SECURITIES
      AND EXCHANGE COMMISSION


WASHINGTON,
      D.C. 20549









FORM
      10-QSB










[X]
      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT
      OF 1934




For
      the
      quarterly period ended September 30, 2005


OR




[ 
      ]
      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT
      OF 1934




For
      the
      transition period from __________ to __________




Commission
      File 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 [  ]




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 [  ]




State
      the
      number of shares outstanding of each of the issuer's classes of common equity,
      as of the last practicable date: 332,143,694 shares of Common Stock, $0.000666
      Par Value, as of October 31, 2005.











TABLE
      OF
      CONTENTS


PART
      I -
      FINANCIAL INFORMATION




ITEM
                1.
            
            UNAUDITED
                FINANCIAL STATEMENTS
            
            F-1Consolidated
                Balance Sheet as of September 30, 2005 (Unaudited)
            
            F-1Consolidated
                Statements of Operations for the three month periods ended
                September
                30, 2005 and 2004 (Unaudited)
            
            F-2Consolidated
                Statements of Operations for the nine month periods ended
                September
                30, 2005 and 2004 (Unaudited)
            
            F-3Consolidated
                Statements of Cash Flows for the periods ended September 30, 2005
                and 2004
                (Unaudited)
            
            F-4Notes
                to Financial Statements
            
            F-5-6ITEM
                2.
            
            MANAGEMENT'S
                DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
            
            1ITEM
                3.
            
            CONTROLS
                AND PROCEDURES
            
            12PART
                II - OTHER INFORMATIONITEM
                1.
            
            LEGAL
                PROCEEDINGS
            
            13ITEM
                2.
            
            UNREGISTERED
                SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
            
            17ITEM
                3.
            
            DEFAULTS
                UPON SENIOR SECURITIES
            
            18ITEM
                4.
            
            SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY HOLDERS
            
            18ITEM
                5.
            
            OTHER
                INFORMATION
            
            19ITEM
                6.
            
            EXHIBITS
                AND REPORTS ON FORM 8-K
            
            19SIGNATURES
            
            21





**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.**





**GOLDSPRING,
                  INC.****UNAUDITED
                  CONDENSED CONSOLIDATED BALANCE SHEET**
  **ASSETS**
              
              September
                  30,
                2005
                (Unaudited)
              
              As
                  Restated
                December
                  31,
                2004CURRENT
                  ASSETS:Cash
                  and cash equivalents
              
              $
              112,247
              
              $
              1,951,802Prepaid
                  expenses and other current assets
              
              
              33,999
              
              
              149,795Finished
                  goods inventory
              
              
              32,457
              
              
              239,943Inventory
              
              
              29,785
              
              
              48,745Discount
                  on Notes Payable
              
              
              648,975
              
              
              -TOTAL
                  CURRENT ASSETS
              
              
              857,463
              
              
              2,390,285PLANT,
                  EQUIPMENT, ,AND MINERAL PROPERTIES, NET:Mineral
                  properties
              
              
              1,689,837
              
              
              1,334,837Plant
                  and Equipment
              
              
              1,543,764
              
              
              1,379,614Plant,
                  Equipment and Mineral Properties
              
              
              3,233,601
              
              
              2,714,451Accumulated
                  depreciation
              
              
              (449,419
              )
              
              (219,834
              )TOTAL
                  PROPERTY AND EQUIPMENT
              
              
              2,784,182
              
              
              2,494,617OTHER
                  ASSETS:Reclamation
                  deposit
              
              
              377,169
              
              
              377,169Equipment
                  purchase deposit
              
              
              100,000
              
              
              110,000TOTAL
                  OTHER ASSETS
              
              
              477,169
              
              
              487,169TOTAL
                  ASSETS
              
              $
              4,118,814
              
              
              5,372,071CURRENT
                  LIABILITIESAccounts
                  Payable
              
              $
              1,191,505
              
              $
              589,799Accrued
                  Expenses
              
              
              299,670
              
              
              792,884Accrued
                  Liquidated Damages
              
              
              1,758,676
              
              
              -Accrued
                  Interest
              
              
              505,708
              
              
              -Short-Term
                  Lease Obligations
              
              
              34,771
              
              
              34,517Current
                  portion of long-term debt
              
              
              15,667,772
              
              
              11,521,776TOTAL
                  CURRENT LIABILITIES
              
              
              19,458,102
              
              
              12,938,976LONG-TERM
                  DEBT AND OTHER LONG-TERM LIABILITIESLong-term
                  debt, net of current portion
              
              
              132,795
              
              
              243,858Long-term
                  Lease obligation, net of current portion
              
              
              89,463
              
              
              119,152Long-term
                  Reclamation liability
              
              
              553,190
              
              
              553,190TOTAL
                  LONG-TERM DEBT AND OTHER LONG-TERM LIABILITIES
              
              
              775,448
              
              
              916,200TOTAL
                  LIABILITIES
              
              $
              20,233,550
              
              $
              13,855,176SHAREHOLDERS'
                  DEFICITCommon
                  stock, $.000666 par value, 500,000,000shares
                  authorized , 328,785,390 shares issued and outstanding
              
              $
              218,971
              
              $
              113,966Treasury
                  Stock
              
              
              (67
              )
              
              (67
              )Additional
                  paid-in capital
              
              
              5,490,349
              
              
              3,574,272Accumulated
                  deficit - Prior years
              
              
              (12,171,276
              )
              
              (2,601,741
              )Accumulated
                  deficit - Current year
              
              
              (9,652,713
              )
              
              (9,569,535
              )TOTAL
                  SHAREHOLDERS’ DEFICIENCY
              
              
              (16,114,736
              )
              
              (8,483,105
              )TOTAL
                  LIABILITIES AND SHAREHOLDERS’ DEFICIENCY
              
              $
              4,118,814
              
              $
              5,372,071




The
      accompanying notes are an integral part of
      these financial statements.




F-1








**GOLDSPRING,
                  INC.****UNAUDITED****CONSOLIDATED
                  STATEMENTS OF OPERATIONS****For
                  the three month periods ended September
                  30,**
  **2005**
              
              **2004**(Unaudited)
              
              (Unaudited)
                  - restatedREVENUE
                  FROM GOLD SALES, NET
              
              $
              951,586
              
              $
              450,252COSTS
                  AND EXPENSESDepletion,
                  depreciation and amortization
              
              
              72,899
              
              
              243,836Reclamation,
                  Exploration and Test Mining Expenses
              
              
              1,061,186
              
              
              690,856General
                  and administrative
              
              
              102,140
              
              
              289,627Other
              
              
              55,311
              
              
              195,734TOTAL
                  COSTS AND EXPENSES
              
              
              1,291,536
              
              
              1,420,053OTHER
                  INCOME (EXPENSE)Gain
                  on derivative instruments, net
              
              
              -
              
              
              49,310Liquidated
                  Damages
              
              
              (1,758,676
              )
              
              -Other
              
              
              -
              
              
              -Interest
                  expense
              
              
              (882,216
              )
              
              -Interest
                  income
              
              
              -
              
              
              20,110(2,640,892
              )
              
              69,420NET
                  LOSS
              
              
              (2,980,842
              )
              
              (900,381
              )Net
                  loss per common share - basic
              
              $
              (0.011
              )
              $
              (0.005
              )Basic
                  weighted average common shares outstanding
              
              
              278,751,210
              
              
              192,859,611


The
      accompanying notes are an integral part of
      these financial statements.





F-2








**GOLDSPRING,
                  INC.****UNAUDITED****CONSOLIDATED
                  STATEMENTS OF OPERATIONS****For
                  the nine month periods ended September
                  30,**
  **2005**
              
              **2004**(Unaudited)
              
              (Unaudited)
                  - restatedREVENUE
                  FROM GOLD SALES, NET
              
              $
              2,155,538
              
              $
              450,252COSTS
                  AND EXPENSESDepletion,
                  depreciation and amortization
              
              
              229,584
              
              
              243,836Reclamation,
                  Exploration and Test Mining Expenses
              
              
              3,870,316
              
              
              690,856General
                  and administrative
              
              
              779,372
              
              
              960,309Consulting
                  and professional services
              
              
              717,774
              
              
              341,880TOTAL
                  COSTS AND EXPENSES
              
              
              5,597,046
              
              
              2,236,881OTHER
                  INCOME (EXPENSE)Gain
                  on derivative instruments, net
              
              
              -
              
              
              444,460Liquidated
                  Damages
              
              
              (4,619,144
              )
              
              -Other
              
              
              -
              
              
              (42,180
              )Interest
                  expense
              
              
              (1,605,587
              )
              
              -Interest
                  income
              
              
              13,526
              
              
              32,746(6,211,205
              )
              
              435,026NET
                  LOSS
              
              
              (9,652,713
              )
              
              (1,351,603
              )Net
                  loss per common share - basic
              
              $
              (0.042
              )
              $
              (0.007
              )Basic
                  weighted average common shares outstanding
              
              
              232,206,184
              
              
              187,168,336


The
      accompanying notes are an integral part of
      these financial statements.




F-3




**GOLDSPRING,
      INC.**


**UNAUDITED** **CONSOLIDATED STATEMENTS OF CASH FLOWS**


For
                      the nine month periods ended September 30,**2005**
                    
                    
                    **2004**(Unaudited)
                    
                    
                    (Unaudited)
                        -
                      restatedCash
                      flows from operating activities:Net
                        loss
                    
                    $
                    (9,652,713
                    )
                    $
                    (1,351,603
                    )Adjustments
                        to reconcile net loss to net cashused
                        in operating activities:Depreciation,
                        depletion, and amortization
                    
                    
                    229,584
                    
                    
                    223,820Accretion
                        of accumulated reclamation obligations
                    
                    
                    -
                    
                    
                    5,940Write-down
                        of long lived assets
                    
                    
                    -
                    
                    
                    14,076Liquidated
                        damages from March 2004 financing and November 2004 restructuring
                    
                    
                    4,619,144
                    
                    
                    -Consulting
                        services provided in exchange for common stock
                    
                    
                    -
                    
                    
                    42,000(Increase)
                        Decrease in operating assets:Finished
                        goods inventory
                    
                    
                    207,486
                    
                    
                    (197,212
                    )Inventory
                    
                    
                    18,960
                    
                    
                    13,165Prepaid
                        and other current assets
                    
                    
                    115,796
                    
                    
                    (21,123
                    )Other
                        assets
                    
                    
                    -
                    
                    
                    (60,000
                    )Increase
                        (decrease) in operating liabilities:Accounts
                        payable
                    
                    
                    601,706
                    
                    
                    890,414Accrued
                        expenses
                    
                    
                    782,162
                    
                    
                    135,000Other
                    
                    
                    (68,999
                    )
                    
                    20,015Total
                        Adjustments to Reconcile Net Loss Used in Operating
                        Activities
                    
                    
                    6,505,839
                    
                    
                    1,066,095Net
                        cash used in operating activities
                    
                    
                    (3,146,874
                    )
                    
                    (285,508
                    )Investing
                        activities:Equipment
                        deposit
                    
                    
                    (10,000
                    )
                    
                    -Acquisition
                        of plant, equipment and mineral properties
                    
                    
                    (369,150
                    )
                    
                    (3,974,088
                    )Net
                        cash used in investing activities
                    
                    
                    (379,150
                    )
                    
                    (3,974,088
                    )Financing
                        activities:Net
                        Proceeds from Issuance of Stock
                    
                    
                    -
                    
                    
                    -Proceeds
                        from financing, net
                    
                    
                    885,410
                    
                    
                    9,428,780Purchase
                        and Cancellation of Company’s Stock
                    
                    
                    -
                    
                    
                    (150,000
                    )Purchase
                        of Company’s Stock and Recorded to Treasury
                    
                    
                    -
                    
                    
                    (75,000
                    )Conversion
                        of debt into Company’s common shares
                    
                    
                    885,812Issuance
                        of Note for acquisition of mining claims
                    
                    
                    160,000
                    
                    
                    -Principal
                        payment Note Payable
                    
                    
                    (244,753
                    )
                    
                    (300,000
                    )Net
                        Cash flows provided by financing activities
                    
                    
                    1,686,469
                    
                    
                    8,903,780Net
                        Increase (Decrease) in cash
                    
                    
                    (1,839,555
                    )
                    
                    4,644,184Cash
                        - beginning of period
                    
                    
                    1,951,802
                    
                    
                    364,138Cash
                        - end of period
                    
                    $
                    112,247
                    
                    $
                    5,008,322Supplemental
                        disclosures of non-cash investing and financing activities:Issuance
                        of notes for liquidated damages for failure to deliver
                        shares
                    
                    $
                    403,175
                    
                    $
                    -Issuance
                        of notes for mandatory redemption payment plus accrued interest
                    
                    $
                    6,885,184
                    
                    $
                    -Purchase
                        and cancellation of common stock in connection with mandatory
                        redemption
                        payment
                    
                    $
                    6,801,975
                    
                    $
                    -Purchase
                        of assets
                    
                    $
                    
                    
                    $
                    168,202Issuance
                        of Company stock for acquisition of mining claims
                    
                    $
                    150,000
                    
                    $
                    -Issuance
                        of Company stock for interest expense
                    
                    $
                    989,008
                    
                    $
                    -Issuance
                        of Company stock for liquidated damages
                    
                    $
                    2,983,952
                    
                    $
                    -


The
      accompanying notes are an integral part of
      these financial statements.




F-4


GOLDSPRING,
      INC.


NOTES
      TO
      FINANCIAL STATEMENTS


September
      30, 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 September 30,
      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*




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 annual financial statement 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.




**NOTE
      B -LIQUIDATED DAMAGES**




For
      the
      third quarter of 2005 (ended September 30, 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
            
            $
            1,758,676$
            1,758,676




F-5


*Non-Registration
      Provisions*




Our
      SB-2
      Registration Statement was declared effective on October 3, 2005, which caused
      the liquidated damages referenced in this Note to cease accruing. The liquidated
      damages arose from our November 2004 subscription agreement, which 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 2% of the face value
      of
      the note for each 30-day period or part thereof after December 30, 2004 until
      our registration statement was declared effective. For the quarter ended
      September 30, 2005, the accrued liquidated damages totaled $ 1,758,676.




**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 the product
      of the number of shares of common stock otherwise deliverable upon conversion
      of
      the note’s principal and interest multiplied by the highest price of our common
      stock for the period beginning with the Deemed Conversion Date (the date the
      holder elects to convert the note) and ending with the payment date. On March
      7,
      2005, we received a mandatory redemption payment demand relating to our failure
      to deliver stock certificates representing 29,573,803 shares of our common
      stock. Under the mandatory redemption payment provisions of the November 2004
      subscription agreement, we repurchased the 29,573,803 shares of common stock
      at
      $0.23 per share, or $6,801,975. We issued a secured convertible note in the
      aggregate amount of $6,885,184 with a 12% interest rate for the 29,573,803
      shares and accrued interest. Payments on this note were scheduled to begin
      on
      April 1, 2005. We are in default on this note, causing the interest rate to
      increase to the default rate of 18%.




F-6


**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
      September 30, 2005, as well as our future results.




***Overview***




We
      are an
      emerging North American precious metals mining company, which was formed in
      June
      2003. In less than two years, we have brought a gold and silver project into
      production, established a solid footprint around our operations in northern
      Nevada, and acquired mineral rights in Canada. We plan to build on this success
      through the acquisition of mineral properties in North America that can be
      efficiently put into near-term production. Our objectives are to increase
      reserves, increase production and increase cash flow to maximize return for
      our
      shareholders.




2005
      has
      been a year filled with challenges for our Company. In addition to trying to
      bring our Plum Mine operation into profitable production, we have continued
      to
      experience the costs and the distractions of the litigation that has impacted
      our Company since late 2004. The litigation has been a drain on our scarce
      capital and human resources. (See Part II, Item 1, “Legal Proceedings,” for a
      detailed discussion.) We are committed to finding a resolution to our pending
      litigation matters that will allow our management to focus on building a
      successful, profitable operation. We are actively seeking financing to meet
      our
      working capital needs. If we are unable to secure such financing, we may be
      unable to continue as a going concern.




In
      March
      2005, we initiated a program to evaluate each process of our mining operation.
      The intent of the program is to identify additional efficiencies that can be
      implemented to improve our overall performance. The program commenced with
      our
      hiring of Scott Jolcover as the mine manager. Mr. Jolcover has significant
      experience in gold mining, primarily around the area of our current operation.
      To date we have made modifications to our processing plant, equipment and
      operations to increase operating efficiency and improve our financial
      performance. In the spirit of maximizing overall operating performance and
      reducing costs, in August 2005, we consolidated our corporate office with the
      Plum Mine facility. The relocation has reduced costs and allowed for more
      effective utilization of our resources, both human and capital.




The
      new
      contact information for the corporate office, effective August 1, 2005,
      is:




P.O.
      Box
      1118


Virginia
      City, NV 89440


Tel
      775.847.5272


Fax
      775.847.4762


www.goldspring.us




Additional
      Contact Information:




Lisa
      Boksenbaum, Corporate and Investor Relations


(480)
      203-0510


E-mail:
      lisab@goldspring.us




We
      continue to look for growth opportunities. On August 31, 2005, we completed
      the
      acquisition of 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. In September 2005, we signed a purchase agreement
      to
      acquire the leases on an additional 19 mineral claims in the same region from
      Comstock Gold, LLC. These acquisitions expand our footprint in the Comstock
      Lode
      region and have the potential for expanding the life of our existing Plum Mine
      operation. The addition of these properties should also provide an opportunity
      to expand our exploration program and improve our geologic understanding of
      the
      physical area and its trends.




1


We
      held
      our Annual Shareholders’ Meeting on October 26, 2005 in Carson City, Nevada. At
      that meeting, our shareholders elected the following slate of five independent
      directors: Christopher L. Aguilar, Todd S. Brown, Stanley A. Hirschman, Bill
      Nance and Rex L. Outzen. The new Board of Directors elected Mr. Aguilar to
      serve
      as Chairman of the Board. The Board also re-elected Robert Faber to serve as
      our
      Company’s President and Chief Executive Officer and elected Lisa Boksenbaum to
      serve as our Company’s Secretary and Treasurer. The results of the election can
      be found below in Part II, Item 4 “Submission of Matters to a Vote of Security
      Holders”.




***Results
      of Operations and Operational Plan***




During
      the third quarter of 2005, our Company continued to focus on operations and
      efficiencies. One of the operational improvements was our takeover of the
      crushing operations at the Plum Mine, which provided us with the opportunity
      to
      have greater control over our overall operations and production results. Our
      third-party crushing contractor had struggled to provide us with continuous
      crushing services, straining our ability to increase our gold production. On
      July 20, 2005, our third-party contractor shut down their crushing operations,
      so that they could dismantle and remove their crushing circuit, creating space
      for the installation of our crushing circuit. We invested approximately $200,000
      procuring conveyors and installing the crushing circuit. The contractor
      continued their mining at the Plum Mine until August 11, 2005, at which time
      mining was suspended due to a lack of space to stockpile the uncrushed
      mineralized material. Delays in the arrival of the conveyor systems for the
      crushing circuit resulted in our missing our targeted completion date for the
      circuit by approximately 30 days. Crushing operations resumed on October 1,
      2005, and mining operations resumed on November 7, 2005. The delay in resuming
      our crushing operations impacted our ability to place new mineralized material
      on the pad and has resulted in lower gold production for the third quarter.
      The
      results of our crushing in October 2005 were positive. We crushed 40,000 tons
      of
      stockpiled mineralized material. We believe we are on track to achieve our
      operating goals for crushing and to realize the financial savings anticipated
      in
      taking over the crushing operations.




We
      added
      Steve Russell, a geologist with over 20 years of experience in the Comstock
      Lode
      district, to our team in October 2005. One of his primary responsibilities
      is to
      oversee ore control in the mine pit. We believe that better ore control in
      the
      pit will reduce dilution, thus improving the grade of mineralized material
      being
      placed on the leach pad and increasing gold production.




In
      the
      remainder of 2005, we plan to focus the bulk of our efforts on achieving
      additional operational improvements in both production and efficiency at our
      Plum Mine operation. We are continuing to pursue operational improvements
      through enhancements to our existing processes. These enhancements are expected
      to stem from increasing our volume of production combined with lowering the
      cost
      of our processes. We are optimistic that the addition of a geologist to manage
      ore control will lead to higher recovery rates, and increased gold production.
      Our objective for operational performance in 2005 is to establish a stable
      and
      predictable level of gold and silver production at the Plum Mine resulting
      in
      profitability and positive cash flow.




***Comparative
      Financial Information:***





**Nine
                Months ended**
              **September
                30, 2005**
            
            **Nine
                Months ended**
              **September
                30, 2004**
            
            **Difference**Revenue
            
            $
            2,155,538
            
            $
            450,252
            
            $
            1,705,286Reclamation,
                Exploration and Test Mining Expenses
            
            $
            3,870,316
            
            $
            690,856
            
            $
            3,179,460Liquidated
                Damages
            
            $
            4,619,144
            
            $
            0.0
            
            $
            4,619,144Interest
                Expense
            
            $
            1,605,587
            
            $
            0.0
            
            $
            1,605,587Net
                Loss
            
            
            ($9,652,713
            )
            
            ($1,351,603
            )
            
            ($8,301,110
            )





2


We
      sold  5,004
      ounces of gold at an average price of $431 per ounce during the nine-month
      period ended September 30, 2005 compared to gold sales of  1,124
      ounces at an average price of $ 400 per ounce during the same period of 2004.
      We
      spent the first six months of 2004 completing the required infrastructure to
      complete our “test mine” and did not sell any gold until the third quarter of
      2004.





Reclamation,
      Exploration and Test Mining Expenses were $3,179,460 more for the first nine
      months of 2005 than the same period in 2004. This 2005 expense increase reflects
      the transition to full-time “test mining” in 2005. During the first nine months
      of 2004, our focus was on building the infrastructure for our mining operation.
      The third quarter of 2004 was the first quarter in which we conducted full-scale
      test mining. Our Company is an Exploration Stage enterprise as defined by SEC
      Industry Guide 7, and, in accordance with SEC Industry Guide 7, infrastructure
      expenditures such as haul roads, leach pads and start-up costs were expensed.





**Quarter
                ended**
              **September
                30, 2005**
            
            **Quarter
                ended**
              **September
                30, 2004**
            
            **Difference**Revenue
            
            $
            951,586
            
            $
            450,252
            
            $
            501,334Reclamation,
                Exploration and Test Mining Expense
            
            $
            1,061,186
            
            $
            690,856
            
            $
            370,330Liquidated
                Damages
            
            $
            1,758,676
            
            $
            0.0
            
            $
            1,758.676Interest
                Expense
            
            $
            882,216
            
            $
            0.0
            
            $
            882,216Net
                Loss
            
            
            ($2,980,842
            )
            
            ($900,381
            )
            
            ($2,000,461
            )





During the
      third quarter
      of 2005 we sold 2,187 ounces of gold at an average price of $ 435 per ounce
      compared to gold sales of 1,124 ounces at an average price of $ 400 per ounce
      during the same period of 2004. Our “test mine” became operational during the
      third quarter 2004, which was our first quarter of selling gold. Prior to the
      3 rd quarter
      2004 we were focused on constructing the required infrastructure to complete
      our
“test mine.”





Reclamation,
      Exploration and Test Mining Expenses in the third quarter of 2005 were $370,330
      more than the third quarter of 2004. This variance reflects the exploration
      drilling performed during the third quarter of 2005 plus the shift from
      infrastructure construction to “test mining.” As detailed above, 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
      liquidated damages included in the tables above stemmed from Non-Registration
      Events Provisions in our November 2004 Subscription Agreement (“Non-Registration
      Provisions”). The Non-Registration Provisions 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 be incurred at a rate of two percent (2%) of
      the
      principal amount of the Debenture for each thirty day period or part thereof
      for
      not having an effective Registration Statement. We have the option to pay the
      liquidated damages in cash or common stock. If we choose to pay in stock, we
      are
      required to pay 200% of the liquidated damages amount. Because our Company
      does
      not currently have sufficient funds to pay in cash, we intend to meet this
      obligation by issuing common shares. Thus, the total amount of liquidated
      damages recorded for the third quarter represents 200% of the cash total. The
      liquidated damages ceased when our registration statement became effective
      on
      October 3, 2005.




3


At
      September 30, 2005, our Company had approximately $15,500,000 of outstanding
      debt bearing an average interest rate of 15%. This debt originated from our
      November 2004 restructuring of the March 2004 private placement, in which common
      shares were exchanged for convertible debt currently bearing interest at 15%
      per
      annum. (See “Recent Financing Events and Restructuring,” below) Prior to
      November 2004, our Company had no outstanding interest-bearing
      debt.





***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.
      The transaction had an effectuation date of March 11, 2003. 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.




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 are actively looking for a business partner to develop
      this
      project.




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. Iron
      bearing material was discovered in the area covered by our mineral permits
      in
      1953 from oil and gas drilling. 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 have reviewed the existing data and
      conducted a preliminary pre-feasibility study on the 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 the third quarter of 2005, we received $1,000,000 in financing (See
      “Recent Financing Events and Restructuring,” below). While this additional
      funding may 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. We have yet to
      realize an operating profit at our Plum Mine location. 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.




Furthermore,
      the litigation that our Company has been involved in since late 2004 has
      strained the Company’s financial resources . (See Part II, Item 1, “Legal
      Proceedings,” for a detailed discussion.) If we are unable to resolve the
      litigation in the near future, the ongoing legal costs may impact 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. We are in default on
      these notes. We are working with the note holders to cure the default. 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.


In
      March
      2005, we issued a secured convertible note in the aggregate amount of $6,885,184
      with a 12% interest rate for the 29,573,803 shares and accrued interest due
      under the mandatory redemption payment provisions of our November 2004
      subscription agreement. Payments on this note were scheduled to begin on April
      1, 2005. We are in default on this note, causing the interest rate to increase
      to the default rate of 18%. We are working with the note holder to cure the
      default. 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.




During
      the third quarter, we took over the crushing operations from our third-party
      contractor. This transition required us to acquire and assemble our own crushing
      equipment at an approximate cost of $200,000. We financed the crushing equipment
      through the issuance of secured notes to existing shareholders. We expect to
      expand our existing leach pads, which currently number three, to a total of
      five
      leach pads during 2006. The cost of this expansion will be approximately
      $600,000. We intend to finance our leach pad expansion project and any other
      capital expenditures in the remainder of 2005 and 2006 through the issuance
      of
      debt or equity instruments to existing shareholders and other parties. There
      can
      be no assurance that such financing will be available.





4


**RISK
      FACTORS**




*Before
      you invest in our common stock, you should be aware that there are risks,
      including those set forth below. You should carefully consider these risk
      factors, together with all the other information included in this prospectus,
      before you decide to purchase shares of our common stock.*




**Risks
      Related to Our Business**




***We
      have limited resources and our inability to obtain additional financing could
      affect our ability to continue as a going concern.***




We
      have
      incurred substantial losses since our inception, and we are currently
      experiencing a cash flow deficiency from operations. Our current cash flow
      and
      capital resources are limited, and we will require additional funds to pursue
      our business. We may not be able to secure further financing in the future.
      If
      we are not able to obtain additional financing on reasonable terms, we may
      not
      be able to execute our business strategy, conduct our operations at the level
      desired, or even to continue business.




***We
      have received a qualified report from our independent
      auditors.***




The
      report by the independent auditors on our financial statements indicates that
      our financial statements have been prepared assuming that we will continue
      as a
      going concern. The report indicates that our recurring losses from operations
      and working capital deficit raise substantial doubt about our ability to
      continue as a going concern.




***We
      have invested capital in high-risk mineral projects where we have not conducted
      significant exploration and engineering studies.***




We
      have
      invested capital in various mineral properties and projects in North America
      where we may not have conducted sufficient exploration and engineering studies
      to minimize the risk of project failure to the extent that is typical in the
      mining industry. Our mineral projects involve high risks because we have not
      invested substantial sums in the characterization of mineralized material,
      geologic analysis, metallurgical testing, mine planning, and economic analysis
      to the same extent that other mining companies might deem reasonable. Standard
      industry practice calls for a mining company to prepare a formal mine plan
      and
      mining schedule and have these documents reviewed by a third party specialist.
      We have prepared a formal mine plan and mining schedule, and these documents
      are
      in the process of being reviewed by a third party specialist.




***We
      will not be successful unless we recover precious metals and sell them for
      a
      profit.***




Our
      success depends on our ability to recover precious metals, process them, and
      successfully sell them for more than the cost of production. The success of
      this
      process depends on the market prices of metals in relation to our costs of
      production. We may not always be able to generate a profit on the sale of gold
      or other minerals because we can only maintain a level of control over our
      costs
      and have no ability to control market prices. The total cash costs of production
      at any location are frequently subject to great variation from year to year
      as a
      result of a number of factors, such as the changing composition of ore grade
      or
      mineralized material production and metallurgy and exploration activities in
      response to the physical shape and location of the ore body or deposit. In
      addition, costs are affected by the price of commodities, such as fuel and
      electricity. Such commodities are at times subject to volatile price movements,
      including increases that could make production at certain operations less
      profitable. A material increase in production costs or a decrease in the price
      of gold or other minerals could adversely affect our ability to earn a profit
      on
      the sale of gold or other minerals.




5


***The
      cost of our exploration and acquisition activities are substantial, and there
      is
      no assurance that the quantities of minerals we discover or acquire will justify
      commercial operations or replace reserves established in the
      future.*** ****




Mineral
      exploration, particularly for gold and other precious metals, is highly
      speculative in nature, involves many risks, and frequently is nonproductive.
      There can be no assurance that our exploration and acquisition activities will
      be commercially successful. Once gold mineralization is discovered, it may
      take
      a number of years from the initial phases of drilling until production is
      possible, during which time the economic feasibility of production may change.
      Substantial expenditures are required to acquire existing gold properties,
      to
      establish ore reserves through drilling and analysis, to develop metallurgical
      processes to extract metal from the ore, and in the case of new properties,
      to
      develop the processing facilities and infrastructure at any site chosen for
      mineral exploration. There can be no assurance that any gold reserves or
      mineralized material that may be discovered or acquired in the future will
      be in
      sufficient quantities or of adequate grade to justify commercial operations
      or
      that the funds required for mineral production operation can be obtained on
      a
      timely or reasonable basis. Mineral exploration companies must continually
      replace mineralized material or reserves depleted by production. As a result,
      there can be no assurance that we will be successful in replacing any reserves
      or mineralized material acquired or established in the future.




***The
      price of gold fluctuates on a regular basis, and a downturn in price could
      negatively impact our operations and cash flow.***




Our
      operations are significantly affected by changes in the market price of gold.
      Gold prices can fluctuate widely and may be affected by numerous factors, such
      as expectations for inflation, levels of interest rates, currency exchange
      rates, central bank sales, forward selling or other hedging activities, demand
      for precious metals, global or regional political and economic crises, and
      production costs in major gold-producing regions, such as South Africa and
      the
      former Soviet Union. The aggregate effect of these factors, all of which are
      beyond our control, is impossible for us to predict. The demand for and supply
      of gold affect gold prices, but not necessarily in the same manner as supply
      and
      demand affect the prices of other commodities. The supply of gold consists
      of a
      combination of new mineral production and existing stocks of bullion and
      fabricated gold held by governments, public and private financial institutions,
      industrial organizations, and private individuals. As the amount produced in
      any
      single year constitutes a small portion of the total potential supply of gold,
      normal variations in current production do not have a significant impact on
      the
      supply of gold or on its price. If gold prices decline substantially, it could
      adversely affect the realizable value of our assets and potential future results
      of operations and cash flow.




***The
      use of hedging instruments may not prevent losses being realized on subsequent
      price decreases or may prevent gains being realized from subsequent price
      increases.*** ****




We
      may
      from time to time sell some future production of gold pursuant to hedge
      positions. If the gold price rises above the price at which future production
      has been committed under these hedge instruments, we will have an opportunity
      loss. However, if the gold price falls below that committed price, our revenues
      will be protected to the extent of such committed production. In addition,
      we
      may experience losses if a hedge counterparty defaults under a contract when
      the
      contract price exceeds the gold price. As of the date of filing of this report,
      we have no open hedge positions.




***Since
      our business consists of exploring for or acquiring gold prospects, the drop
      in
      the price of gold will negatively affect our asset values, cash flows, potential
      revenues and profits.***




We
      plan
      to pursue opportunities to acquire properties with gold mineralized material
      or
      reserves with exploration potential. The price that we pay to acquire these
      properties will be influenced, in large part, by the price of gold at the time
      of the acquisition. Our potential future revenues are expected to be derived
      from the production and sale of gold from these properties or from the sale
      of
      some of these properties. The value of any gold reserves and other mineralized
      material, and the value of any potential mineral production therefrom, will
      vary
      in direct proportion to variations in those mineral prices. The price of gold
      has fluctuated widely as a result of numerous factors beyond our control. The
      effect of these factors on the price of gold, and therefore the economic
      viability of any of our projects, cannot accurately be predicted. Any drop
      in
      the price of gold would negatively affect our asset values, cash flows, and
      potential revenues and profits.




6


***We
      compete with other mineral exploration and mining
      companies.***




We
      compete with other mineral exploration and mining companies or individuals,
      including large, established mining companies with substantial capabilities
      and
      financial resources, to acquire rights to mineral properties containing gold
      and
      other minerals. There is a limited supply of desirable mineral lands available
      for claim staking, lease, or other acquisition. There can be no assurance that
      we will be able to acquire mineral properties against competitors with
      substantially greater financial resources than we have.




***Our
      activities are inherently hazardous and any exposure may exceed our insurance
      limits or may not be insurable.***




Mineral
      exploration and operating activities are inherently hazardous. Operations in
      which we have direct or indirect interests will be subject to all the hazards
      and risks normally incidental to exploration and production of gold and other
      metals, any of which could result in work stoppages, damage to property, and
      possible environmental damage. The nature of these risks is such that
      liabilities might exceed any liability insurance policy limits. It is also
      possible that the liabilities and hazards might not be insurable, or we could
      elect not to insure ourselves against such liabilities because of the high
      premium costs, in which event, we could incur significant costs that could
      have
      a material adverse effect on our financial condition.




***We
      do not have proven or probable reserves, and our mineral calculations are only
      estimates; any material change may negatively affect the economic viability
      of
      our properties.***




Substantial
      expenditures are required to acquire existing gold properties with established
      reserves or to establish proven or probable reserves through drilling and
      analysis. We do not anticipate expending sums for additional drilling and
      analysis to establish proven or probable reserves on our properties. We drill
      in
      connection with our mineral exploration activities and not with the purpose
      of
      establishing proven and probable reserves. Therefore, our activity must be
      called exploration or test mining. While we estimate the amount of mineralized
      material we believe exists on our properties, our calculations are estimates
      only, subject to uncertainty due to factors, including the quantity and grade
      of
      ore, metal prices, and recoverability of minerals in the mineral recovery
      process. There is a great degree of uncertainty attributable to the calculation
      of any mineralized material, particularly where there has not been significant
      drilling, mining, and processing. Until the mineralized material located on
      our
      properties is actually mined and processed, the quantity and quality of the
      mineralized material must be considered as an estimate only. In addition, the
      quantity of mineralized material may vary depending on metal prices. Any
      material change in the quantity of mineralized material may negatively affect
      the economic viability of our properties. In addition, there can be no assurance
      that we will achieve the same recoveries of metals contained in the mineralized
      material as in small-scale laboratory tests or that we will be able to duplicate
      such results in larger scale tests under on-site conditions or during
      production.




***Our
      operations are subject to strict environmental regulations, which result in
      added costs of operations and operational delays.***




Our
      operations are subject to environmental regulations, which could result in
      additional costs and operational delays. All phases of our operations are
      subject to environmental regulation. Environmental legislation is evolving
      in
      some jurisdictions in a manner that may require stricter standards and
      enforcement, increased fines and penalties for non-compliance, more stringent
      environmental assessments of proposed projects, and a heightened degree of
      responsibility for companies and their officers, directors, and employees.
      There
      is no assurance that any future changes in environmental regulation will not
      negatively affect our projects.




7


***We
      have no insurance for environmental problems.***




Insurance
      against environmental risks, including potential liability for pollution or
      other hazards as a result of the disposal of waste products occurring from
      exploration and production, has not been available generally in the mining
      industry. We have no insurance coverage for most environmental risks. In the
      event of a problem, the payment of environmental liabilities and costs would
      reduce the funds available to us for future operations. If we are unable to
      fund
      fully the cost of remedying an environmental problem, we might be required
      to
      enter into an interim compliance measure pending completion of the required
      remedy.




***We
      are subject to federal laws that require environmental assessments and the
      posting of bonds, which add significant costs to our operations and delays
      in
      our projects.***




The
      Bureau of Land Management requires that mining operations on lands subject
      to
      its regulation obtain an approved plan of operations subject to environmental
      impact evaluation under the National Environmental Policy Act. Any significant
      modifications to the plan of operations may require the completion of an
      environmental assessment or Environmental Impact Statement prior to approval.
      Mining companies must post a bond or other surety to guarantee the cost of
      post-mining reclamation. These requirements could add significant additional
      cost and delays to any mining project undertaken by us. Our mineral exploration
      operations are required to be covered by reclamation bonds deemed adequate
      by
      regulators to cover these risks. We believe we currently maintain adequate
      reclamation bonds for our operations.




***Changes
      in state laws, which are already strict and costly, can negatively affect our
      operations by becoming stricter and costlier.***




At
      the
      state level, mining operations in Nevada are regulated by the Nevada Division
      of
      Environmental Protection, or NDEP. Nevada state law requires our Nevada projects
      to hold Nevada Water Pollution Control Permits, which dictate operating controls
      and closure and post-closure requirements directed at protecting surface and
      ground water. In addition, we are required to hold Nevada Reclamation Permits
      required under Nevada law. These permits mandate concurrent and post-mining
      reclamation of mines and require the posting of reclamation bonds sufficient
      to
      guarantee the cost of mine reclamation. Other Nevada regulations govern
      operating and design standards for the construction and operation of any source
      of air contamination and landfill operations. Any changes to these laws and
      regulations could have a negative impact on our financial performance and
      results of operations by, for example, requiring changes to operating
      constraints, technical criteria, fees or surety requirements.




***Title
      claims against our properties could require us to compensate parties, if
      successful, and divert management’s time from
      operations.***




There
      may
      be challenges to our title in the properties in which we hold material
      interests. If there are title defects with respect to any of our properties,
      we
      might be required to compensate other persons or perhaps reduce our interest
      in
      the effected property. The validity of unpatented mineral claims, which
      constitute most of our holdings in the United States, is often uncertain and
      may
      be contested by the federal government and other parties. The validity of an
      unpatented mineral claim, in terms of both its location and its maintenance,
      depends on strict compliance with a complex body of federal and state statutory
      and decisional law. Although we have attempted to acquire satisfactory title
      to
      our properties, we have not obtained title opinions or title insurance with
      respect to the acquisition of the unpatented mineral claims. While we have
      no
      pending claims or litigation pending contesting title to any of our properties,
      there is nothing to prevent parties from challenging our title to any of our
      properties. While we believe we have satisfactory title to our properties,
      some
      risk exists that some titles may be defective or subject to challenge. Also,
      in
      any such case, the investigation and resolution of title issues would divert
      management’s time from ongoing exploration programs.




***We
      have never paid a cash dividend on our common stock and do not expect to pay
      cash dividends in the foreseeable future.***




We
      have
      never paid cash dividends, and we do not plan to pay cash dividends in the
      foreseeable future. Consequently, your only opportunity to achieve a return
      on
      your investment in our company will be if the market price of our common stock
      appreciates and you sell your shares at a profit. There is no assurance that
      the
      price of our common stock that will prevail in the market in the future will
      ever exceed the price that you paid.




8


***Our
      business depends on a limited number of key personnel, the loss of whom could
      negatively affect us.*** ****




Robert
      Faber, Chief Executive Officer, President and acting-Chief Financial Officer,
      and John Cook, Chairman of the Board, are important to our success. If either
      of
      them become unable or unwilling to continue in their present positions, our
      business and financial results could be materially negatively affected.




If
      we
      fail to adequately manage our growth, we may not be successful in growing our
      business and becoming profitable.




We
      plan
      to expand our business and the number of employees over the next 12 months.
      In
      particular, we intend to hire additional administrative personnel. Our inability
      to hire and retain additional qualified employees could have a negative impact
      on our chances of success.




***The
      issuance of securities by us may not have complied with or violated federal
      and
      state securities laws and, as a result, the holders of these securities may
      have
      rescission rights.*** ****




Securities
      issued by us may not have complied with applicable federal and state securities
      laws, the result of which is that the holders of these securities may have
      rescission rights that could require us to reacquire the
      securities.




***Outstanding
      convertible securities and warrants may result in substantial
      dilution.***




At
      March
      31, 2005, we had outstanding 234,567,757 shares of common stock. In addition,
      we
      had outstanding convertible notes and various common stock purchase warrants.
      At
      March 31, 2005, these notes and warrants were convertible into or exercisable
      for a total of approximately 176,000 additional shares of our common stock,
      subject to further anti-dilution provisions.




***Our
      stock is a penny stock and trading of our stock may be restricted by the SEC’s
      penny stock regulations, which may limit a stockholder’s ability to buy and sell
      our stock.***




Our
      stock
      is a penny stock. The Securities and Exchange Commission has adopted Rule 15g-9
      under the Securities Exchange Act of 1934, as amended, which generally defines
      “penny stock” to be any equity security that has a market price (as defined)
      less than $5.00 per share or an exercise price of less than $5.00 per share,
      subject to certain exceptions. Our securities are covered by the penny stock
      rules, which impose additional sales practice requirements on broker-dealers
      that sell to persons other than established customers and “accredited
      investors.” The term “accredited investor” refers generally to institutions with
      assets in excess of $5,000,000 or individuals with a net worth in excess of
      $1,000,000 or annual income exceeding $200,000, or $300,000 jointly with their
      spouse. The penny stock rules require a broker-dealer, prior to a transaction
      in
      a penny stock not otherwise exempt from the rules, to deliver a standardized
      risk disclosure document in a form prepared by the SEC, which provides
      information about penny stocks and the nature and level of risks in the penny
      stock market. The broker-dealer also must provide the customer with current
      bid
      and offer quotations for the penny stock, the compensation of the broker-dealer
      and its salesperson in the transaction, and monthly account statements showing
      the market value of each penny stock held in the customer’s account. The bid and
      offer quotations, and the broker-dealer and salesperson compensation
      information, must be given to the customer orally or in writing prior to
      effecting the transaction and must be given to the customer in writing before
      or
      with the customer’s confirmation. In addition, the penny stock rules require
      that, prior to a transaction in a penny stock not otherwise exempt from these
      rules, the broker-dealer must make a special written determination that the
      penny stock is a suitable investment for the purchaser and receive the
      purchaser’s written agreement to the transaction. These disclosure requirements
      may have the effect of reducing the level of trading activity in the secondary
      market for the stock that is subject to these penny stock rules. Consequently,
      these penny stock rules may affect the ability of broker-dealers to trade our
      securities. We believe that the penny stock rules discourage investor interest
      in and limit the marketability of our common stock. NASD sales practice
      requirements may also limit a stockbroker’s ability to buy or sell our
      stock.




In
      addition to the “penny stock” rules promulgated by the Securities and Exchange
      Commission, the NASD has adopted rules that require that in recommending an
      investment to a customer, a broker-dealer must have reasonable grounds for
      believing that the investment is suitable for that customer. Prior to
      recommending speculative low priced securities to their non-institutional
      customers, broker-dealers must make reasonable efforts to obtain information
      about the customer’s financial status, tax status, investment objectives, and
      other information. Under interpretation of these rules, the NASD believes that
      there is a high probability that speculative low priced securities will not
      be
      suitable for at least some customers. The NASD requirements make it more
      difficult for broker-dealers to recommend that their customers buy our common
      stock, which may limit your ability to buy or sell our stock and have an adverse
      effect on the market for our shares.




9





***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 reversed depletion taken on our mineral properties totaling
      $43,256.




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 had 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.




***Recent
      Financing Events and Restructuring***




On
      July
      15, 2005, we completed a financing transaction, which provided us with $800,000
      in funding. In consideration for the financing, the Company has issued
      promissory notes with a face value of $1.2 million, reflecting an original
      issue
      discount of thirty-three and one-third (33.3%) percent. The term of the notes
      is
      two years, with an optional extension of one year at the option of the investor.
      The annual interest rate on the notes is 15% of the face value and is payable
      monthly. The funds will be used for working capital and general corporate
      purposes.




In
      October 2005, we reached an agreement with the holders of the above-referenced
      $1.2 million in promissory notes. The holders agreed to accept shares of our
      restricted common stock as full payment for the outstanding secured notes.
      Accrued interest on the notes through September 30, 2005 totals $49,964.36.
      In
      consideration for the retirement of the debt, the Company has agreed to issue
      restricted shares to the note holders valued at a 50% discount to market. Market
      price will be determined by the average of the five lowest closing bid prices
      of
      GoldSpring’s common stock for the 20 trading days preceding the effective date
      of the transaction. The completion of this transaction is contingent on our
      ability to obtain a waiver from the subscribers to our November 2004
      Subscription Agreement. We are currently seeking to obtain this
      waiver.




On
      September 28, 2005, we completed a second financing transaction under the same
      terms and conditions as the July 2005 financing. The September 2005 financing
      provided us with $200,000 in funding. The funds will be used for working capital
      and general corporate purposes.




In
      2004,
      we offered securities in a private placement transaction completed during
      March 2004 (the “March Offering”). In connection with the offering, we
      received gross proceeds of $10 million from a group of accredited institutional
      and individual investors. Subsequent to the offering’s close, we failed to meet
      certain requirements of the offering regarding filing an effective registration
      statement with the Securities and Exchange Commission. Under the terms of the
      March 2004 subscription agreement, failure to have an effective registration
      statement by the required date resulted in liquidated damages in the amount
      of
      2% of the principal investment amount (i.e., $200,000) for each 30-day period
      until the registration statement was declared effective. We accrued
      approximately $1.1 million in liquidated damages through November 30, 2004
      associated with our failure to cause our registration statement to be effective.




10


The
      delay
      in effectiveness of our registration statement combined with the allegations
      raised in the lawsuit we filed against our former Chief Executive Officer in
      November 2004 (see Legal Proceedings) 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 March 2004
      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.




During
      the third quarter of 2005, holders of the convertible notes converted a total
      of
      $1,171,629 in principal and interest into shares of common stock at an average
      price per share of $0.0332. 2005 year to date conversions totaled $1,871,820
      in
      principal and interest at an average price per share of $0.0367.




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.




The
      restructured subscription agreement 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 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 stock which was issued in a
      registered transaction 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 the product
      of 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.




11


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, stock which was issued in a registered transaction 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 did not have the
      cash or stock which was issued in a registered transaction 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. Our
      registration statement became effective on October 3, 2005, which caused these
      liquidated damages to cease accruing.




During
      the first half of 2005, we incurred approximately $2.8 million of liquidated
      damages and other expenses related to our obligations under the March 2004
      and
      November 2004 subscription agreements. The damages were compounded by the 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. Our registration statement became effective
      on October 3, 2005. Until the registration statement was declared effective,
      we
      continued to incur liquidated damages under the November 30, 2004 Subscription
      Agreement (See “Recent Financing Events and Restructuring” above for additional
      information). Pursuant to the terms of the Subscription Agreement, the damages
      may be paid in cash or in unrestricted stock. If paid in stock, we are required
      to pay 200% of the cash penalty. Because we did not have the cash or stock
      which
      was issued in a registered transaction 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 April 28, 2005 and July 26, 2005, was approximately
      $
      1.2 million. Pursuant to this settlement agreement, we issued approximately
      40
      million shares of restricted common stock in the third quarter of
      2005.




**Off-Balance
      Sheet Arrangements.**




We
      were
      not a party to any off-balance sheet arrangements during the period covered
      by
      this report.




**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.




12


We
      have
      identified conditions as of September 30, 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 to remedy these deficiencies. These measures include our consolidation
      of 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.




O ur
      former
      Chief Financial Officer became our Chief Executive Officer in September 2004.
      Our Company has not hired another individual to act as Chief Financial Officer.
      We believe the absence of a full-time Chief Financial Officer or Chief
      Accounting Officer has resulted in 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 believe 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
      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.




13


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.




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.




14


The
      Court
      subsequently continued the TRO through February 15, 2005 and confirmed that
      none
      of the Defendants were to receive any payments from our company during the
      pendency of the TRO. Despite the Court’s Order, the Defendants have since
      produced business records of our company demonstrating that, after adopting
      the
      December Consent Resolutions, the Defendants arranged for our company to pay
      them a collective total of $38,721, including $20,869 in payments to Stephen
      Parent.




*The
      Preliminary Injunction and Notice of Appeal*




Following
      additional hearings in which the Court heard witness testimony and evidence,
      the
      Court issued an Order on February 15, 2005 granting Plaintiffs’ Motion for a
      Preliminary Injunction. The Preliminary Injunction ordered the reinstatement
      of
      our company’s Board of Directors as it existed prior to December 10, 2004. As a
      result of the Court’s Order, John F. Cook, Robert T. Faber, Christopher L.
      Aguilar, Todd S. Brown, Leslie L. Cahan, Stanley A. Hirschman, and Phil E.
      Pearce have been reinstated as directors. Stephen B. Parent, Jerrie W. Gasch,
      and Purnendu K. Rana Medhi remained directors until Mr. Medhi’s resignation in
      April 2005. The Court’s February 15 Order also stayed the implementation of the
      Consent Resolutions, and directed us to hold a special shareholders meeting
      within 30 days.




In
      concluding that the Preliminary Injunction should issue, the Court stated,
“The
      Court is specifically concerned about the irreparable injury that would occur
      to
      GoldSpring and its shareholders and investors if Defendants [Mr. Parent, his
      wife, Jerrie W. Gasch, and Purnendu K. Rana Medhi] are permitted to manage
      the
      corporation. There is substantial evidence of Parent’s wrongdoing in his former
      position as CEO of GoldSpring, such as his misappropriation of corporate assets
      for his personal use. The Defendants’ attempt to rescind the [financing]
      transaction that was approved at the Board of Directors meeting on November
      30,
      2004 could adversely impact GoldSpring’s ability to meet its obligations under
      the agreement. Rescission of the refinancing transaction would prove detrimental
      for GoldSpring because the corporation would be forced to pay the $200,000.00
      monthly penalty for failing to file the S-1 Registration with the SEC within
      ninety (90) days of the March 22, 2004 agreement between GoldSpring and [various
      investors]. This penalty had accrued to over $1,000,000.00 as of November 30,
      2004.”




Thereafter,
      the Defendants filed a motion for reconsideration in which they asked that
      the
      Preliminary Injunction be dissolved or, alternatively, that the Court clarify
      the injunction order and require the Plaintiffs to post a bond. On February
      25,
      2005, the Court 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.




15


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
      was filed on October 3, 2005. The 9 th Circuit
      Court of Appeals has placed the matter on its docket for the week of January
      9-13, 2006.




*The
      Investors’ Motion to Intervene*




On
      March
      2, 2005, Longview Fund LP, Longview Equity Fund, Longview International Equity
      Fund, and Alpha Capital AG (collectively, the “Investors”) moved to intervene in
      the Litigation. In doing so, the Investors sought to dissolve the portion of
      the
      Court’s February 25, 2005 Order that prohibited our company from issuing stock
      to them under the refinancing transaction.




In
      their
      motion to intervene, the Investors alleged that they are holders of more than
      $3
      million of Convertible Notes issued by us, which they received pursuant to
      the
      transaction in March 2004. The Investors further alleged that, under the terms
      of the Convertible Notes, they are entitled to convert the notes, in whole
      or in
      part, into our stock at any time. The Investors contended that, by preventing
      us
      from issuing stock, the Court’s February 25 Order is a de facto preliminary
      injunction in favor of the Defendants, and effectively deprived the Investors
      of
      much of the benefits to which they are contractually entitled. Because the
      Defendants had not met the requirements for injunctive relief, the Investors
      argued, that portion of the Court’s Order should be dissolved. Alternatively,
      the Investors asked the Court to order the Defendants to post a $3.5 million
      bond to protect the Investors against any damages stemming from the de facto
      injunction.




On
      March
      7, 2005, the Defendants filed their response to the Investors’ motion. They
      contended that Judge Carroll’s February 25 Order was not an injunction and, in
      any event, that the Investors had failed to meet the requirements for
      intervention. Accordingly, they argued that the motion should be denied.




On
      March
      18, 2005, the Court issued an Order denying the Investors’ motion as moot. The
      Court reasoned that, since its March 17 Order lifted the prohibition on the
      issuance of additional shares of our stock, the Investors had, in essence,
      already received the relief they requested in their motion to intervene.
      Therefore, the issues raised in that motion had become moot.




*The
      Company’s Motion Re: the Gust Rosenfeld Retainer*




After
      purportedly seizing control of our company on December 9, 2004, Stephen Parent,
      acting as the putative president of GoldSpring, authorized the payment of a
      $250,000 retainer to the law firm of Gust Rosenfeld using funds of our company.
      On March 1, 2005, we filed a motion for an order requiring Gust Rosenfeld to
      provide a detailed accounting of its use of these funds and to refund the unused
      portion.




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.




16


*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 share joint representation with
      Mr.
      Parent. Mr. Medhi also informed us that he resigned as a director of our Board
      of Directors as currently constituted and as a member of the board of directors
      designated by earlier consent resolution. We informed the Court that these
      developments constitute additional reasons to deny the Parents’
      motion.




**Item
      2.**  **Unregistered
      Sales of Equity Securities and Use of Proceeds**




The  Non-Registration
      Events Provisions in our November 2004 Subscription Agreement (“Non-Registration
      Provisions”), required us to file and cause to become effective 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 be incurred 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. The liquidated damages ceased
      accruing when our registration statement became effective on October 3,
      2005.




Pursuant
      to the terms of the Subscription Agreement, the damages may be paid in cash
      or
      in unrestricted stock. If paid in stock, we are required to pay 200% of the
      cash
      penalty. Because we did not have the cash or stock which was issued in a
      registered transaction 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 April 28, 2005 and July 26, 2005, was approximately $ 1.2
      million. Pursuant to this settlement agreement, we issued 40,261,601 shares
      of
      restricted common stock in the third quarter of 2005. The Company issued the
      shares of restricted common stock to the approximately 41 investors who had
      rights under the Non-Registration Provisions in reliance upon the exemption
      provided by Section 4(2) of the Securities Act, as a transaction by
      an
      issuer not involving a public offering.




During
      the third quarter of 2005, we issued three million (3,000,000) shares of our
      common stock to the ten members of Comstock Gold, LLC as part of the
      consideration for our acquisition of the leases on the Justice, Keystone and
      Woodville mineral claims from Comstock Gold, LLC. We issued the shares of
      restricted common stock to the ten members in reliance upon the exemption
      provided by Section 4(2) of the Securities Act, as a transaction by an issuer
      not involving a public offering.




17




**Item
      3.**  **Defaults
      Upon Senior Securities**




In
      March
      2005, we issued a secured convertible note in the aggregate amount of $6,885,184
      with a 12% interest rate for the 29,573,803 shares and accrued interest due
      under the mandatory redemption payment provisions of our November 2004
      subscription agreement. Payments on this note were scheduled to begin on April
      1, 2005. We are in default on this note, causing the interest rate to increase
      to the default rate of 18%.




Under
      the
      terms of our November 2004 subscription agreement, we issued 8% convertible
      notes in the aggregate principal amount of $11.1 million to an investor group.
      Under the terms of the notes, our first principal and interest repayment was
      scheduled for April 1, 2005. We are in default on these notes. The default
      interest rate is 12%.




In
      connection with our acquisition of the Plum Mining
      Company, LLC, we issued a promissory note to the seller for $1 million (the
      balance of the purchase price). At September 30, 2005, the outstanding balance
      on the Note was $400,000. We are in default on this Note.




We
      are
      working with the above-referenced note holders to cure the defaults. The above
      referenced notes have a total value of approximately $15,660,000. The total
      arrearage related to these notes was approximately $3,794,000 as of September
      30, 2005. While failure to reach a resolution would likely cause us to seek
      external funding in order to meet our obligations, there can be no assurance
      that such funding would be available.




**Item
      4.**  **Submission
      of Matters to a Vote of Security Holders**




No
      matters were submitted to a vote of security holders during the quarter ended
      September 30, 2005.





*Subsequent
      Events*





The
      2005
      Annual Meeting of Stockholders of GoldSpring, Inc. was held on October 26,
      2005.
      At the meeting, the slate of directors nominated by management—consisting of
      Christopher L. Aguilar, Todd S. Brown, Stanley A. Hirschman, Bill Nance and
      Rex
      Outzen—was elected. Each director was elected to serve until the next annual
      meeting or until his successor is appointed, unless his office is earlier
      vacated in accordance with the By-laws of the Corporation.




The
      matters voted upon and passed at the meeting were: (1) the election
      of the
      above-listed directors; (2) the
      approval of the Company’s 2005 Stock Option and Incentive Plan; (3) the approval
      of the proposal to authorize Serial Preferred Stock; (4) the approval of the
      authorization of additional common stock; and (5) the ratification of the
      Company’s selection of Jewett, Schwartz & Associates as the Company’s
      Independent Auditor.




The
      results of the voting on those matters are outlined in the following table:


(1)  Election
      of directors:




**VOTES
                FOR**
            **AGAINST**
            **ABSTAIN**Christopher
                L. Aguilar
            192,612,585
            45,957,250
            53,831,289Todd
                S. Brown
            192,584,865
            45,957,250
            53,859,009Stanley
                A. Hirschman
            184,615,285
            45,957,250
            61,828,589Bill
                Nance
            192,586,585
            45,957,250
            53,857,289Rex
                L. Outzen
            192,876,365
            45,957,250
            53,567,509








18





**VOTES
                FOR**
            **AGAINST**
            **ABSTAIN**(2)
                The approval of the Company’s 2005 Stock Option and Incentive
                Plan:
            147,022,455
            105,060,941
            20,950(3)
                The approval of the proposal to authorize Serial Preferred
                Stock
            145,058,501
            105,995,765
            1,050,080(4)
                The approval of the authorization of additional common
                stock
            184,922,191
            107,383,603
            95,330(5)
                The ratification of the Company’s selection of Jewett, Schwartz &
                Associates as the Company’s Independent Auditor
            190,524,562
            96,341,516
            5,535,046





**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 September 30, 2005
                (Unaudited)




·
            Consolidated
                Statements of Operations for the three month periods ended September
                30,
                2005 and 2004 (Unaudited)




·
            Consolidated
                Statements of Operations for the nine month periods ended September
                30,
                2005 and 2004 (Unaudited)




·
            Consolidated
                Statements of Cash Flows for the periods ended September 30, 2005
                and 2004
                (Unaudited)




·
            Notes
                to Financial Statements




19




(2)  Exhibits
      filed as part of this Report:




Exhibit Number
            Exhibit10.15
            
            Loan
                Agreement dated as of July 15, 2005 by and among the Registrant and
                the
                subscriber parties thereto (1)10.16
            
            Security
                Agreement dated as of July 15, 2005 by and among the Registrant and
                the
                subscriber parties to the Loan Agreement dated July 15, 2005
                (1)10.17
            
            Form
                of Promissory Note, dated as of July 15, 2005 issued by the Registrant
                to
                the subscribers to the Loan Agreement dated July 15, 2005
                (1)10.18(a)
            
            Purchase
                Agreement for mineral property leases between Company and Comstock
                Gold,
                LLC dated August 31, 2005 - Keystone, Justice and Woodville
                claims10.18(b)
            
            Promissory
                Note dated August 31, 2005 issued by Company to Comstock Gold, LLC
                in
                connection with Purchase Agreement between the parties dated August
                31,
                2005.31.1
            
            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
                amended31.2
            
            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
                amended32.1
            
            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(1)
                Filed as an exhibit to Company’s quarterly report on Form 10-QSB filed on
                August 15, 2005.




(b)  Reports
      filed on Form 8-K during the quarter ended September 30, 2005:




(1)
            A
                Report on Form 8-K was filed with the Securities and Exchange Commission
                on July 21, 2005 under Item 1.01 relating to our completion of a
                financing
                transaction which provided us with $800,000 in
                funding.




(2)
            A
                Report on Form 8-K was filed with the Securities and Exchange Commission
                on July 28, 2005 under Item 5.02 relating to the resignation of one
                of our
                directors, Leslie Cahan. Mr. Cahan expressed no disagreements
                with
                the Company in tendering his resignation.(3)
            A
                Report on Form 8-K was filed with the Securities and Exchange Commission
                on August 3, 2005 under Item 8.01 relating to our issuance of a press
                release announcing the relocation of our corporate headquarters and
                providing an update on our operations.(4)
            A
                Report on Form 8-K was filed with the Securities and Exchange Commission
                on September 6, 2005 under Item 8.01 relating to our acquisition
                of the
                leases on three patented mineral claims in Storey County,
                Nevada.




20




**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.




Date:
                November 11, 2005
            
            GOLDSPRING,
                INC.(Registrant)By:/s/
                Robert T. FaberName:Robert
                T. FaberTitle:President
                and Chief Executive OfficerBy:/s/
                Robert T. FaberName:Robert
                T. FaberTitle:Chief
                Financial Officer







21