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, 2004

             [ ] 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)


P.O. Box 1626  Shingle Springs, California                      95682
-----------------------------------------------     ----------------------------
   (Address of Principal Executive Offices)                    Zip Code


              Issuer's telephone number:       (530) 672-1116


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

Common stock, $0.001 par value, 47,606,174 issued and outstanding as of November
30, 2004.

Transitional Small Business Disclosure Format:   YES             NO    X
                                                    ---------      ---------












<PAGE>
                                      INDEX

                                                                            Page

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

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

        ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
                 OPERATIONS...................................................17

        ITEM 3.  CONTROLS AND PROCEDURES......................................25

PART II - OTHER INFORMATION...................................................26

        ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
                 PROCEEDS.....................................................26

        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


Condensed Balance Sheet as of October 31, 2004 (Unaudited)                  4-5

Condensed Statements of Operations for the three months and nine months
   ended October 31, 2004 and 2003 (Unaudited)                               6

Condensed Statements of Comprehensive Loss for the three months and
   nine months ended October 31, 2004 and 2003 (Unaudited)                   7

Condensed Statements of Cash Flows for the nine months
   ended October 31, 2004 and 2003 (Unaudited)                               8

Notes to Unaudited Financial Statements                                     9-16





































                                        3
<PAGE>
                                                                   NEWGOLD, INC.
                                                         CONDENSED BALANCE SHEET
                                                                OCTOBER 31, 2004
                                                                     (UNAUDITED)
--------------------------------------------------------------------------------

                                     ASSETS

CURRENT ASSETS
     Cash                                                       $     5,424
                                                               -------------

              Total current assets                                    5,424

OTHER ASSETS
     Deferred reclamation costs                                     513,946
     Deposits                                                        12,000
                                                               -------------

              Total other assets                                    525,946
                                                               -------------

                  TOTAL ASSETS                                  $   531,370
                                                               =============
































                                        4

    The accompanying notes are an integral part of these financial statements

<PAGE>
                                                                   NEWGOLD, INC.
                                                         CONDENSED BALANCE SHEET
                                                                OCTOBER 31, 2004
                                                                     (UNAUDITED)
--------------------------------------------------------------------------------

                      LIABILITIES AND SHAREHOLDERS' DEFICIT

CURRENT LIABILITIES
     Accounts payable                                          $        538,276
     Accrued expenses                                                 1,713,643
     Accrued reclamation costs                                          513,946
     Notes payable due to individuals and officer                       663,641
                                                               ----------------

         Total current liabilities                                    3,429,506
                                                               ----------------

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

         Total liabilities                                            4,229,506

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' DEFICIT
     Common stock, $0.001 par value
         50,000,000 shares authorized
         47,606,174 shares issued and outstanding                        47,606
     Additional paid in capital                                      12,145,244
     Accumulated deficit                                            (15,890,986)
                                                               ----------------

              Total shareholders' deficit                            (3,698,136)
                                                               ----------------

                  TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT  $        531,370
                                                               ================


















                                        5

    The accompanying notes are an integral part of these financial statements

<PAGE>
                                                                   NEWGOLD, INC.
                                              CONDENSED STATEMENTS OF OPERATIONS
                          FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 31,
                                                                     (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                    For the Three Months Ended    For the Nine Months Ended
                                                           October 31,                    October 31,
                                                           -----------                    -----------
                                                       2004           2003           2004           2003
                                                       ----           ----           ----           ----
<S>                                                <C>            <C>            <C>            <C>
NET SALES                                          $         -    $         -    $         -    $         -

COST OF GOODS SOLD                                        5,000          9,430         15,000         10,930
                                                   -------------  -------------  -------------  -------------

GROSS LOSS                                               (5,000)        (9,430)       (15,000)       (10,930)

OPERATING EXPENSES                                      (78,561)       (89,283)      (231,343)      (232,566)
                                                   -------------  -------------  -------------  -------------

LOSS FROM OPERATIONS                                    (83,561)       (98,713)      (246,343)      (243,496)
                                                   -------------  -------------  -------------  -------------

OTHER INCOME (EXPENSE)

            Dividend income                                  -              -              -          10,063
            Interest expense                           (157,011)       (31,982)      (256,417)       (91,428)
            Loss on sale of marketable
                securities                             (281,063)            -        (281,063)            -
                                                   -------------  -------------  -------------  -------------
                Total other income
                   (expense)                           (438,074)       (31,982)      (537,480)       (81,365)
                                                   -------------  -------------  -------------  -------------

NET LOSS                                           $   (521,635)  $   (130,695)  $   (783,823)  $   (324,861)
                                                   =============  =============  =============  =============

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

BASIC AND DILUTED WEIGHTED-
            AVERAGE SHARES
            OUTSTANDING                              47,606,174     47,592,255     47,606,174     47,592,255
                                                   =============  =============  =============  =============
</TABLE>








                                        6

    The accompanying notes are an integral part of these financial statements

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

<TABLE>
<CAPTION>
                                                    For the Three Months Ended    For the Nine Months Ended
                                                            October 31,                   October 31,
                                                            -----------                   -----------
                                                       2004           2003           2004           2003
                                                       ----           ----           ----           ----
<S>                                                <C>            <C>            <C>            <C>
NET LOSS                                           $   (521,635)  $   (130,695)  $   (783,823)  $   (324,861)

OTHER COMPREHENSIVE LOSS
      Unrealized loss from
          marketable securities                              -        (247,543)       (49,843)      (247,543)

 LESS: Reclassification
          Adjustment for losses
                 included in net loss                   254,663             -         254,663             -
                                                   -------------  -------------  -------------  -------------
COMPREHENSIVE LOSS                                 $   (266,972)  $   (378,238)  $   (579,003)  $   (572,404)
                                                   =============  =============  =============  =============
</TABLE>





























                                        7

    The accompanying notes are an integral part of these financial statements

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

<TABLE>
<CAPTION>
                                                                                     2004                2003
                                                                                ---------------     ---------------
<S>                                                                             <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net loss                                                                   $     (783,823)     $     (324,861)
     Adjustments to reconcile net loss to net cash
         used in operating activities
              Accretion of warrants issued as a debt discount                          158,249               6,971
              Decrease (Increase) in
                  Deposits                                                              33,000             (75,000)
                  Deferred reclamation costs                                                -             (463,446)
              Increase (Decrease) in
                  Accounts payable                                                      (1,917)                 -
                  Accrued salaries and benefits                                        (94,334)             84,000
                  Accrued expenses                                                     142,613             591,598
                                                                                ---------------     ---------------

                      Net cash used by operating activities                           (546,212)           (180,738)
                                                                                ---------------     ---------------

CASH FLOWS FROM INVESTING ACTIVITIES
     Marketable securities                                                             315,187             (10,062)
                                                                                ---------------     ---------------

                      Net cash provided (used) by investing activities                 315,187             (10,062)
                                                                                ---------------     ---------------


CASH FLOWS FROM FINANCING ACTIVITIES
     Proceeds from the issuance of common stock                                             -               20,000
     Proceeds from notes payable                                                       230,832             285,970
     Repayments of note payable                                                           (350)           (119,452)
                                                                                ---------------     ---------------

                  Net cash provided by financing activities                            230,482             186,518
                                                                                ---------------     ---------------

                      Net decrease in cash                                                (543)             (4,282)

CASH, BEGINNING OF PERIOD                                                                5,967               5,622
                                                                                ---------------     ---------------

CASH, END OF PERIOD                                                             $        5,424      $        1,340
                                                                                ===============     ===============
</TABLE>


..
                                        8

    The accompanying notes are an integral part of these financial statements

<PAGE>
NOTE 1 - ORGANIZATION AND LINE OF BUSINESS

     NEWGOLD,  Inc.  (the  "Company")  has been in the  business  of  acquiring,
     exploring,  developing,  and  producing  gold  properties.  The Company 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,  the Company  placed the Relief  Canyon Mine on care and  maintenance
     status. The Company also conducted exploration at its Washington Gulch Mine
     property in Montana.

     In February  2000 the Company  began to  implement an entirely new business
     model of investing in Internet  companies.  Due to the deterioration of the
     investment  market for these types of companies  later in 2000, the Company
     abandoned this  investment  strategy.  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.

     Merger
     ------
     In November 1996,  Newgold,  Inc. of Nevada ("Old Newgold") was merged into
     Warehouse  Auto  Centers,  Inc.  ("WAC"),  a  public  company,   which  had
     previously  filed an  involuntary  petition  under Chapter 11 of the United
     States  Bankruptcy  Code in the  United  States  Bankruptcy  Court  for the
     Western District of New York.  Pursuant to the plan of  reorganization  and
     merger (the "Plan"), (i) WAC which was the surviving  corporation for legal
     purposes,  changed its name to Newgold Inc., (ii) the outstanding shares of
     Old  Newgold  were  converted  into the right to  receive an  aggregate  of
     12,000,000  shares  or  approximately  69% of the post  merger  outstanding
     common  stock  of the  Company,  (iii)  each  outstanding  share of WAC was
     converted  into the right to receive  1/65 share of the common stock of the
     Company,  for an  aggregate  of  51,034  shares or less than 1% of the post
     merger  outstanding  common  stock,  (iv)  unsecured  trade debts and other
     unsecured  pre-petition  liabilities  were paid in full via the issuance of
     one share of the Company's stock, for each $42 of debt, for an aggregate of
     63,374 shares or less than 1% of the post merger  outstanding common stock,
     and (v) post  petition  creditors  received 1 share of stock for each $1 of
     debt,  for an aggregate of 191,301 shares or  approximately  1% of the post
     merger outstanding common stock. The Plan also required an amendment to the
     Company's  capital structure to increase the number of shares authorized to
     50,000,000 and to reduce the corresponding par value to $.001.

     In connection with the Plan, the Company raised  $4,707,000 of cash through
     the issuance of convertible debtor certificates. Shortly after confirmation
     of the Plan, the debtor certificates were exchanged for 5,135,130 shares of
     common stock  (including  428,130  shares issued in lieu of paying cash for
     underwriter's  fees)  representing  approximately  29% of the  post  merger
     outstanding  common stock. An additional bonus of 513,514 shares was issued
     to investors  and  underwriters  during the year ended January 31, 1998 for
     delay in the effective date of the Company's stock trading.

     For  accounting  purposes,  Old  Newgold has been  treated as the  acquirer
     (reverse  acquisition).  Accordingly,  the historical  financial statements
     prior to November 21, 1996 are those of Old  Newgold.  There were no assets
     or liabilities  acquired in this  transaction and there is no impact on the
     statement of operations.

                                        9
<PAGE>
NOTE 2 - GOING CONCERN

     These  financial  statements  have been prepared on a going concern  basis.
     However, during the year ended January 31, 2004, the Company incurred a net
     loss of $470,823 and had negative  cash flows from  operations of $176,583.
     In  addition,  the  Company  had an  accumulated  shareholders'  deficit of
     $4,425,944  at January 31,  2004.  The  Company's  ability to continue as a
     going  concern  is  dependent  upon  its  ability  to  generate  profitable
     operations in the future  and/or to obtain the necessary  financing to meet
     its  obligations  and repay its  liabilities  arising from normal  business
     operations  when they come due.  The  outcome  of these  matters  cannot be
     predicted with any certainty at this time. Since inception, the Company has
     satisfied its capital needs by issuing equity securities.

     Management  plans to continue to provide for its capital  needs  during the
     year ended  January  31, 2005 by issuing  equity  securities  or  incurring
     additional  debt  financing,  with the proceeds to be used to  re-establish
     mining  operations at Relief Canyon as well as improve its working  capital
     position.  These financial statements do not include any adjustments to the
     amounts and  classification of assets and liabilities that may be necessary
     should the Company be unable to continue as a going concern.

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     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,  the Company carried  insurance against certain property damage
     loss (including business  interruption) and comprehensive general liability
     insurance.  While the Company 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.   The  Company  has  not  obtained
     environmental  liability  insurance because such coverage is not considered
     by  management  to be cost

                                       10
<PAGE>
     effective.  The  Company  currently  carries  no  insurance  on  any of its
     properties due to the current status of the mine and the Company's  current
     financial condition.

     Reclamation Costs
     -----------------
     Reclamation costs and related accrued  liabilities,  which are based on the
     Company'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 the Company's best estimates of its ultimate  reclamation  liabilities
     could change as a result of changes in regulations or cost estimates.

     Comprehensive Income
     --------------------
     The Company 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 the Company's financial statements since the Company
     did  have   unrealized   gain  (loss)  of  from   changes  in  equity  from
     available-for-sale marketable securities.

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

     Loss Per Share
     --------------
     The Company  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:

                                                       2004           2003
                                                   -------------  -------------
     Warrants                                        11,052,916      3,715,076

                                       11
<PAGE>

NOTE 4 - MARKETABLE SECURITIES AVAILABLE FOR SALE

     At April 30, 2004, the Company held 71,205 common shares of NutraCea, which
     were  accounted for as an investment in marketable  securities.  Unrealized
     holding  losses  of $0 and  $49,843  for the three  and nine  months  ended
     October 31, 2004, respectively, and $0 and $0 for the three months and nine
     months  ended  October  31,  2003,  respectively,  were  recorded  in Other
     comprehensive  loss  to  reflect  the  market  value  decrease  during  the
     respective periods. 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

     Property and  equipment  at October 31, 2004 was recorded at no value.  The
     Company 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 the Company can  reestablish  mining  operations  at
     Relief Canyon it is possible that some of these assets could be utilized in
     such operations.

     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 October
     31, 2004.

     In October 2004, the Company re-staked the Relief Canyon mill site and lode
     claims,  which now  include a total of 78  claims.  The  annual  payment to
     maintain these claims is $15,600.

NOTE 6 - NOTES PAYABLE TO RELATED PARTIES AND INDIVIDUALS

     Unsecured  notes payable to individuals  and related parties consist of the
     following at October 31, 2004:

     Convertible loans from officers.  The notes bear interest at
     8% per year and are due  September  30, 2005.  The notes and
     any interest  accrued on the new notes are convertible  into
     common shares of the Company at a conversion  price of $0.15
     per  share.  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.                              $  1,611,993

     Loans from officer.  The notes bear interest at 8% per year.
     The  notes  are  current.  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

                                       12
<PAGE>
     per share and expire in five years from the date of issuance. $     21,231

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

     Other non-interest bearing advances                           $     47,038

     Unamortized warrant expense                                   $ (1,193,120)
                                                                  --------------

     Total notes payable to individuals and related parties        $    663,641
                                                                  ==============

     The Company  recorded  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,  the Company
     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, 2004.  However,  minimum annual royalty payments are required to retain
     the lease rights to the Company's properties.

     Relief Canyon Mine
     ------------------
     The Company  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,
     the Company  staked an  additional  402 claims.  Subsequent  to January 31,
     1998,  the Company  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 the  Company.  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 the Company, 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 the Company.

     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 October 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 December 3, 1996,  plaintiff Roy Christiansen filed a breach of contract
     action against the Company in the Second Judicial  District,  Reno,  Washoe
     County,  Nevada.  Plaintiff  alleged that he was owed $250,000  relating to
     recovery  of his  investment  in a property  subsequently  acquired  by the
     Company. It was discovered during the pendency of this action that a former
     Secretary-Treasurer  of Newgold,  Inc.,  (prior to the Company going public
     through its merger  with  Warehouse  Auto)  signed a

                                       13
<PAGE>
     contract in 1994 which obligated the Company,  Newgold, Inc. (the "Delaware
     Corporation")  to pay $250,000 to  Christiansen,  a former developer of the
     Golden  Asset  project  which  Newgold  purchased  and is located in Helena
     Montana.  This  obligation  was  unknown to the current  principals  of the
     Company.  During the course of  litigation,  Plaintiff  moved the court for
     summary  judgment based on this signed  agreement;  this motion was granted
     and a judgment  for $250,000  was entered  against the Company.  On May 11,
     2000, the Company  satisfied this judgment  through the issuance of 350,000
     shares of Common  Stock to a  shareholder  who  subsequently  settled  this
     judgment.

     On May 7, 1997 a judgment was entered  against the Company on behalf of the
     plaintiff,  Roger Primm,  in the Second  Judicial  District,  Reno,  Washoe
     County,  Nevada.  The underlying lawsuit sought repayment of a loan made by
     the  plaintiff  to the Company;  loan  proceeds  were used for  development
     purposes at the Company's mining  properties.  On May 11, 2000, the Company
     satisfied  this judgment  through the issuance of 300,000  shares of Common
     Stock to a shareholder who subsequently settled this judgment.

     On March 11,  1998,  one of the  Company's  former  consulting  firms,  JBR
     Consultants,  instituted  a suit  against  the Company for sums due under a
     consultant  engineering  contract.  On  August  19,  1998 the court for the
     Second Judicial District,  Washoe County,  Reno, Nevada,  entered a default
     judgment  against the Company for  $28,815.  On  September  25,  1999,  the
     outstanding balance of the judgment was paid in full.

     On February 4, 2000,  a complaint  was filed  against the Company 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 the
     Company 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. The Company  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 the Company  for  reimbursement.  Should Mr. Wong seek to
     assert these judgments against the Company,  the Company cannot predict the
     outcome  of any  such  action  or the  amount  of  expenses  that  would be
     ultimately  incurred in defending any such claims. The Company is currently
     negotiating a settlement with Mr. Wong,  however there is no assurance that
     an acceptable settlement will be consummated.

     On May 18,  2004 Paul Ngoyi  filed a petition  for  involuntary  bankruptcy
     against Newgold (Case No. BK-N-0451511).  Mr. Ngoyi claims to be the holder
     of both the Christiansen and Primm judgments against Newgold and is claming
     that Newgold  cannot pay such  judgments  because it is insolvent.  Newgold
     intends to file for Summary  Judgment  alleging that Mr. Ngoyi's claims are
     invalid as the two judgments were previously  satisfied and that Newgold is
     not insolvent. A preliminary hearing on the Summary Judgment motion has not
     yet been scheduled. The Company intends to vigorously oppose

                                       14
<PAGE>
     the bankruptcy petition.

     The Company 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 the  Company's  financial  position,  results  or  operations  or
     liquidity.

NOTE 8 - SHAREHOLDERS' DEFICIT

     Common Stock
     ------------
     On February 20, 2003  warrants to purchase  200,000  shares of common stock
     were exercised at a price of $0.10 per share.  The original  exercise price
     was $1.00  however the investor and the Company  renegotiated  the exercise
     price to $0.10 per share.

     Warrants
     --------
     The Company has issued common stock  warrants to officers of the Company as
     part of certain financing transactions (see Note 6).

     The fair market value of these  warrants  issued  during the quarter  ended
     October 31, 2004 was determined to be $1,176,767  and was calculated  under
     the Black-Scholes option pricing model with the following assumptions used:

                  Expected life                                      5 years
                  Risk free interest rate                              3.30%
                  Volatility                                            349%
                  Expected dividend yield                              None

     The fair value of these  warrants is being  amortized  to interest  expense
     over one year, the original life of the loans. Total  amortization  expense
     was $122,912  and $158,249 for the three and nine months ended  October 31,
     2004,  respectively,  and $3,577  and $6,970 for the three  months and nine
     months ended October 31, 2003, respectively.

     The following table presents warrant activity from January 31, 2004 through
     October 31, 2004:

                                                                    Weighted-
                                                                    Average
                                                      Number        Exercise
                                                     of Shares        Price
                                                   -------------  -------------
      Outstanding, January 31, 2004                   3,718,229    $      0.15
        Granted                                       7,334,687    $      0.15
                                                   -------------  -------------

          Outstanding, October 31, 2004              11,052,916    $      0.15
                                                   =============  =============
           Exercisable, October 31, 2004             11,052,916    $      0.15
                                                   =============  =============


NOTE 9 - RELATED PARTY TRANSACTIONS

     Loans from officers
     -------------------
     During the nine months ended October 31, 2004, the Chief Executive  Officer
     and  Chairman of the

                                       15
<PAGE>
     Company,  loaned the Company $21,581 and was repaid $350. As of October 31,
     2004 the net  principal  balance  owing to him was  $1,423,973  and accrued
     interest payable was $417,080 (See Note 6).

     During the quarter  ended October 31, 2004 the Chief  Financial  Officer of
     the  Company  loaned the Company  $209,251.  As of October 31, 2004 the net
     principal  balance owing to him was $209,251 and accrued  interest  payable
     was $1,442 (See Note 6).

     Accrued Payroll and Expenses Owed to Officers
     ---------------------------------------------
     As of October  31, 2004 the Company  owed the Chief  Executive  Officer and
     Chairman of the Company  $88,500 for back wages. As of October 31, 2004 the
     Company  owed the Chief  Financial  Officer  and  Secretary  of the Company
     $236,667 for back wages and $19,500 for accrued expenses.

NOTE 10 - SUBSEQUENT EVENTS

     In October 2004, the Company re-staked the Relief Canyon mill site and lode
     claims,  which now include a total of 78 claims.  On December  16, 2004 the
     Company paid a total of $15,600 to the Pershing County Recorders Office and
     the Bureau of Land Management which amount represents the annual payment to
     maintain these claims.




































                                       16
<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 the Company "expects," "anticipates" or "believes" are
forward-looking  statements.  Investors  should be aware that actual results may
differ materially from the Company's expressed expectations because of risks and
uncertainties  about the future.  The Company  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 the Company'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 the  Company's  financial  and operating
results in the past will  affect its 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 Company  control at the Relief Canyon Mine
         are estimated by the Company (based on past  exploration by the Company
         and work done by others).

         In October 2004,  the Company  re-staked  the Relief Canyon  properties
         which now includes 57 mill site and 21 lode claims. These 78 claims are
         unpatented mining claims contained in about 1,000 acres.

         The  Company's  operating  plan is to  place  its  mining  claims  into
         profitable  production  by the end of  calendar  2005,  and use the net
         proceeds  from  these  operations  to  fund  ongoing   exploration  and
         development  of  its  property  holdings.  Through  the  use  of  joint
         ventures,   royalties  and   partnerships,   the  Company   intends  to
         progressively  enlarge the scope and scale of the mining and processing
         operations,  thereby  increasing both the Company's annual revenues and
         its net profits. The Company's objective is to achieve quarterly growth
         rates in revenue and net profits for the foreseeable future;

     o   The Company expects to make capital expenditures in fiscal year 2006 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 the
         Company's exploration growth strategy, it expects exploration, research
         and development expenditures in 2005 will total between $500,000 and $1
         million.










                                       17
<PAGE>
     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 the Company has been dependent on the
         funding from the private  placement of its  securities as well as loans
         from  related  parties  as the  sole  sources  of  capital  to fund its
         operations.

RESULTS OF OPERATIONS

The Company has only  recently  resumed  business  operations  after having been
inactive from July 2001 until February 2003.  Consequently,  comparisons between
the operating  results of the Company for the fiscal years 2004 and 2005 are not
as  relevant  as they  otherwise  would be if the  Company  had been  engaged in
business  operations during both fiscal years. In addition,  because the Company
is in the process of  reinstituting  its  business  and mining  operations,  the
results  of  operations  for the  last  two  fiscal  years  will  likely  not be
indicative  of  the  Company's  current  and  future  operations.   The  current
management  discussion  and  analysis  should  be read from the  context  of the
Company's recent resumption of its mining business.

Operating Results for the Fiscal Quarters Ended October 31, 2004 and 2003
-------------------------------------------------------------------------

Although the Company 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 quarter  ended  October 31,  2004.  The Company was
inactive  during the quarter ended October 31, 2003 and, as a result,  generated
no revenues from operations. The Company hopes to be able to commence generating
revenues  from mining  operations  during the 2006 fiscal year.  The Company has
granted  a 4% net  smelting  return  royalty  to a third  party  which  has been
recorded as an $800,000 deferred option income.

During  the  quarter  ended  October  31,  2004  the  Company  spent  $5,000  on
exploration  expenses  related to the Relief Canyon mining property  compared to
$9,430 on exploration  expenses  expended  during the same quarter ended October
31, 2003. These expenses relate primarily to estimated maintenance and retention
costs  required to maintain the Company's  mining claims.  The Company  incurred
operating expenses of $78,561 during the quarter ended October 31, 2004. Of this
amount,  $55,000 reflects officer  compensation and related payroll taxes during
the quarter,  $8,440 reflect  payroll tax penalties and $13,500 reflect fees for
outside  professional  services.  During the same quarter ended October 31, 2003
the Company incurred  operating  expenses of $89,283 of which $55,000 represents
officer  compensation,  $8,065  reflecting  payroll  tax  penalties  and $19,217
reflect fees for outside  professional  services.  It is  anticipated  that both
exploration  costs and operating  expenses will  increase  significantly  as the
Company resumes its mining operations and exploration program.

The  Company  incurred  interest  expense of $157,011  during the quarter  ended
October 31, 2004 which compares to interest  expenses of $31,982 incurred during
the same quarter  ended October 31, 2003.  The increase in  additional  interest
expense was a direct result of the increase in accretion of warrants issued as a
debt discount which  increased by $122,912 in the quarter ended October 31, 2004
compared to the quarter ended October 31, 2003.






                                       18
<PAGE>
In October 2004, the Company 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 2004.

The Company's total net loss for the quarter ended October 31, 2004 increased to
$521,635  compared to a net loss of $130,695 incurred for the same quarter ended
October 31, 2003.  The larger net loss in the current  fiscal year  reflects the
increase  in  interest  expense  as  well as the  loss  on  sale  of  marketable
securities.

Operating Results for the Nine Months Ended October 31, 2004 and 2003
---------------------------------------------------------------------

During the nine months  ended  October 31,  2004 the  Company  spent  $15,000 on
exploration expenses related to the Relief Canyon mining property. This compares
to exploration expenses of $10,930 expended during the same period ended October
31, 2003. These expenses relate primarily to estimated maintenance and retention
costs  required to maintain the Company's  mining claims.  The Company  incurred
operating expenses of $231,343 during the nine months ended October 31, 2004. Of
this amount,  $165,000  reflects officer  compensation and related payroll taxes
during the period,  $24,945  reflect  payroll tax penalties and $36,632  reflect
fees for outside professional services. During the same period ended October 31,
2003 the Company  incurred  operating  expenses  of  $232,566 of which  $165,000
represents officer compensation and $24,194 reflecting payroll tax penalties. It
is anticipated that both exploration costs and operating  expenses will increase
significantly  as the Company  resumes  its mining  operations  and  exploration
program.

The Company  incurred  interest expense of $256,417 during the nine months ended
October 31, 2004 which compares to interest  expenses of $91,428 incurred during
the same period ended October 31, 2003. Although the amount of loans outstanding
during the first nine months of fiscal 2005 increased slightly,  the increase in
additional  interest expense was a direct result of the increase in accretion of
warrants issued as a debt discount.

The  Company's  total  net loss for the  nine  months  ended  October  31,  2004
increased to $783,823  compared to a net loss of $324,861  incurred for the same
period ended  October 31, 2003.  The larger net loss in the current  fiscal year
reflects the substantial  increase in operating expenses and interest expense as
well as a continuing lack of revenues recognized during the first nine months of
fiscal year 2005.

LIQUIDITY AND CAPITAL RESOURCES

The Company has incurred significant operating losses during the last two fiscal
years and during the quarter  ended  October  31, 2004 which has  resulted in an
accumulated  deficit of $15,890,986 as of the end of the third quarter of fiscal
year 2005. At October 31, 2004, the Company had cash of $5,424 and a net working
capital deficit of $3,424,082.  Since the resumption of its business in February
2003,  the Company has been  dependent on borrowed or invested funds in order to
finance  its  ongoing  operations.  As of October  31,  2004,  the  Company  had
$1,856,762 of outstanding  notes payable  (before  unamortized  debt discount of
$1,193,120)




                                       19
<PAGE>
which  reflects an  increase  compared to notes  payable of  $1,626,280  (before
unamortized debt discount of $44,560) outstanding as of January 31, 2004.

In  October  2004,  the  Company  consolidated  the  amounts  owed to the  Chief
Executive  Officer  and the Chief  Financial  Officer  as of  January  31,  2004
(excluding  accrued interest payable) into new convertible notes payable bearing
interest at 8% and due September 30, 2005. The notes and any interest accrued on
the new notes are convertible  into common shares of the Company at a conversion
price of $0.15 per share.  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.

During the quarter  ended  October 31, 2004 the Company  borrowed an  additional
$3,081 from its President and Chief Executive  Officer at an interest rate of 8%
per  year.  This  amount  increased  the  Company's  total  indebtedness  to its
President to $1,423,973.  Notes  representing  principal and interest due to the
President  as well as notes  payable  to five  other  individuals  have one year
terms. As of October 31, 2004,  $176,500 of loans due to other  individuals were
in default.

The Company received  approximately $34,100 during the quarter ended October 31,
2004 from the sale of its marketable securities.

By   attempting  to  resume   mining   operations,   the  Company  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
the  Company's  intention  to  pursue  several  possible  funding  opportunities
including the sale of additional securities or the incurring of additional debt.


Due to the  Company's  continuing  losses  from  its  business  operations,  the
independent  auditor's report dated November 7, 2004, includes a "going concern"
explanation  relating to the fact that the Company's  continuation  is dependent
upon  obtaining   additional   working  capital  either  through   significantly
increasing  revenues  or through  outside  financing.  As of October  31,  2004,
Newgold's  principal   commitments   included  its  obligation  to  pay  ongoing
maintenance fees on its 78 unpatented mining claims.

Due to the Company's limited cash flow,  operating losses and limited assets, it
is unlikely  that the Company  could  obtain  financing  through  commercial  or
banking  sources.  Consequently,  the Company is  dependent on  continuous  cash
infusions from its major  stockholders or other outside sources in order to fund
its current  operations.  If these investors were unwilling or unable to provide
necessary working capital to the Company, the Company would probably not be able
to  commence  or  sustain  its  operations.  There is no  written  agreement  or
contractual  obligation  which would  require the  Company's  investors  to fund
Company  operations  up to a certain  amount or indeed  continue  to finance the
Company's operations at all.

Management of the Company believes that it will need to raise additional capital
to  continue  to  develop,  promote  and  conduct  its mining  operations.  Such
additional  capital may be raised through public or private financing as well as
borrowing  from  other  sources.  To  date,  the  Company's  President  has paid
substantially  all of the Company's  expenses  since  restarting its





                                       20
<PAGE>
business in February 2003.  Although the Company  believes that these  creditors
and  investors  will continue to fund the  Company's  expenses  based upon their
significant debt or equity interest in Newgold,  there is no assurance that such
investors will continue to pay the Company's expenses. If adequate funds are not
otherwise  available,  the  Company  would not be able to  establish  or sustain
mining operations.

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

During the fiscal  quarter ended October 31, 2004, the Company 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

The Company has been relatively inactive since April 2001.  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.  The Company's  prospects  must be considered in light of the risks
and  difficulties  encountered by new companies  which have not yet  established
their business operations.

The Company  will need  additional  funds to finance its mining and  exploration
activities  as well as fund its current  operations.  It  currently  has no 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 the  Company's  independent  auditors  includes  a "going
concern"  qualification.   In  the  auditor's  opinion,  the  Company's  limited
operating  history and the accumulated net deficit as of January 31, 2004, raise
substantial  doubt about its ability to continue as a going concern.  See Note 2
to the Unaudited Financial Statements.

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 the Company's  operations unless the Company is able to
offset such a price drop by substantially increased production.

The  Company  prepares  estimates  of future  gold  production  for its  various
operations.  The  Company's  production  estimates are dependent on, among other
things, the accuracy of mineral reserve  estimates,  the accuracy of assumptions
regarding  ore grades  and  recovery  rates,  assumptions  pertaining  to ground
conditions  and  physical  characteristics  of ores,  such as  hardness  and the
presence or absence of particular metallurgical characteristics and the accuracy
of  estimated  rates and costs of mining  and  processing.  The  failure  of the
Company to achieve its  production  estimates  could have a material and adverse
effect on any or all of the Company's




                                       21
<PAGE>
future cash flows, profitability, results of operations and financial condition.

The Company's  published figures for mineral  resources are only estimates.  The
Company  has no proven or  probable  reserves  and has no ability  to  currently
measure or prove its reserves other then relying on information  produced in the
1990's  and  thus  may be  unable  to  actually  recover  the  quantity  of gold
anticipated.  The Company can only estimate potential mineral resources 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 the Company'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 the  Company's  exploration  programs  will result in the  discovery of new
mineral reserves or resources.

The Company's mining property rights consist of 78 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,  the Company may not be able to retain its royalty interests on that
property, which could reduce its future revenues.

Mining is  generally  subject  to  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.  The Company  believes that, it is
currently  operating  in  compliance  with all known  safety  and  environmental
standards and regulations applicable to its Nevada property.  However, there can
be no assurance that its  compliance  could be challenged or that future changes
in federal or Nevada laws, regulations or interpretations  thereof will not have
a material adverse affect on the Company'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,  the Company carried  insurance against certain property damage loss
(including business interruption) and comprehensive general liability insurance.
While the Company 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. The Company has not obtained  environmental  liability  insurance  because
such coverage is not considered by management to be cost effective.  The Company
currently  carries no  insurance  on any of its  properties  due to the  current
status of the mine and the Company's current financial condition.







                                       22
<PAGE>
The Company is substantially  dependent upon the continued  services of A. Scott
Dockter,  its  President.  The  Company  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 the Company,  there can be no assurance  that Mr.  Dockter's  services
will  remain  available  to the  Company.  If Mr.  Dockter's  services  are  not
available to the Company, the Company will be materially and adversely affected.
However, Mr. Dockter has been a significant shareholder of the Company since its
inception  and  considers  his  investment  of time and money in the  Company 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  require managers 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. The Company 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 consolidated 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 the Company'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 the Company  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







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<PAGE>
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 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 the
Company's  interpretation of current environmental and regulatory  requirements,
are accrued and expensed, upon determination.




                                       24
<PAGE>
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 the Company's best
estimates of its ultimate  reclamation  liabilities  could change as a result of
changes in regulations or cost estimates.

ITEM 3.  CONTROLS AND PROCEDURES

The  Company  carried  out an  evaluation,  under the  supervision  and with the
participation of the Company's management, including the Company's President and
Chief Executive Officer along with the Company's Chief Financial Officer, of the
effectiveness of the design and operation of the Company'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,  the Company's President and
Chief  Executive  Officer  along  with the  Company's  Chief  Financial  Officer
concluded that the Company's disclosure controls and procedures are effective to
ensure the information  required to be disclosed by the Company 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 the Company'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 the Company's internal controls over financial reporting.


































                                       25
<PAGE>
                           PART II - OTHER INFORMATION

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

SALES OF UNREGISTERED SECURITIES DURING THE QUARTER

In October 2004, the Company borrowed $3,081 from its President,  Scott Dockter.
The promissory  note is not  convertible  into stock,  is due on in one year and
bears interest at 8% per year. In conjunction  with this loan, the President was
issued warrants to purchase 20,540 shares of the Company's common stock of $0.15
per share. In addition,  new convertible  promissory  notes were issued to Scott
Dockter,  the Company's CEO and James Kluber, the Company's CFO in the principal
amounts of $1,402,742 and $209,251,  respectively. The notes bear interest at 8%
per annum and are due September  30, 2005.  In  connection  with the issuance of
these notes,  the Company  issued  warrants to purchase  5,798,140 and 1,395,007
shares  of common  stock to its  Chief  Executive  Officer  and Chief  Financial
Officer,  respectively.  The  issuance  of the notes and  warrants  were made in
reliance upon the exemption from  registration  set forth in Section 4(2) of the
1933  Act as a  transaction  not  involving  a public  offering  and made to two
affiliates of the Company.  The notes and warrants are deemed to be  "restricted
securities"  as defined in Rule 144 under the  Securities Act of 1933 (the "1933
Act").

Prior issuances of the Company's  common stock during fiscal years 2003 and 2004
have been reported in the  Company's  Form 10-KSB for the year ended January 31,
2004.

ITEM 5. OTHER INFORMATION

In October 2004, the Company  re-staked the Relief Canyon  properties  which now
includes 57 mill site and 21 lode claims.  These 78 claims are unpatented mining
claims  contained in about 1,000  acres.  The annual  payment to maintain  these
claims is $15,600.  The Company paid a total of $15,600 to the  Pershing  County
Recorders Office and Bureau of Land Management on December 16, 2004.

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














                                       26
<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:  December 29, 2004           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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