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SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
    FORM 10-QSB     þ
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2005 OR  o
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 000-32429 GOLDSPRING, INC.  FLORIDA
(State or other jurisdiction of
incorporation or organization)
    
    7389
(Primary Standard Industrial
Classification Code Number)
    
    65-0955118
(I.R.S. Employer
Identification No.)
 8585 E. Hartford Drive, Suite 400
Scottsdale, Arizona 85255
(480) 505-4040
(Address, including zip code, and telephone number,
including area code, of registrants principal executive offices) Check whether the issuer (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 issuer was
required to file such reports), and (2)has been subject to such filing requirements for the past 90
days.
Yes þ No o Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B
contained in this form, and no disclosure will be contained, to the best of the issuers knowledge,
in definitive proxy or information statements incorporated by reference in Part III of this Form
10-QSB or any amendment to this Form 10-QSB o State the number of shares outstanding of each of the issuers classes of common equity, as of the
last practicable date: 234,567,757 shares of Common Stock, $0.000666 Par Value, as of March 31,
2005.




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TABLE OF CONTENTS PART I  FINANCIAL INFORMATIONITEM 1. UNAUDITED FINANCIAL STATEMENTS
    
    
    F-1Consolidated Balance Sheet as of March 31, 2005 (Unaudited)
    
    
    F-1Consolidated Statement of Operations (Unaudited)
    
    
    F-3Consolidated Statement of Cash Flows (Unaudited)
    
    
    F-4Notes to Financial Statements
    
    
    F-6-F-7ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
    
    
    1ITEM 3. CONTROLS AND PROCEDURES
    
    
    6PART II  OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGS
    
    
    6ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    9ITEM 3. DEFAULTS UPON SENIOR SECURITIES
    
    
    9ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    10ITEM 5. OTHER INFORMATION
    
    
    10ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
    
    
    10SIGNATURES
    
    
    11Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
    Statement Regarding Forward-Looking Statements The statements contained in this report onForm 10-QSBthat are not purely historical are
forward-looking statements within the meaning of applicable securities laws. Forward-looking
statements include statements regarding our expectations, anticipation, intentions,
beliefs, or strategies regarding the future. Forward looking statements also include
statements regarding fluctuations in the price of gold or certain other commodities, (such as
silver, copper, diesel fuel, and electricity); changes in national and local government
legislation, taxation, controls, regulations and political or economic changes in the United States
or other countries in which we may carry on business in the future; business opportunities that may
be presented to or pursued by us; our ability to integrate acquisitions successfully; operating or
technical difficulties in connection with exploration or mining activities; the speculative nature
of gold exploration, including risks of diminishing quantities or grades of reserves; and contests
over our title to properties. All forward-looking statements included in this report are based on
information available to us as of the filing date of this report, and we assume no obligation to
update any such forward-looking statements. Our actual results could differ materially from the
forward-looking statements. Among the factors that could cause actual results to differ materially
are the factors discussed in Item 1, Business  Risk Factors in ourForm 10-KSBfor the year
ended December 31, 2004.




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PART I  FINANCIAL INFORMATION 
 ITEM 1  FINANCIAL STATEMENTS GOLDSPRING, INC. 
 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET March 31, 2005(Unaudited)ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    620,305Prepaid expenses and other current assets
    
    
    175,892Finished goods inventory
    
    
    106,732Parts and supplies
    
    
    41,377TOTAL CURRENT ASSETS
    
    
    944,306PLANT, EQUIPMENT, MINE DEVELOPMENT, AND MINERAL PROPERTIES, NET:Mineral properties
    
    
    1,738,670Plant, Equipment, Mine Development
    
    
    5,104,276TOTAL PLANT, EQUIPMENT, MINE DEVELOPMENT, AND MINERAL PROPERTIES
    
    
    6,842,946OTHER ASSETS:Reclamation deposit
    
    
    377,169Equipment purchase deposit
    
    
    100,000TOTAL OTHER ASSETS
    
    
    477,169TOTAL ASSETS
    
    $
    8,264,421
 The accompanying notes are an integral part of these financial statements F-1




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LIABILITIES AND SHAREHOLDERS DEFICIENCY CURRENT LIABILITIESAccounts Payable
    
    $
    643,752Accrued Expenses
    
    
    849,018Short-Term Lease Obligations
    
    
    34,772Current portion of long-term debt
    
    
    14,989,584TOTAL CURRENT LIABILITIES
    
    
    16,517,126LONG-TERM DEBT AND OTHER LONG-TERM LIABILITIESLong-term debt, net of current portion
    
    
    141,445Long-term Lease obligation, net of current portion
    
    
    104,671Long-term Asset retirement obligations
    
    
    514,696TOTAL LONG-TERM DEBT AND OTHER LONG-TERM LIABILITIES
    
    
    760,812TOTAL LIABILITIES
    
    $
    17,277,938SHAREHOLDERS DEFICITCommon stock, $.000666 par value, 500,000,000
shares authorized , 234,567,757 shares issued and outstanding
    
    $
    156,222Treasury Stock
    
    
    (67
    )Additional paid-in capital (See Note C)
    
    
    2,325,530Accumulated deficit  Prior years
    
    
    (7,681,757
    )Accumulated deficit  Current year
    
    
    (3,813,445
    )TOTAL SHAREHOLDERS DEFICIENCY
    
    
    (9,013,517
    )TOTAL LIABILITIES AND SHAREHOLDERS DEFICIENCY
    
    $
    8,264,421
 The accompanying notes are
an integral part of these financial statements F-2




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GOLDSPRING, INC. 
 UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS For the three month periods ended March 31, 2005
    
    
    2004(Unaudited)
    
    
    (Unaudited)REVENUE FROM GOLD SALES, NET
    
    $
    512,091
    
    
    $
    COSTS AND EXPENSESCosts Applicable to sales (exclusive of
depreciation, and amortization shown
separately below)
    
    
    1,035,176
    
    
    
    Depletion, depreciation and amortization
    
    
    182,037
    
    
    
    Exploration
    
    
    203,582
    
    
    
    343,391General and administrative
    
    
    323,432
    
    
    
    92,404Consulting and professional services
    
    
    465,088
    
    
    
    TOTAL COSTS AND EXPENSES
    
    
    2,209,315
    
    
    
    435,795OTHER INCOME (EXPENSE)Other (See Note B)
    
    
    (1,874,633
    )
    
    
    Interest expense
    
    
    (255,109
    )
    
    
    Interest income
    
    
    13,521
    
    
    
    458(2,116,221
    )
    
    
    458NET LOSS
    
    
    (3,813,445
    )
    
    
    (435,337
    )Net loss per
common share - basic
    
    $
    (0.019
    )
    
    $
    (0.019
    )Basic weighted average common shares outstanding
    
    
    199,681,753
    
    
    
    175,294,000
 The accompanying notes are an integral part of these financial statements F-3




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GOLDSPRING, INC. 
 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS For the three month periods ended March 31, 2005
    
    
    2004(Unaudited)
    
    
    (Unaudited)Cash flows from operating activities:Net loss
    
    $
    (3,813,445
    )
    
    $
    (435,337
    )Adjustments to reconcile net loss to net cash
used in operating activities:Depreciation, depletion, and amortization
    
    
    171,644
    
    
    
    Accretion of accumulated reclamation obligations
    
    
    10,393
    
    
    
    Liquidated damages from November 2004 restructuring converted
into common stock
    
    
    1,919,036
    
    
    
    Asset retirement obligation amortization
    
    
    33,500
    
    
    
    Consulting services provided in exchange for common stock
    
    
    
    
    
    
    42,000(Increase) Decrease in operating assets:Finished goods inventory
    
    
    181,955
    
    
    
    Inventory
    
    
    (41,377
    )
    
    
    Prepaid and other current assets
    
    
    (26,096
    )
    
    
    Other assets
    
    
    
    
    
    
    (527,600
    )Increase (decrease) in operating liabilities:Accounts payable
    
    
    53,952
    
    
    
    240,045Accrued expenses
    
    
    72,831
    
    
    
    253,396Other
    
    
    290,629
    
    
    
    Total Adjustments to Reconcile Net Loss Used in Operating Activities
    
    
    2,666,467
    
    
    
    7,841Net cash used in operating activities
    
    
    (1,146,978
    )
    
    
    (427,496
    )Investing activities:Equipment deposit
    
    
    10,000
    
    
    
    Acquisition of plant, equipment and mineral properties
    
    
    (79,344
    )
    
    
    (1,357,326
    )Net cash used in investing activities
    
    
    (69,344
    )
    
    
    (1,357,326
    )Financing activities:Proceeds from March 2004 financing, net
    
    
    
    
    
    
    9,532,504Principal payment Note Payable
    
    
    (115,175
    )
    
    
    (100,000
    )Net Cash flows provided by financing activities
    
    
    (115,175
    )
    
    
    9,432,504Net Increase (Decrease) in cash
    
    
    (1,331,497
    )
    
    
    7,647,682Cash - beginning of period
    
    
    1,951,802
    
    
    
    364,138
 F-4




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2005
    
    
    2004(Unaudited)
    
    
    (Unaudited)Cash - end of period
    
    $
    620,305
    
    
    $
    8,011,820Supplemental disclosures of non-cash investing and financing activities:Issuance of
Notes for Liquidated Damages for failure to deliver shares
    
    $
    403,175
    
    
    $
    Issuance of
notes for mandatory redemption payment plus accrued interest (See Note C)
    
    $
    6,885,184
    
    
    $
    Purchase and cancellation of common stock in connection with mandatory
redemption payment (See Note C)
    
    $
    6,801,975
    
    
    $
    
 The accompanying notes are an integral part of these financial statements F-5




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GOLDSPRING, INC. 
   NOTE A  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES/ OVERVIEW Forward-Looking Statements The following discussion contains, in addition to historical information, forward-looking
statements regarding GoldSpring, Inc. (we, the Company, or GSPG), that involve risks and
uncertainties. Our actual results could differ materially. For this purpose, any statements
contained in this Report that are not statements of historical fact may be deemed to be
forward-looking statements. Without limiting the generality of the foregoing, words such as may,
will, expect, believe, anticipate, intend, could, estimate, or continue or the
negative or other variations thereof or comparable terminology are intended to identify
forward-looking statements. Factors that could cause or contribute to such differences include
possible need for additional financing; dependence on management; government regulation; and other
factors discussed in this report and the Companys other filings with the Securities and Exchange
Commission. Basis of Presentation The accompanying unaudited condensed financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and with the
instructions to Form 10-QSB and Article 10 of Regulation S-B. Accordingly, they do not include all
of the information and footnotes required by generally accepted accounting principles for complete
financial statements. In our opinion, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating results for the
three-month period ended March 31, 2005 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2005. For further information, refer to the financial
statements and footnotes thereto included in our Form 10-KSB Report for the fiscal year ended
December 31, 2004. NOTE B LIQUIDATED DAMAGES For the first quarter of 2005 (ended March 31, 2005), we recorded liquidated damages expenses due
to investors of our March 2004 offering and subsequent November 30, 2004 restructuring as follows: Liquidated damages relating to:November 30, 2004 Non-Registration Provisions
    
    $
    1,776,104Failure to timely deliver shares upon notice of converting
note holders
    
    
    98,529$
    1,874,633
 Non-Registration Provisions Our November 2004 subscription agreement required us to file a registration statement with the
Securities and Exchange Commission no later than December 30, 2004 and to cause the registration
statement to be declared effective no later than February 14, 2005. Our former Chief Executive
Officer withdrew our pending registration statement and did not submit a new registration statement
during the period of his purported control of our company. His failure to submit the registration
statement to the SEC by December 30, 2004 triggered liquidated damages to accrue under the November
2004 subscription agreement. Accordingly, at December 31, 2004, we had accrued $222,013 of
liquidated damages relating to Non-Registration Provisions. The liquidated damages continued to
accrue in the amount of $222,013 for each 30-day period after December 30, 2004 until our
registration statement is declared effective. Through March 29, 2005, the accrued liquidated
damages totaled $888,052. The Subscription Agreement requires the liquidated damages to be paid in
cash or free-trading stock. If paid in stock, we must issue stock in the amount of 200% of the
cash payment amount. In lieu of free-trading stock, we negotiated with the investors to issue
restricted stock at a discount to market F-6




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while adhering to the other requirements of the subscription agreement. This settlement
resulted in the issuance of 59,203,918 shares of restricted common stock. Failure to Timely Deliver Conversion Shares On December 20, 2004, we received notice from holders of approximately $500,000 of convertible
notes payable of their intention to convert into shares of our common stock. As a result, we
recorded the issuance of 4,243,791 shares on December 20, 2004. We were required to deliver
certificates representing unrestricted, free-trading stock within three business days of our
receipt of the notices of conversion (the Delivery Date). The failure to deliver the shares by
the Delivery Date resulted in liquidated damages of 1% of the Note principal amount being converted
per business day after the Delivery Date. Our former Chief Executive Officer did not deliver the
stock certificates within the required period. On March 18, 2005 we delivered the certificates
representing the shares of common stock to these converting note holders. The 84 day delay in
delivering the shares resulted in liquidated damages of $403,175. We recognized these damages
during the fourth quarter of 2004 and the first quarter of 2005. We issued convertible notes for
the amount of liquidated damages due. NOTE C  MANDATORY REDEMPTION PAYMENT Under the terms of the November 2004 subscription agreement, convertible note holders have the
right to a mandatory redemption payment in the event we are prohibited or otherwise fail to deliver
shares of our common stock to converting note holders. The mandatory redemption payment is
calculated as an amount equal to multiplying the number of shares of common stock otherwise
deliverable upon conversion of the notes principal and interest multiplied by the highest price of
our common stock for the period beginning with the Deemed Conversion Date (the date the holder
elects to convert the note) and ending with the payment date. On March 7, 2005, we received a
mandatory redemption payment demand relating to our failure to deliver stock certificates
representing 29,573,803 shares of our common stock. Under the mandatory redemption payment
provisions of the November 2004 subscription agreement, we repurchased the 29,573,803 shares of
common stock at $0.23 per share, or $6,801,975. We issued a secured convertible note in the
aggregate amount of $6,885,184 with a 12% interest rate for the 29,573,803 shares and accrued
interest. F-7




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Item 2. Managements Discussion and Analysis or Plan of Operations The following discussion provides information that we believe is relevant to an assessment and
understanding of the consolidated results of operations and financial condition of our company. It
should be read in conjunction with the Consolidated Financial Statements and accompanying Notes. The following discussion addresses matters we consider important for an understanding of our
financial condition and results of operations as of and for the quarter ended March 31, 2005, as
well as our future results. Overview We are a North American production-focused mining company whose objective is to achieve growth
and profitability through enhancements at our active gold and silver-producing mine near Reno,
Nevada and through the acquisition of additional mining projects that can be efficiently put into
near-term operation and production. We have not established any proven or probable reserves that meet the requirements of SEC
Industry Guide 7. Therefore, all of our activities are considered test mining or exploratory in
nature. We are currently undergoing a third-party review of our mine plan. We anticipate that a
reserve report will be released during the second or third quarter of 2005. We currently own mineral properties and conduct our primary mining operations in the Comstock
Lode, located about 30 miles southeast of Reno, Nevada. This operation consists of the Plum Mining
facility. We also own mineral permits in Alberta, Canada. We have no active operations in Canada. The first quarter of 2005 began with a continuation of the numerous challenges that impacted
our companys performance in 2004 in the form of financial and operational issues as well as
management distraction. The legal dispute over control of our company, which began in December
2004, carried over through the first quarter of 2005 (see Part II, Item 1  Legal Proceedings). In
December 2004, while our former Chief Executive Officer purportedly controlled our company, he took
approximately $170,000 of our companys funds to use for his personal legal defense costs and other
personal expenses. We are seeking reimbursement of the money, but we expensed the charges in
December 2004. In addition these funds, we incurred approximately $300,000 in legal fees related
to the dispute over control of our company during the first quarter of 2005. Harsh winter weather
also continued to have a negative impact on production at the Plum Mining facility during early
first quarter 2005. The extreme weather combined with the management disruption resulted in
essentially no mining activity during January 2005. Difficulties with our equipment, especially
with the crusher, posed an additional challenge during the first quarter. Our current management team was reinstated in mid-February 2005 (see Part II, Item 1  Legal
Proceedings). One of our top priorities upon regaining control of the company was to improve
efficiencies and increase production at our Plum Mine. To this end, we hired a new mine manager,
who has significant experience in gold mining, primarily in and around the area of our current
operation. We also implemented modifications to our plant, equipment, and operations to address
our past difficulties and increasing operating efficiency. We have made several enhancements to
the crusher in March and April 2005, including replacing the cone, and we believe these
improvements will substantially increase our ability to meet our production targets for the
remainder of 2005. We believe that many of the non-operating issues that have plagued our company since
early-December 2004 are now being resolved. We are now focusing our efforts on achieving positive
cash flow and growth in 2005. Our ability to maintain that focus will depend largely upon our
relationships with a number of our investors that are now note holders as the result of our 2004
financial restructuring. Although this debt obligation is substantial, we believe that we will be
able to reach an arrangement with our investors that will allow us to structure the repayments in a
manageable fashion. During the first quarter of 2005, we incurred approximately $1.9 million of liquidated damages
and other expenses related to our former Chief Executive Officers decision to withdraw the SEC
registration statement and his failure to deliver common shares pursuant to the November 2004
restructuring agreement. We have now filed the SB-2 registration statement and have delivered the
shares. Therefore, once our registration statement is declared effective by the SEC, we should not
incur additional liquidated damages. (See Recent Financing Events and Restructuring for additional
information) Our negotiations with our note holders regarding the debt obligation have so far been
successful. We remain optimistic that these negotiations will continue in a positive vein and that
we will be able to reach a resolution with our largest note holders
that 1




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yields an outcome
beneficial to our company and all of its shareholders. Specifically, we have reached a tentative
agreement with the note holders for a one-year deferral of the repayment of both the principal and
interest amounts that were originally scheduled to begin in April 2005. The note holders have been
receptive to our approach and our talks with them are progressing. We are optimistic that these
discussions will remain positive in tone and that we will soon have an agreement on deferral of the
obligation. Of course, there can be no assurances that this will be the result. Our strategy calls for growth in two ways. First, we seek growth through the expansion of the
existing ore base at our Plum mining facility. This process consists of actively conducting
exploration to identify additional ore bodies. The successful location of new ore bodies on the
existing property would allow us to expand the size and potentially the lifespan of the Plum mining
project, exclusive of new property acquisitions. Second, we seek growth through the acquisition of
mining projects, which are located within the general vicinity of the Comstock Lode area and which
have proven in-ground reserves, advanced permitting, and solid exploration potential. While the
Comstock Lode is the focus of our search for acquisition opportunities, we would consider
acquisitions outside of the Comstock Lode if those opportunities were compelling. In line with this strategy, on May 4, 2005, we announced that we executed a Letter of Intent
to acquire the leases on three patented mineral claims from Comstock Gold, LLC. The Justice,
Woodville, and Keystone claims are adjacent to our existing operation at the Plum Mine. The Letter
of Intent is subject only to the successful completion of our due diligence and our boards
approval. We expect to complete our due diligence within 60 days, after which time we plan to
enter into a definitive purchase agreement. The proximity of these claims should allow us to
develop the property in a cost-effective manner and likely increase the efficiency of our overall
mining operation. This acquisition is important for our company for a number of other reasons as
well. First, the claims will expand our mining property by 40 acres, increasing our mineralized
material inventory by approximately 33%. Second, the claims will contribute to the enhancement of
overall mine extraction and waste disposal efficiencies. Third, these claims will enlarge our
footprint in the Comstock Lode region and have the potential for expanding the life of our existing
Plum Mine operation. Finally, the addition of these properties will improve our geologic
understanding of the entire physical area and its trends. We believe that there remain significant unexplored and unexploited mineral deposits in the
Comstock Lode region. We plan to invest substantial resources in our existing Plum mining
operation in search of unexploited deposits. We will also seek out acquisition opportunities in
this same region. It is our belief that we possess an advantage with our status as likely the only
heap leach gold mining permit holder in the area. This permit is relatively difficult to obtain,
and it is one that we can expand to include new areas in the event we locate and wish to process
new deposits. Results of Operations and Operational Plan Our Plum Mine, which is located in the Comstock Lode region, went into production in late
third quarter 2004. The Comstock Lode region experienced record level snowfalls at approximately
the same time, continuing through the winter of 2004/2005. While the unusually heavy precipitation
did not interfere with the overall recovery of mineralized material, it did impact our ability to
mine and crush the mineralized material. As mentioned above, our mining operations essentially
shut down in January 2005 due to a combination of harsh weather, equipment difficulties, and
management disruption. Although mining operations resumed when the current management was
reinstated in mid-February 2005, the equipment difficulties continued throughout the first quarter.
For example, between March 15, 2005 and April 1, 2005, we had no crusher production due to
inoperable equipment. We have since taken steps to remedy our equipment challenges, including
replacing the cone and screen plant on the crusher. Our efforts produced approximately 47,000 tons
of mineralized material in April 2005, our best month ever. We have made several other improvements to our equipment and operations since the end of the
first quarter to increase production and improve operating efficiency. On the operations side, we
have added additional solution lines to the mineralized material on leach pad number two, adjusted
the amount of cement used during the agglomeration phase of processing, and added an agglomeraid to
our mineralized material. We believe these adjustments will increase recovery results and minimize
problems with the crusher. We have also increased production capacity at our Merrill Crowe
processing plant by adding a new clarifier and raising the height of the vacuum tower. These
changes have increased processing capacity from 110 gallons per minute to 250 to 300 gallons per
minute. We believe the combination of the equipment modifications, operational improvements, and
management changes made since late-February 2005 leaves us poised to reach our goals for 2005. During the first quarter of 2005, we crushed 59,000 tons of mineralized material at our Plum
Mine operation. Following our equipment improvements early in the second quarter of 2005, we were
able to crush 47,000 tons of mineralized material in April 2005. We believe we are on target to
meet our goal of crushing 60,000 tons of mineralized material per month in the future. During the
first quarter of 2005, we produced 925 ounces of gold, of which approximately 700 ounces were
produced in March 2005. We sold 1,192 ounces of this gold at an average price of $429 per ounce
generating $ 512,000 in revenue. This resulting revenue was smaller than 2




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the operating expenses
we occurred in the first quarter of 2005. We believe that this high level of operating expense is
typical for a mine in early stages of development, as is the Plum Mine. In the remainder of 2005, we plan to focus the bulk of our efforts on achieving additional
operational improvements in both production and efficiency at our Plum Mine operation. We are
continuing to pursue operational improvements through enhancements to our existing processes.
These enhancements are expected to stem from increasing our volume of production combined with
lowering the cost of our processes. Our objective for operational performance in 2005 is to
establish a stable and predictable level of gold and silver production at the Plum Mine resulting
in profitability and positive cash flow. Placer Claims, Water Rights, and Mineral Permits We originally became a mineral company through an acquisition in March 2003. That acquisition
provided us with a number of Nevada-based placer claims, including the Gold Canyon and Spring
Valley claims, and 17 unpatented lode claims called the Big Mike Copper Project. In November 2003,
we acquired the Plum mine facility as well as water rights that are usable at Plum Mine and the
Gold Canyon and Spring Valley placer claims. In a separate transaction, we obtained mineral
permits in Alberta, Canada in May 2004. Of the various placer claims, only the Big Mike Copper Project is budgeted for activity in the
near future. In 2004, prior to the disruptive events referenced earlier, we had executed a
Memorandum of Understanding for a joint venture arrangement to develop and operate the Big Mike
Copper Project. The disruptive events of 2004 caused concern within the management of our joint
venture partner and as a result discussions ceased and the project was abandoned. Based upon our
improving management stability, the joint venture partner has reactivated its interest in the
original joint venture agreement. The Big Mike Copper Project is located in Pershing County, Nevada. It covers a total of 310
acres and consists of 17 unpatented lode claims and one placer claim. We have not established any
proven or probable reserves that meet the requirements of SEC Industry Guide 7. Therefore, all of
our activities are considered exploratory in nature. We have not completed any exploration
activity on the project. We expect that it will be a low-cost copper oxide leaching operation to
recover copper from the copper oxide bearing material remaining from the leaching operation carried
out on the property by a prior owner. The property includes an open pit, mineralized material in a
stockpile and waste dumps. We believe the property has exploration potential for primary and oxide
copper. Although the project was delayed from its original schedule, we believe that the current
price of copper continues to enhance the economic viability of this project, and are actively
working to formalize the joint venture arrangement and to place the project into production. In May 2004, the Alberta government granted us mineral permits for all non-energy minerals on
nearly 800 square miles of Alberta, Canada mineral property. Sedimentary Oolitic iron bearing
material was discovered in 1953 from oil and gas drilling on the area of our mineral permits. We
are in the process of reviewing existing data and conducting a pre-feasibility study on the
project. The study will include new test work to follow-up earlier test work performed on the
property. From 1995 through 1997, a series of tests were performed that showed the mineralized
material present was amenable to treatment to produce iron pellets and pig iron. We are in the
final stages of acquiring coal rights in this area and expect those rights to be secured within the
first half of 2005. We are also investigating the possible acquisition of the rights to the energy
minerals, gas, and oil on this property. Our Canadian project is in its early stages and our activities associated with this mineral
area are exploratory in nature. We have not established any reserves on this property. The scope
and size of this potential project will require substantial capital, time and outside assistance
during both the pre- and post-feasibility stages. We are considering several financial
alternatives, including a joint venture, to develop this project. Liquidity and Capital Resources Our cash resources are severely limited. We have a substantial obligation to pay our note
holders approximately $15 million over the years 2005, 2006, and 2007, resulting from our 2004
financing (See Recent Financing Events and Restructuring below). Under the terms of the November
2004 subscription agreement, the repayment of principal and interest was scheduled to begin in
April 2005. We do not currently have sufficient cash available to meet these obligations. We are
currently negotiating with these note holders in an effort to delay repayment of both the principal
and interest amounts for a 12-month period. Our negotiations with these note holders regarding the repayment delay have so far been successful, and we have reached a
tentative agreement regarding the 12-month payment deferral with our major note holders. We remain
optimistic that we will reach a definitive agreement. However, in 3




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the event we are not successful
in achieving a payment deferral, we will be unable to meet the current note obligations and the
future of our company may be in jeopardy. While failure to reach a resolution would likely cause
us to seek external funding in order to meet our obligation, it is possible that we would be unable
to secure such funding. We have yet to realize an operating profit at our Plum Mine location. Our current business
plan, however, calls for the Plum Mine operations to become profitable and generate positive cash
flow for the year 2005. Until we are able to achieve positive cash flow from operations, our
ability to meet our obligations when due will be in jeopardy. We are currently exploring
short-term bridge financing options. We expect to expand our existing leach pads, which currently number three, to a total of
either four or five leach pads during 2005. The cost of this expansion will be approximately
$600,000. That expenditure represents our only major capital expenditure currently planned for
2005. Our strategy calls for growth through the acquisition of mining projects both inside and
outside of the Comstock Lode area, which have proven in-ground reserves, advanced permitting, and
solid exploration potential. While we plan to invest substantial resources in our existing Plum
mining operation in search of unexploited deposits, we will also seek out acquisition
opportunities. Should such opportunities arise which would be accretive to our business, we would
seek to secure the necessary funding to support those acquisitions. Recent Financing Events and Restructuring In 2004, we offered securities in a private placement transaction completed during March 2004
(the March Offering). In connection with the offering, we received gross proceeds of $10 million
from a group of accredited institutional and individual investors. Subsequent to the offerings
close, we failed to meet certain requirements of the offering regarding filing an effective
registration statement with the Securities and Exchange Commission. Under the terms of the March
2004 subscription agreement, failure to have an effective registration statement by the required
date resulted in liquidated damages in the amount of 2% of the principal investment amount (i.e.,
$200,000) for each 30-day period until the registration statement was declared effective. We
accrued approximately $1.1 million in liquidated damages through November 30, 2004 associated with
our failure to cause our registration statement to be effective. During the SEC review process of the registration statement we filed in connection with the
March Offering, we learned that our founder and former Chief Executive Officer may have
misrepresented the value of certain mineral properties that his company sold to us in a March 2003
transaction. Our discussions with the SEC led to our decision to restate our annual and quarterly
SEC filings to reflect our reevaluation of the value of those mineral properties. This
reevaluation led to an investigation into the activities of our founder. On November 9, 2004, we
filed a lawsuit in Maricopa County (Arizona) Superior Court against Stephen B. Parent and four
other defendants, together with their spouses, and Ecovery, Inc. (See  Legal Proceedings). In
essence, the complaint alleges that Stephen Parent misrepresented the value of certain placer
mining claims that his company, Ecovery, sold to us in 2003 in exchange for approximately
99,000,000 shares of our stock; that Ecovery no longer had good title to the mining claims when
they were sold to us; that Mr. Parent and the other named defendants conspired to defraud us out of
approximately 24,000,000 shares of our stock; and that Mr. Parent misappropriated more than
$300,000 in company funds. The allegations made in our lawsuit raised questions about the representations that our
founder made during the March Offering. The delay in effectiveness of our registration statement
combined with the allegations raised in the lawsuit caused concern among the investors in the March
Offering. We worked with the investors to address their concerns in a manner that would not force
us to pay a large cash penalty or face a lawsuit, both of which would be detrimental to our
shareholders. In consideration for restructuring the original transaction, the investors agreed to
grant us a release for any misrepresentations that may have been made, allowed us to capitalize the
accrued liquidated damages, and provided us with an additional 90 days to cause the registration
statement to become effective, thereby avoiding potential liquidated damages of $600,000 if the
registration statement were to be filed before December 30, 2004. As a result, and effective November 30, 2004, we restructured the private placement
transaction. In connection with the restructuring, we exchanged the 21,739,129 shares of common
stock and the 21,739,129 warrants to purchase shares of common stock issued to the investors in the
March Offering for 8% convertible notes in the aggregate principal amount of approximately $11.1
million and four-year warrants to purchase 27,750,000 shares of common stock at an exercise price
of $0.20 per share, subject to anti-dilution adjustments. The principal amount of the convertible
notes consists of the original $10.0 million investment plus approximately $1.1 million of accrued penalties associated with the delay in effectiveness of
our registration statement covering the resale of the shares of common stock held by the investors.
The restructured subscription agreement also permitted the convertible 4




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note holders to convert
their notes into common stock at a discounted conversion rate if they delivered their notices of
conversion within 20 trading days of the November 30, 2004 restructuring closing date. On or about December 9, 2004, Mr. Parent and fellow directors Jerrie W. Gasch and Purnendu K.
Rana Medhi purportedly seized control of our company. They attempted to remove the remaining seven
members of our board and announced their intention not to honor the restructured subscription
agreement of November 30, 2004, which both Mr. Medhi and Mr. Gasch had approved. On December 21,
2004, Mr. Parent caused our pending registration statement to be withdrawn from SEC consideration,
resulting in further delays to the registration process and additional liquidated damages. Mr.
Parent remained in control of our corporate office until February 16, 2005 (See  Legal
Proceedings). During his period of purported control of our company, Mr. Parent refused to honor
our obligations under either the March 2004 subscription agreement or the restructured November
2004 subscription agreement. On December 20, 2004, we received notice from holders of approximately $3.8 million of
convertible notes payable of their intention to convert into shares of our common stock. As a
result, we recorded the issuance of 33,817,594 shares on December 20, 2004. We were required to
deliver certificates representing unrestricted, free-trading stock within three business days of
our receipt of the notices of conversion. As discussed above, our former Chief Executive Officer
did not deliver the stock certificates within the required period, resulting in material financial
damages to our company. Under the terms of the November 2004 subscription agreement, convertible note holders have the
right to a mandatory redemption payment in the event we are prohibited or otherwise fail to deliver
shares of our common stock to converting note holders. The mandatory redemption payment is
calculated as an amount equal to multiplying the number of shares of common stock otherwise
deliverable upon conversion of the notes principal and interest multiplied by the highest price of
our common stock for the period beginning with the Deemed Conversion Date (the date the holder
elects to convert the note) and ending with the payment date. On March 7, 2005, we received a
mandatory redemption payment demand relating to our failure to deliver stock certificates
representing 29,573,803 shares of our common stock. Under the mandatory redemption payment
provisions of the November 2004 subscription agreement, we repurchased the 29,573,803 shares of
common stock at $0.23 per share, or $6,801,975. We issued a convertible note in the aggregate
amount of $6,885,184 for the 29,573,803 shares and accrued interest. On December 20, 2004, we received notice from holders of approximately $500,000 of convertible
notes payable of their intention to convert into shares of our common stock. As a result, we
recorded the issuance of 4,243,791 shares on December 20, 2004. We were required to deliver
certificates representing unrestricted, free-trading stock within three business days of our
receipt of the notices of conversion (the Delivery Date). The failure to deliver the shares by
the Delivery Date resulted in liquidated damages of 1% of the Note principal amount being converted
per business day after the Delivery Date. Our former Chief Executive Officer did not deliver the
stock certificates within the required period. On March 18, 2005 we delivered the certificates
representing the shares of common stock to these converting note holders. The 84 day delay in
delivering the shares resulted in liquidated damages of $403,175. We recognized these damages
during the fourth quarter of 2004 and the first quarter of 2005. We issued convertible notes for
the amount of liquidated damages due. Our November 2004 subscription agreement required us to file a registration statement with the
Securities and Exchange Commission no later than December 30, 2004 and to cause the registration
statement to be declared effective no later than February 14, 2005. As discussed above, our
former Chief Executive Officer withdrew our pending registration statement and did not submit a new
registration statement during the period of his purported control of our company. His failure to
submit the registration statement to the SEC by December 30, 2004 triggered liquidated damages to
accrue under the November 2004 subscription agreement. Accordingly, at December 31, 2004, we had
accrued $222,013 of liquidated damages relating to Non-Registration Provisions. The liquidated
damages continued to accrue in the amount of $222,013 for each 30-day period after December 30,
2004 until our registration statement is declared effective. Through March 29, 2005, the accrued
liquidated damages totaled $888,052. The Subscription Agreement requires the liquidated damages to
be paid in cash or free-trading stock. If paid in stock, we must issue stock in the amount of 200%
of the cash payment amount. In lieu of free-trading stock, we negotiated with the investors to
issue restricted stock at a discount to market while adhering to the other requirements of the
subscription agreement. This settlement resulted in the issuance of 59,203,918 shares of
restricted common stock. Our former Chief Executive Officers withdrawal of our pending registration statement in
December 2004 prohibited us from re-submitting our registration statement until after our 2004
fiscal year audit was completed and our annual report was filed. On April 29, 2005, two weeks
after filing our annual report on Form 10-KSB, we filed an SB-2 registration statement with the SEC
in order to fulfill our registration obligations under the November 30, 2004 subscription
agreement. As of the date of this filing, we are waiting to receive a response from the SEC to our
registration statement. 5




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Item 3. Controls and Procedures Based on the most recent evaluation, which was completed within 90 days of the filing of this Form
10-QSB, we believe our companys disclosure controls and procedures (as defined in the Exchange Act
Rules 13a-14 and 15d-14) are effective to ensure that information required to be disclosed by us in
this report is accumulated and communicated to our management, including our principal executive
officer and principal financial officer, as appropriate, to allow timely decisions regarding
required disclosure. We have identified conditions as of March 31, 2005 that might be considered
material weaknesses in internal controls that include: 1) a lack of segregation of duties in
accounting and financial reporting activities; and 2) the lack of a sufficient number of qualified
accounting personnel. We are in the process of taking corrective measures to remedy the
deficiencies in future periods. 
 PART II  OTHER INFORMATION 
 Item 1. Legal Proceedings The State Court Case On November 9, 2004, we filed a lawsuit in Maricopa County (Arizona) Superior Court against
defendants Stephen B. Parent, Ron Haswell, Walter Doyle, Seth Shaw, Antonio Treminio, together with
their spouses, and Ecovery, Inc., a Nevada corporation, or Ecovery. The 12-count complaint alleges claims for violations of Arizonas racketeering act, state-law
securities fraud (primary and secondary liability), common-law fraud, negligent misrepresentation,
breach of fiduciary duty, negligence/gross negligence, breach of contract, unjust
enrichment/restitution, theft/conversion, conspiracy liability, and injunctive relief. In essence,
the complaint alleges that Stephen Parent misrepresented the value of certain placer mining claims
that his company, Ecovery, sold to us in 2003 in exchange for approximately 99,000,000 shares of
our stock; that Ecovery no longer had good title to the mining claims when they were sold to us;
that Mr. Parent and the other named defendants conspired to defraud us out of approximately
24,000,000 shares of our stock; and that Mr. Parent misappropriated more than $300,000 in company
funds. On November 29, 2004, we moved for a temporary restraining order, or TRO, prohibiting Mr.
Parent and his spouse from selling, transferring, assigning, or otherwise disposing of up to
approximately 123,000,000 shares of our stock in their possession. After a hearing, at which the
Parents appeared through counsel, the Honorable Anna M. Baca granted the motion, conditioned on the
posting of an $8 million bond. We did not post the bond, and the TRO was subsequently dissolved. On or about December 9, 2004, Mr. Parent and fellow GoldSpring directors Jerrie W. Gasch and
Purnendu K. Rana Medhi purportedly seized control of our company. Afterward, the Parent-led
GoldSpring purported to fire Greenberg Traurig, LLP, or GT, as counsel for our company in this
litigation and to hire Ronan & Firestone, PLC, or Ronan, as substitute counsel. Thereafter, on
December 22, 2004, Ronan filed a stipulation to dismiss the lawsuit, purportedly on behalf of our
company. Also on December 22, 2004, the Parents filed their answer, in which they generally denied
the allegations of the complaint. On December 29, 2004, GT filed a motion on behalf of our company to strike the stipulation to
dismiss that Ronan had filed. Judge Baca heard oral argument on the motion on February 2, 2005 and
took the matter under advisement. Further oral argument was heard on March 22, 2005. In light of
the preliminary injunction that was issued in a related shareholder action in federal district
court (discussed below), and the resolutions passed by our Board of Directors on February 22, 2005,
Judge Baca granted the motion in an Order dated March 22, 2005 and struck Ronans purported
stipulation to dismiss. In the same ruling, Judge Baca said that there are serious conflicts in the continued
representation of the Parents in this lawsuit by Gust Rosenfeld. The Court was referring to the
fact that Parent had hired Gust Rosenfeld as our counsel after purportedly taking over our company
on December 9, 2004. The Court therefore ordered further briefing on whether Gust Rosenfeld should
be disqualified as the Parents counsel. Shortly thereafter, on March 28, 2005, Gust Rosenfeld
voluntarily withdrew as the Parents counsel. The Parents have since retained new counsel. Aside from Stephen and Judith Parent, Seth Shaw also has been served. There is a pending
dispute as to whether Ron Haswell properly has been served. Mr. Shaw filed an answer, in pro per,
on April 6, 2005, and generally denied the allegations of the complaint. Mr. Haswell has not yet
responded to the complaint. The Federal Court Case 6




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Background Stephen B. Parent and several others purporting to represent a majority of the shareholders of
our company adopted Consent Resolutions in Lieu of a Special Meeting of Shareholders dated
December 9, 2004, and Mr. Parent, Jerrie W. Gasch, and Purnendu K. Rana Medhi, each of whom served
as a director of our company until Mr. Medhis resignation in April 2005, adopted Directors
Consent Resolutions (together the December Consent Resolutions) dated December 10, 2004. Taken
together, the December Consent Resolutions, by their purported terms, removed John F. Cook, Robert
T. Faber, Leslie L. Cahan, Todd S. Brown, Christopher L. Aguilar, Stanley A. Hirschman, and Phil E.
Pearce as directors, rescinded the restructuring of a $10 million financing transaction entered
into in March 2004, removed Mr. Faber as President of our company, named Mr. Parent as President of
our company and his wife as Secretary of our company, designated Mr. Parent as the sole signing
officer of our companys bank accounts, and terminated our companys legal counsel. On December 22, 2004, Robert T. Faber and Leslie L. Cahan (collectively, the plaintiffs),
who are shareholders and directors of our company, filed a lawsuit in the United States District
Court for the District of Arizona, entitled Robert T. Faber, et al. v. Stephen B. Parent, et al.,
No. CV04-2960-PHX-EHC (the Litigation). The plaintiffs asserted claims in both their individual
capacities and derivatively, on behalf of our company, against directors Stephen B. Parent, Jerrie
W. Gasch, and Purnendu K. Rana Medhi (collectively, the defendants), alleging that, by adopting
the Consent Resolutions, the defendants had unlawfully orchestrated an illegal coup to wrest
control of our company from its current officers and directors. As discussed below, Messrs. Gasch
and Medhi no longer support the Parent-led board. The Temporary Restraining Order Following a hearing on December 22, 2004, at which the Court heard evidence and argument of
counsel, the Honorable Earl H. Carroll issued a December 23, 2004 Order Granting Plaintiffs Motion
for Temporary Restraining Order, or TRO. The TRO precluded defendants and their agents from (1)
making any withdrawals from any bank accounts of our company, other than reasonable withdrawals
necessary to the daily operations of the business; (2) rescinding or interfering in any way with
any transactions approved by our companys Board of Directors prior to December 9, 2004; (3)
entering into any contracts or agreements with third parties on behalf of our company or disposing
of or transferring any property or assets of our company; and (4) issuing or otherwise transferring
any stock or debentures. The Court subsequently continued the TRO through February 15, 2005 and confirmed that none of
the defendants were to receive any payments from our company during the pendency of the TRO.
Despite the Courts Order, the defendants have since produced business records of our company
demonstrating that, after adopting the December Consent Resolutions, the defendants arranged for
our company to pay them a collective total of $38,721, including $20,869 in payments to Stephen
Parent. The Preliminary Injunction and Notice of Appeal Following additional hearings in which the Court heard witness testimony and evidence, the
Court issued an Order on February 15, 2005 granting plaintiffs Motion for a Preliminary
Injunction. The Preliminary Injunction ordered the reinstatement of our companys Board of
Directors as it existed prior to December 10, 2004. As a result of the Courts Order, John F.
Cook, Robert T. Faber, Christopher L. Aguilar, Todd S. Brown, Leslie L. Cahan, Stanley A.
Hirschman, and Phil E. Pearce have been reinstated as directors. Stephen B. Parent, Jerrie W.
Gasch, and Purnendu K. Rana Medhi remained directors until Mr. Medhis resignation in April 2005.
The Courts February 15 Order also stayed the implementation of the Consent Resolutions, and
directed us to hold a special shareholders meeting within 30 days. In concluding that the Preliminary Injunction should issue, the Court stated, The Court is
specifically concerned about the irreparable injury that would occur to GoldSpring and its
shareholders and investors if Defendants [Mr. Parent, his wife, Jerrie W. Gasch, and Purnendu K.
Rana Medhi] are permitted to manage the corporation. There is substantial evidence of Parents
wrongdoing in his former position as CEO of GoldSpring, such as his misappropriation of corporate
assets for his personal use. The Defendants attempt to rescind the [financing] transaction that
was approved at the Board of Directors meeting on November 30, 2004 could adversely impact
GoldSprings ability to meet its obligations under the agreement. Rescission of the refinancing
transaction would prove detrimental for GoldSpring because the corporation would be forced to pay
the $200,000.00 monthly penalty for failing to file the S-1 Registration with the SEC within ninety
(90) days of the March 22, 2004 agreement between GoldSpring and [various investors]. This penalty
had accrued to over $1,000,000.00 as of November 30, 2004. Thereafter, the defendants filed a motion for reconsideration in which they asked that the
Preliminary Injunction be dissolved or, alternatively, that the Court clarify the injunction order
and require the plaintiffs to post a bond. On February 25, 2005, the Court 7




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held a hearing on the
defendants motion for reconsideration. The Court denied the defendants requests to dissolve the
Preliminary Injunction and to require the posting of a bond. In response to defendants request
for clarification of the injunction order, the Court ordered that our company is not to issue
additional shares prior to the special shareholders meeting, and that the record date for the
special shareholders meeting shall be December 9, 2004. Our company believed that this ruling would disenfranchise the investors that participated in
the November 30, 2004 restructuring transaction by preventing them from receiving and voting the
shares they are entitled to receive through the conversion of their notes. A December 9, 2004
record date would also have disenfranchised all shareholders that acquired their stock on the open
market after December 9, 2004. Therefore, on February 28, 2005, our company filed a legal memorandum with the Court
addressing these issues. In it, we pointed out that applicable federal securities laws require us
to provide shareholders with current financial statements, which will not be available until March
31, 2005, and that Florida law and our companys bylaws require that a record date be fixed in
advance rather than in the past. On March 14, 2005, the Court held a hearing on these issues.
After hearing argument of counsel, the Court indicated that it agreed with our position. Accordingly, on March 17, 2005, the Court vacated its earlier Order directing us to hold a
special shareholders meeting and setting December 9, 2004 as the record date for purposes of that
meeting. The Court also vacated the provision of its February 25 Order prohibiting us from issuing
additional shares. Finally, the Court reaffirmed its earlier Order reinstating our Board of
Directors as it existed prior to December 10, 2004. In doing so, the Court ordered that the
reinstated board shall remain in place until the Court orders otherwise. On April 13, 2005, a notice of appeal was filed on behalf of the Parents, the Gaschs, and the
Medhis seeking to reverse the Courts March 17 Order. On April 21, 2005, the Gaschs moved to
dismiss their appeal. The appeal is pending, but no legal briefs have been exchanged. The Investors Motion to Intervene On March 2, 2005, Longview Fund LP, Longview Equity Fund, Longview International Equity Fund,
and Alpha Capital AG (collectively, the Investors) moved to intervene in the litigation. In
doing so, the Investors sought to dissolve the portion of the Courts February 25, 2005 Order that
prohibited our company from issuing stock to them under the refinancing transaction. In their motion to intervene, the Investors alleged that they are holders of more than $3
million of Convertible Notes issued by us, which they received pursuant to the transaction in March
2004. The Investors further alleged that, under the terms of the Convertible Notes, they are
entitled to convert the notes, in whole or in part, into our stock at any time. The Investors
contended that, by preventing us from issuing stock, the Courts February 25 Order is a de facto
preliminary injunction in favor of the defendants, and effectively deprived the Investors of much
of the benefits to which they are contractually entitled. Because the defendants had not met the
requirements for injunctive relief, the Investors argued, that portion of the Courts Order should
be dissolved. Alternatively, the Investors asked the Court to order the defendants to post a $3.5
million bond to protect the Investors against any damages stemming from the de facto injunction. On March 7, 2005, the defendants filed their response to the Investors motion. They
contended that Judge Carrolls February 25 Order was not an injunction and, in any event, that the
Investors had failed to meet the requirements for intervention. Accordingly, they argued that the
motion should be denied. On March 18, 2005, the Court issued an Order denying the Investors motion as moot. The Court
reasoned that, since its March 17 Order lifted the prohibition on the issuance of additional shares
of our stock, the Investors had, in essence, already received the relief they requested in their
motion to intervene. Therefore, the issues raised in that motion had become moot. The Companys Motion Re: the Gust Rosenfeld Retainer After purportedly seizing control of our company on December 9, 2004, Stephen Parent, acting
as the putative president of GoldSpring, authorized the payment of a $250,000 retainer to the law
firm of Gust Rosenfeld using funds of our company. On March 1, 2005, we filed a motion for an
order requiring Gust Rosenfeld to provide a detailed accounting of its use of these funds and to
refund the unused portion. 8




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On March 14, 2005, Gust Rosenfeld sent us a refund check for $83,903.38 and a ledger showing
how the firm spent the other $166,096.62. Among other things, the ledger revealed that Gust
Rosenfeld withdrew approximately $109,000 as payment for its attorneys fees and costs. The ledger
also showed payments to other lawyers and outside vendors totaling approximately $57,000. Included
in this amount were two refund payments to Stephen Parent totaling $21,000. We have filed a reply brief asking the Court to order Gust Rosenfeld to provide a more
detailed accounting of its expenditures, including billing invoices for legal services it
purportedly rendered to our company. We have also asked the Court to require Gust Rosenfeld to
provide a written explanation for the payments to other lawyers and outside vendors, as well as the
so-called refund payments to Parent. The New Consent Resolutions On March 21, 2005, defendants Stephen and Judith Parent filed a Motion for Order asking the
Court to remove certain directors of our companys Board of Directors. Attached to the motion was
a Consent in Lieu of a Special Meeting of the Shareholders of GoldSpring, Inc., dated March 18,
2005 (the March Consent). The March Consent was nearly identical to the one adopted by the
Parents and others on December 9, 2004. It purported to remove directors Robert T. Faber, John F.
Cook, Leslie L. Cahan, Todd S. Brown, Christopher L. Aguilar, Stanley A. Hirschman, and Phillip E.
Pierce as directors of our company. The March Consent was signed by shareholders Stephen Parent;
Judith Parent; Aztech Environmental Industries, Inc.; Jasmine House, LLC; Frontline 2001, LLC;
Jubilee Investment Trust PLC; Ronald M. Haswell; Mark and Jennifer Ward; Walter T. Plummer; Lynn
Zollinger; Maia Ray; and Rita Hardy. On March 25, 2005, our company and the plaintiffs filed a joint response to the Parents
Motion for Order. In it, we argued that (1) the shareholders who signed the March Consent did not
hold a majority of our companys stock, which rendered the Consent ineffective; (2) the Parents
solicited more than ten shareholders, and therefore violated Securities and Exchange Commission
Rule 14a; and (3) the Parents cannot obtain the relief they seek because they have not asserted an
affirmative claim in court. The Parents filed a reply and supplemental reply on March 20, 2005, and April 11, 2005,
respectively. In the reply, the Parents argued that the shareholders who signed the Consent do, in
fact, hold a majority of the outstanding shares as of the date it was executed, and that any shares
issued after that date are not to be counted. They also denied having solicited more than ten
persons and denied any obligation to state an affirmative claim before seeking the relief asked for
in their motion. In their supplemental reply, the Parents referred to our companys recent Form
8-K filing (the 8-K) with the Securities and Exchange Commission. In the 8-K, we disclosed that
our company had issued (1) 59,203,918 shares of restricted common stock in connection with the
Settlement Agreement Regarding Failure to File a Registration Statement; (2) six secured
convertible notes in an aggregate amount of $6,584,005 in connection with the Settlement Agreement
Regarding Mandatory Redemption Payment; and (3) convertible notes in the amount of $403,175 in
connection with the Settlement Agreement Regarding Failure to deliver shares due upon conversion.
The Parents contended that the transactions referred to in the 8-K constituted an unfair dilution
of the non-Merriman shareholders stock holdings. On April 20, 2005, we filed a Supplemental Notice to inform the Court that Messrs. Gasch and
Medhi do not support the March Consent. In addition, we informed the Court that Mr. Gasch had
signed a Declaration that (1) Mr. Gasch never agreed to serve on the proposed board of directors
contemplated by the March Consent, (2) that Mr. Gasch does not support the March Consent and, if
the March Consent constituted a valid shareholder resolution (which we do not believe) Mr. Gasch
would immediately vote to reinstate the entire Board of Directors as it currently exists, (3) Mr.
Gasch denounces and rescinds the purported Directors Consent Resolutions dated December 10, 2004
and no longer supports any of the resolutions or purported corporate actions contemplated in that
purported consent, and (4) Mr. Gasch has terminated Gust Rosenfeld as his counsel because he no
longer wishes to be associated with or jointed represented by Mr. Parent. Mr. Medhi also informed
us that he resigned as a director of our Board of Directors as currently constituted and as a
member of the board of directors designated by earlier consent resolution. We informed the Court
that these developments constitute additional reasons to deny the Parents motion. 
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Not applicable. 
 Item 3. Defaults Upon Senior Securities Under the terms of our November 2004 subscription agreement, we issued 8% convertible notes to an
investor group. Under the terms of the notes, our first principal and interest repayment was
scheduled for April 1, 2005. Prior to April 1, 2005, knowing that we did 9




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not have sufficient cash available to meet these obligations, we began negotiations with the major
note holders in an effort to delay repayment of both the principal and interest amounts for a
12-month period. Our negotiations with these note holders regarding the repayment delay have so
far been successful and we have reached a tentative agreement regarding the 12-month payment
deferral. We remain optimistic that we will reach a definitive agreement. However, in the event
we are not successful in achieving a payment deferral, we will be unable to meet the
current note obligations. While failure to reach a resolution would likely cause us to seek
external funding in order to meet our obligation, it is possible that we would be unable to secure
such funding. 
 Item 4. Submission of Matters to a Vote of Security Holders Not applicable. 
 Item 5. Other Information Not applicable. 
 Item 6. Exhibits and Reports on Form 8-K  (a)
    The following documents are filed as part of this Report:  (1)
    Financial statements filed as part of this Report:  
    Consolidated Balance Sheet as of March 31, 2005 (Unaudited)
    Consolidated Statement of Operations (Unaudited)
    Consolidated Statement of Cash Flows (Unaudited)
    Notes to Financial Statements  (2)
    Exhibits filed as part of this Report: ExhibitNumber
    
    Exhibit31.1
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a)
and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as
amended.31.2
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a)
and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as
amended.32.1
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
  (b)
    Reports filed on Form 8-K during the quarter ended March 31, 2005:  (1)
    A Report on Form 8-K was filed with the Securities and Exchange
Commission on February 23, 2005 under Item 5.01 relating to the granting of a
preliminary injunction by the United States District Court for the District of
Arizona ordering the reinstatement of the Board of Directors of the Company as it
existed prior to December 10, 2004. As a result of the Courts order, seven
directors were reinstated. A disclosure was also made in this report under Item
5.02 relating to the reinstatement of Robert T. Faber as President and Chief
Executive Officer of the Company and the appointment of Lisa S. Boksenbaum as
Secretary of the Company and Leslie L. Cahan as Treasurer of the Company. 10




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SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized. GOLDSPRING, INC.(Registrant)Date: May 13, 2005
    
    By:
    
    /s/ Robert T. FaberName:
    
    Robert T. FaberTitle:
    
    President and Chief Executive OfficerBy:
    
    /s/ Robert T. FaberName:
    
    Robert T. FaberTitle:
    
    Chief Financial Officer
 11




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EXHIBIT INDEX ExhibitNumber
    
    Exhibit31.1
    
    Certification of Chief Executive Officer pursuant to Rule
13a-14(a) and Rule 15d-14(a), promulgated under the Securities Exchange Act of
1934, as amended.31.2
    
    Certification of Chief Financial Officer pursuant to Rule
13a-14(a) and Rule 15d-14(a), promulgated under the Securities Exchange Act of
1934, as amended.32.1
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002