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 OCTOBER 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 Identification Number)
 incorporation or organization)


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










<PAGE>
Common stock, $0.001 par value, 63,104,072 issued and outstanding as of December
9, 2005.

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























































<PAGE>
                                      INDEX

                                                                            Page
                                                                            ----

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....................................24

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

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

        ITEM 5.   OTHER INFORMATION..........................................25

        ITEM 6.   EXHIBITS ..................................................25





































                                        2
<PAGE>
                         PART I - FINANCIAL INFORMATION


ITEM 1.   FINANCIAL STATEMENTS


                                  NEWGOLD, INC.
                     INDEX TO UNAUDITED FINANCIAL STATEMENTS



                                                                            Page
                                                                            ----

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

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

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

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

       Notes to Unaudited Financial Statements                              8-15

































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

                                     ASSETS

CURRENT ASSETS
     Cash                                                        $          764
     Travel advance                                                       2,657
                                                                ----------------

              Total current assets                                        3,421

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

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

                  TOTAL ASSETS                                   $      517,367
                                                                ================

                      LIABILITIES AND SHAREHOLDERS' DEFICIT

CURRENT LIABILITIES
     Accounts payable                                            $      602,438
     Accrued expenses                                                 1,412,638
     Accrued reclamation costs                                          513,946
     Notes payable due to individuals and officers                      457,634
                                                                ----------------

         Total current liabilities                                    2,986,656
                                                                ----------------

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

         Total liabilities                                            3,786,656

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                                            (17,979,937)
                                                                ----------------

              Total shareholders' deficit                            (3,269,289)
                                                                ----------------

                  TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT    $      517,367
                                                                ================


    The accompanying notes are an integral part of these financial statements

                                        4
<PAGE>
                                                                   NEWGOLD, INC.
                                              CONDENSED STATEMENTS OF OPERATIONS
                                 FOR THE NINE AND THREE MONTHS ENDED OCTOBER 31,
                                                                     (UNAUDITED)
--------------------------------------------------------------------------------


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

COST OF GOODS SOLD                                      159,521           15,000               19,821             5,000
                                                  --------------   --------------       --------------    --------------

GROSS LOSS                                             (159,521)         (15,000)             (19,821)           (5,000)

OPERATING EXPENSES                                     (504,798)        (231,343)            (120,227)          (78,561)
                                                  --------------   --------------       --------------    --------------

LOSS FROM OPERATIONS                                   (664,319)        (246,343)            (140,048)          (83,561)
                                                  --------------   --------------       --------------    --------------

OTHER (EXPENSE)
             Interest expense                          (930,315)        (256,417)            (203,254)         (157,011)
             Loss on sale of
                 marketable securities                        -         (281,063)                   -          (281,063)
                                                  --------------   --------------       --------------    --------------

                     Total other (expense)             (930,315)        (537,480)            (203,254)         (438,074)
                                                  --------------   --------------       --------------    --------------

NET LOSS                                           $ (1,594,634)    $   (783,823)        $   (343,302)     $   (521,635)
                                                  ==============   ==============       ==============    ==============

BASIC AND DILUTED LOSS PER SHARE                   $      (0.03)    $      (0.02)        $      (0.01)     $      (0.01)
                                                  ==============   ==============       ==============    ==============

BASIC AND DILUTED WEIGHTED-
             AVERAGE SHARES
             OUTSTANDING                             54,542,821       47,606,174           63,104,072        47,606,174
                                                  ==============   ==============       ==============    ==============
</TABLE>







    The accompanying notes are an integral part of these financial statements

                                        5
<PAGE>
                                                                   NEWGOLD, INC.
                                      CONDENSED STATEMENTS OF COMPREHENSIVE LOSS
                                 FOR THE NINE AND THREE MONTHS ENDED OCTOBER 31,
                                                                     (UNAUDITED)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                     For the Nine Months Ended             For the Three Months Ended
                                                            October 31,                            October 31,
                                                  -------------------------------       --------------------------------
                                                       2005             2004                 2005              2004
                                                  --------------   --------------       --------------    --------------
<S>                                                <C>              <C>                  <C>               <C>
NET LOSS                                           $ (1,594,634)    $   (783,823)        $   (343,302)     $   (521,635)

OTHER COMPREHENSIVE LOSS
      Unrealized loss from

          marketable securities                               -          (49,843)                   -                 -

LESS: RECLASSIFICATION
      Adjusted for losses
          included in net loss                                -          254,663                    -           254,663
                                                  --------------   --------------       --------------    --------------

COMPREHENSIVE LOSS                                 $ (1,594,634)    $   (579,003)        $   (343,302)     $   (266,972)
                                                  ==============   ==============       ==============    ==============
</TABLE>




























    The accompanying notes are an integral part of these financial statements

                                        6
<PAGE>
                                                                   NEWGOLD, INC.
                                              CONDENSED STATEMENTS OF CASH FLOWS
                                           FOR THE NINE MONTHS ENDED OCTOBER 31,
                                                                     (UNAUDITED)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                      2005               2004
                                                                                ---------------    ----------------
<S>                                                                             <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net loss                                                                    $  (1,594,634)     $     (783,823)
     Adjustments to reconcile net loss to net cash
         used in operating activities
              Accretion of warrants issued as a debt discount                          777,643             158,249
              Accretion of beneficial conversion of warrants                            71,645                   -
              Fair value of warrants issued for services                                15,690                   -
              (Increase) Decrease in
                  Deposits                                                                   -              33,000
                  Travel advance                                                          (657)                  -
              Increase (Decrease) in
                  Accounts payable                                                      34,160              (1,917)
                  Accrued salaries and benefits                                        109,136             (94,334)
                  Accrued expenses                                                    (455,142)            142,613
                                                                                ---------------    ----------------

                      Net cash (used) by
                           operating activities                                     (1,042,159)           (546,212)
                                                                                ---------------    ----------------

CASH FLOWS FROM INVESTING ACTIVITIES
     Marketable securities                                                                   -             315,187
                                                                                ---------------    ----------------

                  Net cash provided by investing activities                                  -             315,187
                                                                                ---------------    ----------------

CASH FLOWS FROM FINANCING ACTIVITIES
     Proceeds from the issuance of common stock                                      2,423,935                   -
     Proceeds from note payable                                                          5,000             230,832
     Repayments of note payable                                                     (1,402,742)               (350)
                                                                                ---------------    ----------------

                  Net cash provided by financing activities                          1,026,193             230,482
                                                                                ---------------    ----------------

                      Net (decrease) in cash                                           (15,966)               (543)

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

CASH, END OF PERIOD                                                              $         764      $        5,424
                                                                                ===============    ================
</TABLE>


    The accompanying notes are an integral part of these financial statements

                                        7
<PAGE>
                                                                   NEWGOLD, INC.
                                                   NOTES TO FINANCIAL STATEMENTS
                                      FOR THE NINE MONTHS ENDED OCTOBER 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 nine months ended October 31, 2005
     include a net loss of  $1,594,634;  negative cash flows from  operations of
     $1,042,159  and  an  accumulated   shareholders'   deficit  of  $3,269,289.
     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

                                        8
<PAGE>
     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, 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

                                        9
<PAGE>
     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)  during the nine month and three month period
     ended  October  31,  2004 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 October 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        11,052,916

                                       10
<PAGE>
     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 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  October  31,  2005  and  2004  Newgold  held no  marketable  securities
     available for sale. In October 2004, the Company sold all of its investment
     in marketable securities through open market transactions with net proceeds
     aggregating  approximately  $34,100. The Company recorded a loss on sale of
     securities on the Statements of Operations of $281,063 and $281,063 for the
     three and nine months ended October 31, 2004, respectively.

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, equipment and capitalized costs 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 October
     31, 2005.

NOTE 6 - NOTES PAYABLE TO RELATED PARTIES AND INDIVIDUALS

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

     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 notes payable                                           $    24,844
         The notes bear interest at 8% per year.
         The notes are due January 31 and October  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                                 47,039
                                                                   -------------
           Total notes payable to individuals and related parties   $   457,634
                                                                   =============

     Newgold  recorded  interest  expense of $203,254 and $930,315 for the three
     months and nine months ended October 31, 2005 compared to interest  expense
     of $157,011 and $256,417 for the three months and nine months ended October
     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 October
     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 nine  months  ended
     October  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 part of the
     issuance of the common stock resulting in no impact on Newgold's results of
     operations. 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.


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


                                       14
<PAGE>
                                                                      Weighted-
                                                                      Average
                                                        Number        Exercise
                                                      of Shares        Price
                                                    -------------  -------------

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

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

NOTE 9 - RELATED PARTY TRANSACTIONS

     Loans from officers
     -------------------
     During the quarter ended October 31, 2005 the Chief  Executive  Officer and
     Chairman of Newgold loaned the Company  $5,000.  As of October 31, 2005 the
     net principal balance owing to him was $24,844 and accrued interest payable
     was $32,413. See Note 6.

     During prior periods,  the Chief Financial Officer and Secretary of Newgold
     loaned  Newgold an aggregate  of  $209,251.  As of October 31, 2005 the net
     principal  balance owing to him was $209,251 and accrued  interest  payable
     was $18,414. See Note 6.

     Accrued Payroll and Expenses Owed to Officers
     ---------------------------------------------
     As of  October  31,  2005  Newgold  owed the Chief  Executive  Officer  and
     Chairman of Newgold $30,000 for back wages.

     As of  October  31,  2005  Newgold  owed the Chief  Financial  Officer  and
     Secretary  of  Newgold  $120,167  for back  wages and  $7,000  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  during  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 calendar 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,   because  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 October 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 October 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  October 31, 2005 Newgold spent $19,821 on  reclamation
and  maintenance   expenses  related  to  the  Relief  Canyon  mining  property.
Reclamation  and  maintenance  expenses  expended  during the same quarter ended
October 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 $120,227  during the quarter  ended  October 31, 2005. Of
this amount,  $93,500  reflects  officer  compensation and related payroll taxes
during the quarter and $15,000 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 occurring in fiscal year 2006.  During the quarter ended October 31,
2004 Newgold incurred  operating expenses of $78,561 of which $55,000 represents
officer  compensation and related payroll taxes,  $8,440 reflecting  payroll tax
penalties  and $13,500  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 $203,254 during the quarter ended October
31, 2005 which  compares to interest  expenses of $157,011  incurred  during the
same quarter ended October 31, 2004. The increase in additional interest expense
was  primarily  due to the increase in  accretion of warrants  issued in October
2004 as a debt discount.

In October 2004,  Newgold  liquidated  its  investment in marketable  securities
through open market transactions.  Net proceeds totaled  approximately  $34,100.
This  resulted in a loss on sale of $281,063.  There were no sales of marketable
securities for the comparable period in fiscal 2006.

Newgold's  total net loss for the quarter  ended  October 31, 2005  decreased to
$343,302  compared







                                       17
<PAGE>
to a net loss of $521,635  incurred for the same quarter ended October 31, 2004.
The larger net loss in the third  quarter of fiscal  2005  reflects  the loss on
sale of marketable securities referred to above.

Operating Results for the Nine Months Ended October 31, 2005 and 2004
---------------------------------------------------------------------
During the nine  months  ended  October  31,  2005  Newgold  spent  $159,521  on
reclamation  and  maintenance  expenses  related  to the  Relief  Canyon  mining
property.  Reclamation and maintenance  expenses expended during the nine months
ended  October  31,  2004 were  $15,000.  These  expenses  relate  primarily  to
maintenance  and retention costs required to maintain  Newgold's  mining claims.
Newgold  incurred  operating  expenses of $504,798  during the nine months ended
October 31, 2005. Of this amount,  $280,501  reflects  officer  compensation and
related  payroll  taxes during the period and $120,938  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 nine months ended October 31, 2004 Newgold  incurred  operating  expenses of
$231,343 of which $165,000 represents officer compensation and $24,945 reflected
payroll tax penalties.  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 $930,315  during the nine  months  ended
October 31, 2005 which compares to interest expenses of $256,417 incurred during
the nine months ended  October 31, 2004.  The  increase in  additional  interest
expense was primarily due to $777,645  representing the increase in accretion of
warrants issued in October 2004 as a debt discount.

Newgold's total net loss for the nine months ended October 31, 2005 increased to
$1,594,634 compared to a net loss of $783,823 incurred for the nine months ended
October 31, 2004.  The larger net loss in the current  fiscal year  reflects the
substantial  increase in operating  expenses  ($504,798)  and  interest  expense
($930,315)  as well as the  continuing  lack of revenues  recognized  during the
first nine months of fiscal year 2006.

LIQUIDITY AND CAPITAL RESOURCES

Newgold has incurred  significant  operating  losses  during the last two fiscal
years and during the nine months ended October 31, 2005 which has resulted in an
accumulated  deficit of $17,979,937 as of October 31, 2005. At October 31, 2005,
Newgold  had cash and other  current  assets of $3,421  compared  to  $33,983 at
October 31, 2004 and a net working  capital  deficit of  $2,983,235.  During the
quarter ended October 31, 2005, Newgold's President loaned the Company $5,000 in
order to fund  operating  expenses.  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  October  31,  2005,  Newgold  had
outstanding  notes  payable  in the gross  principal  amount of  $457,634  which
reflects  a  decrease  of  $1,399,128  compared  to notes  payable  in the gross
principal  amount of $1,856,762,  (net balance of $663,642  after  $1,193,120 of
note payable discount) as of October 31, 2004.

As of  October  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
$2.5  million to $4 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  October  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 October 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 nine months ended October 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  ("NDEP").
While  current  negotiations  with the NDEP are  ongoing,  permitting  Newgold's
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 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.
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.  Even if  Newgold  eventually  obtains  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 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









                                       21
<PAGE>
on-going basis, Newgold evaluates its estimates,  including, but not limited to,
those related to revenue recognition. Newgold uses authoritative pronouncements,
historical  experience and 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







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<PAGE>
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 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







                                       23
<PAGE>
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.

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.

















                                       24
<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 October 31, 2005,  Newgold did not issue any securities
without registration under the Securities Act of 1933 ("1933 Act").

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 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




































                                       25
<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:  January 3, 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








































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