UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-QSB

              [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                  FOR THE QUARTERLY PERIOD ENDED JULY 31, 2005

             [ ] 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
     incorporation or organization)               Identification Number)


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


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






<PAGE>
Common  stock,  $0.001  par  value,  63,104,072  issued  and  outstanding  as of
September 5, 2005.

Transitional Small Business Disclosure Format:    Yes          No   X
                                                     -------     -------























































<PAGE>
                                      INDEX



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

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

        ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
                  OPERATIONS..................................................16

        ITEM 3.   CONTROLS AND PROCEDURES.....................................23

PART II - OTHER INFORMATION...................................................25

        ITEM 2.   UNREGISTERED SALES  OF EQUITY SECURITIES AND USE OF
                  PROCEEDS....................................................25

        ITEM 5.   OTHER INFORMATION...........................................26

        ITEM 6.   EXHIBITS ...................................................26






































                                        2
<PAGE>
                         PART I - FINANCIAL INFORMATION


ITEM 1.   FINANCIAL STATEMENTS


                                  NEWGOLD, INC.
                     INDEX TO UNAUDITED FINANCIAL STATEMENTS



                                                                            Page

Condensed Balance Sheet as of July 31, 2005 (Unaudited)                       4

Condensed Statements of Operations for the three months and six
    months ended July 31, 2005 and 2004 (Unaudited)                           5

Condensed Statements of Comprehensive Loss for the three months
    and six months ended July 31, 2005 and 2004 (Unaudited)                   6

Condensed Statements of Cash Flows for the six months
    ended July 31, 2005 and 2004 (Unaudited)                                  7

Notes to Unaudited Financial Statements                                     8-15


































                                        3
<PAGE>
                                                                   NEWGOLD, INC.
                                                         CONDENSED BALANCE SHEET
                                                                   JULY 31, 2005
                                                                     (UNAUDITED)
--------------------------------------------------------------------------------

                                     ASSETS

CURRENT ASSETS
     Cash                                                       $        31,326
     Travel advance                                                       2,657
                                                               ----------------

              Total current assets                                       33,983

OTHER ASSETS
     Deferred reclamation costs                                         513,946
                                                               ----------------

              Total other assets                                        513,946
                                                               ----------------

                  TOTAL ASSETS                                  $       547,929
                                                               ================

                      LIABILITIES AND SHAREHOLDERS' DEFICIT

CURRENT LIABILITIES
     Accounts payable                                           $       586,438
     Accrued expenses                                                 1,315,860
     Accrued reclamation costs                                          513,946
     Notes payable due to individuals and officers                      257,672
                                                               ----------------

         Total current liabilities                                    2,673,916
                                                               ----------------

DEFERRED REVENUE                                                        800,000
                                                               ----------------

         Total liabilities                                            3,473,916

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' DEFICIT
     Common stock, $0.001 par value
         250,000,000 shares authorized
         63,104,072 shares issued and outstanding                        63,104
     Additional paid in capital                                      14,647,544
     Accumulated deficit                                            (17,636,635)
                                                               ----------------

              Total shareholders' deficit                            (2,925,987)
                                                               ----------------

                  TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT   $       547,929
                                                               ================

                                        4
    The accompanying notes are an integral part of these financial statements
<PAGE>
                                                                   NEWGOLD, INC.
                                              CONDENSED STATEMENTS OF OPERATIONS
                                     FOR THE SIX AND THREE MONTHS ENDED JULY 31,
                                                                     (UNAUDITED)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                           For the Six Months Ended             For the Three Months Ended
                                                                   July 31,                               July 31,
                                                         ----------------------------          ----------------------------
                                                             2005            2004                  2005            2004
                                                         ------------    ------------          ------------    ------------
<S>                                                      <C>             <C>                   <C>             <C>
NET SALES                                                $         -     $         -           $         -     $         -

COST OF GOODS SOLD                                           139,700          10,000               110,700           5,000
                                                         ------------    ------------          ------------    ------------

GROSS LOSS                                                  (139,700)        (10,000)             (110,700)         (5,000)

OPERATING EXPENSES                                          (384,571)       (152,782)             (181,692)        (77,407)
                                                         ------------    ------------          ------------    ------------

LOSS FROM OPERATIONS                                        (524,271)       (162,782)             (292,392)        (82,407)
                                                         ------------    ------------          ------------    ------------

OTHER (EXPENSE)
             Interest expense                               (727,061)        (99,405)             (370,237)        (51,841)
                                                         ------------    ------------          ------------    ------------

                 Total other (expense)                      (727,061)        (99,405)             (370,237)        (51,841)
                                                         ------------    ------------          ------------    ------------

NET LOSS                                                 $(1,251,332)    $  (262,187)          $  (662,629)    $  (134,248)
                                                         ============    ============          ============    ============

BASIC AND DILUTED LOSS PER SHARE                         $     (0.02)    $     (0.01)          $     (0.01)    $     (0.01)
                                                         ============    ============          ============    ============

BASIC AND DILUTED WEIGHTED-
             AVERAGE SHARES
             OUTSTANDING                                  50,191,822      47,606,174            50,911,822      47,606,174
                                                         ============    ============          ============    ============
</TABLE>













                                        5
    The accompanying notes are an integral part of these financial statements
<PAGE>
                                                                   NEWGOLD, INC.
                                      CONDENSED STATEMENTS OF COMPREHENSIVE LOSS
                                     FOR THE SIX AND THREE MONTHS ENDED JULY 31,
                                                                     (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                           For the Six Months Ended             For the Three Months Ended
                                                                   July 31,                               July 31,
                                                         ----------------------------          ----------------------------
                                                             2005            2004                  2005            2004
                                                         ------------    ------------          ------------    ------------
<S>                                                      <C>             <C>                   <C>             <C>
NET LOSS                                                 $(1,251,332)    $  (262,187)          $  (662,629)    $  (134,248)

OTHER COMPREHENSIVE LOSS
      Unrealized loss from
           marketable securities                                   -         (49,843)                    -         (19,225)
                                                         ------------    ------------          ------------    ------------

COMPREHENSIVE LOSS                                       $(1,251,332)    $  (312,030)          $  (662,629)    $  (153,473)
                                                         ============    ============          ============    ============
</TABLE>



































                                        6
    The accompanying notes are an integral part of these financial statements
<PAGE>
                                                                   NEWGOLD, INC.
                                              CONDENSED STATEMENTS OF CASH FLOWS
                                               FOR THE SIX MONTHS ENDED JULY 31,
                                                                     (UNAUDITED)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                      2005               2004
                                                                                ---------------    ----------------
<S>                                                                             <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net loss                                                                   $   (1,251,332)    $      (262,187)
     Adjustments to reconcile net loss to net cash
         used in operating activities
              Accretion of warrants issued as a debt discount                          585,006              35,337
              Accretion of beneficial conversion of warrants                            69,320                   -
              Fair value of warrants issued for services                                15,690                   -
              (Increase) Decrease in
                  Deposits                                                                   -              22,000
                  Travel advance                                                          (657)                  -
              Increase (Decrease) in
                  Accounts payable                                                      18,160                   -
                  Accrued salaries and benefits                                         34,676              82,500
                  Accrued expenses                                                    (477,460)            103,574
                                                                                ---------------    ----------------

                      Net cash (used) by
                           operating activities                                     (1,006,597)            (18,777)
                                                                                ---------------    ----------------

CASH FLOWS FROM INVESTING ACTIVITIES                                                         -                   -

CASH FLOWS FROM FINANCING ACTIVITIES
     Proceeds from the issuance of common stock                                      2,423,935                   -
     Proceeds from note payable                                                              -              18,500
     Repayments of note payable                                                     (1,402,742)               (350)
                                                                                ---------------    ----------------

                  Net cash provided by financing activities                          1,021,193              18,150
                                                                                ---------------    ----------------

                      Net increase (decrease) in cash                                   14,596                (627)

CASH, BEGINNING OF PERIOD                                                               16,730               5,967
                                                                                ---------------    ----------------

CASH, END OF PERIOD                                                             $       31,326     $         5,340
                                                                                ===============    ================
</TABLE>








                                        7
    The accompanying notes are an integral part of these financial statements
<PAGE>
                                                                   NEWGOLD, INC.
                                                   NOTES TO FINANCIAL STATEMENTS
                                          FOR THE SIX MONTHS ENDED JULY 31, 2005
                                                                     (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.


NOTE 2 - GOING CONCERN

         These financial statements have been prepared on a going concern basis.
         However, during the year ended January 31, 2005, Newgold incurred a net
         loss of  $1,278,140  and had  negative  cash flows from  operations  of
         $353,201. In addition, Newgold had an accumulated shareholders' deficit
         of $4,114,280 at January 31, 2005. Information for the six months ended
         July 31, 2005 include a net loss of $727,061;  negative cash flows from
         operations of $1,006,597  and an  accumulated  shareholders' deficit of
         $2,925,987.  Newgold'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,  Newgold has satisfied its
         capital needs by issuing equity securities.

         Management  plans to continue to provide for its capital  needs  during
         the year  ended  January  31,  2006 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

                                        8
<PAGE>
         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, 2005.

         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.

         Marketable Securities Available for Sale
         ----------------------------------------
         Investments in equity securities are classified as  available-for-sale.
         Securities  classified  as  available  for sale are marked to market at
         each period end.  Changes in value on such securities are recorded as a
         component of Other  comprehensive  income (loss).  If declines in value
         are deemed  other than  temporary,  losses are  reflected in Net income
         (loss).

         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.

         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

                                        9
<PAGE>
         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.

         Stock-Based Compensation
         ------------------------
         SFAS No. 123, "Accounting for Stock-Based  Compensation," as amended by
         SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and
         Disclosure,"  defines  a fair  value  based  method of  accounting  for
         stock-based  compensation.  However,  SFAS No.  123 allows an entity to
         continue  to  measure  compensation  cost  related  to stock  and stock
         options  issued to employees  using the intrinsic  method of accounting
         prescribed  by  Accounting  Principles  Board  ("APB")  Opinion No. 25,
         "Accounting for Stock Issued to Employees." Entities electing to remain
         with  the  accounting  method  of  APB  No.  25  must  make  pro  forma
         disclosures  of net income and  earnings per share as if the fair value
         method of accounting defined in SFAS No. 123 had been applied.  Newgold
         has elected to account for its  stock-based  compensation  to employees
         using the intrinsic  value method under APB No. 25. There were no stock
         options granted or outstanding for the three months ended July 31, 2005
         and 2004.

         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:

                                                 2005              2004
                                             ------------      ------------
               Warrants                       13,374,583         3,839,229

         Recent Accounting Pronouncements
         --------------------------------
         In March  2005,  the FASB issued  FASB  Interpretation  ("FIN") No. 47,
         "Accounting for

                                       10
<PAGE>
         Conditional  Asset Retirement  Obligations".  FIN No. 47 clarifies that
         the  term  conditional  asset  retirement  obligation  as  used in FASB
         Statement  No.  143,  "Accounting  for Asset  Retirement  Obligations,"
         refers to a legal obligation to perform an asset retirement activity in
         which the timing and (or) method of  settlement  are  conditional  on a
         future  event that may or may not be within the  control of the entity.
         The   obligation   to  perform   the  asset   retirement   activity  is
         unconditional  even though uncertainty exists about the timing and (or)
         method of  settlement.  Uncertainty  about the timing  and/or method of
         settlement  of a  conditional  asset  retirement  obligation  should be
         factored  into  the   measurement  of  the  liability  when  sufficient
         information  exists.  This interpretation also clarifies when an entity
         would have sufficient information to reasonably estimate the fair value
         of an asset  retirement  obligation.  FIN No. 47 is  effective no later
         than the end of fiscal years ending after  December 15, 2005  (December
         31, 2005 for  calendar-year  companies).  Retrospective  application of
         interim  financial  information  is  permitted  but  is  not  required.
         Management  does not expect  adoption  of FIN No. 47 to have a material
         impact on Newgold's financial statements.

         In May 2005, the FASB issued  Statement of Accounting  Standards (SFAS)
         No. 154,  "Accounting  Changes and Error  Corrections"  an amendment to
         Accounting  Principles  Bulletin  (APB)  Opinion  No.  20,  "Accounting
         Changes",  and SFAS No. 3,  "Reporting  Accounting  Changes  in Interim
         Financial  Statements" though SFAS No. 154 carries forward the guidance
         in APB No. 20 and SFAS No. 3 with respect to accounting  for changes in
         estimates,  changes in reporting entity,  and the correction of errors.
         SFAS No. 154  establishes  new standards on  accounting  for changes in
         accounting  principles,  whereby all such changes must be accounted for
         by  retrospective  application  to the  financial  statements  of prior
         periods unless it is  impracticable to do so. SFAS No. 154 is effective
         for  accounting  changes  and error  corrections  made in fiscal  years
         beginning  after December 15, 2005,  with early adoption  permitted for
         changes and corrections made in years beginning after May 2005.


NOTE 4 - MARKETABLE SECURITIES AVAILABLE FOR SALE

         At July 31, 2005 Newgold held no  marketable  securities  available for
         sale.  At July 31, 2004 Newgold held 71,205  common  shares of NutraCea
         which was accounted  for as an  investment  in  marketable  securities.
         Unrealized  holding  losses of $0 and $0 for the  three and six  months
         ended July 31,  2005,  respectively,  and  $19,225  and $49,843 for the
         three  months and six months ended July 31,  2004,  respectively,  were
         recorded  in Other  comprehensive  loss to  reflect  the  market  value
         decrease  during the period.  In October  2004  Newgold sold all of its
         investment in marketable securities.

NOTE 5 - PROPERTY AND EQUIPMENT

         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.

                                       11
<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>

         All office  furniture and equipment  has been fully  depreciated  as of
July 31, 2005.

NOTE 6 - NOTES PAYABLE TO RELATED PARTIES AND INDIVIDUALS

         Unsecured  notes payable to individuals  and related parties consist of
the following at July 31, 2005:

         Loans from officers:
           Convertible notes payable                                  $ 209,251
               The notes bear 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 notes payable                                         $  19,844
               The notes bear interest at 8% per year.
               The notes are due  January  31,  2006.  Newgold is not in default
               with  respect  to these  loans.  In  connection  with the  loans,
               warrants to  purchase  141,540  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.

           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                             47,038
         Unamortized warrant expense                                    (55,932)
                                                                      ----------
               Total notes payable to individuals and related parties $ 396,701
                                                                      ==========

         Newgold  recorded  interest  expense of $370,237  and  $727,061 for the
         three  months and six months  ended July 31, 2005  compared to interest
         expense  of $51,841  and  $99,405  for the three  months and six months
         ended July 31, 2004.

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
         July 31, 2005. However, minimum annual royalty payments are required to

                                       12
<PAGE>
         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.

         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.

                                       13
<PAGE>
         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 2005 a Special Meeting of Shareholders of Newgold was held for
         the purpose of amending  the  Articles  of  Incorporation  to affect an
         increase  in  the  authorized   shares  of  common  stock  issuable  to
         250,000,000  shares.  At the meeting the  proposal  was approved by the
         shareholders,  with a total of 31,392,611 shares voting in favor of the
         amendment,  411,711  voting  against the  amendment  and 10,207  shares
         abstained from voting.

         In February  2005 Newgold  issued  500,000  shares of common stock at a
         price of $0.15 per share to an investor for total  proceeds of $75,000.
         Additionally,  500,000  warrants to purchase common stock at a price of
         $0.30 per share were issued to the investor.  The warrants expire three
         years from the date of issuance.

         In April 2005  Newgold  issued  2,000,000  shares of common  stock at a
         price of $0.25 per share to investors  for total  proceeds of $500,000.
         Additionally, 1,000,000 warrants to purchase common stock at a price of
         $0.50 per share were issued to the investors. The warrants expire three
         years from the date of issuance.

         In July 2005  Newgold  issued  12,326,231  shares of common  stock at a
         price of $0.15 per share to the Chief  Executive  Officer  according to
         the terms of  existing  notes  payable  to the  officer.  The  issuance
         resulted  in  the   repayment  of  principal   and  interest   totaling
         $1,848,935.

         Warrants
         --------
         Newgold has issued common stock warrants to officers of Newgold as part
         of certain financing transactions (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 six months ended
         July 31, 2005 in  conjunction  with the  issuance  of common  stock was
         determined to be $310,256 and was  calculated  under the  Black-Scholes
         option pricing model with the following assumptions used:

                  Expected life                                 3 years
                  Risk free interest rate                       3.77% - 4.01%
                  Volatility                                    199.8% - 266.1%
                  Expected dividend yield                       None

         The fair value of $294,566  warrants has been  recorded as both a debit
         and credit to  additional  paid in  capital.  The fair value of $15,690
         warrants has been recorded as a debit to operating expense for services
         rendered and a credit to additional paid in capital.


                                       14
<PAGE>

         The following  table  presents  warrant  activity from January 31, 2005
through July 31, 2005:

                                                                 Weighted-
                                                                 Average
                                                  Number         Exercise
                                                of Shares          Price
                                               ------------    -------------

         Outstanding, January 31, 2005          11,724,583      $      0.16
           Granted                               1,650,000      $      0.43
                                               ------------    -------------

             Outstanding, July 31, 2005         13,374,583      $     0.19
                                               ============    =============
              Exercisable, July 31, 2005        13,374,583      $     0.19
                                               ============    =============

NOTE 9 - RELATED PARTY TRANSACTIONS

         Loans from officers
         -------------------
         During  prior  periods,  the Chief  Executive  Officer and  Chairman of
         Newgold loaned Newgold an aggregate of $1,422,587.  As of July 31, 2005
         the net principal balance owing to him was $19,844 and accrued interest
         payable was $32,007. See Note 6.

         During prior  periods,  the Chief  Financial  Officer and  Secretary of
         Newgold  loaned  Newgold an aggregate of $209,251.  As of July 31, 2005
         the net  principal  balance  owing  to him  was  $209,251  and  accrued
         interest payable was $14,136. See Note 6.

         Accrued Payroll and Expenses Owed to Officers
         ---------------------------------------------
         As of July 31,  2005  Newgold  owed the  Chief  Financial  Officer  and
         Secretary  of Newgold  $93,500  for back  wages and $6,000 for  accrued
         expenses.




















                                       15
<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).

         Our  properties  now include 78 unpatented  mining claims  contained in
         about 1000 acres.

         Our  operating  plan is to place  our  mining  claims  into  profitable
         production by the end of fiscal 2006 or early fiscal 2007,  and use the
         net proceeds  from these  operations  to fund ongoing  exploration  and
         development  of  our  property  holdings.  Through  the  use  of  joint
         ventures,  royalties,  arrangements  and  partnerships,  we  intend  to
         progressively  enlarge the scope and scale of the mining and processing
         operations,  thereby increasing 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 fiscal years 2006 and 2007 of
         between $2.5  million and $4 million,  including  costs  related to the
         resumption of mine operations and production at the Relief Canyon mine.

     o   Due to the  strengthening  of the gold market,  and consistent with our
         exploration  growth  strategy,  we  expect  exploration,  research  and
         development  expenditures in 2006 and 2007 will total between  $500,000
         and $1 million.

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

                                       16
<PAGE>
RESULTS OF OPERATION

Newgold resumed  business  operations  after having been inactive from July 2001
until February 2003.  Consequently,  we are in the process of reinstituting  our
business  and mining  operations,  the  results of  operations  for the last two
fiscal  years will  likely not be  indicative  of  Newgold's  current and future
operations.  The current management  discussion and analysis should be read from
the context of Newgold's recent resumption of its mining business.

Operating Results for the Fiscal Quarters Ended July 31, 2005 and 2004
----------------------------------------------------------------------

Although Newgold  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 July 31,  2005 and 2004,  respectively.
Newgold hopes to be able to commence  generating revenues from mining operations
during the 2007  fiscal  year.  Newgold  has  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 July 31, 2005 Newgold spent $110,700 on reclamation and
maintenance  expenses related to the Relief Canyon mining property.  Reclamation
and  maintenance  expenses  expended during the same quarter ended July 31, 2004
were $5,000.  These expenses relate primarily to maintenance and retention costs
required  to  maintain  Newgold's  mining  claims.  Newgold  incurred  operating
expenses of $181,692  during the quarter  ended July 31,  2005.  Of this amount,
$93,501  reflects  officer  compensation  and related  payroll  taxes during the
quarter,  $19,440 reflect web site development  expense and $46,090 reflect fees
for outside  professional  services. A large portion of the outside professional
services  reflects legal and accounting work pertaining to Newgold's  annual and
quarterly  reporting  on Form 10-KSB and Form  10-QSB for fiscal  years 2005 and
2006. During the quarter ended July 31, 2004 Newgold incurred operating expenses
of $77,407 of which $55,000 represents officer  compensation and related payroll
taxes  and  $12,000  reflect  fees  for  outside  professional  services.  It is
anticipated  that  both  mining  costs  and  operating  expenses  will  increase
significantly as Newgold resumes its mining operations and exploration program.

Newgold incurred  interest expense of $370,237 during the quarter ended July 31,
2005 which  compares to interest  expenses of $51,841  incurred  during the same
quarter ended July 31, 2004. Although the amount of loans outstanding during the
second quarter of fiscal 2006 were unchanged (until the last day of the quarter)
compared  to the second  quarter of fiscal  2005,  the  increase  in  additional
interest  expense was  primarily  due to the  increase in  accretion of warrants
issued in October 2004 as a debt discount.

Newgold's  total net loss for the  quarter  ended  July 31,  2005  increased  to
$662,629  compared to a net loss of $134,248 incurred for the same quarter ended
July  31,  2004.  The  larger  net  loss  in the  second  quarter  reflects  the
substantial  increase in operating  expenses and interest expense as well as the
continuing lack of revenues  recognized during the second quarter of fiscal year
2006.

                                       17
<PAGE>
Operating Results for the Six Months Ended July 31, 2005 and 2004
-----------------------------------------------------------------

During the six months ended July 31, 2005 Newgold spent  $139,700 on reclamation
and  maintenance   expenses  related  to  the  Relief  Canyon  mining  property.
Reclamation and maintenance  expenses  expended during the six months ended July
31, 2004 were  $10,000.  These  expenses  relate  primarily to  maintenance  and
retention costs required to maintain  Newgold's mining claims.  Newgold incurred
operating expenses of $384,571during the six months ended July 31, 2005. Of this
amount,  $187,001 reflects officer compensation and related payroll taxes during
the quarter and $105,938 reflect fees for outside professional services. A large
portion of the outside professional  services reflects legal and accounting work
pertaining to Newgold's  annual and quarterly  reporting on Form 10-KSB and Form
10-QSB for fiscal years 2005 and 2006. During the six months ended July 31, 2004
Newgold  incurred  operating  expenses of $152,782 of which $110,000  represents
officer compensation and $23,000 reflect fees for outside professional services.
It is  anticipated  that both mining costs and operating  expenses will increase
significantly as Newgold resumes its mining operations and exploration program.

Newgold  incurred  interest expense of $727,061 during the six months ended July
31, 2005 which compares to interest  expenses of $99,405 incurred during the six
months ended July 31, 2004.  Although the amount of loans outstanding during the
first six months of fiscal 2006 were unchanged (until July 31, 2005) compared to
the first six months of fiscal 2005, the increase in additional interest expense
was primarily due to $585,006 representing the increase in accretion of warrants
issued in October 2004 as a debt discount.

Newgold's  total net loss for the six months  ended July 31, 2005  increased  to
$1,251,332  compared to a net loss of $262,187 incurred for the six months ended
July 31,  2004.  The larger net loss in the  current  fiscal year  reflects  the
substantial  increase in operating  expenses  ($384,571)  and  interest  expense
($727,061)  as well as the  continuing  lack of revenues  recognized  during the
first six months of fiscal year 2006.

LIQUIDITY AND CAPITAL RESOURCES

Newgold has incurred  significant  operating  losses  during the last two fiscal
years and during the six months  ended July 31,  2005 which has  resulted  in an
accumulated  deficit  of  $17,636,635  as of July 31,  2006.  At July 31,  2005,
Newgold had cash and other current  assets of $31,326 and a net working  capital
deficit of $2,639,933.  While cash decreased by $211,866 during the quarter, the
net  working  capital  deficit  decreased  by 31% during the second  quarter due
primarily  to the  approximately  $1  million  reduction  in  notes  payable  to
individuals and officers. Since the resumption of its business in February 2003,
Newgold has been dependent on borrowed or invested funds in order to finance its
ongoing  operations.  As of July 31, 2005, Newgold had outstanding notes payable
in the gross principal amount of $452,634(net balance of $257,672 after $194,962
of note payable  discount)  which reflects a decrease of $1,191,796  compared to
notes  payable  in the gross  principal  amount of  $1,644,430,(net  balance  of
$1,612,630 after $31,800 of note payable discount) as of July 31, 2004.

As of July 31, 2005, we were in default on a promissory note due to an unrelated
party in the principal amount $176,500.

                                       18
<PAGE>
In the quarter ended April 30, 2005 Newgold  raised a total of $575,000  through
the sale of 2,500,000 shares of its restricted stock.

In the quarter ended July 31, 2005 Newgold  issued  12,326,231  shares of common
stock at a price of $0.15 per share to its Chief Executive  Officer according to
the terms of existing notes payable to the officer. The issuance resulted in the
repayment  of  principal  of  $1,402,742  and  interest  of  $446,193   totaling
$1,848,935.

By attempting to resume mining operations, Newgold will require approximately $3
million to $5 million in additional  working  capital above the current  working
capital  deficiency  to bring  the mine into full  production.  It is  Newgold's
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 Newgold's continuing losses from its business operations, the independent
auditor's  report dated April 15, 2005,  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 July 31, 2005, Newgold's principal commitments
included its  obligation  to pay ongoing  maintenance  fees on its 78 unpatented
mining claims.

Management of Newgold believes that it will need to raise additional  capital to
continue to develop, promote and conduct its mining operations. Due to Newgold's
limited cash flow,  operating  losses and limited  assets,  it is unlikely  that
Newgold  could  obtain   financing   through   commercial  or  banking  sources.
Consequently,  Newgold is dependent on continuous  cash infusions from its major
stockholders or other outside  sources in order to fund its current  operations.
To  date,  Newgold's  President  has paid a  substantial  portion  of  Newgold's
expenses  since  restarting  its  business in February  2003.  Although  Newgold
believes  that these  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 Newgold's 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 July 31,  2005,  Newgold did not engage in any
off-balance sheet arrangements as defined in Item 303(c) of the SEC's Regulation
S-B.

FACTORS AFFECTING FUTURE OPERATING RESULTS

Newgold had been relatively  inactive until February 2003.  Consequently,  it is
only  recently  reactivating  its  business  operations  and  has  generated  no
revenues,  other than dividend income, since its inception. As a result, Newgold
has only a limited operating history upon which to evaluate its future potential
performance.  Newgold's  prospects  must be considered in light of

                                       19
<PAGE>
the risks and  difficulties  encountered  by new  companies  which  have not yet
established their business operations.

Newgold  will need  additional  funds to  finance  its  mining  and  exploration
activities as well as fund its current operations. It currently has limited cash
reserves and a working capital deficit and is unable to fund its operations from
revenues.  Consequently,  its ability to meet its  obligations  in the  ordinary
course of business is dependent upon its ability to raise  additional  financing
through public or private equity financings, establish increasing cash flow from
operations,  enter into joint  ventures  or other  arrangements  with  corporate
sources, or secure other sources of financing to fund operations.

The audit report of Newgold's  independent  auditors  includes a "going concern"
qualification. In the auditor's opinion, Newgold's limited operating history and
the accumulated  shareholders' deficit as of January 31, 2005, raise substantial
doubt about its ability to continue as a going concern.  See Note 2 of the Notes
to Financial Statements for the six months ended July 31, 2005.

The price of gold has  experienced  an  increase  in value  over the past  three
years,  generally  reflecting among other things declining interest rates in the
United States;  worldwide  instability  due to terrorism;  and a global economic
slump. Any significant  drop in the price of gold may have a materially  adverse
affect on the results of Newgold's operations unless it is able to offset such a
price drop by substantially increased production.

Newgold's  disclosures of its mineral resources are only estimates.  Newgold has
no proven or probable  reserves and has no ability to currently measure or prove
its 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.  Newgold 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 Newgold's 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, no assurance can be given
that Newgold's  exploration programs will result in the discovery of new mineral
reserves or resources.

Newgold's  mining property rights consist of 78 mill site and unpatented  mining
claims.  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, Newgold may not be able to retain its royalty interests
on

                                       20
<PAGE>
that property, which could reduce its 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 well
as the  rights of  adjoining  property  owners.  Newgold  believes  that,  it is
currently  operating  in  compliance  with all known  safety  and  environmental
standards and regulations applicable to its Nevada property.  Currently, Newgold
is only  permitted to carry on  designated  mining  activities  until it posts a
reclamation  bond and the mining  property is brought into  compliance  with the
requirements of the Nevada  Department of Environmental  Protection.  Permitting
Newgold's mining property for full exploration and mining activities is expected
to take 6 to 15 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 Newgold's
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,  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.

Newgold is  substantially  dependent  upon the  continued  services  of A. Scott
Dockter,  its President.  Newgold has 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 Newgold,
Newgold 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.

CRITICAL ACCOUNTING POLICIES

Newgold's  discussion  and analysis of its financial  conditions  and results of
operations are based upon its 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,
Newgold evaluates its estimates, including, but not limited to, those related to
revenue  recognition.  Newgold  uses  authoritative  pronouncements,  historical
experience  and

                                       21
<PAGE>
other assumptions as the basis for making judgments. Actual results could differ
from those estimates.  Newgold believes that the following  critical  accounting
policies affect its more significant  judgments and estimates in the preparation
of its financial statements.

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

Long-lived assets,  consisting primarily of property and equipment,  patents and
trademarks,  and  goodwill,  comprise a significant  portion of Newgold's  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  industry,   and  the  anticipated   future  economic
environment.

Factors Newgold  considers  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 Newgold determines 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,  it measures any
impairment  based on a projected  discounted  cash flow method  using a discount
rate determined by its 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

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<PAGE>
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 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 Newgold's
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 Newgold's best
estimates of its ultimate  reclamation  liabilities  could change as a result of
changes in regulations or cost estimates.

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

In March 2005, the FASB issued FASB  Interpretation  ("FIN") No. 47, "Accounting
for Conditional  Asset  Retirement  Obligations".  FIN No. 47 clarifies that the
term conditional asset retirement  obligation as used in FASB Statement No. 143,
"Accounting for Asset Retirement  Obligations,"  refers to a legal obligation to
perform an asset  retirement  activity  in which the  timing and (or)  method of
settlement  are  conditional on a future event that may or may not be within the
control of the entity.  The obligation to perform the asset retirement  activity
is unconditional even though uncertainty exists about the timing and (or) method
of  settlement.  Uncertainty  about the timing  and/or method of settlement of a
conditional asset retirement  obligation should be factored into the measurement
of the liability when sufficient  information  exists.  This interpretation also
clarifies  when an  entity  would  have  sufficient  information  to

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<PAGE>
reasonably estimate the fair value of an asset retirement obligation. FIN No. 47
is effective  no later than the end of fiscal  years  ending after  December 15,
2005 (December 31, 2005 for calendar-year companies).  Retrospective application
of interim  financial  information is permitted but is not required.  Management
does not expect  adoption of FIN No. 47 to have a material  impact on  Newgold's
financial statements.

In May 2005, the FASB issued  Statement of Accounting  Standards (SFAS) No. 154,
"Accounting Changes and Error Corrections" an amendment to Accounting Principles
Bulletin (APB) Opinion No. 20, "Accounting Changes",  and SFAS No. 3, "Reporting
Accounting Changes in Interim Financial  Statements" though SFAS No. 154 carries
forward the guidance in APB No. 20 and SFAS No. 3 with respect to accounting for
changes in estimates, changes in reporting entity, and the correction of errors.
SFAS No. 154  establishes  new standards on accounting for changes in accounting
principles,  whereby all such  changes must be  accounted  for by  retrospective
application  to  the  financial   statements  of  prior  periods  unless  it  is
impracticable  to do so. SFAS No. 154 is effective  for  accounting  changes and
error  corrections  made in fiscal years beginning after December 15, 2005, with
early adoption  permitted for changes and  corrections  made in years  beginning
after May 2005.

ITEM 3.  CONTROLS AND PROCEDURES

Newgold  carried  out  an  evaluation,   under  the  supervision  and  with  the
participation of Newgold's  management,  including Newgold's President and Chief
Executive  Officer  along  with  Newgold's  Chief  Financial  Officer,   of  the
effectiveness of the design and operation of Newgold's  disclosure  controls and
procedures  pursuant  to  Exchange  Act Rule  13a-14 as of the end of the period
covered by this report.  Based upon that  evaluation,  Newgold's  President  and
Chief Executive  Officer along with Newgold's Chief Financial  Officer concluded
that  Newgold's  disclosure  controls and procedures are effective to ensure the
information  required to be disclosed  by Newgold in reports  filed or submitted
under the Exchange Act were timely  recorded,  processed and reported within the
time periods  specified in the  Securities  and  Exchange  Commission  rules and
forms.

There have been no  significant  changes in  Newgold's  internal  controls  over
financial  reporting or in other factors which occurred  during the last quarter
covered by this report,  which could materially  affect or are reasonably likely
to materially affect Newgold's internal controls over financial reporting.



















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<PAGE>
                           PART II - OTHER INFORMATION

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

SALES OF UNREGISTERED SECURITIES DURING THE QUARTER

During the quarter ended July 31, 2005, Newgold issued the following  securities
without registration under the Securities Act of 1933 ("1933 Act").

In July 2005 Newgold issued upon conversion 12,326,231 shares of common stock at
a price of $0.15 per share to the Chief Executive Officer according to the terms
of an existing convertible note payable to the officer. The issuance resulted in
the repayment of principal and interest  totaling  $1,848,935 owed by Newgold to
the  officer.  The issued  shares of common  stock are deemed to be  "restricted
securities"  as defined in Rule 144 under the 1933 Act and bear a legend stating
the restrictions on resale.

Prior  issuances of Newgold's  common stock during  fiscal years 2006,  2005 and
2004 have been  reported in  Newgold's  prior  filings with the  Securities  and
Exchange Commission.

ITEM 5.  OTHER INFORMATION

Effective   June  7,  2005  Newgold  was  cleared  to  resume   trading  on  the
Over-the-Counter  Bulletin Board trading  service.  Newgold's  trading symbol is
NGLD.

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






















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<PAGE>
                                   SIGNATURES

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

Dated:  September 12, 2005         NEWGOLD, INC.



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

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








































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