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, 2005




 ̈
            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, 2005 (the “2005 Third Quarter 10-QSB”) is
being filed with the Securities and Exchange Commission (the “SEC”) to restate
our  financial statements as of September 30, 2005 and for the three
and nine months ended September 30, 2005 and 2004, and the period from January
14, 2000 (date of inception) through September 30, 2005.  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 2005 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 2005 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
2005 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 2005 Third Quarter
10-QSB.  This Form 10-Q/A does not describe events occurring after the
2005 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 2005
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 2005 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, 2005
                            
                            
                            December 31, 2004(restated)ASSETSCurrent
      assetsCash
                            
                            $
                            1,373,161
                            
                            
                            $
                            295Total
      current assets
                            
                            
                            1,373,161
                            
                            
                            
                            295Property
      and equipment, net
                            
                            
                            15,947
                            
                            
                            
                            1,349Mineral
      properties
                            
                            
                            819,442
                            
                            
                            
                            —Joint
      venture agreement
                            
                            
                            2,608,481
                            
                            
                            
                            —Reclamation
      bond
                            
                            
                            180,500
                            
                            
                            
                            —Total
      non-current assets
                            
                            
                            3,624,370
                            
                            
                            
                            1,349Total
      assets
                            
                            $
                            4,997,531
                            
                            
                            $
                            1,644LIABILITIES
      AND STOCKHOLDERS' EQUITY (DEFICIT)Current
      liabilitiesAccounts
      payable
                            
                            $
                            987,277
                            
                            
                            $
                            976,316Convertible
      debt - related party
                            
                            
                            —
                            
                            
                            
                            300,000Loan
      payable - related party
                            
                            
                            387,102
                            
                            
                            
                            409,345Total
      current liabilities
                            
                            
                            1,374,379
                            
                            
                            
                            1,685,661Long-term
      liabilitiesDeferred
      tax liability
                            
                            
                            650,762
                            
                            
                            
                            —Total
      long-term liabilities
                            
                            
                            650,762
                            
                            
                            
                            —Total
      liabilities
                            
                            
                            2,025,141
                            
                            
                            
                            1,685,661Stockholders'
      equity (deficit)Common
      stock, $0.001 par value; 400,000,000 sharesauthorized,
      52,150,000  and 108,300,000 shares,respectively,
      issued and outstanding
                            
                            
                            52,150
                            
                            
                            
                            108,300Additional
      paid-in capital
                            
                            
                            7,576,782
                            
                            
                            
                            2,471,559Common
      stock subscribed
                            
                            
                            15,000
                            
                            
                            
                            —Accumulated
      deficit during exploration stage
                            
                            
                            (4,671,542
                            )
                            
                            
                            (4,263,876
                            )Total
      stockholders' equity (deficit)
                            
                            
                            2,972,390
                            
                            
                            
                            (1,684,017
                            )Total
      liabilities and stockholders' equity (deficit)
                            
                            $
                            4,997,531
                            
                            
                            $
                            1,644
 
 See
Accompanying Notes to Financial Statements
  5
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 STATEMENTS
OF OPERATIONS
 (UNAUDITED)
(RESTATED)
 
 For the period fromJanuary 14, 2000(Date of Inception)For the Three Months Ended
                          
                          
                          For the Nine Months Ended
                          
                          
                          ThroughSeptember 30, 2005
                          
                          
                          September 30, 2004
                          
                          
                          September 30, 2005
                          
                          
                          September 30, 2004
                          
                          
                          September 30, 2005(restated)
                          
                          
                          
                          
                          
                          (restated)
                          
                          
                          
                          
                          
                          (restated)Revenue
                          
                          $
                          —
                          
                          
                          $
                          —
                          
                          
                          $
                          —
                          
                          
                          $
                          —
                          
                          
                          $
                          —Operating
      expensesMineral
      exploration and evaluation expenses
                          
                          
                          275,563
                          
                          
                          
                          —
                          
                          
                          
                          338,453
                          
                          
                          
                          —
                          
                          
                          
                          338,453General
      and administrative
                          
                          
                          163,575
                          
                          
                          
                          —
                          
                          
                          
                          360,439
                          
                          
                          
                          —
                          
                          
                          
                          360,439Depreciation
                          
                          
                          139
                          
                          
                          
                          —
                          
                          
                          
                          139
                          
                          
                          
                          —
                          
                          
                          
                          139Total
      operating expenses
                          
                          
                          439,277
                          
                          
                          
                          —
                          
                          
                          
                          699,031
                          
                          
                          
                          —
                          
                          
                          
                          699,031Loss
      before income taxes
                          
                          
                          (439,277
                          )
                          
                          
                          —
                          
                          
                          
                          (699,031
                          )
                          
                          
                          —
                          
                          
                          
                          (699,031
                          )Income
      tax benefit
                          
                          
                          199,822
                          
                          
                          
                          —
                          
                          
                          
                          199,822
                          
                          
                          
                          —
                          
                          
                          
                          199,822Loss
      from continuing operations
                          
                          
                          (239,455
                          )
                          
                          
                          —
                          
                          
                          
                          (499,209
                          )
                          
                          
                          —
                          
                          
                          
                          (499,209
                          )Discontinued
      operations:Gain
      (loss) from discontinued operations
                          
                          
                          6,432
                          
                          
                          
                          (15,363
                          )
                          
                          
                          91,543
                          
                          
                          
                          (275,743
                          )
                          
                          
                          (4,172,333
                          )Net
      loss
                          
                          $
                          (233,023
                          )
                          
                          $
                          (15,363
                          )
                          
                          $
                          (407,666
                          )
                          
                          $
                          (275,743
                          )
                          
                          $
                          (4,671,542
                          )Loss
      per common share - basic and dilutedLoss
      from continuing operations
                          
                          $
                          (0.00
                          )
                          
                          $
                          —
                          
                          
                          $
                          (0.01
                          )
                          
                          $
                          —Gain
      (loss) from discontinued operations
                          
                          
                          0.00
                          
                          
                          
                          (0.00
                          )
                          
                          
                          0.00
                          
                          
                          
                          (0.00
                          )Net
      loss
                          
                          $
                          (0.00
                          )
                          
                          $
                          (0.00
                          )
                          
                          $
                          (0.01
                          )
                          
                          $
                          (0.00
                          )Weighted average common shares outstanding -Basic
      and diluted
                          
                          
                          52,150,000
                          
                          
                          
                          108,300,000
                          
                          
                          
                          50,314,432
                          
                          
                          
                          108,300,000
 
 See
Accompanying Notes to Financial Statements
  6
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 STATEMENT
OF STOCKHOLDERS' EQUITY (DEFICIT)
 (UNAUDITED)
(RESTATED)
 
 AccumulatedDeficit During
                                                                                                                
                                                                                                                
                                                                                                                TotalCommon Stock
                                                                                                                
                                                                                                                
                                                                                                                Additional
                                                                                                                
                                                                                                                
                                                                                                                Common Stock
                                                                                                                
                                                                                                                
                                                                                                                Exploration
                                                                                                                
                                                                                                                
                                                                                                                Stockholders'Shares
                                                                                                                
                                                                                                                
                                                                                                                Amount
                                                                                                                
                                                                                                                
                                                                                                                Paid-in Capital
                                                                                                                
                                                                                                                
                                                                                                                Subscribed
                                                                                                                
                                                                                                                
                                                                                                                Stage
                                                                                                                
                                                                                                                
                                                                                                                Equity (Deficit)Balance,
      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
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                (12,583
                                                                                                                )
                                                                                                                
                                                                                                                
                                                                                                                —
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                —Amortization
      of deferredcompensation
                                                                                                                
                                                                                                                
                                                                                                                —
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                —
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                —
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                10,387
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                —
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                10,387Net
      loss
                                                                                                                
                                                                                                                
                                                                                                                —
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                —
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                —
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                —
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                (1,283,872
                                                                                                                )
                                                                                                                
                                                                                                                
                                                                                                                (1,283,872
                                                                                                                )Balance,
      December 31, 2003
                                                                                                                
                                                                                                                
                                                                                                                108,300,000
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                108,300
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                2,471,559
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                (2,196
                                                                                                                )
                                                                                                                
                                                                                                                
                                                                                                                (3,563,432
                                                                                                                )
                                                                                                                
                                                                                                                
                                                                                                                (985,769
                                                                                                                )Amortization
      of deferredcompensation
                                                                                                                
                                                                                                                
                                                                                                                —
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                —
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                —
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                2,196
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                —
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                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
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                —
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                —
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                —Issuance
      of 12,000,000 warrantsin
      consideration of joint venture option
                                                                                                                
                                                                                                                
                                                                                                                —
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                —
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                1,310,204
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                —
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                —
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                1,310,204Issuance
      of common stockfor
      mining claims (restated, see Note 9)
                                                                                                                
                                                                                                                
                                                                                                                1,400,000
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                1,400
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                488,600
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                —
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                —
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                490,000Issurance
      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
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                —
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                —
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                115,000Common
      stock subscribed
                                                                                                                
                                                                                                                
                                                                                                                —
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                —
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                —
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                15,000
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                —
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                15,000Net
      loss (restated)
                                                                                                                
                                                                                                                
                                                                                                                —
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                —
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                —
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                —
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                (407,666
                                                                                                                )
                                                                                                                
                                                                                                                
                                                                                                                (407,666
                                                                                                                )Balance,
      September 30, 2005 (restated)
                                                                                                                
                                                                                                                
                                                                                                                52,150,000
                                                                                                                
                                                                                                                
                                                                                                                $
                                                                                                                52,150
                                                                                                                
                                                                                                                
                                                                                                                $
                                                                                                                7,576,782
                                                                                                                
                                                                                                                
                                                                                                                $
                                                                                                                15,000
                                                                                                                
                                                                                                                
                                                                                                                $
                                                                                                                (4,671,542
                                                                                                                )
                                                                                                                
                                                                                                                $
                                                                                                                2,972,390
 
 See
Accompanying Notes to Financial Statements
 
 7
 
 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, 2005
                                          
                                          
                                          September 30, 2004
                                          
                                          
                                          September 30, 2005(restated)
                                          
                                          
                                          
                                          
                                          
                                          (restated)CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      loss
                                          
                                          $
                                          (407,666
                                          )
                                          
                                          $
                                          (275,743
                                          )
                                          
                                          $
                                          (4,671,542
                                          )Deduct:
      Gain (loss) from discontinued operations
                                          
                                          
                                          91,543
                                          
                                          
                                          
                                          (275,743
                                          )
                                          
                                          
                                          (4,172,333
                                          )Loss
      from continuing operations
                                          
                                          
                                          (499,209
                                          )
                                          
                                          
                                          —
                                          
                                          
                                          
                                          (499,209
                                          )Adjustments
      to reconcile loss from continuing operationsto
      net cash used in operating activities:Depreciation
                                          
                                          
                                          139
                                          
                                          
                                          
                                          —
                                          
                                          
                                          
                                          139Stock
      based expenses
                                          
                                          
                                          133,062
                                          
                                          
                                          
                                          —
                                          
                                          
                                          
                                          133,062Loss
      on disposition of fixed assets
                                          
                                          
                                          1,349
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          1,349Changes
      in operating assets and liabilities:Other
      assets
                                          
                                          
                                          (180,500
                                          )
                                          
                                          
                                          —
                                          
                                          
                                          
                                          (180,500
                                          )Accounts
      payable
                                          
                                          
                                          205,259
                                          
                                          
                                          
                                          —
                                          
                                          
                                          
                                          205,259Deferred
      income taxes
                                          
                                          
                                          (199,822
                                          )
                                          
                                          
                                          —
                                          
                                          
                                          
                                          (199,822
                                          )Net
      cash used in operating activities
                                          
                                          
                                          (539,722
                                          )
                                          
                                          
                                          —
                                          
                                          
                                          
                                          (539,722
                                          )Net
      cash used in operating activities from discontinued
      operations
                                          
                                          
                                          —
                                          
                                          
                                          
                                          (150,329
                                          )
                                          
                                          
                                          (2,931,324
                                          )CASH
      FLOW FROM INVESTING ACTIVITIESCash
      paid on mineral property claims
                                          
                                          
                                          (87,134
                                          )
                                          
                                          
                                          —
                                          
                                          
                                          
                                          (87,134
                                          )Cash
      paid for joint venture option
                                          
                                          
                                          (690,000
                                          )
                                          
                                          
                                          —
                                          
                                          
                                          
                                          (690,000
                                          )Purchase
      of fixed assets
                                          
                                          
                                          (16,085
                                          )
                                          
                                          
                                          —
                                          
                                          
                                          
                                          (16,085
                                          )Net
      cash used in investing activities
                                          
                                          
                                          (793,219
                                          )
                                          
                                          
                                          —
                                          
                                          
                                          
                                          (793,219
                                          )Net
      cash used in investing activities from discontinued
      operations
                                          
                                          
                                          —
                                          
                                          
                                          
                                          (4,538
                                          )
                                          
                                          
                                          (452,618
                                          )CASH
      FLOW FROM FINANCING ACTIVITIESProceeds
      from stock issuance
                                          
                                          
                                          2,690,807
                                          
                                          
                                          
                                          —
                                          
                                          
                                          
                                          2,690,807Proceeds
      from subscribed stock
                                          
                                          
                                          15,000
                                          
                                          
                                          
                                          —
                                          
                                          
                                          
                                          15,000Net
      cash provided by financing activities
                                          
                                          
                                          2,705,807
                                          
                                          
                                          
                                          —
                                          
                                          
                                          
                                          2,705,807Net
      cash provided by financing activities from discontinued
      operations
                                          
                                          
                                          —
                                          
                                          
                                          
                                          149,149
                                          
                                          
                                          
                                          3,384,237NET
      CHANGE IN CASH
                                          
                                          
                                          1,372,866
                                          
                                          
                                          
                                          (5,718
                                          )
                                          
                                          
                                          1,373,161CASH
      AT BEGINNING OF PERIOD
                                          
                                          
                                          295
                                          
                                          
                                          
                                          18,198
                                          
                                          
                                          
                                          —CASH
      AT END OF PERIOD
                                          
                                          $
                                          1,373,161
                                          
                                          
                                          $
                                          12,480
                                          
                                          
                                          $
                                          1,373,161SUPPLEMENTAL
      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
                                          
                                          $
                                          490,000
                                          
                                          
                                          $
                                          —
                                          
                                          
                                          $
                                          490,000Warrants
      issued in connection with joint venture optionagreement
      related to slag project
                                          
                                          $
                                          1,310,204
                                          
                                          
                                          $
                                          —
                                          
                                          
                                          $
                                          1,310,204Net
      deferred tax liability assumed
                                          
                                          $
                                          913,776
                                          
                                          
                                          $
                                          —
                                          
                                          
                                          $
                                          913,776
 
 See
Accompanying Notes to Financial Statements
  8
  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, 2004 of
Phage Genomics, Inc. (the “Company”).
 
 The
interim financial statements present the balance sheets, statements of
operations, stockholders’ deficit, 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, 2004.
 
 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 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.” to
"Searchlight Minerals Corp.” effective June 23, 2005.
  9
  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 $4,671,542 from operations as of
September 30, 2005 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 (EITF) abstract 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 claims 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 of Disposal of Long-Lived Assets.”
 
 Exploration costs –
Mineral exploration costs are expensed as incurred.
 
 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.
  10
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES
TO FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
  1.
                DESCRIPTION OF
      BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES(continued)
 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, 2005
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.
 
 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.
   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)
 
 Earnings (loss) per
share - The Company follows SFAS No. 128, “Earnings Per Share” and SFAS
No. 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, in 2005 and 2004 that were not included in the
computation of diluted EPS because the effect would be antidilutive were
7,450,418 and 0, 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.
 
 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.
  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)
 
 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.
 
 New accounting
pronouncements – In November 2004, the FASB issued SFAS No. 151,
“Inventory Costs, an amendment of ARB No. 43, Chapter 4.” SFAS No. 151 amends
the guidance in ARB No. 43, Chapter 4, “Inventory Pricing,” to clarify the
accounting for abnormal amounts of idle facility expense, freight, handing
costs, and spoilage. This statement requires that those items be recognized as
current period charges regardless of whether they meet the criterion of "so
abnormal" which was the criterion specified in ARB No. 43. In addition, this
Statement requires that allocation of fixed production overheads to the cost of
production be based on normal capacity of the production facilities. This
pronouncement is effective for the Company beginning October 1, 2005. Adoption
of this statement is not expected to have a material impact on the Company’s
financial statements.
 
 In May
2005, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standard No. 154, “Accounting Changes and Error Corrections.” The
Statement applies to all voluntary changes in accounting principle and to
changes required by an accounting pronouncement that do not include explicit
transition provisions. SFAS No. 154 requires that changes in accounting
principle be retroactively applied, instead of including the cumulative effect
in the income statement. The correction of an error will continue to require
financial statement restatement. A change in accounting estimate will continue
to be accounted for in the period of change and in subsequent periods, if
necessary. SFAS No. 154 is effective for fiscal years beginning after December
31, 2005. Adoption of this statement is not expected to have a material impact
on the Company’s financial statements.
  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)
 
 Correction of an
error
 
 Discontinued
operations - The consolidated statement of operations for the period from
January 14, 2000 (date of inception) through September 30, 2005 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.
 
 Searchlight
Mining Claims – (See Note 3) – The Company restated the Searchlight Mining
Claims as of September 30, 2005. 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 $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.
 
 Joint
venture agreement – (See Note 4) – The Company restated the joint venture
agreement as of September 30, 2005. The Company originally valued the
transaction at the agreed upon cash price of $690,000 and no value was given to
the 12,000,000 warrants issued. The Company restated the valuation of the
warrants by using the market price of common stock issued in connection with a
private placement conducted at the time the warrants were issued. The restated
value of the warrants was $1,310,204. The restatement also included the deferred
future income tax liability assumed of $608,277 for a total increase in purchase
consideration of $1,918,481.
 
 2.
              PROPERTY AND
      EQUIPMENT
 
 Property
and equipment consisted of the following as of September 30, 2005 and December
31, 2004:
 
 2005
                          
                          
                          2004Furniture
      and fixtures
                          
                          $
                          7,038
                          
                          
                          $
                          —Computers
      and equipment
                          
                          
                          9,048
                          
                          
                          
                          33,77616,086
                          
                          
                          
                          33,776Less
      accumulated depreciation
                          
                          
                          139
                          
                          
                          
                          32,427$
                          15,947
                          
                          
                          $
                          1,349
 
 Depreciation
expense was $139 and $11,993 for the nine months ended September 30, 2005 and
2004, respectively.
  14
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES
TO FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 
 3.
              MINERAL PROPERTIES -
      MINING CLAIMS – AS RESTATED (See Note
  9)
 
 As of
September 30, 2005, 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, 2005 mineral properties balance was
$819,442.
 
 The
mining claims were acquired during the third quarter of 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 have the right to acquire
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.
  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, 2005, 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 period ended
September 30, 2005:
 
 As Reported
                  
                  
                  Adjustments
                  
                  
                  As RestatedCash
      and shares issuance to obtain mineral properties, July 7,
      2005
                  
                  $
                  127,134
                  
                  
                  $
                  450,000
                  a
                  
                  $
                  577,134Net
      deferred income tax liability assumed
                  
                  
                  —
                  
                  
                  
                  242,308
                  b
                  
                  
                  242,308Mineral
      properties balance, September 30, 2005
                  
                  $
                  127,134
                  
                  
                  $
                  692,308
                  
                  
                  $
                  819,442
 
 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.
  15
  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 considerations 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.
  (iii)
              Verde
      is not required to contribute any funds for project
      expenses.
  16
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES
TO FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
  4.
              JOINT VENTURE
      AGREEMENT – AS RESTATED (See Note 9)
  (continued)
  (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, 2005:
 
 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, 2005
                  
                  $
                  690,000
                  
                  
                  $
                  1,918,481
                  
                  
                  $
                  2,608,481
 
 5.
              LOAN PAYABLE – RELATED
      PARTY
  As of
September 30, 2005, loans payable to related parties totaling $387,102 consists
of borrowings from former officers and directors of the Company. The
balances bear no interest, are unsecured, and are due on
demand.
  6.
              CONVERTIBLE DEBT –
      RELATED PARTY
 
 On
      July 23, 2002, the Company received additional financing from a former
      officer/director and shareholder in the amount of $300,000. The form of
      financing was a convertible debenture whereby the holder had the option of
      calling the debt in the future together with interest at 8% per annum, or
      converting the debt into shares of the Company at $0.25 per share
      (1,200,000 shares), with a two year warrant for the same number of shares
      exercisable at $0.35 per share. The interest was to be payable in cash.
      The issue of the convertible debenture created a beneficial conversion
      feature, which was accounted for in accordance with EITF 98-5, “Accounting
      for Convertible Securities with Beneficial Conversion Features or
      Contingently Adjustable Conversion Ratios,” and EITF 00-27, “Application
      of Issue No. 98-5 to Certain Convertible Instruments.” The fair value of
      the warrants was determined using the Black-Scholes Model. The beneficial
      conversion feature was valued at $396,000, which was greater than the
      value of the debt. As a result, the debt discount was restricted to the
      value of the debt at $300,000.
  17
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES
TO FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 
 7.
              STOCKHOLDERS’ EQUITY
      (DEFICIT)
 
 During
2005, the Company’s stockholders’ activities consisted of the
following:
 
 a)
              On
      September 30, 2005, the Company effectuated a two-for-one forward stock
      split on its common stock. As a result of the stock split, the Company’s
      authorized number of common stock increased from 200,000,000 shares to
      400,000,000 shares. Accordingly, the accompanying financial statements
      have been adjusted on a retroactive basis for the forward stock split to
      the Company’s date of
inception.
 
 b)
              On
      September 7, 2005 the Company issued 5,400,000 units for $0.25 per unit,
      where each unit consisted of one common share and one half of one purchase
      warrant and one nontransferable warrant exercisable into one tenth (1/10)
      of one unit for no additional consideration if registration requirements
      are not met within four months after the closing. Each purchase warrant
      was exercisable into one share at a price of $0.625 and expired on June 7,
      2006. Total gross proceeds of this offering were $1,350,000. In connection
      with this brokered offering, 540,000 Brokers Warrants, exercisable at
      $0.25 and expiring on June 7, 2006, were issued. Each Broker Warrant was
      exercisable into one common share and one half of one purchase warrant.
      Each purchase warrant was exercisable into one common share at $0.625 and
      expired on June 7, 2006.
 
 c)
              On
      September 6, 2005 the Company issued 460,000 units for $0.25 per unit,
      where each unit consisted of one common share and one half of one purchase
      warrant and one nontransferable warrant exercisable into one tenth (1/10)
      of one unit for no additional consideration if registration requirements
      are not met within four months after the closing. Each purchase warrant
      was exercisable into one share at a price of $0.625 and expired on June 6,
      2006. Total gross proceeds of this offering were
    $115,000.
 
 d)
              On
      September 2, 2005 the Company issued 6,390,000 units for $0.25 per unit,
      where each unit consisted of one common share and one half of one purchase
      warrant and one nontransferable warrant exercisable into one tenth (1/10)
      of one unit for no additional consideration if registration requirements
      were not met within four months after the closing. Each purchase warrant
      was exercisable into one share at a price of $0.625 and expired on June 2,
      2006. Total gross proceeds of this offering were $1,597,500. In connection
      with this brokered offering, 639,000 Brokers Warrants, exercisable at
      $0.25 and expiring on June 2, 2006, were issued. Each Broker Warrant was
      exercisable into one common share and one half of one purchase warrant.
      Each purchase warrant was exercisable into one common share at $0.625 and
      expired on June 2, 2006.
 
 e)
              On
      July 7, 2005, the Company issued 1,400,000 shares (post stock split) of
      common stock for the purchase of 20 mineral claims. The Company 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. This issuance has been restated to
      reflect payments made by issuance of 1,400,000 shares at the market value
      on the date of issuance of
$0.35.
  18
 SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES
TO FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
  7.
              STOCKHOLDERS’ EQUITY
      (DEFICIT) (continued)
 
 f)
              On
      July 6, 2005, the Company issued 200,000 shares (post stock split) of
      common stock at $0.625 per share for reduction of debt at $125,000 as
      negotiated with the debtor.
  g)
              On
      June 1, 2005, the Company approved the issuance of stock warrants for
      12,000,000 shares of common stock with a strike price of $0.375 per share
      in connection with the Clarkdale Slag Project option. Satisfaction of the
      financing related closing conditions of the assignment agreement were met
      on September 7, 2005. On October 24, 2005, the issuance of the warrants
      was completed. The warrants contain an expiration date of June 1,
      2015.
  h)
              On
      February 14, 2005, the Company cancelled all of the stock options that
      were outstanding as at December 31,
2004.
 
 i)
              On
      February 11, 2005, 70,000,000 shares (post stock split) of the Company
      were returned to the Company and cancelled at its par value of $0.001 per
      share.
 
 j)
              On
      February 10, 2005, the Company granted two directors an irrevocable stock
      option to purchase 250,000 shares each of the Company at $0.50 per share
      expiring two years after the director resigns from the Company. The fair
      value under the Binomial Lattice option pricing model totaled $133,062
      which was recorded as an expense as of March 31,
  2005.
 
 k)
              On
      February 10, 2005, the Company issued an irrevocable stock option to
      purchase 250,000 shares of the Company at $0.50 per share expiring on
      February 10, 2010 to settle the convertible debt balance of
      $300,000.
 
 8.
              RELATED PARTY
      TRANSACTIONS
 
 In
February 2005, the Company reorganized from a biotechnology research and
development company to a company focused on the development and acquisition of
mineral properties.  In connection with the reorganization, the
Company entered into mineral options agreements to acquired an interest in 20
mineral claims (“Searchlight Claims”) representing an area of 3,200 acres
located in Clark County, south of Searchlight, Nevada, and agreed to pay a
management fee of $3,500 per month to Pass Minerals, an entity controlled by a
shareholder of the Company, for management services provided regarding the
reorganization of the Company and the development of assaying and testing
procedures for the Searchlight Claims.
  19
 SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES
TO FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 9.
              RESTATEMENT
 
 Searchlight Mining
Claims – Mineral properties have been restated to reflect payments made
by issuance of 1,400,000 shares at $0.35 on July 7, 2005 at the market value 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. 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, 2005 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.
  20
 SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES
TO FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 9.
              RESTATEMENT
      (continued)
 
 The
statements of operations for the three and nine months period ended September
30, 2005, have been restated to reclassify $6,432 and $91,543, respectively, of
other comprehensive income, which consisted of foreign currency adjustment
related to 2004 activity, as discontinued operations. The restatement also
reflects the income tax benefit of $199,823.
 
 The
following table summarizes the balance sheet of the Company as of September 30,
2005 and reconciles the reported amounts to the restated
amounts:
 
 Summarized Balance Sheet -
                                      
                                      AsSeptember 30, 2005
                                      
                                      Reported
                                      
                                      
                                      Adjustments
                                      
                                      
                                      As RestatedMineral
      properties
                                      
                                      $
                                      127,134
                                      
                                      
                                      $
                                      692,308
                                      a
                                      
                                      $
                                      819,442Joint
      venture agreement
                                      
                                      
                                      690,000
                                      
                                      
                                      
                                      1,918,481
                                      b
                                      
                                      
                                      2,608,481Total
      assets
                                      
                                      
                                      2,386,742
                                      
                                      
                                      
                                      2,610,789
                                      
                                      
                                      
                                      4,997,531Deferred
      tax liability
                                      
                                      
                                      —
                                      
                                      
                                      
                                      650,762
                                      c
                                      
                                      
                                      650,762Total
      liabilities
                                      
                                      
                                      1,374,379
                                      
                                      
                                      
                                      650,762
                                      c
                                      
                                      
                                      2,025,141Additional
      paid-in capital
                                      
                                      
                                      6,084,449
                                      
                                      
                                      
                                      1,492,333
                                      a,b,d
                                      
                                      
                                      7,576,782Accumulated
      other comprehensive loss
                                      
                                      
                                      (131,999
                                      )
                                      
                                      
                                      131,999
                                      e
                                      
                                      
                                      —Accumulated
      deficit during exploration stage
                                      
                                      
                                      (5,007,236
                                      )
                                      
                                      
                                      335,694
                                      d,e,f
                                      
                                      
                                      (4,671,542
                                      )Total
      stockholders' equity
                                      
                                      
                                      1,012,364
                                      
                                      
                                      
                                      1,960,027
                                      
                                      
                                      
                                      2,972,391Total
      liabilities and stockholders' equity
                                      
                                      $
                                      2,386,742
                                      
                                      
                                      $
                                      2,610,789
                                      
                                      
                                      $
                                      4,997,531
 The
following table summarizes statement of operations for the three months period
ended September 30, 2005 and reconciles the reported amounts to the restated
amounts:
 
 Summarized Statement of Operations -For the three months ended September 30, 2005
                                
                                As Reported
                                
                                
                                Adjustments
                                
                                
                                
                                As RestatedLoss
      from operations
                                
                                $
                                (439,277
                                )
                                
                                $
                                —
                                
                                
                                
                                $
                                (439,277
                                )Gain
      on settlement
                                
                                
                                45,997
                                
                                
                                
                                (45,997
                                )
                                d
                                
                                
                                —Total
      other income (expense)
                                
                                
                                45,997
                                
                                
                                
                                (45,997
                                )
                                d
                                
                                
                                —Loss
      before income taxes
                                
                                
                                (393,280
                                )
                                
                                
                                (45,997
                                )
                                d
                                
                                
                                (439,277
                                )Income
      tax benefit
                                
                                
                                —
                                
                                
                                
                                199,823
                                
                                f
                                
                                
                                199,823Gain
      from discontinued operations
                                
                                
                                —
                                
                                
                                
                                6,432
                                
                                d,g
                                
                                
                                6,432Net
      loss
                                
                                
                                (393,280
                                )
                                
                                
                                160,257
                                
                                d,f,g
                                
                                
                                (233,023
                                )Foreign currency translation adjustment
                                
                                $
                                13,435
                                
                                
                                $
                                (13,435
                                )
                                g
                                
                                $
                                —
  21
 SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES
TO FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 9.
                RESTATEMENT
      (continued)
 
 The
following table summarizes statement of operations for the nine months period
ended September 30, 2005 and reconciles the reported amounts to the restated
amounts:
 
 Summarized Statement of Operations -For the nine months ended September 30, 2005
                                
                                As Reported
                                
                                
                                Adjustments
                                
                                
                                
                                As RestatedGeneral
      and administrative
                                
                                $
                                681,310
                                
                                
                                $
                                (320,871
                                )
                                d
                                
                                $
                                360,439Loss
      from operations
                                
                                
                                (1,019,902
                                )
                                
                                
                                320,871
                                
                                d
                                
                                
                                (699,031
                                )Gain
      on settlement
                                
                                
                                45,997
                                
                                
                                
                                (45,997
                                )
                                d
                                
                                
                                —Total
      other income (expense)
                                
                                
                                45,997
                                
                                
                                
                                (45,997
                                )
                                d
                                
                                
                                —Loss
      before income taxes
                                
                                
                                (973,905
                                )
                                
                                
                                274,874
                                
                                d
                                
                                
                                (699,031
                                )Income
      tax benefit
                                
                                
                                —
                                
                                
                                
                                199,823
                                
                                f
                                
                                
                                199,823Gain
      from discontinued operations
                                
                                
                                —
                                
                                
                                
                                91,543
                                
                                d,g
                                
                                
                                91,543Net
      loss
                                
                                
                                (973,905
                                )
                                
                                
                                566,239
                                
                                d,f,g
                                
                                
                                (407,666
                                )Foreign
      currency translation adjustment
                                
                                $
                                98,546
                                
                                
                                $
                                (98,546
                                )
                                g
                                
                                $
                                —
 
 The
following table summarizes statement of operations for the period from January
14, 2000 (Date of Inception) through September 30, 2005, 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, 2005
                                  
                                  As Reported
                                  
                                  
                                  Adjustments
                                  
                                  
                                  
                                  As RestatedResearch
      and development
                                  
                                  $
                                  1,900,095
                                  
                                  
                                  $
                                  (1,900,095
                                  )
                                  h
                                  
                                  $
                                  —General
      and administrative
                                  
                                  
                                  2,302,253
                                  
                                  
                                  
                                  (1,941,814
                                  )
                                  d,i
                                  
                                  
                                  360,439Depreciation
                                  
                                  
                                  235,313
                                  
                                  
                                  
                                  (235,174
                                  )
                                  j
                                  
                                  
                                  139Impairment
      loss on intangible assets
                                  
                                  
                                  173,234
                                  
                                  
                                  
                                  (173,234
                                  )
                                  k
                                  
                                  
                                  —Impairment
      loss on property and equipment
                                  
                                  
                                  86,683
                                  
                                  
                                  
                                  (86,683
                                  )
                                  l
                                  
                                  
                                  —Total
      operating expenses
                                  
                                  
                                  5,035,491
                                  
                                  
                                  
                                  (4,336,460
                                  )
                                  m
                                  
                                  
                                  699,031Loss
      from operations
                                  
                                  
                                  (5,035,491
                                  )
                                  
                                  
                                  4,336,460
                                  
                                  m
                                  
                                  
                                  (699,031
                                  )Other
      income
                                  
                                  
                                  282,142
                                  
                                  
                                  
                                  (282,142
                                  )
                                  n
                                  
                                  
                                  —Gain
      on settlement
                                  
                                  
                                  45,997
                                  
                                  
                                  
                                  (45,997
                                  )
                                  d
                                  
                                  
                                  —Interest
      expense, net
                                  
                                  
                                  (300,000
                                  )
                                  
                                  
                                  300,000
                                  
                                  o
                                  
                                  
                                  —Total
      other income (expense)
                                  
                                  
                                  28,139
                                  
                                  
                                  
                                  (28,139
                                  )
                                  d,n,o
                                  
                                  
                                  —Loss
      before income taxes
                                  
                                  
                                  (5,007,352
                                  )
                                  
                                  
                                  4,308,321
                                  
                                  
                                  
                                  
                                  (699,031
                                  )Income
      tax benefit
                                  
                                  
                                  12,837
                                  
                                  
                                  
                                  186,986
                                  
                                  p
                                  
                                  
                                  199,823Net
      loss
                                  
                                  
                                  (4,994,515
                                  )
                                  
                                  
                                  322,973
                                  
                                  d,q,r
                                  
                                  
                                  (4,671,542
                                  )Foreign
      currency translation adjustment
                                  
                                  
                                  (131,999
                                  )
                                  
                                  
                                  131,999
                                  
                                  q
                                  
                                  
                                  —Loss
      from discontinued operations
                                  
                                  $
                                  —
                                  
                                  
                                  $
                                  (4,172,333
                                  )
                                  r
                                  
                                  $
                                  (4,172,333
                                  )
 
 The
restatements had no impact on the Company’s cash or cash flows.
  22
 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 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 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.
              Quarterly
      information restated to conform to year-end December 31, 2005
      adjustments.
 e.
              Reclassify
      accumulated other comprehensive loss prior to 2005 from a biotechnology
      research and development business as discontinued
      operations.
 f.
              Restate
      for deferred income tax benefit related to mineral property
      acquisitions.
 g.
              Reclassify
      foreign currency translation adjustment from the period ended December 31,
      2005 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.
    23
   ITEM
2.           MANAGEMENT’S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.




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. Actual events or results
may differ materially.  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-QSB, the terms "we", "us", "our", “Searchlight” and “our company” mean
Searchlight Minerals Corp. unless otherwise indicated. All dollar amounts in
this Quarterly Report are in U.S. dollars unless otherwise
stated.




OVERVIEW




We are
an exploration stage company engaged in the acquisition and exploration of
mineral properties.  In February, 2005, we announced the
reorganization of Searchlight from a biotechnology research and development
company to a company focused on the development and acquisition of mineral
properties.  In connection with our reorganization we entered into
mineral option agreements to acquire an interest in 20 mineral claims (the
“Searchlight Claims”) representing an area of 3,200 acres located in Clark
County, south of Searchlight, Nevada. Also in connection with our corporate
restructuring, our board of directors approved a change of our name to
"Searchlight Minerals Corp.”  Our name was changed to “Searchlight
Minerals Corp.” effective June 23, 2005.




On
October 24, 2005, we acquired a 50% interest in a joint venture agreement (the
“JV Agreement”) dated May 20, 2005 between NMC and Verde River Iron Company,
LLC, a Nevada limited liability company (“Verde”).  The JV Agreement
was entered into for the purpose of funding 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”).  The slag contained
on the Clarkdale Slag Project site was produced as smelter rejects from prior
processing of copper ores. Subject to implementing a drilling and sampling
program that indicate that 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., a Nevada
Corporation (“NMC”) dated for reference June 1, 2005, as amended August 31, 2005
and October 24, 2005, pursuant to which NMC assigned all of its interest in the
JV Agreement to us. See “Clarkdale Slag Project” below.




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 mineral properties we acquire.  Our current
plan of operation is to conduct mineral exploration activities on the
Searchlight Claims and the Clarkdale Slag Project in order to assess whether
they possess mineral reserves 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 Searchlight’s 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.  See
“Searchlight Option Agreements” and “Clarkdale Slag Project” below. We can
provide no assurance that we will discover mineral reserves on any properties we
acquire.




24




RESTATEMENT




Discontinued
operations - The consolidated statement of operations for the period from
January 14, 2000 (date of inception) through September 30, 2005 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.




Searchlight
Mining Claims – The Company restated the Searchlight Mining Claims as of
September 30, 2005. 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
$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.




Joint
venture agreement – The Company restated the joint venture agreement as of
September 30, 2005. The Company originally valued the transaction at the agreed
upon cash price of $690,000 and no value was given to the 12,000,000 warrants
issued.  The Company restated the valuation of the warrants by using
the market price of common stock issued in connection with a private placement
conducted at the time the warrants were issued.  The restated value of
the warrants was $1,310,204.  The restatement also included the
deferred future income tax liability assumed of $608,277 for a total increase in
purchase consideration of $1,918,481.




Recent
Developments




We
have experienced the following significant developments since our last fiscal
quarter ended June 30, 2005:




1.
                        During
      the quarter ended September 30, 2005, metallurgical studies have been
      performed on the Clarkdale Project site.  Drilling has begun on
      the slag pile and work on the drill hole samples is expected to commence
      by early 2006. We expect some preliminary results of the aforementioned
      samples by early 2006.  Metallurgical studies have also been
      performed on the Searchlight Project site.  Chain of Custody
      surface samples and bulk samples have been taken from the project area and
      analytical work on the samples has begun.  We expect some
      preliminary results of the Searchlight Project samples in early
      2006.2.
                        On
      October 24, 2005, we entered into an amendment (the “Amended Assignment
      Agreement”) to the assignment agreement between us and NMC dated for
      reference June 1, 2005, as amended August 31, 2005 (the ”Assignment
      Agreement”), for the purpose of clarifying Searchlight’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 a copper smelter slag located on a parcel of
      land consisting of approximately 200 acres in Clarkdale, Arizona (the
      “Clarkdale Slag Project”).  As at October 24, 2005, we fulfilled
      our obligations under the terms and conditions of the Assignment
      Agreement.3.
                        In
      connection with the acquisition of our interest in the Clarkdale Slag
      Project and in accordance with the terms of the Assignment Agreement, we
      completed the following issuances of securities: (i) we issued to NMC a
      warrant to purchase 10,000,000 (post-split) shares of our common stock at
      an exercise price of $0.375 per share expiring June 1, 2015, pursuant to
      Section 4(2) of the Securities Act of 1933; and (ii) we issued to NMC’s
      designate, Clarion Finanz AG (“Clarion”), a warrant to purchase 2,000,000
      (post-split) shares of our common stock at an exercise price of $0.375 per
      share expiring June 1, 2015, pursuant to Regulation S of the Securities
      Act of 1933.  See “Acquisition of Clarkdale Slag Project” and
      “Item 2. Unregistered sales of equity securities and use of proceeds”,
      below.




25




4.
              Effective
      October 7, 2005, K. Ian Matheson resigned as the Chief Executive Officer,
      Chief Financial Officer, President, Secretary and Treasurer of Searchlight
      Minerals Corp. (the “Company”).  Mr. Matheson continues to serve
      as a member of the Board of Directors.  In place of Mr.
      Matheson, Ian R. McNeil, a member of Searchlight’s Board of Directors, was
      appointed as our Chief Executive Officer and President and Carl Ager, also
      a member of the our Board of Directors, was appointed as Chief Financial
      Officer, Secretary and Treasurer.5.
              Effective
      September 30, 2005, we completed a two-for-one split of our issued and
      outstanding common stock.  As a result of the stock split,
      Searchlight’s authorized capital has increased from 200,000,000 shares of
      common stock with a par value of $0.001 per share, of which 26,075,000
      shares were issued and outstanding, to 400,000,000 shares of common stock
      with a par value of $0.001 per share, of which 52,150,000 were issued and
      outstanding as at September 30, 2005.  As a result of the stock
      split, the symbol under which our shares trade on the OTC Bulletin Board
      had been changed from “SLGT” to “SRCH,” effective September 30,
      2005.6.
              On
      September 6, 2005, we entered into lease agreement with Burnett &
      Williams, LLC, a Nevada limited liability company (“B&W”) for the
      lease of our head office located at 2441 W. horizon Ridge Parkway,
      Henderson NV 89052 at a rate of $3,100 per month.  The lease is
      for a term of six months commencing September 15, 2005.  The
      lease term is renewable at our option for a further six months on the same
      terms and conditions.
 
 7.
              Following
      the closing of the U.S. Private Placement, the European Private Placement
      and the Canadian Private Placement (each as defined below), we raised
      aggregate gross proceeds of $3.055 Million from three private
      placements.  See “Item 2. Unregistered sales of equity
      securities and use of proceeds”, below.8.
              We
      posted a cash bond in the amount of $180,500 with the Nevada Bureau of
      Land Management, in accordance with the terms of our reclamation permit
      for the Searchlight project granted by the Nevada Bureau of Mining
      Regulation and Reclamation on April 22, 2005.  See “Reclamation
      Permit”, below.




Acquisition
of Clarkdale Slag Project




We
entered into an assignment agreement with Nanominerals Corp., a Nevada
Corporation dated for reference June 1, 2005, as amended August 31, 2005 and
October 24, 2005 pursuant to which NMC assigned all of its interest in the JV
Agreement to us.  The JV Agreement was entered into for the purpose of
funding the processing of a copper smelter slag located on a parcel of land
consisting of approximately 200 acres in Clarkdale, Arizona.




Pursuant
to the terms of the Assignment Agreement, in consideration of the assignment of
NMC’s rights in the Clarkdale Slag Project to us, we agreed to:




(i)
              Repay
      NMC $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)
              Assign
      NMC a five percent net smelter return royalty payable from Searchlight’s
      share of production from the Clarkdale Slag
  Project.




26




(iii)
              Appoint
      sufficient nominees of NMC to Searchlight’s board of directors to
      constitute a majority of the board following execution of the Assignment
      Agreement.(iv)
              Issue
      to NMC, or its designate, 12,000,000 warrants to purchase shares of the
      common stock of Searchlight exercisable for a term of 10 years from the
      date of the Assignment Agreement at an exercise price of $0.375 per
      share.(v)
              Provide
      confirmation to NMC, that Searchlight has received funds of $2,000,000
      pursuant to Searchlight’s private placement offering of its securities to
      accredited investors in the U.S. and to accredited investors outside of
      the U.S.




On
October 24, 2005, we entered into an amendment (the “Amended Assignment
Agreement”) to the Assignment Agreement, for the purpose of clarifying
Searchlight’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, we fulfilled our obligations under
the terms and conditions of the Assignment Agreement.




Following
our acquisition of NMC’s interest in the Clarkdale Slag Project we are presently
proceeding with the joint venture with Verde. Under the terms of the JV
Agreement, we intend 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 byproducts from the slag for
commercial resale.  Pursuant to the terms of the JV Agreement, we are
subject to the following, payments and conditions:




(i)
            We
      are 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 we make the $3,000,000 payment to
      Verde, Verde agrees to transfer all right to process the Clarkdale Slag
      Project slag pile to OPCO and grant us a license to use the project site
      for the project.(ii)
            after
      completion of a bankable feasibility study in Phase II, we are required to
      contribute $27,000,000 (“Project Funding Payment”) to OPCO within 90 days
      of receipt of the study.(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 us 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 Searchlight and
Verde.




27




Searchlight
Option Agreements




On
February 10, 2005, we entered into option agreements (the “Option Agreements”)
with the owners (collectively the “Claim Owners”) of the Searchlight Claims.
Prior to entering into the Option Agreements with Searchlight, each Claim Owner
optioned its interest in the Searchlight Claim it owned to Searchlight Minerals,
Inc. (“SMI”).  Prior to entering into the Option Agreements with
Searchlight, each Claim Owner optioned its interest in the Searchlight Claim it
owned to Searchlight Minerals, Inc. (“SMI”).  Under the terms of the
Option Agreements, each Claim Owner and SMI acknowledged and agreed, among other
things, to the following (the “Acknowledgements”):




(i)
            the
      assignment of SMI’s interest in the Searchlight Claims to
      Searchlight;(ii)
            the
      right of reimbursement of K. Ian Matheson and his related companies for
      amounts advanced to SMI, including $85,000 advanced to
  SMI;(iii)
            that
      following the issuance of 140,000 shares of the common stock of
      Searchlight to each Claim Owner, all of the Claim Owner’s rights and
      interests in the Searchlight Claims will be vested in
      Searchlight;(iv)
            the
      appointment of K. Ian Matheson as director and officer of Searchlight to
      proceed with a restructuring of the business of Searchlight;
      and(v)
            during
      the term of the agreement, to allow Searchlight and its authorized agents
      to have exclusive rights to access the Searchlight Claims for all purposes
      including prospecting, exploring, developing, trenching, stripping,
      excavating, sampling and conducting any and all exploration and
      development activities for the purpose to determining the mineral or metal
      content of the property and the right to remove from the property all such
      materials and minerals deemed necessary to properly test, explore or
      develop the property.




In
consideration of the Acknowledgments, Searchlight agreed, among other things to:
(i) complete a corporate restructuring of its business by March 31, 2005 (the
“Restructuring Date”); (ii) include any shares of its common stock issued to the
Claim Owners in any subsequent registration statement filed by Searchlight under
the Securities Act; (iii) make all regulatory or government payments required to
maintain the Searchlight Claims in good standing during the term of the
agreement, and (iv) issue to each Claim Owner 140,000 restricted shares in the
common stock of Phage in the following manner:




(a)
                  35,000
      shares upon or before the expiry of the third day following the
      Restructuring Date;(b)
                  35,000
      shares upon or before the first anniversary date of the Restructuring
      Date;(c)
                  35,000
      shares upon or before the second anniversary date of the Restructuring
      Date; and(d)
                  35,000
      shares upon or before the third anniversary date of the Restructuring
      Date.




On
June 21, 2005, we entered into extension agreements with the Claim Owners
extending the Restructuring Date under the Option Agreements to June 30,
2005.  On June 30, 2005 we approved the issuance of 1,400,000 (post
split) restricted shares of our common stock to the Claim Owners in
accordance with the terms of the Option Agreements.  We will not
acquire title to the Searchlight Claims until we complete the issuance of
140,000 shares of our common stock to each Claim Owner in accordance with the
terms of the Option Agreements.  Following our entry into the Option
Agreements, K. Ian Matheson was appointed as an officer and director of
Searchlight in February, 2005. K. Ian Matheson and associated companies have a
25.625% net interest in the Searchlight Claims.  Although the Option
Agreements were not negotiated at “arms-length”, management deemed it reasonable
and in the best interest of Searchlight to enter into the Option Agreements
based on certain criteria, such as the potential for discovering mineral
reserves on the Searchlight Claims and the potential benefit to Searchlight’s
stockholders of entering into the transaction.




28




In
connection with our corporate restructuring 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 regarding the reorganization of Searchlight and
the development of assaying and testing procedures for the Searchlight
Claims.




Searchlight
Project and Reclamation Permit




The
intent of the Searchlight Project 2005 exploration work program is to drill 18
exploratory holes and test and develop a 40 acre pit to determine if there is
mineralized material on the property.  We expect to rent a drill rig
and employ drillers to conduct the drilling.  Independent geologists
and engineers are expected to be engaged to certify the work. Budget for this
work is estimated to cost approximately $800,000.




On April
22, 2005, Pilot Plant Inc. (“PPI”), the owner of certain of the Searchlight
Claims, received a reclamation permit from the Nevada Bureau of Mining
Regulation and Reclamation (“BMRR”) for its proposed work program on certain of
the Searchlight Claims.  We acquired an interest in the claims subject
to the reclamation permit received by PPI through our Option Agreement with
PPI.




Pursuant
to the terms of the reclamation permit, PPI received the authorization to
proceed with the reclamation of the mine located on the Rio Raga 304 claim and
to pursue PPI’s planned exploration program on certain of its claims, in the
following manner:





Exploration
      Phase
                                              
                                              Project
                                              
                                              Location
                                              
                                              SizePhase
      I - Exploration Program
                                              
                                              Drilling
      of 18 Sites
                                              
                                              Section
      1, 12, 13, 24 and 25 T. 29 S., R. 63 E. and portions of Sections 19 and
      30, T. 29S., R. 64 E., MDM, Clark County, Nevada
                                              
                                              1.8
      AcresPit
      and Set Backs
                                              
                                              Section
      13, T. 29S., R. 63
                                              
                                              41.5
      AcresPhase
      II – Mine Reclamation
                                              
                                              Plant
      Site
                                              
                                              E.,
      MDM, Clark County,
                                              
                                              3.2
      AcresAccess
      Road
                                              
                                              Nevada
                                              
                                              1
      Acre




The
permit is valid for the life of the project and becomes effective upon receipt
of an acceptable surety by the BMRR.  We agreed, upon receipt of
additional financing, to post by July 3, 2005 the surety bond for the approved
two phase exploration program.  We posted a cash bond in the amount of
$180,500 with the Nevada Bureau of Land Management (“BLM”), in accordance with
the terms of our reclamation permit for the Searchlight project granted by the
Nevada Bureau of Mining Regulation and Reclamation on April 22,
2005.




In
accordance with the terms of our reclamation permit for the Searchlight Project,
metallurgical studies have been performed on the Searchlight Project
site.  Chain of Custody surface samples and bulk samples have been
taken from the project area and analytical work on the samples has
begun.  We expect some preliminary results of the Searchlight Project
samples by early 2006.




PLAN
OF OPERATION




Our
current plan of operation is to conduct mineral exploration activities on the
Searchlight Claims and the Clarkdale Slag Project in order to assess whether
they possess mineral reserves 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 Searchlight’s 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.




29




We have
developed an exploration work program for the Searchlight Project.  We
filed a surety bond in the amount of $27,528 for Phase I and $153,031 for Phase
II with the BLM, and have commenced the two phase exploration program approved
in connection with the reclamation permit received by PPI. During the quarter
ended September 30, 2005, metallurgical studies have been performed on the
Searchlight Project site.  Chain of custody surface samples and bulk
samples have been taken from the project area and analytical work on the samples
has begun.  We expect some preliminary results of the aforementioned
samples by early 2006.  Also during the quarter, metallurgical studies
have been performed on the Clarkdale Project site and drilling has begun on the
Slag Pile.  We expect some preliminary results of the samples by early
2006.




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




Administrative
      Expenses
                    
                    $
                    200,000Legal
      and Accounting Expenses
                    
                    $
                    100,000Consulting
      Services
                    
                    $
                    100,000Clarkdale
      Slag ProjectProperty
      Payments
                    
                    $
                    500,000Ore
      Reserve Study
                    
                    $
                    500,000OPCO
      Payment/Feasibility Study
                    
                    $
                    3,000,000Total
      Clarkdale Slag Project
                    
                    $
                    4,000,000Searchlight
      Gold ProjectSampling
      and Testing
                    
                    $
                    100,000Drill
      Program
                    
                    $
                    550,000Total
      Searchlight Gold Project
                    
                    $
                    650,000TOTAL
                    
                    $
                    5,050,000




We
recorded a net loss of $409,666 for the nine months ended September 30, 2005 and
have an accumulated deficit of $4,671,542 as at September 30,
2005.  As at September 30, 2005 we had cash of $1,373,161 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
$5,000,000.  Accordingly we do not have sufficient funds to meet our
planned expenditures over the next twelve months and will need to seek
additional financing to meet our planned expenditures. See “Future Financings”,
below.




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 mineral properties we acquire.  Our current
plan of operation is to conduct mineral exploration activities on the
Searchlight Claims and the Clarkdale Slag Project in order to assess whether
they possess mineral reserves 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 Searchlight’s 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.  We can
provide no assurance that we will discover mineral reserves on any properties we
acquire.




30




Liquidity
and Financial Condition




Working
Capital




PercentageAt
      September 30,
                          
                          
                          At
      December 31,
                          
                          
                          Increase
      /2005
                          
                          
                          2004
                          
                          
                          (Decrease)Current
      Assets
                          
                          $
                          1,373,161
                          
                          
                          $
                          295
                          
                          
                          
                          465,378.3
                          %Current
      Liabilities
                          
                          $
                          1,374,379
                          
                          
                          $
                          1,685,661
                          
                          
                          
                          (18.5
                          )%Working
      Capital (Deficit)
                          
                          $
                          1,218
                          
                          
                          $
                          (1,685,366
                          )
                          
                          
                          100.1
                          %




Cash
Flows




Nine
      Months Ended
                        
                        
                        Nine
      Months EndedSeptember
      30, 2005
                        
                        
                        September
      30, 2004Cash
      Flows from (used in) Operating Activities
                        
                        $
                        (539,722
                        )
                        
                        $
                        (150,329
                        )Cash
      Flows from (used in) Investing Activities
                        
                        $
                        (793,219
                        )
                        
                        $
                        (4,538
                        )Cash
      Flows from (used in) Financing Activities
                        
                        $
                        2,705,807
                        
                        
                        $
                        149,149Net
      Increase (decrease) in Cash During Period
                        
                        $
                        1,372,866
                        
                        
                        $
                        (5,718
                        )




The
decreases in our working capital deficit from $1,685,366 as at December 31, 2004
as compared to a working capital surplus of $1,218 as at September 30, 2005
primarily due to the increase in cash flows from financing activities of
$2,705,807 from private placements of our securities completed during the nine
months ended September 30, 2005.  The increases in our cash used in
operating activities during the nine months ended September 30, 2005 as compared
to the comparative period in 2004, are primarily a result of: (i) the increase
in our operating expenses which were primarily due to mining and exploration
expenses of $245,377 and increased stock based compensation expenses of
$435,933, and (ii) professional fees incurred in connection with preparing
materials for the private placements we completed during the period ended
September 30, 2005.




Future
Financings




Our plan
of operation calls for significant expenses in connection with the exploration
of the Searchlight Claims and Clarkdale Slag Project which will require us to
obtain 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 there
exists a substantial doubt about our ability to continue as a going
concern.




Off-Balance
Sheet Arrangements




We have
no off-balance sheet arrangements that have or are reasonably likely to have a
current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources.




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.




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.




31




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 10 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.




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 (EITF) abstract 04-02
“Whether Mineral Rights Are Tangible or Intangible Assets”.  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
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 of Disposal of Long-Lived
Assets.”




Exploration
costs




Mineral
exploration costs are expensed as incurred.




Basic
and Diluted Net Income (Loss) Per Share




Searchlight
computes net income (loss) per share in accordance with SFAS No. 128, "Earnings
per Share". SFAS No. 128 requires presentation of both basic and diluted
earnings per share (EPS) on the face of the income statement.  Basic
EPS is computed by dividing net income (loss) available to common shareholders
(numerator) by the weighted average number of shares outstanding (denominator)
during the period. Diluted EPS gives effect to all dilutive potential common
shares outstanding during the period using the treasury stock method and
convertible preferred stock using the if-converted method.  In
computing diluted EPS, the average stock price for the period is used in
determining the number of shares assumed to be purchased from the exercise of
stock options or warrants.  Diluted EPS excludes all dilutive
potential shares if their effect is anti-dilutive.




32




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.




We
were incorporated in January, 2000 and since November, 2001, 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
$4,671,542.  Our ability to achieve and maintain profitability and
positive cash flow is dependent upon:




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




Based
upon current plans, we expect to incur operating losses in future
periods.  This will happen because there are expenses associated with
the research and exploration of our mineral properties.  We may not
guarantee we will be successful in generating revenues in the
future.  Failure to generate revenues will cause us to go out of
business.




Because
the majority of our officers and directors do not have technical training or
experience in exploring for, starting, and operating a mine, we will have to
hire qualified personnel.




If we
can't locate qualified personnel, we may have to suspend or cease exploration
activity which will result in the loss of your investment.  Because
the majority of our officers and directors are inexperienced with exploring for,
starting, and operating a mine, we will have to hire qualified persons to
perform surveying, exploration, and excavation of our property.  Our
officers and directors have no direct training or experience in these areas and
as a result may not be fully aware of many of the specific requirements related
to working within the industry.  Their decisions and choices may not
take into account standard engineering or managerial approaches, mineral
exploration companies commonly use.  Consequently our exploration
activities, earnings and ultimate financial success could suffer irreparable
harm due to certain of management's lack of experience in this
industry.  As a result we may have to suspend or cease exploration
activities which will result in the loss of your investment.




If
we do not obtain additional financing, our business will fail.




Our
current operating funds are sufficient to complete the proposed exploration
program of the Searchlight Claims and Clarkdale Project for the next twelve
months, however, our plan of operations calls for significant expenses in
connection with the exploration of the Searchlight Claims and Clarkdale Project.
We currently do not have any operations and we have no
income.  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
this is an exploration project, we face a high risk of business failure due to
our inability to predict the success of our business.




We have
just begun the initial stages of exploration of our mineral claims, and thus
have no way to evaluate the likelihood that we will be able to operate the
business successfully.  We were incorporated on January 14, 2000, and
to date have been involved primarily in organizational activities, the
acquisition of the mineral claim, obtaining a summary geological report and
performing certain limited work on our mineral claim.  We have not
earned any revenues to date.




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.  Problems such as unusual or unexpected
formations and other conditions are involved in mineral exploration and often
result in unsuccessful exploration efforts.  If no funding is
available, we may be forced to abandon our operations.




33




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, 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.




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




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




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




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




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,
cave-ins 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.




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 will be subject to the laws of the State of Nevada as
we carry out our exploration program.  We may be 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.




34




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




Our
development and production operations are regulated by both US Federal and State
of Nevada environmental laws that relate to the protection of air and water
quality, hazardous waste management and mine reclamation.  These
regulations may 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.




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, 2005, 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, 2005, management considered the impact of the
restatement to our interim financial statements for the nine month period ended
September 30, 2005, 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 a qualified
Chief Financial Officer, as well as the lack of adequate additional research
materials and support staff, represented material weaknesses in our disclosure
controls and procedures as of September 30, 2005.
  In
addition, our management has concluded that management’s failure to consult an
outside expert regarding the initial accounting for certain complex transactions
also represented material weaknesses in our disclosure controls and procedures
as of September 30, 2005.  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, 2005to 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.
  35
 Changes in Internal Controls
over Financial Reporting
 
 While no changes to our disclosure
controls and procedures were made to rectify the material weaknesses during the
period covered by this report because such weaknesses were not known at that
time,subsequently,
on June 14, 2006, we remediated one weakness in part by appointing Melvin L.
Williams as our Chief Financial Officer. Mr. Williams has extensive U.S.
GAAP experience, a B.B.A. in Business Administration from the University of
Oregon, and has been a CPA in the State of Nevada since 1989.
 
 In addition, subsequent to this
period we remediated the weakness of our management’s failure to consult an
outside expert 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.




36




PART
II - OTHER INFORMATION




ITEM
      1.
            LEGAL
      PROCEEDINGS.




None.




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




During
the fiscal quarter ended September 30, 2005, we completed the sales of the
following securities that were not registered pursuant to the Securities
Act:




1.
              On
      July 6, 2005, we issued 200,000 shares of common stock to a consultant for
      payment of accounts payable related to consulting services provided to us
      in January 2002.  These securities were issued pursuant to the
      provisions of Regulation S of the Securities Act.2.
              On
      July 7, 2005, we issued 1,400,000 shares of our common stock to the
      Searchlight Claim owners in connection with the option agreements dated
      February 8, 2005 with the Searchlight Claim owners.  The shares
      were issued pursuant to Section 4(2) of the Securities
      Act.3.
              On
      September 2, 2005, Searchlight closed its brokered private placement of
      3,195,000 units to raise aggregate gross proceeds of US$1,597,500 (the
      “Canadian Private Placement”).  The Canadian Private Placement
      units were issued to accredited investors resident in Canada and pursuant
      to Regulation S (“Regulation S”) of the Securities Act of 1933 (the
      “Securities Act”).  Each unit (a” Unit”) consisted of one share
      of the Searchlight’s common stock (a “Share”), one half of one share
      purchase warrant with each whole warrant entitling the subscriber to
      purchase one additional Share for a period of nine months from the closing
      of the Canadian Private Placement at an exercise price equal to US$1.25
      per Share, and one non-transferable warrant exercisable into one-tenth
      (1/10) of one Unit for no additional consideration if a Registration
      Statement on Form SB-2 registering the resale of the Units is not declared
      effective by the US Securities and Exchange Commission on or before the
      day that is four months and one day after the closing of the Canadian
      Private Placement.  The securities were sold on a best efforts
      agency basis by Dominick & Dominick Securities Inc. (the
      "Agent").  In connection with the Canadian Private Placement,
      the Agent received a fee of US$205,250 and warrants to purchase 319,500
      Units at a price of US$1.25 per Unit for a period of nine months from the
      closing of the Canadian Private Placement.  Each purchaser
      represented to Searchlight that they were a non-US person as defined in
      Regulation S. Searchlight did not engage in a distribution of this
      offering in the United States. Each purchaser represented their intention
      to acquire the securities for investment only and not with a view toward
      distribution.  Appropriate legends were affixed to the stock
      certificate issued to each purchaser in accordance with Regulation
      S.4.
              On
      September 6, 2005, Searchlight closed its private placement of 230,000
      units to raise aggregate gross proceeds of US$115,000 (the “U.S. Private
      Placement”).  The U.S. Private Placement units were issued to
      accredited investors resident in the United States pursuant to Regulation
      D of the Securities Act.  Each unit (a “Unit”) consisted of one
      share of Searchlight’s common stock (a “Share”), one half of one share
      purchase warrant with each whole warrant entitling the subscriber to
      purchase one additional Share for a period of nine months from the closing
      of the U.S. Private Placement at an exercise price equal to US$1.25 per
      Share, and one non-transferable warrant exercisable into one-tenth (1/10)
      of one Unit for no additional consideration if a Registration Statement on
      Form SB-2 registering the resale of the Units is not declared effective by
      the US Securities and Exchange Commission on or before the day that is
      four months and one day after the closing of the U.S. Private
      Placement.  The sales were completed pursuant to Rule 506 of
      Regulation D of the Securities Act.  All securities issued were
      endorsed with a restrictive legend confirming that the securities cannot
      be resold without registration under the Securities Act or an applicable
      exemption from the registration requirements of the Securities
      Act.




37




5.
            On
      September 7, 2005, Searchlight closed a brokered private placement of
      2,700,000 Units to raise aggregate gross proceeds of US$1,350,000 (the
      “European Private Placement”).  The European Private Placement
      units were sold on a best efforts agency basis by Clarion Finanz AG (the
      “European Agent”) pursuant to Regulation S.  The Units offered
      in the European Private Placement are identical to the Units in the
      Canadian Private Placement.  In connection with the European
      Private Placement, the European Agent received a commission of US$135,000
      and warrants to purchase 270,000 Units at a price of US$1.25 per Units for
      a period of nine months from the closing of the European Private
      Placement. Each purchaser represented to Searchlight that they were a
      non-US person as defined in Regulation S. Searchlight did not engage in a
      distribution of the European Private Placement in the United
      States.  Each purchaser represented their intention to acquire
      the securities for investment only and not with a view toward
      distribution.  Appropriate legends were affixed to the stock
      certificate issued to each purchaser in accordance with Regulation
      S.6.
            On
      October 24, 2005, in connection with the acquisition of our interest in
      the Clarkdale Slag Project and in accordance with the terms of the
      assignment agreement, we completed the following issuances of our
      securities: (i) we issued to Nanominerals Corp. a warrant to purchase
      10,000,000 shares of our common stock at an exercise price of $0.375 per
      share expiring June 1, 2015, pursuant to the provisions of Section 4(2) of
      the Securities Act; and (ii) we issued to Clarion Finanz AG, the designate
      of Nanominerals Corp., a warrant to purchase 2,000,000 shares of our
      common stock at an exercise price of $0.375 per share expiring June 1,
      2015, pursuant to the provisions of Regulation S of the Securities
      Act.




Use
of Proceeds




Following
the closing of the U.S. Private Placement, the European Private Placement and
the Canadian Private Placement, we raised aggregate gross proceeds of $3.055
Million from the three private placements. We intend to use the proceeds of the
private placements to fund our plan of development on the Searchlight mineral
claims and the Clarkdale Slag Project and for general corporate
purposes.




ITEM
      3.
            DEFAULTS
      UPON SENIOR SECURITIES.




None.




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




None.




ITEM
      5.
            OTHER
      INFORMATION.




None.




38




ITEM
6.           EXHIBITS AND
REPORTS ON FORM 8-K.




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




ExhibitNumber
                
                Description of Exhibit3.1
                
                Articles
      of Incorporation of L.C.M. Equity, Inc.(1)3.2
                
                Bylaws
      of L.C.M. Equity, Inc.(1)3.3
                
                Articles
      of Incorporation of Uscribble.(1)3.4
                
                Certificate
      of Amendment to Articles of Incorporation – name change to “Regma Bio
      Technologies Limited.”(3)3.5
                
                Certificate
      of Amendment to Articles of Incorporation – name change to “Phage
      Genomics, Inc.”(6)3.6
                
                Certificate
      of Amendment to Articles of Incorporation – name change to “Searchlight
      Minerals Corp.”(12)3.7
                
                Certificate
      of Change to Authorized Capital Pursuant to NRS 78.209(13)3.8
                
                Amended
      Bylaws dated July 22, 2005.(9)3.9
                
                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 Searchlight Minerals Corp. (the “Company”) and Pilot
      Plant Inc. dated February 8, 2005.(8)10.5
                
                Letter
      Agreement between Searchlight and Pilot Plant Inc. dated February 8,
      2005.(8)10.6
                
                Letter
      Agreement between Searchlight and Bear Dog Mines Inc. dated February 8,
      2005.(8)10.7
                
                Letter
      Agreement between Searchlight and Gold Hunter Inc. dated February 8,
      2005.(8)10.8
                
                Letter
      Agreement between Searchlight and Pass Minerals Inc. dated February 8,
      2005.(8)10.9
                
                Letter
      Agreement between Searchlight and Britti Gold Inc. dated February 8,
      2005.(8)10.10
                
                Letter
      Agreement between Searchlight and Geotech Mining Inc. dated February 8,
      2005.(8)10.11
                
                Letter
      Agreement between Searchlight and Gold Crown Inc. dated February 8,
      2005.(8)10.12
                
                Engagement
      Letter dated June 17, 2005 between Searchlight 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)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)




39




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 Company and
      Nanominerals Corp.(11)10.21
                
                Engagement
      Letter dated May 9, 2005 between Searchlight and Dominick & Dominick
      Securities Inc. (12)10.22
                
                First
      Amendment to Assignment Agreement between Nanominerals Corp. and
      Searchlight Minerals Corp. dated August 31, 2005. *10.22
                
                Second
      Amendment to Assignment Agreement between Nanominerals Corp. and
      Searchlight Minerals Corp. dated October 24, 2005.(14)10.23
                
                Office
      Suite Lease Agreement between Burnett & Williams Executive Suites and
      Searchlight Minerals Corp. dated September 6, 2005.*14.1
                
                Code
      of Ethics.(7)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 Officepursuant to 18 U.S.C.
      Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
      of 2002.99.3
                
                Audit
      Committee Charter.(7)99.4
                
                Disclosure
      Committee Charter.(7)




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.




40





(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.*
                                Filed
      with the SEC as an exhibit to our Quarterly Report on Form 10-QSB filed on
      November 21,
2005.




41


REPORTS
ON FORM 8-K




Since the
beginning of our fiscal quarter ended September 30, 2005, we have filed the
following reports on Form 8-K to date:




Date
      of Report
                                
                                Date
      of Filingon
      Form 8-K
                                
                                with
      the SEC
                                
                                Description
      of the Form 8-K(YYYY/MM/DD)
                                
                                (YYYY/MM/DD)2005/07/22
                                
                                2005/07/29
                                
                                Item
      5.03 - Amendment to Bylaws.2005/09/02
                                
                                2005/09/19
                                
                                Item
      3.02 - Closing of $1.59 Million Canadian Private
      Placement;Closing
      of $1.35 Million European Private Placement;and
      Closing of $115,000 U.S. Private Placement;Item
      7.01 - Posting of Reclamation Bond and Two for One Stock
      Split.2005/10/07
                                
                                2005/10/14
                                
                                Item
      5.02 - Changes to Principal Executive Officers;Item
      5.03 - Increased to authorized capital from 200,000,000 shares of common
      stock, par value of $0.001 per share, to 400,000,000 shares of common
      stock, par value of $0.001 per share;Item
      8.01 - Stock symbol change to “SRCH”.2005/10/24
                                
                                2005/10/28
                                
                                Item
      1.01 - Entry into Amended Assignment Agreement with Nanominerals Corp.
      dated October 24, 2005;Item
      2.01 - Completion on October 24, 2005, of the acquisition of all of
      Nanominerals Corp.’s interest in a joint venture agreement dated May 20,
      2005 between Nanominerals Corp. and Verde River Iron Company, LLC
      ;Item
      3.02 - Unregistered Sales of Equity
Securities




42




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 )


43