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UNITED STATESSECURITIES
AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-KSB

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

For the fiscal year ended **December 31,
2006**

[   ] 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 333-135946

HEMIS CORPORATION(Exact name of registrant as specified in its charter)

|NEVADA                                        | 20-2749916                          
|--------------------------------------------- | ------------------------------------
|(State or Other Jurisdiction of Incorporation | (I.R.S. Employer Identification No.)
|of Organization)                              |                                     

Bettlistrasse 358600 Dübendorf, Switzerland(Address of principal executive offices)

(702) 387 2382(Registrants telephone
number, including area code)

Securities registered under Section 12(b) of the Exchange Act:
  NoneSecurities registered under Section 12(g) of the Exchange Act: None

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 shorter period that the registrant
  as required to file such reports), and (2) has been subject to such filing requirements
  for the past 90 days. Yes [X]No [   ]

Check if there is no disclosure of delinquent filers in response
  to Item 405 of Regulation S-B contained in this form, and no disclosure will
  be contained, to the best of registrants knowledge, in definitive proxy
  or information statements incorporated by reference in Part III of this Form-10KSB
  or any amendment to Form 10-KSB.****[X]

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

Issuers revenues for its most recent fiscal year: $0

Aggregate market value of the voting stock of the registrant
  held by non-affiliates of the registrant at March 31, 2007 (computed by reference
  to the closing price of the last sale recorded on the NASD OTC Bulletin Board
  of the common shares on such date):$41,744,546

Number of common shares outstanding at March 31, 2007: 70,245,886

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TABLE OF CONTENTS

| | Part
      I   |                                                                                                                       |   
| | -------------- | --------------------------------------------------------------------------------------------------------------------- | --
| |                |                                                                                                                       |   
| | Item
      1   | Description of Business                                                                                               | 1 
| | Item
      2   | Description of Property                                                                                               | 11
| | Item
      3   | Legal Proceedings                                                                                                     | 34
| | Item
      4   | Submission of Matters to a Vote of Security Holders                                                                   | 34
| |                |                                                                                                                       |   
| | Part II        |                                                                                                                       |   
| |                |                                                                                                                       |   
| | Item
      5   | Market for Common Equity and Related Stockholder Matters                                                              | 34
| | Item
      6   | Managements Discussion and Analysis or Plan of Operation                                                             | 35
| | Item
      7   | Financial Statements                                                                                                  | 45
| | Item
      8   | Changes In and Disagreements with Accountants on Accounting
      and Financial Disclosure                            | 46
| | Item
      8A  | Controls and Procedures                                                                                               | 46
| | Item
      8B  | Other Information                                                                                                     | 47
| |                |                                                                                                                       |   
| | PART
      III |                                                                                                                       |   
| |                |                                                                                                                       |   
| | Item
      9   | Directors, Executive Officers, Promoters and Control Persons;
      Compliance with Section 16(a) of the Exchange Act | 47
| | Item
      10  | Executive Compensation                                                                                                | 51
| | Item
      11  | Security Ownership of Certain Beneficial Owners and Management
      and Related Stockholder Matters                  | 52
| | Item
      12  | Certain Relationships and Related Transactions                                                                        | 54
| | Item
      13  | Exhibits                                                                                                              | 55
| | Item
      14  | Principal Accountant Fees and Services                                                                                | 56

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PART I

Item 1. Description of Business

Cautionary Statement

This Annual Report on Form 10-KSB contains forward-looking
statements that involve risks and uncertainties. These statements relate to
future events or our future financial performance. In some cases, you can
identify forward-looking statements by terminology including, "could" "may",
"will", "should", "expect", "plan", "anticipate", "believe", "estimate",
"predict", "potential" and the negative of these terms or other comparable
terminology. These statements are only predictions. Actual events or results may
differ materially.

While these forward-looking statements, and any assumptions
upon which they are based, are made in good faith and reflect our current
judgment regarding the direction of our business, actual results will almost
always vary, sometimes materially, from any estimates, predictions, projections,
assumptions or other future performance suggested in this Annual Report.

Currency

All currency references in this Report are in US dollars unless
otherwise noted.

Introduction

Hemis Corporation (“we”, “us”, “Hemis”)
  were incorporated as a Nevada company on February 9, 2005. We have been engaged
  in the acquisition, exploration and development of mineral properties since
  our inception. We currently have two wholly-owned subsidiaries: Hemis Gold SA
  de CV which was incorporated in Mexico in May 2005, and Hemis Philippines Corporation
  which was incorporated in the Philippines in June 2006. We use the Mexican subsidiary
  to carry out exploration activities in Mexico. Our Philippines subsidiary had
  minimal operations as of December 31, 2006 and is currently inactive.

Overview

We are engaged in the acquisition and exploration of mineral
  properties in La Zacatecas, Mexico; Sonora, Mexico; British Columbia, Canada;
  and Alaska, U.S.A. Our plan of operations for the next twelve months beginning
  January 1, 2007 is to conduct exploration of our mineral properties in Mexico
  and Canada and to obtain approval of our offshore prospecting permit applications
  for the Anchor Point Gold Project in Alaska.

We have only recently begun our current operations and we have
  not yet earned any revenues and have had operational losses to date, as well
  as an accumulated deficit. From our inception on February 9, 2005 until December
  31, 2006, we have incurred a total comprehensive loss of $8,067,139.

We are an exploration stage company. Our most advanced projects
are at the exploration stage and there is no assurance that any of our mining
claims contain a commercially viable ore body. We plan to undertake further
exploration of our properties. We anticipate that we will require additional
financing in order to pursue full exploration of these claims. We do not have
sufficient

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financing to undertake full exploration of our mineral claims
at present and there is no assurance that we will be able to obtain the
necessary financing.

There is no assurance that a commercially viable mineral
deposit exists on any of our mineral properties. Further exploration beyond the
scope of our planned exploration activities will be required before a final
evaluation as to the economic and legal feasibility of mining of any of our
properties is determined. There is no assurance that further exploration will
result in a final evaluation that a commercially viable mineral deposit exists
on any of our mineral properties.

Mineral Properties and Plan of Operations

We hold interests in four Mexican mineral properties, two
Canadian mineral properties, as well as the rights to acquire various offshore
prospecting permit applications and a non-exclusive license of geologic
information relating to the Anchor Point Gold Project in Alaska, as described
below:

Name of Property
    LocationSanta Rita Property
    La Zacatecas, MexicoEl Tigre Property
    Sonora, MexicoPorvenir Property
    Sonora, MexicoLa Centela Property
    Sonora, MexicoAnchor Point Gold Project
    Alaska, USWolfe Creek and Covenant Properties
    British Columbia, Canada


Our interest in the Santa Rita Property consists of an Option
Agreement we signed with Corex Gold Corp. on January 29, 2007, whereby we have
an option to acquire a 49% interest in whatever interest Corex Gold holds in the
Santa Rita Property.

Our interest in the El Tigre and Porvenir properties consists
of an Option Agreement our wholly owned subsidiary, Hemis Gold S.A. de C.V.
entered into with Loreto Careaga Galaz Widow Rascón and others on December 31,
2005. The agreement grants us an option to acquire a 67.5% interest in the El
Tigre and Porvenir properties.

On September 7, 2006 we entered into an agreement with Electrum
Capital, Inc. and Snra. Maria de Los Angeles Valverde Guzman whereby we acquired
options to acquire up to 75% of the La Centela mineral claims. The La Centela
mineral claims are located to the North, North East and West of the Porvenir
claim.

On January 8, 2007 we entered into an agreement with Aspen
Exploration Corporation pursuant to which Aspen assigned offshore prospecting
permit applications in an area of the Cook Inlet, Alaska to us, together with a
non-exclusive license of all of Aspens right, title and interests to all maps,
aeromagnetic surveys and geologic information developed by Aspen in the Cook
Inlet, Alaska, which we refer to as the Anchor Point Gold Project.

We have not acquired an interest in any physical property in
the Cook Inlet, Alaska. Previously, Aspen have made two attempts to have the
offshore prospecting permit applications granted, but both times, have been
denied. We are in the process of applying to have the same applications granted.
If we are successful in applying for them, we will have the right to exploit,
mine and

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produce all minerals lying beneath the surface of the defined
area. However, there is a risk that the State of Alaska will never accept these
offshore prospecting permit applications in which case this asset will be of
little value to us.

Our interest in the Wolfe Creek and Covenant mining concessions
consists of an option agreement we signed with Stacs GmbH on March 13, 2007
whereby we have an option to acquire a 100% interest to mineral rights on two
properties that we refer to as Wolfe Creek and Covenant, in British Columbia,
Canada.

Our plan of operations is to carry out exploration of our
mineral properties in Sonora, Mexico and British Columbia, Canada and to get
approval for the offshore prospecting permit applications in Alaska. We intend
to primarily explore for gold and molybdenum, but if we discover that any of our
mineral properties hold potential for other minerals that our management
determines are worth exploring further, then we will explore for those other
minerals. Our specific exploration plan for each of our mineral properties,
together with information regarding the location and access, history of
operations, present condition and geology of each of our properties, is
presented in the section of this annual report entitled Description of
Properties. All of our exploration programs are preliminary in nature in that
their completion will not result in a determination that any of our properties
contains commercially exploitable quantities of mineralization. Our management
estimates that if the mineral properties on which we have options do have
commercially exploitable quantities of mineralization, it will cost us
approximately $5,000,000 in exploration expenses and take us until summer of
2009 to make such a determination.

Our exploration programs will be directed by our management and
will be supervised by Dr. Doug Oliver, our Vice-President Operations. We will
engage contractors to carry out our exploration programs under Dr. Olivers
supervision. Contractors that we plan to engage include project geologists,
geochemical sampling crews and drilling companies, each according the specific
exploration program on each property. Our budgets for our exploration programs
are set forth in the section of this annual report entitled Description of
Properties. We plan to solicit bids from drilling companies prior to selecting
any drilling company to complete a drilling program. We anticipate paying normal
industry rates for core drilling.

We plan to complete our exploration programs within the periods
specified in the section of this annual report entitled Description of
Properties.Key factors that could delay completion of our exploration
programs beyond the projected timeframes include the following.

|(a) | Poor availability of drill rigs due to high demand in
      Mexico and Canada;                                                                                                                        
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | Delays in obtaining permission from private owners of
      land adjacent to our properties;                                                                                                          
|(c) | Our inability to identify a joint venture partner and
      conclude a joint venture agreement where we anticipate a joint venture
      will be required due to the high costs of a drilling program;
|(d) | Adverse weather; and                                                                                                                                                                                  
|(e) | Our inability to obtain sufficient
  funding.                                                                                                                                                         

Key factors that could cause our exploration costs to be
greater than anticipated include the following:

|(a) | adverse drilling conditions, including caving ground,
      lost circulation, the presence of artesian water, stuck drill steel and
      adverse weather precluding drill site access;
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | increased costs for contract geologists and geochemical
      sampling crews due to increased                                                                                          

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|    | demand in Mexico and Canada; and                                                        
|--- | ----------------------------------------------------------------------------------------
|(c) | increased drill rig and crew rental costs due to high
      demand in Mexico and Canada.

Our Board of Directors will make determinations as to whether
to proceed with the additional exploration of our mineral properties based on
the results of the preliminary exploration that we undertake. In completing
these determinations, we will make an assessment as to whether the results of
the preliminary exploration are sufficiently positive to enable us to achieve
the financing that would be necessary for us to proceed with more advanced
exploration.

We plan to continue exploration of our mineral claims for so
long as the results of the geological exploration that we complete indicate the
further exploration of our mineral claims is recommended and we are able to
obtain the additional financing necessary to enable us to continue exploration.
All exploration activities on our mineral claims are presently preliminary
exploration activities. Advanced exploration activities, including the
completion of comprehensive drilling programs, will be necessary before we are
able to complete any feasibility studies on any of our mineral properties. If
our exploration activities result in an indication that our mineral claims
contain potentially commercial exploitable quantities of gold, then we would
attempt to complete feasibility studies on our property to assess whether
commercial exploitation of the property would be commercially feasible. There is
no assurance that commercial exploitation of our mineral claims would be
commercially feasible even if our initial exploration programs show evidence of
gold mineralization.

If we determine not to proceed with further exploration of any
of our mineral claims due to results from geological exploration that indicates
that further exploration is not recommended, we will attempt to acquire
additional interests in new mineral resource properties. There is no assurance
that we would be able to acquire an interest in a new property that merits
further exploration. If we were to acquire an interest in a new property, then
our plan would be to conduct resource exploration of the new property. In any
event, we anticipate that our acquisition of a new property and any exploration
activities that we would undertake will be subject to our achieving additional
financing, of which there is no assurance.

Competition

We are a new and unestablished mineral resource exploration
company. We compete with other mineral resource exploration companies for
financing and for the acquisition of new mineral properties. Many of the mineral
resource exploration companies with whom we compete have greater financial and
technical resources than those available to us. Accordingly, these competitors
may be able to spend greater amounts on acquisitions of mineral properties of
merit, on exploration of their mineral properties and on development of their
mineral properties. In addition, they may be able to afford more geological
expertise in the targeting and exploration of mineral properties. This
competition could result in competitors having mineral properties of greater
quality and interest to prospective investors who may finance additional
exploration and development. This competition could adversely impact our ability
to achieve the financing necessary for us to conduct further exploration of our
mineral properties.

We also compete with other junior mineral exploration companies
for financing from a limited number of investors that are prepared to make
investments in junior mineral exploration companies. The presence of competing
junior mineral exploration companies may impact on our ability to raise
additional capital in order to fund our exploration programs if investors are of
the

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view that investments in competitors are more attractive based
on the merit of the mineral properties under investigation and the price of the
investment offered to investors.

We also compete with other junior and senior mineral companies
for available resources, including, but not limited to, professional geologists,
camp staff, helicopter or float planes, mineral exploration supplies and drill
rigs.

Government Regulations

Mexico

Our current and future exploration and development activities,
as well as our future mining and processing operations, are subject to various
federal, state and local laws and regulations in the countries in which we
conduct our activities. These laws and regulations govern the protection of the
environment, prospecting, development, production, taxes, labor standards,
occupational health, mine safety, toxic substances and other matters. We expect
to be able to comply with those laws and do not believe that compliance will
have a material adverse effect on our competitive position. We have obtained,
and intend to obtain all licenses and permits required by all applicable
regulatory agencies in connection with our exploration activities and any mining
operations we carry out. We intend to maintain standards of environmental
compliance consistent with regulatory requirements. We have obtained, and will
obtain at the appropriate time, environmental permits, licenses or approvals
required for our operations. We are not aware of any material violations of
environmental permits, licenses or approvals issued with respect to our
operations.

Mining law in Mexico applies to exploration and exploitation of
natural resources deposits. In connection with mining and exploration activities
in the El Tigre, Porvenir, La Centela and Santa Rita properties, we are subject
to extensive Mexican federal, state and local laws and regulations governing the
protection of the environment, including laws and regulations relating to
protection of air and water quality, hazardous waste management and mine
reclamation as well as the protection of endangered or threatened species.

Before we can commence a full drilling program in Mexico, we
will have to submit an environmental impact statement for authorization (a
Statement). Exploration activities such as mapping and sampling do not require
the preparation of a Statement. We have received all necessary permits to
conduct our initial exploration activities on El Tigre, Porvenir, and La
Centela. Before we can begin a drilling program on any of the properties, we
will have to prepare a Statement which will describe the anticipated
environmental impact of our planned drilling program, as well as outlining our
planned actions to minimize any potential environmental damage. Studies required
to support the environmental impact statement include a detailed analysis of
these areas, among others: soil, water, vegetation, wildlife, cultural resources
and socio-economic impacts. In reviewing the Statement, the Mexican authority
looks at potential impact on the local Mexican environment, as well as reviewing
for local concerns such as proximity to water supplies or potential interference
with local farms. The Mexican authority has ten days to respond after we file a
Statement, and if they do not respond, authorization is deemed to have been
granted. If the Mexican government does respond, then the time within which
authorization will be granted can be increased to six to twelve months or
longer. It is also possible that no authorization will be granted if the Mexican
government is not satisfied that appropriate measure will be taken to protect
the environment.

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For our exploration activities, we will be subject to the
following Mexican government requirements:

- within 90 days after commencement of labor, we must
      file a report with the Mexico Mining Registry;
- Payment of Mining taxes in January and July of each
      year;
- Comply with Official Mexican Standards pertaining to
      safety by submitting receipts showing the purchase of equipment used for
      workplace safety;
- Compliance with general Mexican environmental laws which
      prohibit the following:
      Releasing pollutants into the atmosphere, causing damage to natural
          resources;
        Destroying or cutting trees without authorization; and
        Causing forest or jungle fires
- Releasing pollutants into the atmosphere, causing damage to natural
          resources;
- Destroying or cutting trees without authorization; and
- Causing forest or jungle fires

If we commence mining development or production activities, we
must also comply with the following Mexican environmental laws and standards:

- Authorization of environmental impact statements;
- Under the Mexican hazardous waste regulations, materials left over after
  the removal of minerals are defined as hazardous wastes. These wastes must be
  stored and deposited in areas at least 25 kilometers away from urban centers;
  and
- The use of national waters in mining activities requires a concession or
  assignment from the National Water Commission. Wastewater resulting from
  mining activities requires a wastewater discharge permit.

British Columbia, Canada

We will be required to comply with all regulations, rules and
directives of governmental authorities and agencies applicable to the
exploration of minerals in Canada generally, and in the province of British
Columbia, specifically. Under these laws, prior to production, we have the right
to explore the property, subject only to a notice of work which may entail
posting a bond if we significantly disturb the property surface. This would
first occur during the drilling phase of exploration.

We will have to sustain the cost of reclamation and
environmental mediation for all exploration and development work undertaken. Our
first phase of exploration, which will consist of mapping, re-sampling,
relocation, geological, geochemical and geophysical surveys, and trenching, will
not require any reclamation and environmental mediation work because there will
not be significant physical disturbance to the land. Subsequent drilling will
require some remediation work. We will need to raise additional funds to finance
any drilling programs, including remediation costs.

If we enter into production, the cost of complying with permit
and regulatory environment laws will be greater than in the exploration phases
because the impact on the project area is greater. Permits and regulations will
control all aspects of any production programs if the project continues to that
stage because of the potential impact on the environment. Examples of regulatory
requirements include:

- Water discharge will have to meet water standards;
- Dust generation will have to be minimal or otherwise re-mediated;
- Dumping of material on the surface will have to be re-contoured and
  re-vegetated;

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- An assessment of all material to be left on the surface will need to be
  environmentally benign;
- Ground water will have to be monitored for any potential contaminants;
- The socio-economic impact of the project will have to be evaluated and if
  deemed negative, will have to be re-mediated; and
- There will have to be an impact report of the work on the local fauna and
  flora.

The Canadian Environmental Assessment Act (CEAA), which came
into force in January 1995, governs environmental assessment at the federal
level. The Canadian Environmental Assessment Agency is in charge of
administering the environmental assessment process. The CEAA requires an
environmental assessment where a federal authority supports a private or public
sector project in one or more of four ways:

- by being the proponent of the project,
- by providing money for the project,
- by providing land for the project, or
- by issuing some form of regulatory approval for the project.

In Canada, mineral title belongs to the provincial Crown.
Mining is generally regulated by the provinces. Provincial mining legislation,
policies, and codes of practice, usually have specific requirements for the
control of mining wastes. Provinces also use different procedures to regulate
mining activity. We will be required to comply with all regulations defined in
the Mineral Tenure Act for the Province of British Columbia. In British
Columbia, the proponent must submit a permit application for all mechanized
surface exploration. The application includes information about the mineral
title, the operator, the program of work, and the proposed reclamation plan. For
minimal surface disturbance in a non-sensitive area, a letter permit is issued
by a district inspector of the Ministry of Energy, Mines and Petroleum
Resources. If a mechanized work program is contemplated, the district inspector
follows a consultation procedure with other government agencies, following which
a permit will be issued. For exploration in highly sensitive areas, further
referrals will be made by the Ministry to, for example, the inter-agency
management committee, other government agencies, and/or public stakeholder
groups. We are also subject to safety policies of the Canadian Workers
Compensation Board that regulates the protection of the health and safety of
workers.

In addition to the foregoing, in the future, our Canadian
operations may be affected from time to time by political developments in Canada
and by Canadian Federal, provincial and local laws and regulations, such as
restrictions on mining production and exploration, price controls, tax
increases, expropriation of property, modification or cancellation of contract
rights, and environmental protection controls.

During the initial phases of exploration, there will be no
significant costs of compliance with government regulations. However, while it
is difficult to know exactly how much these costs will be until we have a better
indication of the size and tenor of any production operation, we would expect
that they could be high in the production operation.

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We are in compliance with the Canadian Mining Regulations and
will continue to comply with them in the future. We currently have no funds set
aside to comply with environmental laws concerning our exploration program.

Alaska

Companies which are incorporated under the laws of the United
States, must be qualified under Alaska Statute 38.05.190 to acquire mineral
rights on state-owned land in the State of Alaska. This includes acquiring
mineral rights or acquiring mineral rights through transfer of ownership.To be qualified, the company needs an active Certification as a
corporation in good standing in Alaska. What this means is corporations locating
mineral properties must be qualified prior to locating locationsunder
state mining law, otherwise the locations will not be valid. We obtained our
certification on December 19, 2006.

If we are successful in getting approval for the offshore
prospecting permit applications which relate to the Anchor Point Gold Project,
and if we decide to explore and develop this area, we will be subject to all the
various state and local laws and regulations in Alaska which govern the
protection of the environment, prospecting, development, production, taxes,
labor standards, occupational health, mine safety, toxic substances and other
matters. In particular, there are a number of sensitive environmental issues
associated with the Cook Inlet, for example, regarding the Endangered Species
Act, Marine Mammal Protection Act, and the Clean Water Act. The regulatory
impact to us in this development phase will be onerous and we will have ongoing
compliance obligations, however, we do not anticipate this will cause us
problems.

However, before any development work can be started, we are
obliged to submit a plan of operation to the mining department of the State of
Alaska. We are in the process of pre-applying for this at the moment. The reason
for submitting the plan of operation is because we will be carrying out
development work in the three miles radius off the Alaskan coast, which are
Alaskan state waters. If our development program takes the operation further off
shore, we will be in federal waters and subject to further regulations and
different agencies. It is impossible to tell at this stage whether our
development program will take us into federal waters. It can take anything
between 18 months and three years for the plan of operation to be approved by
the State of Alaska. During this time we can continue to explore and do sampling
work but we are unable to mine.

Intellectual Property

We have not filed for any protection of our trademark. We own
the copyright in our website www.hemiscorporation.com.

Research and Development

Apart from exploration expenses incurred, we have not spent any
amounts on research and development activities since our inception. Our planned
expenditures on our exploration programs are summarized under the section of
this annual report entitled Description of Properties.

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Employees and Consultants

As of March 31, 2007, our Chief Executive Officer our Chief
Financial Officer work as full time consultants, each contributing approximately
40% of their time to Hemis. We have four administrative assistants in our Swiss
office and we employ two geologists on a part time basis. We also engage
independent contractors in the areas of marketing, accounting, bookkeeping,
business and financial consulting and legal services.

On May 15, 2005 we entered into a consulting agreement with
Charles Reed, whereby Mr. Reed agreed to act as our Chief Geologist from May 15,
2005 until the agreement is terminated on 14 days notice by either party. As
remuneration we agreed to issue Mr. Reed 100,000 common shares as compensation
to December 31, 2006 and after that 50,000 common shares per year, payable on a
pro rated basis at the end of each of our fiscal quarters.

On May 22, 2005 we entered into a consulting agreement with
Craig Schneider wherein Mr. Schneider agreed to act as an advisory board member,
to provide us with consulting services, to assist us in finding mining
properties, assist us with geological matters and introduce our management to
persons and businesses involved in mining in Mexico. As compensation we issued
Mr. Schneider a one time payment of 50,000 common shares. The agreement
terminates on May 21, 2007, or on 14 days notice by either party.

On May 22, 2005 we entered into a consulting agreement with
Chris Bogart wherein Mr. Bogart agreed to act as an advisory board member, to
provide us with consulting services to assist us in finding mining properties,
assist us with geological matters and introduce our management to persons and
businesses involved in mining in Mexico. As compensation we issued Mr. Schneider
a one time payment of 50,000 common shares. The agreement terminates on May 21,
2007 or on 14 days notice by either party.

On November 9, 2005, we entered into a consulting agreement
with Hudson Capital Corporation whereby Hudson Capital agreed to assist us in
creating our website, producing marketing material, presenting exchange listing
efforts, providing business consulting and strategic planning advice and
increasing our profile within the brokerage community. The agreement commenced
on December 1, 2005 and expired on March 31, 2006. Pursuant to the agreement, we
paid Hudson Capital $5,000 per month in consulting fees, plus 100,000 common
shares. On May 1, 2006 we signed an agreement to extend the consulting agreement
to December 31, 2007, and agreed to pay Hudson Capital up to 900,000 common
shares upon the occurrence of various corporate milestones and objectives. On
November 9, 2006, we amended the agreement to allow Hemis sole discretion in
awarding bonus shares to Hudson Capital and we issued 900,000 shares on November
14, 2006 as a bonus to Hudson Capital. The bonus was awarded in part as
compensation to Hudson Capital to agree to remove the specific targets and
entitlements to stock bonuses based on corporate milestones as set out in the
original agreement and also to compensate Hudson Capital for certain services it
provided in October and November 2006, including introduction to German
newsletter writers, research analysts and corporate communications
consultants.

On January 5, 2006 we entered into a consulting agreement with
Douglas Oliver whereby he agreed to provide geologist consulting services and
also to act as a Director on our Board of Directors. This agreement has been
superseded by an agreement dated January 1, 2007 pursuant to which Dr. Oliver
was appointed as Vice-President Operations and Geologist for the

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Company and receives fixed remuneration at the rate of
US$10,000 per month commencing January 1, 2007.

On August 20, 2006 we entered into a Director Agreement with
Richard Hamelin, whereby he agreed to act as a Director on our Board of
Directors. Under the agreement, Mr. Hamelin is to receive no compensation but he
is reimbursed for all expenses reasonably incurred in the proper performance of
his obligations as a Director.

On August 25, 2006 we entered into a consulting agreement with
Michael Forster whereby Mr. Forster agreed to assist us in introducing us to his
contacts at Safeport Gold Fund in Liechtenstein with a view to Safeport
potentially investing in us, introduce us to accredited investors in Switzerland
and Europe, organize at least three presentations for potential investors in us,
assist our CEO in identifying strategic alliances in Europe for us, and
introduce us to market participants, investment professionals and financial
institutions in Switzerland and Europe. In consideration for the provision of
such consulting services, we paid Mr. Forster a flat fee of $755,000 which was
payable by the issuance of 1,000,000 shares of our common stock, each share with
a deemed price of $0.75. The agreement terminated on December 31, 2006.

On September 1, 2006 we entered into an advisory board
agreement with George Eliopulos, a geologist, whereby Mr. Eliopulos agrees to
act as an advisory board member, to provide us with consulting services, to
assist us in finding mining properties, assist us with geological matters and
introduce our management to persons and businesses involved in mining around the
world and specifically in the USA. As compensation we issued Mr. Eliopulos a
payment of 20,000 common shares of Hemis, and have agreed to issue Mr. Eliopulos
another 20,000 common shares of Hemis on September 1, 2007. In addition, Mr.
Eliopulos receives a daily rate of $500 for geological consulting services. The
agreement terminates on September 1, 2008, or on 14 days notice by either party.

On September 15, 2006 we entered into a consulting agreement
with Sedona AG, whereby Sedona AG agreed to assist us in raising capital in
Switzerland, use its legal status to promote the sale of shares in Switzerland,
and provide due diligence services to us to ensure that any potential investment
in us complies with all laws and regulations of Switzerland, including money
laundering provisions. In consideration for the provision of such consulting
services, we paid Sedona AG a flat fee of $375,000 which was payable by the
issuance of 500,000 shares of our common stock, each share with a deemed price
of $0.75. The agreement terminates on September 30, 2007.

On October 1, 2006 we entered into an advisory board agreement
with Casey Danielson, a geologist, whereby Mr. Danielson agreed to act as an
advisory board member, to provide us with consulting services, to assist us in
finding mining properties, assist us with geological matters and introduce our
management to persons and businesses involved in mining around the world. As
compensation we agreed to issue Mr. Danielson a one time payment of 20,000
common shares by March 1, 2007. The agreement terminates on October 1, 2008, or
on 14 days notice by either party. As of December 31, 2006 the shares had not
yet been issued.

Conflicts

Dr. Meier, Mr. Weiss, and Dr. Oliver also serve as directors
and officers for Tecton Corporation, Aurum Corporation, Stratos Gold
Corporation, Allegra Corporation, and Sirius Corporation. These are all private
companies which were formerly subsidiaries of Hemis, before being spun off

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as independent companies in 2006 and 2007. On April 2, 2007,
Tecton submitted a registration statement on Form SB-2 registering 33,408,000
common shares with the SEC. The SB2 has not yet been declared effective by the
SEC, however, once it is Tecton will be obliged to file annual and quarterly
reports with the SEC.

Whilst all these companies are mining companies, they all have
a different geographical focus and explore for different types of minerals. In
this way we do not envisage any conflicts of interest arising between us and
Tecton, Aurum, Stratos, Allegra and Sirius. We do not have any formal agreements
with any of these companies with respect to conflicts of interests, nor do we
have we have any written procedures in place to address conflicts of interest
that may arise between our business and the future business activities of our
directors.

In the unlikely event that a conflict of interest were to
arise, for example, if a mineral concession becomes available which would be
equally suitable for us, as well as Tecton, Aurum, Stratos, Allegra, or Sirius
to explore, then our directors would have to decide which company has the most
available funds, and therefore would be better placed to carry out an
exploration program of the new mineral concession.

Item 2. Description of Property.

Our principal executive offices are located at Bettlistrasse
35, 8600 Dübendorf, Switzerland. This office contains two rental suites and we
pay a monthly rent of approximately $800. We also have an office address at 5348
Vegas Drive, #226, Las Vegas, NV 89108. We pay $130 annually for mail forwarding
at this address. Our telephone number is (702) 387 2382.

Our mineral properties are described below.

Santa Rita Property

1. Location and Access

The Santa Rita Property is located in the Sierra Madre Oriental
in Zacatecas, Mexico. The net area is 22,982 hectares (230 square km). The
nearest commercial airport is in the city of Calera de Víctor Rosales.
All-season vehicle access to the property is excellent. Access on the concession
is via dirt roads. Maps showing the location and access to the Santa Rita
Property are presented below.

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2. Ownership Interest

The Santa Rita claim is comprised of mineral concessions that
were issued by the Direccion General de Minas to Corex Global Sociedad de
Responsabilidad Limitada de C. V. a Mexican subsidiary controlled 100% by Corex
Gold Corp., a publicly traded Canadian company junior listed on the TSX Venture
Exchange (TSX:V:CGE). The mineral concession gives Corex Gold the right to
exploit, mine and produce all minerals lying beneath the surface of the Santa
Rita property.

On December 20, 2005, we entered into a "Memo of Understanding"
which granted us the right to proceed with an exploration program on the Santa
Rita property. On June 19, 2006, we entered into a final option agreement (the
2006 Option Agreement) which replaced the Memo of Understanding and which gave
us the right to acquire a 49% interest in the Santa Rita property upon incurring
certain exploration expenses.

However, on January 29, 2007, we entered into a letter
agreement (the 2007 Option Agreement) with Corex Gold Corp. The 2007 Option
Agreement replaces the 2006 Option Agreement. The principal differences between
the 2006 Option Agreement and the 2007 Option Agreement are as follows (and
described further below):

| | • | Our interest in the Santa Rita Property is changed to a
      49% interest in whatever interest Corex Gold holds in the Santa Rita
      Property, as opposed to a 49% interest in the Santa Rita Property itself;                                                                        
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                           
| | • | We will now be making cash payments to Corex Gold,
      whereas previously, under the 2006 Option Agreement, we were incurring
      exploration expenses (as of December 31, 2006, we had incurred $53,696 of
      exploration expenditures pursuant to the 2006 Option Agreement); and
| |   |                                                                                                                                                                                                                                                                                           
| | • | Corex Gold and ourselves will no longer be working
      towards a joint venture arrangement.                                                                                                                                                                                             

On January 31, 2007 Corex Gold Corporation and its subsidiary,
Corex Global S. de R.L. de C.V., signed an Earn-In Agreement with Goldcorp Inc.
through its Mexican subsidiary Glamis Exploracion S.A. de C.V. (Glamis). Under
the terms of the Earn-In Agreement, Glamis has the right to earn up to an 80%
interest in Corexs Santa Rita and Zuloaga concessions in the states of
Zacatecas and Coahuila.

The material terms of the Earn-In Agreement are as follows:

| | • | Corex grants to Glamis the right to earn in and acquire
        an 80% interest in certain mining concessions located in the Melchor Ocampo
        Project in the states of Zacatecas and Coahuila, Mexico (the Property).
        Upon Glamis earning the interest, the parties will explore and develop
        the Property and pursue the development of a mine for the commercial production
        of gold and other metals.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | • | In consideration of Corex granting these rights to
        Glamis, Glamis must a) pay to Corex Gold $150,000 in three installments
        which shall be earn-in payments, and b) incur a minimum of $250,000 expenditures
        annually for five years, and a total of not less than $4,000,000 of expenditures
        over a five year period. Upon payment of the all the earn-in                                             

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| |   | payments, Glamis shall be deemed to have exercised its
      rights under the agreement and have acquired an 80% undivided interest in
      the Property.                                        
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                   
| | • | Upon Glamis successfully earning the interest in the
      Property, the parties will enter into negotiations to settle the terms of
      a joint venture agreement with respect to the Property.
| |   |                                                                                                                                                                                                   
| | • | Glamis may terminate the Earn-In Agreement upon 60 days
      written notice to Corex provided that Glamis                                                                                        
| |   |                                                                                                                                                                                                   
| |   | o                                                                                                                                                                                                 
| |   | o                                                                                                                                                                                                 
| |   | o                                                                                                                                                                                                 
| |   | o                                                                                                                                                                                                 
| |   | o                                                                                                                                                                                                 

Upon termination, Glamis shall no longer have any rights to
earn any interest in the Property.

The material terms of the 2007 Option Agreement are as follows:

Our Interest in the Santa Rita Property: We have agreed
with Corex Gold that we should still retain rights to acquire an interest in the
Santa Rita Property, regardless of the Earn-In Agreement that Corex Gold has
signed with Goldcorp Inc. Accordingly, we have agreed with Corex Gold that we
shall acquire the option to acquire a 49% interest in whatever interest Corex
Gold holds in the Santa Rita Property from time to time.

Our option shall include the right to earn in to any property
that is subject to the terms of the Earn-In Agreement and lies within the area
that is five kilometers beyond the northern, eastern and southern boundaries of
the Santa Rita Property, but no further west than the boundary of the Santa Rita
Property.

Property Payment Schedule: In order for us to exercise
our option and acquire a 49% interest in whatever interest Corex Gold holds in
the Santa Rita Property, we must make the following payments of money and shares
to Corex Gold:

Due Date
    Monies
    Shares
    CommentsJanuary 31, 2007
    $200,000
    25,000
    PaidJuly 31, 2007
    $200,000
    75,000January 31, 2008
    $200,000
    50,000July 31, 2008
    $200,000
    50,000January.31, 2009
    $200,000Total
    $1,000,000
    200,000


We may make any or all such payments before their respective
due dates and upon completion of all such payments, we will have exercised the
option to acquire a 49% interest in whatever interest Corex Gold holds in the
Santa Rita Property.

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Termination: We may terminate the 2007 Option Agreement
at any time upon delivering a notice of termination to Corex Gold.

3. History of Operations

Historically, this area has been mined by small miners and
prospectors. All prior production in this area has been mainly grass-roots,
small family operations. No drilling has ever taken place on the property. Our
exploration of this area will be the first commercial operation.

4. Present Condition of the Property and Current State of
Exploration

The Santa Rita Property is in the early stage of exploration
and presently contains no known gold or silver resources.

Extensive mapping and sampling were carried out during the
first quarter of 2006 on the Santa Rita Property. This principally consisted of
re-examination of areas with small mines and prospects, in order to:

- Look for associated bulk-mineable, disseminated deposits not economic for
  the historic small miners; and
- Better understand the styles and controls of mineralization in the area to
  prospect for blind deposits, covered by alluvium/colluvium or unmineralized
  strata.

Some regional sampling has also been done to examine
geophysical anomalies and major structures to see if they are related to
mineralization. This work included analyses for 373 samples, and geologic
mapping in extensive areas of the property, including most of the known
mineralized occurrences on the property.

As at January 29, 2007 when we signed the 2007 Option Agreement
with Corex Gold, our interest in the Santa Rita project changed from a 49%
interest in the property itself, to a 49% interest in whatever interest Corex
Gold has in the property. Therefore we will no longer be carrying out
exploration of the property and will not incur any more exploration expenses.
Instead, we will need to make six payments to Corex Gold as detailed above in
order to exercise the option.

5. Geology

The Santa Rita concession contains 22,982 hectares (230 sq. km)
in the Sierra Madre Oriental of Zacatecas State. The rocks in this portion of
Mexico are comprised of carbonate rocks intruded by plutons responsible for
carbonate-hosted mantos, breccia pipes, and polymetallic skarns. Examples in
this district include; the polymetallic deposit of La Naranjera, Noche Buena,
Terminal, Bonanza and Penasquito as well as the nearby Concepcion del Oro
district.

El Tigre Property, Porvenir Property and La Centela Property

1. Location and Access

The El Tigre property, the Porvenir property and the La Centela
property are located very close to each other, in western Mexico in the
south-eastern Sonora in the mountains. The nearest river is Sahuaripa River. The
La Centela Property is divided into six concessions which are surrounding the El
Tigre and Porvenir Property.

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A diagram of the El Tigre, Porvenir and La Centela properties
is presented below:



The area where the El Tigre, Porvenir and La Centela properties
are located is 1600 meters above sea level and is located on a hill. They are
approximately 250 km east of Hermosillo, the capital of Sonora. The properties
are accessible by paved road from Hermosillo to within about 15 km of the
properties. A well maintained dirt road comprises the next 8 km with a
four-wheel drive trail providing the final 7 km of access to the properties. We
have re-constructed and improved this four-wheel drive trail and several other
vehicular trails that lead to some of the abandoned mine workings. Valle de
Tacupero is the nearest village to the property and is located on the paved
road. The closest available lodging is in the village of Bamori, which is 10 km
to the north of Valle de Tacupero. Fuel and services are available in Sahuaripa,
which is another 20 km north of Bamori.

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Maps showing the location and access to the El Tigre Property
and the Porvenir Property are presented below.



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2. Ownership Interest

El Tigre and Porvenir

The El Tigre claim property has an area of 30 hectares and the
Porvenir claim property has an area of 83 hectares. The La Centela claim
property consists of six concessions with a total area of 572 hectares.

On December 31, 2005, our wholly owned subsidiary, Hemis Gold
S.A. do C.V., entered into an option agreement with Jose Quiros Soto, Loreto
Careaga Galaz, Viuda de Rascon and Rosa Maria Burgos Robles to acquire a 67.5%
interest in the El Tigre and Porvenir properties. If we incur $200,000 in
exploration expenditures within 548 days (18 months) from the date of the
agreement, January 23, 2006, we will acquire a 67.5% interest in the El Tigre
concession and the Porvenir concession mineral claims.

The property owner Federico Valenzuela controls surface rights
to the El Tigre and Porvenir properties. We have negotiated an agreement with
the property owner that allows us access during exploration and mining.

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As of December 31, 2006, we had incurred $140,227 of exploration
  expenditures pursuant to the option agreement. We are actively pursuing additional
  mineral concessions within this project area.

La Centela

On September 12, 2006 we entered into a binding letter of
intent agreement with Electrum Capital, Inc. and Snra. Maria de Los Angeles
Valverde Guzman (the "Optionors") whereby we obtained options to acquire up to
75% of the La Centela mineral claims. The La Centela mineral claims are located
to the North, North East and West of the Porvenir claim. On October 5, 2006 the
parties entered into an addendum to change the commencement date of the
agreement to October 6, 2006. The agreement required that $25,000 be paid on the
commencement date and that 25,000 common shares be issued within 10 days of the
commencement date. We have already paid the $25,000 and issued the 25,000
shares. The agreement contemplates that a long form agreement will be entered
into between the parties, although there is no deadline for entering into such
an agreement,

The La Centela option agreement consists of two parts; an
option to acquire the first 70% of the mining rights and an option for a further
5% of the mining rights. To acquire the first 70% of the mining rights we must
pay $500,000 and issue 500,000 of our common shares to the mineral rights owner,
spend at least $2,000,000 in exploration expenses and make a final share payment
of 1 share for every ounce of gold we identify, if we identify any gold, to a
maximum of 10,000,000 shares. If we exercise our option to acquire the first 70%
of the mineral rights, we may then acquire a further 5% of the total claim by
making a cash payment of $1,000,000.

To exercise the first 70% of the mining rights, we must deliver
the following stock and payments to the mining concession owners, and we are
required to make the following minimum exploration expenditures within the
periods described:

Period
    Share to be Issued
    Cash Payments
    Exploration ExpendituresAlready Paid & Issued (due October 14, 2006)
    25,000 common shares
    $25,000
    $NilOctober 6, 2006  October 5, 2007
    50,000 common shares
    $50,000
    $200,000October 6, 2007  October 5, 2008
    75,000 common shares
    $75,000
    $200,000October 6, 2008  October 5, 2009
    100,000 common shares
    $100,000
    $200,000October 6, 2009  October 5, 2010
    250,000 common shares
    $250,000
    $1,400,000


Further, if, at the time we have completed all of the payments,
issuances and expenditures as described in the table above, we have identified a
gold deposit, then we must issue one common shares for every once of gold we
estimate that we have identified, up to a maximum of 10,000,000 shares.

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If we exercise our option and acquire a majority interest in
the La Centela mining concession, and if we decide to proceed with mining the
property, the Optionors shall be required to contribute to expenses of the
mining, in proportion to their ownership interest. A failure to contribute
proportionately to the expenses will result in conversion of the Optionors'
interest to a 3% net smelter return. The 3% net smelter return would entitle the
Optionors to 3% of revenues we receive from sales of minerals we have mined in
the property.

3. History of Operations

The El Tigre, Porvenir and La Centela properties were mined by
Spanish and Mexican miners before the Mexican Revolution which took place from
1910 to 1930. These areas have been mined for several hundred years. In the El
Tigre Property there are several large pits which range in size up to
approximately 15 meters wide, 25 meters long and at least 20 meters deep. They
appear to have been previously mined by hand. There are no records indicating
the amount of gold produced from these workings. The area has never been
processed with professional machines.

4. Present Condition of the Property and Current State of
Exploration

El Tigre Property

We have recently finalized the initial exploration phase on the
El Tigre concession. The initial exploration work has yielded positive
indications.

Over 173 samples were collected in sections of the concession
that are far from any of the known prospect pits and analyzed by ALS Chemex in
Hermosillo, Mexico. We conducted the sampling to identify areas of precious
metal mineralization both on and off the claim block. Most of the samples had
detectable gold in the geochemically anomalous range.

As a result of this sampling, five main target areas have been
identified on the property; two areas around the El Tigre monument; one area
with breccia evident at surface, situated east of El Tigre with a few historic
pits; and two large historic workings on the same breccia zone which were
discovered at a distance of 500m along the Eastern High Ridge, which is a
section further east than El Tigre East and along the roadway near the our La
Centela claim

We have one geologic report on the El Tigre Property that was
written by Doug Oliver, Ph. D., our Vice President Operations and geologist who
is also a Director on our Board. The report was prepared in May 2006 and reviews
the potential for mineral deposits in the El Tigre Property.

In his discussion of the results of the rock samples from El
Tigre, Dr Oliver states that because of the highly oxidized state of the rocks
at El Tigre, any bulk-tonnage gold deposit discovered there would be an
excellent candidate for low cost heap leach extraction methods.

The heap leach process is a process of extracting gold by
placing ore on an impermeable pad and applying a diluted cyanide solution that
dissolves a portion of the contained gold, which is then recovered in
metallurgical processes. Some governmental bodies, including the State of
Montana, have banned the use of this method because of environmental concerns.
Neither Mexico, nor the State of Sonora in Mexico have banned the use of this
method and our management is not aware that any government body in Mexico is
considering banning this method.

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The chief environmental consequence of the heap leach process
is the accidental release of cyanide from the site. This can happen either as a
result of a tailings dam failure or during overflow of the pregnant solution
pond during intense rainfall. According to our geologist, Dr. Oliver, Hemis can
prevent both of these situations by designing the processing facility to prevent
the possibility of either of these happening in even worst-case scenarios. The
tailings pond should be professionally designed and constructed with quality
assurance personnel monitoring the process at all stages. The pregnant pond
should be designed to retain the water from a 100-year flood. In professionally
designed and operated mines there should not be a significant risk of accidental
release of cyanide. The costs of building and operating a professionally
designed mine is an integral part of mine construction and we do not anticipate
it would add any unusual or significant expense to our cost of operations,
should we decide to use the heap leach process on a gold deposit if we find
one.

Porvenir Property

As of March 31, 2007, the only work that has been done on the
  Porvenir Property is some geochemical sampling. The owner of the property, Jose
  Quiroz, has promised to come out to the property and show us where he thinks
  the higher grade breccias are.

La Centela Property

We have conducted some preliminary sampling and mapping on the
La Centela property, and have constructed two drill pads, one on a gold-bearing
breccia zone and a second to test the deep molybdenum target. We are also
constructing an exploration camp near the ranch house for the drill crew and
geologists.

Our plan of exploration for the joint El Tigre Gold Project
(the joint El Tigre, Porvenir and La Centela Claims) is as follows:

Description of Phase of Exploration
    Description of Exploration
      Work RequiredCommence core drilling
    We plan to commence core drilling at the end of April
      2007 using Cabo Drilling. Initial drilling will be on three of the five
      known gold- bearing breccia zones. We are planning on eight holes
      averaging 200 meters each. Estimated time of completion is two months.
      Projected cost for this phase is $240,000.Test Hole
    Drilling will then shift to an initial deep hole on the
      El Aliso Moly target. This will be a single test hole of approximately
      1,000 meters. This hole will give us time to get assays and evaluate the
      initial round of drilling at El Tigre. The time to drill this hole is
      estimated at approximately two months. Projected cost for this phase is
      $185,000.


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Follow up drilling
    A round of follow-up drilling will take place to further
      test and expand results from the first round of drilling at El Tigre.
      Target selection will be based on either favorable results from the first
      round, untested breccia zones, and/or target areas found in ongoing
      sampling and mapping. This second round of drilling is currently scheduled
      at five holes averaging 250 meters each but may be expanded depending on
      results from the first round. Estimated time of completion is
      approximately six weeks. Projected cost for this phase is $180,000.On-going sampling andmapping
    We are also currently engaged in on-going sampling and
      mapping at El Tigre. The goal is to generate more targets while we are
      drilling so as to sustain the project. Projected cost for continued
      exploration is $30,000.


There are several key factors that can delay completion of the
exploration program:

- Delays in permit approval for drilling;
- Limited availability of core rigs in Mexico; and
- Lack of funding.

Factors that could cause exploration costs to be greater than
anticipated are largely from drilling conditions to include the following:

- Caving ground;
- Lost circulation;
- Artesian water; and
- Stuck drill steel.

All work on the El Tigre, Porvenir and La Centela properties
will be conducted on our behalf by contractors who will include Dr. Doug Oliver,
our Vice President Operations and geologist and a drilling company. We entered
into a consulting agreement with Dr. Oliver on January 1, 2007 pursuant to which
Dr. Oliver is paid $10,000 per month plus travel expenses. We have been
soliciting bids from various drilling companies and we do not yet have any
written commitments from a drilling company to provide us with drilling
services. Normal industry rates are expected for core drilling. The program will
be supervised by our Vice President Operations, Dr. Oliver.

5. Geology

The El Tigre concession contains 30 hectares (0.3 sq. km) and
the Porvenir property contains 83 hectares (0.83 sq. km). The La Centela
property contains 572 hectares (5.72 sq. km). Exposed bedrock comprises about
20% of the El Tigre, Porvenir and La Centela properties and consists of
intrusive and extrusive igneous rocks. Contacts between these various
lithologies have not been observed thus far, nor have any geologic structures.

The intrusive rocks are primarily granitic in composition.
Large intrusive bodies are exposed to the south and west of the project area.
These larger bodies are the coarsest grained rocks in the

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project area and show the least amount of fracturing or
alteration. Small intrusive bodes are widespread across the project and are
finer in grain size. Some of these bodies appear to be intrusive into the
surrounding volcanic rocks.

Ryolite is the most abundant rock type in the project area. It
commonly contains small phenocrysts of quartz and/or orthoclase and is very
light in color. Breccias consisting of angular clasts surrounded by fine-grained
matrix are widespread across the project area. They are most commonly developed
in the rhyolite volcanic rocks and may also occur in andesites. Mega-breccias
and breccias containing rounded or zoned clasts are in the area. The breccias
often occur in linear zones but also cover broad areas.

The rocks on the El Tigre, Porvenir and La Centela properties
are comprised of rhyolite, breccias, granite, quartz monzonite and andesite.
Surrounding areas show evidence of quartz veins, breccia dikes and breccia
zones, which stretch over a large area and extend to the southeast. On the El
Tigre, Porvenir and La Centela properties there are lots of pits, burrows and
holes, some from which gold appears to have been previously extracted.

Anchor Point Gold Project

1. Location and Access

We have five exploration project locations in Alaska, which are
collectively known as The Anchor Point Gold Project. They are located near shore
on the west side of the lower Cook Inlet adjacent to and north of Anchor point.
The project locations are all located within a 45 square mile area of marine
waters with the following boundaries: beginning at the city of Anchorage,
Alaska, a line running due west from Anchorage to the western shore of Cook
Inlet, and extending south to a line running due west from the village of
Seldovia on the east side of Cook Inlet to the western shore of Cook Inlet. The
nearest onshore access infrastructure is a boat launch area (Anchor Point Boat
Launch) located on the shoreline at the confluence of the Anchor River and Cook
Inlet waters. The boat launch is approximately 1.5 miles west of the city of
Anchor Point connected by 1.5 miles of paved road. The project locations vary in
distance from one mile to eight miles offshore from the Boat launch. Anchor
Point is a city of approximately 1800 population and is located 16 miles north
of the city of Homer Alaska and 24 miles south of Ninilchik Alaska connected by
the Sterling Highway. The Sterling Highway is a two lane paved highway with
year-round access to the State-wide highway system. Access to the project sites
will be by marine vessel from Anchor Point and Homer. Fuel, services, and
lodging are located in Homer and Anchor Point. The nearest hospital and
commercial airport is located in Homer.

The maps below show the location of the Anchor Point Gold
Project and also the location of offshore prospecting permit applications
153-161 and 194-222 that we are applying for.

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2. Ownership Interest

On January 8, 2007 we entered into an agreement with Aspen
Exploration Corporation pursuant to which Aspen assigned us State of Alaska
offshore prospecting permit applications153161, and 194-222 as shown on the
maps above, together with a non-exclusive license of all of Aspens right, title
and interests to all maps, aeromagnetic surveys and geologic information
developed by Aspen in the Cook Inlet, Alaska.

We have not acquired an interest in any physical property in
the Cook Inlet, Alaska. The offshore prospecting permit applications have been
denied for several years, but if we are successful in reapplying for them, we
will have the right to exploit, mine and produce all minerals lying beneath the
surface of the permitted area. However, there is a risk that the State of Alaska
will never accept these offshore prospecting permit applications in which case
this asset will be of little value to us.

Under the terms of the agreement with Aspen, Hemis shall own
and operate all such interests within the area of interest (other than oil and
gas rights and interests), either acquired or proposed to be acquired by Aspen
or us, during the next 30 years; and Aspen will have a right to receive a 5%
gross royalty on all ores, minerals and mineral resources produced from the
offshore prospecting permit applications within the above described area of
interest.

In order to maintain the rights to the offshore prospecting
permit applications together with the non-exclusive license, we have agreed to
pay Aspen $50,000 on signing the agreement, and an annual payment of $50,000
thereafter, beginning in September 2007. If we fail to make the payments, we
will have been deemed to have withdrawn from the agreement with Aspen and the
agreement will be terminated.

Additionally we have granted Aspen a 5% gross royalty in any
ores, minerals, and mineral resources produced from the offshore prospecting
permit applications, including all offshore prospecting permit applications
acquired by us in the area of interest in the Cook Inlet, Alaska during the 30
year term of the agreement. In particular, the 5% royalty on all placer gold
produced shall be paid in kind. Royalty for minerals other than placer gold
shall be 5% of the gross revenue received by or on behalf of us from the sale or
other dispositions of the ores, minerals, and mineral resources.

3. History of Operations / Plan of Operations

Other than sporadic small-scale beach mining over the last
century, there has been no mining in Cook Inlet.

As at March 30, 2007, none of the offshore prospecting permit
applications have been approved. Until approval is obtained, we are involved in
determining where the sampling program is to take place. We anticipate that if
we are successful in obtaining the permits, the initial sampling program will
start in May 2007 and last 30 days.

We will persist in obtaining approval of the offshore
prospecting permits and if we are successful, we have agreed the following plan
of operation, which we shall use as our basis for exploration, development and
mining of all ores, minerals, and mineral resources in the area:

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- In the first year, we will acquire additional aeromagnetic data in the area
  of interest in the Cook Inlet, Alaska, and apply for additional state of
  Alaska offshore prospecting permits or federal offshore exploration and mining
  rights.
- In the second and subsequent years, we will obtain permits and conduct
  exploration of the area.
- Once feasibility is demonstrated, we will acquire the equipment needed to
  economically produce any identified deposits.
- Thereafter, we will pursue the commencement of commercial production of any
  mining deposits that have a market value.

4. Present Condition of the Property and Current State of
Exploration

Cook Inlet is famous for its extremely high tides (the second
highest in the world after the Bay of Fundy). It is proposed that the back and
forth tidal action has served to concentrate heavy minerals along the beach
including gold. Unspecified quantities of gold have been found along the active
beach in several places along Cook Inlet, particularly along the eastern
shoreline. The gold occurs with another heavy mineral called magnetite which is
a magnetic iron oxide. Aeromag surveys show pronounced magnetic anomalies along
the active beach as would be expected due to the magnetite sand. However, there
are other off-shore magnetic anomalies that parallel the beach. These are
interpreted to represent ancestral beaches during low stands of sea-level during
the ice age. These off-shore aeromag anomalies are the targets of the current
exploration. There has never been any testing to determine if gold is present in
the off-shore anomalies.

5. Geology

The surficial geology of the Anchor Point area is roughly divided
  into two parts by the lower Anchor River. North of the river, Kenai lowland
  is underlain by undifferentiated till of the pre-late Wisconsin (pre-Naptowne)
  glaciation and complex glaciolacustrine deposits related to the early (Moosehorn)
  stade of the late Wisconsin (Naptowne) glaciation. In the vicinity of the settlement
  of Anchor River, study of the logs of water wells allowed separation of a dominantly
  glaciolacustrine deposit that is apparently related to the Moosehorn stade of
  the Naptowne glaciation. This terrain is transected by a complex system of abandoned
  meltwater channels. Alluvium of fluvial terraces was deposited by modern streams
  as they incised their channels. Paludal deposits, primarily peat, form broad,
  generally treeless blankets and channel and basin fills. Undifferentiated colluvium
  forms aprons and fans on steep river and inlet bluffs; debris-flow deposits
  and mixed colluvium and alluvium occupy erosion gullies. South of Anchor River,
  the surficial geology is dominantly till with associated coarse-grained ice-stagnation
  deposits comprising a kettle-rich moraine built during the Moosehorn stade of
  the Naptowne glaciation. Most of the kettles are occupied by small lakes or
  contain organic paludal sediments. A rotational slump scallops the steep, rapidly
  eroding sea cliff just north of the mouth of Traverse Creek in the southwestern
  corner of the study area. The beach area along Anchor Point and Laida Spit contain
  wedge and blanket-shaped deposits of medium to coarse sand with local lags of
  cobbles deposited by the action of waves and longshore currents.

27

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Wolfe Creek and Covenant Properties1.
Location and AccessWolfe Creek

We have options to acquire two placer claims in British
Columbia, Canada; claim 524570 covering 80 acres; and claim 545941 covering 40
acres, and a mineral claim 548020 covering 370 acres as outlined below in
bold.

Claim 524570



Note that in Claim 524570, there is an overlapping of a claim
staked under the previous mineral titles system, now deemed a legacy claim and
shown on the east border of the highlighted claim above. It occupies
approximately 10% of the available area on this claim. The partially overlying
claim has priority over that 10% unless it expires. If it does expire the ground
that was previously covered by it will automatically accrue into our claim.

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29

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Claim 548020



These claims are located 3km (1.8 miles) north of the town of
Sooke, which is 20 minutes west of Victoria, directly adjacent to Leechtown, a
historic gold mining town. Access is possible by car to the Sooke potholes
provincial park, from where it is necessary to continue on foot for
approximately one hour using the Galloping Goose trail which runs parallel to
the Sooke River, in a northerly direction for 4km to where the Leech River and
Old Wolfe creek join. At this juncture, one can follow the mostly dry creek bed
west approximately 900 metres (approximately half a mile) to the claims
boundaries. Temperate island climate provides year round access. The claims are
located at latitude 48°29'26" longitude 123°41'59".

The claims cover 800 metres (approximately half a mile) of
available creek frontage and continuous dry creek channel per side. Semi
tropical vegetation is moderately dense in places. Gravels from sand to large
amounts of much coarser ungraded rocks and boulders are encountered throughout.

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Covenant

The Covenant claim consists of placer claim 534244 covering
158.56 acres. The property binds both sides of a heavily pronounced bend on the
Jordan River, 28km west of Sooke. It can be accessed by the logging road north
of the West Coast Highway or, from the logging road that runs east-west on the
south side of Loss Creek. The coordinates of the claims are latitude 48°32'6"
and longitude 123°56'43".

A 4 wheel drive vehicle is recommended because the roads are
all gravel. There are a couple of options if traveling to these claims by road:

1. From Otter Point Road in Sooke, B.C. which is about 30 km
(18 miles) east of Jordan River; and

2. From Forbay Road in Jordan River about 1 km east of the
Jordan River bridge.

2. Ownership Interest

On March 13, 2007 we entered into an option agreement with
Stacs GmbH whereby we acquired an option to purchase a 100% mining rights to the
Wolfe Creek and Covenant mineral concessions, subject to a 3% royalty. In order
to exercise this option we must spend $1,000,000 in exploration expenses by
March 13, 2010.

In addition to making the above payment, we are required to pay
an ongoing royalty of 3% to Stacs GmbH on any minerals recovered.

3. History of Operations/ Plan of Operations

There is a lot of history surrounding gold exploration in the
streams on the south west coast of Vancouver Island, especially in those
originating from a geological formation known as the Leech River Formation, so
named since it is the geological source of placer gold found in the Leech River,
which was named after Lieutenant Peter Leech who discovered gold in its upper
reaches on July 14th, 1864. The geological survey of Canada and the UBC
Lithoprobe project have both confirmed that the deposits within the Leech River
formation are due to the melting of the Juan de Fuca subducting plate underneath
Vancouver Island, where intrusive materials tend to work their way up to the
surface of the island. The rivers and streams in the area have been sporadically
worked since the mid 1800s, and the rivers in the region continue to yield high
quality deposits even today (source: http://www.gis.unbc.ca/courses/geog432/projects/2002/milok000/index.htm
).

Over the next 36 months, we plan to spend approximately
$1,000,000 on mapping, re-sampling, relocation, geological, geochemical and
geophysical surveys, and trenching. Subsequent drilling will require some
remediation work. We are still in the early stages of developing our full
exploration plan on this property, and we dont anticipate that we will begin
exploration of this property for another six months. We plan on spending
approximately $500,000 over the next 12 months in exploration of the Wolfe Creek
and Covenant claims.

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4. Present Condition of the Property and Current State of
Exploration

Wolfe Creek

Limited exploration of the Wolfe Creek property was carried out
by using gold panning techniques. The make and model of goldpan used for
sampling was a 15 Garret Super Sluice green plastic goldpan which features two
1/2"-deep riffles. This model was selected due to its light carry weight
resultant in a quicker recovery time in precious metals versus using heavier
metal versions. The green color was chosen based on preference. Coarse gravels
were encountered throughout and therefore a great deal of time was spent
preparing pans and sifting 25kg dry gravel per pan before washing. A total of
three pans were reduced to observe colors. Pans were removed from a large
ungraded dry pile on the north creek bed on the inside contour of a 45 degree
bend, approx 20m inside the West border of the claim. A large tractor tire was
15 meters west of the hole. In this case, concentrates of each pan were black
magnetite sand with the smallest visible particles of gold, known as colors.
Our prospecting technique consisted of measuring the visible colors per
pan.

Covenant

We have not yet performed evaluation work on this property,
other than verifying access last year. We plan to start exploration work on this
property within the next 6 months.

5. Geology

Regional Geology: South-West Vancouver Island, where the
claims are located, is principally comprised of Wrangellia to the east and
Pacific terrain to the west and southwest divided by Leech River fault thrusts.
The Islands southern shores edge out into Sooke formation sandstone and
conglomerate.

Local Geology: Old Wolf Creek flows west (directly)
along the Leech River fault which separates jurassic to cretaceous Leech River
complex (formation) slates and schists on the north, from tertiary metchosin
volcanics on the south. The metasediments strike nearly west and dip steeply
northeast. The topography shows the stream to have cut down through the bedrock
leaving a series of gravel covered benches. Placer gold, found in the gravel, is
believed to have been derived from small, but numerous, gold-bearing quartz
stringers hosted by the Leech River rocks.

Glossary of Technical Terms

Term
    DefinitionAndesite
    a fine-grained igneous rock.Alluvium
    soil or sediments deposited by a river or other running
      waterBedrock
    solid rock present beneath any soil, sediment or other
      surface cover.Breccia
    a rock formed from fragments of pre-existing rock in
      which the gravel-sized particles are angular in shape and make up an
      appreciable volume of the rock.Breccia pipes
    a circular, chimney-like mass of highly fragmented rock
      resulting from the


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subsidence of large rock segments into a void created by
      solution activity in a lower formation.Clasts
    an individual constituent, grain, or fragment of sediment
      or rock, produced by mechanical or chemical disintegration of a larger
      rock mass.Colluvium
    rock and soil accumulated at the foot of a slope from
      gravitational forcesExtrusive
    igneous rocks that crystallize at Earth's surface.Geologic mapping
    the process of mapping geologic formations, associated
      rock characteristics and structural features.Geophysical
    the study of the earth by quantitative physical methods.Glaciolacustrine
    pertaining to, or characterized by, glacialand
      lacustrineprocesses or conditions. The term is applied especially
      to deposits made in lakes.Granitic
    a common, coarse-grained, light-colored, hard igneous
      rock consisting chiefly of quartz, orthoclase or microclineLost circulation
    the loss of drilling fluids through open faults,
      fractures, and/or permeable rock.Magnetite
    is a mineral, from the iron oxide family. It is the most
      magnetic of all the naturally occurring minerals on earthMolybdenum
    A hard, silvery-white metallic element used to toughen
      alloy steels and soften tungsten alloy. An essential trace element in
      plant nutrition, it is used in fertilizers, dyes, enamels, and reagents.Moraine
    is the term used to describe rock that is moved by a
      glacier as it traverses a continentPaludal
    pertaining to a depositional environment or organisms
      from a marshPhenocryst
    a crystal that is significantly larger than the crystals
      surrounding it. Phenocrysts form during an early phase in the cooling of
      magma, and are crystals of minerals that crystallize at higher
      temperatures than the groundmass.Pluton
    an igneous intrusion.Porphyry
    Rock containing relatively large conspicuous crystals,
      especially feldspar, in a fine-grained igneous matrix.Quartz Monzonite
    a rock enriched in lighter elements formed when molten
      rock (magma) cools and solidifies.Quartz Veins
    regularly shaped and lengthy occurrences of
      mineralization, along with pyrrhotite, galena and other minerals.
      Pyrrhotite is a brownish iron sulfide mineral having weak magnetic
      properties. Galena is a mineral containing mainly lead sulfide that is
      blue-gray in color.Rhyolite
    a fine-grained silica-rich igneous rock, the extrusive
      equivalent of granite.Riffles
    Riffles are the shallower, faster moving sections of a
      stream.Strata
    layers of sediment or layers of sedimentary rock.Tailings
    are the materials left over after the process of
      separating the valuable fraction from the worthless fraction of an ore.Tungsten
    A metal commonly used to make the plugs used for
      connecting metal wires to one another or to the devices in integrated
      circuits.


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Item 3. Legal Proceedings.

We are not aware of any pending or threatened legal proceedings
which involve Hemis or any of its properties or subsidiaries.

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

None

PART II

Item 5. Market for Common Equity and Related Stockholder
  Matters.

There is a limited public market for our common shares. Our
common shares are quoted for trading on the NASD OTC Bulletin Board under the
symbol HMSO and on the Frankfurt Stock Exchange under symbol XZA.

Our common shares became eligible for quotation on the OTC
Bulletin Board on February 8, 2007.

The following table shows the high and low prices of our common
shares on the NASD OTC Bulletin Board. The following quotations reflect
inter-dealer prices, without retail mark-up, mark-down or commission and may not
necessarily represent actual transactions:

Period
    High
    LowFebruary 8, 2007  March 31, 2007
    $3.50
    $0.95


As of March 31, 2007, there were 70,245,886 common shares
outstanding, held by approximately 171 shareholders of record.

To date, we have not paid any cash dividends on our common
shares and do not expect to declare or pay any cash dividends on our common
shares in the foreseeable future. Payment of any cash dividends will depend upon
future earnings, if any, our financial condition, and other factors as deemed
relevant by our Board of Directors.

On July 1, 2006 we issued a stock dividend in the amount of
$0.0001 per share on the issued and outstanding common shares of Hemis as of
July 1, 2006 for which we issued one common share of Aurum Corporation for every
$0.001 of dividend declared, which amounted to one share of Aurum for every 10
shares of Hemis. Prior to the stock dividend, Aurum was a wholly owned
subsidiary of Hemis. After the stock dividend, Hemis' sole share in Aurum was
cancelled, so that Hemis now has no ownership interest in Aurum.

On September 1, 2006 we issued a stock dividend in the amount
of $0.00002 per share on the issued and outstanding common shares of Hemis as of
September 1, 2006 for which we issued one common share of Stratos Gold
Corporation for every $0.0001 of dividend declared, which amounted to one share
of Stratos for every 50 shares of Hemis. Prior to the stock dividend, Stratos
was a wholly owned subsidiary of Hemis.

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Hemis' shares in Stratos were cancelled, so that Hemis now has
no ownership interest in Stratos.

On December 1, 2006 we issued a stock dividend in the amount of
$0.000001 per share on the issued and outstanding common shares of Hemis as of
December 1, 2006 for which we issued one common share of Tecton Corporation for
every $0.0001 of dividend declared, which amounted to one share of Tecton for
every 100 shares of Hemis. Prior to the stock dividend, Tecton was a wholly
owned subsidiary of Hemis, and it was inactive. Hemis' shares in Tecton were
cancelled, so that Hemis now has no ownership interest in Tecton.

On January 12, 2007 we issued a stock dividend in the amount of
$0.0001 per share on the issued and outstanding common shares of Hemis as of
January 12, 2007 for which we issued one common shares of Sirius Corporation for
every $0.01 of dividend declared, which amounted to one share of Sirius for
every 100 shares of Hemis. Prior to the stock dividend, Sirius was a wholly
owned subsidiary of Hemis, and it was inactive. Hemis shares in Sirius were
cancelled, so that Hemis now has no ownership interest in Sirius.

Also, on January 12, 2007 we issued a stock dividend in the
amount of $0.0001 per share on the issued and outstanding common shares of Hemis
as of January 12, 2007 for which we issued one common shares of Allegra
Corporation for every $0.01 of dividend declared, which amounted to one share of
Allegra for every 100 shares of Hemis. Prior to the stock dividend, Allegra was
a wholly owned subsidiary of Hemis, and it was inactive. Hemis shares in
Allegra were cancelled, so that Hemis now has no ownership interest in Allegra.

On January 17, 2007, we issued a stock dividend in the amount
of one common share of Hemis for every one common share of Hemis, issued and
outstanding as of January 17, 2007. In satisfaction of the stock dividend
declaration, we issued 31,675,926 common shares of Hemis to the shareholders,
thereby effectively doubling our issued stock.

The issuances of the common shares of Aurum, Stratos, Tecton,
Sirius and Allegra were exempt distributions pursuant to Regulation S and
Section 4(2) of the Securities Act.

Equity Compensation Plans

As at December 31, 2006 we had no equity compensation plan in
place.

Recent Sales of Unregistered Securities

Since our inception on February 9, 2005 until December 31,
2006, we have completed the following sales of unregistered securities, not
including shares registered on the Registration Statement on form SB2 which was
declared effective by the SEC on January 5, 2007.

- In August 2006, we issued an aggregate of 1,033,730 shares of common stock
    at $0.75 per share in exchange for net cash proceeds of $700,853 after commission
    of $74,444.

35

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- In August 2006, we issued an aggregate of 5,000 shares of common stock at
    $0.75 per share as compensation for a salary bonus of $3,750.00.
- In September 2006, we issued an aggregate of 961,428 shares of common stock
    in exchange for cash at $0.75 per share for net cash proceeds of $625,050
    after commission of $96,021.
- In October 2006, we issued an aggregate 244,000 shares of common stock in
    exchange for cash at $0.75 per share and 357,420 shares of common stock in
    exchange for cash at $0.95. We also issued an aggregate 1,500,000 shares of
    common stock in exchange for consulting services to the following individuals:
    1,000,000 shares to Michael Forster for $750,000 of business development consulting
    services; 500,000 shares to Sedona AG for $375,000 of capital raising consulting
    services. We also issued an aggregate of 50,000 shares of common stock pursuant
    to two of our mining options.
- In November 2006, we issued an aggregate of 295,528 shares of common stock
    for cash at $0.95 per share. We also issued 52,614 shares of common stock
    for cash at $0.75 in November 2006. The price was low because the subscription
    agreements had been submitted by the investors in August 2006 at which time
    we were offering shares to investors at $0.75 per share. However, due to an
    administrative delay in processing the subscription agreements, the shares
    were not issued until November by which time the price per share had risen
    to $0.95. We also issued an aggregate of 1,310,180 shares of common stock
    in exchange for consulting services to the following individuals: 2,130 shares
    to Rene Gahlinger for $1,597.50 of consulting services; 900,000 shares to
    Hudson Capital for $855,000 of business development consulting services; and
    8,050 shares to Michael Forster for $7,647.50 of business development consulting
    services; and 400,000 shares of common stock in exchange for marketing consulting
    for $380,000 to an individual.
- In December 2006, we issued an aggregate of 549,150 shares of common stock
    for cash at $1.20 per share. We issued 15,789 shares of common stock for cash
    at $0.95 per share. We also issued an aggregate of 3,429 shares of common
    stock to Rene Gahlinger in exchange for $4,111 of consulting services.

Shares issued to U.S. residents Harvey Roseff, Doug Oliver and
Charles Reed were exempt from registration pursuant to Rule 4(2) of the
Securities Act. All of the other issuances described above were exempt from
registration under Regulation S of the Securities Act. Where the purchasers of
the shares in the issuances described above are not named, they are all non U.S.
residents, unless otherwise noted.

36

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We did not employ an underwriter in connection with the
issuance of the securities described above.

Purchases of Equity Securities

In May 2006 we sent a non-binding letter of inquiries to our
  shareholders to find out if they would be interested in participating in a possible
  buy back program. 32 shareholders indicated that they would be interested. On
  October 1, 2006 we made formal offers to the 32 shareholders (31 written and
  1 verbal offers). On February 13, 2007, the buy back agreements were executed
  and the Company purchased shares back from the 32 shareholders pursuant to the
  buy back offer made on October 1, 2006.

The material terms of the buy back offer were that we agreed
  to grant the 32 shareholders an option to put an aggregate of 2,311,346 shares
  of common stock to our Company, when we became eligible for trading on the OTC
  Bulletin Board, for a total price of $1,503,382.

Small Business Issuer Purchases of Equity Securities

Period
    Total Numbers of
      Shares Purchased
    Average Price Paid
      per Share
    Total Number of
      Shares Purchased as Part of Publicly
      Announced Plans or Programs
    Maximum Number of
      Shares that May Yet Be Purchased Under the
      Plans or ProgramsOctober 1 31, 2006
    2,261,346
    $0.63
    2,261,346
    NilNovember 130, 2006
    50,000
    $0.63
    50,000
    NilDecember 1- 31, 2006
    Nil
    Nil
    Nil
    NilJanuary 1- 31, 2007
    Nil
    Nil
    Nil
    NilTotal
    2,311,346
    
    2,311,346


Additionally, on January 15, 2007 we agreed to return $47,500
  of proceeds to Benny Gasser for 50,000 shares he purchased in December 2006.

Item 6. Management's Discussion and Analysis or Plan of
Operation.

We are a start-up stage corporation with limited operations and
no revenues from our business operations. Our auditors have issued a going
concern opinion. This means that

37

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our auditors believe there is substantial doubt that we can
continue as an on-going business for the next twelve months unless we obtain
additional capital. Our only source for cash at this time is investments by
others in our company. We must raise cash to implement our plan of operation.

Our plan of operations for the next twelve months beginning January
  1, 2007 is to continue with the exploration of our Mexican and Canadian mineral
  properties, and to continue in our efforts to obtain approval of the offshore
  prospecting permits that relate to the Anchor Point Gold Project. Our planned
  geological exploration programs are described in detail in Item 2 above entitled
  Description of Properties.

Our planned exploration expenditures for the next twelve months
  on our mineral properties, together with amounts we expect to spend on administrative
  costs are summarized as follows:

Description of Expense
    AmountExploration of the joint El Tigre Gold Project (the joint
      El Tigre, Porvenir and La Centela Claims)
    $ 620,000Payment towards acquisition of La Centela mining rights
    $ 250,000Payment towards acquisition of rights in respect of the
      Cook Inlet Permit Applications
    $ 50,000Exploration of the Anchor Point Gold Project, Alaska
      $ 1,000,000Payment towards acquisition of El Tigre and Porvenir mining
      rights
    $ 200,000Payment towards acquisition of Wolfe Creek and Covenant
      mining rights
    $ 333,000Exploration of the Wolfe Creek and Covenant mining rights
    $ 500,000Obtaining interests in other mining rights
    $ 2,000,000General and Administrative Expenses
    $ 4,000,000Total
      $ 9,353,000


The general and administrative expenses for the year will
consist primarily of professional fees for the audit and legal work relating to
our regulatory filings throughout the year, as well as transfer agent fees,
management fees, investor relations and general office expenses.

We had cash and cash equivalents in the amount of $2,438,331
  and a working capital of $1,818,252 as of December 31, 2006. Based on our planned
  expenditures, as of January 1, 2007 we require a minimum of approximately $7,600,000
  to proceed with our plan of operations over the next twelve months. We anticipate
  that we will require additional financing in order to pursue our exploration
  programs beyond the preliminary exploration programs for our mineral properties
  that are outlined above. If we achieve less than the full amount of financing
  that we require, we will scale back our exploration programs on our mineral
  properties and will proceed with scaled back exploration plans based on our
  available financial resources.

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From the date of this annual report for the following 30 months,
  we anticipate that we will not generate any revenue. Accordingly, we will be
  required to obtain additional financing in order to continue our plan of operations.
  We believe that debt financing will not be an alternative for funding additional
  phases of exploration as we do not have tangible assets to secure any debt financing.
  We anticipate that additional funding will be in the form of equity financing
  from the sale of our common stock. However, we do not have any financing arranged
  and we cannot provide investors with any assurance that we will be able to raise
  sufficient funding from the sale of our common stock to fund our exploration
  programs. In the absence of such financing, we will not be able to continue
  exploration of our mineral claims. Even if we are successful in obtaining equity
  financing to fund our exploration programs, there is no assurance that we will
  obtain the funding necessary to pursue any advanced exploration of our mineral
  claims following the completion of preliminary exploration. If we do not continue
  to obtain additional financing, we will be forced to abandon our properties
  and our plan of operations.

Our exploration plans will be continually evaluated and
modified as exploration results become available. Modifications to our plans
will be based on many factors, including: results of exploration, assessment of
data, weather conditions, exploration costs, and the price of gold and available
capital. Further, the extent of our exploration programs that we undertake will
be dependent upon the amount of financing available to us.

Results of Operations

Our results of operations are presented below:

|                                 |   |                     |   |   | Period from February 9, |  
|-------------------------------- | - | ------------------- | - | - | ----------------------- | -
|                                 |   | Twelve Months Ended |   |   | 2005(inception) to      |  
|                                 |   | December 31, 2006   |   |   | December 31, 2005       |  
|Costs and Expenses:              |   |                     |   |   |                         |  
|General and Administrative       | $ | 6,638,181           |   | $ | 1,235,811               |  
|                                 |   |                     |   |   |                         |  
|Depreciation                     |   | 20,219              |   |   | 1,392                   |  
|                                 |   |                     |   |   |                         |  
|Total Operating Expense          |   | 6,658,400           |   |   | 1,237,203               |  
|                                 |   |                     |   |   |                         |  
|Loss on put agreement            |   | 120,316             |   |   | -                       |  
|                                 |   |                     |   |   |                         |  
|Loss from continuing operations  |   | (6,778,716          | ) |   | (1,237,203              | )
|                                 |   |                     |   |   |                         |  
|Loss on discontinued operations  |   | (50,023             | ) |   | -                       |  
|                                 |   |                     |   |   |                         |  
|Net Loss                         | $ | (6,828,739          | ) | $ | (1,237,203              | )
|                                 |   |                     |   |   |                         |  
|Loss per common share (basic and |   |                     |   |   |                         |  
|assuming dilution)               | $ | (0.47               | ) | $ | (0.16                   | )
|                                 |   |                     |   |   |                         |  
|Weighted average common shares   |   |                     |   |   |                         |  
|for computation                  |   | 14,455,265          |   |   | 7,891,803               |  

39

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We anticipate that we will not earn any revenues during the
current fiscal year or in the foreseeable future as we are presently engaged in
the exploration of our mineral properties.

During the period from February 9, 2005 to December 31, 2005,
  our general and administrative expenses primarily included the following: filing
  fees, bank charges and interest of $2,000, professional fees of $72,000, $52.000
  for office and telephone, $285,000 in management and consulting fees, $733,333
  of stock option compensation, $62,000 for rent, $7,000 for marketing and $23,000
  for exploration and mineral property expenses.

During the period from January 1, 2006 to December 31, 2006,
  our general and administrative expenses primarily included the following: accounting
  and legal fees of $334,000, other consulting and management fees of $3,198,000,
  investor relations fees of $315,000, $457,000 in marketing expenses, $229,000
  in office expenses, and $1,100,000 in stock based compensation.

The $5,402,370 increase in expenses from December 31, 2005 is
primarily due to the increased business activity of the Company in the last
fiscal year and an associated increase in professional fees including
accounting, legal and other consulting fees.

On May 1, 2005 we issued options to acquire 5,000,000 shares
  at $0.001 per share to Bruno Weiss, our Chief Financial Officer and options
  to acquire 5,000,000 shares at $0.001 per share to Norman Meier, our President
  and Chief Executive Officer. On January 13, 2007 both Dr. Meier and Mr. Weiss
  exercised their options in full. The options, valued at $5,500,000, were intended
  as compensation for five years of service, and we do not intend to issue more
  options to Dr. Meier and Mr. Weiss until May 2010.

On March 21, 2006 we issued options to acquire 50,000 shares at
$1.00 to Doug Oliver, our Vice President Operations and Chief Geologist. The
options shall expire on the date Dr. Oliver ceases to serve on the Board of
Directors of the Company.

Liquidity and Capital Resources

On December 31, 2006 we had cash or cash equivalents of
$2,438,331 compared to $327,049 at December 31, 2005. We had working capital of
$1,818,252 as of December 31, 2006, compared to $280,173 as of December 31,
2005.

In order for us to exercise our option and acquire a 49%
interest in whatever interest Corex Gold holds in the Santa Rita Property, we
must make the following payments of money and shares to Corex Gold:

40

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Due Date
      Monies
      SharesJanuary 31, 2007
      $200,000
      25,000 (Paid in October, 2006)July 31, 2007
      $200,000
      75,000January 31, 2008
      $200,000
      50,000July 31, 2008
      $200,000
      50,000January.31, 2009
      $200,000Total
      $1,000,000
      200,000


To exercise our option to acquire a 67.5% interest in the El
Tigre and Porvenir properties, we were required to pay at least $15,000 by
January 30, 2006, which we did, and we must spend at least another $200,000
prior to July 2, 2007.

To exercise our option to acquire the first 70% of the La
Centela mineral claim, we must spend at least $550,000 and issue 125,000 common
shares by October 5, 2008, and a further $1,950,000 and 350,000 common shares by
October 5, 2010, within the following time periods and as follows:

Period
    Share to be Issued
    Cash Payments
    Exploration ExpendituresAlready Paid & Issued (due October 14, 2006)
    25,000 common shares (valued at $0.95
      per share)
    $25,000
    $NilOctober 6, 2006  October 5, 2007
    50,000 common shares
    $50,000
    $200,000October 6, 2007 October 5, 2008
    75,000 common shares
    $75,000
    $200,000October 6, 2008  October 5, 2009
    100,000 common shares
    $100,000
    $200,000October 6, 2009  October 5, 2010
    250,000 common shares
    $250,000
    $1,400,000


If we do not make the specified annual expenditures, we will
forfeit our rights to exercise the options.

In order for us to continue to be entitled to the offshore
prospecting permit applications and licenses relating to the Anchor Point Gold
Project, we have agreed to pay Aspen $50,000 on signing the agreement, and an
annual payment of $50,000 thereafter, beginning in September, 2007. We have also
granted Aspen a 5% gross royalty in any ores, minerals, and mineral resources
produced from the offshore prospecting permit applications, including all
offshore prospecting permit applications acquired by us in the area of interest
in the Cook Inlet, Alaska. In particular, the 5% royalty on all placer gold
produced shall be paid in kind. Royalty for minerals other than placer gold
shall be 5% of the gross revenue received by or on behalf of us from the sale or
other dispositions of the ores, minerals, and mineral resources. If we fail to
make these payments, we will forfeit our rights to the Anchor Point Gold
Project.

41

---

In order for us to continue to be entitled to the mineral
rights relating to the Wolfe Creek and Covenant properties we must spend
approximately $333,000 in exploration expenses in the next 12 months in addition
to 5% royalty payments.

Plan of Operations

As of December 31, 2006, we had $2,438,331 in our bank account,
  together with cash in trust of $23,468. This is an increase of $2,089,750 from
  December 31, 2005. Our cash balance increased as a result of capital that we
  raised, combined with less expenses paid. During the year ended December 31,
  2006, we raised $4,695,368 in capital through private placements.

We expect to require approximately an additional $7,600,000 in
  financing to continue our planned operations for the next year (from January
  1, 2007).

Product Research and Development

We do not anticipate spending any material amounts in connection with product
  research and development activities during the next twelve months.

Acquisition of Plant and Equipment and Other Assets

Apart from our interests in the mineral concessions, we do not anticipate the
  sale or acquisition of any material property, plant or equipment during the
  next twelve months. Any acquisitions are subject to obtaining additional financing.

Number of Employees

As of March 31, 2007, our Chief Executive Officer our Chief Financial Officer
  work as full time consultants, each contributing approximately 40% of their
  time to Hemis. We have four administrative assistants in our Swiss office and
  we employ two geologists on a part time basis. We also engage independent contractors
  in the areas of marketing, accounting, bookkeeping, business and financial consulting
  and legal services. In order for us to attract and retain quality personnel,
  we anticipate we will have to offer competitive salaries to future employees.
  We anticipate that it may become desirable to add additional full and or part
  time employees to discharge certain critical functions during the next twelve
  months. This projected increase in personnel is dependent upon our ability to
  generate revenues and obtain sources of financing. There is no guarantee that
  we will be successful in raising the funds required or generating revenues sufficient
  to fund the projected increase in the number of employees. As we continue to
  expand, we will incur additional cost for personnel.

If we are unable to achieve the necessary additional financing,
  then we plan to reduce the amounts that we spend on our exploration activities
  and administrative expenses in order to be within the amount of capital resources
  that are available to us. Specifically, we anticipate that we would defer drilling
  programs pending our obtaining additional financing. Given our plan to scale
  back our operations if we do not achieve additional financing, we anticipate
  that our current cash and working capital will be sufficient to enable us to
  sustain our operations and our interests in our mineral properties for the next
  twelve months.

42

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Going Concern

We have not attained profitable operations and are dependent
  upon obtaining financing to pursue any extensive exploration activities. For
  these reasons our auditors stated in their report that they have substantial
  doubt we will be able to continue as a going concern.

The Company's independent certified public accountants have stated
  in their report included in the Company's December 31, 2006 Form 10-KSB, that
  the Company has incurred operating losses and that the Company is dependent
  upon management's ability to develop profitable operations. These factors among
  others may raise substantial doubt about the Company's ability to continue as
  a going concern.

Future Financings

We will require additional financing in order to proceed with
the exploration of our mineral properties. We plan to complete private placement
sales of our common stock in order to raise the funds necessary to pursue our
plan of operations. Issuances of additional shares will result in dilution to
our existing shareholders. We currently do not have any arrangements in place
for the completion of any private placement financings and there is no assurance
that we will be successful in completing any private placement financings.

We are currently offering common shares for sale through an
offering pursuant to Regulation S of the Securities Act to non US persons. On
April 4, 2007 our shares were quoted on the OTB Bulletin Board at $1.43 per
share.

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have
  or are reasonably likely to have a current or future effect on our financial
  condition, changes in financial condition, revenues or expenses, results of
  operations, liquidity, capital expenditures or capital resources that is material
  to stockholders.

Inflation

It is the opinion of the Company that inflation has not had a material effect
  on its operations.

43

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Critical Accounting Policies

Our financial statements are impacted by the accounting
policies used and the estimates and assumptions made by management during their
preparation. A complete summary of these policies is included in Note A of the
notes to our historical consolidated financial statements. We have identified
below the accounting policies that are of particular importance in the
presentation of our financial position, results of operations and cash flows and
which require the application of significant judgment by management.

Mineral Properties and Exploration Costs

Mineral property interests are composed of mineral properties
owned by us and rights to ownership of mineral properties which we can earn
through cash or share payments, incurring exploration expenditures and
combinations thereof. We account for our mineral property interests whereby all
acquisition and exploration costs are charged to expense as incurred, and all
property sales and option proceeds received are credited to operations. When the
existence of a mineral reserve on a property has been established, future
acquisition, exploration and development costs will be capitalized for that
property. After commercial production on a property commences, the net
capitalized costs will be charged to future operations using the unit of
production method based on estimated recoverable reserves on the property.
Mineral properties are periodically assessed for impairment of value and any
diminution in value is charged to operations at the time of impairment. Should a
property be abandoned, its unamortized capitalized costs are charged to
operations.

Stock Based Compensation

Prior to the January 1, 2006 adoption of the Financial
Accounting Standards Board (FASB) Statement No. 123(R), Share-Based Payment
(SFAS 123R), we accounted for stock-based compensation using the intrinsic
value method prescribed in Accounting Principles Board (APB) Opinion No. 25,
Accounting for Stock Issued to Employees, and related interpretations.
Accordingly, because the stock option grant price equaled the market price on
the date of grant, and any purchase discounts under our stock purchase plans
were within statutory limits, no compensation expense was recognized by us for
stock-based compensation. As permitted by SFAS No. 123, Accounting for
Stock-Based Compensation (SFAS 123), stock-based compensation was included as
a pro forma disclosure in the notes to the consolidated financial statements.

Effective January 1, 2006, the beginning of our first fiscal
  quarter of 2006, we adopted the fair value recognition provisions of SFAS 123R,
  using the modified-prospective transition method. Under this transition method,
  stock-based compensation expense was recognized in the consolidated financial
  statements for granted, modified, or settled stock options. Compensation expense
  recognized included the estimated expense for stock options granted on and subsequent
  to January 1, 2006, based on the grant date fair value estimated in accordance
  with the provisions of SFAS 123R, and the estimated expense for the portion
  vesting in the period for options granted prior to, but not vested as of January
  1, 2006, based on the grant date fair value estimated in accordance with the
  original provisions of SFAS 123. Results for prior periods have not been restated,
  as provided for under the modified-prospective method.

Recent accounting pronouncements

In February 2006, the FASB issued SFAS No. 155. “Accounting for certain
  Hybrid Financial Instruments an amendment of FASB Statements No. 133 and 140,”
  or SFAS No. 155. SFAS No. 155 permits fair value remeasurement for any hybrid
  financial instrument that contains an embedded derivative that otherwise would
  require bifurcation, clarifies which interest-only strips and principal-only
  strips are not subject to the requirements of Statement No. 133, establishes
  a requirement to evaluate interests in securitized financial assets to identify
  interests that are freestanding derivatives or that are hybrid financial instruments
  that contain an embedded derivative requiring bifurcation, clarifies that concentrations
  of credit risk in the form of subordination are not embedded derivatives, and
  amends SFAS No. 140 to eliminate the prohibition on a qualifying special purpose
  entity from holding a derivative financial instrument that pertains to a beneficial
  interest other than another derivative financial instrument. SFAS 155 is effective
  for all financial instruments acquired or issued after the beginning of an entity’s
  first fiscal year that begins after September 15, 2006. We do not expect the
  adoption of SFAS 155 to have a material impact on our consolidated financial
  position, results of operations or cash flows.

44

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In March 2006, the FASB issued FASB Statement No. 156, Accounting for Servicing
  of Financial Assets - an amendment to FASB Statement No. 140. Statement 156
  requires that an entity recognize a servicing asset or servicing liability each
  time it undertakes an obligation to service a financial asset by entering into
  a service contract under certain situations. The new standard is effective for
  fiscal years beginning after September 15, 2006. The adoption of SFAS No.156
  did not have a material impact on the Company's financial position and results
  of operations.

In July 2006, the FASB issued Interpretation No. 48 (FIN 48). “Accounting
  for uncertainty in Income Taxes”. FIN 48 clarifies the accounting for
  Income Taxes by prescribing the minimum recognition threshold a tax position
  is required to meet before being recognized in the financial statements. It
  also provides guidance on derecognition, measurement, classification, interest
  and penalties, accounting in interim periods, disclosure and transition and
  clearly scopes income taxes out of SFAS 5, “Accounting for Contingencies”.
  FIN 48 is effective for fiscal years beginning after December 15, 2006. The
  Company does not expect adoption of this standard will have a material impact
  on its financial position, operations or cash flows.
  In September 2006 the Financial Account Standards Board (the “FASB”)
  issued its Statement of Financial Accounting Standards 157, Fair Value Measurements.
  This Statement defines fair value, establishes a framework for measuring fair
  value in generally accepted accounting principles (GAAP), and expands disclosures
  about fair value measurements. This Statement applies under other accounting
  pronouncements that require or permit fair value measurements, the Board having
  previously concluded in those accounting pronouncements that fair value is the
  relevant measurement attribute. Accordingly, this Statement does not require
  any new fair value measurements. However, for some entities, the application
  of this Statement will change current practice. FAS 157 effective date is for
  fiscal years beginning after November 15, 2007. The Company does not expect
  adoption of this standard will have a material impact on its financial position,
  operations or cash flows. 
  In September 2006 the FASB issued its Statement of Financial Accounting Standards
  158 “Employers’ Accounting for Defined Benefit Pension and Other
  Postretirement Plans”. This Statement improves financial reporting by
  requiring an employer to recognize the overfunded or underfunded status of a
  defined benefit postretirement plan (other than a multiemployer plan) as an
  asset or liability in its statement of financial position and to recognize changes
  in that funded status in the year in which the changes occur through comprehensive
  income of a business entity or changes in unrestricted net assets of a not-for-profit
  organization. This Statement also improves financial reporting by requiring
  an employer to measure the funded status of a plan as of the date of its year-end
  statement of financial position, with limited exceptions. The effective date
  for an employer with publicly traded equity securities is as of the end of the
  fiscal year ending after December 15, 2006. The Company does not expect adoption
  of this standard will have a material impact on its financial position, operations
  or cash flows

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option
  for Financial Assets and Financial Liabilities.” SFAS 159 permits entities
  to choose to measure many financial instruments, and certain other items, at
  fair value. SFAS 159 applies to reporting periods beginning after November 15,
  2007. The adoption of SFAS 159 is not expected to have a material impact on
  the Company’s financial condition or results of operations.

Item 7. Financial Statements.

Our audited financial statements as of December 31, 2006
follow, together with the Report of Independent Registered Public Accounting
Firm thereon, are included in this report commencing on page F-1.

45

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SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549

FINANCIAL STATEMENTS



HEMIS CORPORATION(An exploration stage company)





F-1

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HEMIS CORPORATION.(An exploration stage company)

Index to Financial Statements

|                                                                                                                                                                                                                                                                                          | PAGE            
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------
|                                                                                                                                                                                                                                                                                          |                 
|Report
      of Independent Registered Certified Public Accounting Firm                                                                                                                                                                                                                   | F-3             
|                                                                                                                                                                                                                                                                                          |                 
|Consolidated
      Balance Sheets as of December 31, 2006 and 2005                                                                                                                                                                                                                        | F-4             
|                                                                                                                                                                                                                                                                                          |                 
|Consolidated
      Statements of Losses and Comprehensive Losses for the year ended December
      31, 2006, for the period from February 9, 2005 (date of inception) to
      December 31, 2005, and for the period from February 9, 2005 (date of
      inception) to December 31, 2006 | F-5             
|                                                                                                                                                                                                                                                                                          |                 
|Consolidated
      Statements of Stockholders Equity for the period from February 9, 2005
      (date of inception) to December 31, 2006                                                                                                                                                 | F-6
      ~ F-7 
|                                                                                                                                                                                                                                                                                          |                 
|Consolidated
      Statements of Cash Flows for the year ended December 31, 2006, for the
      period from February 9, 2005 (date of inception) to December 31, 2005, and
      for the period from February 9, 2005 (date of inception) to December 31,
      2006                      | F-8             
|                                                                                                                                                                                                                                                                                          |                 
|Notes
      to Consolidated Financial Statements                                                                                                                                                                                                                                          | F-9
      ~ F-31

F-2

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RUSSELL BEDFORD STEFANOU MIRCHANDANI LLP CERTIFIED PUBLIC
ACCOUNTANTS

REPORT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC
ACCOUNTING FIRM

Board of Directors Hemis Corporation. Las Vegas, NV

We have audited the consolidated balance sheets of Hemis Corporation
  and its wholly-owned subsidiaries (the “Company”), an exploration
  stage company, as of December 31, 2006 and December 31,2005, and the related
  consolidated statements of losses and comprehensive losses, stockholders’
  equity, and cash flows for the year ended December 31, 2006, for the period
  from February 9, 2005 (date of inception) to December 31, 2005, and for the
  period from February 9, 2005 (date of inception) to December 31, 2006. These
  financial statements are the responsibility of the company’s management.
  Our responsibility is to express an opinion on these financial statements based
  upon our audit.

We conducted our audits in accordance with standards of the
Public Company Accounting Oversight Board (United States of America). Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial position of the
Company at December 31, 2006 and December 31, 2005 and the results of its
operations and its cash flows for the year ended December 31, 2006, for the
period from February 9, 2005 (date of inception) to December 31, 2005, and for
the period from February 9, 2005 (date of inception) to December 31, 2006 in
conformity with accounting principles generally accepted in the United States of
America.

As discussed in Note A to the consolidated financial
statements, the Company adopted the provisions of Statement of Financial
Accounting Standards No. 123(R), Share-Based Payment, effective January 1,
2006.

The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going concern. As
discussed in Note K, the Company has not established a source of revenue and has
suffered substantial losses from operations since inception, which raises
substantial doubt about its ability to continue as a going concern. Managements
plans in regard to these matters are also described in Note K. The accompanying
statements do not include any adjustments that might result from the outcome of
this uncertainty.

/s/ RUSSELL BEDFORD STEFANOU
MIRCHANDANI LLP

Russell Bedford Stefanou Mirchandani
LLP    Certified Public Accountants

McLean, Virginia March 30, 2007

F-3

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HEMIS CORPORATION. (An exploration stage company)
CONSOLIDATED BALANCE SHEETSDECEMBER 31, 2006 AND 2005

|                                                           |   | 2006       |   |   | 2005       |  
|---------------------------------------------------------- | - | ---------- | - | - | ---------- | -
|ASSETS                                                     |   |            |   |   |            |  
|CURRENT ASSETS:                                            |   |            |   |   |            |  
|Cash and cash equivalents                                  | $ | 2,438,331  |   | $ | 327,049    |  
|Cash held in trust (Note A)                                |   | 23,468     |   |   | 45,000     |  
|Advances to related party ( Note J)                        |   | 95,000     |   |   | -          |  
|Prepaid expenses and other current assets                  |   | 179,847    |   |   | 9,344      |  
|Total current assets                                       |   | 2,736,646  |   |   | 381,393    |  
|                                                           |   |            |   |   |            |  
|Property and equipment, at cost: (Note B)                  |   |            |   |   |            |  
|Furniture and equipment                                    |   | 82,118     |   |   | 11,549     |  
|Automobile                                                 |   | 6,319      |   |   | -          |  
|Leasehold Improvements                                     |   | 12,135     |   |   | -          |  
|Less: accumulated depreciation                             |   | (22,225    | ) |   | (1,392     | )
|Total property and equipment, net                          |   | 78,347     |   |   | 10,157     |  
|                                                           |   |            |   |   |            |  
|Total assets                                               | $ | 2,814,993  |   | $ | 391,550    |  
|                                                           |   |            |   |   |            |  
|LIABILITIES AND STOCKHOLDERS' EQUITY                       |   |            |   |   |            |  
|CURRENT LIABILITIES:                                       |   |            |   |   |            |  
|Accounts payable and accrued liabilities                   | $ | 282,226    |   | $ | 67,759     |  
|Put liability (Note F)                                     |   | 636,168    |   |   | -          |  
|Advances from related parties (Note C)                     |   | -          |   |   | 33,461     |  
|Total current liabilities                                  |   | 918,394    |   |   | 101,220    |  
|                                                           |   |            |   |   |            |  
|COMMITMENTS AND CONTINGENCIES (Note I)                     |   | -          |   |   | -          |  
|                                                           |   |            |   |   |            |  
|STOCKHOLDERS' EQUITY                                       |   |            |   |   |            |  
|Common stock, par value $.001 per share;
      150,000,000 |   |            |   |   |            |  
|Authorized at December 31, 2006 and December               |   |            |   |   |            |  
|20,309,373 and 10,688,683 shares issued and                |   |            |   |   |            |  
|and December 31,2005, respectively (Note D)                |   | 20,309     |   |   | 10,689     |  
|Deferred compensation expenses (Note E)                    |   | (3,666,667 | ) |   | (4,766,667 | )
|Additional paid-in capital                                 |   | 12,282,458 |   |   | 5,852,886  |  
|Common stock subscription payable (Note D)                 |   | 1,330,938  |   |   | 430,625    |  
|Common stock subscription receivable (Note D)              |   | (3,300     | ) |   | -          |  
|Accumulated deficit during exploration
      stage         |   | (8,065,942 | ) |   | (1,237,203 | )
|Accumulated other comprehensive loss:                      |   |            |   |   |            |  
|Foreign currency translation adjustment                    |   | (1,197     | ) |   | -          |  
|Stockholders' equity                                       |   | 1,896,599  |   |   | 290,330    |  
|Total liabilities and stockholders' equity                 | $ | 2,814,993  |   | $ | 391,550    |  

See accompanying notes to consolidated financial statements.

F-4

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HEMIS CORPORATION. (An exploration stage
company)CONSOLIDATED STATEMENTS OF LOSSES AND COMPREHENSIVE LOSSES

|                                                                   |   |            |   |   | **For the** |   |   | For the         |  
|------------------------------------------------------------------ | - | ---------- | - | - | ----------- | - | - | --------------- | -
|                                                                   |   | For the    |   |   | Period from |   |   | Period          |  
|                                                                   |   | Year ended |   |   | February 9, |   |   | **from**        |  
|                                                                   |   | December,  |   |   | 2005 to     |   |   | **February 9,** |  
|                                                                   |   | 31         |   |   | December    |   |   | 2005 (date of   |  
|                                                                   |   | 2006       |   |   | 31, 2005    |   |   | inception)      |  
|Costs and Expenses:                                                |   |            |   |   |             |   |   |                 |  
|General and Administrative                                         | $ | 6,638,181  |   | $ | 1,235,811   |   | $ | 7,873,992       |  
|Depreciation (Note B)                                              |   | 20,219     |   |   | 1,392       |   |   | 21,611          |  
|Total Operating Expense                                            |   | 6,658,400  |   |   | 1,237,203   |   |   | 7,895,603       |  
|                                                                   |   |            |   |   |             |   |   |                 |  
|Loss from Operations                                               |   | (6,658,400 | ) |   | (1,237,203  | ) |   | (7,895,603      | )
|                                                                   |   |            |   |   |             |   |   |                 |  
|Other income (expenses):                                           |   |            |   |   |             |   |   |                 |  
|Loss on put agreement (Note F)                                     |   | (120,316   | ) |   | -           |   |   | (120,316        | )
|                                                                   |   |            |   |   |             |   |   |                 |  
|Loss from continuing operations, before income                     |   |            |   |   |             |   |   |                 |  
|taxes and discontinued operations                                  |   | (6,778,716 | ) |   | (1,237,203  | ) |   | (8,015,919      | )
|Provision for Income Tax (Note G)                                  |   | -          |   |   | -           |   |   | -               |  
|                                                                   |   |            |   |   |             |   |   |                 |  
|Loss from continuing operations, before                            |   |            |   |   |             |   |   |                 |  
|discontinued operations                                            |   | (6,778,716 | ) |   | (1,237,203  | ) |   | (8,015,919      | )
|Loss from discontinued operations (Note J)                         |   | (22,128    | ) |   | -           |   |   | (22,128         | )
|Loss on disposition of Aurum (Note J)                              |   | (27,895    | ) |   | -           |   |   | (27,895         | )
|                                                                   |   |            |   |   |             |   |   |                 |  
|Net Loss                                                           | $ | (6,828,739 | ) | $ | (1,237,203  | ) | $ | (8,065,942      | )
|Other Comprehensive Loss                                           |   |            |   |   |             |   |   |                 |  
|Loss on foreign currency translation                               |   | (1,197     | ) |   | -           |   |   | (1,197          | )
|Total Comprehensive Loss                                           | $ | (6,829,936 | ) | $ | (1,237,203  | ) | $ | (8,067,139      | )
|                                                                   |   |            |   |   |             |   |   |                 |  
|Loss per common share (basic and assuming dilution)
      (Note G) | $ | (0.47      | ) | $ | (0.16       | ) |   |                 |  
|Continuing operations                                              | $ | (0.47      | ) | $ | (0.16       | ) |   |                 |  
|Discontinued operations                                            | $ | (0.00      | ) | $ | (0.00       | ) |   |                 |  
|                                                                   |   |            |   |   |             |   |   |                 |  
|Weighted average common shares for computation                     |   | 14,455,265 |   |   | 7,891,803   |   |   |                 |  

See accompanying notes to consolidated financial statements.

F-5

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HEMIS CORPORATION. (An exploration stage company)CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITYFOR THE
PERIOD FEBRUARY 9, 2005 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2006

|                                                                                                          |            |  |       |            |  |   |            |  |   |              |  |   |              |   |   | Deficit     |   |   |            |  
|--------------------------------------------------------------------------------------------------------- | ---------- |  | ----- | ---------- |  | - | ---------- |  | - | ------------ |  | - | ------------ | - | - | ----------- | - | - | ---------- | -
|                                                                                                          |            |  |       |            |  |   | Additional |  |   | Common       |  |   | Deferred     |   |   | Accumulated |   |   |            |  
|                                                                                                          | Common     |  |       | Stock      |  |   | Paid       |  |   | Stock        |  |   | Compensation |   |   | During      |   |   |            |  
|                                                                                                          | Shares     |  |       | Amount     |  |   | in Capital |  |   | Subscription |  |   | Expense      |   |   | Exploration |   |   | Total      |  
|                                                                                                          |            |  |       |            |  |   |            |  |   |              |  |   |              |   |   | Stage       |   |   |            |  
|                                                                                                          |            |  |       |            |  |   |            |  |   |              |  |   |              |   |   |             |   |   |            |  
|Issuance of common stock to founders in May 2005 at $0.001
      per share                                | 10,000,000 |  | $     | 10,000     |  | $ | -          |  | $ | -            |  | $ | -            |   | $ | -           |   | $ | 10,000     |  
|                                                                                                          |            |  |       |            |  |   |            |  |   |              |  |   |              |   |   |             |   |   |            |  
|Issuance of stock options to founders in May 2005 in
      exchange for deferred compensation (Note E)    | -          |  |       | -          |  |   | 5,500,000  |  |   | -            |  |   | (5,500,000   | ) |   | -           |   |   | -          |  
|                                                                                                          |            |  |       |            |  |   |            |  |   |              |  |   |              |   |   |             |   |   |            |  
|Shares issued in May 2005 pursuant to private
      placement at $.55 per share                           | 30,000     |  |       | 30         |  |   | 16,470     |  |   | -            |  |   | -            |   |   | -           |   |   | 16,500     |  
|                                                                                                          |            |  |       |            |  |   |            |  |   |              |  |   |              |   |   |             |   |   |            |  
|Shares issued in July 2005 in exchange for
      services at $.55 per share                               | 100,000    |  |       | 100        |  |   | 54,900     |  |   | -            |  |   | -            |   |   | -           |   |   | 55,000     |  
|                                                                                                          |            |  |       |            |  |   |            |  |   |              |  |   |              |   |   |             |   |   |            |  
|Shares issued in July 2005 pursuant to private
      placement at $.55 per share                          | 500        |  |       | 1          |  |   | 274        |  |   | -            |  |   | -            |   |   | -           |   |   | 275        |  
|                                                                                                          |            |  |       |            |  |   |            |  |   |              |  |   |              |   |   |             |   |   |            |  
|Shares issued in August 2005 pursuant to private
      placement at $.55 per share, net of costs and fees | 458,183    |  |       | 458        |  |   | 226,342    |  |   | -            |  |   | -            |   |   | -           |   |   | 226,800    |  
|                                                                                                          |            |  |       |            |  |   |            |  |   |              |  |   |              |   |   |             |   |   |            |  
|Shares issued in September 2005 in exchange
      for services at $.55 per share                          | 100,000    |  |       | 100        |  |   | 54,900     |  |   | -            |  |   | -            |   |   | -           |   |   | 55,000     |  
|                                                                                                          |            |  |       |            |  |   |            |  |   |              |  |   |              |   |   |             |   |   |            |  
|Common stock subscribed                                                                                   | -          |  |       | -          |  |   | -          |  |   | 430,625      |  |   | -            |   |   | -           |   |   | 430,625    |  
|                                                                                                          |            |  |       |            |  |   |            |  |   |              |  |   |              |   |   |             |   |   |            |  
|Amortization of deferred compensation (Note
      E)                                                      | -          |  |       | -          |  |   | -          |  |   | -            |  |   | 733,333      |   |   | -           |   |   | 733,333    |  
|                                                                                                          |            |  |       |            |  |   |            |  |   |              |  |   |              |   |   |             |   |   |            |  
|Net loss                                                                                                  | -          |  |       | -          |  |   | -          |  |   | -            |  |   | -            |   |   | (1,237,203  | ) |   | (1,237,203 | )
|                                                                                                          |            |  |       |            |  |   |            |  |   |              |  |   |              |   |   |             |   |   |            |  
|Balance at December 31, 2005                                                                              | 10,688,683 |  | **$** | **10,689** |  | $ | 5,852,886  |  | $ | 430,625      |  | $ | (4,766,667   | ) | $ | (1,237,203  | ) | $ | 290,330    |  

See accompanying notes to consolidated financial statements.

F-6

---

HEMIS CORPORATION 
  (An exploration stage company)CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (Continued) 
  FOR THE PERIOD FEBRUARY 9, 2005 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2006

DeficitCommon
      
      
      Common
      
      
      Foreign
      
      
      
      
      
      AccumulatedAdditional
      
      
      Stock
      
      
      Stock
      
      
      Currency
      
      
      
      
      
      DuringCommon
      
      
      Stock
      
      
      Paid in
      
      
      Subscription
      
      
      Subscription
      
      
      Translation
      
      
      Deferred
      
      
      ExplorationShares
      
      
      Amount
      
      
      Capital
      
      
      Payable
      
      
      Receivable
      
      
      Adjustments
      
      
      Compensation
      
      
      Stage
      
      
      TotalBalance forward
      
      10,688,683
      
      $
      **** **10,689**
      
      $
      5,852,886
      
      $
      **430,625**
      
      $
      -
      
      $
      -
      
      $
      (4,766,667
      )
      $
      (1,237,203
      )
      $
      290,330Shares issued in January 2006 for common stocksubscribed in December 2005
      
      593,638
      
      
      594
      
      
      325,906
      
      
      (326,500
      )
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -Shares issued in February 2006 in exchange forcommon stock subscribed in December 2005
        andpursuant to private placement at $.55 per share, netof costs and fees
      
      274,795
      
      
      275
      
      
      140,862
      
      
      (93,125
      )
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      48,012Shares issued in March 2006 in exchange forcommon stock subscribed in December 2005
        andpursuant to private placement at $.55 per share, netof costs and fees
      
      164,337
      
      
      163
      
      
      79,386
      
      
      (11,000
      )
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      68,549Issuance of stock options in January 2006 inexchange for consulting services
      
      -
      
      
      -
      
      
      26,845
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      26,845Shares issued in May 2006 pursuant to privateplacement at $.55 per share, net of costs
        and fees
      
      480,000
      
      
      480
      
      
      243,445
      
      
      -
      
      
      (3,300
      )
      
      -
      
      
      -
      
      
      -
      
      
      240,625Shares issued in May 2006 pursuant to privateplacement at $.75 per share, net of costs
        and fees
      
      25,000
      
      
      25
      
      
      16,850
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      16,875Shares issued in May 2006 in exchange for servicesat approximately $.55 per share
      
      1,070,880
      
      
      1,071
      
      
      587,913
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      588,984Shares issued in June 2006 pursuant to privateplacement at $.55 per share, net of costs
        and fees
      
      308,772
      
      
      309
      
      
      164,016
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      164,325Shares issued in June 2006 pursuant to privateplacement at $.75 per share, net of costs
        and fees
      
      150,000
      
      
      150
      
      
      102,229
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      102,379Shares issued in June 2006 in exchange for servicesat approximately $.55 per share
      
      50,000
      
      
      50
      
      
      27,450
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      27,500Shares issued in June 2006 in exchange for servicesat approximately $.75 per share
      
      125,000
      
      
      125
      
      
      93,625
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      93,750Shares issued in August 2006 pursuant to privateplacement at $.75,net of costs and fees
      
      1,033,730
      
      
      1,034
      
      
      699,820
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      700,854Shares issued in August 2006 in exchange for servicesat approximately $.75 per share
      
      5,000
      
      
      5
      
      
      3,745
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      3,750Shares issued in September 2006 pursuant to privateplacement at $.75,net of costs and fees
      
      961,428
      
      
      961
      
      
      624,089
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      625,050Shares issued in October 2006 pursuant to privateplacement at $.75,net of costs and fees
      
      244,000
      
      
      244
      
      
      167,531
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      167,775Shares issued in October 2006 in exchange for servicesat $.75 per share
      
      1,500,000
      
      
      1,500
      
      
      1,123,500
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      1,125,000Shares issued in October 2006 in exchange forexploration expenditures at $.75 per share
      
      25,000
      
      
      25
      
      
      18,725
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      18,750Shares issued in October 2006 pursuant to privateplacement at $.95,net of costs and fees
      
      357,420
      
      
      357
      
      
      311,963
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      312,320Shares issued in October 2006 in exchange forExploration expenditures at $.95 per share
      
      25,000
      
      
      25
      
      
      23,725
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      23,750Shares issued in November 2006 pursuant to privateplacement at $.75 per share, net of costs
        and fees
      
      52,614
      
      
      53
      
      
      31,907
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      31,960Shares issued in November 2006 pursuant to privateplacement at $.95, net of costs and fees
      
      295,528
      
      
      296
      
      
      260,312
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      260,608Shares issued in November 2006 in exchange for servicesat approximately $.95 per share
      
      1,310,180
      
      
      1,310
      
      
      1,242,935
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      1,244,245Shares issued in December 2006 pursuant to privateplacement at $.95,net of costs and fees
      
      15,789
      
      
      16
      
      
      13,484
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      13,500Shares issued in December 2006 pursuant to privateplacement at $1.20,net of costs and fees
      
      549,150
      
      
      549
      
      
      611,051
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      611,600Shares issued in December 2006 in exchange for servicesat $1.20 per share
      
      3,429
      
      
      3
      
      
      4,111
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      4,114Reclassification of equity to liability upon issuance ofput agreement (Note F)
      
      -
      
      
      -
      
      
      (515,852
      )
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      ( 515,852
      )Common stock subscribed
      
      -
      
      
      -
      
      
      -
      
      
      1,330,938
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      1,330,938Amortization of deferred compensation (Note E)
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      1,100,000
      
      
      -
      
      
      1,100,000Net loss
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (6,828,739
      )
      
      (6,828,739
      )Other Comprehensive income (loss):Foreign exchange translation loss
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (1,197
      )
      
      -
      
      
      -
      
      
      ( 1,197
      )Balance at December 31, 2006
      
      20,309,373
      
      
      20,309
      
      
      12,282,459
      
      
      1,330,938
      
      
      (3,300
      )
      
      (1,197
      )
      
      (3,666,667
      )
      $
      (8,065,942
      )
      $
      1,896,599


See accompanying footnotes to the consolidated financial
statements

F-7

---

HEMIS CORPORATION. (An exploration stage company)
CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                      |   |            |   |   | For the period from           |   |   | For the period from               |  
|--------------------------------------------------------------------- | - | ---------- | - | - | ----------------------------- | - | - | --------------------------------- | -
|                                                                      |   |            |   |   | **February 9, 2005 (date of** |   |   | **February 9, 2005(date of** **** |  
|                                                                      |   |            |   |   | inception ) through           |   |   | inception ) through               |  
|                                                                      |   | 2006       |   |   | December 31, 2005             |   |   | December 31, 2006                 |  
|INCREASE IN CASH AND EQUIVALENTS                                      |   |            |   |   |                               |   |   |                                   |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                 |   |            |   |   |                               |   |   |                                   |  
|Net loss from exploration stage operations                            | $ | (6,828,739 | ) | $ | (1,237,203                    | ) | $ | (8,065,942                        | )
|Add: Loss on discontinued operations (Note J)                         |   | 50,023     |   |   | -                             |   |   | 50,023                            |  
|                                                                      |   | (6,778,716 | ) |   | (1,237,203                    | ) |   | (8,015,919                        | )
|Depreciation (Note B)                                                 |   | 20,219     |   |   | 1,392                         |   |   | 21,611                            |  
|Common stock issued in exchange for
      services (Note D)           |   | 3,087,343  |   |   | 110,000                       |   |   | 3,197,343                         |  
|Common stock issued in exchange for exploration expenditure           |   | 42,500     |   |   | -                             |   |   | 42,500                            |  
|(Note D)                                                              |   |            |   |   |                               |   |   |                                   |  
|Stock options issued in exchange for services (Note E)                |   | 26,845     |   |   | -                             |   |   | 26,845                            |  
|Amortization of deferred compensation (Note
      E)                  |   | 1,100,000  |   |   | 733,333                       |   |   | 1,833,333                         |  
|Common stock issued to founders (Note D)                              |   | -          |   |   | 10,000                        |   |   | 10,000                            |  
|Loss on put agreement (Note F)                                        |   | 120,316    |   |   | -                             |   |   | 120,316                           |  
|Adjustments to reconcile net loss from exploration stage              |   |            |   |   |                               |   |   |                                   |  
|operations to cash                                                    |   |            |   |   |                               |   |   |                                   |  
|used for operating activities:                                        |   |            |   |   |                               |   |   |                                   |  
|Changes in assets and liabilities:                                    |   |            |   |   |                               |   |   |                                   |  
|Prepaid expenses and other assets                                     |   | (148,970   | ) |   | (54,344                       | ) |   | (203,313                          | )
|Other receivables                                                     |   | (95,000    | ) |   | -                             |   |   | (95,000                           | )
|Accounts payable and accrued expenses                                 |   | 214,467    |   |   | 67,759                        |   |   | 282,225                           |  
|Net Cash used in continuing operations                                |   | (2,410,996 | ) |   | (369,063                      | ) |   | (2,780,059                        | )
|Net Cash used in discontinued operations                              |   | (50,023    | ) |   | -                             |   |   | (50,023                           | )
|NET CASH USED IN OPERATING ACTIVITIES                                 |   | (2,461,019 | ) |   | (369,063                      | ) |   | (2,830,082                        | )
|CASH FLOWS FROM INVESTING ACTIVITIES:                                 |   |            |   |   |                               |   |   |                                   |  
|Capital expenditures                                                  |   | (88,409    | ) |   | (11,549                       | ) |   | (99,958                           | )
|NET CASH USED IN INVESTING ACTIVITIES                                 |   | (88,409    | ) |   | (11,549                       | ) |   | (99,958                           | )
|CASH FLOWS FROM FINANCING ACTIVITIES:                                 |   |            |   |   |                               |   |   |                                   |  
|Proceeds from sale of common stock and common stock                   |   |            |   |   |                               |   |   |                                   |  
|subscription, net of                                                  |   |            |   |   |                               |   |   |                                   |  
|costs and fees (Note D)                                               |   | 4,695,368  |   |   | 674,200                       |   |   | 5,369,568                         |  
|(Net Repayments) Proceeds from related parties
      advances         |   | (33,461    | ) |   | 33,461                        |   |   | -                                 |  
|(Note C)                                                              |   |            |   |   |                               |   |   |                                   |  
|NET CASH PROVIDED BY FINANCING ACTIVITIES                             |   | 4,661,907  |   |   | 707,661                       |   |   | 5,369,568                         |  
|Effect of exchange rate changes on cash and cash equivalents          |   | (1,197     | ) |   | -                             |   |   | (1,197                            | )
|INCREASE IN CASH AND EQUIVALENTS                                      |   | 2,111,282  |   |   | 327,049                       |   |   | 2,438,331                         |  
|Cash and cash equivalents at the beginning of the period              |   | 327,049    |   |   | -                             |   |   | -                                 |  
|Cash and cash equivalents at the end of
      the period              | $ | 2,438,331  |   | $ | 327,049                       |   | $ | 2,438,331                         |  
|Supplemental Disclosures of Cash Flow Information                     |   |            |   |   |                               |   |   |                                   |  
|Cash paid during the period for interest                              | $ | -          |   | $ | -                             |   | $ | -                                 |  
|Income taxes paid                                                     |   | -          |   |   | -                             |   |   | -                                 |  
|Common stock issued in exchange for
      services (Note D)           |   | 3,087,343  |   |   | 110,000                       |   |   | 3,197,343                         |  
|Common stock issued in exchange for exploration                       |   | 42,500     |   |   | -                             |   |   | 42,500                            |  
|expenditures (Note D)                                                 |   |            |   |   |                               |   |   |                                   |  
|Stock options issued in exchange for services rendered (Note
      E) |   | 26,845     |   |   | -                             |   |   | 26,845                            |  
|Stock options granted in exchange for deferred
      compensation     |   | -          |   |   | 5,500,000                     |   |   | 5,500,000                         |  
|(Note E)                                                              |   |            |   |   |                               |   |   |                                   |  
|Cash held in trust (Note A)                                           |   | 23,468     |   |   | 45,000                        |   |   | 23,468                            |  
|Common stock issued to founders (Note D)                              |   | -          |   |   | 10,000                        |   |   | 10,000                            |  

See accompanying notes to consolidated financial statements.

F-8

---

HEMIS CORPORATION(An exploration stage
company)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies applied in the
preparation of the accompanying consolidated financial statements follows.

Business and Basis of Presentation

Hemis Corporation (the "Company") was incorporated under the
laws of the State of Nevada on February 9, 2005. On May 16, 2005, the Company
incorporated Hemis Gold S.A. de C.V., a wholly owned subsidiary in Mexico. The
Company was organized for the purpose of acquiring and developing gold, silver
and other mineral properties. On June 14, 2005, the Company incorporated under
the laws of the State of Nevada a wholly owned subsidiary, Aurum Financial
Services, Inc. (Aurum). In June 2006, the Companys Board of Directors
authorized to spin off Aurum. Effective July 1, 2006, Aurum is formally spun off
and is no longer a subsidiary of the Company. The financial statements reflect
the operating results and balance sheet items of the discontinued operations
separately from continuing operations. Prior years have been restated. Operating
results for the discontinued operations are described in Note J. In June 2006
the Company incorporated under the laws of Philippines a wholly owned
subsidiary, Hemis Philippines Corporation.

In January 2006 the Company incorporated under the laws of the
State of Nevada four wholly owned subsidiaries, Tecton Corporation, Stratos Gold
Corporation, Allegra Corporation and Sirius Corporation. All of these newly
formed subsidiaries had no business operations as of December 31, 2006. In
September 2006, the Companys Board of Directors authorized to spin off Stratos
Gold Corporation (Stratos), by issuing to the Companys shareholders as of
September 1, 2006 (Record Date) one share of Stratos for every 50 shares of
the Companys common stock owned by the shareholders. Effective September 1,
2006, Stratos is formally spun off and is no longer a subsidiary of the Company.
Stratos had no operations prior to the spin-off (see Note J). In December 2006,
the Companys Board of Directors authorized to spin off Tecton Corporation
(Tecton), by issuing to the Companys shareholders as of December 1, 2006
(Record Date) one share of Tecton for every 100 shares of the Companys common
stock owned by the shareholders. Effective December 1, 2006, Tecton is formally
spun off and is no longer a subsidiary of the Company. Tecton had no operations
prior to the spin-off (see Note J).

The consolidated financial statements include the accounts of
Hemis Corporation and its wholly-owned subsidiaries, Aurum Financial Services,
Inc. (Note J), Hemis Gold S.A. de C.V., Tecton Corporation (Note J), Stratos
Gold Corporation (Note J), Allegra Corporation (Note L), Sirius Corporation
(Note L), and Hemis Philippines Corporation. Significant intercompany
transactions and accounts have been eliminated in consolidation.

F-9

---

HEMIS CORPORATION(An exploration stage
company)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

Cash and Cash Equivalents

For purposes of the Statements of Cash Flows, the Company
considers all highly liquid debt instruments purchased with a maturity date of
three months or less to be cash equivalents. Cash and cash equivalents consist
of operating funds held in financial institutions and funds held by an entity
partially owned and controlled by the Companys Chief Executive Officer and
principal shareholder. The amount of funds held by the Chief Executive Officer
at December 31, 2006 and 2005 was $51,617 and $14,060, respectively, and
included in the cash and cash equivalents. The funds are used to pay for the
Company's miscellaneous services and supplies.

Cash Held in Trust

At December 31, 2006 and 2005, the Company had $23,468 and
$45,000, respectively, of cash held in a lawyer's trust account and the
Companys lawyer has authority to use the funds to pay legal bills, consulting
fees, and expenses. There was no formal escrow agreement, and the President of
the Company has the authority to allocate the trust funds and to withdraw the
funds from trust at any time. The Company has excluded the cash held in trust
from its cash and cash equivalents and accounted for as a current asset.

Income Taxes

The Company has implemented the provisions on Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS
109). SFAS 109 requires that income tax accounts be computed using the
liability method. Deferred taxes are determined based upon the estimated future
tax effects of differences between the financial reporting and tax reporting
bases of assets and liabilities given the provisions of currently enacted tax
laws.

Net Earnings (Losses) Per Common Share

The Company computes earnings per share under Financial
Accounting Standard No. 128, "Earnings Per Share" (SFAS 128). Net loss per
common share is computed by dividing net loss by the weighted average number of
shares of common stock and dilutive common stock equivalents outstanding during
the year. Dilutive common stock equivalents consist of shares issuable upon
conversion of convertible preferred shares and the exercise of the Company's
stock options and warrants (calculated using the treasury stock method). During
the year ended December 31, 2006, and for the period from February 9, 2005 (date
of inception) to December 31, 2005, common stock equivalents are not considered
in the calculation of the weighted average number of common shares outstanding
because they would be anti-dilutive, thereby decreasing the net loss per common
share.

Use of Estimates

The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.

F-10

---

HEMIS CORPORATION(An exploration stage
company)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

Research and Development

The Company accounts for research and development costs in
accordance with the Financial Accounting Standards Boards Statement of
Financial Accounting Standards No. 2 (SFAS 2), Accounting for Research and
Development Costs. Under SFAS 2, all research and development costs must be
charged to expense as incurred. Accordingly, internal research and development
costs are expensed as incurred. Third-party research and developments costs are
expensed when the contracted work has been performed or as milestone results
have been achieved. Company-sponsored research and development costs related to
both present and future products are expensed in the period incurred. The
Company incurred no expenditures on research and product development for the
year ended December 31, 2006 and for the period from February 9, 2005 (date of
inception) to December 31, 2005.

Foreign Currency Translation

The Company translates the foreign currency financial
statements in accordance with the requirements of Statement of Financial
Accounting Standards No. 52, Foreign Currency Translation. Assets and
liabilities are translated at current exchange rates in effect during the
period. Resulting translation adjustments are recorded as a separate component
in stockholders equity. Foreign currency transaction gains and losses are
included in the statement of operations.

Mineral Properties and Exploration Costs

Mineral property interests are composed of mineral properties
owned by the Company and rights to ownership of mineral properties which the
Company can earn through cash or share payments, incurring exploration
expenditures and combinations thereof. The Company accounts for its mineral
property interests whereby all acquisition and exploration costs are charged to
expense as incurred, and all property sales and option proceeds received are
credited to operations. When the existence of a mineral reserve on a property
has been established, future acquisition, exploration and development costs will
be capitalized for that property. After commercial production on a property
commences, the net capitalized costs will be charged to future operations using
the unit of production method based on estimated recoverable reserves on the
property. Mineral properties are periodically assessed for impairment of value
and any diminution in value is charged to operations at the time of impairment.
Should a property be abandoned, its unamortized capitalized costs are charged to
operations. As of December 31, 2006 and 2005, all mineral claim costs of
carrying, retaining and developing unproven properties were charged to
operations in the period incurred.

F-11

---

HEMIS CORPORATION(An exploration stage
company)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

Mineral Property Reclamation Obligations

The operations of the Company have been and may in the future
be affected from time to time in varying degree by changes in environmental
regulations, including those for future removal and site restoration costs. The
likelihood of new regulations and their overall effect upon the Company are not
predictable. The Company will provide for any reclamation costs in accordance
with Financial Accounting Standard No. 143 Accounting for Asset Retirement
Obligations. It is managements opinion that the Company is not currently
exposed to significant environmental and reclamation liabilities and has
recorded no reserve for environmental and reclamation expenditures.

Liquidity

To date the Company has generated no revenues, has incurred
expenses, and has sustained losses. As shown in the accompanying consolidated
financial statements, the Company incurred a net loss of $6,828,739, $1,237,203,
and $8,065,942 for the year ended December 31, 2006, the period from February 9,
2005 (date of inception) through December 31, 2005, and from February 9, 2005
(date of inception) through December 31, 2006. The Companys has working capital
surplus of $1,818,252 as of December 31, 2006. The Companys operations are
subject to all risks inherent in the establishment of a new business enterprise.

Comprehensive Income (Loss)

The Company adopted Statement of Financial Accounting Standards
No. 130, Reporting Comprehensive Income. SFAS No. 130 establishes standards
for the reporting and displaying of comprehensive income and its components.
Comprehensive income is defined as the change in equity of a business during a
period from transactions and other events and circumstances from non-owner
sources. It includes all changes in equity during a period except those
resulting from investments by owners and distributions to owners. SFAS No. 130
requires other comprehensive income (loss) to include foreign currency
translation adjustments and unrealized gains and losses on available-for-sale
securities.

Fair Value of Financial Instruments

Statement of Financial Accounting Standards No. 107,
"Disclosures About Fair Value of Financial Instruments," requires disclosure of
the fair value of certain financial instruments. The carrying value of cash and
cash equivalents, accounts receivable, accounts payable and short-term
borrowings, as reflected in the balance sheets, approximate fair value because
of the short-term maturity of these instruments.

F-12

---

HEMIS CORPORATION(An exploration stage
company)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

Stock Based Compensation

Prior to the January 1, 2006 adoption of the Financial Accounting
  Standards Board (“FASB”) Statement No. 123(R), “Share-Based
  Payment” (“SFAS 123R”), the Company accounted for stock-based
  compensation using the intrinsic value method prescribed in Accounting Principles
  Board (“APB”) Opinion No. 25, “Accounting for Stock Issued
  to Employees,” and related interpretations. As permitted by SFAS No. 123,
  “Accounting for Stock-Based Compensation” (“SFAS 123”),
  stock-based compensation was included as a pro forma disclosure in the notes
  to the consolidated financial statements. The Company had no employee stock
  options granted and outstanding prior to January 1, 2006. Stock options granted
  to two officers are described in Note E.

Effective January 1, 2006, the beginning of the Companys first
fiscal quarter of 2006, the Company adopted the fair value recognition
provisions of SFAS 123R, using the modified-prospective transition method. Under
this transition method, stock-based compensation expense is recognized in the
consolidated financial statements for granted, modified, or settled stock
options. Compensation expense recognized included the estimated expense for
stock options granted on and subsequent to January 1, 2006, based on the grant
date fair value estimated in accordance with the provisions of SFAS 123R, and
the estimated expense for the portion vesting in the period for options granted
prior to, but not vested as of January 1, 2006, based on the grant date fair
value estimated in accordance with the original provisions of SFAS 123. Results
for prior periods have not been restated, as provided for under the
modified-prospective method. The Company had no employee stock based
compensation issued and outstanding at December 31, 2006.

Except for transactions with employees that are within the
scope of Opinion 25, the Company follows SFAS No. 123 and EITF Issue No. 96-18,
Accounting for Equity Instruments That Are Issued to Other Than Employees for
Acquiring, or in Conjunction with Selling, Goods or Services, all transactions
in which goods or services are the consideration received for the issuance of
equity instruments are accounted for based on the fair value of the
consideration received or the fair value of the equity instruments issued,
whichever is more reliably measurable. The Company determines the measurement
date and period(s) the Company should use to recognize the fair value of the
equity instruments in accordance with SFAS 123 and EITF Issue 96-18. Situations
in which counterparty performance may be required over a period of time but the
equity award granted to the party performing the services is fully vested and
nonforfeitable on the date the parties enter into the contract, the measurement
date for the award will be the date the parties enter into the contract, even
though services have not yet been performed.

F-13

---

HEMIS CORPORATION(An exploration stage
company)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

Stock Based Compensation (Continued)

Had compensation costs for the Company's stock options been
determined based on the fair value at the grant dates for the awards, the
Company's net loss and losses per share would have been as follows:

|                                                               |   | For the period from |  
|-------------------------------------------------------------- | - | ------------------- | -
|                                                               |   | 9, 2005 (date of    |  
|                                                               |   | December 31, 2005   |  
|Net loss  as reported                                         | $ | (1,237,203          | )
|Add: Total stock based employee compensation expense as        |   |                     |  
|under intrinsic value method
      (APB. No. 25)               |   | -                   |  
|Deduct: Total stock based employee compensation expense        |   |                     |  
|under fair value based method
      (SFAS No. 123)             |   | -                   |  
|Net loss  Pro Forma                                           | $ | (1,237,203          | )
|Net loss attributable to common
      stockholders  Pro forma | $ | (1,237,203          | )
|Basic (and assuming dilution) loss per share  as reported     | $ | (0.16               | )
|Basic (and assuming dilution) loss per
      share  Pro forma | $ | (0.16               | )

Segment Information

Statement of Financial Accounting Standards No. 131,
Disclosures about Segments of an Enterprise and Related Information (SFAS
131) establishes standards for reporting information regarding operating
segments in annual financial statements and requires selected information for
those segments to be presented in interim financial reports issued to
stockholders. SFAS 131 also establishes standards for related disclosures about
products and services and geographic areas. Operating segments are identified as
components of an enterprise about which separate discrete financial information
is available for evaluation by the chief operating decision maker, or
decision-making group, in making decisions how to allocate resources and assess
performance. The information disclosed herein materially represents all of the
financial information related to the Companys principal operating segment.

Property and Equipment

Property and equipment are stated at cost. When retired or otherwise
  disposed, the related carrying value and accumulated depreciation are removed
  from the respective accounts and the net difference less any amount realized
  from disposition, is reflected in earnings. For financial statement purposes,
  property and equipment are recorded at cost and depreciated using the straight
  line method. The property and equipment will be depreciated over their estimated
  useful lives of 3 to 5 years.

F-14

---

HEMIS CORPORATION(An exploration stage
company)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

Long-Lived Assets

The Company has adopted Statement of Financial Accounting
Standards No. 144 (SFAS 144). The Statement requires that long-lived assets
and certain identifiable intangibles held and used by the Company be reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Events relating to
recoverability may include significant unfavorable changes in business
conditions, recurring losses, or a forecasted inability to achieve break-even
operating results over an extended period. The Company evaluates the
recoverability of long-lived assets based upon forecasted discounted cash flows.
Should an impairment in value be indicated, the carrying value of intangible
assets will be adjusted, based on estimates of future discounted cash flows
resulting from the use and ultimate disposition of the asset. SFAS No. 144 also
requires assets to be disposed of be reported at the lower of the carrying
amount or the fair value less costs to sell.

Revenue Recognition

The Company is in exploration stage and has not generated any
revenues as of December 31, 2006. The Company will recognize revenues pursuant
to the guidance in Staff Accounting Bulletin (SAB) No. 104,Revenue
Recognition , revenue will be recognized when persuasive evidence of an
arrangement exists, delivery has occurred through an irrevocable transfer of
metals to customers accounts or physical delivery of metals, the price is fixed
or determinable, no obligations remain and collectibility is probable. Under the
terms of certain sales contracts and purchase orders received from customers,
the Company will recognize revenue when the product is in a refined and saleable
form and title passes, which is typically when the product is transferred from
the account of the Company to the account of the customer. Under certain of its
sales agreements, the Company may instruct a third-party refiner to transfer
metal from the Companys account to the customers account; at this point, the
Companys account at the third party refinery is reduced and the purchasers
account is increased by the number of ounces of metal sold. These transfers are
irrevocable and the Company has no further responsibility for the delivery of
the metals. Under other sales agreements, physical conveyance may occur by the
Company arranging for shipment of metal from the third party refinery to the
purchaser. In these cases, revenue is recognized at the point when delivery
occurs and title passes to the purchaser. Sales discounts will be recognized
when the related revenue is recorded. The Company will classify any cash sales
discounts as a reduction in revenue. Sales of metals products sold directly to
smelters will be recorded when title and risk of loss transfer to the smelter at
current spot metals prices. Recorded values will be adjusted monthly until final
settlement. Sales of metal in products tolled, rather than sold to smelters,
will be recorded at contractual amounts when title and risk of loss transfer to
the buyer.

Advertising

The Company follows the policy of charging the costs of
advertising to expenses as incurred. The Company incurred $29,358 of advertising
costs for the year ended December 31, 2006, and there were no advertising costs
incurred for the period from February 9, 2005 (date of inception) to December
31, 2005.

F-15

---

HEMIS CORPORATION(An exploration stage
company)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

Concentrations of Credit Risk

Financial instruments and related items, which potentially
subject the Company to concentrations of credit risk, consist primarily of cash,
cash equivalents and related party receivables. The Company places its cash and
temporary cash investments with credit quality institutions. At times, such
investments may be in excess of the FDIC insurance limit. The Company
periodically reviews its trade receivables in determining its allowance for
doubtful accounts.

New Accounting Pronouncements

In February 2006, the FASB issued SFAS No. 155. Accounting
for certain Hybrid Financial Instruments an amendment of FASB Statements No. 133
and 140, or SFAS No. 155. SFAS No. 155 permits fair value remeasurement for
any hybrid financial instrument that contains an embedded derivative that
otherwise would require bifurcation, clarifies which interest-only strips and
principal-only strips are not subject to the requirements of Statement No. 133,
establishes a requirement to evaluate interests in securitized financial assets
to identify interests that are freestanding derivatives or that are hybrid
financial instruments that contain an embedded derivative requiring bifurcation,
clarifies that concentrations of credit risk in the form of subordination are
not embedded derivatives, and amends SFAS No. 140 to eliminate the prohibition
on a qualifying special purpose entity from holding a derivative financial
instrument that pertains to a beneficial interest other than another derivative
financial instrument. SFAS 155 is effective for all financial instruments
acquired or issued after the beginning of an entitys first fiscal year that
begins after September 15, 2006. The Company does not expect the adoption of
SFAS 155 to have a material impact on its consolidated financial position,
results of operations or cash flows.

In March 2006, the FASB issued FASB Statement No. 156,
Accounting for Servicing of Financial Assets - an amendment to FASB Statement
No. 140. Statement 156 requires that an entity recognize a servicing asset or
servicing liability each time it undertakes an obligation to service a financial
asset by entering into a service contract under certain situations. The new
standard is effective for fiscal years beginning after September 15, 2006. The
adoption of SFAS No.156 did not have a material impact on the Company's
financial position and results of operations.

In July 2006, the FASB issued Interpretation No. 48 (FIN 48).
Accounting for uncertainty in Income Taxes. FIN 48 clarifies the
accounting for Income Taxes by prescribing the minimum recognition threshold a
tax position is required to meet before being recognized in the financial
statements. It also provides guidance on derecognition, measurement,
classification, interest and penalties, accounting in interim periods,
disclosure and transition and clearly scopes income taxes out of SFAS 5,
Accounting for Contingencies.FIN 48 is effective for fiscal years
beginning after December 15, 2006. The Company does not expect the adoption of
SFAS 155 to have a material impact on its consolidated financial position,
results of operations or cash flows.

F-16

---

HEMIS CORPORATION(An exploration stage
company)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

New Accounting Pronouncements (Continued)

In September 2006 the Financial Account Standards Board (the
FASB) issued its Statement of Financial Accounting Standards 157, Fair Value
Measurements. This Statement defines fair value, establishes a framework for
measuring fair value in generally accepted accounting principles (GAAP), and
expands disclosures about fair value measurements. This Statement applies under
other accounting pronouncements that require or permit fair value measurements,
the Board having previously concluded in those accounting pronouncements that
fair value is the relevant measurement attribute. Accordingly, this Statement
does not require any new fair value measurements. However, for some entities,
the application of this Statement will change current practice. FAS 157
effective date is for fiscal years beginning after November 15, 2007. The
Company does not expect adoption of this standard will have a material impact on
its financial position, operations or cash flows.

In September 2006 the FASB issued its Statement of Financial
Accounting Standards 158 Employers Accounting for Defined Benefit Pension and
Other Postretirement Plans. This Statement improves financial reporting by
requiring an employer to recognize the overfunded or underfunded status of a
defined benefit postretirement plan (other than a multiemployer plan) as an
asset or liability in its statement of financial position and to recognize
changes in that funded status in the year in which the changes occur through
comprehensive income of a business entity or changes in unrestricted net assets
of a not-for-profit organization. This Statement also improves financial
reporting by requiring an employer to measure the funded status of a plan as of
the date of its year-end statement of financial position, with limited
exceptions. The effective date for an employer with publicly traded equity
securities is as of the end of the fiscal year ending after December 15, 2006.
The Company does not expect adoption of this standard will have a material
impact on its financial position, operations or cash flows

In February 2007, the FASB issued SFAS No. 159, The Fair Value
Option for Financial Assets and Financial Liabilities. SFAS 159 permits
entities to choose to measure many financial instruments, and certain other
items, at fair value. SFAS 159 applies to reporting periods beginning after
November 15, 2007. The adoption of SFAS 159 is not expected to have a material
impact on the Companys financial condition or results of operations.

F-17

---

HEMIS CORPORATION (An exploration stage
company)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE B  PROPERTY AND EQUIPMENT

Property and equipment consists of the following at December
31, 2006 and 2005:

2006
    
    
    2005Office Furniture and
      Equipment
    $
    51,238
    
    $
    3,260Computer Equipment
    
    30,880
    
    
    8,289Automobile
    
    6,319
    
    
    -Leasehold improvements
    
    12,135
    
    
    -Total
    
    100,572
    
    
    11,549Accumulated Depreciation
    
    (22,225
    )
    
    (1,392
    )$
    78,347
    
    $
    10,157


Depreciation expense included as a charge to operations was
$20,219, $1,392, and $21,611, respectively, for the year ended December 31,
2006, for the period from February 9, 2005 (date of inception) through December
31, 2005, and for the period from February 9, 2005 (date of inception) through
December 31, 2006.

NOTE C  ADVANCES FROM RELATED PARTIES

During the year ended December 31, 2006 and the period from
February 9, 2005 (date of inception) through December 31, 2005, the Companys
significant shareholders advanced funds to the Company for working capital
purposes. Total amount due to related parties amounted $33,461 at December 31,
2005. The amounts advanced are unsecured, non-interest bearing and have no
specific terms of repayments. These advances were paid in full during the year
ended December 31, 2006.

NOTE D - CAPITAL STOCK

The Company was authorized to issue 75,000,000 shares of common
  stock with par value of $.001 per share. In April 2006, the Company’s
  Board of Directors passed a resolution to increase the Company’s authorized
  shares of common stock from 75,000,000 shares to 150,000,000 shares with a par
  value of $.001 per share. The Company has 20,309,373 and 10,688,683 shares of
  common stock issued and outstanding at December 31, 2006 and December 31, 2005,
  respectively.

On May 1 2005, the Company issued an aggregate of 10,000,000
shares of common stock to founders. The common shares issued were valued at par
value of the Companys common stock.

In May 2005, the Company issued an aggregate of 30,000 shares
of common stock in exchange for cash at $0.55 per share.

In July 2005, the Company issued an aggregate of 500 shares of
common stock in exchange for cash at $0.55 per share. The Company also issued an
aggregate of 100,000 shares of common stock in exchange for services rendered at
$0.55 per share, which approximated the fair value of shares issued during the
period services were rendered. Compensation costs of $55,000 were charged to
operations during the year ended December 31, 2005.

F-18

---

HEMIS CORPORATION (An exploration stage
company)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE D - CAPITAL STOCK (Continued)

In August 2005, the Company issued an aggregate of 458,183
shares of common stock in exchange for cash at $0.55 per share. The Company
incurred commission costs of $25,200 in connection with the issuance of these
common shares.

In September 2005, the Company issued an aggregate of 100,000
shares of common stock in exchange for services rendered at $0.55 per share,
which approximated the fair value of shares issued during the period services
were rendered. Compensation costs of $55,000 were charged to operations during
the year ended December 31, 2005.

In December 2005, the Company received proceeds of $430,625,
net of $7,150 of commission, for 795,957 shares of common stock subscribed at
$0.55 per share. The common shares subscribed were issued to subscribers in the
first quarter of 2006.

In January 2006, the Company issued an aggregate of 593,638
shares of common stock in exchange for common stock subscribed in December 2005.

In February 2006, the Company issued an aggregate of 274,795
shares of common stock at $0.55 per share in exchange for $93,125 of common
stock subscribed in December 2005 and proceeds of $48,012, net of costs and
fees.

In March 2006, the Company issued an aggregate of 164,337
shares of common stock at $0.55 per share in exchange for $11,000 of common
stock subscribed in December 2005 and proceeds of $68,549, net of costs and
fees.

In May 2006, the Company issued an aggregate of 480,000 shares
of common stock at $0.55 per share in exchange for proceeds of $240,625, net of
costs and fees, and stock subscription receivable in the amount of $3,300. The
Company incurred commission costs of $20,075 in connection with the issuance of
these common shares.

In May 2006, the Company issued an aggregate of 25,000 shares
of common stock at $0.75 per share in exchange for proceeds of $16,875, net of
costs and fees. The Company incurred commission costs of $1,875 in connection
with the issuance of these common shares.

In May 2006, the Company issued an aggregate of 1,070,880
shares of common stock in exchange for services rendered at $0.55 per share,
which approximated the fair value of shares issued during the period services
were rendered. Compensation costs of $588,984 were charged to operations during
the year ended December 31, 2006.

In June 2006, the Company issued an aggregate of 308,772 shares
of common stock at $0.55 per share in exchange for proceeds of $164,325, net of
costs and fees. The Company incurred commission costs of $5,500 in connection
with the issuance of these common shares.

In June 2006, the Company issued an aggregate of 150,000 shares
of common stock at $0.75 per share in exchange for proceeds of $102,379, net of
costs and fees. The Company incurred commission costs of $10,121 in connection
with the issuance of these common shares.

F-19

---

HEMIS CORPORATION (An exploration stage
company)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE D - CAPITAL STOCK (Continued)

In June 2006, the Company issued an aggregate of 50,000 shares
of common stock in exchange for services rendered at $0.55 per share, which
approximated the fair value of shares issued during the period services were
rendered. Compensation costs of $27,500 were charged to operations during the
year ended December 31, 2006.

In June 2006, the Company issued an aggregate of 125,000 shares
of common stock in exchange for services rendered at $0.75 per share, which
approximated the fair value of shares issued during the period services were
rendered. Compensation costs of $93,750 were charged to operations during the
year ended December 31, 2006.

In August 2006, the Company issued an aggregate of 1,033,730
shares of common stock at $0.75 per share in exchange for proceeds of $700,854
net of costs and fees. The Company incurred commission costs of $74,444 in
connection with the issuance of these common shares.

In August 2006, the Company issued an aggregate of 5,000 shares
of common stock in exchange for services rendered at $0.75 per share, which
approximated the fair value of shares issued during the period services were
rendered. Compensation costs of $3,750 were charged to operations during the
year ended December 31, 2006.

In September 2006, the Company issued an aggregate of 961,428
shares of common stock at $0.75 per share in exchange for proceeds of $625,050
net of costs and fees. The Company incurred commission costs of $96,021 in
connection with the issuance of these common shares.

In October 2006, the Company issued an aggregate of 244,000
shares of common stock at $0.75 per share in exchange for proceeds of $167,775
net of costs and fees. The Company incurred commission costs of $15,225 in
connection with the issuance of these common shares.

In October 2006, the Company issued an aggregate of 1,500,000
shares of common stock in exchange for services rendered at $0.75 per share,
which approximated the fair value of shares issued during the period services
were rendered. Compensation costs of $1,125,000 were charged to operations
during the year ended December 31, 2006.

In October 2006, the Company issued 25,000 shares of common
stock in exchange for exploration expenditures pursuant to an agreement dated
September 7, 2006 (Note I). The shares issued were valued at $0.75 per share.
Exploration expenditures of $18,750 were charged to operations during the year
ended December 31, 2006.

In October 2006, the Company issued an aggregate of 357,420
shares of common stock at $0.95 per share in exchange for proceeds of $312,320
net of costs and fees. The Company incurred commission costs of $27,229 in
connection with the issuance of these common shares.

In October 2006, the Company issued an aggregate of 25,000
shares of common stock in exchange for exploration expenditures pursuant to an
agreement dated June 19, 2006 (Note I). The shares issued were valued at $0.95
per share. Exploration expenditures of $23,750 were charged to operations during
the year ended December 31, 2006.

F-20

---

HEMIS CORPORATION (An exploration stage
company)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE D - CAPITAL STOCK (Continued)

In November 2006, the Company issued an aggregate of 52,614
shares of common stock at $0.75 per share in exchange for proceeds of $31,960
net of costs and fees. The Company incurred commission costs of $7,500 in
connection with the issuance of these common shares.

In November 2006, the Company issued an aggregate of 295,528
shares of common stock at $0.95 per share in exchange for proceeds of $260,608
net of costs and fees. The Company incurred commission costs of $20,143 in
connection with the issuance of these common shares.

In November 2006, the Company issued an aggregate of 1,310,180
shares of common stock in exchange for services rendered at approximately $0.95
per share, which approximated the fair value of shares issued during the period
services were rendered. Compensation costs of $1,244,245 were charged to
operations during the year ended December 31, 2006.

In December 2006, the Company issued an aggregate of 15,789
shares of common stock at $0.95 per share in exchange for proceeds of $13,500,
net of costs and fees. The Company incurred commission costs of $1,500 in
connection with the issuance of these common shares.

In December 2006, the Company issued an aggregate of 549,150
shares of common stock at $1.20 per share in exchange for proceeds of $611,600,
net of costs and fees. The Company incurred commission costs of $12,400 in
connection with the issuance of these common shares.

In December 2006, the Company issued an aggregate of 3,429
shares of common stock in exchange for services rendered at $1.20 per share,
which approximated the fair value of shares issued during the period services
were rendered. Compensation costs of $4,111 were charged to operations during
the year ended December 31, 2006.

During the year ended December 31, 2006, the Company received
additional net proceeds in the amount of $1,330,938 for 1,158,332 shares of
common stock subscribed. These shares have not been issued as of December 31,
2006 and are accounted for as common stock subscription payable.

F-21

---

HEMIS CORPORATION (An exploration stage
company)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE E - STOCK OPTIONS

The following table summarizes the changes in options
outstanding and the related prices for the shares of the Company's common stock
issued to its officers and consultants.

Options Outstanding
      Options ExercisableWeightedRemaining
      Weighted
      
      WeightedExercise
      Number
      Contractual
      Average
      Number
      AveragePrices
      Outstanding
      Life (Years)
      Exercise Price
      Exercisable
      Exercise Price$ 0.001
      10,000,000
      3.33
      $ 0.001
      10,000,000
      $ 0.001$ 1.00
      50,000
      3.92
      $
        1.00
      50,000
      $
        1.0010,050,000
      3.23
      $ 0.01
      10,050,000
      $ 0.01


Transactions involving stock options issued to employees are
summarized as follows:

WeightedAverageNumber of
    
    
    Price PerShares
    
    
    ShareBalance at February 9, 2005 (date of
    
    -
    
    $
    -Granted
    
    10,000,000
    
    
    0.001Exercised
    
    -
    
    
    -Cancelled or expired
    
    -
    
    
    -Outstanding at December 31, 2005
    
    10,000,000
    
    $
    0.001Granted
    
    50,000
    
    
    1.00Exercised
    
    -
    
    
    -Cancelled or expired
    
    -
    
    
    -Outstanding at December 31, 2006
    
    10,050,000
    
    $
    0.01


F-22

---

HEMIS CORPORATION (An exploration stage
company)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE E - STOCK OPTIONS (Continued)

In May 2005, the Company granted an aggregate of 10,000,000 stock
  options to its officers in exchange for services provided and to be provided
  over the period of 5 years pursuant to the option agreements. At that point
  in time, the Company concluded that these officers were not employees as defined
  under Statements of Financial Accounting Standards (SFAS)123 R: Share Based
  Payments and under the definition of common law and Internal Revenue Service
  regulations, Revenue Rulings 57-246, 68-597 and 87-41, and the Internal Revenue
  Services' Employment Tax Handbook. The exercise prices of the stock options
  granted were at par. The options vested in full at grant and are exercisable
  anytime within 5 years from the grant date. The options granted are intended
  to retain the services of these officers over a five-year service period, and
  the Company does not intend to issue more options to these officers until the
  5-year service term expires in year 2010, at which time the performance will
  be reviewed and additional rewards will be determined. The Company accounted
  for the stock options at the fair market value of the Company's common stock.
  Deferred compensation cost in the amount of $5,500,000 was recorded as a reduction
  of stockholders' equity and will be amortized over the 5-year period of services
  to be provided by the officers. Compensation expense of $1,100,000 and $733,333
  was charged to operations for the year ended December 31, 2006 and for the period
  from February 9, 2005 (date of inception) to December 31, 2005, respectively.
  Should the officers terminate the service agreements within 5 years, the Company
  has no rights to cancel the options issued and will charged all unamortized
  costs to operations at that time. The terms of these options were required by
  the officers at the time the option and service agreements were entered into,
  and the Company determined that it was necessary to agree to these terms in
  order to retain the services of the officers. Subsequent to the date of financial
  statements, the officers exercised the stock options in exchange for an aggregate
  of 10,000,000 shares of the Company’s common stock (Note L).

In January 2006, the Company granted an aggregate of 50,000
stock options to a consultant in exchange for services rendered. The estimated
value of the stock options vested during the year ended December 31, 2006 was
determined using the Black-Scholes option pricing model and the following
assumptions: expected option life of 5 years, a risk free interest rate of
5.125%, a dividend yield of 0% and volatility of 208%. Compensation expense of
$26,845 was charged to operations during the year ended December 31, 2006.

F-23

---

HEMIS CORPORATION (An exploration stage
company)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE F - PUT AGREEMENT

In October 2006 the Company entered into put agreements with
certain shareholders granting the shareholders an option to put an aggregate of
2,311,346 shares of common stock to the Company, when the Company became
eligible for trading on the NASDAQ-operated Over-the-Counter Bulletin Board
(OTCBB), for a total price of $1,503,382.

The Company accounted for the termination agreement in
accordance with Statement of Financial Accounting Standards No. 150, Accounting
for Certain Financial Instruments with Characteristics of both Liabilities and
Equity (SFAS 150), and classified the fair value attributable to the put option
as an accrued liability, as the put agreement embodies an obligation to
repurchase the Company's equity shares which would require the Company to settle
the agreement by transferring its assets. The put option was initially measured
at its fair value of $949,392 as of the date of the agreement.

Assumptions used to estimate the fair value of the put option
are as follows:

Risk-free interest rate
    4.50
    %Dividend yield
    -Volatility
    165
    %0.35Time to expiration
    year


Equity was reduced by the original value of the shares, being
  $515,852, with the remaining value of $433,540 being charged to other expense.
  The fair value of the put option is determined each reporting period with changes
  in the fair value recorded as other income or expense. At December 31, 2006,
  the fair value of the put option was $636,167; accordingly a gain of $313,224
  in connection with the valuation adjustment on the put agreement was recorded
  at December 31, 2006. Subsequent to the date of the financial statements, all
  the put shares were purchased back by the Company at the price agreed upon (Note
  L).

F-24

---

HEMIS CORPORATION (An exploration stage
company)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE G  INCOME TAXES

Statement of Financial Accounting Standards No. 109 requires
the recognition of deferred tax liabilities and assets for the expected future
tax consequences of events that have been included in the financial statement or
tax returns. Under this method, deferred tax liabilities and assets are
determined based on the difference between financial statements and tax bases of
assets and liabilities using enacted tax rates in effect for the year in which
the differences are expected to reverse. Temporary differences between income
reported for financial reporting purposes and income tax purposes are
insignificant. For income tax reporting purposes, the Companys aggregate unused
net operating losses approximate $8,065,000 which expires through 2026, subject
to limitations of Section 382 of the Internal Revenue Code, as amended. The
deferred tax asset related to the carryforward is approximately $2,742,000. The
Company has provided a valuation reserve against the full amount of the net
operating loss benefit, because in the opinion of management based upon the
earning history of the Company; it is more likely than not that the benefits
will not be realized. Components of deferred tax assets as of December 31, 2006
are as follows:

Non current:Net operating loss
      carryforward
    $
    2,742,000Valuation allowance
    
    (2,742,000
    )Net deferred tax asset
    $
    -


NOTE H  LOSSES PER COMMON SHARE

The following table presents the computation of basic and
diluted loss per share:

|                                           |   | For the year |   |  | For the period from |  
|------------------------------------------ | - | ------------ | - |  | ------------------- | -
|                                           |   | December 31, |   |  | inception) through  |  
|                                           |   | 2006         |   |  | December 31,        |  
|Net loss available for common shareholders | $ | (6,828,739   | ) |  | (1,237,203          | )
|Basic and fully diluted loss per share     | $ | (0.47        | ) |  | (0.16               | )
|Weighted average common shares             |   | 14,455,265   |   |  | 7,891,803           |  

At times the Company did not issue shares immediately when
subscribed because the Company was conducting a review on the investors and to
ensure that all the shares were paid for. The Company accounted for these shares
as common stock subscription payable, until the completion of the review and the
shares are actually issued. These common shares subscribed are entitled to
participate in dividends. In accordance with Statements of Financial Accounting
Standards (SFAS)128: Earnings per Share, the Company has included the common
shares subscribed in the computation of basic loss per share.

During the year ended December 31, 2006 and the period from
February 9, 2005 (date of inception) to December 31, 2005, common stock
equivalents are not considered in the calculation of the weighted average number
of common shares outstanding because they would be anti-dilutive, thereby
decreasing the net loss per common share.

F-25

---

HEMIS CORPORATION (An exploration stage
company)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE I  COMMITMENTS AND CONTINGENCIES

Management and Consulting Agreements

The Company has management and consulting agreements with its
  President and Chief Executive Officer, Chief Financial Officer and Secretary,
  Chief Operating Officer and Geologist, and various outside contractors, certain
  of whom are also Company’s significant shareholders. The Agreements provide
  terms of compensation and may be terminated at any time with 14 days notice
  been delivered by the party.

Advisory Board Agreements

The Company has Advisory Board Agreements with two Board
members. The Agreements provided a term of two years, and may be terminated at
any time with 14 days notice been delivered by the party.

Acquisition of Mining Rights

On December 20, 2005 the Company entered into a Memo of
Understanding, and subsequently a formal option agreement on June 19, 2006 with
Corex Gold Corp.(Corex) to acquire Santa Rita Claim property located in
Zacatecas, Mexico. The option agreement had no initial costs, and the Company
has the right to acquire a 49% interest in the Santa Rita property upon
incurring exploration expenses as agreed upon. Pursuant to the agreement, the
Company committed to exploration expenditures of minimum $200,000 over the first
12 months at which time the Company shall have the rights to withdraw, without
earning any interest. The Company will also issue 25,000 treasury shares to
Corex upon commencement of Phase 1 of the agreement. The 25,000 shares were
issued to Corex in October 2006 (Note D). As of December 31, 2005, the Company
has incurred and charged to operations, $22,519 of expenditures pursuant to this
agreement. On the 1st anniversary of the agreement, the Company would commit to
exploration expenditures of minimum $300,000 over additional 12 months at which
the Company will issue 75,000 treasury shares to Corex. On the 2ndanniversary,
Corex would commit to exploration expenditures of minimum $450,000 over
additional 12 months at which time the Company will issue 100,000 treasury
shares to Corex. The Company may terminate the option agreement at any time
hereafter without further obligation or liability to Corex except respecting
payments, which have not at such time made to Corex in relation to milestones
that have been achieved prior to the time of termination. During the year ended
December 31, 2006, the Company incurred and charged to operations additional
exploration expenditures in the amount of $31,177.

F-26

---

HEMIS CORPORATION (An exploration stage
company)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE I  COMMITMENTS AND CONTINGENCIES (Continued)

On December 31, 2005, the Companys wholly owned subsidiary,
Hemis Gold S.A. de C.V., entered into an option agreement to acquire a 67.5%
interest in the El Tigre located in the Municipality of Sahuaripa, Sonora,
Mexico. The option agreement had no initial costs. If Company incurred $200,000
of exploration expenditures within 548 days from the date of the agreement, the
Company will acquire a 67.5 % interest in the El Tigre Concession and the
Porvenir Concession mineral claims. As of December 31, 2006, the Company has not
incurred expenditures pursuant to this agreement. During the year ended December
31, 2006, the Company incurred and charged to operations additional exploration
expenditures in the amount of $140,227.

On September 7, 2006 the Company entered into an option
agreement to acquire a 75% interest in the mineral rights of the La Centela
property. The agreement was amended on October 4, 2006. The option consists of
two parts; an option for the first 70% and an option for a further 5%. To
acquire the first 70% of the mining rights the Company is required to pay cash
consideration of $500,000 and issue 500,000 common shares to the mineral rights
owner, and spend at least $2,000,000 in exploration expenses, all prior to
October 5, 2010 pursuant to a scheduled payment plan described below, and make a
final share payment of 1 share for every ounce of gold the Company identifies,
if the Company identify any gold, to a maximum of 10,000,000 shares. If the
Company exercises the option to acquire 75% of the mineral rights, the Company
may then acquire a further 5% of the total claim by making a cash payment of
$1,000,000.

To exercise the first 70% of the mining rights, the Company
must deliver the following stock and payments to the mining concession owners,
and make the following exploration expenditures:

- pay $25,000 and issue 25,000 common shares by October 14, 2006 (Note D)
- by October 5, 2007, pay an additional $50,000, issue 50,000 more common
  shares and spend $200,000 on exploration expenses;
- by October 5, 2008, pay an additional $75,000, issue 75,000 more common
  shares and spend $200,000 on additional exploration expenses;
- by October 5, 2009, pay an additional $100,000, issue 100,000 more common
  shares and spend an additional $200,000 on exploration expenses;
- by October 5, 2010, pay an additional $250,000, issue 250,000 more common
  shares and spend an additional $1.400.000 on exploration expenses;
- issuance of one common shares for every once of gold the Company estimates
  and identify, up to a maximum of 10,000,000 shares, if the Company can
  identify any gold at the time of making our final payments to exercise the
  option.

F-27

---

HEMIS CORPORATION (An exploration stage
company)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE I  COMMITMENTS AND CONTINGENCIES (Continued)

Litigation

As of December 31, 2006, the Company is not a party to ant
legal proceedings, nor are there any judgments against the Company. However, the
Company may be subject to legal proceedings and claims, which arise in the
ordinary course of its business. Although occasional adverse decisions or
settlements may occur, the Company believes that the final disposition of such
matters should not have a material adverse effect on its financial position,
results of operations or liquidity.

Option Agreement

On May 15, 2005, the Company entered into an Option Agreement
  with its Chief Geologist. Pursuant to the Option Agreement, the Company agreed
  to issue 1,000,000 stock options to the Chief Geologist. The exercise price
  of the options is $0.001 per share, and shall expire 60 days after the termination
  of the consulting agreement between the Company and the Chief Geologist. The
  grant and vesting of the stock options is contingent upon the Company acquiring
  rights to a property on which a gold deposit of at least 500,000 ounces of gold
  is proven. As of December 31, 2006, the Company has not acquired rights to properties
  as defined and the stock options have not been granted or vested.

NOTE J  DISCONTINUED OPERATIONS

In June 2006, the Companys Board of Directors authorized to
spin off one of its wholly-owned subsidiary, Aurum Financial Services, Inc.
(Aurum), by issuing to the Companys shareholders as of July 1, 2006 (Record
Date) one share of Aurum for every 10 shares of the Companys common stock
owned by the shareholders. Effective July 1, 2006, Aurum is formally spun off
and is no longer a subsidiary of the Company. Aurum was incorporated in June
2006, and had no operations prior to the second quarter of 2006. In accordance
with APB Opinion No. 30, Reporting the Results of Operations -- Reporting the
Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions, the financial statements reflect
the operating results and balance sheet items of the discontinued operations,
Aurum, separately from continuing operations.

Aurum had no assets at December 31, 2006. During the second
quarter of 2006, the Company transferred $50,023 of cash to Aurum for working
capital purposes. Aurum incurred $22,128 of office expenses during the quarter
ended June 30, 2006. Prior to the spinoff, Aurum had $10,000 of prepaid expanses
and $17,895 of cash in bank.

The following summarizes the disposition of the Aurum:

Net assets disposed of
    $
      (27,895
    )Net loss on disposal of Aurum
    $
      (27,895
    )


F-28

---

HEMIS CORPORATION (An exploration stage
company)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE J  DISCONTINUED OPERATIONS (Continued)

Operating results for the discontinued operations for the year
ended December 31, 2006, for the period from February 9, 2005 (date of
inception) through December 31, 2005, and for the period from February 9, 2005
(date of inception) through December 31, 2006 were:

|                                        |   |          |   |   | For the     |  |   | For the     |  
|--------------------------------------- | - | -------- | - | - | ----------- |  | - | ----------- | -
|                                        |   |          |   |   | period from |  |   | period from |  
|                                        |   |          |   |   | February 9, |  |   | February 9, |  
|                                        |   |          |   |   | 2005        |  |   | 2005        |  
|                                        |   | For the  |   |   | (date of    |  |   | (date of    |  
|                                        |   | year     |   |   | inception)  |  |   | inception)  |  
|                                        |   | ended    |   |   | through     |  |   | through     |  
|                                        |   | December |   |   | December    |  |   | December    |  
|                                        |   | 2006     |   |   | 2005        |  |   | 2006,       |  
|Revenue                                 | $ | -        |   | $ | -           |  | $ | -           |  
|Expenses                                |   | 22,128   |   |   | -           |  |   | 22,128      |  
|Net (loss) before tax                   |   | (22,128  | ) |   | -           |  |   | (22,128     | )
|Income tax provision (benefit)          |   | -        |   |   | -           |  |   | -           |  
|Net loss                                |   | (22,128  | ) |   | -           |  |   | (22,128     | )
|                                        |   |          |   |   |             |  |   |             |  
|Net loss on the disposition of Aurum,   |   | (27,895  | ) |   | -           |  |   | (27,895     | )
|Income tax provision (benefit)          |   | -        |   |   | -           |  |   | -           |  
|Loss on disposition of Aurum            |   | (27,895  | ) |   | -           |  |   | (27,895     | )
|Loss on discontinued operations, net of | $ | (50,023  | ) | $ | -           |  | $ | (50,023     | )

There were no depreciation and amortization expense included in
expenses of discontinued operations for the year ended December 31, 2006, for
the period from February 9, 2005 (date of inception) through December 31, 2005,
and for the period from February 9, 2005 (date of inception) through December
31, 2006.

Subsequent to the spin-off of Aurum, the Company has agreed to
grant Aurum a loan of $125,000 as business start up costs and to promote their
activities. As of December 31, 2006, the Company has advanced $95,000 to Aurum.
The loan is non-interest bearing and is due no later than December 31, 2007. The
Companys 3 directors have voting controls of Aurum.

In September 2006, the Companys Board of Directors authorized
to spin off one of its wholly-owned subsidiary, Stratos Gold Corporation
(Stratos), by issuing to the Companys shareholders as of September 1, 2006
(Record Date) one share of Stratos for every 50 shares of the Companys common
stock owned by the shareholders. Effective September 1, 2006, Stratos is
formally spun off and is no longer a subsidiary of the Company. Stratos had no
operations prior to the spin-off in September 2006.

F-29

---

HEMIS CORPORATION(An exploration stage
company)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE J  DISCONTINUED OPERATIONS (Continued)

In December 2006, the Companys Board of Directors authorized
to spin off Tecton Corporation (Tecton), by issuing to the Companys
shareholders as of December 1, 2006 (Record Date) one share of Tecton for
every 100 shares of the Companys common stock owned by the shareholders.
Effective December 1, 2006, Tecton is formally spun off and is no longer a
subsidiary of the Company. Tecton had no operations prior to the spin-off.

NOTE K  GOING CONCERN MATTERS

The accompanying financial statements have been prepared on a
going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. As shown in the
accompanying consolidated financial statements for the period February 9, 2005
(date of inception) to December 31, 2006, the Company accumulated losses of
$8,065,942. The Companys current assets exceeded its current liabilities by
$1,818,252. However, the Company has generated no revenues to date, has incurred
operating expenses and has sustained losses. These factors among others may
indicate that the Company will be unable to continue as a going concern for a
reasonable period of time.

The Company's existence is dependent upon management's ability
to develop profitable operations and resolve its liquidity problems. Management
anticipates the Company will attain profitable status and improve its liquidity
through the strategic acquisition of businesses and continued business
development, and additional equity investment in the Company. The accompanying
consolidated financial statements do not include any adjustments that might
result should the Company be unable to continue as a going concern.

In order to improve the Companys liquidity, the Company is
actively pursuing additional equity financing through discussions with
investment bankers and private investors. There can be no assurance the Company
will be successful in its effort to secure additional equity financing.

If operations and cash flows continue to improve through these
efforts, management believes that the Company can continue to operate. However,
no assurance can be given that managements actions will result in profitable
operations or the resolution of its liquidity problems.

NOTE L  SUBSEQUENT EVENTS

On January 8, 2007 the Company entered into an agreement with
Aspen Exploration Corporation (Aspen) pursuant to which Aspen has assigned
offshore prospecting permit applications in an area of the Cook Inlet, Alaska to
the Company.

On January 12, 2007, the Companys Board of Directors
authorized to spin off one of its wholly-owned subsidiary, Sirius Corporation
(Sirius), by issuing to the Companys shareholders as of January 12, 2007
(Record Date) one share of Sirius for every 100 shares of the Companys common
stock owned by the shareholders. Effective January 12, 2006, Sirius is formally
spun off and is no longer a subsidiary of the Company. Sirius had no operations
prior to the spin-off.

F-30

---

HEMIS CORPORATION(An exploration stage
company)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE L  SUBSEQUENT EVENTS (Continued)

On January 12, 2007, the Companys Board of Directors
authorized to spin off one of its wholly-owned subsidiary, Allegra Corporation
(Allegra), by issuing to the Companys shareholders as of January 12, 2007
(Record Date) one share of Allegra for every 100 shares of the Companys
common stock owned by the shareholders. Effective January 12, 2007, Allegra is
formally spun off and is no longer a subsidiary of the Company. Allegra had no
operations prior to the spin-off.

On January 15, 2007 two officers of the Company, exercised options
  to purchase 10,000,000 common shares of the Companys common stock , at
  an exercise price of $0.001 per share (Note E).

Additionally, from January 1, 2007 through January 16, 2007,
  the Company issued an aggregate of 1,274,053 shares of common stock in exchange
  for cash. The Company also issued an aggregate of 42,500 shares of common stock
  in exchange for services.

On January 17, 2007 the Company declared a stock dividend in
  the amount of one common share of the Company to be issued for every one common
  share of the Company issued as of the Record Date of January 17, 2007. The aggregate
  number of common shares issued as a stock dividend was 31,675,926. This included
  50,000 shares of common stock that should have been canceled prior to the date
  of dividend. The Company corrected this error and canceled the shares in March
  2007.

On January 29, 2007, the Company entered into a letter
agreement (the 2007 Option Agreement) with Corex Gold Corp. (Corex Gold).
The 2007 Option Agreement replaces the option agreement dated June 19, 2006 that
the Company entered into with Corex Gold (Note I), whereby , whereby the
Companys interest in the Santa Rita is changed to 49% interest whatever Corex
Gold holds in Santa Rita property as opposed to a 49% interest in the Santa Rita
property itself.

On February 13, 2007, pursuant to put agreements entered into
  in October 2006 (Note F), the Company purchased an aggregate of 2,311,346 shares
  of common stock from certain shareholders for a total price of $1,503,382.

In February and March 2007, the Company entered into several
  consulting agreements. The consulting agreements generally provide a term of
  one years, and may be terminated with notice been delivered by the party involved.

On March 13, 2007 the Company entered into an option agreement
  with Stacs GmbH (“Stacs”) whereby Stacs has agreed to grant Hemis
  the exclusive option to acquire the 100% interest in the exploration licenses
  and mineral claims comprising the Wolfe Creek and Covenant properties located
  in British Columbia, Canada (the “Property”) subject to a 3% royalty.

Subsequent to January 17, 2007 (stock dividend date), the Company
  issued an aggregate of 574,244 shares of common stock in exchange for cash.
  The Company also issued an aggregate of 8,731,136 shares of common stock in
  exchange for services.

F-31

---

Item 8. Changes In and Disagreements with Accountants on
Accountingand Financial Disclosure

The accounting firm of Russell Bedford Stefanou Mirchandani
LLP, Certified Public Accountants, audited our consolidated financial statements
for the period ending December 31, 2006. Since inception, we have had no changes
in or disagreements with our accountants.

Item 8A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15 under the Exchange Act, we carried
out an evaluation of the effectiveness of the design and operation of our
disclosure controls and procedures as of December 31, 2006, being the date of
our fiscal year end covered by this Annual Report. This evaluation was carried
out under the supervision and with the participation of our Chief Executive
Officer and Chief Financial Officer. Upon that evaluation, our Chief Executive
Officer and Chief Financial Officer concluded that our disclosure controls and
procedures are effective in timely alerting management to material information
relating to us required to be included in our periodic SEC filings.

Disclosure controls and procedures are controls and other
procedures that are designed to ensure that information required to be disclosed
in our reports filed or submitted under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission's rules and forms.

During our fiscal year ended December 31, 2006, there were no
changes in our internal control over financial reporting that have materially
affected, or are reasonably likely to affect, our internal control over
financial reporting.

The term "internal control over financial reporting" is defined
as a process designed by, or under the supervision of, the registrant's
principal executive and principal financial officers, or persons performing
similar functions, and effected by the registrant's board of directors,
management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles and includes those policies and procedures that:

| | (1) | Pertain to the maintenance of records that in reasonable
      detail accurately and fairly reflect the transactions and dispositions of
      the assets of the registrant;                                                                                                                                                                                                   
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                
| | (2) | Provide reasonable assurance that transactions are
      recorded as necessary to permit preparation of financial statements in
      accordance with generally accepted accounting principles, and that
      receipts and expenditures of the registrant are being made only in
      accordance with authorizations of management and directors of the
      registrant; and
| |     |                                                                                                                                                                                                                                                                                                                                                                                
| | (3) | Provide reasonable assurance regarding prevention or
      timely detection of unauthorized acquisition, use or disposition of the
      registrant's assets that could have a material effect on the financial
      statements.                                                                                                                                              

46

---

Item 8B. Other Information.

None.

PART III

Item 9. Directors, Executive Officers, Promoters and Control
  Persons;Compliance with Section 16(a) of the Exchange
  Act.

Directors and Officers

Our bylaws allow the number of directors to be fixed by the
Board of Directors. Our Board of Directors has fixed the number of directors at
four.

Our current directors and officers are as follows:

|Name                       | Age | Position                                           
|-------------------------- | --- | ---------------------------------------------------
|Dr. Norman Meier, PhD, MBA | 32  | Director,
      President, Chief Executive Officer,
|Bruno Weiss                | 53  | Director, Chief Financial
      Officer, Secretary 
|Dr. Douglas Oliver, PhD    | 56  | Director, Vice
      President of Operations       
|Richard Hamelin            | 52  | Director                                           

The directors will serve as directors until our next
shareholder meeting or until a successor is elected who accepts the position.
Officers hold their positions at the will of the Board of Directors. There are
no arrangements, agreements or understandings between non-management
shareholders and management under which non-management shareholders may directly
or indirectly participate in or influence the management of our affairs.

Dr. Norman Meier, Director, President and Chief Executive
Officer

Norman Meier is a founder of Hemis and has been a director
since our inception in February 2005 and President and Chief Executive Officer
since May 1, 2005. From May 2004 to May 2005 Dr. Meier was the founder and
President of LEAP Institute LLC, a company in the business of providing
financial services and investment advice to private investors and companies.
>From November 2002 to April 2004 he worked as Manager Global Sales Support for
Man Investments, Switzerland, where he managed a global sales team in the hedge
fund industry to raise money from financial institutions, bank and brokers
around the world. From April 2002 to October 2002 Dr. Meier worked as an
Investment Advisor at Canaccord Capital in Vancouver, British Columbia, Canada,
where he established and managed portfolios, integrated risk management
strategies, evaluated performance models for existing portfolios, provided
investment advice and traded in securities. From 1995 to 2001 he worked at AWD
Independent Financial Services, Switzerland, initially as a financial advisor,
and later as a team manager. Norman Meier has a PhD in Human Behavior, an MBA
and a BA, all from Newport University in Switzerland. He holds two designations
from the Canadian Securities Institute: a Canadian Investment Manager
Designation and a Derivatives Market Specialist Designation. He also holds a
Financial Planning Designation from AWD Switzerland.

47

---

Bruno Weiss, Director and Chief Financial Officer

Bruno Weiss has been a director of Hemis since our inception in
February 2005. He was appointed as Chief Financial Officer in May 2005. Mr.
Weiss has worked in the financial field for over 30 years. He has extensive
experience in foreign exchange trading and management and in marketing hedge
funds. From July 2002 to the present, Mr. Weiss has been the Managing Director
and Hedge Fund Consultant for Glayva Investment GmbH, Switzerland, where he
marketed different classes of hedge funds until February 2006. Glavya Investment
GmbH changed its name in 2005 to Hemis Switzerland GmbH, and since the
incorporation of Hemis Corp. in February 2005, it has been principally involved
in providing consulting services to us or in acting as our agent to allow us to
carry on business in Switzerland. From October 1992 to June 2002 Mr. Weiss was
the Managing Director, Investment Manager of Foreign Exchange Portfolios at
Weiss and Partners, Currency Investment and Consulting in Switzerland. There he
acquired and managed a portfolio for Swiss and European investors, project
managed an independent multi-manager group in foreign exchange, the "Swiss Forex
Multimanagers", and he developed an implemented in house foreign exchange funds
in cooperation with a Geneva private bank and a Luxemburg SICAV fund for a Swiss
national bank. From 1988 to 1992 Mr. Weiss was the Strategic Foreign Exchange
Manager for several banks, including the Clariden Bank in Zurich, Switzerland.
>From 1981 to 1987 he was the Head of Foreign Exchange Department and Treasurer
of UBS, Zurich Switzerland and Tokyo, Japan. On October 12, 2006, Mr. Weiss was
appointed to act as a director on the board of UC Resources Ltd., a company for
which Richard Hamelin, our director, acts as Chief Executive Officer and
President,

Dr. Douglas Oliver, Director and Vice President of
Operations

On January 10, 2006, Hemis Corporation hired Dr. Douglas Oliver
as a Geologist and appointed him as a director on March 21, 2006. On January 1,
2007 we appointed Dr. Oliver as Vice President of Operations. For the past five
years he has taught Geology at Tarrant County College and the University of
Texas at Arlington. Dr. Oliver is currently on the research faculty at the
University of Arkansas. Dr. Oliver also has 12 years of experience in corporate
mineral exploration focusing primarily on the western United States and Alaska.
He worked as an Exploration Geologist for Occidental Minerals Corporation of
Lakewood, Colorado, from 1977 to 1983 where he managed precious metal
exploration projects in Nevada, Utah and Idaho. He also supervised a molybdenum
porphyry exploration project in Utah. From 1983 to 1986 Dr. Oliver worked as the
Senior Exploration Geologist for Tenneco Minerals in Anchorage, Alaska. There he
was the project manager for a volcanogenic massive sulfide reconnaissance
program in southeast Alaska and a disseminated gold project in northeastern
Nevada. Dr. Oliver also brings eight years of international and domestic
geological and management consulting experience to Hemis. Dr. Oliver has
provided geologic and economic evaluations of precious metal exploration
projects in Honduras, Nevada and the Yukon, diamond deposits in Colorado and has
consulted for the State of Alaska Attorney General's office providing geologic
and economic evaluations of a volcanogenic massive sulfide deposit in
south-central Alaska. Dr. Oliver holds a PhD from Southern Methodist University
in Dallas, Texas, and an MBA from The University of Texas.

Richard Hamelin, Director

On August 20, 2006, we appointed Richard Hamelin as a director
to serve on our Board of Directors. Mr. Hamelins mining career began with Kidd
Creek Mines Ltd. in Timmons Ontario, in 1974. He worked for 12 years in various
departments including production, research and development and engineering. He
has worked in financial services since

48

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1987. Mr. Hamelins career progressed in various capacities
with a variety of firms and culminated as Sr. Vice-President and Director of
Canaccord Capital Corporation where he worked until 2001. From 2001 to February
2004, he worked as an independent businessman in identifying and financing
mining companies. From February 2004 to May 2005, Mr. Hamelin was Executive
Vice-President of ECU Silver, a mining company listed on the TSX Venture
Exchange in Canada. Since June 2005 to now, Mr. Hamelin has been the President
and Chief Executive Officer of UC Resources Ltd., a company listed on the TSX
Venture Exchange with projects in Mexico. Mr. Hamelin currently serves on the
board of two publicly listed companies: UC Resources Ltd. and Spider Resources
Inc., a TSX Venture Exchange listed company, of which he is also Chief Financial
Officer.

Other than as disclosed above, our directors currently do not
serve on the boards of other public companies.

Conflicts

Dr. Meier, Mr. Weiss, and Dr. Oliver also serve as Directors
and Executive Officers for Tecton Corporation, Aurum Corporation, Stratos Gold
Corporation, Allegra Corporation, and Sirius Corporation. These are all private
companies which are former subsidiaries of Hemis, before being spun off as
independent companies in 2006 and 2007. On April 2, 2007, Tecton submitted a
registration statement on Form SB-2 registering 33,408,000 common shares with
the SEC. This has not yet been declared effective by the SEC, however, once it
is Tecton will be obliged to file annual, and quarterly reports with the SEC.

Whilst all these companies are mining companies, they all have
a different geographical focus and explore for different types of minerals. In
this way we do not envisage any conflicts of interest arising between us and
Tecton, Aurum, Stratos, Allegra and Sirius. We do not have any formal agreements
with any of these companies with respect to conflicts of interests, nor do we
have we have any written procedures in place to address conflicts of interest
that may arise between our business and the future business activities of our
directors.

In the unlikely even that a conflict of interest were to arise,
for example, if a mineral concession becomes available which would be equally
suitable for us, as well as Tecton, Aurum, Stratos, Allegra, or Sirius to
explore, then our directors would have to decide which company has the most
available funds, and therefore would be better placed to carry out an
exploration program of the new mineral concession.

Family Relationships

There are no family relationships among our officers or
directors.

No Legal Proceedings

None of our directors, executive officers, promoters or control
persons have been involved in any of the following events during the past five
years:

- any bankruptcy petition filed by or against any business of which such
  person was a general partner or executive officer either at the time of the
  bankruptcy or within two years prior to that time;

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- any conviction in a criminal proceeding or being subject to a pending
  criminal proceeding (excluding traffic violations and other minor offenses);
- being subject to any order, judgment, or decree, not subsequently reversed,
  suspended or vacated, of any court of competent jurisdiction, permanently or
  temporarily enjoining, barring, suspending or otherwise limiting his
  involvement in any type of business, securities or banking activities; or
- being found by a court of competent jurisdiction (in a civil action), the
  Commission or the Commodity Futures Trading Commission to have violated a
  federal or state securities or commodities law, and the judgment has not been
  reversed, suspended, or vacated.

Audit Committee

The functions of the Audit Committee are currently carried out
by our Board of Directors. Our Board of Directors has determined that we do not
presently need an audit committee financial expert on our Board of Directors
carrying out the duties of the Audit Committee. Our Board of Directors has
determined that the cost of hiring a financial expert to act as a director of
Hemis and to be a member of the Audit Committee or otherwise perform Audit
Committee functions outweighs the benefits of having a financial expert on the
Audit Committee.

Director Nominees

We do not have a nominating committee. The Board of Directors,
sitting as a Board, selects those individuals to stand for election as members
of our Board. Since the Board of Directors does not include a majority of
independent directors, the decision of the Board as to director nominees is made
by persons who have an interest in the outcome of the determination. The Board
will consider candidates for directors proposed by security holders, although no
formal procedures for submitting candidates have been adopted. Until otherwise
determined, not less than 90 days prior to the next annual Board of Directors'
meeting at which the slate of Board nominees is adopted, the Board accepts
written submissions that include the name, address and telephone number of the
proposed nominee, along with a brief statement of the candidate's qualifications
to serve as a director and a statement of why the shareholder submitting the
name of the proposed nominee believes that the nomination would be in the best
interests of shareholders. If the proposed nominee is not the security holder
submitting the name of the candidate, a letter from the candidate agreeing to
the submission of his or her name for consideration should be provided at the
time of submission. The letter should be accompanied by a résumé supporting the
nominee's qualifications to serve on the Board of Directors, as well as a list
of references.

The Board identifies director nominees through a combination of
referrals, including by management, existing Board members and security holders,
where warranted. Once a candidate has been identified, the Board reviews the
individual's experience and background and may discuss the proposed nominee with
the source of the recommendation. If the Board believes it to be appropriate,
Board members may meet with the proposed nominee before making a final
determination whether to include the proposed nominee as a member of
management's slate of director nominees submitted to shareholders for election
to the Board.

Among the factors that the Board considers when evaluating
proposed nominees are their knowledge of and experience with and knowledge of
and experience in business

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matters, finance, capital markets and mergers and acquisitions.
The Board may request additional information from the candidate prior to
reaching a determination. The Board is under no obligation to formally respond
to all recommendations, although as a matter of practice, it will endeavor to do
so.

Code of Ethics

We have not yet adopted a code of ethics that applies to Hemis
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions because it has
not yet finalized the content of such a code. Companies whose equity securities
are listed for trading on the OTC Bulletin Board are not currently required to
do so.

Item 10. Executive Compensation.

The following Summary Compensation Table sets forth the total
annual compensation paid or accrued by us to or for the account of the Executive
Officers who held this position during Fiscal 2006 and each other executive
officer whose total annual cash compensation exceeds $100,000:

Summary Compensation Table

Annual Compensation
      Long Term CompensationName and Principal Position
      Year
      Salary
      Bonus
      Other Annual Compensation
      Restricted Stock Award(s)
      Awards Securities Underlying
        Options/SARs
      Payout(s) LTIP Payouts
      All Other Compensation$
      $
      $
      (#)
      (#)
      $
      $Norman Meier (1)
      2006 (2)
      120,000
      0
      0
      
      5,000,000 (5)2005 (3)
      80,000
      0
      0
      8,000,000
      5,000,000 (5)
      8,000
      2,750,000Bruno Weiss (4)
      2006 (2)
      120,000
      0
      0
      
      5,000,000 (5)2005 (3)
      80,000
      0
      0
      2,000,000
      5,000,000 (5)
      2,000,000
      2,750,000


| | (1) | Norman Meier is our President and Chief Executive
      Officer.                                  
| | --- | --------------------------------------------------------------------------------------------------
| | (2) | For the period from January 1, 2006 to December 31,
      2006.                                   
| | (3) | For the period from Inception (February 9, 2005) to
      December 31, 2005                       
| | (4) | Bruno Weiss is our Chief Financial Officer.                                                       
| | (5) | On January 13, 2007 the stock options were exercised in
      full at the exercise price of $0.001

Mr. Weiss and Mr. Norman each spend approximately 40% of the
time they work on the business of Hemis.

Option Grants in the Last Fiscal Year

No stock options were granted to the named executive officers
during the period from January 1, 2006 to December 31, 2006.

Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year-End Option Values

The following table sets forth certain information concerning
unexercised stock options during the last completed fiscal year and fiscal year
end value of unexercised stock

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options held by the named executive officers as of December 31,
2006. None of the named executive officers exercised any of their stock options
during the period from inception (February 9, 2005) to December 31, 2006.

Name
      Number Of Securities Underlying Unexercised Options At 2006 Fiscal
      Year-End(#) Exercisable/Unexercisable
      Value Of Unexercised
      In-The-Money Options At 2006 Fiscal Year-End ($)(2) Exercisable/UnexercisableNorman Meier
      5,000,000 (1)
      $5,995,000Bruno Weiss
      5,000,000 (1)
      $5,995,000


(1)      On May 1, 2005 Norman Meier
and Bruno Weiss were granted 5,000,000 options to purchase shares at $0.001. The
options are exercisable before April 30, 2010. As at the end of fiscal year
2006, none of these options had been exercised.

(2)      The calculation of the value
of unexercised options held by the named executive officers is based upon sales
of our unregistered stock $1.20 per share on December 29, 2006.

Employment and Consulting Agreements

On May 1, 2005 we entered into a management agreement with our
Chief Financial Officer Bruno Weiss wherein we agreed to pay him $10,000 per
month and a stock option to purchase up to 5,000,000 common shares at $0.001 per
share. Mr. Weiss exercised his stock options in full on January 13, 2007. The
agreement may be terminated on 14 days notice by either party. In addition to
the $10,000 received monthly from Hemis, Mr. Weiss now receives $4,000 monthly
from Hemis Switzerland GmbH, a company carrying on business in Switzerland on
behalf of Hemis. The $4,000 monthly salary paid by Hemis Switzerland GmbH is to
compensate Mr. Weiss for additional services related to administrative and legal
issues relating to carrying on business in Switzerland, including communications
with Swiss authorities to ensure compliance with money laundering regulations.
Currently, the $4,000 salary is charged by Hemis Switzerland GmbH to Hemis.

On May 1, 2005 we entered into a management agreement with our
President and Chief Executive Officer Norman Meier wherein we agreed to pay Dr.
Meier $10,000 per month and a stock option to purchase up to 5,000,000 common
shares at $0.001 per share. Dr. Meier exercised his stock options in full on
January 13, 2007. The agreement may be terminated on 14 days notice by either
party. In addition to the $10,000 received monthly from Hemis, Dr. Meier now
receives $4,000 monthly from Hemis Switzerland GmbH, a company carrying on
business in Switzerland on behalf of Hemis. The $4,000 monthly salary paid by
Hemis Switzerland GmbH is to compensate Dr. Meier for additional services
related to administrative and legal issues relating to carrying on business in
Switzerland, including communications with Swiss authorities to ensure
compliance with money laundering regulations. Currently, the $4,000 salary is
charged by Hemis Switzerland GmbH to Hemis.

In addition to the fees compensated pursuant to the Management
agreements, Mr. Weiss and Dr. Meier received from Hemis Switzerland GmbH (which
was charged to Hemis) $27,288 for Bruno Weiss and $40,520 for Norman Meier,
during the year ended December 31, 2006, as additional compensation for
administrative activities in Switzerland.

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None of our directors received compensation for their service
as directors during the period from inception (February 9, 2005) to December 31,
2006.

Compensation Committee

We currently do not have a compensation committee of the Board
of Directors. The Board of Directors as a whole determines executive
compensation.

Termination of Employment and Change of Control Arrangement

There is no compensatory plan or arrangement with respect to
any individual named above which results or will result from the resignation,
retirement or any other termination of employment with us, or from a change in
our control.

Item 11. Security Ownership of Certain Beneficial Owners
  and Managementand Related Stockholder Matters.

Security Ownership of Certain Beneficial Owners and
Management

The following table sets forth the ownership, as of March 31,
2007, of our common stock by each of our directors, and by all executive
officers and directors as a group. No other person known to us is the beneficial
owner of more than 5% of any class of our securities. As of March 31, 2007,
there were 70,245,886common shares issued and outstanding. All persons
named have sole voting and investment power with respect to the shares, except
as otherwise noted. The number of shares described below includes shares which
the beneficial owner described has the right to acquire within 60 days of the
date of this Annual Report.

Title of Class
    Name and Address of
      Beneficial Owner
    Amount and Nature of
      Beneficial Ownership
    Percent of ClassCommon
    Norman Meier (1)
      Neuhofstrasse 8 8600 Dübendorf, Switzerland
    25,950,000 (2)
    37%Common
    Bruno Weiss (3)
      Freudenbergstrasse 26 9113 Degersheim Switzerland
    13,374,000
    19%Common
    Douglas Oliver (4) 11564
      Belfry Point Bentonville, AR 72712
    150,000 (5)
    Less than 1%Richard Hamelin (6) Paseo San
      Luciano No 7 Colonia San Luciano Torreon, Coaquila, 27210
      Mexico
    Nil
    NilAll Officers and Directors
      as a Group
    39,474,000
    56%


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| | 1 | Norman Meier is a director, President and Chief Executive
      Officer of Hemis.                           
| | - | ------------------------------------------------------------------------------------------------------------
| |   |                                                                                                             
| | 2 | Includes 2,000,000 shares owned by Noeme Investment
      Corporation, a company controlled by Norman Meier.
| |   |                                                                                                             
| | 3 | Bruno Weiss is a director and Chief Financial Officer of
      Hemis.                                       
| |   |                                                                                                             
| | 4 | Douglas Oliver is a director of Hemis and Vice President
      of Operations.                               
| |   |                                                                                                             
| | 5 | Includes stock options to purchase 50,000 common shares
      at $1.00.                                     
| |   |                                                                                                             
| | 6 | Richard Hamelin is a director of
Hemis                                                                      

Changes in Control

There are currently no arrangements which would result in a
change in control of Hemis.

Equity Compensation Plan

As at December 31, 2006 no securities are authorized for
issuance under equity compensation plans, either approved by security holders,
or not previously approved by security holders.

Item 12. Certain Relationships and Related Transactions.

Hemis Switzerland GmbH, a company controlled by Norman Meier,
our Chief Executive Officer, acts as an agent for us in paying operating
expenses and salaries for our office and staff in Switzerland.

On May 1, 2005, we issued 10,000,000 common shares at par value
to our directors as follows: 7,000,000 shares to Norman Meier, 1,000,000 shares
to Noeme Investment Corporation, a company controlled by Norman Meier, and
2,000,000 shares to Bruno Weiss, our director. Also on May 1, 2005, we issued an
option to Norman Meier to purchase 5,000,000 shares of our common stock at an
exercise price of $0.001 (par value), and we issued an option to Bruno Weiss to
purchase 5,000,000 shares of our common stock at an exercise price of $0.001
(par value). On January 13, 2007, both directors exercised all 10,000,000
options.

On January 5, 2006 we issued 50,000 common shares at $0.55 per
share to Douglas Oliver, our director. On this day, we also granted Dr. Oliver
options to purchase 50,000 common shares at $1.00.

On January 17, 2006 we issued a stock dividend to all our
shareholders by a declaration of one common share for each common share
outstanding as of January 17, 2007. Pursuant to this, we issued an aggregate of
31,675,926 shares of common stock to our existing shareholders, including
11,975,000 shares to Norman Meier, our director; 1,000,000 shares to Noeme
Investment Corporation, a company controlled by Norman Meier; 6,837,000 shares
to Bruno Weiss, our director; and 50,000 shares to Douglas Oliver, our director.

Other than as described above, we have not entered into any
transactions with our officers, directors, persons nominated for these
positions, beneficial owners of 5% or more of our common stock, or family
members of these persons wherein the amount involved in the transaction or a
series of similar transactions exceeded $120,000 or 1% of our total assets for
the last fiscal year.

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Item 13. Exhibits.

Exhibit Number
      Exhibit Description3.1
      Certificate (Articles) of Incorporation as filed
        with the Nevada Secretary of State on February 9, 2005 (1)3.2
      Certificate of Amendment to Articles of Incorporation
        filed April 28, 2006 (1)3.3
      Bylaws (1)4
      Instrument Defining the Right of Holders - Form
        of Share Certificate (1)10.1
      Santa Rita Option Agreement (1)10.2
      El Tigre and Porvenir Option Agreement (1)10.3
      La Centela Option Agreement (2)10.4
      Addendum to La Centela Option Agreement (2)10.5
      Bruno Weiss Management Agreement (1)10.6
      Douglas Oliver Management Agreement (1)10.7
      Norman Meier Management Agreement (1)10.8
      Norman Meier Option Agreement (3)10.9
      Bruno Weiss Option Agreement (3)10.10
      Hudson Capital Corp. Consulting Agreement (1)10.11
      Amendment to Hudson Capital Corp. Consulting
        Agreement (4)31.1
      Certification of Chief Executive
        Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
        906 of the Sarbanes-Oxley Act of 200231.2
      Certification of Chief Financial
        Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
        906 of the Sarbanes-Oxley Act of 200232.1
      Certification of Chief Executive
        Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
        906 of the Sarbanes-Oxley Act of 200232.2
      Certification of Chief
        Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
        to Section 906 of the Sarbanes-Oxley Act of 2002


| | (1) | Included as exhibits on our Form SB-2 filed July 21,
      2006.         
| | --- | -------------------------------------------------------------------------
| | (2) | Included as exhibits on our Form SB-2/A #2 filed November
      1, 2006. 
| | (3) | Included as exhibits on our Form SB-2/A #3 filed November
      27, 2006.
| | (4) | Included as exhibits on our Form SB-2/A #4 filed December
      12, 2006 

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Item 14. Principal Accountant Fees and
Services.

Audit and Non-Audit Fees

The aggregate fees billed for the two most recently completed
fiscal years ended December 31 for professional services rendered by the
principal accountant for the audit of our company's annual financial statements
and review of the financial statements included in our Annual Report on Form
10-KSB and services that are normally provided by the accountant in connection
with statutory and regulatory filings or engagements for these fiscal periods
were as follows:

|                   |   | Year Ended   | 
|------------------ | - | ------------ | 
|                   |   | December 31, | 
|                   |   | 2006 (1)     | 
|Audit Related Fees | $ | 75,200       | 
|Tax Fees           |   | 0            | 
|All Other Fees     |   | 0            | 
|Total              |   | 75,200       | 

(1) estimated.

Since our inception, our Board of Directors, performing the
duties of the Audit Committee, reviews all audit and non-audit related fees at
least annually. The Board of Directors as the Audit Committee pre-approved all
audit related services in Fiscal 2006.

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SIGNATURES

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

|                     | Hemis Corporation                            
|-------------------- | ---------------------------------------------
|                     | (Registrant)                                 
|                     |                                              
|                     | /s/ Norman Meier                             
|Date: April 13, 2007 | Norman Meier                                 
|                     | Director , President, Chief Executive Officer

Pursuant to the requirements of the Exchange Act this Report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.

|Signature       | Title                                        | Date          
|--------------- | -------------------------------------------- | --------------
|                |                                              |               
|/s/Norman Meier | President, Chief Executive Officer, Director | April 13, 2007
|Norman Meier    |                                              |               
|                |                                              |               
|/s/Bruno Weiss  | Director, Chief Financial Officer            | April 13, 2007
|Bruno Weiss     |                                              |               
|                |                                              |               
|/s/ Doug Oliver |                                              |               
|Doug Oliver     | Director, VP Operations                      | April 13, 2007

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