**SECURITIES AND        EXCHANGE COMMISSION        Washington, D.C. 20549**

**FORM        10-QSB**

*(Mark        One)*

þ     Quarterly        report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly        period ended **June 30, 2007**.

 ̈             Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the        transition period from                            to                    .

Commission file        number: **0001329944**

**MISTRAL        VENTURES INC.**(Exact name of small business issuer as specified in its charter)

| **NEVADA**                        (State or other jurisdiction of incorporation or organization) | **20-2745790**                        (IRS Employer Identification Number) |
|--------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------|

**809-4438 West        10th Avenue, Vancouver, British Columbia V6R 4R8, Canada**(Address of Principal Executive        Office)          (Zip Code)

**(604)        725-4160**(Issuer’s telephone number)

Check whether the registrant: (1)        filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during        the past 12 months (or for such shorter period that the registrant was required to file        such reports), and (2) has been subject to such filing requirements for the past 90        days.

Yes        þ                                No  ̈

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

Yes        þ                                No  ̈

The number of outstanding shares of        the registrant’s common stock, $0.001 par value (the only class of voting stock), as        of August 13, 2007 was 16,140,000.

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**TABLE OF CONTENTS**

**           **Page**    **PART I.**     **ITEM 1.                    FINANCIAL STATEMENTS**  3   Unaudited Balance Sheet as of June 30,                            2007  4   Unaudited Statements of Operations                            for the three and six month periods ended June 30, 2007 and 2006                            and the period from inception to June 30, 2007  5   Unaudited Statements of Cash Flows                            for the six months ended June 30, 2007 and 2006 and the period from                            inception to June 30, 2007  6   Statement of Changes in Stockholders'                            Equity  7   Notes to the Unaudited Financial                            Statements  8                 **ITEM 2. MANAGEMENT'S PLAN OF                            OPERATION**  21  **ITEM 3.                    CONTROLS AND PROCEDURES**  26 **PART II.**     **ITEM 1.                    LEGAL PROCEEDINGS**  26  **ITEM 2.                    UNREGISTERED SALES OF EQUITY SECURITIES**  26  **ITEM 3.                    DEFAULTS UPON SENIOR SECURITIES**  27  **ITEM 4.                    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**  27  **ITEM 5.                    OTHER INFORMATION**  27  **ITEM 6.                    EXHIBITS**  27  **SIGNATURES**  28 **INDEX TO                    EXHIBITS**  29 **
**            2        **

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**PART        I**

 

| **ITEM 1.** | **FINANCIAL STATEMENTS** |
|-------------|--------------------------|

 

As used        herein, the terms “Company,” “we,” “our”, and        “us”, refer to Mistral Ventures, Inc., a Nevada corporation, unless otherwise        indicated. In the opinion of management, the accompanying unaudited financial statements        included in this Form 10-QSB reflect all adjustments (consisting only of normal recurring        accruals) necessary for a fair presentation of the results of operations for the periods        presented. The results of operations for the periods presented are not necessarily        indicative of the results to be expected for the full year.

3

 

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**Mistral Ventures, Inc.**

**(A        Development Stage Company)**

Balance Sheets

(Expressed in U.S. Dollars)

(Unaudited)

 

|                                                                                       |   | **As at 30**

**June**

**2007**

**(Unaudited)** |   | **As at 31**

**December**

**2006**

**(Audited)** |
|--------------------------------------------------------------------------------------------|--------|---------------------------------------------------|--------|-----------------------------------------------------|
|                                                                                       |   | **$**                                             |   | **$**                                               |
|                                                                                       |   |                                              |   |                                                |
| **Assets**                                                                                 |   |                                              |   |                                                |
|                                                                                       |   |                                              |   |                                                |
| **Current**                                                                                |   |                                              |   |                                                |
| Cash and cash equivalents                                                                  |   | 4,396                                             |   | 77,624                                              |
| Prepaid expenses                                                                           |   | -                                                 |   | 687                                                 |
|                                                                                       |   |                                              |   |                                                |
|                                                                                       |   | 4,396                                             |   | 78,311                                              |
|                                                                                       |   |                                              |   |                                                |
| **Liabilities**                                                                            |   |                                              |   |                                                |
|                                                                                       |   |                                              |   |                                                |
| **Current**                                                                                |   |                                              |   |                                                |
| Accounts payable and accrued liabilities (Note                        4)                   |   | 9,382                                             |   | 9,845                                               |
|                                                                                       |   |                                              |   |                                                |
|                                                                                       |   |                                              |   |                                                |
| **Stockholder’s equity**                                                             |   |                                              |   |                                                |
| **Capital stock**(Note                        6)                                           |   |                                              |   |                                                |
| Authorized                                                                                 |   |                                              |   |                                                |
| 450,000,000 common shares, par value $0.001                                                |   |                                              |   |                                                |
| Issued and outstanding                                                                     |   |                                              |   |                                                |
| 30 June 2007 – 16,140,000 common shares, par value                        $0.001     |   |                                              |   |                                                |
| 31 December 2006 – 22,800,000 common shares, par value                        $0.001 |   | 16,140                                            |   | 3,800                                               |
| **Warrants**(Note 6)                                                                       |   | 4                                                 |   | 10                                                  |
| **Additional paid-in capital**                                                             |   | 58,356                                            |   | 122,190                                             |
| **Deficit, accumulated during the exploration                        stage**               |   | (79,486)                                          |   | (57,534)                                            |
|                                                                                            |   |                                              |   |                                                |
|                                                                                       |   | (4,986)                                           |   | 68,466                                              |
|                                                                                       |   |                                              |   |                                                |
|                                                                                       |   | 4,396                                             |   | 78,311                                              |

 

**Nature        and Continuance of Operations**(Note        1)

 

 

 

 

4

 

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**Mistral Ventures, Inc.**

**(A        Development Stage Company)**

Statements of Operations

(Expressed in U.S. Dollars)

(Unaudited)

 

|                                                                                               |   |   | **For the period from the date of inception on 13 May 2005                        to 30**

**June 2007** | **For the**

**six**

**month period ended**

**30 June**

**2007** | **For the**

**six**

**month period ended**

**30 June**

**2006** |
|----------------------------------------------------------------------------------------------------|--------|--------|----------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------|---------------------------------------------------------------------|
|                                                                                               |   |   | **$**                                                                                                    | **$**                                                               | **$**                                                               |
|                                                                                               |   |   |                                                                                                     |                                                                |                                                                |
| **Expenses**                                                                                       |   |   |                                                                                                     |                                                                |                                                                |
| Acquisition of a mineral property                        (Notes 3, 5, 6 and 8)                |   |   | 9,000                                                                                                    | -                                                                   | 9,000                                                               |
| Mineral property exploration costs                                                                 |   |   | 5,230                                                                                                    | -                                                                   | -                                                                   |
| Legal and accounting                                                                               |   |   | 42,507                                                                                                   | 11,883                                                              | 9,605                                                               |
| Listing and filing fees                                                                            |   |   | 2,566                                                                                                    | 1,804                                                               | -                                                                   |
| Management fees (Notes 5 and 6)                                                                    |   |   | 12,700                                                                                                   | 5,900                                                               | 3,400                                                               |
| Office and miscellaneous                                                                           |   |   | 1,977                                                                                                    | 950                                                                 | 999                                                                 |
| Rent (Notes 5 and 6)                                                                               |   |   | 1,800                                                                                                    | 600                                                                 | 600                                                                 |
| Transfer agent fees                                                                                |   |   | 3,706                                                                                                    | 815                                                                 | 393                                                                 |
|                                                                                               |   |   |                                                                                                     |                                                                |                                                                |
| **Net loss for the period**                                                                        |   |   | (79,486)                                                                                                 | (21,952)                                                            | (23,997)                                                            |
|                                                                                               |   |   |                                                                                                     |                                                                |                                                                |
| **Basic and diluted loss per common share**                                                        |   |   |                                                                                                     | (0.001)                                                             | (0.002)                                                             |
|                                                                                               |   |   |                                                                                                     |                                                                |                                                                |
| **Weighted average number of common shares used in per                        share calculations** |   |   |                                                                                                     | 17,495,470                                                          | 9,636,462                                                           |

 

 

 

 

 

 

 

 

 

5

 

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**Mistral Ventures, Inc.**

**(A        Development Stage Company)**

Statements of Cash Flows

(Expressed in U.S. Dollars)

(Unaudited)

 

|                                                                                                 |   |   |  

                         

                         

                         

**For the period from the date of inception on 13 May 2005                        to 30 June 2007** |  

                         

                         

                         

                         

**For the**

**six**

**month period ended**

**30 June 2007** | **For the**

**six**

**month period ended**

**30 June 2006** |
|------------------------------------------------------------------------------------------------------|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------|
|                                                                                                 |   |   | **$**                                                                                                                                                                                                       | **$**                                                                                                                                                                                                  | **$**                                                          |
|                                                                                                 |   |   |                                                                                                                                                                                                        |                                                                                                                                                                                                   |                                                           |
| **Cash flows from operating activities**                                                             |   |   |                                                                                                                                                                                                        |                                                                                                                                                                                                   |                                                           |
| Net loss for the period                                                                              |   |   | (79,486)                                                                                                                                                                                                    | (21,952)                                                                                                                                                                                               | (23,997)                                                       |
| Adjustments to reconcile loss to net cash used by operating                        activities        |   |   |                                                                                                                                                                                                        |                                                                                                                                                                                                   |                                                           |
| Acquisition of a mineral property                        (Notes 3, 5, 6 and 8)                  |   |   | 9,000                                                                                                                                                                                                       | -                                                                                                                                                                                                      | 9,000                                                          |
| Contributions to capital by related party – expenses                        (Notes 5, 6 and 8) |   |   | 12,000                                                                                                                                                                                                      |  

4,000                                                                                                                                                                                          | 4,000                                                          |
| Management fees (Notes 5, 6 and 8)                                                                   |   |   | 2,500                                                                                                                                                                                                       | 2,500                                                                                                                                                                                                  | -                                                              |
| Changes in operating assets and liabilities                                                          |   |   |                                                                                                                                                                                                        |                                                                                                                                                                                                   |                                                           |
| Increase in prepaid expenses                                                                         |   |   | -                                                                                                                                                                                                           | 687                                                                                                                                                                                                    | 250                                                            |
| Increase (decrease) in accounts payable and                        accrued

liabilities              |   |   | 9,382                                                                                                                                                                                                       | (463)                                                                                                                                                                                                  | (2,560)                                                        |
|                                                                                                 |   |   |                                                                                                                                                                                                        |                                                                                                                                                                                                   |                                                           |
|                                                                                                 |   |   | (46,604)                                                                                                                                                                                                    | (15,228)                                                                                                                                                                                               | (13,307)                                                       |
|                                                                                                 |   |   |                                                                                                                                                                                                        |                                                                                                                                                                                                   |                                                           |
| **Cash flows from financing activities**                                                             |   |   |                                                                                                                                                                                                        |                                                                                                                                                                                                   |                                                           |
| Common shares issued (rescinded) for cash (Note                        6)                            |   |   | 50,990                                                                                                                                                                                                      | (58,000)                                                                                                                                                                                               | -                                                              |
| Proceeds from related party                                                                          |   |   | -                                                                                                                                                                                                           | -                                                                                                                                                                                                      | 7,000                                                          |
| Warrants issued for cash                                                                             |   |   | 10                                                                                                                                                                                                          | -                                                                                                                                                                                                      | -                                                              |
|                                                                                                 |   |   |                                                                                                                                                                                                        |                                                                                                                                                                                                   |                                                           |
|                                                                                                 |   |   | 51,000                                                                                                                                                                                                      | (58,000)                                                                                                                                                                                               | 7,000                                                          |
|                                                                                                 |   |   |                                                                                                                                                                                                        |                                                                                                                                                                                                   |                                                           |
| **Increase in cash and cash equivalents**                                                            |   |   | 4,396                                                                                                                                                                                                       | (73,228)                                                                                                                                                                                               | (6,307)                                                        |
|                                                                                                 |   |   |                                                                                                                                                                                                        |                                                                                                                                                                                                   |                                                           |
| **Cash and cash equivalents, beginning of                        period**                            |   |   | -                                                                                                                                                                                                           | 77,624                                                                                                                                                                                                 | 8,677                                                          |
|                                                                                                 |   |   |                                                                                                                                                                                                        |                                                                                                                                                                                                   |                                                           |
| **Cash and cash equivalents, end of period**                                                         |   |   | 4,396                                                                                                                                                                                                       | 4,396                                                                                                                                                                                                  | 2,370                                                          |

 

**Supplemental Disclosures with Respect to Cash Flows**(Note 8)

 

6

 

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**Mistral Ventures, Inc.**

**(A        Development Stage Company)**

Statement of Changes in Stockholders’        Equity

(Expressed in U.S. Dollars)

(Unaudited)

 

|                                                                                                                  | **Number of common shares issued** | **Capital**

**stock** | **Additional**

**paid-in**

**capital** | **Warrants** | **Deficit, accumulated during the exploration                        stage** | **Stockholder’s equity** |
|-----------------------------------------------------------------------------------------------------------------------|------------------------------------|------------------------|------------------------------------------|--------------|------------------------------------------------------------------------------|--------------------------------|
|                                                                                                                  |                               |                   |                                     | **$**        |                                                                         | **$**                          |   | **$** |   | **$** |   | **$** |
|                                                                                                                  |                               |                   |                                     |         |                                                                         |                           |   |   |   |   |   |   |
| **Balance at 13 May 2005 (inception)**                                                                                |                               |                   |                                     |         |                                                                         |                           |   |   |   |   |   |   |
| Common shares issued for cash ($0.001 per share)                                                                      |                               | 5,400,000              |                                     | 5,400        |                                                                         | 3,600                          |   | - |   | - |   | 9,000 |
| Net loss for the period                                                                                               |                               | -                      |                                     | -            |                                                                         | -                              |   |   |   | (5,773) |   | (5,773) |
|                                                                                                                  |                               |                   |                                     |         |                                                                         |                           |   |   |   |   |   |   |
| **Balance at 31 December 2005**                                                                                       |                               | 5,400,000              |                                     | 5,400        |                                                                         | 3,600                          |   | - |   | (5,773) |   | 3,227 |
| Common shares issued for a mineral property ($0.001 per                        share) (Notes 3, 5 and 8)         |                               | 5,400,000              |                                     | 5,400        |                                                                         | 3,600                          |   | - |   | - |   | 9,000 |
| Common shares issued for cash ($0.05 per unit) – 20                        September 2006 (Note 6)              |                               | 12,000,000             |                                     | 12,000       |                                                                         | 87,990                         |   | - |   | - |   | 99,990 |
| Warrants granted for cash (Note 6)                                                                                    |                               | -                      |                                     | -            |                                                                         | -                              |   | 10 |   | - |   | 10 |
| Contributions to capital by related party – expenses                        (Notes 5, 6 and 8)                  |                               | -                      |                                     | -            |                                                                         | 8,000                          |   | - |   | - |   | 8,000 |
| Net loss for the year                                                                                                 |                               | -                      |                                     | -            |                                                                         | -                              |   |   |   | (51,761) |   | (51,761) |
|                                                                                                                  |                               |                   |                                     |         |                                                                         |                           |   |   |   |   |   |   |
| **Balance at 31 December 2006**                                                                                       |                               | 22,800,000             |                                     | 22,800       |                                                                         | 103,190                        |   | 10 |   | (57,534) |   | 68,466 |
| Common shares rescinded for cash ($0.001 per share) –                        9 February 2007 (Note 6)           |                               | (6,960,000)            |                                     | (6,960)      |                                                                         | (51,034)                       |   | (6) |   | - |   | (58,000) |
| Common shares issued to a director ($0.001 per share)                        – 29 March 2007 (Notes 5, 6 and 8) |                               | 300,000                |                                     | 300          |                                                                         | 2,200                          |   | - |   | - |   | 2,500 |
| Contributions to capital by related party – expenses                        (Notes 5, 6 and 8)                  |                               | -                      |                                     | -            |                                                                         | 4,000                          |   | - |   | - |   | 4,000 |
| Net loss for the period                                                                                               |                               | -                      |                                     | -            |                                                                         | -                              |   | - |   | (21,952) |   | (21,952) |
|                                                                                                                  |                               |                   |                                     |         |                                                                         |                           |   |   |   |   |   |   |
| **Balance at 30 June 2007**                                                                                           |                               | 16,140,000             |                                     | 16,140       |                                                                         | 58,356                         |   | 4 |   | (79,486) |   | (4,986) |

         

 

7

 

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**Mistral Ventures, Inc.**

**(A        Development Stage Company)**

Notes to Financial Statements

(Expressed        in U.S. Dollars)

(Unaudited)

**30 June 2007**

 

| **1.** | **Nature and Continuance of Operations** |
|--------|------------------------------------------|

         

Mistral Ventures, Inc. (the “Company”) was incorporated under        the laws of the State of Nevada on 13 May 2005. The Company has acquired a mineral property        located in the Province of British Columbia, Canada and has not yet determined whether this        property contains reserves that are economically recoverable. The recoverability of        property expenditures will be dependent upon the discovery of economically recoverable        reserves, confirmation of the Company’s interest in the underlying property, the        ability of the Company to obtain necessary financing to satisfy the expenditure        requirements under the property agreement and upon future profitable production or proceeds        for the sale thereof.

         

The Company is an exploration stage company as defined by Statement of        Financial Accounting Standard (“SFAS”) No. 7 and Industry Guide 7 of the        Securities and Exchange Commission Industry Guide. The Company has not yet determined        whether this property contains reserves that are economically recoverable. The        recoverability of property expenditures will be dependent upon the discovery of        economically recoverable reserves, confirmation of the Company’s interest in the        underlying property, the ability of the Company to obtain necessary financing to satisfy        the expenditure requirements under the property agreement and upon future profitable        production or proceeds for the sale thereof.

         

The Company’s financial statements as at 30 June 2007 and for the six        month periods then ended have been prepared on a going concern basis, which contemplates        the realization of assets and the settlement of liabilities and commitments in the normal        course of business. The Company has a loss of $21,952 for the six month period ended 30        June 2007 (30 June 2006 - $23,997) and has a working capital deficit of $4,986 at 30 June        2007 (31 December 2006 – working capital of $68,466)

         

Management cannot provide assurance that the Company will ultimately achieve        profitable operations or become cash flow positive, or raise additional debt and/or equity        capital. Management believes that the Company’s capital resources should be adequate        to continue operating and maintaining its business strategy during the fiscal year ending        2007. However, if the Company is unable to raise additional capital in the near future, due        to the Company’s liquidity problems, management expects that the Company will need to        curtail operations, liquidate assets, seek additional capital on less favorable terms        and/or pursue other remedial measures. These financial statements do not include any        adjustments related to the recoverability and classification of assets or the amounts and        classification of liabilities that might be necessary should the Company be unable to        continue as a going concern.

         

At 30 June 2007, the Company has suffered losses from exploration stage        activities to date. Although management is currently attempting to implement its business        plan, and is seeking additional sources of equity or debt financing, there is no assurance        these activities will be successful. Accordingly, the Company must rely on its president to        perform essential functions without compensation until a business operation can be        commenced. These factors raise substantial doubt about the ability of the Company to        continue as a going concern. The financial statements do not include any adjustments that        might result from the outcome of this uncertainty.

 

8

 

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**Mistral Ventures, Inc.**

**(A        Development Stage Company)**

Notes to        Financial Statements

(Expressed        in U.S. Dollars)

(Unaudited)

**30 June 2007**

 

| **2.** | **Significant Accounting Policies** |
|--------|-------------------------------------|

         

The following is a summary of significant accounting policies used in the        preparation of these financial statements.

         

**Basis of presentation**

         

The financial statements of the Company have been prepared in accordance        with accounting principles generally accepted in the United States of America applicable to        exploration stage companies, and are expressed in U.S. dollars. The Company’s fiscal        year end is 31 December.

         

**Cash and cash equivalents**

         

Cash and cash equivalents include highly liquid investments with original        maturities of six months or less.

         

**Mineral property costs**

         

The Company has been in the exploration stage since its formation on 13 May        2005 and has not yet realized any revenues from its planned operations. It is primarily        engaged in the acquisition and exploration of mining properties.

         

Mineral property acquisition costs are capitalized when incurred. In        accordance with Emerging Task Force Issue 04-02, such costs are classified as tangible        assets and are evaluated for impairment and written down as required.

         

Mineral property exploration costs are charged to operations as incurred.        When it has been determined that a mineral property can be economically developed as a        result of establishing proven and probable reserves, the costs incurred to develop such        property, are capitalized. Such costs will be amortized using the units-of-production        method over the estimated life of the probable reserve.

         

Although the Company will take steps to verify title to mineral properties        in which it has an interest, according to the usual industry standards for the stage of        exploration of such properties, these procedures do not guarantee the Company’s        title. Such properties may be subject to prior agreements or transfers and title may be        affected by undetected defects.

         

         

 

 

 

9

 

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**Mistral Ventures, Inc.**

**(A        Development Stage Company)**

Notes to        Financial Statements

(Expressed        in U.S. Dollars)

(Unaudited)

**30 June 2007**

         

**Reclamation costs**

         

The Company’s policy for recording reclamation costs is to record a        liability for the estimated costs to reclaim mined land by recording charges to production        costs for each tonne of ore mined over the life of the mine. The amount charged is based on        management’s estimation of reclamation costs to be incurred. The accrued liability is        reduced as reclamation expenditures are made. Certain reclamation work is performed        concurrently with mining and these expenditures are charged to operations at that        time.

         

**Financial instruments**

         

The carrying value of cash, accounts payable and accrued liabilities, and        due to related party approximates their fair value because of the short maturity of these        instruments. The Company’s operations are in Canada and virtually all of its assets        and liabilities are giving rise to significant exposure to market risks from changes in        foreign currency rates. The Company’s financial risk is the risk that arises from        fluctuations in foreign exchange rates and the degree of volatility of these rates.        Currently, the Company does not use derivative instruments to reduce its exposure to        foreign currency risk.

         

**Derivative financial instruments**

         

The Company has not, to the date of these financial statements, entered into        derivative instruments to offset the impact of foreign currency fluctuations.

         

**Environmental expenditures**

         

The operations of the Company have been, and may in the future be, affected        from time to time, in varying degrees, by changes in environmental regulations, including        those for future reclamation and site restoration costs. Both the likelihood of new        regulations and their overall effect upon the Company vary greatly and are not predictable.        The Company’s policy is to meet or, if possible, surpass standards set by relevant        legislation, by application of technically proven and economically feasible        measures.

         

Environmental expenditures that relate to ongoing environmental and        reclamation programs are charged against earnings as incurred or capitalized and amortized        depending on their future economic benefits. Estimated future reclamation and site        restoration costs, when the ultimate liability is reasonably determinable, are charged        against earnings over the estimated remaining life of the related business operation, net        of expected recoveries.

         

         

         

 

10

 

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**Mistral Ventures, Inc.**

**(A        Development Stage Company)**

Notes to        Financial Statements

(Expressed        in U.S. Dollars)

(Unaudited)

**30 June 2007**

         

**Income taxes**

         

Deferred income taxes are reported for timing differences between items of        income or expense reported in the financial statements and those reported for income tax        purposes in accordance with SFAS No. 109, “*Accounting for        Income Taxes*”, which requires the use of the        asset/liability method of accounting for income taxes. Deferred income taxes and tax        benefits are recognized for the future tax consequences attributable to differences between        the financial statement carrying amounts of existing assets and liabilities and their        respective tax bases, and for tax losses and credit carry-forwards. Deferred tax assets and        liabilities are measured using enacted tax rates expected to apply to taxable income in the        years in which those temporary differences are expected to be recovered or settled. The        Company provides for deferred taxes for the estimated future tax effects attributable to        temporary differences and carry forwards when realization is more likely than        not.

         

**Basic and diluted net loss per share**

         

The Company computes net loss per share in accordance with SFAS No. 128,        “*Earnings per Share*”. SFAS        No. 128 requires presentation of both basic and diluted earnings per share        (“EPS”) on the face of the income statement. Basic EPS is computed by dividing        net loss available to common shareholders (numerator) by the weighted average number of        shares outstanding (denominator) during the period. Diluted EPS gives effect to all        potentially dilutive common shares outstanding during the period using the treasury stock        method and convertible preferred stock using the if-converted method. In computing diluted        EPS, the average stock price for the period is used in determining the number of shares        assumed to be purchased from the exercise of stock options or warrants. Diluted EPS        excludes all potentially dilutive shares if their effect is anti-dilutive.

         

**Comprehensive loss**

         

SFAS No. 130, “*Reporting Comprehensive        Income*”, establishes standards for the reporting and        display of comprehensive loss and its components in the financial statements. As at 31        December 2006, the Company has no items that represent a comprehensive loss and, therefore,        has not included a schedule of comprehensive loss in the financial statements.

         

**Segments of an enterprise and related information**

         

SFAS No. 131, “*Disclosures about Segments of        an Enterprise and Related Information*”, supersedes SFAS No.        14, “*Financial Reporting for Segments of a Business        Enterprise*”. SFAS 131 establishes standards for the way        that public companies report information about operating segments in annual financial        statements and requires reporting of selected information about operating segments in        interim financial statements issued to the public. It also establishes standards for        disclosures regarding products and services, geographic areas and major customers. SFAS 131        defines operating segments as components of a company about which separate financial        information is available that is evaluated regularly by the chief operating decision maker        in deciding how to allocate resources and in assessing performance. The Company has        evaluated this SFAS and does not believe it is applicable at this time.

 

11

 

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**Mistral Ventures, Inc.**

**(A        Development Stage Company)**

Notes to        Financial Statements

(Expressed        in U.S. Dollars)

(Unaudited)

**30 June 2007**

         

**Start-up expenses**

         

The Company has adopted Statement of Position No. 98-5,        “*Reporting the Costs of Start-up        Activities*”, which requires that costs associated with        start-up activities be expensed as incurred.  Accordingly, start-up costs associated        with the Company's formation have been included in the Company's general and administrative        expenses for the period from the date of inception on 13 May 2005 to 31 December        2006.

 

**Foreign currency translation**

         

The Company’s functional and reporting currency is in U.S. dollars.        The financial statements of the Company are translated to U.S. dollars in accordance with        SFAS No. 52, “*Foreign Currency        Translation*”. Monetary assets and liabilities denominated        in foreign currencies are translated using the exchange rate prevailing at the balance        sheet date. Gains and losses arising on translation or settlement of foreign currency        denominated transactions or balances are included in the determination of income. The        Company has not, to the date of these financial statements, entered into derivative        instruments to offset the impact of foreign currency fluctuations.

         

**Use of estimates**

         

The preparation of financial statements in conformity with accounting        principles generally accepted in the United States of America requires management to make        estimates and assumptions that affect the amounts of assets and liabilities and disclosures        of contingent assets and liabilities at the date of the financial statements and the        reported amounts of revenues and expenditures during the reporting period. Actual results        could differ from these estimates.

         

         

         

         

         

         

         

         

         

         

12

 

----

 

**Mistral Ventures, Inc.**

**(A        Development Stage Company)**

Notes to        Financial Statements

(Expressed        in U.S. Dollars)

(Unaudited)

**30 June 2007**

         

**Stock-Based Compensation**

         

Effective January 1, 2006, the Company adopted the provisions of SFAS No.        123(R), “Share-Based Payment”, which establishes accounting for equity        instruments exchanged for employee services. Under the provisions of SFAS 123(R),        stock-based compensation cost is measured at the grant date, based on the calculated fair        value of the award, and is recognized as an expense over the employees’ requisite        service period (generally the vesting period of the equity grant). Before January 1, 2006,        the Company accounted for stock-based compensation to employees in accordance with        Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to        Employees,” and complied with the disclosure requirements of SFAS No. 123,        “Accounting for Stock-Based Compensation”.  The Company adopted FAS 123(R)        using the modified prospective method, which requires the Company to record compensation        expense over the vesting period for all awards granted after the date of adoption, and for        the unvested portion of previously granted awards that remain outstanding at the date of        adoption.  Accordingly, financial statements for the periods prior to January 1, 2006        have not been restated to reflect the fair value method of expensing share-based        compensation.  Adoption of SFAS No. 123(R) does not change the way the Company        accounts for share-based payments to non-employees, with guidance provided by SFAS 123 (as        originally issued) and Emerging Issues Task Force Issue No. 96-18, “Accounting for        Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction        with Selling, Goods or Services”.

         

**Recent accounting pronouncements**

 

In February 2007, the Financial Accounting Standards Board (the        “FASB”) issued SFASNo. 159, “The Fair Value Option for Financial Assets        and Financial Liabilities” (SFAS 159).  SFAS 159 allows the company to choose to        measure many financial assets and financial liabilities at fair value.  Unrealized        gains and losses on items for which the fair value option has been elected are reported in        earnings.  SFAS 159 is effective for fiscal years beginning after November 15,        2007.  The Company is currently evaluating the requirements of SFAS 159 and the        potential impact on the Company’s financial statements.

 

         

         

         

         

         

         

 

13

 

----

 

**Mistral Ventures, Inc.**

**(A        Development Stage Company)**

Notes to        Financial Statements

(Expressed        in U.S. Dollars)

(Unaudited)

**30 June 2007**

         

In September 2006, the Financial Accounting Standards Board (the        “FASB”) issued SFAS No. 158, “Employers’ Accounting for Defined        Benefit Pension and Other Postretirement Plans – an amendment of FASB Statements No.        87, 88, 106 and 132(R)” (SFAS 158”). SFAS 158 requires an employer that        sponsors one or more single-employer defined benefit plans to (a) recognize the overfunded        or underfunded status of a benefit plan in its statement of financial position, (b)        recognize as a component of other comprehensive income, net of tax, the gains or losses and        prior service costs or credits that arise during the period but are not recognized as        components of net periodic benefit cost pursuant to SFAS 87, “Employers’        Accounting for Pensions”, or SFAS 106, “Employers’ Accounting for        Postretirement Benefits Other Than Pensions”, (c) measure defined benefit plan assets        and obligations as of the date of the employer’s fiscal year-end, and (d) disclose in        the notes to financial statements additional information about certain effects on net        periodic benefit cost for the next fiscal year that arise from delayed recognition of the        gains or losses, prior service costs or credits, and transition asset or obligation. SFAS        158 is effective for the Company’s fiscal year ending December 31, 2007. The Company        is currently reviewing the impact of this statement.

         

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurement"        ("SFAS 157"). The Statement provides guidance for using fair value to measure assets and        liabilities. The Statement also expands disclosures about the extent to which companies        measure assets and liabilities at fair value, the information used to measure fair value,        and the effect of fair value measurement on earnings. This Statement applies under other        accounting pronouncements that require or permit fair value measurements. This Statement        does not expand the use of fair value measurements in any new circumstances. Under this        Statement, fair value refers to the price that would be received to sell an asset or paid        to transfer a liability in an orderly transaction between market participants in the market        in which the entity transacts. SFAS 157 is effective for the Company for fair value        measurements and disclosures made by the Company in its fiscal year beginning on January 1,        2008. The Company is currently reviewing the impact of this statement.

 

In March 2006, the FASB issued SFAS No. 156,        “*Accounting for Servicing of Financial        Assets*”, which amends SFAS No. 140        “*Accounting for Transfers and Servicing of Financial Assets        and Extinguishments of Liabilities*”. SFAS No. 156 may be        adopted as early as 1 January 2006, for calendar year-end entities, provided that no        interim financial statements have been issued. Those not choosing to early adopt are        required to apply the provisions as of the beginning of the first fiscal year that begins        after 15 September 2006 (e.g. 1 January 2007, for calendar year-end entities).  The        intention of the new statement is to simplify accounting for separately recognized        servicing assets and liabilities, such as those common with mortgage securitization        activities, as well as to simplify efforts to obtain hedge-like accounting.         Specifically, the FASB said SFAS No. 156 permits a service using derivative financial        instruments to report both the derivative financial instrument and related servicing asset        or liability by using a consistent measurement attribute, or fair value.  The adoption        of SFAS No. 156 is not expected to have a material impact on the Company’s        financial position, results of operations or cash flows.

         

         

14

 

----

 

**Mistral Ventures, Inc.**

**(A        Development Stage Company)**

Notes to        Financial Statements

(Expressed        in U.S. Dollars)

(Unaudited)

**30 June 2007**

         

In February 2006, the FASB issued SFAS No. 155,        “*Accounting for Certain Hybrid Financial        Instruments*”, which amends SFAS No. 133,        “*Accounting for Derivative Instruments and Hedging        Activities*” and SFAS No. 140. SFAS No. 155        permits fair value measurement for any hybrid financial instrument that contains an        embedded derivative that otherwise would require bifurcation, establishes a requirement to        evaluate interests in securitized financial assets to identify interests that are        freestanding derivatives or hybrid financial instruments containing embedded derivatives.        The adoption of SFAS No. 155 is not expected to have a material impact on the        Company’s financial position, results of operations or cash flows.

         

| **3.** | **Mineral Property** |
|--------|----------------------|

 

During the year ended 31 December 2006, the Company acquired a 100% interest        in a mineral property located in the Greenwood Mining Division, British Columbia (the        “Gold Bug Property”) from a director and shareholder of the Company for        proceeds of 5,400,000 common shares of the Company valued at $9,000. The Gold Bug Property        is currently held in trust for the Company by the director and shareholder (Notes 5, 6 and        8). In October 2006, the Company commenced the “Phase 1A Exploration Program”        on the Gold Bug Property. Exploration expenditures for the year ended 31 December 2006 on        the Gold Bug Property total $5,230 and consist of consulting, geology and engineering, and        travel of $2,550, $2,005 and $675 respectively.

         

There have been no further expenditures on this property in 2007.

         

On 12 April 2007, the Company received the results of the Phase 1A        Exploration Program. The results were not favorable and no further work is anticipated at        this time.

 

| **4.** | **Accounts Payable and Accrued Liabilities** |
|--------|----------------------------------------------|

         

Accounts payable and accrued liabilities are non-interest bearing, unsecured        and have settlement dates within one year.

 

| **5.** | **Related Party Transactions** |
|--------|--------------------------------|

         

During the six month period ended 30 June 2007, 300,000 shares were issued        to a director and officer of the Company as incentive for joining the Board of Directors.        These shares were valued at $2,500 and have been recorded as an increase in non-cash        management fee expenditures and an increase in common stock and additional paid-in capital        (Note 8).

         

During the six month period ended 30 June 2007, an officer, director and        shareholder of the Company made contributions to capital for management fees and rent of        $3,400 (30 June 2006 - $3,400, cumulative - $10,200) and $600 (30 June 2006 - $600,        cumulative - $1,800) respectively (Notes 6 and 8). These amounts have been recorded as an        increase in expenditures and an increase in additional paid-in capital.

         

15

 

----

 

**Mistral Ventures, Inc.**

**(A        Development Stage Company)**

Notes to        Financial Statements

(Expressed        in U.S. Dollars)

(Unaudited)

**30 June 2007**

         

During the year ended 31 December 2006, the Company acquired an interest in        the Gold Bug Property from a director and shareholder of the Company        (Notes 3, 6 and 8).

         

| **6.** | **Capital Stock** |
|--------|-------------------|

 

**Authorized**

         

The total authorized capital is 450,000,000 common shares with a par value        of $0.001 per common share.

         

**Issued****and outstanding**

         

The total issued and outstanding capital stock is 16,140,000 common shares        with a par value of $0.001 per common share.

         

|   | i. | On 9 February 2006, the Company issued 5,400,000 common                        shares valued at $0.01 per share for the acquisition of a mineral property                        (Notes 3, 5 and 8). |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | ii. | On 20 September 2006, 12,000,000 Units (the                        “Units”) of the Company were issued for cash proceeds of                        $100,000. Each Unit consists of one common share of the Company and two                        share purchase warrants. Each share purchase warrant entitles the holder to                        purchase an additional common share of the Company at a price of $0.10 per                        common share expiring 19 September 2008 (Note 6). |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | iii. | On 9 February 2007, the Company chose to offer a rescission                        to shareholders who were not accredited investors. In total, 6,960,000                        shares valued at $58,000 were rescinded (Note 6). |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | iv. | On 2 May 2007, the board of directors of the Company                        authorized a one to six forward split of all outstanding common shares and                        a corresponding forward increase in the Company’s authorized common                        stock pursuant to Section 78.209 of the Nevada Revised Statues. The forward                        split and increase in authorized common stock was made effective as of 1                        June 2007. The effect of the forward split was to increase the number of                        the Company’s common shares issued and outstanding from 2,690,000 to                        16,140,000 and to increase the Company’s authorized common shares                        from 75,000,000 shares par value $0.001 to 450,000,000 shares par value                        $0.001. The financial statements have been retroactively adjusted to                        reflect these stock splits. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | v. | During the six month period ended 30 June 2007, an officer,                        director and shareholder of the Company made contributions to capital by                        the payment of the Company’s expenses (Notes 5 and 8). |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

16

 

----

 

 

**Mistral Ventures, Inc.**

**(A        Development Stage Company)**

Notes to        Financial Statements

(Expressed        in U.S. Dollars)

(Unaudited)

**30 June 2007**

 

|   | vi. | During the six month period ended 30 June 2007, 300,000                        shares were issued to a director and officer of the Company as incentive                        for joining the Board of Directors. These shares were valued at $2,500 and                        have been recorded as an increase in non-cash management fee expenditures                        and an increase in common stock and additional paid-in capital (Notes 5 and                        8). |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

         

**Warrants**

         

The following share purchase warrants were outstanding at 30 June        2007:

         

|     |   |  

**Exercise price** |   |  

**Number**

**of warrants** |   | **Remaining**

**contractual life (years)** |
|----------|--------|----------------------------|--------|-------------------------------------|--------|---------------------------------------------|
|     |   | **$**                      |   |                                |   |                                        |
|     |   |                       |   |                                |   |                                        |
| Warrants |   | 0.10                       |   | 10,080,000                          |   | 1.2                                         |

         

The following is a summary of warrant activities during the six month period        ended 30 June 2007:

         

|                                                                                                       |   | **Number of warrants** |   | **Weighted average exercise price** |
|------------------------------------------------------------------------------------------------------------|--------|------------------------|--------|-------------------------------------|
|                                                                                                       |   |                   |   | **$**                               |
|                                                                                                       |   |                   |   |                                |
| Outstanding and exercisable at 1 January 2007                                                              |   | 24,000,000             |   | 0.10                                |
|                                                                                                       |   |                   |   |                                |
| Granted                                                                                                    |   | -                      |   | -                                   |
| Exercised                                                                                                  |   | -                      |   | -                                   |
| Expired                                                                                                    |   | -                      |   | -                                   |
| Rescinded                                                                                                  |   | (13,920,000)           |   | -                                   |
|                                                                                                       |   |                   |   |                                |
| Outstanding and exercisable at 30 June 2007                                                                |   | 10,080,000             |   | 0.10                                |
|                                                                                                       |   |                   |   |                                |
| Weighted average fair value of warrants outstanding and                        exercisable at 30 June 2007 |   |                   |   | 0.000002                            |

         

 

17

 

----

 

**Mistral Ventures, Inc.**

**(A        Development Stage Company)**

Notes to        Financial Statements

(Expressed        in U.S. Dollars)

(Unaudited)

**30 June 2007**

         

The weighted average grant date fair value of warrants issued during the        year ended 30 June 2007 is $0.000002 per warrant. The fair value of each warrant granted        was determined using the Black-Scholes option pricing model and the following weighted        average assumptions:

         

|                    |   |   |   |   |   | **30 June**

**2007** |
|-------------------------|--------|--------|--------|--------|--------|-----------------------|
|                    |   |   |   |   |   |                  |
| Risk free interest rate |   |   |   |   |   | 4.81%                 |
| Expected life           |   |   |   |   |   | 2 years               |
| Annualized volatility   |   |   |   |   |   | 101%                  |
| Expected dividends      |   |   |   |   |   | 0%                    |

 

Because the shares of the Company have not begun trading on any recognized        stock exchange, there is no trading history to establish the expected volatility. The        Company has used the average volatility for two companies in the same industry or        considered to be comparable.

         

Option pricing models require the input of highly subjective assumptions        including the estimate of the share price volatility. Changes in the subjective input        assumptions can materially affect the fair value estimate, and therefore, the existing        models do not necessarily provide a reliable single measure of the fair value of the        Company’s stock options.

         

| **7.** | **Income Taxes** |
|--------|------------------|

         

The Company has losses carried forward for income tax purposes to 30 June        2007. There are no current or deferred tax expenses for the period ended 30 June 2007 due        to the Company’s loss position. The Company has fully reserved for any benefits of        these losses. The deferred tax consequences of temporary differences in reporting items for        financial statement and income tax purposes are recognized, as appropriate. Realization of        the future tax benefits related to the deferred tax assets is dependent on many factors,        including the Company’s ability to generate taxable income within the net operating        loss carry forward period. Management has considered these factors in reaching its        conclusion as to the valuation allowance for financial reporting purposes.

         

         

         

         

         

         

 

18

 

----

 

**Mistral Ventures, Inc.**

**(A        Development Stage Company)**

Notes to        Financial Statements

(Expressed        in U.S. Dollars)

(Unaudited)

**30 June 2007**

         

The provision for refundable federal income tax consists of the        following:

         

|                                                                              |   | **For the**

**six month period ended**

**30 June**

**2007** |   | **For the**

**six month period ended**

**30 June**

**2006** |
|-----------------------------------------------------------------------------------|--------|----------------------------------------------------------------|--------|----------------------------------------------------------------|
|                                                                              |   | **$**                                                          |   | **$**                                                          |
|                                                                              |   |                                                           |   |                                                           |
| Deferred tax asset attributable to:                                               |   |                                                           |   |                                                           |
| Current operations                                                                |   | 7,464                                                          |   | 8,159                                                          |
| Contributions to capital by related party –                        expenses |   | (1,360)                                                        |   | (1,360)                                                        |
| Stock based compensation                                                          |   | (850)                                                          |   | -                                                              |
| Less: Change in valuation allowance                                               |   | (5,254)                                                        |   | (6,799)                                                        |
|                                                                              |   |                                                           |   |                                                           |
| Net refundable amount                                                             |   | -                                                              |   | -                                                              |

         

The composition of the Company’s deferred tax assets as at 30 June        2007 and 31 December 2006 are as follows:

         

|                                        |   |   |   | **30**

**June**

**2007** |   | **31 December 2006** |
|---------------------------------------------|--------|--------|--------|----------------------------|--------|----------------------|
|                                        |   |   |   | **$**                      |   | **$**                |
|                                        |   |   |   |                       |   |                 |
| Net income tax operating loss carry forward |   |   |   | (64,986)                   |   | (49,534)             |
|                                        |   |   |   |                       |   |                 |
| Statutory federal income tax rate           |   |   |   | 34%                        |   | 34%                  |
| Effective income tax rate                   |   |   |   | 0%                         |   | 0%                   |
|                                        |   |   |   |                       |   |                 |
| Deferred tax assets                         |   |   |   | 22,095                     |   | 16,842               |
| Less: Valuation allowance                   |   |   |   | (22,095)                   |   | (16,842)             |
|                                        |   |   |   |                       |   |                 |
| Net deferred tax asset                      |   |   |   | -                          |   | -                    |

 

The potential income tax benefit of these losses has been offset by a full        valuation allowance.

         

As at 30 June 2007, the Company has an unused net operating loss carry        forward balance of approximately $64,986 that is available to offset future taxable income.        This unused net operating loss carry forward balance for income tax purposes expires        between the years 2026 and 2027.

         

         

 

19

 

----

 

**Mistral Ventures, Inc.**

**(A        Development Stage Company)**

Notes to        Financial Statements

(Expressed        in U.S. Dollars)

(Unaudited)

**30 June 2007**

         

| **8.** | **Supplemental Disclosures with Respect to Cash                        Flows** |
|--------|--------------------------------------------------------------------------------|

 

 

|                                       |   | **For the period from the date of inception on 13 May 2005                        to 30 June**

**2007** |   | **For the**

**six**

**month period ended**

**30 June 2007** |   | **For the**

**six**

**month period ended**

**30 June**

**2006** |
|--------------------------------------------|--------|----------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------|--------|---------------------------------------------------------------------|
|                                       |   | **$**                                                                                                    |   |                                                           |   | **$**                                                               |
|                                       |   |                                                                                                     |   |                                                           |   |                                                                |
| Cash paid during the year for interest     |   | -                                                                                                        |   | -                                                              |   | -                                                                   |
| Cash paid during the year for income taxes |   | -                                                                                                        |   | -                                                              |   | -                                                                   |

         

During the six month period ended 30 June 2007, 300,000 shares were issued        to a director and officer of the Company as incentive for joining the Board of Directors.        These shares were valued at $2,500 and have been recorded as an increase in non-cash        management fee expenditures and an increase in common stock and additional paid-in capital        (Notes 5 and 8).

         

During the six month period ended 30 June 2007, an officer, director and        shareholder made contributions to capital for management fees and rent of $3,400 (30 June        2006 - $3,400, cumulative - $10,200) and $600 (30 June 2006 - $600, cumulative - $1,800)        respectively (Notes 5 and 6).

         

During the year ended 31 December 2006, the Company issued 5,400,000 common        shares valued at $9,000 for the acquisition of a mineral property        (Notes 3, 5 and 6).

         

 

 

 

 

 

 

 

20

 

----

 

 

| **ITEM 2.** | **MANAGEMENT’S PLAN OF                        OPERATION** |
|-------------|-----------------------------------------------------------------|

 

The        following discussion should be read in conjunction with our financial statements and notes        thereto included in this report. All information presented herein is based on our period        ended June 30, 2007. Our fiscal year end is December 31.

 

***General***

 

Mistral        Ventures Inc. was incorporated in the State of Nevada on May 13, 2005 to engage in the        acquisition, exploration and development of natural resource properties. We are an        exploration stage company with no revenues and limited operating history. By "exploration        stage" we mean that we were engaged in the search for mineral deposits or reserves and not        in either development or production. Our mining property, known as the Gold Bug Project, is        located in south central British Columbia, Canada.

 

***Exploration***

 

The Company        completed Phase 1A of an exploration program on the Gold Bug Project in November of 2006        with an independent exploration crew managed by Madman Mining Co., Ltd. Samples taken from        the claim were tested and evaluated.

 

A grid was        emplaced with cross lines over the claim. A total of 25 soil samples were collected from        within each of the cross lines over the central portion of the grid. The soil samples        covered the area in which the old workings are located as well as the known and projected        strike/extension of the quartz vein.The soil samples were analyzed for gold and 28 other        elements including copper, zinc, lead and silver. While the vein produced a weak        geochemical trace for copper and zinc it failed to return anomalous values of gold or        silver.

 

A total        of 14 rock samples of vein material from old sites on the property were also analyzed.        Slightly anomalous values of gold, copper, silver, lead and zinc were present in the rock        samples, but the values did not approach ore grade.

 

The        exploration program demonstrated that the target vein is narrow, with a limited strike        length that does not host economic mineralization. In addition, exploration efforts failed        to locate any other mineralized areas within the property. Madman Mining Co., Ltd.        recommended that no further work should be completed on the Gold Bug Project, which        recommendation was considered and adopted by the Company.

 

***Plan        of Operation***

 

The        Company’s plan of operation for the coming year is to seek alternative business        combinations or acquisitions to create value for our shareholders. We do not plan to limit        our options to any particular industry, but will evaluate each opportunity on its merits.        The Company has adopted a conservative policy of seeking opportunities that it considers to        be of exceptional quality. Therefore, we may have to wait some time before consummating a        suitable transaction. Management recognizes that the higher the standards it imposes upon        us, the greater may be its competitive disadvantage when vying with other acquiring        interests or entities.

 

21

 

----

 

We have not        yet entered into any agreement, nor do we have any commitment or understanding to enter        into or become engaged in any transaction, as of the date of this filing.

 

***Results of Operations***

 

During the        period ended June 30, 2007, the Company was involved in the evaluation of the exploration        program completed on the Gold Bug Project. Based on the results of that program the Company        is now in the process of identifying an alternative business opportunity, which opportunity        if acquired, may or may not produce revenue. Due to this uncertainty, the Company does not        expect any revenues until such time as a revenue producing acquisition is accomplished and        thus will likely continue to operate at a loss.

 

***Net        Loss***

 

Since        inception to June 30, 2007, the Company recorded an operating loss of $79,486. Net losses        for the six month period ended June 30, 2007 were $21,952 as compared to $23,997 for the        six months ended June 30, 2006. The Company’s operating losses in the current six        month period are attributable to general and administrative expenses including accounting        costs, professional expenses and consulting fees. Expenses in prior periods have also        included exploration costs directly related to our former precious metals exploration        program. The Company has not generated any revenues since inception.

 

The Company        expects to continue to operate at a loss through fiscal 2007 and cannot determine whether        we will ever generate revenues from operations.

 

***Capital Expenditures***

 

The Company        expended no amounts on capital expenditures from inception to June 30, 2007.

 

***Income Tax Expense (Benefit)***

 

The Company        has an income tax benefit resulting from net operating losses to offset any future        operating profit. However, the Company has not recorded this benefit in the financial        statements because it cannot be assured that we will utilize the net operating losses        carried forward in future years.

 

***Impact of Inflation***

 

The Company        believes that inflation has had a negligible effect on operations over the past three years        and that it can offset inflationary increases by improving operating        efficiencies.

 

***Capital Resources and Liquidity***

 

The Company        had current and total assets of $4,396 as of the six month period ended June 30, 2007,        consisting of cash on hand and total liabilities of $9,382 as of June 30, 2007. Net        stockholders’ deficit in the Company was $4,986 at June 30, 2007. The Company is in        the exploration stage and, since inception, has experienced significant changes in        liquidity, capital resources and shareholders’ equity.

         

Cash flow        used in operating activities was $46,604 for the period from inception to June 30, 2007.        Cash flow used in operating activities was $15,228 for the six month period ended June 30,        2007, as compared to cash flow used in operating activities of $13,307 for the six month        period ended June 30, 2006. Cash flow used in operating activities in the current six month        periods was used for general and administrative expenses.

 

22

 

----

 

 

Cash flow        provided by financing activities for the period from inception to June 30, 2007 was        $51,000. Cash flow used in financing activities for the six month period ended June 30,        2007 was $58,000 as compared to cash flow provided by financing activities of $7,000 for        the six month period ended June 30, 2006. The cash flow used in financing activities during        the current three and six month periods is attributable to the rescission of certain        proceeds received from the sale of common stock.

 

Cash flow        provided by investing activities for the period from inception to June 30, 2007 was        $0.

 

The        Company’s current assets may not be sufficient to conduct its plan of operation over        the next twelve (12) months. Further, should the Company acquire a business opportunity        over the next twelve month period, cash requirements may exceed current assets and the        Company will have to seek debt or equity financing to fund operations. The Company has no        current commitments or arrangements with respect to, or immediate sources of funding.        Further, no assurances can be given that funding, if needed, would be available or        available to the Company on acceptable terms. The Company’s major shareholders would        be the most likely source of new funding in the form of loans or equity placements though        none have made any commitment for future investment and the Company has no agreement formal        or otherwise.

The Company        had no formal long term lines or credit or other bank financing arrangements as of June 30,        2007.

 

Since        earnings, if any, will be reinvested in operations, the Company does not expect to pay cash        dividends in the foreseeable future.

 

The Company        has no defined benefit plan or contractual commitment with any of its officers or        directors.

 

The Company        has no current plans for any significant purchase or sale of any plant or        equipment.

 

***Off        Balance Sheet Arrangements***

 

As of June        30, 2007, the Company has no significant off-balance sheet arrangements that have or are        reasonably likely to have a current or future effect on our financial condition, changes in        financial condition, revenues or expenses, results of operations, liquidity, capital        expenditures, or capital resources that is material to stockholders.

 

***Critical Accounting Policies***

 

In the        notes to the audited financial statements for the year ended December 31, 2006 included in        the Company’s Form 10-KSB, the Company discusses those accounting policies that are        considered to be significant in determining the results of operations and its financial        position. The Company believes that the accounting principles utilized by us conform to        accounting principles generally accepted in the United States of America.

 

The        preparation of financial statements requires Company management to make significant        estimates and judgments that affect the reported amounts of assets, liabilities, revenues        and expenses. By their nature, these judgments are subject to an inherent degree of        uncertainty. On an on-going basis, the Company evaluates estimates. The Company bases its        estimates on historical experience and other facts and circumstances that are believed to        be reasonable, and the results form the basis for making judgments about the carrying value        of assets and liabilities. The actual results may differ from these estimates under        different assumptions or conditions.

 

23

 

----

 

 

***Forward Looking Statements and Factors That May Affect Future Results        and Financial Condition***

 

The        statements contained in the section titled*“Plan of        Operation”*with the exception of historical facts, are        forward looking statements within the meaning of Section 27A of the Securities Act. A        safe-harbor provision may not be applicable to the forward looking statements made in this        Form 10-QSB because of certain exclusions under Section 27A (b). Forward looking statements        reflect our current expectations and beliefs regarding our future results of operations,        performance, and achievements. These statements are subject to risks and uncertainties and        are based upon assumptions and beliefs that may or may not materialize. These statements        include, but are not limited to, statements concerning:

 

|   | - | our anticipated financial performance and business                        plan; |
|--------|---|---------------------------------------------------------------------------------|

|   | - | the sufficiency of existing capital resources; |
|--------|---|------------------------------------------------|

|   | - | our ability to raise additional capital to fund cash                        requirements for future operations; |
|--------|---|-----------------------------------------------------------------------------------------------------------------|

|   | - | uncertainties related to the Company’s future business                        prospects; |
|--------|---|------------------------------------------------------------------------------------------------|

|   | - | the ability of the Company to generate revenues to fund                        future operations; |
|--------|---|---------------------------------------------------------------------------------------------------|

|   | - | the volatility of the stock market and; |
|--------|---|-----------------------------------------|

|   | - | general economic conditions. |
|--------|---|------------------------------|

 

We wish to        caution readers that the Company’s operating results are subject to various risks and        uncertainties that could cause our actual results to differ materially from those discussed        or anticipated including the factors set forth in the section entitled*“Risk Factors”*below. We also wish        to advise readers not to place any undue reliance on the forward looking statements        contained in this report, which reflect our beliefs and expectations only as of the date of        this report. We assume no obligation to update or revise these forward looking statements        to reflect new events or circumstances or any changes in our beliefs or expectations, other        than is required by law.

 

***Risks        Factors***

 

Our future        operating results are highly uncertain. Before deciding to invest in us or to maintain or        increase your investment, you should carefully consider the risks described below, in        addition to the other information contained in our quarterly report. If any of these risks        actually occur, our business, financial condition or results of operations could be        seriously harmed. In that event, the market price for our common stock could decline and        you may lose all or part of your investment.

 

***We        have a history of significant operating losses and such losses may continue in the        future.***

 

Since our        inception in 2005, we have incurred expenses but realized no revenue, resulting in        continuing losses and an accumulated deficit of $79,486 as at June 30, 2007. We will        continue to incur operating losses as we maintain our search for a suitable business        opportunity and satisfy our ongoing disclosure requirements with the Securities and        Exchange Commission. Our only expectation of future profitability is dependent upon our        ability to develop or acquire a revenue producing business opportunity, which acquisition        can in no way be assured. Therefore, we may never be able to achieve        profitability.

 

 

 

 

24

 

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***The        Company’s limited financial resources cast severe doubt on our ability to acquire a        profitable business opportunity.***

 

The        Company’s future operation is dependent upon the development or acquisition of a        profitable business opportunity. However, the prospect of such a business opportunity is        doubtful due to the Company’s limited financial resources. Since we have no current        business, the Company is in a limited position to improve this financial condition through        debt or equity offerings. Therefore, this limitation may act as a deterrent in future        negotiations with prospective business opportunities. Should we be unable to develop or        acquire a profitable business opportunity the Company will, in all likelihood, be forced to        cease operations.

 

***A        public market for our common stock is yet to develop.***

 

A public        market for our common stock is yet to develop despite our quotation on the Over the Counter        Bulletin Board. Should a public market develop it may be limited due to low trading volume        and a small number of brokerage firms acting as market makers. Because of the limitations        of our market and the prospective volatility of the market price of our stock, investors        may face difficulties in selling their shares.

 

***We        may incur significant expenses as a result of being quoted on the Over the Counter Bulletin        Board, which may negatively impact our financial performance.***

 

We may        incur significant legal, accounting and other expenses as a result of being quoted on the        Over the Counter Bulletin Board. The Sarbanes-Oxley Act of 2002, as well as related rules        implemented by the Commission has required changes in corporate governance practices of        public companies. We expect that compliance with these laws, rules and regulations,        including compliance with Section 404 of the Sarbanes-Oxley Act of 2002 as discussed in the        following risk factor, may substantially increase our expenses, including our legal and        accounting costs, and make some activities more time-consuming and costly. As a result,        there may be a substantial increase in legal, accounting and certain other expenses in the        future, which would negatively impact our financial performance and could have a material        adverse effect on our results of operations and financial condition.

 

***Our        internal controls over financial reporting may not be considered effective, which could        result in a loss of investor confidence in our financial reports and in turn have an        adverse effect on our stock price.***

 

Pursuant to        Section 404 of the Sarbanes-Oxley Act of 2002, beginning with our annual report for the        year ending December 31, 2008, we may be required to furnish a report by our management on        our internal controls over financial reporting. Such report will contain, among other        matters, an assessment of the effectiveness of our internal controls over financial        reporting as of the end of the year, including a statement as to whether or not our        internal controls over financial reporting are effective. This assessment must include        disclosure of any material weaknesses in our internal controls over financial reporting        identified by management. If we are unable to assert that our internal controls are        effective as of December 31, 2008, investors could lose confidence in the accuracy and        completeness of our financial reports, which in turn could cause our stock price to        decline.

 

 

25

 

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***Going        Concern***

 

The        Company’s auditors have noted substantial doubt as to the Company’s ability to        continue as a going concern as a result of an accumulated deficit of $79,486 as of June 30,        2007. The Company’s ability to continue as a going concern is subject to the ability        of the Company to realize a profit and /or obtain funding from outside sources.        Management’s plan to address the Company’s ability to continue as a going        concern includes: (1) obtaining funding from private placement sources; (2) obtaining        additional funding from the sale of the Company’s securities; (3) establishing        revenues from prospective business opportunities; (4) obtaining loans and grants from        various financial institutions where possible. Although management believes that it will be        able to obtain the necessary funding to allow the Company to remain a going concern through        the methods discussed above, there can be no assurances that such methods will prove        successful.

 

| **ITEM 3.** | **CONTROLS AND PROCEDURES** |
|-------------|-----------------------------|

 

The        Company’s chief executive officer and chief financial officer are responsible for        establishing and maintaining disclosure controls and procedures for the Company.

 

(a)        Evaluation of Disclosure Controls and Procedures

 

Under the        supervision and with the participation of our management, including our principal executive        officer and principal financial officer, we evaluated the effectiveness of the design and        operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and        15d-15(e) under the Exchange Act, as of June 30, 2007. Based on this evaluation, our        principal executive officer and our principal financial officer concluded that, as of the        end of the period covered by this report, our disclosure controls and procedures were        effective and adequately designed to ensure that the information required to be disclosed        by us in the reports we submit under the Exchange Act is recorded, processed, summarized        and reported within the time periods specified in the applicable rules and forms and that        such information was accumulated and communicated to our chief executive officer and chief        financial officer, in a manner that allowed for timely decisions regarding        disclosure.

 

(b) Changes        in Internal Controls

 

During the        period ended June 30, 2007, there has been no change in internal control over financial        reporting that has materially affected, or is reasonably likely to materially affect our        internal control over financial reporting.

 

**PART        II**

 

| **ITEM 1.** | **LEGAL PROCEEDINGS** |
|-------------|-----------------------|

 

None.

 

| **ITEM 2.** | **UNREGISTERED SALES OF EQUITY SECURITIES** |
|-------------|---------------------------------------------|

 

On March        28, 2007, the Company authorized the issuance of 50,000 (300,000 post forward split        –May 2, 2007) shares of common stock valued at $0.05 per share to Kent Carasquero as        an incentive to him for agreeing to joining our board of directors pursuant to the        exemptions from registration provided by Regulation S and Section 4(2) of the Securities        Act of 1933, as amended.

 

26

 

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The Company        complied with Section 4(2) based on the following factors: (1) the issuance was an isolated        private transaction that did not involve a public offering; (2) there was one offeree who        was issued the stock as an incentive for agreeing to join the board of directors; (3) the        offeree stated an intention not to resell the stock; (4) there were no subsequent or        contemporaneous public offerings of the stock; (5) the stock was not broken down into        smaller denominations; and (6) the negotiations that lead to the issuance of the stock took        place directly between the offeree and the Company.

 

Regulation        S provides generally that any offer or sale that occurs outside of the United States is        exempt from the registration requirements of the Securities Act, provided that certain        conditions are met. Regulation S has two safe harbors. One safe harbor applies to offers        and sales by issuers, securities professionals involved in the distribution process        pursuant to contract, their respective affiliates, and persons acting on behalf of any of        the foregoing (the “issuer safe harbor”), and the other applies to resales by        persons other than the issuer, securities professionals involved in the distribution        process pursuant to contract, their respective affiliates (except certain officers and        directors), and persons acting on behalf of any of the forgoing (the “resale safe        harbor”). An offer, sale or resale of securities that satisfied all conditions of the        applicable safe harbor is deemed to be outside the United States as required by Regulation        S. The distribution compliance period for shares sold in reliance on Regulation S is one        year.

 

The Company        complied with the requirements of Regulation S by having made no directed offering efforts        in the United States, by offering only to an offeree who were outside the United States at        the time the stock was issued, and ensuring that the offeree to whom the stock was issued        was a non-U.S. offeree with an address in a foreign country. 

 

| **ITEM 3.** | **DEFAULTS ON SENIOR                        SECURITIES** |
|-------------|----------------------------------------------------------|

 

None.

 

| **ITEM 4.** | **SUBMISSION OF MATTERS TO A VOTE OF SECURITY                        HOLDERS** |
|-------------|--------------------------------------------------------------------------------|

 

None.

 

| **ITEM 5.** | **OTHER INFORMATION** |
|-------------|-----------------------|

 

None.

 

| **ITEM 6.** | **EXHIBITS** |
|-------------|--------------|

 

Exhibits        required to be attached by Item 601 of Regulation S-B are listed in the Index to Exhibits        on page 29 of this Form 10-QSB, and are incorporated herein by this reference.

 

27

 

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**SIGNATURES**

 

In        accordance with the requirements of the Securities Exchange Act of 1934, the registrant        caused this report to be signed on its behalf by the undersigned, hereunto duly authorized,        this 13th day of August, 2007.

 

***Mistral Ventures, Inc.***

 

 

| /s/ John Xinos |
|----------------|

| John Xinos |
|------------|

Chief        Executive Officer and Director

 

/s/ Kent        Carasquero

Kent        Carasquero

Chief        Financial Officer, Principal Accounting Officer and Director

 

 

 

 

 

28

 

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### INDEX TO EXHIBITS

| Exhibit No. | Page No. | Description                                                                                                                                                                                 |
|-------------|----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3(i)        | *        | Articles of Incorporation (incorporated by reference from our Form SB-2                    Registration Statement, filed April 20, 2006).                                                   |
| 3(ii)       | *        | Bylaws (incorporated by reference from our Form SB-2 Registration Statement,                    filed April 20, 2006).                                                                      |
| 31(i)       | Attached | Certification of the Chief Executive Officer                    pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                  |
| 31(ii)      | Attached | Certification of the Chief Financial Officer                    pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                  |
| 32(i)       | Attached | Certification of the Chief Executive Officer                    pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the                    Sarbanes-Oxley Act of 2002. |
| 32(ii)      | Attached | Certification of the Chief Financial Officer                    pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the                    Sarbanes-Oxley Act of 2002. |

* Incorporated by reference from previous filings of the Company.

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