UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-K





(Mark
      One)x
            ANNUAL
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934For
      the fiscal year ended December 31, 2008OR ̈
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
      SECURITIES EXCHANGE ACT OF 1934





For
the transition period from
                            
to





Commission
file number: 000-31585





DIAMOND
DISCOVERIES INTERNATIONAL CORP.


(Name of
Small Business Issuer)





Delaware
            
            06-1579927(State
      or Other Jurisdiction
            
            (IRS
      Employer Identification No.)of
      Incorporation)45
      Rockefeller Plaza, Suite 2000New
      York, NY
            
            10111(Address
      of Principal Executive Offices)
            
            (Zip
      Code)(212)
      332-8016(Issuer’s
      Telephone Number, Including Area
Code)





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





Securities
registered under Section 12(g) of the Exchange Act: Common Stock





Title
      of Each Class
            
            Name
      of Each Exchange
              on
      Which RegisteredCommon
      Stock, par value $.001
            
            None





Check
whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the 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 x





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- K or any amendment to this Form 10-K.  ̈





Issuer’s
revenues for its most recent fiscal year were: $0.





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer,”
“accelerated filer,” and “small reporting company” in Rule 12-2 of the Exchange
Act.





Large
      accelerated filer   ̈
            Accelerated
      filer   ̈Non-accelerated
      filer   ̈
            Smaller
      reporting company x(Do
      not check if a smaller reporting company)





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





Yes      ̈       No   x





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 as of May 14, 2009 is $2,419,502.





The
number of shares outstanding of the Company’s common stock, as of May 14,
2009 is 383,991,830.





Transitional Small Business Disclosure
Format (check one): Yes ̈Nox













TABLE
OF CONTENTS




DESCRIPTION
      OF BUSINESS
                  3DESCRIPTION
      OF PROPERTY
                  8LEGAL
      PROCEEDINGS
                  10SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS
                  10MARKET
      FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
                  10MANAGEMENT’S
      DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
                  13INDEX
      TO FINANCIAL STATEMENTS
                  17FINANCIAL
      STATEMENTS
                  17CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE
                  31CONTROLS
      AND PROCEDURES
                  31DIRECTORS,
      EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION
      16(A) OF THE EXCHANGE ACT
                  32EXECUTIVE
      COMPENSATION
                  34SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
                  35CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS
                  37PRINCIPAL
      ACCOUNTANT FEES AND SERVICES
                  38EXHIBITS
      AND REPORTS ON FORM 8-K
                  38SIGNATURES
                  39


2





PART
I





This
Annual Report on Form 10-K and the information incorporated by reference
includes “forward-looking statements” within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
and Exchange Act of 1934, as amended. Various statements, estimates,
predictions, and projections stated under “Risk Factors,” “Management’s
Discussion and Analysis or Plan of Operations” and “Business,” and elsewhere in
this Annual Report are “forward-looking statements” within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act.
These statements appear in a number of places in this Annual Report and include
statements regarding the intent, belief or current expectations of Diamond
Discoveries International or our officers with respect to, among other things,
the ability to successfully implement our acquisition and exploration
strategies, including trends affecting our business, financial condition and
results of operations. While these forward-looking statements and the related
assumptions are made in good faith and reflect our current judgment regarding
the direction of the related business, actual results will almost always vary,
sometimes materially, from any estimates, predictions, projections, assumptions,
or other future performance suggested herein. These statements are based upon a
number of assumptions and estimates, which are inherently subject to significant
uncertainties and contingencies, many of which are beyond our control and
reflect future business decisions which are subject to change. Some of these
assumptions inevitably will not materialize, and unanticipated events will occur
which will affect our results. Some important factors (but not necessarily all
factors) that could affect our revenues, growth strategies, future profitability
and operating results, or that otherwise could cause actual results to differ
materially from those expressed in or implied by any forward-looking statement,
include the following:





• our
ability to successfully implement our acquisition and exploration
strategies;


• the
success or failure of our exploration activities and other opportunities that we
may pursue;


• changes
in the availability of debt or equity capital and increases in borrowing costs
or interest rates;


• changes
in regional and national business and economic conditions, including the rate of
inflation;


• changes
in the laws and government regulations applicable to us; and


•
increased competition.





Stockholders
and other users of this Annual Report on Form 10-K are urged to carefully
consider these factors in connection with the forward-looking statements. We do
not intend to publicly release any revisions to any forward-looking statements
contained herein to reflect events or circumstances occurring after the date
hereof or to reflect the occurrence of unanticipated events.





Item 1. Description of
Business





We were
incorporated in the State of Delaware on April 24, 2000. We are an
exploration stage company that is engaged in the acquisition and exploration of
mineral properties. Our initial focus is in the area of the Torngat fields
located in the province of Quebec, Canada. Other than contracting with third
parties to conduct exploration and gather data on our behalf, we have conducted
no operations to date and do not expect to receive any revenues for at least the
next two years. During the next two years we plan to continue to concentrate our
efforts on exploration and data gathering. During the next two years we will be
solely dependent on the availability of external financing to fund our
operations. Our independent public accountants expressed substantial doubt about
our ability to continue as a going concern because such continuance is dependent
upon our ability to raise capital. If we are unable to secure adequate financing
we will be unable to continue our exploration and data gathering efforts.
Because we are an exploration stage company, we do not
know if a commercially viable mineral deposit exists on any of our properties.
Further exploration will be required before the economic and legal feasibility
of developing the properties can be determined.





Acquisition
Agreements





Caribou
Property





On March
17, 2008, we entered into an acquisition agreement with Messrs. Bertrand
Brassard and Michel Lavoie.  Pursuant to such agreement, we acquired
certain mineral rights in property located in the Thetford Mines area, part of
the Appalachian Belt, Province of Quebec, Canada. The total consideration of
$205,000, of which $75,000 represents the amount paid in cash and $130,000
represents the fair value of a total of 10,000,000 shares of the Company’s
common stock issued to Messrs. Brassard and Lavoie.  The exchange of
shares for the permits was a non-cash transaction that is not reflected in the
accompanying statement of cash flows for the year ended December 31, 2008 and
for the period from April 24, 2000 to December 31, 2008.





In
connection with the acquisition of these mineral rights, the Company agreed to
pay the sellers a 2% royalty on the “net smelter returns” of the property. Net
smelter returns are determined by the net amount received from the production of
all metals and/or minerals from the property. The Company has the right to
purchase, at any time prior to the beginning of any commercial production on the
property, 1% royalty on the “net smelter returns” for a total cash payment of
$1,000,000.




3


Torngat
Property





On
September 12, 2000, we entered into an acquisition agreement with
Messrs. Peter Ferderber and Stanley G. Hawkins, and Tandem
Resources Ltd., a Canadian mineral exploration company of which
Mr. Hawkins is the President. Pursuant to such Agreement, we acquired
certain mineral exploration permits covering an area of approximately 469.05
square kilometers in the Torngat fields, which are located on the east coast of
Ungava Bay, in the northwestern part of Quebec. The Torngat fields are one of
four fields in Quebec that contain diamondiferous kimberlite formations. The
Torngat fields are composed of a central plateau about 400 meters above sea
level, and are broken by steep-sided gorges and fjords along the coast. The
largest of these features, Alluviaq Fjord, bisects the property covered by the
permits. Several dykes in the area are well exposed sub-vertical features in the
Alluviaq Fjord, and display horizontal and vertical continuity. These traits
result from rock being pushed up from below the surface, into a vertical
position against other horizontal rocks. Geologists usually identify these rock
formations as strong targets for the presence of diamonds.





The
consideration paid under the Acquisition Agreement was 1,000,000 shares of our
common stock to each of Messrs. Ferderber and Hawkins, and the payment of
$35,000 Canadian to Mr. Hawkins and $25,000 Canadian to Mr. Ferderber.
We also assigned to Messrs. Ferderber and Hawkins a one per cent (1%)
interest in the “Net Smelter Returns” of the property, one half of which is
payable over the first $50 million Canadian in revenues from the property.
(Net Smelter Returns are determined by the net amount of money received from the
sale of ore, or ore concentrates or other products from a property to a smelter
or other ore buyer.) Once Messrs. Ferderber and Hawkins have received
$10 million Canadian from these Net Smelter Returns, their interest
terminates. Tandem Resources Ltd. received an option to purchase 40% of the
mineral rights on the properties. This option is conditioned on a number of
events occurring, which are:





(1) The
expenditure by us of $5 million Canadian on exploration of the
property;


(2)
Tandem paying us $2 million Canadian; and


(3)
Tandem and us entering into a joint venture agreement to operate the property,
within 60 days of a demonstration by us of the expenditure of
$5 million Canadian on exploration of the property.





In
addition, we will have twenty-one (21) days from the date we notify Tandem
that we have made the $Cdn5 million exploration expenditure, to negotiate a
financing agreement with Tandem to provide Tandem with the $Cdn2 million
required to exercise the option. Should no agreement be reached in such 21-day
period, our right to provide this financing shall expire.





Based
upon an analysis of samples taken from these properties, we believe that the
properties for which we have exploration permits contain
kimberlite.  Kimberlite is a type of igneous rock that occasionally
contains tiny to extremely tiny diamonds, and on very rare occasions contains
gem quality diamonds.  Certain samples taken from our properties have
contained both macro diamonds and micro diamonds.  Samples from most
of the dykes contain diamond fragments as well.





Prospecting
Geophysics Ltd., a Quebec-based firm of which Mr. Ferderber is
President, has provided us with a Progress Report, dated August 29, 2000,
which discusses these samples, which they had collected. Prospecting
Geophysics Ltd. has been contracted to conduct further surveys and
exploration on this property.





Mr. Ferderber
is the record owner of the property covered by the permits, which he has
transferred to us. He had originally executed an agreement, as of June 20,
2000, transferring the right to explore the properties covered by the permits to
us. This June 20, 2000 agreement was subsequently incorporated into the Acquisition Agreement discussed
above. We have received an opinion of Lavery, de Billy, a firm of barristers and
solicitors of Montreal, Canada, dated July 10, 2000, that
Mr. Ferderber is the record owners of the permits under the Mining Act
(Quebec), and that the permits are in good standing as of June 21, 2000.
The opinion further states that at the date of examination, there were no liens,
charges or encumbrances registered against any of the permits. The opinion
disclaimed any physical verification of the location of the properties covered
by the permits, and states that no survey of the area covered by the permits was
conducted.





The
permits, which were set to expire at dates ranging from October 17, 2004 to
March 30, 2005, were renewed by the Company for an additional five years at
an annual license fee of $75 Canadian per square kilometer.





Our
Exploration Program





Caribou
Property





Prior to
any decision to develop the properties, a mineral deposit must be assessed to
determine the total tonnage of minerals bearing material and the estimated value
of the minerals. Gathering this data usually takes, as noted above, at least two
years. At that time, we will decide whether, and, if so, how, to proceed. We may
seek either a joint venture partner or a senior partner that will undertake the
exploration of the properties. It must be noted that there is a substantial risk
that no commercially viable mineral deposit will be found, and if that is the
case, we are likely to have difficulty finding any partners to undertake further
exploration.


4





At the
present time, we do not hold any interest in a mineral property that is in
production. Our viability and potential success lie in our ability to
successfully explore, exploit and generate revenue from our properties. There
can be no assurance that such revenues will be obtained. The exploration of
mineral deposits involves significant risks over a long period of time, which a
combination of careful evaluations, experience and knowledge may not eliminate.
It is impossible to ensure that the current or proposed exploration programs on
the exploration permits will be profitable or successful. Our inability to
locate a viable mineral deposit on our properties could result in a total loss
of our business.





We intend
to continue to explore the Caribou Property through the completion of the
exploration phase.  We contract with third parties to perform all
exploration activities.





Our
exploration operations are subject to all of the hazards and risks normally
incident to exploration of this type, any of which could result to damage to
life or property, environmental damage, and possible legal liability for any or
all damages. Our activities may be subject to prolonged disruptions due to
weather conditions surrounding the location of properties over which we have
permits. Difficulties, such as an unusual or unexpected rock formation
encountered by workers but not indicated on a map, or other conditions may be
encountered in the gathering of samples and data, and could delay our
exploration program. While we may obtain insurance against certain risks in such
amounts as we deem adequate, the nature of these risks are such that liabilities
could exceed policy limits or be excluded from coverage. We do not currently
carry insurance to protect against these risks and there is no assurance that we
will obtain such insurance in the future. There are also risks against which we
cannot, or may not elect to, insure. The potential costs which could be
associated with any liabilities not covered by insurance or in excess of
insurance coverage or compliance with applicable laws and regulations may cause
substantial delays and require significant capital outlays, adversely affecting
our final position, future earnings, and/or competitive position.





FY
2008 Activities





In June 2008, the Company’s
wholly-owned subsidiary, Platinum Discoveries Corp., received from
GEOLOGICA  Groupe – Conseil Inc. (“Geologica”) a NI 43 -101 Technical
Report on the Company’s 100% owned Caribou Property authored by Alain-Jean
Beauregard, P.Geo., OGQ, FGAC and Daniel Gaudreault, P. Eng., OIQ, AEMQ,
Thetford-Mines area in the province of Quebec Canada. Eleven (11) deposits and
showings are present on the Caribou property (Montreal Mine, Caribou Mine,
American Chrome Deposit, American Chrome Jr., Finneth, Cesar, Dumais,
Vaillancourt, Gagne, Greenshields and Lambly-Nadeau/Victoria Mines). Compiling
and analyzing all previous work led to sensing a very close relationship between
the cumulate sequence of the Thetford Mines Ophiolitic Complex, chromiferous
mineralization, and Platinum Group Elements (PGE) mineralization.





More than eleven (11) known chromite
deposits and showings on the Company’s property were recognized and defined. The
report indicates that the results of the past work are very interesting and
significant for the Company since they not only confirm the presence of platinum
and palladium on the Caribou property, but also seem to show that PGE
mineralization is preferentially associated with the contact between ultramafic
and mafic units of the Thetford Mines Ophiolitic Complex. More than 10 Km of
favorable contact is present on the Property. Large-scale mapping of this
metalotect led to identifying new PGE showings.





Moreover, recent sampling on the
Starchrome property immediately south of the Caribou property, has confirmed the
possibility of finding economic grades of platinum and palladium. In fact, a
grab sample (sample SC-1) has revealed 15.93 g/t Pt-Pd and .427 ppm Rh.
Previously, a channel sampling carried out by Allican had revealed a total
platinum-palladium values of  2.61 g/t, and 3.83 g/t and 4.66 g/t over
widths of 4.7m.





In September 2008 the Company announced
that Platinum Discoveries Corp. commenced evaluation of the Caribou project in
the Thetford Mines area of Southern Quebec.  Sampling of the eleven
(11) showings that are present on the Caribou Property have begun and will be
sent to ALS Laboratories for assay testing.  These showings have shown
potential for chromium, nickel and platinum mineralizations.  A
heliborne geophysical survey is also planned that in addition to the surface
sampling will assist in prioritizing drill targets.





In addition to exploration work carried
on by the Company, Auger Resources Limited, a private Canadian company
controlled by the Forbes & Manhattan Inc., has begun a major drill program
on its historical chromium deposits of Reed Belanger and Hall which are adjacent
to the Company’s Caribou property.





In November 2008, preliminary results
from the exploration work done in 2008 field season confirmed the presence of
high chromium (Cr2O3) mineralization in pyroxenite unit over several
meters.


5





We
estimate that it will require approximately $500,000 to conduct an exploration
program on the Caribou property through 2009. This amount will be used to pay
for continued drilling of identified targets, prospecting and geological
mapping, helicopter and airplane support, lodging and food for workers, pick-up
truck rentals, assays, property taxes to the Quebec Department of Natural
Resources and supervision.  If we continue with the exploration of the
Caribou property, we plan to raise a minimum of $500,000 through one or more
private offerings pursuant to Rule 506 or Regulation D or through an offshore
offering pursuant to Regulation S; however, nothing in this annual report shall
constitute an offer of any securities for sale. Such shares when sold will not
have been registered under the Act and may not be offered or sold in the United
States absent registration or an applicable exemption from registration
requirements. If we are unable to raise this amount, we will most likely cease
all activity related to our exploration program, or at the very least, proceed
on a reduced scale. We have to date relied on a small number of investors to
provide us with financing for the commencement of our exploration program,
including TVP Capital Corp., a principal stockholder. Amounts owed to these
individuals are payable upon demand.





Torngat
Property





The
Company performed exploration activities related to the Torngat Property through
the end of 2007 at which time it was determined not to pursue any further
exploration of that property.





FY
2000 Activities





During
2000, we began early stage exploration activities, and gathered samples from one
property for analysis. An exploration team of eight men gathered samples and
data at this property. The samples are taken from dykes or “pipes” containing
kimberlite. These samples were analyzed by Lakefield Research Limited, of
Ontario, an independent laboratory, which uses caustic dissolution to extract
the diamonds from the samples. This laboratory issued reports dated
September 26 and September 27, 2000, on two samples, one of which
indicates that out of a 24.65 kilogram sample, two diamonds were found weighing
0.015 carats in the aggregate. The second sample of 30.22 kilograms yielded
eight diamonds, with a total weight of 0.001 carats.





On
March 27, 2001, the Gem Trade Laboratory of the Gemological Institute of
America (“G.I.A.”), an independent laboratory, issued a report in which they
analyzed “random samples” of numerous transparent pink crystal fragments that
were obtained from the property covered by our permits known as D.D.I. #1 in
October 2000, by our agent Prospecting Geophysics Ltd. These samples
were taken from property located in the original 469.05 square kilometers in the
Torngat mountain region. The conclusion of the report was that the samples that
ranged in size from approximately 0.40 to 0.70 MM consisted of natural corundum.
Corundum is the hardest mineral after diamond. The samples obtained from the
property covered by our permit were transparent pink suggesting that they
consist of the “ruby” gem. A ruby is a red variety of the mineral
corundum.





FY
2001 Activities





During
April 2001, we began the second phase of our exploration, after the weather in
northwestern Quebec allowed for exploration activities.  We, through
Prospecting Geophysics Ltd., began to determine the extent of the
kimberlite dykes that were located in phase one, and gathered larger mini-bulk
and bulk samples. These next samples are expected to be up to 7,000 pounds. This
should enable the Company to test for larger, and potentially more marketable
diamonds which may, or may not, exist in the kimberlite dykes. There is, of
course, a substantial risk that we will not find such diamonds. Prospecting
Geophysics Ltd. will, at the same time, be attempting to locate additional
kimberlite dykes and pipes, and sample them as well.





FY
2002 Activities





In 2002,
we acquired permits for an additional 50,000 acres adjacent to the property
where we already have permits located in the Torngat mountain region of Quebec.
We acquired the permits by staking the property and paying the requisite fees to
the Quebec Department of Natural Resources. In addition to paying the fees, we
must perform a certain amount of assessment work on each claim to keep them in
good standing. We have successfully completed all assessment work related to
this property.





We,
through Prospecting Geophysics Ltd., continued exploration during the 2002
season, taking large rock bulk samples from property included in the original
469.05 square kilometers and commenced exploration in the newly acquired 50,000
acres.  We located four new kimberlite dyke systems that contain 27
new dykes, most of which have been sampled.  Reduced samples from the
original field samples were subject to micro-probed analysis and found to
contain typical kimberlite minerals, phologopite and olivine and the important
indicator minerals chrome diopside, pyrope garnet, picro-ilmenite and chromite.
One 110 pound sample containing an olivine xenolith was found to contain a large
population of indicator minerals including 243 G9 garnets, 65 chrome diopsides,
and 143 spinels. This mineral assemblage is similar to the Arx Dyke which is
located on our permit property that contained the nine micro and one macro
diamonds.





FY
2003 Activities





The 2003
exploration program, managed by Prospecting Geophysics Ltd. of Val D'Or, Quebec
consisted of geological mapping, rock sampling, stream geochemistry, ground
magnetometer surveys and prospecting.  Analytical results are still
being received.  The program defined and evaluated four loosely
bounded belts containing more than 50 Kimberlite dykes, two kimberlite pipes and
several suspected dykes.  Besides the two macro diamonds and 13 micro
diamonds previously discovered in the "A" dyke in 2000, and the rubies reported
from the D, F and K dykes in 2001, SGS Lakefield Research discovered diamond
fragments from kimberlite/aillikite samples taken from the F, E, B, G, Yvon #2,
Champagne pipe, Peter Lake, P, U, Bella, at eight locations on the St. Pierre N.
dyke and at five locations along the MJR kimberlite dyke in
2003.  Subsequently in 2003, diamond fragments have been verified at
Mount Jacques Rousseau.


6





Geologist,
Robert Dillman, consultant to Diamond Discoveries, received results from C.F.
Mineral Research Limited of microprobe analysis of several picked mineral
samples from various dykes.  The January 2004 results indicated
forsterite olivines and clinopyroxenes with diamond inclusion compositions, some
of which are associated with large diamonds were noted in the Yvon #2, K16 and
St. Pierre Southdykes.  The February 2004 results determined the
presence of chrome diopside and forsterite olivine (Diamond Indicator Minerals)
from seven dykes named: St. Pierre dyke, St. Pierre Extension, A Dyke, C Dyke
Champagne, K dyke and K25 dyke.  Five of the dykes have an aillikite
composition and the St. Pierre and St. Pierre extension have a kimberlite
composition.  Using the C.F. Minerals classification, 100% of the
olivine grains analyzed from the St. Pierre, St. Pierre Extension and the K dyke
are classified as having diamond inclusion compositions and there is potential
for these dykes to host diamonds.





FY
2004 Activities





During
the 2004 exploration program, the Company was able to complete one hole for a
total of 100 feet of the total 10,000 foot program prior to the onset of severe
weather.  The Company has received the caustic fusion analyses from
the first hole in the scheduled 10,000 foot drill program on Diamond
Discoveries’ Torngat Mountains diamond project in Northeastern
Quebec.  The 34.7 kilogram sample from 22 feet of kimberlite core was
sent to Saskatchewan Research Council Labs where it was analyzed for diamond
content.  No macro or microdiamonds were found in the
core.





The
Company purchased the drill and left it on the property and has the camp and
fuel in place to get an early start on the following exploration
season.  The Company will resume the scheduled drill program in the
spring of 2005 focusing on its main targets, the Round Lake Structure and
Champagne Pipe.  Earlier surface sampling located macrodiamonds and
microdiamonds in dykes proximal to the Round Lake Structure.





The
Company’s geologists have noted rubies and pink corundums in several places
across the property.  They also noted pink corundum in the broken core
from the first drill hole.  Along with the search for diamond bearing
kimberlite pipes the geologists will begin evaluation the size and gem potential
of the many ruby occurrences.





FY
2005, FY 2006 and FY 2007 Activities





In June,
2005, the Company engaged McPhar Geosurveys Ltd. (“McPhar”) to conduct an
airborne magnetic survey of the Torngat property.  In July 2005, the
Company engaged Watts, Griffis and McOuat (“WGM”), a geological and engineering
consulting firm.  WGM was retained to oversee and direct the
continuing exploration of the Torngat property.  The firm of
Patterson, Grant and Watson Ltd. (“PGW”) reviewed the results of the airborne
magnetic survey conducted by McPhar.  PWG identified 40 targets, 10
first priority, 23 second priority targets and seven third priority
targets.  While some of the targets correlate to previously identified
kimberlitic dykes, several targets are for new dykes not previously
sampled.  After their review of the report on the McPhar airborne
magnetic survey, WGM outlined a program for exploration during the 2005
season.  The primary objectives of the field program
were:





1.
            independent
      replication of previously reported diamonds recovered from three of the
      known kimberlite dykes;


2.
            independent
      field sampling of drainages associated with airborne anomalies selected by
      PGW and sample sites selected by WGM to confirm prior
    results;


3.
            ground
      magnetic confirmation of all potential targets that were readily
      accessible;


4.
            rock
      chip sampling of newly discovered and previously untested dykes associated
      with airborne anomalies; and


5.
            to
      the extent possible, test by drilling selected airborne anomalies with the
      diamond drill already available on the
property.





In August
2005, the field exploration commenced with a crew of 12.  The crew
completed drilling of 2 of the targets identified by PGW.  In
addition, the crew collected 38 alluvial and rock chip samples from prospective
dykes and drainages adjacent to the airborne anomalies and completed ground
magnetic surveys covering 20 of the airborne anomalies.  The alluvial
and rock chip samples along with selected core samples were sent to Saskatchewan
Research Council Geoanalytical Laboratory (“SRC”) for processing.  The
results of the sample processing will be available in a few
months.  Exploration of the Torngat property has been suspended for
the winter months due to inclement weather.  WGM continues to analyze
and compile all the available geophysical, geological and geochemical
data.  On October 18th, the
Company was informed by WGM that all five objectives of the 2005 field program
were achieved.  Further field exploration of the Torngat property did
not resume in 2008 while the Company evaluated a potential opportunity for a
joint venture on property located in Quebec.


7




Government
Regulation and Licensing
 
 Our
operations require licenses and permits from various governmental authorities.
We believe that we presently hold all necessary licenses and permits required
for our intended activities under applicable laws and regulations, and we
believe that we are complying at the present time in all material respects with
the terms of such licenses and permits. However, our licenses and permits are
subject to changes in regulations and in various operating circumstances. We may
not be able to obtain all necessary licenses and permits required to carry out
exploration activities.
 
 We are
currently subject to the environmental regulations set forth under the
Environmental Act (Quebec), the Mining Act (Quebec) and the Forest Act (Quebec).
We believe that we are in compliance with all of these acts, and moreover, we
believe that the environmental impact of our exploration activities will be
minimal. To the extent that we remove large amounts of rock or soil from the
properties, we will likely have to remediate any environmental disruption caused
by our activities. It is impossible to assess with any certainty the cost of
such replacement or remediation activities, or the potential liability that we
would face if we were to be found to have violated one, or more, of these
Acts.
 
 Employees
 
 We do not
have any full time employees at the present time. We have one part time
employee, Mr. Edward C. Williams, who is an executive officer. We use third
parties to oversee and conduct our exploration activities.
 
 Competition
 
 The
mineral exploration business is competitive in all of its phases. We expect to
compete with numerous other exploration companies and individuals, including
competitors with greater financial, technical and other resources than us, for
the resources required for exploration. The greater resources of other entities
will likely position these competitors to conduct exploration within a shorter
time frame than we can, giving them a market advantage.
 
 Currency
Fluctuation
 
 We also
have exposure to currency fluctuations, since our properties are located in
Canada, and thus our transactions are largely in Canadian dollars. Such
fluctuations can materially affect our financial position and other results of
operations. References to the “dollar” or “$US” in this Form 10K are to United
States Dollars, and “Canadian” or “$Cdn” refers to Canadian dollars. Unless
otherwise stated, the translations of $US to $Cdn and vice versa have been made
at the average rate for the year indicated. The following table sets forth the
high and low exchange rate of the Canadian dollar per US dollar as of the latest
practicable date and for each of the last six months:
 
 Period
                    
                    High
                    
                    
                    LowMay 14,
      2009
                    
                    
                    1.1954
                    
                    
                    
                    1.1495
                    (1)April 2009
                    
                    
                    1.2707
                    
                    
                    
                    1.1875March 
      2009
                    
                    
                    1.3066
                    
                    
                    
                    1.2192February
      2009
                    
                    
                    1.2731
                    
                    
                    
                    1.2160January 
      2009
                    
                    
                    1.2765
                    
                    
                    
                    1.1761December 
      2008
                    
                    
                    1.3008
                    
                    
                    
                    1.1872November 2008
                    
                    
                    1.2952
                    
                    
                    
                    1.1477
  
 (1)
Represents the low rate on May 8, 2009.
 
 Item 2. Description of
Property
 
 We do not
own real property, nor do we hold any other real property interest other than
the exploration permits which we discuss above under the caption “Description of
Business.” As noted above, we have engaged Prospecting Geophysics Ltd. as
our on-site project manager for our exploration activities.
 
 In
compliance with Guide 7 of Industry Guides under the Securities Act of 1933 and
the Securities Exchange Act of 1934, the following information is provided,
since we are engaged or are to be engaged in significant mining
operations:
 
 (1)           The
permits were acquired in the Torngat Property Acquisition Agreement cover 469.05
square kilometers of properties in northwest Quebec, Canada, on the eastern
shore of Ungava Bay and by staking an additional 50,000 acres adjacent to such
properties and paying the requisite fees to the Quebec Department of Natural
Resources. With the exception of the five (5) month period from
November to March in which there is inclement weather in the area
surrounding the properties, there is nothing preventing access to the
properties. However, hazardous weather conditions could prevent us from
accessing the properties in other months as well. The properties are only
accessible by air via a helicopter or by boat. There are no roads that permit
direct access to the properties.
  8
 
 (2)           Pursuant
to an agreement between us and Peter Ferderber, Peter Ferderber has transferred
to us six (6) permits for the properties. The properties covered by the
permits are indicated on the map presented in Appendix A by the areas
marked D.D.I. Further, pursuant to the Acquisition Agreement, in consideration
for the permits, we have issued 1,000,000 shares of our common stock to
Mr. Ferderber and have paid him $25,000 Canadian, and at
Mr. Ferderber’s request, $35,000 Canadian to Stanley G. Hawkins. We have
obtained the opinion of Lavery, de Billy, Barristers and Solicitors of Montreal,
Canada dated July 10, 2000, that Mr. Ferderber was the record owner of
the permits under the Mining Act of Quebec and that the permits were in good
standing as of June 21, 2000.
 
 (3)           To
our knowledge, Messrs. Ferderber and Hawkins staked the 469.05 square
kilometer property in the Torngat fields in northwest Quebec, Canada, on the
eastern shore of Ungava Bay in 1999, and there were no previous owners,
operators, or operations on the property.
 
 (4)           Although
there can be no assurance of successful diamond development, initial progress
reports of the property have indicated that there are micro diamonds on the
property. A 24.65 kilogram sample taken from the property, has yielded two
diamonds weighing 0.015 carats and a 30.22 kilogram sample has yielded eight
diamonds weighing 0.001 carats.
 
 Geology
 
 The
Torngat Property, where the properties for which we have mineral permits are
located, lies within the Torngat mountain province. The crust in the province is
thickened because two continental plates were pushed, more than a billion years
ago, one on top of the other. The predominant rock type on the properties are
the Tasiuyak Gneiss, a northwest trending belt of gneissic rock. The gneisses
are considered to be altered sedimentary rocks.
 
 The rocks
of the Torngat mountain province strike northwest-southeast within the Torngat
property. Cross-cutting the gneisses, there are a number of kimberlite dykes.
The individual dykes are dark green and generally coarse grained across most of
their width.
 
 The
properties are in a location over an early Precambrian bedrock segment which is
bedrock dating back to the earliest era of geological history, called an
“Archon.” An Archon is an immobile segment of the earth’s crust exceeding
1.5 billion years in age. Kimberlite, a form of igneous rock, is widely
regarded as the main source for diamonds, and is reported from postulated Archon
called the “Baltic Shield.” Only in the past decade have diamond explorers
recognized that these Baltic Shield rocks are potentially viable for
diamonds.
 
 The Property is Without Known
Reserves and our Proposed Program is Exploratory in
Nature.    Exploration for diamonds and minerals on
the properties began because the formation and layout of the rocks on the
properties indicated that some of the rocks had been pushed up through the
earth’s crust. This is initially identified by geologists from the age and shape
of the rocks. When these different or unexpected rock formations appear,
geologist then consider the area surrounding these rocks as strong targets for
exploration for diamonds. This is because, geologists believe, as the rocks are
pushing up through the earth’s surface from great depths, the rocks travel
through diamond fields located below the earth’s surface and therefore rocks
containing diamonds are forced to the surface.
 
 Rocks
containing these characteristics were identified on the properties covered by
our mineral permits. Once these rocks were identified, we then conducted a
magnetometer survey. The magnetometer is a small electronic device used by
geologists to survey the land for areas of high magnetism. This can be used in
the air or on the ground. This test is conducted because, when the rocks are
being pushed through the earth’s surface (as described above), in addition to
bringing rocks containing diamonds, iron from below the Earth’s surface is also
forced to the surface. The magnetometer reads the surface of the Earth for any
magnetism created by the iron upon the belief that if a particular property
contains a high concentration of iron that was forced up from below the earth’s
surface; the property may also contain diamonds that have been similarly forced
up to the surface.
 
 An
airborne magnetometer survey was conducted over the properties for which we have
mineral permits, and six (6) magnetic dykes were discovered. This indicated
to us that these properties were potentially a source for diamonds. In addition,
samples of rock taken from the properties have yielded small
diamonds.
 
 Prior to
2005, we hired Prospecting Geophysics Ltd. to conduct these exploration
procedures. Mr. Peter Ferderber is the President of Prospecting
Geophysics Ltd. Mr. Ferderber has over forty years of experience in
mining exploration. In July 2005, the Company engaged Watts, Griffis and McOuat
(“WGM”), a geological and engineering consulting firm.  WGM was
retained to oversee and direct the continuing exploration of the Torngat
property.  The first phase of exploration involved identifying areas
on the property from which to take samples and gathering small samples from the
properties for analysis. This analysis to date has demonstrated the presence of
10 micro diamonds in two samples taken. The second phase involves determining
the extent of any kimberlite dykes that were located in phase one and to gather
mini-bulk and bulk samples. This will enable us to determine if there are larger
and more marketable diamonds on the properties. Phase two of our exploration
began in April 2001 and was suspended in 2006 until further notice while the
Company evaluates a potential opportunity for a joint venture on property
located in Quebec.  Operations are generally suspended from October to
April because of inclement weather.
  9
 
 The
following is a breakdown of the estimated budget for particular aspects of our
exploration activities:
 
 Drill
      program
                    
                    400,000Testing
      samples
                    
                    100,000Total
                    
                    $
                    500,000
 
 (5)           In
the Quebec sector of the Torngat belt, roughly fifteen dykes have been mapped.
These dykes occupy fractures oriented at an approximately right angle to the
country rocks, suggesting tensions opened up by later scale folding. Two of
these dykes on an adjacent property have been sampled, confirming the presence
of diamonds. However, to date, no proven reserves have been established and
there can be no assurance that any such reserves will ever exist.
 
 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
  None.
 
 PART
II.
 
 Item 5. Market for Common Equity and
Related Stockholder Matters.
 
 As of
July 18, 2002 prices for the Common Stock were quoted on the Over the
Counter Bulletin Board operated by the National Association of Securities
Dealers, Inc. under the symbol DMDD. The Company’s common stock was
delisted on May 17, 2008 and has been reported on the pink sheets since that
date.  The following table sets forth the high and low closing bid
prices of the Company’s Common Stock for the periods indicated as reported by
the NASD. These quotations reflect inter-dealer prices without retail markup,
markdown or commissions and may not necessarily represent actual
transactions.
 
 High
                                      
                                      
                                      LowFiscal
      Year 2007First
      Quarter
                                      
                                      
                                      0.008
                                      
                                      
                                      
                                      0.005Second
      Quarter
                                      
                                      
                                      0.019
                                      
                                      
                                      
                                      0.004Third
      Quarter
                                      
                                      
                                      0.014
                                      
                                      
                                      
                                      0.005Fourth
      Quarter
                                      
                                      
                                      0.010
                                      
                                      
                                      
                                      0.004Fiscal
      Year 2008First
      Quarter
                                      
                                      
                                      0.018
                                      
                                      
                                      
                                      0.004Second
      Quarter
                                      
                                      
                                      0.035
                                      
                                      
                                      
                                      0.006Third
      Quarter
                                      
                                      
                                      0.048
                                      
                                      
                                      
                                      0.008Fourth
      Quarter
                                      
                                      
                                      0.015
                                      
                                      
                                      
                                      0.004Fiscal
      Year 2009First
      Quarter
                                      
                                      
                                      N/A
                                      
                                      
                                      
                                      N/A
 
 Of the
383,991,830 shares of our common stock issued and outstanding as of May 14,
2009,92,439,763
shares of our common stock are currently considered “restricted securities” and
in the future, may be sold only in compliance with Rule 144 or in an exempt
transaction under the Act unless registered under the Act.
 
 As of
May 14, 2009 the number of holders of record of our common stock was
approximately 115.
 
 We do not
anticipate paying any cash dividends on our common stock in the foreseeable
future because we intend to retain our earnings to finance the expansion of our
business. Thereafter, the declaration of dividends will be determined by the
Board of Directors in light of conditions then existing, including, without
limitation, our financial condition, capital requirements and business
condition. We are prohibited from paying cash dividends on the common stock
until any issued and outstanding preferred stock is converted into common stock.
However, there were no shares of preferred stock outstanding as of December 31,
2008.
  10
 
 Equity
Compensation Plan Information:
 
 Number of securities to be
                            issued upon exercise of
                            outstanding options,
                            warrants and rights
                          
                          
                          Weighted-average exercise
                            price of outstanding options,
                            warrants and rights
                          
                          
                          Number of securities
                            available for future issuance
                            under equity compensation
                            plans (excluding securities
                            reflected in column
                            (a))(a)
                          
                          
                          (b)
                          
                          
                          (c)Equity
      compensation plans approved by security holders
                          
                          
                          0
                          
                          
                          $
                          0.00
                          
                          
                          
                          1,500,000Equity
      compensation plans not approved by security holders
                          
                          
                          0
                          
                          
                          $
                          0.00
                          
                          
                          
                          2,200,000Total
                          
                          
                          0
                          
                          
                          $
                          0.00
                          
                          
                          
                          3,700,000
 
 Stock
Option Plans
 
 2005
Plan
 
 On
November 14, 2005, the Company adopted the Diamond Discoveries International
Corp. 2005 Stock Incentive Plan (the “2005 Plan”).  Under the 2005
Plan, 35,000,000 shares of common stock are reserved for
issuance.  The purpose of the 2005 Plan is to provide incentives for
officers, directors, consultants and key employees to promote the success of the
Company, and to enhance the Company’s ability to attract and retain the services
of such persons.  Options granted under the 2005 Plan may be either:
(i) options intended to qualify as “incentive stock options” under Section 422
of the Internal Revenue Code of 1986; or (ii) non-qualified stock
options.  Stock options may be granted under the 2005 Plan for all
employees and consultants of the Company, or employees of any present or future
subsidiary or parent of the Company.  The 2005 Plan is administered by
the Board of Directors.  The Compensation Committee is empowered to
interpret the 2005 Plan and to prescribe, amend and rescind the rules and
regulations pertaining to the 2005 Plan.  Options granted under the
2005 Plan generally vest over three years.  No option is transferable
by the optionee other than by will or the laws of descent and distribution and
each option is exercisable, during the lifetime of the optionee, only by the
optionee.  The Compensation Committee may not receive
options.
 
 Any
incentive stock option that is granted under the 2005 Plan may not be granted at
a price less than the fair market value of the Company’s Common Stock on the
date of grant (or less than 110% of the fair market value in the case of holders
of 10% or more of the total combined voting power through all classes of stock
of the Company or a subsidiary or parent of the
Company.)  Non-qualified stock options may be granted at the exercise
price established by the Compensation Committee, which may be less than the fair
market value of the Company’s Common Stock on the date of grant.
 
 Each
option granted under the 2005 Plan is exercisable for a period not to exceed ten
years from the date of grant (or five years in the case of a holder of more than
10% of the total combined voting power of all classes of stock of the Company or
a subsidiary or parent of the Company) and shall lapse upon expiration of such
period, or earlier upon termination of the recipient’s employment with the
Company, or as determined by the Compensation Committee.
 
 2004
Plan
 
 On
September 30, 2004, the Company adopted the Diamond Discoveries International
Corp. 2004 Stock Incentive Plan (the “2004 Plan”).  Under the 2004
Plan, 35,000,000 shares of common stock are reserved for
issuance.  The purpose of the 2004 Plan is to provide incentives for
officers, directors, consultants and key employees to promote the success of the
Company, and to enhance the Company’s ability to attract and retain the services
of such persons.  Options granted under the 2004 Plan may be either:
(i) options intended to qualify as “incentive stock options” under Section 422
of the Internal Revenue Code of 1986; or (ii) non-qualified stock
options.  Stock options may be granted under the 2004 Plan for all
employees and consultants of the Company, or employees of any present or future
subsidiary or parent of the Company.  The 2004 Plan is administered by
the Board of Directors.  The Compensation Committee is empowered to
interpret the 2004 Plan and to prescribe, amend and rescind the rules and
regulations pertaining to the 2004 Plan.  Options granted under the
2004 Plan generally vest over three years.  No option is transferable
by the optionee other than by will or the laws of descent and distribution and
each option is exercisable, during the lifetime of the optionee, only by the
optionee.  The Compensation Committee may not receive
options.
  11
 
 Any
incentive stock option that is granted under the 2004 Plan may not be granted at
a price less than the fair market value of the Company’s Common Stock on the
date of grant (or less than 110% of the fair market value in the case of holders
of 10% or more of the total combined voting power through all classes of stock
of the Company or a subsidiary or parent of the
Company.)  Non-qualified stock options may be granted at the exercise
price established by the Compensation Committee, which may be less than the fair
market value of the Company’s Common Stock on the date of grant.
 
 Each
option granted under the 2004 Plan is exercisable for a period not to exceed ten
years from the date of grant (or five years in the case of a holder of more than
10% of the total combined voting power of all classes of stock of the Company or
a subsidiary or parent of the Company) and shall lapse upon expiration of such
period, or earlier upon termination of the recipient’s employment with the
Company, or as determined by the Compensation Committee.
 
 2003
Plan
 
 On May
30, 2003, the Company adopted the Diamond Discoveries International Corp. 2003
Stock Incentive Plan (the “Plan”).  Under the Plan, 15,000,000 shares
of common stock are reserved for issuance.  The purpose of the Plan is
to provide incentives for officers, directors, consultants and key employees to
promote the success of the Company, and to enhance the Company’s ability to
attract and retain the services of such persons.  The Plan orivudes
for the grant of incentive stock options and nonqualified stock options
(“Options”) and restricted stock awards (“Restricted Stock Awards”) and Stock
Appreciation Rights, Performance Shares, Dividend Equivalent Payments, and Other
Stock Based Awards (“Options,”“Restricted Stock Awards,” and “Stock Appreciation
Rights,” are collectively referred to herein as “Awards”). Options granted under
the Plan may be either: (i) options intended to qualify as “incentive stock
options” under Section 422 of the Internal Revenue Code of 1986; or (ii)
non-qualified stock options.  Stock options may be granted under the
Plan for all employees and consultants of the Company, or employees of any
present or future subsidiary or parent of the Company.  The Plan is
administered by the Board of Directors.  The Compensation Committee is
empowered to interpret the Plan and to prescribe, amend and rescind the rules
and regulations pertaining to the Plan.  Options granted under the
Plan generally vest over three years.  The Compensation Committee may
not receive options.
 
 Any
incentive stock option that is granted under the Plan may not be granted at a
price less than the fair market value of the Company’s Common Stock on the date
of grant (or less than 110% of the fair market value in the case of holders of
10% or more of the total combined voting power through all classes of stock of
the Company or a subsidiary or parent of the Company.)  Non-qualified
stock options may be granted at the exercise price established by the
Compensation Committee, which may be less than the fair market value of the
Company’s Common Stock on the date of grant, but in no event shall such exercise
price be less than 55% of such fair market value.
 
 Each
option granted under the Plan is exercisable for a period not to exceed ten
years from the date of grant (or five years in the case of an incentive stock
option granted to a holder of more than 10% of the total combined voting power
of all classes of stock of the Company or a subsidiary or parent of the Company)
and shall lapse upon expiration of such period, or earlier upon termination of
the recipient’s employment with the Company, or as determined by the
Compensation Committee.
 
 Awards
are generally non-transferable other than by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order.
 
 The
Company’s Board of Directors may at any time, and from time to time, amend,
terminate, or suspend one or more of the Plan in any manner it deems
appropriate, provided that such amendment, termination or suspension cannot
adversely affect rights or obligations with respect to shares or options
previously granted, unless the Award recipient consents to such changes in
writing. The Board of Directors may not, without shareholder approval: make any
amendment which would materially modify the participation eligibility
requirements for the 2005 Plan and 2004 Plan, to the extent they require
approval in order to satisfy the Internal Revenue Code requirements; make other
modifications requiring stockholder approval to satisfy the Internal Revenue
Code requirements, increase the total number of shares of common stock which may
be issued pursuant to the 2005 Plan and 2004 Plan, except in the case of a
reclassification of the Company’s capital stock or a consolidation or merger of
the Company.
 
 Recent
Sales of Unregistered Securities
 
 In May 2008, in connection with a
private placement of its common stock, the Company issued 5,750,000 shares of
its common stock for $141,250. In June 2008, the Company issued 10,000,000
shares of its common stock in connection with the acquisition of the Caribou
property which is recorded in other assets in the accompanying balance sheet of
$130,000 which approximated the fair value of the shares.  In October
2008, the Company issued 10,025,000 shares of its common stock in exchange for
services performed by various consultants and recorded a charge to general and
administrative expenses of $131,625 which approximated the fair value of the
shares.
  12
 
 The sale
and issuance of the aforementioned shares were exempt transactions under Section
4(2) of the Securities Act of 1933 as a transaction by an issuer not involving a
public offering.  At the time of sale, the persons who acquired these
securities were all full, informed and advised about matters concerning us,
including our business, financial affairs and other matters.  The
shareholders acquired the securities for their own account or their
designees.
 
 Item 6. Selected Financial
Data.
 
 Not
applicable.
 
 Item
7. Management’s Discussion and Analysis of Financial Condition or Plan of
Operation
 
 The following discussion and
analysis should be read in conjunction with the financial statements and notes
thereto included elsewhere in this Annual Report on Form 10-K.The
following discussion regarding us and our business and operations contains
forward-looking statements. Such statements consist of any statement other than
a recitation of historical fact, and can be identified by the use of such
forward-looking terminology such as “may,” “expect,” “anticipate,” “estimate” or
“continue” or the negative thereof or other variations thereon, or comparable
terminology. The reader is cautioned that all forward-looking statements are
necessarily speculative, and there are certain risks and uncertainties that
could cause actual events or results to differ materially from those referred to
in such forward-looking statements. The Company undertakes no obligation to
update the information contained herein. Forward-looking statements are subject
to inherent risks and uncertainties, some of which are summarized in “Risk
Factors” section of this Form 10-K.
 
 Operations
to Date
 
 We were
incorporated in the State of Delaware in April of 2000.  We have
not engaged in commercial operations since inception, and therefore have not
realized any revenues from operations since inception.  We do not
expect to commence operations in the foreseeable future and do not expect to
generate revenue in calendar year 2009.
 
 For the fiscal years ended December 31,
2008 and 2007 and the period from April 24, 2000 (date of inception) to
December 31, 2008 we incurred $(127,436), $19,342 and $2,404,291 in exploration
costs, net of reimbursements and $1,001,930, $1,451,220 and $16,271,079 in
general and administrative expenses, respectively. General and administrative
expenses consisted primarily of professional fees related to our corporate
filings and consulting and other expenses incurred in operating our business. We
incurred a net loss of $874,494 or $(.00) per share based on 370,037,390
weighted average shares outstanding for the fiscal year ended December 31, 2008
compared to a net loss of $1,470,562 or $(.00) per share based on 320,318,230
weighted average shares outstanding for the fiscal year ended December 31,
2007.
 
 Going Concern
 
 In
connection with their audit report on our financial statements as of December
31, 2008, Rodefer & Moss, our independent registered public accounting firm,
expressed substantial doubt about our ability to continue as a going concern
because such continuance is dependent upon our ability to raise sufficient
capital.
 
 We have
explored, and continue to explore, all avenues possible to raise the funds
required.  Continuation of our exploration efforts is dependent upon
our ability to raise capital.
 
 Ultimately,
we must achieve profitable operations if we are to be a viable entity. Although
we believe that there is a reasonable basis to believe that we will successfully
raise the needed funds to continue exploration, we cannot assure you that we
will be able to raise sufficient capital to continue exploration, or that if
such funds are raised, that exploration will result in a finding of commercially
exploitable reserves, or that if exploitable reserves exist on our properties,
that extraction activities can be conducted at a profit.
 
 Cash
Flow and Capital Resources
 
 Through
December 31, 2008 we have relied on advances of approximately $1,648,000 from
our principal stockholders, trade payables of approximately $199,000, notes
payable of approximately 1,194,000 and proceeds of approximately $5,156,000 from
the sale of common stock to support our limited operations. As of December 31,
2008, we had approximately $33,848 of cash.
 
 We plan
to seek additional equity or debt financing of up to $500,000 which we plan to
use for the next phase of our exploration program to be conducted through
December 31, 2009, as well as working capital purposes. We currently have
limited sources of capital, including the public and private placement of equity
securities and the possibility of issuance of debt securities to our
stockholders. With virtually no assets, the availability of funds from
traditional sources of debt will be limited, and will almost certainly involve
pledges of assets or guarantees by officers, directors and stockholders.
Stockholders have advanced funds to us in the past, but we cannot assure you
that they will be a source of funds in the future. If we do not get sufficient
financing, we may not be able to continue as a going concern and we may have to
curtail or terminate our operations and liquidate our business (see Note 1
to financial statements).
  13
 
 Plan
of Operation
 
 Our
business plan for the next year will consist of further exploration on the
properties over which we hold the mineral exploration permits as well as
preliminary marketing efforts.
 
 We
estimate that it will require approximately $500,000 to conduct an exploration
program on the Caribou property through 2009. This amount will be used to pay
for continued drilling of identified targets, prospecting and geological
mapping, helicopter and airplane support, lodging and food for workers, pick-up
truck rentals, assays, property taxes to the Quebec Department of Natural
Resources and supervision.  If we continue with the exploration of the
Caribou property, we plan to raise a minimum of $500,000 through one or more
private offerings pursuant to Rule 506 or Regulation D or through an offshore
offering pursuant to Regulation S; however, nothing in this annual report shall
constitute an offer of any securities for sale. Such shares when sold will not
have been registered under the Act and may not be offered or sold in the United
States absent registration or an applicable exemption from registration
requirements. If we are unable to raise this amount, we will most likely cease
all activity related to our exploration program, or at the very least, proceed
on a reduced scale. We have to date relied on a small number of investors to
provide us with financing for the commencement of our exploration program,
including TVP Capital Corp., a principal stockholder. Amounts owed to these
individuals are payable upon demand.
 
 We employ
one individual on a part time basis, who is an executive officer. We do not
expect any significant changes in the number of employees within the next twelve
months.
 
 Risk
Factors
 
 Operations—New
Entity/Startup Entity
 
 We
have no history running our mineral exploration business.
 
 We are
engaged in the exploration stage of our business. We have not engaged in any
substantive business operations to date. More particularly, we have not engaged
in any mining operations. We have only engaged in exploratory activities,
feasibility studies and the establishment of initial exploration plans. Thus, we
have no way to evaluate the likelihood that we will be able to operate our
business successfully. You should consider our business future based on the
risks associated with our early stage, and lack of experience.
 
 We
expect to face many of the typical challenges of a startup
business.
 
 A startup
business like ours faces a number of challenges. For example, engaging the
services of qualified support personnel and related consultants and other
experts is very important in the mineral exploration business, and there is keen
competition for the services of these experts, consultants, and support
personnel. Equally important in the mineral exploration business is establishing
initial exploration plans for mining prospects, and analyzing relevant
information efficiently. Establishing and maintaining budgets and appropriate
financial controls is also very important to a startup business. We expect to
incur substantial operating losses for the foreseeable future, as well. The
failure to address one or more of these activities, or curb operating losses,
may impair our ability to carry out our business plan.
 
 Operations—Mineral Exploration Activities
 
 Mineral
exploration has many inherent risks of operations which may prevent ultimate
success.
 
 Mineral
exploration has significant risks. Mineral exploration companies (like us) are
dependent on locating mineral reserves on the properties over which it has
mineral permits, and are also dependent on the skillful management of minerals,
when and if found or located on these properties. These minerals, when found in
deposits and mineralizations, can vary substantially in a prospect, rendering
what was initially believed to be a profitable deposit into one of little or no
value. Unforeseen changes in regulations, the value of minerals, environmental
regulations, mining technology, site conditions, and/or labor conditions can all
have a negative impact on our operations, and each may impair our ability to
carry out our business plan.
  14
 
 Our
business future is dependent on finding mineral deposits with sufficient
mineralization and grade.
 
 Our
business model depends on locating prospects with a sufficient amount of
mineralization to justify surface and drilling sampling. No assurance can be
given that our specific exploration target areas will be valuable in locating
mineralizations. Even if initial mineralization reports are positive, subsequent
activities may determine that deposits are not commercially viable. Thus, at any
stage in the exploration process, we may determine that there is no business
reason to continue and, at that time, our resources may not enable us to
continue exploratory operations and will cause us to terminate our
business.
 
 We
have no known mineral reserves, and if we cannot find any, we will have to cease
operations.
 
 We have
no mineral reserves. If we do not find a mineral reserve containing diamonds, or
if we cannot develop any diamond-bearing mineral reserve, either because we do
not have the money to effect such a development, or because it will not be
economically feasible to do it, we will have to cease operations, and you may
lose your entire investment.
 
 We
are relying on geological reports to locate potential mineral deposits, which
may be inaccurate.
 
 We rely
on geological reports to determine which of the properties, for which we have
mineral permits, to explore. There is no sure method of verifying the care and
manner used to prepare these reports without further verification on our part,
or on our agents’ part. Verification of reports is expected to be costly, and
may take a considerable period of time. Verification could result in our
rejecting a potential mineral prospect; however, we will have borne the expense
of this verification with no likelihood of recovering the amounts expended.
Decisions made without adequately checking the mining prospects could result in
significant unrecoverable expenses. Mineral deposits initially thought to be
valuable may, in fact, turn out to be of little value. Therefore, it is possible
that investment funds will have been used, with no value having been achieved
from the operations based on the reports.
 
 Regulatory
compliance in the mineral exploration business is complex, and the failure to
meet all of the various requirements could result in fines, or other limitations
on the proposed business.
 
 Our
mineral exploration activities will be subject to regulation by numerous
governmental authorities. We are subject to environmental regulations under the
Environmental Act (Quebec), the Mining Act (Quebec), and the Forest Act
(Quebec). The failure to comply fully with these or any other governmental
regulations will adversely affect our ability to explore for economic
mineralization, and our subsequent business stages. The failure to comply with
any regulations or licenses may result in fines or other penalties. We expect
compliance with these regulations to be substantial. Therefore, compliance with
(or, conversely, the failure to so comply with) applicable regulations will
affect our ability to succeed in our business plans and to generate revenues and
profits.
 
 Mineral
exploration is a hazardous business, which entails risks for liability and/or
damages.
 
 The
search for valuable minerals involves numerous hazards. As a result, we may
become subject to liability for such hazards, including pollution, cave-ins and
other hazards against which we cannot insure against, or against which we may
not elect to insure. We do not currently carry any insurance to protect against
the potential liability of such hazards. The payment of any liabilities
attributed to us may have a material adverse effect on our financial position
and may cause us to cease operations.
 
 We
face intense competition, and our competitors may have greater resources than we
do and be better able to locate and explore mineral resources in a quicker and
more cost efficient manner than we can.
 
 It is our
belief that there are a significant number of companies with greater resources
than those available to us, to locate and explore mineral resources. These
companies may be able to reach production stages sooner than we can, and obtain
a share of the market for mineral products before we can.
 
 Because
our management has only limited experience in mineral exploration, we have a
higher risk of failure.
 
 Our
management has only limited experience in mineral exploration. As a result of
this limited experience, there is a higher risk of our being unable to complete
our business plan in the exploration of our mineral property.
 
 Capital
Issues
 
 We
do not currently have sufficient capital to engage in exploration
activities.
 
 The cost
of our planned exploration activities is approximately $500,000. As of the date
of this filing, we do not have sufficient capital to engage in exploration
activities, and no sources for financing. The extent to which we will be able to
implement our exploration for minerals will be determined by our ability to
engage in offerings of equity securities and/or debt securities. Without
additional capital, we will have to either curtail our business plan, or abandon
it altogether.
  15
 
 We
do not have any identified sources of additional capital, the absence of which
may prevent us from continuing our operations.
 
 We do
not, presently, have any arrangements with any investment banking firms or
institutional lenders. Because we will need additional capital, we will have to
expend significant effort to raise operating funds. These efforts may not be
successful. If not, we will have to either curtail our business plan, or abandon
it altogether.
 
 Corporate
Governance Risks
 
 Our
officers and directors will devote approximately one-third of their time to our
operations.
 
 Our
officers and directors have other interests. Because of these other interests,
each will be devoting only one-third of their time to our operations, which
could have a negative impact on the efficiency of our operations.
 
 Critical
Accounting Policies and Estimates
 
 Our
financial statements have been prepared in accordance with accounting principles
generally accepted in the United States of America. The preparation of these
financial statements requires us to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses, and related
disclosure of contingent assets and liabilities. On an on-going basis, we
evaluate our estimates. We base our estimates on historical experience and on
other assumptions that are believed to be reasonable under the circumstances.
Accordingly, actual results could differ from these estimates under different
assumptions or conditions. This section summarizes the critical accounting
policies and the related judgments involved in their application.
 
 Valuation
of Deferred Tax Assets
 
 We
regularly evaluate our ability to recover the reported amount of our deferred
income taxes considering several factors, including our estimate of the
likelihood that we will generate sufficient taxable income in future years in
which temporary differences reverse. Due to the uncertainties related to, among
other things, the extent and time of future taxable income and the potential
changes in the ownership of the Company, which could subject our net operating
loss carryforwards to substantial annual limitations, we offset our net deferred
tax assets by an equivalent valuation allowance as of December 31,
2008.
 
 Valuation
of Long-Lived Assets
 
 We assess
the recoverability of long-lived assets, such as mining claims, whenever we
determine that events or changes in circumstances indicate that their carrying
amount may not be recoverable. Our assessment is primarily based upon our
estimate of future cash flows associated with these assets. If at some point in
the future, we estimate that the undiscounted cash flows is less than the
carrying value of the assets, this determination could result in non-cash
charges to income that could materially affect our financial position or results
of operations for that period.
  16
  Item 7A.. Quantitative and Qualitative
Disclosures about Market Risk.
 
 Not
Applicable.
 
 Item
8. Financial Statements and Supplemental Data
 
 DIAMOND
DISCOVERIES INTERNATIONAL CORP.
 (An
Exploration Stage Company)
 
 INDEX TO FINANCIAL STATEMENTS
 
 Report
      of Independent Registered Public Accounting Firm
                        18Balance
      Sheet December 31, 2008
                        19Statements
      of Operations Years Ended December 31, 2008 and 2007 and Period from
      April 24, 2000 (Date of Inception) to December 31,
    2008
                        20Statements
      of Changes in Stockholders’ Deficiency Years Ended December 31, 2008 and
      2007 and Period from April 24, 2000 (Date of Inception) to December
      31, 2008
                        21Statements
      of Cash Flows Years Ended December 31, 2008 and 2007 and Period from
      April 24, 2000 (Date of Inception) to December 31,
    2008
                        22Notes
      to Consolidated Financial Statements
                        23
  17
 
 REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
 
 To the
Board of Directors and Stockholders
 Diamond
Discoveries International Corp.:
 
 We have
audited the accompanying consolidated balance sheets of Diamond Discoveries
International Corp. (an exploration stage company) (the “Company”) as of
December 31, 2008 and 2007, and the related consolidated statements of
operations, changes in stockholders’ deficiency and cash flows for the years
then ended and for the period April 24, 2000 (inception) through December 31,
2008, respectively. 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 standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting.  Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion of the effectiveness of the Company’s internal control over financial
reporting.  Accordingly, we express no such opinion.  An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, 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, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Diamond Discoveries
International Corp. (an exploration stage company), as of December 31, 2008 and
2007, and the results of its operations and cash flows for the years then ended
and for the period April 24, 2000 (inception) through December 31, 2008 in
conformity with accounting principles generally accepted in the United States of
America.
 
 The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, the Company has no present
revenue.  The success of the Company’s business plan is also dependent
upon the amount of funds it is able to raise in the near future.  The
Company’s capital resources as of March 31, 2009 are not sufficient to sustain
operations or complete its planned activities for the upcoming year unless it
raises additional funds.   These conditions raise substantial
doubt about the Company’s ability to continue as a going concern. Management’s
plans concerning these matters are described in Note 1. The accompanying
financial statements do not include any adjustments that might result from the
outcome of these uncertainties.
 
 /s/
      Rodefer Moss & Co, PLLCKnoxville,
      TennesseeNovember
      __, 2009
  18
 
 DIAMOND
DISCOVERIES INTERNATIONAL CORP.
 (An
Exploration Stage Company)
 BALANCE SHEET
 DECEMBER 31,
2008
  2008
                      
                      
                      2007ASSETSCurrent
      assetsCash
                      
                      $
                      33,848
                      
                      
                      $
                      4,213Other
      current assets
                      
                      —
                      
                      
                      
                      38,41833,848
                      
                      
                      
                      42,631Property
      and equipment, net
                      
                      —
                      
                      
                      
                      119,813Other
      assets
                      
                      222,775
                      
                      
                      
                      38,334Total
                      
                      $
                      256,623
                      
                      
                      $
                      200,778LIABILITIES
      AND STOCKHOLDERS’ DEFICIENCYLiabilities:Notes
      payable
                      
                      $
                      1,264,529
                      
                      
                      $
                      1,596,822Accounts
      payable
                      
                      198,659
                      
                      
                      
                      196,447Other
      current liabilities
                      
                      175,000
                      
                      
                      
                      —Advances
      from stockholders
                      
                      202,874
                      
                      
                      
                      241,9511,841,062
                      
                      
                      
                      2,035,220Total
      liabilities
                      
                      1,841,062
                      
                      
                      
                      2,035,220Commitments
      and contingenciesStockholders’
      deficiency:Preferred
      stock, par value $.001 per share; 20,000,000 shares authorized; none
      issued
                      
                      —
                      
                      
                      
                      —Common
      stock, par value $.001 per share; 480,000,000 shares authorized;
      383,991,830 and 358,216,830 shares issued and outstanding at December 31,
      2008 and 2007, respectively
                      
                      383,992
                      
                      
                      
                      358,217Additional
      paid-in capital
                      
                      17,061,141
                      
                      
                      
                      16,684,041Deficit
      accumulated during the exploration stage
                      
                      (18,376,483
                      )
                      
                      
                      (17,501,989
                      )Accumulated
      other comprehensive income (loss)
                      
                      (646,584
                      )
                      
                      
                      (936,572
                      )Unearned
      compensation
                      
                      (6,505
                      )
                      
                      
                      (438,139
                      )Total
      stockholders’ deficiency
                      
                      (1,584,439
                      )
                      
                      
                      (1,834,442
                      )Total
                      
                      $
                      256,623
                      
                      
                      $
                      200,778
 
 See Notes
to Consolidated Financial Statements.
  19
 
 DIAMOND
DISCOVERIES INTERNATIONAL CORP.
 (An
Exploration Stage Company)
 STATEMENTS OF OPERATIONS
 YEARS
ENDED DECEMBER 31, 2008 AND 2007 AND PERIOD FROM
 APRIL 24,
2000 (DATE OF INCEPTION) TO DECEMBER 31, 2008
 
 2008
                  
                  
                  2007
                  
                  
                  April 24,
                    2000
      to
                    December 31,
                    2008Revenues
                  
                  $
                  —
                  
                  
                  $
                  —
                  
                  
                  $
                  —Operating
      expenses:Exploration
      costs
                  
                  
                  216,367
                  
                  
                  
                  78,298
                  
                  
                  
                  3,953,729Reimbursements
      of exploration costs
                  
                  
                  (343,803
                  )
                  
                  
                  (58,956
                  )
                  
                  
                  (1,549,438
                  )Exploration
      costs, net of reimbursements
                  
                  
                  (127,436
                  )
                  
                  
                  19,342
                  
                  
                  
                  2,404,291General
      and administrative expenses
                  
                  
                  1,001,930
                  
                  
                  
                  1,451,220
                  
                  
                  
                  16,271,079Total
      operating expenses
                  
                  
                  874,494
                  
                  
                  
                  1,470,562
                  
                  
                  
                  18,675,370Operating
      loss
                  
                  
                  (874,494
                  )
                  
                  
                  (1,470,562
                  )
                  
                  
                  (18,675,370
                  )Other
      income (expenses)(Loss)
      gain on modification of debt
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  1,193,910Interest
      expense
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  (895,023
                  )Net
      loss
                  
                  $
                  (874,494
                  )
                  
                  $
                  (1,470,562
                  )
                  
                  $
                  (18,376,483
                  )Basic
      net loss per common share
                  
                  $
                  —
                  
                  
                  $
                  —Basic
      weighted average common shares outstanding
                  
                  
                  370,037,390
                  
                  
                  
                  320318,230
 
 See Notes
to Consolidated Financial Statements.
  20
 
 DIAMOND
DISCOVERIES INTERNATIONAL CORP.
 (An
Exploration Stage Company)
 STATEMENTS OF CHANGES IN STOCKHOLDERS’
DEFICIENCY
 YEARS
ENDED DECEMBER 31, 2008 AND 2007 AND PERIOD FROM APRIL 24,
2000
 (DATE
OF INCEPTION) TO DECEMBER 31, 2008
 
 Preferred
      stock
                            
                            
                            Common
      stock
                            
                            
                            Additional
                              paid-in
                            
                            
                            Deficit
                              Accumulated
                              during
      the
                              exploration
                            
                            
                            Accumulated
                              other
                              comprehensive
                              income
                            
                            
                            Subscriptions
                              receivable
                            
                            
                            UnearnedShares
                            
                            
                            Amount
                            
                            
                            Shares
                            
                            
                            Amount
                            
                            
                            capital
                            
                            
                            stage
                            
                            
                            (loss)
                            
                            
                            Shares
                            
                            
                            Amount
                            
                            
                            compensation
                            
                            
                            TotalIssuance
      of shares to founders effective as of April 24, 2000
                            
                            
                            —
                            
                            
                            $
                            —
                            
                            
                            
                            4,850,000
                            
                            
                            $
                            4,850
                            
                            
                            $
                            —
                            
                            
                            $
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            $
                            —
                            
                            
                            $
                            —
                            
                            
                            $
                            4,850Issuance
      of shares as payment for legal services
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            150,000
                            
                            
                            
                            150
                            
                            
                            
                            3,600
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            3,750Issuance
      of shares in connection with acquisition of mineral
permits
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            2,000,000
                            
                            
                            
                            2,000
                            
                            
                            
                            48,000
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            50,000Subscription
      for purchase of 10,000,000 shares
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            10,000,000
                            
                            
                            
                            10,000
                            
                            
                            
                            240,000
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            10,000,000
                            
                            
                            
                            (250,000
                            )
                            
                            
                            —
                            
                            
                            
                            —Proceeds
      from issuance of common stock
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (1,000,000
                            )
                            
                            
                            25,000
                            
                            
                            
                            —
                            
                            
                            
                            25,000Net
      loss
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (713,616
                            )
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (713,616
                            )Balance,
      December 31, 2000
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            17,000,000
                            
                            
                            
                            17,000
                            
                            
                            
                            291,600
                            
                            
                            
                            (713,616
                            )
                            
                            
                            
                            
                            
                            
                            9,000,000
                            
                            
                            
                            (225,000
                            )
                            
                            
                            —
                            
                            
                            
                            (630,016
                            )Proceeds
      from issuance of common stock
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (9,000000
                            )
                            
                            
                            225,000
                            
                            
                            
                            —
                            
                            
                            
                            225,000Net
      loss
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (1,021,190
                            )
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (1,021,190
                            )Balance,
      December 31, 2001
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            17,000,000
                            
                            
                            
                            17,000
                            
                            
                            
                            291,600
                            
                            
                            
                            (1,734,806
                            )
                            
                            
                            
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (1,426,206
                            )Proceeds
      from private placements of units of common stock and
    warrants
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            1,685,000
                            
                            
                            
                            1,685
                            
                            
                            
                            756,565
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            51,758
                            
                            
                            
                            (23,291
                            )
                            
                            
                            —
                            
                            
                            
                            734,959Net
      loss
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (877,738
                            )
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (877,738
                            )Balance,
      December 31, 2002
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            18,685,000
                            
                            
                            
                            18,685
                            
                            
                            
                            1,048,165
                            
                            
                            
                            (2,612,544
                            )
                            
                            
                            
                            
                            
                            
                            51,758
                            
                            
                            
                            (23,291
                            )
                            
                            
                            —
                            
                            
                            
                            (1,568,985
                            )Issuance
      of shares as payment for accounts payable
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            3,000,000
                            
                            
                            
                            3,000
                            
                            
                            
                            295,423
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            298,423Issuance
      of shares as payment for services
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            6,715,000
                            
                            
                            
                            6,715
                            
                            
                            
                            1,368,235
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            1,374,950Issuance
      of stock options
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            1,437,000
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (1,437,000
                            )
                            
                            
                            —Issuance
      of shares as payment for advances from stockholders
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            7,500,000
                            
                            
                            
                            7,500
                            
                            
                            
                            767,500
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            775,000Issuance
      of shares as payment for notes payable
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            1,810,123
                            
                            
                            
                            1,810
                            
                            
                            
                            124,898
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            126,708Proceeds
      from issuance of common stock
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            6,000,000
                            
                            
                            
                            6,000
                            
                            
                            
                            444,000
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            4,000,000
                            
                            
                            
                            (281,250
                            )
                            
                            
                            —
                            
                            
                            
                            168,750Proceeds
      from issuance of common stock in connection with exercise of stock
      options
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            10,050,000
                            
                            
                            
                            10,050
                            
                            
                            
                            292,450
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            302,500Amortization
      of unearned compensation
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            169,744
                            
                            
                            
                            169,744Net
      loss
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (3,222,057
                            )
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (3,222,057
                            )Foreign
      currency translation adjustment
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (360,900
                            )
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (360,900
                            )Total
      comprehensive loss ($3,582,957)
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —Balance,
      December 31, 2003
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            53,760,123
                            
                            
                            
                            53,760
                            
                            
                            
                            5,777,671
                            
                            
                            
                            (5,834,601
                            )
                            
                            
                            (360,900
                            )
                            
                            
                            4,051,758
                            
                            
                            
                            (304,541
                            )
                            
                            
                            (1,267,256
                            )
                            
                            
                            (1,935,867
                            )Issuance
      of shares as payment for services
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            16,842,000
                            
                            
                            
                            16,842
                            
                            
                            
                            1,614,858
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            1,631,700Proceeds
      from issuance of common stock
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            4,000,000
                            
                            
                            
                            4,000
                            
                            
                            
                            384,832
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            524,207
                            
                            
                            
                            (56,754
                            )
                            
                            
                            —
                            
                            
                            
                            332,078Issuance
      of shares as payment for accounts payable
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            1,400,000
                            
                            
                            
                            1,400
                            
                            
                            
                            138,600
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            140,000Issuance
      of stock options
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            1,139,000
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (1,139,000
                            )
                            
                            
                            —Proceeds
      from issuance of common stock in connection with exercise of stock
      options
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            31,125,000
                            
                            
                            
                            31,125
                            
                            
                            
                            395,125
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            426,250Forgiveness
      of stock subscriptions
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (4,575,965
                            )
                            
                            
                            361,295
                            
                            
                            
                            —
                            
                            
                            
                            361,295Amortization
      of unearned compensation
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            529,423
                            
                            
                            
                            529,423Net
      loss
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (3,724,106
                            )
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (3,724,106
                            )Foreign
      currency translation adjustment
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (131,269
                            )
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (131,269
                            )Total
      comprehensive loss ($3,855,375)
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —Balance,
      December 31, 2004
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            107,127,123
                            
                            
                            
                            107,127
                            
                            
                            
                            9,450,086
                            
                            
                            
                            (9,558,707
                            )
                            
                            
                            (492,169
                            )
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (1,876,833
                            )
                            
                            
                            (2,370,496
                            )Issuance
      of shares as payment for services
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            6,000,000
                            
                            
                            
                            6,000
                            
                            
                            
                            204,000
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            210,000Proceeds
      from issuance of common stock
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            69,883,657
                            
                            
                            
                            69,884
                            
                            
                            
                            2,376,044
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            2,445,928Issuance
      of shares as payment for accounts payable
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            36,481,050
                            
                            
                            
                            36,481
                            
                            
                            
                            1,156,386
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            1,192,867Issuance
      of stock options
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            1,218,500
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (1,218,500
                            )
                            
                            
                            —Proceeds
      from issuance of common stock in connection with exercise of stock
      options
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            28,125,000
                            
                            
                            
                            28,125
                            
                            
                            
                            253,125
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            281,250Amortization
      of unearned compensation
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            889,960
                            
                            
                            
                            889,960Net
      loss
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (3,419,547
                            )
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (3,419,547
                            )Foreign
      currency translation adjustment
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (151,691
                            )
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (151,691
                            )Total
      comprehensive loss ($3,571,238)
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —Balance,
      December 31, 2005
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            247,616,830
                            
                            
                            
                            247,617
                            
                            
                            
                            14,658,141
                            
                            
                            
                            (12,978,254
                            )
                            
                            
                            (643,860
                            )
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (2,205,373
                            )
                            
                            
                            (921,729
                            )Issuance
      of shares as payment for services
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            46,000,000
                            
                            
                            
                            46,000
                            
                            
                            
                            1,334,000
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            1,380,000Proceeds
      from issuance of common stock
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            100,000
                            
                            
                            
                            100
                            
                            
                            
                            3,400
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            3,500Issuance
      of stock options
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            150,000
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (150,000
                            )
                            
                            
                            —Proceeds
      from issuance of common stock in connection with exercise of stock
      options
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            11,500,000
                            
                            
                            
                            11,500
                            
                            
                            
                            103,500
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            115,000Amortization
      of unearned compensation
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            1,142,674
                            
                            
                            
                            1,142,674Net
      loss
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (3,053,173
                            )
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (3,053,173
                            )Foreign
      currency translation adjustment
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (48,535
                            )
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (48,535
                            )Total
      comprehensive loss ($3,101,708)
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —Balance,
      December 31, 2006
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            305,216,830
                            
                            
                            
                            305,217
                            
                            
                            
                            16,249,041
                            
                            
                            
                            (16,031,427
                            )
                            
                            
                            (692,395
                            )
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (1,212,699
                            )
                            
                            
                            (1,382,263
                            )Issuance
      of shares as payment for services
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            52,000,000
                            
                            
                            
                            52,000
                            
                            
                            
                            416,000
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            468,000Issuance
      of stock options
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            10,000
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (10,000
                            )
                            
                            
                            —Proceeds
      from issuance of common stock in connection with exercise of stock
      options
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            1,000,000
                            
                            
                            
                            1,000
                            
                            
                            
                            9,000
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            10,000Amortization
      of unearned compensation
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            784,560
                            
                            
                            
                            784,560Net
      loss
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (1,470,562
                            )
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (1,470,562
                            )Foreign
      currency translation adjustment
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (244,177
                            )
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (244,177
                            )Total
      comprehensive loss ($1,714,741)
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —Balance,
      December 31, 2007
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            358,216,830
                            
                            
                            
                            358,217
                            
                            
                            
                            16,684,041
                            
                            
                            
                            (17,501,989
                            )
                            
                            
                            (936,572
                            )
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (438,139
                            )
                            
                            
                            (1,834,442
                            )Issuance
      of shares as payment for services
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            10,025,000
                            
                            
                            
                            10,025
                            
                            
                            
                            121,600
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            131,625Issuance
      of shares in connection with acquisition of mineral
permits
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            10,000,000
                            
                            
                            
                            10,000
                            
                            
                            
                            120,000
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            130,000Proceeds
      from issuance of common stock
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            5,750,000
                            
                            
                            
                            5,750
                            
                            
                            
                            135,500
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            141,250Amortization
      of unearned compensation
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            431,634
                            
                            
                            
                            431,634Net
      loss
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (874,494
                            )
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (874,494
                            )Foreign
      currency translation adjustment
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            289,988
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            289,988Total
      comprehensive loss ($584,506)
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —Balance,
      December 31, 2008
                            
                            
                            —
                            
                            
                            $
                            —
                            
                            
                            
                            383,991,830
                            
                            
                            $
                            383,992
                            
                            
                            $
                            17,061,141
                            
                            
                            $
                            (18,376,483
                            )
                            
                            
                            (646,584
                            )
                            
                            
                            —
                            
                            
                            $
                            —
                            
                            
                            $
                            (6,505
                            )
                            
                            $
                            (1,584,439
                            )
  See Notes
to Consolidated Financial Statements.
  21




DIAMOND
DISCOVERIES INTERNATIONAL CORP.


(An
Exploration Stage Company)


STATEMENTS
OF CASH FLOWS


YEARS
ENDED DECEMBER 31, 2008 AND 2007 AND PERIOD FROM


APRIL 24,
2000 (DATE OF INCEPTION) TO DECEMBER 31, 2008





2008
                
                
                2007
                
                
                April 24,
                  2000 to
                  December 31,
                  2008Operating
      activities:Net
      loss
                
                $
                (874,494
                )
                
                $
                (1,470,562
                )
                
                $
                (18,364,180
                )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Costs
      of services paid through issuance of common stock
                
                
                131,625
                
                
                
                468,000
                
                
                
                5,204,875Amortization
      of unearned compensation
                
                
                431,634
                
                
                
                784,560
                
                
                
                3,947,995Amortization
      of discount on note payable
                
                
                —
                
                
                
                —
                
                
                
                45,107Forgiveness
      of stock subscriptions
                
                
                —
                
                
                
                —
                
                
                
                361,295(Loss)
      gain on modification of debt
                
                
                —
                
                
                
                —
                
                
                
                (1,193,910
                )Cost
      of mineral permits paid through the issuance of common
    stock
                
                
                —
                
                
                
                —
                
                
                
                50,000Loss
      on disposal of property and equipment
                
                
                70,533
                
                
                
                —
                
                
                
                74,680Depreciation
                
                
                47,022
                
                
                
                46,947
                
                
                
                171,953Changes
      in operating assets and liabilities:Other
      assets
                
                
                43,570
                
                
                
                —
                
                
                
                (34,133
                )Accounts
      payable
                
                
                35,723
                
                
                
                4,410
                
                
                
                2,896,115Other
      current liabilities
                
                
                175,000
                
                
                
                —
                
                
                
                175,000Net
      cash used in operating activities
                
                
                60,613
                
                
                
                (166,645
                )
                
                
                (6,665,203
                )Investing
      activities:Purchases
      of property and equipment
                
                
                —
                
                
                
                —
                
                
                
                (252,733
                )Acquisition
      of Caribou Property
                
                
                (75,000
                )
                
                
                —
                
                
                
                (75,000
                )Proceeds
      from sale of property and equipment
                
                
                —
                
                
                
                —
                
                
                
                10,000Net
      cash used in investing activities
                
                
                (75,000
                )
                
                
                —
                
                
                
                (317,733
                )Financing
      activities:Advances
      from stockholders, net
                
                
                (52,228
                )
                
                
                159,423
                
                
                
                1,647,590Proceeds
      from issuance of notes payable, net of payments
                
                
                (45,000
                )
                
                
                —
                
                
                
                212,729Proceeds
      from issuance of common stock and warrants
                
                
                141,250
                
                
                
                10,000
                
                
                
                5,156,465Net
      cash provided by financing activities
                
                
                44,022
                
                
                
                169,423
                
                
                
                7,016,784Net
      increase (decrease) in cash
                
                
                29,635
                
                
                
                2,778
                
                
                
                33,848Cash,
      beginning of period
                
                
                4,213
                
                
                
                1,435
                
                
                
                —Cash,
      end of period
                
                $
                33,848
                
                
                $
                4,213
                
                
                $
                33,848





See Notes
to Consolidated Financial Statements.




22





DIAMOND
DISCOVERIES INTERNATIONAL CORP.


(An
Exploration Stage Company)





NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS





Note 1—Business
and basis of presentation:





Diamond
Discoveries International Corp. (the “Company”) was incorporated in the State of
Delaware on April 24, 2000. The Company is engaged in activities related to
the exploration for mineral resources in Canada. It conducts exploration and
related activities through contracts with third parties.





As
further explained in Note 3, the Company acquired mineral permits for
property in the “Torngat Fields” located in the Province of Quebec, Canada. The
Company intended to develop the permits from early stage exploration through
completion of the exploration phase. Prior to any further exploration decisions,
a mineral deposit must be appropriately assessed. Gathering this data usually
takes several years. Once the appropriate data was gathered, management
determined not to proceed any further with the exploration of this
property.





In March
2008, the Company acquired mineral rights for property located in the Thetford
Mines area (the “Caribou Property”).  The Company intends to develop the
mineral rights from the early stage exploration through completion of the
exploration phase. Prior to any further exploration decisions, a mineral deposit
must be appropriately assessed. Gathering this data usually takes several years.
Once the appropriate data has been gathered, management will determine how to
proceed any further with the exploration of this property.





Other
than contracting with third parties to conduct exploration and gather data on
its behalf, the Company had not conducted any operations or generated any
revenues as of December 31, 2008. Accordingly, it is considered an “exploration
stage company” for accounting purposes.  In addition to exploration costs,
the Company incurs general and administrative expense which consists primarily
of professional fees relating to corporate filings and consulting and other
expenses incurred in operating our business.





The
accompanying financial statements have been prepared assuming the Company will
continue as a going concern. However, in addition to not generating any
revenues, the Company had a working capital deficiency of approximately
$1,800,000 and a stockholders’ deficiency of approximately $1,584,000 as of
December 31, 2008. Management believes that the Company will not generate any
revenues during the twelve month period subsequent to December 31, 2008 in which
it will be gathering and evaluating data related to the mineral rights for the
Caribou Property. Since its inception, the Company has received total
consideration of $7,016,784 as a result of proceeds of shareholder advances, the
issuance of notes payable and the sales of common stock, management believes
that the Company will still need total additional financing of approximately
$500,000 to continue to operate as planned during the twelve month period
subsequent to December 31, 2008. These conditions raise substantial doubt about
the Company’s ability to continue as a going concern.





Management
plans to obtain such financing through private offerings of debt and equity
securities. However management cannot assure that the Company will be able to
obtain any or all of the additional financing it will need to continue to
operate through at least December 31, 2009 or that, ultimately, it will be
able to generate any profitable commercial mining operations. If the Company is
unable to obtain the required financing, it may have to curtail or terminate its
operations and liquidate its remaining assets and liabilities.





The
accompanying financial statements do not include any adjustments related to the
recoverability and classifications of assets or the amounts and classification
of liabilities that might be necessary should the Company be unable to continue
its operations as a going concern.





Note 2—Summary
of significant accounting policies:





Use of
estimates:





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





23




Mining
costs:


Exploration
and evaluation costs are expensed as incurred. Management’s decision to develop
or mine a property will be based on an assessment of the viability of the
property and the availability of financing. The Company will capitalize mining
exploration and other related costs attributable to reserves in the event that a
definitive feasibility study establishes proven and probable reserves.
Capitalized mining costs will be expensed using the unit of production method
and will also be subject to an impairment assessment.





Concentrations
of credit risk:





The
Company maintains its cash in bank deposit accounts, the balances of which, at
times, may exceed Federal insurance limits. Exposure to credit risk is reduced
by placing such deposits with major financial institutions and monitoring their
credit ratings.





Impairment
of long-lived assets:





Impairment
losses on long-lived assets, such as mining claims, are recognized when events
or changes in circumstances indicate that the undiscounted cash flows estimated
to be generated by such assets are less than their carrying value and,
accordingly, all or a portion of such carrying value may not be recoverable.
Impairment losses are then measured by comparing the fair value of assets to
their carrying amounts.





Income
taxes:





The
Company accounts for income taxes pursuant to the asset and liability method
which requires deferred income tax assets and liabilities to be computed
annually for temporary differences between the financial statement and tax bases
of assets and liabilities that will result in taxable or deductible amounts in
the future based on enacted tax laws and rates applicable to the periods in
which the differences are expected to affect taxable income. Valuation
allowances are established when necessary to reduce deferred tax assets to the
amount expected to be realized. The income tax provision or credit is the tax
payable or refundable for the period plus or minus the change during the period
in deferred tax assets and liabilities.





Net
earnings (loss) per share:





The
Company presents “basic” earnings (loss) per share and, if applicable, “diluted”
earnings per share pursuant to the provisions of Statement of Financial
Accounting Standards No. 128, “Earnings per Share”. Basic earnings (loss)
per share is calculated by dividing net income or loss by the weighted average
number of common shares outstanding during each period. The calculation of
diluted earnings per share is similar to that of basic earnings per share,
except that the denominator is increased to include the number of additional
common shares that would have been outstanding if all potentially dilutive
common shares, such as those issuable upon the exercise of stock options and
warrants, were issued during the period.





Since the
Company had a net loss for the years ended December 31, 2008 and 2007, the
assumed effects of the exercise of the warrants to purchase 95,576,849 shares of
common stock that were issued during 2005 and the application of the treasury
stock method would have been anti-dilutive.  Therefore, there is no diluted
per share amounts in the 2008 and 2007 statements of operations.





Foreign
currency translation and transactions:





The
functional currency of the Company’s operations is Canadian dollars.  The
assets and liabilities arising from these operations are translated at current
exchange rates and related revenues and expenses at average exchange rates in
effect during the year.  Resulting translation adjustments, if material,
are recorded in the statement of changes in stockholders' deficiency while
foreign currency transaction gains and losses are included in
operations.





The
Company recorded a loss of $874,494, $1,470,562 and $18,376,483 during the years
ended December 31, 2008 and 2007 and the period from April 24, 2000 (Date
of Inception) to December 31, 2008, respectively.  During the years ended
December 31, 2008 and 2007, the Company recorded a net foreign currency
translation adjustment of $289,988 and ($244,177), respectively, in its interest
in the Caribou Property and Torngat Mountains operations reflecting a
strengthening of the Canadian dollar against the U. S. dollar which is included
in accumulated other comprehensive income (loss).  Translation adjustments
for prior periods have been immaterial.





Comprehensive
loss





Comprehensive
loss consists of net loss for the period, unrealized hedging transactions and
foreign currency translation adjustments.





24




Recent
accounting pronouncements:


In
December 2007, the FASB issued Statement of Financial Standards No. 141(R)
(“SFAS No. 141(R)”), “Business Combinations,” which revises the previously
issued SFAS 141. SFAS No. 141(R) establishes principles and requirements
for how the acquirer of a business recognizes and measures in its financial
statements the identifiable assets acquired, the liabilities assumed, any
non-controlling interest in the acquire.  The statement also provides
guidance for recognizing and measuring goodwill acquired in the business
combination and determines what information to disclose to enable users of the
financial statements to evaluate the nature and financial effects of the
business combination. SFAS No. 141(R) is effective for financial statements
issued for fiscal years beginning after December 15, 2008 and will be
applied prospectively. The adoption of this statement is not expected to have a
material impact on the Company’s consolidated financial statements.





In
December 2007, the FASB issued Statement of Financial Standards No. 160 (“SFAS
No. 160”), “Non-controlling Interests in Consolidated Financial Statements, an
amendment of ARB No. 51.” SFAS No. 160 establishes accounting and
reporting standards for ownership interests in subsidiaries held by parties
other than the parent, the amount of consolidated net income attributable to the
parent and to the non-controlling interest, changes in a parent’s ownership
interest, and the valuation of retained non-controlling equity investments when
a subsidiary is deconsolidated. SFAS No. 160 also establishes disclosure
requirements that clearly identify and distinguish between the interests of the
parent and the interests of the non-controlling owners. SFAS No. 160 is
effective for financial statements issued for fiscal years beginning after
December 15, 2008. FAS 160 will be applied prospectively, with a disclosure
requirement for existing minority interests to be applied retrospectively. The
adoption of this statement is not expected to have a material impact on the
Company’s consolidated financial statements.





In May
2008, the FASB issued Statement of Financial Standards No. 162 (“SFAS No. 162”),
“The Hierarchy of Generally Accepted Accounting Principles.” SFAS No. 162
identifies the sources of accounting principles and the framework for selection
the principles to be used in the preparation of financial statements of
nongovernmental entities that are presented in conformity with generally
accepted accounting principles in the United States.  It is effective 60
days following the SEC’s approval of the Public Company Accounting Oversight
Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity
With Generally Accepted Accounting Principles.”  The adoption of this
statement is not expected to have a material impact on the Company’s
consolidated financial statements.





Note 3—Permits:





Pursuant
to an agreement consummated on September 12, 2000, the Company acquired
certain permits in the Torngat Fields from Peter Ferderber and S. G. Hawkins,
who were key consultants and advisors to the Company, for total consideration of
$90,540, of which $40,540 ($60,000 Canadian) represents the amount paid in cash
and $50,000 represents the fair value of a total of 2,000,000 shares of the
Company’s common stock issued to Messrs. Ferderber and Hawkins. The
exchange of shares for the permits was a non-cash transaction that is not
reflected in the accompanying statement of cash flows for the period from
April 24, 2000 to December 31, 2008.





In
connection with the acquisition of these permits, the Company assigned to the
sellers a 1% interest in the “net smelter returns” of the property, one-half of
which is payable over the first $50,000,000 (Canadian) of revenues produced from
the property. Such interest would terminate once the sellers receive a total of
$10,000,000 (Canadian) based on such interest. Net smelter returns are
determined by the net amount received from the sale to a smelter or other buyer
of ore, ore concentrates or other products produced from the
property.





Mr. Hawkins
owns Tandem Resources, Ltd. (“Tandem”). As part of the agreement for the
purchase of the permits, the Company granted Tandem an option to purchase a 40%
interest in a joint venture that would be formed between the Company and Tandem
to conduct operations related to the properties covered by the permits at such
time as the Company has incurred expenditures related to such operations
totaling $5,000,000 (Canadian). The exercise price for the option will be
$2,000,000 (Canadian). Mr. Ferderber also is the president of
PGL.





In 2002,
the Company acquired additional permits for 50,000 acres of adjacent property in
the Torngat Fields by staking the property and paying the requisite fees to the
Quebec Department of Natural Resources. The Company performed exploration
activities related to the Torngat Property through the end of 2007 at which time
it was determined not to pursue any further exploration of that
property.





Pursuant
to an agreement consummated on March 17, 2008, the Company acquired certain
mineral rights in property located in the Thetford Mines area, part of the
Appalachian Belt, Province of Quebec, Canada from Bertrand Brassard and Michel
Lavoie for total consideration of $205,000, of which $75,000 represents the
amount paid in cash and $130,000 represents the fair value of a total of
10,000,000 shares of the Company’s common stock issued to Messrs. Brassard and
Lavoie.  The exchange of shares for the permits was a non-cash transaction
that is not reflected in the accompanying statement of cash flows for the year
ended December 31, 2008 and for the period from April 24, 2000 to December 31,
2008.





In
connection with the acquisition of these mineral rights, the Company agreed to
pay the sellers a 2% royalty on the “net smelter returns” of the property. Net
smelter returns are determined by the net amount received from the production of
all metals and/or minerals from the property. The Company has the right to
purchase, at any time prior to the beginning of any commercial production on the
property, 1% royalty on the “net smelter returns” for a total cash payment of
$1,000,000.


25




Note 4—Property
and equipment:





Property and equipment is stated at
cost.  Depreciation is calculated using the straight-line method over the
estimated useful lives of such assets.  Expenditures for maintenance and
repairs are charged to expense as incurred.





At December 31, 2008 and 2007, major
classes of property and equipment are as follows:




2008
                  
                  
                  2007
                  
                  Estimated
                    Useful LivesDrilling
      equipment
                  
                  $
                  —
                  
                  
                  $
                  239,626
                  
                  5
      yearsLess
      accumulated depreciation
                  
                  
                  —
                  
                  
                  
                  (119,813
                  )Property
      and equipment, net
                  
                  $
                  —
                  
                  
                  $
                  119,813





Depreciation expense for the year
ended December 31, 2008 and 2007 was $47,022 and $46,947, respectively. During
the year ended December 31, 2008, the Company recorded an impairment loss of
$70,533 which is included in general and administrative expenses in the
accompanying statement of operations.





Note 5—Notes
payable:





In
November 2005, the Company and Prospecting Geophysics Ltd. (“PGL”) entered into
an agreement whereby the amount due to PGL was converted to a non-interest
bearing note payable totaling $1,500,000 (Canadian).  The note is secured
with the permits identified in Note 3.  In connection with the agreement,
the Company recorded a gain on the modification of debt of $1,349,623 during
2005.  The Company recorded the note using a 12% discount rate. 
The Company was unable to make the scheduled payments ($600,000
Canadian) during 2006 under this note payable and therefore the note is
effectively in default.





Note 6—Stockholders’
equity:





Preferred
stock





As of
December 31, 2008, the Company was authorized to issue up to 20,000,000 shares
of preferred stock with a par value of $.001 per share. The preferred stock may
be issued in one or more series with dividend rates, conversion rights, voting
rights and other terms and preferences to be determined by the Company’s Board
of Directors, subject to certain limitations set forth in the Company’s Articles
of Incorporation. No shares of preferred stock had been issued by the Company as
of December 31, 2008.





Common
stock





During
the period from April 24, 2000 to December 31, 2000, the Company
issued 150,000 shares of common stock as payment for legal services.
Accordingly, general and administrative expenses in the accompanying statement
of operations, and common stock and additional paid-in capital in the
accompanying statements of stockholders’ deficiency, for the period from
April 24, 2000 to December 31, 2004 was increased to reflect the estimated
fair value of the shares of $3,750.





On
May 20, 2000, the Company completed the sale of 10,000,000 shares of common
stock for $250,000, or $.025 per share, through a private placement intended to
be exempt from registration under the Securities Act of 1933 (the “Act”).
Initially, the buyer paid $25,000 in cash and $225,000 through the issuance of a
10% promissory note. The exchange of shares for a note receivable was a noncash
transaction that is not reflected in the accompanying statement of cash flows
for the period from April 24, 2000 to December 31, 2004. The 10% promissory
note was paid on various dates through May 20, 2001.





During
the year ended December 31, 2002, the Company received total cash
consideration of $734,959 as a result of the sale of 1,633,242 units of common
stock and warrants to purchase common stock at $.45 per unit through private
placements intended to be exempt from registration under the Act. Each unit
consisted of one share of common stock and one warrant to purchase one share of
common stock exercisable at $.75 per share for a two year period from the date
of purchase. The Company had also received subscriptions through the private
placements for the purchase of 51,758 units at $.45 per unit or a total of
$23,291 as of December 31, 2002. The notes receivable from the subscribers
are noninterest bearing and were due six months from the respective dates of
sale, but remained outstanding at December 31, 2004. All the warrants remained
outstanding as of December 31, 2004.


In 2003,
the Company issued 6,715,000 shares of its common stock in exchange for services
performed by various consultants and recorded a charge to general and
administrative expenses of $1,374,950, or $0.20 per share, for the fair value of
the shares.





26




In
May 2003, the Company issued 1,500,000 shares of its common stock in
payment of accounts payable to Prospecting Geophysics, Ltd. of $148,423, or
$0.10 per share, which approximated the fair value of the shares.





From
July 2003 to September 2003, the Company issued 1,810,123 shares of
its common stock in payment of 8% demand notes payable of $126,708, or $0.07 per
share, which approximated the fair value of the shares.





In
August 2003, in connection with a private placement of its common stock,
the Company issued 2,000,000 shares of its common stock for $150,000, or $0.08
per share.  In addition, the Company issued 6,500,000 shares of its common
stock for $65,000, or $0.01 per share, in connection with the exercise of stock
options.





In
September 2003, the Company issued 5,000,000 shares of its common stock in
payment of advances from stockholders of $525,000, or $0.11 per share, which
approximated the fair value of the shares.





In
October 2003, the Company issued 2,500,000 shares of its common stock in
payment of advances from stockholders of $250,000, or $0.10 per share, which
approximated the fair value of the shares.  In addition, in connection with
a private placement of its common stock, the Company issued 4,000,000 shares of
its common stock for $300,000, or $0.08 per share, $281,250 of which represents
a subscription receivable at December 31, 2004.  Also, the Company issued
540,000 shares of its common stock in payment for accounts payable of $54,000,
or $0.10 per share, which approximated the fair value of the shares. Further,
the Company issued 2,350,000 shares of its common stock for $225,500, or $0.10
per share, in connection with the exercise of stock options.





In
November 2003, the Company issued 1,200,000 shares of its common stock for
$12,000, or $0.01 per share, in connection with the exercise of stock
options.





In
December 2003, the Company issued 960,000 shares of its common stock in
payment for accounts payable of $96,000, or $0.10 per share, which approximated
the fair value of the shares.





In 2004,
the Company issued 15,467,000 shares of its common stock in exchange for
services performed by various consultants and recorded a charge to general and
administrative expenses of $1,546,700 for the fair value of the
shares.





In March
2004, in connection with a private placement of its common stock, the Company
issued 2,500,000 shares of its common stock for $238,832.





In March
2004, the Company issued 450,000 shares of its common stock in payment of
$45,000 of accounts payable, which approximated the fair value of the
shares.





In May
2004, in connection with a private placement of its common stock, the Company
issued 125,000 shares of its common stock valued at $12,500 as payment for the
commission associated with the private placement.





In May
2004, the Company issued 950,000 shares of its common stock in payment of
$95,000 of accounts payable, which approximated the fair value of the
shares.





In July
2004, in connection with a private placement of its common stock, the Company
issued 1,500,000 shares of its common stock for $150,000.  In addition, the
Company issued 1,250,000 shares of its common stock in exchange for services
performed by various consultants and recorded a charge to general and
administrative expenses of $99,750 for the fair value of the shares. 
Further, the Company issued 1,250,000 shares of its common stock in connection
with the exercise of stock options.





In
December 2004, the Company issued 29,875,000 shares of its common stock in
connection with the exercise of stock options.





In
January 2005, the Company issued 2,600,000 shares of its common stock in
connection with the exercise of stock options.





In July
2005, in connection with a private placement of its common stock, the Company
issued 27,750,000 shares of its common stock for $971,250.  In addition,
the Company issued 8,587,858 shares of its common stock in payment of $302,500
of accounts payable, which approximated the fair value of the
shares.





In August
2005, the Company issued 1,100,000 shares of its common stock in connection with
the exercise of stock options.





In
September 2005, in connection with a private placement of its common stock, the
Company issued 2,300,000 shares of its common stock for $80,500.





27




In
October 2005, the Company issued 6,000,000 shares of its common stock in
exchange for services performed by various consultants and recorded a charge to
general and administrative expenses of $210,000 for the fair value of the
shares.





In
December 2005, in connection with a private placement of its common stock, the
Company issued 39,833,657 shares of its common stock for $1,394,178.  In
addition, the Company issued 27,893,192 shares of its common stock in payment of
$890,367 of accounts payable, which approximated the fair value of the
shares.  Further, the Company issued 24,425,000 shares of its common stock
in connection with the exercise of stock options.





In
January 2006, the Company issued 11,500,000 shares of its common stock in
connection with the exercise of stock options.  In addition, in connection
with a private placement of its common stock, the Company issued 100,000 shares
of its common stock for $3,500.  Finally, the Company issued 46,000,000
shares of its common stock in exchange for services performed by various
consultants and recorded a charge to general and administrative expenses of
$1,380,000 which approximated the fair value of the shares.





In
September 2007, the Company issued 52,000,000 shares of its common stock in
exchange for services performed by various consultants and recorded a charge to
general and administrative expenses of $468,000 which approximated the fair
value of the shares.  In October 2007, the Company issued 1,000,000 shares
of its common stock in connection with the exercise of stock
options.





In May 2008, in connection with a
private placement of its common stock, the Company issued 5,750,000 shares of
its common stock for $141,250. In June 2008, the Company issued 10,000,000
shares of its common stock in connection with the acquisition of the Caribou
property which is recorded in other assets in the accompanying balance sheet of
$130,000 which approximated the fair value of the shares.  In October 2008,
the Company issued 10,025,000 shares of its common stock in exchange for
services performed by various consultants and recorded a charge to general and
administrative expenses of $131,625 which approximated the fair value of the
shares.





The
issuances of common stock for services and in payment of accounts payable, 8%
demand notes payable, advances to stockholders and acquisitions were non-cash
transactions and, accordingly, they are not reflected in the accompanying
statements of cash flows for the years ended December 31, 2008 and 2007 and the
period from April 24, 2000 (Date of Inception) to December 31,
2008.





Stock
Option Plans





2005
Plan





On
November 14, 2005, the Company adopted the Diamond Discoveries International
Corp. 2005 Stock Incentive Plan (the “2005 Plan”).  Under the 2005 Plan,
35,000,000 shares of common stock are reserved for issuance.  The purpose
of the 2005 Plan is to provide incentives for officers, directors, consultants
and key employees to promote the success of the Company, and to enhance the
Company’s ability to attract and retain the services of such persons. 
Options granted under the 2005 Plan may be either: (i) options intended to
qualify as “incentive stock options” under Section 422 of the Internal Revenue
Code of 1986; or (ii) non-qualified stock options.  Stock options may be
granted under the 2005 Plan for all employees and consultants of the Company, or
employees of any present or future subsidiary or parent of the Company. 
The 2005 Plan is administered by the Board of Directors.  The Compensation
Committee is empowered to interpret the 2005 Plan and to prescribe, amend and
rescind the rules and regulations pertaining to the 2005 Plan.  Options
granted under the 2005 Plan generally vest over three years.  No option is
transferable by the optionee other than by will or the laws of descent and
distribution and each option is exercisable, during the lifetime of the
optionee, only by the optionee.  The Compensation Committee may not receive
options.





Any
incentive stock option that is granted under the 2005 Plan may not be granted at
a price less than the fair market value of the Company’s Common Stock on the
date of grant (or less than 110% of the fair market value in the case of holders
of 10% or more of the total combined voting power through all classes of stock
of the Company or a subsidiary or parent of the Company.)  Non-qualified
stock options may be granted at the exercise price established by the
Compensation Committee, which may be less than the fair market value of the
Company’s Common Stock on the date of grant.





Each
option granted under the 2005 Plan is exercisable for a period not to exceed ten
years from the date of grant (or five years in the case of a holder of more than
10% of the total combined voting power of all classes of stock of the Company or
a subsidiary or parent of the Company) and shall lapse upon expiration of such
period, or earlier upon termination of the recipient’s employment with the
Company, or as determined by the Compensation Committee.


28





2004
Plan





On
September 30, 2004, the Company adopted the Diamond Discoveries International
Corp. 2004 Stock Incentive Plan (the “2004 Plan”).  Under the 2004 Plan,
35,000,000 shares of common stock are reserved for issuance.  The purpose
of the 2004 Plan is to provide incentives for officers, directors, consultants
and key employees to promote the success of the Company, and to enhance the
Company’s ability to attract and retain the services of such persons. 
Options granted under the 2004 Plan may be either: (i) options intended to
qualify as “incentive stock options” under Section 422 of the Internal Revenue
Code of 1986; or (ii) non-qualified stock options.  Stock options may be
granted under the 2004 Plan for all employees and consultants of the Company, or
employees of any present or future subsidiary or parent of the Company. 
The 2004 Plan is administered by the Board of Directors.  The Compensation
Committee is empowered to interpret the 2004 Plan and to prescribe, amend and
rescind the rules and regulations pertaining to the 2004 Plan.  Options
granted under the 2004 Plan generally vest over three years.  No option is
transferable by the optionee other than by will or the laws of descent and
distribution and each option is exercisable, during the lifetime of the
optionee, only by the optionee.  The Compensation Committee may not receive
options.





Any
incentive stock option that is granted under the 2004 Plan may not be granted at
a price less than the fair market value of the Company’s Common Stock on the
date of grant (or less than 110% of the fair market value in the case of holders
of 10% or more of the total combined voting power through all classes of stock
of the Company or a subsidiary or parent of the Company.)  Non-qualified
stock options may be granted at the exercise price established by the
Compensation Committee, which may be less than the fair market value of the
Company’s Common Stock on the date of grant.





Each
option granted under the 2004 Plan is exercisable for a period not to exceed ten
years from the date of grant (or five years in the case of a holder of more than
10% of the total combined voting power of all classes of stock of the Company or
a subsidiary or parent of the Company) and shall lapse upon expiration of such
period, or earlier upon termination of the recipient’s employment with the
Company, or as determined by the Compensation Committee.





2003
Plan





On
May 30, 2003, the Company adopted the Diamond Discoveries International
Corp. 2003 Stock Incentive Plan (the “Plan”).  Under the Plan, 15,000,000
shares of common stock are reserved for issuance.  The purpose of the Plan
is to provide incentives for officers, directors, consultants and key employees
to promote the success of the Company, and to enhance the Company’s ability to
attract and retain the services of such persons.  Options granted under the
Plan may be either: (i) options intended to qualify as “incentive stock options”
under Section 422 of the Internal Revenue Code of 1986; or (ii)
non-qualified stock options.  Stock options may be granted under the Plan
to all employees and consultants of the Company, or employees of any present or
future subsidiary or parent of the Company.  The Plan is administered by
the Board of Directors.  The Compensation Committee is empowered to
interpret the Plan and to prescribe, amend and rescind the rules and regulations
pertaining to the Plan.  Options granted under the Plan generally vest over
three years.  No option is transferable by the optionee other than by will
or the laws of descent and distribution and each option is exercisable, during
the lifetime of the optionee, only by the optionee.  The Compensation
Committee may not receive options.





Any
incentive stock option that is granted under the Plan may not be granted at a
price less than the fair market value of the Company’s Common Stock on the date
of grant (or less than 110% of the fair market value in the case of holders of
10% or more of the total combined voting power through all classes of stock of
the Company or a subsidiary or parent of the Company.)  Non-qualified stock
options may be granted at the exercise price established by the Compensation
Committee, which may be less than the fair market value of the Company’s Common
Stock on the date of grant.





Each
option granted under the Plan is exercisable for a period not to exceed ten
years from the date of grant (or five years in the case of an incentive option
granted to a holder of more than 10% of the total combined voting power of all
classes of stock of the Company or a subsidiary or parent of the Company) and
shall lapse upon expiration of such period, or earlier upon termination of the
recipient’s employment with the Company, or as determined by the Compensation
Committee.





In 2003,
the Company issued options to acquire 13,875,000 shares of its common stock at a
weighted average exercise price of $.04 per share to consultants and other
non-employees.  The options had an aggregate fair market value of
$1,437,000 at the respective dates of issuance as determined based on the
Black-Scholes options-pricing model. Accordingly, the Company initially
increased unearned compensation and additional paid-in capital by $1,437,000 to
record the fair value of the options.





In
February 2004, the Company issued options to acquire 1,000,000 shares of its
common stock at an exercise price of $.10 per share to consultants and other
non-employees.  The options had an aggregate fair market value of $90,000
at the date of issuance as determined based on the Black-Scholes options-pricing
model. Accordingly, the Company initially increased unearned compensation and
additional paid-in capital by $90,000 to record the fair value of the
options.





In
December 2004, the Company issued options to acquire 33,975,000 shares of its
common stock at an exercise price of $.01 per share to consultants and other
non-employees.  The options had an aggregate fair market value of
$1,049,000 at the date of issuance as determined based on the Black-Scholes
options-pricing model. Accordingly, the Company initially increased unearned
compensation and additional paid-in capital by $1,049,000 to record the fair
value of the options.





29




In July
2005, the Company issued options to acquire 1,150,000 shares of its common stock
at an exercise price of $.01 per share to consultants and other
non-employees.  The options had an aggregate fair market value of $34,500
at the date of issuance as determined based on the Black-Scholes options-pricing
model. Accordingly, the Company initially increased unearned compensation and
additional paid-in capital by $34,500 to record the fair value of the
options.





In
December 2005, the Company issued options to acquire 30,000,000 shares of its
common stock at an exercise price of $.01 per share to consultants and other
non-employees.  The options had an aggregate fair market value of
$1,184,000 at the date of issuance as determined based on the Black-Scholes
options-pricing model. Accordingly, the Company initially increased unearned
compensation and additional paid-in capital by $1,184,000 to record the fair
value of the options.





In
January 2006, the Company issued options to acquire 5,000,000 shares of its
common stock at an exercise price of $.01 per share to consultants and other
non-employees.  The options had an aggregate fair market value of $150,000
at the date of issuance as determined based on the Black-Scholes options-pricing
model. Accordingly, the Company initially increased unearned compensation and
additional paid-in capital by $150,000 to record the fair value of the
options.





In
October 2007, the Company issued options to acquire 1,000,000 shares of its
common stock at an exercise price of $.01 per share to consultants and other
non-employees.  The options had an aggregate fair market value of $10,000
at the date of issuance as determined based on the Black-Scholes options-pricing
model. Accordingly, the Company initially increased unearned compensation and
additional paid-in capital by $10,000 to record the fair value of the
options.





The
Company recorded a charge of $431,634 and $784,560 to compensation expense to
amortize unearned compensation for the years ended December 31, 2008 and 2007,
respectively.





The following assumptions were used to
price options granted during the years ended December 31, 2008 and 2007, all of
whose exercise price was less than market at the date of grant: Risk free rate
of return, 4%; expected life, 3 years; expected volatility, 300.59%; expected
dividends, zero.




The
following table summarizes information with respect to options granted under the
2005 Plan, 2004 Plan and the 2003 Plan as of and for the years ended December
31, 2008 and 2007.





2008
                  
                  
                  2007Shares
                  
                  
                  Weighed
                    Average
                    Exercise
                    Price
                  
                  
                  Shares
                  
                  
                  Weighted
                    Average
                    Exercise
                    PriceOptions
      outstanding beginning of year
                  
                  
                  —
                  
                  
                  $
                  —
                  
                  
                  
                  1,500,000
                  
                  
                  $
                  0.01Options
      expired
                  
                  
                  —
                  
                  
                  $
                  —
                  
                  
                  
                  (1,500,000
                  )
                  
                  $
                  0.01Options
      exercised
                  
                  
                  —
                  
                  
                  $
                  —
                  
                  
                  
                  (1,000,000
                  )
                  
                  $
                  0.01Options
      granted
                  
                  
                  —
                  
                  
                  $
                  —
                  
                  
                  
                  1,000,000
                  
                  
                  $
                  0.01Options
      outstanding end year
                  
                  
                  —
                  
                  
                  $
                  —
                  
                  
                  
                  —
                  
                  
                  $
                  —Options
      exercisable end of year
                  
                  
                  —
                  
                  
                  $
                  —
                  
                  
                  
                  —
                  
                  
                  $
                  —Options
      price range, end of year
                  
                  $
                  —
                  
                  
                  
                  
                  
                  
                  $
                  —Options
      price range for exercised shares
                  
                  $
                  —
                  
                  
                  
                  
                  
                  
                  $
                  —Options
      available for grant at end of year
                  
                  
                  3,700,000
                  
                  
                  
                  
                  
                  
                  
                  3,700,000Weighted
      average fair value of options granted during the year
                  
                  $
                  —
                  
                  
                  
                  
                  
                  
                  $
                  0.01Weighted
      average exercise price of options granted during the year
                  
                  $
                  —
                  
                  
                  
                  
                  
                  
                  $
                  0.01





Warrants





In August 2003, in connection with its
private placement of common stock, the Company issued warrants to acquire
2,000,000 shares of its common stock at an exercise price of $.075 per
share.  The warrants expired in August 2006.





In January 2004, in connection with its
private placement of common stock, the Company issued warrants to acquire
2,500,000 shares of its common stock at an exercise price of $0.10 per
share.  The warrants expired in January 2007.





In 2005, in connection with its private
placement of common stock, the Company issued warrants to acquire 95,576,849
shares of its common stock at an exercise price of $.035 per share.  The
warrants expired in December 2008.


30




Note 7—Income
taxes:





As of December 31, 2008, the Company
had net operating loss carryforwards of approximately $19,023,000 available to
reduce future Federal taxable income which will expire at various dates through
2022. The Company had no other material temporary differences as of that date.
Due to the uncertainties related to, among other things, the changes in the
ownership of the Company, which could subject those loss carryforwards to
substantial annual limitations, and the extent and timing of its future taxable
income, if any, the Company offset the deferred tax assets of approximately
$7,609,000 attributable to the potential benefits from the utilization of those
net operating loss carryforwards by an equivalent valuation allowance as of
December 31, 2008.





The Company had also offset the
potential benefits from net operating loss carryforwards of approximately
$7,609,000 and $7,375,000 by equivalent valuation allowances as of
December 31, 2008 and 2007. As a result of the increases in the valuation
allowance of $234,000 for the year ended December 31, 2008, $686,000 for the
year ended December 31, 2007 and $7,609,000 for the period from
April 24, 2000 to December 31, 2008, the Company did not recognize any
credits for income taxes in the accompanying statements of operations to offset
its pre-tax losses in any of those periods.





Note 8—Guarantee:





On March 14, 2003, the Company
became a guarantor of a promissory note issued by one of its stockholders with
an outstanding balance of approximately $101,200 that was originally scheduled
to mature on July 31, 2003. The maturity dates of the promissory note and
the guaranty have been extended to April 30, 2010.




Note
9—Internal Controls




Standard
No. 5 issued by the Public Company Accounting Oversight Board (“PCAOB No. 5”)
which governs the reporting requirements for Section 404 of the Sarbanes-Oxley
Act of 2002 (“SOX 404”) was issued in 2007.  The Company conducted its
assessment of internal control over financial reporting as required by SOX
404.  PCAOB No. 5 defines significant deficiencies and material
weaknesses.  It is likely that the Company will be unable to achieve the
level of compliance contemplated in SOX 404 to receive an unmodified opinion on
its internal control over financial reporting from its external
auditors.




* 
      *        *





Item
9. Changes In and Disagreements With Accountants on Accounting and Financial
Disclosure





None





Item
9A(T). Controls and Procedures





(A)
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES




We
carried out an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) as of December 31, 2008. This evaluation was carried
out under the supervision and with the participation of our Chief Executive
Officer, Mr. Antonio Sciacca and Chief Financial Officer, Mr. Edward Williams.
Based upon that evaluation, our Chief Executive Officer and Chief Financial
Officer concluded that, as of December 31, 2008, our disclosure controls and
procedures were not effective. In making this evaluation, the Chief
 Executive Officer and Chief Financial Officer considered, among other
things, the material weakness in our internal control over financial
reporting described below.





Disclosure
controls and procedures are controls and other procedures that are designed to
ensure that information required to be disclosed in our reports filed or
submitted under the Exchange Act are recorded, processed, summarized and
reported, within the time periods specified in the SEC's rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed in our
reports filed under the Exchange Act is accumulated and communicated to
management, including our Chief Executive Officer and Chief Financial Officer,
to allow timely decisions regarding required disclosure.




31


(B)
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING





Management of the Company is
responsible for establishing and maintaining effective internal control over
financial reporting as defined in Rule 13a-15(f) under the Exchange Act. The
Company’s internal control over financial reporting is designed to provide
reasonable assurance to the Company’s management and Board of Directors
regarding the preparation and fair presentation of published financial
statements in accordance with United States’ generally accepted accounting
principles (US GAAP), including those policies and procedures that: (i) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the Company, (ii)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with US GAAP and that
receipts and expenditures are being made only in accordance with authorizations
of management and directors of the Company, and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition,
use, or disposition of the Company’s assets that could have a material effect on
the financial statements.





Management conducted an evaluation of
the effectiveness of internal control over financial reporting based on the
framework in Internal Control-Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission. Management’s assessment
included an evaluation of the design of our internal control over financial
reporting and testing of the operational effectiveness of our internal control
over financial reporting. Based on this evaluation, management concluded that,
as of December 31, 2008, the Company did not maintain effective internal
controls over financial reporting due to our limited number of employees which
resulted in our inability to effectively segregate all conflicting
duties.





Currently
we employ one individual who is in charge of our accounting and financial duties
on a day-to-day basis and we also use one consultant to assist in the
preparation of the financial statements and accompanying footnotes.




To remedy
this material weakness, we will, to the extent possible, implement procedures to
assure the initiation of transactions, the custody of assets and the recording
of transactions will be performed by separate individuals. Further, concurrent
with having sufficient resources we will engage additional individuals to assist
us in remedying this material weakness.





Limitations on the
Effectiveness of Internal Controls





Our
management does not expect that our disclosure controls and procedures or our
internal control over financial reporting will necessarily prevent all fraud and
material error. Our disclosure controls and procedures are designed to provide
reasonable assurance of achieving our objectives and our Chief Executive Officer
and Chief Financial Officer concluded that our disclosure controls and
procedures are effective at that reasonable assurance level. Further, the design
of a control system must reflect the fact that there are resource constraints,
and the benefits of controls must be considered relative to their costs. Because
of the inherent limitations in all control systems, no evaluation of controls
can provide absolute assurance that all control issues and instances of fraud,
if any, within the Company have been detected. These inherent limitations
include the realities that judgments in decision-making can be faulty, and that
breakdowns can occur because of 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 the internal control. The design of
any system of controls also is based in part upon certain assumptions about the
likelihood of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future conditions.
Over time, control may become inadequate because of changes in conditions, or
the degree of compliance with the policies or procedures may
deteriorate.





This annual report does not include an
attestation report of the Company’s registered public accounting firm regarding
internal control over financial reporting. Management’s report was not subject
to attestation by our registered public accounting firm pursuant to temporary
rules of the Securities and Exchange Commission that permit the Company to
provide only management’s report in the Annual Report.





(C)
CHANGES IN INTERNAL CONTROL




There have been no significant changes
in our internal controls over financial reporting during the quarter ended
December 31, 2008 that have materially affected or are reasonably likely to
materially affect such controls.





Item
9B. Other Information





None.


32





PART
III





Item
10. Directors, Executive Officers, Promoters and Control Persons; Compliance
With Section 16(A) Of The Exchange Act





The
following Table sets forth certain information regarding the executive officers
and directors of the Company as of May 14, 2009.  All officers and
directors are elected for a term of one year and until their successors are
elected.





Name
            
            Age
            
            Company
      PositionAntonio
      Sciacca
            
            50
            
            Chairman,
      President, CEO, and DirectorEdward
      C. Williams
            
            49
            
            Secretary,
      Treasurer, Director and Principal Accounting
  Officer





Antonio
Sciacca




Mr.
Sciacca has been our chief executive officer since June 2008 and a director
since March 2007.  Since 1995 Mr. Sciacca has been the Director of
Programs/Operations of North American Controls Inc a manufacturing company with
facilities for the U.S. defense industry.  Mr. Sciacca currently sits on
the board of Immaculate Conception schools in Warren, Michigan.




Edward
C. Williams





Mr. Williams
has been secretary and a director since March 2004.  Mr. Williams has
served as President and Chief Executive Officer of Williams Financial Group,
Inc., a financial and business consulting firm from December 1996 to
present.  In addition, from May 1999 to December 1999, he was a
director of iCommerce Group, Inc. and was Chief Financial Officer, Treasurer and
Assistant Secretary. From September 1997 to February 1999, Mr.
Williams was the Chief Financial Officer of Caribbean Cigar Company. He also
served as Interim President from June 1998 to July 1998. He was a
Director from November 1997 to February 1999. Mr. Williams was Vice
President - Finance of DenAmerica Corp. from April 1996 to July 1996,
and he was Chief Financial Officer of American Family Restaurants, Inc. from
February 1993 to March 1996, when American Family Restaurants, Inc.
merged with DenWest Restaurant Corp. Both of such corporations operated
restaurants. From 1987 until January 1993, Mr. Williams was employed by
KPMG, most recently as a senior manager.





Conflicts
of Interest





Our
management has other financial and business interests to which a significant
amount of time is devoted which may pose conflicts of interest with regard to
allocation of their time and efforts. Teodosio Pangia, our former president,
director and CEO beneficially owns 1.2% of our common stock and is also the sole
principal of Epwort Trading, Ltd., a holder of 14.0% of our common stock, and
beneficially owns and/or controls, either directly or indirectly, seven
companies, Altea Investments, Ltd., Gata Investments, Ltd., Baychester
Investments, Ltd., TVP Capital Corp., Bekeman Investments, Ltd.,
Aester Investment Holdings Limited and S D Investments, Ltd., which in the
aggregate hold 8,243,000 shares or 2.2% of our shares of common stock. There can
be no assurance that management will resolve all conflicts of interest in favor
of Diamond Discoveries. Failure of management to conduct Diamond Discoveries’
business in its best interest may result in liability of the management to
Diamond Discoveries.





Committees





The entire Board of Directors performs
the functions of the audit committee and compensation committee.  The
Company does not have an audit committee financial expert serving on the audit
committee.  The Company intends to add such persons to the Board of
Directors and the Audit Committee at such time as the Company has adequate funds
to compensate such persons for their services.





Section 16(a)
Beneficial Ownership Reporting Compliance





Section
16(a) of the Security Exchange Act of 1934 requires directors, executive
officers and 10% or greater shareholders of the Company to file with the
Securities and Exchange Commission initial reports of ownership (Form 3) and
reports of changes in ownership of equity securities of the Company (Form 4 and
Form 5) and to provide copies of all such Forms as filed to the Company. Based
solely on our review of the copies of these forms received by us or
representations from certain reporting persons, we believe that SEC beneficial
ownership reporting requirements for fiscal 2008 were met with the following
exceptions:





Our
former CEO Teodosio V. Pangia failed to timely file Form 3 and a Form 4 to
report transactions in March 2003 and has not yet filed these
reports.




33


Code
of Ethics





We have a
code of ethics (the “Code”) that applies to members of our Board of Directors,
our officers including our president (being our principal executive officer),
and our chief financial officer (being our principal financial and accounting
officer).  The Code sets forth written standards that are designed to deter
wrongdoing and to promote: honest and ethical conduct, full, fair, accurate,
timely, and understandable disclosure in reports and documents that we file
with, or submit to, the Securities and Exchange Commission and in other public
communications made by us; compliance with applicable governmental laws, rules
and regulations; prompt internal reporting of violations of the Code to an
appropriate person or persons identified in the Code; and accountability for
adherence to the Code.





A copy of
the Code is attached as an exhibit to the Form 10-K filed on April 14,
2004.





Item
11. Executive Compensation





The table
below shows the annual, long-term and other compensation for services in all
capacities to the Company and its subsidiaries paid during the years ended
December 31, 2008 and 2007, to the Chief Executive Officer and the other four
most highly compensated executive officers of the Company during the years ended
December 31, 2008 and 2007 (our “named executive officers”):





SUMMARY
COMPENSATION TABLE





Annual Compensation
                                
                                
                                Long Term CompensationName and Position
                                
                                Year
                                
                                Salary ($)
                                
                                
                                Bonus ($)
                                
                                
                                Other
                                  Annual
                                  Compensation ($)
                                
                                
                                Restricted
                                  Stock
                                  Awards ($)
                                
                                
                                Securities
                                  Under-lying
                                  Options/
                                  SARS (#)
                                
                                
                                All Other
                                  Compensation ($)Antonio
      Sciacca
                                
                                2008
                                
                                $
                                —Chief
      Executive Officer
                                
                                2007
                                
                                
                                —Edward
      C. Williams(1)
                                
                                2008
                                
                                $
                                —Chief
      Financial Officer
                                
                                2007
                                
                                
                                90,000


(1)
            During 2007, the salary for Mr.
      Williams was paid by the issuance of shares of common stock in the
      Company.





Grants
of Plan Based Awards





There
were no grants under plan based awards during fiscal 2008 or 2007.





Outstanding
Equity Awards at Fiscal Year-End





There
were no outstanding equity awards as of December 31, 2008 for the CEO or
CFO.





Long
Term Incentive Plans - Awards in Last Fiscal Year





None.





Compensation
of Directors





Standard Arrangements.





At
present, the Company does not pay its directors for attending meetings of the
Board of Directors, although the Company may adopt a director compensation
policy in the future. The Company has no standard arrangement pursuant to which
directors of the Company are compensated for any services provided as a director
or for committee participation or special assignments.





Other Arrangements.





During
the years ended December 31, 2008 and 2007, and except as disclosed elsewhere in
this report, no director of the Company received any form of compensation from
the Company.





Employment
Contracts and Termination of Employment, and Change-in-Control
Arrangements.





We have
not entered into employment agreements with any of our officers or
directors.




34


Item
12. Security Ownership of Certain Beneficial Owners and Management





The
following table sets forth the name and address of each officer and director of
the Company and each person who owns beneficially more than five percent of the
Common Stock of the Company, and the number of shares owned by each such person
and by all officers and directors as a group as of May 14, 2009:





Name and Address of Beneficial Owner(1)
                    
                    Amount and Nature of Ownership
                    
                    
                    Approximate
                      % of Class(2)Antonio
      Sciacca, Chairman, President, CEO and Director
                    
                    
                    14,114,286
                    
                    
                    
                    3.7
                    %Edward
      C. Williams, Secretary, CFO and Director
                    
                    
                    875,000
                    
                    
                    
                    *Directors
      and Officers as a Group
                    
                    
                    14,989,286
                    
                    
                    
                    3.9
                    %Teodosio
      V. Pangia
                    
                    
                    66,564,763
                    (3)
                    
                    
                    17.3
                    %Epwort
      Trading Ltd.(4)
                    
                    
                    53,821,763
                    
                    
                    
                    14.0
                    %


* Less
than 1%


(1)
            Unless
      otherwise indicated, the beneficial owner’s address is the same as the
      Company’s principal office.


(2)
            Percentages
      calculated on the basis of the amount of outstanding shares plus, for each
      person, any shares that person has the right to acquire within
      60 days pursuant to options or other
  rights.


(3)
            Includes
      an aggregate of 8,243,000 shares held TVP Capital Corp., Altea
      Investments, Ltd., Gata Investments, Ltd., Bekeman
      Investments, Ltd., SD Investments, Ltd., Baychester
      Investments Ltd., and Aester Investments Holdings Limited, companies
      beneficially owned and/or controlled (directly or indirectly) by
      Mr. Pangia, 4,500,000 shares held by Mr. Pangia and 53,821,763 shares
      held by Epwort Trading, Ltd., see footnote
  (4) below.


(4)
            Teodosio
      V. Pangia is the sole officer, director and shareholder of Epwort Trading,
      Ltd.





Equity
Compensation Plan Information:





Number of securities to be
                    issued upon exercise of
                    outstanding options,
                    warrants and rights
                  
                  Weighted-average exercise
                    price of outstanding options,
                    warrants and rights
                  
                  Number of securities
                    available for future issuance
                    under equity compensation
                    plans (excluding securities
                    reflected in column
                    (a))(a)
                  
                  (b)
                  
                  (c)Equity
      compensation plans approved by security holders
                  0
                  
                  $
                  0.00
                  
                  1,500,000Equity
      compensation plans not approved by security holders
                  0
                  
                  $
                  0.00
                  
                  2,200,000Total
                  0
                  
                  $
                  0.00
                  
                  3,700,000




Stock
Option Plans





2005
Plan





On
November 14, 2005, the Company adopted the Diamond Discoveries International
Corp. 2005 Stock Incentive Plan (the “2005 Plan”).  Under the 2005 Plan,
35,000,000 shares of common stock are reserved for issuance.  The purpose
of the 2005 Plan is to provide incentives for officers, directors, consultants
and key employees to promote the success of the Company, and to enhance the
Company’s ability to attract and retain the services of such persons. 
Options granted under the 2005 Plan may be either: (i) options intended to
qualify as “incentive stock options” under Section 422 of the Internal Revenue
Code of 1986; or (ii) non-qualified stock options.  Stock options may be
granted under the 2005 Plan for all employees and consultants of the Company, or
employees of any present or future subsidiary or parent of the Company. 
The 2005 Plan is administered by the Board of Directors.  The Compensation
Committee is empowered to interpret the 2005 Plan and to prescribe, amend and
rescind the rules and regulations pertaining to the 2005 Plan.  Options
granted under the 2005 Plan generally vest over three years.  No option is
transferable by the optionee other than by will or the laws of descent and
distribution and each option is exercisable, during the lifetime of the
optionee, only by the optionee.  The Compensation Committee may not receive
options.


35





Any
incentive stock option that is granted under the 2005 Plan may not be granted at
a price less than the fair market value of the Company’s Common Stock on the
date of grant (or less than 110% of the fair market value in the case of holders
of 10% or more of the total combined voting power through all classes of stock
of the Company or a subsidiary or parent of the Company.)  Non-qualified
stock options may be granted at the exercise price established by the
Compensation Committee, which may be less than the fair market value of the
Company’s Common Stock on the date of grant.





Each
option granted under the 2005 Plan is exercisable for a period not to exceed ten
years from the date of grant (or five years in the case of a holder of more than
10% of the total combined voting power of all classes of stock of the Company or
a subsidiary or parent of the Company) and shall lapse upon expiration of such
period, or earlier upon termination of the recipient’s employment with the
Company, or as determined by the Compensation Committee.





2004
Plan





On
September 30, 2004, the Company adopted the Diamond Discoveries International
Corp. 2004 Stock Incentive Plan (the “2004 Plan”).  Under the 2004 Plan,
35,000,000 shares of common stock are reserved for issuance.  The purpose
of the 2004 Plan is to provide incentives for officers, directors, consultants
and key employees to promote the success of the Company, and to enhance the
Company’s ability to attract and retain the services of such persons. 
Options granted under the 2004 Plan may be either: (i) options intended to
qualify as “incentive stock options” under Section 422 of the Internal Revenue
Code of 1986; or (ii) non-qualified stock options.  Stock options may be
granted under the 2004 Plan for all employees and consultants of the Company, or
employees of any present or future subsidiary or parent of the Company. 
The 2004 Plan is administered by the Board of Directors.  The Compensation
Committee is empowered to interpret the 2004 Plan and to prescribe, amend and
rescind the rules and regulations pertaining to the 2004 Plan.  Options
granted under the 2004 Plan generally vest over three years.  No option is
transferable by the optionee other than by will or the laws of descent and
distribution and each option is exercisable, during the lifetime of the
optionee, only by the optionee.  The Compensation Committee may not receive
options.





Any
incentive stock option that is granted under the 2004 Plan may not be granted at
a price less than the fair market value of the Company’s Common Stock on the
date of grant (or less than 110% of the fair market value in the case of holders
of 10% or more of the total combined voting power through all classes of stock
of the Company or a subsidiary or parent of the Company.)  Non-qualified
stock options may be granted at the exercise price established by the
Compensation Committee, which may be less than the fair market value of the
Company’s Common Stock on the date of grant.





Each
option granted under the 2004 Plan is exercisable for a period not to exceed ten
years from the date of grant (or five years in the case of a holder of more than
10% of the total combined voting power of all classes of stock of the Company or
a subsidiary or parent of the Company) and shall lapse upon expiration of such
period, or earlier upon termination of the recipient’s employment with the
Company, or as determined by the Compensation Committee.





2003
Plan





On May
30, 2003, the Company adopted the Diamond Discoveries International Corp. 2003
Stock Incentive Plan (the “Plan”).  Under the Plan, 15,000,000 shares of
common stock are reserved for issuance.  The purpose of the Plan is to
provide incentives for officers, directors, consultants and key employees to
promote the success of the Company, and to enhance the Company’s ability to
attract and retain the services of such persons.  The Plan orivudes for the
grant of incentive stock options and nonqualified stock options (“Options”) and
restricted stock awards (“Restricted Stock Awards”) and Stock Appreciation
Rights, Performance Shares, Dividend Equivalent Payments, and Other Stock Based
Awards (“Options,”“Restricted Stock Awards,” and “Stock Appreciation Rights,”
are collectively referred to herein as “Awards”). Options granted under the Plan
may be either: (i) options intended to qualify as “incentive stock options”
under Section 422 of the Internal Revenue Code of 1986; or (ii) non-qualified
stock options.  Stock options may be granted under the Plan for all
employees and consultants of the Company, or employees of any present or future
subsidiary or parent of the Company.  The Plan is administered by the Board
of Directors.  The Compensation Committee is empowered to interpret the
Plan and to prescribe, amend and rescind the rules and regulations pertaining to
the Plan.  Options granted under the Plan generally vest over three
years.  The Compensation Committee may not receive options.





Any
incentive stock option that is granted under the Plan may not be granted at a
price less than the fair market value of the Company’s Common Stock on the date
of grant (or less than 110% of the fair market value in the case of holders of
10% or more of the total combined voting power through all classes of stock of
the Company or a subsidiary or parent of the Company.)  Non-qualified stock
options may be granted at the exercise price established by the Compensation
Committee, which may be less than the fair market value of the Company’s Common
Stock on the date of grant, but in no event shall such exercise price be less
than 55% of such fair market value.





Each
option granted under the Plan is exercisable for a period not to exceed ten
years from the date of grant (or five years in the case of an incentive stock
option granted to a holder of more than 10% of the total combined voting power
of all classes of stock of the Company or a subsidiary or parent of the Company)
and shall lapse upon expiration of such period, or earlier upon termination of
the recipient’s employment with the Company, or as determined by the
Compensation Committee.


36




Awards
are generally non-transferable other than by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order.





The
Company’s Board of Directors may at any time, and from time to time, amend,
terminate, or suspend one or more of the Plan in any manner it deems
appropriate, provided that such amendment, termination or suspension cannot
adversely affect rights or obligations with respect to shares or options
previously granted, unless the Award recipient consents to such changes in
writing. The Board of Directors may not, without shareholder approval: make any
amendment which would materially modify the participation eligibility
requirements for the 2005 Plan and 2004 Plan, to the extent they require
approval in order to satisfy the Internal Revenue Code requirements; make other
modifications requiring stockholder approval to satisfy the Internal Revenue
Code requirements, increase the total number of shares of common stock which may
be issued pursuant to the 2005 Plan and 2004 Plan, except in the case of a
reclassification of the Company’s capital stock or a consolidation or merger of
the Company.





Item 13. Certain Relationships and
Related Transactions.





Teodosio
Pangia, our former president, director and CEO, beneficially owns 4,500,000
shares or 1.2% of our shares or common stock and is the sole principal of Epwort
Trading Ltd., which owns 53,821,763 shares, or 14.0% of our shares of common
stock and beneficially owns and/or controls, either directly or indirectly,
seven companies, TVP Capital Corp., Altea Investments, Ltd., Gata
Investments, Ltd., Baychester Investments, Ltd., Bekeman
Investments, Ltd., Aester Investments Holdings Limited and S D
Investments, Ltd., which in the aggregate hold 8,243,000 shares or 2.2% of
our shares of common stock.





We
entered into an Acquisition Agreement dated September 12, 2000 with
Mr. Ferderber, Mr. Hawkins and Tandem Resources Ltd. The
Acquisition Agreement provides for us to purchase certain mineral exploration
permits from Messrs. Ferderber and Hawkins. Such permits cover 469.05
square kilometers in the Torngat fields in northwest Quebec, Canada, on the
eastern shore of Ungava Bay. As consideration for the acquisition of these
permits, we have issued 1,000,000 shares of our common stock to each of
Messrs. Ferderber and Hawkins and have paid $35,000 Canadian to
Mr. Hawkins and $25,000 Canadian to Mr. Ferderber.





In
addition, the Acquisition Agreement further provides for an option to Tandem
Resources Ltd., to purchase 40% of the properties covered by the permits
conditioned on (i) the Company expending $5,000,000 Canadian on exploration
of the properties; (ii) Tandem paying us $2,000,000 Canadian and
(iii) Tandem entering into a joint venture agreement with us to operate the
properties within 60 days of our demonstrating expenditure of $5,000,000
Canadian on exploration of the properties. In addition, we will have twenty-one
(21) days from the date we notify Tandem that we have expended $5,000,000
Canadian on exploration of the properties, to negotiate a financing agreement
with Tandem to provide Tandem with the $2,000,000 Canadian required to exercise
the option. Should no agreement be reached in the twenty-one (21) day
period, our right to provide this financing shall expire. Also, upon the closing
of the acquisition, we assigned to Messrs. Ferderber and Hawkins a one (1%)
percent interest in the Net Smelter Returns of the properties, half of which is
payable over the first $50,000,000 Canadian in revenues from the properties.
This interest in the Net Smelter Returns terminates once Ferderber and Hawkins
have received, in the aggregate, $10,000,000 Canadian.





In
connection with the Acquisition Agreement, Mr. Ferderber has executed an
agreement with us as of June 20, 2000 which transfers mineral rights over
all of the properties to us.





We
entered into a Prospecting and Survey Agreement with Prospecting
Geophysics Ltd. dated November 20, 2000, whereby Prospecting
Geophysics Ltd. will act as the project manager for the Company’s mineral
exploration operations. Peter Ferderber is the President of Prospecting
Geophysics Ltd. Under the agreement, we are to pay for Mr. Ferderber’s
services at a rate of $500 per day, on days that he personally attends the
properties, in addition to reimbursing all expenses incurred by Prospecting
Geophysics on behalf of the Company. Mr. Ferderber anticipates attending
the properties approximately five to seven days every month. Prospecting
Geophysics is required under the agreement to conduct prospecting and surveying
activities on our behalf. The agreement has a term of eighteen (18) months
with automatic renewal unless either party gives 30 days’ notice of its
intent to terminate. During the years ended December 31, 2006 and 2005 and
the periods from April 24, 2000 (date of inception) to December 31, 2006,
we incurred exploration costs by Prospecting Geophysics Ltd. of $0
Canadian, $0 Canadian and $3,992,022Canadian, respectively. In addition, the
Company owed Prospecting Geophysics Ltd. $1,500,000 Canadian at December
31, 2006.




37


Item
14.  Principal Accountant Fees and Services





During
2008 and 2007, the Company incurred the following fees for professional services
rendered by the principal accountant:





2008
                  
                  
                  2007Fees
      for audit services
                  
                  $
                  26,800
                  
                  
                  $
                  30,100Fees
      for audit-related services
                  
                  $
                  0
                  
                  
                  $
                  0Tax
      fees
                  
                  $
                  0
                  
                  
                  $
                  0All
      other fees
                  
                  $
                  0
                  
                  
                  $
                  0





The Audit
Committee pre-approves all audit and non-audit services to be performed by the
Company’s independent auditors.




Item
15. Exhibits and Reports on Form 8-K.





There
were no Current Reports on Form 8-K filed by the Registrant during the
fourth quarter of the calendar year ended December 31, 2008.





Exhibit
              Number
            
            Description
      of Document3.1
            
            Articles
      of Incorporation as filed on April 24, 2000(1)3.2
            
            Bylaws
      of Diamond Discoveries International Corp.(1)10.1
            
            Acquisition
      Agreement dated September 12, 2000 between the Company and Peter
      Ferderber, Stanley Hawkins and Tandem Resources Ltd.(2)10.2
            
            Prospecting
      and Survey Agreement between Prospecting Geophysics Ltd and the Company
      dated August 14, 2000.(1)10.3
            
            Transfer
      of Mining Rights between Peter Ferderber and the Company dated
      June 20, 2000.(1)10.4
            
            Option
      Agreement between Diamond Discoveries International Corp. and Tandem
      Resources Ltd. dated September 12, 2000.(2)10.5
            
            Revised
      Prospecting and Survey Agreement between Prospecting Geophysics Ltd. and
      the Company dated November 20, 2000.(2)10.6
            
            Investment
      Agreement, dated as of May 10, 2007 by and between Diamond Discoveries
      International Corp. and Dutchess Private Equities Fund,
      Ltd.(4)10.7
            
            Registration
      Rights Agreement, dated as of May 10, 2007, by and between Diamond
      Discoveries International Corp. and Dutchess Private Equities Fund,
      Ltd.(4)14
            
            Code
      of Ethics for the Chief Executive Officer and Chief Financial
      Officer(3)31.1
            
            Certification
      by the Chief Executive Officer and Chief Financial Officer pursuant to
      Section 302 of the Sarbanes Oxley Act of 2002.32.1
            
            Certification
      by the Chief Executive Officer and Chief Financial Officer pursuant to 18
      U.S.C. 1350, Section 906 of the Sarbanes Oxley Act of
  2002.99.1
            
            Title
      opinion of Lavery, de Billy on the Mining Exploration
      Permits.(1)




(1)
              Previously
      filed on September 21, 2000 as part of the Company’s Registration
      Statement on Form 10-SB, File
  No. 0-31585.


(2)
              Previously
      filed on December 1, 2000 as part of the Company’s Amended
      Registration Statement on
      Form 10-SB, File No. 0-31585.


(3)
              Previously
      filed on April 14, 2004 as an exhibit to Form
  10-K.


(4)
              Previously
      filed on May 14, 2007 as an exhibit to Form
8-K.




38





SIGNATURES





In
accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.





DIAMOND
      DISCOVERIES INTERNATIONAL CORP.By:
              /s/
      Antonio SciaccaAntonio
      Sciacca,
                Chief
      Executive Officer and DirectorDated:
      February 19, 2010





In
accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.





By:
            /s/
      Antonio SciaccaAntonio
      Sciacca,
              Chief
      Executive Officer and DirectorDated:
      February 19, 2010By:
            /s/
      Edward C. WilliamsEdward
      C. Williams,
              Chief
      Financial Officer and DirectorDated:
      February 19, 2010




39