**Back
            to Table of Contents**





As
      filed
      with the Securities and Exchange Commission on May 19, 2006




**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**







**FORM 10-KSB**


**(Mark
      one)**


**ý**
            **ANNUAL
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE****ACT
                OF 1934.****For
                the fiscal year ended December 31, 2005****OR****o**
            **TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                EXCHANGE ACT OF 1934.****For
                the transition period from ____________
                to____________**




**Commission
      File No: 000-46494**









**KEY
      GOLD CORPORATION**


(Exact
      Name of Small Business Issuer in its Charter)




**Nevada**
              (State
                or Other Jurisdiction
              of
                Incorporation or Organization)
            **98-0372619**
              (I.R.S.
                Employer
              Identification
                No.)





**1942
                Broadway**
              **Suite 216**
              **Boulder,
                Colorado**
              (Address
                and telephone number of Principal Executive Offices)
            **80302**
              (Zip
                Code)




**(303)
      323-1927**


(Issuer’s
      Telephone Number, Including Area Code)







Check
      whether the issuer (1) filed all reports required to be filed by
      Section 13 or 15(d) of the Exchanged Act during the past 12 months (or
      for such shorter period that the registrant was required to file such reports),
      and (2) has been subject to such filing requirements for the past 90
      days.  Yes ý No o




Check
      if
      disclosure of delinquent filers in response to Item 405 of Regulation S-B is
      not
      contained in this form, and no disclosure will be contained, to the best of
      the
      registrant’s knowledge, in definitive proxy or information statements
      incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this Form 10-KSB. ý




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes ༃ No ý





State
                issuer’s revenues for its most recent fiscal year:
            
            $
            0State
                the aggregate market value of the voting and non-voting common equity
                held
                by non-affiliates computed by reference to the price at which the
                common
                equity was sold, or the average bid and asked price of such common
                equity,
                as of May 5, 2006
            
            $
            4,495,740Number
                of shares of Common Stock ($0.01 par value) outstanding as of the
                close of
                business on May 5, 2006:
            
            
            41,870,370





Transitional
                Small Business Disclosure Format
            
            Yeso
            
            Noý









**Back
        to Table of Contents**


**KEY
      GOLD CORPORATION**





**TABLE
      OF CONTENTS**





**Page**PART I
            3Item
                1.
            Description
                of Business
            3Item
                2.
            Description
                of Property
            9Item
                3.
            Legal
                Proceedings
            10Item
                4.
            Submission
                of Matters to a Vote of Security
                Holders
            10PART II
            10Item
                5.
            Market
                for Common Equity and Related Stockholder
                Matters
            10Item
                6.
            Management’s
                Discussion and Analysis or Plan of
                Operation
            10Item
                7.
            Financial
                Statements
            13Item
                8.
            Changes
                In and Disagreements With Accountants on Accounting
                and Financial Disclosure
            13Item
                8A.
            Controls
                and Procedures
            13Item
                8B
            Other
                Information
            14PART III
            14Item
                9.
            Directors,
                Executive Officers, Promoters and Control
                Persons, Compliance With Section 16(a) of the Exchange
                Act
            14Item
                10.
            Executive
                Compensation
            15Item
                11.
            Security
                Ownership of Certain Beneficial Owners and
                Management and Related Stockholder Matters
            15Item
                12.
            Certain
                Relationships and Related
                Transactions
            16Item
                13.
            Exhibits
            16Item
                14.
            Principal
                Accountant Fees and Services
            17






-2-
 **Back
          to Table of Contents**


**PART
      I**





**Item
              1.**
            **Description
                of Business**





**Business
      Overview**





DDI
      International Inc. was incorporated in March 2002 in the state of Nevada. Its
      initial business plan was to develop a dental portal that was to provide
      assistance and information to dentists, consumers, and industry providers in
      the
      dental industry.





On
      May
      17, 2004, DDI International Inc. changed its name to Key Gold Corporation (the
      “Company”). In connection with the name change, our Chairman, Chief Executive
      Officer, and majority shareholder resigned and a new sole director and
      management were appointed. We adopted a new business plan to pursue funding
      for
      geological mapping of a specified region in China with the ultimate intent
      to
      participate in the exploring and mining for precious and non-precious metals
      and
      other mineral resources in that region. In 2005, we expanded our efforts into
      Mongolia, taking advantage of our knowledge of geological occurrences in various
      mining and prospecting areas in the country.




During
      the early part of 2005, the Company worked on a reconnaissance program to
      confirm work previously done by the Company’s joint venture partner with respect
      to its exploration projects in Mongolia, which joint venture partner holds
      key
      mineral licenses. The Company decided to commence a shallow drill program on
      the
      first of the targets identified by the reconnaissance program. During the period
      between May 28, 2005 and June 8, 2005, the Company completed a six-hole, 430
      meter reverse circulation (“RC”) drilling program at the Uhaa Hudag gold
      prospect located in the south Gobi Desert of south-central Mongolia. All of
      the
      six RC holes, numbered UH05-01 to UH05-06, were inclined to the north at -45o
and drilled to depths ranging from 54 to 100 meters. The objective of the
      program was to test for near-surface, bulk mineable, oxide gold mineralization
      by undercutting a series of trenches where assay results for channel sampling
      proved encouraging, with widths of up to 79 meters grading 1.96 grams per tonne
      of gold. Although two previous rounds of drilling were completed on the property
      by the joint venture partner in 1997 and in 2003, these programs did not
      adequately test the mineralizing system due to either poor drill core recovery
      techniques or the inconsistencies in the mineralization.




In
      August
      of 2005, the Company sent two geologists to conduct further reconnaissance
      work
      in the northeastern part of Mongolia exploring the Tsaigan and Hu Chuluu
      concessions controlled by a private Canadian company. Based on the initial
      results of the reconnaissance work, the Company and the private company agreed
      in principal the basic terms of an earn-in joint venture relationship. These
      terms were never finalized as the Company was waiting for clarification from
      the
      Mongolian government on its proposed mineral tax legislation.




On
      May
      12, 2006, the parliament of Mongolia passed new legislation levying tax on
      windfall profit resulting from mineral exploration in the country. Although
      no
      formal text of the new bill had been released as of the date of the filing
      of
      this Annual Report on Form 10-KSB, the reports from sources in the country
      and
      other media indicate that the Mongolian government would impose a tax beginning
      at the rate of 68% when copper prices reach $2,600 per metric tonne and when
      gold prices reach $500 per ounce. Based on the information available regarding
      this new legislation, the Company is exploring other opportunities in the
      resource sector.




Late
      in
      December 2005, the Company visited the far eastern parts of China to assess
      mineral opportunities in the region. Although the area is rich with minerals,
      the Company determined that there was too much risk to invest in exploration
      of
      the region because of the unstable political climate and the limited resources
      then available to the Company.




Subsequent
      to the fiscal year ended 2005, the Company notified its joint venture partner
      with respect to the simpler Gold project, PRC, JHP Resources Limited, that
      it
      will not proceed with further exploration on the joint venture’s concession.
      There are no further expenditures required by the Company and no shares have
      been issued to JHP Resources Limited.




**Our
      Business Focus**




The
      key
      to our strategy is to explore for mining projects that have the potential to
      host large bulk mineable gold-bearing deposits in areas that have had limited
      exploration work over the past decade due to historically depressed commodity
      prices. With the recent increase in the price of gold and most other commodities
      in the natural resource sector, the Company plans to look for more opportunities
      in the resource industry.




-3-
 **Back
          to Table of Contents**




**Competition**





The
      Company competes with other mining companies in connection with the acquisition
      of prospective properties and joint venture projects. There is a high degree
      of
      competition for the limited number of opportunities, particularly with other
      companies that have substantially greater financial resources than the Company.
      As a result, the Company may have difficulty acquiring attractive projects
      at
      reasonable prices.





The
      Company believes no single company has sufficient market power to affect the
      price or supply of gold or other minerals or natural resource commodities for
      which it plans to explore in the world market.





**Research
      and Development**





We
      expect
      our growth objectives will be achieved through evaluating prospects and
      deploying modern exploration techniques that have not been used on such
      prospects in the regions of the world in which we are exploring.





**Intellectual
      Property**





We
      have
      no patents, trademarks, licenses, franchises, concessions, or royalty
      agreements.





**Effect
      of Foreign Government Regulations**





Mining
      operations and exploration activities are subject to various national, state,
      provincial and local laws and regulations in China and Mongolia as well as
      other
      jurisdictions, which govern prospecting, development, mining, production,
      exports, taxes, labor standards, occupational health, waste disposal, protection
      of the environment, mine safety, hazardous substances and other matters. The
      Company has pending applications for those licenses, permits and other
      authorizations currently required to conduct its explorations in China (through
      its joint venture company). In China, joint venture agreements, business
      licenses for joint venture companies, and the acquisition and transfer of
      exploration and mining permits are all acquired subject to government approval.
      Such approval may involve many levels of government (i.e. Federal, Provincial,
      County and/or City approval), and the Company cannot guarantee that all such
      approvals will be successfully obtained even where a joint venture has been
      successfully established. Moreover, even where joint venture agreements obtain
      government approval and business licenses are issued, there can be no guarantee
      that the transfer and/or acquisition of exploration and/or mining permits will
      be approved, nor can the Company guarantee that such approvals will be obtained
      from all levels of government required for such approval.





On
      May
      12, 2006, the parliament of Mongolia passed new legislation levying tax on
      windfall profit resulting from minerals in the country. Although no formal
      text
      of the new bill had been released as of the date of the filing of this Annual
      Report on Form 10-KSB, the reports from sources in the country and other media
      indicate that the Mongolian government would impose a tax beginning at the
      rate
      of 68% when copper prices reach $2,600 per metric ton and when gold prices
      reach
      $500 per ounce. Based on the information available regarding this new
      legislation, the Company is exploring other opportunities in the resource
      sector.





**Environmental
      Regulation**





The
      Company's exploration projects are subject to various federal, state, and local
      laws and regulations governing protection of the environment, both in China
      and
      Mongolia. These laws are continually changing and, as a general matter, are
      becoming more restrictive. The Company's policy is to conduct business in a
      way
      that safeguards public health and the environment. The Company believes that
      its
      operations are conducted in material compliance with applicable laws and
      regulations. Changes to current local, state, or federal laws and regulations
      in
      the jurisdictions where the Company operates or may operate in the future could
      require additional capital expenditures and increased operating costs. Although
      the Company is unable to predict what additional legislation, if any, might
      be
      proposed or enacted, additional regulatory requirements could impact the
      economics of its projects.





In
      the
      proceeding year, there were no material environmental incidents or
      non-compliance with any applicable environmental regulations. The Company
      estimates that it will not incur material capital expenditures for environmental
      control facilities during the current fiscal year.




-4-
 **Back
          to Table of Contents**





**Employees**





As
      of
      March 31, 2006, the Company had no full-time employees. The Company obtains
      the services of John Anderson, its Chief Executive Officer, on a consultancy
      basis through its agreement with Axiom Consulting Corp., a Canadian corporation
      (“Axiom”). John Anderson, who serves as our Chief Executive Officer and as our
      sole director, is also a director, officer, and sole shareholder of Axiom.
      (See
      Item 10—Executive Compensation and Item 12—Certain Relationships and Related
      Transactions.) The Company obtains additional administrative and engineering
      services on a consultancy basis, including a secretarial assistant who currently
      assists with the day-to-day business operations of the Company.





**RISK
      FACTORS**





*Ownership
      of our common stock involves a high degree of risk, you should consider
      carefully the factors set forth below, as well as other information contained
      in
      this annual report.*





**Risks
      Related to Our Business and Our Marketplace**




***A
      Substantial or Extended Decline in Gold Prices Would Have a Material Adverse
      Effect on the Company***




Our
      business is dependent on the price of gold, which is affected by numerous
      factors beyond our control. Factors tending to put downward pressure on the
      price of gold include:




•
            
            Sales
                or leasing of gold by governments and central banks;




•
            
            A
                strong U.S. dollar;




•
            
            Global
                and regional recession or reduced economic activity;




•
            
            Speculative
                trading;




•
            
            Decreased
                demand for industrial uses, use in jewelry or investment;




•
            
            High
                supply from production, disinvestment and scrap;




•
            
            Sales
                by producers in forward transactions and other hedging transactions;
                and




•
            
            Devaluing
                local currencies (relative to gold priced in U.S. dollars) leading
                to
                lower production costs and higher production in certain regions.




Any
      drop
      in the price of gold adversely impacts our revenues, profits and cash flows.




In
      addition, a sustained low gold price can:




•
            
            Reduce
                revenues further through production cutbacks due to cessation of
                the
                mining of deposits or portions of deposits that have become uneconomic
                at
                the then-prevailing gold price;




•
            
            Halt
                or delay the development of new projects;




•
            
            Reduce
                funds available for exploration, with the result that depleted reserves
                are not replaced; and/or




•
            
            Reduce
                existing reserves, by removing ores from reserves that cannot be
                economically mined or treated at prevailing prices.




***Gold
      Producers Must Continually Obtain Additional Reserves***




Gold
      producers must continually replace reserves depleted by production. Depleted
      reserves must be replaced by expanding known ore bodies or by locating new
      deposits in order for producers to maintain production levels over the long
      term. Exploration is highly speculative in nature, involves many risks and
      frequently is unproductive. No assurances can be given that any of our new
      or
      ongoing exploration programs will result in new mineral producing operations.
      Once mineralization is discovered, it may take many years from the initial
      phases of drilling until production is possible, during which time the economic
      feasibility of production may change.




-5-
 **Back
          to Table of Contents**




***Estimates
      of Proven and Probable Reserves Are Uncertain***




Estimates
      of proven and probable reserves are subject to considerable uncertainty. Such
      estimates are, to a large extent, based on interpretations of geologic data
      obtained from drill holes and other sampling techniques. Producers use
      feasibility studies to derive estimates of operating costs based upon
      anticipated tonnage and grades of ore to be mined and processed, the predicted
      configuration of the ore body, expected recovery rates of metals from the ore,
      comparable facility, equipment, operating costs, and other factors. Actual
      operating costs and economic returns on projects may differ significantly from
      original estimates. Further, it may take many years from the initial phase
      of
      drilling before production is possible and, during that time, the economic
      feasibility of exploiting a discovery may change.




***Increased
      Costs Could Affect Profitability***




Costs
      at
      any particular mining location frequently are subject to variation from one
      year
      to the next due to a number of factors, such as changing ore grade, metallurgy
      and revisions to mine plans in response to the physical shape and location
      of
      the ore body. In addition, costs are affected by the price of commodities such
      as fuel and electricity. Such commodities are at times subject to volatile
      price
      movements, including increases that could make production at certain operations
      less profitable. A material increase in costs at any significant location could
      have a significant effect on our profitability.




***Mining
      Accidents or Other Adverse Events at a Mining Location Could Reduce Our
      Production Levels***




At
      any of
      our operations, production may fall below historic or estimated levels as a
      result of mining accidents such as a pit wall failure in an open pit mine,
      or
      cave-ins or flooding at underground mines. In addition, production may be
      unexpectedly reduced at a location if, during the course of mining, unfavorable
      ground conditions or seismic activity are encountered; ore grades are lower
      than
      expected; the physical or metallurgical characteristics of the ore are less
      amenable to mining or treatment than expected; or our equipment, processes
      or
      facilities fail to operate properly or as expected.




***Mining
      Companies Are Subject to Extensive Environmental Laws and Regulations***




Our
      exploration, mining and processing operations are regulated in all countries
      in
      which we operate under various federal, state, provincial and local laws
      relating to the protection of the environment, which generally include air
      and
      water quality, hazardous waste management and reclamation. Delays in obtaining
      or failure to obtain government permits and approvals may adversely impact
      our
      operations. The regulatory environment in which we operate could change in
      ways
      that would substantially increase costs to achieve compliance, or otherwise
      could have a material adverse effect on our operations or financial position.





***Our
      Operations Are Subject to Risks of Doing Business Abroad***





Exploration,
      development and production activities outside of North America are potentially
      subject to political and economic risks, including:




•
            
            Cancellation
                or renegotiation of contracts;




•
            
            Disadvantages
                of competing against companies from countries that are not subject
                to U.S.
                laws and regulations, including the Foreign Corrupt Practices Act;




•
            
            Changes
                in foreign laws or regulations;




•
            
            Royalty
                and tax increases or claims by governmental entities, including
                retroactive claims;




•
            
            Expropriation
                or nationalization of property;




•
            
            Currency
                fluctuations (particularly in countries with high inflation);




•
            
            Foreign
                exchange controls;




•
            
            Restrictions
                on the ability of local operating companies to sell gold offshore
                for U.S.
                dollars, or on the ability of such companies to hold U.S. dollars
                or other
                foreign currencies in offshore bank accounts;




•
            
            Import
                and export regulations, including restrictions on the export of gold;




•
            
            Restrictions
                on the ability to pay dividends offshore;




•
            
            Risk
                of loss due to civil strife, acts of war, guerrilla activities,
                insurrection and terrorism;




•
            
            Risk
                of loss due to disease and other potential endemic health issues;
                and




•
            
            Other
                risks arising out of foreign sovereignty over the areas in which
                our
                operations are conducted.






-6-
 **Back
          to Table of Contents**




Consequently,
      our exploration, development and production activities may be substantially
      affected by factors beyond our control, any of which could materially adversely
      affect our financial position or results of operations. Furthermore, in the
      event of a dispute arising from such activities, we may be subject to the
      exclusive jurisdiction of courts outside North America, which could adversely
      affect the outcome of a dispute.




***Currency
      Fluctuations May Affect Costs***





Currency
      fluctuations may affect the costs that we incur at our operations. Gold is
      sold
      throughout the world based principally on the U.S. dollar price, but a portion
      of our operating expenses are incurred in local currencies. The appreciation
      of
      non-U.S. dollar currencies against the U.S. dollar can increase the costs of
      gold production in U.S. dollar terms at mines located outside the United States,
      making such mines less profitable.




***Our
      Earnings Could Be Affected by the Prices of Other Commodities***




Our
      earnings also could be affected by the prices of other commodities such as
      fuel
      and other consumable items, although to a lesser extent than by the price of
      gold. The prices of these commodities are affected by numerous factors beyond
      our control.




***We
      Compete with Other Mining Companies***





We
      compete with other mining companies to attract and retain key executives and
      other employees with technical skills and experience in the mining industry.
      We
      also compete with other mining companies for rights to mine properties
      containing gold and other minerals. There can be no assurance that we will
      continue to attract and retain skilled and experienced employees, or to acquire
      additional rights to mine properties.





***The
      Company’s Limited Operating History Makes It Difficult to Judge Its
      Prospects***





The
      Company has a limited operating history upon which an evaluation of the Company,
      its current business and its prospects can be based. Investors should consider
      any purchase of the Company's shares in light of the risks, expenses, and
      problems frequently encountered by all companies in the early stages of its
      corporate development.





***Future
      Sales of Shares May Adversely Impact the Value of the Company’s
      Stock***





If
      required, the Company may seek to raise additional capital through the sale
      of
      common stock. Future sales of shares by the Company or its stockholders could
      cause the market price of its common stock to decline.





***Mineral
      Exploration and Development Activities Are Speculative in
      Nature***





Resource
      exploration and development is a speculative business, characterized by a number
      of significant risks including, among other things, unprofitable efforts
      resulting not only from the failure to discover mineral deposits but from
      finding mineral deposits which, though present, are insufficient in quantity
      and
      quality to return a profit from production. The marketability of minerals
      acquired or discovered by the Company may be affected by numerous factors which
      are beyond the control of the Company and which cannot be accurately predicted,
      such as market fluctuations, the proximity and capacity of milling facilities,
      mineral markets and processing equipment and such other factors as government
      regulations, including regulations relating to royalties, allowable production,
      importing and exporting of minerals and environmental protection, the
      combination of which factors may result in the Company not receiving an adequate
      return of investment capital.





Substantial
      expenditures are required to establish ore reserves through drilling, to develop
      metallurgical processes to extract the metal from the ore and, in the case
      of
      new properties, to develop the mining and processing facilities and
      infrastructure at any site chosen for mining. Although substantial benefits
      may
      be derived from the discovery of a major mineralized deposit, no assurance
      can
      be given that minerals will be discovered in sufficient quantities and grades
      to
      justify commercial operations or that funds required for development can be
      obtained on a timely basis. Estimates of reserves, mineral deposits and
      production costs can also be affected by such factors as environmental
      permitting regulations and requirements, weather, environmental factors,
      unforeseen technical difficulties, unusual or unexpected geological formations
      and work interruptions. In addition, the grade of ore ultimately mined may
      differ from that indicated by drilling results. Short term factors relating
      to
      reserves, such as the need for orderly development of ore bodies or the
      processing of new or different grades, may also have an adverse effect on mining
      operations and on the results of operations. Material changes in ore reserves,
      grades, stripping ratios or recovery rates may affect the economic viability
      of
      any project.




-7-
 **Back
          to Table of Contents**





***The
      Company Will Be Subject to Operating Hazards and Risks Which May Adversely
      Affect the Company’s Financial Condition***





Mineral
      exploration involves many risks, which even a combination of experience,
      knowledge and careful evaluation may not be able to overcome. The Company's
      operations will be subject to all the hazards and risks normally incidental
      to
      exploration, development, and production of metals, such as unusual or
      unexpected formations, cave-ins or pollution, all of which could result in
      work
      stoppages, damage to property and possible environmental damage. The Company
      does not have general liability insurance covering its operations and does
      not
      presently intend to obtain liability insurance as to such hazards and
      liabilities. Payment of any liabilities as a result could have a materially
      adverse effect upon the Company's financial condition





***The
      Company Currently Relies on Certain Key Individuals and the Loss of One of
      These
      Certain Individuals Could Have an Adverse Effect on the
      Company***





The
      Company's success depends to a certain degree upon certain key members of the
      management. These individuals are a significant fact in the Company's growth
      and
      success. The loss of the service of members of the management and certain key
      employees could have a material adverse effect on the Company. In particular,
      the success of the Company is highly dependant upon the efforts of the
      President, Treasurer, Secretary, CEO and director of the Company, John Anderson,
      and the loss of whose services would have a material adverse effect on the
      success and development of the Company.





***The
      Company Does Not Maintain Key Man Insurance to Compensate the Company for the
      Loss of Certain Individuals***




The
      Company does not anticipate having key man insurance in place in respect of
      any
      of its senior officers or personnel.





***We
      Are an Exploration Company, and There is No Assurance That a Commercially Viable
      Deposit or Reserve Exists on Any of the Properties for Which the Company Has
      ,
      or Might Obtain an Interest*** .





The
      Company is an exploration stage company and cannot give assurance that a
      commercially viable deposit, or "reserve," exists on any properties for which
      the Company currently has (through a joint venture agreement) or may have
      (through potential future joint venture agreements or acquisitions) an interest.
      Therefore, determination of the existence of a reserve depends on appropriate
      and sufficient exploration work and the evaluation of legal, economic, and
      environmental factors. If the Company fails to find a commercially viable
      deposit on any of its properties, its financial condition and results of
      operations will be materially adversely affected.





***We
      Require Substantial Funds Merely to Determine Whether Commercial Mineral
      Deposits Exist on Our Properties***





Any
      potential development and production of the Company's exploration properties
      depends upon the results of exploration programs and/or feasibility studies
      and
      the recommendations of duly qualified engineers and geologists. Such programs
      require substantial additional funds. Any decision to further expand the
      Company's operations on these exploration properties is anticipated to involve
      consideration and evaluation of several significant factors including, but
      not
      limited to:





§
            Costs
                of bringing each property into production, including exploration
                work, preparation of production feasibility studies, and
                construction of production
                facilities;


§
            Availability
                and costs of financing;


§
            Ongoing
                costs of production;


§
            Market
                prices for the minerals to be
                produced;


§
            Environmental
                compliance regulations and restraints;
                and


§
            Political
                climate and/or governmental regulation and
                control.






-8-
 **Back
          to Table of Contents**




***General
      Mining Risks***





Factors
      beyond the control of the Company may affect the marketability of any substances
      discovered from any resource properties the Company may acquire. Metal prices,
      in particular gold and copper prices, have fluctuated widely in recent years.
      Government regulations relating to price, royalties, allowable production and
      importing and exporting of minerals can adversely affect the Company. There
      can
      be no certainty that the Company will be able to obtain all necessary licenses
      and permits that may be required to carry out exploration, development and
      operations on any projects it may acquire and environmental concerns about
      mining in general continue to be a significant challenge for all mining
      companies.





***Our
      Common Stock May Be Subject to Penny Stock Rules, Which May Make It More
      Difficult for Our Stockholders to Sell Their Common
      Stock.***





Broker-dealer
      practices in connection with transactions in “penny stocks” are regulated by
      certain penny stock rules adopted by the Securities and Exchange Commission
      (“SEC”). Penny stocks generally are equity securities with a price of less than
      $5.00 per share. The penny stock rules require a broker-dealer, prior to a
      purchase or sale of a penny stock not otherwise exempt from the rules, to
      deliver to the customer a standardized risk disclosure document that provides
      information about penny stocks and the risks in the penny stock market. The
      broker-dealer also must provide the customer with current bid and offer
      quotations for the penny stock, the compensation of the broker-dealer and its
      salesperson in the transaction, and monthly account statements showing the
      market value of each penny stock held in the customer’s account. In addition,
      the penny stock rules generally require that prior to a transaction in a penny
      stock the broker-dealer make a special written determination that the penny
      stock is a suitable investment for the purchaser and receive the purchaser’s
      written agreement to the transaction. These disclosure requirements may have
      the
      effect of reducing the level of trading activity in the secondary market for
      a
      stock that becomes subject to the penny stock rules.





***We
      Are Not Required to Meet or Maintain Any Listing Standards for Our Common Stock
      to be Quoted on the OTC Bulletin Board or in the Pink Sheets, Which Could Affect
      Our Stockholders’ Ability to Access Trading Information About Our Common
      Stock.***





The
      OTC
      Bulletin Board and the Pink Sheets are each separate and distinct from the
      Nasdaq Stock Market and any national stock exchange, such as the New York Stock
      Exchange or the American Stock Exchange. Although the OTC Bulletin Board is
      a
      regulated quotation service operated by the NASD, that displays real-time
      quotes, last sale prices, and volume information in over-the-counter (“OTC”)
      equity securities like our common stock, and although Pink Sheets’ Electronic
      Quotation Service is an Internet-based, real-time quotation service for OTC
      equities for market makers and brokers that provides pricing and financial
      information for the OTC securities markets, we are not required to meet or
      maintain any qualitative or quantitative standards for our common stock to
      be
      quoted on either the OTC Bulletin Board or in the Pink Sheets. Our common stock
      does not presently meet the minimum listing standards for listing on the Nasdaq
      Stock Market or any national securities exchange, which could affect our
      stockholders’ ability to access trading information about our common stock.
      Additionally, we are required to satisfy the reporting requirements under the
      Securities Exchange.





***We
      Are a Development Stage Company and Our Financial Statements Contain a Going
      Concern Qualification.***




Since
      inception, the Company has been in the development stage and as of the end
      of
      fiscal year 2005 has incurred losses totaling approximately $1,143,375. The
      Company has historically funded its operations through debt or equity financing.
      Its ability to continue as a going concern is dependent on its ability to
      continue to raise additional capital to fund future operations and ultimately
      to
      attain profitable operations, as to the availability of which there can be
      no
      assurance. The Company’s audited financial statements provide a going concern
      qualification, as the various factors reviewed by the Company’s auditors raise
      substantial doubt as to the Company’s ability to continue as a going concern.




**Item
              2.**
            **Description
                of Property**





We
      do not
      own any real estate, but lease approximately 1,254 square feet of office space
      in Vancouver, British Columbia through Axiom. We entered into this lease
      agreement on January 1, 2005 and maintain a month-to-month tenancy. Our monthly
      rent payment is approximately $2,509.00.





On
      June
      15, 2004, we also entered into a sublease agreement for an additional 120 square
      feet of office space in Boulder, Colorado with a monthly rent payment of
      approximately $390 through May 31, 2006.




-9-
 **Back
          to Table of Contents**





**Item
              3.**
            **Legal
                Proceedings**





We
      are
      not currently a party to any material legal proceeding.





**Item
              4.**
            **Submission
                of Matters to a Vote of Security
                Holders**





No
      matter
      was submitted to a vote of security holders, through the solicitation of proxies
      or otherwise, during the fourth quarter of the fiscal year covered by this
      report.





**PART
      II**





**Item
              5.**
            **Market
                for Common Equity and Related Stockholder
                Matters**





Our
      common stock has been quoted on the OTC Bulletin Board since February 25,
      2004, and currently is quoted on the OTC Bulletin Board and the Pink Sheets
      under the trading symbol “KYGC.” The following table sets forth the high and low
      bid prices for our common stock for the periods indicated, as reported by OTC
      Bulletin Board. Such quotations reflect inter-dealer prices, without retail
      mark-up, mark-down or commissions, and may not necessarily represent actual
      transactions.




**Bid****High**
                
                **Low**Year
                    ended December 31, 2005:First
                    Quarter
                
                $
                1.26
                
                $
                0.45Second
                    Quarter
                
                0.64
                
                0.24Third
                    Quarter
                
                0.41
                
                0.21Fourth
                    Quarter
                
                0.50
                
                0.14Year
                    ended December 31, 2004:First
                    Quarter (1)
                
                NONE
                
                NONESecond
                    Quarter (2)
                
                2.30
                
                0.04Third
                    Quarter
                
                1.50
                
                0.84Fourth
                    Quarter
                
                1.35
                
                0.88





(1)
            The
                Company did not qualify to trade until February 25,
                2004.


(2)
            The
                Company completed an 8-for-1 forward stock split on May 18, 2004.





As
      of May
      16, 2006, there were approximately 47 holders of record of our common
      stock.





We
      have
      never declared or paid any cash dividends on our common stock. For the
      foreseeable future, we expect to retain any earnings to finance the operation
      and expansion of our business.





**Item
              6.**
            **Management’s
                Discussion and Analysis or Plan of
                Operation**





THE
      FOLLOWING PRESENTATION OF OUR MANAGEMENT’S DISCUSSION AND ANALYSIS SHOULD BE
      READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND OTHER FINANCIAL
      INFORMATION INCLUDED ELSEWHERE IN THIS REPORT.





**A
      Note About Forward-Looking Statements**





This
      Annual Report on Form 10-KSB contains “forward-looking statements” within the
      meaning of the Private Securities Litigation Reform Act of 1995 that are based
      on current management’s expectations. These statements may be identified by
      their use of words like “plans”, “expect”, “aim”, “believe”, “projects”,
“anticipate”, “intend”, “estimate”, “will”, “should”, “could” and other
      expressions that indicate future events and trends. All statements that address
      expectations or projections about the future, including statements about our
      business strategy, expenditures, and financial results are forward-looking
      statements. We believe that the expectations reflected in such forward-looking
      statements are accurate. However, we cannot assure you that such expectations
      will occur.




-10-
 **Back
          to Table of Contents**




Actual
      results could differ materially from those in the forward-looking statements
      due
      to a number of uncertainties including, but not limited to, those discussed
      in
      this section. Factors that could cause future results to differ from these
      expectations include general economic conditions, further changes in our
      business direction or strategy; competitive factors, mining and exploration
      uncertainties, and an inability to attract, develop, or retain technical,
      consulting, managerial, agents, or independent contractors both with respect
      to
      us and with respect to JHP (as defined below). As a result, the identification
      and interpretation of data and other information and their use in developing
      and
      selecting assumptions from and among reasonable alternatives requires the
      exercise of judgment. To the extent that the assumed events do not occur, the
      outcome may vary substantially from anticipated or projected results, and
      accordingly, no opinion is expressed on the achievability of those
      forward-looking statements. No assurance can be given that any of the
      assumptions relating to the forward-looking statements specified in the
      following information are accurate, and we assume no obligation to update any
      such forward-looking statements. You should not unduly rely on these
      forward-looking statements, which speak only as of the date of this Annual
      Report. Except as required by law, we are not obligated to release publicly
      any
      revisions to these forward-looking statements to reflect events or circumstances
      occurring after the date of this Report or to reflect the occurrence of
      unanticipated events.




**Overview
      of the Company**




We
      are a
      start-up, development stage company and have not yet generated or realized
      any
      revenues from our business operations. During the second quarter 2004, we
      borrowed $500,000 in an arms-length transaction from an unaffiliated third
      party, which funds were applied toward our working capital and accounting and
      filing fees with the balance of such funds allocated for our transaction with
      JHP Resources Limited, a company incorporated in British Columbia, Canada
      ("JHP"), and for additional operating capital. The $500,000 debt obligation
      was
      converted later in the second quarter 2004 into 500,000 shares of our common
      stock.




In
      May
      2004, we changed our core business from continuing our development of a
      vertically integrated dental website and adopted a new business plan to pursue
      funding for geological mapping of a specified region in China with the ultimate
      intent to participate in the exploring and mining for precious and non-precious
      metals and other mineral resources in that region. We expanded the scope of
      our
      expected exploration and mining activities to Mongolia.




We
      have
      ceased our participation in the exploration project in China, and due to a
      proposed tax law change in Mongolia, have concluded that it is no longer
      financially viable to continue exploration activities in Mongolia. Through
      December 31, 2005 we incurred exploration costs of $43,283 and $106,705 in
      China
      and Mongolia, respectively. We are currently seeking other exploration
      opportunities.




Effective
      as of May 17, 2004, we changed our name from "DDI International Inc." to "Key
      Gold Corporation" and our common stock was split on an eight-for-one basis.
      Effective upon the opening of the markets on May 18, 2004 our trading symbol
      was
      changed to "KYGC," and we obtained a new Cusip number of 49308W 10
      5.




On
      September 1, 2004, we closed a private placement financing for the issuance
      of
      370,370 shares of our common stock for the aggregate consideration of $500,000
      at a deemed price of $1.35 per share. Additionally, we granted one full warrant
      for each share purchased with an exercise price of $1.50 per share. Each warrant
      has a term of two years.




Prior
      to
      May 2004, when we operated as DDI, we had raised $25,000 in a Regulation S
      non-public offering in April 2002, which funds were used to pay for our
      organizational costs and the costs of our registration statement. On March
      15,
      2002, we borrowed $3,000 from our then-president, Dr. Brooke Mitchell, which
      funds were used for working capital and for accounting and filing fees.
      Effective on May 17, 2004, Dr. Brooke Mitchell, our sole Director, President,
      and Chief Executive Officer, and Rene Daignault, our Secretary and Treasurer,
      resigned and John Anderson was appointed to serve in those capacities. We also
      entered into a series of arrangements with Dr. Mitchell, pursuant to
      which:




·
            Dr.
                Mitchell forgave our promissory obligation to him in the amount of
                $3,000
                and accrued interest;




·
            We
                cancelled our contractual right to acquire certain assets from Dr.
                Mitchell;




·
            Dr.
                Mitchell tendered 5,875,000 (pre-split) shares of common stock owned
                of
                record and beneficially by him for
                cancellation;




·
            We
                entered into a mutual general release with Dr. Mitchell;
                and




·
            We
                tendered the sum of $49,000 to Dr.
                Mitchell.






-11-
 **Back
          to Table of Contents**




For
      a
      more detailed description of our transaction with Dr. Mitchell, please see
      our
      Schedule 14f-1, filed with the Securities and Exchange Commission on May 10,
      2004, and our Current Report on Form 8-K, filed with the Securities and Exchange
      Commission on May 18, 2004.




**Limited
      Operating History; Need For Additional Capital**




There
      is
      no historical financial information about us upon which to base an evaluation
      of
      our performance. We are a development stage company and have not generated
      any
      revenues from our current operations.




We
      cannot
      guarantee we will be successful in our new core business, especially after
      halting our exploration activities in Asia, or in any business operations.
      Our
      business is subject to risks inherent in the establishment of a new business
      enterprise, including limited capital resources and in the exploration of
      precious and non-precious metals and other mineral resources.




We
      have
      no assurance that future financing will be available on acceptable terms. If
      financing is not available on satisfactory terms, we may be unable to continue
      with our current business plan. If equity financing is available to us on
      acceptable terms, it could result in additional dilution to our existing
      stockholders.




**Results
      of Operations for the Years Ended December 31, 2005 and
      2004**




From
      inception to December 31, 2005, we had a loss of $(1,143,375). Over one-half
      of
      this amount was generated in 2005,with the balance generated in the 2004 fiscal
      year.




Operating
      expenses increased from $349,111 in 2004 to $554,512 in 2005. An analysis of
      the
      increases in the operating expenses and the relevant components is set forth
      below.




We
      began
      our initial Asian exploration activities in China during the second half of
      2004, and expanded these activities from China to Mongolia during 2005. During
      the year ended December 31, 2005, we incurred exploration expenses $188,185.
      There were no comparable amounts in 2004. We have halted our exploration
      activities in Asia.




During
      the year ended December 31, 2005, we expended $ 268,201
      for professional and consulting fees, compared to $270,267 in the same period
      of
      2004. These amounts included consulting fees paid to a related party of $110,880
      in 2005 and $67,500 in 2004. The slight decrease in 2005 relates to legal and
      accounting charges associated with our change in control and financing
      activities in 2004 that did not recur in 2005, offset by the increase in
      consulting fees to a related party. The consulting fees to a related party
      increased in 2005 as they were incurred for a full year in 2005 compared to
      a
      partial year in 2004. Professional fees in 2005 relate to the implementation
      of
      our new business strategy adopted in May 2004.




We
      have
      no permanent employees and do not expect to hire any employees. We utilize
      contract services and consultants to perform our administrative
      services.




The
      advertising campaign we undertook in 2004 was completed in the first quarter
      of
      2005. We did not resume advertising activities during the balance of
      2005.




We
      incurred interest costs of $215,000 in 2004 related to the issuance of debt
      that
      was subsequently converted into shares of our common stock. We had no interest
      bearing debt during 2005.




Our
      per-share net loss, based on the weighted average number of outstanding shares
      of common stock, was about one cent for both 2005 and 2004.




**Liquidity
      and Capital Resources**




As
      of
      December 31, 2005, our total assets were $75,785 and our total liabilities
      were
      $25,160, all of which were current, resulting in working capital of $53,625..
      As
      of December 31, 2004, our total assets were $643,678 (all of which were current)
      and our total liabilities were $38,540 (all of which were current), resulting
      in
      working capital of $605,138. The decrease in total assets is a result of a
      decrease in cash, which was used in operations during the year ended December
      31, 2005.




-12-
 **Back
          to Table of Contents**




Despite
      our negative cash flows from operation of $594,365 and $325,836 for the years
      ended December 31, 2005 and 2004, respectively, we have been able to obtain
      additional operating capital through private equity funding sources. However,
      we
      do not have sufficient working capital to continue our exploration activities,
      which now have been halted. Management's plan includes new exploration
      opportunities and eventual implementation of our business plan. We have relied
      upon equity funding and loans from stockholders since inception.




No
      assurances can be given that we can obtain sufficient working capital through
      the sale of our common stock and borrowing or that the development and
      implementation of our business plan will generate sufficient revenues in the
      future to sustain ongoing operations. These factors raised substantial doubt
      with our auditor about our ability to continue as a going concern.




As
      of the
      date of this Annual Report, we have yet to generate any revenues from our
      business operations.




**Plan
      of Operation for the Next Twelve Months**




Until
      we
      changed our core business, we had funded our operations principally from our
      April 2002 non-public offering and from the March 15, 2004, $3,000 loan from
      Dr.
      Brooke Mitchell. After our change of business in May 2004, we have funded our
      operations from the above-referenced $500,000 loan (now converted into 500,000
      shares of our common stock) and from proceeds of our $500,000 private placement
      of common stock and warrants. We do not have the economic resources to meet
      our
      operating capital needs during the next 12 months. We will need to raise
      additional capital through by additional loan or private capital stock
      transactions. There can be no assurance that funds required will be available
      on
      terms acceptable to us or at all. If we are unable to raise sufficient funds
      on
      terms acceptable to us, we may be unable to complete our business plan. If
      equity financing is available to us on acceptable terms, it could result in
      additional dilution to our existing stockholders.




**Off-Balance
      Sheet Arrangements**




With
      the
      abandonment of our China exploration project, we are no longer a party to any
      off balance sheet arrangements.




**Current
      Conditions**




We
      have
      ceased exploration activities in both China and Mongolia and are currently
      seeking new exploration opportunities. We have not as yet identified any new
      prospects, nor do we currently have the capital to pursue an opportunity if
      one
      is identified.




**Item
              7.**
            **Financial
                Statements**





Our
      consolidated financial statements required to be included in Item 7 are set
      forth in the Index to Financial Statements set forth on page F-1 of this
      report.





**Item
              8.**
            **Changes
                In and Disagreements With Accountants on Accounting and Financial
                Disclosure.**





Not
      applicable.





**Item
              8A.**
            **Controls
                and Procedures**





The
      Company maintains a system of disclosure controls and procedures which are
      designed to ensure that information required to be disclosed by the Company
      in
      the reports filed under the Exchange Act is recorded, processed, summarized
      and
      reported within the time periods specified under the Securities and Exchange
      Commission’s rules and forms. Based on an evaluation performed, the Company’s
      certifying officer has concluded that the disclosure controls and procedures
      were effective as of the end of the period covered by this report to provide
      reasonable assurance of the achievement of these objectives.




-13-
 **Back
          to Table of Contents**





Notwithstanding
      the foregoing, there can be no assurance that the Company’s disclosure controls
      and procedures will detect or uncover all failures of persons within the Company
      to disclose material information otherwise required to be set forth in the
      Company’s reports.





We
      do not
      believe that there has been any change in the Company’s internal control over
      financial reporting during the period covered by this report that has materially
      affected, or is reasonably likely to materially affect, the Company’s internal
      control over financial reporting.





**Item
              8B.**
            **Other
                Information**





There
      is
      no other information required to be disclosed during the fourth quarter of
      the
      fiscal year covered by this report.





**PART
      III**





**Item
              9.**
            **Directors,
                Executive Officers, Promoters and Control Persons; Compliance with
                Section 16(a) of the Exchange
                Act**





**Executive
      Officers and Directors**





The
      following table sets forth certain information regarding our executive officers
      and directors as of May 16, 2006:





**Name**
            
            **Age**
            
            **Position**John
                Anderson
            
            42
            
            President,
                Chief Executive Officer, Secretary, Treasurer, and
                Director





*John
      Anderson, President, Chief Executive Officer, Secretary, Treasurer, and
      Director.* Mr.
      Anderson has served as President, Chief Executive Officer, Secretary, and
      Treasurer of the Company since May 7, 2004. From December of 1994 to the
      present, Mr. Anderson has been president of Axiom, a personal consulting and
      investing company primarily involved in capital raising for private and public
      companies in North America, Europe, and Asia. From February of 2001 to the
      present, he has served as a director of Wescorp Energy, Inc., a publicly traded
      Nevada corporation, and from March of 2003 to the present as its president
      and
      chief executive officer. In addition, from November 2005 to the present he
      has
      served as a director of Eternal Energy Corp., a publicly traded Nevada
      corporation involved in the exploration of petroleum and natural gas. Mr.
      Anderson holds a B.A. from University of Western Ontario.




**Committees**




The
      Company does not have any standing nominating or compensation committees of
      the
      Board, or committees performing similar functions.




**Audit
      Committee Functions**




The
      Company does not have a separately designated standing audit committee. Rather,
      its entire board of directors performs the required functions of an audit
      committee. Our Board is responsible for: (1) selection and oversight of our
      independent accountant; (2) establishing procedures for the receipt, retention
      and treatment of complaints regarding accounting, internal controls and auditing
      matters; (3) establishing procedures for the confidential, anonymous submission
      by our employees of concerns regarding accounting and auditing matters; (4)
      engaging outside advisors; and, (5) funding for the outside auditory and any
      outside advisors engagement by the audit committee.




**Disclosure
      Committee**




The
      Company has a disclosure committee and disclosure committee charter. Its
      disclosure committee is comprised of all of its officers and directors. The
      purpose of the committee is to provide assistance to the chief executive officer
      and the chief financial officer in fulfilling their responsibilities regarding
      the identification and disclosure of material information about the Company
      and
      the accuracy, completeness, and timeliness of its financial
      reports.




-14-
 **Back
          to Table of Contents**




**Meetings
      of the Board of Directors**




The
      Board
      did not hold any meetings during the fiscal year ended December 31, 2005, but
      the sole director executed not less than five (5) written consents during the
      course of the year.





**Code
      of Ethics**





The
      Company adopted a code of ethics that applies to all its executive officers
      and
      employees. A copy of the adopted code of ethics is attached to the Company’s
      2003 Annual Report on Form 10-KSB as Exhibit 99.1 - Code of Ethics. The Company
      undertakes to provide any person with a copy of its code of ethics free of
      charge. Please contact Mr. Anderson at (303) 323-1927 to request a copy of
      the
      Company’s code of ethics. Management believes the Company’s code of ethics is
      reasonably designed to deter wrongdoing and promote honest and ethical conduct;
      provide full, fair, accurate, timely and understandable disclosure in public
      reports; comply with applicable laws; ensure prompt internal reporting of code
      violations; and provide accountability for adherence to the
      code.





**Item
              10.**
            **Executive
                Compensation**





John
      Anderson, who serves as President, Chief Executive Officer, Secretary, and
      Treasurer, does not receive any compensation. There are no current plans to
      compensate him, unless and until the Company begins to realize revenues and
      become profitable in its business operations. Since its inception, no stock
      options, stock appreciation rights, or long-term incentive plans have been
      granted, exercised, or repriced.





**Employment
      Agreements**





The
      Company entered into a Consulting Agreement, effective April 1, 2004, with
      Axiom
      to provide consulting and management services for the Company. Mr. Anderson
      is a
      director, officer, and sole shareholder of Axiom. In consideration for
      these services, the Company pays Axiom a fee of $7,500 per month. Upon
      expiration of the agreement, either party may renew for a term of one year
      or
      longer, if desired. The minimum commitment under this agreement is $90,000
      for
      2005 and $22,500 for 2006.





There
      are
      no other employment agreements between the Company and any named executive
      officer, and there is no employment agreement or other compensating plan or
      arrangement with regard to the named executive officer that provides for
      specific compensation in the event of resignation, retirement, other termination
      of employment or from a change of control of the Company or from a change in
      the
      named executive officer’s responsibilities following a change in
      control.





**Compensation
      of Directors**





Our
      sole
      director does not receive any compensation, as such.




**Item
              11.**
            **Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters**




As
      of
      March 31, 2006, the Company had 41,870,370 shares of common stock
      outstanding.




The
      table
      following sets forth information regarding the beneficial ownership of common
      stock for each person who is known by us to be the beneficial owner of more
      than
      five percent of our voting securities, for each of our directors and named
      executive officers, and all of our directors and executive officers as a group.
      Unless otherwise indicated in the footnotes, each person named below has sole
      voting and investment power over the shares indicated.




For
      purposes of this table, a person is deemed to be the “beneficial owner” of the
      number of shares of common stock that such person has the right to acquire
      within 60 days of March 31, 2006 through the exercise of any option,
      warrant or right, through the conversion of any security, through the power
      to
      revoke a trust, discretionary account, or similar arrangement, or through the
      automatic termination of a trust, discretionary account or similar
      arrangement.




**Name
                of Beneficial Owner / Management and Addresses**
            
            **Number
                of Shares**
            
            **Percent
                of Class**John
                Anderson (1)
            
            1,000,000
            
            2.39
            %All
                executive officers and directors as a group (1 person)
            
            1,000,000
            
            2.39
            %





(1)
            Shares
                are held in the name of Axiom Consulting Corp. The business address
                for
                this person is Suite 1300-885 West Georgia Street, Vancouver, British
                Columbia, V6C 3E8.






-15-
 **Back
          to Table of Contents**





**Item
              12.**
            **Certain
                Relationships And Related
                Transactions**





The
      Company entered into a Consulting Agreement, effective April 1, 2004, with
      Axiom
      to provide consulting and management services for the Company. Mr. Anderson
      is a
      director and officer of Axiom and in consideration for these services, the
      Company will pay Axiom a fee of $7,500 plus GST per month.





On
      January 1, 2005, Axiom leased approximately 1,254 square feet of office space
      in
      Vancouver, British Columbia. The Company currently utilizes this space for
      general office and administrative purposes and pays approximately $2,509 a
      month
      for rent.





**Item
              13.**
            **Exhibits**





(a)
      Exhibits




**INDEX
      TO EXHIBITS**


**Exhibit**
              **Number**
            
            **Description
                of Document**2.3
            
            Articles
                of Merger between Key Gold Corporation (as merging entity) and DDI
                International Inc. (as surviving entity), filed with Secretary of
                State of
                Nevada on May 17, 2004, filed as Exhibit 2.3 to the Company’s Current
                Report on Form 8-K filed on May 18, 2004 (the “May 2004 8-K”), and
                incorporated herein by reference.3.1
            
            Corporate
                Charter filed as Exhibit 3.1 to the Company's Registration Statement
                on
                Form SB-2 filed on June 5, 2002 (the “Registration Statement”), and
                incorporated herein by reference.3.2
            
            Articles
                of Incorporation of the Company filed as Exhibit 3.2 to the Registration
                Statement and incorporated herein by reference.3.3
            
            Bylaws
                of the Company filed as Exhibit 3.3 to the Company's Registration
                Statement and incorporated herein by reference.3.4
            
            Articles
                of Incorporation of Key Gold Corporation (as merging entity), filed
                with
                the Secretary of State of Nevada on May 5, 2004, filed as Exhibit
                3.4 to
                the Company's May 2004 8-K and incorporated by
                reference.10.1
            
            Articles
                of Incorporation of Key Gold Corporation (as merging entity), filed
                with
                the Secretary of State of Nevada on May 5, 2004, filed as Exhibit 3.4 to
                the Company's May 2004 8-K and incorporated by
                reference.10.2
            
            Form
                of Share Subscription Agreement between the Company and JHP Resources
                Limited filed as Exhibit 10.6 to the Company's May 2004 8-K and
                incorporated herein by reference.10.3
            
            Form
                of Deed of Put Option by the Company in favor of Grantee filed as
                Exhibit
                10.7 to the Company's May 2004 8-K and incorporated herein by
                reference.10.4
            
            Form
                of Deed of Call Option by Grantor in favor of the Company filed as
                Exhibit
                10.7 to the Company's May 2004 8-K and incorporated herein by
                reference.10.5
            
            Sublease
                dated June 15, 2004 by and between Company and Broadway Suites, Inc.
                filed
                as Exhibit 10.5 to the Company’s Annual Report on Form 10-KSB field on
                April 15, 2005 (the “2005 10-KSB”), and incorporated herein by
                reference.10.6
            
            Lease
                dated January 1, 2005 by and between P. Sun’s Enterprises (Vancouver) Ltd.
                and Axiom Consulting Corp. filed as Exhibit 10.6 to the 2005 10-KSB,
                and
                incorporated herein by reference.10.7
            
            Addendum
                to the Lease dated March 10, 2005 by and between P. Sun’s Enterprises
                (Vancouver) Ltd. and Axiom Consulting Corp. filed as Exhibit 10.7
                to the
                2005 10-KSB, and incorporated herein by reference.10.8
            
            Consulting
                Agreement dated May 31, 2003 by and between Company and Axiom Consulting
                Corp. filed as Exhibit 10.8 to the 2005 10-KSB, and incorporated
                herein by
                reference.






-16-
 **Back
          to Table of Contents**




10.9
            
            Letter
                Agreement dated February 18, 2005 by and between Company and QGX
                Ltd.
                filed as Exhibit 10.9 to the 2005 10-KSB, and incorporated herein
                by
                reference.31.1*
            
            Certification
                pursuant to Section 302 of the Sarbanes-Oxley Act32.1*
            
            Certification
                pursuant to Section 906 of the Sarbanes-Oxley Act99.1
            
            Code
                of Ethics filed as Exhibit 99.1 to the Company's 2003 10-KSB and
                incorporated herein by reference.99.2
            
            Audit
                Committee Charter filed as Exhibit 99.2 to the Company's 2003 10-KSB
                and
                incorporated herein by reference.99.3
            
            Disclosure
                Committee Charter filed as Exhibit 99.3 to the Company's 2003 10-KSB
                and
                incorporated herein by reference.





*
            Filed
                herewith.





**Item
              14.**
            **Principal
                Accountant Fees and
                Services**





For
      the
      year ended December 31, 2005, Kelly & Co. audited the Company’s
      consolidated financial statements and provided tax return and tax related
      services. For the year ended December 31, 2004, Kelly & Co., audited
      the Company’s consolidated financial statements and provided tax return and tax
      related services. On August 12, 2004, the Company dismissed Dale Matheson
      Carr-Hilton LaBonte (“DMCH”) as the Company’s principal accountant effective on
      such date. On August 12, 2004, the registrant appointed Kelly & Co.
      (“Kelly”) as the Company’s new principal accountant.





The
      aggregate fees billed for professional services by the accountants in 2005
      and
      2004 were as follows:





**2005**
            
            **2004**Audit
                Fees
            
            $
            22,000
            
            $
            20,000Audit
                Related Fees (1)
            
            $
            31,975
            
            $
            17,031Tax
                Fees
            
            $
            0
            
            $
            0All
                Other Fees
            
            $
            5,535
            
            $
            0Total
            
            $
            59,510
            
            $
            37,031





(1)
            Quarterly
                review fees.





It
      is the
      Board’s policy and procedure to approve in advance all audit engagement fees and
      terms and all permitted non-audit services provided by our independent auditors.
      We believe that all audit engagement fees and terms and permitted non-audit
      services provided by our independent auditors as described in the above table
      were approved in advance by our Board.




-17-
 **Back
          to Table of Contents**




**SIGNATURES**





In
      accordance with Section 13 or 15(d) of the Exchange Act, the Company caused
      this
      report to be signed on its behalf by the undersigned, thereunto duly
      authorized.




**KEY
              GOLD
              CORPORATION**By:
            /s/ JOHN
              ANDERSONName:  
                John Anderson
              Title:    
                President, Chief Executive Officer, Secretary,
              Treasurer, and Director





In
      accordance with the Exchange Act, this report has been signed below by the
      following persons on behalf of the Company and in the capacities and on the
      dates indicated.





**Signature**
            
            **Title**
            
            **Date**/s/John
                Anderson
            
            President,
                Chief Executive Officer, Secretary, Treasurer, and
                Director
            
            May
                19, 2006John
                Anderson
            
            (Principal
                Executive and Financial Officer)






-18-
 **Back
          to Table of Contents**














**Key
      Gold Corporation**


**(A
      Company in the Development Stage)**




**Financial
      Statements**






***December
      31, 2005 and***


**For
      Each of the Two Years in the Period Ended December 31, 2005
      and**


**For
      the Period From March 22, 2002 (Inception) to December 31,
      2005**




**Back
          to Table of Contents**


**Key
        Gold Corporation**
 **(A
        Company in the Development Stage)**
  **Index
        to the Financial Statements**
  ***December
        31, 2005 and***
 ***For
        Each of the Two Years in the Period Ended December 31, 2005
        and***
 ***For
        the Period From March 22, 2002 (Inception) to December 31, 2005***


Report
                of Independent Registered Public Accounting
                Firm
            F-2Financial
                Statements of Key Gold Corporation (A Company in the Development
                Stage):Balance
                Sheet as of December 31, 2005
            F-3Statements
                of Operations For Each of the Two Years in the
                Period Ended December 31, 2005 and for the Period from March 22,
                2002
                (Inception) to December 31, 2005
            F-4Statement
                of Shareholders' Equity for the Period From March
                22, 2002 (Inception) to December 31, 2005
            F-5Statements
                of Cash Flows For Each of the Two Years in the
                Period Ended December 31, 2005 and for the Period from March 22,
                2002
                (Inception) to December 31, 2005
            F-8Notes
                to the Financial Statements
            F-10






F-1
 **Back
          to Table of Contents**





*Report
      of Independent Registered Public Accounting
      Firm*





Board
      of
      Directors and Shareholders


Key
      Gold
      Corporation




We
      have
      audited the accompanying balance sheet of Key Gold Corporation, a Company in
      the
      Development Stage, as of December 31, 2005 and the related statements of
      operations, shareholders' equity and cash flows for each of the two years in
      the
      period ended December 31, 2005, and for the period from March 22, 2002
      (inception) to December 31, 2005. These financial statements are the
      responsibility of the Company's management. Our responsibility is to express
      an
      opinion on these financial statements based on our audits.




We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audits to obtain reasonable assurance about whether the
      financial statements are free of material misstatement. An audit includes
      examining, on a test basis, evidence supporting the amounts and disclosures
      in
      the financial statements. An audit also includes assessing the accounting
      principles used and significant estimates made by management, as well as
      evaluating the overall financial statement presentation. We believe that our
      audits and the report of the other auditors provide a reasonable basis for
      our
      opinion.




In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of the Company as of December 31,
      2005
      and the results of its operations and its cash flows for each of the two years
      in the period ended December 31, 2005 and for the period from March 22, 2002
      (inception) through December 31, 2005 in conformity with accounting principles
      generally accepted in the United States of America.




The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. As discussed in Note 6, *Financial
      Results, Liquidity and Management's Plan* , to the
      financial statements, the Company has incurred net losses since inception,
      is in
      the development stage, has experienced negative cash flows from operations
      since
      inception and has significantly modified until it is able to successfully
      implement its business plan and generate sufficient revenues in the future
      to
      sustain its ongoing operations. These factors raise substantial doubt about
      its
      ability to continue as a going concern. Management's plans in regard to these
      matters are also described in Note 6. The financial statements do not include
      any adjustments that might result from the outcome of this
      uncertainty.






/s/
      Kelly
& Company


Kelly &
Company




Costa
      Mesa, California


May
      19,
      2006




F-2
 **Back
          to Table of Contents**


**Key
        Gold Corporation**
 **(A
        Company in the Development Stage)**
  **Balance
        Sheet**
  ***December
        31, 2005***
 *ASSETS*Current
                    assets:Cash
                
                $
                35,170Prepaid
                    professional fees
                
                
                26,561Prepaid
                    management fees - related party
                
                
                9,120Prepaid
                    rent
                
                
                3,566Total
                    current assets
                
                
                74,417Equipment,
                    net
                
                
                1,368**Total
                    assets**
                
                **$**
                **75,785***LIABILITIES
                    AND SHAREHOLDERS' EQUITY*Current
                    liabilities:Accounts
                    payable and accrued expenses
                
                $
                25,160Total
                    current liabilities
                
                
                25,160Commitments
                    and contingenciesShareholders'
                    equity:Common
                    stock, $.001 par value, 200,000,000 shares authorized, 41,870,370
                    shares
                    issued and outstanding
                
                
                41,870Additional
                    paid-in capital
                
                
                1,214,130Deficit
                    accumulated during the development stage
                
                
                (1,205,375
                )Total
                    shareholders' equity
                
                
                50,625**Total
                    liabilities and shareholders' equity**
                
                **$**
                **75,785**





The
      accompanying notes are an integral part of the financial
      statements.




F-3
 **Back
          to Table of Contents**





**Key
      Gold Corporation**


**(A
      Company in the Development Stage)**




**Statements
      of Operations**




***For
      Each of the Two Years in the Period Ended December 31, 2005
      and***


***For
      the Period From March 22, 2002 (Inception) to December 31, 2005***


For
                      thePeriod
                      FromMarch
                      22, 2002For
                      the Year Ended December 31,
                  
                  (Inception)
                      to2005
                  
                  2004
                  
                  December
                      31, 2005Operating
                      expenses:Exploration
                      fees
                  
                  $
                  149,988
                  
                  
                  —
                  
                  $
                  149,988General
                      and administrative
                  
                  
                  136,323
                  
                  $
                  78,844
                  
                  
                  222,693Professional
                      and consulting fees
                  
                  
                  157,321
                  
                  
                  202,767
                  
                  
                  377,314Consulting
                      fees - related party
                  
                  
                  110,880
                  
                  
                  67,500
                  
                  
                  178,380Total
                      operating expenses
                  
                  
                  554,512
                  
                  
                  349,111
                  
                  
                  928,375**Interest
                      expense**
                  ****
                  ****
                  **—**
                  ****
                  ****
                  **215,000**
                  ****
                  ****
                  **215,000**
                  ******Net
                      loss**
                  ****
                  **$**
                  **(554,512**
                  **)**
                  **$**
                  **(564,111**
                  **)**
                  **$**
                  **(1,143,375**
                  **)****Net
                      loss per common share - basic and diluted**
                  ****
                  **$**
                  **(0.0132**
                  **)**
                  **$**
                  **(0.0095**
                  **)**
                  **$**
                  **(0.0147**
                  **)****Weighted
                      average number of shares outstanding - basic and diluted**
                  ****
                  ****
                  **41,870,370**
                  ****
                  ****
                  **59,112,123**
                  ****
                  ****
                  **77,583,288**
  The
      accompanying notes are an integral part of the financial
      statements.




F-4
 **Back
          to Table of Contents**




**Key
      Gold Corporation**


**(A
      Company in the Development Stage)**




**Statements
      of Shareholders' Equity**




***For
      the Period From March 22, 2002 (Inception) to December 31, 2005***




DeficitAccumulatedAdditional
              
              During
                  theCommon
              
              Common
              
              Paid-in
              
              DevelopmentShares
              
              Stock
              
              Capital
              
              Stage
              
              Total**Balance,
                  March 22, 2002 (inception)**
              
              
              **—**
              
              
              **—**
              
              
              **—**
              
              
              **—**
              
              
              **—**Issuance
                  of common shares to an officer and director for the rights to acquire
                  an
                  intangible asset based upon the common share's fair value of $0.001
                  per
                  share in March 2002.
              
              
              6,000,000
              
              $
              6,000
              
              
              **—**
              
              $
              (6,000
              )
              
              **—**Issuance
                  of shares for cash at $0.005 per share in April 2002.
              
              
              5,000,000
              
              
              5,000
              
              $
              20,000
              
              
              —
              
              $
              25,000Effect
                  of a stock split on outstanding shares on an 8 for 1 basis, effective
                  May
                  17, 2004
              
              
              77,000,000
              
              
              77,000
              
              
              (20,000
              )
              
              (57,000
              )
              
              **—**Net
                  loss
              
              
              **—**
              
              
              **—**
              
              
              **—**
              
              
              (19,591
              )
              
              (19,591
              )**Balance,
                  December 31, 2002**
              
              
              **88,000,000**
              
              **$**
              **88,000**
              
              
              **—**
              
              **$**
              **(82,591**
              **)**
              **$**
              **5,409**
 The
        accompanying notes are an integral part of the financial
        statements.




F-5
 **Back
          to Table of Contents**




**Key
      Gold Corporation**


**(A
      Company in the Development Stage)**




**Statements
      of Shareholders' Equity**






***For
      the Period From March 22, 2002 (Inception) to December 31, 2005***


DeficitAccumulatedAdditional
              
              During
                  theCommon
              
              Common
              
              Paid-in
              
              DevelopmentShares
              
              Stock
              
              Capital
              
              Stage
              
              Total**Balance,
                  December 31, 2002**
              
              
              **88,000,000**
              
              **$**
              **88,000**
              
              
              —
              
              **$**
              **(82,591**
              **)**
              **$**
              **5,409**Net
                  loss
              
              
              —
              
              
              —
              
              
              —
              
              
              (5,161
              )
              
              (5,161
              )**Balance,
                  December 31, 2003**
              
              
              **88,000,000**
              
              **$**
              **88,000**
              
              
              —
              
              **$**
              **(87,752**
              **)**
              **$**
              **248**Redemption
                  and retirement of common shares in a treasury stock transaction
                  based on a
                  release agreement price per share of $0.001 in May 2004
              
              
              (47,000,000
              )
              
              (47,000
              )
              
              —
              
              
              1,000
              
              
              (46,000
              )Issuance
                  of common shares in satisfaction of debt at $1.43 per share in
                  June 2004
                  based on the value of the stock issued
              
              
              500,000
              
              
              500
              
              $
              714,500
              
              
              —
              
              
              715,000Issuance
                  of equity units comprised of one share and one warrant for cash
                  at a per
                  equity unit price of $1.35 in August 2004
              
              
              370,370
              
              
              370
              
              
              499,630
              
              
              —
              
              
              500,000Net
                  loss
              
              
              —
              
              
              —
              
              
              —
              
              
              (564,111
              )
              
              (564,111
              )**Balance,
                  December 31, 2004**
              
              
              **41,870,370**
              
              **$**
              **41,870**
              
              **$**
              **1,214,130**
              
              **$**
              **(650,863**
              **)**
              **$**
              **605,137**






The
      accompanying notes are an integral part of the financial
      statements.




F-6
 **Back
          to Table of Contents**




**Key
        Gold Corporation**
 **(A
        Company in the Development Stage)**
  **Statements
        of Shareholders' Equity**
   ***For
        the Period From March 22, 2002 (Inception) to December 31, 2005***


DeficitAccumulatedAdditional
              
              During
                  theCommon
              
              Common
              
              Paid-in
              
              DevelopmentShares
              
              Stock
              
              Capital
              
              Stage
              
              Total**Balance,
                  December 31, 2004**
              
              
              **41,870,370**
              
              **$**
              **41,870**
              
              **$**
              **1,214,130**
              
              **$**
              **(650,863**
              **)**
              **$**
              **605,137**Net
                  loss
              
              
              —
              
              
              —
              
              
              —
              
              
              (554,512
              )
              
              (554,512
              )**Balance,
                  December 31, 2005**
              
              
              **41,870,370**
              
              **$**
              **41,870**
              
              **$**
              **1,214,130**
              
              **$**
              **(1,205,375**
              **)**
              **$**
              **50,625**


The
      accompanying notes are an integral part of the financial
      statements.




F-7
 **Back
          to Table of Contents**


**Key
        Gold Corporation**
 **(A
        Company in the Development Stage)**
  **Statements
        of Cash Flows**
  ***For
        Each of the Two Years in the Period Ended December 31, 2005
        and***
 ***For
        the Period From March 22, 2002 (Inception) to December 31, 2005***
  For
                  thePeriod
                  FromMarch
                  22, 2002For
                  the Year Ended December 31
              
              (Inception)
                  to2005
              
              2004
              
              2005Cash
                  flows from operating activities:Net
                  loss
              
              $
              (554,512
              )
              $
              (564,110
              )
              $
              (1,143,375
              )Adjustments
                  to reconcile net loss to net cash used in operating
                  activities:Depreciation
                  expense
              
              
              210
              
              
              —
              
              
              210Interest
                  expense recorded on debt to equity conversion
              
              
              —
              
              
              215,000
              
              
              215,000Changes
                  in operating assets and liabilities:Prepaid
                  professional expenses
              
              
              (26,561
              )
              
              —
              
              
              (26,561
              )Prepaid
                  management fees - related party
              
              
              (9,120
              )
              
              —
              
              
              (9,120
              )Prepaid
                  rent
              
              
              8,998
              
              
              (12,564
              )
              
              (3,566
              )Accounts
                  payable and accrued expenses
              
              
              (13,380
              )
              
              35,838
              
              
              25,161**Net
                  cash used in operating activities**
              
              
              **(594,365**
              **)**
              
              **(325,836**
              **)**
              
              **(942,251**
              **)**Cash
                  flows used in investing activities:Additions
                  to property and equipments
              
              
              (1,579
              )
              
              —
              
              
              (1,579
              )**Net
                  cash used in investing activities**
              
              
              **(1,579**
              **)**
              
              —
              
              
              **(1,579**
              **)**Cash
                  flows provided by financing activities:Proceeds
                  from issuance of notes
              
              
              —
              
              
              500,000
              
              
              500,000Proceeds
                  from a note from the then Chairman, Chief Executive Officer and
                  majority
                  shareholder
              
              
              —
              
              
              3,000
              
              
              3,000Amount
                  paid to the then Chairman, Chief Executive Officer and majority
                  shareholder in connection with the Release Agreement
              
              
              —
              
              
              (49,000
              )
              
              (49,000
              )Proceeds
                  from the issuance of common stock and warrants, net of related
                  offering
                  costs and expenses
              
              
              —
              
              
              500,000
              
              
              525,000**Net
                  cash provided by financing activities**
              ****
              ****
              **—**
              ****
              ****
              **1,060,705**
              ****
              ****
              **979,000**




The
        accompanying notes are an integral part of the financial
        statements.
  F-8
 **Back
            to Table of Contents**
  **Key
        Gold Corporation**
 **(A
        Company in the Development Stage)**
  **Statements
        of Cash Flows**
  ***For
        Each of the Two Years in the Period Ended December 31, 2005
        and***
 ***For
        the Period From March 22, 2002 (Inception) to December 31, 2005***
 For
                    thePeriod
                    FromMarch
                    22, 2002For
                    the Year Ended December 31
                
                (Inception)
                    to2005
                
                2004
                
                2005**Net
                    increase (decrease) in cash**
                ****
                **$**
                **(595,944**
                **)**
                **$**
                **734,869**
                ****
                **$**
                **35,170**
                ******Cash
                    - beginning of period**
                ****
                ****
                **631,114**
                ****
                ****
                **2,950**
                ****
                ****
                **—**
                ******Cash
                    - end of period**
                ****
                **$**
                **35,170**
                ****
                **$**
                **737,819**
                ****
                **$**
                **35,170**


*Supplemental
      Disclosure of Non-Cash Financing Activities:*




During
      the year ended December 31, 2004, the Company converted two notes amounting
      to
      $500,000 into 500,000 shares of common stock with a fair value of $715,000.




During
      2002, the Company issued 6,000,000 shares of common stock for the rights to
      acquire an intangible asset.






The
      accompanying notes are an integral part of the financial
      statements.




F-9
 **Back
          to Table of Contents**




**Key
      Gold Corporation**


**(A
        Company in the Development Stage)**
  **Notes
        to the Financial Statements**
  ***December
        31, 2005 and***
 ***For
        Each of the Two Years in the Period Ended December 31, 2005
        and***
 ***For
        the Period From March 22, 2002 (Inception) to December 31, 2005***


**1.**
            **Description
                of Business and Development Stage
                Operations**




The
      Company was incorporated in March 2002 in the state of Nevada on May 17, 2004.
      On that date, the Chairman, Chief Executive Officer and majority shareholder
      (the "former officer") resigned and a new sole director and management were
      put
      in place. At the same time as the former officer's resignation, he entered
      into
      a mutual release agreement (the "Agreement") with the Company; which among
      other
      things, provided for the redemption by the Company of all of his shares that
      were recorded as a treasury stock transaction (Notes 3 and 7).




The
      Company adopted a new business plan to pursue funding for geological mapping
      of
      a specified region in China and Mongolia with the ultimate intent to participate
      in the exploring and mining for precious and non-precious metals and other
      mineral resources in that region. The Company has ceased these activities in
      Asia and is seeking other exploration opportunities. The Company anticipates
      funding its operations for the next twelve months through loans and additional
      equity financing as required.




**2.**
            **Summary
                of Significant Accounting
                Policies**




*Basis
      of Presentation*




These
      financial statements are presented in United States dollars and have been
      prepared in accordance with accounting principles generally accepted in the
      United States.




*Fair
      Value of Financial Instruments*




In
      accordance with the requirements of Financial Accounting Standards Board's
      Statement of Financial Accounting Standards ("SFAS") No. 107, *Disclosures
      about Fair Value of Financial Instruments* ,
      the
      Company has determined the estimated fair value of financial instruments using
      available market information and appropriate valuation methodologies. The fair
      value of financial instruments classified as current assets or liabilities
      approximate carrying value due to the short-term maturity of the
      instruments.




*Cash
      and Cash Equivalents*




The
      Company considers deposits that can be redeemed on demand and investments that
      have original maturities of less than three months, when purchased, to be cash
      equivalents. There are no cash equivalents as of December 31, 2005. The Company
      has no requirement for compensating balances. The Company did not have cash
      balances that exceeded the federally insured limits at December 31,
      2005.




F-10
 **Back
          to Table of Contents**




**Key
        Gold Corporation**
 **(A
        Company in the Development Stage)**
  **Notes
        to the Financial Statements**
  ***December
        31, 2005 and***
 ***For
        Each of the Two Years in the Period Ended December 31, 2005
        and***
 ***For
        the Period From March 22, 2002 (Inception) to December 31, 2005***





**2.**
            **Summary
                of Significant Accounting Policies,
                Continued**




*Net
      Loss per Common Share*




Basic
      loss per share includes no dilution and is computed by dividing income available
      to common stockholders by the weighted average number of common shares
      outstanding for the period. The Company does not have any potentially dilutive
      securities; therefore, the accompanying presentation is only of basic loss
      per
      share.




*Stock
      Split*




On
      May
      17, 2004, an eight for one stock split of the Company's common stock occurred.
      Accordingly, all capital accounts, historical share amounts, weighted average
      share, and loss per share amounts have been restated to reflect the forward
      stock split.




*Treasury
      Stock*




The
      Company elected to retire the treasury shares acquired in the May 2004
      Arrangements and Release Agreement (the "Release Agreement") entered into with
      the former officer and restore them to the status of authorized and unissued
      shares. The Company has chosen to record the treasury share transactions using
      the cost method. During the year ended December 31, 2004, the Company retired
      47,000,000 shares of common stock (Note 7).




*Income
      Taxes*




The
      Company follows the liability method of accounting for income taxes. Under
      this
      method, deferred income tax assets and liabilities are recognized for the future
      tax consequences attributable to differences between the financial statement
      carrying amounts of existing assets and liabilities and their respective tax
      balances. Deferred income tax assets and liabilities are measured using enacted
      or substantially enacted tax rates expected to apply to the taxable income
      in
      the years in which those differences are expected to be recovered or settled.
      The effect on deferred income tax assets and liabilities of a change in tax
      rates is recognized in income in the period that includes the date of enactment
      or substantive enactment.




F-11
 **Back
          to Table of Contents**




**Key
      Gold Corporation**


**(A
        Company in the Development Stage)**
  **Notes
        to the Financial Statements**
  ***December
        31, 2005 and***
 ***For
        Each of the Two Years in the Period Ended December 31, 2005
        and***
 ***For
        the Period From March 22, 2002 (Inception) to December 31, 2005***





**2.**
            **Summary
                of Significant Accounting Policies,
                Continued**




*Use
      of Estimates and Assumptions*




The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States requires us to make estimates and
      assumptions that affect the reported amounts of assets, liabilities, revenues
      and expenses and disclosure of contingent obligations in the financial
      statements and accompanying notes. Our most significant assumptions are employed
      in estimates used in the determination of the deferred income tax asset
      valuation allowance, accrued obligations, and estimating stock-based charges.
      The estimation process requires assumptions to be made about future events
      and
      conditions, and as such, is inherently subjective and uncertain. Actual results
      could differ materially from our estimates.




*Advertising
      Costs*




Advertising
      costs are expensed as incurred. Advertising costs totaled $17,815, $40,999,
      and
      $59,814 for the years ended December 31, 2005 and 2004 and for the period from
      March 22, 2002 (inception) to December 31, 2005, respectively.




*New
      Accounting Pronouncements*




In
      December 2004, the FASB issued Statement No. 123(R), *Share-Based
      Payment* .
      This
      statement eliminates the use of the intrinsic value method described in
      Accounting Principles Board Opinion No. 25 ("APB No. 25"), *Accounting
      for Stock Issued to Employees* ,
      and
      requires an entity to measure the cost of employee services received in exchange
      for an award of equity instruments based on the grant-date fair value of the
      award. That cost will be recognized over the period during which an employee
      is
      required to provide service in exchange for the award. We adopted the provisions
      of Statement No. 123(R) on January 1, 2006, when it became a mandatory
      requirement. The Company does not expect the adoption of this statement to
      have
      a material impact on its financial position, results of operations or cash
      flows.




F-12
 **Back
          to Table of Contents**




**Key
        Gold Corporation**
 **(A
        Company in the Development Stage)**
  **Notes
        to the Financial Statements**
  ***December
        31, 2005 and***
 ***For
        Each of the Two Years in the Period Ended December 31, 2005
        and***
 ***For
        the Period From March 22, 2002 (Inception) to December 31, 2005***





**3.**
            **Joint
                Ventures**




*Fencheng,
      China Gold Venture*




In
      May
      2004, the Company entered an agreement to pursue mineral exploration in China.
      During the year ended December 31, 2004, the Company made a payment of $88,462
      for professional fees related to the documentation for this investment and
      in
      the year ended December 31, 2005, the Company incurred exploration costs of
      $43,283 on this project.. The Company has abandoned its interest in this project
      and has no further interest nor does it have any further
      obligations.




*Mongolian
      Gold Venture*




In
      March
      2005, the Company entered into an exploration agreement in Mongolia. During
      the
      year ended December 31, 2005, the Company incurred exploration costs of $106,705
      on this project. As a result of proposed tax changes in Mongolia, the Company
      does not believe that it is economically feasable to continue with this
      project.




**4.**
            **Prepaid
                Professional Fees**




The
      Company repaid legal fees during the year ended December 31, 2005. This amount
      was used for legal services received during 2006.




**5.**
            **Deferred
                Income Taxes**




A
      significant portion of the net operating loss carry-forward may not be available
      to be realized for the Company because of a change in the ownership of the
      Company's shares of common stock. Due to the uncertainty of its realization
      and
      anticipated limitations on the loss carry-forward, a full valuation allowance
      has been provided for the deferred tax asset.




There
      is
      no current or deferred income tax provision due to the Company's historical
      losses and valuation allowance.




Significant
      components of the Company's deferred income tax assets and liabilities at
      December 31, 2005 and 2004 are as follows:


2005
              
              2004Deferred
                  income tax assets (liabilities):Net
                  operating loss carryforward
              
              $
              388,748
              
              $
              200,213Valuation
                  allowance
              
              
              (388,748
              )
              
              (200,213
              )**Net
                  deferred income tax asset**
              
              
              **—**
              
              
              **—**


F-13
 **Back
          to Table of Contents**




**Key
        Gold Corporation**
 **(A
        Company in the Development Stage)**
  **Notes
        to the Financial Statements**
  ***December
        31, 2005 and***
 ***For
        Each of the Two Years in the Period Ended December 31, 2005
        and***
 ***For
        the Period From March 22, 2002 (Inception) to December 31, 2005***




**5.**
            **Deferred
                Income Taxes,
                Continued**




The
      Company, based upon its history of losses and management's assessment of when
      operations are anticipated to generate taxable income, has concluded that it
      is
      more likely than not that none of the net deferred income tax assets will be
      realized through future taxable earnings and has established a valuation
      allowance for them. The valuation allowance increased by $188,535 during the
      year ended December 31, 2005.




Reconciliation
      of the effective tax rate to the U.S. statutory rate is as follows:




For
                  thePeriod
                  FromFor
                  the
              
              For
                  the
              
              March
                  22, 2002Year
                  Ended
              
              Year
                  Ended
              
              (Inception)
                  toDecember
                  31, 2005
              
              December
                  31, 2004
              
              December
                  31, 2005Tax
                  expense at U.S. statutory rate
              
              
              (34.0
              )%
              
              (34.0
              )%
              
              (34.0
              )%Change
                  in valuation allowance
              
              
              34.0
              %
              
              34.0
              %
              
              34.0
              %**Effective
                  income tax rate**
              
              
              **—**
              
              
              **—**
              
              
              **—**


The
      Company also has federal net operating loss carryforwards of $1,143,375. The
      federal net operating loss carryforwards will begin to expire in 2023.




**6.**
            **Commitments
                and Contingencies**




*Financial
      Results, Liquidity and Management's Plan*




The
      Company has incurred net losses for the years ended December 31, 2005 and 2004
      and for the period from March 22, 2002 (inception) to December 31, 2005 of
      $(554,512), $(564,111), and $(1,143,375), respectively. These factors raise
      substantial doubt about the Company's ability to continue as a going concern.
      Despite its negative cash flows from operations of $(594,365), $(325,836) and
      $(942,251) for the years ended December 31, 2005 and 2004 and for the period
      from March 22, 2002 (inception) to December 31, 2005, respectively, the Company
      has been able to obtain additional operating capital through private equity
      funding sources. Management's plans include the continued development and
      eventual implementation of its business plan. The Company has relied upon equity
      funding and loans from shareholders since inception.




No
      assurances can be given that the Company can obtain sufficient working capital
      through the sale of the Company's common stock and borrowing or that the
      development and implementation of its business plan will generate sufficient
      revenues in the future to sustain ongoing operations. The financial statements
      do not include any adjustments that might be necessary if the Company is unable
      to continue as a going concern.




F-14
 **Back
          to Table of Contents**




**Key
      Gold Corporation**


**(A
        Company in the Development Stage)**
  **Notes
        to the Financial Statements**
  ***December
        31, 2005 and***
 ***For
        Each of the Two Years in the Period Ended December 31, 2005
        and***
 ***For
        the Period From March 22, 2002 (Inception) to December 31, 2005***





**6.**
            **Commitments
                and Contingencies,
                Continued**




*Facility
      Leases*




The
      Company, through an entity owned by its Chief Executive Officer, leases office
      space in Vancouver, British Columbia. This lease commenced on January 1, 2005,
      requires a monthly payment of approximately $2,509 plus common area fees, is
      on
      a month-to-month basis, and can be terminated at any time by either party.




The
      Company also leases office space in Boulder, Colorado. The lease commenced
      on
      June 15, 2004 and was renewed for another twelve month term on June 15, 2005.
      The average monthly minimum payment was $692 for the twelve months ended
      December 31, 2005.




Rent
      expense for the years ended December 31, 2005 and 2004 and for the period from
      March 22, 2002 (inception) to December 31, 2005 amounted to $45,739, $6,442,
      and
      $52,181, respectively.




*Litigation*




The
      Company is not aware of any litigation matters pending or threatened as of
      December 31, 2005 that will materially affect the Company's financial
      statements. The Company is sometimes involved in matters of litigation that
      the
      Company considers ordinary routine litigation incidental to the Company's
      business. The Company's policy is to accrue during a period, as a charge to
      operations, amounts related to legal matters if it is probable that a liability
      has been incurred and the amount of loss can be reasonably estimated, as
      required by SFAS No. 5, *Accounting
      for Contingencies* .




*Consulting
      Agreement with Related Party*




The
      Company has a corporate services agreement with an entity that is controlled
      by
      the Company's chairman of the board of directors and president that was entered
      into in April 2004. Under the terms of the agreement, the Company pays a monthly
      fee of $7,500 to the related entity for various corporate and administrative
      services and will continue through March 2006. Upon expiration of the agreement,
      either party may renew for a term of one year or longer, if desired. The minimum
      commitment under this agreement is $90,000 for 2005 and $22,500 for 2006. The
      corporate services agreement resulted in the recognition of $110,880 and $67,500
      as consulting fee - related party for the years ended December 31, 2005 and
      2004, respectively. There is an amount of $9,120 which has been prepaid on
      the
      consulting agreement as of December 31, 2005.




F-15
 **Back
          to Table of Contents**




**Key
        Gold Corporation**
 **(A
        Company in the Development Stage)**
  **Notes
        to the Financial Statements**
  ***December
        31, 2005 and***
 ***For
        Each of the Two Years in the Period Ended December 31, 2005
        and***
 ***For
        the Period From March 22, 2002 (Inception) to December 31, 2005***





**7.**
            **Equity
                Transactions**




*Common
      Stock*




Common
      Shares Split




In
      April
      2004, the Company's Board of Directors approved a forward-split of its issued
      and outstanding shares of common stock on an 8 for 1 basis for the shareholders
      of record on May 15, 2004 and was effective on May 17, 2004. All capital
      accounts, historical share amounts weighted average share and loss per share
      data in this report give effect to the stock split, applied retroactively,
      to
      all periods presented.




Redemption
      of Common Shares




In
      May
      2004, the former officer sold 47,000,000 shares of common stock back to the
      Company in a redemption of common shares. Pursuant to a release agreement
      between himself and the Company, he received a cash payment of $49,000 and
      caused the satisfaction of a $3,000 promissory note due from the Company as
      consideration for the shares retired. The net redemption price of $46,000
      amounted to $0.001 per share of common stock. The redemption and ultimate
      retirement of the common shares has been accounted for as treasury stock
      transaction (Note 2).




Common
      Shares Issued in Satisfaction of Debt




In
      June
      2004 the Company issued 500,000 shares of its common stock in consideration
      of
      the satisfaction of two notes with a combined face value of $500,000.




Sale
      of Equity Units




In
      August
      2004, the Company sold 370,370 equity units to one party who had previously
      loaned the Company money through a private placement offering. Each equity
      unit
      was comprised of one share of the Company's common stock and one warrant to
      purchase a share of the Company's common stock. The per equity unit price was
      $1.35 for an aggregate value of $500,000. The warrant granted the holder the
      right to acquire the Company's stock at an exercise price of $1.50 per share,
      with an exercise period that expired 24 months after the unit's purchase by
      the
      investor.




F-16
 **Back
          to Table of Contents**




**Key
        Gold Corporation**
 **(A
        Company in the Development Stage)**
  **Notes
        to the Financial Statements**
  ***December
        31, 2005 and***
 ***For
        Each of the Two Years in the Period Ended December 31, 2005
        and***
 ***For
        the Period From March 22, 2002 (Inception) to December 31, 2005***


**7.**
            **Equity
                Transactions,
                Continued**




*Warrant
      Activity*




Warrants
      Issued




In
      August
      2004 as part of its private placement offering, the Company sold equity units.
      Each unit consisted of one share of the Company's common stock and one warrant
      to acquire one share of the Company's common stock at $1.50 per share with
      an
      exercise period that expired 24 months after the unit's purchase by the
      investor.




A
      summary
      of stock warrants follows:


WeightedAverageExerciseWarrants
              
              Price**Outstanding
                  at December 31, 2004**
              
              
              **370,370**
              
              **$**
              **1.50**Granted
              
              
              —
              
              
              —Exercised
              
              
              —
              
              
              —Cancelled
              
              
              —
              
              
              —**Outstanding
                  at December 31, 2005**
              
              
              **370,370**
              
              **$**
              **1.50**




All
      warrants are exercisable at the time of issuance. The following table summarizes
      information about warrants at December 31, 2005:




WarrantsOutstanding
                  atExercise
                  Price
              
              December
                  31, 2005
              
              Remaining
                  Life$
                  1.50
              
              
              370,370
              
              
              0.83


Reservation
      of Common Stock




As
      of
      December 31, 2005, the Company has reserved for future issuance common stock
      as
      follows:




Warrants
              
              
              370,370


F-17
 **Back
          to Table of Contents**




**Key
      Gold Corporation**


**(A
      Company in the Development Stage)**




**Notes
      to the Financial Statements**




***December
      31, 2005 and***


***For
      Each of the Two Years in the Period Ended December 31, 2005
      and***


***For
      the Period From March 22, 2002 (Inception) to December 31, 2005***




**8.**
            **Loss
                Per Share**






Basic
      and
      diluted loss per common share have been computed by dividing the loss available
      to common shareholders by the weighted-average number of common shares
      outstanding for the periods.






The
      computations of basic and diluted loss per common share are as
      follows:


For
                  thePeriod
                  FromMarch
                  22, 2002For
                  the Year Ended December 31
              
              (Inception)
                  to2005
              
              2004
              
              2005Loss
                  per common share, basic and diluted:Numerator:Net
                  loss available to common shareholders
              
              $
              (554,512
              )
              $
              (564,111
              )
              $
              (1,143,375
              )Denominator:Weighted
                  average shares - basic and diluted
              
              
              41,870,370
              
              
              59,112,123
              
              
              77,583,288**Loss
                  per common share, basic and diluted**
              ****
              **$**
              **(0.0132**
              **)**
              **$**
              **0.0095**
              ****
              **$**
              **(0.0147**
              **)**


The
      effect of the potentially dilutive securities was not included in the
      computation of diluted loss per share, because to do so would have been
      antidilutive for the periods presented.






F-18