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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

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

                   For the fiscal year ended December 31, 2004
                                             -----------------

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

     For the transition period from _________________ to __________________

                        Commission file number: 001-31546


                              PACIFIC SPIRIT, INC.
             ------------------------------------------------------
             (Exact name of Registrant as specified in its charter)



            Nevada                                      98-0349685
-------------------------------             ------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)



                                11640 96A Avenue
                    Surrey, British Columbia, Canada V3V 2A1
                    -----------------------------------------
                    (Address of principal executive offices)


                                (604) 760 - 1400
               --------------------------------------------------
               Registrant's telephone number, including area code


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, Par Value $0.001
                         ------------------------------
                                (Title of Class)

                                       1

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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 such reports),  and
(2) has been subject to such filing requirements for the past 90 days.

                                             Yes                  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
                                                 ----------         -----------


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.)

                          $66,000 as at March 29, 2005
                          ----------------------------


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


               3,820,000 shares of common stock at March 29, 2005
               --------------------------------------------------


                                       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..............................................12
ITEM   8:  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
                  AND FINANCIAL DISCLOSURES..................................24
ITEM   9:  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS......24
ITEM 10:  EXECUTIVE COMPENSATION.............................................25
ITEM 11:  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.....26
ITEM 12:  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.....................26
ITEM 13:  EXHIBITS AND REPORTS...............................................27
ITEM 14:  PRINCIPAL ACCOUNTANT FEES AND SERVICES ........................... 27










                                       3

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PART I

ITEM 1:  DESCRIPTION OF BUSINESS
In General

We are a  pre-exploration  stage  company.  We have acquired a mining lease on a
total of six  unpatented  lode mineral claims  property  located in the State of
Nevada and has not yet determined  whether this property  contains reserves that
are economically recoverable.  A patented lode mineral claim is the highest form
mineral claim tenure.  No  additional  assessment  work is necessary to keep the
claims in good standing.  All mineral rights, both surface and underground,  are
included in the claim. An unpatented claim requires  additional  assessment work
before all mineral rights can be claimed.

The  recoverability  of minerals  from the property  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 to  complete  the  development  of the  property  and upon future
profitable production or proceeds for the sale thereof.

Mining Lease Agreement

By a lease agreement  effective June 1, 2001 and amended June 25, 2002, November
25,  2002,  and January 9, 2004 the Company was granted the  exclusive  right to
explore  and mine the Del Oro and NP Claims  located in  Pershing  County of the
State of  Nevada.  The  term of this  lease is for 30  years,  renewable  for an
additional  30  years so long as the  condition  of the  lease  is met.  Minimum
payments and performance commitments are as follows:

Minimum Advance Royalty Payments:

The owner  shall be paid a royalty  of 4% of the net  smelter  returns  from all
production.  In respect to this royalty,  the Company is required to pay minimum
advance royalty  payments of the following:  - $5,000 upon execution  (paid) and
$4,500 (paid) for extension of the agreement;  - $2,000 upon execution (paid) of
the amended  agreement dated January 9, 2004; - $5,000 on July 9, 2004 (paid); -
$10,000 on January 9, 2005  (currently  being  renegotiated);  and - each annual
payment thereafter of $50,000 plus an annual increase or decrease  equivalent to
the rate of inflation designated by  the Consumer Price Index for that year with
execution  year  as  base year. Each such payment shall be made by January 9, of
each successive year of lease.

The advance royalty payment of $10,000 due by January 9, 2005 has not been made.
The  Company  is  currently  negotiating  an  amendment  to the  balance  of the
scheduled  advance royalty  payments.  As per the lease agreement,  the landlord
must give written default notice and the Company has 15 days to cure the default
or the lease can be  terminated.  No notice has been received due to the current
negotiations.

                                       4

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The Company can reduce the net  smelter  return  royalty to 0.5% by payment of a
buy-out price of $5,000,000.  Advance  royalty  payments made to the date of the
buy-out will be applied to reduce the buy-out price.

Performance Commitment:

In the event that the Company  terminates the lease after June 1 of any year, it
is required to pay all federal and state mining claim  maintenance  fees for the
next assessment year. The Company is required to perform reclamation work on the
property as required by federal,  state and local law for disturbances resulting
from the Company's activities on the property.

Description of the Del Oro Property

The six unpatented lode mineral  claims,  referred to as the "Del Oro" property,
are located approximately 28 miles south of Winnemucca, Nevada.

Location and Access

The Del Oro Property is Located in Sections  29, 30, and 31,  Township 31 North,
Range 38 East, MDB&M,  Pershing County,  Nevada.  The claims are situated in the
Goldbanks Mining District  approximately  28 miles south of Winnemucca,  Nevada.
Access from  Winnemucca  is south along the Grass Valley paved / gravel road for
approximately 22 miles, turning southwest onto a dirt road toward the east range
about  one mile  north of Leach  Hot  Springs.  The  dirt  road  runs  generally
down-slope toward the southwest for approximately  four miles, then changes to a
south-southeast  direction and begins upslope for approximately three miles here
the road enters unnamed  drainage and continues  approximately  two and one half
miles southwest onto the north side line of the claims.

History of the Del Oro Property

In 1992,  Equinox Resources assumed the operations of the wx Syndicate.  The Del
Oro claims were leased in 1993 to Cameco U. S., Inc.  which  conducted  magnetic
surveys,  rock and limited soil  sampling and then drilled  4,610 feet in eleven
reverse circulation drill holes. This drilling returned anomalous gold assays to
0.012 ounces per ton over 25 feet north of the present  claim  position.  Cameco
surrendered their lease in 1994 to Nevada Mine Properties, Inc. (a subsidiary of
Hecla Mining Co.). Subsequently Nevada Mine Properties quit-claimed the property
to Nevada Mine Properties II, Inc (no association with Hecla).

In 1995  Newhawk  Gold Mines LTD.  acquired  a land  position  in the area which
included a lease on the Del Oro  Property.  A regional  soil grid survey in 1996
resulted in a three-hole  1,850 foot reverse  circulation  drill program testing
the roots beneath the  previously  drilled air track targets.  Drill  intercepts
returned 0.017 ounces per ton of gold over 15 feet. The leased property has been
maintained by Nevada Mine Properties II, Inc. since 1998. In June 2001,  Pacific
Spirit Inc. leased the six claims from Nevada Mine Properties II, Inc.

                                       5
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Geological Report

Our business  activities to date have been restricted to obtaining a report from
our mining engineer,  Sam S. Arentz,  III. According to Mr. Arentz's report, the
six Del Oro claims were staked in 1986 by wx syndicate  who completed 12 shallow
air track drill holes which  returned  gold assays in the amount of 0.019 Ounces
per ton over 10 feet to 0.010 Ounces per ton over 50 feet.

Mr. Arentz recommends a two-phase program to explore the Del Oro Property. Phase
1 includes  additional  claim staking followed by geologic mapping and rock chip
and soil sampling.  A five hole, 2,500 foot reverse circulation drill program is
proposed  for phase 1. If  drilling  intersects  gold values in the 0.05 to 0.10
Ounces per ton range over thicknesses of tens of feet, then consideration  would
be given toward a phase 2 effort which would include an additional  5000 feet of
reverse circulation drilling.

PHASE 1 - PROPOSED BUDGET

                                          ESTIMATED COSTS (US$)
                                          ---------------------
Claim Acquisition                                    2,000
Rock and Soil Sampling and Assays                    2,500
Geologic Mapping                                     3,000
Drilling + Assays (2,500' @ $15 / Ft)               37,500
Reclamation                                          5,000
Report Preparation                                   3,000
                                                     -----
                                                   53,000

PHASE 2 - PROPOSED BUDGET

Drilling + Assays (5000' @ $15 / Ft)                75,000
Reclamation                                          5,000
Report Preparation                                   3,000
                                                     -----
                                                    83,000


Compliance with Government Regulation

We will secure all necessary  permits for  exploration  and, if  development  is
warranted on the  property,  will file final plans of operation  before we start
any mining  operations.  We anticipate no discharge of water into active stream,
creek,  river, lake or any other body of water regulated by environmental law or
regulation.  No  endangered  species  will  be  disturbed.  Restoration  of  the
disturbed  land will be completed  according to law. All holes,  pits and shafts
will be sealed upon abandonment of the property. It is difficult to estimate the
cost of compliance with the  environmental  law since the full nature and extent
of our proposed  activities  cannot be determined  until we start our operations
and know what will involve from an environmental standpoint.

                                       6

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The initial drill program outlined in Phase I will be conducted on B.L.M. lands.
The BLM will require the submittal of a plan of operation which would be used as
the basis for the bonding requirement, water permit and reclamation program. The
reclamation  program  could  include  both  surface  reclamation  and drill hole
plugging  and  abandonment.  The  amount of the  bonding  would be based upon an
estimate by the BLM related to the cost of reclamation if done by an independent
contractor.  It is estimated the bonding  requirement would be $5,000. The water
permit and fee is  included in the  reclamation  cost which is  estimated  to be
$1,000.

We would be subjected to the B.L.M.  rules and regulations  governing  mining on
federal lands including a draft  environmental  impact  statement or EIS, public
hearings and a final EIS. The final EIS would address county and state needs and
requirements  and would cover  issues and permit  requirements  concerning:  air
quality,  heritage resources,  geology, energy, noise, soils, surface and ground
water, wetlands, use of hazardous chemicals,  vegetation,  wildlife, recreation,
land  use,   socioeconomic  impact,   scenic  resources,   health  and  welfare,
transportation  and reclamation.  Bonding  requirements for mining are developed
from the final EIS.

We are in compliance  with all laws and will continue to comply with the laws in
the future.  We believe that compliance with the laws will not adversely  affect
our  business  operations.  Pacific  Spirit,  Inc.  anticipates  that it will be
required to post bonds in the event the expanded work programs involve extensive
surface disturbance.

Employees

We have no employees  as of the date of this annual  report other than Mr. Peter
Sotola, the president and sole director.

Research and Development Expenditures

We have not incurred any exploration  expenditures to date. We have not incurred
any other 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.

Risk Factors
------------

In addition to the other  information  in this  current  report,  the  following
factors should be carefully considered in evaluating our business and prospects:

THE SOLE MINERAL PROPERTY IN WHICH WE HAVE AN INTEREST, THE DEL ORO PROJECT, HAS
NO RESERVES.

Our sole mineral property  interest is the Del Oro Project.  As this property is
in the pre-exploration  stage, it has no reserves and does not generate any cash
flow.  Accordingly,  we have no means of  producing  any income.  We  anticipate
incurring losses for the foreseeable future.

                                       7

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

Our current  operating  funds are less than  necessary  to meet the terms of the
mining lease, and therefore we will need to obtain additional financing in order
to complete our  business  plan.  As of December  31,  2004,  we had cash in the
amount of $576. We currently do not have any operations and we have no income.

Our business plan for the next twelve months calls for  significant  expenses in
connection  with the  exploration of the Del Oro Property.  In order to complete
phase one of the exploration  program, we anticipate the costs to be $53,000. We
are also  required  to pay an  additional  $10,000  in  order to keep our  lease
agreement respecting the Del Oro Property in good standing.  The royalty payment
of $10,000 due by January 9, 2005 has not been made.  The  Company is  currently
negotiating  an  amendment  to the  balance  of the  scheduled  advance  royalty
payments.  In addition, we anticipate incurring $10,000 in professional fees and
$15,000 in administrative expenses.

We  will  require  additional   financing  in  order  to  meet  the  anticipated
exploration  costs and to sustain our business  operations.  We do not currently
have any arrangements for financing and we can provide no assurance to investors
that we will be able to find such  financing if required.  Obtaining  additional
financing  would be subject to a number of factors,  including the market prices
for gold, copper,  nickel and platinum group metals,  investor acceptance of our
property  and investor  sentiment.  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.  Any sale of share  capital  will result in dilution to
existing shareholders.  The only other anticipated alternative for the financing
of  further  exploration  would  be the  offering  by us of an  interest  in our
properties  to be  earned by  another  party or  parties  carrying  out  further
exploration thereof, which is not presently contemplated.

IF WE DO NOT COMPLETE THE REQUIRED COMMITMENTS OF THE MINING LEASE AGREEMENT, WE
WILL LOSE OUR  INTEREST IN THE DEL ORO  RESOURCE  PROPERTY  AND OUR BUSINESS MAY
FAIL.

We are  obligated to incur  minimum  payments  and  performance  commitments  as
outlined in the Mining Lease Agreement  mentioned in that section. If we fail to
meet the terms of the lease  agreement,  we will forfeit our interest in the Del
Oro Property.  The lease may be terminated if the landlord  gives written notice
of such default.  After receipt of default,  Pacific  Spirit has 15 days to cure
the default. We will require substantial additional capital to fund phase one of
the exploration  program. We have no agreements for additional  financing and we
can provide no assurance to investors that additional  funding will be available
to us on  acceptable  terms,  or at all,  to  continue  operations,  to fund new
business  opportunities or to execute our business plan. If we lose our interest
in the Del Oro Property, then there is a substantial risk that our business will
fail.

                                       8

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

The search for  valuable  minerals  as a business  is  extremely  risky.  We can
provide  investors  with no  assurance  that the mineral  property  that we have
leased contains  commercially  exploitable reserves of copper,  nickel, gold and
platinum  group  metals.  Exploration  for  minerals  is a  speculative  venture
necessarily involving substantial risk. The expenditures to be made by us in the
exploration of the optioned  mineral  properties may not result in the discovery
of  commercial  quantities  of minerals.  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.

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 liabilities 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.

WE MAY NOT BE ABLE TO OPERATE AS A GOING CONCERN AND OUR BUSINESS MAY FAIL.

The Independent  Auditor's  Report to our audited  financial  statements for the
period ended  December 31,  2004,  indicates  that there are a number of factors
that raise  substantial  doubt about our ability to continue as a going concern.
Such factors  identified  in the report are: we are in a net loss  position;  we
have not attained  profitable  operations;  and we are dependent  upon obtaining
adequate financing to fulfill our exploration activities.  If we are not able to
continue as a going concern, it is likely investors will lose their investments.

IF WE  BECOME  SUBJECT  TO  BURDENSOME  GOVERNMENT  REGULATION  OR  OTHER  LEGAL
UNCERTAINTIES, OUR BUSINESS WILL BE NEGATIVELY AFFECTED.

The legal  and  regulatory  environment  that  pertains  to the  exploration  of
minerals is uncertain  and may change.  Uncertainty  and new  regulations  could
increase our costs of doing  business and prevent us from  exploring for mineral
deposits.  The growth of demand for minerals may also be  significantly  slowed.
This  could  delay  growth in  potential  demand  for and limit our  ability  to
generate  revenues.  In  addition  to new laws and  regulations  being  adopted,
existing laws may be applied to mining that have not as yet been applied.  These
new  laws may  increase  our cost of doing  business  with the  result  that our
financial condition and operating results may be harmed.

                                       9

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BECAUSE OUR SOLE DIRECTOR  OWNS 65.44% OF OUR  OUTSTANDING  COMMON  STOCK,  THEY
COULD  MAKE AND  CONTROL  CORPORATE  DECISIONS  THAT MAY BE  DISADVANTAGEOUS  TO
MINORITY SHAREHOLDERS.

Our sole director owns  approximately  65.44% of the  outstanding  shares of our
common stock.  Accordingly,  he 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, and also
the power to prevent or cause a change in control. The interests of our director
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. Peter Sotola is presently  required to spend only 15% of his
business time on business management services for our company.  While Mr. Sotola
presently  possesses  adequate time to attend to our  interests,  it is possible
that the demands on Mr. Sotola from his other  obligations  could  increase with
the  result  that he would no longer be able to  devote  sufficient  time to the
management of our business.  In addition,  Mr. Sotola may not possess sufficient
time  for our  business  if the  demands  of  managing  our  business  increased
substantially beyond current levels.

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

There is  currently  no  market  for our  common  stock  and we can  provide  no
assurance  that a market  will  develop.  We expect to apply for  listing of our
common stock on the over the counter  bulletin  board.  However,  we can provide
investors with no assurance that our shares will be traded on the bulletin board
or, if  traded,  that a public  market  will  materialize.  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.

IF A MARKET FOR OUR COMMON STOCK DEVELOPS, OUR STOCK PRICE MAY BE VOLATILE.

If a market for our common stock  develops,  we anticipate that the market price
of our common stock will be subject to wide  fluctuations in response to several
factors, including:

(1) actual or  anticipated  variations  in our  results of  operations;
(2) our ability or inability to generate new revenues;
(3) increased  competition;  and
(4) conditions and trends in the mineral exploration industry.

Further,  if our common  stock is traded on the NASD over the  counter  bulletin
board,  our  stock  price may be  impacted  by  factors  that are  unrelated  or
disproportionate to our operating  performance.  These market  fluctuations,  as
well as general economic,  political and market conditions,  such as recessions,
interest rates or international  currency  fluctuations may adversely affect the
market price of our common stock.

                                       10

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Forward-Looking Statements

This Form 10-KSB  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 are likely to differ  materially from those  anticipated in these
forward-looking  statements  for many  reasons,  including the risks faced by us
described in the above "Risk Factors" section and elsewhere in this document.


ITEM 2:  DESCRIPTION OF PROPERTY

Our executive offices are located at 11640 96A Avenue, Surrey, British Columbia,
Canada.  Our officers  provided  principal  executive office space and telephone
service free of charge up to June 30, 2004. Effective July 31, 2004, the Company
was charged $250 per month for rent and telephone expenses. The costs associated
with the use of the telephone  and mailing  address were deemed by management to
be reasonable.

ITEM 3:  LEGAL PROCEEDINGS

There are no legal proceedings pending or threatened against us.

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

No matter was 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 through  the
facilities of any quotation system.  While we intend to apply to have our shares
of common stock quoted on the National  Association  of Securities  Dealers' OTC
Bulletin Board, there is no guarantee that we will be successful.

We have 27 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

                                       11

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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.

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

Plan of Operation

Our plan of operation for the twelve months following the date of this report is
to  complete  the  recommended  phase  one  exploration  program  on the Del Oro
Property in which we hold a leasehold interest.  We anticipate that this program
will cost us $53,000.

In January 2004, we amended our mineral claims  agreement  regarding the Del Oro
Property located approximately 28 miles south of Winnemucca, Nevada. We paid the
lessor of the property $2,000 upon execution of the agreement.  We also paid the
lessor $5,000 by July 9, 2004 as per the amended agreement. In order to keep the
lease in good  standing,  we must pay the lessor $10,000 by January 9, 2005, and
$50,000 per year  thereafter.  The royalty  payment of $10,000 due by January 9,
2005 has not been made. The Company is currently negotiating an amendment to the
balance of the scheduled advance royalty payments.

In addition,  we anticipate spending $10,000 on professional fees and $15,000 on
administrative  expenses.  Our  cash on hand at  December  31,  2004  was  $576.
Accordingly,  we will need to raise  additional  funds in order to complete  the
recommended  exploration  program  on the Del Oro  Property  and meet our  other
expected  expenses.  We do not  currently  have  any  arrangements  for  raising
additional funding.

Results of Operations For the Year Ended December 31, 2004


We  incurred  a  net  loss of  $23,338  for the year-ended December 31, 2004, as
compared to a loss of $12,962 in the same period in 2003.  The  increase in  net
loss  was  primarily  due to the increase in office and administrative services,
mineral  property royalty payments, and filing fees. During fiscal year 2004, we
incurred legal fees of $1,000 (2003: $2,719),  administrative services of $3,000
(2003: $500), accounting and audit fees of $6,550  (2003: $6,751), mineral lease
advance  royalty  of $7,805 (2003: $2,155), office and miscellaneous expenses of
$1,500 (2003: $231), and transfer  agent and filing fees of $3,261 (2003: $414).
Effective  July  2004,  as  per a management agreement, the president started to
charge  $500  per month for administrative services. At year-end, we had cash on
hand of $576 (2003: $12,499).  Our liabilities at the same date totalled $18,180
(2003: $6,698).

ITEM 7:  FINANCIAL STATEMENTS


                                       12

<page>

                              PACIFIC SPIRIT, INC.

                        (A Pre-exploration Stage Company)

                              FINANCIAL STATEMENTS

                           December 31, 2004 and 2003

                             (Stated in US Dollars)




                                       13

<page>

TERRY AMISANO LTD.                                               AMISANO HANSON
KEVIN HANSON LTD.                                         CHARTERED ACCOUNTANTS



             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders,
Pacific Spirit Inc.

We have  audited  the  accompanying  balance  sheets of Pacific  Spirit  Inc. (A
Pre-exploration  Stage Company) as of December 31, 2004 and 2003 and the related
statements of operations,  cash flows and stockholders'  equity (deficiency) for
the years ended  December  31, 2004 and 2003 and the period May 4, 2001 (Date of
Incorporation)  to  December  31,  2004.  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 of America).  Those standards require
that we plan and  perform an audit to obtain  reasonable  assurance  whether the
financial  statements  are free of  material  misstatement.  An  audit  includes
examining on a test basis,  evidence  supporting the amounts and  disclosures in
the  financial  statements.  An audit also  includes  assessing  the  accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for our opinion.

In our opinion,  these financial statements referred to above present fairly, in
all  material  respects,  the  financial  position of Pacific  Spirit Inc. as of
December 31, 2004 and 2003 and the results of its  operations and its cash flows
for the years ended  December 31, 2004 and 2003 and the period May 4, 2001 (Date
of Incorporation) to December 31, 2004, in conformity with accounting principles
generally accepted in the United States of America.

The  accompanying  financial  statements  referred  to above have been  prepared
assuming that the Company will continue as a going concern. As discussed in Note
1 to the financial statements,  the Company is in the exploration stage, and has
no  established  source of  revenue  and is  dependent  on its  ability to raise
capital from shareholders or other sources to sustain operations. These factors,
along with other  matters as set forth in Note 1, raise  substantial  doubt that
the  Company  will  be able  to  continue  as a  going  concern.  The  financial
statements do not include any adjustments  that might result from the outcome of
this uncertainty.


Vancouver, Canada                                       (sgd) "AMISANO HANSON"
March 3, 2005                                            Chartered Accountants





750 West Pender Street, Suite 604                     Telephone:  604-689-0188
Vancouver Canada                                      Facsimile:  604-689-9773
V6C 2T7                                               E-MAIL: amishan@telus.net


                                       14
<page>

                               PACIFIC SPIRIT INC.
                        (A Pre-exploration Stage Company)
                                 BALANCE SHEETS
                           December 31, 2004 and 2003
                             (Stated in US Dollars)
                             ----------------------

<table>
<caption>
                                                     ASSETS                        2004               2003
                                                     ------                        ----               ----

                                                                           <c>                  <c>
Current
    Cash                                                                    $            576    $         12,499
    Prepaid expenses                                                                     800                 733
                                                                            ----------------    ----------------

                                                                            $          1,376    $         13,232
                                                                            ================    ================

                                                    LIABILITIES
                                                    -----------

Current
    Accounts payable and accrued liabilities - Note 3                       $         12,504    $          6,698
    Due to related party - Note 3                                                      5,676                   -
                                                                            ----------------    ----------------

                                                                                      18,180               6,698
                                                                            ----------------    ----------------

                                         STOCKHOLDERS' EQUITY (DEFICIENCY)

Preferred stock, $0.001 par value
         10,000,000  shares authorized, none outstanding
Common stock, $0.001 par value
        100,000,000  shares authorized
          3,820,000  (2003:  3,820,000) shares outstanding                             3,820               3,820
Paid-in capital                                                                       87,180              87,180
Deficit accumulated during the pre-exploration stage                                (107,804)            (84,466)
                                                                            ----------------    ----------------

                                                                                     (16,804)              6,534
                                                                            ----------------    ----------------

                                                                            $          1,376    $         13,232
                                                                            ================    ================
</table>
Nature and Continuance of Operations - Note 1
Commitments - Note 4
Subsequent Event - Note 4



                             SEE ACCOMPANYING NOTES


                                       15

<page>


                               PACIFIC SPIRIT INC.
                        (A Pre-exploration Stage Company)
                            STATEMENTS OF OPERATIONS
                 for the years ended December 31, 2004 and 2003
  and for the period May 4, 2001 (Date of Incorporation) to December 31, 2004
                             (Stated in US Dollars)
                             ----------------------

<table>
<caption>
                                                                                                         May 4, 2001
                                                                                                          (Date of
                                                                                                       Incorporation)
                                                                              Years ended                    to
                                                                              December 31,              December 31,
                                                                         2004             2003              2004
                                                                         ----             ----              ----

                                                                    <c>              <c>               <c>
Expenses
    Accounting and audit fees                                       $        6,550   $       6,751    $        26,234
    Administrative services - Note 3                                         3,000             500             20,500
    Bank charges and interest                                                  222             218                859
    Exploration costs                                                            -               -              1,747
    Incorporation costs                                                          -               -                900
    Legal fees                                                               1,000           2,719             32,206
    Mineral lease advance royalty - Note 4                                   7,805           2,155             17,960
    Office and miscellaneous                                                 1,500             231              2,018
    Transfer agent & filing fees                                             3,261             414              5,480
                                                                    --------------   -------------    ---------------

Loss before other item                                                     (23,338)        (12,988)          (107,904)

Other item
    Interest income                                                              -              26                100
                                                                    --------------   -------------    ---------------

Net loss for the period                                             $      (23,338)  $     (12,962)   $      (107,804)
                                                                    ==============   =============    ===============

Basic loss per share                                                $        (0.01)  $       (0.00)
                                                                    ==============   =============

Weighted Average Number of Shares Outstanding                            3,820,000       3,820,000
                                                                    ==============   =============
</table>



                             SEE ACCOMPANYING NOTES

                                       16

<page>

                               PACIFIC SPIRIT INC.
                        (A Pre-exploration Stage Company)
                            STATEMENTS OF CASH FLOWS
                 for the years ended December 31, 2004 and 2003
  and for the period May 4, 2001 (Date of Incorporation) to December 31, 2004
                             (Stated in US Dollars)
                             ----------------------

<table>
<caption>
                                                                                                     May 4, 2001
                                                                                                       (Date of
                                                                                                    Incorporation)
                                                                           Years ended                    to
                                                                          December 31,               December 31,
                                                                      2004            2003               2004
                                                                      ----            ----               ----

                                                                 <c>             <c>               <c>
Cash Flows used Operating Activities
    Net loss for the period                                      $     (23,338)  $     (12,962)   $       (107,804)
    Changes in non-cash working capital
     items related to operations:
      Prepaid expenses                                                     (67)           (733)               (800)
      Accounts payable and accrued
       liabilities                                                       5,806          (1,789)             12,504
                                                                 -------------   --------------   ----------------

                                                                       (17,599)        (15,484)            (96,100)
                                                                 -------------   -------------    ----------------

Cash Flows from Financing Activities
    Capital stock issued                                                     -               -              91,000
    Advance from a director                                              5,676               -               5,676
                                                                 -------------   -------------    ----------------

                                                                         5,676               -              96,676
                                                                 -------------   -------------    ----------------

Increase (decrease) in cash during the period                          (11,923)        (15,484)                576

Cash, beginning of the period                                           12,499          27,983                   -
                                                                 -------------   -------------    ----------------

Cash, end of the period                                          $         576   $      12,499    $            576
                                                                 =============   =============    ================

Supplemental disclosure of cash flow
 information
    Cash paid for:
      Interest                                                   $           -   $           -    $              -
                                                                 =============   =============    ================

      Income taxes                                               $           -   $           -    $              -
                                                                 =============   =============    ================
</table>




                             SEE ACCOMPANYING NOTES

                                       17

<page>

                               PACIFIC SPIRIT INC.
                        (A Pre-exploration Stage Company)
                 STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
    for the period May 4, 2001 (Date of Incorporation) to December 31, 2004
                             (Stated in US Dollars)
                             ----------------------

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

                                     <c>               <c>              <c>               <c>                <c>
Capital stock issued for cash - at $0.01    2,500,000  $         2,500  $        22,500  $                -   $        25,000

Net loss for the period                             -                -                -             (40,255)          (40,255)
                                      ---------------  ---------------  ---------------  ------------------   ---------------

Balance as at December 31, 2001             2,500,000            2,500           22,500             (40,255)          (15,255)

Capital stock issued for cash - at $0.05    1,320,000            1,320           64,680                   -            66,000

Net loss for the year ended
 December 31, 2002                                  -                -                -             (31,249)          (31,249)
                                      ---------------  ---------------  ---------------  ------------------   ---------------

Balance as at December 31, 2002             3,820,000            3,820           87,180             (71,504)           19,496

Net loss for the year ended
 December 31, 2003                                  -                -                -             (12,962)          (12,962)
                                      ---------------  ---------------  ---------------  ------------------   ---------------

Balance as at December 31, 2003             3,820,000            3,820           87,180             (84,466)            6,534

Net loss for the year ended
 December 31, 2004                                 -                -                -              (23,338)          (23,338)
                                      ---------------  ---------------  ---------------  ------------------   ---------------

Balance as at December 31, 2004             3,820,000  $         3,820  $        87,180  $         (107,804)  $       (16,804)
                                      ===============  ===============  ===============  ==================   ===============
</table>



                             SEE ACCOMPANYING NOTES

                                       18

<page>

                               PACIFIC SPIRIT INC.
                        (A Pre-exploration Stage Company)
                        NOTES TO THE FINANCIAL STATEMENTS
                           December 31, 2004 and 2003
                             (Stated in US Dollars)


Note 1        Nature and Continuance of Operations
              ------------------------------------

              The  Company is in the  pre-exploration  stage.  The  Company  has
              entered  into a lease  agreement  to  explore  and mine a property
              located in the state of Nevada,  United  States of America and has
              not yet determined  whether this property  contains  reserves that
              are economically  recoverable.  The recoverability of amounts from
              the property 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 to complete the  development  of the
              property and upon future profitable production or proceeds for the
              sale thereof.

              The  financial  statements  have  been  prepared  using  generally
              accepted  accounting  principles  in the United  States of America
              applicable for a going concern which assumes that the Company will
              realize its assets and discharge its  liabilities  in the ordinary
              course of business.  The Company has a working capital  deficiency
              of $16,804  and as at  December  31,  2004,  has not yet  attained
              profitable  operations  and has  accumulated a deficit of $107,804
              since  inception.  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. These  financial
              statements  do not  include  any  adjustments  to the  amounts and
              classification  of assets and  liabilities  that may be  necessary
              should the Company be unable to continue as a going  concern.  The
              Company anticipates that additional funding will be in the form of
              equity  financing from the sale of common shares.  The Company may
              also seek to obtain  short-term  loans from the  directors  of the
              company.  There are no  current  arrangements  in place for equity
              funding or short-term loans.

              The Company was incorporated in the State of Nevada, United States
              of America on May 4, 2001.

Note 2        Summary of Significant Accounting Policies
              ------------------------------------------

              The  financial  statements  of the Company  have been  prepared in
              accordance with generally  accepted  accounting  principles in the
              United States of America.  Because a precise determination of many
              assets and  liabilities  is  dependent  upon  future  events,  the
              preparation  of  financial  statements  for a  period  necessarily
              involves  the use of estimates  that have been made using  careful
              judgement. Actual results may vary from these estimates.

              The financial  statements  have,  in  management's  opinion,  been
              properly   prepared   within  the  framework  of  the  significant
              accounting policies summarized below:


                                       19

<page>

Note 2        Summary of Significant Accounting Policies - (cont'd)
              ------------------------------------------

              Pre-exploration Stage Company
              -----------------------------

              The Company  complies with  Financial  Accounting  Standard  Board
              Statement No. 7 and The  Securities  and Exchange  Commission  Act
              Guide 7 for its characterization of the Company as pre-exploration
              stage.

              Mineral Lease
              -------------

              Costs of lease  acquisition,  exploration,  carrying and retaining
              unproven mineral lease properties are expensed as incurred.

              Environmental Costs
              -------------------

              Environmental  expenditures that relate to current  operations are
              expensed 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
              expensed.  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 plan of  action  based on the then
              known facts.

              Income Taxes
              ------------

              The Company uses the  liability  method of  accounting  for income
              taxes  pursuant to  Statement of  Financial  Accounting  Standards
              ("FAS"),  No. 109 "Accounting for Income Taxes".  Under the assets
              and  liability  method  of  FAS  109,   deferred  tax  assets  and
              liabilities  are  recognized  for  the  future  tax   consequences
              attributable  to  temporary   differences  between  the  financial
              statements carrying amounts of existing assets and liabilities and
              their  respective tax bases.  Deferred tax assets and  liabilities
              are measured  using enacted tax rates expected to apply to taxable
              income  in the  years in which  those  temporary  differences  are
              expected to be recovered or settled.

              Basic Loss Per Share
              --------------------

              The Company  reports basic loss per share in  accordance  with the
              FAS No.  128,  "Earnings  Per  Share".  Basic  loss  per  share is
              computed using the weighted  average number of shares  outstanding
              during the year.

                                       20

<page>

Note 2        Summary of Significant Accounting Policies - (cont'd)
              ------------------------------------------

              Financial Instruments
              ---------------------

              The  carrying  value  of  cash,   accounts   payable  and  accrued
              liabilities  and due to  related  party  approximates  fair  value
              because  of  the  short  maturity  of  these  instruments.  Unless
              otherwise  noted, it is  management's  opinion that the Company is
              not exposed to  significant  interest,  currency  or credit  risks
              arising from these financial instruments.

              New Accounting Standards
              ------------------------

              Management does not believe that any recently issued,  but not yet
              effective  accounting  standards if currently adopted could have a
              material effect on the accompanying financial statements.

Note 3        Related Party Transactions
              --------------------------

              The  Company  was  charged  the  following  by a  director  of the
              Company:

<table>
<caption>
                                                                                                   May 2, 2001
                                                                                                    (Date of
                                                                                                 Incorporation)
                                                                         Years ended                   to
                                                                        December 31,              December 31,
                                                                    2004            2003              2004
                                                                    ----            ----              ----
              
                                                 <c>            <c>             <c>
              Administrative services                           $       3,000  $           -   $           3,000
                                                                =============  =============   =================
</table>

              These  charges were  measured by the exchange  amount which is the
              amount agreed upon by the transacting parties.

              Included in accounts payable at December 31, 2004 is $3,000 (2003:
              $Nil)  consisting of unpaid  management  fees due to a director of
              the Company.

              The amount  due to  related  party,  a  director  of the  Company,
              consist of unpaid advances of $5,676. The amount due is unsecured,
              non-interest bearing and has no specific terms for repayment.

                                       21

<page>

Note 4        Commitments
              -----------

              Mineral Property

              By a lease  agreement  effective June 1, 2001 and amended June 25,
              2002,  November  25,  2002 and  January 9, 2004,  the  Company was
              granted the exclusive right to explore and mine the Del Oro and NP
              Claims located in Pershing County of the State of Nevada. The term
              of this  lease is for 30 years,  renewable  for an  additional  30
              years so long as the  conditions  of the  lease  are met.  Minimum
              payments and performance commitments are as follows:

              Minimum Advance Royalty Payments:

              The owner shall be paid a royalty of 4% of the net smelter returns
              from all  production.  In respect to this royalty,  the Company is
              required to pay minimum advance royalty payments of the following:

              -        $5,000 upon execution (paid) and $4,500 (paid) for
                        extension of the agreement;

              -        $2,000 upon execution of the amended agreement dated
                       January 9, 2004 (paid);

              -        $5,000 on July 9, 2004 (paid);

              -        $10,000 on January 9, 2005;

              -         each January 9 thereafter, a payment of $50,000 plus an
                annual increase or decrease equivalent to the  date of inflation
                designated by the Consumer  Price Index for that year with the
                execution year as the base year.

              The advance royalty payment of $10,000 due January 9, 2005 has not
              been made.  The Company is currently  negotiating  an amendment to
              the balance of the advance royalty  payments due. As per the lease
              agreement,  the landlord must give written  default  notice to the
              Company  and the  Company  then has 15 days to cure the default or
              the lease can be  terminated.  No notice has been  received due to
              current negotiations.

              The Company can reduce the net smelter  return  royalty to 0.5% by
              payment of a buy-out price of $5,000,000. Advance royalty payments
              made to the date of the  buy-out  will be  applied  to reduce  the
              buy-out price.


                                       22

<page>

Note 4        Commitments - (cont'd)
              -----------

              Performance Commitment:

              In the event that the Company terminates the lease after June 1 of
              any year, it is required to pay all federal and state mining claim
              maintenance  fees for the next  assessment  year.  The  Company is
              required to perform  reclamation  work on the property as required
              by federal,  state and local law for  disturbances  resulting from
              the Company's activities on the property.

Note 5        Deferred Tax Assets
              -------------------

              The following table  summarizes the significant  components of the
              Company's deferred tax assets:

<table>
<caption>
                                                                                                      Total
              
                                                                                  <c>
              Deferred tax assets
                  Non-capital loss carryforward                                                   $        25,294
              Less: valuation allowance                                                                   (25,294)
                                                                                                  ---------------

                                                                                                  $             -
                                                                                                  ===============
</table>

              The amount  taken into income as deferred  tax assets must reflect
              that  portion of the income  tax loss  carryforwards  that is more
              likely than not to be realized from future operations. The Company
              has chosen to provide an allowance  of 100% against all  available
              income tax loss carryforwards, regardless of their time of expiry.

Note 6        Income Taxes
              ------------

              No  provision  for  income  taxes has been  provided  for in these
              financial statements due to the net loss. At December 31, 2004 the
              Company  has  net  operating  loss  carryforwards,   which  expire
              commencing in 2021, totalling  approximately $106,804, the benefit
              of which has not been recorded in the financial statements.

                                       23

<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  2004  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 disclosed 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

<table>
<caption>

              <c>      <c>                                          <c>
Name              Age     Position with Registrant                     Served as a Director
                                                                         or Officer since
Peter Sotola       58     President, Secretary, Treasurer,                May 4, 2001
                          Chief Executive Officer, and
                          Director (Principal Executive Officer,
                          Principal Financial Officer, and Principal
                          Accounting Officer)
</table>

                                       24

<page>

The following is a biographical summary of Mr. Peter Sotola:

Peter Sotola is the founder of our company.  Mr. Sotola has been the  President,
Secretary-Treasurer  and Director  since  Pacific  Spirit's  inception on May 4,
2001.  Between  1987 and 1999 Mr.  Sotola  was an account  executive  at Georgia
Pacific  Securities,  which has its  principal  offices  in  Vancouver,  British
Columbia,  and engages in the business of buying and selling public  securities.
From 1999 to the  present  Mr.  Sotola has been  engaged in  providing  business
consulting services.  He is expected to hold his position with our company until
the next annual  meeting of  shareholders.  Mr.  Sotola  educational  experience
includes attending the College of Hotel Management in Mareinbad,  Czechoslovakia
between 1976 and 1980. From 1980 to 1982 he attended the Economic  University in
Prague, Czechoslovakia where he majored in economics and political science.

All directors are elected annually by our shareholders and hold office until the
next Annual  General  Meeting.  Each officer holds office at the pleasure of the
board of directors.

ITEM 10:  EXECUTIVE COMPENSATION

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 years ended December 31, 2004 and 2003.

<table>
<caption>
                          Annual Compensation                         Long Term Compensation
                          -------------------                         ----------------------

                                                   Other       Annual Restricted Stock Options/   LTIP          All Other
Name (1)       Title      Year     Salary   Bonus  Compensation       Awarded          SARs (#)   payouts ($)   Compensation
--------       -----      ----     ------   -----  ------------       -------          --------   -----------   ------------

            <c>       <c>       <c>       <c>     <c>               <c>              <c>        <c>           <c>
Peter Sotola   President/  2004      $0       0      $3,000             0                0          0             0
               Secretary/  2003      $0       0           0             0                0          0             0
               Treasurer
</table>

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
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, 2004 all such filing requirements
applicable to our officers and  directors  were  complied  with  exception  that
reports were filed late by the following persons:

<table>
<caption>
Name and principal position           Number of late       Transactions not timely      Known failures to file a
                                      reports              reported                     required form

                                  <c>                    <c>                          <c>
Peter Sotola                          Nil                      Nil                         One

(President, Secretary, Treasurer,
and Director)
</table>


                                       25

<page>

ITEM 11:  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information regarding the beneficial ownership of
our shares of common  stock at March 14, 2005 by (i) each person  known by us to
be the  beneficial  owner of more  than 5% of our  outstanding  shares of common
stock, (ii) each of our directors, (iii) our executive officers, and (iv) by all
of our  directors and  executive  officers as a group.  Each person named in the
table,  has sole voting and investment power with respect to all shares shown as
beneficially  owned by such person and can be contacted at our executive  office
address.

<table>
<caption>
     TITLE OF CLASS          NAME OF BENEFICIAL OWNER        SHARES OF COMMON STOCK          PERCENT OF CLASS
------------------------- -------------------------------- ---------------------------- ---------------------------

                       <c>                                <c>                           <c>
Common                    Peter Sotola                              2,500,000                    65.44 %
------------------------- -------------------------------- ---------------------------- ---------------------------
Directors and Officers                                                                            65.44%
as a Group consisting
of one person
</table>

The percent of class is based on  3,820,000  shares of common  stock  issued and
outstanding as of the date of this annual report.

ITEM 12:  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During the fiscal year ended December 31, 2004, we paid $3,000 to our president,
Peter Sotola for management services that he has provided to us.

Otherwise,  neither our sole director or officer,  nor any proposed  nominee for
election  as a  director,  nor any person who  beneficially  owns,  directly  or
indirectly,  shares  carrying more than 10% of the voting rights attached to all
of our outstanding  shares, nor any promoter,  nor any relative or spouse of any
of the foregoing persons has any material interest,  direct or indirect,  in any
transaction  since our  incorporation or in any presently  proposed  transaction
which, in either case, has or will materially affect us.

Our management is involved in other  business  activities and may, in the future
become  involved  in  other  business  opportunities.  If  a  specific  business
opportunity  becomes  available,  such  persons may face a conflict in selecting
between our business  and their other  business  interests.  In the event that a
conflict of interest  arises at a meeting of our  directors,  a director who has
such a conflict  will disclose his interest in a proposed  transaction  and will
abstain from voting for or against the approval of such transaction.


                                       26

<page>

ITEM 13:  EXHIBITS AND REPORTS

 3.1          Certificate and Articles of Incorporation*
 3.2          By-Laws*
10.1          Lease Agreement dated June 1, 2001*
10.2          Lease Agreement dated June 25, 2002*
10.3          Lease Agreement dated November 25, 2002*
10.4          Lease amendment dated January 9, 2004**
31.1          Certification  pursuant to 18 U.S.C.  Section 1350, as adopted
              pursuant to Section 302 of the  Sarbanes-Oxley Act of 2002
31.2          Certification  pursuant to 18 U.S.C.  Section 1350, as adopted
              pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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

 *    previously filed as an exhibit to our registration statement on Form SB-2,
      as amended.
 **   previously filed as an exhibit to Form 10-KSB for the year ended
      December 31, 2003

There were no reports  filed on Form 8-K during the quarter  ended  December 31,
2004.

ITEM 14:  PRINCIPAL ACCOUNTANT FEES AND SERVICES

Our principal accountants,  Amisano Hanson,  Chartered  Accountants,  billed the
following fees for the services indicated:

                               Fiscal year-ended
                               December 31, 2004              December 31, 2003

Audit fees                       $   631                               $ 3,110
Audit-related fees                     -                                     -
Tax fees                               -                                     -
All other fees                   $ 4,214                               $ 2,610

Audit  fees  consist  of fees  related  to  professional  services  rendered  in
connection  with the audit of our annual  financial  statements.  All other fees
relate to  professional  services  rendered in connection with the review of the
quarterly financial statements.

Our audit  committee's  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,  the audit
committee may also pre-approve  particular services on a case-by-case basis. Our
audit committee approved all services that our independent  accountants provided
to us in the past two fiscal years.

<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.

Dated: March 29, 2005
                                           Pacific Spirit, Inc.

                                           /s/ Peter Sotola
                                           ------------------------------------
                                           Peter Sotola
                                           President, Secretary, Treasurer
                                           Chief Executive Officer and Director
                                           (Principal Executive Officer,
                                           Principal Financial Officer and
                                           Principal Accounting Officer)