of the agreement include monthly compensation of $2,100 CAD. Additionally, on September 10, 2016, the Company entered into a Management Consulting Agreement with annual compensation of $50,000 USD, payable monthly as the scope of work had increased.

Stock-Based Compensation

All warrants previously issued by the Company have expired as of the fiscal year ending December 31, 2014. No new warrants have been issued as of March 31, 2019.

4. NOTES PAYABLE, RELATED PARTIES

Notes payable, related parties consisted of the following as of September 30, 2018 and December 31, 2017, respectively:

September 30,

2019

December 31,

2018

Note payable ⁽¹⁾

149,078

Total related party notes payable

149,078

(1)

Note payable to the former CEO, unsecured, bearing interest at 10% and due on demand. Per the settlement of a lawsuit, the terms of this note were adjusted. Legal expenses incurred as a result of the lawsuit would bear interest at 10%, however, all other expenses would bear interest at 5%.

4. NOTES PAYABLE, RELATED PARTIES (CONT’D)

The following presents components of interest expense by instrument type:

	Three Months Ended September 30, 2019			Three Months Ended September 30, 2018			Nine Months Ended September 30, 2019			Nine Months Ended September 30, 2018
Interest on notes payable, related parties	$	(2,116	)	$	(2,283	)	$	(6,280	)	$	8,943
Total interest (expense) income	$	(2,116	)	$	(2,283	)	$	(6,280	)	$	8,943

The negative interest recognized in the nine months ended September 30, 2018 is due to a recalculation on the loan per revisions to the agreement from the lawyers of the lawsuit recognized in the first three months of 2018. Previously omitted costs were added to the outstanding loan and the interest rate was left at 10% for legal expenses incurred but adjusted to 5% for all other expenses.

5. COMMITMENTS AND CONTINGENCIES

A) Mining claims

The Company had a lease and purchase option agreement that began in March 1998 which has since expired, covering six patented claims in the Cerbat Mountains, Hualapai Mining District and Mohave County Arizona. The Company paid $1,500 per quarter as minimum advance royalties. The Company forfeited 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 would be credited toward the purchase price as of the date the payments were made.

B) Mining reclamation costs

Mining and reclamation permits, and an air quality permit have been issued by the California regulatory agencies in the names of both Twin Mountain, our joint venture partner, and the Company on August 25, 2016 for a 5 year permit. The Company posted a cash bond in the amount of $1,379 (1% of the total bond amount) and Twin Mountain has posted the remainder of the $137,886 bond. If Twin Mountain defaults, we would be responsible for reclamation of the property, but reclamation costs incurred in that event would be paid in whole or part by the bond posted by us and Twin Mountain. Can-Cal & Candeo Growth Solutions are now joint owners of this Permit which has been extended to December 31, 2048.

C) Litigation

On June 3, 2014, a group of Company shareholders under the direction of Ronald D. Sloan (a former Chief Executive Officer and director of the Company) (collectively the “Plaintiffs”) filed a shareholder derivative complaint in Nevada State Court against the Company, as well as its then current directors (Thompson MacDonald, G. Michael Hogan, and Ron Schinnour), William Hogan, FutureWorth Capital Corp. and Candeo (collectively the “Defendants”). The Plaintiffs are alleging, among other things, that the Defendants caused the Company to enter into a transaction with Candeo involving the Pisgah Property that was not in the best interests of the Company. However, the transaction with Candeo is in the best interests of the Company (see above in "Note 3 – Related Party - Material Supply Agreement”).

There are many other allegations made by the Plaintiffs, all of which are considered by the Defendants to be frivolous with no basis in fact. In fact, due to the actions of the prior management of the Company, the Company would not have been able to continue operations and would have failed without the intervention of new management, including certain of the Defendants, and without entering into the transaction with Candeo. Accordingly, no provision has been recorded in the financial statements of the Company for any payment to the Plaintiffs pursuant to the claim or otherwise. Legal counsel for the Company is Justin C. Jones, Esq., currently of Jones Lovelock of Las Vegas, Nevada.

5. COMMITMENTS AND CONTINGENCIES (CONT’D)

Can-Cal Resources Ltd., as one of several Defendants in Derivative Lawsuit reached “Settlement Agreement in Principle” mid-November 2017, on July 9, 2018, the courts approved the Stipulation and Agreement of Settlement.

Terms of the Agreement include:

A new Board was constituted as of May 13, 2019, with Mr. Casey Douglass, appointee of Defendants and Mr. Hugo Bondi, appointee of Plaintiffs, whom then unanimously voted in Mr. Gary Oosterhoff as third Director.

Anvance Royalty payments on minimum tonnage of lava material to Candeo Lava Products within certain time frames.

Proceeds from lava material income are budgeted towards Plaintiff’s legal costs, acute Accounts Payables and Management Fees. An annual minimum was established to cover base costs of keeping Can-Cal from insolvency.

	·	As Candeo develops its marketing, it expects to substantially increase volumes of lava material sales and thus future purchases from Can-Cal. After the first 60-75,000 tons are purchased and or advance royalty paid, then Can-Cal will begin to receive 20% of gross revenues, or ORI (Overriding Royalty Interest) from Candeo’s sales of lava material.
	·	Can-Cal Resources will be able to focus on developing any other resource potential.

In or about June 2017, the Securities and Exchange Commission initiated an administrative proceeding before an administrative law judge seeking to revoke Can-Cal’s registration as a publicly traded security. In November 2017, the SEC’s Division of Enforcement sought summary adjudication on the issue of permanent revocation of Cal-Cal’s securities registration. Can-Cal opposed the motion and the matter has been fully briefed; however, as of April 5, 2019, the SEC has moved to dismiss this proceeding. In January 2020, after several motions and procedural delays, the SEC administrative law judge in the matter issued a decision revoking Can-Cal’s United States securities registration.

In the ordinary course of business, we are from time to time involved in various pending or threatened legal actions. The litigation process is inherently uncertain and it is possible that the resolution of such matters might have a material adverse effect upon our financial condition and/or results of operations. However, in the opinion of our Board of Directors, matters currently pending or threatened against us are not expected to have a material adverse effect on our financial position or results of operations.

6. SUBSEQUENT EVENTS

October 21, 2019, the Company filed an 8-K reporting that funds had been received in the amount of $100,000 from a third party with whom they executed a Memorandum of Understanding with. That company is Archemetrix Mineral Resources LLC, with subsequent Definitive Agreement details described below.

On March 31, 2020, Richmond (Dick) Graham was appointed to the Can-Cal Advisory Board.

With over 25 years of mineral and energy development experience and consulting experience to boards and management teams Mr. Graham brings experience that is well suited to Can-Cal. Richmond’s past private and public company experience is rich in senior management and board roles. His experience includes the Board of Moss Lake Gold Mines (TSXV.MOK sold to Wesdome), Officer of Landis Energy (TSXV.LIS formerly Landis Mining sold to AltaGas TSX.ALA), Co-Founder/President/CEO/Board member of Banyan Gold Corp (TSXV.BYN). He currently provides advisory services to Boards and sits on the Boards of private international and North American companies. In addition, he Chairs the Saskatchewan Science Center Board of Directors and is active on other charity boards.

Mr. Graham is a Professional Engineer (P.Eng.), Project Management Professional (PMP), Certified Management Consultant (CMC), and holds the designation of ICD.D from the Institute of Corporate Directors. Richmond is a graduate of Saskatchewan Polytech (Diploma Mechanical Engineering Technology), Lakehead University (B.Eng.), and Royal Roads University (MBA).

6. SUBSEQUENT EVENTS (CONT’D)

On March 31, 2020, Can-Cal issued a press release regarding the election of Mr. Graham. The press release is filed herewith as Exhibit 99.1.

On May 15th, 2020, Can-Cal Resources Ltd.’s (the “Company”, “Can-Cal”, “we” and “us”) Board of Directors unanimously passed a Resolution agreeing to issue, once the Company becomes compliant with securities commissions in governing jurisdictions, 500,000 shares of restricted common stock to Mr. Richmond Graham, appointed to the Can-Cal Advisory Board on March 31, 2020 (as disclosed in the Current Report on Form 8-K filed on April 3, 2020) in consideration for services to be rendered, vesting over time at key milestones aligned with creating shareholder value. A total of 250,000 shares vest immediately recognizing the significant contribution of Mr. Graham in advancing the governance and mining develop plans of Can-Cal in 2020; 125,000 shares vest on the signing of the definitive agreements with a developer/processor of the Pisgah resource; and a final 125,000 shares vest when Can-Cal is back in full compliance with its Securities and Exchange Commission filing requirements.

The Board of Directors believes that the share-based compensation payable to Mr. Richmond is appropriate due to the fact that the Company has very limited cash and funding resources.

We claim an exemption from registration for the issuance pursuant to Section 4(a)(2) and/or Rule 506 of Regulation D of the Securities Act of 1933, as amended (the “Securities Act”), since the foregoing issuance did not involve a public offering, the recipient (a) was an “accredited investor”; and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Securities Act, and the recipient acquired the securities for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof. The securities were offered without any general solicitation by us or our representatives. No underwriters or agents were involved in the foregoing issuances and we paid no underwriting discounts or commissions. The securities sold are subject to transfer restrictions, and the certificates evidencing the securities contain an appropriate legend stating that such securities have not been registered under the Securities Act and may not be offered or sold absent registration or pursuant to an exemption therefrom. The securities were not registered under the Securities Act and such securities may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act and any applicable state securities laws.

The Company continued to negotiate an agreement with a third-party to develop Can-Cal’s Pisgah resource. Additionally, Mr. Graham has brought his considerable engineering, business, exploration, mining, and public company experience to bear on these efforts.

The Company plans to take steps to bring its filings current with the Securities and Exchange Commission (SEC). Assuming the Company becomes current in its SEC filings, it then plans to take steps to comply with the rules and regulations of the provincial jurisdictions of Alberta and British Columbia, Canada.

On May 24th, 2020, Can-Cal Resources Ltd. (the “Company”, “we” and “us”) entered into a Definitive Agreement with Archemetrix Mineral Resources, LLC (“AMR”), relating to its 120-acre Pisgah Mountain property located in Pisgah, California (“Pisgah Property”). Can-Cal had been seeking a partner to properly develop the Pisgah Property.

Pursuant to the Definitive Agreement, AMR had agreed to mine resources from the Pisgah Property.

The Mineral Lease calls for up to 9 million tons of material to be processed by AMR for commercial markets and remains in place until such 9 million tons are processed, or 15 years from the date of the Mineral Lease. The Definitive Agreement remains in place until the end of the Mineral Lease.

The initial processing under the Definitive Agreement is anticipated to commence in the third quarter of 2020 with the start of a pilot program. In the event the pilot program is successful, and subject to certain conditions, the processing of the Pisgah Property pursuant to the terms of the Definitive Agreement is expected to begin during the first half of 2021. Under the Definitive Agreement all capital costs are borne by AMR.

6. SUBSEQUENT EVENTS (CONT’D)

Profits from the sale of any metals processed by AMR under the Definitive Agreement provide a royalty share to Can-Cal consisting of a minimum of 40% of net profits from the sale of mineral concentrate, increasing incrementally based on certain milestones of gross tonnage of material processed.

Additionally, prior to the first 8 million tons being processed, an optional right may be exercised whereby an additional 4.5 million tons of material, above the initial 9 million tons, can be processed under the Definitive Agreements with terms yet to be agreed upon by the parties, at which time the term of the Mineral Lease will be extended by 15 years.

Profits from byproducts remaining from the process to derive a concentrate for smelter-refiners, are to be split 50/50 between the parties.

Specific minimum as well as ongoing performance requirements are to be met through out the duration of the Definitive Agreements.

The Definitive Agreement requires AMR to pay a Royalty Advance of $1.2 million to the Company, payable as follows: (a) $100,000 which was paid by AMR in the third quarter of 2019; (b) $100,000 payable by June 22, 2020, pursuant to certain conditions being met as described in the Definitive Agreement; (c) $150,000 prior to commencement of Pilot Program expected in Q3 of 2020; (d) $350,000 no later than 60 days after the pilot program or commercial activity at the Pisgah Property has started; and (e) $500,000 at the earlier of (i) the date that AMR commences commercial processing on the Pisgah Property or (ii) the first anniversary of the Definitive Agreement.

In recognition of the Royalty Advance, the Company agreed to grant AMR a Warrant to purchase up to 5 million shares of common stock (the "AMR Warrants"), of which (a) warrants to purchase 3 million shares have an exercise price of $0.20 and expire on May 24, 2023; (b) warrants to purchase 1 million shares have an exercise price of $0.25 per share and expire on May 24, 2024; and (c) warrants to purchase 1 million shares have an exercise price of $0.25 per share and expire on May 24, 2024. The shares of common stock issuable upon exercise of the first tranche of warrants (i.e., (a) above), are required to be held for three months (1,000,000 shares), six months (1,000,000 shares) and nine months (1,000,000 shares) from the date of their exercise and the shares of common stock issuable upon exercise of the second and third tranches of warrants (i.e., (b) and (c) above), are required to be held for six months from the date of their exercise.

The Definitive Agreements include certain indemnification and other requirements of the parties typical of transactions of this type. The Mineral Lease may be terminated by AMR in certain situations including our breach of the representations of the Mineral Lease and our failure to cure such breaches 30 days after notice thereof is provided to the Company. In certain circumstances we also have the right to terminate the Mineral Lease, including upon AMR's breach of the agreement (and failure to cure 30 days after notice thereof is provided to AMR) and AMR's failure to meet certain minimum volume requirements relating to the processing of materials.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Forward-Looking Statements

This quarterly report contains “forward-looking statements”. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, statements regarding: the plans, strategies and objections of management for future operations; the future plans or business of our company; future economic conditions or performance; and any statements of assumptions underlying any of the foregoing.

Forward-looking statements may include the words “may,” “could,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this report. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the dates on which they are made. Except as required by applicable law, we do not intend, and undertake no obligation, to update any forward-looking statement.

Although we believe the expectations reflected in the forward-looking statements in this report are reasonable, actual results could differ materially from those projected or assumed in any forward-looking statements. All forward-looking statements are subject to change and inherent risks and uncertainties. The factors impacting these risks and uncertainties include, but are not limited to:

	·	our current lack of working capital;

	·	a possible inability to raise additional financing;

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

	·	deterioration in general or regional economic conditions;

	·	adverse state or federal legislation or regulations that increase the costs of compliance;

	·	inability to efficiently manage our operations; and

	·	the unavailability of funds for capital expenditures.

All financial information contained herein is shown in United States dollars unless otherwise stated. Our financial statements are prepared in accordance with United States generally accepted accounting principles.

In this quarterly report, unless otherwise specified, all references to “shares” refer to shares of common stock in the capital of our company.

As used in this quarterly report on Form 10-Q, the terms “we”, “us” “our” and “Can-Cal” refer to Can-Cal Resources Ltd., a Nevada corporation, unless otherwise specified.

Corporate 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.

At September 30, 2019, we had cash on hand of approximately $59,764 available to sustain operations. At December 31, 2018, cash on hand was $54. 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.

On April 9, 2013, the Company entered into the Original MSA with Candeo and the Amended MSA on March 3, 2014. Pursuant to the Amended MSA, Candeo is entitled to purchase Material from the Pisgah Property at a price equal to the greater of $15 per ton and the net sales margin per ton removed from the Pisgah Property realized as follows: (i) 35% of the net sales margins during the first year of mining; and (ii) 50% of the net sales margins for the subsequent years during the term of the Amended MSA. Under the Amended MSA, Candeo has the right to remove an Initial Amount of up to 1,000,000 tons of Material from the Pisgah Property and Additional Amounts of 1,000,000 tons each, upon the successful removal of the Initial Amount from the Pisgah Property. Candeo’s right to remove the Additional Amounts from the Pisgah Property is on the basis that once Candeo has removed the first Additional Amount of the Material from the Pisgah Property, it shall have the right to remove subsequent Additional Amounts of Material from the Property, so long as it removes its then current Additional Amount. As such, Candeo’s right to extend the term of the Amended MSA is entirely based on Candeo’s successful performance of its Material removal commitments under the terms of the Amended MSA.

The term of the Amended MSA has been extended from an initial term of ten (10) years to twenty (20) years (the “Primary Term”) and Candeo has the option to extend the term for an additional thirty (30) years exercisable at any time with no less than three (3) months written notice prior to the expiration of the Primary Term, provided that Candeo is not in default under any of the provisions of the Second Amended and Restated MSA and that the whole of the Initial Amount has been removed from the Property.

Can-Cal Resources Ltd., as one of several Defendants in Derivative Lawsuit reached “Settlement Agreement in Principle” mid-November 2017. , July 9, 2018, court approved the Stipulation and Agreement of Settlement .

Terms of the Agreement include:

Anvance Royalty payments on minimum tonnage of lava material to Candeo Lava Products within certain time frames.

	·	As Candeo develops its marketing, it expects to substantially increase volumes of lava material sales and thus future purchases from Can-Cal. After the first 60-75,000 tons are purchased and or advance royalty paid, then Can-Cal will begin to receive 20% of gross revenues, or ORI (Overriding Royalty Interest) from Candeo’s sales of lava material.
	·	Can-Cal Resources will be able to focus on developing any other resource potential.

Results of Operations

Three and Nine Months Ended September 30, 2019 Compared to the Three and Nine Months Ended September 30, 2018

Results of Operations for the Three and Nine Months Ended September 30, 2019 and 2018:

	Three Months Ended September 30, 2019			Three Months Ended September 30, 2018			Nine Months Ended September 30, 2019			Nine Months Ended September 30, 2018

Operating expenses
Exploration costs	$	–		$	–		$	–		$	1,251
General and administrative expense		28,581			28,374			99,588			142,947
Director fees		18,750			18,750			56,250			56,250
Total operating expenses		47,331			47,124			155,838			200,448

Net loss from operations		(47,331	)		(47,124	)		(155,838	)		(200,448	)

Other income (expense)
Interest expense, related party		(2,116	)		(2,283	)		(6,280	)		8,943
Gain from sale of assets		–			–			–			–
Other income		–			–			–			–
Foreign exchange gain (loss)		(3,158	)		(528	)		(2,118	)		(137	)
Liability write-off		–			–			–			58,985
Total other income (expense)		(5,274	)		(2,811	)		(8,398	)		67,791	)

Loss before provision for income taxes		(52,605	)		(49,935	)		(134,244	)		(132,657	)
Provision for taxes		–			–			–			–

Net loss	$	(52,605	)	$	(49,935	)	$	(134,244	)	$	(132,657	)

Exploration Costs:

Exploration costs were $Nil for the three and nine months ended September 30, 2019, respectively, and $Nil and $1,251 for the three and nine months ended September 30, 2018, respectively. The costs were related to property taxes.

General and Administrative:

General and administrative expenses were $28,581 and $99,588 for the three and nine months ended September 30, 2018, respectively, and $28,374 and $142,947 for 2018, respectively. The decrease in costs from 2019 compared to 2018 is from the overall decrease in general and administrative expense in due to management fees and filing fees.

Director Fees:

Director fees were $18,750 and $56,250 for the three and nine months ended September 30, 2019, respectively, and $18,750 and $56,250 for the three and nine months ended September 30, 2018, respectively..

Net Operating Gain or Loss:

Net operating loss for the three and nine months ended September 30, 2019 was $51,019 or $0.00 per share and $134,244 or $0.00 per share, respectively, there was a net operating loss of $49,935 or $0.00 per share and $132,657 or $0.00 for the three and nine months ended September 30, 2018, respectively. This operating loss increase is primarily due to higher General and Administrative expense and Director fees as explained above.

Interest Expense:

Interest expense for the three and nine months ended September 30, 2019 was an expense of $2,116 and $6,280, respectively, and a $2,283 and a recovery of $8,943 for 2018, respectively. The recovery in the nine months ended September 30, 2018 was due to a recalculation of the related party loan outstanding with G. Michael Hogan that was recognized in the first three months of the year. After being reviewed by the lawyers involved in the lawsuit, it was determined that previously omitted expenses would be included and that legal expenses would remain bearing an interest rate of 10%, but all other expenses would bear an interest rate of 5%.

Liability Write-off:

Certain liabilities were written off in 2018 as backup was provided showing that vendors had acknowledged a zero balance. Expense and payment transactions for these would have occurred during the period that the comprehensive Form 10-K had covered from October 1, 2015 to September 30, 2017 when backup for these payments had not previously been received.

Net Loss:

For the three months ended September 30, 2019, net loss was largely impacted by the general and administrative expense and director fees while the nine months ended September 30, 2018 was also impacted from the liability write-off in the first three months of 2018. The nine months ended September 30, 2018 saw a $9,700 positive impact from the gain on sale of assets and other income.

LIQUIDITY AND CAPITAL RESOURCES

The following table summarizes total assets, accumulated deficit, stockholders’ equity (deficit) and working capital at September 30, 2019 and December 31, 2018.

	September 30, 2019			December 31, 2018
Total Assets	$	70,195		$	54
Accumulated (Deficit)		(11,947,451	)		(11,813,208	)
Stockholders’ Equity (Deficit)		(1,308,087	)		(1,196,467	)
Working Capital (Deficit)	$	(1,308,087	)	$	(1,173,844	)

At September 30, 2019, the Company had total assets of $70,195, consisting of prepaid expenses and cash, compared to assets of $54 at December 31, 2018. The Company has implemented financial controls in the business to ensure each expense is warranted and needed. The Company had $59,764 of cash on hand at September 30, 2019.

Off Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements of any kind.

Contractual Obligations

An agreement was signed effective June 10, 2016 with For Life Financial for the office administration of the Company and can be terminated by either party with one month’s written notice. An agreement was signed effective September 10, 2016 to manage the Company. The contract is effective until December 31, 2020 and will continue until the earlier of the completion of the services or the termination of the agreement. Termination of the agreement may be for any or no reason upon four months written notice. The Company may, in its sole discretion, request For Life Financial to cease performing services during the four-month period. For Life Financial may terminate this agreement for any or no reason upon two months written notice.

On September 1, 2017, an agreement was signed with Red to Black Inc. to perform the accounting for the Company. The contract is effective until December 31, 2020 and will automatically renew and can be terminated by either party with thirty days notice. No new contract has been signed and the automatic renewal has been continuing.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and are not required to provide the information under this item.

ITEM 4. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) and 15d-15(f) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. We conducted an evaluation (the “Evaluation”), under the supervision and with the participation of our Executive Director of the effectiveness of the design and operation of our disclosure controls and procedures (“Disclosure Controls”) as of the end of the period covered by this report pursuant to Rule 13a-15 of the Exchange Act. Based on this Evaluation, our Chief Executive Officer has concluded that the Company’s disclosure controls and procedures were not effective because of the identification of a material weakness in our internal control over financial reporting which is identified below in Management’s Annual Report on Internal Control over Financial Reporting, which we view as an integral part of our disclosure controls and procedures.

Changes in Internal Control

We have also evaluated our internal control over financial reporting, and there have been no significant changes in our internal controls or in other factors that could significantly affect those controls as of September 30, 2019.

Limitations on the Effectiveness of Controls

Our management, including our Executive Director, does not expect that our Disclosure Controls and internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management or board override of the control.

The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

CEO Certification

Appearing immediately following the Signatures section of this report there are Certifications of the Executive Director. The Company currently has no CFO. The Certification are required in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 (the Section 302 Certifications). This Item of this report, which you are currently reading is the information concerning the Evaluation referred to in the Section 302 Certifications and this information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

Can-Cal Resources Ltd., as one of several Defendants in Derivative Lawsuit reached “Settlement Agreement in Principle” mid-November 2017. As of December 4, 2019, all Parties are progressing toward a more detailed Definitive Agreement.

Terms of the Agreement include:

Anvance Royalty payments on minimum tonnage of lava material to Candeo Lava Products within certain time frames.

	·	As Candeo develops its marketing, it expects to substantially increase volumes of lava material sales and thus future purchases from Can-Cal. After the first 60-75,000 tons are purchased and or advance royalty paid, then Can-Cal will begin to receive 20% of gross revenues, or ORI (Overriding Royalty Interest) from Candeo’s sales of lava material.
	·	Can-Cal Resources will be able to focus on developing any other resource potential.

ITEM 1A. RISK FACTORS.

As we are a smaller reporting company, we are not required to provide the information required by this item.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Since the beginning of the fiscal quarter ended September 30, 2018, we have not sold any equity securities that were not registered under the Securities Act of 1933, as amended, that were not previously reported in a quarterly report on Form 10-Q or a current report on Form 8-K.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

Since the beginning of the fiscal quarter ended September 30, 2018, we have had no senior securities issued and outstanding.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS.

			Incorporated by reference
Exhibit	Exhibit Description	Filed herewith	Form	Period ending	Exhibit	Filing date
3.1	Articles of Incorporation		Form 10-SB	N/A	3.0	7/9/1999
3.2	Amendment to the Articles of Incorporation		Form 10-SB	N/A	3.1	7/9/1999
3.3	By-Laws		Form 10-SB	N/A	3.2	7/9/1999
10.1	Form of Mineral Lease Agreement		10-K	12/31/2014	10.1	1/7/2016
10.2	Form of Promissory Note with FutureWorth Capital		10-K	12/31/2014	10.2	1/7/2016
10.3	Form of Subscription Agreement for Promissory Note with FutureWorth Capital		10-K	12/31/2014	10.3	1/7/2016
10.4	Form of Warrant Certificate with FutureWorth Capital		10-K	12/31/2014	10.4	1/7/2016
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act	X
32.1	Certification of Principal Executive Officer/Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act	X
99.1	Summary of Significant Details Regarding Pisgah, Wikieup, Cerbat and the Owl Canyon Properties		10-KSB	12/31/07	99.1	04/16/08
101.INS	XBRL Instance Document	X
101.SCH	XBRL Schema Document	X
101.CAL	XBRL Calculation Linkbase Document	X
101.DEF	XBRL Definition Linkbase Document	X
101.LAB	XBRL Labels Linkbase Document	X
101.PRE	XBRL Presentation Linkbase Document	X

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CAN-CAL RESOURCES LTD.

By: /s/ Casey Douglass

Casey Douglass, Chairman of the Board of Directors

Date: August 28, 2020

POWER OF ATTORNEY

Pursuant to the requirements of the Securities Act of 1933, as amended, and Exchange Act of 1934, as amended, this Quarterly Report on Form 10-Q has been signed by the following persons in the capacities indicated on the dates indicated.

/s/ Gary Oosterhoff

Gary Oosterhoff, Director

Date: August 28, 2020

/s/ Hugo Bondi

Hugo Bondi, Director

Date: August 28, 2020

CAN CAL RESOURCES LTD 10-Q