UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                  FORM 10-QSB/A
                                 AMENDMENT NO. 1

              [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                  FOR THE QUARTERLY PERIOD ENDED APRIL 30, 2006

             [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
                   EXCHANGE ACT FOR THE TRANSITION PERIOD FROM
                       _______________ to _______________

                         Commission File Number 0-20722

                                  NEWGOLD, INC.
        (Exact name of small business issuer as specified in its charter)



          DELAWARE                                          16-1400479
-------------------------------                  -------------------------------
(State of other jurisdiction of                  (I.R.S. Employer Identification
 incorporation or organization)                               Number)


      400 Capitol Mall, Suite 900
        Sacramento, California                                95814
    -------------------------------              -------------------------------
(Address of Principal Executive Offices)                     Zip Code


               Issuer's telephone number:      (916) 449-3913


Check  whether  the issuer  (1) has filed all  reports  required  to be filed by
Section 13 or 15(d) of the Securities  Exchange Act of 1934 during the preceding
12 months (or for such shorter  period that the issuer was required to file such
reports),  and (2) has been subject to such filing  requirements for the past 90
days:

                      YES   X                      NO
                         -------                     -------

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

                      YES                          NO   X
                         -------                     -------

Common stock,  $0.001 par value,  68,604,072  issued and outstanding as of April
30, 2006.

Transitional Small Business Disclosure Format:   YES               NO   X
                                                    -------          -------
<PAGE>

                                EXPLANATORY NOTE

This  amendment  on Form  10-QSB/A  (the  April 2006 Form  10-QSB/A)  amends the
quarterly  report on Form 10-QSB of Newgold,  Inc.  ("Newgold")  for the quarter
ended April 30, 2006 (the 2006 Form 10-QSB),  which was originally filed on June
19, 2006.  This  Amendment  No. 1 to the April 2006 Form 10-QSB/A is being filed
for the purpose of reflecting  changes made as a result of the completion of the
SAS No. 100 review by  Newgold's  independent  accountants  by amending  certain
portions of the  Management's  Discussion and Analysis or Plan of Operations and
expanded  disclosure  appearing in  Newgold's  financial  statements.  This Form
10-QSB/A includes restated financial  statements due to an error in recording of
derivative transactions. See "Restatement" section under Note 1 to the financial
statements.

As required by Rule 12b-15 of the Securities  Exchange Act of 1934, set forth in
their  entirety  are  Item  1  (Financial  Statements),   Item  2  (Management's
Discussion and Analysis or Plan of Operation), and Item 6 (Exhibits).

As part of this amendment,  Newgold is also filing new  certifications  from its
chief executive  officer and chief financial  officer  (Exhibits 31.1, 31.2, and
32).

No  attempt  has been made in this Form  10-QSB/A  to update  other  disclosures
presented  in  the  April  2006  Form  10-QSB.  Consequently,   except  for  the
adjustments  described  above,  this  Amendment  No. 1 to the  April  2006  Form
10-QSB/A does not reflect events  occurring after June 19, 2006, the date of the
original filing of Newgold's  April 2006 Form 10-QSB,  or modify or update those
disclosures that may have been affected by subsequent events. Accordingly,  this
Amendment  No. 1 to the April 2006 Form 10-QSB/A  should be read in  conjunction
with  Newgold's  filings made with the SEC subsequent to the filing of the April
2006 Form 10-QSB.



























                                        1
<PAGE>
                                      INDEX

                                                                            Page
                                                                            ----


PART I - FINANCIAL INFORMATION..............................................  3

        ITEM 1. FINANCIAL STATEMENTS........................................  3

        ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
                OPERATIONS.................................................. 21

        ITEM 3. CONTROLS AND PROCEDURES..................................... 31

PART II - OTHER INFORMATION................................................. 32

        ITEM 6. EXHIBITS ................................................... 32









































                                        2
<PAGE>
                         PART I - FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENTS


                                  NEWGOLD, INC.
                     INDEX TO UNAUDITED FINANCIAL STATEMENTS



                                                                            Page

       Condensed Balance Sheet as of April 30, 2006 (Unaudited)               4

       Condensed Statements of Operations for the three months ended
           April 30, 2006 and 2005 (Unaudited)                                6

       Condensed Statements of Cash Flows for the three months
           ended April 30, 2006 and 2005 (Unaudited)                          7

       Notes to Unaudited Financial Statements                               11




































                                        3
<PAGE>
                                                                   NEWGOLD, INC.
                                                  (AN EXPLORATION STAGE COMPANY)
                                                                   BALANCE SHEET
                                                                  APRIL 30, 2006
--------------------------------------------------------------------------------


                                     ASSETS
                                   (restated)

CURRENT ASSETS
     Cash                                                           $   398,749
     Travel advance                                                       5,714
                                                                   -------------

              Total current assets                                      404,463

PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation
     of $960                                                             50,525

OTHER ASSETS
     Restricted cash                                                    243,204
     Deferred reclamation costs                                         270,736
                                                                   -------------

              Total other assets                                        513,940
                                                                   -------------

                  TOTAL ASSETS                                      $   968,928
                                                                   =============

--------------------------------------------------------------------------------


                      LIABILITIES AND SHAREHOLDERS' DEFICIT
                                   (restated)

CURRENT LIABILITIES
     Accounts payable                                               $   657,010
     Accrued expenses                                                 1,246,731
     Accrued reclamation costs                                          270,736
     Notes payable due to individuals and officers                      452,634
                                                                   -------------

         Total current liabilities                                    2,627,111
                                                                   -------------

LONG-TERM LIABILITIES
     Convertible debenture and related derivative liabilities,
         net of unamortized discount of $646,293 and deferred
         financing costs of $89,375                                   1,096,258
     Deferred revenue                                                   800,000
                                                                   -------------

         Total long-term liabilities                                  1,896,258

              Total liabilities                                       4,523,369




                                        4
    The accompanying notes are an integral part of these financial statements
<PAGE>
COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' DEFICIT
     Common stock, $0.001 par value
         250,000,000 shares authorized
         68,604,072 shares issued and outstanding                        68,604
     Additional paid in capital                                      16,101,566
     Deficit accumulated during the exploration stage               (19,724,611)
                                                                   -------------

              Total shareholders' deficit                            (3,554,441)
                                                                   -------------

                  TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT       $   968,928
                                                                   =============












































                                        5
    The accompanying notes are an integral part of these financial statements
<PAGE>
                                                                   NEWGOLD, INC.
                                                  (AN EXPLORATION STAGE COMPANY)
                                                        STATEMENTS OF OPERATIONS
                              FOR THE THREE MONTHS ENDED APRIL 30, 2006 AND 2005
                       AND FOR THE PERIOD FROM JANUARY 1, 1995 TO APRIL 30, 2006
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                         For the Three Months Ended April 30,    For the Period
                                                         ------------------------------------    From January 1,
                                                               2006                              1995 to April
                                                            (restated)             2005             30, 2006
                                                         ---------------      ---------------    ---------------
<S>                                                      <C>                  <C>                <C>
NET SALES                                                 $           -        $           -      $           -

COST OF GOODS SOLD                                               69,510               29,000            372,341
                                                         ---------------      ---------------    ---------------

GROSS LOSS                                                      (69,510)             (29,000)          (372,341)

OPERATING EXPENSES                                             (247,729)            (202,880)       (14,159,737)
                                                         ---------------      ---------------    ---------------

LOSS FROM OPERATIONS                                           (317,239)            (231,880)       (14,532,078)
                                                         ---------------      ---------------    ---------------

OTHER INCOME (EXPENSE)
     Interest income                                                  -                    -             72,687
     Dividend income                                                  -                    -             30,188
     Other income                                                     -                    -              6,565
     Adjustments to fair value of derivatives                  (290,847)                   -           (328,265)
     Interest expense                                           (85,990)            (356,824)        (2,495,027)
     Loss from joint venture                                          -                    -           (859,522)
     Loss on sale of marketable securities                            -                    -           (281,063)
     Bad debt expense                                                 -                    -            (40,374)
     Loss on disposal of plant, property
      and equipment                                                   -                    -           (334,927)
     Loss on disposal of bond                                         -                    -            (21,000)
                                                         ---------------      ---------------    ---------------

         Total other income (expense)                          (376,837)            (356,824)        (4,250,738)
                                                         ---------------      ---------------    ---------------

NET LOSS                                                  $    (694,078)       $    (588,704)     $ (18,782,816)
                                                         ===============      ===============    ===============

BASIC AND DILUTED LOSS PER SHARE                          $       (0.01)       $       (0.01)
                                                         ===============      ===============

BASIC AND DILUTED WEIGHTED-AVERAGE
  SHARES OUTSTANDING                                         68,356,881           49,446,380
                                                         ===============      ===============
</TABLE>





                                        6
    The accompanying notes are an integral part of these financial statements
<PAGE>
                                                                   NEWGOLD, INC.
                                                  (AN EXPLORATION STAGE COMPANY)
                                                        STATEMENTS OF CASH FLOWS
                              FOR THE THREE MONTHS ENDED APRIL 30, 2006 AND 2005
                       AND FOR THE PERIOD FROM JANUARY 1, 1995 TO APRIL 30, 2006
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                             For the Three Months Ended April 30,    For the Period
                                                                             ------------------------------------    From January 1,
                                                                                   2006                              1995 to April
                                                                                (restated)             2005             30, 2006
                                                                             ---------------      ---------------    ---------------
<S>                                                                          <C>                  <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                                                       ($694,078)           ($588,704)      ($18,782,818)
   Adjustments to reconcile net loss to net cash
      used in operating activities
         Accretion of warrants issued as a debt discount                                  -              294,192          1,274,265
         Accretion of beneficial conversion                                               -               26,868            107,468
         Accretion of debt discount                                                  54,629                    -             57,369
         Adjustments to fair value of derivatives                                   290,847                    -            328,264
      Loss from joint venture                                                             -                    -            859,522
         Loss on sale of marketable securities                                            -                    -            281,063
         Depreciation and amortization                                                9,086                    -            133,243
         Loss on disposal of property, plant and equipment                                -                    -            334,927
         Impairment in value of property, plant and equipment                             -                    -            807,266
         Loss on disposal of bond                                                         -                    -             21,000
         Impairment in value of Relief Canyon Mine                                        -                    -          3,311,672
         Impairment in value of joint  investments                                        -                    -            490,000
         Bad debt                                                                         -                    -             40,374
         Assigned value of stock and warrants exchanged for services                      -                    -            552,948
</TABLE>


























                                        7
    The accompanying notes are an integral part of these financial statements
<PAGE>
                                                                   NEWGOLD, INC.
                                                  (AN EXPLORATION STAGE COMPANY)
                                                        STATEMENTS OF CASH FLOWS
                              FOR THE THREE MONTHS ENDED APRIL 30, 2006 AND 2005
                       AND FOR THE PERIOD FROM JANUARY 1, 1995 TO APRIL 30, 2006
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
<S>                                                                          <C>                  <C>                <C>

         Gain on write off of note payable                                                -                    -             (7,000)
         Judgment loss accrued                                                            -                    -            250,000
         (Increase) decrease in
            Restricted cash                                                               -                    -           (243,204)
            Travel advance                                                           (4,392)                (657)            (1,714)
            Deposits                                                                      -                    -              4,500
            Deferred reclamation costs                                                    -                    -           (194,742)
            Prepaid expenses                                                              -                    -             (2,900)
            Reclamation bonds                                                             -                    -            185,000
            Other assets                                                                  -                    -             (1,600)
         Increase (decrease) in
            Accounts payable                                                       (141,223)              30,000            376,050
            Accrued expenses                                                        (59,059)             (50,237)         1,904,515
                                                                             ---------------      ---------------    ---------------

               Net cash used by operating activities                               (544,188)            (348,538)        (7,914,532)
                                                                             ---------------      ---------------    ---------------

CASH FLOWS FROM INVESTING ACTIVITIES
   Proceeds from sale of marketable securities                                            -                    -             34,124
   Investment in marketable securities                                                    -                    -           (315,188)
   Advances from shareholder                                                              -                    -              7,436
   Contribution from joint venture partner                                                -                    -            775,000
   Purchase of joint venture partner interest                                             -                    -           (900,000)
   Capital expenditures                                                             (32,287)                   -         (3,002,993)
   Proceeds from disposal of property, plant and equipment                                                     -            278,783
</TABLE>




















                                        8
    The accompanying notes are an integral part of these financial statements
<PAGE>
                                                                   NEWGOLD, INC.
                                                  (AN EXPLORATION STAGE COMPANY)
                                                        STATEMENTS OF CASH FLOWS
                              FOR THE THREE MONTHS ENDED APRIL 30, 2006 AND 2005
                       AND FOR THE PERIOD FROM JANUARY 1, 1995 TO APRIL 30, 2006
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S>                                                                          <C>                  <C>                <C>

   Investments in joint ventures                                                          -                    -           (490,000)
   Note receivable                                                                        -                    -           (268,333)
   Repayment of note receivable                                                           -                    -            268,333
                                                                             ---------------      ---------------    ---------------

               Net cash used by investing activities                                (32,287)                   -         (3,612,838)
                                                                             ---------------      ---------------    ---------------

CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds from the issuance of common stock                                       100,000              575,000          7,659,253
   Proceeds from notes payable                                                      180,000                    -          5,734,548
   Principal repayments of notes payable                                             (5,000)                   -         (2,042,706)
   Repayment of advances to affiliate                                                     -                    -           (231,663)
   Deferred revenue                                                                       -                    -            800,000

               Net cash provided by financing activities                            275,000              575,000         11,919,432
                                                                             ---------------      ---------------    ---------------

                  Net increase in cash                                             (301,476)             226,462            392,062

CASH, BEGINNING OF YEAR                                                             700,224               16,730              6,687
                                                                             ---------------      ---------------    ---------------

CASH, END OF YEAR                                                             $     398,749        $     243,192      $     398,749
                                                                             ===============      ===============    ===============
</TABLE>






















                                        9
    The accompanying notes are an integral part of these financial statements
<PAGE>
                                                                   NEWGOLD, INC.
                                                  (AN EXPLORATION STAGE COMPANY)
                                                        STATEMENTS OF CASH FLOWS
                              FOR THE THREE MONTHS ENDED APRIL 30, 2006 AND 2005
                       AND FOR THE PERIOD FROM JANUARY 1, 1995 TO APRIL 30, 2006
--------------------------------------------------------------------------------

SUPPLEMENTAL CASH FLOW INFORMATION FOR THE THREE MONTHS ENDED APRIL 30, 2006 AND
2005 AND JANUARY 1, 1995 THROUGH APRIL 30, 2006 AS FOLLOWS:
<TABLE>
<CAPTION>
                                                                             For the Three Months Ended April 30,    For the Period
                                                                             ------------------------------------    From January 1,
                                                                                   2006                              1995 to April
                                                                                (restated)             2005             30, 2006
                                                                             ---------------      ---------------    ---------------
<S>                                                                          <C>                  <C>                <C>


Cash paid for interest                                                        $                    $           -      $     161,107
Cash paid for income taxes                                                    $           -        $           -      $           -

Non Cash Investing and Financing Activities:
   Conversion of related party note payable to common
      stock,including interest payable of $446,193                            $           -        $           -      $   1,848,935
</TABLE>







































                                       10
    The accompanying notes are an integral part of these financial statements
<PAGE>
                                                                   NEWGOLD, INC.
                                                  (AN EXPLORATION STAGE COMPANY)
                                                   NOTES TO FINANCIAL STATEMENTS
                                       FOR THE THREE MONTHS ENDED APRIL 30, 2006
                                                                     (UNAUDITED)
--------------------------------------------------------------------------------

NOTE 1 - ORGANIZATION AND LINE OF BUSINESS

NEWGOLD, Inc. has been in the business of acquiring, exploring,  developing, and
producing gold  properties.  Newgold had rights to mine properties in Nevada and
Montana.  Its primary focus was on the Relief Canyon mine located near Lovelock,
Nevada,  where it has performed  development and exploratory drilling and was in
the process of obtaining  permits to allow  operation of the Relief Canyon Mine.
In December 1997,  Newgold placed the Relief Canyon Mine on care and maintenance
status.  From  mid-2001  until the  beginning  of 2003  Newgold was  essentially
inactive,  only  continuing  with  some of the care and  maintenance  at  Relief
Canyon, as provided for by a non-affiliate company owned by the Chairman and CEO
of Newgold.

Newgold  has  embarked on a business  strategy  whereby it will invest in and/or
manage gold mining and other mineral producing properties.  Currently, Newgold's
principal  assets  include  various  mineral leases  associated  with the Relief
Canyon mine located  near  Lovelock,  Nevada along with various  items of mining
equipment located at that site.  Newgold's business will be to acquire,  explore
and, if warranted,  develop  various mining  properties  located in the state of
Nevada.  Newgold plans to carryout  comprehensive  exploration  and  development
programs on its properties.  While Newgold may fund and conduct these activities
itself,  Newgold's current plan is to outsource most of these activities through
the use of various joint venture,  royalty or partnership  arrangements pursuant
to which other companies would agree to finance and carryout the exploration and
development  programs on Newgold's mining  properties.  Consequently,  Newgold's
current  plan will not  require  the  hiring of  significant  amounts  of mining
employees  but will  require a smaller  group of  employees  to  monitor  and/or
supervise the mining and  exploration  activities of other  entities in exchange
for royalties or other revenue sharing arrangements.


Restatement
-----------

The Company restated its previously  filed financial  statements due to error in
recording of  derivative  transactions.  The effect on its  previously  reported
financial statements is as follows:

                                     As Reported     Adjustment     As Restated
                                    -------------   ------------   -------------
Assets                                   968,928             -          968,928
Liabilities                            4,040,071        483,298       4,523,369
Shareholder's Deficit                 (3,071,145)      (483,296)     (3,554,441)
Net Loss                                (210,718)      (483,300)       (694,078)
EPS                                        (0.01)            -            (0.01)


NOTE 2 - GOING CONCERN


These financial  statements have been prepared on a going concern basis.  During
the years ended January 31, 2006 and 2005 and the period from January 1, 1995 to
January 31,  2006,  Newgold  incurred  net losses of  approximately  $2,645,231,
$1,278,140  and  $18,088,740,  respectively.  In  addition,  Newgold had a total
shareholders'  deficit of  $2,960,365  and was in the  exploration  stage  since
inception and through  January 31, 2006.  Information for the three months ended
April  30,  2006  include  a net loss of  $694,078;  negative  cash  flows  from
operations of $544,188 and an accumulated  shareholders'  deficit of $3,554,441.
The  Company's  ability to continue  as a going  concern is  dependent  upon its
ability to generate  profitable  operations  in the future  and/or to obtain the
necessary  financing to meet its obligations  and repay its liabilities  arising
from normal business operations when they come due. The outcome of these matters
cannot be  predicted  with any  certainty  at this time.  Since  inception,  the
Company has satisfied its capital needs by issuing equity securities.

                                      11
<PAGE>
Management  plans to continue to provide for its capital  needs  during the year
ended January 31, 2007 by issuing equity securities or incurring additional debt
financing,  with the proceeds to be used to  re-establish  mining  operations at
Relief Canyon as well as improve its working capital  position.  These financial
statements do not include any adjustments to the amounts and  classification  of
assets  and  liabilities  that may be  necessary  should  Newgold  be  unable to
continue as a going concern.

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation
---------------------
These  financial  statements have been prepared in accordance with the rules and
regulations  of  the  Securities  and  Exchange  Commission   ("SEC").   Certain
information and footnotes normally included in financial  statements prepared in
accordance with generally accepted accounting principles in the United States of
America have been condensed or omitted  pursuant to these rules and regulations.
These consolidated  financial  statements should be read in conjunction with the
consolidated  financial  statements and the notes thereto  included in Newgold's
Form 10-KSB, as filed with the SEC for the year ended January 31, 2006.


Exploration Stage Company
-------------------------
Effective  January 1, 1995 (date of  inception),  the  Company is  considered an
exploration  stage Company as defined in SFAS No. 7. The  Company's  exploration
stage activities consist of the development of several mining properties located
in Nevada. Sources of financing for these exploration stage activities have been
primarily debt and equity  financing.  The Company has, at the present time, not
paid any dividends and any dividends  that may be paid in the future will depend
upon the financial requirements of the Company and other relevant factors.


Cash and Cash Equivalents
-------------------------
For the purpose of the  statements of cash flows,  Newgold  considers all highly
liquid investments purchased with original maturities of three months or less to
be cash equivalents.

Restricted Cash
---------------
Restricted  cash  represents a  certificate  of deposit with Wells Fargo Bank to
serve as  collateral  for a  reclamation  bond  with the  Nevada  Department  of
Environmental Protection at the Relief Canyon Mine.

Deferred Reclamation Costs
--------------------------
In August  2001,  the  Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standards ("SFAS") No. 143,  "Accounting for
Asset  Retirement  Obligations,"  which  established a uniform  methodology  for
accounting for estimated  reclamation and abandonment  costs.  The statement was
adopted  February 1, 2003.  The  reclamation  costs will be allocated to expense
over the life of the related  assets and will be adjusted for changes  resulting
from the  passage  of time and  revisions  to either the timing or amount of the
original present value estimate.

Prior to adoption of SFAS No. 143, estimated future reclamation costs were based
principally on legal and regulatory  requirements.  Such costs related to active
mines were accrued and charged over the  expected  operating  lives of the mines
using the UOP method based on proven and probable  reserves.  Future remediation
costs for inactive mines were accrued based on management's best estimate at the
end of each period of the undiscounted  costs expected to be incurred at a site.
Such cost estimates included, where applicable, ongoing care, maintenance and

                                       12
<PAGE>
monitoring  costs.  Changes in  estimates  at inactive  mines were  reflected in
earnings in the period an estimate was revised.

Risks Associated with Gold Mining
---------------------------------
The  business  of gold  mining is subject to certain  types of risks,  including
environmental  hazards,  industrial  accidents,  and theft.  Prior to suspending
operations,  Newgold  carried  insurance  against  certain  property damage loss
(including business interruption) and comprehensive general liability insurance.
While Newgold maintained insurance consistent with industry practice,  it is not
possible to insure against all risks  associated  with the mining  business,  or
prudent to assume that  insurance  will continue to be available at a reasonable
cost. Newgold has not obtained  environmental  liability  insurance because such
coverage is not considered by management to be cost effective. Newgold currently
carries no insurance on any of its  properties  due to the current status of the
mine and Newgold's current financial condition.

Comprehensive Income
--------------------
Newgold utilizes SFAS No. 130, "Reporting  Comprehensive Income." This statement
establishes standards for reporting comprehensive income and its components in a
financial  statement.  Comprehensive  income as defined  includes all changes in
equity (net assets) during a period from non-owner sources. Examples of items to
be included in comprehensive income, which are excluded from net income, include
foreign currency translation adjustments, minimum pension liability adjustments,
and unrealized  gains and losses on  available-for-sale  marketable  securities.
Comprehensive  income is  presented  in  Newgold's  financial  statements  since
Newgold  did  have   unrealized   gain  (loss)  from   changes  in  equity  from
available-for-sale marketable securities.

Estimates
---------
The preparation of financial  statements  requires  management to make estimates
and assumptions  that affect the reported  amounts of assets and liabilities and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.

Loss Per Share
--------------
Newgold  utilizes  SFAS No. 128,  "Earnings  per Share." Basic loss per share is
computed  by   dividing   loss   available   to  common   shareholders   by  the
weighted-average number of common shares outstanding.  Diluted loss per share is
computed  similar  to basic  loss per  share  except  that  the  denominator  is
increased to include the number of additional common shares that would have been
outstanding if the potential common shares had been issued and if the additional
common  shares were  dilutive.  Common  equivalent  shares are excluded from the
computation if their effect is anti-dilutive.

The following  common stock  equivalents  were excluded from the  calculation of
diluted loss per share since their effect would have been anti-dilutive:

                                                 2006                 2005
                                            --------------       --------------
              Warrants                        21,274,583           13,224,583

Recent Accounting Pronouncements
--------------------------------
In February 2006, the FASB issued SFAS No. 155,  "Accounting  for Certain Hybrid
Financial  Instruments",  which amends SFAS No. 133, "Accounting for Derivatives
Instruments and Hedging Activities" and SFAS No. 140,  "Accounting for Transfers
and Servicing of Financial Assets and  Extinguishment of Liabilities".  SFAS No.
155 amends SFAS No. 133 to narrow the

                                       13
<PAGE>
scope exception for interest-only and principal-only  strips on debt instruments
to include only such strips  representing  rights to receive a specified portion
of the  contractual  interest or principle cash flows.  SFAS No. 155 also amends
SFAS No.  140 to allow  qualifying  special-purpose  entities  to hold a passive
derivative financial  instrument  pertaining to beneficial interests that itself
is a derivative instrument.  The Company is currently evaluating the impact this
new  Standard  but  believes  that it will not  have a  material  impact  on the
Company's financial position, results of operations, or cash flows.

In March  2006,  the FASB  issued SFAS No. 156,  "Accounting  for  Servicing  of
Financial  Assets"  ("SFAS NO.  156"),  which  provides  an approach to simplify
efforts to obtain  hedge-like  (offset)  accounting.  This Statement amends FASB
Statement No. 140,  "Accounting for Transfers and Servicing of Financial  Assets
and  Extinguishments  of  Liabilities",  with  respect  to  the  accounting  for
separately recognized servicing assets and servicing liabilities.  The Statement
(1)  requires an entity to recognize a servicing  asset or  servicing  liability
each time it undertakes  an obligation to service a financial  asset by entering
into a servicing contract in certain situations;  (2) requires that a separately
recognized  servicing asset or servicing liability be initially measured at fair
value, if practicable;  (3) permits an entity to choose either the  amortization
method or the fair value  method for  subsequent  measurement  for each class of
separately recognized servicing assets or servicing liabilities;  (4) permits at
initial adoption a one-time reclassification of available-for-sale securities to
trading securities by an entity with recognized  servicing rights,  provided the
securities  reclassified  offset the  entity's  exposure  to changes in the fair
value  of the  servicing  assets  or  liabilities;  and  (5)  requires  separate
presentation of servicing assets and servicing liabilities subsequently measured
at fair value in the balance sheet and additional disclosures for all separately
recognized servicing assets and servicing liabilities. SFAS No. 156 is effective
for  all  separately  recognized  servicing  assets  and  liabilities  as of the
beginning of an entity's  fiscal year that begins after September 15, 2006, with
earlier  adoption  permitted  in  certain  circumstances.   The  Statement  also
describes the manner in which it should be initially  applied.  The Company does
not  believe  that SFAS No.  156 will have a  material  impact on its  financial
position, results of operations or cash flows.

NOTE 4 - PROPERTY AND EQUIPMENT

Property and  equipment at April 30, 2006 was recorded at $51,485 and  consisted
of $32,286 of computer  equipment  and  related  software  purchased  during the
quarter  ended April 30, 2006 and $19,199 in  additional  monitoring  wells that
were installed at the Relief Canyon Mine during the year ended January 31, 2006.

Newgold  had  previously  determined  that the value of its fixed  assets at the
Relief Canyon Mine were  permanently  impaired and wrote off assets with a basis
of $800,000. If Newgold can reestablish mining operations at Relief Canyon it is
possible that some of these assets could be utilized in such operations.




                                       14
<PAGE>
A summary of property and equipment was as follows:

<TABLE>
<CAPTION>
                                    `                 Machinery
                                                          &         Development    Capitalized
                                       Buildings      Equipment        Costs        Interest         Total
                                     -------------  -------------  -------------  -------------  -------------
<S>                                   <C>            <C>            <C>            <C>            <C>
         Relief Canyon Mine           $   215,510    $   277,307    $   261,742    $    45,441    $   800,000
</TABLE>


NOTE 5 - NOTES PAYABLE TO RELATED PARTIES AND INDIVIDUALS

Unsecured  notes  payable to  individuals  and  related  parties  consist of the
following at April 30, 2006:

Loans from officers:
  Convertible note payable                                         $    209,251
      The note bears interest at 8% per year.
      In  October  2004,  Newgold  consolidated  the  amounts  owed to the Chief
      Executive  Officer and the Chief Financial  Officer  referred to in Note 9
      (excluding  accrued interest  payable) into new convertible  notes payable
      due  September  30, 2005.  The notes and any  interest  accrued on the new
      notes are convertible  into common shares of Newgold at a conversion price
      of $0.15 per share. On July 31, 2005 the Chief Executive Officer converted
      his note payable and accrued  interest payable on all of his notes payable
      into  12,326,231  common shares of Newgold.  In connection with the loans,
      warrants to purchase  5,798,140 and 1,395,007  shares of common stock have
      been  issued  to the  Chief  Executive  Officer  and the  Chief  Financial
      Officer, respectively.

  Term note payable                                                $     19,844
      The note bears interest at 8% per year.
      The  note is due  January  31,  2007  and is owed to the  Chief  Executive
      Officer.  Newgold  is not  in  default  with  respect  to  this  loan.  In
      connection  with the loan,  warrants to purchase  132,293 shares of common
      stock  have  been  issued.   The  warrants  have  been  valued  using  the
      Black-Scholes  option pricing model (see Note 8). The warrants were issued
      at $0.15 per share and  expire in five  years  from the date of  issuance.
      These loans were paid off subsequent to April 30, 2006.

Loan from individual                                               $    176,500
      The note bears interest at 8% per year.
      The note is  currently  due.  Newgold is in default  with  respect to this
      loan.

Other non-interest bearing advances                                      47,039
                                                                  --------------
      Total notes payable to individuals and related parties       $    452,634
                                                                  ==============


Interest expense was $85,990, $356,824 and $2,495,027 for the three months ended
April 30, 2006 and 2005,  and the period from January 1, 1995 to April 30, 2006,
respectively.


NOTE 6 - CONVERTIBLE DEBENTURE

On January 27, 2006,  Newgold entered into a Securities  Purchase Agreement (the
"Purchase  Agreement")  and other  agreements  in  connection  with the  private
placement of a convertible debenture,  in the principal amount of $1,000,000 and
bearing  interest at 8% per annum (the  "Debenture").  The  Debenture was funded
$600,000  on January 27,  2006,  and  $200,000 on March 2, 2006 with  additional
funding of $200,000 due upon the registration statement being declared

                                       15
<PAGE>
effective  by the SEC. Of the $600,000  funded on January 27, 2006,  $77,500 was
paid for various loan fees and closing costs. Of the $200,000 funded on March 2,
2006,  $20,000  was paid for loan  fees.  The  Debenture  is due and  payable on
January 27, 2009 unless it is converted  into shares of Newgold  Common Stock or
is repaid prior to its expiration date. The conversion rate is adjustable and at
any conversion date, will be the lower of $0.2626 per share or 95% of the Market
Conversion Price.

In conjunction  with the Purchase  Agreement,  Newgold  entered into an Investor
Registration  Rights  Agreement  (the  "Registration  Rights  Agreement").   The
Registration  Rights Agreement  requires Newgold to register at least 24,050,025
shares of our Common Stock to cover the  conversion of the  Debenture  (assuming
conversion  prices  substantially  below  $0.2626) and  2,500,000  shares of our
Common Stock issuable upon  conversion of warrants (the  "Warrants")  granted to
the Debenture holder.  Newgold is required to keep this  Registration  Statement
effective until the Debenture has been fully converted,  repaid,  or becomes due
and the Warrants have been fully exercised or expire. Both the Debenture and the
Warrants are currently convertible or exercisable, respectively.

In  conjunction  with the Purchase  Agreement,  Newgold  entered into a Security
Agreement (the "Security  Agreement").  The Security Agreement creates a secured
interest in favor of the Debenture  holder in our mining  interest and assets in
the  Relief  Canyon  Mine  property.  This  security  interest  was  created  by
recordation  of a Memorandum  of Security  Agreement  filed in Pershing  County,
Nevada on February  14,  2006.  Consequently,  if a default  occurred  under the
Debenture,  the Debenture  holder could take over or sell all of our  interests,
business and assets associated with the Relief Canyon Mine.

The  transaction,  to the extent that it is to be satisfied with common stock of
the Company,  would normally be included as equity obligations.  However, in the
instant case,  due to the  indeterminate  number of shares which might be issued
under the embedded  convertible  note debt  conversion  feature,  the Company is
required to record a liability for the fair value of the detachable warrants and
the  embedded   convertible  feature  of  the  note  payable  (included  in  the
liabilities as a "derivative liability").

The accompanying  financial statements comply with current requirements relating
to warrants and embedded conversion features as described in FAS 133, EITF 98-5,
00-19, and 00-27, and APB 14 as follows:


o    The Company  allocated the proceeds  received between  convertible debt and
     the  detachable  warrants based upon the relative fair market values on the
     date the proceeds were received.
o    Subsequent  to the initial  recording,  the change in the fair value of the
     detachable  warrants,  determined  under the  Black-Scholes  option pricing
     formula, and the change in the fair value of the embedded derivative in the
     conversion   feature  of  the   convertible   debentures  are  recorded  as
     adjustments to the liabilities at January 31, 2006.
o    $(290,847)  of  expense  relating  to the  change in the fair  value of the
     Company's  stock  reflected in the change in the fair value of the warrants
     and derivatives (noted above) is included as other income (expense).
o    Accreted interest of $54,629 as of April 30, 2006.


The following table summarizes the various  components of the convertible  notes
as of April 30, 2006:

                                       16
<PAGE>

            Derivative liabilities                 $    1,031,926
            Convertible debenture                         800,000
            Unamortized discount                         (646,293)
            Deferred financing costs, net                 (89,375)
                                                  ----------------
            Total convertible debt
             and financing costs                   $    1,096,258
                                                  ================



NOTE 7 - COMMITMENTS AND CONTINGENCIES

Except for the advance  royalty and rent  payments  noted below,  Newgold is not
obligated  under any  capital  leases or  non-cancelable  operating  lease  with
initial or  remaining  lease  terms in excess of one year as of April 30,  2006.
However, minimum annual royalty payments are required to retain the lease rights
to Newgold's properties.

Relief Canyon Mine
------------------
Newgold purchased the Relief Canyon Mine from J.D. Welsh Associates ("Welsh") in
January  1995.  The mine  consisted  of 39 claims  and a lease for  access to an
additional 800 acres  contiguous to the claims.  During 1997,  Newgold staked an
additional 402 claims. Subsequent to January 31, 1998, Newgold reduced the total
claims to 50 (approximately  1,000 acres).  The annual payment to maintain these
claims is $5,000.  As part of the original purchase of Relief Canyon Mine, Welsh
assigned  the lease from Santa Fe Gold  Corporation  (Santa Fe) to Newgold.  The
lease granted Santa Fe the sole right of approval of transfer to any  subsequent
owner of the Relief Canyon Mine. Santa Fe had accepted lease and minimum royalty
payments from Newgold, but has declined to approve the transfer.  Due to Welsh's
inability  to  transfer  the  Santa Fe lease,  the  original  purchase  price of
$500,000 for Relief Canyon Mine was reduced by $50,000 in 1996 to $450,000.

Subsequent to January 31, 1998, the lease was terminated by Santa Fe. Management
believes loss of the Santa Fe lease will have no material  adverse affect on the
remaining operations of the mine operation or the financial position of Newgold.

During 1996, Repadre Capital  Corporation  ("Repadre")  purchased for $500,000 a
net smelter  return  royalty  (Repadre  Royalty).  Repadre was to receive a 1.5%
royalty from  production at each of the Relief Canyon Mine and Mission Mines. In
July 1997,  an  additional  $300,000  was paid by Repadre for an  additional  1%
royalty from the Relief  Canyon Mine.  In October,  1997,  when the Mission Mine
lease was  terminated,  Repadre  exercised  its option to  transfer  the Repadre
Royalty  solely to the Relief Canyon Mine  resulting in a total 4% royalty.  The
total amount  received of $800,000 has been recorded as deferred  revenue in the
accompanying financial statements.

Crescent Red Caps Joint Venture
-------------------------------
Newgold is the owner of a 22.22% joint  venture  interest and is the operator of
the Crescent Red Caps Joint Venture  ("Crescent Red Caps"). The remaining 77.78%
interest is held by ASDi LLC, a California limited liability company owned by A.
Scott Dockter,  Chairman and CEO of Newgold.  Additionally,  Newgold,  by making
expenditures over the next three years aggregating $2,700,000,  will end up with
a 66.66%  overall  interest  in the joint  venture.  Newgold  will then have the
opportunity to purchase the remaining joint venture interest held by Mr. Dockter
based on the results of the exploration  work  contemplated by these  additional
expenditures.

The  Company  acquired  its  22.22% in the joint  venture by issuing to ASDi LLC
2,500,000  shares

                                       17
<PAGE>
of its restricted common stock and a warrant to purchase 2,500,000 shares of its
common  stock at a price of $0.40.  The warrant has a term of three  years.  The
common  stock was  valued at $0.20 per share for a total of  $500,000.  The fair
market value of the warrants was  calculated to be $359,522 as determined by the
methodology  described in Note 9. The Company recorded this investment as a loss
form the joint venture of $859,522 for the year ended January 31, 2006.

The  properties  are  subject  to two leases  which  include  approximately  135
unpatented  mining claims and cover  approximately  2700 acres. All gold, silver
and other mineral production by Crescent Red Caps is subject to a 3% net smelter
return ("NSR") royalty payable to the lessors except for barite which is subject
to a 10% royalty on ore produced from claims covered by the leases.

Litigation
----------
On February 4, 2000, a complaint was filed against Newgold by Sun G. Wong in the
Superior Court of Sacramento  County,  California (Case No.  00AS00690).  In the
complaint,  Mr. Wong claims that he was held liable as a guarantor of Newgold in
a claim  brought by Don  Christianson  in a breach of  contract  action  against
Newgold.  Despite the fact that Newgold settled the action with Mr. Christianson
through the  issuance  of 350,000  shares of Newgold  common  stock,  Mr.  Wong,
nevertheless,  paid $60,000 to a third party claiming to hold Mr. Christianson's
judgment pursuant to Mr. Wong's guaranty agreement.  Similarly, Mr. Wong alleges
that he was held liable as a guarantor for a debt of $200,000 owed by Newgold to
Roger Primm with  regard to money  borrowed  by  Newgold.  Mr.  Primm filed suit
against  Newgold  which was settled  through the  issuance of 300,000  shares of
Newgold common stock. Nevertheless, Mr. Wong alleges that he remains liable to a
third party claiming to hold Mr. Primm's judgment for up to $200,000 pursuant to
his guaranty of such debt of Mr. Primm.

On December 29, 2000,  the superior  court  entered a default  judgment  against
Newgold in the amount of $400,553 with regard to the  Christianson  judgment and
an additional $212,500 in regard to the Primm judgment against Mr. Wong. Newgold
believes  that  Mr.  Wong was not  obligated  to pay any  sums  pursuant  to his
guarantees with regard to the Christianson  and Primm judgments  against Newgold
and,  as a result,  Mr. Wong should not have any  recourse  against  Newgold for
reimbursement.  Should Mr. Wong seek to assert these judgments  against Newgold,
Newgold  cannot predict the outcome of any such action or the amount of expenses
that would be  ultimately  incurred in  defending  any such  claims.  Newgold is
currently  negotiating a settlement with Mr. Wong; however there is no assurance
that an acceptable settlement will be consummated.

Newgold is involved in various  other  claims and legal  actions  arising in the
ordinary  course  of  business.  In the  opinion  of  management,  the  ultimate
dispositions  of these  matters  will  not have a  material  adverse  effect  on
Newgold's financial position, results of operations or liquidity.

NOTE 8 - SHAREHOLDERS' DEFICIT

Common Stock
------------
In March 2006 Newgold  issued 500,000 shares of common stock at a price of $0.20
per share to an investor for total proceeds of $100,000.  Additionally,  500,000
warrants to purchase  common  stock at a price of $0.40 per share were issued to
the investor. The warrants expire three years from the date of issuance.




                                       18
<PAGE>
Warrants
--------
Newgold  has issued  common  stock  warrants  to  officers of Newgold as part of
certain financing transactions (see Note 5). Newgold has also issued warrants as
part of the issuance of a convertible debt transaction (see Note 6). Newgold has
also issued warrants as part of the issuance of common stock (see this Note 8).

The fair market value of warrants issued during the three months ended April 30,
2006 in  conjunction  with the  issuance of common  stock was  determined  to be
$56,724 and was calculated under the Black-Scholes option pricing model with the
following assumptions used:

         Expected life                                3 years
         Risk free interest rate                      4.78%
         Volatility                                   160.4%
         Expected dividend yield                      None

The fair value of these warrants has been recorded as both a debit and credit to
additional paid in capital.

The  following  table  presents  warrant  activity from January 31, 2006 through
April 30, 2006:

                                                                    Weighted-
                                                                    Average
                                                  Number            Exercise
                                                 of Shares          Price
                                              --------------     --------------
         Outstanding, January 31, 2006           20,774,583       $       0.25
           Granted                                  500,000       $       0.40
                                              --------------     --------------
         Outstanding, April 30, 2006             21,274,583       $       0.25
                                              ==============     ==============
         Exercisable, April 30, 2006             21,274,583       $       0.25
                                              ==============     ==============


NOTE 9 - RELATED PARTY TRANSACTIONS

Loans from officers
-------------------
During the quarter  ended April 30, 2006 the Company  repaid  $5,000  previously
borrowed  from  the  Chief  Executive  Officer.  As of  April  30,  2006 the net
principal  balance owing to the Chief Executive  Officer and Chairman of Newgold
was $19,844 and accrued interest payable was $33,430. See Note 5.

During  prior  periods,  the Chief  Financial  Officer and  Secretary of Newgold
loaned Newgold an aggregate of $209,251.  As of April 30, 2006 the net principal
balance owing to him was $209,251 and accrued interest payable was $26,831.  See
Note 5.

Joint venture with officer
--------------------------
On January 25,  2006,  Newgold  entered into a joint  venture with ASDi,  LLC to
develop two Nevada mining  properties known as the Red Caps Project and Crescent
Valley  Project.  The Red Caps consists of  approximately  96 unpatented  mining
claims covering 1900 acres and the Crescent Valley consists of  approximately 39
unpatented  mining claims  covering 750 acres.  The Red Caps and Crescent Valley
mining claims are currently owned by ASDi, LLC, which is owned and managed by A.
Scott Dockter,  Chairman and CEO of Newgold.  The joint venture will be operated
through a newly formed Nevada  limited  liability  company  called  Crescent Red


                                       19
<PAGE>
Caps, LLC. The terms of the joint venture provide for ASDi to contribute the Red
Caps and  Crescent  Valley  mining  claims to the LLC in  exchange  for  Newgold
issuing 2.5 million shares of its Common Stock to ASDi. Additionally,  2,500,000
warrants to purchase  common  stock at a price of $0.40 per share were issued to
ASDi LLC.  The warrants  expire  three years from the date of issuance.  Newgold
will  initially  own a 22.22%  interest  in the LLC and ASDi  will hold a 77.78%
interest.  By  expending  up to  $1,350,000  on each project over the next three
years,  Newgold can  increase  its  interest  in the LLC to 66.66%.  Thereafter,
Newgold has the right to purchase the remaining interest in the LLC held by ASDi
at a price to be determined by the results of the  exploration  work  conducted.
Newgold will be the Manager of the LLC.


Accrued Payroll and Expenses Owed to Officers
---------------------------------------------
As of April 30, 2006 Newgold owed the Chief  Financial  Officer and Secretary of
Newgold $34,000 for back wages.



NOTE 10 - SUBSEQUENT EVENTS

In May 2006  Newgold  repaid the  remaining  term note payable of $19,844 to the
Chief Executive Officer. The accrued interest remains outstanding. See Note 5.


































                                       20
<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

CAUTION ABOUT FORWARD-LOOKING STATEMENTS

This Form 10-QSB includes  "forward-looking"  statements  about future financial
results, future business changes and other events that haven't yet occurred. For
example,  statements  like Newgold  "expects,"  "anticipates"  or "believes" are
forward-looking  statements.  Investors  should be aware that actual results may
differ  materially from Newgold's  expressed  expectations  because of risks and
uncertainties  about the  future.  Newgold  does not  undertake  to  update  the
information in this Form 10-QSB if any forward-looking statement later turns out
to be inaccurate.  Details about risks  affecting  various  aspects of Newgold's
business  are  discussed  throughout  this Form 10-QSB and should be  considered
carefully.

PLAN OF OPERATION FOR THE NEXT TWELVE MONTHS

Certain key factors that have affected our  financial  and operating  results in
the past will affect our future financial and operating results.  These include,
but are not limited to the following:

     o   Gold prices, and to a lesser extent, silver prices;

     o   Current gold  deposits  under our control at the Relief Canyon Mine are
         estimated by us (based on past  exploration by Newgold and work done by
         others).

     o   Our proposed exploration of properties now include 78 unpatented mining
         claims contained in about 1000 acres of the Relief Canyon Property;  96
         unpatented  mining claims contained in about 1900 acres of the Red Caps
         Property;  and 39 unpatented mining claims contained in about 750 acres
         of the Crescent Valley Property.

     o   Our operating plan is to commence  exploration work on all three mining
         properties  beginning  with the Relief  Canyon  mining  property in the
         summer of 2006. We expect this exploration  program to continue through
         the end of 2006.  We expect to begin  exploration  work at the Red Caps
         and  Crescent  Valley  properties  in the fall of 2006.  By the  fourth
         quarter  of fiscal  2007,  we plan to resume  mining  operation  at the
         Relief  Canyon  mine.  We  anticipate  by the end of fiscal  2007 to be
         realizing  production  revenue from the Relief Canyon mine. Through the
         use of joint ventures,  royalties,  arrangements and  partnerships,  we
         intend to progressively enlarge the scope and scale of our exploration,
         mining and processing  operations,  thereby potentially  increasing our
         chances of  locating  commercially  viable  ore  deposits  which  could
         increase both our annual  revenues and ultimately our net profits.  Our
         objective is to achieve  annual growth rates in revenue and net profits
         for the foreseeable future.

     o   We expect to make capital  expenditures in calendar years 2006 and 2007
         of between $2.5 million and $4 million,  including costs related to the
         exploration of the Relief Canyon mining property. We will have to raise
         additional outside capital to pay for






                                       21
<PAGE>
         these  activities and the resumption of mine  operations and production
         at the Relief Canyon mine.

     o   Additional funding or the utilization of other venture partners will be
         required to fund mining operations,  exploration, research, development
         and operating  expenses at the Red Caps and Crescent Valley properties.
         In the  past we  have  been  dependent  on  funding  from  the  private
         placement  of our  securities  as well as loans from  related and third
         parties as the sole sources of capital to fund operations.


RESULTS OF OPERATION

Newgold,  Inc., a Delaware  corporation  ("we," "us," "our" or "Newgold")  has a
business  strategy  to invest  in,  explore  and if  warranted,  conduct  mining
operations  of  its  current  mining  properties  and  other  mineral  producing
properties. Newgold is a public company that in the past has been engaged in the
exploration,  acquisition  and  development  of  gold-bearing  properties in the
continental  United States.  Currently,  our principal  assets  include  various
mineral  leases  associated  with the Relief Canyon Mine located near  Lovelock,
Nevada along with various items of mining equipment and improvements  located at
that site.  We have also  entered  into a joint  venture  to explore  additional
mining  properties  known as the Red Caps Project and Crescent  Valley  Project,
both of which are located in Lander County, Nevada.

Operating Results for the Fiscal Quarters Ended April 30, 2006 and 2005
-----------------------------------------------------------------------

Although we  commenced  efforts to  re-establish  its mining  business  early in
fiscal year 2004, no mining  operations have commenced and no revenues have been
recognized  during the  quarters  ended April 30,  2006 and 2005,  respectively.
Newgold hopes to be able to commence  generating revenues from mining operations
during the 2007 fiscal year. We have granted a 4% net smelting return royalty to
a third  party  related  to the Relief  Canyon  mining  property  which has been
recorded as an $800,000 deferred option income.


During the  quarter  ended April 30, 2006 we spent  $69,510 on  reclamation  and
maintenance  expenses related to the Relief Canyon mining property.  Reclamation
and maintenance  expenses  expended during the same quarter ended April 30, 2005
were $29,000. These expenses relate primarily to maintenance and retention costs
required to  maintain  our mining  claims.  We  incurred  operating  expenses of
$247,729  during the  quarter  ended April 30,  2006.  Of this  amount,  $93,500
reflects  officer  compensation and related payroll taxes during the quarter and
$123,864 reflect fees for outside professional  services. A large portion of the
outside  professional  services reflects legal and accounting work pertaining to
our annual and quarterly  reporting on Form 10-KSB and Form 10-QSB  occurring in
fiscal  year 2006 as well as our  recently  filed Form SB-2.  During the quarter
ended April 30, 2005 we incurred operating expenses of $202,880 of which $93,500
represented  officer  compensation and related payroll taxes,  $22,323 reflected
promotional  expenses  and  $59,848  reflected  fees  for  outside  professional
services.  It is anticipated that both mining costs and operating  expenses will
increase   significantly  as  we  resume  our  exploration  program  and  mining
operations.







                                       22
<PAGE>
We incurred  interest expense of $85,990 during the quarter ended April 30, 2006
which compares to interest expenses of $356,824 incurred during the same quarter
of 2005. The principal balance of loans outstanding  during the first quarter of
fiscal year 2007 decreased by $602,741  compared to first quarter of fiscal year
2006, which was primarily the result of the Chief Executive Officer's conversion
of a convertible  note payable of $1,402,742 into shares of common stock in July
2005, which was partially offset by the convertible debenture of $600,000 issued
in January 2006 and an additional  convertible  debenture of $200,000  issued in
March 2006. The increase in additional interest expense during the quarter ended
April 30, 2006 was primarily due to the increase in accretion of warrants issued
in October 2004 as a debt discount.

In  conjunction  with the  Convertible  Debenture  issued  January 27, 2006,  we
allocated the proceeds  received  between  convertible  debt and the  detachable
warrants  based upon the  relative  fair market  values on the date the proceeds
were received. Subsequent to the initial recording, the change in the fair value
of the detachable  warrants,  determined under the Black-Scholes  option pricing
formula,  and the change in the fair  value of the  embedded  derivative  in the
conversion feature of the convertible  debentures are recorded as adjustments to
the  liabilities  at  January  31,  2006.  This  resulted  in $37,418 of expense
relating to the change in the fair value of  Newgold's  stock  reflected  in the
change in the fair value of the warrants and  derivatives  (noted  above) and is
included as other income (expense).


Our total net loss for the quarter  ended April 30, 2006  increased  to $694,078
compared to a net loss of $588,704 incurred for the same quarter ended April 30,
2005.  The higher  net loss in the first  quarter of fiscal  2007  reflects  the
income effect of the adjustment to fair value of derivatives  and lower interest
expense that are  partially  offset by the increase in operating  expenses as we
reactivate our mining  activities  and a continued  lack of revenues  recognized
during the quarter.


LIQUIDITY AND CAPITAL RESOURCES


We have incurred  significant  operating  losses since  inception and during the
three months ended April 30, 2006 which has resulted in an  accumulated  deficit
of  $19,724,611  as of April 30, 2006.  At April 30, 2006, we had cash and other
current  assets of  $404,463  compared to $701,546 at January 31, 2006 and a net
working capital  deficit of $2,222,655.  Since the resumption of our business in
February  2003, we have been dependent on borrowed or invested funds in order to
finance  our  ongoing  operations.  As of April  30,  2006,  we had  outstanding
debentures and notes payable in the gross  principal  amount of $1,252,634  (net
balance of $1,548,892  after  $(735,668)  of note payable  discount and deferred
financing  costs and  $1,031,926 of  derivative  liabilities)  which  reflects a
decrease of $602,741  compared to notes payable in the gross principal amount of
$1,855,375,  (net balance of $1,327,147 after $528,228 of note payable discount)
as of April 30, 2005.


In January 2006 we made a cash deposit of $243,204 in a blocked account to cover
future  reclamation  costs as required by the Nevada Department of Environmental
Protection for the Relief Canyon Mine.

As of  April  30,  2006,  we were in  default  on a  promissory  note  due to an
unrelated party in the principal amount $176,500.



                                       23
<PAGE>
On January 25,  2006,  Newgold  entered into a joint  venture with ASDi,  LLC to
develop two Nevada mining  properties known as the Red Caps Project ("Red Caps")
and Crescent Valley Project ("Crescent Valley").  Pursuant to the joint venture,
Newgold  will  initially  own a 22.22%  interest in the LLC and ASDi will hold a
77.78%  interest.  By expending up to  $1,350,000  on each project over the next
three years, Newgold can increase its interest in the LLC to 66.66%. Thereafter,
Newgold has the right to purchase the remaining interest in the LLC held by ASDi
at a price to be determined by the results of the exploration work conducted.

On January 27,  2006,  we entered  into a Securities  Purchase  Agreement  and a
Convertible Debenture in the principal amount of $1,000,000 and bearing interest
at 8% per annum.  The Debenture  was funded  $600,000 on January 27, 2006 and we
received  an  additional  $200,000  on March 2, 2006 upon the filing of a resale
registration  statement  with the SEC and we will receive a final  $200,000 upon
the registration statement being declared effective by the SEC.

By attempting to resume mining  operations,  we will require  approximately  $10
million to $15 million in additional  working capital above the amounts realized
from the  convertible  debentures  to bring  the  Relief  Canyon  Mine into full
production. It is our intention to pursue several possible funding opportunities
including  the  sale of  additional  securities,  entering  into  joint  venture
arrangements, or the incurring of additional debt.

Due to our continuing losses from business operations, the independent auditor's
report dated April 26, 2006, includes a "going concern"  explanation relating to
the fact that Newgold's  continuation  is dependent  upon  obtaining  additional
working  capital either  through  significantly  increasing  revenues or through
outside  financing.  As of  April  30,  2006,  Newgold's  principal  commitments
included its  obligation  to pay ongoing  maintenance  fees on its 78 unpatented
mining  claims and the funding  arrangement  pursuant to the joint  venture with
ASDi, LLC.

Our  management  believes  that it will  need to  raise  additional  capital  to
continue to develop,  promote  and  conduct  our mining  operations.  Due to our
limited cash flow,  operating losses and limited assets,  it is unlikely that we
could obtain financing through commercial or banking sources.  Consequently,  we
are dependent on continuous cash infusions from our major  stockholders or other
outside  sources  in  order  to  fund  our  current  operations.  Prior  to  the
transaction  with  Cornell  Capital  Partners,  Newgold's  president  had paid a
substantial  portion of  Newgold's  expenses  since  restarting  its business in
February  2003.  Although  we believe  that our  creditors  and  investors  will
continue to fund Newgold's  expenses based upon their significant debt or equity
interest in Newgold,  there is no assurance that such investors will continue to
pay our expenses. If adequate funds are not otherwise available,  through public
or private financing as well as borrowing from other sources,  Newgold would not
be able to establish or sustain its mining operations.

Off-Balance Sheet Arrangements
------------------------------

During the fiscal  quarter  ended April 30, 2006,  Newgold did not engage in any
off-balance sheet arrangements as defined in Item 303(c) of the SEC's Regulation
S-B.






                                       24
<PAGE>
FACTORS AFFECTING FUTURE OPERATING RESULTS

We are an exploration stage company and an investment in, or ownership  position
in our common  stock is  inherently  risky.  Some of these risks  pertain to our
business  in  general,  and others are risks  which would only affect our common
stock.  The price of our common  stock could  decline  and/or  remain  adversely
affected  due to any of these risks and  investors  could lose all or part of an
investment  in our  company  as a result of any of these  risks  coming to pass.
Readers of this Report should, in addition to considering these risks carefully,
refer to the other information  contained in this Report,  including disclosures
in our financial statements and all related notes, for a full description of our
business.  If any of the events  described  below were to occur,  our  business,
prospects,  financial condition,  or results of operations or cash flow could be
materially  adversely affected.  When we say that something could or will have a
material adverse effect on it, we mean that it could or will have one or more of
these  effects.  We also  refer  readers  to the  information  in  this  Report,
discussing  the  impact  of  Forward-Looking   Statements  on  the  descriptions
contained in this Report and included in the Factors discussed below.

As an exploration stage company with unproven mining  properties,  we may not be
able to achieve  positive cash flows and our limited history of operations makes
evaluation  of our business and  prospects  difficult.  We have been  relatively
inactive since April 2001.  Consequently,  we have only recently reactivated our
business operations and we have not generated any revenues,  other than dividend
income,  since our  reactivation.  As a result, we have only a limited operating
history upon which to evaluate our future potential  performance.  Our prospects
must be considered  in light of the risks and  difficulties  encountered  by new
companies which have not yet established their business operations.

We will need additional  funds to finance our mining and exploration  activities
as well as fund our current operations.  We currently have limited cash reserves
and a working capital deficit of $2,222,655 as of April 30, 2006.  Consequently,
our ability to meet our long-term obligations in the ordinary course of business
is dependent upon our ability to raise  additional  financing  through public or
private equity financings, establish cash flow from operations, enter into joint
ventures or other arrangements with corporate  sources,  or secure other sources
of financing to fund operations.

Our independent  certified public accountants  qualified their opinion contained
in our  financial  statements  as of and for the years ended  January 31,  1997,
through  January 31,  2006 to include an  explanatory  paragraph  related to our
ability to continue as a going concern,  stating that " the Company has incurred
a net loss of $2,645,231 and had negative cash flow from operations of $899,807.
In  addition,  the  Company  had an  accumulated  deficit of  $19,030,535  and a
shareholders'  deficit of $2,960,365 at January 31, 2006." These factors,  among
others, as discussed in "Note 2- Going Concern" to the financial  statements for
the quarter ended April 30, 2006, raise  substantial  doubt about our ability to
continue  as a  going  concern.  The  auditors  recognize  that  the  cash  flow
uncertainty makes their basic  assumptions about value uncertain.  When it seems
uncertain whether an asset will be used in a "going concern" or sold at auction,
the auditors  assume that the business is a "going  concern" for purposes of all
their work, and then they disclose that there is material uncertainty about that
assumption.  It is  definitely a  consequence  of our  negative  cash flows from
operations that we continually need additional





                                       25
<PAGE>
cash. At any time, a serious  deficiency in cash flows could occur and it is not
always possible or convenient to raise additional  capital. A problem in raising
capital  could  result in temporary or  permanent  insolvency  and  consequently
potential lawsuits by unpaid creditors and perhaps closure of the business.  All
of these things are possibilities. It is certain, in any case, that analysts and
investors  view  unfavorably  any  report  of  independent  auditors  expressing
substantial doubt about a company's ability to continue as a going concern.

The price of gold has experienced an increase in value over the past four years,
generally  reflecting among other things declining  interest rates in the United
States;  worldwide instability due to terrorism;  and a slow recovery from prior
global economic  slumps.  Any  significant  drop in the price of gold may have a
materially adverse affect on the results of our operations unless we are able to
offset such a price drop by substantially increased production.

Our disclosures of mineral  resources are only  estimates.  We have no proven or
probable reserves and have no ability to currently measure or prove our reserves
other then  estimating  such  reserves  relying on  information  produced in the
1990's  and  thus  may be  unable  to  actually  recover  the  quantity  of gold
anticipated.  We can only  estimate  a  potential  mineral  resource  which is a
subjective  process which  depends in part on the quality of available  data and
the  assumptions  used and judgments made in  interpreting  such data.  There is
significant  uncertainty in any resource  estimate such that the actual deposits
encountered  or reserves  validated  and the  economic  viability  of mining the
deposits may differ materially from our estimates.

Gold  exploration  is highly  speculative  in nature.  Success in exploration is
dependent  upon a number of factors  including,  but not limited to,  quality of
management, quality and availability of geological expertise and availability of
exploration  capital.  Due to these and other  factors,  the  probability of our
exploration  program  identifying   individual   prospects  having  commercially
significant  reserves cannot be predicted.  It is likely that many of the claims
explored will not contain any commercially viable reserves.  As such substantial
funds will be spent on exploration which may identify only a few, if any, claims
having commercial  development  potential.  In addition,  if commercially viable
reserves are identified, significant amounts of capital will be required to mine
and process such reserves.

Our mining property rights consist of 78 mill site and unpatented  mining claims
at the  Relief  Canyon  Mine and  approximately  135  unpatented  mining  claims
covering approximately 2700 acres located along the Cortez/Battle Mountain trend
that are part of the Crescent Red Caps Joint Venture. The validity of unpatented
mining claims is often  uncertain and is always  subject to contest.  Unpatented
mining  claims are  generally  considered  subject  to  greater  title risk than
patented mining claims, or real property interests that are owned in fee simple.
If title to a particular property is successfully challenged, we may not be able
to retain our royalty interests on that property,  which could reduce our future
revenues.

Mining is  subject  to  extensive  regulation  by state and  federal  regulatory
authorities.  State and federal statutes regulate environmental quality, safety,
exploration  procedures,  reclamation,  employees'  health  and  safety,  use of
explosives, air quality standards,  pollution of stream and fresh water sources,
noxious odors, noise, dust, and other environmental protection controls as





                                       26
<PAGE>
well as the  rights of  adjoining  property  owners.  We  believe  that,  we are
currently  operating  in  substantial  compliance  with  all  known  safety  and
environmental  standards  and  regulations  applicable  to its Nevada  property.
Currently,  we are only permitted to carry on designated mining activities until
the mining property is brought into full compliance with the requirements of the
Nevada   Department  of  Environmental   Protection   ("NDEP").   While  current
environmental  work  is  ongoing,   permitting  our  mining  property  for  full
exploration and mining  activities is expected to take 4 to 12 months.  However,
there can be no assurance that permits will be granted or that future changes in
federal or Nevada laws,  regulations or interpretations  thereof will not have a
material adverse affect on our ability to resume and sustain mining operations.

The  business  of gold  mining is subject to certain  types of risks,  including
environmental  hazards,  industrial  accidents,  and theft.  Prior to suspending
operations, we carried insurance against certain property damage loss (including
business  interruption) and comprehensive  general  liability  insurance.  Since
resuming  operations in February 2003,  Newgold has not carried insurance on any
of its properties  due to the current  status of the mine and Newgold's  current
financial  condition.  While we maintained  insurance  consistent  with industry
practice,  it is not possible to insure  against all risks  associated  with the
mining  business,  or prudent  to assume  that  insurance  will  continue  to be
available at a reasonable  cost.  We have not obtained  environmental  liability
insurance  because such  coverage is not  considered  by  management  to be cost
effective.  We currently  carry no insurance on any of our properties due to the
current status of our mining properties and our current financial condition.

We are substantially  dependent upon the continued services of A. Scott Dockter,
its president.  We have no employment  agreement with Mr. Dockter,  nor is there
either key person life insurance or disability  insurance on Mr. Dockter.  While
Mr. Dockter expects to spend the majority of his time assisting  Newgold,  there
can be no  assurance  that Mr.  Dockter's  services  will  remain  available  to
Newgold.  If Mr.  Dockter's  services  are  not  available  to us,  we  will  be
materially and adversely affected.  However,  Mr. Dockter has been a significant
shareholder  of Newgold since its inception and considers his investment of time
and money in Newgold of significant personal value.

We have acquired the exploration  rights to two mining  properties from ASDi LLC
whose sole manager and majority member is A. Scott Dockter, President and CEO of
Newgold.  Consequently,  Mr.  Dockter  has a conflict  of interest in this joint
venture.  Furthermore, ASDi LLC will initially hold a 77.78% interest in a newly
formed  Nevada LLC  through  which the joint  venture  will be  operated.  While
Newgold will be the sole manager of the Nevada LLC, Mr.  Dockter will be able to
control  the joint  venture  activities  through his  position  with the Manager
(Newgold)  and through his  ownership  and control of the majority  member (ASDi
LLC).  While Mr.  Dockter  will  endeavor to always act in the best  interest of
Newgold and its  stockholders,  stockholders  will have only limited  ability to
influence or object to actions taken by the Nevada LLC in exploring,  developing
and capital spending on the joint venture properties.

As of April 30,  2006,  Newgold had  approximately  68,604,072  shares of Common
Stock  outstanding and a convertible  debenture which is convertible  into up to
24,050,025 shares of our







                                       27
<PAGE>
Common Stock. Additionally, warrants to purchase a total of 21,274,583 shares of
our Common Stock were  outstanding as of April 30, 2006.  Furthermore,  up to an
additional  24,050,025  shares of Common  Stock  could  become  issuable  to the
convertible  debenture  holders if a default were to occur. The possibility that
substantial  amounts of our outstanding Common Stock may be sold by investors or
the  perception  that such sales could occur,  often called  "equity  overhang,"
could adversely affect the market price of our Common Stock and could impair our
ability to raise additional capital through the sale of equity securities in the
future

At the  time of  entering  into the  $1,000,000  Secured  Convertible  Debenture
("Convertible  Debenture") with Cornell Capital  Partners,  the Fixed Conversion
Price was $0.26 per share  which  would  equal  approximately  3,808,073  if the
entire  principal were converted into Newgold Common Stock.  This represents the
minimum  number  of  shares  issuable  upon the  conversion  of the  Convertible
Debenture.  However,  if the market price for Newgold Common Stock should remain
below $0.26 per share, we would be required to issue  substantially  more shares
of Common Stock upon the conversion of the Convertible  Debenture.  The issuance
of  significantly  more shares at a lower conversion price would have a dilutive
effect to our current stockholders.

CRITICAL ACCOUNTING POLICIES

The  discussion  and  analysis  of  our  financial  conditions  and  results  of
operations are based upon our financial statements,  which have been prepared in
accordance with generally accepted  accounting  principles in the United States.
The preparation of financial  statements  requires  management to make estimates
and disclosures on the date of the financial  statements.  On an on-going basis,
we evaluate  our  estimates,  including,  but not limited to,  those  related to
revenue recognition. We use authoritative pronouncements,  historical experience
and other  assumptions as the basis for making  judgments.  Actual results could
differ from those estimates.  We believe that the following critical  accounting
policies affect our more significant  judgments and estimates in the preparation
of our financial statements.

Exploration Stage Company
-------------------------


Effective  January  1,  1995  (date of  inception),  Newgold  is  considered  an
exploration stage company as defined in SFAS No. 7. Newgold's  exploration stage
activities  consist of the development of several mining  properties  located in
Nevada.  Sources of financing for these  exploration  stage activities have been
primarily debt and equity financing.  Newgold has, at the present time, not paid
any dividends and any dividends  that may be paid in the future will depend upon
the financial requirements of Newgold and other relevant factors.


Valuation of long-lived assets
------------------------------

Long-lived assets,  consisting primarily of property and equipment,  patents and
trademarks,  and goodwill,  comprise a significant  portion of our total assets.
Long-lived  assets are reviewed  for  impairment  whenever  events or changes in
circumstances  indicate  that  their  carrying  values  may not be  recoverable.
Recoverability of assets is measured by a comparison of the carrying value of an
asset to the future net cash flows expected to be generated by those assets. The
cash flow projections are based on historical  experience,  management's view of
growth rates within the


                                       28
<PAGE>
industry, and the anticipated future economic environment.

Factors we consider important that could trigger a review for impairment include
the following:

         (a)      significant  underperformance  relative to expected historical
                  or projected future operating results,

         (b)      significant  changes in the manner of its use of the  acquired
                  assets or the strategy of its overall business, and

         (c)      significant negative industry or economic trends.

When we  determine  that the  carrying  value of  long-lived  assets and related
goodwill and  enterprise-level  goodwill may not be  recoverable  based upon the
existence of one or more of the above  indicators of impairment,  we measure any
impairment  based on a projected  discounted  cash flow method  using a discount
rate determined by our management to be  commensurate  with the risk inherent in
its current business model.

Deferred Reclamation Costs
--------------------------

In August  2001,  the  Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standards ("SFAS") No. 143,  "Accounting for
Asset  Retirement  Obligations,"  which  established a uniform  methodology  for
accounting for estimated  reclamation and abandonment  costs.  The statement was
adopted  February 1, 2003.  The  reclamation  costs will be allocated to expense
over the life of the related  assets and will be adjusted for changes  resulting
from the  passage  of time and  revisions  to either the timing or amount of the
original present value estimate.

Prior to adoption of SFAS No. 143, estimated future reclamation costs were based
principally on legal and regulatory  requirements.  Such costs related to active
mines were accrued and charged over the  expected  operating  lives of the mines
using the UOP method based on proven and probable  reserves.  Future remediation
costs for inactive mines were accrued based on management's best estimate at the
end of each period of the undiscounted  costs expected to be incurred at a site.
Such cost estimates included,  where applicable,  ongoing care,  maintenance and
monitoring  costs.  Changes in  estimates  at inactive  mines were  reflected in
earnings in the period an estimate was revised.

Exploration Costs
-----------------

Exploration  costs are  expensed  as  incurred.  All costs  related to  property
acquisitions are capitalized.

Mine Development Costs
----------------------

Mine development  costs consist of all costs associated with bringing mines into
production, to






                                       29
<PAGE>
develop  new ore bodies and to develop  mine areas  substantially  in advance of
current production. The decision to develop a mine is based on assessment of the
commercial viability of the property and the availability of financing. Once the
decision to proceed to development is made,  development and other  expenditures
relating to the project will be deferred and carried at cost with the  intention
that these will be  depleted by charges  against  earnings  from  future  mining
operations.   No  depreciation  will  be  charged  against  the  property  until
commercial production  commences.  After a mine has been brought into commercial
production,  any additional  work on that property will be expensed as incurred,
except for large development programs, which will be deferred and depleted.

Reclamation Costs
-----------------

Reclamation  costs  and  related  accrued  liabilities,  which  are based on our
interpretation of current environmental and regulatory requirements, are accrued
and expensed, upon determination.

Based on current environmental  regulations and known reclamation  requirements,
management  has  included  its  best  estimates  of  these  obligations  in  its
reclamation accruals. However, it is reasonably possible that our best estimates
of our ultimate  reclamation  liabilities could change as a result of changes in
regulations or cost estimates.

Valuation of Derivative Instruments
-----------------------------------

FAS No. 133  "Accounting  for  Derivative  Instruments  and Hedging  Activities"
requires bifurcation of embedded derivative instruments and measurement of their
fair value for accounting  purposes.  In determining the appropriate fair value,
the Company uses the Black  Scholes model as a valuation  technique.  Derivative
liabilities  are  adjusted to reflect  fair value at each  period end,  with any
increase or decrease in the fair value being  recorded in results of  operations
as Adjustments  to Fair Value of  Derivatives.  In addition,  the fair values of
freestanding  derivative  instruments  such as warrants  are valued  using Black
Scholes models.

Recent Accounting Pronouncements
--------------------------------

In February 2006, the FASB issued SFAS No. 155,  "Accounting  for Certain Hybrid
Financial  Instruments",  which amends SFAS No. 133, "Accounting for Derivatives
Instruments and Hedging Activities" and SFAS No. 140,  "Accounting for Transfers
and Servicing of Financial Assets and  Extinguishment of Liabilities".  SFAS No.
155 amends  SFAS No. 133 to narrow the scope  exception  for  interest-only  and
principal-only   strips  on  debt   instruments  to  include  only  such  strips
representing  rights to receive a specified portion of the contractual  interest
or  principle  cash  flows.  SFAS No.  155  also  amends  SFAS No.  140 to allow
qualifying  special-purpose  entities  to hold a  passive  derivative  financial
instrument  pertaining  to  beneficial  interests  that  itself is a  derivative
instrument.  Newgold is currently evaluating the impact of this new Standard but
believes  that it  will  not  have a  material  impact  on  Newgold's  financial
position, results of operations, or cash flows.

In March  2006,  the FASB  issued SFAS No. 156,  "Accounting  for  Servicing  of
Financial  Assets"  which  provides an  approach  to simplify  efforts to obtain
hedge-like (offset) accounting. This


                                       30
<PAGE>
Statement amends FASB Statement No. 140, "Accounting for Transfers and Servicing
of Financial Assets and  Extinguishments  of  Liabilities",  with respect to the
accounting for separately recognized servicing assets and servicing liabilities.
The Statement (1) requires an entity to recognize a servicing asset or servicing
liability each time it undertakes an obligation to service a financial  asset by
entering into a servicing  contract in certain  situations;  (2) requires that a
separately  recognized  servicing  asset or  servicing  liability  be  initially
measured at fair value, if  practicable;  (3) permits an entity to choose either
the amortization method or the fair value method for subsequent  measurement for
each class of separately  recognized servicing assets or servicing  liabilities;
(4)   permits   at   initial   adoption   a   one-time    reclassification    of
available-for-sale securities to trading securities by an entity with recognized
servicing  rights,  provided  the  securities  reclassified  offset the entity's
exposure to changes in the fair value of the  servicing  assets or  liabilities;
and (5)  requires  separate  presentation  of  servicing  assets  and  servicing
liabilities  subsequently  measured  at fair  value  in the  balance  sheet  and
additional  disclosures  for all  separately  recognized  servicing  assets  and
servicing  liabilities.  SFAS No. 156 is effective for all separately recognized
servicing  assets and liabilities as of the beginning of an entity's fiscal year
that begins after September 15, 2006, with earlier adoption permitted in certain
circumstances.  The  Statement  also  describes the manner in which it should be
initially  applied.  Newgold  does not  believe  that  SFAS No.  156 will have a
material impact on its financial position, results of operations or cash flows.

ITEM 3.  CONTROLS AND PROCEDURES

Disclosure Controls and Procedures.
-----------------------------------


We carried out an evaluation,  under the supervision and with the  participation
of management, including our principal executive officer and principal financial
officer,  of the  effectiveness  of the design and  operation of our  disclosure
controls and  procedures (as defined under Rules  13a-15(e) and 15d-15(e)  under
the  Securities  Exchange Act of 1934,  as amended) as of the end of the quarter
covered by this report.  Based upon that  evaluation,  our  principal  executive
officer and principal  financial officer concluded that our disclosure  controls
and  procedures  are effective in timely  alerting them to material  information
relating to us (including our  consolidated  subsidiary)  that is required to be
included in our periodic reports.


Changes in Internal Control Over Financial Reporting.
-----------------------------------------------------

There  was no change in our  internal  control  over  financial  reporting  that
occurred during the period covered by this report that has materially  affected,
or is  reasonably  likely  to  materially  affect,  our  internal  control  over
financial reporting.












                                       31
<PAGE>

                           PART II - OTHER INFORMATION


ITEM 6.  EXHIBITS

         31.1     Certification   of  CEO   pursuant   to  Section  302  of  the
                  Sarbanes-Oxley Act of 2002.

         31.2     Certification   of  CFO   pursuant   to  Section  302  of  the
                  Sarbanes-Oxley Act of 2002.

         32.      Certification  by CEO and CFO  pursuant  to Section 906 of the
                  Sarbanes- Oxley Act of 2002















































                                       32
<PAGE>
                                   SIGNATURES

In accordance with the requirements of the Securities  Exchange Act of 1934, the
Registrant  has  caused  this  amended  report to be signed on its behalf by the
undersigned, thereunto duly authorized.

Dated:  June 26, 2006               NEWGOLD, INC.



                                    /s/ SCOTT DOCKTER
                                    --------------------------------------------
                                    Scott Dockter, President and Chief Executive
                                    Officer

                                    /s/ JAMES KLUBER
                                    --------------------------------------------
                                    James Kluber, Principal Accounting Officer
                                    and Chief Financial Officer








































                                       33