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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

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

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

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

     For the transition period from _________________ to __________________

                       Commission file number: 333-124829

                            DRIFTWOOD VENTURES, INC.
                            -------------------------
                 (Name of small business issuer in its charter)

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

                            Driftwood Ventures, Inc.
                             Steven Chan, President
                             1463 Park Drive, Surrey
                            British Columbia, Canada

                                     V3R 5P2
                       -----------------------------------
                    (Address of principal executive offices)

                                 (250) 729-5731
                             ------------------------
                            Issuer's telephone number

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

        Title of each class                 Name of each exchange on which
        to be so registered                 each class is to be registered

             None                                       None

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

                                  Common Stock
                                  ------------
                                (Title of Class)

Check  whether the Issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Securities  Exchange  Act  during the past 12 months (or for
such shorter period that the registrant was required to file

<page>

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 is not  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 10-KSB
or any amendment to this Form 10-KSB.

                    Yes      X                             No
                                                              ---------

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

                    Yes      X                             No
                                                              ---------


State issuer's revenues for its most recent fiscal year:          Nil
                                                          ----------------

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates  computed by reference to the price at which the common equity
was sold,  or the average bid and asked  price of such  common  equity,  as of a
specified  date within the past 60 days.  (See  definition  of affiliate in Rule
12b-2 of the Exchange Act.)

  $90,700 as at March 27, 2007 based on the last sale price of our common stock
  -----------------------------------------------------------------------------

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.

              5,807,000 shares of common stock as at March 27, 2006
              -----------------------------------------------------


                                       2

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                                TABLE OF CONTENTS

                                                                           Page

ITEM 1:  DESCRIPTION OF BUSINESS..............................................4
ITEM 2:  DESCRIPTION OF PROPERTY.............................................11
ITEM 3:  LEGAL PROCEEDINGS...................................................11
ITEM 4:  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.................11
ITEM 5:  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS............11
ITEM 6:  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION...........12
ITEM 7:  FINANCIAL STATEMENTS................................................14
ITEM 8:  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURES...............................................26
ITEM 8A: CONTROLS AND PROCEDURES............................................ 26
ITEM 9:  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS........26
ITEM 10:  EXECUTIVE COMPENSATION.............................................28
ITEM 11:  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.....28
ITEM 12:  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.....................29
ITEM 13:  EXHIBITS AND REPORTS...............................................29
ITEM 14:  PRINCIPAL ACCOUNTANT FEES AND SERVICES.............................30





                                       3

<page>


PART I

ITEM 1:  DESCRIPTION OF BUSINESS

In General

We are an  exploration  stage  company.  We are engaged in the  acquisition  and
exploration of mineral properties.

We own a 100%  undivided  right,  title and interest in and to the mineral claim
known as the Silver Creek claim or the Hope mineral claim. There is no assurance
that  a  commercially  viable  mineral  deposit  exists  on the  claim.  Further
exploration  will be  required  before  a final  evaluation  as to the  economic
feasibility of the claim is determined.

Our plan of operation is to conduct  exploration  work on the Silver Creek claim
in order to  ascertain  whether  it  possesses  economic  quantities  of gold or
silver.  There can be no assurance  that economic  mineral  deposits or reserves
exist on the Silver Creek claim until  appropriate  exploration work is done and
an economic  evaluation based on such work concludes that production of minerals
from the claim is economically feasible.

Even if we complete our proposed  exploration programs on the Silver Creek claim
and they are successful in identifying a mineral deposit,  we will have to spend
substantial  funds on further  drilling and  engineering  studies before we will
know if we have a commercially viable mineral deposit.

Mineral property  exploration is typically  conducted in phases. Each subsequent
phase of exploration  work is  recommended  by a geologist  based on the results
from the most recent phase of exploration.  Once we have completed each phase of
exploration,  we will make a decision as to whether or not we proceed  with each
successive  phase based upon the  analysis of the results of that  program.  Our
directors  will  make  this  decision  based  upon  the  recommendations  of the
independent  geologist  or  professional  engineer  who oversees the program and
records  the  results,  as well as our  president  Steven  Chan.  Based upon our
initial  review of results from the phase one  exploration  program,  we will be
proceeding with the phase two program.

We retained Mr. Lawrence Stephenson,  a professional  geologist,  to conduct the
initial  phase  of  exploration  on  the  Silver  Creek  claim  and  act  as our
independent geologist for this phase. He has completed the phase one program and
has received  results from the  processing of samples that were gathered  during
the  program.  Mr.  Stephenson  conducted  the  program  without  the  aid  of a
geological  technician.  Mr.  Stephenson  conducted soil sampling along selected
areas of the  property.  Fourteen  soil and five  silt  samples  were  taken and
assayed  for the  presence  of  metals.  The  results  indicate  that  there are
anomalous metal values in the eastern  portion of the property area.  Based upon
the exploration  results,  Mr.  Stephenson  recommended that we proceed with the
phase two exploration  program.  There is no affiliation  between Mr. Stephenson
and Glen Macdonald,  the professional  geologist who prepared the geology report
on the Silver Creek  claim.  We spent a total of $3,400 in  connection  with the
completion of the phase one exploration program.

The first phase of  exploration  consisted  of detailed  geological  mapping and
sampling.   Geological  mapping  involves  plotting  previous  exploration  data
relating to a claim on a map in order to determine  the best claim  locations to
conduct subsequent exploration work.

Sampling  involves the gathering of rock and soil from claim areas with the most
potential to host economically significant mineralization.  All samples gathered
will be sent to a  laboratory  where they are  crushed  and  analysed  for metal
content.

                                       4

<page>

Mr.  Stephenson  concluded from the first phase of  exploration  that the Silver
Creek  claims  contain  intrusive  rocks with  anomalous  values of base metals,
located  within its  boundaries.  The  association of these zones with the known
gold  mineralization  needs to be further explored to complete the evaluation of
the claims.  More detailed surveying to better delineate the anomalous zones and
the main showing area is  recommended  to guide future  exploration  and develop
exploration drilling targets effectively.

Description, Location and Access

The  Silver  Creek  claim is  located  southwest  of the  town of Hope,  British
Columbia.  The claim is accessible by a well maintained  paved road on the north
side of the claim from the town of Hope.

Topography  of the area is rugged,  rising from the Silver  Creek River at under
200 meters to the top of area  ranges over 1,500  meters.  The valleys are steep
sided coastal  alpine  mountain type with typical rain forest  vegetation of the
coastal ranges of British Columbia.  There is a mix of cedar, hemlock and spruce
trees on the mineral claim,  with alder,  willow and cottonwood on old roads and
poorly drained areas.  Undergrowth brush is typical with salal, devil's club and
assorted berry bushes. Climate is also typical of the lower mainland area and is
such that the lower and middle  elevations  of the claim will be  workable  year
round with little difficulty. Higher ground may require snow machines or similar
track mounted vehicles.

Mineral Property Purchase and Sale Agreement

On December 15, 2004,  we entered into an agreement  with Serena Tan of Calgary,
Alberta,  whereby she sold a 100%  interest in and to the Silver Creek claim for
$7,000.  There was no affiliation or relationship between our management and Ms.
Tan prior to this agreement.

The Silver Creek claim consists of one mineral claim under tenure number 411682.
The claim is in good  standing  until  June 24,  2007.  This  means that we must
complete at least $100 in exploration work on the claim by that date in order to
extend the claim expiry date by one year, to June 24, 2008.  In each  subsequent
year, we are obligated to spend at least $200 on claim  exploration  in order to
extend the good standing date by an additional year.

Infrastructure and Condition of the Mineral Claim

The Silver  Creek claim is free of mineral  workings.  There is no  equipment or
other  infrastructure  facilities located on the claim. There is no power source
located on the claim.  We will need to use portable  generators  if we require a
power source for exploration of the Silver Creek claim.

Mineralization

The  geology  of the area of the  Silver  Creek  claim  is based on  preliminary
identification  of  some  surface  rock  that  was  completed  by  the  Canadian
government.  Intrusive units were identified on the claim,  which related to the
mineralization in the surrounding areas.

An intrusive  unit is a body of rock that has been forced into or between  other
rocks due to sub-surface  volcanic activity.  Significant  mineralization may be
found in areas where intrusions have occurred.

Sulphide  mineralization,   compounds  containing  sulphur  and  one  additional
element, is ubiquitous on the claim.  Precious metal mineralization on the claim
is in the form of chalcopyrite and pyrite with arsenopyrite reported as the main
gold rich mineral and tetrahedrite as the silver rich mineral. Chalcopyrite is a
yellow  rock  consisting  of  copper,  iron  and  sulphur,  while  pyrite  is  a
combination   of  iron  and  sulphur,   more  commonly  known  as  fool's  gold.
Arsenopyrite,  a combination of iron,  sulphur and arsenic,  is often associated
with gold mineralization,  while tetrahedrite,  a combination of copper, sulphur
and arsenic, is often associated with silver mineralization.

                                       5

<page>

Exploration History

Almost no  exploration  work has been  conducted on the Silver Creek claim.  The
area was subject to an airborne  magnetic  survey  conducted  by the  Geological
Survey of Canada in 1972. Such a survey uses technical  equipment  mounted in an
aircraft to measure  changes in the magnetic  field over claim  areas.  Magnetic
anomalies may be a result of  accumulations  of certain  magnetic  rocks such as
phrrhotite,  hematite and magnetite.  These rock types are often found alongside
precious  metals such as gold and silver.  This survey resulted in the discovery
of a distinct  magnetic  anomaly  over an area that  includes  the Silver  Creek
claim.

Geological Assessment Report: Silver Creek Claim

We commissioned Mr. Glen Macdonald to prepare a geological  report on the Silver
Creek claim. The cost of the report was paid for by the vendor of the claim, Ms.
Serena Tan as part of our  agreement to acquire the claim.  We have not paid any
fees  to Mr.  Macdonald  in  connection  with  the  claim  or  our  registration
statement.

Mr.  Macdonald  holds  bachelor  degrees  in  economics  and  geology  from  the
University of British  Columbia and has practiced his  profession as a geologist
for over 28 years. He is a member of the Association of Professional  Engineers,
Geologists and  Geophysicists  of Alberta and of the Association of Professional
Engineers  and  Geoscientists  of the Province of British  Columbia.  The report
summarizes  the  results  of prior  exploration  and makes  recommendations  for
further  exploration.  We do not have an agreement with Mr. Macdonald to perform
the recommended exploration on the Silver Creek claim.

Conclusions

In his  report,  Mr.  Macdonald  concluded  that the Silver  Creek claim has the
potential  to host  significant  amounts  of  mineralization  and  that  further
exploration of the claim is warranted.

Mr. Macdonald recommended a two phase exploration program to complete an initial
evaluation  of the claim and to select drill  targets.  The first phase has been
completed  and the second  phase of  exploration  will  proceed,  as  successful
results were obtained from the phase one program. This determination was made by
our consulting  geologist,  along with our president,  Steven Chan, based on the
potential for the Silver Creek claim to contain economic mineralization.

The first phase of  exploration  consisted  of detailed  geological  mapping and
sampling.   Geological  mapping  involves  plotting  previous  exploration  data
relating to a claim on a map in order to determine  the best claim  locations to
conduct subsequent exploration work.

Sampling  involves the gathering of rock and soil from claim areas with the most
potential to host economically significant mineralization.  All samples gathered
will be sent to a  laboratory  where they are  crushed  and  analysed  for metal
content.

The recommended  phase two program will entail follow-up  sampling in areas only
if significant mineralization is encountered in the first phase.


Proposed Budget

Approximate costs for the recommended phase two program is as follows:

1. Follow-up sampling                                   $ 3,000
2. Assays                                               $ 1,500
3. Contingency                                          $   500
                                                        -------
Total Phase II Costs:                                   $ 5,000

                                       6

<page>

Compliance with Government Regulation

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 British Columbia specifically.

We will have to sustain the cost of reclamation and environmental  mediation for
all exploration and development  work  undertaken.  The amount of these costs is
not known at this time as we do not know the extent of the  exploration  program
that  will  be  undertaken  beyond  completion  of the  currently  planned  work
programs.  Because  there is presently no  information  on the size,  tenor,  or
quality of any resource or reserve at this time,  it is impossible to assess the
impact of any capital  expenditures on earnings or our  competitive  position in
the event a potentially economic deposit is discovered.

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 program 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;

         -        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.

Employees

We have no  employees  as of the date of this annual  report  other than our two
directors.

Research and Development Expenditures

We have  not  incurred  any  research  or  development  expenditures  since  our
incorporation.

Subsidiaries

We do not have any subsidiaries.

Patents and Trademarks

We do not own, either legally or beneficially, any patents or trademarks.

                                       7

<page>

                          Risk Factors

An  investment  in our common stock  involves a high degree of risk.  You should
carefully  consider the risks described below and the other  information in this
annual  report  before  investing in our common  stock.  If any of the following
risks occur, our business,  operating  results and financial  condition could be
seriously  harmed.  The value of our common  stock  could  decline due to any of
these risks, and you may lose all or part of your investment.

IF WE DO NOT OBTAIN ADDITIONAL FINANCING, OUR BUSINESS WILL FAIL.

Our current  operating  funds are less than  necessary  to complete all intended
exploration  of the Silver  Creek  claim,  and  therefore we will need to obtain
additional financing in order to complete our business plan. We currently do not
have any  operations  and we have no income.  As well,  we will not  receive any
funds from this registration.

Our  business  plan  calls  for  significant  expenses  in  connection  with the
exploration of the Silver Creek claim. We require  additional funding to conduct
the phase two  exploration  program  on the claim  with an  estimated  budget of
$5,000. We will also require additional  financing in order to determine whether
the  claim  contains  economic  mineralization  and  to  cover  our  anticipated
administrative  costs. We may also require additional  financing if the costs of
the  exploration  of the Silver Creek claim are greater than  anticipated.  Even
after  completing  all  proposed  exploration,  we  will  not  know if we have a
commercially viable mineral deposit.

We will require  additional  financing to sustain our business  operations if we
are not successful in earning revenues once  exploration is complete.  We do not
currently have any  arrangements  for financing and may not be able to find such
financing  if required.  Obtaining  additional  financing  would be subject to a
number of factors,  including  the market price for gold and silver,  as well as
investor  acceptance of our mineral claim and general market  conditions.  These
factors may make the timing, amount, terms or conditions of additional financing
unavailable to us.

The most likely source of future funds presently  available to us is through the
sale of equity capital. The only other anticipated alternative for the financing
of further  exploration  would be our sale of a partial  interest  in the Silver
Creek claim to a third party in exchange for cash or  exploration  expenditures,
which is not presently contemplated.

BECAUSE WE HAVE ONLY RECENTLY COMMENCED BUSINESS OPERATIONS, WE FACE A HIGH RISK
OF BUSINESS FAILURE.

We  have  only  recently  commenced  exploration  on  the  Silver  Creek  claim.
Accordingly, we have no way to evaluate the likelihood that our business will be
successful. We were incorporated on February 13, 2003 and to date have completed
phase one of our mineral claim  exploration.  We have not earned any revenues as
of the date of this annual report.  Potential  investors  should be aware of the
difficulties  normally encountered by new mineral exploration  companies and the
high rate of failure of such  enterprises.  The  likelihood  of success  must be
considered in light of the problems, expenses,  difficulties,  complications and
delays  encountered in connection with the exploration of the mineral properties
that we plan to undertake. These potential problems include, but are not limited
to,  unanticipated  problems  relating to exploration,  and additional costs and
expenses that may exceed current estimates.

Prior to completion of our  exploration  stage, we anticipate that we will incur
increased operating expenses without realizing any revenues. We therefore expect
to incur significant losses into the foreseeable future. We recognize that if we
are unable to generate significant revenues from development of the Silver Creek
claim and the  production  of minerals  from the claims,  we will not be able to
earn profits or continue operations.

                                       8

<page>

There is no history upon which to base any assumption as to the likelihood  that
we will prove successful, and it is doubtful that we will generate any operating
revenues  or ever  achieve  profitable  operations.  If we are  unsuccessful  in
addressing these risks, our business will most likely fail.

BECAUSE OF THE SPECULATIVE NATURE OF EXPLORATION OF MINING PROPERTIES,  THERE IS
A SUBSTANTIAL RISK THAT OUR BUSINESS WILL FAIL.

The  search  for  valuable  minerals  as a  business  is  extremely  risky.  The
likelihood of our mineral claims containing economic  mineralization or reserves
is  extremely  remote.   Exploration  for  minerals  is  a  speculative  venture
necessarily  involving  substantial  risk. In all probability,  the Silver Creek
claim does not contain any reserves and funds that we spend on exploration  will
be lost. As well,  problems such as unusual or unexpected  formations  and other
conditions are involved in mineral  exploration and often result in unsuccessful
exploration efforts. In such a case, we would be unable to complete our business
plan.

WE NEED TO  CONTINUE  AS A GOING  CONCERN IF OUR  BUSINESS  IS TO  SUCCEED.  OUR
INDEPENDENT  AUDITOR  HAS RAISED  DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING
CONCERN.

Dale  Matheson  Carr-Hilton  LaBonte  LLP's  report  to  our  audited  financial
statements  for the year ended  December 31, 2006  indicates  that since we have
incurred losses since our inception and that we require additional funds to meet
our obligations and fund the costs of our operations, there is substantial doubt
about our ability to continue as a going  concern.  Our ability to continue as a
going concern  depends upon our ability to generate  profitable  operations  and
obtain  the  necessary   financing  to  meet  our   obligations  and  repay  our
liabilities.  If we are not able to  continue as a going  concern,  it is likely
investors will lose all of their investment.

BECAUSE OF THE INHERENT DANGERS INVOLVED IN MINERAL EXPLORATION, THERE IS A RISK
THAT WE MAY INCUR LIABILITY OR DAMAGES AS WE CONDUCT OUR BUSINESS.

The search for valuable minerals involves numerous hazards.  As a result, we may
become subject to liability for such hazards, including pollution,  cave-ins and
other  hazards  against which we cannot insure or against which we may elect not
to insure. The payment of such liabilities may have a material adverse effect on
our financial position.

BECAUSE WE INTEND TO SELL ADDITIONAL STOCK IN ORDER TO FINANCE FUTURE BUSINESS
OPERATIONS, SHAREHOLDERS WILL SUFFER DILUTION

We will have to raise additional  capital in order to fund our proposed business
operations.  If is likely that these additional funds will be raised through the
sale of shares of our common stock. Any additional issuance of common stock will
result in existing shareholders  suffering dilution,  which may result in a loss
of investment.

EVEN IF WE DISCOVER  COMMERCIAL  RESERVES OF PRECIOUS METALS ON THE SILVER CREEK
CLAIM, WE MAY NOT BE ABLE TO SUCCESSFULLY COMMENCE COMMERCIAL PRODUCTION.

The Silver Creek claim does not contain any known bodies of  mineralization.  If
our exploration  programs are successful in  establishing  gold and/or silver of
commercial tonnage and grade, we will require additional funds in order to place
the mineral claim into commercial production.  We may not be able to obtain such
financing.

BECAUSE  MANAGEMENT  HAS NO TECHNICAL  EXPERIENCE  IN MINERAL  EXPLORATION,  OUR
BUSINESS HAS A HIGHER RISK OF FAILURE.

                                       9

<page>

Neither of our directors has any technical  training in the field of geology and
specifically in the areas of exploring for,  starting and operating a mine. As a
result,  we may  not be  able to  recognize  and  take  advantage  of  potential
acquisition and exploration opportunities in the sector. As well, with no direct
training or  experience,  our  management may not be fully aware of the specific
requirements  related to working in this industry.  Their  decisions and choices
may not be well thought out and our operations,  earnings and ultimate financial
success may suffer irreparable harm as a result.

BECAUSE OUR DIRECTORS OWN 84.4% OF OUR OUTSTANDING COMMON STOCK, THEY COULD MAKE
AND CONTROL CORPORATE  DECISIONS THAT MAY BE  DISADVANTAGEOUS  TO OTHER MINORITY
SHAREHOLDERS.

Our  directors,  Steven  Chan and  Keith  Smith own  approximately  84.4% of the
outstanding  shares  of  our  common  stock.  Accordingly,   they  will  have  a
significant  influence in determining the outcome of all corporate  transactions
or other  matters,  including  mergers,  consolidations,  and the sale of all or
substantially  all of our  assets.  They will also have the power to  prevent or
cause a change in control.  The  interests of our  directors may differ from the
interests of the other stockholders and thus result in corporate  decisions that
are disadvantageous to other shareholders.

BECAUSE  OUR  PRESIDENT  HAS  OTHER  BUSINESS  INTERESTS,  HE MAY NOT BE ABLE OR
WILLING  TO  DEVOTE A  SUFFICIENT  AMOUNT  OF TIME TO OUR  BUSINESS  OPERATIONS,
CAUSING OUR BUSINESS TO FAIL.

Our president, Mr. Steven Chan spends approximately 20% of his business time, or
approximately  ten hours per week,  providing his services to us. While Mr. Chan
presently  possesses  adequate time to attend to our  interests,  it is possible
that the demands on him from other  obligations  could  increase with the result
that he would no longer be able to devote  sufficient  time to the management of
our business.

IF WE SELL A PARTIAL INTEREST IN THE SILVER CREEK CLAIM IN ORDER TO FUND FURTHER
EXPLORATION, THE VALUE OF OUR SOLE ASSET WILL BE DIMINISHED AND THE VALUE OF OUR
STOCK COULD BE NEGATIVELY IMPACTED

If we are unable to raise  sufficient  funds for exploration of the Silver Creek
claim,  we may be forced to seek a joint  venture  partner who would  provide us
with funding for exploration in exchange for an partial  interest in our claims.
A sale of a interest in our sole asset could have an adverse effect on the value
of our stock.

IF A MARKET FOR OUR COMMON STOCK DOES NOT DEVELOP, SHAREHOLDERS MAY BE UNABLE TO
SELL THEIR SHARES.

We have retained a market maker that has filed an  application  for quotation on
the OTC Bulletin Board on our behalf.  However, there is not guarantee that this
application will be accepted.  Our shares may never trade on the bulletin board.
If no  market  is ever  developed  for our  shares,  it  will be  difficult  for
shareholders  to sell their stock.  In such a case,  shareholders  may find that
they are unable to achieve benefits from their investment.

A PURCHASER  IS  PURCHASING  PENNY STOCK WHICH LIMITS HIS OR HER ABILITY TO SELL
THE STOCK.

Our shares constitute penny stock under the Exchange Act. The shares will remain
penny stock for the foreseeable  future. The classification of penny stock makes
it more difficult for a broker-dealer to sell the stock into a secondary market,
thus limiting investment  liquidity.  Any broker-dealer engaged by the purchaser
for the purpose of selling  his or her shares in our company  will be subject to
rules 15g-1 through  15g-10 of the Exchange Act.  Rather than creating a need to
comply  with those  rules,  some  broker-dealers  will refuse to attempt to sell
penny stock.

                                       10

<page>

Forward-Looking Statements

This annual report  contains  forward-looking  statements that involve risks and
uncertainties.  We use words such as anticipate,  believe, plan, expect, future,
intend and similar expressions to identify such forward-looking  statements. You
should not place too much  reliance  on these  forward-looking  statements.  Our
actual  results  may  differ   materially   from  those   anticipated  in  these
forward-looking  statements  for many  reasons,  including the risks faced by us
described in the "Risk Factors" section and elsewhere in this annual report.

ITEM 2:  DESCRIPTION OF PROPERTY

We own a 100%  undivided  right,  title and interest in and to one mineral claim
comprising  the Silver Creek  claim.  These  property  rights only relate to the
exploration  and extraction of minerals from the claim.  We do not hold any real
property interest.

We do not own or lease any property other than the Silver Creek claim.

Our office  relocated to 1463 Park Drive  Surrey,  British  Columbia in December
2005. Our offices are located in the home of our president, Mr. Steve Chan. It's
approximately  150  square  feet in  size.  It  contains  office  furniture  and
equipment  sufficient to administer our business.  Our  president,  Steven Chan,
donates office this office space to us.

ITEM 3:  LEGAL PROCEEDINGS

There are no legal proceedings pending or threatened against us. Our address for
service  of process in Nevada is 1802 N Carson  Street,  Suite 212 Carson  City,
Nevada, USA 89701.

ITEM 4:  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted during the fourth quarter of our fiscal year to a vote
of security holders, through the solicitation of proxies or otherwise.

PART II

ITEM 5: MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

Our  shares of common  stock do not trade on any  stock  exchange  or  quotation
system.  We have retained a market maker to file an application for quotation on
the OTC Bulletin Board on our behalf.  However, there is not guarantee that this
application will be accepted.

We have 32 shareholders of record as at the date of this annual report.

Dividends

There are no  restrictions  in our  articles  of  incorporation  or bylaws  that
prevent us from declaring  dividends.  The Nevada Revised Statutes,  however, do
prohibit  us  from  declaring  dividends  where,  after  giving  effect  to  the
distribution of the dividend:

1.       we would not be able to pay our debts as they become due in the usual
      course of business; or

2.       our total  assets  would be less than the sum of our total  liabilities
         plus  the  amount  that  would be  needed  to  satisfy  the  rights  of
         shareholders who have  preferential  rights superior to those receiving
         the distribution.

                                       11

<page>

We have not declared any dividends,  and we do not plan to declare any dividends
in the foreseeable future.

ITEM 6: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Our plan of operation  for the twelve  months  following the date of this annual
report is to  complete  the  recommended  phase two  exploration  program on the
Silver  Creek  claim.  We  anticipate  that  the  cost of this  program  will be
approximately  $5,000.  We have retained  Lawrence  Stephenson,  a  professional
geologist to conduct this  exploration  work.  He is  currently  organizing  the
necessary equipment and personnel for the program.

Following  completion of the phase two exploration program, we intend to conduct
a phase  three  program.  In  determining  whether  to  conduct  a  phase  three
exploration,  we will rely upon the advice of the geologist that  undertakes the
exploration program. Following the phase two program, the geologist will provide
us with a summary of the results of the program,  as well as recommendations for
additional  exploration,  if any.  These  recommendations  will be  based on the
quantity and grade of any minerals discovered and the potential to discover more
mineralization  on the  property.  Our board of  directors  will then review the
recommendations  of the  geologist  and  determine  whether to proceed  with his
recommendations.  We are unable to determine  exactly what this exploration will
consist of until the second phase of exploration  is complete,  but we expect it
will  include a drilling  component  and will cost  between  $50,000 to $100,000
dollars. Drilling involves extracting a long cylinder of rock from the ground to
determine  amounts of metals at different  depths.  Pieces of the rock obtained,
known as drill core, are analysed for mineral content.

Even after completing the phase two exploration  program,  we will have to spend
funds on  further  exploration  before  we will  know if we have a  commercially
viable mineral deposit. We are unable to determine exactly what this exploration
will consist of until the second phase of exploration is complete, but we expect
it will include several  drilling  programs,  as well as engineering  studies to
determine the  feasibility  of operating a mine on the property.  These drilling
programs  and studies  will  encompass  at least  several  phases of  additional
exploration and may cost several million dollars before we are able to determine
if mining operations on the property are warranted.

If  warranted,  the phase three program will be followed by a phase four program
consisting of more drilling to delineate the extent of mineralization discovered
underground  based on results from  drilling in phase  three.  This program will
likely cost approximately $200,000 to $300,000.

Our management will be responsible for retaining  qualified personnel to conduct
exploration  on the  Silver  Creek  claim  and  arranging  for the  lease of any
required equipment for each phase of exploration.  They will also be responsible
for attempting to secure additional financing for us.

In the next 12 months,  we also  anticipate  spending an  additional  $15,000 on
professional fees and  administrative  expenses,  including  remaining  expenses
payable  in  connection  with the  filing  of this  registration  statement  and
anticipated costs of complying with reporting  obligations once our registration
statement is effective.

Total expenditures over the next 12 months are therefore expected to be $20,000.
As of December  31,  2006,  we had cash on hand of $1,764.  This amount will not
cover the costs of the phase two exploration program. We will require additional
funds to cover all of the anticipated expenses.

We will require additional  funding in order to cover our  administrative  costs
and to proceed with  additional  recommended  exploration  work on the phase two
program.  We anticipate that additional  funding will be required in the form of
equity  financing from the sale of our common stock or through  director  loans.

                                       12

<page>

During the year ended December 31, 2006 our President, Mr. Steve Chan, loaned us
$30,000 to finance  anticipated  expenses for the next twelve  months.  The loan
from Mr.  Steve  Chan is  interest  free,  unsecured  and has no fixed  terms of
repayment.  Mr. Chan is prepared to loan us additional funds as needed, although
he does not have any obligation in this regard.

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  subsequent
exploration.  We believe  that debt  financing  will not be an  alternative  for
funding the complete  exploration  program.  We do not have any  arrangements in
place for any future equity financing.

If we cannot arrange  financing on a timely basis, we may have to delay proposed
exploration programs. Alternatively, we may consider developing the Silver Creek
claim on a joint venture  basis.  This means that we would transfer a portion of
our 100% interest in the claim to a third party in exchange for them  conducting
a certain  amount  of  exploration  on the  claim.  However,  we do not have any
arrangement in this regard.

It is our  intention  to sell  shares of our common  stock to finance  the phase
three exploration program, as well as all additional exploration programs on the
property.  After our shares of common  stock are  quoted for  trading on the OTC
Bulletin  Board,  we intend to sell  additional  shares of our  common  stock in
private  transactions and through investments  arranged through  broker-dealers.
However,  we do not have any  arrangements  for  additional  sales of our common
stock and there is no guarantee  that we will be able to secure such  financing.
As well, we have not contacted any broker-dealers regarding potential financing.

The  company  would  seek  to  acquire  other  mineral   claims  should  further
exploration  of its  Silver  Creek  claims be  discontinued  due to  unfavorable
exploration results.

Results Of Operations For The Period From Inception Through December 31, 2006

We have not earned any revenues from our  incorporation  on February 13, 2003 to
December 31, 2006. We do not anticipate  earning  revenues  unless we enter into
commercial  production  on the Silver  Creek claim,  which is doubtful.  We have
commenced  the  exploration  stage of our  business but can provide no assurance
that  we will  discover  economic  mineralization  on the  property,  or if such
minerals are discovered, that we will enter into commercial production.

We incurred  operating expenses in the amount of $76,022 for the period from our
inception on February 13, 2003 to March 31, 2006. These operating  expenses were
comprised  of mineral  claim  costs of  $17,900,  professional  fees of $33,052,
donated services and rent of $18,200,  organization costs of $420 and office and
sundry costs of $6,450.  The professional fees consist of audit,  accounting and
legal fees that we have incurred. Donated services and rent consist of the value
of  management  services  and office  space  that our  president,  Steven  Chan,
provides to us free of charge.

We have not attained  profitable  operations  and are dependent  upon  obtaining
additional  financing to pursue exploration  activities.  For these reasons, our
auditors  believe  that  there  is  substantial  doubt  that  we will be able to
continue as a going concern.

                                       13

<page>



ITEM 7:  FINANCIAL STATEMENTS

















                            DRIFTWOOD VENTURES, INC.
                         (An Exploration Stage Company)


                              FINANCIAL STATEMENTS


                                DECEMBER 31, 2006





REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

BALANCE SHEETS

STATEMENTS OF OPERATIONS

STATEMENTS OF CASH FLOWS

STATEMENT OF STOCKHOLDERS' DEFICIT

NOTES TO THE FINANCIAL STATEMENTS


                                       14

<page>

<TABLE>
<CAPTION>
<S>                      <C>                       <C>                        <C>
[DALE MATHESON           Partnership of:           Robert J Burkart, Inc.     James F Carr-Hilton, Ltd.
[CARR-HILTON LABONTE     Alvin F Dale, Ltd.        Peter J Donaldson, Inc.    R.J. LaBonte, Ltd.
-------------------      Robert J Matheson, Inc.   Fraser G Ross, Ltd.
[CHARTERED ACCOUNTANTS LOGO]
</TABLE>
--------------------------------------------------------------------------------



             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of Driftwood Ventures, Inc.

We have audited the accompanying  balance sheets of Driftwood Ventures,  Inc. (a
development  stage  company)  as at  December  31, 2006 and 2005 and the related
statements  of  operations,  stockholders'  deficit and cash flows for the years
ended  December  31,  2006  and 2005  and the  period  from  February  13,  2003
(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 on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform our audits to obtain  reasonable  assurance  whether the  financial
statements  are free of material  misstatement.  The Company is not  required to
have,  nor were we engaged to perform,  an audit of its  internal  control  over
financial reporting.  Our audits included consideration of internal control over
financial  reporting  as  a  basis  for  designing  audit  procedures  that  are
appropriate  in the  circumstances,  but not for the  purpose of  expressing  an
opinion on the  effectiveness  of the Company's  internal control over financial
reporting.  Accordingly,  we express  no such  opinion.  An audit also  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the financial  statements and includes assessing the accounting  principles used
and significant estimates made by management,  as well as evaluating the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  these  financial  statements  present  fairly,  in all material
respects,  the financial  position of Driftwood Ventures Inc. as at December 31,
2006 and 2005 and the  results  of its  operations  and cash flows for the years
ended  December  31,  2006  and 2005  and the  period  from  February  13,  2003
(inception)  to  December  31, 2006 in  conformity  with  accounting  principles
generally accepted in the United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 1 to the
financial  statements,  to date the Company has reported  losses since inception
from operations and requires  additional  funds to meet its obligations and fund
the costs of its  operations.  These factors raise  substantial  doubt about the
Company's  ability to continue as a going  concern.  Management's  plans in this
regard are  described  in Note 1. The  financial  statements  do not include any
adjustments that might result from the outcome of this uncertainty.

                                                               "DMCL"
                                          Dale Matheson Carr-Hilton Labonte LLP
                                                          CHARTERED ACCOUNTANTS
Vancouver, Canada
March 5, 2007

                                       15

<page>



                            DRIFTWOOD VENTURES, INC.
                         (An Exploration Stage Company)

                                 BALANCE SHEETS

<table>
<caption>
-----------------------------------------------------------------------------------------------------------------------------

                                                                                           2006                     2005
                                                                                           ----                     ----

ASSETS

                                                                                   <c>                    <c>
Current assets
     Cash                                                                       $          1,764         $         2,577
     Prepaid expenses                                                                     10,000                       -
                                                                                    --------------------    -------------------
                                                                                $         11,764         $         2,577
                                                                                    ====================    ===================

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities
     Accounts payable and accrued liabilities                                   $         11,320         $         5,387
     Due from related party (Note 3)                                                      30,166                     100
                                                                                    --------------------    -------------------
                                                                                          41,486                   5,487
                                                                                    --------------------    -------------------

Stockholders' Deficit
Common Stock (Note 4)
     Authorized:
         75,000,000 common shares, par value of $0.001
     Issued and Outstanding:
              5,807,000 common shares (2005 - 5,807,000)                                   5,807                   5,807
     Additional paid-in capital                                                           22,293                  22,293
     Donated capital (Note 3)                                                             18,200                   9,800
     Deficit accumulated during the exploration stage                                    (76,022)                (40,810)
                                                                                    --------------------    -------------------
                                                                                         (29,722)                 (2,910)
                                                                                    --------------------    -------------------

                                                                                $         11,764         $         2,577
                                                                                    ====================    ===================
</table>






    The accompanying notes are an integral part of these financial statements

                                       16

<page>

                            DRIFTWOOD VENTURES, INC.
                         (An Exploration Stage Company)

                            STATEMENTS OF OPERATIONS
<table>
<caption>
-------------------------------------------------------------------------------------------------------------------------------
                                                                                                               Period from
                                                                  Year                    Year               February 13, 2003
                                                                 ended                   ended                (Inception) to
                                                             December 31,            December 31,             December 31,
                                                                 2006                    2005                      2006
                                                                 ----                    ----                      ----

                                                        <c>                   <c>                      <c>
Expenses
     Donated services and rent (Note 3)                $          8,400       $           8,400       $           18,200
     Mineral property costs (Note 5)                              7,500                   3,400                   17,900
     Organizational costs                                             -                       -                      420
     Office and sundry                                            3,686                   2,702                    6,450
     Professional fees                                           15,626                  13,426                   33,052
------------------------------------------------------------------------------------------------------------------------------

Net Loss                                               $         35,212       $          27,928       $           76,022
==============================================================================================================================


Basic and Diluted Net Loss Per Share                   $         (0.01)       $          (0.00)
===============================================================================================


Weighted Average Number Of Shares Outstanding
                                                              5,807,000               5,807,000
===============================================================================================
</table>


















    The accompanying notes are an integral part of these financial statements

                                       17

<page>

                            DRIFTWOOD VENTURES, INC.
                         (An Exploration Stage Company)

                            STATEMENTS OF CASH FLOWS

<table>
<caption>
--------------------------------------------------------------------------------------------------------------------------------
                                                                                                                  Period from
                                                                          Year                   Year           February 13, 2003
                                                                          ended                  ended            (Inception) to
                                                                     December 31,           December 31,          December 31,
                                                                          2006                   2005                 2006
                                                                          ----                   ----                 ----

                                                                <c>                   <c>                     <c>
Cash Flows From Operating Activities
     Net loss                                                   $        (35,212)     $        (27,928)       $        (76,022)
     Non cash items:
       Donated management services and rent                                8,400                 8,400                  18,200
     Changes in non-cash working capital items:
       Prepaid expenses                                                  (10,000)                    -                 (10,000)
        Accounts payable and accrued liabilities                           5,933                   967                  11,320
                                                                -----------------------------------------------------------------
Cash Flows Used In Operating Activities                                  (30,879)              (18,561)                (56,502)
                                                                -----------------------------------------------------------------

Cash Flows From Financing Activities
     Common stock issued                                                       -                 1,000                  28,100
     Due to related party                                                 30,066                     -                  30,166
                                                                -----------------------------------------------------------------
Cash Flows Provided By Financing Activities                               30,066                 1,000                  58,266
                                                                -----------------------------------------------------------------

(Decrease) Increase in Cash                                                 (813)              (17,561)                  1,764

Cash, Beginning                                                            2,577                20,138                       -
                                                                -----------------------------------------------------------------

Cash, Ending                                                    $          1,764      $          2,577        $          1,764
=================================================================================================================================

Supplementary Cash Flow Information
     Cash paid for:
         Interest                                               $              -      $              -        $              -
         Income taxes                                           $              -      $              -        $              -
=================================================================================================================================
</table>






    The accompanying notes are an integral part of these financial statements

                                       18

<page>

                            DRIFTWOOD VENTURES, INC.
                         (An Exploration Stage Company)

                       STATEMENT OF STOCKHOLDERS' DEFICIT
         PERIOD FROM FEBRUARY 13, 2003 (INCEPTION) TO DECEMBER 31, 2006

<table>
<caption>
                                                                                  Additional     Deficit
                                                                       Common                    Accumulated
                                                                       Shares                    During the
                                       Common Shares        Paid-in   Subscription     Donated   Exploration
                                     ------------------
                                      Number   Par Value    Capital    Receivabl       Capital    Stage            Total

                                 <c>          <c>       <c>          <c>           <c>           <c>           <c>
Balance, February 13, 2003 (Inception)      -  $      -   $       -   $         -   $         -   $        -    $          -
Net loss                                    -         -           -             -             -         (420)           (420)
---------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2003                  -         -           -             -             -         (420)           (420)

Shares issued for cash
 - November, 2004 at $0.001         4,900,000      4,900          -             -             -            -           4,900
 - December, 2004 at $0.01            750,000        750      6,750             -             -            -           7,500
 - December, 2004 at $0.10            157,000        157     15,543             -             -            -          15,700
Share subscription receivable               -          -          -        (1,000)            -            -          (1,000)
Donated management services and rent        -          -          -             -         1,400            -           1,400
Net loss                                    -          -          -             -             -       (12,462)       (12,462)
---------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2004          5,807,000      5,807     22,293        (1,000)        1,400       (12,882)        15,618

Share subscription receivable               -          -          -         1,000             -            -           1,000
Donated management services and rent        -          -          -             -         8,400            -           8,400
Net loss                                    -          -          -             -             -       (27,928)       (27,928)
--------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2005          5,807,000      5,807     22,293             -         9,800       (40,810)        (2,910)

Donated management services and rent        -          -          -             -         8,400            -           8,400
Net loss                                    -          -          -             -             -       (35,212)       (35,212)
---------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2006          5,807,000  $   5,807  $  22,293   $         -   $    18,200  $    (76,022)  $     29,722)
---------------------------------------------------------------------------------------------------------------------------------
</table>


    The accompanying notes are an integral part of these financial statements

                                       19

<page>

                            DRIFTWOOD VENTURES, INC.
                         (An Exploration Stage Company)

                        NOTES TO THE FINANCIAL STATEMENTS

                                DECEMBER 31, 2006



     NOTE 1 - NATURE AND CONTINUANCE OF OPERATIONS


       The Company was incorporated in the State of Nevada on February 13, 2003.
       The Company is an  exploration  stage  company as defined by Statement of
       Financial  Accounting Standard ("SFAS") No. 7. The Company owns a mineral
       property  located  in  the  New  Westminster  Mining  Division,   British
       Columbia,  Canada  and has  not  yet  determined  whether  this  property
       contains reserves that are economically  recoverable.  The recoverability
       of  property  expenditures  will  be  dependent  upon  the  discovery  of
       economically recoverable reserves, confirmation of the Company's interest
       in the  underlying  property,  the  ability  of  the  Company  to  obtain
       necessary  financing to satisfy the  expenditure  requirements  under the
       property agreement and upon future profitable  production or proceeds for
       the sale thereof.


       Going Concern

       These  financial  statements have been prepared on a going concern basis.
       The  Company  has  incurred  losses  since  inception   resulting  in  an
       accumulated  deficit of $76,022 and working capital deficiency of $29,722
       at  December  31,  2006  and  further  losses  are   anticipated  in  the
       development of its business raising substantial doubt about the Company's
       ability to  continue  as a going  concern.  Its  ability to continue as a
       going  concern is  dependent  upon the ability of the Company to generate
       profitable  operations  in the  future  and/or  to obtain  the  necessary
       financing to meet its obligations and repay its liabilities  arising from
       normal business  operations  when they come due.  Management has plans to
       seek additional  financing through private placements of its common stock
       and/or loans from directors.  These  financial  statements do not include
       any adjustments  relating to the  recoverability  and  classification  of
       recorded assets, or the amounts of and classification of liabilities that
       might be necessary in the event the Company cannot continue.

     NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   a)    Basis of Presentation

       The financial  statements of the Company have been prepared in accordance
       with  generally  accepted  accounting  principles in the United States of
       America and are expressed in U.S. dollars.  The Company's fiscal year end
       is December 31.

                                       20

<page>

                            DRIFTWOOD VENTURES, INC.
                         (An Exploration Stage Company)

                        NOTES TO THE FINANCIAL STATEMENTS

                                DECEMBER 31, 2006

     NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

b)         Mineral Property

         The Company is primarily  engaged in the  acquisition,  exploration and
         development of mineral properties.  Mineral property  acquisition costs
         are  capitalized  in  accordance  with EITF 04-2  when  management  has
         determined that probable  future benefits  consisting of a contribution
         to future cash inflows,  have been  identified  and adequate  financial
         resources  are available or are expected to be available as required to
         meet the terms of property  acquisition  and budgeted  exploration  and
         development  expenditures.   Mineral  property  acquisition  costs  are
         expensed as incurred if the  criteria  for  capitalization  is not met.
         Mineral property  exploration  costs are expensed as incurred.  When it
         has  been  determined  that a  mineral  property  can  be  economically
         developed as a result of establishing proven and probable reserves, the
         costs incurred to develop such property are capitalized. As of the date
         of  these   financial   statements,   the  Company  has  incurred  only
         acquisition and exploration costs which have been expensed. To date the
         Company  has not  established  any proven or  probable  reserves on its
         mineral properties.

     c)  Use of Estimates and Assumptions

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

     d)  Foreign Currency Translation

         The  Company's  functional  currency  is the  Canadian  dollar  and its
         reporting   currency  is  the  United  States  dollar.   The  financial
         statements of the Company are  translated  to United States  dollars in
         accordance with SFAS No. 52 "Foreign  Currency  Translation".  Monetary
         assets and liabilities denominated in foreign currencies are translated
         using the exchange rate prevailing at the balance sheet date. Gains and
         losses arising on translation are included in comprehensive  income, as
         a  separate  component  of  stock  holders'  equity.  Foreign  currency
         transaction  gain or losses are  included in net loss.  The Company has
         not,  to  the  date  of  these  financials  statements,   entered  into
         derivative  instruments  to  offset  the  impact  of  foreign  currency
         fluctuations.

                                       21

<page>

                            DRIFTWOOD VENTURES, INC.
                         (An Exploration Stage Company)

                        NOTES TO THE FINANCIAL STATEMENTS

                                DECEMBER 31, 2006

     NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     e)  Financial Instruments

         The carrying value of cash,  accounts payable and accrued  liabilities,
         and advances from related party  approximates  their fair value because
         of the short maturity of these  instruments.  The Company's  operations
         are in Canada  and  virtually  all of its assets  and  liabilities  are
         giving rise to market  risks from  changes in foreign  currency  rates.
         Currently,  the Company does not use  derivative  instruments to reduce
         its exposure to foreign currency risk.

     f)  Environmental Costs

         Environmental  expenditures  that  relate  to  current  operations  are
         charged to operations or capitalized as appropriate.  Expenditures that
         relate to an existing condition caused by past operations, and which do
         not contribute to current or future revenue generation,  are charged to
         operations.  Liabilities  are recorded when  environmental  assessments
         and/or  remedial  efforts are probable,  and the cost can be reasonably
         estimated.  Generally,  the timing of these accruals coincides with the
         earlier  of  completion  of  a  feasibility   study  or  the  Company's
         commitments to a plan of action based on the then known facts.

     g)  Income Taxes

         Potential  benefits  of income  tax losses  are not  recognized  in the
         accounts  until  realization  is more likely than not.  The Company has
         adopted SFAS No. 109 as of its inception.  Pursuant to SFAS No. 109 the
         Company is  required to compute tax asset  benefits  for net  operating
         losses carried forward.  Potential benefit of net operating losses have
         not been recognized in these financial  statements  because the Company
         cannot be assured it is more  likely  than not it will  utilize the net
         operating losses carried forward in future years.

     h)  Net Loss Per Share

         Basic loss per share  includes no dilution  and is computed by dividing
         loss available to common stockholders by the weighted average number of
         common  shares  outstanding  for the  period.  Dilutive  loss per share
         reflects the potential  dilution of securities  that could share in the
         losses  of  the  Company.   Because  the  Company  does  not  have  any
         potentially  dilutive  securities,  diluted  loss per share is equal to
         basic loss per share.

     i)  Stock-based Compensation

         The Company has not adopted a stock option plan and has not granted any
         stock  options.   Accordingly  no  stock-based  compensation  has  been
         recorded to date.

                                       22

<page>

                            DRIFTWOOD VENTURES, INC.
                         (An Exploration Stage Company)

                        NOTES TO THE FINANCIAL STATEMENTS

                                DECEMBER 31, 2006

     NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     j)  Recent Accounting Pronouncements

       In September  2006, the FASB issued SFAS No. 157, "Fair Value  Measures".
       This Statement defines fair value,  establishes a framework for measuring
       fair value in generally accepted  accounting  principles (GAAP),  expands
       disclosures  about fair  value  measurements,  and  applies  under  other
       accounting pronouncements that require or permit fair value measurements.
       SFAS No. 157 does not require any new fair value  measurements.  However,
       the FASB anticipates that for some entities,  the application of SFAS No.
       157 will change current practice. SFAS No. 157 is effective for financial
       statements  issued for fiscal years  beginning  after  November 15, 2007,
       which for the Company would be the fiscal year beginning January 1, 2008.
       The Company is currently  evaluating  the impact of SFAS No. 157 but does
       not  expect  that  it  will  have a  material  impact  on  its  financial
       statements.

       In September 2006, the FASB issued SFAS No. 158,  "Employers'  Accounting
       for  Defined  Benefit  Pension  and  Other  Postretirement  Plans."  This
       Statement  requires  an employer  to  recognize  the over funded or under
       funded  status of a defined  benefit post  retirement  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.  SFAS No.
       158 is effective  for fiscal  years ending after  December 15, 2006 which
       for the Company  would be February 1, 2007.  The Company  does not expect
       that the  implementation of SFAS No. 158 will have any material impact on
       its financial position and results of operations.


       In February  2007,  the FASB issued SFAS No. 159,  "The Fair Value Option
       for Financial Assets and Financial  Liabilities".  This Statement permits
       entities  to  choose to  measure  many  financial  assets  and  financial
       liabilities at fair value. Unrealized gains and losses on items for which
       the fair value option has been elected are reported in earnings. SFAS No.
       159 is effective for fiscal years  beginning after November 15, 2007. The
       Company  is  currently  assessing  the  impact  of  SFAS  No.  159 on its
       financial position and results of operations.

       In September 2006, the SEC issued Staff  Accounting  Bulletin ("SAB") No.
       108,   "Considering  the  Effects  of  Prior  Year   Misstatements   when
       Quantifying  Misstatements in Current Year Financial Statements." SAB No.
       108  addresses  how the effects of prior year  uncorrected  misstatements
       should be  considered  when  quantifying  misstatements  in current  year
       financial  statements.   SAB  No.  108  requires  companies  to  quantify
       misstatements  using a balance sheet and income statement approach and to
       evaluate  whether either approach results in quantifying an error that is
       material in light of relevant  quantitative and qualitative  factors. SAB
       No. 108 is effective for periods  ending after  November 15, 2006,  which
       for the Company would be

                                       23

<page>

                            DRIFTWOOD VENTURES, INC.
                         (An Exploration Stage Company)

                        NOTES TO THE FINANCIAL STATEMENTS

                                DECEMBER 31, 2006

     NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     j)  Recent Accounting Pronouncements (Continued)

         January 1, 2007.  The  Company is  currently  evaluating  the impact of
         adopting  SAB No. 108 but does not expect  that it will have a material
         effect on its financial statements.

     NOTE 3 - RELATED PARTY TRANSACTIONS

     During the year ended December 31, 2006, a director of the Company provided
     a loan of $30,000 to the  Company.  The amount is  unsecured,  non-interest
     bearing and has no specified terms of repayment.  In addition,  at December
     31,  2006,  the  Company  owed a director  $166  (2005-$100)  for  expenses
     incurred on behalf of the Company.

     The  president  of the  Company  donates  management  services  and  office
     premises to the Company.  The services are valued at $500 per month and the
     office  premises  are  valued  at $200 per  month.  During  the year  ended
     December 31, 2006 donated services of $6,000 (2005-$6,000) and donated rent
     expense of $2,400 (2005-$2,400) were charged to operations.

     NOTE 4 - COMMON STOCK

     The  total  number of  authorized  common  stock  that may be issued by the
     Company is 75,000,000 shares of stock with a par value of $0.001 per share.

     NOTE 5 - MINERAL PROPERTY

     Pursuant to a mineral property purchase  agreement dated December 15, 2004,
     the Company acquired a 100% undivided right, title and interest in the Hope
     mineral  claim  located in the New  Westminster  Mining  Division,  British
     Columbia,  Canada for $7,000 cash. During the year ended December 31, 2006,
     the  Company  incurred  additional  $7,500   (2005-$3,400)  in  exploration
     expenses on the claim.

                                       24

<page>

                            DRIFTWOOD VENTURES, INC.
                         (An Exploration Stage Company)

                        NOTES TO THE FINANCIAL STATEMENTS

                                DECEMBER 31, 2006

6.   INCOME TAXES

     The  components  of the net deferred  tax asset at December  31, 2006,  and
     2005,  and the statutory  tax rate,  the effective tax rate and the elected
     amount of the valuation allowance are indicated below:

                                                 2006                2005
                                                 ----                ----

    Net operating loss                 $        35,212     $        27,928
    Statutory tax rate                             35%                 35%
    Effective tax rate                              -                   -



    Deferred tax asset                 $        12,234     $         9,775
    Valuation allowance                        (12,234)             (9,775)
                                      -------------------------------------

    Net deferred tax asset             $             -     $             -
                                      =====================================

     As of December 31, 2006,  the Company had net operating loss carry forwards
     of  approximately  $35,000 that may be available  to reduce  future  years'
     taxable income and will expire commencing 2024.  Availability of loss usage
     is subject to change of ownership  limitations  under Internal Revenue Code
     382.  Future tax benefits  which may arise as a result of these losses have
     not been recognized in these financial statements,  as their realization is
     determined not likely to occur and accordingly,  the Company has recorded a
     valuation  allowance for the deferred tax asset  relating to these tax loss
     carryforwards.

                                       25

<page>

ITEM 8:  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

ITEM 8A:  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls

We evaluated the  effectiveness of our disclosure  controls and procedures as of
the end of the  2006  fiscal  year.  This  evaluation  was  conducted  with  the
participation  of our  chief  executive  officer  and our  principal  accounting
officer.

Disclosure  controls  are  controls  and other  procedures  that are designed to
ensure that  information that we are required to disclose in the reports we file
pursuant  to  the  Securities  Exchange  Act of  1934  is  recorded,  processed,
summarized and reported.

Limitations on the Effective of Controls

Our  management  does not expect that our  disclosure  controls or our  internal
controls over  financial  reporting  will prevent all error and fraud. A control
system, no matter how well conceived and operated,  can provide only reasonable,
but no absolute,  assurance  that the  objectives  of a control  system are met.
Further, any control system reflects limitations on resources,  and the benefits
of a control system must be considered  relative to its costs. These limitations
also include the realities that judgments in  decision-making  can be faulty and
that  breakdowns  can occur  because of simple  error or mistake.  Additionally,
controls  can be  circumvented  by the  individual  acts  of  some  persons,  by
collusion of two or more people or by management override of a control. A design
of a control  system is also  based upon  certain  assumptions  about  potential
future conditions;  over time, controls may become inadequate because of changes
in conditions,  or the degree of compliance  with the policies or procedures may
deteriorate.  Because of the inherent  limitations in a  cost-effective  control
system, misstatements due to error or fraud may occur and may not be detected.

Conclusions

Based upon their  evaluation of our controls,  the chief  executive  officer and
principal  accounting  officer have concluded  that,  subject to the limitations
noted  above,  the  disclosure  controls  are  effective  providing   reasonable
assurance that material  information  relating to us is made known to management
on a timely basis during the period when our reports are being  prepared.  There
were no  changes in our  internal  controls  that  occurred  during the  quarter
covered by this report that have materially  affected,  or are reasonably likely
to materially affect our internal controls.

                                    PART III

ITEM 9:  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

Our executive officers and directors and their respective ages as of the date of
this annual report are as follows:

Directors:

Name of Director        Age

Steven Chan             40
Keith Smith             55

                                       26

<page>


Executive Officers:

Name of Officer              Age          Office
---------------------        -----        -------
Steven Chan                   40         President, Chief
                                         Executive Officer,
                                         Promoter and Secretary

Keith Smith                   55         Treasurer, Principal
                                         Accounting Officer and
                                         Principal Financial Officer

Biographical Information

Set forth below is a brief description of the background and business experience
of each of our executive officers and directors for the past five years.

Mr. Steven Chan has acted as our president, chief executive officer,  secretary,
promoter and a director  since our  incorporation  on February  13, 2003.  Since
April  2001,  Mr.  Chan  has  acted  as   vice-president   of  Cambridge   House
International  Inc., a private  Vancouver  based  corporation  that sponsors and
organizes industry seminars. Cambridge House secures conference center locations
for  business  sector  exhibitions  and then  sells  convention  floor  space to
exhibitors.

From May 2001 to June 2002, Mr. Chan was employed as a sales representative with
Telus Corp., a New Westminster,  British Columbia based telephone company.  From
January 1998 to April 2001, he acted as a corporate  consultant for Big Bar Gold
Corporation,   a  Canadian   reporting  company  involved  in  mineral  property
exploration.  In this  role,  Mr.  Chan  introduced  the  company  to  potential
investors  and   identified   potential   asset   acquisitions   for  management
consideration.

Mr. Chan does not have any professional training or technical credentials in the
exploration, development and operation of mines.

Mr. Chan intends to devote approximately 20% of his business time, or
approximately ten hours per week, to our affairs.

Mr. Keith Smith has acted as our treasurer and a director since February 13,
2003.   Mr. Smith has been a general manager and shareholder of Light Speed
Communications, a Burnaby, British Columbia based internet service provider
since 1995.

Mr. Smith does not have any professional training or technical credentials in
the exploration, development and operation of mines.

Mr. Smith intends to devote approximately 15%, or approximately six hours per
week, of her business time to our affairs.

Term of Office

Our  directors  are  appointed for a one-year term to hold office until the next
annual  general  meeting of our  shareholders  or until  removed  from office in
accordance with our bylaws. Our officers are appointed by the board of directors
and will hold office until removed by the board.

Significant Employees

We have no significant employees other than the officers and directors described
above.

Section 16(A) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our executive officers and directors,
and persons who beneficially own more than 10% of our equity securities, to file

                                       27

<page>

reports of ownership and changes in ownership  with the  Securities and Exchange
Commission.  Officers,  directors and greater than 10% shareholders are required
by SEC  regulation  to furnish us with  copies of all  Section  16(a) forms they
file.  Based on our review of the copies of such forms we  received,  we believe
that during the fiscal year ended December 31, 2006 all such filing requirements
applicable to our officers and  directors  were  complied  with  exception  that
reports were filed late by the following persons:

                                Number     Transactions   Known Failures
                                Of  late    Not Timely    To File a
Name and principal position     Reports     Reported      Required Form
-------------------------------------------------------------------------------
Steven Chan                         0          0               1
(President, CEO, secretary
and a director)

Keith Smith                         0          0               1
(Treasurer and a director)


ITEM 10:  EXECUTIVE COMPENSATION

Summary Compensation Table

The table below summarizes all compensation awarded to, earned by, or
paid to our  executive  officers by any person for all services  rendered in all
capacities  to us for the fiscal  period from our inception on February 13, 2003
to December 31, 2006.
<table>
<caption>
                                                                                           Nonqualified
                                                                            Non-Equity     Deferred
Name and               Year   Salary  Bonus      Stock        Option      Incentive Plan   Compensation       All Other       Total
Principal Position                               Awards       Awards       Compensation    on Earnings       Compensation

                   <c>      <c>      <c>     <c>            <c>           <c>            <c>               <c>             <c>
Steven Chan            2006      $0      $0      None            None          None           None              None            $0
President, CEO         2005      $0      $0      None            None          None           None              None            $0
and Director           2004      $0      $0      None            None          None           None              None            $0

Keith Smith            2006      $0      $0      None            None          None           None              None            $0
Treasurer and          2005      $0      $0      None            None          None           None              None            $0
Director               2004      $0      $0      None            None          None           None              None            $0
</table>
Stock Option Grants

We have not  granted  any  stock  options  to the  executive  officer  since our
inception.

Consulting Agreements

We do not have any employment or consulting agreement with Mr. Chan or Mr.
Smith. We do not pay them any amount for acting as directors.

ITEM 11:  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

The following  table provides the names and addresses of each person known to us
to own  more  than 5% of our  outstanding  common  stock  as of the date of this
annual  report,  and by the officer and director,  individually  and as a group.
Except as otherwise indicated, all shares are owned directly.

                                       28

<page>


                                                Amount of
Title of      Name and address                  beneficial     Percent
Class         of beneficial owner               ownership      of class
-----------------------------------------------------------------------

Common         Steven Chan                      3,400,000      58.55%
Stock          President, Chief
               Executive Officer,
               Secretary
               and Director
               707 7th Avenue, Suite 5
               New Westminster, BC V3M 2J2

Common         Keith Smith                      1,500,000      25.83%
Stock          Treasurer and Director
               7739 19th Avenue
               Burnaby, BC 3N 1E8

Common         All officers and directors       4,900,000      84.38%
Stock          as a group that consists of
               two people

The percent of class is based on  5,807,000  shares of common  stock  issued and
outstanding as of the date of this annual report.

ITEM 12:  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During the year ended December 31, 2006, Steven Chan, our president,  provided a
loan of $30,000 to us. The amount is unsecured,  non-interest bearing and has no
specified  terms of  repayment.  In addition,  at December 31, 2006, we owed Mr.
Chan $166 (2005-$100) for expenses incurred on behalf of the Company.

Mr. Chan donates management services and office premises to us. The services are
valued at $500 per month and the office  premises  are valued at $200 per month.
During  the  year  ended   December  31,  2006,   donated   services  of  $6,000
(2005-$6,000) and donated rent expense of $2,400  (2005-$2,400)  were charged to
operations.

Otherwise,  none of the following  parties has, since our date of incorporation,
had any material interest,  direct or indirect, in any transaction with us or in
any presently proposed transaction that has or will materially affect us:

  * Any of our directors or officers;
  * Any person  proposed as a nominee for  election as a director;
  * Any person   who beneficially owns, directly or indirectly, shares carrying
    more than 10% of the voting rights attached to our outstanding shares of
    common stock;
  * Our  promoters,  Steven Chan and Keith Smith;
  * Any member of the immediate family of any of the foregoing persons.

ITEM 13:  EXHIBITS AND REPORTS

Exhibits

Exhibit
Number     Description

  3.1*    Articles of Incorporation
  3.2*    Bylaws
 10.1*    Mineral Property Purchase Agreement dated December 15, 2004
 31.1     Certification pursuant to Rule 13a-14(a) under the
          Securities Exchange Act of 1934
 31.2     Certification pursuant to Rule 13a-14(a) under the
          Securities Exchange Act of 1934
 32.1     Certification pursuant to 18 U.S.C. Section 1350, as
          adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 32.2     Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
          to Section 906 of the Sarbanes-Oxley Act of 2002
99.1**    Claims location map

                                       29

<page>

*  filed as an exhibit to our SB-2 dated May 12, 2005

** filed as an exhibit to our registration statement on Form SB-2 filed
   on December 23, 2005

Reports on Form 8-K

We did not file any reports on Form 8-K during the last fiscal quarter of 2006.

ITEM 14:  PRINCIPAL ACCOUNTANT FEES AND SERVICES

Our principal  accountants,  Dale Matheson  Carr-Hilton  Labonte LLP,  Chartered
Accountants, rendered invoices to us during the fiscal periods indicated for the
following fees and services:

                               Fiscal year ended       Fiscal year ended
                               December 31, 2005       December 31, 2006
Audit fees                           $8,100               $9,600
Audit-related fees                     Nil                   Nil
Tax fees                               Nil                   Nil
All other fees                         Nil                   Nil

Audit  fees  consist  of fees  related  to  professional  services  rendered  in
connection with the audit of our annual financial statements,  the review of the
financial statements included in each of our quarterly reports on Form 10-QSB.

Our  policy  is to  pre-approve  all audit and  permissible  non-audit  services
performed by the  independent  accountants.  These  services  may include  audit
services,  audit-related  services,  tax services and other services.  Under our
audit  committee's  policy,  pre-approval  is generally  provided for particular
services or categories of services,  including planned  services,  project based
services  and  routine  consultations.  In  addition,  we may  also  pre-approve
particular  services on a case-by-case  basis. We approved all services that our
independent accountants provided to us in the past two fiscal years.

                                       30

<PAGE>

SIGNATURES

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

Driftwood Ventures, Inc.


By          /s/ Steven Chan
---------------------------
            Steven Chan
            President, CEO, Secretary & Director
            Date: March 27, 2007

By          /s/ Keith Smith
---------------------------
            Keith Smith
            Treasurer, Director,
            principal accounting officer and
            principal financial officer
            Date: March 27, 2007

In  accordance  with the  Securities  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.


By          /s/ Steven Chan
---------------------------
            Steven Chan
            President, CEO, Secretary & Director
            Date: March 27, 2007

By          /s/ Keith Smith
---------------------------
            Keith Smith
            Treasurer, Director,
            principal accounting officer and
            principal financial officer
            Date: March 27, 2007





                                       31