SECURITIES
      AND EXCHANGE COMMISSION


WASHINGTON,
      D.C. 20549







FORM
      10-QSB/A


Amendment
      No. 1










x
            QUARTERLYREPORT 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
                1934For the transition
              period from to









Commission
      File No. 000-32429





**GOLDSPRING,
      INC.**


(Exact
      name of small business issuer as specified in its charter)





FLORIDA
            
            7389
            
            65-0955118(State
                or other jurisdiction of
            
            (Primary
                Standard Industrial
            
            (I.R.S.
                Employerincorporation
                or organization)
            
            Classification
                Code Number)
            
            Identification
                No.)








P.O.
      Box
      1118


Virginia
      City, NV 89440


(775)
      847-5272


(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 x
      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.














TABLE
      OF
      CONTENTS





PART
      I - FINANCIAL
      INFORMATION


ITEM
                  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 ANALYSISOR
                  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
              10ITEM
                  4
              SUBMISSION
                  OF MATTERS TO A VOTE OF SECURITY HOLDERS
              10ITEM
                  5.
              OTHER
                  INFORMATION
              10ITEM
                  6
              EXHIBITS
                  AND REPORTS ON FORM 8-K
              10SIGNATURES
              
              12








**Statement
      Regarding Forward-Looking Statements**





*The
      statements contained in this report on Form 10-QSB that 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 our Form 10-KSB for the year ended
      December 31, 2004.*













**PART
      I -** **FINANCIAL
      INFORMATION**





**ITEM
      1 - FINANCIAL STATEMENTS**  
 **GOLDSPRING,
                    INC.****UNAUDITED
                    CONDENSED****CONSOLIDATED
                    BALANCE SHEET**
  **March
                    31, 2005**(Unaudited
                    - Restated)**ASSETS**CURRENT
                    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
                
                
                1,334,837Plant,
                    Equipment, Mine Development
                
                
                1,427,994PLANT,
                    PROPERTY AND EQUIPMENT
                
                
                2,762,831Accumulated
                    depreciation
                
                
                (295,622
                )TOTAL
                    PROPERTY AND EQUIPMENT
                
                
                2,467,209OTHER
                    ASSETS:Reclamation
                    deposit
                
                
                377,169Equipment
                    purchase deposit
                
                
                100,000TOTAL
                    OTHER ASSETS
                
                
                477,169TOTAL
                    ASSETS
                
                $
                3,888,684
 
 
 The
        accompanying notes are an integral part of these
        financial statements
 
 
 F-1
 
  
 **LIABILITIES
                  AND SHAREHOLDERS' DEFICIENCY**CURRENT
                  LIABILITIESAccounts
                  Payable
              
              $
              643,752Accrued
                  Expenses
              
              
              849,020Short-Term
                  Lease Obligations
              
              
              34,772Current
                  portion of long-term debt
              
              
              14,989,584TOTAL
                  CURRENT LIABILITIES
              
              
              16,517,128LONG-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
              
              
              553,190TOTAL
                  LONG-TERM DEBT AND OTHER LONG-TERM LIABILITIES
              
              
              799,306TOTAL
                  LIABILITIES
              
              $
              17,316,434SHAREHOLDERS'
                  DEFICITCommon
                  stock, $.000666 par value, 500,000,000shares
                  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
              
              
              (12,171,276
              )Accumulated
                  deficit - Current year
              
              
              (3,738,159
              )TOTAL
                  SHAREHOLDERS’ DEFICIENCY
              
              
              (13,427,750
              )TOTAL
                  LIABILITIES AND SHAREHOLDERS’ DEFICIENCY
              
              $
              3,888,684
   The
        accompanying notes are an integral part of these
        financial statements
 
 F-2
 
 
 **GOLDSPRING,
                    INC.****UNAUDITED****CONSOLIDATED
                    STATEMENTS OF OPERATIONS****For
                    the three month periods ended March
                    31,**
  **2005**
                
                **2004**(Unaudited-Restated)
                
                (Unaudited-Restated)REVENUE
                    FROM GOLD SALES, NET
                
                $
                512,091
                
                $
                -COSTS
                    AND EXPENSESCosts
                    Applicable to sales (exclusive of depreciation, and amortization
                    shown
                    separately below)
                
                
                -
                
                
                -Depletion,
                    depreciation and amortization
                
                
                75,787
                
                
                -Exploration
                
                
                1,269,721
                
                
                1,711,095General
                    and administrative
                
                
                323,433
                
                
                315,641Consulting
                    and professional services
                
                
                465,088
                
                
                92,404TOTAL
                    COSTS AND EXPENSES
                
                
                2,134,029
                
                
                2,118,840OTHER
                    INCOME (EXPENSE)Other
                    (See Note B)
                
                
                (1,874,633
                )
                
                -Interest
                    expense
                
                
                (255,109
                )
                
                -Interest
                    income
                
                
                13,521
                
                
                458(2,116,221
                )
                
                458NET
                    LOSS
                
                
                (3,738,159
                )
                
                (2,118,382
                )Net
                    loss per common share - basic
                
                $
                (0.022
                )
                $
                (0.012
                )Basic
                    weighted average common shares outstanding
                
                
                173,379,180
                
                
                175,294,000
 
 
 The
        accompanying notes are an integral part of these financial
        statements
 
 
 F-3
 
 **GOLDSPRING,
          INC.**
 **UNAUDITED** **CONSOLIDATED
          STATEMENTS OF CASH FLOWS**
 For
            the
            three month periods ended March 31,
 **2005**
                
                **2004**(Unaudited
                    - Restated)
                
                (Unaudited-Restated)Cash
                    flows from operating activities:Net
                    loss
                
                $
                (3,378,159
                )
                $
                (2,118,383
                )Adjustments
                    to reconcile net loss to net cashused
                    in operating activities:Depreciation,
                    depletion, and amortization
                
                
                75,787
                
                
                -Liquidated
                    damages from November 2004 restructuring
                
                
                1,874,633
                
                
                -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
                
                
                -
                
                
                (135,736
                )Increase
                    (decrease) in operating liabilities:Accounts
                    payable
                
                
                53,953
                
                
                240,045Accrued
                    expenses
                
                
                56,136
                
                
                253,396Asset
                    retirement obligation
                
                
                33,500Other
                
                
                351,726
                
                
                -Total
                    Adjustments to Reconcile Net Loss Used in Operating
                    Activities
                
                
                2,560,217
                
                
                399,705Net
                    cash used in operating activities
                
                
                (1,177,942
                )
                
                (1,718,678
                )Investing
                    activities:Equipment
                    deposit
                
                
                10,000
                
                
                -Acquisition
                    of plant, equipment and mineral properties
                
                
                (48,380
                )
                
                (66,144
                )Net
                    cash used in investing activities
                
                
                (38,380
                )
                
                (66,144
                )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
                
                
                364,138Cash
                    - 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
                
                $
                403,175Issuance
                    of notes for mandatory redemption payment (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-4
 
 GOLDSPRING,
        INC.
 NOTES
        TO
        FINANCIAL STATEMENTS
 March
        31,
        2005 AND 2004
 
 **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.
 
 **Restatement
        of Financial Statements**
 
 As
        a
        result of the restatements to our 2004 financials, discussed below, our March
        31, 2005 financial statements have been restated. The impact of the 2004
        restatements on our financials for the first quarter of 2005 are reflected
        in
        the following table.
  Upon
        review of the standards for reporting mineral reserves as defined by SEC
        Industry Guide 7 (“Guide 7”), we have concluded that we did not have sufficient
        information to establish the existence of reserves as of December 31, 2004
        and
        that certain costs that we had incurred in the development of our mining
        facility must be expensed as exploration or “test mining” costs. We have
        restated our 2004 financial statements to classify all costs previously
        capitalized (the recovery of which is dependent upon the economical extraction
        of gold from the mineralized material we are currently processing), as test
        mining expenses. These costs, which total approximately $4.5 million net
        of
        accumulated depreciation, include our asset retirement obligation asset of
        $453,786. In connection with our restatement of our mineral property assets,
        we
        have also reversed depletion taken on our mineral properties totaling $43,256.
  
 F-5
  The
                    effect of the restatements on the March 31, 2005 consolidated
                    statement of
                    operations is as follows
  As
                    Previously
                
                Effect
                    of
                
                AsReported
                
                Restatement
                
                RestatedMineral
                    Properties
                
                $
                1,738,670
                
                
                ($403,833
                )
                $
                1,334,837Plant,
                    Property and Equipment
                
                $
                5,104,276
                
                $
                (3,971,904
                )
                $
                1,132,372ARO/Reclamation
                    Liability
                
                $
                514,696
                
                $
                38,494
                
                $
                553,190Accumulated
                    Deficit - Prior Years
                
                
                ($7,681,757
                )
                
                ($4,489,519
                )
                
                ($12,171,276
                )Net
                    Loss - Current Year
                
                
                ($3,813,445
                )
                $
                75,286
                
                
                ($3,738,159
                )Net
                    Loss per share
                
                
                ($0.022
                )
                $
                0.00
                
                
                ($0.022
                )
 
 We
        have
        also restated our shareholders’ equity. On December 20, 2004, we received notice
        from holders of approximately $3.8 million of convertible notes of their
        intention to convert into shares of our common stock. In connection with
        the
        notice we reduced convertible notes payable by $3.8 million and recorded
        an
        additional 33,817,594 shares (converted at approximately $0.11 per share)
        at
        December 31, 2004. Upon further consideration, we have determined that since
        the
        shares had not been physically issued prior to year end, the liability and
        stockholders’ equity accounts should not be adjusted until the shares have been
        issued. Accordingly, we restated our convertible note and stock holder equity
        accounts by approximately $3.8 million. The restatement has no affect on
        net
        loss or cash flows as previously reported.
  Our
        decision to make the above-referenced restatements for the year ended December
        31, 2004 has resulted in the need to restate the financial statements for
        the
        first quarter of 2005. The first quarter financial information, as restated,
        is
        presented within this filing.
 ****
 **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 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.
 
 F-6
 
 *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% annual interest rate for the
        29,573,803 shares and accrued interest. In the event of a default, the annual
        interest rate increases to 18%.
  
 F-7
 
 
 **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 natural resource company, focused on gold and other precious
        metals. We are in the exploration stage, and our exploration program includes
        conducting test mining at our Billie the Kid / Lucerne property in northern
        Nevada. Our objective is to achieve growth and profitability through exploration
        at our current properties and acquisitions of projects that we believe we
        can
        bring into production within a short period of time. We currently own mineral
        property rights and conduct our primary exploration and test mining activities
        in Storey County, Nevada, located about 30 miles southeast of Reno, Nevada.
        This
        exploration project consists of the Plum Mine facility. We also own mineral
        permits in Alberta, Canada. We have no active operations in Canada.
  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 test mining 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
        exploration project. We also implemented modifications to our plant and
        equipment during the first half of 2005 to address our past difficulties
        and
        increasing efficiency. In the spirit of maximizing overall operating performance
        and reducing costs, effective August 1, 2005, the Company has consolidated
        its
        corporate office with the Plum Mine facility. The relocation will reduce
        costs
        and allow for more effective utilization of our resources, both human and
        capital.
  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 increased test mining production
        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 filed
        the SB-2 registration statement in April of 2005 and have delivered the shares.
        We are now in the process of trying to have the registration statement declared
        effective by the SEC. Until the registration statement is declared effective,
        we
        continue to incur liquidated damages under the November 30, 2004 Subscription
        Agreement (See Recent Financing Events and Restructuring for additional
        information).
  We
        continue to look for growth opportunities. This process consists of actively
        conducting exploration to identify additional mineralized material. The
        successful location of additional mineralized material on the existing property
        would allow us to expand the size and the lifespan of the Plum mining project,
        exclusive of new property acquisitions. 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.
  We
        also
        seek growth through the acquisition of mining projects which have proven
        in-ground reserves, advanced permitting, and solid exploration potential.
        We
        seek to acquire proven projects whose business operations and business models
        make those projects economically feasible for a company of our
        size.
  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 prior to September 30, 2005, after which time
        we
        plan to enter into a definitive purchase agreement. The proximity of these
        claims should allow us to explore the property in a cost-effective manner
        and
        likely increase the efficiency of our overall exploration activities. 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. Second, the claims will contribute to the
        enhancement of overall mine extraction and waste disposal efficiencies. Third,
        these claims will enlarge our footprint and have the potential for expanding
        the
        life of our existing Plum Mine exploration project. Finally, the addition
        of
        these properties will improve our geologic understanding of the entire physical
        area and its trends.
  
 1
 
 ***Restatement
        of Financial Statements***
  Upon
        review of the standards for reporting mineral reserves as defined by SEC
        Industry Guide 7 (“Guide 7”), we have concluded that we did not have sufficient
        information to establish the existence of reserves as of December 31, 2004
        and
        that certain costs that we had incurred in the development of our mining
        facility must be expensed as exploration or “test mining” costs. We have
        restated our 2004 financial statements to classify all costs previously
        capitalized (the recovery of which is dependent upon the economical extraction
        of gold from the mineralized material we are currently processing), as test
        mining expenses. These costs, which total approximately $4.5 million net
        of
        accumulated depreciation, include our asset retirement obligation asset of
        $453,786. In connection with our restatement of our mineral property assets,
        we
        have also restated our asset retirement obligation liability, classifying
        it as
        an environmental reclamation liability and not an asset retirement obligation
        as
        described by Financial Accounting Standards Board Statement No.
        143.
   We
        have
        also restated our shareholders’ equity. On December 20, 2004, we received notice
        from holders of approximately $3.8 million of convertible notes of their
        intention to convert into shares of our common stock. In connection with
        the
        notice we reduced convertible notes payable by $3.8 million and recorded
        an
        additional 33,817,594 shares (converted at approximately $0.11 per share)
        at
        December 31, 2004. Upon further consideration, we have determined that since
        the
        shares had not been physically issued prior to year end, the liability and
        stockholders’ equity accounts should not be adjusted until the shares have been
        issued. Accordingly, we restated our convertible note and stock holder equity
        accounts by approximately $3.8 million. The restatement has no affect on
        net
        loss or cash flows as previously reported.
   Our
        decision to make the above-referenced restatements for the year ended December
        31, 2004 has resulted in the need to restate the financial statements for
        the
        first quarter of 2005. The first quarter financial information, as restated,
        is
        presented within this filing.
   ***Results
        of Operations and Operational Plan***
  Our
        Plum
        Mine, which is located in Storey County, Nevada, went into test mining
        production in late third quarter 2004. We have not established reserves on
        this
        exploration project. Therefore, all of our activities on this property are
        considered test mining or exploratory in nature. Our mining operations
        essentially shut down in January 2005 due to a combination of harsh weather,
        equipment difficulties, and management disruption. Although test mining 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 output due to inoperable
        equipment. We have since taken steps to remedy our equipment challenges,
        including replacing the cone and screen plant on the crusher. Due to these
        improvements, we crushed 144,000 tons of mineralized material in the second
        quarter, representing an increase of 141% from the first quarter 2005.
  We
        have
        made several other improvements to our equipment and test mining operations
        since the end of the first quarter of 2005 to increase test mining production
        and improve efficiency. On the test mining side, we have added additional
        solution lines to the mineralized material on test 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 test production capacity at our Merrill Crowe
        processing plant by adding a new clarifier, changing the pumps and raising
        the
        height of the vacuum tower. With these changes, we increased capacity at
        the
        plant from 100 gallons per minute to 300 gallons per minute and we are now
        operating 24 hours per day, 7 days per week. 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.
  
 2
 
 During
        the first quarter of 2005, we crushed 59,000 tons of mineralized material
        at our
        Plum Mine test mine. 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 test 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 the operating expenses we incurred in the first quarter
        of
        2005. We believe that this high level of operating expense is typical for
        a mine
        in the test mining stage, as is the Plum Mine.
  In
        the
        remainder of 2005, we plan to focus the bulk of our efforts on achieving
        additional improvements in both test production and efficiency at our Plum
        Mine
        test mining project. We are continuing to pursue operational improvements
        through enhancements to our existing processes. These enhancements are expected
        to stem from increasing our volume of test 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 test production
        at
        the Plum Mine resulting in profitability and positive cash flow. While we
        may
        generate an operating profit above our operating costs in 2005, we may not
        recover our total costs of this exploration project.
  ***Comparative
        Financial Information:***
 
 **First
                  Quarter 2005**
              
              **First
                  Quarter 2004**
              
              **Difference**Revenue
              
              $
              512,091
              
              $
              0.0
              
              $
              512,091Exploration
                  Expense
              
              $
              1,269,721
              
              $
              1,711,095
              
              $
              441,374Liquidated
                  Damages
              
              $
              1,874,633
              
              $
              0.0
              
              $
              1,627,308Net
                  Loss
              
              
              ($3,738,159
              )
              
              ($2,118,382
              )
              
              ($1,619,777
              )
 
 We
        sold
        1,192 ounces of gold at an average price of $429 per ounce during the first
        quarter 2005 versus no gold sales in the first quarter 2004. During the first
        quarter 2004, we were constructing the infrastructure required to begin “test
        mining”.
 
 Exploration
        Expenses were $441,374 less for the first quarter of 2005 than the same period
        in 2004. This 2005 expense reduction reflects lower infrastructure expenditures
        in 2005 and a shift to “test mining”. Also, weather conditions during the first
        quarter 2005 limited the amount of actual mining and crushing performed.
        Our
        Company is an Exploration Stage enterprise and in accordance with Industry
        Guide
        7 infrastructure expenditures such as haul roads, leach pads and start-up
        costs
        were expensed. The majority of our infrastructure work was performed in 2004.
 
 In
        March
        2004 we completed a private placement which was subject to Non-Registration
        Events Provisions (“Non-Registration Provisions”). The Non-Registration
        Provisions required us to file and cause to become effective a registration
        statement with the Securities and Exchange Commission so that investors may
        sell
        their shares of common stock without restriction. Pursuant to the Subscription
        Agreement, liquidated damages accrue at a rate of percent (2%) of the investment
        amount for each thirty day period or part thereof for not having an effective
        Registration Statement. In November 2004 we capitalized 100% or $1.1 million
        of
        liquidated damages as part of the November 2004 restructuring. Our November
        2004
        subscription agreement also 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. His failure to
        submit
        the registration statement to the SEC by December 30, 2004 triggered liquidated
        damages to accrue at a rate of percent (2%) of the principal amount of the
        Debenture for each thirty day period or part thereof for not having an effective
        Registration Statement.
  ***Placer
        Claims, Water Rights, and Mineral Permits***
  We
        originally became a mineral company through an acquisition of unpatented
        placer
        mineral claims and the Big Mike copper claims in June 2003 from Ecovery,
        Inc.
        Specifically, 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. This acquisition did not
        include
        any real property rights. 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.
  
 3
 
 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. We have not completed any exploration activity on
        the
        project. 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. In November 2004, we entered into a Memorandum of
        Understanding to form a joint venture to begin exploration activities on
        this
        property. The negotiations were put on hold in December 2004 by the dispute
        over
        control of the company. We continue to look for a business partner to develop
        this project. We are still in discussions with the party who executed the
        Memorandum of Understanding in November 2004.
  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 negotiating the acquisition of the coal
        rights
        in this area. We are also investigating the possible acquisition of the rights
        to the energy minerals, gas, and oil on this property.
  This
        is
        an early stage project 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***
  We
        recognize that our cash resources are limited. Our continued existence and
        plans
        for future growth depend on our ability to obtain the capital necessary to
        operate, through the generation of revenue or the issuance of additional
        debt or
        equity. In July 2005, we received $800,000 in financing (See Recent Financing
        Events and Restructuring, below). While this additional funding will meet
        our
        immediate working capital needs, if we are not able to generate sufficient
        revenues and cash flows or obtain additional or alternative funding, we will
        be
        unable to continue as a going concern. As disclosed in the report of our
        independent registered public accounting firm in our financial statements
        provided in our Form 10-KSB for the year ended December 31, 2004, our recurring
        losses and negative cash flow from operations raise substantial doubt about
        our
        ability to continue as a going concern.
  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 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, we are in default on these notes, and 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.
  We
        have
        yet to realize an operating profit at our Plum Mine location. However, we
        believe that our Plum Mine operations will become profitable and generate
        positive cash flow during the year 2005. While we may generate an operating
        profit above our operating costs in 2005, we may not recover our total costs
        of
        this exploration project.
  We
        expect
        to expand our existing test leach pads, which currently number three, to
        a total
        of either four or five test leach pads during 2005. The cost of this expansion
        will be approximately $600,000. We are also in the process of taking over
        the
        crushing operations from our third-party contractor. This transition requires
        us
        to acquire and assemble our own crushing equipment, at an approximate cost
        of
        $100,000. These expenditures represent our only major capital expenditures
        currently planned for 2005. We intend to finance our crushing equipment,
        our
        test leach pad expansion project and any other capital expenditures in 2005
        through the issuance of debt and equity instruments to existing shareholders
        and
        other parties.
  
 4
   ***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
        or
        part thereof 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 June 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 2004 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 2004 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 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.
  
 5
 
 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. Pursuant to the terms of the Subscription Agreement,
        the
        damages may be paid in cash or in unrestricted common stock. If paid in stock,
        we are required to pay 200% of the cash penalty. Because we do not have the
        cash
        or free-trading stock to pay the liquidated damages, we reached a settlement
        agreement with the investors to pay the liquidated damages in restricted
        common
        stock valued at $0.03 per share. The total liquidated damages accrued between
        December 30, 2004 and April 27, 2005 was approximately $ 1,776,000. Pursuant
        to
        this settlement agreement, we issued approximately 59 million shares of
        restricted common stock in April 2005.
  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 filed
        the SB-2 registration statement in April of 2005 and have delivered the shares.
        We are now in the process of trying to get the registration statement declared
        effective by the SEC. Until the registration statement is declared effective,
        we
        continue to incur liquidated damages under the November 30, 2004 Subscription
        Agreement.
 ****
 **Item
        3.**  **Controls
        and Procedures**
  Based
        on
        the most recent evaluation, which was completed as of the end of the period
        covered by this Form 10-QSB, we believe our company’s disclosure controls and
        procedures (as defined in the Exchange Act Rules 13a-15(e) and 15d-15(e)
        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. Our executive officers
        have also concluded that our disclosure controls and procedures are also
        effective to give reasonable assurance that the information required to be
        disclosed in our filings is recorded, processed, summarized and reported
        within
        the time periods specified in the rules and forms of the SEC.
  We
        have
        identified conditions as of March 31, 2005 that we believe are significant
        deficiencies 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 have taken corrective
        measures since the end of the second quarter of 2005 to remedy these
        deficiencies. These measures include our decision to consolidate the corporate
        office with the office at the Plum Mine operation. This consolidation has
        provided the corporate office with additional accounting personnel. We believe
        that the presence of additional qualified accounting personnel will allow
        us to
        effectively correct the lack of segregation of duties in accounting and
        financial reporting activities.
 
 In
        December 2003 our CFO implemented a business expense reimbursement policy
        which
        he reviewed with all employees who regularly traveled for business including
        the
        Company’s founder, CEO and Chairman. The CFO discussed the policy again with the
        former CEO and Chairman in January 2004 due to his failure to comply with
        the
        policy. The CEO’s continued failure to properly document business expenses led
        the CFO to discuss the problem with the Company’s Board of Directors, the
        Company’s outside auditor and legal counsel. In April / May 2004 the Company’s
        outside auditor spoke with the CEO regarding his failure to document travel
        and
        entertainment expenses. In August 2004 the Company’s Board of Directors decided
        to take firm measures to resolve this problem with the CEO. These steps led
        to
        the CEO’s resignation on September 3, 2004. The Board then appointed the CFO as
        President and Chief Executive Officer.
 
 6
 
 
 In
        response to this deficiency, five independent board members were added and
        an
        audit committee, composed of directors’ independent of the Company’s day-to-day
        management function, was formed to oversee the financial reporting and to
        review
        and approve executive expense account charges.
 
 As
        our
        former CFO is assuming the duties of the CEO and the Company has presently
        not
        hired another individual to act as CFO, we believe we have a significant
        deficiency with respect to the lack of qualified accounting personnel. We
        have
        been able to mitigate this deficiency by engaging outside consultants to
        assist
        the Company in its accounting activities, but acknowledge that the only
        effective long-term solution to our accounting needs is to hire a qualified
        CFO.
        Due to our budgetary constraints and the small size of our company we are
        uncertain as to when we will be able to accomplish this. We estimate that
        the
        annual cost of a qualified individual to act as the Company’s CFO would be
        between $75,000 and $100,000.
 
 We
        are in
        the process of taking additional 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. The discovery process is currently ongoing.
  
 7
 
 
 Mr.
        Treminio has since been dismissed from the suit in accordance with the terms
        of
        a prior settlement agreement between Mr Treminio and GoldSpring, Inc..
        Mr. Shaw filed an answer, *in
        pro per* ,
        on
        April 6, 2005, and generally denied the allegations of the complaint. Mr.
        Haswell and Mr. Doyle have filed answers and generally denied the allegations
        of
        the complaint. Ecovery, Inc. has not yet responded to the complaint.
  ***The
        Federal Court Case***
  *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.”
 
 8
  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 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 defendants (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. On June 10, 2005, the
        defendants (the Parents) filed their opening appellate brief. The plaintiffs
        filed their response brief on August 16, 2005. The defendants’ response brief is
        due on October 3, 2005.
  *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.
  
 9
 **
 
 *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.
  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.
  
 10
 
  **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 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, there can be no assurance that such funding
        would
        be available. If such funding were not available, we might have no alternative
        other than to default on these notes.
 
 **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
 
 11
 
 (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.
 
 12
 
 **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:
                September 21 , 2005
              By:
              /s/ Robert
                T. FaberName:
              Robert T. FaberTitle:
              President
                and Chief Executive OfficerBy:
              Robert
                T. FaberName:
              Robert T. FaberTitle:
              Chief Financial Officer