UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K
 þ
    
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGEACT OF 1934For the Fiscal Year Ended December 31, 2008ORo
    
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGEACT OF 1934
  GILLA INC.
  Nevada
(State or Other Jurisdiction of Incorporation or Organization)
    
    88-0335710
(I.R.S. Employer Identification Number)112 North Curry Street, Carson City, NV
(Address of Principal Executive Offices)
    
    89703
(Zip Code)
 (416) 884-8807
  Common Shares, Preferred Shares
  Yes   þ
    
    No   o
  Yes   þ
    
    No   o
  Yes   o
    

No   þ
 o
  o o o þ
  Yes   þ
    
    No   o
 The aggregate market value of the voting common stock held by non-affiliates of the Registrant on
June 30, The registrant does not have any non-voting equities




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##### 



TABLE OF CONTENTS
FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 31, 2008
 Part IITEM 1
    
    BusinessITEM 2.
    
    PropertiesITEM 3.
    
    Legal ProceedingsITEM 4.
    
    Submission of Matters to a Vote of Security HoldersPart IIITEM 5.
    
    Market for Registrants Common Equity and Related Stockholders MattersITEM 6.
    
    Selected Financial DataITEM 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of OperationITEM 8.
    
    Financial Statements and Supplementary DataITEM 9.
    
    Changes In and Disagreements with Accountants on Accounting and Financial DisclosureITEM 9A.
    
    Controls and ProceduresPart IIIITEM 10.
    
    Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange ActITEM 11.
    
    Executive CompensationITEM 12.
    
    Security Ownership of Certain Beneficial Owners and ManagementITEM 13.
    
    Certain Relationships and Related TransactionsITEM 14.
    
    Principal Accountants Fee and ServicesPart IVITEM 15.
    
    Exhibits and Reports on Form 8KSignaturesExhibits




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Forward-Looking Statements
  
 PART I
 
 ITEM 1. BUSINESS
 Business Development
   Business of Issuer
   MANAGEMENT RISKS




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##### 



SECURITIES MARKET AND STOCK OWNERSHIP RISKS
    GEOLOGIC UNCERTAINTY AND INHERENT VARIABILITY




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##### 



POLITICAL RISKS
 Political unrest or changes in Cameroon or Angola or nearby countries could interfere with our
operating or financing activities.
  GOLD EXPLORATION IS HIGHLY SPECULATIVE, INVOLVES SUBSTANTIAL EXPENDITURES, AND IS FREQUENTLY
NON-PRODUCTIVE
    THE PRICE OF GOLD AND OTHER MINERALS ARE HIGHLY VOLATILE AND A DECREASE IN THE PRICE OF GOLD AND
OTHER MINERALS CAN HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS
  FUEL PRICE VARIABILITY




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##### 



VARIATIONS IN MINING AND PROCESSING PARAMETERS
  CHANGES IN ENVIRONMENTAL AND MINING LAWS AND REGULATIONS
   REPORTS TO SECURITIES HOLDERS
    
 ITEM 2. PROPERTIES




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##### 



ITEM 3. LEGAL PROCEEDINGS
   
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS




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##### 



PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
  2008
    
    HIGH
    
    
    LOWFirst Quarter
    
    $
    1.25
    
    
    $
    0.51Second Quarter
    
    $
    0.95
    
    
    $
    0.53Third Quarter
    
    $
    0.95
    
    
    $
    0.37Fourth Quarter
    
    $
    0.52
    
    
    $
    0.25
  DIVIDENDS
 RECENT SALES OF UNREGISTERED SECURITIES




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##### 



ITEM 6. Selected Financial Data.  Earnings per share for each of the fiscal years shown below are based on the weighted average
number of shares outstanding.
 Years ended December 31,2008
    
    
    2007Revenues
    
    
    
    
    
    
    Net Loss
    
    $
    (2,248,898
    )
    
    $
    (562,475
    )Earning Loss Per Share
    
    $
    (0.08
    )
    
    $
    (0.10
    )Total assets
    
    $
    17,582,217
    
    
    $
    724,112Total liabilities
    
    $
    7,293
    
    
    $
    10,889
 
 ITEM
7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
    2 2




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CERTAIN BUSINESS RISK FACTORS
  WE HAVE A LIMITED OPERATING HISTORY WITH SIGNIFICANT LOSSES AND EXPECT LOSSES TO CONTINUE FOR THE
FORESEEABLE FUTURE
 We have yet to establish any history of profitable operations.
  THERE IS SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN DUE TO SIGNIFICANT
RECURRING LOSSES FROM OPERATIONS, ACCUMULATED DEFICIT AND WORKING CAPITAL DEFICIT ALL OF WHICH
MEANS THAT WE MAY NOT BE ABLE TO CONTINUE OPERATIONS UNLESS WE OBTAIN ADDITIONAL FUNDING.




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##### 



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
   Table of Contents
 Report of Independent Registered Public Accounting Firm
    
    
    F-2Balance Sheets
    
    
    F-3Statements of Operations
    
    
    F-4Statements of Changes in Shareholders Deficit
    
    
    F-5Statements of Cash Flows
    
    
    F-6Notes to the Financial Statements
    
    
    F-7 - F-20




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Report of Independent Registered Public Accounting Firm
 
     /s/
 
 F-2




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##### 



GILLA, INC.
(formerly OSPREY GOLD CORP.)
(AN EXPLORATION STAGE COMPANY)
 CONSOLIDATED BALANCE SHEET
 December 31,
    
    
    December 31,2008
    
    
    2007ASSETSCURRENT ASSETSCash
    
    $
    235,774
    
    
    $
    670,142Other receivable
    
    
    2,333
    
    
    
    3,970TOTAL CURRENT ASSETS
    
    
    238,107
    
    
    
    674,112NON CURRENT ASSETSMining rights
    
    
    17,344,110
    
    
    
    Mining camp
    
    
    
    
    
    
    50,000TOTAL ASSETS
    
    $
    17,582,217
    
    
    $
    724,112LIABILITIES AND SHAREHOLDERS DEFICITCURRENT LIABILITIESAccounts payable
    
    $
    7,293
    
    
    $
    6,731Accrued expenses
    
    
    
    
    
    
    4,158TOTAL LIABILITIES
    
    
    7,293
    
    
    
    10,889SHAREHOLDERS DEFICITCommon stock, .0002 par value, 300,000,000 shares authorized;
38,898,055 and 5,676,069 shares issued and outstanding, respectively
    
    
    7,780
    
    
    
    1,135Additional paid in capital
    
    
    30,341,239
    
    
    
    11,237,285Accumulated deficit
    
    
    (12,774,095
    )
    
    
    (10,525,197
    )TOTAL SHAREHOLDERS EQUITY
    
    
    17,574,924
    
    
    
    713,223TOTAL LIABILITIES AND SHAREHOLDERS DEFICIT
    
    $
    17,582,217
    
    
    $
    724,112
  F-3




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##### 



GILLA, INC.
(formerly OSPREY GOLD CORP.)
(AN EXPLORATION STAGE COMPANY)
 CONSOLIDATED STATEMENTS OF OPERATIONS
 March 28, 1995For the Year Ended
    
    
    For the Period FromDecember 31,
    
    
    (Inception) to2008
    
    
    2007
    
    
    December 31, 2008REVENUES
    
    $
    
    
    
    $
    
    
    
    $
    TOTAL REVENUES
    
    
    
    
    
    
    
    
    
    
    EXPENSES:Exploration cost
    
    
    44,650
    
    
    
    31,481
    
    
    
    1,660,122General and administrative
    
    
    2,142,271
    
    
    
    718,816
    
    
    
    15,165,315TOTAL OPERATING EXPENSES
    
    
    2,186,921
    
    
    
    750,297
    
    
    
    16,825,437NET LOSS FROM OPERATIONS
    
    
    (2,186,921
    )
    
    
    (750,297
    )
    
    
    (16,825,437
    )OTHER INCOME (EXPENSES)Loss on abandoment of mining camp
    
    
    (50,000
    )
    
    
    
    
    
    
    (50,000
    )Gain of forgiveness of debt
    
    
    3,941
    
    
    
    167,553
    
    
    
    1,828,932Gain on sale of mining properties
    
    
    
    
    
    
    
    
    
    
    2,100,000Bad Debt (write off)
    
    
    (13,874
    )
    
    
    
    
    
    
    (13,874
    )Gain (loss) on foreign exchange rate transactions
    
    
    (2,044
    )
    
    
    (8,358
    )
    
    
    149,044Interest expense
    
    
    
    
    
    
    (3,277
    )
    
    
    (3,277
    )Interest income
    
    
    
    
    
    
    31,904
    
    
    
    40,517TOTAL OTHER EXPENSES
    
    
    (61,977
    )
    
    
    187,822
    
    
    
    4,051,342NET LOSS
    
    $
    (2,248,898
    )
    
    $
    (562,475
    )
    
    $
    (12,774,095
    )WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING-BASIC
    
    
    27,951,703
    
    
    
    5,548,691
    
    
    
    25,933,983EARNINGS (LOSS) PER COMMON SHARES-BASIC
    
    $
    (0.08
    )
    
    $
    (0.10
    )
    
    $
    (0.49
    )WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING-DILUTED
    
    
    29,747,165
    
    
    
    5,548,691
    
    
    
    27,224,445EARNINGS (LOSS) PER COMMON SHARES-DILUTED
    
    $
    (0.08
    )
    
    $
    (0.10
    )
    
    $
    (0.47
    )
  F-4




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##### 



GILLA, INC.
(formerly OSPREY GOLD CORP.)
(AN EXPLORATION STAGE COMPANY)
 
 Common Stock
    
    
    Additional
    
    
    AccumulatedShares
    
    
    Amount
    
    
    Paid In Capital
    
    
    Deficit
    
    
    TotalBalance  December 31, 2002
    
    
    10,882
    
    
    $
    2
    
    
    $
    306,403
    
    
    $
    (700,132
    )
    
    $
    (393,727
    )Issuance of common stock for mining claims  related party
    
    
    620,000
    
    
    
    124
    
    
    
    6,076
    
    
    
    
    
    
    
    6,200Issuance of common stock for consulting services
    
    
    120,000
    
    
    
    24
    
    
    
    399,976
    
    
    
    
    
    
    
    400,000Issuance of common stock for directors fees
    
    
    10,000
    
    
    
    2
    
    
    
    309,998
    
    
    
    
    
    
    
    310,000Fair market value of options granted
    
    
    
    
    
    
    
    
    
    
    465,000
    
    
    
    
    
    
    
    465,000Purchase of camp
    
    
    40,000
    
    
    
    8
    
    
    
    49,992
    
    
    
    
    
    
    
    50,000Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (915,574
    )
    
    
    (915,574
    )Balance December 31, 2003
    
    
    800,882
    
    
    $
    160
    
    
    $
    1,537,445
    
    
    $
    (1,615,706
    )
    
    $
    (78,101
    )Issuance of common stock for mining claims  related party
    
    
    2,016,800
    
    
    
    404
    
    
    
    19,764
    
    
    
    
    
    
    
    20,168Issuance of common stock for mining claims
    
    
    11,000
    
    
    
    2
    
    
    
    176,998
    
    
    
    
    
    
    
    177,000Issuance of common stock for directors fees
    
    
    6,000
    
    
    
    1
    
    
    
    41,999
    
    
    
    
    
    
    
    42,000Issuance of common stock for consulting fees
    
    
    463,813
    
    
    
    93
    
    
    
    4,430,167
    
    
    
    
    
    
    
    4,430,260Issuance of common stock for management fees
    
    
    80,000
    
    
    
    16
    
    
    
    527,984
    
    
    
    
    
    
    
    528,000Issuance of common stock for financing fees
    
    
    4,000
    
    
    
    1
    
    
    
    23,999
    
    
    
    
    
    
    
    24,000Issuance of common stock for cancellation of letter of
intent and services
    
    
    310,000
    
    
    
    62
    
    
    
    324,938
    
    
    
    
    
    
    
    325,000Sale of common stock
    
    
    215,600
    
    
    
    43
    
    
    
    1,208,261
    
    
    
    
    
    
    
    1,208,304Capital contribution
    
    
    
    
    
    
    
    
    
    
    68,408
    
    
    
    
    
    
    
    68,408Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,717,947
    )
    
    
    (7,717,947
    )Balance December 31, 2004
    
    
    3,908,095
    
    
    $
    782
    
    
    $
    8,359,963
    
    
    $
    (9,333,653
    )
    
    $
    (972,908
    )Sale of common stock
    
    
    2,000,000
    
    
    
    400
    
    
    
    499,600
    
    
    
    
    
    
    
    500,000Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (213,799
    )
    
    
    (213,799
    )Balance December 31, 2005
    
    
    5,908,095
    
    
    $
    1,182
    
    
    $
    8,859,563
    
    
    $
    (9,547,452
    )
    
    $
    (686,707
    )Cancellation of common stock
    
    
    (1,223,000
    )
    
    
    (245
    )
    
    
    245
    
    
    
    
    
    
    
    Issuance of common stock for consulting fees
    
    
    700,000
    
    
    
    140
    
    
    
    1,574,860
    
    
    
    
    
    
    
    1,575,000Issuance of common stock for services rendered
    
    
    33,802
    
    
    
    7
    
    
    
    43,500
    
    
    
    
    
    
    
    43,507Issuance of common stock for directors fees
    
    
    10,000
    
    
    
    2
    
    
    
    32,498
    
    
    
    
    
    
    
    32,500Issuance of common stock for satisfaction of debt
    
    
    6,567
    
    
    
    1
    
    
    
    19,699
    
    
    
    
    
    
    
    19,700Issuance of common stock for salary
    
    
    210,605
    
    
    
    42
    
    
    
    684,426
    
    
    
    
    
    
    
    684,468Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (415,270
    )
    
    
    (415,270
    )Balance December 31, 2006
    
    
    5,646,069
    
    
    $
    1,129
    
    
    $
    11,214,791
    
    
    $
    (9,962,722
    )
    
    $
    1,253,198Issuance of common stock for directors fees
    
    
    30,000
    
    
    
    6
    
    
    
    22,494
    
    
    
    
    
    
    
    22,500Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (562,475
    )
    
    
    (562,475
    )Balance December 31, 2007
    
    
    5,676,069
    
    
    $
    1,135
    
    
    $
    11,237,285
    
    
    $
    (10,525,197
    )
    
    $
    713,223Sale of common stock
    
    
    916,667
    
    
    
    183
    
    
    
    274,817
    
    
    
    
    
    
    
    275,000Issuance of common stock for management fees
    
    
    1,000,000
    
    
    
    200
    
    
    
    499,800
    
    
    
    
    
    
    
    500,000Issuance of common stock for mining claims
    
    
    30,440,184
    
    
    
    6,089
    
    
    
    17,338,022
    
    
    
    
    
    
    
    17,344,111Issuance of common stock for termination of service
    
    
    220,331
    
    
    
    44
    
    
    
    132,154
    
    
    
    
    
    
    
    132,198Issuance of common stock for consulting fees
    
    
    644,804
    
    
    
    129
    
    
    
    386,753
    
    
    
    
    
    
    
    386,882Fair market value of options granted
    
    
    
    
    
    
    
    
    
    
    712,407
    
    
    
    
    
    
    
    712,407Dividends
    
    
    
    
    
    
    
    
    
    
    (240,000
    )
    
    
    
    
    
    
    (240,000
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,248,898
    )
    
    
    (2,248,898
    )Balance December 31, 2008
    
    
    38,898,055
    
    
    $
    7,780
    
    
    $
    30,341,239
    
    
    $
    (12,774,095
    )
    
    $
    17,574,924
  F-5




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##### 



GILLA, INC.
(formerly OSPREY GOLD CORP.)
(AN EXPLORATION STAGE COMPANY)
 CONSOLIDATED STATEMENTS OF CHANGES IN CASH FLOWS
 For the Period FromFor the Year Ended
    
    
    March 28, 1995December 31
    
    
    (Inception) to2008
    
    
    2007
    
    
    December 31, 2008CASH FLOW FROM OPERATING ACTIVITIESNet (loss) from operations
    
    $
    (2,248,898
    )
    
    $
    (562,475
    )
    
    $
    (12,774,095
    )Adjustment to reconcile net income (loss)
to net cash used in operating activities:Stock compensation
    
    
    1,731,489
    
    
    
    22,500
    
    
    
    10,836,792(Increase) decrease in assets:Other receivable
    
    
    1,637
    
    
    
    (971
    )
    
    
    (2,333
    )Mining camp
    
    
    50,000
    
    
    
    
    
    
    
    50,000Increase(decrease) in current liabilitiesAccounts payable
    
    
    (3,596
    )
    
    
    (131,580
    )
    
    
    377,950Accrued expenses
    
    
    
    
    
    
    (51,539
    )
    
    
    4,156Net cash provided by (used in) operating activities
    
    
    (469,368
    )
    
    
    (724,065
    )
    
    
    (1,507,530
    )CASH FLOW FROM FINANCING ACTIVITIESDividends
    
    
    (240,000
    )
    
    
    
    
    
    
    (240,000
    )Sale of common stock
    
    
    275,000
    
    
    
    
    
    
    
    1,983,304Net cash provided by financing activities
    
    
    35,000
    
    
    
    
    
    
    
    1,743,304CASH FLOW FROM INVESTING ACTIVITIESRestricted cash
    
    
    
    
    
    
    1,058,613
    
    
    
    Net cash used in investing activities
    
    
    
    
    
    
    1,058,613
    
    
    
    Net Increase (decrease) in cash
    
    
    (434,368
    )
    
    
    334,548
    
    
    
    235,774Cash and cash equivalents at beginning of period
    
    
    670,142
    
    
    
    335,594
    
    
    
    Cash and cash equivalents at end of period
    
    $
    235,774
    
    
    $
    670,142
    
    
    $
    235,774Supplemental Disclosure of Cash FlowInformation:Cash paid for:Interest
    
    
    
    
    
    
    
    
    
    
    Taxes
    
    
    
    
    
    
    
    
    
    
    
  F-6




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##### 



NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 ORGANIZATION AND DESCRIPTION OF BUSINESS
   Basis of Accounting
  Going Concern
  Cash Equivalents
  F-7




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##### 



NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 Use of Estimates
  Earnings per share
  Mining Properties and Deferred Expenditures
     Foreign Currency Translation
  Concentration of Credit Risk
  F-8




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##### 



NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 Income Taxes
   Fair Value of Financial Instruments
  Stock Based Compensation
   Impairment or Disposal of Long-Lived Assets
   F-9




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##### 



NOTE 2 RECENT ACCOUNTING PRONOUNCEMENTS  Employers Disclosures about Postretirement Benefit Plan Assets
  Effective Date of FASB Interpretation No. 48 for Certain Nonpublic Enterprises
  Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in
Variable Interest Entities
  Accounting for an Instrument (or an Embedded Feature) with a Settlement Amount That is Based on the
Stock of an Entitys Consolidated Subsidiary
  F-10




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##### 



NOTE 2 RECENT ACCOUNTING PRONOUNCEMENTS (Continued)
 Accounting for Defensive Intangible Assets
  Equity Method Investment Accounting Considerations
  Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active
  Issuers Accounting for Liabilities Measured at Fair Value with a Third-Party Credit Enhancement
  Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of FASB Statement No. 133
and FASB Interpretation No. 45; and Clarification of the Effective Date of FASB Statement No. 161
  F-11




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##### 



NOTE 2 RECENT ACCOUNTING PRONOUNCEMENTS (Continued)
 Endowments of Not-for-Profit Organizations: Net Asset Classification of Funds Subject to an Enacted
Version of the Uniform Prudent Management of Institutional Funds Act, and Enhanced Disclosures for
all Endowment Funds
  Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating
Securities
  Determining Whether an Instrument (or an Embedded Feature) Is Indexed to an entitys Own Stock
  Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion ( Including
Partial Cash Settlement)
  F-12




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##### 



NOTE 2 RECENT ACCOUNTING PRONOUNCEMENTS (Continued)
 The Hierarchy of Generally Accepted Accounting Principles
  Determination of the Useful Life of Intangible Assets
  NOTE 3 MINING CAMP
 th
 NOTE 4 RELATED PARTY
  NOTE 5 EQUITY
   F-13




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##### 



NOTE 5 EQUITY (continued)
 2003-Stock issued for mining claims-related party
   2003-Stock issued for consulting services
  2003-Stock issued for directors fees
  2003-Stock issued for purchase of camp
 th
 2004-Stock issued for mining claims-related party
 th
  F-14




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##### 



NOTE 5 EQUITY (continued)
  2004-Stock issued for mining claims
    2004-Stock issued for directors fees
  2004-Stock issued for consulting services
    2004-Stock issued for management fees
  2004-Stock issued for financing fees
  2004-Stock issued for cancellation of letter of intent and services
  F-15




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##### 



NOTE 5 EQUITY (continued)
 2004-Sale of common stock
     2004-Capital contribution
  2005-Sale of common stock
  2006-Cancellation of common stock
 th
 2006-Stock issued for consulting services
  2006-Common stock issued for services rendered
  2006-Common stock issued for directors fees
  F-16




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##### 



NOTE 5 EQUITY (continued)
 2006-Common stock issued for satisfaction of debt
  2006-Common stock issued for salary
  2007-Reverse stock split
  2007-Issuance of common stock for directors fees
  2008-Stock issued for mining claims
   F-17




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##### 



NOTE 5 EQUITY (continued)
 2008-Stock issued for consulting services
    2008-Stock issued for termination of services
  2008-Sale of common stock
     2008Expected DividendYield
    
    $
    Risk Free InterestRate
    
    
    Expected Volatility
    
    
    138
    %Expected Term
    
    < 1 Year
  NUMBER OFOPTIONS AND
    
    
    WEIGHTED AVERAGEWARRANTS
    
    
    EXERCISE PRICEStock OptionsBalance at December 31, 2007
    
    
    
    
    
    
    Granted
    
    
    5,144,804
    
    
    $
    0.60Exercised
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Terminated
    
    
    
    
    
    
    Balance at December 31, 2008
    
    
    5,144,804
    
    
    $
    0.60Weighted average fair value
of options granted for
services during 2008
    
    
    
    
    
    $
    0.60
 F-18




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##### 



NOTE 6 EARNINGS PER SHARE
  Income
    
    
    Shares
    
    
    Per-share(Numerator)
    
    
    (Denominator)
    
    
    AmountIncome from continuing
operations
    
    $
    (2,248,898
    )Less preferred stock dividends
    
    
    Income available to common
stockholders  Basic earnings
per share
    
    
    (2,248,898
    )
    
    
    27,951,703
    
    
    $
    (0.08
    )Effect of dilutive securities
no dilutive securities
    
    
    
    
    
    
    
    
    
    
    Income available to common
stockholders  Diluted
earnings per share
    
    $
    (2,248,898
    )
    
    
    29,747,165
    
    
    $
    (0.08
    )
 F-19




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##### 



NOTE 7 BUSINESS COMBINATION
    NOTE 8 INCOME TAXES
    December 31,2008
    
    
    2007Computed expected tax benefit
    
    $
    (854,581
    )
    
    $
    (213,741
    )Benefit of operating loss carryforwards
    
    
    
    
    
    
    Valuation allowance
    
    
    854,581
    
    
    
    213,741Net tax benefit
    
    $
    
    
    
    $
    
  Deferred Tax Assets
    
    December 31, 2008Current Deferred Tax Assets
    
    $
    Net operating loss carryforward
    
    
    4,854,156Total gross deferred Tax Assets
Less valuation allowance
    
    $
    (4,854,156
    )Net deferred tax assets
    
    $
    
  F-20




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##### 



NOTE 9 SUBSEQUENT EVENTS
 
  
 ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING FINANCIAL DISCLOSURE
   
 ITEM 9A. CONTROLS AND PROCEDURES
    Internal Control  Integrated Framework
 ITEM 9B OTHER ITEMS
  F-21




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##### 



PART III
 
 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
 A) IDENTIFY DIRECTORS AND EXECUTIVE OFFICERS
 NAME
    
    AGE
    
    POSITIONGeorges Benarroch
    
    62
    
    President/Chief Financial Officer/DirectorLinda Kent
    
    53
    
    Corporate Secretary & TreasurerDirectorDaniel Barrette
    
    44
    
    Chief Operating OfficerDirectorStanley D. Robinson
    
    59
    
    Director
  Georges Benarroch/Chief Financial Officer/President/Director
  Linda Kent/Corporate Secretary Treasurer/Director
  Mr. Daniel Barrette
  Mr. Stanley D. Robinson, M.Sc., P.Geo
  F-22




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##### 



B) IDENTIFY SIGNIFICANT EMPLOYEES
  C) FAMILY RELATIONSHIPS
  D) INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
  E) AUDIT COMMITTEE
   
 ITEM 11. EXECUTIVE COMPENSATION
 SUMMARY COMPENSATION TABLE
  Other
    
    
    RestrictedAnnual
    
    
    Option Stocks/Salary
    
    
    Bonus
    
    
    Compensation
    
    
    Payouts AwardedName/Title
    
    Year
    
    
    $
    
    
    $
    
    
    $
    
    
    #Georges Benarroch
    
    
    2008
    
    
    
    6,666
    
    
    
    
    
    
    
    
    
    
    
    100,000President/CEO
    
    
    2007
    
    
    
    80,000
    
    
    
    
    
    
    
    
    
    
    
    10,0002006
    
    
    
    17,857
    
    
    
    
    
    
    
    
    
    
    
    475,100Linda Kent
    
    
    2008
    
    
    
    10,917
    
    
    
    
    
    
    
    
    
    
    
    100,000Secretary/Treasurer
    
    
    2007
    
    
    
    65,000
    
    
    
    
    
    
    
    
    
    
    
    10,0002006
    
    
    
    47,382
    
    
    
    
    
    
    
    
    
    
    
    328,850Daniel Barrette
    
    
    2008
    
    
    
    3,000
    
    
    
    
    
    
    
    
    
    
    
    COO
    
    
    2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 OPTIONS/SAR GRANTS TABLE
  COMPENSATION OF DIRECTORS
     EMPLOYMENT CONTRACTS
  REPORT ON REPRICING OF OPTIONS/SARS
  F-23




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##### 



ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 A) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
 =
 Title of
    
    
    
    
    
    
    
    
    
    Percentage ofClass
    
    Name of Beneficial Owner
    
    
    Common Shares
    
    
    ClassCommon
    
    Georges Fotso
    
    
    10,000,000
    
    
    
    26
    %Common
    
    Capital Venture Facilitators (1)
    
    
    6,392,150
    
    
    
    16
    %Common
    
    Mathurin Djekam
    
    
    4,248,037
    
    
    
    11
    %Common
    
    Credifinance Capital Corp. (2)
    
    
    2,649,752
    
    
    
    7
    %
 
 (1)
    
    Georges Fotso has direct/indirect control of Gilla shares held by Capital Venture Facilitators.(2)
    
    Credifinance Capital Corp. is a privately held Delaware corporation. Georges Benarroch is the President & Chief
Financial Officer of Credifinance Capital Corp. B) SECURITY OWNERSHIP OF MANAGEMENT
 Title of
    
    
    
    
    
    
    
    
    
    Percentage ofClass
    
    Name of Beneficial Owner
    
    
    Common Shares
    
    
    ClassCommon
    
    Daniel Barrette/Chief Operating Office
    
    
    200,000
    
    
    
    0.51
    %Common
    
    Linda Kent/Corporate Secretary Treasurer Director
    
    
    502,530
    
    
    
    1
    %Common
    
    Georges Benarroch (1)
    
    
    4,422,616
    
    
    
    11
    %
 
 (1)
    
    Mr. Benarrochs shares include the shares held by Credifinance Capital Corp. and FRD Trust which he is
either the beneficiary of the trust or has voting power of. 
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 (A) CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
  (B) TRANSACTIONS WITH PROMOTERS
   F-24




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##### 



ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  (1) Audit Fees
  (2) Audit Related Fees
  (3) Tax Fees
   (4) All Other Fees
  F-25




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##### 



ITEM 15. EXHIBITS AND REPORTS ON FORM 8-K
 Date
    
    Item(s)2006-01-19
    
    
    5.022006-02-08
    
    
    8.01, 9.012006-10-05
    
    
    2.01, 5.02, 8.01, 9.12006-12-29
    
    
    3.022007-02-01
    
    
    3.012007-03-
 (A) LISTING OF EXHIBITS
 EXHIBIT NUMBER
    
    DESCRIPTION3(i)(a)
    
    *Articles of Incorporation of Osprey Gold Corp.3(i)(b)
    
    *Articles of Amendment changing name to Osprey Gold Corp.3(ii)
    
    *Bylaws of Osprey Gold Corp.31.1
    
    Section 302 Certification32.1
    
    Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 *
    
    Incorporated by reference filed as form 10SB F-26




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##### 



(B) CODE OF ETHICS
           F-27




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##### 



SIGNATURES
  GILLA INC.
(FORMERLY INCITATIONS)By:
    /s/  Georges BenarrochGeorges Benarroch, President &Chief Financial Officer  Name
    
    Title
    
    Date/s/ Georges Benarroch
    
    President
Chief Financial Officer
Director
    
    March 31,2009
 F-28