UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549




Amendment
No. 1


TO


Form
10-QSB


ON


Form
10-Q/A




x
            Quarterly
      report pursuant Section 13 or 15(d) of the Securities Exchange Act of
      1934


For the
quarterly period ended September 30, 2006




 ̈
            Transition
      report pursuant Section 13 or 15(d) of the Securities Exchange Act of
      1934


For
the transition period from _______ to _______.




Commission
file number 000-30995




SEARCHLIGHT
MINERALS CORP.


(Exact
name of registrant as specified in its charter)




Nevada
                  (State or other jurisdiction of incorporation or
                  organization)
                98-0232244
                  (I.R.S. Employer Identification No.)#120 - 2441 West Horizon Ridge Pkwy.
                  Henderson, Nevada
                  (Address of principal executive offices)
                89052
                  (Zip code)




(702)
939-5247


(Registrant’s telephone number, including area
code)




Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 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
x           No  ̈




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 “smaller reporting company” in Rule 12b-2 of the
Exchange Act.





Large
      accelerated filer  ̈
            Accelerated
      filer xNon-accelerated
      filer  ̈
            Smaller
      reporting company  ̈


(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




As of
July 6, 2009, the registrant had 106,468,637 outstanding shares of common
stock.









Explanatory
Note


On
November 8, 2007, the management of Searchlight Minerals Corp. (“Searchlight”,
the “Company”, or as used in the context of “we”, “us” or “our”) concluded that
our audited financial statements for the years ended December 31, 2006 and 2005,
and our unaudited interim financial statements for the periods ended March 31,
2005 through June 30, 2007 needed to be restated and should not be relied
upon.
  On May
5, 2008, our management concluded that our audited financial statements for the
year ended December 31, 2007, and our unaudited interim financial statements for
the period ended September 30, 2007 needed to be restated and should not be
relied upon.
  This
Amendment No. 1 (the “Form 10-Q/A”) to our Quarterly Report on Form 10-QSB for
the three months ended September 30, 2006 (the “2006 Third Quarter 10-QSB”) is
being filed with the Securities and Exchange Commission (the “SEC”) to restate
our financial statements as of September 30, 2006 and for the three and nine
months ended September 30, 2006 and 2005, and the period from January 14, 2000
(date of inception) through September 30, 2006.  In addition, we are
concurrently filing Reports on Form 10-K/A to amend and restate our financial
statements for the annual periods in fiscal years 2005 through 2006 and our
consolidated financial statements for the annual periods in fiscal year 2007 and
Reports on Form 10-Q/A to amend and restate our financial statements for the
quarterly periods ended March 31, 2005 through September 30, 2005, March 31,
2006 through September 30, 2006, and our consolidated financial statements for
the quarterly periods ended March 31, 2007 through September 30,
2007.
  We
have restated certain items on our balance sheets and statements of
operations.  On our balance sheets: (i) mineral properties have been
restated to include the market value of certain shares issued by us under the
terms of our option agreements for the mineral claims making up the Searchlight
Gold Project; and (ii) the Clarkdale Slag Project has been restated to include
revision of acquisition costs related to issuance of warrants, consideration of
certain terms with respect to future payments that should have been recorded as
contingent consideration and related deferred future income tax liability in
connection with our acquisition of Transylvania International,
Inc.  (“Transylvania”).  Our statements of operations have
been restated to reclassify net losses prior to January 1, 2005 as losses from
discontinued operations.  Our statement of operations for the year
ended December 31, 2006 has been restated to reclassify foreign currency
translation adjustments to general and administrative
expense.  Related to this issue, our balance sheet for the period
ended December 31, 2006 has been restated to reclassify accumulated other
comprehensive loss as accumulated deficit during the exploration
stage.
  Searchlight
Claims - We initially valued the total transaction based on actual costs
incurred by the former owner of $87,134, plus $40,000, represented by $2,000 per
claim, for a total acquisition price of $127,134.  The Searchlight
Gold Project mineral properties have been restated in the financial statements
to reflect payments made by issuance of 1,400,000 shares at $0.35 on July 7,
2005, 1,400,000 shares at $2.20 on July 27, 2006 and 1,400,000 shares at $3.22
on June 29, 2007 at the market values on the dates of issuance.  The
impact of this restatement had the following impact on our balance sheets for
the periods ended September 30, 2005 through December 31, 2006 and our
consolidated balance sheets for the periods ended March 31, 2007 through
December 31, 2007:
  ·
              increasing
      the mineral property by $450,000 for the shares issued and by $242,308 for
      the deferred future income tax liability assumed for a total increase of
      $692,308 for the periods ended September 30, 2005, December 31, 2005,
      March 31, 2006 and June 30,
2006.
  ·
              cumulative
      increase to the mineral asset by $3,530,000 for the shares issued and by
      $1,774,156 for the deferred future income tax liability assumed for a
      total increase of $5,304,156 for the periods ended September 30, 2006,
      December 31, 2006 and March 31,
2007.
  ·
              cumulative
      increase to the mineral asset by $8,038,000 for the shares issued and by
      $4,537,124 for the deferred future income tax liability assumed for a
      total increase of $12,575,124 for the period ended June 30,
      2007.
  1
  ·
              increasing
      the mineral asset by $450,000 for the shares issued on July 7, 2005 and by
      $242,308 for the related deferred tax liability assumed and by $385,846
      for the recomputation of deferred tax liability as a result of the
      Clarkdale Slag Project restatement for a total increase of $1,078,154 for
      the period ended September 30,
2007.
  ·
              increasing
      the mineral asset by $1,182,594 for the recomputation of the deferred tax
      liability as a result of the Clarkdale Slag Project restatement for the
      period ended December 31, 2007.
  Joint
Venture Agreement - During the second quarter of 2008, we also determined that
the accounting treatment for the 12,000,000 warrants issued to Nanominerals
Corp. (“Nanominerals”) and its designates in connection with the assignment of
the option for the Clarkdale Slag Project approved on June 1, 2005 was not
appropriate.  We have assigned a value to the warrants of $1,310,204
by using the sales price of shares of common stock issued in connection with a
private placement conducted at the time the warrants were issued.  The
adjustment also included the deferred future income tax liability assumed of
$608,277 for a total increase in purchase consideration of
$1,918,481.  Nanominerals is one of our principal stockholders, and is
an affiliate of two members of our executive management and board of directors,
Ian R. McNeil and Carl S. Ager.
  The
value of the warrants, as restated, was computed using the binomial lattice
method based on the following assumptions:
  Dividend
      yield
                    
                    
                    —Expected
      volatility
                    
                    
                    79
                    %Risk-free
      interest rate
                    
                    
                    3.91
                    %Expected
      life (years)
                    
                    
                    9.6
  This
restatement had the effect of increasing the joint venture and merger option
agreements by $1,918,481 on our balance sheets for the periods ended September
30, 2005, December 31, 2005, March 31, 2006, June 30, 2006, September 30, 2006
and December 31, 2006.
  Clarkdale
Slag Project – On February 15, 2007, we entered into an agreement and plan of
merger with Transylvania. Pursuant to the agreement Transylvania merged with and
into our wholly owned subsidiary, Clarkdale Minerals LLC. This agreement
superseded the original Clarkdale Slag Project option assignment. During the
second quarter of 2008, we identified certain errors in our previously issued
financial statements related to our purchase accounting treatment of the
acquisition of Transylvania, and the resultant computation of future deferred
income tax liability assumed.  We have restated certain items on our
consolidated balance sheets and statements of operations as
follows:
  ·
              amounts
      recorded for the Clarkdale Slag Project on our consolidated balance sheets
      have been restated to reflect changes to the purchase accounting of the
      acquisition of Transylvania based on the acquisition agreement and the
      recomputation of the value of the 12,000,000 warrants issued to
      Nanominerals Corp., and its designates in connection with the assignment
      of the option for the Clarkdale Slag Project.  The amount
      recorded for the Clarkdale Slag Project was also affected by the
      recomputation of the deferred future federal and state income tax
      liability in connection with our acquisition of the Clarkdale Slag
      Project.
  ·
              amounts
      recorded for the Searchlight Gold Project on our consolidated balance
      sheets have been restated to include the impact of the recomputation of
      the deferred future income tax liability and state income tax
      liability.  This recomputation was required because changes made
      to the acquisition accounting of the Clarkdale Slag Project affected the
      computation of the deferred future income tax liability related to the
      mineral claims making up the Searchlight Gold
  Project.
  ·
              our
      consolidated statement of operations for each of the periods ended March
      31, 2007, June 30, 2007, September 30, 2007 and December 31, 2007 has been
      restated to reflect the recomputation of the tax benefits related to net
      operating losses as a result of changes to the purchase accounting for the
      Clarkdale Slag Project.  There was no other impact on the
      results of operations.
  2
  ·
              our
      consolidated statement of operations for the three months ended March 31,
      2007 has been restated to reclassify related party mineral exploration and
      evaluation expense not stated separately in previous
      reports.  There was no change to the underlying expense or
      results of operations as previously
  reported.
  During
the second quarter of 2008, we determined that the acquisition accounting method
used in prior periods to record the purchase accounting for the Clarkdale Slag
Project was not appropriate for the 2007 acquisition of
Transylvania.  The adjustments included revision of the acquisition
accounting related to payment terms and conditions contained in the acquisition
agreement.  The overall recorded acquisition purchase consideration
was reduced by $7,546,217 with a corresponding reduction in recorded liabilities
of $7,546,217.  The recorded liabilities were adjusted, as
follows:
  ·
              the
      recorded current portion (relating to the $30,000 monthly obligation due
      to VRIC) decreased on the balance sheet by
  $227,174.
  ·
              the
      recorded long-term portion (relating to the $30,000 monthly obligation due
      to VRIC) decreased on the balance sheet by
  $919,043.
  ·
              the
      payment due to VRIC (with respect to the date that a feasibility study
      relating to the Clarkdale Slag Project establishes that the project is
      economically viable and “bankable,” or the “Project Funding Date”)
      decreased on the balance sheet by
  $6,400,000.
  We
have accounted for the payments based on the Project Funding Date and the
payments based on future cash flow as contingent consideration.  If
the contingency requirements are met, the purchase price of the Clarkdale Slag
Project will be adjusted accordingly at that time.
  The
restatement had the following impact on our balance sheets for the periods ended
March 31, 2007 through December 31, 2007:
  ·
              increasing
      the acquisition cost of the Slag Project by $1,918,481 for the warrants
      issued in connection with the option assignment and by $14,925,422 for the
      deferred tax liability assumed and decreasing the acquisition cost by
      $7,546,217 for the contingent payment terms for a total increase of
      $9,297,686 for the periods ended March 31, 2007 and June 30,
      2007.
  ·
              increasing
      the acquisition cost of the Slag Project by $1,918,481 for the warrants
      issued in connection with the option assignment and by $10,801,018 for the
      deferred tax liability assumed and decreasing the acquisition cost by
      $7,546,217 for the contingent payment terms for a total increase of
      $5,173,282 for the period ended September 30,
  2007.
  ·
              increasing
      the acquisition cost of the Slag Project by $1,918,481 for the warrants
      issued in connection with the option assignment and decreasing the
      acquisition cost by $4,121,755 for the deferred tax liability assumed and
      by $7,546,217 for the contingent payment terms for a total decrease of
      $9,749,491 for the period ended December 31,
  2007.
  The
original terms of the underlying purchase agreement were unchanged and this
adjustment had no effect on the acquisition agreement.
  Discontinued
Operations - The statements of operations from the date of inception through the
periods ended March 31, 2005, June 30, 2005, September 30, 2005, December 31,
2005, March 31, 2006, June 30, 2006, September 30, 2006 and December 31, 2006
and the consolidated statements of operations from the date of inception through
the periods ended March 31, 2007, June 30, 2007, September 30, 2007, December
31, 2007 have been restated to reclassify net losses prior to January 1, 2005 as
discontinued operations.  On February 10, 2005, we announced that we
were changing our business from biotechnology to becoming a mineral exploration
company, dedicated to the discovery and exploration of gold and other precious
metal deposits.  Activity between January 1 and February 10, 2005
consisted of minor general and administrative expenses and as a result was not
included in loss from discontinued operations.
  3
  Foreign
Currency Translation Reclassification - The statement of operations for the year
ended December 31, 2006, has been restated to reclassify foreign currency
translation adjustment as general and administrative expense.  Foreign
currency translation adjustment was related to translation of accounts payable
assumed as part of our change of business in 2005.  This restatement
had the impact of increasing net loss and eliminating other comprehensive loss
for the year ended December 31, 2006 by $11,769.  Related to the same
issue, the balance sheet at December 31, 2006 has been restated to reclassify
accumulated other comprehensive loss as accumulated deficit during exploration
stage.  These restatements had the impact of eliminating accumulated
other comprehensive loss and increasing accumulated deficit during exploration
stage at December 31, 2006 by $121,606.
  The
restatements had no impact on our cash or cash flows.
  A
description of the restatements made to our financial statements is provided at
Note 9 to the  financial statements included with this
report.
  This
Form 10-Q/A sets forth the 2006 Third Quarter Form 10-QSB in its
entirety.  This Form 10-Q/A includes items that have been changed as a
result of the restatement and the items that are unchanged from the 2006 Third
Quarter Form 10-QSB.
  Other
than the amending of the disclosures relating to the restatement and responding
to the staff’s comments, no other modifications or updates have been made to the
2006 Third Quarter 10-QSB.  Information not affected by items
described above remains unchanged and reflects the disclosures made at the time
of, and as of the dates described in, the 2006 Third Quarter
10-QSB.  This Form 10-Q/A does not describe events occurring after the
2006 Third Quarter 10-QSB (including with respect to exhibits), or modify or
update disclosures (including forward-looking statements) which may have been
affected by events or changes in facts occurring after the date of the 2006
Third Quarter 10-QSB.  Accordingly, this Form 10-Q/A should be read in
its historical context and in conjunction with our filings made with the SEC
subsequent to the filing of the 2006 Third Quarter 10-QSB, as information in
such filings may update or supersede certain information contained in this Form
10-Q/A.
  Item 6
of Part II of this Form 10-Q/A has been amended to contain the currently-dated
certifications from our principal executive officer and principal financial
officer, as required by Section 302 and 906 of the Sarbanes-Oxley Act of
2002.




4




PART
I - FINANCIAL INFORMATION




ITEM
1.  FINANCIAL STATEMENTS.




SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 BALANCE
SHEETS
 (UNAUDITED)
(RESTATED)
  September
      30, 2006
                            
                            
                            December
      31, 2005(restated)ASSETSCurrent
      assetsCash
                            
                            $
                            4,687,405
                            
                            
                            $
                            705,856Employee
      advance
                            
                            
                            20,212
                            
                            
                            
                            —Total
      current assets
                            
                            
                            4,707,617
                            
                            
                            
                            705,856Property
      and equipment, net
                            
                            
                            31,412
                            
                            
                            
                            15,136Mineral
      properties
                            
                            
                            5,431,290
                            
                            
                            
                            819,442Joint
      venture agreement
                            
                            
                            2,608,481
                            
                            
                            
                            2,608,481Reclamation
      bond
                            
                            
                            180,500
                            
                            
                            
                            180,500Total
      non-current assets
                            
                            
                            8,251,683
                            
                            
                            
                            3,623,559Total
      assets
                            
                            $
                            12,959,300
                            
                            
                            $
                            4,329,415LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilitiesAccounts
      payable
                            
                            $
                            808,700
                            
                            
                            $
                            783,246Loan
      payable - related party
                            
                            
                            382,792
                            
                            
                            
                            379,877Loan
      payable
                            
                            
                            —
                            
                            
                            
                            15,000Total
      current liabilities
                            
                            
                            1,191,492
                            
                            
                            
                            1,178,123Long-term
      liabilitiesDeferred
      tax liability
                            
                            
                            1,140,946
                            
                            
                            
                            450,940Total
      long-term liabilities
                            
                            
                            1,140,946
                            
                            
                            
                            450,940Total
      liabilities
                            
                            
                            2,332,438
                            
                            
                            
                            1,629,063Stockholders'
      equityCommon
      stock, $0.001 par value; 400,000,000 sharesauthorized,
      67,231,000 and 52,150,000 shares,respectively,
      issued and outstanding
                            
                            
                            67,231
                            
                            
                            
                            52,150Additional
      paid-in capital
                            
                            
                            17,731,037
                            
                            
                            
                            7,843,502Common
      stock subscribed
                            
                            
                            —
                            
                            
                            
                            270,000Accumulated
      deficit during exploration stage
                            
                            
                            (7,171,406
                            )
                            
                            
                            (5,465,300
                            )Total
      stockholders' equity
                            
                            
                            10,626,862
                            
                            
                            
                            2,700,352Total
      liabilities and stockholders' equity
                            
                            $
                            12,959,300
                            
                            
                            $
                            4,329,415
  See
Accompanying Notes to Financial Statements
  5
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 STATEMENTS
OF OPERATIONS
 (UNAUDITED)
(RESTATED)
  For
      the three months ended
                                        
                                        
                                        For
      the nine months ended
                                        
                                        
                                        For
      the period fromJanuary 14,
      2000(Date of
      Inception)ThroughSeptember
      30,2006
                                        
                                        
                                        September
      30,2005
                                        
                                        
                                        September
      30,2006
                                        
                                        
                                        September
      30,2005
                                        
                                        
                                        September
      30,2006(restated)
                                        
                                        
                                        
                                        
                                        
                                        (restated)
                                        
                                        
                                        
                                        
                                        
                                        (restated)Revenue
                                        
                                        $
                                        —
                                        
                                        
                                        $
                                        —
                                        
                                        
                                        $
                                        —
                                        
                                        
                                        $
                                        —
                                        
                                        
                                        $
                                        —Operating
      expensesMineral
      exploration and evaluation expenses
                                        
                                        
                                        518,476
                                        
                                        
                                        
                                        275,563
                                        
                                        
                                        
                                        1,293,864
                                        
                                        
                                        
                                        338,453
                                        
                                        
                                        
                                        2,180,887Mineral
      exploration and evaluationexpenses
      - related party
                                        
                                        
                                        123,750
                                        
                                        
                                        
                                        —
                                        
                                        
                                        
                                        371,250
                                        
                                        
                                        
                                        —
                                        
                                        
                                        
                                        371,250General
      and administrative
                                        
                                        
                                        231,304
                                        
                                        
                                        
                                        163,575
                                        
                                        
                                        
                                        897,925
                                        
                                        
                                        
                                        360,439
                                        
                                        
                                        
                                        1,731,729Depreciation
                                        
                                        
                                        1,651
                                        
                                        
                                        
                                        139
                                        
                                        
                                        
                                        4,617
                                        
                                        
                                        
                                        139
                                        
                                        
                                        
                                        5,567Total
      operating expenses
                                        
                                        
                                        875,181
                                        
                                        
                                        
                                        439,277
                                        
                                        
                                        
                                        2,567,656
                                        
                                        
                                        
                                        699,031
                                        
                                        
                                        
                                        4,289,433Loss
      from operations
                                        
                                        
                                        (875,181
                                        )
                                        
                                        
                                        (439,277
                                        )
                                        
                                        
                                        (2,567,656
                                        )
                                        
                                        
                                        (699,031
                                        )
                                        
                                        
                                        (4,289,433
                                        )Other
      income (expense)Interest
      income
                                        
                                        
                                        24,106
                                        
                                        
                                        
                                        —
                                        
                                        
                                        
                                        24,106
                                        
                                        
                                        
                                        —
                                        
                                        
                                        
                                        24,106Loss
      on equipment disposition
                                        
                                        
                                        —
                                        
                                        
                                        
                                        —
                                        
                                        
                                        
                                        (4,398
                                        )
                                        
                                        
                                        —
                                        
                                        
                                        
                                        (4,398
                                        )Total
      other income (expense)
                                        
                                        
                                        24,106
                                        
                                        
                                        
                                        —
                                        
                                        
                                        
                                        19,708
                                        
                                        
                                        
                                        —
                                        
                                        
                                        
                                        19,708Loss
      before income taxes
                                        
                                        
                                        (851,075
                                        )
                                        
                                        
                                        (439,277
                                        )
                                        
                                        
                                        (2,547,948
                                        )
                                        
                                        
                                        (699,031
                                        )
                                        
                                        
                                        (4,269,725
                                        )Income
      tax benefit
                                        
                                        
                                        280,614
                                        
                                        
                                        
                                        199,823
                                        
                                        
                                        
                                        841,842
                                        
                                        
                                        
                                        199,823
                                        
                                        
                                        
                                        1,241,487Loss
      from continuing operations
                                        
                                        
                                        (570,461
                                        )
                                        
                                        
                                        (239,454
                                        )
                                        
                                        
                                        (1,706,106
                                        )
                                        
                                        
                                        (499,208
                                        )
                                        
                                        
                                        (3,028,238
                                        )Discontinued
      operations:Gain
      (loss) from discontinued operations
                                        
                                        
                                        —
                                        
                                        
                                        
                                        6,432
                                        
                                        
                                        
                                        —
                                        
                                        
                                        
                                        91,543
                                        
                                        
                                        
                                        (4,143,168
                                        )Net
      Loss
                                        
                                        $
                                        (570,461
                                        )
                                        
                                        $
                                        (233,022
                                        )
                                        
                                        $
                                        (1,706,106
                                        )
                                        
                                        $
                                        (407,665
                                        )
                                        
                                        $
                                        (7,171,406
                                        )Loss
      per common share - basic and diluted:Net
      loss
                                        
                                        $
                                        (0.01
                                        )
                                        
                                        $
                                        (0.01
                                        )
                                        
                                        $
                                        (0.03
                                        )
                                        
                                        $
                                        (0.01
                                        )Weighted
      average common shares outstanding -Basic
      and diluted
                                        
                                        
                                        66,820,130
                                        
                                        
                                        
                                        52,150,000
                                        
                                        
                                        
                                        60,338,392
                                        
                                        
                                        
                                        50,314,432
  See
Accompanying Notes to Financial Statements
  6
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 STATEMENT
OF STOCKHOLDERS' EQUITY
 (UNAUDITED)
(RESTATED)
 Common
                                      
                                      
                                      Accumulated Deficit
      During
                                      
                                      
                                      TotalCommon
      Stock
                                      
                                      
                                      Additional
                                      
                                      
                                      Stock
                                      
                                      
                                      Exploration
                                      
                                      
                                      Stockholders'Shares
                                      
                                      
                                      Amount
                                      
                                      
                                      Paid-in
      Capital
                                      
                                      
                                      Subscribed
                                      
                                      
                                      Stage
                                      
                                      
                                      EquityBalance,
      January 14, 2000
                                      
                                      
                                      —
                                      
                                      
                                      $
                                      —
                                      
                                      
                                      $
                                      —
                                      
                                      
                                      $
                                      —
                                      
                                      
                                      $
                                      —
                                      
                                      
                                      $
                                      —Issuance
      of common stock(recapitalized)
                                      
                                      
                                      50,000,000
                                      
                                      
                                      
                                      50,000
                                      
                                      
                                      
                                      (25,000
                                      )
                                      
                                      
                                      —
                                      
                                      
                                      
                                      (24,999
                                      )
                                      
                                      
                                      1Net
      loss
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      (231,969
                                      )
                                      
                                      
                                      (231,969
                                      )Balance,
      December 31, 2000
                                      
                                      
                                      50,000,000
                                      
                                      
                                      
                                      50,000
                                      
                                      
                                      
                                      (25,000
                                      )
                                      
                                      
                                      —
                                      
                                      
                                      
                                      (256,968
                                      )
                                      
                                      
                                      (231,968
                                      )Issuance
      of common stock inreverse
      merger
                                      
                                      
                                      10,300,000
                                      
                                      
                                      
                                      10,300
                                      
                                      
                                      
                                      (5,150
                                      )
                                      
                                      
                                      —
                                      
                                      
                                      
                                      (5,150
                                      )
                                      
                                      
                                      —Net
      loss
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      (767,798
                                      )
                                      
                                      
                                      (767,798
                                      )Balance,
      December 31, 2001
                                      
                                      
                                      60,300,000
                                      
                                      
                                      
                                      60,300
                                      
                                      
                                      
                                      (30,150
                                      )
                                      
                                      
                                      —
                                      
                                      
                                      
                                      (1,029,916
                                      )
                                      
                                      
                                      (999,766
                                      )Capital
      contribution
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      1,037,126
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      1,037,126Beneficial
      conversion featureassociated
      with debt
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      300,000
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      300,000Net
      loss
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      (1,249,644
                                      )
                                      
                                      
                                      (1,249,644
                                      )Balance,
      December 31, 2002
                                      
                                      
                                      60,300,000
                                      
                                      
                                      
                                      60,300
                                      
                                      
                                      
                                      1,306,976
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      (2,279,560
                                      )
                                      
                                      
                                      (912,284
                                      )Debt
      exchanged for common stock
                                      
                                      
                                      48,000,000
                                      
                                      
                                      
                                      48,000
                                      
                                      
                                      
                                      1,152,000
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      1,200,000Deferred
      compensation
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      12,583
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —Amortization
      of deferredcompensation
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      10,387Net
      loss
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      (1,283,872
                                      )
                                      
                                      
                                      (1,283,872
                                      )Balance,
      December 31, 2003
                                      
                                      
                                      108,300,000
                                      
                                      
                                      
                                      108,300
                                      
                                      
                                      
                                      2,471,559
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      (3,563,432
                                      )
                                      
                                      
                                      (985,769
                                      )Amortization
      of deferredcompensation
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      2,196Net
      loss
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      (700,444
                                      )
                                      
                                      
                                      (700,444
                                      )Balance,
      December 31, 2004
                                      
                                      
                                      108,300,000
                                      
                                      
                                      
                                      108,300
                                      
                                      
                                      
                                      2,471,559
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      (4,263,876
                                      )
                                      
                                      
                                      (1,684,017
                                      )Issuance
      of stock options for1,000,000
      shares of common stockto
      two officers
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      133,062
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      133,062Issuance
      of stock options for500,000
      shares of common stockin
      satisfaction of debt
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      300,000
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      300,000Return
      and cancellation of70,000,000
      shares of commonstock
                                      
                                      
                                      (70,000,000
                                      )
                                      
                                      
                                      (70,000
                                      )
                                      
                                      
                                      70,000
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
 See
Accompanying Notes to Financial Statements
  7
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 STATEMENT
OF STOCKHOLDERS' EQUITY
 (UNAUDITED)
(RESTATED)
 Common
                                                                
                                                                
                                                                Accumulated Deficit
      During
                                                                
                                                                
                                                                TotalCommon
      Stock
                                                                
                                                                
                                                                Additional
                                                                
                                                                
                                                                Stock
                                                                
                                                                
                                                                Exploration
                                                                
                                                                
                                                                Stockholders'Shares
                                                                
                                                                
                                                                Amount
                                                                
                                                                
                                                                Paid-in
      Capital
                                                                
                                                                
                                                                Subscribed
                                                                
                                                                
                                                                Stage
                                                                
                                                                
                                                                EquityIssuance
      of 12,000,000 warrantsin
      consideration of joint ventureoption
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                1,310,204
                                                                
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                1,310,204Issuance
      of common stockfor
      mining claims
                                                                
                                                                
                                                                1,400,000
                                                                
                                                                
                                                                
                                                                1,400
                                                                
                                                                
                                                                
                                                                488,600
                                                                
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                490,000Issuance
      of common stockin
      satisfaction of debt, $0.625 per share
                                                                
                                                                
                                                                200,000
                                                                
                                                                
                                                                
                                                                200
                                                                
                                                                
                                                                
                                                                124,800
                                                                
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                125,000Issuance
      of common stock for cash,Reg.
      S - Private Placement,$0.25
      per share, net of$205,250
      commissions
                                                                
                                                                
                                                                6,390,000
                                                                
                                                                
                                                                
                                                                6,390
                                                                
                                                                
                                                                
                                                                1,369,070
                                                                
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                1,375,460Issuance
      of common stock for cash,Reg.
      S - Private Placement,$0.25
      per share, net of$135,000
      commission
                                                                
                                                                
                                                                5,400,000
                                                                
                                                                
                                                                
                                                                5,400
                                                                
                                                                
                                                                
                                                                1,194,947
                                                                
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                1,200,347Issuance
      of common stock for cash,Reg.
      D 506 - Private Placement,$0.25
      per share
                                                                
                                                                
                                                                460,000
                                                                
                                                                
                                                                
                                                                460
                                                                
                                                                
                                                                
                                                                114,540
                                                                
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                115,000Issuance
      of stock options for1,500,000
      shares of common stockto
      three officers
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                266,720
                                                                
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                266,720Common
      stock subscribed
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                270,000
                                                                
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                270,000Net
      loss
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                (1,201,424
                                                                )
                                                                
                                                                
                                                                (1,201,424
                                                                )Balance,
      December 31, 2005
                                                                
                                                                
                                                                52,150,000
                                                                
                                                                
                                                                
                                                                52,150
                                                                
                                                                
                                                                
                                                                7,843,502
                                                                
                                                                
                                                                
                                                                270,000
                                                                
                                                                
                                                                
                                                                (5,465,300
                                                                )
                                                                
                                                                
                                                                2,700,352Issuance
      of common stock for cash,Reg.
      D - Private Placement,$0.45
      per share, net of$87,750
      commission
                                                                
                                                                
                                                                3,900,000
                                                                
                                                                
                                                                
                                                                3,900
                                                                
                                                                
                                                                
                                                                1,663,350
                                                                
                                                                
                                                                
                                                                (270,000
                                                                )
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                1,397,250Issuance
      of common stockrelated
      to exercise of warrants
                                                                
                                                                
                                                                1,225,000
                                                                
                                                                
                                                                
                                                                1,225
                                                                
                                                                
                                                                
                                                                (1,225
                                                                )
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                —Issuance
      of stock options for120,000
      shares of common stockto
      two officers
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                20,864
                                                                
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                20,864Issuance
      of stock options for500,000
      shares of common stockto
      two directors
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                122,420
                                                                
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                122,420Issuance
      of stock options for100,000
      shares of common stockto
      two directors
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                24,484
                                                                
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                24,484Issuance
      of common stock for cashReg.
      S - Private Placement,$0.625
      per sharefrom
      exercise of warrants
                                                                
                                                                
                                                                6,125,000
                                                                
                                                                
                                                                
                                                                6,125
                                                                
                                                                
                                                                
                                                                3,822,000
                                                                
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                3,828,125
 See
Accompanying Notes to Financial Statements
  8
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 STATEMENT
OF STOCKHOLDERS' EQUITY
 (UNAUDITED)
(RESTATED)
  Common
                                                      
                                                      
                                                      Accumulated Deficit
      During
                                                      
                                                      
                                                      TotalCommon
      Stock
                                                      
                                                      
                                                      Additional
                                                      
                                                      
                                                      Stock
                                                      
                                                      
                                                      Exploration
                                                      
                                                      
                                                      Stockholders'Shares
                                                      
                                                      
                                                      Amount
                                                      
                                                      
                                                      Paid-in
      Capital
                                                      
                                                      
                                                      Subscribed
                                                      
                                                      
                                                      Stage
                                                      
                                                      
                                                      EquityIssuance
      of common stock for cashReg.
      S - Private Placement,$0.375
      per sharefrom
      exercise of warrants
                                                      
                                                      
                                                      1,768,500
                                                      
                                                      
                                                      
                                                      1,768
                                                      
                                                      
                                                      
                                                      661,420
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      663,188Issuance
      of common stock for cashReg.
      S - Private Placement,$0.625
      per sharefrom
      exercise of warrants
                                                      
                                                      
                                                      612,500
                                                      
                                                      
                                                      
                                                      613
                                                      
                                                      
                                                      
                                                      382,200
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      382,813Issuance
      of stock options for100,000
      shares of common stockto
      officer for recruitmentamortized
      over vesting period.
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      1,309
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      1,309Issuance
      of common stock toofficer
      for recruitment
                                                      
                                                      
                                                      50,000
                                                      
                                                      
                                                      
                                                      50
                                                      
                                                      
                                                      
                                                      102,950
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      103,000Issuance
      of stock options for50,000
      shares of common stockto
      employee for recruitmentamortized
      over vesting period
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      1,309
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      1,309Issuance
      of common stock formining
      claims (restated, see Note 3)
                                                      
                                                      
                                                      1,400,000
                                                      
                                                      
                                                      
                                                      1,400
                                                      
                                                      
                                                      
                                                      3,078,600
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      3,080,000Amortization
      of stock options issuedto
      employee and officerover
      vesting period
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      7,854
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      7,854Net
      loss (restated)
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      (1,706,106
                                                      )
                                                      
                                                      
                                                      (1,706,106
                                                      )Balance,
      September 30, 2006 (restated)
                                                      
                                                      
                                                      67,231,000
                                                      
                                                      
                                                      $
                                                      67,231
                                                      
                                                      
                                                      $
                                                      17,731,037
                                                      
                                                      
                                                      $
                                                      —
                                                      
                                                      
                                                      $
                                                      (7,171,406
                                                      )
                                                      
                                                      $
                                                      10,626,862
 See
Accompanying Notes to Financial Statements
  9
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 STATEMENTS
OF CASH FLOWS
 (UNAUDITED)
(RESTATED)
 Period
      fromJanuary
      14, 2000(Date
      of inception)For
      the nine months ended
                                                        
                                                        
                                                        throughSeptember
      30,2006
                                                        
                                                        
                                                        September
      30,2005
                                                        
                                                        
                                                        September
      30,2006(restated)
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        (restated)CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      loss
                                                        
                                                        $
                                                        (1,706,106
                                                        )
                                                        
                                                        $
                                                        (407,666
                                                        )
                                                        
                                                        $
                                                        (7,171,406
                                                        )Deduct:
      Gain (loss) from discontinued operations
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        91,543
                                                        
                                                        
                                                        
                                                        (4,143,168
                                                        )Loss
      from continuing operations
                                                        
                                                        
                                                        (1,706,106
                                                        )
                                                        
                                                        
                                                        (499,209
                                                        )
                                                        
                                                        
                                                        (3,028,238
                                                        )Adjustments
      to reconcile loss from continuing operationsto
      net cash used in operating activities:Depreciation
                                                        
                                                        
                                                        4,617
                                                        
                                                        
                                                        
                                                        139
                                                        
                                                        
                                                        
                                                        5,567Stock
      based expenses
                                                        
                                                        
                                                        281,240
                                                        
                                                        
                                                        
                                                        133,062
                                                        
                                                        
                                                        
                                                        681,022Loss
      on disposition of fixed assets
                                                        
                                                        
                                                        4,398
                                                        
                                                        
                                                        
                                                        1,349
                                                        
                                                        
                                                        
                                                        5,747Changes
      in operating assets and liabilities:
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        —Other
      current assets
                                                        
                                                        
                                                        (20,212
                                                        )
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        (20,212
                                                        )Other
      assets
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        (180,500
                                                        )
                                                        
                                                        
                                                        (180,500
                                                        )Accounts
      payable and accrued liabilities
                                                        
                                                        
                                                        28,369
                                                        
                                                        
                                                        
                                                        205,259
                                                        
                                                        
                                                        
                                                        51,538Deferred
      income taxes
                                                        
                                                        
                                                        (841,842
                                                        )
                                                        
                                                        
                                                        (199,822
                                                        )
                                                        
                                                        
                                                        (1,241,487
                                                        )Net
      cash used in operating activities
                                                        
                                                        
                                                        (2,249,536
                                                        )
                                                        
                                                        
                                                        (539,722
                                                        )
                                                        
                                                        
                                                        (3,726,563
                                                        )Net
      cash used in operating activities from discontinued
      operations
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        (2,931,324
                                                        )CASH
      FLOW FROM INVESTING ACTIVITIESCash
      paid on mineral property claims
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        (87,134
                                                        )
                                                        
                                                        
                                                        (87,134
                                                        )Cash
      paid for joint venture agreement
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        (690,000
                                                        )
                                                        
                                                        
                                                        (690,000
                                                        )Purchase
      of fixed assets
                                                        
                                                        
                                                        (25,291
                                                        )
                                                        
                                                        
                                                        (16,085
                                                        )
                                                        
                                                        
                                                        (41,376
                                                        )Net
      cash used in investing activities
                                                        
                                                        
                                                        (25,291
                                                        )
                                                        
                                                        
                                                        (793,219
                                                        )
                                                        
                                                        
                                                        (818,510
                                                        )Net
      cash used in investing activities from discontinued
      operations
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        (452,618
                                                        )CASH
      FLOW FROM FINANCING ACTIVITIESProceeds
      from stock issuance
                                                        
                                                        
                                                        6,271,376
                                                        
                                                        
                                                        
                                                        2,690,807
                                                        
                                                        
                                                        
                                                        8,962,183Proceeds/payments
      on loan payable
                                                        
                                                        
                                                        (15,000
                                                        )
                                                        
                                                        
                                                        15,000
                                                        
                                                        
                                                        
                                                        —Proceeds
      from subscribed stock
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        270,000Net
      cash provided by financing activities
                                                        
                                                        
                                                        6,256,376
                                                        
                                                        
                                                        
                                                        2,705,807
                                                        
                                                        
                                                        
                                                        9,232,183Net
      cash provided by financing activities from discontinued
      operations
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        3,384,237NET
      CHANGE IN CASH
                                                        
                                                        
                                                        3,981,549
                                                        
                                                        
                                                        
                                                        1,372,866
                                                        
                                                        
                                                        
                                                        4,687,405CASH
      AT BEGINNING OF PERIOD
                                                        
                                                        
                                                        705,856
                                                        
                                                        
                                                        
                                                        295
                                                        
                                                        
                                                        
                                                        —CASH
      AT END OF PERIOD
                                                        
                                                        $
                                                        4,687,405
                                                        
                                                        
                                                        $
                                                        1,373,161
                                                        
                                                        
                                                        $
                                                        4,687,405SUPPLEMENTAL
      INFORMATIONInterest
      Paid
                                                        
                                                        $
                                                        —
                                                        
                                                        
                                                        $
                                                        —
                                                        
                                                        
                                                        $
                                                        50,751Income
      Taxes Paid
                                                        
                                                        $
                                                        —
                                                        
                                                        
                                                        $
                                                        —
                                                        
                                                        
                                                        $
                                                        —Non-cash
      investing and financing activities:Stock
      and options for common stock issued in satisfaction of
      debt
                                                        
                                                        $
                                                        —
                                                        
                                                        
                                                        $
                                                        300,000
                                                        
                                                        
                                                        $
                                                        1,500,000Stock
      issued for conversion ofaccounts
      payable, 200,000 shares at $0.625
                                                        
                                                        $
                                                        —
                                                        
                                                        
                                                        $
                                                        125,000
                                                        
                                                        
                                                        $
                                                        125,000Assets
      acquired for common stock issued for the acquisition
                                                        
                                                        $
                                                        3,080,000
                                                        
                                                        
                                                        $
                                                        490,000
                                                        
                                                        
                                                        $
                                                        3,570,000Warrants
      issued in connection with joint venture optionagreement
      related to slag project
                                                        
                                                        $
                                                        —
                                                        
                                                        
                                                        $
                                                        1,310,204
                                                        
                                                        
                                                        $
                                                        1,310,204Net
      deferred tax liability assumed
                                                        
                                                        $
                                                        1,614,147
                                                        
                                                        
                                                        $
                                                        913,776
                                                        
                                                        
                                                        $
                                                        2,527,923
 See
Accompanying Notes to Financial Statements
  10
 SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES
TO FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
  1.
                    DESCRIPTION OF
      BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT
      POLICIES
 
 Basis of presentation
– The accompanying unaudited financial statements have been prepared in
accordance with Securities and Exchange Commission requirements for interim
financial statements. Therefore, they do not include all of the information and
footnotes required by accounting principles generally accepted in the United
States for complete financial statements. The financial statements should be
read in conjunction with the Form 10-KSB for the year ended December 31, 2005 of
Searchlight Minerals Corp. (the “Company”).
 
 The
interim financial statements present the balance sheets, statements of
operations, stockholders’ equity, and cash flows of the Company. The financial
statements have been prepared in accordance with accounting principles generally
accepted in the United States.
 
 These
financial statements have been prepared by the Company without audit, and
include all adjustments (which consist solely of normal recurring adjustments,
except as described in note 9) which, in the opinion of management, are
necessary for a fair presentation of financial position and results of
operations. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted, although the Company believes that
the disclosures are adequate to make the information presented not misleading.
It is suggested that these financial statements be read in conjunction with the
Company’s audited financial statements and notes thereto for the year ended
December 31, 2005.
 
 Description of
business – Searchlight Minerals Corp. is considered an exploration stage
company since its formation and the Company has not yet realized any revenues
from its planned operations.  The Company is primarily focused on the
exploration, acquisition and development of mining and mineral
properties.  Upon the location of commercially minable reserves, the
Company plans to prepare for mineral extraction and enter the development
stage.
  History - The Company
was incorporated on January 12, 1999 pursuant to the laws of the State of Nevada
under the name L.C.M. Equity, Inc.  From 1999 to 2005, the Company
operated primarily as a biotechnology research and development company with its
headquarters in Canada and an office in the UK.  On November 2, 2001,
the Company entered into an acquisition agreement with Regma Bio Technologies,
Ltd. pursuant to which Regma Bio Technologies, Ltd. entered into a reverse
merger with us with the surviving entity named “Regma Bio Technologies Limited”.
On November 26, 2003, the Company changed its name from “Regma Bio Technologies
Limited” to “Phage Genomics, Inc.”
   In
February, 2005, the Company announced its reorganization from a biotechnology
research and development company to a company focused on the development and
acquisition of mineral properties. In connection with its reorganization the
Company entered into mineral option agreements to acquire an interest in the
Searchlight Claims. The Company has consequently been considered an exploration
stage enterprise. Also in connection with its corporate restructuring, its board
of directors approved a change in its name from “Phage Genomics, Inc.” (Phage)
to "Searchlight Minerals Corp.” effective June 23, 2005.
  11
 
 SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES
TO FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 1.
                    DESCRIPTION OF
      BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES
      (continued)
  Going concern - The
Company incurred cumulative net losses of $7,171,406 from operations as of
September 30, 2006 and has not commenced its mining and mineral processing
operations, rather, still in the exploration stage, raising substantial doubt
about the Company’s ability to continue as a going concern.  The
Company will seek additional sources of capital through the issuance of debt or
equity financing, but there can be no assurance the Company will be successful
in accomplishing its objectives.
 
 The
ability of the Company to continue as a going concern is dependent on additional
sources of capital and the success of the Company’s plan.  The
financial statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern.
 
 Use of estimates -
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
 
 Mineral rights - The
Company capitalizes acquisition and option costs of mineral property
rights.  The amount capitalized represents fair value of the mineral
rights acquired.
 
 The
Company capitalizes acquisition and option costs of mineral rights as tangible
assets in accordance with Emerging Issues Task Force abstract 04-02 (“EITF
04-02”), “Whether Mineral Rights are Tangible or Intangible Assets and Related
Issues”.  Upon commencement of commercial production, the mineral
rights will be amortized using the unit-of-production method over the life of
the mineral rights.  If the Company does not continue with exploration
after the completion of the feasibility study, the mineral rights will be
expensed at that time. The Company evaluates the carrying value of capitalized
mining costs and related property and equipment costs, to determine if these
costs are in excess of their recoverable amount whenever events or changes in
circumstances indicate that their carrying amounts may not be recoverable. The
periodic evaluation of carrying value of capitalized costs and any related
property and equipment costs are based upon expected future cash flows and/or
estimated salvage value in accordance with Statement of Financial Accounting
Standards (SFAS) No. 144, “Accounting for Impairment or Disposal of Long-Lived
Assets.”
 
 Exploration costs –
Mineral exploration costs are expensed as incurred.
 12
 
 SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES
TO FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 1.    
DESCRIPTION OF
BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES
(continued)
 
 Property and
equipment – Property and equipment is stated at cost less accumulated
depreciation. Depreciation is provided principally on the straight-line method
over the estimated useful lives of the assets, which are generally 3 to 39
years. The cost of repairs and maintenance is charged to expense as incurred.
Expenditures for property betterments and renewals are capitalized. Upon sale or
other disposition of a depreciable asset, cost and accumulated depreciation are
removed from the accounts and any gain or loss is reflected in other income
(expense).
 
 The
Company periodically evaluates whether events and circumstances have occurred
that may warrant revision of the estimated useful lives of property and
equipment or whether the remaining balance of property and equipment should be
evaluated for possible impairment. If events and circumstances warrant
evaluation, the Company uses an estimate of the related undiscounted cash flows
over the remaining life of the property and equipment in measuring their
recoverability.
  Impairment of long-lived
assets–The Company reviews and evaluates long-lived assets for impairment when
events or changes in circumstances indicate the related carrying amounts may not
be recoverable. The assets are subject to impairment consideration under SFAS
No. 144 if events or circumstances indicate that their carrying amount might not
be recoverable.  As of September 30, 2006 exploration is progressing
in accordance with the Company’s plan of operations and no events or
circumstances have happened to indicate the related carrying values of the
properties may not be recoverable. When the Company determines SFAS 144
impairment analysis should be done, the analysis will be performed using the
rules of EITF 04-03, “Mining Assets: Impairment and Business
Combinations.”
  Various
factors could impact our ability to achieve forecasted production schedules.
Additionally, commodity prices, capital expenditure requirements and reclamation
costs could differ from the assumptions the Company may use in cash flow models
used to assess impairment. The ability to achieve the estimated quantities of
recoverable minerals from exploration stage mineral interests involves further
risks in addition to those factors applicable to mineral interests where proven
and probable reserves have been identified, due to the lower level of confidence
that the identified mineralized material can ultimately be mined
economically.
 
 Material
changes to any of these factors or assumptions discussed above could result in
future impairment charges to operations.
 
 Reclassifications –
Certain amounts in the prior period financial statements have been reclassified
to conform to current period presentation.
 13
 
 SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES
TO FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 1.   
DESCRIPTION OF
BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES
(continued)
 
 Asset retirement
obligation - The Company has adopted Statement of Financial Accounting
Standards No. 143 (“SFAS 143”), “Accounting for Asset Retirement Obligations”,
which requires that an asset retirement obligation (“ARO”) associated with the
retirement of a tangible long-lived asset be recognized as a liability in the
period in which it is incurred and becomes determinable, with an offsetting
increase in the carrying amount of the associated asset.  The cost of
the tangible asset, including the initially recognized ARO, is depleted, such
that the cost of the ARO is recognized over the useful life of the
asset.  The ARO is recorded at fair value, and accretion expense is
recognized over time as the discounted liability is accreted to its expected
settlement value.  The fair value of the ARO is measured using
expected future cash flow, discounted at the Company’s credit-adjusted risk-free
interest rate.  To date, no significant asset retirement obligation
exists due to the early stage of exploration.  Accordingly, no
liability has been recorded.
 
 Fair value of financial
instruments – Financial Accounting Standards Statement No. 107,
“Disclosure About Fair Value of Financial Instruments”, requires the Company to
disclose, when reasonably attainable, the fair market values of its assets and
liabilities which are deemed to be financial instruments. The carrying amounts
and estimated fair values of the Company’s financial instruments approximate
their fair value due to the short-term nature.
 
 Revenue recognition -
Revenues are recognized during the period in which the revenues are earned.
Costs and expenses are recognized during the period in which they are
incurred.
  Research and
development - All research and development expenditures are expensed as
incurred.
  Earnings (loss) per
share - The Company follows Statement of Financial Accounting Standard
No. 128 (“SFAS 128”), “Earnings Per Share” and Statement of Financial Accounting
Standard No. 150 (“SFAS 150”), “Accounting for Certain Financial Instruments
with Characteristics of Both Liabilities and Equity,” which establish
standards for the computation, presentation and disclosure requirements for
basic and diluted earnings per share for entities with publicly-held common
shares and potential common stock issuances. Basic earnings (loss) per share are
computed by dividing net income by the weighted average number of common shares
outstanding.  In computing diluted earnings per share, the weighted
average number of shares outstanding is adjusted to reflect the effect of
potentially dilutive securities, such as stock options and
warrants.  Common stock equivalent shares are excluded from the
computation if their effect is antidilutive. Weighted average of common stock
equivalents, which include stock options and warrants to purchase common stock,
on September 30, 2006 and 2005 that were not included in the computation of
diluted EPS because the effect would be antidilutive were, 24,847,626 and
7,450,418, respectively.
 
 Expenses of offering
– The Company accounts for specific incremental costs directly to a proposed or
actual offering of securities as a direct charge against the gross proceeds of
the offering.
 14
 
 SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES
TO FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
  1.   
DESCRIPTION OF
BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES
(continued)
  Income taxes - The
Company accounts for its income taxes in accordance with the Statement of
Financial Accounting No. 109 (“SFAS 109”), “Accounting for Income Taxes”, which
requires recognition of deferred tax assets and liabilities for future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and tax credit carry-forwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment
date.
 
 For
acquired properties that do not constitute a business as defined in Emerging
Issues Task Force Issue No. 98-03 (“EITF 98-03”), “Determining Whether a
Nonmonetary Transaction Involves Receipt of Productive Assets or of a Business”,
deferred income tax liability is recorded on GAAP basis over income tax basis
using statutory federal and state rates. The resulting estimated future federal
and state income tax liability associated with the temporary difference between
the acquisition consideration and the tax basis is computed in accordance with
EITF 98-11 “Accounting for Acquired Temporary Differences in Certain Purchase
Transactions That Are Not Accounted for as Business Combinations” and SFAS 109,
and is reflected as an increase to the total purchase price which is then
applied to the underlying acquired assets in the absence of there being a
goodwill component associated with the acquisition
transactions.
 
 Stock-based
compensation - On December 16, 2004, the FASB issued Statement of
Financial Accounting Standard No. 123R (“SFAS 123R”), “Share-Based
Payment”, which replaces Statement of Financial Accounting Standard No. 123
(“SFAS 123”), “Accounting for Stock-Based Compensation” and supersedes APB
Opinion No. 25, “Accounting for Stock Issued to Employees.” SFAS No. 123R
requires all share-based payments to employees, including grants of employee
stock options, to be recognized in the financial statements based on the grant
date fair value of the award. Under SFAS No. 123R, the Company must determine
the appropriate fair value model to be used for valuing share-based payments,
the amortization method for compensation cost and the transition method to be
used at date of adoption. The transition methods include prospective and
retroactive adoption option. Under the retroactive option, prior periods may be
restated either as of the beginning of the year of adoption or for all periods
presented. The prospective method requires that compensation expense be recorded
for all unvested stock options and restricted stock at the beginning of the
first quarter of adoption of SFAS No. 123R, while the retroactive methods would
record compensation expense for all unvested stock options and restricted stock
beginning with the first period restated. The Company adopted the requirements
of SFAS No. 123R for the fiscal year beginning after December 31,
2004.
 15
 
 SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES
TO FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 1.
                    DESCRIPTION OF
      BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES
      (continued)
 
 New accounting
pronouncements – In May 2005, the FASB issued SFAS No. 154, “Accounting
Changes and Error Corrections, a replacement of APB No. 20 and FASB Statement
No. 3” (“SFAS No. 154”). SFAS No. 154 requires retrospective application to
prior periods’ financial statements of a voluntary change in accounting
principle unless it is impracticable. APB Opinion No. 20 “Accounting Changes,”
previously required that most voluntary changes in accounting principle be
recognized by including in net income of the period of the change the cumulative
effect of changing to the new accounting principle. This statement is effective
for years beginning after January 1, 2006. The adoption of this statement had
little or no effect on the Company’s financial position, results of operations,
and disclosures.
 
 In
November 2005, the FASB issued FASB Staff Position FAS 115-1 and FAS 124-1, “The
Meaning of Other-Than-Temporary Impairment and Its Application to Certain
Investments” (“FSP 115-1”), which provides guidance on determining when
investments in certain debt and equity securities are considered impaired,
whether that impairment is other-than-temporary, and on measuring such
impairment loss. FSP 115-1 also includes accounting considerations subsequent to
the recognition of an other-than temporary impairment and requires certain
disclosures about unrealized losses that have not been recognized as
other-than-temporary impairments. FSP 115-1 is required to be applied to
reporting periods beginning after December 15, 2005.  The adoption of
this guidance had little or no effect on the Company’s financial position,
results of operations, and disclosures.
 
 In
February 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No.
155, “Accounting for Certain HybridFinancial
Instruments—an Amendment of FASB Statements No. 133 and 140” (“SFAS No. 155”).
SFAS No. 155 allows financial instruments that contain an embedded derivative
and that otherwise would require bifurcation to be accounted for as a whole on a
fair value basis, at the holders’ election. SFAS No. 155 also clarifies and
amends certain other provisions of SFAS No. 133 and SFAS No. 140. This statement
is effective for all financial instruments acquired or issued in fiscal years
beginning after September 15, 2006. Adoption of this statement is not expected
to have a material impact on the Company’s financial
statements.
 
 In
March 2006, the FASB issued SFAS No. 156, “Accounting for Servicing of Financial
Assets—an Amendment of FASB Statement No. 140” (“SFAS No. 156”). SFAS No. 156
provides guidance on the accounting for servicing assets and liabilities when an
entity undertakes an obligation to service a financial asset by entering into a
servicing contract. This statement is effective for all transactions in fiscal
years beginning after September 15, 2006.  Adoption of this statement
is not expected to have a material impact on the Company’s financial
statements.
 
 In
September 2006, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 108 (SAB 108).  SAB 108 considers the effects of prior
year misstatements when quantifying misstatements in the current year financial
statements.  It is effective for fiscal years ending after November
15, 2006.  The effect of SAB 108 has been incorporated into the
Company’s financial reporting.
 16
 
 SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES
TO FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 1.
                    DESCRIPTION OF
      BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES
      (continued)
 
 In
August 2006, the SEC published amendments to the disclosure requirements for
executive and director compensation, related party transactions, director
independence and other corporate governance matters, security ownership of
officers and directors.  The rules affect disclosure in proxy
statements, annual reports and registration statements.  These
amendments are effective for filings for fiscal years ending on or after
December 15, 2006.  The effect of these amendments has been
incorporated into the Company’s financial reporting.
 
 In
July 2006, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation No. 48, “Accounting for Uncertainty in Income Taxes —
an interpretation of FASB Statement No. 109” (“FIN 48”), which
clarifies the accounting and disclosure for uncertainty in tax positions.
FIN 48 seeks to reduce the diversity in practice associated with certain
aspects of the recognition and measurement related to accounting for income
taxes. This interpretation is effective for fiscal years beginning after
December 15, 2006. The Company is currently in the process of evaluating
the financial impact of this statement.
 
 In
September 2006, the FASB issued statement No. 157, “Fair Value
Measurements” (“SFAS 157”). SFAS 157 defines fair value, establishes a
framework for measuring fair value in accordance with accounting principles
generally accepted in the United States, and expands disclosures about fair
value measurements. SFAS 157 is effective for fiscal years beginning after
November 15, 2007, with earlier application encouraged. Any amounts
recognized upon adoption as a cumulative effect adjustment will be recorded to
the opening balance of retained earnings in the year of adoption. The Company is
currently evaluating the potential impact of adopting this statement on the
Company’s consolidated financial position, results of operations or cash
flows.
 
 In
September 2006, the FASB issued Statement No. 158 “Employers’ Accounting
for Defined Benefit Pension and Other Postretirement Plans (“SFAS 158”).
SFAS 158 requires companies to recognize the over funded or under funded
status of a defined benefit postretirement plan as an asset or liability in its
statement of financial position and to recognize changes in that funded status
in the year in which the changes occur through comprehensive income.
SFAS 158 requires companies to measure the funded status of a plan as of
the date of its year-end statement of financial position, with limited
exceptions. The Company adopted SFAS 158 effective for the fiscal year
ending December 31, 2006.  Adoption of this statement had no
impact on the Company’s financial position or results of
operations.
 
 Correction of an
error
 
 Searchlight
Mining Claims – (See Note 3) - The Company restated the Searchlight Mining
Claims as of March 31, 2006. The Company originally valued the transaction at
$127,134 for cash paid and shares valued at $40,000, or $2,000 per claim. The
Company determined that pursuant to EITF 98-11, the shares should have been
valued at their market price on the date of the issue. The restatement of the
Searchlight Claims mineral properties also reflects the deferred future income
tax liability assumed, the value of which has been added to the acquisition
costs of the underlying mineral properties. The impact of this restatement had
the effect of increasing the mineral property by $3,530,000 for the shares
issued and by $1,774,156 for the deferred future income tax liability assumed
for a total increase of $1,774,156.
 
 Joint
venture agreement– (See Note 4)
- The warrants issued in connection with the assignment of the original Slag
Project option have been restated to reflect the recomputation of the value of
the 12,000,000 warrants issued as consideration for the option to acquire a
mineral interest in the Slag Project of $1,918,481, (including related deferred
tax liability assumed of $608,277) which was computed based on private placement
stock price at the time the warrants were issued.
 17
 
 SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES
TO FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 1.
                    DESCRIPTION OF
      BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES
      (continued)
 
 Discontinued
      operations - The statement of operations for the period from
      January 14, 2000 (date of inception) through September 30, 2006 has been
      restated to reclassify net losses prior to January 1, 2005 as discontinued
      operations. On February 10, 2005, the Company announced that it was
      reorganizing itself and changing its focus from biotech to becoming a
      mineral exploration company, dedicated to the discovery and exploration of
      gold and other precious metal deposits.  Activity between
      January 1 and February 10, 2005 consisted of minor general and
      administrative expenses and foreign currency translation adjustment, which
      has been included in loss from discontinued
  operations.
 
 The
statement of operations for the nine months ended September 30, 2006, has been
restated to reclassify $11,769 of foreign currency translation adjustment
related to 2004 activity as general and administrative expense. The restatement
also reflects the income tax benefit of $280,614 and $841,842 for the three and
nine months ended September 30, 2006, respectively.
 
 2.
                    PROPERTY AND
      EQUIPMENT
 
 Property
and equipment consisted of the following as of September 30, 2006 and December
31, 2005:
 
 September
      30,
                                2006
                              
                              
                              December
      31, 2005Furniture
      and fixtures
                              
                              $
                              15,600
                              
                              
                              $
                              7,038Lab
      equipment
                              
                              
                              2,804
                              
                              
                              
                              —Computers
      and equipment
                              
                              
                              17,331
                              
                              
                              
                              9,04835,735
                              
                              
                              
                              16,086Less
      accumulated depreciation
                              
                              
                              4,323
                              
                              
                              
                              950$
                              31,412
                              
                              
                              $
                              15,136
 
 Depreciation
expense was $4,617 and $139 for the nine months ended September 30, 2006 and
2005, respectively.
 
 3.    
MINERAL PROPERTIES -
MINING CLAIMS – AS RESTATED (See Note 9)
 
 As of
September 30, 2006 mining claims consisted of 3,200 acres located near
Searchlight, Nevada. The 3,200 acre property is staked as twenty 160 acre
claims. At September 30, 2006 mineral properties balance was
$5,431,290.
 
 The
mining claims were acquired during 2005 with issuance of 1,400,000 shares of the
Company’s common stock and the provision that the Company, at its option, issue
an additional 1,400,000 shares each year in June for three remaining
years.  If at any time before each subsequent issuance of shares, the
Company does not choose to continue the transaction, it is under no obligation
to issue further shares and would no longer hold the mining
claims.
 
 On
August 26, 2005, the Company paid $180,500 to the Bureau of Land Management as a
bond for future reclamation work in Searchlight, Nevada.
 18
 
 SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES
TO FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 3.
                    MINERAL PROPERTIES -
      MINING CLAIMS – AS RESTATED (See Note 9)
      (continued)
 
 The
      mining claims are capitalized as tangible assets in accordance with EITF
      04-02.  Upon commencement of commercial production, the claims
      will be amortized using the unit-of-production method over the life of the
      claim.  If the Company does not continue with exploration after
      the completion of the feasibility study, the claims will be expensed at
      that time.
 
 The
Company reviews and evaluates long-lived assets for impairment when events or
changes in circumstances indicate the related carrying amount may not be
recoverable. The assets are subject to impairment consideration under SFAS No.
144 if events or circumstances indicate that their carrying amount might not be
recoverable. As of September 30, 2006 exploration on these properties is
progressing in accordance with the Company’s plan of operations and no events or
circumstances have happened to indicate the related carrying values of the
properties may not be recoverable. When the Company determines SFAS 144
impairment analysis should be done, the analysis will be performed using the
rules of EITF 04-03, “Mining Assets: Impairment and Business
Combinations.”
 
 The
following table summarizes the changes of mineral properties for the nine months
ended September 30, 2006 and for the year ended December 31,
2005:
 
 As
      Reported
                                          
                                          
                                          Adjustments
                                          
                                          
                                          
                                          
                                          
                                          As
      RestatedCash
      and shares issuance to obtain mineralproperties,
      July 7, 2005
                                          
                                          $
                                          127,134
                                          
                                          
                                          $
                                          450,000
                                          
                                          
                                          
                                          a
                                          
                                          
                                          $
                                          577,134Net
      deferred income tax liability assumed
                                          
                                          
                                          —
                                          
                                          
                                          
                                          242,308
                                          
                                          
                                          
                                          b
                                          
                                          
                                          
                                          242,308Mineral
      properties balance, December 31, 2005
                                          
                                          
                                          127,134
                                          
                                          
                                          
                                          692,308
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          819,442Share
      issuance to obtain mineral properties, July 27, 2006
                                          
                                          
                                          —
                                          
                                          
                                          
                                          3,080,000
                                          
                                          
                                          
                                          c
                                          
                                          
                                          
                                          3,080,000Net
      deferred income tax liability assumed
                                          
                                          
                                          —
                                          
                                          
                                          
                                          1,531,848
                                          
                                          
                                          
                                          b
                                          
                                          
                                          
                                          1,531,848Mineral
      properties balance, September 30, 2006
                                          
                                          $
                                          127,134
                                          
                                          
                                          $
                                          5,304,156
                                          
                                          
                                          
                                          
                                          
                                          
                                          $
                                          5,431,290
 
 The
restatement adjustments are as follows:
 
 a.
                    Restate
      issuance of 1,400,000 shares to obtain mineral properties on July 7, 2005
      at the market value of $0.35 per share on the date of
      issuance.
 b.
                    Restate
      for the resulting estimated future income tax liability associated with
      the temporary difference between tax basis and acquisition value, which
      was applied to the mineral asset in the absence of there being a goodwill
      component associated with the
transaction.
 c.
                    Restate
      issuance of 1,400,000 shares to obtain mineral properties on July 27, 2006
      at the market value of $2.20 per share on the date of
      issuance.
 19
 
 SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES
TO FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 4.
                    JOINT VENTURE
      AGREEMENT – AS RESTATED (See Note
9)
 
 On
October 24, 2005, the Company completed the acquisition of all of Nanominerals
Corp. (“NMC”) interest in a joint venture agreement (“JV Agreement”) dated May
20, 2005 between NMC and Verde River Iron Company, LLC (“Verde”).  NMC
is a related party entity whereby the Company’s President and Chief Financial
Officer have an ownership interest.  The JV Agreement will allow the
processing and extraction of minerals from a copper smelter slag pile located on
a parcel of land consisting of approximately 200 acres in Clarkdale, Arizona
(“Clarkdale Slag Project”).  The acquisition consideration of NMC’s
interest in the JV Agreement fulfilled are as follows:
 
 (i)
                      Payment
      to NMC of $690,000 in respect of certain payments made by NMC towards the
      acquisition of the Clarkdale Slag Project made pursuant to the terms of
      the JV Agreement;
 (ii)
                      Assignment
      to NMC of a five percent net smelter return royalty payable from the
      Company’s share of production from the Clarkdale Slag
      Project;
 (iii)
                      Appointment
      of nominees of NMC to the Company’s board of directors to constitute a
      majority of the board;
 (iv)
                      Issuance
      to NMC or its designates, warrants to purchase 12,000,000 shares (post
      stock split) of the Company’s common stock at exercise price of $0.375 per
      share (post stock split) exercisable for a term of 10 years;
      and
 (v)
                      Provide
      confirmation to NMC, that the Company has received funds of $2,000,000
      pursuant to its private placement offering of its securities to accredited
      investors in the U.S. and to accredited investors outside the
      U.S.
 
 Additionally,
the Company entered into an amendment (the “Amended Assignment Agreement”) to
the Assignment Agreement, for the purpose of clarifying the Company’s obligation
to pay NMC a royalty equal to 5% of the Net Smelter Returns (as defined in the
Amended Assignment Agreement) resulting from the processing and extraction of
minerals from the Clarkdale Slag Project. As at October 24, 2005, the Company
fulfilled its obligations under the terms and conditions of the Assignment
Agreement.
 
 Following
the acquisition of NMC’s interest in the Clarkdale Slag Project, the Company is
presently proceeding with the joint venture with Verde. Under the terms of the
JV Agreement, the Company intends to form a jointly owned limited liability
operating company (“OPCO”) to pursue a four phase work program for the purpose
of processing up to 2/3 or 20,000,000 tons minimum of slag from a copper smelter
slag pile located at the Clarkdale Slag Project site, to extract by products
from the slag for commercial resale. Pursuant to the terms of the JV
Agreement, we are subject to the following, payments and
conditions:
  (i)
                    The
      Company is required to fund all expenditures for Phase I of the work
      program and we must pay $3,000,000 into OPCO’s account within 14 days of
      the completion of Phase I. At the time the Company makes the $3,000,000
      payment to OPCO, Verde agrees to transfer all right to process the
      Clarkdale Slag Project slag pile to OPCO and grant the Company a license
      to use the project site for the
project.
  (ii)
                    After
      completion of a bankable feasibility study in Phase II, the Company is
      required to contribute $27,000,000 (“Project Funding Payment”) to OPCO
      within 90 days of receipt of the
study.
 20
 
 SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES
TO FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 4.
                    JOINT VENTURE
      AGREEMENT – AS RESTATED (See Note 9)
  (continued)
  (iii)
                    Verde
      is not required to contribute any funds for project
      expenses.
  (iv)
                    In
      the event of termination by either party, provided that Phase II has been
      completed, Verde agreed to assign 10% of its net operating profits from
      the project to the Company until it receives an amount equal to two times
      the amount of its total investment in the
  project.
  (v)
                      A
      principal of Verde, will be paid an amount of $10,000,000 from the Project
      Funding Payment, the Initial Payment (as further defined in the JV
      Agreement) and net cash flow of the project before any money is
      distributed to the Company and
Verde.
  The
following table summarizes the impact of the restatement on the historical
balances of the joint venture agreement reported for the period ended September
30, 2006:
 
 As
      Reported
                              
                              
                              Adjustments
                              
                              
                              As
      RestatedCash
      consideration
                              
                              $
                              690,000
                              
                              
                              $
                              —
                              
                              
                              $
                              690,000Issuance
      of warrants
                              
                              
                              —
                              
                              
                              
                              1,310,204
                              
                              
                              
                              1,310,204Net
      deferred income tax liability assumed
                              
                              
                              —
                              
                              
                              
                              608,277
                              
                              
                              
                              608,277Joint
      venture agreement balance,
                                September
      30, 2006
                              
                              $
                              690,000
                              
                              
                              $
                              1,918,481
                              
                              
                              $
                              2,608,481
 
 5.
                    LOAN PAYABLE – RELATED
      PARTY
 
 As
of September 30, 2006, loan payable to related parties totaling $382,792
consists of borrowings from former officers and directors of the Company. The
balance bears no interest, is unsecured, and is due on demand.
 
 6.    
STOCKHOLDERS’
EQUITY
 
 During
the nine months ended September 30, 2006 the Company’s stockholders’
equity activity consisted of the following:
 
 a)
                    On
      July 27, 2006, the Company issued 1,400,000 shares to the owners of the
      Searchlight Claims. This issuance is the second of four required share
      payments to complete the acquisition of the Searchlight Claims totaling
      5,600,000 shares.
 
 b)
                    On
      June 23, 2006, the Company issued 50,000 shares at $2.06 per share as
      consideration for an employment contract entered into on June 14, 2006
      with a new Chief Financial Officer. In addition, the Company advanced
      $33,084 for withholding taxes required to be paid on total compensation of
      $103,000. The advance is to be repaid bi-monthly with full payment to be
      made in December 2006.
 
 c)
                    On
      June 21, 2006, the Company issued 8,506,000 shares of common stock from
      the exercise of warrants resulting in cash proceeds of $4,874,126.
      Warrants exercised were for 6,125,000 shares at $0.625 per share,
      1,768,500 shares at $0.375 per share and 612,500 at $0.625 per share. Each
      of the warrants was set to expire in June 2006 and all were
      exercised.
 21
 
 SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES
TO FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 6.    
STOCKHOLDERS’
EQUITY (continued)
 
 d)
                    On
      February 9, 2006, the Company issued 1,225,000 shares of common stock and
      warrants to purchase an additional 612,500 shares of common stock with an
      exercise price of $0.625 expiring between June 2 and June 7,
      2006.  These are related to the penalty shares and warrants for
      the late registration of shares with the Securities and Exchange
      Commission pursuant to the private placements completed in September
      2005.  Pursuant to the private placements, subscribers received
      penalty units consisting of one share and one half of one share purchase
      warrant.  The penalty units were exercisable into 1/10th
      of the total number of units issued in the private placement if a
      registration statement on Form SB-2 was not declared effective within four
      months and one day of the closing date of the private
      placements.  The Registration Statement was not effective prior
      to the filing deadline resulting in the issuance of the penalty
      units.
 
 e)
                    On
      January 18, 2006, the Company issued 39 units for $45,000 per unit where
      each unit consisted of 100,000 shares and 100,000 purchase
      warrants.  Each purchase warrant is exercisable into one share
      at a price of $0.65 expiring on January 18, 2008.  Total gross
      proceeds for this offering were
$1,755,000.
 
 Warrants
associated with the 2006 equity issuances do not constitute a registration
payment arrangement.
 
 7. STOCK OPTION
PLAN
 
 On
April 7, 2006, the Board of Directors adopted the 2006 Stock Option Plan (the
"Plan").  Under the terms of the Plan, options to purchase up to
40,000,000 shares of common stock that may be granted to our employees,
officers, directors, and eligible consultants of Searchlight. The Plan provides
that the option price be the fair market value of the stock at the date of grant
as determined by the Board of Directors. Options granted become exercisable and
expire as determined by the Board of Directors. The maximum aggregate number of
shares of our common stock that may be optioned and sold under the Plan will be
increased effective the first day of each of our fiscal quarters, beginning with
the fiscal quarter commencing July 1, 2006, by an amount equal to the lesser of:
(i) 15% of the total increase in the number of shares of common stock
outstanding during the previous fiscal quarter; or (ii) a lesser number of
shares of common stock as may be determined by the Board of
Directors.
  During
the nine months ended September 30, 2006, the Company issued granted stock
options as follows:
 
 a)
                    On
      June 14, 2006, the Company granted nonqualified stock options for the
      purchase of 50,000 shares of common stock at $2.06 per
      share.  The options were granted as a recruitment incentive to
      an employee and vest 50% on December 14, 2006 and the remaining 50% on
      June 14, 2007. The options contain an expiration date of June 14,
      2008.
 
 b)
                    On
      June 14, 2006, the Company granted nonqualified stock options for the
      purchase of 100,000 shares of common stock at $2.06 per
      share.  The options were granted as a recruitment incentive to
      the Chief Financial Officer and vest 50% on June 14, 2007 and the
      remaining 50% on June 14, 2008. The options contain an expiration date of
      June 14, 2011.
 
 c)
                    On
      June 6, 2006, the Company granted nonqualified stock options for the
      purchase of 100,000 shares of common stock at $2.40 per
      share.  The options were granted equally to two directors, are
      fully vested and expire on June 6,
2011.
 22
 
 SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES
TO FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 7. STOCK OPTION
PLAN (continued)
 
 d)
                    On
      June 6, 2006, the Company granted nonqualified stock options for the
      purchase of 500,000 shares of common stock at $2.40 per
      share.  The options were granted equally to two
      officer/directors, are fully vested and expire on June 6,
      2011.
 
 e)
                    On
      April 7, 2006 the Company granted stock options for the purchase of
      120,000 shares of common stock at $1.70 per share.  The options
      were granted equally to two officers, are fully vested and expire on April
      7, 2011.
 
 Expense
for the three and nine months ended September 30, 2006 related to vesting and
granting of stock options were $7,854 and $178,240, respectively, and are
included in general and administrative expense.
 
 8.
                    COMMITMENTS AND
      CONTINGENCIES
 
 Employment contracts
– Ian R. McNeil, President and Chief Executive Officer. The Company entered into
an employment agreement with Ian R. McNeil effective January 1,
2006.  Pursuant to the terms of the agreement, Mr. McNeil is to be
paid an annual salary of $108,000 in consideration of which Mr. McNeil agreed to
act as the Company’s President and Chief Executive Officer On December 31, 2005,
Mr. McNeil received a one time bonus of $36,000 upon execution of the
agreement.  Mr. McNeil is also eligible for discretionary bonus to be
determined based on factors considered relevant by the Company’s board of
directors, and may be granted, subject to the approval of the board of
directors, incentive stock options to purchase shares of the Company’s common
stock in such amounts and at such times as the board of directors, in its
absolute discretion, may from time to time determine.  The term of the
agreement is for an indefinite period, unless otherwise terminated pursuant to
the terms of the agreement.  In the event that the agreement is
terminated by the Company other than for cause, the Company will provide Mr.
McNeil with six months written notice or payment equal to six months of his
monthly remuneration.
 
 Carl
S. Ager, Treasurer and Secretary. The Company entered into an employment
agreement with Carl S. Ager effective January 1, 2006.  Pursuant to
the terms of the agreement, Mr. Ager is to be paid an annual salary of $80,000
in consideration of which Mr. Ager agreed to act as the Company’s Treasurer and
Secretary.  On December 31, 2005, Mr. Ager received a one time bonus
of $26,666 on execution of the agreement. Mr. Ager is also eligible for
discretionary bonus to be determined based on factors considered relevant by the
Company’s board of directors, and may be granted, subject to the approval of the
board of directors, incentive stock options to purchase shares of the Company’s
common stock in such amounts and at such times as the board of directors, in its
absolute discretion, may from time to time determine.  The term of the
agreement is for an indefinite period, unless otherwise terminated pursuant to
the terms of the agreement.  In the event that the agreement is
terminated by the Company other than for cause, the Company will provide Mr.
Ager with six months written notice or payment equal to six months of his
monthly remuneration.
 23
 
 SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES
TO FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 8.
                    COMMITMENTS AND
      CONTINGENCIES
(continued)
 
 Melvin
L. Williams, Chief Financial Officer.  The Company entered into an
employment agreement with Melvin L. Williams effective June 14,
2006.  Pursuant to the terms of the agreement, Mr. Williams is to be
paid an annual salary of $60,000 based on 300-400 hours worked and bonus
consisting of 50,000 restricted shares of the Company’s common stock and 100,000
options to purchase additional shares of common stock at a price of $2.06 per
share exercisable for a period of five years until June 14, 2011, with the
options vesting 50% on the first anniversary of the execution of the agreement,
in consideration of which Mr. Williams agreed to act as the Company’s Chief
Financial Officer.  Mr. Williams is also eligible for discretionary
bonus to be determined based on factors considered relevant by the Company’s
board of directors, and may be granted, subject to the approval of the board of
directors, incentive stock options to purchase shares of the Company’s common
stock in such amounts and at such times as the board of directors, in its
absolute discretion, may from time to time determine.  The term of the
agreement is for an indefinite period, unless otherwise terminated pursuant to
the terms of the agreement.  In the event that the agreement is
terminated by the Company other than for cause, the Company will provide Mr.
Williams with thirty days written notice or payment equal to three months of his
monthly remuneration.
 
  9.   RESTATEMENT
  Searchlight Mining
Claims – Mineral properties have been restated to reflect payment made by
issuance of 1,400,000 shares at $0.35 on July 7, 2005 and 1,400,000 shares at
$2.20 on July 27, 2006 at the market values on the dates of
issuance.  This restatement had the impact of increasing the mineral
properties and additional paid-in capital, mineral properties also increased for
deferred income tax liability assumed. Changes in amounts are reflected in
tabular format as noted below.
 
 Joint venture agreement– The warrants issued in connection with the assignment of the original
Slag Project option have been restated to reflect the recomputation of the value
of the 12,000,000 warrants issued as consideration for the option to acquire a
mineral interest in the Slag Project of $1,918,481, (including related deferred
tax liability assumed of $608,277) which was computed based on private placement
stock price at the time the warrants were issued. The original terms of the
underlying option agreement were unchanged and this adjustment had no effect on
the agreement.
 
 Discontinued
operations – The statement of operations for the period from January 14,
2000 (date of inception) through September 30, 2006 has been restated to
reclassify net losses prior to January 1, 2005 as discontinued operations. On
February 10, 2005, the Company announced that it was reorganizing itself and
changing its focus from biotech to becoming a mineral exploration company,
dedicated to the discovery and exploration of gold and other precious metal
deposits. Activity between January 1 and February 10, 2005 consisted of minor
general and administrative expenses and foreign currency translation adjustment,
which has been included in loss from discontinued operations.
 
 The
statement of operations for the six months ended June 30, 2006, has been
restated to reclassify $11,769 of foreign currency translation adjustment
related to 2004 activity as general and administrative expense. The restatement
also reflects the income tax benefit of $280,614 and $561,228 for the three and
six months ended September 30, 2006, respectively.
 24
 
 SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES
TO FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 9.
                    RESTATEMENT
      (continued)
 
 The
following table summarizes the balance sheet of the Company as of September 30,
2006 and reconciles the reported amounts to the restated
amounts:
 
 Summarized
      Balance Sheet -September
      30, 2006
                                
                                As
      Reported
                                
                                
                                Adjustments
                                
                                
                                
                                
                                
                                As
      RestatedMineral
      properties
                                
                                $
                                127,134
                                
                                
                                $
                                5,304,156
                                
                                
                                
                                a
                                
                                
                                $
                                5,431,290Joint
      venture agreement
                                
                                
                                690,000
                                
                                
                                
                                1,918,481
                                
                                
                                
                                b
                                
                                
                                
                                2,608,481Total
      assets
                                
                                
                                5,736,663
                                
                                
                                
                                7,222,637
                                
                                
                                
                                a,b
                                
                                
                                
                                12,959,300Deferred
      tax liability
                                
                                
                                —
                                
                                
                                
                                1,140,946
                                
                                
                                
                                c
                                
                                
                                
                                1,140,946Total
      liabilities
                                
                                
                                1,191,492
                                
                                
                                
                                1,140,946
                                
                                
                                
                                c
                                
                                
                                
                                2,332,438Additional
      paid-in capital
                                
                                
                                12,890,833
                                
                                
                                
                                4,840,204
                                
                                
                                
                                a,b
                                
                                
                                
                                17,731,037Accumulated
      other comprehensive loss
                                
                                
                                (121,606
                                )
                                
                                
                                121,606
                                
                                
                                
                                d
                                
                                
                                
                                —Accumulated
      deficit during exploration stage
                                
                                
                                (8,291,287
                                )
                                
                                
                                1,119,881
                                
                                
                                
                                d,e
                                
                                
                                
                                (7,171,406
                                )Total
      stockholders' equity
                                
                                
                                4,545,171
                                
                                
                                
                                6,081,691
                                
                                
                                
                                
                                
                                
                                
                                10,626,862Total
      liabilities and stockholders' equity
                                
                                $
                                5,736,663
                                
                                
                                $
                                7,222,637
                                
                                
                                
                                
                                
                                
                                $
                                12,959,300
 
 The
following table summarizes the statement of operations for the nine months ended
September 30, 2006 and reconciles the reported amounts to the restated
amounts:
 
 Summarized
      Statement of Operations -For
      the nine months ended September 30, 2006
                                
                                As
      Reported
                                
                                
                                Adjustments
                                
                                
                                
                                
                                
                                As
      RestatedMineral
      exploration and evaluation expenses
                                
                                $
                                1,665,114
                                
                                
                                $
                                (371,250
                                )
                                
                                
                                f
                                
                                
                                $
                                1,293,864Mineral
      exploration and evaluation expenses –related
      party
                                
                                
                                —
                                
                                
                                
                                371,250
                                
                                
                                
                                f
                                
                                
                                
                                371,250General
      and administrative
                                
                                
                                886,156
                                
                                
                                
                                11,769
                                
                                
                                
                                g
                                
                                
                                
                                897,925Total
      operating expenses
                                
                                
                                2,555,887
                                
                                
                                
                                11,769
                                
                                
                                
                                g
                                
                                
                                
                                2,567,656Loss
      from operations
                                
                                
                                (2,555,887
                                )
                                
                                
                                (11,769
                                )
                                
                                
                                g
                                
                                
                                
                                (2,567,656
                                )Loss
      before income taxes
                                
                                
                                (2,536,179
                                )
                                
                                
                                (11,769
                                )
                                
                                
                                g
                                
                                
                                
                                (2,547,948
                                )Income
      tax benefit
                                
                                
                                —
                                
                                
                                
                                841,842
                                
                                
                                
                                e
                                
                                
                                
                                841,842Net
      loss
                                
                                
                                (2,536,179
                                )
                                
                                
                                830,073
                                
                                
                                
                                e,g
                                
                                
                                
                                (1,706,106
                                )Foreign
      currency translation adjustment
                                
                                $
                                (11,769
                                )
                                
                                $
                                11,769
                                
                                
                                
                                g
                                
                                
                                $
                                —
 25
 
 SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES
TO FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 9.
                    RESTATEMENT
      (continued)
 
 The
following table summarizes the statement of operations for the three months
ended September 30, 2006 and reconciles the reported amounts to the restated
amounts:
 
 Summarized
      Statement of Operations -For
      the three months ended September 30, 2006
                              
                              As
      Reported
                              
                              
                              Adjustments
                              
                              
                              
                              
                              
                              As
      RestatedMineral
      exploration and evaluation expenses
                              
                              $
                              642,226
                              
                              
                              $
                              (123,750
                              )
                              
                              
                              f
                              
                              
                              $
                              518,476Mineral
      exploration and evaluation expenses –related
      party
                              
                              
                              —
                              
                              
                              
                              123,750
                              
                              
                              
                              f
                              
                              
                              
                              123,750Total
      operating expenses
                              
                              
                              875,181
                              
                              
                              
                              —
                              
                              
                              
                              
                              
                              
                              
                              875,181Loss
      from operations
                              
                              
                              (875,181
                              )
                              
                              
                              —
                              
                              
                              
                              
                              
                              
                              
                              (875,181
                              )Loss
      before income taxes
                              
                              
                              (851,075
                              )
                              
                              
                              —
                              
                              
                              
                              
                              
                              
                              
                              (851,075
                              )Income
      tax benefit
                              
                              
                              —
                              
                              
                              
                              280,614
                              
                              
                              
                              e
                              
                              
                              
                              280,614Net
      loss
                              
                              $
                              (851,075
                              )
                              
                              $
                              280,614
                              
                              
                              
                              e
                              
                              
                              $
                              (570,461
                              )
 
 The
following table summarizes statement of operations for the period from January
14, 2000 (Date of Inception) through September 30, 2006, and reconciles the
reported amounts to the restated amounts:
 
 Summarized
      Statement of Operations -For
      the period from January 14, 2000 (Date of Inception)Through
      September 30, 2006
                              
                              As
      Reported
                              
                              
                              Adjustments
                              
                              
                              
                              
                              
                              As
      RestatedResearch
      and development
                              
                              $
                              1,900,095
                              
                              
                              $
                              (1,900,095
                              )
                              
                              
                              h
                              
                              
                              $
                              —Mineral
      exploration and evaluation expenses
                              
                              
                              2,552,137
                              
                              
                              
                              (371,250
                              )
                              
                              
                              f
                              
                              
                              
                              2,180,887Mineral
      exploration and evaluationexpenses
      - related party
                              
                              
                              —
                              
                              
                              
                              371,250
                              
                              
                              
                              f
                              
                              
                              
                              371,250General
      and administrative
                              
                              
                              3,353,084
                              
                              
                              
                              (1,621,355
                              )
                              
                              
                              i
                              
                              
                              
                              1,731,729Depreciation
                              
                              
                              240,741
                              
                              
                              
                              (235,174
                              )
                              
                              
                              j
                              
                              
                              
                              5,567Impairment
      loss on intangible assets
                              
                              
                              173,234
                              
                              
                              
                              (173,243
                              )
                              
                              
                              k
                              
                              
                              
                              —Impairment
      loss on property and equipment
                              
                              
                              86,683
                              
                              
                              
                              (86,683
                              )
                              
                              
                              l
                              
                              
                              
                              —Total
      operating expenses
                              
                              
                              8,305,974
                              
                              
                              
                              (4,016,541
                              )
                              
                              
                              m
                              
                              
                              
                              4,289,433Loss
      from operations
                              
                              
                              (8,305,974
                              )
                              
                              
                              4,016,541
                              
                              
                              
                              m
                              
                              
                              
                              (4,289,433
                              )Other
      income
                              
                              
                              282,142
                              
                              
                              
                              (282,142
                              )
                              
                              
                              n
                              
                              
                              
                              —Interest
      expense, net
                              
                              
                              (300,000
                              )
                              
                              
                              300,000
                              
                              
                              
                              o
                              
                              
                              
                              —Total
      other income (expense)
                              
                              
                              1,850
                              
                              
                              
                              17,858
                              
                              
                              
                              n,o
                              
                              
                              
                              19,708Loss
      before income taxes
                              
                              
                              (8,304,124
                              )
                              
                              
                              4,034,399
                              
                              
                              
                              
                              
                              
                              
                              (4,269,725
                              )Income
      tax benefit
                              
                              
                              12,837
                              
                              
                              
                              1,228,650
                              
                              
                              
                              e,p
                              
                              
                              
                              1,241,487Net
      loss
                              
                              
                              (8,291,287
                              )
                              
                              
                              1,119,881
                              
                              
                              
                              e,q
                              
                              
                              
                              (7,171,406
                              )Foreign
      currency translation adjustment
                              
                              
                              (121,606
                              )
                              
                              
                              121,606
                              
                              
                              
                              q
                              
                              
                              
                              —Loss
      from discontinued operations
                              
                              $
                              —
                              
                              
                              $
                              (4,143,168
                              )
                              
                              
                              r
                              
                              
                              $
                              (4,143,168
                              )
 
 The
restatements had no impact on the Company’s cash or cash flows.
 26
 
 SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES
TO FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 9.   RESTATEMENT
(continued)
 
 The
restatement adjustments are as follows:
 
 a.
                      Restate
      issuance of 1,400,000 shares to obtain mineral properties on July 7, 2005
      at the market value of $0.35 per share and 1,400,000 on July 27, 2006 at
      the market value of $2.20 per share on the date of
      issuance.  The resulting estimated future income tax liability
      associated with the temporary difference between the tax basis and
      acquisition value was applied to the mineral asset in the absence of there
      being a goodwill component associated with the
      transaction.
 b.
                      Restate
      issuance of warrants in 2005 in connection with the Clarkdale Slag Project
      option of $1,918,481 (comprising of related deferred tax liability assumed
      of $608,277 and an increase to stockholders’ equity of $1,310,204) which
      was computed based on private placement stock price at the time the
      warrants were issued.
 c.
                      Restate
      for computation of deferred tax liability assumed in mineral property
      acquisition.
 d.
                      Reclassify
      accumulated other comprehensive loss prior to 2005 from a biotechnology
      research and development business as discontinued
      operations.
 e.
                      Restate
      for deferred income tax benefit related to mineral property
      acquisitions.
 f.
                      Reclassify
      related party mineral exploration and evaluation
    expense.
 g.
                      Reclassify
      foreign currency translation adjustment from the period ended March 31,
      2006 as general and administrative
expense.
 h.
                      Reclassify
      research and development expense incurred prior to 2005 as discontinued
      operations.
 i.
                      Reclassify
      general and administrative expense incurred prior to 2005 as discontinued
      operations.
 j.
                      Reclassify
      depreciation expense incurred prior to 2005 as discontinued
      operations.
 k.
                      Reclassify
      impairment loss on intangible assets incurred prior to 2005 as
      discontinued operations.
 l.
                      Reclassify
      impairment loss on property and equipment incurred prior to 2005 as
      discontinued operations.
 m.
                      Reclassify
      operating expenses incurred prior to 2005 as discontinued
      operations.
 n.
                      Reclassify
      other income earned prior to 2005 as discontinued
      operations.
 o.
                      Reclassify
      interest expense incurred prior to 2005 as discontinued
      operations.
 p.
                      Reclassify
      income tax benefit prior to 2005 as discontinued
      operations.
 q.
                      Reclassify
      accumulated other comprehensive loss prior to 2005 from a biotechnology
      research and development business as discontinued
      operations.
 r.
                      Reclassify
      net losses prior to 2005 as discontinued
  operations.
  27




ITEM
2.               
MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.




FORWARD
LOOKING STATEMENTS




The
information in this discussion contains forward-looking
statements.  These forward-looking statements involve risks and
uncertainties, including statements regarding our capital needs, business
strategy and expectations. Any statements contained herein that are not
statements of historical facts may be deemed to be forward-looking statements.
In some cases, you can identify forward-looking statements by terminology such
as “may,” “will,” “should,” “expect,” “plan,” “intend,” “anticipate,” “believe,”
“estimate,” “predict,” “potential,” or “continue,” the negative of such terms or
other comparable terminology.  These statements reflect the current
views of management with respect to future events and are subject to risks,
uncertainties and other factors that may cause our actual results, performance
or achievements, or industry results, to be materially different from those
described in the forward-looking statements.  Such risks and
uncertainties include those set forth under the caption “Management’s Discussion
and Analysis or Plan of Operation” and elsewhere in this Quarterly Report. In
evaluating these statements, you should consider various factors, including the
risks discussed below, and, from time to time, in other reports we file with the
United States Securities and Exchange Commission (the “SEC”).  As used
in this Quarterly Report on Form 10-Q/A, the terms “we,” “us,” “our,”
“Searchlight” and the “Company” mean Searchlight Minerals Corp. unless otherwise
indicated. All dollar amounts in this Quarterly Report are in U.S. dollars
unless otherwise stated.




INTRODUCTION




We are an
exploration stage company engaged in the acquisition and exploration of mineral
properties. We have entered into mineral option agreements to acquire 20 mineral
claims (the “Searchlight Claims”) representing an area of 3,200 acres located in
Clark County, south of Searchlight, Nevada.  On October 24, 2005,
pursuant to a joint venture agreement (the “JV Agreement”) dated May 20, 2005
between Nanominerals Corp. and Verde River Iron Company, LLC, a Nevada limited
liability company (“Verde”), we received the option to acquire up to 50% of a
project involving the processing of a copper smelter slag pile located on a
parcel of land consisting of approximately 200 acres in Clarkdale, Arizona (the
“Clarkdale Slag Project”).  Upon completion of a drilling and sampling
program to determine if the project is feasible, we intend to re-process the
slag pile using an extraction process developed using industry standard
metallurgy.  We acquired our interest in the Clarkdale Slag Project
pursuant to an assignment agreement with Nanominerals Corp. dated for reference
June 1, 2005 (the “Assignment Agreement”), as amended August 31, 2005 and
October 24, 2005, pursuant to which Nanominerals assigned all of its interest in
the JV Agreement to us.




We have
not earned any revenues to date and do not anticipate earning revenues until
such time as we enter into commercial production of our mineral
properties.  Our current plan of operation is to conduct mineral
exploration activities on the Searchlight Claims in order to assess whether they
possess mineral reserves capable of commercial extraction, and drilling and
sampling activities on the Clarkdale Slag Project site in order to assess
whether the slag possesses a mineral inventory capable of commercial
extraction.  The agreements pursuant to which we acquired our
interests in the Searchlight Claims and Clarkdale Slag Project provide that we
must make a series of cash payments over certain time periods, expend certain
minimum amounts on the exploration of the properties, or contribute our share of
ongoing expenditures.  If we fail to make such payments or
expenditures in a timely fashion, we may lose our interest in those
properties.




RESTATEMENT




On
November 8, 2007, the management concluded that the unaudited interim financial
statements for the period ending September 30, 2006 needed to be restated and
should not be relied upon.  The financial statements were restated for
the following:




Searchlight Mining
Claims – Mineral properties have been restated to reflect payment made by
issuance of 1,400,000 shares at $0.35 on July 7, 2005 at the market values on
the date of issuance.  This restatement had the impact of increasing
the mineral properties and additional paid-in capital, mineral properties also
increased for deferred income tax liability assumed.





28


Joint venture agreement– The warrants issued in connection with the assignment of the original
Slag Project option have been restated to reflect the recomputation of the value
of the 12,000,000 warrants issued as consideration for the option to acquire a
mineral interest in the Slag Project of $1,918,481, (including related deferred
tax liability assumed of $608,277) which was computed based on private placement
stock price at the time the warrants were issued.  The original terms
of the underlying option agreement were unchanged and this adjustment had no
effect on the agreement.




RECENT
CORPORATE DEVELOPMENTS




We
experienced the following significant corporate developments since the
completion of our last fiscal quarter ended June 30, 2006:




1.
            On
      September 20, 2006, we received Chain of Custody (COC) analysis results
      from twelve drill holes and a 750-pound bulk sample taken from the slag
      pile located on our Clarkdale Slag Project property in Clarkdale,
      Arizona.  The results from the analysis of the drill holes are
      summarized below, see “Current Status of Exploration of Clarkdale Slag
      Project”.




2.
            On
      September 8, 2006, our board of directors approved certain amendments to
      our Code of Ethics, primarily relating to updating the Code of Ethics,
      expanding on permitted relationships between board members and third
      parties, and clarifying ethics obligations of the Company and the board in
      public reporting, corporate opportunities and
  gifts.




3.
            Also
      on September 8, 2006, we adopted a revised audit committee charter and a
      whistle blower policy.  The purpose of the amendment to the
      audit committee charter is to expand on the role of the audit committee’s
      relationship with external auditors and the primary committee
      responsibilities.  The purpose of the whistle blower policy is
      to encourage all employees to disclose any wrongdoing that may adversely
      impact us, our customers, shareholders, employees, investors, or the
      public at large.  The policy also sets forth (i) an
      investigative process of reported acts of wrongdoing and retaliation and
      (ii) procedures for reporting questionable auditing, accounting and
      internal control matters from employees on a confidential and anonymous
      basis and from other interested third
parties.




4.
            In
      September, 2006, Mr. K. Ian Matheson, a member of our board of directors,
      terminated his monthly $3,500 management fee. Prior to September, 2006 in
      connection with our corporate restructuring in fiscal 2005, we agreed to
      pay a management fee of $3,500 per month to Pass Minerals Inc., a company
      controlled by Mr. Matheson, for management services provided by Mr.
      Matheson respecting the reorganization of Searchlight and the development
      of assaying and testing procedures for the Searchlight
    Claims.




5.
            On
      July 27, 2006, we issued 1,400,000 shares pursuant to our mineral option
      agreements with the owners of the Searchlight Claims.  The
      issuance was completed pursuant to Section 4(2) of the Securities
      Act.  As of the date of this Quarterly Report, we have issued
      2,800,000 of the 5,600,000 shares of our common stock required to complete
      our acquisition of the Searchlight
Claims.




Current
Status of Exploration of Searchlight Claims




Our
current plan of operation is to conduct mineral exploration activities on the
Searchlight Claims in order to assess whether they possess mineral reserves
capable of commercial extraction.  We filed a surety bond in the
amount of approximately $180,500 for Phase 1 and Phase 2 of our work program
with the Bureau of Land Management (“BLM”), and have commenced the two phase
exploration program approved in connection with the terms of our reclamation
permit.




29




The
initial work program (Phase 1) for the Searchlight Claims is focused on analysis
of surface samples to determine the best method to extract precious metals from
this material for the drill program.  Extraction tests on several
Chain-of-Custody (COC) surface sampling is currently in progress by Arrakis,
Inc. (“Arrakis”).  We have completed the initial “clave” testing,
which is designed to help improve the metallurgical process and recovery of
precious metals.  We are planning to optimize this process through
additional “optimization” clave tests.  We are currently awaiting the
test results from Arrakis which are expected to be received during our next
fiscal quarter.  After this work is completed, an 18-hole drill
program will be undertaken by independent engineers to determine the tonnage and
extractable grades from the property.




Should
these results prove favorable, then Phase 2, which will consist of infill
drilling, bulk sampling and pilot leach tests to determine the commercial
feasibility of the project, is expected to commence although there can be no
assurances.  The scope and cost of Phase 2 will be determined after
Phase 1 is complete.




Current
Status of Exploration of Clarkdale Slag Project




Our
current plan of operation is to continue to conduct drilling and sampling
activities on the slag pile located on the Clarkdale Slag Project site in order
to assess whether the slag possesses mineralized material capable of commercial
extraction.  Pursuant to our 2006 exploration program, drilling
commenced on our Clarkdale Slag Project under chain-of-custody (“COC”) sampling
by Mountain States R&D International Inc. (“MSRDI”).  To date, we
have drilled a total of 18 holes (SD1-18), comprising more than 1,700 feet, in
the slag pile all under the supervision of MSRDI and adhered to
COC.  These holes were drilled as part of a minerals study being
conducted by MSRDI on our behalf.  Sample preparation and analysis
were performed under MSRDI’s COC sampling.  During our fiscal quarter
ended September 30, 2006, we received COC analysis results from eighteen drill
holes and a 750-pound bulk sample taken from the slag pile located on our
Clarkdale Slag Project.  The following composite drill results and
bulk sample analysis were reported to us by MSRDI:




30




Summary
of Results




Results
                  
                  Gold
                    Au
(opt)*
                  
                  
                  Silver
                    Ag
(opt)*
                  
                  
                  Copper
                    Cu (%)
                  
                  
                  Zinc
                    Zn (%)
                  
                  
                  Iron
                    Fe (%)1.
      18 Drill Hole Average
                  
                  
                  0.46
                  
                  
                  
                  0.13
                  
                  
                  
                  0.37
                  
                  
                  
                  2.47
                  
                  
                  
                  33.12.
      750-pound Bulk Sample Average
                  
                  
                  0.42
                  
                  
                  
                  0.06
                  
                  
                  
                  0.35
                  
                  
                  
                  2.88
                  
                  
                  
                  31.0




1.
Drill Hole Results




Drill
    Hole
                    
                    Composite
                      Footage
                    
                    
                    Gold
                      Au
(opt)*
                    
                    
                    Silver
                      Ag
(opt)*
                    
                    
                    Copper
                      Cu (%)
                    
                    
                    Zinc
                      Zn (%)
                    
                    
                    Iron
                      Fe (%)SD1
                    
                    
                    0.0
      – 55.0
                    
                    
                    
                    0.210
                    
                    
                    
                    —
                    
                    
                    
                    0.70
                    
                    
                    
                    2.10
                    
                    
                    
                    32.1SD2
                    
                    
                    0.0
      – 60.0
                    
                    
                    
                    0.213
                    
                    
                    
                    —
                    
                    
                    
                    0.73
                    
                    
                    
                    2.13
                    
                    
                    
                    34.6SD3
                    
                    
                    0.0
      – 109.0
                    
                    
                    
                    0.228
                    
                    
                    
                    —
                    
                    
                    
                    0.37
                    
                    
                    
                    2.99
                    
                    
                    
                    33.4SD4
                    
                    
                    0.0
      – 80.0
                    
                    
                    
                    0.190
                    
                    
                    
                    —
                    
                    
                    
                    0.39
                    
                    
                    
                    3.29
                    
                    
                    
                    32.3SD5
                    
                    
                    0.0
      – 89.0
                    
                    
                    
                    0.229
                    
                    
                    
                    —
                    
                    
                    
                    0.39
                    
                    
                    
                    2.29
                    
                    
                    
                    30.2SD6
                    
                    
                    0.0
      – 50.0
                    
                    
                    
                    0.216
                    
                    
                    
                    —
                    
                    
                    
                    0.36
                    
                    
                    
                    3.04
                    
                    
                    
                    32.5SD7
                    
                    
                    0.0
      – 111.5
                    
                    
                    
                    0.667
                    
                    
                    
                    0.249
                    
                    
                    
                    0.26
                    
                    
                    
                    3.10
                    
                    
                    
                    36.2SD8
                    
                    
                    0.0
      – 117.5
                    
                    
                    
                    0.716
                    
                    
                    
                    0.140
                    
                    
                    
                    0.29
                    
                    
                    
                    2.79
                    
                    
                    
                    33.3SD9
                    
                    
                    0.0
      – 114.0
                    
                    
                    
                    0.633
                    
                    
                    
                    0.153
                    
                    
                    
                    0.34
                    
                    
                    
                    2.43
                    
                    
                    
                    32.7SD10
                    
                    
                    0.0
      – 112.5
                    
                    
                    
                    0.669
                    
                    
                    
                    0.110
                    
                    
                    
                    0.32
                    
                    
                    
                    2.57
                    
                    
                    
                    33.5SD11
                    
                    
                    0.0
      – 131.0
                    
                    
                    
                    0.571
                    
                    
                    
                    0.127
                    
                    
                    
                    0.32
                    
                    
                    
                    2.18
                    
                    
                    
                    33.4SD12
                    
                    
                    0.0
      – 89.0
                    
                    
                    
                    0.428
                    
                    
                    
                    0.109
                    
                    
                    
                    0.31
                    
                    
                    
                    1.99
                    
                    
                    
                    32.1SD13
                    
                    
                    0.0
      – 127.5
                    
                    
                    
                    0.590
                    
                    
                    
                    0.114
                    
                    
                    
                    0.39
                    
                    
                    
                    2.86
                    
                    
                    
                    33.3SD14
                    
                    
                    0.0
      – 107.5
                    
                    
                    
                    0.538
                    
                    
                    
                    0.139
                    
                    
                    
                    0.36
                    
                    
                    
                    2.14
                    
                    
                    
                    33.0SD15
                    
                    
                    0.0
      – 89.0
                    
                    
                    
                    0.483
                    
                    
                    
                    0.143
                    
                    
                    
                    0.33
                    
                    
                    
                    1.96
                    
                    
                    
                    32.8SD16
                    
                    
                    0.0
      – 118.0
                    
                    
                    
                    0.633
                    
                    
                    
                    0.125
                    
                    
                    
                    0.31
                    
                    
                    
                    2.49
                    
                    
                    
                    34.8SD17
                    
                    
                    0.0
      – 116.0
                    
                    
                    
                    0.657
                    
                    
                    
                    0.116
                    
                    
                    
                    0.30
                    
                    
                    
                    2.36
                    
                    
                    
                    35.0SD18
                    
                    
                    0.0
      – 36.0
                    
                    
                    
                    0.390
                    
                    
                    
                    0.070
                    
                    
                    
                    0.22
                    
                    
                    
                    1.70
                    
                    
                    
                    31.3Average
                    
                    
                    
                    
                    
                    
                    0.46
                    
                    
                    
                    0.13
                    
                    
                    
                    0.37
                    
                    
                    
                    2.47
                    
                    
                    
                    33.1* opt (ounces per
      ton)




MSRDI
performed the copper, zinc, and iron analysis using the fusion assay method,
followed by atomic absorption.  Gold and silver analysis was performed
by Arrakis, under COC of MSRDI, using an acid total digestion method followed by
atomic absorption.




31




2.
Surface Bulk Sample Results




Sample
                      
                      Composite
                        Detail
                      
                      Gold
                        Au (opt)
                      
                      
                      Silver
                        Ag (opt)
                      
                      
                      Copper
                        Cu (%)
                      
                      
                      Zinc
                        Zn (%)
                      
                      
                      Iron
                        Fe (%)SS1B-1
                      
                      Surface
      Bulk Sample
                      
                      
                      0.361
                      
                      
                      
                      0.285
                      
                      
                      
                      0.36
                      
                      
                      
                      3.00
                      
                      
                      
                      33.8SS1B-2
                      
                      Surface
      Bulk Sample
                      
                      
                      0.422
                      
                      
                      ND*
                      
                      
                      
                      0.35
                      
                      
                      
                      2.80
                      
                      
                      
                      30.4SS1B-3
                      
                      Surface
      Bulk Sample
                      
                      
                      0.428
                      
                      
                      ND*
                      
                      
                      
                      0.33
                      
                      
                      
                      2.90
                      
                      
                      
                      30.4SS1B-4
                      
                      Surface
      Bulk Sample
                      
                      
                      0.444
                      
                      
                      ND*
                      
                      
                      
                      0.36
                      
                      
                      
                      2.80
                      
                      
                      
                      29.8SS1B-5
                      
                      Surface
      Bulk Sample
                      
                      
                      0.434
                      
                      
                      ND*
                      
                      
                      
                      0.34
                      
                      
                      
                      2.90
                      
                      
                      
                      30.6Average
                      
                      
                      
                      
                      0.42
                      
                      
                      
                      0.06
                      
                      
                      
                      0.35
                      
                      
                      
                      2.88
                      
                      
                      
                      31.0* ND (None
      Detected)




Under
COC, MSRDI collected a 4,000-pound bulk sample comprised of material taken over
the entire surface of the 45-acre slag pile.  MSRDI milled 750 pounds
of this material through our pilot plant located in Phoenix, Arizona, and
subsequently performed the copper, zinc, and iron analysis using the fusion
assay method, followed by atomic absorption.  Gold and silver analysis
of the bulk sample was also performed by MSRDI using the fire assay method
followed by atomic absorption.




We have
retained Dr. Richard F. Hewlett as the Project Manager for our Clarkdale Slag
Project.  Under the guidance of Dr. Hewlett, the Company contracted
MSRDI of Tucson, AZ, to execute a Minerals Study. MSRDI, under the direction of
its president, Dr. Roshan Bhappu, PE, has guided the Minerals Study, which will
include the processing of additional bulk samples to finalize grade and
tonnage.  As part of our Minerals Study (Phase 1), we received COC
results from all 18 drill holes and we are awaiting verification of the grade
and tonnage of precious and base metals present in the Clarkdale Slag Project
property.  If we receive favorable results from the Phase 1 work,
although there can be no assurances, subject to our geologist’s recommendation,
our plan of operation is to proceed with Phase 2, which will include additional
metallurgical tests and a test module.




Upon
receipt of favorable results of our Phase 1 work program, we intend to commence
the Bankable Feasibility Study (Phase 2), which is expected to include
additional metallurgical tests and a test module.  We have commenced
assembling this test module ‘pilot plant’ in Phoenix, Arizona, which is designed
to establish the metals processing and recovery circuit that is expected to be
incorporated into a commercial-scale facility at Clarkdale next
year.  Once this work is completed, construction and start up (Phase
3) is estimated to take one year.




32




Preliminary
capital costs for the Clarkdale Slag Project are estimated as
follows:




PHASE
                                  
                                  DESCRIPTION
                                  
                                  CAPITAL COSTS
                                    ($)Phase 1
                                  
                                  Property
      Payments
                                  
                                  $
                                  500,000Minerals
      Study
                                  
                                  $
                                  500,000Phase 2
                                  
                                  Bankable
      Feasibility Study
                                  
                                  $
                                  3,000,000Phase 3
                                  
                                  Construction
      & Start UpPlant
      Construction & Related Costs
                                  
                                  $
                                  15,200,000Property
      Payments
                                  
                                  $
                                  6,500,000Working
      Capital
                                  
                                  $
                                  5,300,000Total Capital
      Costs
                                  
                                  $
                                  31,000,000




PLAN
OF OPERATION




The
following discussion and analysis summarizes our plan of operation for the next
twelve months, our results of operations for the nine months ended September 30,
2006 and changes in our financial condition from our year ended December 31,
2005.  The following discussion should be read in conjunction with the
Management’s Discussion and Analysis or Plan of Operation included in our Annual
Report on Form 10-KSB for the year ended December 31, 2005.




Our
current plan of operation is to continue to conduct mineral exploration
activities on the Searchlight Claims, and drilling and sampling activities for
the Clarkdale Slag Project to assess whether the slag possesses a mineral
inventory capable of commercial extraction.  The agreements pursuant
to which we acquired our interests in the Searchlight Claims and Clarkdale Slag
Project provide that we must make a series of cash payments over certain time
periods, expend certain minimum amounts on the exploration of the properties, or
contribute our share of ongoing expenditures.  If we fail to make such
payments or expenditures in a timely fashion, we may lose our interests in those
properties.  The current status of our exploration program on the
Searchlight Claims and the Clarkdale Slag Project are summarized above under the
headings “Current Status of Exploration of Searchlight Claims” and “Current
Status of Exploration of Clarkdale Slag Project”.




Cash
Requirements




Our
estimated expenses for the next twelve months are as follows:




EXPENSE
                                        
                                        
                                        COST ($)Administrative
      Expenses
                                        
                                        
                                        
                                        
                                        $
                                        200,000Legal and Accounting
      Expenses
                                        
                                        
                                        
                                        
                                        $
                                        100,000Consulting
      Services
                                        
                                        
                                        
                                        
                                        $
                                        100,000Clarkdale Slag
      Project- Property Payments
                                        
                                        $
                                        500,000- Mineral Inventory Study
                                        
                                        $
                                        500,000- OPCO Payment/Feasibility
    Study
                                        
                                        $
                                        3,000,000Total Clarkdale Slag
      Project
                                        
                                        
                                        
                                        
                                        
                                        $
                                        4,000,000Searchlight Gold
      Project- Sampling and Testing
                                        
                                        $
                                        100,000- Drill Program
                                        
                                        $
                                        550,000Total Searchlight Gold
      Project
                                        
                                        
                                        
                                        
                                        
                                        $
                                        650,000Total Amounts Spent to
      date
                                        
                                        
                                        
                                        
                                        
                                        $
                                        (1,100,000
                                        )TOTAL
                                        
                                        
                                        
                                        
                                        
                                        $
                                        3,950,000




33




We
recorded a net loss before income taxes of $2,547,948 for the nine months ended
September 30, 2006 and have an accumulated deficit of $7,171,406 since
inception.  As at the date of this Quarterly Report, we had cash of
approximately $4,680,000 and for the next twelve months, management anticipates
that the minimum cash requirements to fund our proposed exploration program and
our continued operations will be $3,950,000.  Accordingly, we have
sufficient funds to meet our planned expenditures over the next twelve
months.




RESULTS
OF OPERATIONS




Third
Quarter and Nine Month Summary




Third Quarter Ended September 30
                                                    
                                                    
                                                    Nine Months Ended September 30Percentage
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    Percentage2006
                                                    
                                                    
                                                    2005
                                                    
                                                    
                                                    Increase /
                                                    
                                                    
                                                    2006
                                                    
                                                    
                                                    2005
                                                    
                                                    
                                                    Increase /(restated)
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    (Decrease)
                                                    
                                                    
                                                    (restated)
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    (Decrease)Revenue
                                                    
                                                    $
                                                    —
                                                    
                                                    
                                                    $
                                                    —
                                                    
                                                    
                                                    
                                                    N/A
                                                    
                                                    
                                                    $
                                                    —
                                                    
                                                    
                                                    $
                                                    —
                                                    
                                                    
                                                    
                                                    N/AOperating
      Expenses
                                                    
                                                    
                                                    875,181
                                                    
                                                    
                                                    
                                                    439,277
                                                    
                                                    
                                                    
                                                    99.2
                                                    %
                                                    
                                                    
                                                    2,567,656
                                                    
                                                    
                                                    
                                                    699,031
                                                    
                                                    
                                                    
                                                    267.3
                                                    %Other
      Income (Expense)
                                                    
                                                    
                                                    24,106
                                                    
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    n/a
                                                    
                                                    
                                                    
                                                    19,708
                                                    
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    n/aIncome
      Tax Benefit
                                                    
                                                    
                                                    280,614
                                                    
                                                    
                                                    
                                                    199,823
                                                    
                                                    
                                                    
                                                    40.4
                                                    %
                                                    
                                                    
                                                    841,842
                                                    
                                                    
                                                    
                                                    199,823
                                                    
                                                    
                                                    
                                                    321.3
                                                    %Gain
      from Discontinued Operations
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    6,432
                                                    
                                                    
                                                    
                                                    (100.0
                                                    )%
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    91,543
                                                    
                                                    
                                                    
                                                    (100.0
                                                    )%Net
      Loss
                                                    
                                                    $
                                                    (570,461
                                                    )
                                                    
                                                    $
                                                    (233,022
                                                    )
                                                    
                                                    
                                                    93.7
                                                    %
                                                    
                                                    $
                                                    (1,706,106
                                                    )
                                                    
                                                    $
                                                    (407,665
                                                    )
                                                    
                                                    
                                                    318.5
                                                    %




Revenue




We are
presently in the exploration stage of our business, have not earned any revenues
to date, and do not anticipate earning revenues until such time as we enter into
commercial production of the Clarkdale Slag Project, the Searchlight Claims or
other mineral properties we may acquire from time to time.




Operating
Expenses




Our
operating expenses for the quarters ended September 30, 2006 and September 30,
2005 are outlined in the table below:




Third Quarter Ended September 30
                                  
                                  
                                  Nine Months Ended September 30Percentage
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  Percentage2006
                                  
                                  
                                  2005
                                  
                                  
                                  Increase /
                                  
                                  
                                  2006
                                  
                                  
                                  2005
                                  
                                  
                                  Increase /(restated)
                                  
                                  
                                  
                                  
                                  
                                  (Decrease)
                                  
                                  
                                  (restated)
                                  
                                  
                                  
                                  
                                  
                                  (Decrease)Mineral
      exploration and evaluation expenses
                                  
                                  $
                                  518,476
                                  
                                  
                                  $
                                  275,563
                                  
                                  
                                  
                                  88.2
                                  %
                                  
                                  $
                                  1,293,864
                                  
                                  
                                  $
                                  338,453
                                  
                                  
                                  
                                  282.3
                                  %Mineral
      exploration and evaluation expenses – related party
                                  
                                  
                                  123,750
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  n/a
                                  
                                  
                                  
                                  371,250
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  n/aGeneral and 
      administrative
                                  
                                  
                                  231,304
                                  
                                  
                                  
                                  163,575
                                  
                                  
                                  
                                  41.4
                                  %
                                  
                                  
                                  897,925
                                  
                                  
                                  
                                  360,439
                                  
                                  
                                  
                                  149.1
                                  %Depreciation
                                  
                                  
                                  1,651
                                  
                                  
                                  
                                  139
                                  
                                  
                                  
                                  1,087
                                  %
                                  
                                  
                                  4,617
                                  
                                  
                                  
                                  139
                                  
                                  
                                  
                                  3,221.5
                                  %Total
      Expenses
                                  
                                  $
                                  875,181
                                  
                                  
                                  $
                                  439,277
                                  
                                  
                                  
                                  99.2
                                  %
                                  
                                  $
                                  2,567,656
                                  
                                  
                                  $
                                  1,019,902
                                  
                                  
                                  
                                  151.2
                                  %




Operating
expenses for the nine months ended September 30, 2006 increased by 151.2% as
compared to the comparative period in 2005 largely due to: (i) increased mineral
exploration expenses in connection with the acquisition of our interest in the
Clarkdale Slag Project and Searchlight Claims and associated increases in our
mineral exploration activities, and (ii) increased general and administrative
expenses due to professional fees associated with the completion of our private
placements, the preparation of our registration statement on Form SB-2 and
compliance with our reporting obligations under the Exchange
Act.




34




Liquidity
and Financial Condition




Working CapitalPercentageAt September 30, 2006
                            
                            
                            At December 31, 2005
                            
                            
                            Increase / (Decrease)(restated)Current
      Assets
                            
                            $
                            4,707,617
                            
                            
                            $
                            705,856
                            
                            
                            
                            566.9
                            %Current
      Liabilities
                            
                            
                            (1,191,492
                            )
                            
                            
                            (1,178,123
                            )
                            
                            
                            1.13
                            %Working
      Capital (Deficit)
                            
                            $
                            3,516,125
                            
                            
                            $
                            (472,267
                            )
                            
                            
                            644.5
                            %





Cash FlowsNine Months Ended
                            
                            
                            Nine Months EndedSeptember 30, 2006
                            
                            
                            September 30, 2005(restated)Cash
      Flows used in Operating Activities
                            
                            $
                            (2,249,536
                            )
                            
                            $
                            (539,722
                            )Cash
      Flows used in Investing Activities
                            
                            $
                            (25,291
                            )
                            
                            $
                            (793,219
                            )Cash
      Flows provided by Financing Activities
                            
                            $
                            6,256,376
                            
                            
                            $
                            2,705,807Net
      Increase in Cash During Period
                            
                            $
                            3,981,549
                            
                            
                            $
                            1,372,866




The
increase in our working capital surplus of $3,516,125 as at September 30, 2006
as compared to a working capital deficit of $472,267 as at December 31, 2005 was
primarily due to the increase in cash flows from financing activities of
$6,256,376 from private placements of our securities completed during the nine
months ended September 30, 2006 and the exercise of 100% of the outstanding
warrants in June, 2006, issued in connection with private placements closed in
September, 2005.  In connection with the exercise of the warrants,
8.506 million of our shares of common stock were issued to the warrant
holders.




Future
Financings




Our
plan of operation calls for significant expenses in connection with the
exploration of the Searchlight Claims, and drilling and sampling activities on
the Clarkdale Slag Project which will require us to obtain additional
financing.  We recorded a net operating loss of $1,706,106 for the
nine months ended September 30, 2006 and have an accumulated deficit of
$7,171,406 since inception.  As at the date of this Quarterly Report,
we had cash of approximately $4,680,000 and for the next twelve months,
management anticipates that the minimum cash requirements to fund our proposed
exploration program and our continued operations will be
$3,950,000.  Accordingly, we have sufficient funds to meet our planned
expenditures over the next twelve months; however, in order to complete our
planned exploration activities and development of our mineral properties, we
will need to seek additional financing.




Obtaining
additional financing would be subject to a number of factors, including the
market prices for the mineral property and gold.  These factors may
make the timing, amount, terms or conditions of additional financing unavailable
to us. Since our inception, we have used our common stock to raise money for our
operations and for our property acquisitions.  We have not attained
profitable operations and are dependent upon obtaining financing to pursue our
plan of operation.  For these reasons, our independent auditors
believe that there exists a substantial doubt about our ability to continue as a
going concern.




OFF-BALANCE
SHEET ARRANGEMENTS




None.




CRITICAL
ACCOUNTING POLICIES




We have
identified certain accounting policies, described below, that are the most
important to the portrayal of our current financial condition and results of
operations.




35




Use
of Estimates




In
preparing the financial statements in conformity with accounting principles
generally accepted in the United States, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent liabilities at the date of the
financial statements and revenues and expenses during the reported
period.  Actual results could differ from these
estimates.




Property
and Equipment




Property
and equipment is stated at cost less accumulated
depreciation.  Depreciation is provided principally on the
straight-line method over the estimated useful lives of the assets, which are
generally 3 to 39 years.  The cost of repairs and maintenance is
charged to expense as incurred. Expenditures for property betterments and
renewals are capitalized.  Upon sale or other disposition of a
depreciable asset, cost and accumulated depreciation are removed from the
accounts and any gain or loss is reflected in other income
(expense).





We
periodically evaluate whether events and circumstances have occurred that may
warrant revision of the estimated useful lives of property and equipment or
whether the remaining balance of property and equipment should be evaluated for
possible impairment.  If events and circumstances warrant evaluation,
we use an estimate of the related undiscounted cash flows over the remaining
life of the property and equipment in measuring their
recoverability.




Mineral
Rights




We
capitalize acquisition and option costs of mineral property
rights.  The amount capitalized represents fair value of the mineral
rights acquired.




We
capitalize acquisition and option costs of mineral rights as tangible assets in
accordance with Emerging Issues Task Force abstract 04-02 (“EITF 04-02”),
“Whether Mineral Rights are Tangible or Intangible Assets and Related
Issues”.  Upon commencement of commercial production, the mineral
rights will be amortized using the unit-of-production method over the life of
the mineral rights.  If we do not continue with exploration after the
completion of the feasibility study, the mineral rights will be expensed at that
time.  We evaluate the carrying value of capitalized mining costs and
related property and equipment costs, to determine if these costs are in excess
of their recoverable amount whenever events or changes in circumstances indicate
that their carrying amounts may not be recoverable.  The periodic
evaluation of carrying value of capitalized costs and any related property and
equipment costs are based upon expected future cash flows and/or estimated
salvage value in accordance with Statement of Financial Accounting Standards
(SFAS) No. 144, “Accounting for Impairment or Disposal of Long-Lived
Assets.”




Exploration
costs




Mineral
exploration costs are expensed as incurred.




RISKS
AND UNCERTAINTIES




We
lack an operating history and have losses which we expect to continue into the
future. As a result, we may have to suspend or cease exploration activities and
if we do not obtain additional financing, our business will fail.




We
were incorporated in January 12, 1999 and since that time were engaged in the
business of biotechnology research and development.  In February,
2005, we changed our business to mineral exploration.  We have no
exploration history upon which an evaluation of our future success or failure
can be made. Our net loss since inception is $7,171,406.  Our ability
to achieve and maintain profitability and positive cash flow is dependent
upon:




-
              our
      ability to locate a profitable mineral property;
  and
  36
  -
              our
      ability to generate revenues.




Our
plan of operation calls for significant expenses in connection with the
exploration of the Searchlight Claims and drilling and sampling activities on
the Clarkdale Slag Project which will require us to obtain additional financing.
We recorded a net loss of $1,706,106 for the nine months ended September 30,
2006 and have an accumulated deficit of $7,171,406 as at September 30,
2006.  As at the date of this Quarterly Report, we had cash of
approximately $4,600,000 and for the next twelve months, management anticipates
that the minimum cash requirements to fund our proposed exploration program and
our continued operations will be $3,950,000.  Accordingly we do have
sufficient funds to meet our planned expenditures over the next twelve months,
however, we will need to seek additional financing to meet our planned
expenditures on the Clarkdale Slag Project.




Obtaining
additional financing would be subject to a number of factors, including the
market prices for the mineral property and base and precious
metals.  These factors may make the timing, amount, terms or
conditions of additional financing unavailable to us.  Since our
inception, we have used our common stock to raise money for our operations and
for our property acquisitions. W e have not attained profitable operations and
are dependent upon obtaining financing to pursue our plan of
operation.  For these reasons, our independent auditors believe there
exists a substantial doubt about our ability to continue as a going
concern.




Because
our management does not have formal training specific to the technicalities of
mineral exploration, there is a higher risk our business will fail.




Our
executive officers and directors do not have any formal training as geologists
or in the technical aspects of management of a mineral exploration
company.  Our management lacks technical training and experience with
exploring for, starting, and operating a mine.  With no direct
training or experience in these areas, our management may not be fully aware of
the specific requirements related to working within this
industry.  Our management's decisions and choices may not take into
account standard engineering or managerial approaches mineral exploration
companies commonly use.  Consequently, our operations, earnings, and
ultimate financial success could suffer irreparable harm due to management's
lack of experience in this industry.




Because
of the unique difficulties and uncertainties inherent in mineral exploration
ventures, we face a high risk of business failure.




You
should be aware of the difficulties normally encountered by new mineral
exploration companies and the high rate of failure of such
enterprises.  The likelihood of success must be considered in light of
the problems, expenses, difficulties, complications and delays encountered in
connection with the exploration of the mineral properties that we plan to
undertake.  These potential problems include, but are not limited to,
unanticipated problems relating to exploration, and additional costs and
expenses that may exceed current estimates.  The expenditures to be
made by us in the exploration of the mineral claim may not result in the
discovery of mineral deposits.  If funding is not available, we may be
forced to abandon our operations.




Because
we anticipate our operating expenses will increase prior to our earning
revenues, we may never achieve profitability.




Prior to
completion of our exploration stage, we anticipate that we will incur increased
operating expenses without realizing any revenues.  We therefore
expect to incur significant losses into the foreseeable future. We recognize
that if we are unable to generate significant revenues from the exploration of
the Searchlight Claims or the Clarkdale Slag Project, we will not be able to
earn profits or continue operations.  There is no history upon which
to base any assumption as to the likelihood that we will prove successful, and
we can provide no assurance that we will generate any revenues or ever achieve
profitability.  If we are unsuccessful in addressing these risks, our
business will most likely fail.




37




If
the price of base and precious metals declines, our financial condition and
ability to obtain future financings will be impaired.




The price
of base and precious metals is affected by numerous factors, all of which are
beyond our control. Factors that tend to cause the price of base and precious
metals to decrease include the following:




(a)
            Sales
      or leasing of base and precious metals by governments and central
      banks;(b)
            A
      low rate of inflation and a strong US dollar;(c)
            Speculative
      trading;(d)
            Decreased
      demand for base and precious metals in industrial, jewelry and investment
      uses;(e)
            High
      supply of base and precious metals from production, disinvestment, scrap
      and hedging;(f)
            Sales
      by base and precious metals producers and foreign transactions and other
      hedging transactions; and(g)
            Devaluing
      local currencies (relative to base and precious metals price in US
      dollars) leading to lower production costs and higher production in
      certain major base and precious metals producing
  regions.




Our
business is dependent on the price of base and precious metals.  We
have not undertaken hedging transactions in order to protect us from a decline
in the price of base and precious metals.  A decline in the price of
base and precious metals may also decrease our ability to obtain future
financings to fund our planned exploration programs.




Because
of the inherent dangers involved in mineral exploration, there is a risk that we
may incur liability or damages as we conduct our business.




The
search for valuable minerals involves numerous hazards.  As a result,
we may become subject to liability for such hazards, including pollution and
other hazards against which we cannot insure or against which we may elect not
to insure.  At the present time we have no coverage to insure against
these hazards. The payment of such liabilities may have a material adverse
effect on our financial position.




If
we are unable to achieve economic re-processing of minerals from our Clarkdale
Slag Project, then our financial condition and our revenues will be adversely
affected.




We are
currently undertaking drilling and sampling activities on the Clarkdale Slag
Project site in order to assess whether the slag possesses mineralized material
capable of commercial extraction.  Once the results from the drill
program are fully analyzed, we intend to undertake the next steps on the
project. These next steps may include more drilling, analytical work, and
testing of material on a larger scale (such as a test plant).  At such
time that we deem appropriate, a bankable feasibility study will be
undertaken.  There is no assurance that actual recoveries of base and
precious metals or other minerals re-processed from the slag pile will be
economically feasible.  If metal recoveries are less than projected,
then our metal sales will be less than anticipated and may not equal or exceed
the cost of mining and recovery in which case our operating results and
financial conditions will be adversely affected.




38




As
we undertake exploration of the Searchlight Claims, we will be subject to
compliance with government regulation that may increase the anticipated cost of
our exploration program.




There are
several governmental regulations that materially restrict mineral
exploration.  We are subject to the laws of the State of Nevada and
applicable federal laws as we carry out our exploration program on the
Searchlight Claims.  We are required to obtain work permits, post
bonds and perform remediation work for any physical disturbance to the land in
order to comply with these laws.  While our planned exploration
program budgets for regulatory compliance, there is a risk that new regulations
could increase our costs of doing business and prevent us from carrying out our
exploration program.




If
we become subject to increased environmental laws and regulation, our operating
expenses may increase.




Our
exploration operations are regulated by both US Federal and Nevada and Arizona
state environmental laws that relate to the protection of air and water quality,
hazardous waste management and mine reclamation.  These regulations
will impose operating costs on us.  If the regulatory environment for
our operations changes in a manner that increases costs of compliance and
reclamation, then our operating expenses would increase with the result that our
financial condition and operating results would be adversely
affected.




We
have no known mineral reserves and if we cannot find any, we will have to cease
operations.




We have
no mineral reserves. Mineral exploration is highly speculative.  It
involves many risks and is often non-productive. Even if we are able to find
mineral reserves on our property our production capability is subject to further
risks including:




-
                  Costs
      of bringing the property into production including exploration work,
      preparation of production feasibility studies, and construction of
      production facilities, all of which we have not budgeted
    for;-
                  Availability
      and costs of financing;-
                  Ongoing
      costs of production; and-
                  Environmental
      compliance regulations and
restraints.




The
marketability of any minerals acquired or discovered may be affected by numerous
factors which are beyond our control and which cannot be accurately predicted,
such as market fluctuations, the lack of milling facilities and processing
equipment near the Searchlight Claims, the success of our drilling and sampling
activities on the Clarkdale Slag Project and such other factors as government
regulations, including regulations relating to allowable production, exporting
of minerals, and environmental protection.  If we do not find a
mineral reserve or if we cannot explore the mineral reserve, either because we
do not have the money to do it or because it will not be economically feasible
to do it, we will have to cease operations.




As
we undertake exploration of our mineral claims, we will be subject to compliance
with government regulation that may increase the anticipated cost of our
exploration program.




There are
several governmental regulations that materially restrict mineral
exploration.  We are required to obtain work permits, post bonds and
perform remediation work for any physical disturbance to the land in order to
comply with these laws.  If we enter the production phase, the cost of
complying with permit and regulatory environment laws will be greater because
the impact on the project area is greater.  Permits and regulations
will control all aspects of the production program if the project continues to
that stage. Examples of regulatory requirements include:




(a)
                                Water
      discharge will have to meet drinking water standards;(b)
                                Dust
      generation will have to be minimal or otherwise
    re-mediated;




39




(c)
              Dumping
      of material on the surface will have to be re-contoured and re-vegetated
      with natural vegetation;(d)
              An
      assessment of all material to be left on the surface will need to be
      environmentally benign;(e)
              Ground
      water will have to be monitored for any potential
      contaminants;(f)
              The
      socio-economic impact of the project will have to be evaluated and if
      deemed negative, will have to be re-mediated; and(g)
              There
      will have to be an impact report of the work on the local fauna and flora
      including a study of potentially endangered
  species.




There is
a risk that new regulations could increase our costs of doing business and
prevent us from carrying out our exploration program.  We will also
have to sustain the cost of reclamation and environmental remediation for all
exploration work undertaken.  Both reclamation and environmental
remediation refer to putting disturbed ground back as close to its original
state as possible.  Other potential pollution or damage must be
cleaned-up and renewed along standard guidelines outlined in the usual
permits.  Reclamation is the process of bringing the land back to its
natural state after completion of exploration activities. Environmental
remediation refers to the physical activity of taking steps to remediate, or
remedy, any environmental damage caused.  The amount of these costs is
not known at this time as we do not know the extent of the exploration program
that will be undertaken beyond completion of the recommended work
program.  If remediation costs exceed our cash reserves we may be
unable to complete our exploration program and have to abandon our
operations.  See “Description of Business - Compliance with Government
Regulation”, below.




We
may conduct further offerings in the future in which case your shareholdings
will be diluted.




Since our
inception we have relied on such equity sales of our common stock to fund our
operations.  We may conduct further equity offerings in the future to
finance our current projects or to finance subsequent projects that we decide to
undertake.  If common stock is issued in return for additional funds,
the price per share could be lower than that paid by our current
stockholders.  We anticipate continuing to rely on equity sales of our
common stock in order to fund our business operations.  If we issue
additional stock, your percentage interest in us will be lower.  This
condition is often referred to as "dilution".  The result of this
could reduce the value of your stock.




Because
our stock is a penny stock, stockholders will be more limited in their ability
to sell their stock.




Our
common stock is considered to be a “penny stock” since it does not qualify for
one of the exemptions from the definition of “penny stock” under Section 3a51-1
of the Securities Exchange Act for 1934 (the “Exchange Act”).  Our
common stock is a “penny stock” because it meets one or more of the following
conditions (i) the stock trades at a price less than $5.00 per share; (ii) it is
not traded on a “recognized” national exchange; (iii) it is not quoted on the
Nasdaq Stock Market, or even if so, has a price less than $5.00 per share; or
(iv) is issued by a company that has been in business less than three years with
net tangible assets less than $5 million.




40


The
principal result or effect of being designated a “penny stock” is that
securities broker-dealers participating in sales of our common stock will be
subject to the “penny stock” regulations set forth in Rules 15-2 through 15g-9
promulgated under the Exchange Act.  For example, Rule 15g-2 requires
broker-dealers dealing in penny stocks to provide potential investors with a
document disclosing the risks of penny stocks and to obtain a manually signed
and dated written receipt of the document at least two business days before
effecting any transaction in a penny stock for the investor's
account.  Moreover, Rule 15g-9 requires broker-dealers in penny stocks
to approve the account of any investor for transactions in such stocks before
selling any penny stock to that investor.  This procedure requires the
broker-dealer to (i) obtain from the investor information concerning his or her
financial situation, investment experience and investment objectives; (ii)
reasonably determine, based on that information, that transactions in penny
stocks are suitable for the investor and that the investor has sufficient
knowledge and experience as to be reasonably capable of evaluating the risks of
penny stock transactions; (iii) provide the investor with a written statement
setting forth the basis on which the broker-dealer made the determination in
(ii) above; and (iv) receive a signed and dated copy of such statement from the
investor, confirming that it accurately reflects the investor's financial
situation, investment experience and investment
objectives.  Compliance with these requirements may make it more
difficult and time consuming for holders of our common stock to resell their
shares to third parties or to otherwise dispose of them in the market or
otherwise.




ITEM
3.               
CONTROLS AND PROCEDURES.





NOTE:
This Item 3. Controls and Procedures has been updated to reflect the restatement
of our 2005 and 2006 financial statements, as discussed above in the
Introductory Explanatory Note and in Item 2 under the section heading
“Restatements.”





Evaluation
of Disclosure Controls and Procedures





This Quarterly Report on Form
10-Q/A presents a restatement of the financial statements for the covered
period. In connection with this amendment to our Quarterly Report for the
period ended September 30, 2006, our management reevaluated the effectiveness of
our disclosure controls and procedures (as defined in Rule 13a-15(e) under the
Exchange Act of 1934, as amended (the “Exchange Act”)) as of
the end of the period covered by this report.





Subsequently,
we discovered material weaknesses in our internal control over financial
reporting. For this reason, in reevaluating the adequacy of our disclosure
controls and procedures as of the end of the period covered by this report, our
management has determined that our disclosure controls and procedures were not
adequate.  In assessing whether our disclosure controls and procedures
were effective as of September 30, 2006, management considered the impact of the
restatement to our interim financial statements for the nine month period ended
September 30, 2006, as outlined in Item 2, as well as our control
environment.





Our management is responsible for
establishing and maintaining an adequate system of disclosure controls and
procedures designed to provide reasonable assurance that the information
required to be disclosed by us in reports that we file and submit under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the SEC’s rules and forms. Disclosure controls also are
designed to reasonably assure that such information is accumulated and
communicated to management, including the Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required
disclosures. Disclosure controls include components of internal control over
financial reporting, which consists of control processes designated to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements in accordance with United States generally
accepted accounting principles.





Based
on the reevaluation, our management has concluded that the lack of adequate
additional research materials and support staff, represented a material weakness
in our disclosure controls and procedures as of September 30,
2006.




In
addition, our management has concluded that management’s failure to consult an
outside expert regarding the initial accounting for certain complex
transactions  represented material weaknesses in our disclosure
controls and procedures as of September 30, 2006.  Such complex
transactions included:




·
            capital
      asset acquisitions; and




·
            accounting
      for income taxes.




The internal control deficiencies
associated with capital asset acquisitions related to the acquisition accounting
method used to record the share issuances made to acquire the Searchlight
Claims, the issuance of warrants in connection with the assignment of the option
for the Clarkdale Slag Project, and the internal control deficiencies associated
with accounting for income taxes related to the purchase accounting treatment of
the share issuances made to acquire the Searchlight Claims, the issuance of
warrants in connection with the assignment of the option for the Clarkdale Slag
Project, and the resultant computation of future deferred income tax liability
assumed.





Accordingly, our management has
concluded that our disclosure controls and procedures were not effective as of
September 30, 2006 to provide reasonable assurance that information required to
be disclosed by us in the reports that we file is recorded, processed, and
summarized within the appropriate periods.





41





Changes in Internal Controls
over Financial Reporting





While no changes to our disclosure
controls and procedures were made to rectify the material weakness during the
period covered by this report because such weakness was not known at that
time,subsequent to
the period we remediated this weakness in part by appointing an independent
director who will participate in the review our internal controls and who has
been appointed to our audit committee.  We also have consulted with a
third party financial consultant who has assisted in our restatement regarding
our capital acquisition and accounting for income taxes.  Management
has:





·
            completed
      a review and updated risk assessment of all of our financial controls and
      procedures;




·
            provided
      additional training of financial
staff;




·
            purchased
      additional research materials and
services;




·
            shortened
      the financial closing process to allow more time for a thorough
      review;




·
            reviewed
      and instituted controls for each weakness;
  and




·
            adopted
      a policy to consult outside experts on complex accounting
      issues.





42





PART
II - OTHER INFORMATION




ITEM
1.               
LEGAL PROCEEDINGS.




None.




ITEM
2.               
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.




During
the nine months ended September 30, 2006, we did not complete any sales of
securities that were not registered pursuant to the Securities Act of 1933 (the
“Securities Act”) and have not been reported on our previous Quarterly Reports
on Form 10-QSB during the year.




ITEM
3.               
DEFAULTS UPON SENIOR SECURITIES.




None.




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




None.




ITEM
5.               
OTHER INFORMATION.




None.




43


ITEM
6.               
EXHIBITS.




The
following exhibits are either provided with this Quarterly Report on Form 10-Q/A
or are incorporated herein by reference:




ExhibitNumber
                                                                                      
                                                                                      Description of
      Exhibits3.1
                                                                                      
                                                                                      Articles
      of Incorporation of L.C.M. Equity, Inc.(1)3.2
                                                                                      
                                                                                      Articles
      of Incorporation of Uscribble.(1)3.3
                                                                                      
                                                                                      Certificate
      of Amendment to Articles of Incorporation – name change to “Regma Bio
      Technologies Limited.”(3)3.4
                                                                                      
                                                                                      Certificate
      of Amendment to Articles of Incorporation – name change to “Phage
      Genomics, Inc.”(6)3.5
                                                                                      
                                                                                      Certificate
      of Amendment to Articles of Incorporation – name change to “Searchlight
      Minerals Corp.”(12)3.6
                                                                                      
                                                                                      Certificate
      of Change to Authorized Capital Pursuant to NRS 78.209.(13)3.7
                                                                                      
                                                                                      Amended
      Bylaws dated July 22, 2005.(9)3.8
                                                                                      
                                                                                      Amended
      Bylaws dated August 9, 2005.(12)4.1
                                                                                      
                                                                                      Specimen
      Stock Certificate.(1)10.1
                                                                                      
                                                                                      Acquisition
      Agreement.(2)10.2
                                                                                      
                                                                                      2002
      Nonqualified Stock Option Plan.(4)10.3
                                                                                      
                                                                                      2003
      Nonqualified Stock Option Plan.(5)10.4
                                                                                      
                                                                                      Letter
      Agreement between Phage Genomics, Inc., Searchlight Minerals Corp.,
      Kiminco Inc., Pass Minerals Inc., Debra L. Matheson, and Pilot Plant Inc.
      dated February 8, 2005.(8)10.5
                                                                                      
                                                                                      Letter
      Agreement between Phage Genomics Inc., Searchlight Minerals Corp., K. Ian
      Matheson, and Pilot Plant Inc. dated February 8, 2005.(8)10.6
                                                                                      
                                                                                      Letter
      Agreement between Phage Genomics, Inc., Searchlight Minerals Corp., K. Ian
      Matheson, and Bear Dog Mines Inc. dated February 8, 2005.(8)10.7
                                                                                      
                                                                                      Letter
      Agreement between Phage Genomics, Inc., Searchlight Minerals Corp., K. Ian
      Matheson, and Gold Hunter Inc. dated February 8, 2005.(8)10.8
                                                                                      
                                                                                      Letter
      Agreement between Phage Genomics, Inc., Searchlight Minerals Corp.,
      Kiminco Inc., Pass Minerals Inc., Michael D. Anderson, Farrell Drozd,
      Michael I. Matheson, and Pass Minerals Inc. dated February 8, 2005.(8)10.9
                                                                                      
                                                                                      Letter
      Agreement between Phage Genomics, Inc., Searchlight Minerals Corp., K. Ian
      Matheson, and Britti Gold Inc. dated February 8, 2005.(8)10.10
                                                                                      
                                                                                      Letter
      Agreement between Phage Genomics, Inc., Searchlight Minerals Corp.,
      Kiminco Inc., Pass Minerals Inc., Michael D. Anderson, Geosearch Inc.,
      Patrick I. Matheson, and Geotech Mining Inc. dated February 8, 2005.(8)10.11
                                                                                      
                                                                                      Letter
      Agreement between Phage Genomics, Inc., Searchlight Minerals Corp.,
      Kiminco Inc., Pass Minerals Inc., and Gold Crown Inc. dated February 8,
      2005.(8)10.12
                                                                                      
                                                                                      Engagement
      Letter dated June 17, 2005 between Searchlight Minerals Corp. and Clarion
      Finanz AG.(10)10.13
                                                                                      
                                                                                      Extension
      Agreement dated effective June 22, 2005 among Searchlight, K. Ian
      Matheson, Searchlight Minerals, Inc. and Pilot Plant Inc.(10)10.14
                                                                                      
                                                                                      Extension
      Agreement dated effective June 22, 2005 among Searchlight, K. Ian
      Matheson, Searchlight Minerals, Inc. and Bear Dog Mines Inc.(10)10.15
                                                                                      
                                                                                      Extension
      Agreement dated effective June 22, 2005 among Searchlight, K. Ian
      Matheson, Searchlight Minerals, Inc. and Gold Hunter Inc.(10)





44




10.16
                                                                                  
                                                                                  Extension
      Agreement dated effective June 22, 2005 among Searchlight, K. Ian
      Matheson, Searchlight Minerals, Inc., Pass Minerals Inc., Michael D.
      Anderson, Farrell Drozd and Michael I. Matheson.(10)10.17
                                                                                  
                                                                                  Extension
      Agreement dated effective June 22, 2005 among Searchlight, K. Ian
      Matheson, Searchlight Minerals, Inc. and Britti Gold Inc.(10)10.18
                                                                                  
                                                                                  Extension
      Agreement dated effective June 22, 2005 among Searchlight, K. Ian
      Matheson, Searchlight Minerals, Inc., Geotech Mining Inc., Michael D.
      Anderson, Geosearch Inc. and Patrick B. Matheson.(10)10.19
                                                                                  
                                                                                  Extension
      Agreement dated effective June 22, 2005 among Searchlight, K. Ian
      Matheson, Searchlight Minerals, Inc. and Gold Crown Minerals Inc.(10)10.20
                                                                                  
                                                                                  Assignment
      Agreement dated for reference June 1, 2005 between Searchlight Minerals
      Corp. and Nanominerals Corp.(11)10.21
                                                                                  
                                                                                  Engagement
      Letter dated May 9, 2005 between Searchlight Minerals Corp. and Dominick
      & Dominick Securities Inc.(12)10.22
                                                                                  
                                                                                  First
      Amendment to Assignment Agreement between Nanominerals Corp. and
      Searchlight Minerals Corp. dated August 31, 2005.(15)10.23
                                                                                  
                                                                                  Second
      Amendment to Assignment Agreement between Nanominerals Corp. and
      Searchlight Minerals Corp. dated October 24, 2005.(14)10.24
                                                                                  
                                                                                  Agency
      Agreement between Searchlight Minerals Corp. and Dominick & Dominick
      Securities Inc. dated September 1, 2005.(18)10.25
                                                                                  
                                                                                  Office
      Suite Lease Agreement between Burnett & Williams Executive Suites and
      Searchlight Minerals Corp. dated September 6, 2005.(15)10.26
                                                                                  
                                                                                  Finders’
      Fee Agreement between Searchlight Minerals Corp. and S&P Investors,
      Inc. dated December 7, 2005.(16)10.27
                                                                                  
                                                                                  Employment
      Agreement between Searchlight Minerals Corp. and Carl S. Ager dated as of
      January 1, 2006.(17)10.28
                                                                                  
                                                                                  Employment
      Agreement between Searchlight Minerals Corp. and Ian R. McNeil dated as of
      January 1, 2006.(17)10.29
                                                                                  
                                                                                  2006
      Stock Option Plan.(19)10.30
                                                                                  
                                                                                  Engineering
      Services Agreement dated as of May 1, 2006 with Cimetta Engineering and
      Construction Co., Inc.(21)10.31
                                                                                  
                                                                                  Office
      Suite Lease Agreement between Burnett & Williams Executive Suites and
      Searchlight Minerals Corp. dated July 20, 2006. (22)10.32
                                                                                  
                                                                                  Contract
      for Engineering Services between URS Corporation and Verde River Iron
      Company LLC dated March 21, 2005.(22)10.33
                                                                                  
                                                                                  Contract
      for Drilling Services dated May 23, 2006 between Boart Longyear Company
      and Searchlight Minerals Corp. and Contact for Services dated October 17,
      2005 between Boart Longyear Company and Searchlight Minerals Corp.(22)




45




14.1
            
            Code
      of Ethics(20)31.1
            
            Certification
      of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002.31.2
            
            Certification
      of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002.32.1
            
            Certification
      of Chief Executive Officer and Chief Financial Officer pursuant to 18
      U.S.C. Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.99.1
            
            Audit
      Committee Charter(20)99.2
            
            Disclosure
      Committee Charter.(7)




46




Notes:




(1)
                                                      Filed
      with the SEC as an exhibit to our Registration Statement on Form 10-SB
      originally filed on July 7, 2000.(2)
                                                      Filed
      with the SEC as an exhibit to our Current Report on Form 8-K filed on
      November 13, 2001.(3)
                                                      Filed
      with the SEC as an exhibit to our Annual Report on Form 10-KSB filed on
      April 1, 2002.(4)
                                                      Filed
      with the SEC as an exhibit to our Form S-8 Registration Statement filed on
      April 10, 2002.(5)
                                                      Filed
      with the SEC as an exhibit to our Form S-8 filed on June 30,
      2003.(6)
                                                      Filed
      with the SEC as an exhibit to our Form 8-K filed on December 22,
      2003;(7)
                                                      Filed
      with the SEC as an exhibit to our Annual Report on Form 10-KSB filed on
      April 13, 2004.(8)
                                                      Filed
      with the SEC as an exhibit to our Annual Report on Form 10-KSB filed on
      April 15, 2005.(9)
                                                      Filed
      with the SEC as an exhibit to our Current Report on Form 8-K filed on July
      29, 2005.(10)
                                                      Filed
      with the SEC as an exhibit to our Current Report on Form 8-K filed on June
      24, 2005.(11)
                                                      Filed
      with the SEC as an exhibit to our Current Report on Form 8-K filed on June
      16, 2005.(12)
                                                      Filed
      with the SEC as an exhibit to our Quarterly Report on Form 10-QSB filed on
      August 22, 2005.(13)
                                                      Filed
      with the SEC as an exhibit to our Current Report on Form 8-K filed on
      October 14, 2005.(14)
                                                      Filed
      with the SEC as an exhibit to our Current Report on Form 8-K filed on
      October 28, 2005.(15)
                                                      Filed
      with the SEC as an exhibit to our Quarterly Report on Form 10-QSB filed on
      November 21, 2005.(16)
                                                      Filed
      with the SEC as an exhibit to our Current Report on Form 8-K filed on
      December 13, 2005.(17)
                                                      Filed
      with the SEC as an exhibit to our Current Report on Form 8-K filed on
      March 2, 2006.(18)
                                                      Filed
      with the SEC as an exhibit to our Registration Statement on Form SB-2
      originally filed on April 3, 2006.(19)
                                                      Filed
      with the SEC as an exhibit to our Quarterly Report on Form 10-QSB filed on
      May 15, 2006.(20)
                                                      Filed
      with the SEC as an exhibit to our Current Report on Form 8-K filed on
      September 27, 2006.(21)
                                                      Filed
      with the SEC as an exhibit to our Quarterly Report on Form 10-QSB filed on
      August 14, 2006.(22)
                                                      Filed
      with the SEC as an exhibit to our Second Amended Registration Statement on
      Form SB-2/A filed on October 30,
2006.




47




SIGNATURES




Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.




SEARCHLIGHT MINERALS
      CORP.Date:
              July
      6, 2009
              By:
              /s/ Ian R.
      McNeilIAN R.
      McNEILPresident
      and Chief Executive Officer(Principal
      Executive Officer )Date:
              July
      6, 2009
              By:
              /s/ Melvin L.
      WilliamsMELVIN L.
      WILLIAMSChief
      Financial Officer(Principal
      Financial Officer )




48