UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549  FORM
10-K  [X] ANNUAL REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For the fiscal year ended:  December
31, 2008 or  [ ] TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For the transition period from
                 to  Commission File Number:  000-17106  LKA
INTERNATIONAL, INC. (Exact Name of registrant as
specified in its Charter)  Delaware
91-1428250(State or
other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification
No.)  3724 47th Street Ct. N.W. Gig Harbor, Washington 98335 (Address of principal executive
offices)  (253) 851-7486 (Registrants telephone number, including
area code)  Securities registered pursuant to Section
12(b) of the Act: None  Securities registered pursuant to Section
12(g) of the Act: Common Stock, par value $0.001  Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes
[  ] No [X]  Indicate by check mark if the registrant is not required
to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes [
 ]   No [X]  Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15(d)
of the Exchange Act 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. (1) Yes [X] No [  ]
    (2) Yes [X] No [  ]  Indicate by check mark if disclosure of
delinquent filers pursuant to item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. [  ]   1   Indicate by
check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer or a smaller reporting company:  Large accelerated
filer       [   ]
Accelerated filed
                    [ 
 ]Non-accelerated
filer         [ 
 ]
Smaller reporting
company    [X]  Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]  Aggregate Market Value of Non-Voting
Common Stock Held by Non-Affiliates  State the aggregate market value of the
voting and non-voting common equity held by non-affiliates computed by reference
to the price at which the common equity was last sold, or the average bid and
asked price of such common equity, as of the last business day of the
registrants most recently completed second quarter.  The market value of the voting and
non-voting common stock is $5,191.74, based on 5,191,740 shares held by
non-affiliates.  Because there has been no established public market for
the Issuers common stock during the past five years, the Issuer has arbitrarily
valued these shares at par value of $0.001 per share.  Applicable Only to Registrants Involved
in Bankruptcy Proceedings During the Preceding Five Years  Not applicable.  (Applicable Only to Corporate
Registrants)  Indicate the number of shares outstanding
of each of the registrants classes of common stock, as of the latest practicable
date.  As of March 26, 2009, the registrant had
12,803,251 shares of common stock outstanding.  Documents Incorporated by
Reference  See Part IV, Item
15.  PART I  FORWARD LOOKING STATEMENTS  In this Annual Report, references to LKA International,
LKA, the Company, we, us, our and words of similar import) refer to
LKA International, Inc., the Registrant.  Statements made in this Form 10-K which are not purely
historical are forward-looking statements with respect to the goals, plan
objectives, intentions, expectations, financial condition, results of
operations, future performance and business of LKA. Such forward-looking
statements include those that are preceded by, followed by or that include the
words "may", "would", "could", "should", "expects", "projects", "anticipates",
"believes", "estimates", "plans", "intends", "targets" or similar
expressions.  Forward-looking statements involve inherent risks and
uncertainties, and important factors (many of which are beyond our control) that
could cause actual results to differ materially from those set forth in the
forward-looking statements, including the following, in addition to those
contained in this Annual Report: general economic or industry conditions
nationally and/or in the communities in which we conduct business; fluctuations
in global gold and silver markets; legislation or regulatory requirements,
including environmental requirements; conditions of the securities markets;
competition; our ability to raise capital; changes in accounting principals,
policies or guidelines; financial or political instability; acts of war or
terrorism; and other economic, competitive, governmental, regulatory and
technical factors affecting our operations, products, services and prices.   2   Accordingly, results actually
achieved may differ materially from expected results in these statements.
Forward-looking statements speak only as of the date they are made. LKA does not
undertake, and specifically disclaims, any obligation to update any
forward-looking statements to reflect events or circumstances occurring after
the date of such statements.  ITEM 1.  BUSINESS  Business Development  LKA International, Inc. was incorporated on March 15,
1988, in the State of Delaware.  Since our inception, our authorized
capital has been 100,000,000 shares, consisting of 50,000,000 shares of common
stock with a par value of one mill ($0.001) per share, and 50,000,000 shares of
preferred stock, also with a par value of one mill per share.  LKA owns certain real and personal property interests
including patented and unpatented mining claims, water rights, buildings,
fixtures, improvements, equipment, and permits situated in Lake City, Colorado,
which are described below. LKA's activities associated with these properties
have been sporadic since they were acquired by its predecessor in December,
1982.  On November 5, 2007, we entered into a letter agreement
by which we agreed to grant to Richmont Mines, Inc., an option to acquire a 50%
undivided interest in our Gold Wonder mine located in Hinsdale County, Colorado,
in exchange for Richmont's payment of (i) $150,000 within 10 days of the date of
the Letter Agreement; and (ii) an additional $150,000 within 60 days of the date
of the Letter Agreement and a conditional commitment to make project development
expenditures and/or direct payments to LKA of an additional $17.7 million over a
63 month period. From December, 2007 through October, 2008 Richmont conducted
general exploration, portal rehabilitation, mine improvements, permit compliance
work and an exploratory drilling program within the Golden Wonder. Core holes
were drilled to explore for lateral and down-plunge extensions of the main vein
system below the mines sixth level. By October 22, 2008 Richmont determined
that the results of the drilling program did not warrant its further
expenditures in the project and notified LKA of its election not to proceed
beyond the $3 million Initial Commitment Period under the terms of the Letter
Agreement. As a result, Richmont relinquished all of its rights with respect to
the Golden Wonder  mine.  During this period, Richmont exceeded its initial
commitment of  $3 million in project-related expenditures and LKA
recognized direct cash payments from Richmont of  $747,216 as lease
revenue. Included in this amount was approximately $550,000 to, or on behalf of,
LKA for option fees, litigation settlement costs and finders fees.  For more information on the Notice of Termination see our
8-K Current Report dated October 22, 2008, and filed with the Securities and
Exchange Commission on October 24, 2008.  The Lake City, Colorado
Properties. The Ute-Ule silver mine and
milling facility and the Golden Wonder gold mine (respectively, the "Ute-Ule
Property" and the "Golden Wonder Property" or, collectively, the "Properties"),
consist of certain patented and unpatented mining claims located in Hinsdale
County, Colorado. In December, 1982, our predecessor, LKA Holdings, Inc., a Utah
corporation ("LKA Utah") acquired a 51% interest in the Properties from Lake
City Mines, Inc., a Colorado corporation ("Lake City Mines"), which retained the
remaining 49% interest. Immediately after the acquisition, LKA Utah assigned 90%
of its interest in the future proceeds that it had the right to receive from the
Properties to Caldera Partners Limited Partnership, a Washington limited
partnership ("Caldera") in return for approximately $1.6 million, which LKA used
to develop the Properties. As a result, Caldera owned a 45.9% interest in the
future proceeds that LKA Utah had the right to receive on the Properties. LKA's
President, Kye A. Abraham, is Caldera's Managing Partner. Subsequent to a
bankruptcy filing by Lake City Mines in February 1984, LKA acquired Lake City
Mines interest in the Properties through a Sheriffs sale. On March 1, 2005, the Company
completed the acquisition of Caldera's 45.9% interest in the Golden Wonder and
Ute Ule mines. Per the terms of the agreement, the Company agreed to issue
Caldera 6,434,042 "unregistered" and "restricted" shares of common stock in
exchange for Caldera's interest in the mines and the full satisfaction of all
receivables due to Caldera from the Company. Caldera was also relieved of any
future obligations to contribute  3   further
exploration and development funds. For more information on this transaction, see
the Company's Current Report on Form 8-K, dated March 3, 2005, and filed with
the Securities and Exchange Commission on March 4, 2005.  Description of Business  LKA is currently engaged in an intensive exploration
program at the Golden Wonder mine with the objective of  returning the mine
to a producing status. The exploration program, which began in November, 2008,
has involved extensive sampling/assaying for the purpose of identifying possible
new production zones within the mine. As part of this exploration effort LKA has
hired a mining contactor to produce a bulk sample of ore(s)  from those
areas within the mine yielding consistently high assays from the sampling
program. As of the date of this report more than 90 tons of ore have been
produced for the bulk sample and shipped to Teck Comincos ore processing
facility in Trail, B.C. The grade of the ore will be determined through a
detailed sampling and assaying process which will culminate in a sale of the ore
to Teck. LKA and Teck Cominco have executed an ore purchase agreement for this
purpose. Assuming that sufficient ore is located with the Golden Wonder to
justify commercial production, LKA expects to crush and ship ore directly to
Teck for sale. LKA is also engaged in the construction of new stormwater and
groundwater control systems below the working pad at the Golden Wonders 6 th
level pursuant to permit-related agreements with the Burea of Land Management,
The Colorado Division of Reclamation, Mining and Safety and the Colorado
Department of Public Health and Environment.  LKA expects to complete this
contruction process within the next 30 days.  Principal Products or Services and their
Markets  We do not currently have any products or services.  Distribution Methods of the Products or
Services  None; not applicable.  Status of any Publicly Announced New Product or
Service  None; not applicable.  Competitive Business Conditions and Our Competitive
Position in the Industry and Methods of Competition  Management believes that there are literally thousands of
non-operating mining companies such as LKA. We believe that our competitive
position in the industry will be very insignificant.  Sources and Availability of Raw Materials and Names of
Principal Suppliers  We do not use any raw materials, as we do not directly
conduct any material operations.  Dependence on One or a Few Major Customers  From 1998 through the second quarter of 2006, our
revenues consisted solely of royalties from the mining activities of Au Mining,
Inc., a Colorado corporation ("Au Mining"). In the third quarter of 2006, Au
Mining ceased these activities and we do not currently have any source of
revenue.  Patents, Trademarks, Licenses, Franchises,
Concessions, Royalty Agreements or Labor Contracts, including Duration  We have obtained "110d" limited impact permits from the
Colorado Division of  Reclamation Mining and Safety and have posted
reclamation bonds to ensure the clean-up of environmental disturbances on the
Ute-Ule and Golden Wonder Properties. We are currently in compliance with all
applicable permit and bonding requirements in this regard. Permits associated
with an exploratory drift/tunnel at the Golden Wonder have been applied for and
we believe that these permits will be granted within the next 60 to 90 days.
Permits governing water discharge and  4   emissions controls of certain
mining related equipment have been applied for. Management believes that these
permits will be granted but can make no assurances in this regard.  Need for any Governmental Approval of Principal
Products or Services  None; not applicable.  Effect of Existing or Probable Governmental
Regulations on our Business  We are subject to the following regulations of the SEC
and applicable securities laws, rules and regulations:  Smaller Reporting Company  We are subject to the reporting requirements of Section
13 of the Securities Exchange Act of 1934, as amended (the Exchange Act), and
subject to the disclosure requirements of Regulation S-K of the SEC, as a
smaller reporting company.  That designation will relieve us of some of
the informational requirements of Regulation S-K applicable to larger companies.  Sarbanes/Oxley Act  We are also subject to the Sarbanes/Oxley Act of 2002.
 The Sarbanes/Oxley Act created a strong and independent accounting
oversight board to oversee the conduct of auditors of public companies and
strengthens auditor independence.  It also requires steps to enhance the
direct responsibility of senior members of management for financial reporting
and for the quality of financial disclosures made by public companies;
establishes clear statutory rules to limit, and to expose to public view,
possible conflicts of interest affecting securities analysts; creates guidelines
for audit committee members appointment, compensation and oversight of the work
of public companies auditors; management assessment of our internal controls;
auditor attestation to managements conclusions about internal controls
(anticipated to commence with the December 31, 2009, year end); prohibits
certain insider trading during pension fund blackout periods; requires companies
and auditors to evaluate internal controls and procedures; and establishes a
federal crime of securities fraud, among other provisions. Compliance with the
requirements of the Sarbanes/Oxley Act has substantially increased our legal and
accounting costs.  Exchange Act Reporting
Requirements  Section 14(a) of the Exchange Act requires all companies
with securities registered pursuant to Section 12(g) of the Exchange Act to
comply with the rules and regulations of the SEC regarding proxy solicitations,
as outlined in Regulation 14A. Matters submitted to stockholders at special or
annual meetings thereof or pursuant to a written consent will require us to
provide our stockholders with the information outlined in Schedules 14A or 14C
of Regulation 14; preliminary copies of this information must be submitted to
the SEC at least 10 days prior to the date that definitive copies of this
information are forwarded to our stockholders.  We are also required to file Annual Reports on SEC Form
10-K and Quarterly Reports on SEC Form 10-Q with the SEC on a regular basis, and
will be required to timely disclose certain material events (e.g., changes in
corporate control; acquisitions or dispositions of a significant amount of
assets other than in the ordinary course of business; and bankruptcy) in a
Current Report on SEC Form 8-K.  Research and Development Costs During
the Last Two Fiscal Years  We have not spent any money on research and development
in the past five years and we do not plan to make any such expenditures in the
foreseeable future.  Cost and Effects of Compliance with Environmental
Laws  As the owner of permits pertaining to the Properties, we
are subject to many federal, state and local laws and regulations relating to
environmental quality. For example, any mining operations conducted on the
Properties must comply with federal and state laws and regulations that protect
the quality of surface water and groundwater.  5    The Colorado Division of Reclamation Mining and Safety
(the "Division") requires mine operators to have permits to conduct mining
activities in Colorado. The Division also requires operators to obtain a
reclamation bond to ensure the clean-up of disturbances on mining properties and
conducts regular inspections to make sure that the operators are in compliance
with applicable environmental laws and regulations. We have obtained, and/or are
in the process of obtaining, all necessary bonds and permits required by the
State of Colorado and believe that we are in compliance with all laws and
regulations in this regard. However, we can provide no assurance as to the
impact on LKA of any future environmental laws or regulations or any
governmental interpretation of existing or future laws or regulations.  The Federal Bureau of Land Management (the "BLM") has
advised us of its desire to extend to the Ute-Ule Property certain environmental
clean-up activities that it is conducting on neighboring properties that we do
not own. The BLM has commissioned and obtained an engineering evaluation and
cost analysis ("EE/CA") report on the Ute-Ule and the neighboring public lands.
This EE/CA, which was prepared by Harding ESE, Inc., analyzes the current
environmental state of the Ute-Ule Property and other properties in the area.
The EE/CA has identified a large volume of mine tailings and metals loading of
shallow ground water, with elevated levels of arsenic, cadmium and lead being
present. The total clean-up costs on all of these properties are estimated at
approximately $7 million, with the projected clean-up cost of the Ute-Ule alone
estimated at approximately $4,317,000. A later report commissioned by the BLM
entitled Value Engineering Study on
the Ute Ulay Mine/Mill Site  Final Report dated January 5, 2006 projected
these costs to be approximately $2.1 million. Management believes that due to
LKAs status as a de minimus participant, the Companys actual costs associated
with this effort will be substantially below BLM estimates. Under the federal
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"),
the BLM and EPA may either require a property owner to perform the necessary
cleanup or the agencies may perform the work and seek recovery of costs against
the owner.  As of the date of this Report, management has had several
meetings with the BLM and the Solicitor General's office in an effort to
negotiate a settlement of this matter.  The Company and the BLM remain in
the process of discussing and deliberating the purported environmental impacts
as discussed in the engineering evaluation and cost analysis report commissioned
by the BLM.  No determination of an overall site clean-up plan has yet been
made by the BLM. The BLM has taken the position that LKA will be liable for the
cleanup on the Ute-Ule property, with the timing of the cleanup, the ultimate
cost, and LKA's share of the total cost, still to be determined.  The BLM
has indicated its willingness to negotiate a settlement of the matter and LKA
intends to vigorously defend itself.  We can not accurately predict what
our ultimate liability, if any, will be. If we are unsuccessful in reaching a
cost effective arrangement with the BLM and are held responsible for the entire
amounts associated with the cleanup the financial consequences could render the
Company insolvent.  Number of Total Employees and Number of Full Time
Employees  Kye A. Abraham is LKA's only full-time employee. Nanette
K. Abraham is a part-time employee and assists with bookkeeping and
administrative work.  Reports to Security Holders  Additional Information  You may read and copy any materials that we
file with the SEC at the SECs Public Reference Room at 100 F Street, N.E.,
Washington, D.C. 20549.  You may also find all of the reports or
registration statements that we have filed electronically with the SEC at its
Internet site at www.sec.gov.
 Please call the SEC at 1-202-551-8090 for further information on this or
other Public Reference Rooms.  The Companys SEC Reports are also available
from commercial document retrieval services, such as Corporation Service
Company, whose telephone number is 1-800-222-2122.  ITEM 1A.  RISK FACTORS  Not required for smaller reporting companies.   6   ITEM 2:
 PROPERTIES  We own a 100% interest in the Ute-Ule and Golden Wonder
Properties. Prior to March 3, 2005, we paid to Caldera 45.9% of the proceeds
that we received from the Properties through our Lease Agreement with Au Mining.
However, on that date, the Company completed the acquisition of Caldera's 45.9%
interest in the Golden Wonder and Ute Ule mines. As a result of this assignment,
the Company is entitled to receive all lease and royalty payments on these
Properties. We are currently engaged in exploration and limited production at
the Golden Wonder mine.  On November 5, 2007, we entered into a letter agreement
with Richmont Mines, Inc., under which we agreed to grant to Richmont an option
to acquire a 50% undivided interest in the Golden Wonder mine, located in
Hinsdale County, Colorado.  Richmonts exercise of this option was subject
to numerous contingencies, including Richmonts expenditure of significant
exploration, development, and related costs.  After completing its initial
commitment funding under the letter agreement, Richmont exercised its option not
to proceed with further exploration or development and to relinquish its rights
with respect to the Golden Wonder mine.  For a discussion of Richmonts
Notice of Termination in this regard, see our Current Report on Form 8-K, dated
October 22, 2008, and filed with the SEC on October 24, 2008.  Both the Ute-Ule silver mine and the Golden Wonder gold
mine are vein type deposits associated with volcanic activity occurring millions
of years ago during a turbulent period known in geology as Tertiary time. During
this violent geologic era, most of the known precious metal mines in the State
of Colorado were formed along a southwest to northeast channel or narrow band
approximately 20 miles wide, which stretches in a diagonal trend from Durango in
the southwest to Boulder County in the northeast. This zone has been called the
Colorado Mineral Belt. Lake City, Colorado lies astride this mineral belt in a
topographical cul de sac 57 miles southwest of Gunnison, Colorado. On the other
side of the mountain range that encloses the cul de sac are the historic
precious metal mining districts of Ouray, Telluride, Silverton and Creede, which
were productive in the late 19th century.  LKAs early exploration and
development efforts in the mid-1980s and its now-terminated Lease Purchase
Agreement with Au Mining  produced approximately 136,622 ounces of gold on
the Properties..  Each Property is described below.  Ute-Ule Group.  The Ute-Ule Property consist of 23 patented mining claims
located approximately four miles west of Lake City, Colorado. These are highly
mineralized silver-lead-zinc mines with excellent access via a gravel road that
is maintained year-round by the County of Hinsdale. This road goes from the
Property to Lake City and from Lake City a blacktop road (State Highway 149)
extends northward approximately 46 miles to an intersection with U.S. 50, about
nine miles west of Gunnison, Colorado.  This Property has a long history of mineral extraction
dating back to the nineteenth century. Most of this extraction occurred between
1874 and 1903.  We can not assure you that the mineralized material found
on the Property can be mined and milled on a commercial basis.  The Ute-Ule Property is the subject of an EE/CA which
identifies certain environmental hazards on the property.  We are in the
process of negotiating a settlement of this matter with the Bureau of Land
Management and the Solicitor General.  See the heading Costs and Effects
of Compliance with Environmental Laws of Part I, Item 1 of this Report; and the
caption Legal Proceedings, Part I, Item 3 of this Report.  The Ute Mill.  A 100 ton-per-day flotation mill, including various
equipment and support facilities, exists on the Ute-Ule Property. The mill is
located at the level of the main haulage tunnel of the Ute mine. It is in
satisfactory condition and was used effectively by LKA Utah to mill ore from the
Golden Wonder mine during a 1984 pilot production program. The mill is also
ideally suited for the processing of ore from the Ute-Ule mines.   7   To the knowledge of
management, this mill is the only mill located in the Lake City District. Since
the Lake City District has no smelting facilities, ore and ore concentrates, if
any, from the Properties, or other mines in the district would have to be sent
to smelters in other distant locations.  Since the mill is the only one in the Lake City District
and construction of another mill of this size would be possible only at
substantial cost and subject to considerable environmental constraints,
management believes that LKA could derive income from custom milling or the sale
of the mill if mining is successfully revived in the District.  Water for milling and the power needs of the mill has
historically been available through water rights pertaining to the Property.
Although we believe the Property is currently in compliance with applicable laws
and regulations, any future operations at the mill may require additional
settling ponds and additional treatment of waste water may be required to
preserve water quality. We do not believe that these requirements would impose
an undue burden on us.  LKA re-acquired the Ute-Ule Property pursuant to a lease
agreement with Au Mining in 2003.  Substantial additional funding will be
required to make the mill operational. We can provide no assurance that we will
be successful in any such fundraising efforts.  Golden Wonder.  The Golden Wonder Property consists of three patented and
25 unpatented mining claims located approximately 2-1/2 miles south of Lake
City, Colorado. It has been worked intermittently since its discovery in 1880.
 The mine is at an elevation of 10,323 feet and is situated on a hill slope
approximately 1,500 feet above the valley floor.   The initial
discovery was made after finding high grade float in the surface containing free
gold. A limited body of ore was mined prior to 1889. The Property was generally
unworked through 1930. From 1930 to 1969, sporadic mining and development
efforts were conducted, some of which resulted in the extraction of ore.  During the summer of 1969, Southern Union Production
Company ("Supron") began an exploration program at the Golden Wonder. Out of
this, the SUPCO winze (a steeply inclined passageway connecting the mine
workings) was started in the winter of 1970-1971 and completed to a depth of
approximately 150 feet below the third level of the mine, with lateral drifting
along the course of mineralization off the winze on the fourth level. Work was
halted on the property in 1972, when Supron decided to discontinue all its
metallic mineral operations in the western United States and South America. In
1973, Rocky Mountain Ventures secured a lease on the Property and shipped a
small tonnage of dump material to a mill then operating at Crested Butte,
Colorado for processing.  In 1997, Au Mining leased the mine and
commercially produced ore through the second quarter of 2006.  Ore Production  The Golden Wonder has been explored and developed by
drifts on six different levels, with raises and winzes connecting the lower
levels. In 1984, LKA Utah conducted a five-month pilot production program that
resulted in the sale of approximately $590,000 of gold concentrates to ASARCO.
The average grade of the ore produced during the pilot program was 0.96 ounces
of gold per ton and the average gold price at that time was $325 per ounce. The
majority of this production was derived from two stopes on the mine's fourth
level, which consistently averaged one ounce of gold per ton. Commercial
quantities of gold were also taken from the mine's fifth level. From 1997 until
the second quarter of 2006, when Au Mining discontinued production at the Golden
Wonder, that entity had conducted commercial mining operations and produced
approximately 8,349 tons of ore containing 133,701 ounces of gold  from the
mine's fifth and sixth levels, with a limited amount produced from the seventh
level. The average grade of the ore produced during this period was 16.01 ounces
of gold per ton.  The average gold price during the period in which the ore
was sold was $337.76. Total gold production from the mine under LKAs ownership
has been approximately 136,621 ounces. The average grade of all ore produced
during this period was 14.84 ounces per ton.    Office Space.  We currently lease approximately 750 square feet of
office space located at 3724 47th Street Ct. N.W., Gig Harbor, Washington.
Effective as of January 1, 2005, we paid monthly rent of $1,300 to Abraham and
Co., Inc. a FINRA member broker/dealer which is controlled by our President, Kye
A. Abraham. This rent includes the use of the office  8   space, bookkeeping services,
telephone, office supplies, utilities, internet, computers and photocopiers. The
office is attached to Mr. Abraham's home. The lease arrangement is a
month-to-month oral lease with Mr. Abraham and the payment amount increased to
$1,500 per month in 2007 to keep pace with increased costs.  ITEM 3:  LEGAL
PROCEEDINGS  Except as discussed below, LKA is not the subject of any
pending legal proceedings and, to the knowledge of management, no proceedings
are presently contemplated against LKA by any federal, state or local
governmental agency.  1.  LKA International, Inc. v. Au Mining, Inc.
 On August 27, 2007, we entered into a Settlement Agreement and Release
with Au Mining, Inc.  Under the terms of the Agreement, Au Mining agreed to
release all rights to the Golden Wonder Mine and the Ute Ule Mine, including all
mining rights thereto, that it had under the 2003 Lease Agreement between the
parties and/or Au Mining's option exercise under the parties 1997 Lease
Agreement.  For more information regarding this Settlement Agreement see
our 8-K Current Report dated August 24, 2007.  2.  Ute-Ule - BLM remediation matter.  As of
the date of this Report, management has had several meetings with the BLM and
the Solicitor General's office in an effort to negotiate a settlement of this
matter. The Company and the BLM remain in the process of discussing and
deliberating the purported environmental impacts as discussed in the engineering
evaluation and cost analysis report commissioned by the BLM.  No
determination of an overall site clean-up plan has yet been made by the BLM.
 The BLM has taken the position that LKA will be liable for the cleanup on
the Ute-Ule property, with the timing of the cleanup, the ultimate cost, and
LKA's share of the total cost, still to be determined.  The BLM has
indicated its willingness to negotiate a settlement of the matter and LKA
intends to vigorously defend itself.  We are currently in the negotiating
stages of this process and we can not accurately predict what our ultimate
liability, if any, will be. If we are unsuccessful in reaching a cost effective
arrangement with the BLM and are held responsible for the entire amounts
associated with the cleanup the financial consequences could render the Company
insolvent.  In the first quarter of 2007, the Company filed a Notice
of Intent (NOI) with the BLM for the purpose of driving a 4,600 exploratory
drift from the Companys unpatented claims at the valley floor into Gold Hill in
the hope of intersecting the Golden Wonder vein system.  In May, 2007, the
BLM informed us that this project, as proposed by the Company, does not qualify
for the NOI process and that it wants the Company to proceed by filing a
comprehensive Plan of Operations, which is considerably more expensive
 and time-consuming. The Company believes it is clearly entitled to use the
NOI process for exploratory projects of this nature and has appealed the local
BLM decision to the Interior Board of Land Appeals (IBLA). On July 23,
2008, the administrative law judge reversed the BLMs decision and remanded the
case back to the BLM for action consistent with the judges opinion.  None of this directly effects the Companysability to continue mining the Golden Wonder from
the current working areas where it maintains active permits.  On May 16, 2007, the Company learned of a lawsuit filed
by Barrick GoldStrike Mines, Inc. (Barrick) against Au Mining and its
officers, alleging that Au Mining salted Golden Wonder mine assay samples to
indicate considerably higher gold content than was actually contained in the ore
that it delivered to Barrick in May/June, 2006.  Based on Barricks
sampling protocol and the fact that the grade of ore in the contested shipment,
while high, was not inconsistent with ore grades produced from the Golden Wonder
and shipped to various processors over a period of nine years, LKA believes that
it is hightly unlikely that Au Mining could have carried out such a scheme.
However, if Barrick is able to substantiate its allegations, it could call into
question the grade of the gold in the Golden Wonder mine.  LKA is not a
party to this lawsuit.  On May 18, 2007, we filed a Current Report on Form
8-K with respect to this matter.  To the knowledge of management, no director or executive
officer is party to any action in which any has an interest adverse to the
Company.  To the knowledge of management, no director or executive officer
is party to any action in which any has an interest adverse to LKA.   9   ITEM 4:  SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS  We have not submitted a matter to a vote of our
shareholders during the fourth quarter of our fiscal year ended December 31,
2008.   PART II   ITEM 5:  MARKET FOR REGISTRANTS COMMON
EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES  Market Information  There is no established trading market for our shares
of common stock. Our shares of common stock are quoted on the OTC Bulletin Board
of the Financial Industry Regulatory Authority, Inc. (FINRA) under the symbol
LKAI; however, management does not expect any established trading market to
develop in our shares of common stock unless and until we have material
operations.  In any event, no assurance can be given that any market for
our common stock will develop or be maintained. If a public market ever develops
in the future, the sale of shares of our common stock that are deemed to be
restricted securities pursuant to Rule 144 of the SEC by members of management
or others may have a substantial adverse impact on any such market.  All
current holders of shares of our common stock have satisfied the six-month
holding period requirement of Rule 144; these listed persons shares are subject
to the resale limitations outlined below under the heading Rule 144.  Set forth below are the high and low closing bid prices
for our common stock for each quarter of 2007 and 2008. These bid prices were
obtained from Pink OTC Markets, Inc. All prices listed herein reflect
inter-dealer prices, without retail mark-up, mark-down or commissions and may
not represent actual transactions.   Period
High
LowJanuary 1, 2007, through March 31, 2007
$1.10
$0.70April 1, 2007, through June 30, 2007
$1.01
$0.75July 1, 2007, through September 30, 2007
$0.80
$0.37October 1, 2007, through December 31, 2007
$0.81
$0.40January 1, 2008, through March 31, 2008
$1.10
$0.49April 1, 2008, through June 30, 2008
$1.65
$0.60July 1, 2008, through September 30, 2008
$1.60
$0.68October 1, 2008, through December 31, 2008
$0.70
$0.11  Rule 144  The following is a summary of the current requirements of
Rule 144:   10    Affiliate or Person Selling on Behalf of an
Affiliate
Non-Affiliate (and has not been an Affiliate During
the Prior Three Months)Restricted Securities of Reporting Issuers
During six-month holding period  no resales
under Rule 144 Permitted.

After Six-month holding period  may resell
in accordance with all Rule 144 requirements including:
·
Current public information,
·
Volume limitations,
·
Manner of sale requirements for
equity securities, and
·
Filing of Form 144.
During six- month holding period  no
resales under Rule 144 permitted.

After six-month holding period but before one
year  unlimited public resales under Rule 144 except that the current
public information requirement still applies.

After one-year holding period  unlimited
public resales under Rule 144; need not comply with any other Rule 144
requirements.Restricted Securities of Non-Reporting
Issuers
During one-year holding period  no resales
under Rule 144 permitted.

After one-year holding period  may resell
in accordance with all Rule 144 requirements including:
·
Current public information,
·
Volume limitations,
·
Manner of sale requirements for
equity securities, and
·
Filing of Form 144.
During one-year holding period  no resales
under Rule 144 permitted.

After one-year holding period  unlimited
public resales under Rule 144; need not comply with any other Rule 144
requirements.  Holders  The number of record holders of the
Companys common stock as of the date of this Report is approximately 503, not
including an indeterminate number who may hold shares in street name.  Dividends  LKA has not declared any cash dividends with respect to
its common stock and does not intend to declare dividends in the foreseeable
future. There are no material restrictions limiting, or that are likely to
limit, our ability to pay dividends on our common stock.  Securities Authorized for Issuance Under Equity
Compensation Plans  Plan Category
Number of Securities to be issued upon exercise of
outstanding options, warrants and rights
Weighted-average exercise price of outstanding
options, warrants and rights
Number of securities remaining available for future
issuance under equity compensation plans excluding securities reflected in
column (a)(a)
(b)
(c)Equity compensation plans approved by security
holders
-0-
-0-
-0-  11    Equity compensation plans not approved by security
holders
1,000,000
$0.40
-0-Total
1,000,000
$0.40
-0-  Recent Sales of Unregistered Securities; Use of
Proceeds from Registered Securities  On August 1, 2006, we issued 30,000 "unregistered" and
"restricted" shares of our common stock to Sean Tingey for services valued at
$.91 per share.  On February 22, 2007, we issued 100,000 unregistered
and restricted shares of our common stock to Charles H. Brown for consulting
and business relations services.  Also on February 22, 2007, we granted to Steve Glass
warrants to purchase a total of 200,000 shares of our common stock at a price of
$0.80 per share, exercisable for a period of five years.  The warrants for
100,000 of these shares will vest upon the issuance by the State of Colorado of
a permit to commence exploration operations on the Companys claims at
Slumgullion Pass near Lake City, Colorado.  The warrants for the remaining
100,000 such shares will vest upon the successful conclusion of LKAs
environmental cleanup matter with the Bureau of Land Management.  See the
caption Legal Proceedings, Part I, Item 3 of this Report.  On August 21, 2007, we issued 50,000 shares of our common
stock to Nancy Bentson-Essex for legal services valued at $3,000.  On December 28, 2007, the Companys board of directors
authorized the issuance of options to purchase 1,000,000 shares of the Companys
common stock to Mr. Abraham for services previously rendered. The options have
an exercise price of $0.40 per share, and have a five-year term from the date of
grant.  We believe that the offer and sale of these securities
was exempt from the registration requirements of the Securities Act of 1933, as
amended, pursuant to Sections 4(2) and 4(6) thereof, and Rule 506 of Regulation
D of the SEC and from various similar state exemptions.  In connection with
the sale of these securities, the Company relied on the fact that there were
fewer than 35 non-accredited recipients.  In addition, neither the
Company nor anyone acting on its behalf offered or sold these securities by any
form of general solicitation or general advertising.  Use of Proceeds of Registered Securities  There were no proceeds received during the
calendar year ended December 31, 2008, from the sale of registered securities.  Purchases of Equity Securities by Us and
Affiliated Purchasers  Period
(a) Total Number of Shares (or Units) Purchased
(1)
(b) Average Price Paid per Share (or Unit)
(c) Total Number of Shares (or Units) Purchased as
Part of Publicly Announced Plans or Programs
(d) Maximum Number (or Approximate Dollar Value) of
Shares (or Units) that may yet be Purchased Under the Plans or
ProgramsOctober 1, 2008, through October 31, 2008
-0-
-0-
-0-
-0-November 1, 2008, through November 30, 2008
-0-
-0-
-0-
-0-  12    December 1, 2008, through December 31, 2008
-0-
-0-
-0-
-0-Total
-0-
-0-
-0-
-0-   ITEM 6:  SELECTED FINANCIAL DATA  Not required for smaller reporting
companies.  ITEM 7:  MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION  Forward-looking Statements  Statements made in this Form 10-K which are not purely
historical are forward-looking statements with respect to the goals, plan
objectives, intentions, expectations, financial condition, results of
operations, future performance and business of LKA. Such forward-looking
statements include those that are preceded by, followed by or that include the
words "may", "would", "could", "should", "expects", "projects", "anticipates",
"believes", "estimates", "plans", "intends", "targets" or similar
expressions.  Forward-looking statements involve inherent risks and
uncertainties, and important factors (many of which are beyond our control) that
could cause actual results to differ materially from those set forth in the
forward-looking statements, including the following, in addition to those
contained in this Annual Report: general economic or industry conditions
nationally and/or in the communities in which we conduct business; fluctuations
in global gold and silver markets; legislation or regulatory requirements,
including environmental requirements; conditions of the securities markets;
competition; our ability to raise capital; changes in accounting principals,
policies or guidelines; financial or political instability; acts of war or
terrorism; and other economic, competitive, governmental, regulatory and
technical factors affecting our operations, products, services and prices.  Accordingly, results actually achieved may differ
materially from expected results in these statements. Forward-looking statements
speak only as of the date they are made. LKA does not undertake, and
specifically disclaims, any obligation to update any forward-looking statements
to reflect events or circumstances occurring after the date of such
statements.  Liquidity and Capital Resources  Current assets at December 31, 2008,
totaled $382,223.  As of that date, we had $182,984 in cash, $16,941 in a
margin trading account, $10,226 in prepaid expenses and $172,072 in investments
in trading securities.  During fiscal 2008, our operating
activities provided net cash of $195,788.  In 2007, by contrast, operating
activities used net cash of $100,791.  Net cash used by investing
activities increased to $35,480 in 2008, from $0 in the prior year.  Net
cash used for financing activities decreased to $0 in 2008, compared to $280,000
used in 2007 and relates solely to a payment on notes payable of $280,000, which
was related to the settlement of our dispute with Au Mining in August 2007.  At December 31, 2008, the Company had
working capital of $120,761, as compared to working capital of $464,060 at
December 31, 2007.  Results of Operations  Year Ended December 31, 2008,
Compared to Year Ended December 31, 2007  During the calendar year ended December 31, 2008, we
received from Richmont lease revenue of $747,216, compared to revenue of $0 in
2007.  Due to our dispute with Au Mining, royalty revenues ceased during
the year ended December 31, 2006, and we do not expect to receive any future
revenues until production activities resume on our Properties.  13    Operating expenses decreased from $1,844,275 in 2007, to
$742,706 in 2008. This change was primarily due to expenses associated with the
settlement of our litigation with Au Mining which totaled $530,000 in 2007.
 In addition, general and administrative expenses decreased to $298,867 in
2008, from $502,646 in the 2007 period.  Officer salaries and bonus
decreased to $150,000 in 2008, as compared to $615,092 in 2007. With a
combination of significantly increased revenues and significantly decreased
operating costs, we had operating income of $4,510 during the calendar year
ended December 31, 2008, as compared to an operating loss of $1,844,275 in
2007.  Our total other expense increased to $205,297 in 2008,
from $135,009 in the prior year.  Interest income decreased to $7,531 in
2008, from $14,546 in 2007. Interest expense increased to $31,520 in 2008 from
$16,726 in 2007.  We had $106,561 in bad debt expense, $65,570 in
unrealized loss on securities, and $68,931 in realized gain on securities in
2008. This compares to bad debt of $99,180, unrealized losses and realized gains
of $133,460 and $28,559, respectively, in 2008. We received $59,754 in dividend
and other investment income in 2008, versus $71,252 in 2008.  After taking into account income tax expense of $212,610
for 2008 an income tax benefit of $400,600 in 2007, net loss totaled $(413,397),
or $(0.03) per share, and $(1,578,684) , or $(0.12) per share, respectively,
during these periods. Our stockholders' equity of $638,617 at December 31, 2008,
represented a decrease of approximately 61% in stockholders' equity of
$1,052,014 at December 31, 2007.  Off-Balance Sheet Arrangements  We had no off-balance sheet arrangements of
any kind for the year ended December 31, 2008.  ITEM 7A:  QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK  Not required for smaller reporting
companies.   ITEM 8:  FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA    14                         LKA INTERNATIONAL, INC.  CONSOLIDATED FINANCIAL STATEMENTS  December 31, 2008 and 2007  15        C O N T E N T S   Report of Independent Registered Public Accounting
Firm
17Consolidated Balance Sheet
19Consolidated Statements of Operations
21Consolidated Statements of Stockholders'
Equity
23Consolidated Statements of Cash Flows
24Notes to Consolidated Financial Statements
25                               16     Report of Independent Registered Public Accounting
Firm  To the Board
of Directors LKA
International Inc Gig Harbor,
WA  We have
audited the accompanying consolidated balance sheet of LKA International Inc
Corporation, (LKA) as of December 31, 2008 and the related consolidated
statements of operations, changes in stockholders deficit and cash flows for
the year then ended. These financial statements are the responsibility of LKAs
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.  We conducted
our audit in accordance with standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatements. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Companys internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall consolidated financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.  In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of LKA as of December 31, 2008
and the consolidated results of its operations and its cash flows for the year
then ended in conformity with accounting principles generally accepted in the
United States of America.   /s/ MALONE
& BAILEY, PC www.malone-bailey.com Houston,
Texas  March 27,
2009    17      Report
of Independent Registered Public Accounting Firm   To the Board
of Directors LKA
International, Inc. Gig Harbor,
Washington  We have
audited the consolidated balance sheet of LKA International, Inc. as of December
31, 2007, and the related consolidated statements of operations, stockholders
equity, and cash flows for the year then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.  We conducted our audit in
accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.  We were not
engaged to examine management's assertion about the effectiveness of LKA
Internationals internal control over financial reporting as of December 31,
2007 and, accordingly, we do not express an opinion.  In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the consolidated financial position of LKA
International, Inc. as of December 31, 2007, and the results of its operations
and its cash flows for the year then ended, in conformity with U.S. generally
accepted accounting principles.   /s/HJ & Associates, LLC  HJ &
Associates, LLC Salt Lake
City, Utah April 14,
2008     18   LKA INTERNATIONAL, INC. Consolidated
Balance Sheets   ASSETS  December 31,2008

2007CURRENT
ASSETSCash
$
182,984

$
       22,676Margin
trading account

16,941

-Prepaid
expenses

10,226

24,048Income
tax refund receivable

-

244,890Due
from affiliates, net of allowance (Note 4)

-

32,263Notes
receivable, net of allowance (Note 5)

-

57,896Accrued
interest receivable, net of allowance (Note 5)

-

9,020Deferred tax asset

-

56,900Investments in trading securities

172,072

720,953Total Current Assets

382,223

1,168,646FIXED
ASSETSLand,
equipment and mining claims (Notes 2 and 3)

612,274

512,424Accumulated depreciation (Note 2)

(100,450)

(80,600)Total Fixed Assets, Net of
Accumulated Depreciation

511,824

431,824OTHER
NON-CURRENT ASSETSReclamation Bonds

113,120

63,835Deferred tax asset

-

155,710Total Other Non-Current
Assets

113,120

219,545TOTAL ASSETS
$
1,007,167

$   1,820,015                     The
accompanying notes are an integral part of these consolidated financial
statements.  19   LKA INTERNATIONAL, INC. Consolidated
Balance Sheet (Continued)   LIABILITIES
AND STOCKHOLDERS EQUITY  December 31,2008

2007CURRENT
LIABILITIESAccounts payable
$
121,470

$
    77,115Margin
trading account

-

86,526Note
payable

10,000

10,000Notes
payable - related party (Note 4)

62,803

62,803Accrued
interest payable - related party (Note 4)

67,189

68,142Deferred gain (Note 10)

-

150,000Settlement payable (Note 7)

-

250,000Total Current
Liabilities

261,462

704,586NON-CURRENT LIABILITIESAsset
retirement obligation (Note 3)

107,088

63,415Total Liabilities

368,550

768,001Commitments and Contingencies (note 8)STOCKHOLDERS' EQUITYPreferred stock; $0.001 par value, 50,000,000 shares
authorized, no shares issued or outstanding

-

-Common stock; $0.001
par value, 50,000,000 shares authorized, 12,890,498 and 12,890,498 shares
issued, 12,803,251 and 12,803,251 shares outstanding, respectively

12,891

12,891Additional paid-in capital

7,224,062

7,224,062Treasury stock;
87,247 and 87,247 shares at costs, respectively

(86,692)

(86,692)Accumulated deficit

(6,511,644)

(6,098,247)Total Stockholders'
Equity

638,617

1,052,014TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
$
1,007,167

$1,820,015               The
accompanying notes are an integral part of these consolidated financial
statements.  20    LKA
INTERNATIONAL, INC. Consolidated
Statements of Operations  For the Years Ended December 31,2008
2007REVENUESLease revenue
$
747,216
$
-OPERATING EXPENSESGeneral and administrative

298,867

502,646Exploration, development and related costs

293,839

196,537Settlement expense (Note 7)

-

530,000Officer salaries and bonus (Note 4)

150,000

615,092Total Operating
Expenses

742,706

1,844,275OPERATING INCOME (LOSS)

4,510

(1,844,275)OTHER INCOME (EXPENSE)Interest expense

(31,520)

(16,726)Interest income

7,531

14,546Bad debt expense (Notes 4 and 5)

(106,561)

(99,180)Unrealized (loss) on securities

(65,570)

(133,460)Realized gain (loss) on securities

(68,931)

28,559Dividend and other investment income

59,754

71,252Total Other Income
(Expense)

(205,297)

(135,009)LOSS
PRIOR TO INCOME TAX EXPENSE

(200,787)

(1,979,284)INCOME TAX (EXPENSE) BENEFIT (Note 1)

(212,610)

400,600NET LOSS
$
(413,397)
$
(1,578,684)BASIC
AND DILUTED NET LOSS PER SHARE
$
(0.03)
$
(0.12)WEIGHTED
AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTED

12,890,498

12,844,060                The accompanying notes are an integral part of these consolidated
financial statements.  21   LKA INTERNATIONAL, INC. Consolidated
Statements of Stockholders Equity  Common
Stock

Treasury
Stock

Additional Paid-in

Accumulated

Total
Stockholders'Shares

Amount

Shares

Amount

Capital

Deficit

EquityBalance, December 31,
2006
12,740,498

$
12,741

(63,927)

$
(60,986)

$
6,699,120

$
(4,519,563)

$
2,131,312Issuance of common
stock for services at $0.80 per share
100,000


100

-


-


79,900


-


80,000Issuance of common
stock for services at $0.60 per share
50,000


50

-


-


29,950


-


30,000Issuance of 1,000,000
options for the purchase of common stock to officer for services
-


-

-


-


415,092


-


415,092Repurchase of common
stock
-


-

(23,320)


(25,706)


-


-


(25,706Net loss for the year
ended December 31, 2007
-


-

-


-


-


(1,578,684)


(1,578,684)Balance, December 31,
2007
12,890,498


12,891

(87,247)


(86,692)


7,224,062


(6,098,247)


1,052,014Net loss for the year
ended December 31, 2008
-


-

-


-


-


(413,397)


(413,397)Balance, December 31,
2008
12,890,498

$
12,891

(87,247)

$
(86,692)

$
7,224,062

$
(6,511,644)

$
638,617          The
accompanying notes are an integral part of these consolidated financial
statements.  22   LKA INTERNATIONAL, INC. Consolidated
Statements of Cash Flows  For the Years Ended December 31,2008
2007CASH FLOWS FROM OPERATING ACTIVITIESNet loss
$
(413,397)
$
(1,578,684)Items to reconcile net income to net cash provided by (used
in) operating activities:Unrealized loss on investments

60,770

133,460Realized (gain) loss on investments

68,931

(28,559)Bad debt expense

106,561

99,180Investment purchases

(121,586)

(803,359)Investment proceeds

540,766

1,160,099Note payable for settlement expense

-

530,000Depreciation expense

19,850

20,830Accretion of asset retirement
obligation

2,567

1,722Income tax expense

212,610

-Common stock issued for services

-

110,000Options issued for services

-

415,092Treasury stock purchased

-

(25,706)Changes in operating assets and liabilities(Increase) decrease in money market
accounts

(103,467)

200,145(Increase) decrease in prepaid and other
assets

13,822

(1,007)(Increase) decrease in due to/from
affiliate

-

(126)(Increase) in interest receivable

(7,382)

(9,843)(Increase) in net deferred tax assets and
liabilities

-

(189,055)(Increase) in reclamation bond

(49,285)

-Decrease in income tax receivable

244,890

-Increase in accounts payable

21,091

4,001Increase in accrued expenses

19,047

13,514Increase (decrease) in deferred
gain

(420,000)

150,000(Decrease) in income taxes payable

-

(302,495)Net Cash Provided (Used)
by Operating Activities

195,788

(100,791)CASH FLOWS FROM INVESTING ACTIVITIESPurchase of construction work in
process

(35,480)

-Net Cash Used by Investing
Activities
$
(35,480)
$
-               The
accompanying notes are an integral part of these consolidated financial
statements.  23   LKA INTERNATIONAL, INC. Consolidated
Statements of Cash Flows (Continued)  For the Years Ended
December
31,2008

2007CASH FLOWS FROM
FINANCING ACTIVITIESPayment on notes
payable
$
-

$
(280,000)Net
Cash (Used) by Financing Activities

-


(280,000)NET INCREASE
(DECREASE) IN CASH

160,308


(380,791)CASH AT BEGINNING OF
PERIOD

22,676


403,467CASH AT END OF
PERIOD
$
182,984

$
22,676CASH PAID FOR:Interest
$
6,338

$
3,213Income Taxes
$
-

$
94,107NON-CASH INVESTING
AND FINANCING ACTIVITIESNotes receivable
issued in exchange for previous notes receivable and related
interest
$
-

$
11,314Accounts payable
issued for construction work-in process
$
23,264

$
-Increase in asset
retirement obligations assumed
$
41,105

$
-                           The
accompanying notes are an integral part of these consolidated financial
statements.  24   LKA INTERNATIONAL, INC. Notes to the
Consolidated Financial Statements December 31,
2008 and 2007  NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES  The consolidated financial statements presented are those of LKA
International, Inc. (LKA), a Delaware corporation and its wholly-owned
subsidiary (LKA International, Inc.), a Nevada corporation.  LKA was
incorporated on March 15, 1988, under the laws of the State of Delaware. LKA was
engaged in several natural resource projects, but ceased operations shortly
thereafter due to high capital investments and the risk of no return. LKA exited
the development stage in September 2003 as a result of the reacquisition of its
interest in an operating mine near Lake City, Colorado. LKA is currently engaged
in efforts to expand mine production and continues to seek additional investment
opportunities.  a. Accounting Methods  LKAs financial statements are prepared using the accrual method
of accounting.  LKA has elected a calendar year-end.  b. Basic and Diluted Income (Loss) Per Share  LKA computes net income (loss) per share in accordance with SFAS
No. 128, "Earnings per Share" (SFAS 128). SFAS 128 requires presentation of both
basic and diluted earnings per share (EPS) on the face of the income statement.
Basic EPS is computed by dividing net income (loss) available to common
shareholders (numerator) by the weighted average number of shares outstanding
(denominator) during the period. Diluted EPS gives effect to all dilutive
potential common shares outstanding during the period including convertible
debt, stock options, and warrants, using the treasury stock method, and
convertible securities, using the if-converted method. In computing diluted EPS,
the average stock price for the period is used in determining the number of
shares assumed to be purchased from the exercise of stock options or warrants.
Diluted EPS excludes all dilutive potential shares if their effect is
anti-dilutive. LKA had net losses as of December 31, 2008 and 2007, so the
diluted EPS excluded all dilutive potential shares in the diluted EPS because
there effect is anti-dilutive.  c. Exploration Costs  Costs related to locating and evaluating mineral and ore deposits,
as well as determining the economic mineability of such deposits are expensed as
incurred.  d. Asset Retirement Obligations  On January 1, 2003, LKA adopted SFAS No. 143, Accounting for
Asset Retirement Obligations (SFAS 143).  SFAS 143 requires legal
obligations associated with the retirement of long-lived assets to be recognized
at fair value at the time the obligations are incurred.  Upon initial
recognition of a liability, the cost should also be capitalized as part of the
carrying amount of the related long-lived asset. See Note 3.     25   LKA INTERNATIONAL, INC. Notes to the
Consolidated Financial Statements December 31,
2008  NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued)  e. Income Taxes  LKA files income tax returns in the U.S. federal jurisdiction, and
the state of Colorado. LKA adopted the provisions of FASB Interpretation No. 48,
Accounting for Uncertainty in Income Taxes, on January 1, 2007. LKAs policy is to recognize interest accrued related to
unrecognized tax benefits in interest expense and penalties in operating
expenses. Deferred taxes are provided on a liability method whereby deferred
tax assets are recognized for deductible temporary differences and operating
loss and tax credit carryforwards and deferred tax liabilities are recognized
for taxable temporary differences. Temporary differences are the differences
between the reported amounts of assets and liabilities and their tax bases.
 Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or all of
the deferred tax assets will not be realized.  Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates on the
date of enactment.  The provision for income taxes for the years ended December 31,
2008 and 2007 consist of the following:  2008
2007DeferredFederal
$
212,610
$
(161,296)State

-

(27,798)CurrentFederal

-

(179,772)State

-

(31,734)Total provision
for income taxes
$
212,610
$
(400,600)  Net deferred tax assets consist of the following components as of
December 31, 2008 and 2007:  2008
2007Deferred tax assets:Net operating loss carry forward
$
237,978
$
159,623Accrued expenses

22,844

23,168Allowance for bad debts

-

33,721Depreciation

2,488

(3,863)Valuation allowance

(263,310)

-Net
deferred tax asset
$
-
$
212,649     26   LKA INTERNATIONAL, INC. Notes to the
Consolidated Financial Statements December 31,
2008 and 2007  NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued)  e. Income Taxes (Continued)  The
federal income tax provision differs from the amount of income tax determined by
applying the U.S. federal income tax rate of 34% to pretax income from
continuing operations for the years ended December 31, 2008 and 2007 due to the
following:  2008
2007Pre-tax
book income (loss)
$
(68,268)
$
(668,400)Meals
and entertainment

1,364

1,230Unrealized loss

22,294

45,375Stock
for services

-

37,400Options
issued for services

-

141,135Related
party accruals

(25,644)

4,593Penalties and other

146

218Depreciation

(731)

(370)Accretion

873

585Allowance for doubtful accounts

(33,721)

33,721Net
operating loss carry forward

(159,623)

159,623Net
operating loss carry back

-

244,890Valuation allowance

263,310

-Write
off of prior deferred tax asset

212,610

-Federal Income Tax
$
212,610
$
-  LKA
had net operating losses of approximately $700,000 that expire 20 years from
when incurred.  Due to the change in ownership provisions of the Tax Reform
Act of 1986, net operating loss carryforwards for Federal income tax reporting
purposes are subject to annual limitations.  Should a change in ownership
occur, net operating loss carryforwards may be limited as to use in future
years.  f. Cash Equivalents  LKA considers all highly liquid investments with maturities of
three months or less when purchased to be cash equivalents.  g. Principles of Consolidation  The consolidated financial statements include those of LKA
International, Inc., a Delaware corporation and its wholly-owned subsidiary (LKA
International, Inc.), a Nevada corporation.  All significant intercompany
accounts and transactions have been eliminated.  h. Use of Estimates  The preparation of financial statements 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 revenues and expenses
during the reporting period.  Actual results could differ from those
estimates.      27   LKA INTERNATIONAL, INC. Notes to the
Consolidated Financial Statements December 31,
2008 and 2007   NOTE
1 - ORGANIZATION
AND SIGNIFICANT ACCOUNTING POLICIES (Continued)  i. Revenue Recognition Policy  Revenue from the lease of property is recognized when all rights
to the property have been delivered, obligations of LKA have been fulfilled and
amounts due under the lease are deemed collectible.  Royalty revenue is recognized by LKA at the time the
Licensee/Operator of LKAs mineral properties has delivered ore and or
concentrates to the buyer and receives notice of a final sale/settlement and is
entitled to payment.  j. Securities and Investments  LKA applies the provisions of SFAS No. 115, Accounting for Certain
Investments in Debt and Equity Securities (SFAS 115), regarding marketable
securities. LKA invests in securities that are intended to be bought and held
principally for the purpose of selling them in the near term, and as a result,
classifies such investments as trading securities.  Trading securities are
recorded at fair value on the balance sheet with changes in fair value being
reflected as unrealized gains or losses in the current period.  In
addition, and in accordance with the provisions of SFAS 115, LKA also classifies
the cash flows from purchases, sales, and maturities of trading securities as
cash flows from operating activities.  k. Allowance
for Doubtful Accounts  The allowance for doubtful accounts is based on LKAs assessment
of the collectability of payments on accounts, notes and accrued interest
receivable. This assessment requires judgment regarding the ability of customers
to pay the amounts owed to LKA.  l. Stock-Based
Compensation  LKA
records stock-based compensation in accordance with SFAS No. 123(R) Share Based
Payments (SFAS 123(R)), using the fair value method. All transactions in which
goods or services are the consideration received for the issuance of equity
instruments are accounted for based on the fair value of the consideration
received or the fair value of the equity instrument issued, whichever is more
reliably measurable. Equity instruments issued to employees and the cost of the
services received as consideration are measured and recognized based on the fair
value of the equity instruments issued.  m. Fair Value of Financial Instruments  Our financial instruments consist of cash and cash equivalents,
accounts payable and notes payable.  The carrying amounts of cash and
cash equivalents, accounts payable and notes payable approximate fair value due
to the highly liquid nature of these short-term instruments.  In September 2006, the FASB issued SFAS 157, Fair Value
Measurements, as amended in February 2008 by FASB Staff Position (FSP) FAS
157-2, Effective Date of FASB Statement No. 157.  SFAS 157 defines fair
value, establishes a framework for measuring fair value and expands disclosures
about fair value measurements.    SFAS 157 also established a
fair value hierarchy that prioritizes the use of inputs used in valuation
techniques into the following three levels:  Level 1quoted prices in active markets for identical assets and
liabilities.   28    LKA INTERNATIONAL, INC. Notes to the
Consolidated Financial Statements December 31,
2008 and 2007  Level 2observable inputs other than quoted prices in active
markets for identical assets and liabilities.  Level 3unobservable inputs.  The adoption of FAS 157 did not have an effect on LKAs financial
condition or results of operations, but SFAS 157 introduced new disclosures
about how LKA values certain assets and liabilities. Much of the disclosure is
focused on the inputs used to measure fair value, As required by SFAS 157,
financial assets and liabilities are classified based on the lowest level of
input that is significant to the fair value measurement. LKAs assessment of the
significance of a particular input to the fair value measurement requires
judgment and may affect the valuation of the fair value of assets and
liabilities and their placement within the fair value hierarchy levels.
Following are the major categories of assets and liabilities measured at fair
value on a recurring basis as of December 31, 2008, using quoted prices in
active markets for identical assets (Level 1); significant other observable
inputs (Level 2); and significant unobservable inputs (Level 3):  Fair
Value Measurements at December 31, 2008 UsingLevel
1


Level
2


Level
3


TotalMarketable Securities

$
172,072


$
-


$
-


$
172,072Total

$
172,072


$
-


$
-


$
172,072  FSP FAS 157-2 defers the effective date of SFAS 157 for all
nonfinancial assets and liabilities, except those items recognized or disclosed
at fair value on an annual or more frequently recurring basis, until January 1,
2009. As such, LKA partially adopted the provisions of SFAS 157 effective
January 1, 2008.  The partial adoption of this statement did not have a
material impact on LKAs financial statements.  LKA expects to adopt the
remaining provisions of SFAS 157 beginning in 2009.   LKA does not
expect this adoption to have a material impact on its financial statements.   29   LKA INTERNATIONAL, INC. Notes to the
Consolidated Financial Statements December 31,
2008 and 2007   NOTE
1 - ORGANIZATION
AND SIGNIFICANT ACCOUNTING POLICIES  n. New Accounting Pronouncements  In December 2007, the FASB issued SFAS No. 141(R),
Business Combinations (SFAS No. 141(R)). SFAS No. 141(R)
applies to all transactions or other events in which an entity obtains control
of one or more businesses. SFAS No. 141(R) establishes how the acquirer of
a business should recognize, measure and disclose in its financial statements
the identifiable assets and goodwill acquired, the liabilities assumed and any
noncontrolling interest in the acquired business. SFAS No. 141(R) is
applied prospectively for all business combinations with an acquisition date on
or after the beginning of the first annual reporting period beginning on or
after December 15, 2008, with early application prohibited. SFAS
No. 141(R) did not have an impact on LKAs historical financial statements
and will be applied to business combinations completed, if any, on or after
January 1, 2009.  In December 2007, the FASB issued SFAS No. 160,
Noncontrolling Interests in Consolidated Financial Statementsan amendment of
ARB No. 51 (SFAS No. 160). SFAS No. 160 establishes
accounting and reporting standards for the noncontrolling interest in a
subsidiary and for the deconsolidation of a subsidiary. SFAS No. 160
requires entities to report noncontrolling interests as a separate component of
shareholders equity in the consolidated financial statements. The amount of
earnings attributable to the parent and to the noncontrolling interests should
be clearly identified and presented on the face of the consolidated statements
of operations. Additionally, SFAS No. 160 requires any changes in a
parents ownership interest of its subsidiary, while retaining its control, to
be accounted for as equity transactions. SFAS No. 160 is effective for
fiscal years beginning on or after December 15, 2008 and interim periods
within those fiscal years. The adoption of SFAS No. 160 is not expected to
have a material impact on LKAs financial statements.  In March 2008, the FASB issued SFAS No. 161,
Disclosures about Derivative Instruments and Hedging Activitiesan amendment of
FASB Statement No. 133 (SFAS No. 161). SFAS No. 161 requires
that objectives for using derivative instruments be disclosed in terms of
underlying risk and accounting designation. This disclosure better conveys the
purpose of derivative use in terms of the risks that the entity is intending to
manage. SFAS No. 161 is effective for fiscal years and interim periods
beginning after November 15, 2008. The adoption of SFAS No. 161 is not
expected to have a material impact on LKAs financial statements.  In May of 2008, the FASB issued Statement No. 162, The Hierarchy
of Generally Accepted Accounting Principles (SFAS No. 162).SFAS
No. 162 identifies literature established by the FASB as the source for
accounting principles to be applied by entities which prepare financial
statements presented in conformity with generally accepted accounting principles
(GAAP) in the United States.  This statement is effective 60 days following
approval by the SEC of the Public Company Accounting Oversight Board amendments
to AU Section 411, The Meaning of Present Fairly in Conformity With Generally
Accepted Accounting Principles. This statement will require no
changes in LKAs financial reporting practices.       30   LKA INTERNATIONAL, INC. Notes to the
Consolidated Financial Statements December 31,
2008 and 2007  NOTE
1 - ORGANIZATION
AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)  n. New Accounting Pronouncements (Continued)  In May of 2008 the FASB issued Statement No. 163, Accounting for
Financial Guarantee Insurance  an interpretation of FASB Statement No. 60,
Accounting and Reporting by Insurance Enterprises (SFAS No. 163).SFAS No. 163 requires that an insurance enterprise recognize a claim
liability prior to an event of default (insured event) when there is evidence
that credit deterioration has occurred in an insured financial obligation.
 This statement also clarifies how Statement 60 applies to financial
guarantee insurance contracts.  This statement is effective for fiscal
years beginning after December 15, 2008.  The adoption of SFAS No. 163
is not expected to have a material impact on LKAs financial statements.  In June 2008, the FASB Emerging Issues Task Force (EITF) reached a
consensus on EITF Issue No. 07-5, "Determining Whether an Instrument (or
Embedded Feature) is Indexed to an Entity's Own Stock" (EITF 07-5). EITF 07-5
will be effective for fiscal years beginning after December 15, 2008. The
adoption of EITF 07-5 is not expected to have a material impact on LKAs
financial statements.  m. Reclassification of Prior Period Balances  Certain amounts in prior periods have been reclassified to conform
with the report classifications of the year ended December 31, 2008, with no
effect on previously reported net income or stockholders equity.  NOTE 2 - FIXED ASSETS  Fixed assets and depreciation for the period are as follows:  December 31,2008

2007Fixed
assets:Land
$
376,442

$
376,442Mining
claims

12,137


12,137Automobile

66,923


66,923Construction work-in process

58,745


56,922Unamortized asset retirement obligation (Note 3)

98,027


-Less:
Accumulated depreciation

(100,450)


(80,600)Total fixed assets
$
511,824

$
431,824   Depreciation expense for the years ended December 31, 2008 and
2007 was $19,850 and $20,830, respectively.   31   LKA INTERNATIONAL, INC. Notes to the
Consolidated Financial Statements December 31,
2008 and 2007  NOTE 3 - ASSET RETIREMENT OBLIGATIONS  SFAS 143 addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated retirement costs.  LKAs asset retirement obligations (AROs)
consist of estimated costs related to the reclamation of the Golden Wonder and
Ute Ule mines in correspondence with federal and state reclamation laws as
defined by each applicable mine permit.  The obligation and corresponding
asset have been recognized in the period in which the liability was incurred.
 Changes in estimates could occur due to mine plan revisions, changes in
estimated costs, and changes in the timing of the performance of reclamation
activities.  LKA calculated its initial estimated AROs for final reclamation
and mine closure based upon anticipated amounts and timing of future cash
expenditures for a third party to perform the required work.  Spending
estimates have been escalated for inflation at 1.93% per annum, then discounted
at the credit-adjusted risk-free rate of 4.09% per annum at September 18, 2003.
 LKA recorded an ARO asset associated with the liability and amortizes the
asset over its expected life using the strait-line depreciation method.
 The ARO liability is being accreted to the projected spending date.  During the fourth quarter of 2004, LKA revised its assessment of
the anticipated productivity of the Ute Ule mine, and determined that the mine
would not be subject to further development or mining activity. As a result, the
entire ARO asset associated with the Ute Ule mine was written off.  On October 9, 2008, LKA received approval of its plan to add 6.4
acres to its mining permit with the State of Colorado on the Golden Wonder mine.
 As a result, LKA has recorded an additional asset retirement obligation
totaling $41,106, which consists of estimated additional costs related to the
reclamation of the Golden Wonder mine in correspondence with federal and state
reclamation laws as defined by each applicable mine permit.  The Company calculated its estimated ARO for additional final
reclamation and mine closure costs based upon anticipated amounts and timing of
future cash expenditures for a third party to perform the required work.
 Spending estimates were escalated for inflation at 2.29% per annum and
discounted at a credit-adjusted risk-free rate of 7.54% per annum. The Company
recorded an ARO asset associated with the liability and will amortize the asset
over its expected life of seven years using the straight-line depreciation
method.  The ARO liability addition will be accreted based on the initial
projected reclamation completion date of September 30, 2016.  Changes in
estimates could occur due to mine plan revisions, changes in estimated costs and
changes in the timing of the performance of anticipated reclamation
activities.  Accretion expense for the years ended December 31, 2008 and 2007
was $2,567 and $1,722, respectively.    32   LKA INTERNATIONAL, INC. Notes to the
Consolidated Financial Statements December 31,
2008 and 2007  NOTE 4 - RELATED PARTY TRANSACTIONS  Notes Payable  LKA owes Cognitive Associates Limited Partnership $56,828 in
unpaid principal from a note dated December 31, 1986.  The note is
unsecured, due upon demand, and accrues interest at 10% per annum.  No
payments have been made during the year ended December 31, 2008.  Accrued
interest related to this note totaled $59,288 as of December 31, 2008.  LKA owes Cognitive Intelligence Limited Partnership $5,975 in
unpaid principal from a note dated October 1, 1987.  The note is unsecured,
due upon demand, and accrues interest at 10% per annum.  No payments have
been made during the year ended December 31, 2008.  Accrued interest
related to this note totaled $7,901 as of December 31, 2008.  Office Space  LKA pays a company owned by an officer and shareholder $1,500 per
month for office rent and expenses under a month to month oral arrangement.
 The affiliated Company, (Abraham & Co., Inc. a NASD member and
registered investment advisor) also executes LKAs securities transactions and
manages its investment portfolio.  Notes Receivable  From 2002 to 2007, the Company advanced $64,526 to various parties
in the form of legal payments associated with activities unrelated to the
operation of the company. The counterparties are considered to be affiliates of
LKA as they are represented, collectively, by an officer of LKA. These advances
are due upon demand and non-interest bearing.  During the fourth quarter of
2008, LKA determined the notes to be uncollectible and wrote off the notes,
resulting in the recording of $32,263 in bad debt expense during the year ended
December 31, 2008.  Stock Options and Bonus  On December 31, 2003, LKAs board of directors authorized the
issuance of options to purchase 2,000,000 shares of LKAs common stock to an
officer and shareholder for services previously rendered. The shares were
granted in two tranches of 1,000,000 options on December 31, 2004, and 1,000,000
options on December 31, 2005. The 2004 and 2005 grants had an exercise price of
$0.25 and $0.55 per share, respectively, and have a three-year term from the
date of grant. See Note 9.  During the year ended December 31, 2007, LKA awarded $50,000 in
bonuses to an officer and shareholder related to the execution of the option
agreement to grant Richmont Mines a 50% joint venture interest in the Golden
Wonder Mine (see Note 10).  On December 28, 2007, LKAs board of directors authorized the
issuance of options to purchase 1,000,000 shares of LKAs common stock to an
officer and shareholder for services previously rendered. The options have an
exercise price of $0.40 per share, and have a five-year term from the date of
grant. See Note 9.  33   LKA INTERNATIONAL, INC. Notes to the
Consolidated Financial Statements December 31,
2008 and 2007  NOTE 5 -
NOTES RECEIVABLE  In October 2003, LKA loaned $99,997 to seven individuals.
 These notes accrued interest at 8.5% per annum and were due in full by
December 15, 2004.  On December 15, 2004, all seven of the notes receivable
were exchanged for new notes totaling $110,164.  The new notes extended the
term of the previous notes through December 15, 2005 and had face values
equivalent to the full value of all prior notes plus all associated accrued
interest collectively totaling $119,938.  On March 1, 2006, all seven of
the notes were again exchanged for new notes.  The new notes extended the
term of the previous notes through March 1, 2007, and had face values equivalent
to the full value of all prior notes plus all associated accrued interest.
 On May 16, 2006, one of the notes receivable was paid in full in the
amount of $5,785, including accrued interest.  All of the replacement notes are secured by common stock owned by
the president of LKA, accrue interest at 8.5% per annum, and were due in full on
March 1, 2007.  LKA verbally agreed to extend the due date of these notes
past December 31, 2007 and no repayments have yet been received.  As such,
during the fourth quarter of 2008, LKA determined the notes to be uncollectible
and wrote off the notes and related interest receivable, resulting in the
recording of $74,298 in bad debt expense during the year ended December 31,
2008.  NOTE 6 - NOTIFICATION OF POSSIBLE ENVIRONMENTAL REMEDIATION  During the fall of 2002, the Federal Bureau of Land Management
(the "BLM") advised LKA of its desire to extend to the Ute-Ule Property certain
environmental clean-up activities that it is conducting on neighboring
properties that LKA does not own.  The BLM has commissioned and obtained an engineering evaluation
and cost analysis (EE/CA) report on the Ute-Ule and the neighboring public
lands. The EE/CA, which was released for a 30 day public comment period in
December of 2002, has identified a large volume of mine tailings and metals
loading of shallow ground water, with elevated levels of arsenic, cadmium and
lead being present.  The total clean-up costs on all of these properties
are estimated at approximately $7 million, with the projected clean-up cost of
the Ute-Ule alone estimated at approximately $4,317,000. The BLM has prepared a
written response to the public comments received concerning the EE/CA and is in
the process of selecting an overall site clean-up plan and is determining the
final engineering plans. Once these tasks are completed, the BLM will then enter
into the process of implementing those plans. As of December 31, 2008, LKA and
the BLM remain in the process of discussing and deliberating the reported
environmental impacts as previously reported within the EE/CA. No determination
of an overall site clean-up plan has yet been made by the BLM.  Under the federal Comprehensive Environmental Response,
Compensation and Liability Act (CERCLA), the BLM and EPA may either require a
property owner to perform the necessary cleanup or the agencies may perform the
work and seek recovery of costs against the owner.  The BLM has taken the
position that LKA will be liable for the cleanup on the Ute-Ule property, with
the timing of the cleanup, the ultimate cost, and LKAs share of the total cost,
still to be determined.  The BLM has indicated its willingness to negotiate
a settlement of the matter and LKA intends to vigorously defend itself.
 However, LKA is in the early stages of this process and cannot accurately
predict a range of what the ultimate liability, if any, will be.  34   LKA INTERNATIONAL, INC. Notes to the
Consolidated Financial Statements December 31,
2008 and 2007  NOTE 7 - SETTLEMENT OF LITIGATION  On October 6, 2006, LKA received a letter from counsel for Au
Mining (AUM), lease and operator of the Golden Wonder Mine, and its principals,
demanding immediate payment of $740,000, with interest alleged to be due to them
under the lease agreement with AUM.  The lease agreement with AUM provided
for the payment of $5,000 each to AUMs principals every month for work on the
anticipated lower level development of the Golden Wonder mine until the
commencement of commercial mining thereon.  On or about October 27, 2006, LKA filed a Complaint for
Declaratory Judgment against AUM. It seeks a declaratory judgment that LKA has
no obligation to make payments under the lease agreement because the new
development contemplated thereby has not commenced.  The complaint also
seeks an order requiring AUM to pay LKA's attorneys fees and costs incurred in
connection with the action.  AUM subsequently counterclaimed against LKA, seeking rescission of
the lease agreement or, in the alternative, damages from LKA for breach of the
lease agreement.  The counterclaim sought damages for LKAs alleged failure
to make the $5,000 per month payments and for alleged breach of the duty of good
faith and fair dealing in failing to finance the development of new levels of
the Golden Wonder mine.  On August 24, 2007, LKA entered into a settlement agreement with
AUM. Under the terms of the agreement, AUM agreed to release all rights to the
Golden Wonder Mine and the Ute Ule Mine, including all mining rights thereto,
that it had under the 2003 Lease Agreement between the parties and/or AUM's
option exercise under the parties' 1997 Lease Agreement. LKA agreed to pay to
AUM the sum of $280,000 within 60 days of the date of the agreement, with the
payment of an additional $250,000 payable 12 months from the date of the
agreement. LKA remitted the $280,000 payment to AUM on October 22, 2007.  On August 24, 2007, LKA executed a promissory note evidencing the
remaining obligation of $250,000. The note bore interest at the rate of eight
percent, included a late fee of five percent of the balance due, and had no
prepayment penalty.  During August 2008, Richmont Mines, Inc. paid the
remaining settlement payment of $250,000 principal and $20,000 in interest on
behalf of LKA as part of its Letter Agreement with LKA (see Note 10).  In connection with the agreement, LKA has executed a Royalty
Agreement under which it is to pay to AUM a net smelter royalty of six percent
on all future proceeds received from materials produced from the Golden Wonder
Mine, with all royalty payments to cease once AUM has received total royalty
payments of $12,647,505. The parties have further agreed to dismiss with
prejudice all claims and counterclaims made in Case No. 2006 CV 05, filed in the
District Court of Colorado, Hinsdale County. In addition, AUM has agreed to
grant LKA subterranean access to the Golden Wonder Mine through its Red Cloud
patented mining claim for an annual fee of $1,000 during the years that such
easement is used.  35   LKA INTERNATIONAL, INC. Notes to the
Consolidated Financial Statements December 31,
2008 and 2007  NOTE 8 - COMMITMENTS AND CONTINGENCIES  Except as discussed above in Notes 6 an 7, LKA is not the subject
of any pending legal proceedings and, to the knowledge of management; no
proceedings are presently contemplated against LKA by any federal, state or
local governmental agency.  NOTE 9 - STOCK-BASED COMPENSATION  On December 31, 2004, LKA granted an option to its President to
purchase up to 1,000,000 shares of LKAs common stock at an exercise price of
$0.25 per share, exercisable for three years (the 2004 Options).  These
options expired unexercised on December 31, 2007.  On December 31, 2005, LKA granted an option to its President to
purchase up to 1,000,000 shares of LKAs common stock at an exercise price of
$0.55 per share, exercisable for three years from the date of grant (the 2005
Options).  These options expired unexercised on December 31, 2008.  On December 28, 2007, LKA granted an option to its President to
purchase 1,000,000 shares of LKAs common stock at an exercise price of $0.40
per share, exercisable for five years from the date of grant (the 2007
Options).  On January 1, 2006, LKA adopted SFAS No. 123(R), requiring
measurement and recognition of expense for all share-based payment awards to
employees and directors based on estimated fair values. SFAS No. 123R supersedes
SFAS No. 123 and APB No. 25. Prior to January 1, 2006, LKA accounted for stock option
plans under the recognition and measurement provisions of APB No. 25 and related
interpretations, as permitted by SFAS No. 123, which did not require
compensation cost be recognized for LKAs stock options provided the option
exercise price was established at 100% (or greater) of the common stock fair
market value on the date of the grant.  Awards granted after January 1,
2006, will be valued at fair value in accordance with the provisions of SFAS No.
123R and recognized on a straight line basis over the service periods of each
award.  Additionally, SFAS  No. 123R  requires companies to
record compensation expense for the unvested portion of previously granted
awards as they continue to vest, as calculated previously and recorded in
accordance with the provisions of SFAS No. 148, Accounting for Stock-Based
Compensation-Transition and Disclosure. There were no unvested amounts
associated with previously issued employee options as of January 1, 2006. As
such, the adoption of this new accounting guidance did not have an impact to
LKAs current or previously reported financial information.  As of January 1, 2006, and until December 28, 2007, LKA had two
employee option awards outstanding, representing a total of 2,000,000 options to
purchase shares of LKAs common stock. LKA estimated the fair values of these
stock option awards using a Black-Scholes option pricing model and the following
assumptions: expected stock price volatility of 110% and 138%, risk-free
interest rates ranging from 3.2% to 4.4%, weighted average expected option lives
of 3 years, and no dividend yield. The Black-Scholes option valuation model was
developed for use in estimating the fair value of traded options that have no
vesting restrictions and that are fully transferable. In addition, option
valuation models require the input of highly subjective assumptions including
expected stock price volatility.  36   LKA INTERNATIONAL, INC. Notes to the
Consolidated Financial Statements December 31,
2008 and 2007  NOTE 9 - STOCK-BASED COMPENSATION (CONTINUED)  On December 28, 2007, LKA issued an additional employee option
award for a total of 1,000,000 options to purchase shares of LKAs common stock.
LKA estimated the fair values of these stock option awards using a Black-Scholes
option pricing model and the following assumptions: expected stock price
volatility of 131%, a risk-free interest rate of 3.52%, a weighted average
expected option life of 5 years, and no dividend yield. The Black-Scholes option
valuation model was developed for use in estimating the fair value of traded
options that have no vesting restrictions and that are fully transferable. In
addition, option valuation models require the input of highly subjective
assumptions including expected stock price volatility. The resulting fair value
estimate, net of tax, totaled $415,092. This amount was recorded as a current
period expense during the fourth quarter of 2007.  The weighted average
intrinsic value of all outstanding options at December 31, 2008 and 2007 was $0
and $56,000, respectively.  The following table summarizes the options outstanding and
associated activity for the years ended December 31, 2008 and 2007:  Number of Options
Weighted Average PriceOptions
outstanding at December 31, 2006

2,000,000
$
0.39Granted

1,000,000

0.40Exercised

-

-Forfeited

(1,000,000)

(0.25)Options
outstanding at December 31, 2007

2,000,000
$
0.48Options
exercisable at December 31, 2007

2,000,000
$
0.48GrantedExercised

-

-Expired

(1,000,000)

(0.55)Options
outstanding at December 31, 2008

1,000,000
$
0.40Options
exercisable at December 31, 2008

1,000,000
$
0.40  NOTE 10 - LETTER AGREEMENT  On December 21, 2007, Richmont Mines, Inc. and LKA entered into a
Letter Agreement, whereby Richmont had an Initial Commitment Period for the
option to acquire a 50% joint venture interest in the Golden Wonder mine. During
this Initial Commitment Period, Richmont was required to invest $3 million in
certain project-related expenditures prior to September 1, 2008.  The
Initial Commitment Period was extended 60 days until November 1, 2008.  On October 22, 2008, upon meeting the agreed upon funding
commitment, Richmont elected not to exercise its option to proceed with future
development of the mine and terminated the Letter Agreement, at which time LKA
recognized direct cash payments totaling $747,216 from Richmont as lease
revenue, including $150,000 of deferred revenue at December 31, 2007.  This
amount was recorded as deferred lease   37   LKA INTERNATIONAL, INC. Notes to the
Consolidated Financial Statements December 31,
2008 and 2007  NOTE 10 - LETTER AGREEMENT (CONTINUED)  revenue until October 2008 when the letter was terminated.
 Included in this amount are expenditures for exploration and development
within the mine as well as approximately $550,000 to, or on behalf of, LKA for
option fees, litigation settlement costs and project-related finders fees.
 During August 2008, Richmont paid the remaining settlement payment of
$250,000 principal and $20,000 in interest on behalf of LKA to Au Mining (AUM),
former lessee and operator of the Golden Wonder Mine.  This amount is
included in the recognized revenue of $747,216 for the year ending December 31,
2008.      38   ITEM
9:  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE  On July 10, 2008, our Board
of Directors resolved to dismiss HJ & Associates, LLC, as our principal
independent accountant and to retain Malone & Bailey, PC, Certified Public
Accountants, of Houston, Texas, as our new principal independent accountant.
 See our 8-K Current Report dated July 10, 2008 and filed with the SEC on
July 11, 2008.  During our two most recent
fiscal years, and through the date of such Current Report, there were no
disagreements between us and HJ & Associates, LLC, whether resolved or not
resolved, on any matter of accounting principles or practice, financial
statement disclosure or auditing scope or procedure, which, if not resolved to
the satisfaction of HJ & Associates, LLC, would have caused it to make a
reference to the subject matter of the disagreement in connection with its
report.  ITEM
9A(T):  CONTROLS AND PROCEDURES  Our management, with the
participation of our principal executive and principal financial officer,
evaluated the effectiveness of our disclosure controls and procedures as of the
end of the period covered by this Annual Report.  Based on that evaluation,
our President and our Treasurer concluded that our disclosure controls and
procedures as of the end of the period covered by the Annual Report were
effective and that the information required to be disclosed by us in reports
filed under the Exchange Act is (i) recorded, processed, summarized and reported
within the time periods specified in the SECs rules and forms and (ii)
accumulated and communicated to our management, including our President and our
Treasurer, as appropriate to allow timely decisions regarding disclosure.
 A controls system cannot provide absolute assurance, however, that the
objectives of the controls system are met, and no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if
any, within a company have been detected.  Managements Annual Report on Internal Control Over Financial
Reporting  Our management is
responsible for establishing and maintaining adequate internal control over
financial reporting (as defined in Rule 13a-15(f) under the Exchange Act).
 Our internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes of accounting
principles generally accepted in the United States.  Because of its inherent
limitations, internal control over financial reporting may not prevent or detect
misstatements. Therefore, even those systems determined to be effective can
provide only reasonable assurance of achieving their control objectives.  Our management, with the
participation of the President and the Treasurer, evaluated the effectiveness of
our internal controls over financial reporting as of December 31, 2008.  In
making this assessment, management used the criteria set forth by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO) in Internal
Control  Integrated Framework.  Based on this evaluation, our management,
with the participation of the President and acting CFO, concluded that, as of
December 31, 2008, our internal controls over financial reporting were
effective.  This Annual Report does not
include an attestation report of our registered public accounting firm regarding
our internal controls over financial reporting.  Managements report was
not subject to attestation by our registered public accounting firm pursuant to
temporary rules of the SEC that permit us to provide only managements report in
this Annual Report.  Changes in
Internal Control Over Financial Reporting  There have
been no changes in internal control over financial reporting.   39   ITEM
9B:  OTHER INFORMATION  None; not
applicable.  PART
III  ITEM 10:
 DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE  Identification of Directors and Executive Officers  The following
table sets forth the names of all current directors and executive officers of
the Company. These persons will serve until the next annual meeting of the
stockholders or until their successors are elected or appointed and qualified,
or their prior resignation or termination.  Name
Positions Held
Date
of Election or Designation
Date
of Termination or ResignationKye A. Abraham
President
Chairman of the
Board
Director
03/88
03/88
03/88
*
*
*Nanette
Abraham
Secretary
1990
*Director
Treasurer
1990
12/02
*
*  · These
persons presently serve in the capacities indicated.  Background and Business
Experience  Kye
Abraham, President, Chairman of the Board Mr. Abraham is 50 years old. He has
been the President of LKA since 1988. Mr. Abraham is also the President,
Chairman of the Board and sole shareholder of Abraham & Co., Inc., a
registered NASD broker/dealer. Mr. Abraham is also the Managing Partner of
Caldera. Nanette
Abraham, Secretary/Treasurer and Director. Ms. Abraham, age 51, and, until
recently was  employed as a Research Associate by the Russell Investment
Group Company, a worldwide financial consulting company, since 1991. . She has
been the Secretary and Director of LKA for over 10 years, and was appointed to
the office of Treasurer in December, 2002.  Significant
Employees  LKA has no
employees who are not executive officers, but who are expected to make a
significant contribution to its business.  Family
Relationships  Our President, Kye Abraham,
is the husband of Nanette Abraham, who is our Secretary/Treasurer.  Involvement in Other
Public Companies Registered Under the Exchange Act  None; not applicable.  Involvement in Certain
Legal Proceedings  During the past five years,
no present or former director, executive officer or person nominated to become a
director or an executive officer of ours:   40   (1)
was a general partner or executive officer of any business against which any
bankruptcy petition was filed, either at the time of the bankruptcy or two years
prior to that time;  (2) was convicted in a
criminal proceeding or named subject to a pending criminal proceeding (excluding
traffic violations and other minor offenses);  (3) was subject to any
order, judgment or decree, not subsequently reversed, suspended or vacated, of
any court of competent jurisdiction, permanently or temporarily enjoining,
barring, suspending or otherwise limiting his involvement in any type of
business, securities or banking activities; or  (4) was found by a court of
competent jurisdiction (in a civil action), the SEC or the Commodity Futures
Trading Commission to have violated a federal or state securities or commodities
law, and the judgment has not been reversed, suspended or vacated.  Promoters and control
person.  See the heading
Transactions with Related Persons below.  Section 16(a) Beneficial
Ownership Reporting Compliance  Our shares of common stock
are registered under the Exchange Act, and therefore our officers, directors and
holders of more than 10% of our outstanding shares are subject to the provisions
of Section 16(a) which requires them to file with the SEC initial reports of
ownership and reports of changes in ownership of common stock and our other
equity securities.  Officers, directors and greater than 10% beneficial
owners are required by SEC regulations to furnish us with copies of all Section
16(a) reports they file.  Based solely upon review of the copies of such
forms furnished to us during the fiscal year ended December 31, 2008, the
following were filed timely:  Name
Type
FiledKye A. Abraham
Form 4
March 31,
2008Kye A. Abraham
Form 4
June 12, 2008
(1)  (1)
 On March 17, 2009, Mr. Abraham filed an amendment to this Form 4 in order
to correct an inadvertent calculation error in the initial filing.  On June 10, 2008, Mr.
Abraham filed a Form 4 with respect to three transactions that occurred on June
3, 2008.  Based solely on a review of such Form, the Company believes that
this Form was not timely filed.  Code of Ethics  We have adopted a Code of
Conduct for our President and Secretary/Treasurer. A copy of the Code of Conduct
was attached as Exhibit 14 to our Annual Report on Form 10-KSB for the calendar
year ended December 31, 2003. See Part IV, Item 15 of this Report.  Corporate
Governance  Nominating
Committee  We have not established a
Nominating Committee because we believe that our Board of Directors is able to
effectively manage the issues normally considered by a Nominating Committee.  Audit Committee  We have not adopted an
audit committee separate from our Board of Directors because the Board of
Directors consists of only Mr. and Mrs. Abraham.   41   ITEM
11:  EXECUTIVE COMPENSATION  The following
table sets forth the aggregate compensation paid by the Company for services
rendered during the periods indicated:  SUMMARY
COMPENSATION TABLE  Name and Principal
Position
(a)
Year



(b)
Salary
($)


(c)
Bonus
($)


(d)
Stock Awards
($)

(e)
Option Awards
($)

(f)
Non-Equity Incentive
Plan Compensation
($)
(g)
Nonqualified
 Deferred Compensation
($)
(h)
All Other
Compensation
($)

(i)
Total
Earnings
($)

(j)Kye Abraham,
President, Director
12/31/08
12/31/07
12/31/06
$138,000
$127,500
$127,500
$0
$50,000
$0
0
0
0
0
(1)
0
0
0
0
0
0
0
0
0
0
$127,500 $177,500
$127,500Nannette Abraham
Sec./Treas
Director
12/31/08
12/31/07
12/31/06
$12,000
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0 (1)
 On December 28, 2007, our Board of Directors resolved to grant to Mr.
Abraham an option to purchase up to 1,000,000 unregistered and restricted
shares of our common stock at a price of $0.40 per share, exercisable for five
years. Beginning
in October, 2006, Kye Abraham began receiving a salary of $12,500 per month for
his services to LKA. Prior to that, his salary was $10,000 per month. We do not
have any employment agreements with Mr. Abraham or with any other party.   42   Outstanding Equity Awards at Fiscal Year End  Option
Awards
                     Stock
Awards ________________________________________________________________________ Name
Number of Securities
Underlying Unexercised Options (#) Exercisable
Number of Securities
underlying Unexercised Options (#) Unexercisable
Equity Incentive Plan
Awards Number of Securities Underlying Unexercised Unearned Options
(#)
Option Exercise
Price
($)
Option Expiration
Date
Number of Shares or
Units of Stock That Have Not Vested (#)
Market Value of
Shares or Units of Stock That Have Not Vested
($)
Equity Incentive Plan
Awards: Number of Unearned Shares, Vested Units or Other Rights That Have
Not Vested (#)
Equity Incentive Plan
Awards: Market or Payout Value of Unearned Shares, Units or Other Rights
That Have Not Vested ($)(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)Kye Abraham
1,000,000
0
0
(1)
(1)
0
0
0
0Nanette
Abraham
0
0
0
0
0
0
0
0
0  (1)
 Effective as of December 31, 2004, and December 31, 2005, respectively,
the Company granted to Mr. Abraham options to purchase: (i) up to 1,000,000
unregistered and restricted shares of common stock at a price of $0.25 per
share; and (ii) up to 1,000,000 unregistered and restricted shares of common
stock at a price of $0.55 per share. All of these options were exercisable for a
period of three years, and have expired.  On December 28, 2007, our Board
of Directors resolved to grant to Mr. Abraham an option to purchase up to
1,000,000 unregistered and restricted shares of our common stock at a price
of $0.40 per share, exercisable for five years.  Compensation of
Directors  Name
Fees Earned or Paid
in Cash ($)
Stock Awards
($)
Option Awards
($)
Non-Equity Incentive
Plan Compensation ($)
Nonqualified Deferred
Compensation Earnings ($)
All Other
Compensation ($)
Total ($)(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)Kye Abraham
0
0
0
0
0
0
0Nanette
Abraham
0
0
0
0
0
0
0   43   ITEM
12:  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS  Security Ownership of
Certain Beneficial Owners  The following
tables set forth the share holdings of those persons who were principal
shareholders of the Companys common stock .  Ownership
of Principal Shareholders Title Of Class
Name and Address of
Beneficial Owner
Amount and Nature of
Beneficial Owner
Percent of
ClassCommon Stock
Kye Abraham
8,698,577(1)
63.0%(2) (1)
Consists of 1,189,535 shares that are held directly by Mr. And Ms. Abraham and
6,434,042 shares that are owned by Caldera Partners Limited, of which Mr.
Abraham is the Managing Director and 75,000 shares that are owned by Abraham
& Co., which is controlled by Mr. Abraham.   This figure also includes
1,000,000 shares underlying options to purchase shares of our common stock at
$0.40 per share. (2)
Based on a total of 13,803,251 shares outstanding, which includes 1,000,000
shares underlying options to purchase our common stock at $0.40 per share.  Security Ownership of Management  The following
table sets forth the share holdings of the Companys directors and executive
officers as of April 11, 2008:  Ownership
of Officers and Directors Title of Class
Name and
Address of Beneficial Owner
Amount and Nature of
Beneficial Owner
Percent of
ClassCommon Stock
Kye Abraham
8,698,577(1)
63.0%
(2)Common Stock
Nanette
Abraham
(3)  (1)
Consists of 1,189,535 shares that are held directly by Mr. And Ms. Abraham and
6,434,042 shares that are owned by Caldera Partners Limited, of which Mr.
Abraham is the Managing Director and 75,000 shares that are owned by Abraham
& Co., which is controlled by Mr. Abraham.   This figure also
includes 1,000,000 shares underlying options to purchase shares of our common
stock at $0.40 per share. (2)
Based on a total of 13,803,251 shares outstanding, which includes 1,000,000
shares underlying options to purchase our common stock at $0.40 per share. (3)
As the spouse of Kye A. Abraham, Nanette Abraham may be deemed to beneficially
own all 8,698,577 shares that Mr. Abraham beneficially owns.  Changes in
Control  To the knowledge of
management, there are no present arrangements or pledges of LKA's securities
which may result in a change in its control.   44   Securities
Authorized for Issuance under Equity Compensation Plans  Equity Compensation Plan
Information  Plan Category
Number of Securities
to be issued upon exercise of outstanding options, warrants and
rights
Weighted-average
exercise price of outstanding options, warrants and rights
Number of securities
remaining available for future issuance under equity compensation plans
excluding securities reflected in column (a)(a)
(b)
(c)Equity compensation
plans approved by security holders
-0-
-0-
-0-Equity compensation
plans not approved by security holders
1,000,000
$0.40
-0-Total
1,000,000
$0.40
-0-  ITEM 13:
 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTORS
INDEPENDENCE  Transactions with Related Persons  The Company
owes Cognitive Associates Limited Partnership $56,828 in unpaid principal from a
note dated December 31, 1986.  The note is unsecured, due upon demand, and
accrues interest at 10% per annum.  No payments have been made during the
year ended December 31, 2008.  Accrued interest related to this note
totaled $59,288 as of December 31, 2008.  The Company
owes Cognitive Intelligence Limited Partnership $5,975 in unpaid principal from
a note dated October 1, 1987.  The note is unsecured, due upon demand, and
accrues interest at 10% per annum.  No payments have been made during the
year ended December 31, 2008.  Accrued interest related to this note
totaled $7,901 as of December 31, 2008.  The Company
pays a company owned by Mr. Abraham $1,500 per month for office rent and
expenses.  The affiliated Company, (Abraham & Co., Inc. a NASD member
and registered investment advisor) also executes the Companys securities
transactions and manages its investment portfolio.  From 2002 to
2007, the Company advanced $64,526 to various parties in the form of legal
payments associated with activities unrelated to the operation of the Company.
The counterparties are considered to be affiliates of the Company as they are
represented, collectively, by an officer of the Company. These advances are due
upon demand and non-interest bearing. During the fourth quarter of 2008, the
Company determined these notes to be uncollectible and wrote off the notes,
resulting in the recording of $32,263 in bad debt expense during the year ended
December 31, 2008.  On December
31, 2003, the Companys board of directors authorized the issuance of options to
purchase 2,000,000 shares of the Companys common stock to Mr. Abraham for
services previously rendered. The options were granted in two tranches of
1,000,000 options on December 31, 2004, and 1,000,000 options on December 31,
2005. The 2004 and 2005 grants had an exercise price of $0.25 and $0.55 per
share, respectively, and had a three-year term from the date of grant.  All
of these options have expired.  During the
year ended December 31, 2007, the Company awarded $50,000 in bonuses to Mr.
Abraham in connection with the execution of the letter agreement to grant
Richmont Mines an option to purchase a 50% joint venture interest in the Golden
Wonder Mine.   45   On December 28, 2007, the Companys board of directors authorized
the issuance of options to purchase 1,000,000 shares of the Companys common
stock to Mr. Abraham for services previously rendered. The options have an
exercise price of $0.40 per share, and have a five-year term from the date of
grant.  Promoters and Certain
Control Persons  See the heading
Transactions with Related Persons above.  Parents of the Smaller
Reporting Company  LKA has no parents, except
to the extent that Mr. Abraham may be deemed to be its parent by virtue of his
beneficial ownership of approximately 60% of its currently outstanding
shares.  Director
Independence  We do not have any
independent directors serving on our Board of Directors.  ITEM 14:
 PRINCIPAL ACCOUNTANT FEES AND SERVICES  The following is a summary
of the fees billed to us by our principal accountants during the fiscal years
ended December 31, 2008, and 2007:  Fee
Category

2008

2007Audit Fees
$
15,000

$
26,100Audit-related
Fees
$
0

$
0Tax Fees
$
0

$
1,900All Other Fees
$
0

$
0Total Fees
$
15,000

$
28,000  Audit Fees
-Consists of fees for professional services rendered by our principal
accountants for the audit of our annual financial statements and review of the
financial statements included in our Forms 10-Q or services that are normally
provided by our principal accountants in connection with statutory and
regulatory filings or engagements.  Audit-related Fees - Consists of fees for assurance and
related services by our principal accountants that are reasonably related to the
performance of the audit or review of our financial statements and are not
reported under Audit fees.  Tax Fees
- Consists of fees for professional services rendered by our principal
accountants for tax compliance, tax advice and tax planning.  All Other
Fees - Consists of fees for products and services provided by our principal
accountants, other than the services reported under Audit fees, Audit-related
fees, and Tax fees above.  Policy on Audit
Committee Pre-Approval of Audit and Permissible Non-Audit Services of
Independent Auditors  We have not adopted an
Audit Committee; therefore, there is no Audit Committee policy in this regard.
However, we do require approval in advance of the performance of professional
services to be provided to us by our principal accountant. Additionally, all
services rendered by our principal accountant are performed pursuant to a
written engagement letter between us and the principal accountant.   46   PART IV  ITEM 15:
 EXHIBITS AND FINANCIAL STATEMENT SCHEDULES  (a)(1)(2)    Financial
Statements.  See the audited financial statements for the year ended
December 31, 2008 contained in Item 8 above which are incorporated herein by
this reference.  (a)(3)         Exhibits.
 The following exhibits are filed as part of this Annual Report:  Exhibits  Exhibit Number
Description
(1)3.1
Certificate of
Incorporation (2)3.2
By-laws
 (2)10.1
Notice of Termination
from Richmont Mines, Inc. (3)14
Code of Conduct
(4)31.1
302 Certification of
Kye Abraham31.2
302 Certification of
Nanette Abraham32
906
Certification DOCUMENTS
INCORPORATED BY REFERENCE (1)
 Summaries of all exhibits contained within this Report are modified in
their entirety by reference to these exhibits. (2)
 Incorporated by reference to our Annual Report on Form 10-KSB for the
calendar year ended December 31, 2001, filed with the SEC on February 11,
2003. (3)
 Incorporated by reference to our Current Report on Form 8-K dated October
22, 2008, filed with the SEC on October 24, 2008. (4)
 Incorporated by reference to our Annual Report on Form 10-KSB for the
calendar year ended December 31, 2003, filed with the SEC on March 29, 2004.  SIGNATURES  Pursuant to
the requirements of Section 13 or 15(d) 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.  LKA
INTERNATIONAL, INC.  Date:
March 27,
2009

By:
/s/Kye
AbrahamKye Abraham,
President, Chairman of the Board and Director   In accordance
with the Securities Exchange Act, this Report has been signed below by the
following persons on behalf of the Company and in the capacities and on the
dates indicated:  LKA
INTERNATIONAL, INC.  Date:
March 27,
2009

By:
/s/Kye
AbrahamKye Abraham,
President, Chairman of the Board and Director  47    Date:
March 27,
2009

By:
/s/Nanette
AbrahamNanette Abraham,
Secretary, Treasurer and Director   48