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 March 31, 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           x           No            ̈




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





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


(Do
not check if a smaller reporting company)




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




Yes            ̈      No           x




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









Explanatory
Note




On
November 8, 2007, the management of Searchlight Minerals
Corp.  (“Searchlight”, the “Company”, or as used in the context of
“we”, “us” or “our”) concluded that our audited financial statements for the
years ended December 31, 2006 and 2005, and our unaudited interim financial
statements for the periods ended March 31, 2005 through June 30, 2007 needed to
be restated and should not be relied upon.
  On May
5, 2008, our management concluded that our audited financial statements for the
year ended December 31, 2007, and our unaudited interim financial statements for
the period ended September 30, 2007 needed to be restated and should not be
relied upon.
  This
Amendment No. 1 (the “Form 10-Q/A”) to our Quarterly Report on Form 10-QSB for
the three months ended March 31, 2007 (the “2007 First Quarter 10-QSB”) is being
filed with the Securities and Exchange Commission (the “SEC”) to restate our
consolidated financial statements as of March 31, 2007 and for the three months
ended March 31, 2007 and 2006, and the period from January 14, 2000 (date of
inception) through March 31, 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.
  We
have restated certain items on our balance sheets and statements of
operations.  On our balance sheets: (i) mineral properties have been
restated to include the market value of certain shares issued by us under the
terms of our option agreements for the mineral claims making up the Searchlight
Gold Project; and (ii) the Clarkdale Slag Project has been restated to include
revision of acquisition costs related to issuance of warrants, consideration of
certain terms with respect to future payments that should have been recorded as
contingent consideration and related deferred future income tax liability in
connection with our acquisition of Transylvania International,
Inc.  (“Transylvania”).  Our statements of operations have
been restated to reclassify net losses prior to January 1, 2005 as losses from
discontinued operations.  Our statement of operations for the year
ended December 31, 2006 has been restated to reclassify foreign currency
translation adjustments to general and administrative
expense.  Related to this issue, our balance sheet for the period
ended December 31, 2006 has been restated to reclassify accumulated other
comprehensive loss as accumulated deficit during the exploration
stage.
  Searchlight
Claims - We initially valued the total transaction based on actual costs
incurred by the former owner of $87,134, plus $40,000, represented by $2,000 per
claim, for a total acquisition price of $127,134. The Searchlight Gold Project
mineral properties have been restated in the financial statements to reflect
payments made by issuance of 1,400,000 shares at $0.35 on July 7, 2005,
1,400,000 shares at $2.20 on July 27, 2006 and 1,400,000 shares at $3.22 on June
29, 2007 at the market values on the dates of issuance. The impact of this
restatement had the following impact on our balance sheets for the periods ended
September 30, 2005 through December 31, 2006 and our consolidated balance sheets
for the periods ended March 31, 2007 through December 31, 2007:
 
 ·
              increasing the mineral property
      by $450,000 for the shares issued and by $242,308 for the deferred future
      income tax liability assumed for a total increase of $692,308 for the
      periods ended September 30, 2005, December 31, 2005, March 31, 2006 and
      June 30, 2006.
 
 ·
              cumulative increase to the
      mineral asset by $3,530,000 for the shares issued and by $1,774,156 for
      the deferred future income tax liability assumed for a total increase of
      $5,304,156 for the periods ended September 30, 2006, December 31, 2006 and
      March 31, 2007.
 
 ·
              cumulative increase to the
      mineral asset by $8,038,000 for the shares issued and by $4,537,124 for
      the deferred future income tax liability assumed for a total increase of
      $12,575,124 for the period ended June 30,
  2007.
  1
  ·
              increasing the mineral asset by
      $450,000 for the shares issued on July 7, 2005 and by $242,308 for the
      related deferred tax liability assumed and by $385,846 for the
      recomputation of deferred tax liability as a result of the Clarkdale Slag
      Project restatement for a total increase of $1,078,154 for the period
      ended September 30,
2007.
  ·
              increasing the mineral asset by
      $1,182,594 for the recomputation of the deferred tax liability as a result
      of the Clarkdale Slag Project restatement for the period ended December
      31, 2007.
  Joint
Venture Agreement - During the second quarter of 2008, we also determined that
the accounting treatment for the 12,000,000 warrants issued to Nanominerals
Corp.  (“Nanominerals”) and its designates in connection with the
assignment of the option for the Clarkdale Slag Project approved on June 1, 2005
was not appropriate.  We have assigned a value to the warrants of
$1,310,204 by using the sales price of shares of common stock issued in
connection with a private placement conducted at the time the warrants were
issued.  The adjustment also included the deferred future income tax
liability assumed of $608,277 for a total increase in purchase consideration of
$1,918,481.  Nanominerals is one of our principal stockholders, and is
an affiliate of two members of our executive management and board of directors,
Ian R. McNeil and Carl S. Ager.
  The
value of the warrants, as restated, was computed using the binomial lattice
method based on the following assumptions:
  Dividend
      yield
              --Expected
      volatility
              79%Risk-free
      interest rate
              3.91%Expected
      life (years)
              9.6
 
  This
restatement had the effect of increasing the joint venture and merger option
agreements by $1,918,481 on our balance sheets for the periods ended September
30, 2005, December 31, 2005, March 31, 2006, June 30, 2006, September 30, 2006
and December 31, 2006.
  Clarkdale
Slag Project – On February 15, 2007, we entered into an agreement and plan of
merger with Transylvania. Pursuant to the agreement Transylvania merged with and
into our wholly owned subsidiary, Clarkdale Minerals LLC. This agreement
superseded the original Clarkdale Slag Project option assignment. During the
second quarter of 2008, we identified certain errors in our previously issued
financial statements related to our purchase accounting treatment of the
acquisition of Transylvania, and the resultant computation of future deferred
income tax liability assumed.  We have restated certain items on our
consolidated balance sheets and statements of operations as
follows:
  ·
              amounts
      recorded for the Clarkdale Slag Project on our consolidated balance sheets
      have been restated to reflect changes to the purchase accounting of the
      acquisition of Transylvania based on the acquisition agreement and the
      recomputation of the value of the 12,000,000 warrants issued to
      Nanominerals Corp., and its designates in connection with the assignment
      of the option for the Clarkdale Slag Project.  The amount
      recorded for the Clarkdale Slag Project was also affected by the
      recomputation of the deferred future federal and state income tax
      liability in connection with our acquisition of the Clarkdale Slag
      Project.
  ·
              amounts
      recorded for the Searchlight Gold Project on our consolidated balance
      sheets have been restated to include the impact of the recomputation of
      the deferred future income tax liability and state income tax
      liability.  This recomputation was required because changes made
      to the acquisition accounting of the Clarkdale Slag Project affected the
      computation of the deferred future income tax liability related to the
      mineral claims making up the Searchlight Gold
  Project.
  ·
              our
      consolidated statement of operations for each of the periods ended March
      31, 2007, June 30, 2007, September 30, 2007 and December 31, 2007 has been
      restated to reflect the recomputation of the tax benefits related to net
      operating losses as a result of changes to the purchase accounting for the
      Clarkdale Slag Project.  There was no other impact on the
      results of operations.
  2
  ·
              our
      consolidated statement of operations for the three months ended March 31,
      2007 has been restated to reclassify related party mineral exploration and
      evaluation expense not stated separately in previous
      reports.  There was no change to the underlying expense or
      results of operations as previously
  reported.
  During
the second quarter of 2008, we determined that the acquisition accounting method
used in prior periods to record the purchase accounting for the Clarkdale Slag
Project was not appropriate for the 2007 acquisition of
Transylvania.  The adjustments included revision of the acquisition
accounting related to payment terms and conditions contained in the acquisition
agreement.  The overall recorded acquisition purchase consideration
was reduced by $7,546,217 with a corresponding reduction in recorded liabilities
of $7,546,217.  The recorded liabilities were adjusted, as
follows:
  ·
              the
      recorded current portion (relating to the $30,000 monthly obligation due
      to VRIC) decreased on the balance sheet by
  $227,174.
  ·
              the
      recorded long-term portion (relating to the $30,000 monthly obligation due
      to VRIC) decreased on the balance sheet by
  $919,043.
  ·
              the
      payment due to VRIC (with respect to the date that a feasibility study
      relating to the Clarkdale Slag Project establishes that the project is
      economically viable and “bankable,” or the “Project Funding Date”)
      decreased on the balance sheet by
  $6,400,000.
  We
have accounted for the payments based on the Project Funding Date and the
payments based on future cash flow as contingent consideration.  If
the contingency requirements are met, the purchase price of the Clarkdale Slag
Project will be adjusted accordingly at that time.
  The restatement had the following
impact on our balance sheets for the periods ended March 31, 2007 through
December 31, 2007:
  ·
              increasing the acquisition cost
      of the Slag Project by $1,918,481 for the warrants issued in connection
      with the option assignment and by $14,925,422 for the deferred tax
      liability assumed and decreasing the acquisition cost by $7,546,217 for
      the contingent payment terms for a total increase of $9,297,686 for the
      periods ended March 31, 2007 and June 30,
  2007.
  ·
              increasing the acquisition cost
      of the Slag Project by $1,918,481 for the warrants issued in connection
      with the option assignment and by $10,801,018 for the deferred tax
      liability assumed and decreasing the acquisition cost by $7,546,217 for
      the contingent payment terms for a total increase of $5,173,282 for the
      period ended September 30,
2007.
  ·
              increasing the acquisition cost
      of the Slag Project by $1,918,481 for the warrants issued in connection
      with the option assignment and decreasing the acquisition cost by
      $4,121,755 for the deferred tax liability assumed and by $7,546,217 for
      the contingent payment terms for a total decrease of $9,749,491 for the
      period ended December 31,
2007.
  The
original terms of the underlying purchase agreement were unchanged and this
adjustment had no effect on the acquisition agreement.
  Discontinued
Operations - The statements of operations from the date of inception through the
periods ended March 31, 2005, June 30, 2005, September 30, 2005, December 31,
2005, March 31, 2006, June 30, 2006, September 30, 2006 and December 31, 2006
and the consolidated statements of operations from the date of inception through
the periods ended March 31, 2007, June 30, 2007, September 30, 2007, December
31, 2007 have been restated to reclassify net losses prior to January 1, 2005 as
discontinued operations.  On February 10, 2005, we announced that we
were changing our business from biotechnology to becoming a mineral exploration
company, dedicated to the discovery and exploration of gold and other precious
metal deposits.  Activity between January 1 and February 10, 2005
consisted of minor general and administrative expenses and as a result was not
included in loss from discontinued operations.
  3
  Foreign
Currency Translation Reclassification - The statement of operations for the year
ended December 31, 2006, has been restated to reclassify foreign currency
translation adjustment as general and administrative expense.  Foreign
currency translation adjustment was related to translation of accounts payable
assumed as part of our change of business in 2005.  This restatement
had the impact of increasing net loss and eliminating other comprehensive loss
for the year ended December 31, 2006 by $11,769.  Related to the same
issue, the balance sheet at December 31, 2006 has been restated to reclassify
accumulated other comprehensive loss as accumulated deficit during exploration
stage.  These restatements had the impact of eliminating accumulated
other comprehensive loss and increasing accumulated deficit during exploration
stage at December 31, 2006 by $121,606.
  The
restatements had no impact on our cash or cash flows.
  A
description of the restatements made to our financial statements is provided at
Note 15 to the consolidated financial statements included with this
report.
  This
Form 10-Q/A sets forth the 2007 First 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 First
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 First 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 First Quarter
10-QSB.  This Form 10-Q/A does not describe events occurring after the
2007 First 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
First 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 First 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)
 
 March 31, 2007
                  
                  
                  December 31, 2006(restated)ASSETSCurrent
      assetsCash
                  
                  $
                  13,688,258
                  
                  
                  $
                  3,684,248Prepaid
      expenses
                  
                  
                  106,249
                  
                  
                  
                  106,235Total
      current assets
                  
                  
                  13,794,507
                  
                  
                  
                  3,790,483Property
      and equipment, net
                  
                  
                  360,836
                  
                  
                  
                  30,187Mineral
      properties
                  
                  
                  5,431,290
                  
                  
                  
                  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
                  
                  
                  135,958,193
                  
                  
                  
                  8,452,998Total
      assets
                  
                  $
                  149,752,700
                  
                  
                  $
                  12,243,481LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilitiesAccounts
      payable
                  
                  $
                  919,452
                  
                  
                  $
                  888,651Accounts
      payable - related party
                  
                  
                  152,638
                  
                  
                  
                  311,863Loan
      payable - related party
                  
                  
                  382,792
                  
                  
                  
                  382,792VRIC
      payable, current portion - related party
                  
                  
                  169,391
                  
                  
                  
                  -Total
      current liabilities
                  
                  
                  1,624,273
                  
                  
                  
                  1,583,306Long-term
      liabilitiesVRIC
      payable, net of current portion - related party
                  
                  
                  2,289,738
                  
                  
                  
                  -Deferred
      tax liability
                  
                  
                  48,666,970
                  
                  
                  
                  860,331Total
      long-term liabilities
                  
                  
                  50,956,708
                  
                  
                  
                  860,331Total
      liabilities
                  
                  
                  52,580,981
                  
                  
                  
                  2,443,637Stockholders'
      equityCommon
      stock, $0.001 par value; 400,000,000 shares authorized, 91,377,827 and
      67,231,000 shares, respectively, issued and
outstanding
                  
                  
                  91,378
                  
                  
                  
                  67,231Additional
      paid-in capital
                  
                  
                  105,496,554
                  
                  
                  
                  17,738,891Accumulated
      deficit during exploration stage
                  
                  
                  (8,416,213
                  )
                  
                  
                  (8,006,278
                  )Total
      stockholders' equity
                  
                  
                  97,171,719
                  
                  
                  
                  9,799,844Total
      liabilities and stockholders' equity
                  
                  $
                  149,752,700
                  
                  
                  $
                  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
                  
                  
                  ThroughMarch 31, 2007
                  
                  
                  March 31, 2006
                  
                  
                  March 31, 2007(restated)
                  
                  
                  
                  
                  
                  (restated)Revenue
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -Operating
      expensesMineral
      exploration and evaluation expenses
                  
                  
                  295,308
                  
                  
                  
                  278,744
                  
                  
                  
                  3,207,263Mineral
      exploration and evaluation expenses - related party
                  
                  
                  90,000
                  
                  
                  
                  123,750
                  
                  
                  
                  585,000General
      and administrative
                  
                  
                  333,450
                  
                  
                  
                  224,701
                  
                  
                  
                  2,377,092Depreciation
                  
                  
                  2,789
                  
                  
                  
                  793
                  
                  
                  
                  10,048Total
      operating expenses
                  
                  
                  721,547
                  
                  
                  
                  627,988
                  
                  
                  
                  6,179,403Loss
      from operations
                  
                  
                  (721,547
                  )
                  
                  
                  (627,988
                  )
                  
                  
                  (6,179,403
                  )Other
      income (expense)Rental
      revenue
                  
                  
                  7,620
                  
                  
                  
                  -
                  
                  
                  
                  7,620Loss
      on equipment disposition
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (4,388
                  )Interest
      and dividend income
                  
                  
                  33,898
                  
                  
                  
                  -
                  
                  
                  
                  110,930Total
      other income (expense)
                  
                  
                  41,518
                  
                  
                  
                  -
                  
                  
                  
                  114,162Loss
      before income taxes
                  
                  
                  (680,029
                  )
                  
                  
                  (627,988
                  )
                  
                  
                  (6,065,241
                  )Income
      tax benefit
                  
                  
                  270,094
                  
                  
                  
                  280,614
                  
                  
                  
                  1,792,196Loss
      from continuing operations
                  
                  
                  (409,935
                  )
                  
                  
                  (347,374
                  )
                  
                  
                  (4,273,045
                  )Discontinued
      operations:Loss
      from discontinued operations
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (4,143,168
                  )Net
      loss
                  
                  $
                  (409,935
                  )
                  
                  $
                  (347,374
                  )
                  
                  $
                  (8,416,213
                  )Loss
      per common share – basic and dilutedNet
      loss
                  
                  $
                  (0.01
                  )
                  
                  $
                  (0.01
                  )Weighted
      average common shares outstanding -Basic
      and diluted
                  
                  
                  77,717,438
                  
                  
                  
                  55,950,556
 
 See
Accompanying Notes to these Consolidated Financial Statements
  6
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 CONSOLIDATED
STATEMENT OF STOCKHOLDERS' EQUITY
 (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 inreverse
      merger
              
              
              10,300,000
              
              
              
              10,300
              
              
              
              (5,150
              )
              
              
              -
              
              
              
              (5,150
              )
              
              
              -Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (767,798
              )
              
              
              (767,798
              )Balance,
      December 31, 2001
              
              
              60,300,000
              
              
              
              60,300
              
              
              
              (30,150
              )
              
              
              -
              
              
              
              (1,029,916
              )
              
              
              (999,766
              )Capital
      contribution
              
              
              -
              
              
              
              -
              
              
              
              1,037,126
              
              
              
              -
              
              
              
              -
              
              
              
              1,037,126Beneficial
      conversion featureassociated
      with debt
              
              
              -
              
              
              
              -
              
              
              
              300,000
              
              
              
              -
              
              
              
              -
              
              
              
              300,000Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (1,249,644
              )
              
              
              (1,249,644
              )Balance,
      December 31, 2002
              
              
              60,300,000
              
              
              
              60,300
              
              
              
              1,306,976
              
              
              
              -
              
              
              
              (2,279,560
              )
              
              
              (912,284
              )Debt
      exchanged for common stock
              
              
              48,000,000
              
              
              
              48,000
              
              
              
              1,152,000
              
              
              
              -
              
              
              
              -
              
              
              
              1,200,000Deferred
      compensation
              
              
              -
              
              
              
              -
              
              
              
              12,583
              
              
              
              -
              
              
              
              -
              
              
              
              -Amortization
      of deferredcompensation
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              10,387Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (1,283,872
              )
              
              
              (1,283,872
              )Balance,
      December 31, 2003
              
              
              108,300,000
              
              
              
              108,300
              
              
              
              2,471,559
              
              
              
              -
              
              
              
              (3,563,432
              )
              
              
              (985,769
              )Amortization
      of deferredcompensation
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              2,196Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (700,444
              )
              
              
              (700,444
              )Balance,
      December 31, 2004
              
              
              108,300,000
              
              
              
              108,300
              
              
              
              2,471,559
              
              
              
              -
              
              
              
              (4,263,876
              )
              
              
              (1,684,017
              )Issuance
      of stock options for1,000,000
      shares of common stockto
      two officers
              
              
              -
              
              
              
              -
              
              
              
              133,062
              
              
              
              -
              
              
              
              -
              
              
              
              133,062Issuance
      of stock options for500,000
      shares of common stockin
      satisfaction of debt
              
              
              -
              
              
              
              -
              
              
              
              300,000
              
              
              
              -
              
              
              
              -
              
              
              
              300,000Return
      and cancellation of70,000,000
      shares of commonstock
              
              
              (70,000,000
              )
              
              
              (70,000
              )
              
              
              70,000
              
              
              
              -
              
              
              
              -
              
              
              
              -Issuance
      of 12,000,000 warrantsin
      consideration of joint ventureoption
              
              
              -
              
              
              
              -
              
              
              
              1,310,204
              
              
              
              -
              
              
              
              -
              
              
              
              1,310,204Issuance
      of common stockfor
      mining claims
              
              
              1,400,000
              
              
              
              1,400
              
              
              
              488,600
              
              
              
              -
              
              
              
              -
              
              
              
              490,000Issuance
      of common stockin
      satisfaction of debt, $0.625 per share
              
              
              200,000
              
              
              
              200
              
              
              
              124,800
              
              
              
              -
              
              
              
              -
              
              
              
              125,000Issuance
      of common stock for cash,Reg.
      S - Private Placement,$0.25
      per share, net of$205,250
      commissions
              
              
              6,390,000
              
              
              
              6,390
              
              
              
              1,369,070
              
              
              
              -
              
              
              
              -
              
              
              
              1,375,460Issuance
      of common stock for cash,Reg.
      S - Private Placement,$0.25
      per share, net of$135,000
      commission
              
              
              5,400,000
              
              
              
              5,400
              
              
              
              1,194,947
              
              
              
              -
              
              
              
              -
              
              
              
              1,200,347Issuance
      of common stock for cash,Reg.
      D 506 - Private Placement,$0.25
      per share
              
              
              460,000
              
              
              
              460
              
              
              
              114,540
              
              
              
              -
              
              
              
              -
              
              
              
              115,000Issuance
      of stock options for1,500,000
      shares of common stockto
      three officers
              
              
              -
              
              
              
              -
              
              
              
              266,720
              
              
              
              -
              
              
              
              -
              
              
              
              266,720Common
      stock subscribed
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              270,000
              
              
              
              -
              
              
              
              270,000Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (1,201,424
              )
              
              
              (1,201,424
              )Balance,
      December 31, 2005
              
              
              52,150,000
              
              
              
              52,150
              
              
              
              7,843,502
              
              
              
              270,000
              
              
              
              (5,465,300
              )
              
              
              2,700,352Issuance
      of common stock for cash,Reg.
      D - Private Placement,$0.45
      per share, net of$87,750
      commission
              
              
              3,900,000
              
              
              
              3,900
              
              
              
              1,663,350
              
              
              
              (270,000
              )
              
              
              -
              
              
              
              1,397,250Issuance
      of common stockrelated
      to exercise of warrants
              
              
              1,225,000
              
              
              
              1,225
              
              
              
              (1,225
              )
              
              
              -
              
              
              
              -
              
              
              
              -Issuance
      of stock options for120,000
      shares of common stockto
      two officers
              
              
              -
              
              
              
              -
              
              
              
              20,864
              
              
              
              -
              
              
              
              -
              
              
              
              20,864Issuance
      of stock options for500,000
      shares of common stockto
      two directors
              
              
              -
              
              
              
              -
              
              
              
              122,420
              
              
              
              -
              
              
              
              -
              
              
              
              122,420Issuance
      of stock options for100,000
      shares of common stockto
      two directors
              
              
              -
              
              
              
              -
              
              
              
              24,484
              
              
              
              -
              
              
              
              -
              
              
              
              24,484Issuance
      of common stock for cashReg.
      S - Private Placement,$0.625
      per sharefrom
      exercise of warrants
              
              
              6,125,000
              
              
              
              6,125
              
              
              
              3,822,000
              
              
              
              -
              
              
              
              -
              
              
              
              3,828,125Issuance
      of common stock for cashReg.
      S - Private Placement,$0.375
      per sharefrom
      exercise of warrants
              
              
              1,768,500
              
              
              
              1,768
              
              
              
              661,420
              
              
              
              -
              
              
              
              -
              
              
              
              663,188Issuance
      of common stock for cashReg.
      S - Private Placement,$0.625
      per sharefrom
      exercise of warrants
              
              
              612,500
              
              
              
              613
              
              
              
              382,200
              
              
              
              -
              
              
              
              -
              
              
              
              382,813Issuance
      of stock options for100,000
      shares of common stockto
      officer for recruitmentamortized
      over vesting period.
              
              
              -
              
              
              
              -
              
              
              
              1,309
              
              
              
              -
              
              
              
              -
              
              
              
              1,309Issuance
      of common stock toofficer
      for recruitment
              
              
              50,000
              
              
              
              50
              
              
              
              102,950
              
              
              
              -
              
              
              
              -
              
              
              
              103,000Issuance
      of stock options for50,000
      shares of common stockto
      employee for recruitmentamortized
      over vesting period.
              
              
              -
              
              
              
              -
              
              
              
              1,309
              
              
              
              -
              
              
              
              -
              
              
              
              1,309Issuance
      of common stockfor
      mining claims
              
              
              1,400,000
              
              
              
              1,400
              
              
              
              3,078,600
              
              
              
              -
              
              
              
              -
              
              
              
              3,080,000Amortization
      of stock options issuedto
      employee and officer overvesting
      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 stockin
      connection with the acquisition tofive
      investors, $3.975 per share
              
              
              16,825,000
              
              
              
              16,825
              
              
              
              66,862,550
              
              
              
              -
              
              
              
              -
              
              
              
              66,879,375Issuance
      of stock options for75,700
      shares of common stockto
      three officers and one employee
              
              
              -
              
              
              
              -
              
              
              
              124,059
              
              
              
              -
              
              
              
              -
              
              
              
              124,059Issuance
      of common stock for cashReg.
      D - Private Placement,$3.00
      per share, net of $381,990commission
      and $79,513 issuance costs
              
              
              4,520,666
              
              
              
              4,521
              
              
              
              13,095,978
              
              
              
              -
              
              
              
              -
              
              
              
              13,100,499Issuance
      of common stock for cashReg.
      S - Private Placement,$3.00
      per share, net of $111,100commission
      and $8,842 issuance costs
              
              
              575,000
              
              
              
              575
              
              
              
              1,604,483
              
              
              
              -
              
              
              
              -
              
              
              
              1,605,058Issuance
      of common stock for cashReg.
      S - Private Placement,$3.00
      per share, net of $525,386commission
      and $85,513 issuance costs
              
              
              2,226,161
              
              
              
              2,226
              
              
              
              6,065,358
              
              
              
              -
              
              
              
              -
              
              
              
              6,067,584Amortization
      of stock options issuedto
      employees and officers overvesting
      period
              
              
              -
              
              
              
              -
              
              
              
              5,235
              
              
              
              -
              
              
              
              -
              
              
              
              5,235Net
      loss March 31, 2007 (restated)
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (409,935
              )
              
              
              (409,935
              )Balance,
      March 31, 2007 (restated)
              
              
              91,377,827
              
              
              $
              91,378
              
              
              $
              105,496,554
              
              
              $
              -
              
              
              $
              (8,416,213
              )
              
              $
              97,171,719
 
 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 three months ended
                  
                  
                  throughMarch 31, 2007
                  
                  
                  March 31, 2006
                  
                  
                  March 31, 2007(restated)
                  
                  
                  
                  
                  
                  (restated)CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      loss
                  
                  $
                  (409,935
                  )
                  
                  $
                  (347,374
                  )
                  
                  $
                  (8,416,213
                  )Deduct:
      Loss from discontinued operations
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (4,143,168
                  )Loss
      from continuing operations
                  
                  
                  (409,935
                  )
                  
                  
                  (347,374
                  )
                  
                  
                  (4,273,045
                  )Adjustments
      to reconcile loss from continuing operations to net cash used in operating
      activities:Depreciation
                  
                  
                  2,789
                  
                  
                  
                  793
                  
                  
                  
                  10,048Stock
      based expenses
                  
                  
                  129,293
                  
                  
                  
                  -
                  
                  
                  
                  818,169Loss
      on disposition of fixed assets
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  5,737Changes
      in operating assets and liabilities:Other
      current assets
                  
                  
                  (13
                  )
                  
                  
                  (1,998
                  )
                  
                  
                  (106,248
                  )Other
      assets
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (183,040
                  )Accounts
      payable and accrued liabilities
                  
                  
                  (242,713
                  )
                  
                  
                  67,780
                  
                  
                  
                  200,639Deferred
      income taxes
                  
                  
                  (270,094
                  )
                  
                  
                  (280,614
                  )
                  
                  
                  (1,792,196
                  )Net
      cash used in operating activities
                  
                  
                  (790,673
                  )
                  
                  
                  (561,413
                  )
                  
                  
                  (5,319,936
                  )Net
      cash used in operating activities from discontinued
      operations
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (2,931,324
                  )CASH
      FLOW FROM INVESTING ACTIVITIESCash
      paid to VRIC on closing date
                  
                  
                  (9,900,000
                  )
                  
                  
                  -
                  
                  
                  
                  (9,900,000
                  )Cash
      paid for additional acquisition costs
                  
                  
                  (82,158
                  )
                  
                  
                  -
                  
                  
                  
                  (82,158
                  )Capitalized
      interest
                  
                  
                  (17,942
                  )
                  
                  
                  -
                  
                  
                  
                  (17,942
                  )Cash
      paid on mineral property claims
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (87,134
                  )Cash
      paid for joint venture and merger option
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (890,000
                  )Purchase
      of property and equipment
                  
                  
                  (5,746
                  )
                  
                  
                  -
                  
                  
                  
                  (47,579
                  )Net
      cash used in investing activities
                  
                  
                  (10,005,846
                  )
                  
                  
                  -
                  
                  
                  
                  (11,024,813
                  )Net
      cash used in investing activities from discontinued
      operations
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (452,618
                  )CASH
      FLOW FROM FINANCING ACTIVITIESProceeds
      from stock issuance
                  
                  
                  21,453,817
                  
                  
                  
                  1,397,250
                  
                  
                  
                  30,416,000Stock
      issuance costs
                  
                  
                  (611,230
                  )
                  
                  
                  -
                  
                  
                  
                  (611,230
                  )Principal
      payments on deferred purchase liability
                  
                  
                  (42,058
                  )
                  
                  
                  -
                  
                  
                  
                  (42,058
                  )Proceeds/payments
      on loan payable
                  
                  
                  -
                  
                  
                  
                  (15,000
                  )
                  
                  
                  -Proceeds
      from subscribed stock
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  270,000Net
      cash provided by financing activities
                  
                  
                  20,800,529
                  
                  
                  
                  1,382,250
                  
                  
                  
                  30,032,712Net
      cash provided by financing activities from discontinued
      operations
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  3,384,237NET
      CHANGE IN CASH
                  
                  
                  10,004,010
                  
                  
                  
                  820,837
                  
                  
                  
                  13,688,258CASH
      AT BEGINNING OF PERIOD
                  
                  
                  3,684,248
                  
                  
                  
                  705,856
                  
                  
                  
                  -CASH
      AT END OF PERIOD
                  
                  $
                  13,688,258
                  
                  
                  $
                  1,526,693
                  
                  
                  $
                  13,688,258CONSOLIDATED
      STATEMENTS OF CASH FLOWS (continued)SUPPLEMENTAL
      INFORMATIONInterest
      Paid, net of capitalized amounts
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  50,751Income
      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
                  
                  
                  $
                  -
                  
                  
                  $
                  -Assets
      acquired for common stock issued for mineral
properties
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  3,570,000Assets
      acquired for liabilities incurred in the acquisition
                  
                  $
                  2,501,187
                  
                  
                  $
                  -
                  
                  
                  $
                  2,501,187Net
      deferred tax liability assumed
                  
                  $
                  48,076,734
                  
                  
                  $
                  -
                  
                  
                  $
                  50,821,336Merger
      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
 
 See
Accompanying Notes to these Consolidated Financial Statements




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 15) 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 $8,416,213 from operations as of March
31, 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 $17,942 and $0
for the three months ended March 31, 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 if events or
circumstances indicate that their carrying amount might not be recoverable. As
of March 31, 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 rules of EITF 04-03, “Mining Assets: Impairment and
Business Combinations.”
  Various
factors could impact our ability to achieve forecasted production schedules.
Additionally, commodity prices, capital expenditure requirements and reclamation
costs could differ from the assumptions the Company may use in cash flow models
used to assess impairment. The ability to achieve the estimated quantities of
recoverable minerals from exploration stage mineral interests involves further
risks in addition to those factors applicable to mineral interests where proven
and probable reserves have been identified, due to the lower level of confidence
that the identified mineralized material can ultimately be mined
economically.
 
 Material
changes to any of these factors or assumptions discussed above could result in
future impairment charges to operations.
 
 Reclassifications –
Certain amounts in the prior period financial statements have been reclassified
to conform to current period presentation.
  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 March 31, 2007 and 2006 that were not included in the computation of diluted
EPS because the effect would be antidilutive were 25,352,207 and 27,210,222,
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.
  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 March 31, 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 March 31, 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 March 31, 2007 and December 31,
2006:
 
 2007
                              
                              
                              2006Furniture
      and fixtures
                              
                              $
                              15,600
                              
                              
                              $
                              15,600Lab
      equipment
                              
                              
                              2,804
                              
                              
                              
                              2,804Computers
      and equipment
                              
                              
                              17,788
                              
                              
                              
                              17,788Income
      property
                              
                              
                              309,750
                              
                              
                              
                              —Capitalized
      interest
                              
                              
                              17,942
                              
                              
                              
                              —Construction
      in progress
                              
                              
                              5,746
                              
                              
                              
                              —369,630
                              
                              
                              
                              36,192Less
      accumulated depreciation
                              
                              
                              8,794
                              
                              
                              
                              6,005$
                              360,836
                              
                              
                              $
                              30,187
 
 Depreciation
expense was $2,789 and $793 for the three months ended March 31, 2007 and 2006,
respectively.
 
 3.
              CLARKDALE SLAG PROJECT
      – AS RESTATED (See Note
15)
  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 15)
  (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 15)
  (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 15)
  (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
  15)
 
 As of
March 31, 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 March 31, 2007, the mineral properties balance was
$5,431,290.
 
 The
mining claims were acquired during 2005 with issuance of 1,400,000 shares of the
Company’s common stock and the provision that the Company, at its option, issue
an additional 1,400,000 shares each year in June for three remaining
years.  If at any time before each subsequent issuance of shares, the
Company does not choose to continue the transaction, it is under no obligation
to issue further shares and would no longer hold the mining
claims.
 
 On
August 26, 2005, the Company paid $180,500 to the Bureau of Land Management as a
bond for future reclamation work in Searchlight, Nevada.
 
 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 March 31, 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 mineral properties, 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, March 31, 2007
                    
                    $
                    127,134
                    
                    
                    $
                    5,304,156
                    
                    
                    $
                    5,431,290
  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.
 
 5.
              LOAN PAYABLE – FORMER
      OFFICERS AND DIRECTORS
  As of
March 31, 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 March 31 ,
  2008
                                      
                                      $
                                      169,3912009
                                      
                                      
                                      183,4512010
                                      
                                      
                                      198,6772011
                                      
                                      
                                      215,1672012
                                      
                                      
                                      233,026Thereafter
                                      
                                      
                                      1,459,4172,459,129VRIC
      payable, current portion
                                      
                                      
                                      169,391VRIC
      payable, net of current portion
                                      
                                      $
                                      2,289,738
  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 11.
  22
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)(RESTATED)
 7.
              STOCKHOLDERS’
      EQUITY
 
 During
the three months ended March 31, 2007, the Company’s stockholders’ activities
consisted of the following:
 
 a)
              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.
 
 b)
              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.
  23
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)(RESTATED)
 7.
              STOCKHOLDERS’
      EQUITY (continued)
 
 c)
              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.
 
 d)
              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.
  24
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)(RESTATED)
 8.
                STOCK OPTION PLAN AND
      WARRANTS
 
 Subsequent
to March 31, 2007, effective 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. 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. 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 reduced 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
April 7, 2006, the Board of Directors of Searchlight adopted the 2006 Stock
Option Plan (the "Plan").  Under the terms of the Plan, options to
purchase up to 40,000,000 shares of common stock that may be granted to our
employees, officers, directors, and eligible consultants of Searchlight. The
Plan provides that the option price be the fair market value of the stock at the
date of grant as determined by the Board of Directors. Options granted become
exercisable and expire as determined by the Board of Directors. The maximum
aggregate number of shares of our common stock that may be optioned and sold
under the Plan will be increased effective the first day of each of our fiscal
quarters, beginning with the fiscal quarter commencing July 1, 2006, by an
amount equal to the lesser of: (i) 15% of the total increase in the number of
shares of common Stock outstanding during the previous fiscal quarter; or (ii) a
lesser number of shares of common stock as may be determined by the Board of
Directors.
  During
the three months ended March 31, 2007, the Company granted stock options as
follows:
  a)
              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.
  Expenses
for the three months ended March 31, 2007 and 2006 related to vesting and
granting of stock options were $129,293 and $0, respectively, and are included
in general and administrative expense.
 
 Stock options –
During the three months ended March 31, 2007, the Company granted stock options
to employees and directors totaling 75,700 with a weighted average exercise
price of $4.04 per share.  Certain stock options were exercisable upon
grant and expire five years after the grant date.  As of March 31,
2007 stock options outstanding totaled 3,945,700 with a weighted average
exercise price of $0.83 per share.
  25
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)(RESTATED)
 8.
                STOCK OPTION PLAN AND
      WARRANTS
(continued)
 
 The
following table summarizes the Company’s stock option activity for the three
months ended March 31, 2007:
 
 Number of
                            Shares
                          
                          
                          Weighted
                            Average
                            Exercise PriceBalance,
      December 31, 2006
                          
                          
                          3,870,000
                          
                          
                          $
                          0.77Options
      granted and assumed
                          
                          
                          75,700
                          
                          
                          
                          4.04Options
      expired
                          
                          
                          —
                          
                          
                          
                          —Options
      cancelled
                          
                          
                          —
                          
                          
                          
                          —Options
      exercised
                          
                          
                          —
                          
                          
                          
                          —Balance, March 31,
    2007
                          
                          
                          3,945,700
                          
                          
                          $
                          0.83
 
 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
                    
                    
                    4.68
                    %Expected
      life (years)
                    
                    
                    4.25
 
 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.
  26
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)(RESTATED)
 8.
              STOCK OPTION PLAN AND
      WARRANTS (continued)
 
 The
following table summarizes information about options granted during the three
months ended March 31, 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
                                                              Value75,700
                                                            
                                                            Equals
                                                            
                                                            
                                                            $
                                                            4.04
                                                            
                                                            
                                                            $4.04
      to $4.04
                                                            
                                                            
                                                            $
                                                            0.41—
                                                            
                                                            Exceeds
                                                            
                                                            
                                                            $
                                                            —
                                                            
                                                            
                                                            $—to $—
                                                            
                                                            
                                                            $
                                                            ——
                                                            
                                                            Less Than
                                                            
                                                            
                                                            $
                                                            —
                                                            
                                                            
                                                            $ — to $ —
                                                            
                                                            
                                                            $
                                                            —75,700
                                                            
                                                            Equals
                                                            
                                                            
                                                            $
                                                            4.04
                                                            
                                                            
                                                            $4.04 to $4.04
                                                            
                                                            
                                                            $
                                                            0.41
 
 Stock
options/warrants – During the three months ended March 31, 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
three months ended March 31, 2007:
 
 Number of
                            Shares
                          
                          
                          Weighted
                            Average
                            Exercise PriceBalance,
      December 31, 2006
                          
                          
                          20,160,000
                          
                          
                          $
                          0.51Options/warrants
      granted and assumed
                          
                          
                          3,914,958
                          
                          
                          
                          4.49Options/warrants
      expired
                          
                          
                          —
                          
                          
                          
                          —Options/warrants
      cancelled
                          
                          
                          —
                          
                          
                          
                          —Options/warrants
      exercised
                          
                          
                          —
                          
                          
                          
                          —Balance, March 31,
    2007
                          
                          
                          24,074,958
                          
                          
                          $
                          1.16
  27
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)(RESTATED)
 9.
                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
      assumed a lease as a lessor on February 15, 2007 that was entered into by
      TI 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)
 10.
                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 $270,094 and $280,614 for the three months ended March
31, 2007 and 2006, respectively.
 
 Significant
components of the Company’s net deferred income tax assets at March 31, 2007 and
December 31, 2006 were as follows:
 
 March 31,
                          2007
                        
                        
                        December 31,
                          2006Deferred
      income tax assetsNet
      operating loss carryforward
                        
                        $
                        2,258,358
                        
                        
                        $
                        1,667,592Option
      compensation
                        
                        
                        271,764
                        
                        
                        
                        205,057Gross
      deferred income tax asset
                        
                        
                        2,530,122
                        
                        
                        
                        1,872,649Valuation
      allowance
                        
                        
                        (270,549
                        )
                        
                        
                        (204,005
                        )2,259,573
                        
                        
                        
                        1,668,644Deferred
      income tax liabilitiesProperty,
      plant & equipment
                        
                        
                        1,215
                        
                        
                        
                        1,052Acquisition
      related liabilities
                        
                        
                        50,925,328
                        
                        
                        
                        2,527,923Net
      deferred income tax liability
                        
                        $
                        48,666,970
                        
                        
                        $
                        860,331
  29
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)(RESTATED)
 10.
                INCOME TAXES
      (continued)
 
 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 March 31, 2007 and December
31, 2006.
 
 Deferred
income tax liability was recorded on GAAP basis over income tax basis using
statutory federal and state 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 and slag project assets 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 March 31, 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.
 
 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.
  30
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)(RESTATED)
 11.
              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 $12,151 for
the 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.
 
 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.
  31
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)(RESTATED)
 11.
              COMMITMENTS AND
      CONTINGENCIES (continued)
  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.
  12.
              CONCENTRATION OF
      CREDIT RISK
 
 Financial
instruments that potentially subject the Company to concentration of credit risk
consist of cash investments.  The Company maintains its cash accounts
with one financial institution. Cash accounts at this financial institution are
insured by the Federal Deposit Insurance Corporation for up to $100,000 per
financial institution.
 
 13.
                CONCENTRATION OF
      ACTIVITY
 
 For
the three months ended March 31, 2007, the Company purchased services from two
major vendors, Dr. Hewlett and NMC, that exceeded more than 10% of total
purchases and amounted to approximately $110,000 and $90,000,
respectively.  NMC is considered a related party and is more fully
discussed the related party note that follows.
  32
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)(RESTATED)
 14.
              RELATED PARTY
      TRANSACTIONS
 
 During
the three months ended March 31, 2007 and 2006, the Company utilized the
services of NMC to provide technical assistance and financing related
activities.  NMC was reimbursed expenses during
2006.  Commencing in 2006, NMC invoiced $300,000 for 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 three months ended March 31, 2007, the Company incurred total fees and
reimbursement of expenses to NMC of $90,000 and $20,775, respectively. At March
31, 2007, the Company had an outstanding balance due to NMC of
$152,638.
 
 For
the year ended December 31, 2006, the Company incurred total fees and
reimbursements of expenses to NMC of $495,000 and $271,103, respectively. At
December 31, 2006, the Company had an outstanding balance due to NMC of
$311,863.
  33
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)(RESTATED)
 15.
              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 and 1,400,000 shares at
$2.20 on July 27, 2006 at the market values on the dates of
issuance.  This restatement had the impact of increasing the mineral
properties and additional paid-in capital, mineral properties also increased for
deferred income tax liability assumed. Changes in amounts are reflected in
tabular format as noted below.
 
 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
$15,411,666.
 
 The
following table summarizes the consolidated balance sheet of the Company as of
March 31, 2007 and reconciles the reported amounts to the restated
amounts:
 
 Summarized Consolidated Balance Sheet -March 31, 2007
                    
                    As Reported
                    
                    
                    Adjustments
                    
                    
                    As RestatedProperty
      and equipment, net
                    
                    $
                    342,894
                    
                    
                    $
                    17,942
                    a
                    
                    $
                    360,836Mineral
      properties
                    
                    
                    127,134
                    
                    
                    
                    5,304,156
                    b
                    
                    
                    5,431,290Slag
      project
                    
                    
                    111,469,191
                    
                    
                    
                    9,297,686
                    c
                    
                    
                    120,766,877Total
      assets
                    
                    
                    135,132,916
                    
                    
                    
                    14,619,784
                    
                    
                    
                    149,752,700VRIC
      payable, current portion – related party
                    
                    
                    335,001
                    
                    
                    
                    (165,610
                    ) 
      c
                    
                    
                    169,391Due
      to VRIC
                    
                    
                    6,400,000
                    
                    
                    
                    (6,400,000
                    ) 
      c
                    
                    
                    —VRIC
      payable, net of current portion –related party
                    
                    
                    3,252,403
                    
                    
                    
                    (962,665
                    ) 
      c
                    
                    
                    2,289,738Deferred
      tax liability
                    
                    
                    33,151,312
                    
                    
                    
                    15,515,658
                    d
                    
                    
                    48,666,970Total
      liabilities
                    
                    
                    44,593,598
                    
                    
                    
                    7,987,383
                    
                    
                    
                    52,580,981Additional
      paid-in capital
                    
                    
                    100,656,349
                    
                    
                    
                    4,840,205
                    b,c
                    
                    
                    105,496,554Accumulated
      other comprehensive loss
                    
                    
                    (121,606
                    )
                    
                    
                    121,606
                    e
                    
                    
                    —Accumulated
      deficit during exploration stage
                    
                    
                    (10,086,803
                    )
                    
                    
                    1,670,590
                    e,f
                    
                    
                    (8,416,213
                    )Total
      stockholders' equity
                    
                    
                    90,539,318
                    
                    
                    
                    6,632,401
                    
                    
                    
                    97,171,719Total
      liabilities and stockholders' equity
                    
                    $
                    135,132,916
                    
                    
                    $
                    14,619,784
                    
                    
                    $
                    149,752,700
  34
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)(RESTATED)
 15.
              RESTATEMENT
      (continued)
 
 The
following tables summarize the consolidated statements of operations for the
three months ended March 31, 2007, and reconcile the reported amounts to the
restated amounts:
 
 Summarized Consolidated Statement of Operations -For the three months ended March 31, 2007
                  
                  As Reported
                  
                  
                  Adjustments
                  
                  
                  As RestatedMineral
      exploration and evaluation expenses
                  
                  $
                  385,308
                  
                  
                  $
                  (90,000
                  ) g
                  
                  $
                  295,308Mineral
      exploration and evaluation expenses - related party
                  
                  
                  —
                  
                  
                  
                  90,000
                  g
                  
                  
                  90,000Total
      operating expenses
                  
                  
                  721,547
                  
                  
                  
                  —
                  
                  
                  
                  721,547Loss
      from operations
                  
                  
                  (713,927
                  )
                  
                  
                  (7,260
                  ) h
                  
                  
                  (721,547
                  )Total
      other income (expense)
                  
                  
                  33,898
                  
                  
                  
                  7,260
                  h
                  
                  
                  41,518Income
      tax benefit
                  
                  
                  —
                  
                  
                  
                  270,094
                  f
                  
                  
                  270,094Net
      loss
                  
                  $
                  (680,029
                  )
                  
                  $
                  270,094
                  f
                  
                  $
                  (409,935
                  )
 
 The
following table summarizes the consolidated statements of operations for the
period from January 14, 2000 (Date of Inception) through March 31, 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 March 31, 2007
                  
                  As Reported
                  
                  
                  Adjustments
                  
                  
                  As RestatedResearch
      and development
                  
                  $
                  1,900,095
                  
                  
                  $
                  (1,900,095
                  )   
      i
                  
                  $
                  —Mineral
      exploration and evaluation expenses
                  
                  
                  3,792,263
                  
                  
                  
                  (585,000
                  )   g
                  
                  
                  3,207,263Mineral
      exploration and evaluation expenses - related party
                  
                  
                  —
                  
                  
                  
                  585,000
                  g
                  
                  
                  585,000General
      and administrative
                  
                  
                  3,998,447
                  
                  
                  
                  (1,621,355
                  )   
      j
                  
                  
                  2,377,092Depreciation
                  
                  
                  245,222
                  
                  
                  
                  (235,174
                  )   
      k
                  
                  
                  10,048Impairment
      loss on intangible assets
                  
                  
                  173,234
                  
                  
                  
                  (173,234
                  )   
      l
                  
                  
                  —Impairment
      loss on property and equipment
                  
                  
                  86,683
                  
                  
                  
                  (86,683
                  )  
      m
                  
                  
                  —Total
      operating expenses
                  
                  
                  10,195,944
                  
                  
                  
                  (4,016,541
                  )   n
                  
                  
                  6,179,403Loss
      from operations
                  
                  
                  (10,188,324
                  )
                  
                  
                  4,008,921
                  n,h
                  
                  
                  (6,179,403
                  )Other
      income
                  
                  
                  282,142
                  
                  
                  
                  (282,142
                  )   o
                  
                  
                  —Interest
      expense, net
                  
                  
                  (300,000
                  )
                  
                  
                  300,000
                  p
                  
                  
                  —Total
      other income (expense)
                  
                  
                  88,684
                  
                  
                  
                  25,478
                  h,o,p
                  
                  
                  114,162Loss
      before income taxes
                  
                  
                  (10,099,640
                  )
                  
                  
                  4,034,399
                  
                  
                  
                  (6,065,241
                  )Income
      tax benefit
                  
                  
                  12,837
                  
                  
                  
                  1,779,359
                  f,q
                  
                  
                  1,792,196Net
      loss
                  
                  
                  (10,086,803
                  )
                  
                  
                  1,670,590
                  e,f
                  
                  
                  (8,416,213
                  )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.
  35
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)(RESTATED)
 15.
              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 and 1,400,000 on July 27, 2006 at
      the market value of $2.20 per share on the date of
      issuance.  The resulting estimated future income tax liability
      associated with the temporary 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
      related party mineral exploration and evaluation
    expense.
 h.
              Reclassify
      rental revenue 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
      operating expenses incurred prior to 2005 as discontinued
      operations.
 o.
              Reclassify
      other income earned prior to 2005 as discontinued
      operations.
 p.
              Reclassify
      interest expense incurred 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.
  36




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




FORWARD
LOOKING STATEMENTS




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




As
used in this Quarterly Report on Form 10-Q/A, the terms “we,” “us,” “our,”
“Searchlight” and the “Company” mean Searchlight Minerals Corp. unless otherwise
indicated. All dollar amounts in this Quarterly Report are in U.S. dollars
unless otherwise stated.




INTRODUCTION




We are an
exploration stage company engaged in the acquisition and exploration of mineral
properties 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. 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 March 31, 2007 has been restated to
reclassify net losses prior to January 1, 2005 as losses from discontinued
operations.




37




The
consolidated statement of operation for the period from January 14, 2000 (date
of inception) through March 31, 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, weinitially
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 and 1,400,000 shares at
$2.20 on July 27, 2006 at the market values on the dates of issuance. The
restatement to the balance sheet at March 31, 2007 had the impact of increasing
stockholders equity by $3,530,000 and the mineral asset by $5,304,156. The
impact to the statement of operations reflects an income tax benefit obtained of
$270,094.




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 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. Other than the impact of the deferred tax
      computation, there was no change to the purchase accounting of the
      Searchlight Gold Project.




·
            our
      consolidated statement of operations for the period from inception to
      March 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.




·
            our
      consolidated statement of operations for the three months ended March 31,
      2007 has been restated to reclassify related party mineral exploration and
      evaluation expense not stated separately in previous reports. There was no
      change to the underlying expense or results of operations as previously
      reported.




During
the second quarter of 2008, we determined that the acquisition accounting method
used in prior periods to record the purchase accounting for the Clarkdale Slag
Project was not appropriate for the 2007 acquisition of Transylvania. The
adjustments included revision of the acquisition accounting related to payment
terms and conditions contained in the acquisition agreement. The overall
recorded acquisition purchase consideration increased by $9,297,686 with a
corresponding reduction in recorded liabilities of $7,546,217. The
recorded liabilities were adjusted, as follows:




38
 
  ·
                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.
  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 fiscal year ended December 31, 2006:




1.
            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 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. 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. 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 reduced the number
      of shares of the Company’s common stock available for issuance under the
      2007 Plan to a maximum of
4,000,000.




39




2.
            On
      April 30, 2007, our Board of Directors amended and restated the Company’s
      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 the Company’s prior bylaws with respect to
      corporate governance, shareholder and director meeting procedures, and to
      amend the structure of the Company’s board of directors to provide for
      staggered terms to assure continuity and stability in the Company’s board
      of directors. The changes to the Company’s prior bylaws include: (i)
      expanding certain provisions with respect to shareholders’ meetings
      including reduction of quorum requirements and amendments to actions by
      majority stockholder consent; (ii) amending certain provisions respecting
      corporate governance and committees, and directors’ meetings; (iii)
      adopting a classified Board of Directors with staggered three year terms;
      (iv) expanding certain provisions with respect to officers and their
      duties; (v) changing certain provisions with respect to share
      certificates; and (vi) adding certain dividend
  provisions.




3.
            On
      March 22, 2007, we 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, we 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, we sold an
      aggregate of 2,226,161 units for gross proceeds of $6,678,483, with each
      unit consisting of one share of our 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
      Searchlight if its common stock trades above $6.50 per share for 20
      consecutive trading days. Also under the terms of the March Offering we
      agreed to use our best efforts to file with the SEC a registration
      statement on Form SB-2 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 us to
      the Agent in connection with the March Offering and the Agent also
      received warrants to purchase 75,175 shares of our common stock at a price
      of US$4.50 per share, exercisable for a period of two years from the
      closing date.




4.
            On
      February 23, 2007, we 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
      our 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 our common stock
      trades above $6.50 per share for 20 consecutive trading days. Pursuant to
      the terms of the US Offering, we agreed to use our best efforts to file
      with the SEC a registration statement on Form SB-2 registering the offered
      securities within four months and one day after the closing of the US
      Offering. We agreed not to exercise our call rights until the registration
      statement registering the securities underlying the units sold has been
      declared effective by the SEC. We 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 totaled $381,990 and the agents also received warrants to
      purchase 90,870 shares of our common stock at a price of $4.50 per share,
      exercisable for a period of two years from the closing
    date.




40




5.
            Also
      on February 23, 2007, we 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 our 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 Searchlight if its common stock trades above $6.50 per share
      for 20 consecutive trading days. Pursuant to the terms of the February
      Offering, we agreed to use our best efforts to file with the SEC a
      registration statement on Form SB-2 registering the offered securities
      within four months and one day after the closing of the February Offering.
      We agreed not to exercise our call rights until the registration statement
      registering the securities underlying the units sold has been declared
      effective by the SEC. We 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 totaled $111,100 and the agents also received warrants
      to purchase 12,300 shares of our common stock at a price of $4.50 per
      share, exercisable for a period of two years from the closing
      date.




6.
            Effective
      February 16, 2007, we entered into amendments to our employment agreements
      with the following executives: (i) we increased the salary of Ian McNeil,
      President, from $108,000 to $190,000 per year; (ii) we increased the
      salary of Carl Ager, Vice President, Secretary and Treasurer, from $80,000
      to $160,000 per year; and (iii) we increased the salary of Melvin
      Williams, Chief Financial Officer, from $60,000 to $130,000 per year based
      on 600-800 hours of service annually. Also on February 16, 2007 in
      connection with the amendments to the executive employment agreements, our
      board of directors also approved the following stock option grants
      pursuant to our 2006 Stock Option Plan: (i) Ian McNeil received 24,800
      options; (ii) Carl Ager received 24,800 options; and (iii) Melvin Williams
      received 18,600 options. Each option is exercisable to acquire a share of
      our common stock at a price of $4.04 (the closing price on February 16,
      2007), vesting on the grant date and expiring five years from the grant
      date.




7.
            On
      February 16, 2007, Ian Matheson resigned as a member of our board of
      directors and the board appointed Harry B. Crockett to fill the vacancy
      created by Mr. Matheson’s resignation. There was no disagreement between
      Mr. Matheson and Searchlight regarding any matter relating to its
      operations, policies or practices. Harry B. Crockett is the managing
      member of Verde River Iron Company, LLC a private Nevada limited liability
      company which was the prior owner of the slag pile underlying the
      Clarkdale Slag Project. Mr. Crockett serves as a court appointed receiver
      serving various Superior Courts throughout California having served in
      this capacity over the last 15 years. Mr. Crockett has previously served
      as an Executive Vice President of American Savings, specializing in
      troubled debt and troubled assets as well as serving as Chairman of the
      Make A Wish Foundation of San Joaquin County, a charitable foundation
      serving the needs of terminally ill children. Mr. Crockett holds a
      Bachelor of Arts degree from Golden Gate University in San Francisco
      California and a California Real Estate Brokers license. Mr. Crockett also
      has a pilot license with a single and multi engine land and instrument
      ratings.




8.
            Effective
      February 16, 2007, we dismissed our independent registered public
      accounting firm, Kyle L. Tingle, CPA, LLC (“KLT”). The decision to change
      accountants was recommended by our audit committee and approved by the
      board of directors on February 16, 2007. On February 16, 2007, the board
      of directors appointed Brown Armstrong, Paulden, McCown, Starbuck,
      Thornburgh & Keeter Accountancy Corporation as our new independent
      registered public accounting firm following the dismissal of
      KLT.




9.
            On
      February 15, 2007, we entered into an agreement and plan of merger with
      Clarkdale Minerals LLC, Verde River Iron Company, LLC and Transylvania
      International, Inc. (“TI”), pursuant to which TI merged with and into our
      wholly owned subsidiary, Clarkdale Minerals LLC, with Clarkdale Minerals
      LLC as the sole surviving corporation. The acquisition of TI was completed
      in accordance with the terms and conditions of the Letter Agreement dated
      November 22, 2006, as amended February 15, 2007 among Searchlight, Verde
      River Iron Company, LLC, Harry B. Crockett and Gerald Lembas. Pursuant to
      our acquisition of TI we now own the property underlying a slag pile
      located in Clarkdale, Arizona from which we seek to recover base and
      precious metals through the reprocessing of slag material, subject to
      payment of certain royalties.




41




10.
            On
      January 10, 2007, we incorporated two wholly owned subsidiaries: Clarkdale
      Metals Corp, a Nevada corporation and Clarkdale Minerals LLC, a Nevada
      limited liability corporation. Clarkdale Minerals LLC was formed for the
      purpose of completing the merger with Transylvania International, Inc.
      pursuant to our Agreement and Plan of Merger with Transylvania
      International, Inc. dated February 15,
2007.




PLAN
OF OPERATION




The
following discussion and analysis summarizes our plan of operation for the next
twelve months, our results of operations for the three months ended March 31,
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 have drilled 18 holes (SD1-18) in the slag
pile 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.




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. The materials
study, expected to be completed in the second 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 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.




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 third 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.




42




The table
below provides an overview of the results from metallurgical tests received from
Arrakis during the quarter ended March 31, 2007:




Chain
of Custody Results Summary




Feed
    Grade
                              
                              
                              Extracted
      GradeCOC Tests(1)
                              
                              Gold (opt)*(1)(2)
                              
                              
                              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 are provided below:




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 somewhat standard bottle roll
leach test approximated 0.19 opt gold.




43




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.
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 $409,935 for the three months ended March 31, 2007 and
have an accumulated deficit of $8,416,213 since inception. As at March 31, 2007
we had cash of $13,688,258 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




Three
Months Summary




Three
      Months Ended March 31,Percentage2007
                                
                                
                                2006
                                
                                
                                Increase
      / (Decrease)(restated)Revenue
                                
                                $
                                -
                                
                                
                                $
                                -
                                
                                
                                
                                n/aOperating
      Expenses
                                
                                
                                (721,547
                                )
                                
                                
                                (627,988
                                )
                                
                                
                                14.9
                                %Other
      income
                                
                                
                                41,518
                                
                                
                                
                                -
                                
                                
                                
                                n/aIncome
      tax benefit
                                
                                
                                270,094
                                
                                
                                
                                280,614
                                
                                
                                
                                (3.7
                                )%Net
      Loss
                                
                                $
                                (409,935
                                )
                                
                                $
                                (347,374
                                )
                                
                                
                                18.0
                                %




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 March 31, 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
expenses for the three months ended March 31, 2007 and March 31, 2006 are
outlined in the table below:




Three
      Months Ended March 31,Percentage2007
                                        
                                        
                                        2006
                                        
                                        
                                        Increase
      / (Decrease)(restated)Mineral
      exploration and evaluation
                                        
                                        $
                                        295,308
                                        
                                        
                                        $
                                        278,744
                                        
                                        
                                        
                                        5.9
                                        %Mineral
      exploration and evaluation – related party
                                        
                                        
                                        90,000
                                        
                                        
                                        
                                        123,750
                                        
                                        
                                        
                                        (27.3
                                        )%General
      and administrative
                                        
                                        
                                        333,450
                                        
                                        
                                        
                                        224,701
                                        
                                        
                                        
                                        48.4
                                        %Depreciation
                                        
                                        
                                        2,789
                                        
                                        
                                        
                                        793
                                        
                                        
                                        
                                        251.8
                                        %Total
      Operating Expenses
                                        
                                        $
                                        721,547
                                        
                                        
                                        $
                                        627,988
                                        
                                        
                                        
                                        14.9
                                        %




Operating
expenses for the three months ended March 31, 2007 increased by 14.9% as
compared to the comparative period in 2006 primarily as a result of: (i)
increased mineral exploration expenses in connection with our 2006 drilling and
sampling program on the Clarkdale Slag Project and Searchlight Claims; and (ii)
increased professional and administrative fees associated with the acquisition
of Transylvania International, Inc., the completion of our equity financings and
the preparation of our Registration Statement on Form SB-2.




Liquidity
and Financial Condition




Working
Capital




PercentageAt
      March 31, 2007
                                      
                                      
                                      At
      December 31, 2006
                                      
                                      
                                      Increase
      / (Decrease)(restated)Current
      Assets
                                      
                                      $
                                      13,794,507
                                      
                                      
                                      $
                                      3,790,483
                                      
                                      
                                      
                                      263.9
                                      %Current
      Liabilities
                                      
                                      
                                      (1,624,273
                                      )
                                      
                                      
                                      (1,583,306
                                      )
                                      
                                      
                                      2.5
                                      %Working
      Capital
                                      
                                      $
                                      12,170,234
                                      
                                      
                                      $
                                      2,207,177
                                      
                                      
                                      
                                      451.4
                                      %




Cash
Flows




Three
      Months Ended
                                  
                                  
                                  Three
      Months EndedMarch
      31, 2007
                                  
                                  
                                  March
      31, 2006(restated)Cash
      Flows used in Operating Activities
                                  
                                  $
                                  790,673
                                  
                                  
                                  $
                                  561,413Cash
      Flows used in Investing Activities
                                  
                                  $
                                  10,005,846
                                  
                                  
                                  $
                                  -Cash
      Flows provided by Financing Activities
                                  
                                  $
                                  20,800,529
                                  
                                  
                                  $
                                  1,382,250Net
      Increase in Cash During Period
                                  
                                  $
                                  10,004,010
                                  
                                  
                                  $
                                  820,837




Summary
of Financing Activities




During
the first quarter of 2007, we completed the following financings to fund our
proposed exploration program, our acquisition of Transylvania International,
Inc. and our continued operations:




-
            On
      March 22, 2007, we closed a private placement offering and issued
      2,226,161 units for gross proceeds of $6,678,483. The securities sold
      pursuant to the offering were issued to non-US investors in accordance
      with the terms of Regulation S of the Securities Act of 1933. An aggregate
      commission and corporate finance fee totaling $525,386 was paid by us to
      an agent in connection with the offering and the agent also received
      warrants to purchase 75,175 shares of our common
  stock.




-
            On
      February 23, 2007, we 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”). Commissions paid to agents in
      connection with the US Offering totaled $381,990 and the agents also
      received warrants to purchase 90,870 shares of our common
      stock.




46




-
            On
      February 23, 2007, we 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”). Commissions paid to agents in connection with the February
      Offering totaled $111,100 and the agents also received warrants to
      purchase 12,300 shares of our common
stock.




During
the quarter ended March 31, 2007 we raised a total of $21,965,485 from our
equity financings. See “Item 2. Unregistered Sales Of Equity Securities And Use
Of Proceeds”, below.




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 $12,170,234 as at March 31, 2007 was
primarily due to the increase in cash flows from financing activities of
$20,800,529 from private placements of our securities completed during the
quarter. See “Recent Sales of Unregistered Securities”, below.




Income Tax Liability.Included
in long term liabilities in the accompanying consolidated financials statements
is a balance of $48,666,970 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 March 31, 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 2027 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 at March 31, 2007 no options have been
granted under the 2007 Plan. During the three months ended March 31, 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 three months ended March 31, 2007 related
to granting of stock options was $129,293.




During
the three months ended March 31, 2007 we granted stock purchase warrants related
to common stock issued through a private placement totaling 3,660,913 with an
exercise price of $4.50 per share and stock warrants totaling 178,345 were
issued to underwriters of the private placement with an exercise price of $4.50
per share.




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
$409,935 for the three months ended March 31, 2007 and have an accumulated
deficit of $8,416,213 since inception. As at March 31, 2007 we had cash of
$13,688,258 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.




47




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.




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, 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




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 March 31, 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.




48




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.




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 net loss
since inception is $8,416,213. 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 $409,935 for the three months ended March 31, 2007 and
have an accumulated deficit of $8,416,213 as at March 31, 2007. As at March 31,
2007 we had cash of $13,688,258 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 would be subject to a number of factors, including the
market prices for the mineral property and base and precious metals. These
factors may make the timing, amount, terms or conditions of additional financing
unavailable to us. Since our inception, we have used our common stock to raise
money for our operations and for our property acquisitions. 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.




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.




49




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:




(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.




50




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. At such time that
we deem appropriate, a bankable feasibility study will be undertaken. There is
no assurance that actual recoveries of base and precious metals or other
minerals re-processed from the slag pile will be economically feasible. If metal
recoveries are less than projected, then our metal sales will be less than
anticipated and may not equal or exceed the cost of mining and recovery in which
case our operating results and financial conditions will be adversely
affected.




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:




51




-
            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;




(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.




52




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.




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.




53




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
 
 This
Quarterly Report on Form 10-Q/A presents a restatement of the financial
statements for the covered period. In connection with this amendment to our
Quarterly Report for the period ended March 31, 2007, our management reevaluated
the effectiveness of our disclosure controls and procedures (as defined in Rule
13a-15(e) under the Exchange Act of 1934, as amended (the “Exchange
Act”)) as of the end of the period covered by this
report.
 
 Subsequently, we discovered material
weaknesses in our internal control over financial reporting. For this reason, in
reevaluating the adequacy of our disclosure controls and procedures as of the
end of the period covered by this report, our management has determined that our
disclosure controls and procedures were not adequate.  In assessing
whether our disclosure controls and procedures were effective as of March 31,
2007, management considered the impact of the restatement to our interim
financial statements for the three month period ended March 31, 2007, as
outlined in Item 2, as well as our control environment.
 
 Our
management is responsible for establishing and maintaining an adequate system of
disclosure controls and procedures designed to provide reasonable assurance that
the information required to be disclosed by us in reports that we file and
submit under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the SEC’s rules and
forms.  Disclosure controls also are designed to reasonably assure
that such information is accumulated and communicated to management, including
the Chief Executive Officer and Chief Financial Officer, as appropriate, to
allow timely decisions regarding required disclosures.  Disclosure
controls include components of internal control over financial reporting, which
consists of control processes designated to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements in accordance with United States generally accepted
accounting principles.
 
 Based on the reevaluation, our
management has concluded that the lack of adequate additional support staff
represented a material weakness in our disclosure controls and procedures as of
March 31, 2007.
 
 In addition, our management has
concluded that management’s failure to consult an outside expert regarding the
initial accounting for certain complex transactions  represented
material weaknesses in our disclosure controls and procedures as of March 31,
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.
 
 Accordingly,
our management has concluded that our disclosure controls and procedures were
not effective as of March 31, 2007 to provide reasonable assurance that
information required to be disclosed by us in the reports that we file is
recorded, processed, and summarized within the appropriate
periods.
  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 research
materials represented a material weakness in our disclosure controls and
procedures.  In January 2007, we remediated this weakness by obtaining
additional research materials.
 
 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 March 31, 2007, we completed the following unregistered
sales of our securities:




1.
            On
      March 22, 2007, we closed a private placement offering of 2,226,161 units
      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, we 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, each
      unit consisted of one share of our 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 we
      agreed to use our best efforts to file with the SEC 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 us to the Agent in connection with the March
      Offering and the Agent also received warrants to purchase 75,175 shares of
      our common stock.




2.
            On
      February 23, 2007, we 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
      our 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 our common stock
      trades above $6.50 per share for 20 consecutive trading days. Pursuant to
      the terms of the US Offering, we agreed to use our best efforts to file a
      registration statement on Form SB-2 declared effective by the SEC within
      four months of the closing date of the US Offering. We agreed not to
      exercise our call rights until the registration statement registering the
      securities underlying the units sold has been declared effective by the
      SEC. We 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 totaled
      $381,990 and the agents also received warrants to purchase 90,870 shares
      of our common stock at a price of $4.50 per share, exercisable for a
      period of two years from the closing
date.




3.
            Also
      on February 23, 2007, we 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 our 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 our common stock trades above $6.50 per share for 20
      consecutive trading days. Pursuant to the terms of the February Offering,
      we agreed to use our best efforts to file a registration statement on Form
      SB-2 declared effective by the SEC within four months of the closing date
      of the February Offering. We agreed not to exercise our call rights until
      the registration statement registering the securities underlying the units
      sold has been declared effective by the SEC. We 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 totaled $111,100 and the agents also
      received warrants to purchase 12,300 shares of our common stock at a price
      of $4.50 per share, exercisable for a period of two years from the closing
      date.




56




4.
            On
      February 15, 2007, we approved the issuance of 16,825,000 shares of our
      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 our 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.




ITEM
3.          DEFAULTS UPON
SENIOR SECURITIES.




None.




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




None.




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