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 June 30, 2007




 ̈
            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
xNo  ̈




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 June
30, 2007 (the “2007 Second Quarter 10-QSB”) is being filed with the Securities
and Exchange Commission (the “SEC”) to restate our consolidated financial
statements as of June 30, 2007 and for the three and six months ended June 30,
2007 and 2006, and the period from January 14, 2000 (date of inception) through
June 30, 2007.  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.
     
 ·
              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.
    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.
    ·
              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.
    ·
              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 17 to the consolidated
financial statements included with this report.
  This Form 10-Q/A sets forth the 2007
Second 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 2007 Second 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 2007 Second 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 2007 Second Quarter 10-QSB.  This Form 10-Q/A does
not describe events occurring after the 2007 Second 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 2007 Second 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 2007 Second 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)
 CONSOLIDATED
BALANCE SHEETS
 (UNAUDITED)
(RESTATED)
 
 June 30, 2007
                                      
                                      
                                      December 31, 2006(restated)ASSETSCurrent
      assetsCash
                                      
                                      $
                                      11,665,903
                                      
                                      
                                      $
                                      3,684,248Prepaid
      expenses
                                      
                                      
                                      216,250
                                      
                                      
                                      
                                      106,235Total
      current assets
                                      
                                      
                                      11,882,153
                                      
                                      
                                      
                                      3,790,483Property
      and equipment, net
                                      
                                      
                                      1,499,338
                                      
                                      
                                      
                                      30,187Mineral
      properties
                                      
                                      
                                      12,702,258
                                      
                                      
                                      
                                      5,431,290Slag
      project
                                      
                                      
                                      120,766,877
                                      
                                      
                                      
                                      -Land
      - smelter site and slag pile
                                      
                                      
                                      5,916,150
                                      
                                      
                                      
                                      -Land
                                      
                                      
                                      3,300,000
                                      
                                      
                                      
                                      -Reclamation
      bond and deposits
                                      
                                      
                                      183,040
                                      
                                      
                                      
                                      183,040Joint
      venture and merger option agreements
                                      
                                      
                                      -
                                      
                                      
                                      
                                      2,808,481Total
      non-current assets
                                      
                                      
                                      144,367,663
                                      
                                      
                                      
                                      8,452,998Total
      assets
                                      
                                      $
                                      156,249,816
                                      
                                      
                                      $
                                      12,243,481LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilitiesAccounts
      payable
                                      
                                      $
                                      871,155
                                      
                                      
                                      $
                                      888,651Accounts
      payable - related party
                                      
                                      
                                      20,053
                                      
                                      
                                      
                                      311,863Capital
      lease payable, current portion
                                      
                                      
                                      20,302
                                      
                                      
                                      
                                      -Loan
      payable - related party
                                      
                                      
                                      382,792
                                      
                                      
                                      
                                      382,792VRIC
      payable, current portion - related party
                                      
                                      
                                      172,802
                                      
                                      
                                      
                                      -Total
      current liabilities
                                      
                                      
                                      1,467,104
                                      
                                      
                                      
                                      1,583,306Long-term
      liabilitiesVRIC
      payable, net of current portion - related party
                                      
                                      
                                      2,245,237
                                      
                                      
                                      
                                      -Capital
      lease payable, net of current portion
                                      
                                      
                                      75,937
                                      
                                      
                                      
                                      -Deferred
      tax liability
                                      
                                      
                                      51,159,846
                                      
                                      
                                      
                                      860,331Total
      long-term liabilities
                                      
                                      
                                      53,481,020
                                      
                                      
                                      
                                      860,331Total
      liabilities
                                      
                                      
                                      54,948,124
                                      
                                      
                                      
                                      2,443,637Stockholders'
      equityCommon
      stock, $0.001 par value; 400,000,000 shares authorized, 92,777,827 and
      67,231,000 shares, respectively, issued and
outstanding
                                      
                                      
                                      92,778
                                      
                                      
                                      
                                      67,231Additional
      paid-in capital
                                      
                                      
                                      110,016,963
                                      
                                      
                                      
                                      17,738,891Common
      stock subscribed
                                      
                                      
                                      195,000
                                      
                                      
                                      
                                      -Accumulated
      deficit during exploration stage
                                      
                                      
                                      (9,003,049
                                      )
                                      
                                      
                                      (8,006,278
                                      )Total
      stockholders' equity
                                      
                                      
                                      101,301,692
                                      
                                      
                                      
                                      9,799,844Total
      liabilities and stockholders' equity
                                      
                                      $
                                      156,249,816
                                      
                                      
                                      $
                                      12,243,481
 
 See
Accompanying Notes to these Consolidated Financial Statements
  5
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 CONSOLIDATED
STATEMENTS OF OPERATIONS
 (UNAUDITED)
(RESTATED)
 
 For
      the period fromJanuary
      14, 2000(Date
      of Inception)For the three months
      ended
                                      
                                      
                                      For the six months
    ended
                                      
                                      
                                      ThroughJune 30, 2007
                                      
                                      
                                      June 30, 2006
                                      
                                      
                                      June 30, 2007
                                      
                                      
                                      June 30, 2006
                                      
                                      
                                      June 30, 2007(restated)
                                      
                                      
                                      
                                      
                                      
                                      (restated)
                                      
                                      
                                      
                                      
                                      
                                      (restated)Revenue
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -Operating
      expensesMineral
      exploration and evaluation expenses
                                      
                                      
                                      163,676
                                      
                                      
                                      
                                      497,046
                                      
                                      
                                      
                                      458,984
                                      
                                      
                                      
                                      775,388
                                      
                                      
                                      
                                      3,370,939Mineral
      exploration and evaluation expenses - related party
                                      
                                      
                                      90,000
                                      
                                      
                                      
                                      123,750
                                      
                                      
                                      
                                      180,000
                                      
                                      
                                      
                                      247,500
                                      
                                      
                                      
                                      675,000General
      and administrative
                                      
                                      
                                      721,558
                                      
                                      
                                      
                                      441,518
                                      
                                      
                                      
                                      1,055,008
                                      
                                      
                                      
                                      666,621
                                      
                                      
                                      
                                      3,098,650Depreciation
                                      
                                      
                                      11,453
                                      
                                      
                                      
                                      2,173
                                      
                                      
                                      
                                      14,243
                                      
                                      
                                      
                                      2,966
                                      
                                      
                                      
                                      21,502Total
      operating expenses
                                      
                                      
                                      986,687
                                      
                                      
                                      
                                      1,064,487
                                      
                                      
                                      
                                      1,708,235
                                      
                                      
                                      
                                      1,692,475
                                      
                                      
                                      
                                      7,166,091Loss
      from operations
                                      
                                      
                                      (986,687
                                      )
                                      
                                      
                                      (1,064,487
                                      )
                                      
                                      
                                      (1,708,235
                                      )
                                      
                                      
                                      (1,692,475
                                      )
                                      
                                      
                                      (7,166,091
                                      )Other
      income (expense)Rental
      revenue
                                      
                                      
                                      11,960
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      19,580
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      19,580Loss
      on equipment disposition
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (4,398
                                      )
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (4,398
                                      )
                                      
                                      
                                      (4,388
                                      )Interest
      and dividend income
                                      
                                      
                                      117,842
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      151,740
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      228,772Interest
      expense, net
                                      
                                      
                                      (44
                                      )
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (44
                                      )
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (44
                                      )Total
      other income (expense)
                                      
                                      
                                      129,758
                                      
                                      
                                      
                                      (4,398
                                      )
                                      
                                      
                                      171,276
                                      
                                      
                                      
                                      (4,398
                                      )
                                      
                                      
                                      243,920Loss
      before income taxes
                                      
                                      
                                      (856,929
                                      )
                                      
                                      
                                      (1,068,885
                                      )
                                      
                                      
                                      (1,536,959
                                      )
                                      
                                      
                                      (1,696,873
                                      )
                                      
                                      
                                      (6,922,171
                                      )Income
      tax benefit
                                      
                                      
                                      270,094
                                      
                                      
                                      
                                      280,614
                                      
                                      
                                      
                                      540,188
                                      
                                      
                                      
                                      561,228
                                      
                                      
                                      
                                      2,062,290Loss
      from continuing operations
                                      
                                      
                                      (586,835
                                      )
                                      
                                      
                                      (788,271
                                      )
                                      
                                      
                                      (996,771
                                      )
                                      
                                      
                                      (1,135,645
                                      )
                                      
                                      
                                      (4,859,881
                                      )Discontinued
      operations:Loss
      from discontinued operations
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (4,143,168
                                      )Net
      loss
                                      
                                      $
                                      (586,835
                                      )
                                      
                                      $
                                      (788,271
                                      )
                                      
                                      $
                                      (996,771
                                      )
                                      
                                      $
                                      (1,135,645
                                      )
                                      
                                      $
                                      (9,003,049
                                      )Loss
      per common share - basic and dilutedNet
    loss
                                      
                                      $
                                      (0.01
                                      )
                                      
                                      $
                                      (0.01
                                      )
                                      
                                      $
                                      (0.01
                                      )
                                      
                                      $
                                      (0.02
                                      )Weighted
      average common shares outstanding -Basic and
      diluted
                                      
                                      
                                      91,393,212
                                      
                                      
                                      
                                      58,125,044
                                      
                                      
                                      
                                      84,593,103
                                      
                                      
                                      
                                      57,043,807
 
 See
Accompanying Notes to these Consolidated Financial Statements
 
 6
 
 SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 CONSOLIDATED
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
 (UNAUDITED)
(RESTATED)
  AccumulatedCommon
                                          
                                          
                                          Deficit
      During
                                          
                                          
                                          TotalCommon Stock
                                          
                                          
                                          Additional
                                          
                                          
                                          Stock
                                          
                                          
                                          Exploration
                                          
                                          
                                          Stockholders'Shares
                                          
                                          
                                          Amount
                                          
                                          
                                          Paid-in Capital
                                          
                                          
                                          Subscribed
                                          
                                          
                                          Stage
                                          
                                          
                                          EquityBalance,
      January 14, 2000
                                          
                                          
                                          -
                                          
                                          
                                          $
                                          -
                                          
                                          
                                          $
                                          -
                                          
                                          
                                          $
                                          -
                                          
                                          
                                          $
                                          -
                                          
                                          
                                          $
                                          -Issuance
      of common stock (recapitalized)
                                          
                                          
                                          50,000,000
                                          
                                          
                                          
                                          50,000
                                          
                                          
                                          
                                          (25,000
                                          )
                                          
                                          
                                          -
                                          
                                          
                                          
                                          (24,999
                                          )
                                          
                                          
                                          1Net
      loss
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          (231,969
                                          )
                                          
                                          
                                          (231,969
                                          )Balance,
      December 31, 2000
                                          
                                          
                                          50,000,000
                                          
                                          
                                          
                                          50,000
                                          
                                          
                                          
                                          (25,000
                                          )
                                          
                                          
                                          -
                                          
                                          
                                          
                                          (256,968
                                          )
                                          
                                          
                                          (231,968
                                          )Issuance
      of common stock in reverse 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 feature associated with debt
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          300,000
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          300,000Net
      loss
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          (1,249,644
                                          )
                                          
                                          
                                          (1,249,644
                                          )Balance,
      December 31, 2002
                                          
                                          
                                          60,300,000
                                          
                                          
                                          
                                          60,300
                                          
                                          
                                          
                                          1,306,976
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          (2,279,560
                                          )
                                          
                                          
                                          (912,284
                                          )Debt
      exchanged for common stock
                                          
                                          
                                          48,000,000
                                          
                                          
                                          
                                          48,000
                                          
                                          
                                          
                                          1,152,000
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          1,200,000Deferred
      compensation
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          12,583
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -Amortization
      of deferred compensation
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          10,387Net
      loss
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          (1,283,872
                                          )
                                          
                                          
                                          (1,283,872
                                          )Balance,
      December 31, 2003
                                          
                                          
                                          108,300,000
                                          
                                          
                                          
                                          108,300
                                          
                                          
                                          
                                          2,471,559
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          (3,563,432
                                          )
                                          
                                          
                                          (985,769
                                          )Amortization
      of deferred compensation
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          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 for 1,000,000 shares of common stock to two
      officers
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          133,062
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          133,062Issuance
      of stock options for 500,000 shares of common stock in satisfaction of
      debt
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          300,000
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          300,000Return
      and cancellation of 70,000,000 shares of common stock
                                          
                                          
                                          (70,000,000
                                          )
                                          
                                          
                                          (70,000
                                          )
                                          
                                          
                                          70,000
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -Issuance
      of 12,000,000 warrants in consideration of joint venture option (restated,
      see Note 3)
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          1,310,204
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          1,310,204Issuance
      of common stock  for 20 mining claims
                                          
                                          
                                          1,400,000
                                          
                                          
                                          
                                          1,400
                                          
                                          
                                          
                                          488,600
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          490,000Issuance
      of common stock  in satisfaction of debt, $0.625 per
      share
                                          
                                          
                                          200,000
                                          
                                          
                                          
                                          200
                                          
                                          
                                          
                                          124,800
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          125,000Issuance
      of common stock for cash,  Reg. S - Private
      Placement,  $0.25 per share, net of  $205,250
      commissions
                                          
                                          
                                          6,390,000
                                          
                                          
                                          
                                          6,390
                                          
                                          
                                          
                                          1,369,070
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          1,375,460Issuance
      of common stock for cash,  Reg. S - Private Placement, $0.25 per
      share, net of $135,000 commission
                                          
                                          
                                          5,400,000
                                          
                                          
                                          
                                          5,400
                                          
                                          
                                          
                                          1,194,947
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          1,200,347Issuance
      of common stock for cash,  Reg. D 506 - Private
      Placement,  $0.25 per share
                                          
                                          
                                          460,000
                                          
                                          
                                          
                                          460
                                          
                                          
                                          
                                          114,540
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          115,000Issuance
      of stock options for 1,500,000 shares of common stock to three
      officers
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          266,720
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          266,720Common
      stock subscribed
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          270,000
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          270,000Net
      loss
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          (1,201,424
                                          )
                                          
                                          
                                          (1,201,424
                                          )Balance,
      December 31, 2005
                                          
                                          
                                          52,150,000
                                          
                                          
                                          
                                          52,150
                                          
                                          
                                          
                                          7,843,502
                                          
                                          
                                          
                                          270,000
                                          
                                          
                                          
                                          (5,465,300
                                          )
                                          
                                          
                                          2,700,352Issuance
      of common stock for cash,  Reg. D - Private
      Placement,  $0.45 per share, net of  $87,750
      commission
                                          
                                          
                                          3,900,000
                                          
                                          
                                          
                                          3,900
                                          
                                          
                                          
                                          1,663,350
                                          
                                          
                                          
                                          (270,000
                                          )
                                          
                                          
                                          -
                                          
                                          
                                          
                                          1,397,250Issuance
      of common stock related to exercise of warrants
                                          
                                          
                                          1,225,000
                                          
                                          
                                          
                                          1,225
                                          
                                          
                                          
                                          (1,225
                                          )
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -Issuance
      of stock options for 120,000 shares of common stock to two
      officers
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          20,864
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          20,864Issuance
      of stock options for 500,000 shares of common stock to two
      directors
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          122,420
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          122,420Issuance
      of stock options for 100,000 shares of common stock to two
      directors
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          24,484
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          24,484Issuance
      of common stock for cash Reg. S - Private Placement, $0.625 per share from
      exercise of warrants
                                          
                                          
                                          6,125,000
                                          
                                          
                                          
                                          6,125
                                          
                                          
                                          
                                          3,822,000
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          3,828,125Issuance
      of common stock for cash Reg. S - Private Placement, $0.375 per share from
      exercise of warrants
                                          
                                          
                                          1,768,500
                                          
                                          
                                          
                                          1,768
                                          
                                          
                                          
                                          661,420
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          663,188Issuance
      of common stock for cash Reg. S - Private Placement, $0.625 per share from
      exercise of warrants
                                          
                                          
                                          612,500
                                          
                                          
                                          
                                          613
                                          
                                          
                                          
                                          382,200
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          382,813Issuance
      of stock options for 100,000 shares of common stock to officer for
      recruitment amortized over vesting period.
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          1,309
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          1,309Issuance
      of common stock to officer for recruitment
                                          
                                          
                                          50,000
                                          
                                          
                                          
                                          50
                                          
                                          
                                          
                                          102,950
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          103,000Issuance
      of stock options for 50,000 shares of common stock to employee for
      recruitment amortized over vesting period.
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          1,309
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          1,309Issuance
      of common stock  for mining claims
                                          
                                          
                                          1,400,000
                                          
                                          
                                          
                                          1,400
                                          
                                          
                                          
                                          3,078,600
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          3,080,000Amortization
      of stock options issued to employee and officer over vesting
      period
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          15,708
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          15,708Net
      loss December 31, 2006
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          (2,540,978
                                          )
                                          
                                          
                                          (2,540,978
                                          )Balance,
      December 31, 2006
                                          
                                          
                                          67,231,000
                                          
                                          
                                          
                                          67,231
                                          
                                          
                                          
                                          17,738,891
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          (8,006,278
                                          )
                                          
                                          
                                          9,799,844Issuance
      of common stock in connection with the acquisition to five investors,
      $3.975 per share
                                          
                                          
                                          16,825,000
                                          
                                          
                                          
                                          16,825
                                          
                                          
                                          
                                          66,862,550
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          66,879,375Issuance
      of stock options for 82,946 shares of common stock to three officers and
      two employees
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          132,633
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          132,633Issuance
      of common stock for cash Reg. D - Private Placement, $3.00 per share, net
      of $381,990 commission and $79,513 issuance costs
                                          
                                          
                                          4,520,666
                                          
                                          
                                          
                                          4,521
                                          
                                          
                                          
                                          13,095,978
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          13,100,499Issuance
      of common stock for cash Reg. S - Private Placement, $3.00 per share, net
      of $111,100 commission and $8,842 issuance costs
                                          
                                          
                                          575,000
                                          
                                          
                                          
                                          575
                                          
                                          
                                          
                                          1,604,483
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          1,605,058Issuance
      of common stock for cash Reg. S - Private Placement, $3.00 per share, net
      of $525,386 commission and $85,513 issuance costs
                                          
                                          
                                          2,226,161
                                          
                                          
                                          
                                          2,226
                                          
                                          
                                          
                                          6,065,358
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          6,067,584Amortization
      of stock options issued to employeex and officers over vesting
      period
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          10,470
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          10,470Issuance
      of common stock for mining claims (restated, see Note
    17)
                                          
                                          
                                          1,400,000
                                          
                                          
                                          
                                          1,400
                                          
                                          
                                          
                                          4,506,600
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          4,508,000Common
      stock subscribed for exercise of warrants
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          195,000
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          195,000Net
      loss June 30, 2007 (restated)
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          (996,771
                                          )
                                          
                                          
                                          (996,771
                                          )Balance,
      June 30, 2007 (restated)
                                          
                                          
                                          92,777,827
                                          
                                          
                                          $
                                          92,778
                                          
                                          
                                          $
                                          110,016,963
                                          
                                          
                                          $
                                          195,000
                                          
                                          
                                          $
                                          (9,003,049
                                          )
                                          
                                          $
                                          101,301,692
 
 See
Accompanying Notes to these Consolidated Financial Statements
 
 7
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 (UNAUDITED)
(RESTATED)
 
 Period
      fromJanuary
      14, 2000(Date
      of inception)For the six months
    ended
                                  
                                  
                                  throughJune 30, 2007
                                  
                                  
                                  June 30, 2006
                                  
                                  
                                  June
      30, 2007(restated)
                                  
                                  
                                  
                                  
                                  
                                  (restated)CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      loss
                                  
                                  $
                                  (996,771
                                  )
                                  
                                  $
                                  (1,135,645
                                  )
                                  
                                  $
                                  (9,003,049
                                  )Deduct:
      Loss from discontinued operations
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (4,143,168
                                  )Loss
      from continuing operations
                                  
                                  
                                  (996,771
                                  )
                                  
                                  
                                  (1,135,645
                                  )
                                  
                                  
                                  (4,859,881
                                  )Adjustments
      to reconcile loss from continuing operations to net cash used in operating
      activities:Depreciation
                                  
                                  
                                  14,243
                                  
                                  
                                  
                                  2,966
                                  
                                  
                                  
                                  21,502Stock
      based expenses
                                  
                                  
                                  143,103
                                  
                                  
                                  
                                  273,386
                                  
                                  
                                  
                                  831,979Loss
      on disposition of fixed assets
                                  
                                  
                                  -
                                  
                                  
                                  
                                  4,398
                                  
                                  
                                  
                                  5,737Amortization
      of prepaid expense
                                  
                                  
                                  9,999
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  9,999Changes
      in operating assets and liabilities:Other
      current assets
                                  
                                  
                                  (120,014
                                  )
                                  
                                  
                                  (31,245
                                  )
                                  
                                  
                                  (226,249
                                  )Other
      assets
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (183,040
                                  )Accounts
      payable and accrued liabilities
                                  
                                  
                                  (328,306
                                  )
                                  
                                  
                                  14,255
                                  
                                  
                                  
                                  115,046Deferred
      income taxes
                                  
                                  
                                  (540,188
                                  )
                                  
                                  
                                  (561,228
                                  )
                                  
                                  
                                  (2,062,290
                                  )Net
      cash used in operating activities
                                  
                                  
                                  (1,817,934
                                  )
                                  
                                  
                                  (1,433,113
                                  )
                                  
                                  
                                  (6,347,197
                                  )Net
      cash used in operating activities from discontinued
      operations
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (2,931,324
                                  )CASH
      FLOW FROM INVESTING ACTIVITIESCash
      paid on mineral property claims
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (87,134
                                  )Cash
      paid for joint venture and merger option
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (890,000
                                  )Cash
      paid to VRIC on closing date
                                  
                                  
                                  (9,900,000
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (9,900,000
                                  )Cash
      paid for additional acquisition costs
                                  
                                  
                                  (130,105
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (130,105
                                  )Capitalized
      interest
                                  
                                  
                                  (66,852
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (66,852
                                  )Purchase
      of property and equipment
                                  
                                  
                                  (971,553
                                  )
                                  
                                  
                                  (20,202
                                  )
                                  
                                  
                                  (1,013,386
                                  )Net
      cash used in investing activities
                                  
                                  
                                  (11,068,510
                                  )
                                  
                                  
                                  (20,202
                                  )
                                  
                                  
                                  (12,087,477
                                  )Net
      cash used in investing activities from discontinued
      operations
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (452,618
                                  )CASH
      FLOW FROM FINANCING ACTIVITIESProceeds
      from stock issuance
                                  
                                  
                                  21,453,817
                                  
                                  
                                  
                                  6,271,376
                                  
                                  
                                  
                                  30,416,000Stock
      issuance costs
                                  
                                  
                                  (677,570
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (677,570
                                  )Principal
      payments on capital lease payable
                                  
                                  
                                  (20,000
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (20,000
                                  )Principal
      payments on deferred purchase liability
                                  
                                  
                                  (83,148
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (83,148
                                  )Proceeds/payments
      on loan payable
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (15,000
                                  )
                                  
                                  
                                  -Proceeds
      from subscribed stock
                                  
                                  
                                  195,000
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  465,000Net
      cash provided by financing activities
                                  
                                  
                                  20,868,099
                                  
                                  
                                  
                                  6,256,376
                                  
                                  
                                  
                                  30,100,282Net
      cash provided by financing activities from discontinued
      operations
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  3,384,237NET
      CHANGE IN CASH
                                  
                                  
                                  7,981,655
                                  
                                  
                                  
                                  4,803,061
                                  
                                  
                                  
                                  11,665,903CASH
      AT BEGINNING OF PERIOD
                                  
                                  
                                  3,684,248
                                  
                                  
                                  
                                  705,856
                                  
                                  
                                  
                                  -CASH
      AT END OF PERIOD
                                  
                                  $
                                  11,665,903
                                  
                                  
                                  $
                                  5,508,917
                                  
                                  
                                  $
                                  11,665,903SUPPLEMENTAL
      INFORMATIONInterest
      Paid, net of capitalized amounts
                                  
                                  $
                                  44
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  50,795Income
      Taxes Paid
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  -Non-cash
      investing and financing activities:Stock
      and options for common stock issued in satisfaction of
      debt
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  1,500,000Assets
      acquired for common stock issued for the acquisition
                                  
                                  $
                                  66,879,375
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  66,879,375Assets
      acquired for common stock issued for mineral
properties
                                  
                                  $
                                  4,508,000
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  8,078,000Assets
      acquired for liabilities incurred in the acquisition
                                  
                                  $
                                  2,501,187
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  2,501,187Net
      deferred tax liability assumed
                                  
                                  $
                                  50,839,702
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  53,584,304Merger
      option payment applied to the acquisition
                                  
                                  $
                                  200,000
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  200,000Reclassify
      joint venture option agreement to slag project
                                  
                                  $
                                  690,000
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  690,000Warrants
      issued in connection with joint venture option agreement related to slag
      project
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  1,310,204Stock
      issued for conversion of accounts payable, 200,000 shares at
      $0.625
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  125,000
  8




SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED 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, 2006 of
Searchlight Minerals Corp. (the "Company").
 
 The
interim financial statements present the balance sheets, statements of
operations, stockholders’ equity, and cash flows of the Company. The financial
statements have been prepared in accordance with accounting principles generally
accepted in the United States.
 
 These
financial statements have been prepared by the Company without audit, and
include all adjustments (which consist solely of normal recurring adjustments,
except as described in Note 17) 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, 2006.
 
 Description of
business – Searchlight Minerals Corp. is considered an exploration stage
company since its formation and the Company has not yet realized any revenues
from its planned operations.  The Company is primarily focused on the
exploration, acquisition and development of mining and mineral
properties.  Upon the location of commercially minable reserves, the
Company plans to prepare for mineral extraction and enter the development
stage.
 
 History - The Company
was incorporated on January 12, 1999 pursuant to the laws of the State of Nevada
under the name L.C.M. Equity, Inc.  From 1999 to 2005, the Company
operated primarily as a biotechnology research and development company with its
headquarters in Canada and an office in the UK.  On November 2, 2001,
the Company entered into an acquisition agreement with Regma Bio Technologies,
Ltd. pursuant to which Regma Bio Technologies, Ltd. entered into a reverse
merger with us with the surviving entity named “Regma Bio Technologies Limited”.
On February 2, 2004, 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. 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
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 
 1.
                DESCRIPTION OF
      BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES
      (continued)
 
 Going concern - The
Company incurred cumulative net losses of $9,003,049 from operations as of June
30, 2007 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.
 
 Principles of
consolidation – The consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries, Clarkdale Minerals,
LLC (CML) and Clarkdale Metals, Corp. (CMC).  Significant intercompany
accounts and transactions have been eliminated.
 
 Use of estimates -
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
 
 Mineral rights - The
Company capitalizes acquisition and option costs of mineral property
rights.  The amount capitalized represents fair value of the mineral
rights acquired.
 
 The
Company capitalizes acquisition and option costs of mineral rights as tangible
assets in accordance with Emerging Issues Task Force abstract 04-02 (“EITF
04-02”), “Whether Mineral Rights Are Tangible or Intangible Assets and Related
Issues”.  Upon commencement of commercial production, the mineral
rights will be amortized using the unit-of-production method over the life of
the mineral rights.  If the Company does not continue with exploration
after the completion of the feasibility study, the mineral rights will be
expensed at that time.  The Company evaluates the carrying value of
capitalized mining costs and related property and equipment costs, to determine
if these costs are in excess of their recoverable amount whenever events or
changes in circumstances indicate that their carrying amounts may not be
recoverable. The periodic evaluation of carrying value of capitalized costs and
any related property and equipment costs are based upon expected future cash
flows and/or estimated salvage value in accordance with Statement of Financial
Accounting Standards (SFAS) No. 144, “Accounting for Impairment of Disposal of
Long-Lived Assets.”
 
 Capitalized interest
cost - The Company capitalizes interest cost related to acquisition,
development and construction of property and equipment which is designed as
integral parts of the manufacturing process.  The capitalized interest
is recorded as part of the asset it relates to and will be amortized over the
asset’s useful life once production commences.  Interest cost
capitalized from imputed interest on acquisition indebtedness was $66,852 and $0
for the six months ended June 30, 2007 and 2006, respectively.
  10
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 
 1.
              DESCRIPTION OF
      BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES(continued)
  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.
  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, “Accounting for
Impairment or Disposal of Long-lived Assets”, if events or circumstances
indicate that their carrying amount might not be recoverable. As of June 30,
2007 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 a SFAS 144 impairment analysis should be done, the analysis will be
performed using the guidance 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.
  11
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
  1.
                DESCRIPTION OF
      BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES
      (continued)
  Asset retirement
obligation - The Company has adopted Statement of Financial Accounting
Standard 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.
 
 Revenue recognition -
Revenues are recognized during the period in which the revenues are earned.
Costs and expenses are recognized during the period in which they are
incurred.
  Research and
development - All research and development expenditures are expensed as
incurred.
  Earnings (loss) per
share - The Company follows 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,
on June 30, 2007 and 2006 that were not included in the computation of diluted
EPS because the effect would be antidilutive were 25,525,499 and 27,230,287,
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.
  12
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 
 1.
                DESCRIPTION OF
      BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES
      (continued)
 
 Income taxes - The
Company accounts for its income taxes in accordance with Statement of Financial
Accounting Standard 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.
 
 On
July 13, 2006, the Financial Accounting Standards Board (“FASB”) issued
interpretation No. 48, “Accounting for Uncertainty in Income Taxes – An
Interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 clarifies the
accounting for uncertainty in income taxes recognized in an entity’s financial
statements in accordance with SFAS No. 109, and prescribes a recognition
threshold and measurement attributes for financial statement disclosure of tax
positions taken or expected to be taken on a tax return.  Under FIN
48, the impact of an uncertain income tax position on the income tax return must
be recognized at the largest amount that is more-likely-than-not to be sustained
upon audit by the relevant taxing authority. An uncertain income tax position
will not be recognized if it has less than 50% likelihood of being
sustained.  Additionally, FIN 48 provides guidance on de-recognition,
classification, interest and penalties, accounting in interim periods,
disclosure and transition.  The Company adopted the provision of FIN
48 on January 1, 2007, which did not have any impact on the consolidated
financial statements.
 
 For
acquired properties, that do not constitute a business as defined in Emerging
Issues Task Force Issue No. 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 in accordance with EITF
98-11 and SFAS 109.
  13
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED 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 Financial
Accounting Standard No. 123R, “Share-Based Payment”, which replaces SFAS
No. 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 has adopted the
requirements of SFAS No. 123R for the fiscal year beginning after December 31,
2004.
 
 New accounting
pronouncements – In February 2007, the FASB issued
SFAS No. 159, “The Fair Value Option for Financial Assets and
Financial Liabilities — Including an amendment of FASB Statement
No. 115” (“SFAS 159”), which permits entities to choose to measure
many financial instruments and certain other items at fair value that are not
currently required to be measured at fair value. The objective is to improve
financial reporting by providing entities with the opportunity to mitigate
volatility in reported earnings caused by measuring related assets and
liabilities differently without having to apply complex hedge accounting
provisions. SFAS 159 also establishes presentation and disclosure
requirements designed to facilitate comparisons between entities that choose
different measurement attributes for similar types of assets and liabilities.
SFAS 159 does not affect any existing accounting literature that requires
certain assets and liabilities to be carried at fair value, nor eliminate
disclosure requirements included in other accounting standards, including
requirements for disclosures about fair value measurements included in
SFAS 157, “Fair Value Measurements,” and SFAS 107, “Disclosures about
Fair Value of Financial Instruments.” SFAS 159 is effective for fiscal year
beginning after November 15, 2007. The Company is currently assessing the
impact that the adoption of SFAS 159 will have on the Company’s
consolidated financial statements.
 
 In
September 2006, the FASB issued Statement No. 158 “Employers’ Accounting
for Defined Benefit Pension and Other Postretirement Plans (“SFAS 158”).
SFAS 158 requires companies to recognize the over funded or under funded
status of a defined benefit postretirement plan as an asset or liability in its
statement of financial position and to recognize changes in that funded status
in the year in which the changes occur through comprehensive income.
SFAS 158 requires companies to measure the funded status of a plan as of
the date of its year-end statement of financial position, with limited
exceptions. The Company adopted SFAS 158 effective for the fiscal year
ending December 31, 2006.  Adoption of this statement had no
impact on the Company’s financial position or results of
operations.
  14
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 
 1.
                DESCRIPTION OF
      BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES
      (continued)
 
 In
September 2006, the FASB issued statement No. 157, “Fair Value
Measurements” (“SFAS 157”). SFAS 157 defines fair value, establishes a
framework for measuring fair value in accordance with accounting principles
generally accepted in the United States, and expands disclosures about fair
value measurements. SFAS 157 is effective for fiscal years beginning after
November 15, 2007, with earlier application encouraged. Any amounts
recognized upon adoption as a cumulative effect adjustment will be recorded to
the opening balance of retained earnings in the year of adoption. The
Company has not yet determined the impact of this Statement on its
financial position and results of operations.
 
 In
September 2006, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 108 (SAB 108).  SAB 108 considers the effects of prior
year misstatements when quantifying misstatements in the current year financial
statements.  It is effective for fiscal years ending after November
15, 2006.  The adoption of this guidance had no material effect on the
Company’s consolidated financial position, results of operations, and
disclosures.
 
 In
August 2006, the SEC published amendments to the disclosure requirements for
executive and director compensation, related party transactions, director
independence and other corporate governance matters, security ownership of
officers and directors.  The rules affect disclosure in proxy
statements, annual reports and registration statements.  These
amendments are effective for filings for fiscal years ending on or after
December 15, 2006.  The effect of these amendments has been
incorporated into the Company’s financial reporting.
 
 In
March 2006, the FASB issued SFAS No. 156, “Accounting for Servicing of Financial
Assets: (“SFAS 156”), which requires all separately recognized servicing assets
and servicing liabilities to be initially measured at fair
value.  SFAS 156 permits, but does not require, the subsequent
measurement of servicing assets and servicing liabilities at fair
value.  Adoption is required as of the beginning of the first fiscal
year that begins after September, 15, 2006.  The adoption of SFAS 156
had no material effect on the Company’s consolidated financial position, results
of operations or disclosures.
 
 In
February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid
Financial Instruments, an amendment of FASB Statements No. 133 and 140” (“SFAS
155”).  SFAS 155 clarifies certain issues relating to embedded
derivatives and beneficial interests in securitized financial
assets.  The provisions of SFAS 155 are effective for all financial
instruments acquired or issued after fiscal years beginning after September 15,
2006.  The adoption of this statement had no material impact on the
Company’s consolidated financial position, results of operations, and
disclosures.
 
 15
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 
 1.
                DESCRIPTION OF
      BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES
      (continued)
 
 Correction of an
error
 
 Searchlight
Mining Claims – (See Note 4) – The Company restated the Searchlight Mining
Claims as of June 30, 2007. The restatement of the Searchlight Claims mineral
properties reflects the revised deferred future income tax liability assumed as
part of the subsequent contingent issuances of securities, the value of which
has been added to the acquisition costs of the underlying mineral properties.
Pursuant to EITF 98-11, the Company values the shares issued to obtain mineral
properties at their market price at the date of the issue.
 
 Clarkdale
Slag Project – (See Note 3) – The Company restated the Clarkdale Slag Project as
of June 30, 2007. The Company has determined that the acquisition should be
accounted for using the accounting treatment defined in EITF 98-03 and EITF
98-11, together with applicable sections of SFAS 141 which are not covered in
EITF 98-03 and EITF 98-11.  The Company’s initial and continuing
estimates of probability with respect to certain contingent payment terms were
in error.  The company determined that certain terms with respect to
future payments should have been recorded as contingent consideration and not
recorded as purchase consideration with a corresponding liability. In accordance
with SFAS 141, contingent consideration should only be recorded as a liability
if it is determinable beyond a reasonable doubt. In assessing the future
payments related to the acquisition, the Company determined that treatment of
the terms as beyond a reasonable doubt was not appropriate. As a result, the
amounts previously recorded as a liability have now been disclosed as contingent
consideration.
 
 The
Company determined that the acquisition accounting method used in prior periods
with respect to warrants issued in connection with the assignment of the
original Slag Project option was not appropriate and has restated the purchase
accounting 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.
  16
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 
 2.
              PROPERTY AND
      EQUIPMENT
 
 Property
and equipment consisted of the following as of June 30, 2007 and December 31,
2006:
 
 2007
                      
                      
                      2006Furniture
      and fixtures
                      
                      $
                      28,781
                      
                      
                      $
                      15,600Lab
      equipment
                      
                      
                      2,804
                      
                      
                      
                      2,804Computers
      and equipment
                      
                      
                      30,992
                      
                      
                      
                      17,788Income
      property
                      
                      
                      309,750
                      
                      
                      
                      —Capitalized
      interest
                      
                      
                      66,852
                      
                      
                      
                      —Construction
      in progress
                      
                      
                      925,029
                      
                      
                      
                      —Vehicles
                      
                      
                      38,175
                      
                      
                      
                      —Site
      equipment
                      
                      
                      117,203
                      
                      
                      
                      —1,519,586
                      
                      
                      
                      36,192Less
      accumulated depreciation
                      
                      
                      20,248
                      
                      
                      
                      6,005$
                      1,499,338
                      
                      
                      $
                      30,187
 
 Depreciation
expense was $14,243 and $2,966 for the six months ended June 30, 2007 and 2006,
respectively.
 
 3.
                CLARKDALE SLAG PROJECT
      – AS RESTATED (See Note
17)
  On
February 15, 2007, the Company completed a merger with Transylvania
International, Inc. (TI) which provided the Company with 100% ownership of the
Clarkdale Slag Project in Clarkdale, Arizona, through its wholly owned
subsidiary CML.  This acquisition superseded the joint venture option
agreement to acquire a 50% ownership interest as a joint venture partner
pursuant to Nanominerals Corp. (“NMC”) interest in a joint venture agreement
(“JV Agreement”) dated May 20, 2005 between NMC and Verde River Iron Company,
LLC (“VRIC”). Subsequent to the acquisition, Mr. Harry Crockett joined the
Company’s board of directors. VRIC is an affiliate of Mr.
Crockett.
  The
Company believes the acquisition of the Clarkdale Slag Project was beneficial
because it provides for 100% ownership of the properties, thereby eliminating
the need to finance and further develop the project in a joint venture
environment.
  This
merger was treated as a statutory merger for tax purposes whereby, CML was the
surviving merger entity.
  The
Company applied EITF 98-03 with regard to the acquisition of the Clarkdale Slag
Project. The Company determined that the acquisition of the Clarkdale Slag
Project did not constitute an acquisition of a business, as that term is defined
in EITF 98-03, and the Company recorded the acquisition as a purchase of
assets.
  17
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 
 3.
              CLARKDALE SLAG PROJECT
      – AS RESTATED (See Note 17)
  (continued)
  The
$130 million purchase price was comprised of a combination of the cash paid, the
deferred tax liability assumed in connection with the acquisition, and the fair
value of our common shares issued, based on the closing market price of our
common stock, using the average of the high and low prices of our common stock
on the closing date of the acquisition. The Clarkdale Slag Project is without
known reserves and the project is exploratory in nature in accordance with
Industry Guides promulgated by the Commission, Guide 7 paragraph (a)(4)(i). As
required by EITF 04-03 paragraph 2 and EITF 98-11, the Company then allocated
the purchase price among the assets as follows (and also further described in
this Note 3 to the financial statements): $5,916,150 of the purchase price was
allocated to the slag pile site, $3,300,000 to the remaining land acquired, and
$309,750 to income property and improvements. The purchase price allocation to
the real properties were based on fair market values determined using an
independent real estate appraisal firm (Scott W. Lindsay, Arizona Certified
General Real Estate Appraiser No. 30292). The remaining $120,766,877 of the
purchase price was allocated to the Slag Project, which has been capitalized as
a tangible asset in accordance with EITF 04-02. Upon commencement of commercial
production, the material will be amortized using the unit-of-production method
over the life of the Slag Project.
  The
Company also formed a second wholly owned subsidiary CMC, for the purpose of
developing a processing plant at the Clarkdale Slag Project.
 
 Closing
of the TI acquisition occurred on February 15, 2007 (the “Closing Date”) and was
subject to, among other things, the following terms and conditions:
 
 a)
              The
      Company paid $200,000 in cash to VRIC on the execution of the Letter
      Agreement;
 
 b)
              The
      Company paid  $9,900,000 in cash to VRIC on the Closing
      Date;
 
 c)
                The
      Company issued 16,825,000 shares of its common stock, valued at $3.975 per
      share, using the average of the high and low on the Closing Date to the
      designates of VRIC on the closing pursuant to Section 4(2) and Regulation
      D of the Securities Act of
1933;
 
 In
addition to the cash and equity consideration paid and issued upon closing, the
acquisition agreement contains the following payment terms and
conditions:
  d)
              The
      Company agreed to continue to pay VRIC $30,000 per month until the earlier
      of: (i) the date that is 90 days after receipt of a bankable feasibility
      study by the Company (the “Project Funding Date”), or (ii) the tenth
      anniversary of the date of the execution of the letter
      agreement;
  18
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 
 3.
              CLARKDALE SLAG PROJECT
      – AS RESTATED (See Note 17)
  (continued)
 
 The
acquisition agreement also contains additional contingent payment terms which
are based on the Project Funding Date as defined in the
agreement:
  e)
              The
      Company has agreed to pay VRIC $6,400,000 on the Project Funding
      Date;
  f)
              The
      Company has agreed to pay VRIC a minimum annual royalty of $500,000,
      commencing on the Project Funding Date (the “Advance Royalty”), and an
      additional royalty consisting of 2.5% of the “net smelter returns” on any
      and all proceeds of production from the Clarkdale Slag Project (the
      “Project Royalty”).  The Advance Royalty remains payable until
      the first to occur of: (1) the end of the first calendar year in which the
      Project Royalty equals or exceeds $500,000; or (2) February 15,
      2017.  In any calendar year in which the Advance Royalty remains
      payable, the combined Advance Royalty and Project Royalty will not exceed
      $500,000 in any calendar year,
and,
  g)
              The
      Company has agreed to pay VRIC an additional amount of $3,500,000 from the
      net cash flow of the Clarkdale Slag
Project.
  The
Company has accounted for this as a contingent payment and upon meeting the
contingency requirements, the purchase price of the Clarkdale Slag Project will
be adjusted to reflect the additional consideration.
  The
following table reflects the recorded purchase consideration for the Slag
Project:
 
 As Reported
                    
                    
                    Restatement
                      Adjustments
                    
                    
                    
                    
                    
                    As RestatedPurchase
      price:Cash
      payments
                    
                    $
                    10,100,000
                    
                    
                    $
                    —
                    
                    
                    
                    
                    
                    $
                    10,100,000Joint
      venture option acquired in 2005 for cash
                    
                    
                    690,000
                    
                    
                    
                    —
                    
                    
                    
                    
                    
                    
                    690,000Warrants
      issued in 2005 for joint venture option
                    
                    
                    —
                    
                    
                    
                    1,918,481
                    
                    
                    
                    a
                    
                    
                    
                    1,918,481Common
      stock issued
                    
                    
                    66,879,375
                    
                    
                    
                    -
                    
                    
                    
                    
                    
                    
                    
                    66,879,375Monthly
      payments, current portion
                    
                    
                    395,001
                    
                    
                    
                    (227,174
                    )
                    
                    
                    b
                    
                    
                    
                    167,827Monthly
      payments, net of current portion
                    
                    
                    3,252,403
                    
                    
                    
                    (919,043
                    )
                    
                    
                    b
                    
                    
                    
                    2,333,360Due
      to VRIC
                    
                    
                    6,400,000
                    
                    
                    
                    (6,400,000
                    )
                    
                    
                    b
                    
                    
                    
                    —Acquisition
      costs
                    
                    
                    127,000
                    
                    
                    
                    —
                    
                    
                    
                    
                    
                    
                    
                    127,000Total
      purchase price
                    
                    
                    87,843,779
                    
                    
                    
                    (5,627,736
                    )
                    
                    
                    
                    
                    
                    
                    82,216,043Net
      deferred income tax liability assumed - slag project
                    
                    
                    33,151,312
                    
                    
                    
                    14,925,422
                    
                    
                    
                    c
                    
                    
                    
                    48,076,734$
                    120,995,091
                    
                    
                    $
                    9,297,686
                    
                    
                    
                    d
                    
                    
                    $
                    130,292,777
  19
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 
 3.
                CLARKDALE SLAG PROJECT
      – AS RESTATED (See Note 17)
  (continued)
 
 The
restatement adjustments are as follows:
 
 a.
              Restate
      valuation of warrants issued using the Binomial Lattice option
      pricing-model 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.
 b.
              Restate
      for revision of the acquisition related to contingent payment terms and
      conditions contained in the agreement and the resultant deferred tax
      liability assumed in
acquisition.
 c.
              Recomputation
      of deferred tax liability assumed in mineral property acquisition for
      effect of restated acquisition costs discussed in items a and b
      above.
 d.
              Overall
      restatement impact on the Clarkdale Slag
  Project.
 
 The following table reflects the
components of the Slag Project:
 
 Allocation of acquisition cost:
                    
                    As Reported
                    
                    
                    Restatement
                      Adjustments
                    
                    
                    
                    
                    
                    As RestatedSlag
      project (including net deferred tax liability assumed of
      $48,076,734)
                    
                    $
                    111,469,191
                    
                    
                    $
                    9,297,686
                    
                    
                    
                    d
                    
                    
                    $
                    120,766,877Land
      - slag pile site
                    
                    
                    5,916,150
                    
                    
                    
                    —
                    
                    
                    
                    
                    
                    
                    
                    5,916,150Land
                    
                    
                    3,300,000
                    
                    
                    
                    —
                    
                    
                    
                    
                    
                    
                    
                    3,300,000Income
      property and improvements
                    
                    
                    309,750
                    
                    
                    
                    —
                    
                    
                    
                    
                    
                    
                    
                    309,750Total
                    
                    $
                    120,995,091
                    
                    
                    $
                    9,297,686
                    
                    
                    
                    
                    
                    
                    $
                    130,292,777
 
 For
the three months ended March 31, 2007, TI operations were limited to minor
rental activity revenue of approximately $10,000 and rental expenses and
property holding costs of approximately $8,000 for net pre tax income of
approximately $2,000.
  20
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 
 4.
                MINERAL PROPERTIES -
      MINING CLAIMS – AS RESTATED (See Note
  17)
 
 As of
June 30, 2007, mining claims consisted of 3,200 acres located near Searchlight,
Nevada. The 3,200 acre property is staked as twenty 160 acre
claims.  At June 30, 2007, the mineral
properties balance was $12,702,258.
 
 The
mining claims were acquired during 2005 with issuance of 1,400,000 shares of the
Company’s common stock and the provision that the Company, at its option, issue
an additional 1,400,000 shares each year in June for three remaining
years.  If at any time before each subsequent issuance of shares, the
Company does not choose to continue the transaction, it is under no obligation
to issue further shares and would no longer hold the mining
claims.
 
 On
August 26, 2005, the Company paid $180,500 to the Bureau of Land Management as a
bond for future reclamation work in Searchlight, Nevada.
 
 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
claims.  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 June 30, 2007, 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 that a 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 impact of the restatement on the historical
balances of mineral properties reported for periods ended as
noted:
 
 As Previously
                                Reported
                              
                              
                              Adjustments
                              
                              
                              
                              
                              
                              As RestatedCash
      and shares issuance to obtain mineralproperties,
      July 7, 2005
                              
                              $
                              127,134
                              
                              
                              $
                              450,000
                              
                              
                              
                              a
                              
                              
                              $
                              577,134Net
      deferred income tax liability assumed
                              
                              
                              —
                              
                              
                              
                              242,308
                              
                              
                              
                              b
                              
                              
                              
                              242,308Mineral
      properties balance, December 31, 2005
                              
                              
                              127,134
                              
                              
                              
                              692,308
                              
                              
                              
                              
                              
                              
                              
                              819,442Share
      issuance to obtain mineral properties, July 27, 2006
                              
                              
                              —
                              
                              
                              
                              3,080,000
                              
                              
                              
                              c
                              
                              
                              
                              3,080,000Net
      deferred income tax liability assumed
                              
                              
                              —
                              
                              
                              
                              1,531,848
                              
                              
                              
                              b
                              
                              
                              
                              1,531,848Mineral
      properties balance, December 31, 2006
                              
                              
                              127,134
                              
                              
                              
                              5,304,156
                              
                              
                              
                              
                              
                              
                              
                              5,431,290Share
      issuance to obtain mineral properties, June 29, 2007
                              
                              
                              —
                              
                              
                              
                              4,508,000
                              
                              
                              
                              d
                              
                              
                              
                              4,508,000Net
      deferred income tax liability assumed
                              
                              
                              —
                              
                              
                              
                              2,762,968
                              
                              
                              
                              b
                              
                              
                              
                              2,762,968Mineral
      properties balance, June 30, 2007
                              
                              $
                              127,134
                              
                              
                              $
                              12,575,124
                              
                              
                              
                              
                              
                              
                              $
                              12,702,258
  21
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 
 4.
              MINERAL PROPERTIES -
      MINING CLAIMS – AS RESTATED (See Note 15)
      (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.
 b.
              Restate
      for the resulting estimated future income tax liability associated with
      the temporary difference between tax basis and acquisition value, which
      was applied to the mineral asset in the absence of there being a goodwill
      component associated with the
transaction.
 c.
              Restate
      issuance of 1,400,000 shares to obtain mineral properties on July 27, 2006
      at the market value of $2.20 per share on the date of
      issuance.
 d.
              Restate
      issuance of 1,400,000 shares to obtain mineral properties on June 29, 2007
      at the market value of $3.22 per share on the date of
      issuance.
 
 5.
              LOAN PAYABLE – FORMER
      OFFICERS AND DIRECTORS
  As of
June 30, 2007 and December 31, 2006, loans payable to related parties totaling
$382,792 consisted of borrowings from former officers and directors of the
Company. These individuals have not had any involvement in management of the
Company since February 2005.  The balance of the loan is non-interest
bearing, unsecured and without any fixed repayment terms.
  6.
              CLARKDALE ACQUISITION
      PAYABLE
 
 Pursuant
to the Clarkdale acquisition agreement the Company agreed to pay VRIC $30,000
per month until the Project Funding Date.
 
 The
Company has recorded a liability for this commitment using imputed interest
based on its best estimate of future cash flows. The effective interest rate
used was 8.00%, resulting in an initial present value of $2,501,187 and imputed
interest of $1,128,813. The expected term used was 10 years which represents the
maximum term the VRIC liability is payable if the Company does not obtain
Project Funding.
 
 The
following table represents future principal payments on VRIC payable for each of
the twelve month periods ending June 30,
 
 2008
                    
                    $
                    172,8022009
                    
                    
                    187,1442010
                    
                    
                    202,6772011
                    
                    
                    219,4992012
                    
                    
                    237,718Thereafter
                    
                    
                    1,398,1992,418,039VRIC
      payable, current portion
                    
                    
                    172,802VRIC
      payable, net of current portion
                    
                    $
                    2,245,237
 
 The
acquisition agreement also contains payment terms which are based on the Project
Funding Date as defined in the agreement. The terms of and conditions of these
payments are discussed in more detail in Note 3 and 12.
  22
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 
 7.
              CAPITAL LEASE
      PAYABLE
  The
Company leases equipment under a capital lease. The capital lease payable
consisted of the following at June 30, and December 31,
 
 Lender
                          
                          Collateral
                          
                          Monthly
                            Payment
                          
                          
                          Interest
                            Rate
                          
                          Maturity
                          
                          2007
                          
                          
                          2006Caterpillar
      Financial ServicesServices
      Corporation
                          
                          Equipment
                          
                          $
                          2,200
                          
                          
                          
                          4.45
                          %
                          Jul-11
                          
                          $
                          96,239
                          
                          
                          $
                          —96,239
                          
                          
                          
                          —Capital
      lease payable, current portion
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          (20,302
                          )
                          
                          
                          —Capital
      lease payable, net of current portion
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          $
                          75,937
                          
                          
                          $
                          —
 
 The
following table represents future minimum lease payments on capital lease
payable for the six months ending June 30,
 
 2008
                    
                    $
                    24,2022009
                    
                    
                    26,4012010
                    
                    
                    26,4012011
                    
                    
                    26,401Thereafter
                    
                    
                    2,200Total
      future minimum lease payments
                    
                    $
                    105,605Imputed
      interest
                    
                    
                    (9,366
                    )Present
      value of future minimum lease payments
                    
                    $
                    96,239
 
 The
following assets acquired under the capital lease and the related amortization
were included in property, plant and equipment at June 30, and December
31,
 
 2007
                    
                    
                    2006Site
      Equipment
                    
                    $
                    116,239
                    
                    
                    
                    —Accumulated
      amortization
                    
                    
                    (5,651
                    )
                    
                    
                    —$
                    110,588
                    
                    
                    
                    —
  23
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 
 8.
              STOCKHOLDERS’
      EQUITY
 
 During
the six months ended June 30, 2007, the Company’s stockholders’ activities
consisted of the following:
 
 a)
              On
      June 29, 2007, the Company issued 1,400,000 shares to the owners of the
      Searchlight Claims. The issuance is the third of four required share
      payments to complete the acquisition of the mining claims totaling
      5,600,000 shares.
 
 b)
              On
      March 22, 2007 the Company closed a private placement offering for gross
      proceeds of $6,678,483 (the "March Offering"). The securities sold
      pursuant to the March Offering were issued to non-US investors in
      accordance with the terms of Regulation S of the Securities Act of 1933.
      In connection with the March Offering, the Company entered into an Agency
      Agreement with D&D Securities Company (“D&D") dated March 21, 2007
      (the "Agency Agreement"). The securities were sold to subscribers on a
      best efforts agency basis. Pursuant to the terms of the Agency Agreement,
      the Company sold an aggregate of 2,226,161 units for gross proceeds of
      $6,678,483, with each unit consisting of one share of its common stock and
      one half of one share purchase warrant with each whole warrant entitling
      the subscriber to purchase one additional share for a period of two years
      from the closing date at an exercise price of US$4.50 per Share. The
      warrants are callable by Searchlight if its common stock trades above
      $6.50 per share for 20 consecutive trading days. Also under the terms of
      the March Offering the Company agreed to use its best efforts to file with
      the Securities and Exchange Commission a registration statement on Form
      SB-2, or on such other form as is available, registering the offered
      securities within four months and one day after the closing of the March
      Offering.  An aggregate commission and corporate finance fee
      totaling $525,386 was paid by the company to the Agent in connection with
      the March Offering and the Agent also received warrants to purchase 75,175
      shares of its common stock.
 
 c)
              On
      February 23, 2007, the Company closed a private placement offering and
      issued 4,520,666 units for aggregate gross proceeds of $13,562,002 to
      accredited investors resident in the United States pursuant to Regulation
      D of the Securities Act (the “US Offering”).  Each unit
      consisted of one share of its common stock and one half of one share
      purchase warrant with each whole warrant entitling the subscriber to
      purchase one additional share for a period of two years from the closing
      date at an exercise price of $4.50 per share.  The warrants are
      callable by us if its common stock trades above $6.50 per share for 20
      consecutive trading days.  Pursuant to the terms of the US
      Offering, the Company agreed to use its best efforts to file a
      registration statement declared effective by the SEC within four months of
      the closing date of the US Offering.  The Company agreed not to
      exercise its call rights until the registration statement registering the
      securities underlying the units sold has been declared effective by the
      SEC.  The Company further agreed to keep the registration
      statement effective pursuant to Rule 415 of the Securities Act for a
      period of eighteen months following the date the registration statement is
      declared effective by the SEC.  A portion of the US Offering was
      sold on a best efforts agency basis.  Commissions paid to agents
      in connection with the US Offering totalled $381,990 and the agents also
      received warrants to purchase 90,870 shares of its common stock at a price
      of $4.50 per share, exercisable for a period of two years from the closing
      date.
  24
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 
 8.
              STOCKHOLDERS’
      EQUITY (continued)
 
 d)
              Also
      on February 23, 2007, the Company closed a private placement offering and
      issued 575,000 units for aggregate gross proceeds of $1,725,000 to non-US
      investors pursuant to Regulation S of the Securities Act (the “February
      Offering”).  Each unit consisted of one share of its common
      stock and one half of one share purchase warrant with each whole warrant
      entitling the subscriber to purchase one additional share for a period of
      two years from the closing date at an exercise price of $4.50 per
      share.  The warrants are callable by us if its common stock
      trades above $6.50 per share for 20 consecutive trading
      days.  Pursuant to the terms of the Non-US Offering, the Company
      agreed to use its best efforts to file a registration statement declared
      effective by the SEC within four months of the closing date of the
      February Offering.  The Company agreed not to exercise its call
      rights until the registration statement registering the securities
      underlying the units sold has been declared effective by the
      SEC.  The Company further agreed to keep the registration
      statement effective pursuant to Rule 415 of the Securities Act for a
      period of eighteen months following the date the registration statement is
      declared effective by the SEC.  Commissions paid to agents in
      connection with the February Offering totalled $111,100 and the agents
      also received warrants to purchase 12,300 shares of its common stock at a
      price of $4.50 per share, exercisable for a period of two years from the
      closing date.
 
 e)
              On
      February 15, 2007, the Company approved the issuance of 16,825,000 shares
      of its common stock to five investors in connection with the Agreement and
      Plan of Merger dated February 15, 2007.  The issuance was
      completed pursuant to Section 4(2) and Regulation D of the Securities Act
      on the basis that each investor was a sophisticated investor and was in a
      position of access to relevant material information regarding its
      operations.  Each investor delivered appropriate investment
      representations satisfactory to us with respect to this transaction and
      consented to the imposition of restrictive legends upon the certificates
      evidencing such share certificates.
 
 Warrants
associated with the 2007 equity issuances do not constitute a registration
payment arrangement.
 
 9.
              STOCK OPTION PLAN AND
      WARRANTS
 
 On
April 30, 2007, the Board of Directors adopted the 2007 Stock Option Plan (the
“2007 Plan”) and determined to cease granting any further options under the
Company’s 2006 Stock Option Plan. Under the terms of the 2007 Plan, options to
purchase up to 40,000,000 shares of common stock of the Company may be granted
to eligible Participants.  On May 8, 2007, the Board of Directors
determined to cease granting any further options under the Company’s 2003
Nonqualified Stock Option Plan and amended the number of shares of the Company’s
common stock available for issuance under the 2007 Plan to a maximum of
4,000,000. On June 15, 2007, shareholders of the Company approved the 2007
Plan.
 
 The
2007 Plan provides that the option price for incentive stock options be the fair
market value of the stock at the date of the grant and the option price for
non-qualified stock options be no less than 85% of the fair market value of the
stock at the date of the grant.  The maximum term of an option shall
be established for that option by the Board of Directors or, if not so
established, shall be ten years from the grant date. Options granted under the
2007 Plan become exercisable and expire as determined by the Board of
Directors.
  25
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 
 9.
              STOCK OPTION PLAN AND
      WARRANTS (continued)
  During
the six months ended June 30, 2007, the Company granted stock options as
follows:
  a)
              On
      June 15, 2007, the Company granted incentive stock options for the
      purchase of 7,246 shares of common stock at $3.45 per share. The options
      were granted to an employee, are fully vested and expire on June 15,
      2009.
  b)
              On
      February 16, 2007, the Company granted nonqualified stock options for the
      purchase of 75,700 shares of common stock at $4.04 per share. The options
      were granted to three officers and one employee, are fully vested and
      expire on February 16, 2012.
  Expense
for the six months ended June 30, 2007 and 2006 related to vesting and granting
of stock options were $143,103 and $273,386, respectively, and are included in
general and administrative expense.
 
 Stock options –
      During the six months ended June 30, 2007, the Company granted stock
      options to employees and directors totaling 82,946 with a weighted average
      exercise price of $3.99 per share.  Certain stock options were
      exercisable upon grant and expire five years after the grant
      date.  As of June 30, 2007 stock options outstanding totaled
      3,952,946 with a weighted average strike price of $0.84 per
      share.
 
 The
following table summarizes the Company’s stock option activity for the six
months ended June 30, 2007:
 
 Number of
                        Shares
                      
                      
                      Weighted
                        Average
                        Exercise PriceBalance,
      December 31, 2006
                      
                      
                      3,870,000
                      
                      
                      $
                      0.77Options
      granted and assumed
                      
                      
                      82,946
                      
                      
                      
                      3.99Options
      expired
                      
                      
                      —
                      
                      
                      
                      —Options
      cancelled
                      
                      
                      —
                      
                      
                      
                      —Options
      exercised
                      
                      
                      —
                      
                      
                      
                      —Balance,
      June 30, 2007
                      
                      
                      3,952,946
                      
                      
                      $
                      0.84
 
 The
Company estimates the fair value of these options granted by using the Binomial
Lattice option pricing-model with the following assumptions used for
grants:
 
 2007Dividend
      yield
                                
                                —Expected
      volatility
                                
                                76.6%Risk-free
      interest rate
                                
                                4.56 % to 4.68%Expected
      life (years)
                                
                                2
      to 4.25
  26
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 
 9.
              STOCK OPTION PLAN AND
      WARRANTS (continued)
 
 The
Company believes this model provides the best estimate of fair value due to its
ability to incorporate inputs that change over time, such as volatility and
interest rates, and to allow for actual exercise behavior of option holders.
 
 The
Company estimates expected volatility using a representative peer group average,
because of limited historical equity transactions of the Company. The risk-free
interest rate is based on the implied yield available on U.S. Treasury
zero-coupon issues over equivalent lives of the options.
  The
expected life of employee stock options represents the weighted-average period
the stock options are expected to remain outstanding and is a derived output of
the Binomial Lattice model. The expected life of employee stock options is
impacted by all of the underlying assumptions and calibration of the Company’s
model. The Binomial Lattice model estimates the probability of exercise as a
function of these two variables based on the entire history of exercises and
cancellations on all past option grants made by the Company.
 
 The
following table summarizes information about options granted during the six
months ended June 30, 2007:
  Number of Options
                Granted
                During 2007
              
              Exercise Price
                Equals, Exceeds
                Or
                Is Less than Mkt.
                Price of Stock
                On Grant Date
              
              Weighted
                Average
                Exercise
                Price
              
              
              Range of
                Exercise
                Price
              
              
              Weighted
                Average Fair
                Value82,946
              
              Equals
              
              $
              3.99
              
              
              $
              3.45
      to $4.04
              
              
              $
              0.40—
              
              Exceeds
              
              $
              —
              
              
              $
              —
      to $—
              
              
              $
              ——
              
              Less
      Than
              
              $
              —
              
              
              $
              — to
      $ —
              
              
              $
              —82,946
              
              Equals
              
              $
              3.99
              
              
              $
              3.45
      to $4.04
              
              
              $
              0.40
  Stock
options/warrants – During the six months ended June 30, 2007 the Company
granted stock warrants related to common stock issued through a private
placement totaling 3,660,913 with a strike price of $4.50 per share and stock
warrants totaling 178,345 were issued to underwriters of the private placement
with a strike price of $4.50 per share.
 
 The value
of the warrants was allocated against additional paid in capital as part of the
overall offering cost of the private placement.
 
 The
following table summarizes information about options/warrants granted during the
six months ended June 30, 2007:
 
 Number of
                        Shares
                      
                      
                      Weighted
                        Average
                        Exercise PriceBalance,
      December 31, 2006
                      
                      
                      20,160,000
                      
                      
                      $
                      0.51Options/warrants
      granted and assumed
                      
                      
                      3,922,204
                      
                      
                      $
                      4.49Options/warrants
      expired
                      
                      
                      —
                      
                      
                      
                      —Options/warrants
      cancelled
                      
                      
                      —
                      
                      
                      
                      —Options/warrants
      exercised
                      
                      
                      —
                      
                      
                      
                      —Balance,
      June 30, 2007
                      
                      
                      24,082,204
                      
                      
                      $
                      1.16
  27
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 
 10.
                PROPERTY RENTAL
      AGREEMENTS AND
LEASES
 
 The
Company through its subsidiary CML has the following lease and rental agreements
as lessor:
 
 Clarkdale Arizona Central
Railroad – Lease
 
 CML has a
month-to-month rental agreement with Clarkdale Arizona Central Railroad. The
rental payment is $1,700 per month.
 
 Commercial Building –
Lease
 
 CML rents
commercial building space to two tenants. The rental arrangements for both
tenants stem from expired leases and are month-to-month. Rent under these
agreements totaled $1,260 per month.
 
 Land Lease – Wastewater
Effluent
 
 CML
entered into a lease on August 25, 2004 with the Town of Clarkdale, AZ
(Clarkdale). The Company provides approximately 60 acres of land to Clarkdale
for disposal of Class B effluent. In return, the Company has first right to
purchase up to 46,000 gallons per day of the effluent for its use at fifty
percent (50%) of the potable water rate. In addition, if Class A effluent
becomes available, the Company may purchase that at seventy five percent (75%)
of the potable water rate.
 
 The term
of the lease is 5 years with a one year extension available. At such time as
Clarkdale no longer uses the property for effluent disposal, and for a period of
twenty five (25) years measured from the date of the lease, the Company has a
continuing right to purchase Class B, and if available, Class A at then market
rates.
  28
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 
 11.
                INCOME
      TAXES
 
 The
Company is a Nevada corporation and is subject to federal and Arizona income
taxes.  Nevada does not impose a corporate income tax.
 
 The
income tax benefit was $540,188 and $561,228 for the six months ended June 30,
2007 and 2006, respectively.
 
 Significant
components of the Company’s net deferred income tax assets at June 30, 2007 and
December 31, 2006 were as follows:
  June 30,
                          2007
                        
                        
                        December 31,
                          2006Deferred
      income tax assetsNet
      operating loss carryforward
                        
                        $
                        2,514,641
                        
                        
                        $
                        1,667,592Option
      compensation
                        
                        
                        277,012
                        
                        
                        
                        205,057Gross
      deferred income tax asset
                        
                        
                        2,791,653
                        
                        
                        
                        1,872,649Valuation
      allowance
                        
                        
                        (275,726
                        )
                        
                        
                        (204,005
                        )2,515,927
                        
                        
                        
                        1,668,644Deferred
      income tax liabilitiesProperty,
      plant & equipment
                        
                        
                        1,286
                        
                        
                        
                        1,052Acquisition
      related liabilities
                        
                        
                        53,674,487
                        
                        
                        
                        2,527,923Net
      deferred income tax liability
                        
                        $
                        51,159,846
                        
                        
                        $
                        860,331
 
 A
valuation allowance for deferred tax related to option compensation was
established for net deferred tax assets not allocated to offset acquisition
related deferred tax liabilities due to the uncertainty of realizing these
deferred tax assets based on conditions existing at June 30, 2007 and December
31, 2006.
 
 Deferred
income tax liability was recorded on GAAP basis over income tax basis using
statutory federal rates with the corresponding increase in the purchase price
allocation to the assets acquired.
 
 The
resulting estimated future federal and state income tax liability associated
with the temporary difference between the acquisition consideration and the tax
basis as computed in accordance with EITF 98-11 and SFAS 109, is reflected as an
increase to the total purchase price which has been applied to the underlying
mineral properties in the absence of there being a goodwill component associated
with the acquisition transactions.
 
 The
Company had cumulative net operating losses of approximately $6,152,146 and
$4,764,549 as of June 30, 2007 and December 31, 2006, respectively for federal
income tax purposes.  The net operating loss carryforwards will be
expiring between 2025 and 2027.  The Company had no material loss
carryforwards for state income tax purposes.
  29
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 
 11.
              INCOME TAXES
      (continued)
 
 As of
January 1, 2007, the Company did not have any unrecognized tax
benefits.  The adoption of FIN 48 did not result in any cumulative
effect adjustment to the January 1, 2007 balance of the Company’s accumulated
deficit.  Upon adoption of FIN 48, the Company did not accrue for
interest and penalties as there were no unrecognized tax benefits.  If
interest and penalties were to be assessed, we would charge interest to interest
expense, and penalties to general and administrative expense.  It is
not anticipated that unrecognized tax benefits would significantly increase or
decrease within 12 months of the reporting date.
 
 The
Company and its subsidiary file income tax returns in the United
States.  These tax returns are subject to examination by taxation
authorities provided the years remain open under the relevant statutes of
limitations, which may result in the payment of income taxes and/or decrease its
net operating losses available for carryforwards.  The Company is no
longer subject to income tax examinations by US federal and state tax
authorities for years prior to 2004. While the Company believes its tax filings
do not include uncertain tax positions, the results of potential examinations or
the effect of changes in tax law cannot be ascertained at this
time.  The Company currently has no tax years under
examination.
 
 12.
              COMMITMENTS AND
      CONTINGENCIES
 
 Lease obligations –
The Company rents office space in Henderson, Nevada.  The lease terms
expired in November 2006 and the Company continues to rent the existing space
under month-to-month terms for $4,000 per month.
 
 Rental
expense, resulting from this operating lease agreement, approximated $20,151 for
the six months ended June 30, 2007 and $12,151 for three months ended March 31,
2007.
 
 Employment contracts
– Ian R. McNeil, President and Chief Executive Officer.  The Company
has an employment agreement with Mr. McNeil effective since January 1,
2006.  Under the terms of the agreement, as updated February 16, 2007,
Mr. McNeil is paid a salary of $190,000. Mr. McNeil is also eligible for a
discretionary bonus to be determined based on factors considered relevant by the
Company’s board of directors, and may be granted, subject to the approval of the
board of directors, incentive stock options to purchase shares of the Company’s
common stock in such amounts and at such times as the board of directors, in its
absolute discretion, may from time to time determine.  The term of the
agreement is for an indefinite period, unless otherwise terminated pursuant to
the terms of the agreement.  In the event that the agreement is
terminated by the Company other than for cause, the Company will provide Mr.
McNeil with six months written notice or payment equal to six months of his
monthly remuneration.
 
 Carl
S. Ager, Treasurer and Secretary.  The Company has an employment
agreement with Mr. Ager effective since January 1, 2006.  Under the
terms of the agreement, as updated February 16, 2007, Mr. Ager is paid a salary
of $160,000.  Mr. Ager is also eligible for a discretionary bonus to
be determined based on factors considered relevant by the Company’s board of
directors, and may be granted, subject to the approval of the board of
directors, incentive stock options to purchase shares of the Company’s common
stock in such amounts and at such times as the board of directors, in its
absolute discretion, may from time to time determine.  The term of the
agreement is for an indefinite period, unless otherwise terminated pursuant to
the terms of the agreement.  In the event that the agreement is
terminated by the Company other than for cause, the Company will provide Mr.
Ager with six months written notice or payment equal to six months of his
monthly remuneration.
  30
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 
 12.
              COMMITMENTS AND
      CONTINGENCIES
(continued)
 
 Melvin
L. Williams, Chief Financial Officer.  The Company has an employment
agreement with Mr. Williams effective since June 14, 2006.  Under the
terms of the agreement, as updated February 16, 2007, Mr. Williams is paid a
salary of $130,000 based on 600-800 hours worked. Mr. Williams is also eligible
for a discretionary bonus to be determined based on factors considered relevant
by the Company’s board of directors, and may be granted, subject to the approval
of the board of directors, incentive stock options to purchase shares of the
Company’s common stock in such amounts and at such times as the board of
directors, in its absolute discretion, may from time to time
determine.  The term of the agreement is for an indefinite period,
unless otherwise terminated pursuant to the terms of the
agreement.  In the event that the agreement is terminated by the
Company other than for cause, the Company will provide Mr. Williams with thirty
days written notice or payment equal to three months of his monthly
remuneration.
 
 Purchase consideration
Clarkdale Slag Project - In consideration of the acquisition of the
Clarkdale Slag Project from VRIC, the Company has agreed to certain additional
contingent payments.  The acquisition agreement contains payment terms
which are based on Project Funding Date as defined in the
agreement:
  a)
              The
      Company has agreed to pay VRIC $6,400,000 on the Project Funding
      Date;
  b)
              The
      Company has agreed to pay VRIC a minimum annual royalty of $500,000,
      commencing on the Project Funding Date (the “Advance Royalty”), and an
      additional royalty consisting of 2.5% of the net smelter returns (“NSR”)
      on any and all proceeds of production from the Clarkdale Slag Project (the
      “Project Royalty”).  The Advance Royalty remains payable until
      the first to occur of: (1) the end of the first calendar year in which the
      Project Royalty equals or exceeds $500,000; or (2) February 15,
      2017.  In any calendar year in which the Advance Royalty remains
      payable, the combined Advance Royalty and Project Royalty will not exceed
      $500,000, and,
  c)
              The
      Company has agreed to pay VRIC an additional amount of $3,500,000 from the
      net cash flow of the Clarkdale Slag
Project.
  The
Advance Royalty shall continue for a period of ten (10) years from the Agreement
Date or until such time that the Project Royalty shall exceed $500,000 in any
calendar year, at which time the Advance Royalty requirement shall end
forever.
  13.
                CONCENTRATION OF
      CREDIT RISK
 
 Financial
instruments that potential subject the Company to concentration of credit risk
consist of cash investments.  The Company places its temporary cash
investments with one financial institution.  Cash accounts at the
financial institution are insured by the Federal Deposit Insurance Corporation
for up to $100,000 per financial institution.
 
 14.
                CONCENTRATION OF
      ACTIVITY
 
 For the
six months ended June 30, 2007, the Company purchased services from one major
vendor, Talson Corporation, that exceeded more than 10% of total purchases and
amounted to approximately $552,000.
  31
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 
 15.
              RELATED PARTY
      TRANSACTIONS
 
 During
the six months ended June 30, 2007 and 2006, the Company utilized the services
of NMC to provide technical assistance and financing related
activities.  These services related primarily to the Clarkdale Slag
Project and Searchlight Claims project. Mr. McNeil and Mr. Ager are affiliated
with NMC.
 
 In
addition to the above fees, NMC provided dedicated use of its laboratory,
instrumentation, milling equipment and research facilities.  NMC
provided invoices for these fees plus expenses.
 
 For
the six months ended June 30, 2007, the Company incurred total fees and
reimbursement of expenses to NMC of $180,000 and $51,046, respectively. At June
30, 2007, the Company had an outstanding balance due to NMC of
$20,053.
 
 For the
three months ended June 30, 2007, the Company incurred total fees and
reimbursement of expenses to NMC of $90,000 and $30,271,
respectively.
 
 16.
              SUBSEQUENT EVENT –
      WARRANT EXERCISE
 
 Subsequent
to June 30, 2007, on August 9, 2007, the Company issued 400,000 shares of common
stock from the exercise of warrants resulting in cash proceeds of $260,000.
Warrants exercised were for 400,000 shares at $0.65 per share. Each of the
warrants was set to expire on January 18, 2008. Cash proceeds of $195,000 from
the exercise of warrants were received prior to June 30, 2007 and were reported
as subscribed common stock. Remaining cash proceeds of $65,000 were received in
July 2007.
 
 17.
              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, 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.  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.
 
 Clarkdale Slag
Project – The Company determined that acquisition accounting methods used
in prior periods to record the purchase accounting for the Slag Project were not
appropriate with respect to contingent consideration and has restated the
purchase accounting to reflect the acquisition terms with respect to future
payments related to the acquisition and with respect to warrants issued in
connection with the assignment of the original Slag Project
option.
 
 The
adjustments include revision of the acquisition accounting related to payment
terms and conditions contained in the agreement which resulted in an increase in
recorded purchase consideration of $9,297,686, including an increase of the
recorded purchase consideration related to warrants issued in connection with
the option assignment on the project of $1,918,481 which was computed based on
stock price at the time the warrants were issued. The related deferred tax
liability assumed for the acquisition of the project increased by
$14,925,422.
  32
 SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 
 17.
              RESTATEMENT
      (continued)
 
 Discontinued
operations
 
 The
consolidated unaudited statement of operation for the period from January 14,
2000 (date of inception) through June 30, 2007 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 as a result was not included in
loss from discontinued operations.
 
 The
following table summarizes the consolidated balance sheet of the Company as of
June 30, 2007 and reconciles the reported amounts to the restated
amounts:
 
 Summarized Consolidated Balance Sheet -June 30, 2007
                              
                              As Reported
                              
                              
                              Adjustments
                              
                              
                              
                              
                              
                              As RestatedProperty
      and equipment, net
                              
                              $
                              1,432,486
                              
                              
                              $
                              66,852
                              
                              
                              
                              a
                              
                              
                              $
                              1,499,338Mineral
      properties
                              
                              
                              127,134
                              
                              
                              
                              12,575,124
                              
                              
                              
                              b
                              
                              
                              
                              12,702,258Slag
      project
                              
                              
                              111,469,191
                              
                              
                              
                              9,297,686
                              
                              
                              
                              c
                              
                              
                              
                              120,766,877Total
      assets
                              
                              
                              134,310,154
                              
                              
                              
                              21,939,662
                              
                              
                              
                              
                              
                              
                              
                              156,249,816VRIC
      payable, current portion – related party
                              
                              
                              680,000
                              
                              
                              
                              (507,198
                              )
                              
                              
                              c
                              
                              
                              
                              172,802Due
      to VRIC
                              
                              
                              6,400,000
                              
                              
                              
                              (6,400,000
                              )
                              
                              
                              c
                              
                              
                              
                              -VRIC
      payable, net of current portion –related party
                              
                              
                              2,817,404
                              
                              
                              
                              (572,167
                              )
                              
                              
                              c
                              
                              
                              
                              2,245,237Deferred
      tax liability
                              
                              
                              33,151,312
                              
                              
                              
                              18,008,534
                              
                              
                              
                              d
                              
                              
                              
                              51,159,846Total
      liabilities
                              
                              
                              44,418,955
                              
                              
                              
                              13,438,986
                              
                              
                              
                              
                              
                              
                              
                              54,948,124Additional
      paid-in capital
                              
                              
                              100,668,760
                              
                              
                              
                              9,348,203
                              
                              
                              
                              b,c
                              
                              
                              
                              110,016,963Accumulated
      other comprehensive loss
                              
                              
                              (121,606
                              )
                              
                              
                              121,606
                              
                              
                              
                              e
                              
                              
                              
                              —Accumulated
      deficit during exploration stage
                              
                              
                              (10,943,733
                              )
                              
                              
                              1,940,684
                              
                              
                              
                              e,f
                              
                              
                              
                              (9,003,049
                              )Total
      stockholders' equity
                              
                              
                              89,891,199
                              
                              
                              
                              11,410,493
                              
                              
                              
                              
                              
                              
                              
                              101,301,692Total
      liabilities and stockholders' equity
                              
                              $
                              134,310,154
                              
                              
                              $
                              21,939,662
                              
                              
                              
                              
                              
                              
                              $
                              156,249,816
  The
following tables summarize the consolidated statements of operations for the
three months ended June 30, 2007, and reconcile the reported amounts to the
restated amounts:
 
 Summarized Consolidated Statement of Operations -For the three months ended June 30, 2007
                          
                          As Reported
                          
                          
                          Adjustments
                          
                          
                          
                          
                          
                          As RestatedTotal
      operating expenses
                          
                          $
                          986,731
                          
                          
                          $
                          (44
                          )
                          
                          
                          g
                          
                          
                          $
                          986,687Loss
      from operations
                          
                          
                          (974,771
                          )
                          
                          
                          (11,916
                          )
                          
                          
                          h
                          
                          
                          
                          (986,687
                          )Total
      other income (expense)
                          
                          
                          117,842
                          
                          
                          
                          11,916
                          
                          
                          
                          h
                          
                          
                          
                          129,758Income
      tax benefit
                          
                          
                          —
                          
                          
                          
                          270,094
                          
                          
                          
                          f
                          
                          
                          
                          270,094Net
      loss
                          
                          $
                          (856,929
                          )
                          
                          $
                          270,094
                          
                          
                          
                          f
                          
                          
                          $
                          (586,835
                          )
  33
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 
 17.
              RESTATEMENT
      (continued)
 
 The
following tables summarize the consolidated statements of operations for the six
months ended June 30, 2007, and reconcile the reported amounts to the restated
amounts:
 
 Summarized Consolidated Statement of Operations -For the six months ended June 30, 2007
                          
                          As Reported
                          
                          
                          Adjustments
                          
                          
                          
                          
                          
                          As RestatedTotal
      operating expenses
                          
                          $
                          1,708,279
                          
                          
                          $
                          (44
                          )
                          
                          
                          g
                          
                          
                          $
                          1,708,235Loss
      from operations
                          
                          
                          (1,688,699
                          )
                          
                          
                          (19,536
                          )
                          
                          
                          h
                          
                          
                          
                          (1,708,235
                          )Total
      other income (expense)
                          
                          
                          151,740
                          
                          
                          
                          19,536
                          
                          
                          
                          h
                          
                          
                          
                          171,276Income
      tax benefit
                          
                          
                          —
                          
                          
                          
                          540,188
                          
                          
                          
                          f
                          
                          
                          
                          540,188Net
      loss
                          
                          $
                          (1,536,959
                          )
                          
                          $
                          540,188
                          
                          
                          
                          f
                          
                          
                          $
                          (996,771
                          )
 
 The
following table summarizes the consolidated statements of operations for the
period from January 14, 2000 (Date of Inception) through June 30, 2007, and
reconciles the reported amounts to the restated amounts:
 
 Summarized Consolidated Statement of Operations -For the period from January 14, 2000 (Date of Inception)Through June 30, 2007
                          
                          As Reported
                          
                          
                          Adjustments
                          
                          
                          
                          
                          
                          As RestatedResearch
      and development
                          
                          $
                          1,900,095
                          
                          
                          $
                          (1,900,095
                          )
                          
                          
                          i
                          
                          
                          $
                          —General
      and administrative
                          
                          
                          4,720,005
                          
                          
                          
                          (1,621,355
                          )
                          
                          
                          j
                          
                          
                          
                          3,098,650Depreciation
                          
                          
                          256,676
                          
                          
                          
                          (235,174
                          )
                          
                          
                          k
                          
                          
                          
                          21,502Impairment
      loss on intangible assets
                          
                          
                          173,234
                          
                          
                          
                          (173,234
                          )
                          
                          
                          l
                          
                          
                          
                          —Impairment
      loss on property and equipment
                          
                          
                          86,683
                          
                          
                          
                          (86,683
                          )
                          
                          
                          m
                          
                          
                          
                          —Interest
      expense, net
                          
                          
                          300,044
                          
                          
                          
                          (300,000
                          )
                          
                          
                          n
                          
                          
                          
                          44Total
      operating expenses
                          
                          
                          11,482,676
                          
                          
                          
                          (4,316,585
                          )
                          
                          
                          o,g
                          
                          
                          
                          7,166,091Loss
      from operations
                          
                          
                          (11,463,096
                          )
                          
                          
                          4,347,005
                          
                          
                          
                          o,h
                          
                          
                          
                          (7,116,091
                          )Other
      income
                          
                          
                          282,142
                          
                          
                          
                          (282,142
                          )
                          
                          
                          p
                          
                          
                          
                          —Total
      other income (expense)
                          
                          
                          506,526
                          
                          
                          
                          262,606
                          
                          
                          
                          p,h
                          
                          
                          
                          243,920Loss
      before income taxes
                          
                          
                          (10,956,570
                          )
                          
                          
                          4,034,399
                          
                          
                          
                          r,e
                          
                          
                          
                          (6,922,171
                          )Income
      tax benefit
                          
                          
                          12,837
                          
                          
                          
                          2,049,453
                          
                          
                          
                          q,f
                          
                          
                          
                          2,062,290Net
      loss
                          
                          
                          (10,943,733
                          )
                          
                          
                          1,940,684
                          
                          
                          
                          e,f
                          
                          
                          
                          (9,003,049
                          )Foreign
      currency translation adjustment
                          
                          
                          (121,606
                          )
                          
                          
                          121,606
                          
                          
                          
                          e
                          
                          
                          
                          —Loss
      from discontinued operations
                          
                          $
                          —
                          
                          
                          $
                          (4,143,168
                          )
                          
                          
                          r
                          
                          
                          $
                          (4,143,168
                          )
 
 The
restatements had no impact on the Company’s cash or cash flows.
  34
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 
 17.
              RESTATEMENT
      (continued)
 
 The
restatement adjustments are as follows:
 
 a.
              Restate
      for capitalization of interest related to deferred purchase
      liability.
 b.
              Restate
      issuance of 1,400,000 shares to obtain mineral properties on July 7, 2005
      at the market value of $0.35 per share, 1,400,000 on July 27, 2006 at the
      market value of $2.20 per share and 1,400,000 shares at $3.22 per share on
      June 29, 2007 on the date of issuance.  The resulting estimated
      future income tax liability associated with the temporary differences
      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.
 c.
              Restate
      for revision of the acquisition accounting related to contingent payment
      terms and conditions contained in the agreement and the resultant deferred
      tax liability assumed in
acquisition.
 d.
              Restate
      for computation of deferred tax liability assumed in mineral property
      acquisition.
 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
      interest expense from operating expenses to other income
      (expense).
 h.
              Reclassify
      rental revenue and interest expense from operations to other income
      (expense).
 i.
              Reclassify
      research and development expense incurred prior to 2005 as discontinued
      operations.
 j.
              Reclassify
      general and administrative expense incurred prior to 2005 as discontinued
      operations.
 k.
              Reclassify
      depreciation expense incurred prior to 2005 as discontinued
      operations.
 l.
              Reclassify
      impairment loss on intangible assets incurred prior to 2005 as
      discontinued operations.
 m.
                Reclassify
      impairment loss on property and equipment incurred prior to 2005 as
      discontinued operations.
 n.
              Reclassify
      interest expense incurred prior to 2005 as discontinued
      operations.
 o.
              Reclassify
      operating expenses incurred prior to 2005 as discontinued
      operations.
 p.
              Reclassify
      other income earned prior to 2005 as discontinued
      operations.
 q.
              Reclassify
      income tax benefit prior to 2005 as discontinued
      operations.
 r.
              Reclassify
      net losses prior to 2005 as discontinued
  operations.
 
 35




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




FORWARD
LOOKING STATEMENTS




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




INTRODUCTION




We are an
exploration stage company engaged in the acquisition and exploration of mineral
properties and slag reprocessing projects.  Our business is presently
focused on our two mineral projects: (i) the Clarkdale Slag Project, located in
Clarkdale, Arizona, pursuant to which we seek to recover precious and base
metals from the reprocessing of slag material produced from the smelting of
copper ores from former mines in the Jerome, Arizona area; and (ii) the
Searchlight Gold Project, which involves exploration for precious metals on
mining claims near Searchlight, Nevada.




Our
current plan of operation on the Clarkdale Slag Project during the next twelve
months is to complete our materials study, continue our pilot testing and site
work in Clarkdale, construct our first unit (module) of production, and, subject
to positive results from our pre-feasibility studies and the results from our
one unit module of production, finance and construct a processing
facility.  The unit module consists of a module intended to process up
to 200 tons of slag material per day.  If the results from our
pre-feasibility studies and the production results from the operation of our one
unit module are not sufficiently positive for us to proceed with the
construction of our proposed processing facility we will have to scale back or
abandon our proposed operations on the Clarkdale Slag Project.




Our
current plan of operation on the Searchlight Gold Project is to continue the
metallurgical testing program to determine the most favorable production-scale
extraction methods to optimize recovery of precious metals, drill for reserves
(18 holes) and to perform a pre-feasibility study.  We have not earned
any revenues to date and do not anticipate earning revenues until such time as
we enter into commercial production of our properties.




Restatements




We
have restated certain items on our consolidated balance sheets and statements of
operations.  On our consolidated 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.  Our consolidated statement of operations for the period
from inception to June 30, 2007 has been restated to reclassify net losses prior
to January 1, 2005 as losses from discontinued operations.


36




The
consolidated statement of operation for the period from January 14, 2000 (date
of inception) through June 30, 2007 has 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.




In
addition, 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
included in this report 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 restatement to the balance sheet at June 30, 2007 had
the impact of increasing stockholders equity by $8,038,000 and the mineral asset
by $12,575,124.  The impact to the statement of operations reflects an
income tax benefit obtained of $540,188.




Further,
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 the Clarkdale Slag Project and the resultant
computation of future deferred income tax liability assumed.  We have
restated certain items on our consolidated balances 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 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 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 the related impact of
      the computation of the deferred future income tax liability and state
      income tax liability.




·
            our
      consolidated statement of operations for the period from inception to June
      30, 2007 has been restated to reflect the computation of the tax benefits
      related to net operating losses as a result of changes to the purchase
      accounting for the Clarkdale Slag Project and the Searchlight Gold
      Project.  There was no other impact on the results of
      operations.




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
increased by $9,297,686 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 tothe $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.




37




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
original terms of the underlying purchase agreement were unchanged and this
adjustment had no effect on the acquisition agreement.




During
the second quarter of 2008, we also determined that the accounting treatment for
the 12,000,000 warrants to Nanominerals issued in connection with the original
Clarkdale Slag Project option assignment made on June 1, 2005 related to the
Clarkdale Slag Project was not appropriate and 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.




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




The
restatements had no impact on our cash or cash flows.




RECENT
CORPORATE DEVELOPMENTS




We
experienced the following significant corporate developments since the
completion of our quarter ended March 31, 2007:




1.
            During
      the quarter ended June 30, 2007, significant progress was made on the
      Company's Clarkdale Slag Project, including: (i) advancement in the
      building construction and site remediation program on the Clarkdale
      project site, (ii) employment of a full-time operations manager, (iii)
      completion of purchase orders for much of the processing equipment to be
      used in the first module of production, and (iv) receipt of a report,
      prepared by Independent Mining Consultants (“IMC”) of Tucson, Arizona,
      outlining the tonnage and grade estimate of our slag pile in Clarkdale,
      Arizona. See “Item 2. Plan of Operation-Clarkdale Slag Project”,
      below.




2.
            On
      May 14, 2007 the Company entered into an agreement with The Talson
      Corporation (“TC”) for the purpose of providing certain construction and
      refurbishing services in connection with development of the first unit
      module for the Clarkdale Slag Project. Pursuant to the terms of the
      agreement, as amended on June 4, 2007: (i) the Company agreed to pay a sum
      of $2,118,653 in consideration of the construction and refurbishing
      services to be provided by TC to the Company, subject to additional
      amounts to be included in the final contract sum for overhead on the
      project, and (ii) TC agreed to substantially complete the contract work
      under the agreement by no later than 180 days from the execution of the
      initial agreement.  The agreement may be terminated by the
      Company at any time without cause.




3.
            Effective
      April 30, 2007, our Board of Directors adopted our 2007 Stock Option Plan
      (the "2007 Plan") and determined to cease granting any further options
      under our 2006 Stock Option Plan.  Under the terms of the 2007
      Plan, options to purchase up to 40,000,000 shares of our common stock may
      be granted to eligible Participants.  The 2007 Plan provides
      that the option price for incentive stock options be the fair market value
      of the stock at the date of the grant and the option price for non-
      qualified stock options be no less than 85% of the fair market value of
      the stock at the date of the grant. Options granted under the 2007 Plan
      become exercisable and expire as determined by the Board of
      Directors.  The effective date of the 2007 Plan is April 30,
      2007.


38


4.
            On
      April 30, 2007, our Board of Directors amended and restated our bylaws
      (the “Amended Bylaws’).  The amendment to the bylaws was for the
      purpose of, among other things, removing certain outdated and redundant
      provisions that existed in our prior bylaws with respect to corporate
      governance, shareholder and director meeting procedures, and to amend the
      structure of our board of directors to provide for staggered terms to
      assure continuity and stability in our board of
  directors.




5.
            On
      May 8, 2007, the Board of Directors determined to cease granting any
      further options under our 2003 Nonqualified Stock Option Plan and reduced
      the number of shares of the Company’s common stock available for issuance
      under the 2007 Stock Option Plan to a maximum of
  4,000,000.




6.
              On
      June 15, 2007 the Company held its annual meeting of shareholders (the
      “2007 AGM”). At the 2007 AGM all stockholder proposals were approved by a
      majority vote of the stockholders, see “Item 4. Submission of matters to a
      vote of security holders”, below. At a board of directors meeting held
      immediately following the 2007 AGM the following officers of the Company
      were reappointed to hold office until their successors have been duly
      elected and qualified: Ian R. McNeil was reappointed as Chief Executive
      Officer and President, Carl S. Ager was reappointed as Vice President,
      Secretary and Treasurer, and Melvin L. Williams was reappointed as Chief
      Financial Officer. Also on June 15, 2007 the board reappointed Robert D.
      McDougal as sole member of the Company’s audit and compensation committees
      and Ian R. McNeil, Carl S. Ager and Robert D. McDougal were reappointed to
      the Company’s disclosure committee. Subsequently on July 27, 2007 the
      Company appointed Harry Crockett to serve on the Company’s compensation
      committee.




7.
            On
      June 29, 2007, we approved the issuance of 1,400,000 shares of our common
      stock to certain claim owners in connection with the option agreements
      dated February 8, 2005 among Searchlight and the mineral claim
      owners.  The issuance was completed pursuant to Section 4(2) of
      the Securities Act of 1933.  As of the date of this quarterly
      report we have issued 4,200,000 of 5,600,000 shares of our common stock
      required to complete our acquisition of the Searchlight
      Claims.  See “Item 2. Unregistered Sales of Equity Securities
      And Use of Proceeds”, below.




8.
            Effective
      July 1, 2007, our Board of Directors approved a director compensation
      policy for our non- employee directors.  Under our new
      compensation policy commencing July 1, 2007 our non- employee directors
      receive compensation as follows: (i) each non-employee director will be
      issued annually such number of restricted shares of our common stock as is
      equal to the sum of $36,000, to be issued on a quarterly basis based on
      the closing price of our stock on the last day of trading in each fiscal
      quarter; and (ii) each non-employee director will receive an annual
      retainer of $36,000 payable in monthly installments.  The above
      restricted stock awards and annual retainer are subject to the
      non-employee director’s continued service to the Company during the fiscal
      year.


39




PLAN
OF OPERATION




The
following discussion and analysis summarizes our plan of operation for the next
twelve months, our results of operations for the six months ended June 30, 2007
and changes in our financial condition from our year ended December 31,
2006.  The following discussion should be read in conjunction with the
Management’s Discussion and Analysis or Plan of Operation included in our Annual
Report on Form 10-KSB for the year ended December 31, 2006.




Clarkdale
Slag Project




As of the
date of this Quarterly Report, we received chain of custody analysis results
from eighteen drill holes and a 750-pound bulk sample taken from the slag pile
located on our Clarkdale Slag Project under the supervision of Mountain States
R&D International Inc. (“MSRDI”).  These holes were drilled as
part of a materials study being conducted by MSRDI on our
behalf.  Sample preparation and analysis was performed under MSRDI’s
chain of custody sampling.




During
the quarter ended June 30, 2007, as part of our materials study, we received a
report, prepared by Independent Mining Consultants (“IMC”) of Tucson, Arizona,
outlining the tonnage and grade estimate of our slag pile in Clarkdale, Arizona.
A summary of the estimates contained in the report is as follows:




Slag Pile
                    
                    Tons in
                      Millions
                    
                    
                    Au opt*
                    
                    
                    Ag opt*
                    
                    
                    Cu %*
                    
                    
                    Zn %*
                    
                    
                    Fe %*East
                    
                    
                    19.86
                    
                    
                    
                    0.50
                    
                    
                    
                    0.10
                    
                    
                    
                    0.34
                    
                    
                    
                    2.47
                    
                    
                    
                    33.18West**
                    
                    
                    0.34
                    
                    
                    
                    0.39
                    
                    
                    
                    0.07
                    
                    
                    
                    0.22
                    
                    
                    
                    1.70
                    
                    
                    
                    31.30Combined
                    
                    
                    20.20
                    
                    
                    
                    0.50
                    
                    
                    
                    0.10
                    
                    
                    
                    0.34
                    
                    
                    
                    2.46
                    
                    
                    
                    33.15





Notes


opt
            (ounces
      per ton)




*
            Independent
      Mining Consultants accepted the certified chain-of-custody data as
      presented by Mountain States R&D International Inc and did not perform
      independent verification of this
data.




**
            Volume
      of the west slag- was calculated and supplied to Independent Mining
      Consultants by Dr. Richard Hewlett, an independent mining consultant to
      the Company.




Independent
Mining Consultants was presented with the drill hole and bulk density data as
well as the topographic maps showing the present day surface of the slag
pile.  Independent Mining Consultants has used this information to
develop the estimated volume and tonnage of the slag pile.  Mountain
States R&D International Inc, utilizing ‘Chain-of-Custody’ parameters,
certified the grade of the slag pile that was used to determine the volume and
tonnage of the slag pile.  All tonnage is reported in short tons
(2,000 pounds).




Volume
and Tonnage Estimate




The slag
pile was created when molten slag from the Clarkdale copper smelter was dumped
and solidified during the years 1915-1952. As the dumping continued, the pile
increased in size to its present dimensions. The slag pile is bisected by an
active railroad line that splits the pile into two sections of slag generated
from the smelting of copper concentrates from milling operations, located on the
east and west sides of the railroad track.  The eastern portion of the
slag pile is the larger of the two, and its volume and tonnage have been
calculated by Independent Mining Consultants.  The volume of the west
portion of the slag pile has been calculated by Dr. Richard Hewlett, an
independent mining consultant retained by Searchlight. The volume estimates are
as follows:


40





Volume EstimateSlag Pile
                        
                        (million cubic feet)East
                        
                        
                        198.0West
                        
                        
                        3.4Total
    Volume
                        
                        
                        201.4




During
our drilling program, drill hole samples were collected at 2.5 -foot intervals,
weighed and bagged. The average bulk density of the drill hole cuttings was
calculated to be 200.6 pounds per cubic foot.  This equates to an
average tonnage factor of 9.97 cubic feet per ton and therefore, the estimate of
the in-place tonnage of the slag pile is as follows:




Tonnage EstimateSlag Pile
                  
                  (million tons)East
                  
                  
                  19.86West
                  
                  
                  0.34Total
    Volume
                  
                  
                  20.20




Other
slag has been recently identified on the property and is expected to be further
delineated in the future.




Grade
Estimate




Mountain
States R & D Inc. (“MSRDI”) was retained by Searchlight to collect and
analyze samples of the slag pile under ‘Chain-of-Custody’
protocol.  The slag grades from the 18-hole sonic drilling program
were reported under MSRDI’s certification.




A
computer block model of the East Slag pile was developed and the grade of the
five metals assayed (gold, silver, copper, zinc and iron) were estimated into
the block model from the drill data using an inverse distance squared
method.  The following data was used to compile the estimated grades
from the East and West Slag piles:




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




41




Our
current plan of operation on the Clarkdale Slag Project is to complete our
materials study, continue our pilot testing and site work in Clarkdale,
construct our first unit (module) of production.  The materials study,
continuing in the third quarter of 2007, is expected to show total and
“processable” tonnage as well as the grade study completed by independent
engineers.  In the third quarter of 2007, we hope to complete our
pilot testing and continue site work which will include finalizing the
metallurgy and flow sheet, optimizing the processing protocols and begin
rehabilitating the operations site.  We then anticipate our first
module of production, designed to determine the economics of the project and
serve as final feasibility of the project, to be completed in the fourth quarter
of 2007.  If the feasibility of the project proves economic, financing
and construction of the processing facility is expected to commence in the first
quarter of 2008.




Until
such time as we have established economic feasibility of the Clarkdale Slag
Project through our pre-feasibility studies and the operation of our one unit
module of production from the slag pile, there is no assurance that we will
proceed to the construction of our proposed processing facility.  If
the results from our pre-feasibility studies and the production results from the
operation of our one unit module are not sufficiently positive for us to proceed
with the construction of our processing facility we will have to scale back or
abandon our proposed operations on the Clarkdale Slag Project.




Searchlight
Gold Project




In early
2007, we received the initial results of the metallurgical and analytical
analysis on the chain of custody surface samples and bulk samples (6 tons)
samples taken from the project area by Arrakis Inc.  Our current plan
of operation on the Searchlight Gold Project is to continue the metallurgical
testing program to determine the most favorable production-scale extraction
methods to optimize recovery of precious metals, drill for reserves (18 holes)
and to perform a pre-feasibility study.  The metallurgical testing
program which includes independent metallurgical testing, bulk sampling,
concentration tests, milling and leaching and extraction tests to optimize
recovery of precious metals is expected to be completed in the fourth quarter of
2007.  A drilling and pre-feasibility program, which is expected to
include an 18-hole drill program, chain-of-custody sampling and assaying of
drill hole material, pilot plant tests and a pre-feasibility report, is then
anticipated to begin in the fourth quarter of 2007.




The table
below provides an overview of the results from metallurgical tests received from
Arrakis during the six months ended June 30, 2007:


42




Chain
of Custody Results Summary




COC Tests(1)
                                                                                    
                                                                                    Feed Grade
                                                                                      Gold (opt)*(1)(2)
                                                                                    
                                                                                    
                                                                                    Extracted Grade
                                                                                      Gold (opt)*(1)(2)
                                                                                    
                                                                                    Leach Method(1)Bench
      Leach TestsSP4
      – 500grams
                                                                                    
                                                                                    0.58
                                                                                    
                                                                                    
                                                                                    0.24
      – 0.42
                                                                                    
                                                                                    48
      hr LeachSP4
      – 50lbs head
                                                                                    
                                                                                    0.54Con
      1
                                                                                    
                                                                                    1.56
                                                                                    
                                                                                    
                                                                                    0.36
                                                                                    
                                                                                    96
      hr leachCon
      2
                                                                                    
                                                                                    0.93
                                                                                    
                                                                                    
                                                                                    0.75
                                                                                    
                                                                                    96
      hr leachBulk
      Leach TestsBL1
      - 1,000 lbs
                                                                                    
                                                                                    0.58
                                                                                    
                                                                                    
                                                                                    0.25
                                                                                    
                                                                                    48
      hr LeachBL2
      - 1,000 lbs
                                                                                    
                                                                                    0.58
                                                                                    
                                                                                    
                                                                                    0.22
                                                                                    
                                                                                    48
      hr LeachBL3
      – 9,000 lbs head1,674
      lbs cons
                                                                                    
                                                                                    0.90
                                                                                    
                                                                                    
                                                                                    0.21
                                                                                    
                                                                                    72
      hr LeachAutoclave
      TestsTP2-12
      – 200 grams
                                                                                    
                                                                                    0.34
      – 0.39
                                                                                    
                                                                                    
                                                                                    0.03
      – 0.26
                                                                                    
                                                                                    1.5
      hr AutoclaveTP8
      – 200 grams
                                                                                    
                                                                                    0.37
                                                                                    
                                                                                    
                                                                                    0.16
                                                                                    
                                                                                    1.5
      hr AutoclaveTP9
      (TP8 tails)
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    0.14
                                                                                    
                                                                                    1.5 hr AutoclaveTotal
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    0.30
                                                                                    
                                                                                    3.0 hr
Autoclave





Notes


*
            opt
      (ounces per ton)




(1)
            Gold
      analysis was performed by Arrakis, Inc. under chain-of-custody parameters.
      Analysis of all head ore samples was done by 3 acid digestion in a
      Milestone Ethos Plus microwave sample digester and analyzed by a Perkin
      Elmer 5100 graphite furnace atomic adsorption (GFAA) system with Zeeman
      background correction.  Pregnant solutions from all bench and
      bulk tests were analyzed for Au using calibration blanks and standards
      corrected with matching sample matrix to the specific solution being
      read.




(2)
            Feed
      Grade is the initial gold content in the sample. Extracted Grade is the
      amount of gold leached into
solution.




Results
of the chain of custody surface samples from metallurgical tests received from
Arrakis are as follows:




Surface Sample I.D.
                        
                        Feed Grade
                          Au (opt)*SS5
                        
                        
                        0.39SS6
                        
                        
                        0.48SS7
                        
                        
                        0.55SS8
                        
                        
                        0.69




*
opt (ounces per ton)




While the
feed grade of the preliminary samples indicated significant gold content, the
grade recovered into solution from sample SS8 in a bottle roll leach test
approximated 0.19 opt gold.  Following this initial sampling, Arrakis
tested a variety of bench scale leach methods in order to improve extraction of
the gold.  The bench testing and optimization of leach conditions
improved the extraction efficiency to 72% and outlined a protocol for bulk leach
testing.  To further the work program, six tons of COC bulk samples
were collected from the Searchlight property on September 14,
2005.


43




Results
from analyses of the bulk samples were as follows:




Bulk Test I.D.
                        
                        Feed Grade
                          Au (opt)*
                        
                        
                        Extracted Grade
                          Au (opt)*BL
      1
                        
                        
                        0.58
                        
                        
                        
                        0.25BL
      2
                        
                        
                        0.58
                        
                        
                        
                        0.22BL 3
                        
                        
                        0.90
                        
                        
                        
                        0.21


*
opt (ounces per ton)




Arrakis
has begun work on examining pressure leaching via autoclave to enhance both the
kinetics and extraction efficiency of gold from solution.  A series of
11 autoclave tests were conducted using 200-gram samples in a Parr 1 liter
pressure reactor. Solution analysis was completed by Arrakis,
Inc.  The results of such tests are summarized in the following
table:




Autoclave Test I.D.*
                        
                        Feed Grade
                          Au (opt)**
                        
                        
                        Extracted Grade
                          Au (opt)**TP2
                        
                        
                        0.37
                        
                        
                        
                        0.07TP3
                        
                        
                        0.39
                        
                        
                        
                        0.08TP4
                        
                        
                        0.38
                        
                        
                        
                        0.03TP5
                        
                        
                        0.37
                        
                        
                        
                        0.15TP6
                        
                        
                        0.34
                        
                        
                        
                        0.19TP7
                        
                        
                        0.37
                        
                        
                        
                        0.03TP8
                        
                        
                        0.37
                        
                        
                        
                        0.16TP9
                        
                        
                        0.37
                        
                        
                        
                        0.14TP10
                        
                        
                        0.37
                        
                        
                        
                        0.23TP11
                        
                        
                        0.37
                        
                        
                        
                        0.26TP12
                        
                        
                        0.37
                        
                        
                        
                        0.15


Notes:


*
            All
      samples approximated 200 grams in 1 liter of solution. Leach time for all
      samples approximated 90 min and the sample for TP7 was dead roasted prior
      to leaching.




**
            opt
      (ounces per ton)




The
current work plan for the Searchlight Gold Project is to continue the
metallurgical testing program to determine the most favorable production-scale
extraction methods to optimize recovery of precious metals.  Once
these results are obtained, we intend to embark on an 18 hole drilling program
and perform a pre-feasibility study.


44




Cash
Requirements




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




EXPENSE
                  
                  COSTAdministrative
      Expenses
                  
                  $
                  2,000,000Legal
      and Accounting Expenses
                  
                  $
                  600,000Consulting
      Services
                  
                  $
                  1,000,000Clarkdale Slag
      Project•      Materials Study
                  
                  $
                  50,000•      Pilot Testing/Site Work
                  
                  $
                  300,000•      First Module of Production
                  
                  $
                  7,000,000•      Processing Facility (begin)
                  
                  $
                  15,000,000$
                  22,350,000Searchlight Gold
      Project•      Metallurgical Testing Program
                  
                  $
                  400,000•      Drilling and Feasibility Program
      (begin)
                  
                  $
                  300,000$
                  700,000TOTAL
                  
                  $
                  26,650,000




We
recorded a net loss of $996,771 for the six months ended June 30, 2007 and have
an accumulated deficit of $9,003,049 since inception.  As at June 30,
2007 we had cash of $11,665,903 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 $26,650,000.  Accordingly
we do not have sufficient funds to meet our planned expenditures over the next
twelve months and will need to obtain further financing to fund our
operations.  See “Future Financings”, below.




RESULTS
OF OPERATIONS




Second
Quarter and Six Month Summary




Second Quarter Ended June 30
                        
                        
                        Six Months Ended June 30Percentage
                        
                        
                        
                        
                        
                        
                        
                        
                        PercentageIncrease /
                        
                        
                        
                        
                        
                        
                        
                        
                        Increase /2007
                        
                        
                        2006
                        
                        
                        (Decrease)
                        
                        
                        2007
                        
                        
                        2006
                        
                        
                        (Decrease)(restated)
                        
                        
                        
                        
                        
                        
                        
                        
                        (restated)Revenue
                        
                        $
                        -
                        
                        
                        $
                        -
                        
                        
                        
                        n/a
                        
                        
                        $
                        -
                        
                        
                        $
                        -
                        
                        
                        
                        n/aOperating
                        
                        
                        (986,731
                        )
                        
                        
                        (1,064,487
                        )
                        
                        
                        7.3
                        %
                        
                        
                        (1,708,235
                        )
                        
                        
                        (1,692,475
                        )
                        
                        
                        1.0
                        %ExpensesOther
      income (expense)
                        
                        
                        129,758
                        
                        
                        
                        (4,398
                        )
                        
                        
                        3,050.4
                        %
                        
                        
                        171,276
                        
                        
                        
                        (4,398
                        )
                        
                        
                        3.994.4
                        %Income
      tax benefit
                        
                        
                        270,094
                        
                        
                        
                        280,614
                        
                        
                        
                        (3.8
                        )%
                        
                        
                        540,188
                        
                        
                        
                        561,228
                        
                        
                        
                        (3.7
                        )%Net
      Loss
                        
                        $
                        (586,835
                        )
                        
                        $
                        (788,271
                        )
                        
                        
                        (25.6
                        )%
                        
                        $
                        (996,771
                        )
                        
                        $
                        (1,135,645
                        )
                        
                        
                        (12.2
                        )%




Revenue




We are
currently in the exploration stage of our business, and have not earned any
revenues from our planned mineral operations to date.  We did not
generate any revenues from inception in 2000 through the quarter ended June 30,
2007.  We do not anticipate earning revenues from our planned mineral
operations until such time as we enter into commercial production of the
Clarkdale Slag Project, the Searchlight Gold Project or other mineral properties
we may acquire from time to time, and of which there are no
assurances.


45




Operating
Expenses




Our
operating expenses for the quarters ended June 30, 2007 and June 30, 2006 are
outlined in the table below:




Second Quarter Ended June 30
                    
                    
                    Six Months Ended June 30Percentage
                    
                    
                    
                    
                    
                    
                    
                    
                    PercentageIncrease /
                    
                    
                    
                    
                    
                    
                    
                    
                    Increase /2007
                    
                    
                    2006
                    
                    
                    (Decrease)
                    
                    
                    2007
                    
                    
                    2006
                    
                    
                    (Decrease)(restated)
                    
                    
                    
                    
                    
                    
                    
                    
                    (restated)Mining
      exploration and evaluation
                    
                    $
                    163,676
                    
                    
                    $
                    497,046
                    
                    
                    
                    (67.1
                    )%
                    
                    $
                    458,984
                    
                    
                    $
                    775,388
                    
                    
                    
                    (40.8
                    )%Mining
      exploration and evaluation – related party
                    
                    
                    90,000
                    
                    
                    
                    123,750
                    
                    
                    
                    (27.3
                    )%
                    
                    
                    180,000
                    
                    
                    
                    247,500
                    
                    
                    
                    (27.3
                    )%General
      and administrative
                    
                    
                    721,558
                    
                    
                    
                    441,518
                    
                    
                    
                    63.4
                    %
                    
                    
                    1,055,008
                    
                    
                    
                    666,621
                    
                    
                    
                    58.3
                    %Depreciation
                    
                    
                    11,453
                    
                    
                    
                    2,173
                    
                    
                    
                    427.1
                    %
                    
                    
                    14,243
                    
                    
                    
                    2,966
                    
                    
                    
                    380.2
                    %Total
      Operating Expenses
                    
                    $
                    986,687
                    
                    
                    $
                    1,064,487
                    
                    
                    
                    (7.3
                    )%
                    
                    $
                    1,708,235
                    
                    
                    $
                    1,692,475
                    
                    
                    
                    1.0
                    %




Operating
expenses for the six months ended June 30, 2007 increased by 1% as compared to
the comparative period in 2006 primarily as a result of increased professional
and administrative expenses associated with holding our 2007 annual meeting of
stockholders, the acquisition of Transylvania International, Inc., the
completion of our equity financings and the preparation of our Registration
Statement on Form SB-2.




During
the three and six months ended June 30, 2007 the Company incurred total fees and
reimbursement expenses of $90,000 and $180,000, respectively,to Nanominerals Corp.(“NMC”)an affiliate of the
Company, for technical consulting services provided by NMC in connection with
the Company’s mineral exploration projects.During the six months
ended June 30, 2007 the Company also reimbursed NMC $51,046 for expenses
relating to use of NMC’s laboratory, instrumentation, milling equipment and
research facilities.




Liquidity
and Financial Condition




Working CapitalPercentageAt June 30, 2007
                      
                      
                      At December 31, 2006
                      
                      
                      Increase / (Decrease)(restated)Current
      Assets
                      
                      $
                      11,882,153
                      
                      
                      $
                      3,790,483
                      
                      
                      
                      213.5
                      %Current
      Liabilities
                      
                      
                      (1,467,104
                      )
                      
                      
                      (1,583,306
                      )
                      
                      
                      428.9
                      %Working
      Capital
                      
                      $
                      10,415,049
                      
                      
                      $
                      2,207,177
                      
                      
                      
                      371.9
                      %





Cash FlowsSix Months Ended
                      
                      
                      Six Months EndedJune 30, 2007
                      
                      
                      June 30, 2006(restated)Cash
      Flows used in Operating Activities
                      
                      $
                      (1,817,934
                      )
                      
                      $
                      (1,433,113
                      )Cash
      Flows used in Investing Activities
                      
                      $
                      (11,068,510
                      )
                      
                      $
                      (20,202
                      )Cash
      Flows provided by Financing Activities
                      
                      $
                      20,868,099
                      
                      
                      $
                      6,256,376Net
      Increase in Cash During Period
                      
                      $
                      7,981,655
                      
                      
                      $
                      4,803,061




Property and Equipment.Property and equipment increased by $1,469,151 during the six month
period ended June 30, 2007. The increase was primarily due to site improvement
and equipment at the Clarkdale Slag Project.




Working Capital. The increase
in our working capital surplus from $2,207,177 as at December 31, 2006 as
compared to a working capital surplus of $10,415,049 as at June 30, 2007 was
primarily due to the increase in cash flows from financing activities of
$20,868,099 from private placements of our securities completed during the six
months ended June 30, 2007.


46


Income Tax Liability.Included
in long term liabilities in the accompanying consolidated financials statements
is a balance of $51,159,846 for deferred tax liability relating to the Clarkdale
Slag Project and the Searchlight Gold Project.  Deferred income tax
liability was recorded on excess of fair market value acquired over income tax
basis at a combined statutory federal and state rate of 38% with the
corresponding increase in the purchase price allocation of the assets
acquired.  As of June 30, 2007 and December 31, 2006, we had net
operating loss carryforwards of approximately $6,152,146 and $4,764,549,
respectively for federal income taxes.  The net operating loss
carryforwards expire between 2025 and 2027.




Equity Compensation.On April
30, 2007, we adopted our 2007 Stock Option Plan (the "2007 Plan"). Under the
terms of the 2007 Plan, as amended May 8, 2007, options to purchase up to
4,000,000 shares of common stock that may be granted to our employees, officers,
directors, and eligible consultants. As of June 30, 2007 7,246 options have been
granted under the 2007 with an exercise price of $3.45 per share.  The
options are fully vested and expire on June 15, 2009.  During the six
months ended June 30, 2007 we issued under our 2006 Stock Option Plan options to
acquire 75,700 shares of common stock to three of our executive officers and an
employee with an exercise price of $4.04 per share.  The options are
fully vested and expire on February 16, 2012. Compensation expense for the six
months ended June 30, 2007 related to granting of stock options was
$143,103.




Future
Financings




Our
plan of operation calls for significant expenses in connection with our
Clarkdale Slag Project and Searchlight Gold Project.  We recorded a
net  loss of $996,771 for the six months ended June 30, 2007 and have
an accumulated deficit of $9,003,049 since inception.  As at June 30,
2007 we had cash of $11,665,903 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 $26,650,000.  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.




Obtaining
additional financing is subject to a number of factors, including the market
prices for our 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




None.




CRITICAL
ACCOUNTING POLICIES




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




Use
of Estimates




In
preparing the consolidated 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.


47




Mineral
Rights




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





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




Property
and Equipment




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




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




Impairment
of long-lived assets




We
review and evaluate 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 June 30, 2007 exploration is
progressing in accordance with our plan of operations and no events or
circumstances have happened to indicate the related carrying values of the
properties may not be recoverable.  When we determine 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 we 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.




Exploration
Costs




Mineral
exploration costs are expensed as incurred.


48




Capitalized
interest cost




We
capitalize interest cost related to development and construction of property and
equipment.  The capitalized interest is recorded as part of the asset
it relates to and will be amortized over the asset’s useful life once production
commences.




RISKS
AND UNCERTAINTIES




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




We were
incorporated in January 12, 1999 and since that time were engaged in the
business of biotechnology research and development. In February, 2005, we
changed our business to mineral exploration.  We have a limited
history upon which an evaluation of our future success or failure can be
made.  Our ability to achieve and maintain profitability and positive
cash flow is dependent upon, among other things:




-
              our
      ability to locate a profitable mineral
property;
 -
              positive
      results from our feasibility studies on the Searchlight Claims and the
      Clarkdale Slag Project;
 -
              positive
      results from the operation of our initial test module on the Clarkdale
      Slag Project; and
 -
              our
      ability to generate revenues.




Our
plan of operation calls for significant expenses in connection with the
exploration of the Searchlight Claims and drilling and sampling activities on
the Clarkdale Slag Project which will require us to obtain additional
financing.  We recorded a net loss of $996,771 for the six months
ended June 30, 2007 and have an accumulated deficit of $9,003,049 as at June 30,
2007.  As at June 30, 2007 we had cash of $11,665,903 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
$26,650,000.  Accordingly we do not have sufficient funds to meet our
planned expenditures over the next twelve months and will need to obtain further
financing to fund our operations.




Obtaining
additional financing is subject to a number of factors, including the market
prices for the mineral property and base and precious metals.  These
factors may make the timing, amount, terms or conditions of additional financing
unavailable to us. Since our inception, we have used our common stock to raise
money for our operations and for our property acquisitions.  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.




If
the results from our pre-feasibility studies and the production results from the
operation of our one unit module are not sufficiently positive for us to proceed
with the construction of our processing facility we will have to scale back or
abandon our proposed operations on the Clarkdale Slag Project.




Our
current plan of operation on the Clarkdale Slag Project is to complete our
materials study, continue our pilot testing and site work in Clarkdale,
construct our first unit (module) of production and finance.  In the
third quarter of fiscal 2007, we hope to complete our pilot testing and continue
site work which will include finalizing the metallurgy and flow sheet,
optimizing the processing protocols and begin rehabilitating the operations
site.  We then anticipate our first module of production, designed to
determine the economics of the project and serve as final feasibility of the
project, to be completed in the fourth quarter of 2007.  If the
feasibility of the project proves economic, financing and construction of the
processing facility is expected to commence in the first quarter of
2008.




If the
results from our pre-feasibility studies on the Clarkdale Slag Project and the
production results from the operation of our one unit module are not
sufficiently positive for us to proceed with the construction of our proposed
processing facility we will have to scale back or abandon our proposed
operations on the Clarkdale Slag Project.  There is no assurance that
actual recoveries of base and precious metals or other minerals reprocessed from
the slag pile will be economically feasible.  If metal recoveries are
less than projected, then our metal sales will be less than anticipated and may
not equal or exceed the cost of mining and recovery in which case our operating
results and financial conditions will be adversely affected.


49


If
we are unable to achieve projected mineral recoveries from our test mining
activities at the Clarkdale Slag Project and Searchlight Gold Project, then our
financial condition will be adversely affected.




As we
have not established any reserves on either our Clarkdale Slag Project or
Searchlight Gold project to date, there is no assurance that actual recoveries
of minerals from material mined during test mining activities will equal or
exceed our exploration costs on our mineral properties.  To date we
have completed only a limited amount of drilling and sampling on Clarkdale Slag
Project site and the process testing of results has been limited to small pilot
plants and bench scale testing.  There is no assurance that if the
Company moves to production scale from pilot plant scale that the Company’s
production results will match pre-feasibility estimates.  If mineral
recoveries are less than projected, then our sales of minerals will be less than
anticipated and may not equal or exceed the cost of exploration and recovery in
which case our operating results and financial condition will be adversely
affected.




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




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




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




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




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




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




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




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




50




(a)
            Sales
      or leasing of base and precious metals by governments and central
      banks;




(b)
            A
      low rate of inflation and a strong US
dollar;




(c)
            Speculative
      trading;




(d)
            Decreased
      demand for base and precious metals in industrial, jewelry and investment
      uses;




(e)
            High
      supply of base and precious metals from production, disinvestment, scrap
      and hedging;




(f)
            Sales
      by base and precious metals producers and foreign transactions and other
      hedging transactions; and




(g)
            Devaluing
      local currencies (relative to base and precious metals price in US
      dollars) leading to lower production costs and higher production in
      certain major base and precious metals producing
  regions.




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




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




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




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




We are
currently undertaking drilling and sampling activities on the Clarkdale Slag
Project site in order to assess whether the slag possesses mineralized material
capable of commercial extraction.  Once the results from the drill
program are fully analyzed, we intend to undertake the next steps on the
project.  These next steps may include more drilling, analytical work,
and testing of material on a larger scale (such as a test plant) and building a
production facility.  Until such time as we have established economic
feasibility of the Clarkdale Slag Project through our pre-feasibility studies
and the operation of our one unit module of production from the slag pile, there
is no assurance that we will proceed to the construction of a proposed
processing facility.  If the results from our pre-feasibility studies
and the production results from the operation of our one unit module are not
sufficiently positive for us to proceed with the construction of our proposed
processing facility we will have to scale back or abandon our proposed
operations on the Clarkdale Slag Project.  There is no assurance that
actual recoveries of base and precious metals or other minerals re-processed
from the slag pile will be economically feasible.  If metal recoveries
are less than projected, then our metal sales will be less than anticipated and
may not equal or exceed the cost of mining and recovery in which case our
operating results and financial conditions will be adversely
affected.


51


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




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




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




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




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




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




-
            Costs
      of bringing the property into production including exploration work,
      preparation of production feasibility studies, and construction of
      production facilities;




-
            Availability
      and costs of financing;




-
            Ongoing
      costs of production; and




-
            Environmental
      compliance regulations and
restraints.




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




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




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




(a)
            Water
      discharge will have to meet drinking water
  standards;




52




(b)
            Dust
      generation will have to be minimal or otherwise
    re-mediated;




(c)
            Dumping
      of material on the surface will have to be re-contoured and re-vegetated
      with natural vegetation;




(d)
            An
      assessment of all material to be left on the surface will need to be
      environmentally benign;




(e)
            Ground
      water will have to be monitored for any potential
      contaminants;




(f)
            The
      socio-economic impact of the project will have to be evaluated and if
      deemed negative, will have to be re-mediated;
  and




(g)
            There
      will have to be an impact report of the work on the local fauna and flora
      including a study of potentially endangered
  species.




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




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




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




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




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


53


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




ITEM
3.               
CONTROLS AND PROCEDURES.




NOTE: This Item 3. Controls and
Procedures has been updated to reflect the restatement of our 2005, 2006 and
2007 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
 
  
  
  
 Based on the reevaluation, our
management has concluded that management’s failure to consult an outside expert
regarding the initial accounting for certain complex
transactions  represented material weaknesses in our disclosure
controls and procedures as of June 30, 2007.  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 2007 acquisition of Transylvania, 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, the acquisition of the
Clarkdale Slag Project, and the resultant computation of future deferred income
tax liability assumed.
 
   54
  Changes
in Internal Controls over Financial Reporting
 
 Based on the reevaluation as
described above, our management concluded in prior periods starting with March
31, 2005, the lack of adequate additional support staff represented a material
weakness in our disclosure controls and procedures.  In April 2007, we
remediated this weakness by obtaining access to and utilizing additional support
staff under the direct supervision of our Chief Financial
Officer.
 
 In addition, subsequent to the period
we remediated the weakness of 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.


55




PART
II - OTHER INFORMATION




ITEM
1.               
LEGAL PROCEEDINGS.




None.




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




During
the three months ended June 30, 2007, we completed the following unregistered
sales of our securities:




1.
            On
      June 29, 2007, we approved the issuance of 1,400,000 shares of our common
      stock to certain claim owners in connection with the option agreements
      dated February 8, 2005 among Searchlight and the mineral claim
      owners.  The issuance was completed pursuant to Section 4(2) 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.




ITEM
3.               
DEFAULTS UPON SENIOR SECURITIES.




None.




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




We held
an annual meeting of our stockholders on June 15, 2007 for the purpose of
adopting the following proposals:




1.
            To
      elect to our Board of Directors: one Class I director to hold office until
      the 2010 annual meeting of our stockholders, two Class II directors to
      hold office until the 2009 annual meeting of our stockholders, and one
      Class III director to hold office until the 2008 annual meeting of our
      stockholders, or until the directors’ respective successors are duly
      elected and qualified;




2.
            To
      ratify the appointment of Brown Armstrong, Paulden, McCown, Starbuck,
      Thornburgh & Keeter Accountancy Corporation for the fiscal year ending
      December 31, 2007; and




3.
            To
      approve our 2007 Stock Option
Plan.


56




At the
annual meeting, the above proposals were approved by a majority of our
stockholders.  The results of the shareholder vote taken on the
proposals was as follows:




Proposals
                
                For
                
                
                Against
                
                
                Abstain/Withheld
                
                
                Broker Non-
                  VotesClass
      I Director
                  Nominee:
      Ian R. McNeil
                
                
                45,850,998
                
                
                
                -
                
                
                
                209,100
                
                
                
                7,300,876Class
      II Director
                  Nominee:
      Harry B. Crockett
                
                
                45,850,998
                
                
                
                -
                
                
                
                209,100
                
                
                
                7,300,876Class
      II Director
                  Nominee:
      Carl S. Ager
                
                
                45,850,998
                
                
                
                -
                
                
                
                209,100
                
                
                
                7,300,876Class
      III Director
                  Nominee:
      Robert D. McDougal
                
                
                46,044,598
                
                
                
                -
                
                
                
                15,500
                
                
                
                7,300,876Ratification
      of Brown Armstrong as our Independent Registered
                
                
                46,054,523
                
                
                
                4,500
                
                
                
                575
                
                
                
                7,300,876Accounting
      FirmApproval
      of 2007 Stock Option Plan
                
                
                44,715,612
                
                
                
                920,311
                
                
                
                383,675
                
                
                
                7,300,876




ITEM
5.               
OTHER INFORMATION.




None.




ITEM
6.               
EXHIBITS.




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




ExhibitNumber
                      
                      Description of Exhibits31.1
                      
                      Certification
      of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002.31.2
                      
                      Certification
      of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002.32.1
                      
                      Certification
      of Chief Executive Officer and Chief Financial Officer pursuant to 18
      U.S.C. Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.


57




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
)


58