Exhibit 4.2.2

                                     WARRANT
                                     -------

THE SECURITIES  REPRESENTED BY THIS WARRANT HAVE NOT BEEN  REGISTERED  UNDER THE
SECURITIES ACT OF 1933, AS AMENDED,  OR APPLICABLE  STATE  SECURITIES  LAWS. THE
SECURITIES  HAVE BEEN ACQUIRED FOR  INVESTMENT  AND MAY NOT BE OFFERED FOR SALE,
SOLD,  TRANSFERRED  OR  ASSIGNED  IN THE  ABSENCE OF AN  EFFECTIVE  REGISTRATION
STATEMENT FOR THE SECURITIES  UNDER THE  SECURITIES ACT OF 1933, AS AMENDED,  OR
APPLICABLE  STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN A FORM REASONABLY
SATISFACTORY  TO THE ISSUER THAT  REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
APPLICABLE  STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID
ACT.  NOTWITHSTANDING  THE FOREGOING,  THIS WARRANT MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT.


                                  NEWGOLD, INC.


                        Warrant To Purchase Common Stock

Warrant No.: CCP-002                                 Number of Shares: 1,250,000

Date of Issuance: January 27, 2006

Newgold,  Inc., a Delaware  corporation (the "COMPANY"),  hereby certifies that,
for good and valuable  consideration,  the receipt and  sufficiency of which are
hereby acknowledged, Cornell Capital Partners, LP (the "HOLDER"), the registered
holder hereof or its permitted  assigns,  is entitled,  subject to the terms set
forth below, to purchase from the Company upon surrender of this Warrant, at any
time or times on or after the date hereof, but not after 11:59 P.M. Eastern Time
on the  Expiration  Date (as defined  herein)  One  Million  Two  Hundred  Fifty
Thousand  (1,250,000)  fully paid and  nonassessable  shares of Common Stock (as
defined herein) of the Company (the "WARRANT  SHARES") at the exercise price per
share  provided in Section  1(b) below or as  subsequently  adjusted;  provided,
however,  that in no event shall the holder be entitled to exercise this Warrant
for a number of Warrant Shares in excess of that number of Warrant Shares which,
upon giving effect to such exercise,  would cause the aggregate number of shares
of Common Stock  beneficially  owned by the holder and its  affiliates to exceed
4.99% of the  outstanding  shares of the Common Stock  following  such exercise,
except within sixty (60) days of the Expiration Date (however,  such restriction
may be waived by Holder (but only as to itself and not to any other holder) upon
not  less  than 65 days  prior  notice  to the  Company).  For  purposes  of the
foregoing  proviso,  the aggregate number of shares of Common Stock beneficially
owned by the holder and its  affiliates  shall  include  the number of shares of
Common Stock  issuable  upon  exercise of this Warrant with respect to which the
determination  of such proviso is being made, but shall exclude shares of Common
Stock which would be issuable  upon (i) exercise of the  remaining,  unexercised
Warrants  beneficially  owned by the holder and its









                                        1
<PAGE>
affiliates  and (ii) exercise or conversion of the  unexercised  or  unconverted
portion of any other securities of the Company  beneficially owned by the holder
and its affiliates  (including,  without  limitation,  any convertible  notes or
preferred stock) subject to a limitation on conversion or exercise  analogous to
the limitation contained herein.  Except as set forth in the preceding sentence,
for purposes of this  paragraph,  beneficial  ownership  shall be  calculated in
accordance  with  Section  13(d) of the  Securities  Exchange  Act of  1934,  as
amended.  For purposes of this Warrant, in determining the number of outstanding
shares of Common Stock a holder may rely on the number of outstanding  shares of
Common Stock as reflected in (1) the  Company's  most recent Form 10-QSB or Form
10-KSB, as the case may be, (2) a more recent public announcement by the Company
or (3) any other notice by the Company or its transfer  agent  setting forth the
number of shares of Common Stock  outstanding.  Upon the written  request of any
holder, the Company shall promptly,  but in no event later than one (1) Business
Day following the receipt of such notice,  confirm in writing to any such holder
the number of shares of Common Stock then  outstanding.  In any case, the number
of outstanding shares of Common Stock shall be determined after giving effect to
the  exercise of Warrants (as defined  below) by such holder and its  affiliates
since the date as of which such number of outstanding shares of Common Stock was
reported.

         Section 1.

                  (a) This  Warrant is the common  stock  purchase  warrant (the
"WARRANT")  issued pursuant to the Securities  Purchase  Agreement  ("SECURITIES
PURCHASE  AGREEMENT")  dated the date hereof  between the Company and the Buyers
listed on Schedule I thereto.

                  (b) DEFINITIONS. The following words and terms as used in this
Warrant shall have the following meanings:

                           (i) "APPROVED STOCK PLAN" means any employee  benefit
plan which has been approved by the Board of Directors of the Company,  pursuant
to which the Company's  securities  may be issued to any  employee,  consultant,
officer or director for services provided to the Company.

                           (ii)   "BUSINESS   DAY"  means  any  day  other  than
Saturday,  Sunday or other day on which commercial banks in the City of New York
are authorized or required by law to remain closed.

                           (iii) "CLOSING BID PRICE" means the closing bid price
of Common  Stock as quoted on the  Principal  Market (as  reported by  Bloomberg
Financial Markets ("BLOOMBERG") through its "Volume at Price" function).

                           (iv) "COMMON  STOCK" means (i) the  Company's  common
stock,  par value $0.001 per share,  and (ii) any capital  stock into which such
Common  Stock shall have been  changed or any  capital  stock  resulting  from a
reclassification of such Common Stock.

                           (v)  "EVENT  OF  DEFAULT"  means an event of  default
under the Securities  Purchase Agreement,  the Convertible  Debentures issued in
connection therewith or the Investor's Registration Rights Agreement.







                                        2
<PAGE>
                           (vi)  "EXCLUDED   SECURITIES"  means,  provided  such
security is issued at a price which is greater  than or equal to the  arithmetic
average  of the  Closing  Bid  Prices  of the  Common  Stock  for the  ten  (10)
consecutive trading days immediately preceding the date of issuance,  any of the
following,  other than shares issued to the Holder  hereunder or upon conversion
of  the  Convertible  Debentures  issued  pursuant  to the  Securities  Purchase
Agreement:  (a) any issuance by the Company of securities  in connection  with a
strategic partnership or a joint venture (the primary purpose of which is not to
raise  equity  capital),  (b) any  issuance  by the  Company  of  securities  as
consideration  for a merger or  consolidation  or the acquisition of a business,
product, license, or other assets of another person or entity and (c) options to
purchase shares of Common Stock,  provided (I) such options are issued after the
date of this Warrant to employees of the Company within thirty (30) days of such
employee's starting his employment with the Company, and (II) the exercise price
of such  options is not less than the Closing  Bid Price of the Common  Stock on
the date of issuance of such option.

                           (vii) "EXPIRATION DATE" means the date four (4) years
from the  Issuance  Date of this  Warrant  or, if such date falls on a Saturday,
Sunday or other day on which banks are  required or  authorized  to be closed in
the City of New York or the State of New York or on which  trading does not take
place on the  Principal  Exchange  or  automated  quotation  system on which the
Common Stock is traded (a "HOLIDAY"), the next date that is not a Holiday.

                           (viii) "ISSUANCE DATE" means the date hereof.

                           (ix) "OPTIONS" means any rights,  warrants or options
to subscribe for or purchase Common Stock or Convertible Securities.

                           (x) "OTHER SECURITIES" means other than shares issued
to the Holder hereunder or upon conversion of the Convertible  Debentures issued
pursuant to the Securities  Purchase Agreement (i) those options and warrants of
the Company  issued  prior to, and  outstanding  on, the  Issuance  Date of this
Warrant,  (ii) the shares of Common  Stock  issuable on exercise of such options
and  warrants,  provided  such options and  warrants  are not amended  after the
Issuance Date of this Warrant and (iii) the shares of Common Stock issuable upon
exercise of this Warrant.

                           (xi)  "PERSON"   means  an   individual,   a  limited
liability  company, a partnership,  a joint venture, a corporation,  a trust, an
unincorporated  organization  and a  government  or  any  department  or  agency
thereof.

                           (xii)  "PRINCIPAL  MARKET"  means the New York  Stock
Exchange,  the American Stock Exchange,  the Nasdaq National Market,  the Nasdaq
SmallCap  Market,  whichever is at the time the  principal  trading  exchange or
market  for such  security,  or the  over-the-counter  market on the  electronic
bulletin  board for such security as reported by Bloomberg or, if no bid or sale
information is reported for such security by Bloomberg,  then the average of the
bid prices of each of the market  makers for such  security  as  reported in the
"pink sheets" by the National Quotation Bureau, Inc.

                           (xiii)  "SECURITIES  ACT" means the Securities Act of
1933, as amended.





                                        3
<PAGE>
                           (xiv)  "WARRANT"  means this Warrant and all Warrants
issued in exchange, transfer or replacement thereof.

                           (xv)  "WARRANT  EXERCISE  PRICE" shall be $0.30 or as
subsequently adjusted as provided in Section 8 hereof.

                           (xvi)  "WARRANT  SHARES"  means the  shares of Common
Stock issuable at any time upon exercise of this Warrant.

                  (c) Other Definitional Provisions.

                           (i)  Except  as  otherwise   specified  herein,   all
references  herein (A) to the Company  shall be deemed to include the  Company's
successors  and (B) to any applicable law defined or referred to herein shall be
deemed  references  to such  applicable  law as the same may have been or may be
amended or supplemented from time to time.

                           (ii) When used in this Warrant,  the words  "HEREIN",
"HEREOF",  and  "HEREUNDER"  and words of similar  import,  shall  refer to this
Warrant  as a whole  and not to any  provision  of this  Warrant,  and the words
"SECTION",  "SCHEDULE",  and "EXHIBIT" shall refer to Sections of, and Schedules
and Exhibits to, this Warrant unless otherwise specified.

                           (iii)  Whenever the context so  requires,  the neuter
gender includes the masculine or feminine,  and the singular number includes the
plural, and vice versa.

         Section 2. EXERCISE OF WARRANT.

         Subject  to the  terms  and  conditions  hereof,  this  Warrant  may be
exercised by the holder hereof then registered on the books of the Company,  pro
rata as  hereinafter  provided,  at any time on any Business Day on or after the
opening of business on such  Business Day,  commencing  with the first day after
the date hereof, and prior to 11:59 P.M. Eastern Time on the Expiration Date (i)
by delivery of a written notice, in the form of the subscription notice attached
as EXHIBIT A hereto  (the  "EXERCISE  NOTICE"),  of such  holder's  election  to
exercise this Warrant,  which notice shall specify the number of Warrant  Shares
to be  purchased,  payment  to the  Company  of an amount  equal to the  Warrant
Exercise Price(s)  applicable to the Warrant Shares being purchased,  multiplied
by the number of Warrant Shares (at the applicable Warrant Exercise Price) as to
which this Warrant is being  exercised  (plus any  applicable  issue or transfer
taxes) (the "AGGREGATE  EXERCISE PRICE") in cash or wire transfer of immediately
available  funds  and the  surrender  of  this  Warrant  (or an  indemnification
undertaking  with  respect  to this  Warrant  in the case of its loss,  theft or
destruction)  to a common carrier for overnight  delivery to the Company as soon
as  practicable  following such date ("CASH BASIS") In the event of any exercise
of the rights represented by this Warrant in compliance with this Section 2, the
Company  shall on or before the fifth (5th)  Business Day  following the date of
receipt of the Exercise  Notice,  the Aggregate  Exercise Price and this Warrant
(or an  indemnification  undertaking with respect to this Warrant in the case of
its loss,  theft or destruction) and the receipt of the  representations  of the
holder specified in Section 6 hereof, if requested by the Company (the "EXERCISE
DELIVERY  DOCUMENTS"),  and if the Common  Stock is DTC  eligible,  credit  such
aggregate number of shares of Common Stock to which the holder shall be entitled
to the holder's or its  designee's  balance  account with The  Depository  Trust
Company;  provided,  however,  if the holder who submitted



                                        4
<PAGE>
the Exercise  Notice  requested  physical  delivery of any or all of the Warrant
Shares,  or, if the Common Stock is not DTC eligible then the Company shall,  on
or before  the fifth  (5th)  Business  Day  following  receipt  of the  Exercise
Delivery Documents, authorize the issuance and surrender to a common carrier for
overnight   delivery  to  the  address  specified  in  the  Exercise  Notice,  a
certificate,  registered in the name of the holder,  for the number of shares of
Common  Stock to which the holder  shall be entitled  pursuant to such  request.
Upon delivery of the Exercise Notice and Aggregate Exercise Price referred to in
clause  (i) or (ii)  above the  holder of this  Warrant  shall be deemed for all
corporate  purposes to have  become the holder of record of the  Warrant  Shares
with respect to which this Warrant has been exercised.  In the case of a dispute
as to the  determination of the Warrant Exercise Price, the Closing Bid Price or
the  arithmetic  calculation of the Warrant  Shares,  the Company shall promptly
issue to the holder the number of Warrant  Shares that is not disputed and shall
submit the disputed  determinations or arithmetic calculations to the holder via
facsimile  within  one (1)  Business  Day of receipt  of the  holder's  Exercise
Notice.

                  (a) If the holder and the Company are unable to agree upon the
determination  of the Warrant  Exercise  Price or arithmetic  calculation of the
Warrant Shares within one (1) day of such disputed  determination  or arithmetic
calculation  being submitted to the holder,  then the Company shall  immediately
submit via  facsimile  (i) the disputed  determination  of the Warrant  Exercise
Price or the Closing Bid Price to an independent,  reputable  investment banking
firm or (ii) the disputed  arithmetic  calculation  of the Warrant Shares to its
independent,  outside accountant. The Company shall cause the investment banking
firm or the  accountant,  as the case may be, to perform the  determinations  or
calculations  and notify the Company and the holder of the results no later than
forty-eight (48) hours from the time it receives the disputed  determinations or
calculations.  Such investment  banking firm's or accountant's  determination or
calculation,  as the case may be,  shall be deemed  conclusive  absent  manifest
error.

                  (b) Unless the rights  represented  by this Warrant shall have
expired  or shall have been  fully  exercised,  the  Company  shall,  as soon as
practicable and in no event later than five (5) Business Days after any exercise
and at its own  expense,  issue a new Warrant  identical in all respects to this
Warrant  exercised  except it shall  represent  rights to purchase the number of
Warrant Shares purchasable immediately prior to such exercise under this Warrant
exercised,  less the number of Warrant Shares with respect to which such Warrant
is exercised.

                  (c) No fractional Warrant Shares are to be issued upon any pro
rata  exercise of this Warrant,  but rather the number of Warrant  Shares issued
upon such  exercise of this  Warrant  shall be rounded up or down to the nearest
whole share.

If the Company or its Transfer  Agent shall fail for any reason or for no reason
to issue to the holder within ten (10) days of receipt of the Exercise  Delivery
Documents, a certificate for the number of Warrant Shares to which the holder is
entitled or to credit the holder's  balance  account with The  Depository  Trust
Company for such number of Warrant  Shares to which the holder is entitled  upon
the holder's  exercise of this Warrant,  the Company  shall,  in addition to any
other remedies  under this Warrant or otherwise  available to such holder and/or
the  Company  fails to  deliver a new  Warrant  to the  holder for the number of
Warrant  Shares to which such holder is  entitled  pursuant to Section 2 hereof,
then, pay as additional  damages in cash to such holder on each day the issuance
of such certificate for Warrant Shares is not timely effected an

                                        5
<PAGE>
amount  equal to 0.25% of the  product  of (A) the sum of the  number of Warrant
Shares  not  issued to the  holder on a timely  basis and to which the holder is
entitled,  and (B) the Closing Bid Price of the Common Stock for the trading day
immediately preceding the last possible date which the Company could have issued
such Common Stock to the holder without violating this Section 2.

         Section 3. COVENANTS AS TO COMMON STOCK.  The Company hereby  covenants
and agrees as follows:

                  (a) This Warrant is, and any Warrants  issued in  substitution
for or  replacement  of this Warrant will upon issuance be, duly  authorized and
validly issued.

                  (b) All Warrant  Shares  which may be issued upon the exercise
of the rights  represented  by this  Warrant  will,  upon  issuance,  be validly
issued,  fully paid and nonassessable and free from all taxes, liens and charges
with respect to the issue thereof.

                  (c) During the period within which the rights  represented  by
this Warrant may be exercised, the Company will at all times have authorized and
reserved at least one hundred  percent  (100%) of the number of shares of Common
Stock needed to provide for the exercise of the rights then  represented by this
Warrant and the par value of said shares will at all times be less than or equal
to the applicable  Warrant  Exercise  Price. If at any time the Company does not
have a sufficient  number of shares of Common Stock  authorized  and  available,
then the  Company  shall  call and hold a special  meeting  of its  stockholders
within  sixty  (60) days of that time for the sole  purpose  of  increasing  the
number of authorized shares of Common Stock.

                  (d) If at any time  after the date  hereof the  Company  shall
file a  registration  statement,  the Company shall  include the Warrant  Shares
issuable  to the  Holder,  pursuant  to the  terms  of this  Warrant  and  shall
maintain,  so long as any other shares of Common Stock shall be so listed,  such
listing of all Warrant  Shares from time to time  issuable  upon the exercise of
this Warrant; and the Company shall so list on each national securities exchange
or  automated  quotation  system,  as the case may be, and shall  maintain  such
listing of, any other shares of capital  stock of the Company  issuable upon the
exercise of this Warrant if and so long as any shares of the same class shall be
listed on such national securities exchange or automated quotation system.

                  (e) The Company will not, by amendment of its  Certificate  of
Incorporation or through any reorganization,  transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, or any other voluntary action,
avoid or seek to avoid the  observance or  performance of any of the terms to be
observed  or  performed  by it  hereunder,  but will at all times in good  faith
assist in the  carrying  out of all the  provisions  of this  Warrant and in the
taking of all such action as may  reasonably  be requested by the holder of this
Warrant in order to protect the exercise privilege of the holder of this Warrant
against dilution or other  impairment,  consistent with the tenor and purpose of
this  Warrant.  The  Company  will not  increase  the par value of any shares of
Common Stock  receivable  upon the  exercise of this  Warrant  above the Warrant
Exercise  Price  then in effect,  and (ii) will take all such  actions as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and  nonassessable  shares of Common  Stock upon the exercise of this
Warrant.




                                        6
<PAGE>
                  (f) This Warrant will be binding upon any entity succeeding to
the Company by merger,  consolidation or acquisition of all or substantially all
of the Company's assets.

         Section 4. TAXES.  The Company shall pay any and all taxes,  except any
applicable  withholding,  incurred  by the  Company,  which may be payable  with
respect to the  issuance and  delivery of Warrant  Shares upon  exercise of this
Warrant.

         Section 5. WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise
specifically  provided  herein,  no holder,  as such,  of this Warrant  shall be
entitled  to vote or  receive  dividends  or be deemed  the  holder of shares of
capital stock of the Company for any purpose,  nor shall  anything  contained in
this Warrant be construed to confer upon the holder hereof,  as such, any of the
rights of a  stockholder  of the Company or any right to vote,  give or withhold
consent to any corporate  action  (whether any  reorganization,  issue of stock,
reclassification  of stock,  consolidation,  merger,  conveyance or  otherwise),
receive  notice of  meetings,  receive  dividends  or  subscription  rights,  or
otherwise,  prior to the  issuance to the holder of this  Warrant of the Warrant
Shares which he or she is then entitled to receive upon the due exercise of this
Warrant.  In addition,  nothing  contained in this Warrant shall be construed as
imposing  any  liabilities  on such  holder to  purchase  any  securities  (upon
exercise of this  Warrant or  otherwise)  or as a  stockholder  of the  Company,
whether  such  liabilities  are  asserted by the Company or by  creditors of the
Company.  Notwithstanding this Section 5, the Company will provide the holder of
this Warrant with copies of the same notices and other  information given to the
stockholders of the Company generally, contemporaneously with the giving thereof
to the stockholders.

         Section 6.  REPRESENTATIONS OF HOLDER.  The holder of this Warrant,  by
the  acceptance  hereof,  represents  that it is acquiring  this Warrant and the
Warrant  Shares  for its own  account  for  investment  only and not with a view
towards,  or for resale in connection  with, the public sale or  distribution of
this  Warrant or the Warrant  Shares,  except  pursuant to sales  registered  or
exempted  under the  Securities  Act;  provided,  however,  that by  making  the
representations herein, the holder does not agree to hold this Warrant or any of
the Warrant Shares for any minimum or other specific term and reserves the right
to dispose of this Warrant and the Warrant Shares at any time in accordance with
or pursuant to a  registration  statement or an exemption  under the  Securities
Act. The holder of this Warrant further represents,  by acceptance hereof, that,
as of this date, such holder is an "accredited investor" as such term is defined
in Rule  501(a)(1) of Regulation D promulgated  by the  Securities  and Exchange
Commission under the Securities Act (an "ACCREDITED INVESTOR"). Upon exercise of
this Warrant,  except pursuant to an effective  registration  statement covering
the Warrant Shares,  the holder shall,  if requested by the Company,  confirm in
writing,  in a form  satisfactory  to the  Company,  that the Warrant  Shares so
purchased  are being  acquired  solely for the holder's own account and not as a
nominee  for  any  other  party,  for  investment,  and not  with a view  toward
distribution or resale and that such holder is an Accredited  Investor.  If such
holder  cannot  make  such  representations  because  they  would  be  factually
incorrect,  it shall be a condition  to such  holder's  exercise of this Warrant
that the Company  receive such other  representations  as the Company  considers
reasonably  necessary to assure the Company that the issuance of its  securities
upon  exercise of this  Warrant  shall not  violate  any United  States or state
securities laws.




                                        7
<PAGE>
         Section 7. OWNERSHIP AND TRANSFER.

                  (a) The  Company  shall  maintain at its  principal  executive
offices (or such other  office or agency of the Company as it may  designate  by
notice to the holder hereof), a register for this Warrant,  in which the Company
shall  record the name and address of the person in whose name this  Warrant has
been issued, as well as the name and address of each transferee. The Company may
treat the person in whose name any Warrant is  registered on the register as the
owner and holder  thereof for all  purposes,  notwithstanding  any notice to the
contrary,  but in all events  recognizing  any transfers made in accordance with
the terms of this Warrant and  accompanied by an opinion of counsel from counsel
to the Holder in a generally, in a generally acceptable form, to the effect that
such  securities to be sold,  assigned or transferred  may be sold,  assigned or
transferred pursuant to an exemption from such registration requirements.

         Section 8.  ADJUSTMENT OF WARRANT  EXERCISE PRICE AND NUMBER OF SHARES.
The Warrant  Exercise  Price and the number of shares of Common  Stock  issuable
upon exercise of this Warrant shall be adjusted from time to time as follows:

                  (a) ADJUSTMENT OF WARRANT  EXERCISE PRICE AND NUMBER OF SHARES
UPON ISSUANCE OF COMMON STOCK.  If and whenever on or after the Issuance Date of
this Warrant,  the Company issues or sells, or is deemed to have issued or sold,
any shares of Common Stock (other than (i) Excluded  Securities,  (ii) shares of
Common  Stock  which are issued or deemed to have been  issued by the Company in
connection  with an Approved  Stock Plan, or (iii) the Other  Securities)  for a
consideration per share less than a price (the "APPLICABLE  PRICE") equal to the
Warrant  Exercise  Price in effect  immediately  prior to such issuance or sale,
then  immediately  after such issue or sale the Warrant  Exercise  Price then in
effect shall be reduced to an amount equal to such consideration per share. Upon
each such  adjustment of the Warrant  Exercise  Price  hereunder,  the number of
Warrant  Shares  issuable upon exercise of this Warrant shall be adjusted to the
number of shares  determined by multiplying the Warrant Exercise Price in effect
immediately  prior to such  adjustment by the number of Warrant Shares  issuable
upon exercise of this Warrant  immediately prior to such adjustment and dividing
the  product  thereof  by  the  Warrant   Exercise  Price  resulting  from  such
adjustment.

                  (b) EFFECT ON WARRANT  EXERCISE PRICE OF CERTAIN  EVENTS.  For
purposes of determining the adjusted  Warrant  Exercise Price under Section 8(a)
above, the following shall be applicable:

                           (i)  ISSUANCE OF OPTIONS.  If after the date  hereof,
the Company in any manner  grants any Options and the lowest price per share for
which one share of Common Stock is issuable upon the exercise of any such Option
or upon  conversion  or exchange of any  convertible  securities  issuable  upon
exercise of any such Option is less than the Applicable  Price,  then such share
of Common  Stock shall be deemed to be  outstanding  and to have been issued and
sold by the Company at the time of the  granting or sale of such Option for such
price per share.  For  purposes of this  Section  8(b)(i),  the lowest price per
share for which one share of Common  Stock is  issuable  upon  exercise  of such
Options or upon conversion or exchange of such  Convertible  Securities shall be
equal to the sum of the lowest  amounts of  consideration  (if any)  received or
receivable by the Company with respect to any one share of Common Stock upon the
granting or sale of the Option,  upon exercise of the Option or upon  conversion
or




                                        8
<PAGE>
exchange of any convertible  security  issuable upon exercise of such Option. No
further  adjustment of the Warrant  Exercise Price shall be made upon the actual
issuance  of such  Common  Stock  or of such  convertible  securities  upon  the
exercise of such  Options or upon the actual  issuance of such Common Stock upon
conversion or exchange of such convertible securities.

                           (ii)  ISSUANCE  OF  CONVERTIBLE  SECURITIES.  If  the
Company,  other than shares issued to the Holder hereunder or upon conversion of
the Convertible Debentures issued pursuant to the Securities Purchase Agreement,
in any manner issues or sells any  convertible  securities  and the lowest price
per share for which one share of Common Stock is issuable upon the conversion or
exchange  thereof is less than the Applicable  Price,  then such share of Common
Stock shall be deemed to be outstanding  and to have been issued and sold by the
Company at the time of the issuance or sale of such  convertible  securities for
such price per share.  For the  purposes of this  Section  8(b)(ii),  the lowest
price per share for  which  one  share of  Common  Stock is  issuable  upon such
conversion  or  exchange  shall  be equal to the sum of the  lowest  amounts  of
consideration (if any) received or receivable by the Company with respect to one
share of Common Stock upon the issuance or sale of the convertible  security and
upon conversion or exchange of such convertible  security. No further adjustment
of the Warrant  Exercise  Price  shall be made upon the actual  issuance of such
Common Stock upon conversion or exchange of such convertible securities,  and if
any such issue or sale of such  convertible  securities is made upon exercise of
any Options for which  adjustment of the Warrant  Exercise Price had been or are
to be made  pursuant  to other  provisions  of this  Section  8(b),  no  further
adjustment of the Warrant  Exercise  Price shall be made by reason of such issue
or sale.

                           (iii) CHANGE IN OPTION  PRICE OR RATE OF  CONVERSION.
Other than  shares  issued to the Holder  hereunder  or upon  conversion  of the
Convertible Debentures issued pursuant to the Securities Purchase Agreement,  if
the purchase price provided for in any Options, the additional consideration, if
any,  payable  upon  the  issue,  conversion  or  exchange  of  any  convertible
securities, or the rate at which any convertible securities are convertible into
or exchangeable for Common Stock changes at any time, the Warrant Exercise Price
in effect at the time of such change  shall be adjusted to the Warrant  Exercise
Price  which  would  have  been in  effect  at such  time  had such  Options  or
convertible  securities  provided for such changed  purchase  price,  additional
consideration  or  changed  conversion  rate,  as the case  may be,  at the time
initially granted, issued or sold and the number of Warrant Shares issuable upon
exercise of this Warrant shall be  correspondingly  readjusted.  For purposes of
this Section 8(b)(iii),  if the terms of any Option or convertible security that
was  outstanding  as of the  Issuance  Date of this  Warrant  are changed in the
manner  described in the  immediately  preceding  sentence,  then such Option or
convertible  security  and the  Common  Stock  deemed  issuable  upon  exercise,
conversion  or  exchange  thereof  shall be deemed to have been issued as of the
date of such change.  No adjustment  pursuant to this Section 8(b) shall be made
if such  adjustment  would result in an increase of the Warrant  Exercise  Price
then in effect.

                  (c) EFFECT ON WARRANT  EXERCISE PRICE OF CERTAIN  EVENTS.  For
purposes of determining the adjusted  Warrant Exercise Price under Sections 8(a)
and 8(b), the following shall be applicable:






                                        9
<PAGE>
                           (i)  CALCULATION OF  CONSIDERATION  RECEIVED.  If any
Common Stock, Options or convertible  securities are issued or sold or deemed to
have been issued or sold for cash, the consideration  received therefore will be
deemed to be the net amount  received  by the Company  therefore.  If any Common
Stock, Options or convertible  securities are issued or sold for a consideration
other than cash, the amount of such  consideration  received by the Company will
be the fair  value of such  consideration  as  determined  in good  faith by the
Company's  Board of  Directors,  except  where such  consideration  consists  of
marketable securities, in which case the amount of consideration received by the
Company  will be the market price of such  securities  on the date of receipt of
such  securities.  If any Common Stock,  Options or  convertible  securities are
issued to the owners of the  non-surviving  entity in connection with any merger
in which the  Company  is the  surviving  entity,  the  amount of  consideration
therefore  will be deemed to be the fair value of such portion of the net assets
and  business  of the  non-surviving  entity as is  attributable  to such Common
Stock, Options or convertible securities,  as the case may be. If the holders of
warrants  representing  at least two thirds (2/3) of the Warrant Shares issuable
upon exercise of these Warrants then outstanding indicate their disagreement, in
writing,  to the Company as to the  Calculation  of the  consideration  received
within five (5) days after the occurrence of an event  requiring  valuation (the
"Valuation  Event") and if such parties are unable to reach agreement within ten
(10) days after notice from the warrant  holders is received by the Company (the
"Notification  Date"),  then  the  fair  value  of  such  consideration  will be
determined  within five (5) Business  Days after the tenth (10th) day  following
the Notification Date by an independent, reputable appraiser jointly selected by
the Company and the holders of Warrants  representing at least two-thirds (b) of
the Warrant Shares issuable upon exercise of the Warrants then outstanding.  The
determination  of such appraiser shall be final and binding upon all parties and
the fees and expenses of such  appraiser  shall be borne  jointly by the Company
and the holders of Warrants.

                           (ii) INTEGRATED  TRANSACTIONS.  In case any Option is
issued in connection with the issue or sale of other  securities of the Company,
together   comprising   one   integrated   transaction   in  which  no  specific
consideration is allocated to such Options by the parties  thereto,  the Options
will be deemed to have been  issued for a  consideration  as  determined  by the
Company's Board of Directors.

                           (iii) TREASURY SHARES. The number of shares of Common
Stock  outstanding at any given time does not include shares owned or held by or
for the account of the Company,  and the  disposition  of any shares so owned or
held will be considered an issue or sale of Common Stock.

                           (iv) RECORD  DATE.  If the Company  takes a record of
the holders of Common Stock for the purpose of  entitling  them (1) to receive a
dividend  or  other  distribution   payable  in  Common  Stock,  Options  or  in
convertible securities or (2) to subscribe for or purchase Common Stock, Options
or convertible  securities,  then such record date will be deemed to be the date
of the issue or sale of the shares of Common Stock deemed to have been issued or
sold  upon  the  declaration  of such  dividend  or the  making  of  such  other
distribution  or the  date of the  granting  of such  right of  subscription  or
purchase, as the case may be.

                  (d) ADJUSTMENT OF WARRANT  EXERCISE PRICE UPON  SUBDIVISION OR
COMBINATION  OF  COMMON  STOCK.  If the  Company  at any time  after the date of
issuance  of this  Warrant  subdivides



                                       10
<PAGE>
(by any stock split, stock dividend,  recapitalization or otherwise) one or more
classes  of its  outstanding  shares of Common  Stock  into a greater  number of
shares,  any  Warrant  Exercise  Price  in  effect  immediately  prior  to  such
subdivision will be  proportionately  reduced and the number of shares of Common
Stock  obtainable  upon  exercise  of  this  Warrant  will  be   proportionately
increased. If the Company at any time after the date of issuance of this Warrant
combines (by combination,  reverse stock split or otherwise) one or more classes
of its outstanding  shares of Common Stock into a smaller number of shares,  any
Warrant Exercise Price in effect  immediately  prior to such combination will be
proportionately  increased  and the  number  of  Warrant  Shares  issuable  upon
exercise of this Warrant will be proportionately decreased. Any adjustment under
this Section  8(d) shall  become  effective at the close of business on the date
the subdivision or combination becomes effective.

                           (i)  DISTRIBUTION  OF ASSETS.  If the  Company  shall
declare or make any dividend or other distribution

                  (e)  CERTAIN   EVENTS.   If  any  event  occurs  of  the  type
contemplated by the provisions of this Section 8 but not expressly  provided for
by such  provisions  (including,  without  limitation,  the  granting  of  stock
appreciation rights, phantom stock rights or other rights with equity features),
then the Company's Board of Directors will make an appropriate adjustment in the
Warrant  Exercise Price and the number of shares of Common Stock obtainable upon
exercise  of this  Warrant  so as to protect  the  rights of the  holders of the
Warrants;  provided, except as set forth in section 8(d),that no such adjustment
pursuant  to this  Section  8(f) will  increase  the Warrant  Exercise  Price or
decrease the number of shares of Common Stock obtainable as otherwise determined
pursuant to this Section 8.

                  (f) NOTICES.

                           (i)  Immediately  upon any  adjustment of the Warrant
Exercise  Price,  the Company will give written  notice thereof to the holder of
this  Warrant,   setting  forth  in  reasonable  detail,  and  certifying,   the
calculation of such adjustment.

                           (ii) The  Company  will  give  written  notice to the
holder of this  Warrant  at least  ten (10) days  prior to the date on which the
Company  closes its books or takes a record (A) with  respect to any dividend or
distribution   upon  the  Common  Stock,  (B)  with  respect  to  any  pro  rata
subscription  offer to holders of Common Stock or (C) for determining  rights to
vote with  respect to any Organic  Change (as  defined  below),  dissolution  or
liquidation,  provided that such  information  shall be made known to the public
prior to or in conjunction with such notice being provided to such holder.

                           (iii) The Company  will also give  written  notice to
the holder of this Warrant at least ten (10) days prior to the date on which any
Organic Change,  dissolution or liquidation will take place,  provided that such
information  shall be made known to the public prior to or in  conjunction  with
such notice being provided to such holder.

         Section   9.   PURCHASE   RIGHTS;   REORGANIZATION,   RECLASSIFICATION,
CONSOLIDATION, MERGER OR SALE.






                                       11
<PAGE>
                  (a) In  addition  to any  adjustments  pursuant  to  Section 8
above,  if at any  time  the  Company  grants,  issues  or  sells  any  Options,
Convertible  Securities  or rights to purchase  stock,  warrants,  securities or
other  property pro rata to the record holders of any class of Common Stock (the
"PURCHASE  RIGHTS"),  then the holder of this  Warrant  will be  entitled,  upon
exercise of this Warrant, to acquire, upon the terms applicable to such Purchase
Rights,  the aggregate  Purchase Rights which such holder could acquire pursuant
to the number of shares of Common Stock  acquired upon exercise of this Warrant,
the date on which a record  is taken  for the  grant,  issuance  or sale of such
Purchase Rights, or, if no such record is taken, the date as of which the record
holders of Common  Stock are to be  determined  for the grant,  issue or sale of
such Purchase Rights.

                  (b) Any  recapitalization,  reorganization,  reclassification,
consolidation,  merger, sale of all or substantially all of the Company's assets
to another Person or other  transaction in each case which is effected in such a
way that  holders of Common Stock are  entitled to receive  (either  directly or
upon subsequent  liquidation) stock,  securities or assets with respect to or in
exchange for Common Stock is referred to herein as an "ORGANIC CHANGE." Prior to
the  consummation of any (i) sale of all or  substantially  all of the Company's
assets to an acquiring  Person or (ii) other Organic Change  following which the
Company is not a  surviving  entity,  the  Company  will  secure from the Person
purchasing  such assets or the successor  resulting from such Organic Change (in
each case,  the "ACQUIRING  ENTITY") a written  agreement (in form and substance
satisfactory to the holders of Warrants  representing at least two-thirds of the
Warrant  Shares  issuable  upon exercise of the Warrants  then  outstanding)  to
deliver to each holder of Warrants in exchange for such Warrants,  a security of
the Acquiring Entity evidenced by a written instrument  substantially similar in
form and  substance  to this  Warrant  and  satisfactory  to the  holders of the
Warrants  (including an adjusted  warrant  exercise price equal to the value for
the Common Stock reflected by the terms of such  consolidation,  merger or sale,
and exercisable for a corresponding  number of shares of Common Stock acquirable
and receivable  upon exercise of the Warrants  without regard to any limitations
on  exercise,  if the value so  reflected  is less than any  Applicable  Warrant
Exercise Price immediately prior to such  consolidation,  merger or sale). Prior
to the  consummation  of any  other  Organic  Change,  the  Company  shall  make
appropriate  provision  (in form and  substance  satisfactory  to the holders of
Warrants representing a majority of the Warrant Shares issuable upon exercise of
the  Warrants  then  outstanding)  to  insure  that each of the  holders  of the
Warrants will  thereafter have the right to acquire and receive in lieu of or in
addition  to (as the case may be) the  Warrant  Shares  immediately  theretofore
issuable and  receivable  upon the exercise of such holder's  Warrants  (without
regard to any  limitations  on  exercise),  such shares of stock,  securities or
assets  that would  have been  issued or payable  in such  Organic  Change  with
respect to or in exchange for the number of Warrant Shares which would have been
issuable and  receivable  upon the exercise of such  holder's  Warrant as of the
date of such Organic  Change  (without  taking into account any  limitations  or
restrictions on the exercisability of this Warrant).

         Section 10.  LOST,  STOLEN,  MUTILATED OR  DESTROYED  WARRANT.  If this
Warrant is lost, stolen,  mutilated or destroyed, the Company shall promptly, on
receipt  of an  indemnification  undertaking  (or,  in the  case of a  mutilated
Warrant,  the Warrant),  issue a new Warrant of like  denomination  and tenor as
this Warrant so lost, stolen, mutilated or destroyed.





                                       12
<PAGE>
         Section  11.   NOTICE.   Any  notices,   consents,   waivers  or  other
communications required or permitted to be given under the terms of this Warrant
must be in writing and will be deemed to have been delivered:  (i) upon receipt,
when delivered  personally;  (ii) upon receipt, when sent by facsimile (provided
confirmation  of  receipt is  received  by the  sending  party  transmission  is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one Business Day after deposit with a nationally  recognized  overnight
delivery  service,  in each case properly  addressed to the party to receive the
same. The addresses and facsimile numbers for such communications shall be:

If to Holder:                       Cornell Capital Partners, LP
                                    101 Hudson Street - Suite 3700
                                    Jersey City, NJ  07302
                                    Attention:        Mark A. Angelo
                                    Telephone:        (201) 985-8300
                                    Facsimile:        (201) 985-8266

With Copy to:                       David Gonzalez, Esq.
                                    101 Hudson Street - Suite 3700
                                    Jersey City, NJ 07302
                                    Telephone:        (201) 985-8300
                                    Facsimile:        (201) 985-8266


If to the Company, to:              Newgold, Inc.
                                    400 Capital Mall - Suite 900
                                    Sacramento, CA 95814
                                    Attention:   Scott Dockter
                                    Telephone:   (916) 449-3913
                                    Facsimile:        (916) 449-8259

With a copy to:                     James W. Kluber
                                    327 Copperstone Trail
                                    Coppell, TX 75019
                                    Telephone:        (214) 447-5336
                                    Facsimile:        (214) 359-0306

                                    Weintraub Genshlea Chediak
                                    400 Capital Mall - 11th Floor
                                    Sacramento, CA 95814
                                    Attention:     Roger Linn, Esq.
                                    Telephone:    (916) 558-6000
                                    Facsimile:     (916) 446-1611


If to a holder of this Warrant,  to it at the address and  facsimile  number set
forth on EXHIBIT C hereto,  with copies to such holder's  representatives as set
forth on EXHIBIT C, or at such other address and facsimile as shall be delivered
to the Company upon the issuance or transfer of this










                                       13
<PAGE>
Warrant.  Each party shall provide five days' prior written  notice to the other
party of any change in address or  facsimile  number.  Written  confirmation  of
receipt (A) given by the recipient of such notice, consent, facsimile, waiver or
other  communication,  (or (B)  provided by a  nationally  recognized  overnight
delivery service shall be rebuttable  evidence of personal  service,  receipt by
facsimile or receipt from a nationally  recognized overnight delivery service in
accordance with clause (i), (ii) or (iii) above, respectively.

         Section  12.  DATE.  The date of this  Warrant  is set  forth on page 1
hereof. This Warrant, in all events, shall be wholly void and of no effect after
the close of business on the Expiration Date,  except that  notwithstanding  any
other provisions  hereof,  the provisions of Section 8(b) shall continue in full
force and effect  after such date as to any Warrant  Shares or other  securities
issued upon the exercise of this Warrant.

         Section 13. AMENDMENT AND WAIVER.  Except as otherwise provided herein,
the  provisions  of the  Warrants  may be amended  and the  Company may take any
action  herein  prohibited,  or omit to perform  any act herein  required  to be
performed  by it, only if the Company has  obtained  the written  consent of the
holders of Warrants  representing  at least  two-thirds  of the  Warrant  Shares
issuable upon exercise of the Warrants then  outstanding;  provided that, except
for Section  8(d),  no such action may  increase the Warrant  Exercise  Price or
decrease the number of shares or class of stock  obtainable upon exercise of any
Warrant without the written consent of the holder of such Warrant.

         Section  14.  DESCRIPTIVE  HEADINGS;  GOVERNING  LAW.  The  descriptive
headings of the several sections and paragraphs of this Warrant are inserted for
convenience  only and do not  constitute a part of this  Warrant.  The corporate
laws of the State of Delaware  shall govern all issues  concerning  the relative
rights of the Company and its stockholders.  All other questions  concerning the
construction,  validity,  enforcement and interpretation of this Agreement shall
be governed by the  internal  laws of the State of New  Jersey,  without  giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of New Jersey or any other jurisdictions) that would cause the application
of the laws of any jurisdictions  other than the State of New Jersey. Each party
hereby  irrevocably  submits  to the  exclusive  jurisdiction  of the  state and
federal courts sitting in Hudson County and the United States District Court for
the District of New Jersey,  for the adjudication of any dispute hereunder or in
connection herewith or therewith, or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to assert in any
suit, action or proceeding,  any claim that it is not personally  subject to the
jurisdiction of any such court,  that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper.  Each party hereby  irrevocably waives personal service of process and
consents  to process  being  served in any such suit,  action or  proceeding  by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof.  Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.










                                       14
<PAGE>
         Section 15.  WAIVER OF JURY TRIAL.  AS A MATERIAL  INDUCEMENT  FOR EACH
PARTY HERETO TO ENTER INTO THIS  WARRANT,  THE PARTIES  HERETO  HEREBY WAIVE ANY
RIGHT  TO  TRIAL  BY JURY IN ANY  LEGAL  PROCEEDING  RELATED  IN ANY WAY TO THIS
WARRANT  AND/OR  ANY  AND  ALL OF  THE  OTHER  DOCUMENTS  ASSOCIATED  WITH  THIS
TRANSACTION.


                   REMAINDER OF PAGE INTENTIONALLY LEFT BLANK



















































                                       15
<PAGE>
         IN WITNESS WHEREOF, the Company has caused this Warrant to be signed as
of the date first set forth above.

                                           NEWGOLD, INC.

                                           By: /s/ SCOTT DOCKTER
                                              --------------------------------
                                           Name: Scott Dockter
                                           Title: Chief Executive Officer


















































                                       16