UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





AMENDMENT
NO. 2


TO


FORM
10-QSB


ON


FORM
10-Q








(Mark
One)





x
            Quarterly
      report pursuant to section 13 or 15(d) of the Securities Exchange Act of
      1934 for the Quarter ended September 30,
2007


OR


 ̈
            Transition
      report pursuant to section 13  or 15 (d) of the Securities
      Exchange Act of 1934





Commission
file number 000-52696





DOMINION
MINERALS CORP.


(Exact
name of registrant as specified in its charter)










Delaware
              
              22-3091075(State
      or other jurisdiction
              
              (I.R.S.
      Employer Identification No.)of
      incorporation or organization)





410 Park
Avenue, 15th
Floor


New York,
New York 10022


(Address
of principal executive offices)





(212)
231-8171


(Issuer’s
telephone number)





N/A


(Former
name, former address and former fiscal year, if changed since last
report)





Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange 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 x  No  ̈





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


Yes
 ̈  No
x





State the
number of shares outstanding of each of the issuer’s class of common equity, as
of the latest practicable date:  41,246,852.





Transitional
Small Business Disclosure Format (Check one):   Yes x  No  ̈










AMENDMENT NO. 2 TO FORM
10-QSB ON FORM 10-Q




This Amendment No. 2 to Form
10-QSB on Form 10-Q amends our Quarterly Report on Amendment No. 1 to
Form 10-QSB as previously filed with the Securities and Exchange Commission
on November 20, 2007.





As described in Note 3 to the Company’s
financial statements included herein, the Company has restated its financial
statements as of and for the quarter ended and nine months ended September 30,
2007, to revise the accounting for common stock issued in connection with the
conversion on April 1, 2007 of a promissory note previously issued by the
Company and services that the Company expected to receive from the holders of
the promissory note.  As described in Note 3, the Company filed suit
on December 23, 2008 in an effort to recover the shares of common stock issued
and reached a settlement agreement on February 11, 2009, under which a portion
of the shares issued were cancelled or returned to the Company.  The
Company has re-stated its accounting for the issuance of the shares and has
recorded a non-cash charge to income of $2,205,492 in the quarter ended June 30,
2007 related to the shares that will not be returned to the Company and for
which the Company will not receive the services it expected.





The restatement of the Company’s
financial statements, as described in Note 3, reduced the Company’s net income
for the quarter ended and nine months ended September 30, 2007 by
$2,205,492.  The restatement reduced the total amount of Shareholders’
Equity by $3,230 and increased Current Liabilities by $3,230, as of that
date.  Except for these effects and the inclusion of Note 3 and
related revisions to Note 1, paragraph (g) Note 7, paragraph (a) and Note
10, this Amendment No. 2 and the Company’s financial statements included herein
are unchanged from the Report previously filed.





This Amendment contains the complete
text of the original report with the corrected information appearing in the
financial statements.










PART
I – FINANCIAL INFORMATION




ITEM
1. FINANCIAL STATEMENTS


EMPIRE MINERALS CORP. AND
      SUBSIDIARIES(FORMERLY KNOWN AS XACORD
      CORP.)(AN EXPLORATION
      COMPANY)CONSOLIDATED BALANCE
      SHEETAS OF SEPTEMBER 30,
      2007
  ASSETSSEPTEMBER
302007UNAUDITED(Restated)CURRENT
    ASSETS:Cash and cash
      equivalents
                                          
                                          $
                                          2,091,228Notes
      receivable
                                          
                                          
                                          80,000Prepaid
    expense
                                          
                                          
                                          94,521Total current
      assets
                                          
                                          
                                          2,265,749EQUIPMENT,
    net
                                          
                                          
                                          41,467OTHER
    ASSETS:Notes issuance
      cost
                                          
                                          
                                          29,916Long term
      investment
                                          
                                          
                                          2,210,855Total other
      assets
                                          
                                          
                                          2,240,771Total
assets
                                          
                                          $
                                          4,547,987LIABILITIES
      AND SHAREHOLDERS' EQUITYCURRENT
      LIABILITIES:Accrued
      liabilities
                                          
                                          $
                                          157,070Convertible note payable, net of
      discount $14,970
                                          
                                          
                                          585,110Total current
      liabilities
                                          
                                          
                                          742,180COMMITMENTS AND
      CONTINGENCIES
                                          
                                          
                                          -SHAREHOLDERS'
      EQUITY:Preferred stock, Voting Series I,
      $0.0001 par value; 5,000,000 shares authorized;0 shares issued and
      outstanding
                                          
                                          
                                          -Common stock, $0.0001 par value;
      700,000,000 shares authorized41,556,696 and 20,485,000 issued
      and outstandingas of September 30, 2007 and
      December 31, 2006, respectively
                                          
                                          
                                          4,156Escrowed common
      stock
                                          
                                          
                                          (267
                                          )Additional paid-in
      capital
                                          
                                          
                                          13,612,258Shares to be returned for services
      not received
                                          
                                          
                                          (1,654,167
                                          )Stock subscription
      receivable
                                          
                                          
                                          (1,560
                                          )Deficit accumulated during the
      development stage
                                          
                                          
                                          5,449Accumulated other comprehensive
      income
                                          
                                          
                                          (8,160,062
                                          )Total shareholders'
      equity
                                          
                                          
                                          3,805,807Total liabilities and
      shareholders' equity
                                          
                                          $
                                          4,547,987
  The
accompanying notes are an integral part of this consolidated
statement.


2




Table of Contents




EMPIRE MINERALS CORP. AND
      SUBSIDIARIES(FORMERLY KNOWN AS XACORD
      CORP.)(AN EXPLORATION
      COMPANY)CONSOLIDATED STATEMENTS OF
      OPERATIONS AND OTHER COMPREHENSIVE INCOME(UNAUDITED)


Nine
      months
                      
                      
                      From
    inception
                      
                      
                      From
    inceptionThree months
      ended
                      
                      
                      ended
                      
                      
                      (March 1,
    2006)
                      
                      
                      (March 1,
    2006)September
    30,
                      
                      
                      September
      30,
                      
                      
                      to September
      30,
                      
                      
                      to September
      30,2007
                      
                      
                      2006
                      
                      
                      2007
                      
                      
                      2006
                      
                      
                      2007(Restated)
                      
                      
                      
                      
                      
                      (Restated)REVENUE
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      -COST OF
    SALES
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -GROSS
PROFIT
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -RESEARCH AND DEVELOPMENT
      COSTS
                      
                      
                      48,140
                      
                      
                      
                      155,163
                      
                      
                      
                      323,875
                      
                      
                      
                      200,000
                      
                      
                      
                      722,565GENERAL
      AND  ADMINISTRATIVE EXPENSES
                      
                      
                      903,525
                      
                      
                      
                      386,599
                      
                      
                      
                      3,448,936
                      
                      
                      
                      864,312
                      
                      
                      
                      5,180,502LOSS FROM EXPECTED SERVICES NOT
      RECEIVED
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      2,205,492
                      
                      
                      
                      
                      
                      
                      
                      2,205,492LOSS FROM
      OPERATIONS
                      
                      
                      (951,665
                      )
                      
                      
                      (541,762
                      )
                      
                      
                      (5,978,303
                      )
                      
                      
                      (1,064,312
                      )
                      
                      
                      (8,108,559
                      )OTHER
    EXPENSE
                      
                      
                      (72,558
                      )
                      
                      
                      -
                      
                      
                      
                      (58,087
                      )
                      
                      
                      -
                      
                      
                      
                      (51503
                      )LOSS BEFORE PROVISION FOR INCOME
      TAXES
                      
                      
                      (1,024,223
                      )
                      
                      
                      (541,762
                      )
                      
                      
                      (6,036,390
                      )
                      
                      
                      (1,064,312
                      )
                      
                      
                      (8,160,062
                      )PROVISION FOR INCOME
      TAXES
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -NET LOSS
                      
                      
                      (1,024,223
                      )
                      
                      
                      (541,762
                      )
                      
                      
                      (6,036,390
                      )
                      
                      
                      (1,064,312
                      )
                      
                      
                      (8,160,062
                      )OTHER COMPREHENSIVE
      INCOMEForeign
      currency translation adjustment
                      
                      
                      2,687
                      
                      
                      
                      -
                      
                      
                      
                      8,100
                      
                      
                      
                      -
                      
                      
                      
                      5,449COMPREHENSIVE
      LOSS
                      
                      $
                      (1,021,536
                      )
                      
                      $
                      (541,762
                      )
                      
                      $
                      (6,028,290
                      )
                      
                      $
                      (1,064,312
                      )
                      
                      $
                      (8,154,613
                      )LOSS PER
    SHAREBasic and diluted loss per
      share
                      
                      $
                      (0.03
                      )
                      
                      $
                      (0.03
                      )
                      
                      $
                      (0.18
                      )
                      
                      $
                      (0.07
                      )Basic and diluted weighted average
      number of common shares
                      
                      
                      40,029,773
                      
                      
                      
                      18,168,352
                      
                      
                      
                      33,478,825
                      
                      
                      
                      15,979,566




The
accompanying notes are an integral part of this consolidated
statement.


3


Table of
Contents




EMPIRE MINERALS CORP. AND
      SUBSIDIARIES (FORMERLY XACORD CORP.)(FORMERLY KNOWN AS XACORD
      CORP.)(AN EXPLORATION
      COMPANY)STATEMENT OF SHAREHOLDERS'
      EQUITY
  SHARES TOADDITIONAL
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    STOCK
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    BE
RETURNED
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    OTHER
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    TOTALPREFERRED
    STOCK
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    COMMONSTOCK
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    SHARES IN
      ESCROW
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    PAID-IN
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    SUBSCRIPTION
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    FOR
SERVICES
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    ACCUMULATED
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    COMPREHENSIVE
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    SHAREHOLDERS'SHARES
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    AMOUNT
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    SHARES
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    AMOUNT
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    SHARES
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    AMOUNT
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    CAPITAL
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    RECEIVABLE
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    NOT
RECEIVED
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    DEFICIT
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    GAIN (LOSS)
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    EQUITYBalance at inception, March 1,
      2006
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    -
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    $
                                                                                                                                                                                                                    -
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    -
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    $
                                                                                                                                                                                                                    -
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    -
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    $
                                                                                                                                                                                                                    -
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    $
                                                                                                                                                                                                                    -
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    $
                                                                                                                                                                                                                    -
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    $
                                                                                                                                                                                                                    -
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    $
                                                                                                                                                                                                                    -
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    $
                                                                                                                                                                                                                    -Founders stock issued for cash,
      $0.001 per share
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    6,460,000
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    646
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    5,814
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    (6,460
                                                                                                                                                                                                                    )
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    -Shares issued March 29, 2006 for
      $80,500 in servicesand $4,500 cash, at $0.01 per
      share
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    8,500,000
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    850
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    84,150
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    (8,500
                                                                                                                                                                                                                    )
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    76,500Stock sold through subscriptionagreementsthrough September 30, 2006 at
      $0.50 per share
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    3,695,000
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    369
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    1,847,131
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    1,847,500Stock warrants issued to
      employees
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    474
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    474Stock warrants issued to
      consultants for advisory services
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    829
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    829Net loss
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    (1,064,312
                                                                                                                                                                                                                    )
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    (1,064,312
                                                                                                                                                                                                                    )Balance as of September 30, 2006
      (Unaudited)
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    -
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    $
                                                                                                                                                                                                                    -
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    18,655,000
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    $
                                                                                                                                                                                                                    1,865
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    -
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    $
                                                                                                                                                                                                                    -
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    $
                                                                                                                                                                                                                    1,938,398
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    $
                                                                                                                                                                                                                    (14,960
                                                                                                                                                                                                                    )
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    $
                                                                                                                                                                                                                    -
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    $
                                                                                                                                                                                                                    (1,064,312
                                                                                                                                                                                                                    )
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    $
                                                                                                                                                                                                                    -
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    $
                                                                                                                                                                                                                    860,991Proceeds on subscription
      receivable
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    11,900
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    11,900Shares
    issued$0.50 per share, forcash
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    1,810,000
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    182
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    904,818
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    905,000$0.10 per share, conversion of
      warrants, for cash
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    20,000
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    2
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    1,998
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    2,000Warrants issued for consulting
      services
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    196,284
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    196,284Foreign currency translation
      loss
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    -2,651
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    (2,651
                                                                                                                                                                                                                    )Net loss
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    (1,059,360
                                                                                                                                                                                                                    )
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    (1,059,360
                                                                                                                                                                                                                    )Balance, December 31,
      2006
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    -
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    $
                                                                                                                                                                                                                    -
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    20,485,000
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    $
                                                                                                                                                                                                                    2,049
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    -
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    $
                                                                                                                                                                                                                    -
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    $
                                                                                                                                                                                                                    3,041,498
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    $
                                                                                                                                                                                                                    (3,060
                                                                                                                                                                                                                    )
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    $
                                                                                                                                                                                                                    -
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    $
                                                                                                                                                                                                                    (2,123,672
                                                                                                                                                                                                                    )
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    $
                                                                                                                                                                                                                    (2,651
                                                                                                                                                                                                                    )
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    $
                                                                                                                                                                                                                    914,164Proceeds on subscription
      receivable
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    1,500
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    1,500Stock
issued$0.10 per share, conversion of
      warrants for cash
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    450,000
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    45
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    44,955
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    45,000$0.10 per share, cashless
      conversion of warrants
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    1,600,000
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    160
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    (160
                                                                                                                                                                                                                    )
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    -$0.50 per share, CEO for
      compensation
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    1,500,000
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    150
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    749,850
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    750,000$0.50 per share, for
      cash
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    3,264,000
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    326
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    1,631,674
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    1,632,000$0.50 per share, for consulting
      services
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    1,900,000
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    190
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    949,810
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    950,000$0.50 per share, for exploration
      & development
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    4,000,000
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    400
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    (2,666,667
                                                                                                                                                                                                                    )
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    (267
                                                                                                                                                                                                                    )
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    666,533
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    666,666$0.50 per share, for loan issuance
      cost
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    200,000
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    20
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    99,980
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    100,000$0.50 per share, for services and
      conversion of note
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    7,925,000
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    793
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    3,961,707
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    (1,654,167
                                                                                                                                                                                                                    )
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    2,308,333Shares assumed pursuant to reverse
      merger
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    100
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    10,000
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    232,696
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    23
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    (145,230
                                                                                                                                                                                                                    )
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    (135,207
                                                                                                                                                                                                                    )Repurchase preferred
      stock
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    (100
                                                                                                                                                                                                                    )
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    (10,000
                                                                                                                                                                                                                    )
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    (10,000
                                                                                                                                                                                                                    )Warrants issued with convertible
      note
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    31,641
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    31,641Special
      Warrantsissued for
    cah
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    2,080,000
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    2,080,000issued
      with convertible promissory note
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    500,000
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    500,000Foreign currency translation
      gain
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    8,100
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    8,100Net loss
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    (6,036,390
                                                                                                                                                                                                                    )
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    (6,036,390
                                                                                                                                                                                                                    )Balance, September 30, 2007
      (Unaudited) (Restated)
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    -
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    $
                                                                                                                                                                                                                    -
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    41,556,696
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    $
                                                                                                                                                                                                                    4,156
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    (2,666,667
                                                                                                                                                                                                                    )
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    $
                                                                                                                                                                                                                    (267
                                                                                                                                                                                                                    )
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    $
                                                                                                                                                                                                                    13,612,258
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    $
                                                                                                                                                                                                                    (1,560
                                                                                                                                                                                                                    )
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    $
                                                                                                                                                                                                                    (1,654,167
                                                                                                                                                                                                                    )
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    $
                                                                                                                                                                                                                    (8,160,062
                                                                                                                                                                                                                    )
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    $
                                                                                                                                                                                                                    5,449
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    
                                                                                                                                                                                                                    $
                                                                                                                                                                                                                    3,805,807


The
accompanying notes are an integral part of this consolidated
statement.


4





Table of
Contents




EMPIRE MINERALS CORP. AND
      SUBSIDIARIES(FORMERLY KNOWN AS XACORD
      CORP.)(AN EXPLORATION
      COMPANY)CONSOLIDATED STATEMENT OF CASH
      FLOWS(UNAUDITED)




Nine months
                                                        
                                                        
                                                        From
    inception
                                                        
                                                        
                                                        From
    inceptionended
                                                        
                                                        
                                                        (March 1,
    2006)
                                                        
                                                        
                                                        (March 1,
    2006)Septermber
    30,
                                                        
                                                        
                                                        to September
      30,
                                                        
                                                        
                                                        to September
      30,2007
                                                        
                                                        
                                                        2006
                                                        
                                                        
                                                        2007(Restated)
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        (Restated)CASH FLOWS FROM OPERATING
      ACTIVITIES:Net
    loss
                                                        
                                                        $
                                                        (6,036,390
                                                        )
                                                        
                                                        $
                                                        (1,064,312
                                                        )
                                                        
                                                        $
                                                        (8,160,062
                                                        )Adjustments to reconcile net loss
      to net cashused in operating
      activities:Depreciation
                                                        
                                                        
                                                        7,488
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        7,488Warrants issued for
      services
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        1,303
                                                        
                                                        
                                                        
                                                        197,587Amortization of debt
      discount
                                                        
                                                        
                                                        16,671
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        93,171Amortization of loan issuance
      cost
                                                        
                                                        
                                                        144,083
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        144,083Common stock issued for advisory
      services
                                                        
                                                        
                                                        1,605,479
                                                        
                                                        
                                                        
                                                        76,500
                                                        
                                                        
                                                        
                                                        1,605,479Loss from expected services not
      received
                                                        
                                                        
                                                        2,205,492
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        2,205,492Loss on currency
      exchange
                                                        
                                                        
                                                        11,080
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        11,080Change in operating
      liabilities:
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        -Accrued
      liabilities
                                                        
                                                        
                                                        (35,550
                                                        )
                                                        
                                                        
                                                        75,632
                                                        
                                                        
                                                        
                                                        153,840Net cash used in operating
      activities
                                                        
                                                        
                                                        (2,081,647
                                                        )
                                                        
                                                        
                                                        (910,877
                                                        )
                                                        
                                                        
                                                        (3,741,842
                                                        )CASH FLOWS FROM INVESTING
      ACTIVITIES:Capital
      contribution
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        (138,000
                                                        )
                                                        
                                                        
                                                        -Equipment
      Purchases
                                                        
                                                        
                                                        (4,166
                                                        )
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        (46,471
                                                        )Long term
      investment
                                                        
                                                        
                                                        (1,544,189
                                                        )
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        (1,544,189
                                                        )Notes
      receivable
                                                        
                                                        
                                                        (80,000
                                                        )
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        (80,000
                                                        )Net cash used in investing
      activites
                                                        
                                                        
                                                        (1,628,355
                                                        )
                                                        
                                                        
                                                        (138,000
                                                        )
                                                        
                                                        
                                                        (1,670,660
                                                        )CASH FLOWS FROM FINANCING
      ACTIVITIES:Proceeds from sale of common
      stock
                                                        
                                                        
                                                        1,632,000
                                                        
                                                        
                                                        
                                                        1,847,500
                                                        
                                                        
                                                        
                                                        4,396,400Proceeds from special
      warrants
                                                        
                                                        
                                                        2,068,920
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        2,068,920Proceeds from exercise of
      warrants
                                                        
                                                        
                                                        45,000
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        47,000Payment on note issuance
      cost
                                                        
                                                        
                                                        (74,000
                                                        )
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        (74,000
                                                        )Payment for notes
      payables
                                                        
                                                        
                                                        (25,000
                                                        )
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        (25,000
                                                        )Proceeds from notes
      payable
                                                        
                                                        
                                                        1,105,000
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        1,105,000Proceeds from subscription
      receivable
                                                        
                                                        
                                                        1,500
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        1,500Payment for buy back preferred
      stock
                                                        
                                                        
                                                        (10,000
                                                        )
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        (10,000
                                                        )Net cash provided by financing
      activities:
                                                        
                                                        
                                                        4,743,420
                                                        
                                                        
                                                        
                                                        1,847,500
                                                        
                                                        
                                                        
                                                        7,509,820EFFECT OF EXCHANGE RATE CHANGES ON
      CASH
                                                        
                                                        
                                                        9,933
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        (6,090
                                                        )NET INCREASE IN CASH AND CASH
      EQUIVALENTS
                                                        
                                                        
                                                        1,043,351
                                                        
                                                        
                                                        
                                                        798,623
                                                        
                                                        
                                                        
                                                        2,091,228CASH AND CASH EQUIVALENTS,
      beginning of the period
                                                        
                                                        
                                                        1,047,877
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -CASH AND CASH EQUIVALENTS, end of
      period
                                                        
                                                        $
                                                        2,091,228
                                                        
                                                        
                                                        $
                                                        798,623
                                                        
                                                        
                                                        $
                                                        2,091,228SUPPLEMENTAL
      DISCLOSURES:Interest
    paid
                                                        
                                                        $
                                                        66,024
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        66,024Income taxes
      paid
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        -Assumption of liabilities in
      reverse merger
                                                        
                                                        $
                                                        149,186
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        149,186Conversion of notes and interest
      for common stock
                                                        
                                                        $
                                                        106,071
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        106,071Issuance of founders stock for
      subscription receivable
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        (14,960
                                                        )
                                                        
                                                        $
                                                        (14,960
                                                        )Shares issued for exploration and
      development of investment
                                                        
                                                        $
                                                        666,667
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        666,667Warrants issued for debt issuance
      costs
                                                        
                                                        $
                                                        31,641
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        31,641Net liabitlities assumed in
      reverse acquisition
                                                        
                                                        $
                                                        135,207
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        135,207Warrants issued for repayment of
      notes
                                                        
                                                        $
                                                        500,000
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        500,000Common stock issued for loan
      issuance cost
                                                        
                                                        $
                                                        100,000
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        100,000


The
accompanying notes are an integral part of this consolidated
statement.


5


Table of
Contents




EMPIRE
MINERALS CORP. AND SUBSIDIARIES


(FORMERLY
KNOWN AS XACORD CORP.)


(AN
EXPLORATION COMPANY)


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


SEPTEMBER
30, 2007


(UNAUDITED)





1.
            Nature of Business and
      Significant Accounting
Policies





a.
            Nature
      of Business— Empire
      Minerals Corp. (“Company”) (formerly known as Xacord Corp.) was
      incorporated January 4, 1996 under the laws of Delaware. The Company
      is engaged in the exploration of precious and base metals including gold
      and copper. All potential properties currently under exploration are
      located in the People’s Republic of China and
    Panama.





From
September 2005 to January 2007, the Company changed its name 3 times
to reflect the changing business plans. The original name of the Company was
Objectsoft Corporation. In June 2005, the name was changed to Nanergy, Inc.
In, June 2006, the name was changed to Xacord Corp and in
January 2007, the name was changed to its current name, Empire Minerals
Corp.





On
February 20, 2007, the Company completed a triangular reverse merger with
Empire Minerals Corp., a Nevada Corporation (formerly known as Empire Gold
Corp.) (“Subsidiary”) and Xacord Acquisition Sub Corp, then the Company’s
subsidiary (“Xacord”). All 26,504,000 shares in the Subsidiary were exchanged
one for one for 26,504,000 shares in the Company. Additionally, 5,950,000
warrants in the Subsidiary were exchanged one for one for 5,950,000 warrants in
the Company. The Subsidiary was the accounting acquirer and the Company was the
legal acquirer. The transaction was accounted for as a reverse merger and
recapitalization. As such, the accompanying financial statements reflect the
historical operations of the Subsidiary in the capital structure of the Company
at the beginning of the first period presented herein.





b.
            Basis
      of Presentation—
      The accompanying consolidated financial statements have been prepared in
      accordance with accounting principles generally accepted in the United
      States of America. The consolidated financial statements include the
      financial statements of the Company, its wholly owned subsidiaries Empire
      Minerals Corp., a Nevada corporation (formerly known as Empire Gold
      Corp.), 50% owned Zhaoyuan Dongxing Gold Mining Co., Ltd. (“Dongxing”),
      and 70% owned Empire (Tianjin) Resources Co., Ltd. (“Tianjin”)
      (“Subsidiaries”). All significant inter-company transactions and balances
      between the Company and its subsidiaries are eliminated upon
      consolidation. Minority interest has not been presented on the
      consolidated balance sheet because accumulated losses have exceeded the
      minority shareholders’ equity. In accordance with APB No. 18, the
      minority interest has been written down to zero on the accompanying
      balance sheet.





The
Company is currently in an exploration stage, which is characterized by
significant expenditures for the examination and development of exploration
opportunities by its Subsidiaries. The Subsidiaries’ focus for the foreseeable
future will continue to be on securing joint venture agreements within the
People’s Republic of China and Panama to begin conducting mining
operations.





c.
            Use of
      Estimates — The preparation of financial statements in conformity
      with accounting principles generally accepted in the United States of
      America requires management to make estimates and assumptions that affect
      certain reported amounts and disclosures, such as the fair value of
      warrants and stock issued for services as well as various accruals, for
      example, we must calculate the fair value of options granted based on
      various assumptions. Accordingly, the actual results could differ from
      those estimates.





6


Table of
Contents


EMPIRE
MINERALS CORP. AND SUBSIDIARIES


(FORMERLY
KNOWN AS XACORD CORP.)


(AN
EXPLORATION COMPANY)


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


SEPTEMBER
30, 2007


(UNAUDITED)





d.
            Fair
      value of financial instruments- The Company believes the
      carrying value of its financial instruments, including convertible notes,
      approximate fair value due to their short
    maturities.





e.
            Cash
      and Cash Equivalents— For purposes of the statements of cash flows, the Company defines cash
      equivalents as all highly liquid debt instruments purchased with an
      original maturity of three months or
  less.





f.
            Concentration
      of risk





Financial
instruments, which potentially subject the Company to concentrations of credit
risk, consist of cash and cash equivalents. The Company places its cash with
high quality financial institutions and at times may exceed the FDIC $100,000
insurance limit. The Company has limited experience as it is an exploration
stage company but does not anticipate incurring any losses related to this
credit risk. As of September 30, 2007, the Company had amounts in bank
accounts in excess of FDIC insurance of $1,877,963.





The
Company has gold mining activities in People’s Repbulic of China (“PRC”).
Accordingly, the Company’s mining business, financial condition and results of
operations may be influenced by the political, economic and legal environments
in the PRC, and by the general state of the PRC’s economy. The Company’s
operations in the PRC are subject to specific considerations and significant
risks not typically associated with companies in the North America and Western
Europe. These include risks associated with, among others, the political,
economic and legal environments and foreign currency exchange. The Company’s
results may be adversely affected by changes in governmental policies with
respect to laws and regulations, anti-inflationary measures, currency conversion
and remittance abroad, and rates and methods of taxation, among other
things.





g.
            Net Loss Per
      Share — In accordance with Statement of Financial Accounting
      Standard (SFAS) No. 128, Earnings Per Share, an
      basic earnings/loss per common share (EPS) is computed by dividing net
      loss for the period by the weighted average number of common shares
      outstanding during the period. Under SFAS 128, diluted earnings/loss per
      share is computed similar to basic loss per share except that the
      denominator is increased to include the number of additional common shares
      that would have been outstanding if the potential common shares had been
      issued and dilutive.
      Net loss used in determining basic EPS was $6,036,390, $1,064,312
      and $8,160,062 for the nine months ended September 30, 2007, the period
      from inception (March 1, 2006) through September 30, 2006, and the period
      from inception (March 1, 2006) through September 30, 2007, respectively.
      The weighted average number of shares of common stock used in determining
      basic EPS was 33,478,825 and 15,979,566 for the nine months ended
      September 30, 2007 and the period from inception (March 1, 2006) through
      September 30, 2006,
respectively.




7


Table of
Contents




EMPIRE
MINERALS CORP. AND SUBSIDIARIES


(FORMERLY
KNOWN AS XACORD CORP.)


(AN
EXPLORATION COMPANY)


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


SEPTEMBER
30, 2007


(UNAUDITED)





h.
            Income
      Taxes— The Company
      provides for income taxes under SFAS 109,“Accounting
      for Income Taxes,”which requires the recognition of deferred tax liabilities and assets for
      the expected future tax consequences of temporary differences between the
      carrying amounts and the tax bases of assets and liabilities using the
      enacted income tax rate expected to apply to taxable income in the period
      in which the deferred tax liability or assets is expected to be settled or
      realized. SFAS 109 requires that a valuation allowance be established if
      necessary, to reduce the deferred tax assets to the amount that management
      believes is more likely than not to be realized. The provision for federal
      income tax differs from that computed amount by applying federal statutory
      rates to income before federal income tax expense mainly due to expenses
      that are not deductible and income that is not taxable for federal income
      taxes, including permanent differences such as non-deductible meals and
      entertainment.





i.
            Stock
      based compensation—
      For stock, options and warrants issued to service providers, employees and
      founders, the Company follows SFAS No. 123(R),Share-Based
      Payment,and EITF
      96-18,Accounting
      for Equity Instruments That Are Issued to Other Than Employees for
      Acquiring, or in Conjunction with Selling, Goods or Services,which requires recording the
      options and warrants at the fair value of the service provided and
      expensing over the related service
  period.





j.
            Recently
      issued accounting
pronouncements





In
September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. This
statement clarifies the definition of fair value, establishes a framework for
measuring fair value and expands the disclosures on fair value measurements.
SFAS No. 157 is effective for fiscal years beginning after
November 15, 2006. Management has not determined the effect, if any; the
adoption of this statement will have on the financial statements.





In
November 2006, Emerging Issues Task Force (“EITF”) issued 96-19 “Debtor’s
Accounting for a Modification or Exchange of Debt Instruments”. EITF 96-19
provides a test to determine whether a transaction should be accounted for as an
“extinguishment” (with gain or loss recognition) or as a “modification” (with no
gain or loss recognition). If the change in the fair value of the embedded
conversion option is at least 10 percent of the carrying amount of the
original debt instrument immediately prior to the modification or exchange, the
transaction should be accounted for as an “extinguishment”. EITF 96-19 also
provides that when a convertible debt instrument is modified or exchanged in a
transaction that is not accounted for as an extinguishment, an increase in the
fair value of the embedded conversion option should be reduce the carrying
amount of the debt instrument with a corresponding increase in additional
paid-in capital. However, a decrease in the fair value of an embedded conversion
option resulting from a modification or an exchange should not be recognized.
The Company adopted EITF 96-19.





k.
            Equipment— Equipment is stated at cost
      and is depreciated using the straight-line method over their estimated
      useful lives of five years. Expenditures for maintenance and repairs are
      charged to operations as incurred. The estimated service lives of
      equipment and vehicles are as
follows:





8


Table of
Contents


EMPIRE
MINERALS CORP. AND SUBSIDIARIES


(FORMERLY
KNOWN AS XACORD CORP.)


(AN
EXPLORATION COMPANY)


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


SEPTEMBER
30, 2007


(UNAUDITED)





Depreciable
      lifeExploration
      equipment
            
            5
      yearsOffice
      equipment
            
            5
      yearsVehicles
            
            5
      years





l.
            Political
      and economic risks—
      The Company entered into joint venture contracts to establish businesses
      in China and Panama. Accordingly, the Company’s business, financial
      condition and results of operations may be influenced by the political,
      economic and legal environments in these
  countries.





The
Company’s operations in these countries are subject to specific considerations
and significant risks not typically associated with companies in the North
America and Western Europe. These include risks associated with, among others,
the political, economic and legal environments and foreign currency exchange.
The Company’s results may be adversely affected by changes in governmental
policies with respect to laws and regulations, anti-inflationary measures,
currency conversion and remittance abroad, and rates and methods of taxation,
among other things.





m.
            Impairment
      for long live assets— SFAS No. 144, “Accounting for the Impairment or Disposal of
      Long-Lived Assets” requires that long-lived assets to be disposed of by
      sale, including those of discontinued operations, be measured at the lower
      of carrying amount or fair value less cost to sell, whether reported in
      continuing operations or in discontinued operations. SFAS No. 144
      broadens the reporting of discontinued operations to include all
      components of an entity with operations that can be distinguished from the
      rest of the entity and that will be eliminated from the ongoing operations
      of the entity in a disposal transaction. SFAS No. 144 also
      establishes a “primary-asset” approach to determine the cash flow
      estimation period for a group of assets and liabilities that represents
      the unit of accounting for a long-lived asset to be held and used. The
      Company has no impairment issues to
  disclose.





n.
            Foreign
      currency translation— The reporting currency of the Company is US dollar. Dongxing and Tianjin
      use their local currency RMB, as their functional currency. Results of
      operations and cash flows are translated at average exchange rates during
      the period, assets and liabilities are translated at the unified exchange
      rate as quoted by the People’s Bank of China at the end of the period, and
      equity is translated at historical exchange
  rates.





Translation
adjustments amounted to $5,449 gain as of September 30, 2007. Asset and
liability accounts at September 30, 2007 were translated at 7.50 RMB to
$1.00. Equity accounts were stated at their historical rate. The average
translation rates applied to income statement accounts and cash flows for the
period ended September 30, 2007, from inception (March 1, 2006) to
September 30, 2006, and from inception (March 1, 2006) to
September 30, 2007 were 7.65 RMB, 7.99 RMB and 7.81 RMB, respectively. In
accordance with Statement of Financial Accounting Standards No. 95,
“Statement of Cash Flows,” cash flows from the Company’s operations is
calculated based upon the local currencies using the average translation rate.
Because cash flows are also translated at average translation rates for the
period, amounts reported on the statement of cash flows will not necessarily
agree with changes in the corresponding balances on the balance
sheet.





9


Table of
Contents


EMPIRE
MINERALS CORP. AND SUBSIDIARIES


(FORMERLY
KNOWN AS XACORD CORP.)


(AN
EXPLORATION COMPANY)


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


SEPTEMBER
30, 2007


(UNAUDITED)





Transaction
gains and losses that arise from exchange rate fluctuations on transactions
denominated in a currency other than the functional currency are included in the
results of operations as incurred. For the nine months ended September 30,
2007, from inception (March 1, 2006) to September 30, 2006, and from
inception (March 1, 2006) to September 30, 2007, total transaction
gain (loss) amounted to $11,080, $0, and $11,080 respectively.





2.
            Going
      Concern





The
Company is an exploration stage company and therefore has had no revenues or
cash flows from operations. The Company has insufficient sources of cash flows
raising substantial doubt about its ability to continue as a going concern. In
response to these conditions, management is continuing to look for financing
from various sources, although there are no guarantees that they will be
successful in their endeavors. In addition, the Company is in the process of
finding more companies in China and Panama to form joint ventures agreements
with in order to begin mining operations. No adjustment has been made to the
accompanying financial statements as a result of this uncertainty.





3. Restatement – Conversion of
Promissory Note, Issuance of Common Stock, Litigation and Partial Recovery of
Common Stock Shares issued





As
discussed in the Company’s Report on Form 8-K filed on April 22, 2009, the
Company has concluded, based on further review, that it should restate the
accounting for the issuance of 7,925,000 shares of its common stock under
agreements entered into on April 1, 2007 for the conversion of a promissory
note, previously issued by the Company and discussed below.  The
transaction was previously reported as the conversion of the outstanding balance
of the promissory note, including accrued interest, of $106,071, at that
carrying value, into 7,925,000 shares of the Company’s common stock,
representing a conversion price of $0.013 per share.  The Company has
concluded that the accounting for the transaction should have been recorded at
the fair value of the common stock issued and the Company should have recognized
the value of services that, at that time, the Company expected to receive from
the holders of the promissory note.  The Company has not received the
services that it expected to receive and on December 23, 2008, the Company filed
suit in the Supreme Court of the State of New York, seeking return of the shares
issued and other relief.  On February 11, 2009, the Company entered
into a Settlement Agreement of that suit, as a result of which a total of
3,308,333 of the 7,925,000 shares originally issued will be returned to the
Company or otherwise cancelled and the Company will make payments aggregating
$63,230 to the defendants, as more fully discussed below.  Reflecting
the terms of the Settlement Agreement, the Company has restated its financial
statements to record the shares issued at their estimated fair value and to
recognize a loss of $2,205,492 as of April 1, 2007, the date of the agreements
under which the shares were issued, as discussed below.





On
February 14, 2001, the Company (which was then known as ObjectSoft Corporation)
executed the promissory note (the “Note”) in the amount of $100,000 to Jay N.
Goldberg (the “Original Holder”). The Note, which was due on March 16, 2001 (the
“Maturity Date”), accrued interest at 12% per annum and, in the event of
default, accrued interest at 20% per annum. The principal plus all accrued and
unpaid interest was payable in cash on the Maturity Date or, at the option of
the holder, was convertible into equity securities of the Company to be issued
to certain institutional investors in a proposed private placement expected to
be completed at or prior to the Maturity Date.





On May
30, 2001, the Company and the Original Holder executed an Allonge and Amendment
to Promissory Note, amending the Maturity Date to December 31,
2001.  The Original Holder also waived any Events of Default that may
have occurred and agreed to cooperate with the Company in a potential
restructuring of the Company or other transaction pursuant to which the terms of
the Note may be restructured.  This restructuring was
unsuccessful.  In July 2001, ObjectSoft filed a Bankruptcy Petition in
the Bankruptcy Court for the District of New Jersey and, in November of 2004,
emerged from the Bankruptcy filing with no assets and a single liability for the
principal amount of the Note of $100,000.  None of our present
officers, directors or employees were associated with us at the time of, or
involved in any way in, the bankruptcy proceeding.





On
November 16, 2004, the Original Holder executed an “Assignment and Endorsement
of Note” and assigned all of the Original Holder’s right, title and interest in
and to the Note, to Securities Acquisition New York, LLC
(“SANY”).   Prior to June 2006, with the agreement of the then
management of the Company, SANY converted $32,300 of the principal amount of the
Note into 807,500 shares of common stock of the Company (as adjusted for
subsequent stock splits), at an effective conversion price of $0.04 per
share.  On October 26, 2006, SANY executed an “Agreement of Assignment
of Note” and assigned all of their right, title and interest in and to the Note
to West Greenwood Foundation (“WGF”).   On the date of
assignment, the principal balance was $67,700 and the amount of accrued interest
was $28,170.





As
described in Note 8a, the Company previously entered into consulting agreements
with Saddle River Associates (“SRA”) for general business consulting and
financial advisory services.  SRA introduced the Company to Xacord
Corporation (as ObjectSoft was then known), which entity had originally issued
the Note and with whom we completed the reverse triangular merger on February
20, 2007 (see Note 1a).  In addition, SRA advised the Company of the
opportunity to invest in the Exploration and Development Agreement with
Bellhaven Copper & Gold, Inc., which Agreement is described in Note
4.





Following
our reverse triangular merger on February 20, 2007 (see Note 1a), on April 1,
2007, WGF and various entities and individuals (“designees”), which designees
simultaneously purchased various interests in the Note from WGF, requested to
convert the outstanding balance of the Note of $106,071 ($67,700 of principle
and $38,371 of accrued interest) into 7,925,000 shares of our common stock,
representing a conversion rate of approximately $0.013 per share.  The
Company was advised by SRA that these designees would be able to provide the
Company with expertise and assistance to further the development of the
Company’s Panamanian Exploration and Development Agreement with
Bellhaven.  Consequently, the Company agreed to the conversion and the
Note was cancelled.





Over
time, the Company has become aware that the designees did not possess the
expertise necessary to provide the services that the Company expected that it
would receive to assist it with its Panamanian operations.   On
December 23, 2008, the Company filed suit in the Supreme Court of the State of
New York, against SRA, WGF and the designees, seeking return of the shares
issued for conversion of the Note and other relief.  The written
agreements related to conversion of the Note did not refer to the provision of
any services by the holders of the Note and the defendants asserted that no such
agreement related to future services existed.  Notwithstanding that
assertion, the defendants agreed to return a portion of the shares issued and on
February 11, 2009, the Company entered into a Settlement Agreement with the
defendants.  The Company concluded that it was in its best interests
to accept the terms of the Settlement Agreement, rather than continue to
litigate the matter.  As a result of the Settlement Agreement, of the
7,925,000 shares originally issued, 1,000,000 shares will be cancelled and a
further 2,308,333 shares (one-third of the remaining shares issued of 6,925,000)
will be returned to the Company.  The Company will make payments
aggregating $63,230 to the defendants, representing (1) payment of principal and
interest on the Note from April 2007 to the date of the Settlement Agreement for
that portion of the Note for which shares are being returned and (2) outstanding
consulting fees due to SRA of $25,000.





The
Company originally accounted for the conversion of the Note based on the written
terms of the agreements with WGF and the designees and recorded the common
shares issued at the carrying amount of the note.  However, to reflect
the company’s expectation that it would also receive future services in addition
to the conversion of the Note, the 7,925,000 shares issued should have been
recorded at their fair value.  On April 1, 2007, the closing price of
the Company’s common stock was $2.50 per share.  Although the
Company’s common stock is publically traded, the trading volume is small; during
the two year period ended December 31, 2007, the total trading volume of our
common stock was less than 250,000 shares.  In various private
placements of the Company’s common stock that occurred between April 2006 and
October 2007, the Company sold an aggregate of 12,819,000 shares of its common
stock for cash, each placement at a price of $0.50 per share.  Because
the 7,925,000 shares issued represents a number of shares substantially in
excess of the Company’s historical trading volume, the Company believes that the
price of $0.50 per share at which it has effected private placements is a more
reasonable estimate of fair value for the 7,925,000 shares issued than the
quoted market price. Accordingly, the Company has restated its financial
statements for the period ended June 30, 2007 and all subsequent periods to
reflect the April 2007 issuance of the 7,925,000 shares at a fair value of $0.50
per share or an aggregate of $3,962,500.





As
discussed above, the written terms of the Note provide for conversion only if a
private placement was completed at or prior to maturity of the Note on December
31, 2001.  The Note bears interest at 12% and accordingly the carrying
value of the Note together with accrued interest at the date of conversion is
considered to be a reasonable approximation of the fair value of the Note as of
that date.  In relation to the services that the Company expected to
receive from the designees, EITF Issue 96-18 provides that the fair value of
shares issued to non-employees for services to be performed should be determined
as of the earlier of the date at which a commitment for performance by the
counterparty to earn the shares is reached or the date at which their
performance is complete.  EITF Issue 00-18 further provides that where
there are no specific performance criteria required by the recipient in order to
retain the shares issued, a measurement date has been reached and the shares
should be valued as of the date of the agreement.  The Company
expected that the designees would provide their services over the multi-year
life of the Company’s Panamanian operations but no specific performance criteria
were established.  Accordingly, the Company has valued the services it
expected to receive based on the fair value of the common shares at the time
they were issued, which as discussed above has been estimated at $0.50 per
share.  The difference of $3,856,429 between the fair value of the
shares issued of $3,962,500 and the carrying value of the Note at the date of
conversion of $106,071, which carrying value is considered to be a reasonable
approximation of its fair value at that date, has been allocated as the value of
the services the Company expected to receive.





The
Company has not received the services that it expected to receive when the
shares were issued and as a result of the Settlement Agreement, the Company has
recorded a loss of $2,205,492 as of April 1, 2007, reflecting the fair value of
the shares that will not be returned to the Company or cancelled as a result of
the Settlement Agreement, together with the amounts to be paid by the Company
under the Settlement Agreement, offset by $60,000 previously recorded by the
Company for amounts outstanding under the Company’s previous consulting
agreements with SRA.  At June 30, 2007, the value of the shares issued
on April 1, 2007 but subsequently cancelled or returned to the Company as a
result of the Settlement Agreement have been recorded as
contra-equity.  The affect of restatement of the Company’s financial
statements as of  September 30, 2007 as described above was as
follows:





Nine Months Ended September 30,
                                                      2007
                                                    
                                                    
                                                    From inception (March 1, 2006) to
                                                      September 30, 2007As Previously
                                                      Reported
                                                    
                                                    
                                                    As Restated
                                                    
                                                    
                                                    As Previously
                                                      Reported
                                                    
                                                    
                                                    As RestatedLoss
      from expected services not received
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    $
                                                    2,205,492
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    $
                                                    2,205,492Loss
      from operations
                                                    
                                                    $
                                                    (3,772,811
                                                    )
                                                    
                                                    $
                                                    (5,978,303
                                                    )
                                                    
                                                    $
                                                    (5,903,067
                                                    )
                                                    
                                                    $
                                                    (8,108,559
                                                    )Loss
      before provision for income taxes
                                                    
                                                    
                                                    (3,830,898
                                                    )
                                                    
                                                    
                                                    (6,036,390
                                                    )
                                                    
                                                    
                                                    (5,954,570
                                                    )
                                                    
                                                    
                                                    (8,160,062
                                                    )Net
      loss
                                                    
                                                    $
                                                    (3,830,898
                                                    )
                                                    
                                                    $
                                                    (6,036,390
                                                    )
                                                    
                                                    $
                                                    (5,954,570
                                                    )
                                                    
                                                    $
                                                    (8,160,062
                                                    )Comprehensive
      loss
                                                    
                                                    $
                                                    (3,822,798
                                                    
                                                    
                                                    $
                                                    (6,028,290
                                                    )
                                                    
                                                    $
                                                    (5,949,121
                                                    )
                                                    
                                                    $
                                                    (8,154,613
                                                    )Net
      loss per share
                                                    
                                                    $
                                                    (0.11
                                                    )
                                                    
                                                    $
                                                    (0.18
                                                    )September 30, 2007Shareholders’
      Equity
                                                    
                                                    $
                                                    3,809,037
                                                    
                                                    
                                                    $
                                                    3,805,807





4.
            Note
      receivable





On
August 9, 2007, the Company entered into a loan agreement with Silver
Global S.A., a corporation organized and operating under the laws of the
Republic of Panama (the “debtor”) for the amount of $80,000, payable on demand.
The debtor pays the Company interest on the principal at 5% per
annum.





5.
            Equipment





Equipment
consists of the following:





September 30, 2007(Unaudited)Exploration
      equipment
                
                $
                16,411Office
      equipment
                
                
                5,445Vehicles
                
                
                27,194Total
                
                
                49,050Less:
      accumulated depreciation
                
                
                7,583Equipment,
      net
                
                $
                41,467





10


Table of
Contents




EMPIRE
MINERALS CORP. AND SUBSIDIARIES


(FORMERLY
KNOWN AS XACORD CORP.)


(AN
EXPLORATION COMPANY)


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


SEPTEMBER
30, 2007


(UNAUDITED)





Equipment
is stated at cost less accumulated depreciation. Depreciation is computed using
the straight-line method over the estimated useful lives of the assets.
Depreciation expense amounted to $7,488, $0 and $7,488 for the nine months ended
September 30, 2007, the period from inception (March 1, 2006) through
September 30, 2006 and the period from inception (March 1, 2006)
through September 30, 2007, respectively. Accumulated depreciation for the
equipment amounted to $7,583 as of September 30, 2007.





6.
            Long
      term investment





Cuprum
Resources Corp. (“Cuprum”) — In March 2007, the Company, Bellhaven Copper
& Gold, Inc. (“Bellhaven”) and Cuprum entered into an Exploration
Development Agreement (“Agreement”). The Agreement grants the Company an option
to acquire up to 75% of the authorized and outstanding stock of Cuprum, the
holder of a Mineral Concession from the Republic of Panama on a copper prospect
located in the Republic of Panama. The Agreement calls for the Company to pay
Cuprum or Bellhaven $2,000,000 in annual installments of $500,000 each beginning
in March 2007, issue Bellhaven shares of the Company’s common stock as
valued under an escrow agreement with a total value of $4,000,000 and further
investments totaling $15,000,000 to be used in exploration and development work
on the copper prospect underlying Cuprum’s Mineral Concession. Currently, the
Company owns less than 20% of Cuprum and therefore, has recorded this investment
under the cost method of accounting for investments. At September 30, 2007,
the Company made its first cash installment payment of $500,000, invested
another $1,044,189 which was used for exploration and development work, issued
1,333,334 shares of common at $0.50 per share or $666,666. Accordingly, the
Company recorded $2,210,855 as investments in the accompanying balance sheet
which includes the $1,044,189 incurred in exploration and development work. The
exploration and development work is made up of the project costs for the period.
The project costs include drilling, general geology, camp, mobilization,
geophysics, land administration, assays and shipping, helicopter, office and
management expenses. The costs have been capitalized by the Company as part of
the Company’s acquisition of the 75% stake in Cuprum, as per the Exploration and
Development Agreement. Another 2,666,667 shares of common stock has been placed
into escrow and is recorded as an offset to equity until such time as the shares
are released at which time the Company will reflect an increase to both the
investment and equity. Subsequent to September 30, 2007, the Company invested an
additional $354,422 to be used in exploration and development work.





Zhaoyuan
Dongxing Gold Mining Co., Ltd. (“Zhaoyuan Dongxing”) — The Company entered into
a joint venture agreement with Zhaoyuan Dongxing Gold Minerals Co., Ltd.
(“Dongxing”) to conduct gold mining activities in the PRC. The agreement calls
for a total capital contribution of $500,000 from the Company. Dongxing will
contribute various mining licenses and other assets such as instruments and
equipment. The Company will receive a 50% equity stake in the joint venture in
exchange for its $500,000 contribution. Dongxing will receive the remaining 50%
stake in the joint venture in exchange for its contribution of mining licenses
and other assets. The amount was due and payable when Dongxing acquired the
required business license approvals in the People’s Republic of China. On
December 20, 2006, the joint venture company, Zhaoyuan Dongxing was
approved by the Chinese government and the business license was granted on
December 21, 2006. The Company has contributed the full $500,000 capital
contribution as per the joint venture agreement. The Company consolidates the
financial statements of Zhaoyuan Dongxing into its financial statements because
the Company exercises control over the Zhaoyuan Dongxing through its 50%
ownership; additionally, the Company has the right to appoint three of the five
board of director members and has control over the selection of key management
personnel.





11


Table of
Contents




EMPIRE
MINERALS CORP. AND SUBSIDIARIES


(FORMERLY
KNOWN AS XACORD CORP.)


(AN
EXPLORATION COMPANY)


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


SEPTEMBER
30, 2007


(UNAUDITED)





Empire
(Tianjin) Resources Co., Ltd. (“Tianjin”) — In November 2006, the Company
and Tianjin Institute of Geology and Mineral Resources (“TIGMR”) signed a
cooperative joint venture agreement to form Tianjin. The purpose of the joint
venture is to engage in the exploration and development of gold and other
mineral products in the People’s Republic of China. The agreement calls for a
$1,000,000 total capital contribution. The Company obtained a 70% equity stake
in the joint venture in exchange for $1,000,000. The $1,000,000 contribution is
required to be paid in installments after the approval by the Chinese
government. The approval and the business license were received on
April 12, 2007. The Company’s made the first two installment payments of
$200,000 on July 5, 2007 and $300,000 on September 5, 2007, and will
make a third installment payment of $500,000 on or before February 28, 2008.
TIGMR will contribute mining licenses and mineral data to the joint venture for
the remaining 30% interest. As of September 30, 2007, TIGMR has not
contributed mining licenses and mineral data to the joint venture. As per
Amendment Number 2 entered into by the Company and TIGMR, the transfer of the
licenses is required to be made on or before February 28, 2008. The term of
the joint venture is 30 years beginning on April 12, 2007, the date
the business license was issued. The Company has consolidated the financial
statements of the joint venture into the its financial statements as the Company
exercise control over the joint venture by its 70% of ownership.





7.
            Convertible
      Note Payable





a.
            In
      February 2001, the Company executed a Promissory Note (“Note”) in the
      amount of $100,000 to Jay N. Goldberg
  (“Holder”).





12


Table of
Contents




EMPIRE
MINERALS CORP. AND SUBSIDIARIES


(FORMERLY
KNOWN AS XACORD CORP.)


(AN
EXPLORATION COMPANY)


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


SEPTEMBER
30, 2007


(UNAUDITED)





See Note
3 for further discussion of this Note.





b.
            On June 25, 2007, the
      Company executed a Convertible Promissory Note (“Note”) in the amount of
      $300,000. The Note was payable in 90 days, bearing a total of $26,000
      interest during the term of the Note. The Company also incurred additional
      fees associated with the Note in the amount of $34,000 and warrants to
      purchase 300,000 shares of the Company’s common stock at an exercise price
      of $1.00 for a two-year term. The Note is secured by 600,000 shares of the
      Company’s common stock, and the Company’s interest in income generated
      from the operations and sales of certain identified exploration / mining
      leases in Panama and China. The Holder of the Note may at any time convert
      the principal amount for shares of the Company’s common stock at a rate of
      $1.00 per share. On September 19, 2007, the Company and the Holder
      executed an Amendment to the Note. Pursuant to the amended agreement, the
      maturity date was extended to December 15, 2007. In addition, the
      warrant granted to the holder to purchase 300,000 shares of common stock
      at $1.00 for a two-year term was canceled and new warrant was granted to
      the holder to purchase 300,000 shares of common stock at $0.65 for a
      two-year term.





c.
            On June 26, 2007, the
      Company executed a Convertible Promissory Note (“Note”) in the amount of
      $300,000. The Company received $150,000 which represents the first half of
      the proceeds on the same date, and the remaining $150,000 in July, 2007.
      The Note is payable in 120 days and bears a total of $15,000 interest
      during the term of the Note. The Company also incurred additional fees
      associated with the Note in the amount of $15,000 and 100,000 shares of
      the Company’s common stock. The Note is secured by 600,000 shares of the
      Company’s common stock, and the Company’s interest in income generated
      from the operations and sales of certain identified exploration / mining
      leases in Panama and China. The Holder of the Note may at any time convert
      the principal amount for shares of the Company’s Common Stock at a rate of
      $1.00 per share. On October 29, 2007, the Company repaid the entire
      principal in cash to the Note Holder. On October 30, 2007, the
      Company paid the Note Holder $15,000, which represented the additional
      fees incurred in connection with the
  Note.





d.
            On July 2, 2007, the Company
      executed a Convertible Promissory Note (“Note”) in the amount of $500,000.
      The Note is payable in 90 days and bears a total of $25,000 interest
      during the term of the Note. The Company also incurred additional fees
      associated with the Note in the amount of $25,000 and 100,000 shares of
      the Company’s common stock. The holder of the Note may at any time convert
      the principal amount for shares of the Company’s common stock at a rate of
      $1.00 per share. On July 5, 2007, the Company paid the interest and
      additional fees and issued 100,000 shares of common stock to the holder
      pursuant to the Note. On September 19, 2007, the Company repaid the
      entire principal by issuing 1,000,000 Special Warrants to the Note
      Holder.





13


Table of
Contents




EMPIRE
MINERALS CORP. AND SUBSIDIARIES


(FORMERLY
KNOWN AS XACORD CORP.)


(AN
EXPLORATION COMPANY)


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


SEPTEMBER
30, 2007


(UNAUDITED)





8.
            Related
      Party Transactions





a.
            Saddle River Associates — The
      Company entered into three agreements with Saddle River Associates (SRA),
      a shareholder in the Company. The first transaction dated March 26,
      2006 relates to a one year Advisory Agreement in which SRA will provide
      consulting services related to locating and evaluating financing
      alternatives, corporate structuring and other business issues for $15,000
      per month. The agreement automatically renews annually, unless either
      party gives 90 days notice to terminate. The Company paid SRA
      $135,000 for the period from inception (March 1, 2006) through
      December 31, 2006 and $135,000 for the nine months ended
      September 30, 2007, under the terms of this
      agreement.





The
second agreement, an Acquisition Services Agreement, dated April 9, 2006
amended December 15, 2006 and June 1, 2007 relates to additional
consulting services whereby SRA will identify and introduce prospective merger
entities and will assist the Company with the business aspects of the
transaction. Pursuant to this agreement, SRA introduced the Company to Xacord;
SRA had no relationship to Xacord prior to identifying and introducing them to
the Company as a potential merger partner. The Company paid SRA $250,000 upon
signing the agreement and a total of $550,000 which represents payment in full
for the services as per the agreement. The related expense is included in the
accompanying statement of operations. The Company was also required to issue
500,000 warrants when and if the Company obtained at least $3,000,000 in
financing and for each $1,000,000 in financing received over $3 million,
the Company was to issue an additional 100,000 warrants up to a total of
1,000,000 warrants. The warrants were to have a 5 year life, would vest
upon grant and would be exercisable at $0.50 per share. The warrants were
canceled pursuant to Amendment Number 2, executed on June 1,
2007.





Additionally,
the Company entered into a third agreement with SRA in October 2006. The
agreement called for consulting services to the Company on a month to month
basis, for $5,000 per month, prior to the merger between the Company and its
subsidiary. This agreement was terminated on the date of the merger,
February 21, 2007. The accompanying consolidated balance sheet includes the
accrued consulting fees to SRA for the period, October 1, 2006 to
February 21, 2007 totaling $23,750.





b.
            Chief Financial Officer — The
      Company’s Chief Financial Officer (“CFO”) provided consulting services to
      the Company prior to the merger to assist in merger preparations at $5,000
      per month on a month to month basis beginning in November 2006
      through February 21, 2007. As of April 1, 2007, the CFO has
      resumed providing consulting services to the Company at $6,000 per month
      on a month to month basis. The services provided include the day to day
      financial management of the company and any related functions related to
      the financial operations of the
Company.





On
June 18, 2007, the Company and the CFO entered into a Stock Repurchase
Agreement in which the company repurchased from the CFO, 100 shares of the
Company’s outstanding Series I Preferred Stock (“Preferred Shares”) held by the
CFO for $10,000.





c.
            On July 15, 2007, the
      Company and Euro Centro Consulting Corp (“Euro”), a shareholder of the
      Company entered into a consulting agreement. Pursuant to the agreement,
      the Company received a one-time referral services from Euro in exchange
      for a cash fee of $50,000 and 100,000 shares of common stock. The shares
      were valued at $0.50 per share, for a total amount of $50,000, which was
      expensed as of September 30,
2007.





14


Table of
Contents




EMPIRE
MINERALS CORP. AND SUBSIDIARIES


(FORMERLY
KNOWN AS XACORD CORP.)


(AN
EXPLORATION COMPANY)


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


SEPTEMBER
30, 2007


(UNAUDITED)





9.
            Shareholders’
      equity





The
Company is authorized to issue 705,000,000 shares: 700,000,000 shares of $0.0001
par value common stock and 5,000,000 shares of $0.0001 par value preferred
stock. As of September 30, 2007, the Company has 41,556,696 of Common Stock
outstanding, including 2,666,667 shares held in escrow.





a.
            Effective August 11, 2006,
      the Company amended the Articles of Incorporation as follows: Each twenty
      (20) shares of Common Stock then issued was automatically combined
      into one share of Common Stock of the Company (“20-1 reverse split”). No
      fractional shares or scrip representing fractions of a share were issued,
      but in lieu thereof, each fraction of a share that any stockholder would
      otherwise be entitled to receive was rounded up to the nearest whole
      share. As a result of the 20 to 1 reverse split, the issued number of
      shares of Common Stock was reduced by 88,377,055, from 93,028,479 shares
      of Common Stock issued prior to the 20-1 reverse split to 4,651,424 shares
      of Common Stock issued subsequent to the 20-1 reverse split. The rounding
      of fractional shares to the nearest whole share resulted in an additional
      661 shares being issued to stockholders who would have been entitled to
      receive a fraction of a share. The total number of shares of Common Stock
      issued after the issuance of the rounding of fractional shares was
      4,652,085.





b.
            Effective January 22, 2007,
      the Company amended the Articles of Incorporation as follows: Each twenty
      (20) shares of Common Stock then issued was automatically combined
      into one share of Common Stock of the Company (“20-1 reverse split”). No
      fractional shares or scrip representing fractions of a share were issued,
      but in lieu thereof, each fraction of a share that any stockholder would
      otherwise be entitled to receive was rounded up to the nearest whole
      share. As a result of the 20 to 1 reverse split, the issued number of
      shares of Common Stock was reduced by 4,419,481, from 4,652,085 to 232,604
      shares of Common Stock. The rounding of fractional shares to the nearest
      whole share resulted in an additional 248 shares being issued to
      stockholders who would have been entitled to receive a fraction of a
      share. The total number of shares of Common Stock issued after the
      issuance of the rounding of fractional shares was
      232,852.





c.
            On February 20, 2007, the
      Company issued 26,504,000 shares of its common stock for 26,504,000 shares
      of common stock, representing all of the outstanding stock of its
      subsidiary pursuant to the triangular merger accounted for as a reverse
      merger and recapitalization. Additionally, all warrants issued by the
      subsidiary and outstanding at the date of the mere were exchanged for
      warrants in the Company. Prior to the merger, the Subsidiary had entered
      into several agreements which accounted for the shares of common stock
      outstanding:





(1)
            Upon the formation of the
      Subsidiary, the founding shareholders received 6,460,000 shares of common
      stock for $6,460. As of September 30, 2007, the Company received
      $4,900 as payment for the shares. Therefore, the Company recorded
      subscription receivable for the amount of $1,560 at September 30,
      2007 for the remaining
balance.





15


Table of
Contents


EMPIRE
MINERALS CORP. AND SUBSIDIARIES


(FORMERLY
KNOWN AS XACORD CORP.)


(AN
EXPLORATION COMPANY)


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


SEPTEMBER
30, 2007


(UNAUDITED)





(2)
            On March 29, 2006, the
      Subsidiary issued managements and key consultants 8,500,000 shares for
      services valued at $76,500 and cash $8,500, totaling $0.01 per share. As
      of March 31, 2007, the Subsidiary received $8,500 in cash for
      payment. The Subsidiary recorded $76,500 of consulting expense during the
      year ended December 31, 2006. Additionally, the Subsidiary issued
      warrants to purchase up to a total of 5,970,000 to management and
      consultants. The warrants were vested upon grant, have a 3 year life, and
      are exercisable at $0.10 per share. Warrants to purchase up to 3,500,000
      shares of common stock issued to management contained a cashless exercise
      provision. The eight warrants were valued at $197,587 using the
      Black-Scholes Option Pricing Model, using a volatility rate of 62% based
      on the volatility of a publicly traded exploration stage company in a
      similar stage of development, and a risk free rate of 4.79%. The
      Subsidiary recognized $197,587 of compensation expense during the year
      ending December 31, 2006. At September 30, 2007, four warrants
      with options to purchase a total of 470,000 were exercised for cash. The
      Subsidiary received $47,000 in cash for the exercise of the four warrants.
      Two warrants with options to purchase a total of up to 2,000,000 were
      exercised utilizing the cashless exercise provision. A total of 1,600,000
      shares of common stock were issued to management in the transaction. Two
      warrants to purchase a total of up to 3,500,000 shares of common stock,
      were canceled pursuant to an Agreement for Cancellation of Warrants
      entered into by and between the parties. As of September 30, 2007,
      300,000 warrants to purchase shares of common stock remained
      outstanding.





(3)
            During the period from
      April 2006 through February 19, 2007, the Subsidiary sold
      7,499,000 shares of common stock at a price of $0.50 per share for cash
      totaling $3,749,500.





(4)
            During the period from
      January 2007 to February 2007, the Subsidiary issued 475,000
      shares of its common stock to various individuals and entities in exchange
      for consulting services to the Subsidiary. The Company recorded consulting
      expenses in the amount of $237,500 in the accompanying statement of
      operations.





(5)
            On February 19, 2007, the
      Subsidiary issued to its President and Chief Executive Officer, 1,500,000
      shares of common stock as a bonus for his services to the Subsidiary and
      as incentive compensation for future services. The Company recorded
      consulting expenses in the amount of $750,000 in the accompanying
      statement of operations.





d.
            On March 1, 2007, the
      Company issued 1,000,000 shares of its common stock to Silver Global, SA,
      a Panamanian corporation (“Silver”) pursuant to an agreement between the
      parties. The agreement provides that Silver will perform consulting
      services for the Company related to the identification, location,
      definition of mineral business opportunities in Panama and introductions
      to persons or entities holding potential acquisition properties involving
      Panama Mineral Concessions and related services. The Company recorded
      $500,000 in consulting fees in the accompanying statement of
      operations.





16


Table of
Contents




EMPIRE
MINERALS CORP. AND SUBSIDIARIES


(FORMERLY
KNOWN AS XACORD CORP.)


(AN
EXPLORATION COMPANY)


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


SEPTEMBER
30, 2007


(UNAUDITED)





e.
            On March 9, 2007, the
      Company issued 4,000,000 shares of Common Stock to Bellhaven Gold &
      Copper, Inc. (“Bellhaven”) as part of an Exploration Development Agreement
      entered into by and between the Company, Bellhaven and its wholly owned
      subsidiary, Cuprum Resources Corp (“Cuprum”) (“agreement”). The agreement
      grants the Company an option to acquire up to 75% of the authorized and
      outstanding stock of Cuprum, the holder of a Mineral Concession from the
      Republic of Panama on a copper prospect located in the Republic of Panama.
      The agreement calls for the Company to pay Cuprum or Bellhaven $2,000,000
      in annual installments of $500,000 each, issue Bellhaven shares of the
      Company’s common stock as valued under an escrow agreement with a total
      value of $4,000,000 and expend $15,000,000 in exploration and development
      work on the copper prospect underlying Cuprum’s Mineral Concession. As per
      the agreement, the Company has delivered a certificate in the amount of
      1,333,334 shares of common stock to Bellhaven and deposited 2,666,667
      shares of its common stock into escrow. The Company has recorded $666,666
      as investment on the accompanying balance
  sheet.





f.
            On
      April 1, 2007, the Company issued 7,925,000 shares of Common Stock to
      West Greenwood Foundation (“WGF”) and various entities and individuals
      (“designees”), pursuant to the conversion of the Convertible Promissory
      Note executed by the Company in February 2001
      (“Note”).  See Note 3 for further discussion of this stock
      issuance.





g.
            On May 4, 2007, the Company
      completed a Private Placement to sell 4,000,000 shares of Common Stock at
      a price of $0.50 per share for cash totaling $2,000,000. The transaction
      was completed in the form of a Restricted Equity Purchase Agreement and
      called for the Company to deposit the Stock Certificate representing the
      sold shares with a Custodial Bank selected by the purchaser. The closing
      date of the transaction was scheduled for 30 days from the date of
      the deposit of the Stock Certificate with the Custodial Bank. The
      agreement was initially amended to extend the closing date to
      August 31, 2007; the Company is formalizing an extension to
      November 30, 2007. Proceeds from the sale of the shares of Common
      Stock are due to the Company on the closing
  date.





h.
            On June 18, 2007, the
      Company and the Chief Financial Officer (“CFO”) entered into a Stock
      Repurchase Agreement in which the Company repurchased from the CFO, 100
      shares of the Company’s outstanding Series I Preferred Stock
      (“Preferred Shares”) held by the CFO. The Preferred Shares were
      repurchased by the Company from the CFO for $10,000. The Preferred Shares
      repurchased represented the total amount of Preferred Stock issued and
      outstanding. Subsequent to the repurchase of the Preferred Shares, the
      Company filed a Certificate of Designation with the State of Delaware and
      canceled the Series I Preferred
  Stock.





17


Table of
Contents


EMPIRE
MINERALS CORP. AND SUBSIDIARIES


(FORMERLY
KNOWN AS XACORD CORP.)


(AN
EXPLORATION COMPANY)


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


SEPTEMBER
30, 2007


(UNAUDITED)





i.
            On June 26, 2007, the
      Company issued 100,000 shares of common stock as a form of payment for
      additional fees directly related to a Convertible Promissory Note (see
      Note 7c).





j.
            On July 2, 2007, the Company
      issued 100,000 shares of common stock as a form of payment for additional
      fees directly related to a Convertible Promissory Note (see Note
      7d).





k.
            On July 15, 2007, the
      Company issued 100,000 shares of common stock to Euro Centro Consulting
      Corp, a shareholder, as a form of payment for additional fees for
      consulting service.





l.
            On July 31, 2007, the
      Company completed a Private Placement to sell 1,000,000 shares of Common
      Stock at a price of $0.50 per share for cash totaling $500,000. The
      transaction was completed in the form of a Subscription Agreement and
      called for the Company to issue warrants to purchase 1,000,000 shares of
      common stock at $1.00 per share for a 2 year
    term.





m.
            On July 15, 2007, the
      Company and Netzach Group, LLC (“Netzach”) a shareholder of the Company,
      entered into a consulting agreement. Pursuant to the agreement the Company
      received referral services from Netzach in exchange for 125,000 shares of
      common stock. The shares were valued at $0.50 per share, for a total
      amount of $62,000, which was expensed as of September 30,
      2007.





n.
            From August 2007 to
      September 2007, the Company sold a total of 270,000 shares of common
      stock in the form of Subscription Agreements at $.50 per share. The total
      proceeds to the Company for the sale of the shares were
      $135,000.





o.
            On
      September 11, 2007, the Company and Openshore Holdings Limited
      (“Openshore”) entered into a consulting agreement for one year service
      term. Pursuant to the agreement, the Company received a one time
      consulting services from Openshore in exchange for 200,000 shares of
      common stock. The shares were valued at $0.50 per share, for a total
      amount of $100,000. For the nine months ended September 30, 2007,
      $5,479 has been expensed as consulting service
  fee.




On
June 25, 2007, the Company granted a 300,000 warrants to purchase 300,000
shares of the Company’s common stock, as a form of payment for additional fees
directly related to a Convertible Promissory Note (see Note 7b). The warrant has
an exercise price of $1.00 per share for a two-year term. The warrant was
canceled on September 19, 2007 and a new grant was issued in the form of a
warrant to purchase 300,000 shares of common stock at an exercise price of
$0.65, was issued to the note holder. The fair values of the warrants were
estimated at the date of grant using the Black-Scholes option-pricing model with
the following assumptions:





18


Table of
Contents




EMPIRE
MINERALS CORP. AND SUBSIDIARIES


(FORMERLY
KNOWN AS XACORD CORP.)


(AN
EXPLORATION COMPANY)


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


SEPTEMBER
30, 2007


(UNAUDITED)





Expected
              
              Expected
              
              Dividend
              
              Risk
      Free
              
              Grant
      DateLife
              
              Volatility
              
              Yield
              
              Interest Rate
              
              Fair Value2 years
              
              48.69%
              
              —
              
              4.78%
              
              $31,641




From
August 2007 to September 2007, the Company received a total of
$2,068,920 in cash, netted of $11,080 loss in currency exchange, and the
cancellation of a Promissory Note in the amount of $500,000, for the sale of
5,160,000 Special Warrants offered by the Company at a price of $0.50 per
Special Warrant. Each Special Warrant is convertible into one share of common
stock of the Company and one half of one Common Share purchase warrant (each
whole warrant, a “Warrant”). Each Warrant will entitle the holder to acquire one
share of common stock at an exercise price of $0.65 for a two-year term. The
Special Warrants Agreement includes an addendum requires the Company (i) to
register the shares underlying both the converted shares and the warrants,
(ii) to complete a registration statement to be filed within 150 days,
and (iii) effective within 210 days. The Agreement imposes cash penalties
of 2% per 30 day period for non-compliance. The potential registration
penalties should be accounted for in accordance with FSP EITF 00-19-2. That FSP
requires that the penalties be accounted for in accordance with FAS 5, that is,
they are recognized when they are “probable” and can be “reasonably estimated”,
which may be at inception. The Company concluded that the registration penalties
are not probable at this time.




The
Company had 1,000,000 warrants exercisable at $1.00 and 5,460,000 warrants
exercisable at $0.65 outstanding as of September 30, 2007 and the following
is a summary of the warrant activities:





Weighted-Number
      of
                          
                          
                          Number
      of
                          
                          
                          Average
                          
                          
                          AverageWarrants
                          
                          
                          Warrants
                          
                          
                          Exercise
                          
                          
                          RemainingOutstanding
                          
                          
                          Exercisable
                          
                          
                          Price
                          
                          
                          Contratual
                            LifeBalance
      at inception, March 1, 2006
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          $
                          —
                          
                          
                          
                          —Granted
                          
                          
                          5,970,000
                          
                          
                          
                          5,970,000
                          
                          
                          $
                          0.16
                          
                          
                          3
      yearsForfeited
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          $
                          —
                          
                          
                          
                          —Exercised
                          
                          
                          (20,000
                          )
                          
                          
                          (20,000
                          )
                          
                          $
                          0.10Balance
      at December 31, 2006
                          
                          
                          5,950,000
                          
                          
                          
                          5,950,000
                          
                          
                          $
                          0.10
                          
                          
                          2.75
      yearsGranted,
      June 25, 2007
                          
                          
                          300,000
                          
                          
                          
                          300,000
                          
                          
                          $
                          1.00
                          
                          
                          2
      yearsGranted,
      August through September, 2007
                          
                          
                          5,160,000
                          
                          
                          
                          5,160,000
                          
                          
                          $
                          0.50
                          
                          
                          2
      yearsForfeited
                          
                          
                          (5,500,000
                          )
                          
                          
                          (5,500,000
                          )
                          
                          $
                          —
                          
                          
                          
                          —Exercised
                          
                          
                          (450,000
                          )
                          
                          
                          (450,000
                          )
                          
                          $
                          0.10Balance
      at September 30, 2007
                          
                          
                          5,460,000
                          
                          
                          
                          5,460,000
                          
                          
                          $
                          1.00
                          
                          
                          1.99
      years





10.
            Income
      Taxes





Deferred
income taxes reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial statement purposes and
the amounts used for income tax purposes. Significant components of the
Company’s deferred tax assets and liabilities at September 30, 2007 are as
follows:




19


Table of
Contents




EMPIRE
MINERALS CORP. AND SUBSIDIARIES


(FORMERLY
KNOWN AS XACORD CORP.)


(AN
EXPLORATION COMPANY)


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


SEPTEMBER
30, 2007


(UNAUDITED)





Total
      net operating loss as of December 31, 2006
                
                $
                2,123,672Effective
      income tax rate
                
                
                40
                %Total
      deferred tax assets
                
                
                849,469Less:
      valuation allowance
                
                
                (849,469
                )Total
      deferred tax assets as of December 31, 2006
                
                $
                —Net
      loss for the nine months ended September 30, 2007,
      restated
                
                $
                6,036,390Effective
      income tax rate
                
                
                40
                %Total
      deferred tax assets
                
                
                2,414,556Less:
      valuation allowance
                
                
                (2,414,556
                )Total
      deferred tax assets as of September 30, 2007
                
                $
                —




The
Company’s deferred tax asset as September 30, 2007 of $2,414,556 was fully
offset by a valuation allowance, resulting in a net deferred tax asset of $0
because of the uncertainty of the Company’s ability to utilize the net operating
loss carryforward against future earnings..




The
reconciliation of the effective income tax rate to the federal statutory rate
for the period ended September 30, 2007 is as follows:





Federal
      income tax rate
                    
                    
                    34
                    %State
      tax, net of federal benefit
                    
                    
                    6
                    %Increase
      in valuation allowance
                    
                    
                    (40
                    )
      %Effective
      income tax rate
                    
                    
                    —
                    %




The
deferred tax assets result from net operating loss carry-forwards. These assets
will therefore reverse either upon their utilization against taxable income or
upon their statutory expiration. Net operating loss carry-forwards will expire
beginning in 2020 through 2027.





11
            Commitments— The Company and its Subsidiary
      entered into various agreements during the period beginning
      March 2006 (Subsidiary’s inception date) and ending
      September 30, 2007. These
include:





a.
            Empire (Tianjin) Resources Co.,
      Ltd. — The Company is to pay $500,000 on December 5, 2007 to Tianjin
      pursuant to the cooperative joint venture agreement. (See Note
      6)





b.
            Employment Agreements — On
      April 12, 2006, the Company entered into employment agreements with
      its Chief Executive Officer and its Vice President of Exploration. The
      agreements have a term of 2 years and are automatically renewed for
      2 year terms unless the Company or the employee gives 90 days
      prior written notice to terminate the
  agreement.





c.
            Office Lease — The Company is
      subject to a two year lease agreement dated March 1, 2006 for office
      space requiring monthly payments of $800. The agreement expires February
      2008 and has options for renewal, although the terms of the renewal are
      subject to negotiations by both parties. Rent expense for the year total
      $12,485. In March 2007, the Company leased additional space at the
      same location of its initial office lease. The additional space is leased
      on a month to month basis at a rate of $495 per
    month.





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EMPIRE
MINERALS CORP. AND SUBSIDIARIES


(FORMERLY
KNOWN AS XACORD CORP.)


(AN
EXPLORATION COMPANY)


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


SEPTEMBER
30, 2007


(UNAUDITED)





d.
            Cuprum Resources Corp. — In
      March 2007, the Company, Bellhaven Copper & Gold, Inc.
      (“Bellhaven”) and Cuprum Resources Corp (“Cuprum) entered into an
      Exploration Development Agreement (“agreement”). The agreement requires
      the Company over the next three years to issue 4 million shares of
      stock and cash $17,000,000. At September 30, 2007, the Company was
      committed to release 2,666,667 shares of its common stock from escrow and
      $16 million in cash. Subsequent to September 30, 2007, the
      Company invested an additional $354,422 which was used in exploration and
      development work.




Commitments
are summarized as below:





Period
      ending September 30,2008
                  
                  $
                  3,200,0002009
                  
                  
                  7,555,0002010
                  
                  
                  6,500,0002011
      and thereafter
                  
                  
                  —





12.
            Subsequent
      Events





a.
            The Company received $25,000 for
      the sale of 50,000 shares of common stock at $0.50 per share, subsequent
      to September 30, 2007.





b.
            The company received $50,000 for
      the sale of 100,000 Special Warrants at $0.50 per share, subsequent to
      September 30, 2007. The terms of the Special Warrants are identical
      to the Special Warrants sold and disclosed in Note
    9g.





c.
            On October 26, 2007, the
      Company repaid the entire balance due on the Convertible Promissory Note
      issued to Esther and Isaac Weiss, in the amount of
      $300,000.





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ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.




General




The
Company is engaged in the acquisition, exploration, development and operation of
mineral and natural resource properties and prospects. The present activities
are concentrated on mineral prospects and properties located in the Republic of
Panama and in the People’s Republic of China.




The
Company has entered into an agreement with Bellhaven Copper & Gold, Inc., a
British corporation and its wholly owned subsidiary, Cuprum Resources, Corp., a
Panamanian corporation. Under this agreement, the Company may acquire a majority
ownership interest in Cuprum Resources, Corp. Cuprum holds a mineral Concession
from the Republic of Panama on a copper prospect located in the Guariviara Area
of Panama.




The
Nevada Subsidiary has entered into two joint venture agreements involving
mineral properties and/or prospects located within China. These properties are
primarily regarded as gold prospects or properties. One of the Chinese joint
venture agreements of the Nevada Subsidiary is with Zhaoyuan Dongxing Gold
Minerals Co., Ltd, an entity organized under the China Company Law. Under this
agreement, the parties have formed Zhaoyuan Empire Gold Corp., Ltd., a Chinese
entity in which they each own a 50% interest subject to future adjustment. This
jointly held entity holds three mining leases from the Chinese government on
gold prospects located in the Shandong Province of China along with certain
mining and mill equipment. The other joint venture agreement of the Nevada
Subsidiary is with the Tianjin Institute of Geology, a Chinese legal entity.
Under this agreement the parties have formed a Chinese limited liability company
named Empire (Tianjin) Resources Co., Ltd. This entity was formed to acquire
mineral interests in and explore, develop and, if warranted, conduct mining
operations on mineral properties located in the Inner Mongolian Autonomous
Region of Tianjin Province in the Peoples Republic of China. The Nevada
Subsidiary holds a 70% interest in this entity subject to future adjustment to
reflect the parties’ respective capital contributions.





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  The
following chart sets out our present organizational
structure:









The
proposed operations of the two Chinese Joint Ventures and the acquisition of the
majority interest in the Cuprum Resources, Corp. and operations on the
Panamanian prospect will require our expenditure of materially more capital than
is presently available to us. Our proposed operations include:





•
            Supervising, and if necessary
      providing or procuring additional financing for, the operations of the two
      Chinese Joint Ventures;





•
            Acquiring the majority interest
      in the Panamanian corporation holding the mineral concession and providing
      financing for and supervising its
  operations;





•
            Exploring and evaluating
      additional mineral and natural resource acquisitions;
      and





23




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•
            Seeking the necessary additional
      capital to finance
activities.




The
following subsections set out information on our history and present and
proposed operations and certain of the risk factors associated with us and our
securities.




History of the
Company




The
Company was formed as a Delaware corporation on January 4, 1996 under the
name ObjectSoft Corporation. On May 9, 2005, The Company changed its name
to Nanergy, Inc. On June 5, 2006, its name was changed to Xacord Corp. On
January 3, 2007, the Company changed it’s name to Empire Minerals
Corp.




We
were originally formed in January of 1996 to acquire the business of a
predecessor company, Object Soft Corporation, a New Jersey Corporation. This
acquisition was completed in the form of a corporate business combination
effective January 31, 1996. The acquired business involved the provision of
retail Kiosks, which were internet-connected, advertising-interactive Kiosks.
The Kiosks were public access terminals that offered terminals that offered
information entertainment and the ability to execute financial transactions via
a touch screen. This business was unsuccessful and in July of 2001, we filed a
Bankruptcy Petition in the Bankruptcy Court for the District of New Jersey. None
of our present officers, directors or significant employees were associated with
us at the time of or involved in any way in our bankruptcy proceeding. In
November of 2004, we exited the Bankruptcy case with no assets, one liability in
the form of a convertible promissory note with a principal balance of
$100,000.00 and outstanding stock of 195 shares of common stock. We then
operated as a shell corporation seeking a new business opportunity either
through a corporate business combination or an acquisition of
assets.




In
September of 2005, we were a party to a business combination in which we
acquired the ownership of a New Jersey corporation holding licenses, patents and
developments to certain photovoltaic processes. In this transaction, the Company
issued 99,455 shares of our common stock The Company also agreed to issue
additional shares of common stock and stock options, if certain economic
milestones were met by December 31, 2006. These economic milestones were
not met. In 2006, we abandoned our efforts to develop the involved
processes.




During
the period from June 17, 2005 to the date of this Form 10-QSB, the Company
effected three reverse stock splits of its outstanding common stock by amending
its Certificate of Incorporation. On June 17, 2005, each outstanding 100
shares was reversed into one share. On August 11, 2006, each 20 outstanding
shares were reversed into one share. On January 22, 2007, each 20
outstanding shares were reversed into one share. In all three reverse splits,
all fractional shares due to be issued were rounded up to the next full share.
Unless otherwise indicated, all references to a number of shares of the
Company’s common stock have been adjusted to give effect to the applicable stock
splits.





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On
February 20, 2007 we completed a business combination in which we acquired
all of the outstanding stock of the Nevada Subsidiary in exchange for shares of
our common stock. The combination was structured as a three-party merger in
which:





•
            The Company acquired all of the
      outstanding stock of the Nevada
  Subsidiary;





•
            A Nevada corporation named Xacord
      Acquisitions Sub Corp. formed and wholly owned by the Company to be used
      as a vehicle for the transaction was merged into the Nevada
      Subsidiary;





•
            The outstanding shares of the
      common stock of the Nevada Subsidiary as of the Effective Time of the
      merger were converted into shares of the common stock of the Company on a
      share for share basis with a total of 26,504,000 shares of the Company’s
      stock issued in this
conversion;





•
            The Company assumed four warrants
      issued by the Nevada Subsidiary to purchase up to a total of 4,500,000
      shares of the Company’s Common Stock at $0.10 per share during a three
      year term. These warrants were held as follows: (i) a warrant for
      2,000,000 shares was held by Saddle River Associates, Inc., a financial
      and business consultant to the Company; (ii) an additional warrant
      for 500,000 shares was held by Saddle River Associates, Inc.; (iii) a
      warrant for 1,500,000 shares was held by Pinchas Althaus, President and a
      director of the Company; and (iv) a warrant for 50,000 shares was
      held by Chaya Schreiber, a former shareholder of the Nevada Subsidiary.
      The warrant to purchase 50,000 shares was exercised on March 2, 2007.
      The remaining three warrants for 4,000,000 were canceled by mutual
      agreement of the parties on June 1,
  2007.





•
            The Company assumed a contingent
      obligation of the Nevada Subsidiary to issue warrants to Saddle River
      Associates, Inc. to purchase up to 500,000 shares of the Company’s Common
      Stock at $0.50 per share during a five-year term from issuance, if the
      Company obtains specified amounts of additional capital;
      and





•
            The Company acquired the rights
      of the Nevada Subsidiary under a Letter of Intent to enter into the
      agreements relating to the acquisition of the majority interest in the
      Panamanian corporation holding the concession to the copper
      prospect.





•
            The management of the parties at
      the time of the business combination consisted of: (i) Diego Roca was
      the sole officer and director of the Company and of Xacord Acquisition Sub
      Corp.; and (ii) Pinchas Althaus, Diego Roca and Bruce Minsky were the
      officers and directors of the Nevada subsidiary. Messrs. Althaus,
      Roca and Minsky became the three directors and three of the officers of
      the Company and the Nevada Subsidiary upon completion of the business
      combination.





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Table of
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The
following diagrams set forth the organizational status of the Company and the
Nevada Subsidiary before and after the completion of their business
combination.




Status Before Business
Combination:









Actions in Business
Combination:










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Status After Business
Combination:









Present and Proposed
Operations




Dongxing
Venture




In
2006, the Nevada Subsidiary entered into a joint venture arrangement with
Zhaoyuan Dongxing Gold Minerals Co., Ltd., a Chinese legal entity formed under
the laws of the People’s Republic of China (“Dongxing”). The control person of
Dongxing was at the formation of the joint venture and now is Quizhi Liu, its
Chairman and President, who was and is not affiliated with the Company or the
Nevada Subsidiary. Under this arrangement, and after receiving the necessary
business license in December of 2006, Dongxing and the Nevada Subsidiary formed
a Chinese entity for the venture under the China Company Law. The entity is
named Zhaoyuan Empire Gold Co., Ltd. (“Zhaoyuan Co.”). As set out below, the
results of the exploration work on the properties of Zhaoyuan Co. were less than
anticipated and these properties are not presently considered material by the
Nevada Subsidiary. Unless Zhaoyuan Co. acquires other mineral prospects or
additional geological work or its present properties produce beneficial results,
we do not plan to invest any material amount of additional funds in this
venture. Under the present circumstances, it is unlikely we can salvage or
recoup any material amount of this investment. The material terms of the
arrangements of this joint venture and the material related events to date of
this Amendment No. 2 to the Registration Statement are:





•
            The formation of Zhaoyuan Co., in
      which the Nevada Subsidiary and Dongxing each have a 50% equity
      interest;





27


Table of
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•
            Dongxing contributed to Zhaoyuan
      Co. three Mining Licenses granted by the Shandong Land and Resources
      Administration Bureau on mineral properties located in the Shandong
      Province of China, along with certain mining equipment and
      instruments;





•
            The Nevada Subsidiary contributed
      $500,000.00 (USD) to Zhaoyuan
Co.;





•
            The Nevada Subsidiary has
      exercised its right to appoint three of the five directors of Zhaoyuan Co.
      including the Chief Director and to appoint the General Manager and Chief
      Financial Officer and Dongxing has exercised its right to appoint the
      other two directors;





•
            The joint venture has a term of
      15 years commencing in December of
  2006;





•
            The Nevada Subsidiary has the
      right and option to contribute an additional $500,000.00 (USD) to the
      equity capital of Zhaoyuan Co. as the mining activities progress, in which
      case the Nevada Subsidiary’s equity interest in Zhaoyuan Co. would
      increase to 70% and Dongxing’s equity interest would decrease to
      30%;





•
            If the Nevada Subsidiary has
      invested a total of $1,000,000 in Zhaoyuan Co.and either Dongxing or the
      Nevada Subsidiary invest any additional capital in Zhaoyuan, the
      investment would be in the form of non-interest bearing contributed
      capital which the investing party would have the right to recover from
      Zhaoyuan Co.’s tax free profit before any sharing of profit would be
      allocated to the Nevada Subsidiary or
  Dongxing;





•
            The arrangement defines an area
      of mutual interest including all potential mineral properties in Zhaoyuan
      City in the Shandong Province other than the three properties contributed
      to Zhaoyuan Co. by Dongxing and a specific property therein on which an
      independent third party presently holds an Exploration License;
      and





•
            The Nevada Subsidiary has the
      final control over the selection of personnel and operations, provided
      that Dongxing has a preferential right to provide exploration services to
      Zhaoyuan Co. to the extent it can do so at comparable market
      rates.




Following
its formation as the joint venture company in December of 2006, Zhaoyuan Co.
initiated a program for the renovation, exploration and development of the
Dongxing mine. The previous operations on this property involved mining
production down to the 150 meter level. Our completed renovation program
included:





•
            General clean-up of the property,
      de-watering the mine and installation of underground electric and air
      systems;





•
            Renovation and upgrading of the
      concentration mill located on the
  property;





28




Table of
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•
            Expansion of mine cross drifts at
      the 150 meter level; and





•
            Completion of safety upgrades to
      the property followed by the acquisition of safety approvals from local
      authorities.




Zhaoyuan
Co. then conducted an exploration program which included a 1,896.3 meter drill
program initiated on May 5, 2007. The program consisted of four holes that
were to test the downward potential of gold bearing vein systems observed and
previously mined from 0 to 150 meters depth. The target depth of this
investigation was between 250m and 500m.




The
drilling was completed on July 1, 2007. A thorough cleanup was done, post
drilling, to minimize the environmental footprint. The drill core was logged and
some sections were split and analyzed by a local state run laboratory. Anomalous
gold, between 0.1 and 0.4 g/t was encountered in several sericitic alteration
zones. These results were significantly lower than expected and it was concluded
to reevaluate our strategy regarding this property.




Of
the $500,000 invested by the Company, approximately $461,000 was expended in the
renovation of the property and exploration program.




Zhaoyuan
Co. is presently exploring the possibility of acquiring additional mineral
prospective properties in the area and plans to do additional geological
modeling work on the present property. However, unless these efforts are
successful, the Company does not plan to invest any material amount of
additional funds in this venture, as it will not consider the present property
to have material prospects.




The
concentration mill located on the present property has a capacity of 60 tons a
day. It consists of a jaw crusher, conveyor systems, a ball mill and a flotation
cell system. The mill reduces a gold and silver concentrate. Any concentrate
produced would be sent to the refinery located in the area. This refinery
presently custom-processes such concentrates and retains the silver recovered
from the concentrate as payment for the refining fee. We have renovated the mill
facilities and achieved successful concentrate results in test mill runs.
However, unless Zhaoyuan Co. can acquire and develop a property with sufficient
ore reserves, the mill will have no material value.




Tianjin Empire
Venture




On
November 21, 2006, the Nevada Subsidiary entered into a Joint Venture
Contract with the Tianjin Institute of Geology, and Mineral Resources, a Chinese
legal entity (“Institute”) for the formation and operation of a mining joint
venture in the form of a Chinese limited liability company to be named Empire
(Tianjin) Resources Co., Ltd. (“Tianjin Empire”). Tianjin Empire is to be formed
to conduct mineral exploration, development, and, if warranted, mining
operations in the Inner Mongolia Autonomous Region of Tianjin Province in the
People’s Republic of China (“Cooperation Area”). As set out below, the Institute
has not yet transferred to Tianjin Empire the mineral properties the Institute
is to contribute to the capital of Tianjin Empire. Until mineral properties with
a valuation satisfactory to us are contributed to Tianjin Empire by the
Institute, the properties proposed for transfer are not considered to be
material properties by us. The material terms of this contract and the related
material events to the date of this Amendment No. 2 to the Registration
Statement are:





29




Table of
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•
            The execution of the contract on
      November 21, 2006 followed by the application for the required
      business license for Tianjin Empire for its formation and operation which
      license was granted in April of
2007;





•
            The Institute is to contribute
      capital to Tianjin Empire in the amount of Renminbi (the main currency
      used in China) totaling approximately $300,000.00. It is intended that the
      Institute’s capital contribution will be made in the form of the transfer
      to Tianjin Empire of mineral resources exploration licenses on properties
      located in the Cooperation Area. Any properties transferred will be valued
      for purposes of the Institute’s capital contribution by mutual agreement
      of the Institute and the Nevada Subsidiary. The Institute is obligated to
      transfer the properties for its capital contribution to Tianjin Empire.
      The Institute has not presented its valuation on the prospective
      properties for contribution purposes. The Institute has not timely
      presented the mineral properties and their valuations for transfer to
      Tianjin Empire under the terms of the agreement for this venture. We have
      agreed with the Institute to extend the deadline for the completion of the
      property transfers by the Institute for its capital contribution and for
      the payment by the Nevada Subsidiary of the $500,000.00 balance to
      February 28, 2008.





•
            The Institute will contribute to
      Tianjin Empire the mineral information and data held by Licenses on
      properties located in the Cooperation Area along with the mineral data had
      by it on that region;





•
            The Nevada Subsidiary shall
      contribute a total of $1,000,000.00 (USD) to Tianjin Empire as
      follows: (i) $200,000.00 paid on July 5, 2007; (ii) $300,000 paid on
      September 5, 2007; and (iii) $500,000.00 to be paid on or before
      February 28, 2008;





•
            The Nevada Subsidiary shall own
      70% of Tianjin Empire and the Institute shall own 30%; subject to
      adjustment so that the respective ownership interests will be equal to the
      respective capital contributions of the
  parties;





•
            Any additional increase in the
      capital of Tianjin Empire shall be under terms decided by its Board of
      Directors subject to a first right of refusal by the party agreeing to
      contribute to a proposed capital increase contribution share not made by
      the non-contributing party and ownership interests of the parties shall be
      adjusted to reflect the actual ratio of capital contributions of the
      parties;





•
            The Institute shall have a
      preferential right to provide exploration services to Tianjin Empire at a
      fair market price;





30




Table of
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•
            The Nevada Subsidiary and the
      Institute shall each have a pre-emptive right of first refusal to purchase
      all or any part of the other’s interest in Tianjin Empire except for
      transfer of an interest to an affiliate of the
      transferor;





•
            Tianjin Empire shall have a five
      member Board of Directors with the Nevada Subsidiary having the right to
      appoint three members, including the Chairman, and the Institute having
      the right to appoint two members, including the Vice-Chairman, and these
      appointments have been made;





•
            Certain activities of Tianjin
      Empire’s Board of Directors require unanimous assent of the directors,
      including: (i) amendment to its Articles of Association;
      (ii) increase or reduction of its registered capital; (iii) its
      dissolution; (iv) mortgage or pledge of its assets; or (iv) merger,
      division or change of form of organization of Tianjin
      Empire;





•
            Subject to approval of the Board
      of Directors, the Nevada Subsidiary shall nominate Tianjin Empire’s
      General Manager and Chief Financial Officer and the Institute shall
      nominate its Deputy General Manager, which nominations have been
      completed;





•
            The contract sets out provisions
      and guidelines for the operations of Tianjin Empire;
      and





•
            The duration of Tianjin Empire
      shall be for a term of 30 years from the granting of its original
      business licenses.




The
Institute (through an affiliate) received its business license on four mineral
prospects on April 13 2007. However, the Institute has not completed all
the valuations of the properties for purposes of transferring the properties to
Tianjin Empire to make its capital contribution. The Institute and the Nevada
Subsidiary have agreed to extend the deadline for the property transfers at a
valuation mutually agreed upon by the parties to complete the Institute’s
capital contribution to February 28, 2008. If the Institute’s capital
contribution is not timely made, it is the intention of the Company to terminate
its participation in the Tianjin Empire venture.




Although
Tianjin Empire has preliminary plans to develop an exploration program for the
properties covered by the business license issued to the Institute, until the
properties are transferred to Tianjin Empire, the Company does not consider the
properties to be material.




On
March 27, 2006, the Nevada Subsidiary entered into an agreement with
Universal Gold Corp., a New York corporation (“Universal”). Universal is
controlled by Walter Reissman, its Chief Executive Officer, and there were no
preexisting affiliations between him or Universal, with the Company or the
Nevada Subsidiary. Universal is engaged in the business of providing
facilitating services and information to persons and entities desiring to
acquire, explore, develop and operate mineral properties in China.





31




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The
agreement with Universal was related to the Tianjin joint venture in that
Universal introduced to the Institute and provided information on mineral
properties and prospects in the area of interest. Under this agreement, the
Nevada Subsidiary purchased from Universal certain business relationships, due
diligence, know-how and research and development in process, and all related
relevant and technical information whether tangible or intangible, including
without limitation any data, designs, calculations, computer source codes (human
readable format), specifications, test and installation, instructions, service
and maintenance notes, technical, operating and service and maintenance manuals,
user documentation, training materials, and other data, information, know-how
and all goodwill associated therewith, in each case which are in the possession
of, owned by, developed and/or licensed to Universal which relate to, and are
necessary or desirable to enhance, develop, manufacture, assemble, service,
maintain, install, operate, use or test and/or explore, mine and/or produce
precious metals/minerals, not limited to gold, in China. The Nevada Subsidiary
paid Universal $350,000.00 under the agreement. The total payment under the
agreement of $350,000 was expensed when paid during the year ended
December 31, 2006 as research and development expenses and no value was
placed on the purchased assets.




Chinese
Regulations




Under
the amended “Mineral Resources Law of the PRC”, which became effective as of
January 1, 1997, all mineral resources of the PRC are owned by the State.
The Ministry of Land and Resources (“MLR”) is responsible for the supervision
and administration of the mining and exploration of mineral resources
nationwide. The geology and mineral resources departments of the Chinese
Government in the respective provinces, autonomous regions and municipalities
are responsible for the supervision and administration of the exploration,
development and mining of mineral resources within their own jurisdictions. The
companies engaged in the mining or exploration of mineral resources must obtain
mining and exploration licenses, as the case may be, which are transferable for
consideration only in certain circumstances as provided under PRC laws, subject
to approval by relevant administrative authorities.




According
to the relevant PRC laws, before the exploration and mining activities relating
to mineral resources can commence, the project company must first obtain the
exploration license and the mining license, which generally entitles the project
company to the exploration and mining rights attached to the relevant mining
project. Furthermore, if the mining activities involve gold resources, the Gold
Operating Permit must also be obtained.




Holders
of exploration licenses and holders of mining licenses are subject to
exploration right usage fees and mining right usage fees, respectively. In
accordance with the “Administrative Measures on Registration of Mineral
Resources Exploitation”, mining right usage fees are payable on an annual basis.
The rate of mining right usage fee is RMB1,000 per sq.km. of mining area p.a. On
the other hand, in accordance with the “Administrative Measures on Registration
of Tenement of Mineral Resources Exploration and Survey”, exploration right
usage fees are calculated according to the size of the exploration area and are
payable on an annual basis. The rate of exploration right usage fees for the
first year to the third year of exploration is RMB100 per sq.km. of exploration
area p.a. From the fourth year of exploration onwards, the rate increases by
RMB100 per sq.km of exploration area p.a. However, the annual maximum rate may
not exceed RMB500 per sq.km. of exploration area. In addition, according to the
amended “Administration Regulation for Collection of Mineral Resource
Compensation Fee”), which became effective as of July 3, 1997, holders of
mining licenses are subject to mineral resource compensation fees, which
accounts for a certain percentage of the sales revenue of such holders. The
mineral resource compensation fee is paid on a half-yearly basis.





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An
exploration license must be obtained before carrying out exploration activities.
In accordance with the “Administrative Measures on Registration of Tenement of
Mineral Resources Exploration and Survey”, the applicant must submit the
following documents to the MLR or its local branch for the exploration license:
(i) an application form for registration and a drawing or map indicating
the scope of the blocks for which the applicant is applying; (ii) a copy of
the certificate validating the qualification of the exploration unit;
(iii) an exploration working plan and an exploration contract or documents
evidencing that the exploration unit and project are entrusted by the State;
(iv) an implementation proposal for the exploration, and its appendixes
thereto; (v) documents of proof showing the source of the funds for the
exploration project; and (vi) materials otherwise required by the relevant
authority.




After all
related documents required by the authority have been provided and submitted,
the competent authority shall make a decision within 40 days and notify the
applicant of the result. If the application is approved, the applicant must pay
the exploration right usage fee before obtaining the exploration license, which
is calculated according to the size of the exploration area. The fee is payable
on an annual basis.




The
maximum valid period of the initial term of the exploration license is three
years. An application must be submitted to the original competent registration
authority for renewal of such exploration license at least 30 days prior to
the expiration date stipulated thereon. Each renewal of valid term cannot exceed
two years. If the holder of an exploration license fails to renew the same, such
license is automatically annulled upon expiration.




During
the term of an exploration license, the holder of such exploration license has
the privileged priority to obtain mining rights to the mineral resources in the
exploration area, provided that the holder of the exploration license meets the
qualifying conditions for mining rights owners. The holder of the exploration
license has the rights, among others, to: (i) explore without interference
within the area under license during the license term, (ii) construct
exploration facilities, and (iii) pass through other exploration areas and
adjacent ground to access the licensed area.





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The
holder of an exploration license is obliged to, among other things:
(i) begin exploration within the prescribed term, (ii) explore
according to a prescribed exploration work scheme, (iii) comply with
Chinese laws and regulations regarding labor safety, water and soil
conservation, land reclamation and environmental protection, (iv) make
detailed reports to local and other licensing authorities, (v) close and
occlude the wells arising from exploration work, (vi) take other measures
to protect against safety concerns after the exploration work is completed, and
(vii) complete minimum exploration expenditures as required by the
Administrative Measures on Registration of Tenement of Mineral Resources
Exploration and Survey.




In
accordance with the “Administrative Measures on Registration of Mineral
Resources Exploitation”, to apply for the mining license, the applicant must
submit the following documents to the MLR or its local branch: (i) an
application form for registration and a drawing or map indicating the scope of
the mining area; (ii) certificate validating the qualification of the
applicant; (iii) a plan for development and utilization of the mineral
resources; (iv) approval documents for establishment of the mining company;
(v) an environment influence evaluation report for the exploitation of the
mineral resources; and (vi) materials otherwise required by the relevant
authority.




After
all related documents required by the authority have been provided and
submitted, the competent authority shall make a decision within 40 days and
notify the applicant of the result. If the application is approved, the
applicant must pay the mining right usage fee before obtaining the mining
license, which is calculated according to the size of the mining area and must
be paid on an annual basis.




The
maximum valid period of the initial term of the mining license is determined
according to the construction scale of the mine. For a large size mine, the term
may be as long as 30 years, for a middle size mine, 20 years, and for
a small size mine, 10 years. An application may be submitted to the
original competent registration authority for renewal of such license at least
30 days prior to its expiration date. If the holder of a mining license
fails to renew the same, such license is automatically annulled upon
expiration.




The
holder of a mining license has the rights, among others, to: (i) conduct
mining activities during the term and within the mining area prescribed by the
mining license, (ii) sell mineral products (except for mineral products that the
State Council has identified for unified purchase by designated units),
(iii) construct production and living facilities within the mine area, and
(iv) use the land necessary for production and construction, in accordance
with applicable laws.




The
holder of a mining license is required to, among other things: (i) conduct
mine construction or mining activities within a defined time period,
(ii) conduct efficient production, rational mining and comprehensive use of
the mineral resources, (iii) pay resources tax and mineral resources
compensation (royalties) pursuant to applicable laws, (iv) comply with
State laws and regulations regarding labor safety, water and soil conservation,
land reclamation and environmental protection, (v) be subject to the
supervision and management by the departments in charge of geology and mineral
resources, and (vi) complete and present mineral reserves forms and mineral
resource development and use statistics reports, in accordance with applicable
law.





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The
holder of an exploration or mining license may transfer its exploration or
mining license to others, subject to the approval of MLR.




An
exploration license may only be transferred if the transferor has: (i) held
the exploration license for two years as of the issue date, or discovered
minerals in the exploration area, which are able to be explored or mined
further, (ii) held a valid and subsisting exploration license,
(iii) completed the stipulated minimum exploration expenditures,
(iv) paid the user fees and the price for exploration rights pursuant to
the relevant regulations, and (v) obtained the necessary approval from the
authorized department in charge of the minerals.




A
mining license may only be transferred if the transferor needs to change the
ownership of such mining rights because it is: (i) engaging in a merger or
split, (ii) entering into equity or cooperative joint ventures with others,
(iii) selling its company’s assets, or (iv) engaging in a similar
transaction that will result in an alteration of the property ownership of the
company.




Additionally,
when state-owned assets or state funds are involved in a transfer of exploration
licenses and mining licenses, the related state-owned assets rules and
regulations apply and a proper evaluation report must be completed and filed
with the MLR.




Following
documents must be submitted to MLR or its local branch to transfer an
exploration or mining license: (i) a transfer application form;
(ii) transfer agreement signed between the transferor and transferee;
(iii) qualification certificates of the transferee; (iv) certificates
proving that the transferor has meet the relevant requirements for transferring
exploration license or mining license; (v) report regarding the exploration
or mining status of the mineral resources; and (vi) materials otherwise
required by the relevant authority. Additionally, when state-owned company
transfers its mining license, approval document regarding the mining license
transfer issued by its governing authorities should also be
submitted.




Speculation
in exploration and mining rights is prohibited. The penalties for speculation
are that the rights of the speculator may be revoked, illegal income from
speculation confiscated and a fine levied.




According
to the “Provisions on the Administration of Gold Operating Permit”, the
applicant for mining of gold minerals must submit the following documents to the
National Development Reform Commission (“NDRC”): (i) an application form
for exploitation of gold minerals; (ii) a formal map indicating the scope
of the mining area; (iii) file records or the approval documents regarding
the ore reserves report; (iv) an environment influence evaluation report
approved by competent environment protection authorities; (v) the contract
and the articles of association of the company and the approval for
establishment of the company, if the applicant is a company limited by shares;
and (vi) the awards rendered by relevant authorities in respect of any
boundary dispute concerning the mining area.





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The
valid period for a Gold Operating Permit varies from five years to
15 years, depending upon the production size of the mine. An application
must be submitted to the NDRC for renewal of the Gold Operating Permit at least
30 days prior to the expiration date stipulated thereon.




The
holder of a Gold Operating Permit is entitled to exploit gold mineral resources
in the areas specified in the Gold Operating Permit, subject to obtaining a
corresponding mining license




Our
Chinese operations are subject to the laws governing foreign investments in
China, laws governing exploration and mining activities and laws on
environmental issues, including the following:





•
            Foreign Investment in
      China:





(a)
            Catalogue of Industries for
      Guiding Foreign Investments;





(b)
            Company
    Law;





(c)
            Regulation on Company
      Registration and Administration;
and





(d)
            Laws of the Fhinese — Foreign
      Equity Joint Venture and its Implementation
      Regulations.





•
            Exploration/mining
      activities:





(a)
            Mineral Resource
      Law;





(b)
            Procedures for Administration of
      Registration of Mining of the Mineral
  Resources;





(c)
            Procedures for Administration of
      Registration of Exploring Area of the Mineral
      Resources;





(d)
            Administration Rules on the
      Transfer of Exploration Rights and Mining
  Rights;





(e)
            Safety Production
      Law;





(f)
            Regulation of Safety Production
      License; and





(g)
            Implementation Rules for the
      Safety Production License of Non-coal Mines
    Enterprise.





•
            Environmental
      Issues:





(a)
            Environmental Protection
      Law;





(b)
            Law of the Prevention and Control
      of Environmental Pollution by Solid
  Waste;





(c)
            Law of the Prevention and Control
      of Water Pollution;





(d)
            Law of Appraising of the
      Environmental Impacts;





(e)
            Administration Regulation for
      Environmental Protection of Construction
  Projects;




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Table
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(f)
            Administrative Provisions for
      Environmental Protection of Construction Projects;
    and





(g)
            Administrative Provisions on the
      Completion-Based Check and Acceptance of Construction
      Projects.




Panamian
Venture




On
March 6, 2007, the Company entered into an Exploration Development
Agreement with Bellhaven Copper & Gold, Inc., a corporation organized in
British Columbia, Canada (“Bellhaven”) and Bellhaven’s wholly owned Nevada
Subsidiary, Cuprum Resources Corp., a corporation organized in the Republic of
Panama (“Cuprum”). Cuprum is the holder of a Mineral Concession from the
Republic of Panama on a copper prospect located in the Guariviara area of
Panama. This agreement grants the Company an option to acquire up to 75% of the
authorized and outstanding stock of Cuprum.




The
material terms of this agreement and the material events related to it as of the
date of this Registration Statement are:





•
            The
      Company is granted the option to acquire up to 75% of Cuprum outstanding
      stock;





•
            To acquire 65% of Cuprum’s stock
      the Company must: (i) pay to Cuprum or Bellhaven $2,000,000.00;
      (ii) issue to Bellhaven shares of the Company common stock as valued
      under an escrow agreement with a total value of $4,000,000.00; and (iii)
      expend $15,000.000.00 in exploration and development work on the copper
      prospect underlying Cuprum’s prospect underlying Cuprum’s Mineral
      Concession;





•
            The first $500,000.00 was paid on
      March 30, 2007. The 4,000,000 shares of the Company’s common stock
      were deposited into escrow on May 14, 2007. The remaining
      $1,500,000.00 is payable by the Company in three $500,000.00 annual
      installments due on March 6, 2008, 2009 and
    2010;





•
            The escrow agreement under which
      the 4,000,000 shares of the Company’s common stock issued to Bellhaven and
      deposited provides: (i) for the immediate release and delivery to
      Bellhaven of one-third of the shares (1,333,334); (ii) the release
      and delivery to Bellhaven of an additional one-third of the shares on each
      of March 6, 2008 and 2009; (iii) the adjustment of total shares
      to be issued to Bellhaven by valuing the shares at the price received by
      the Company for the first $1,000,000 raised by the sale of the Company’s
      common stock or securities convertible into the common stock sold to
      non-affiliates of the Company after March 6, 2007, so that, if that
      price is less than $1.00 the shares to Bellhaven would be increased and if
      more than $1.00 the total shares to Bellhaven would be decreased; and
      (iv) the Company has agreed to file a Registration Statement under
      the U.S. Securities Act of 1933 for the shares of its common stock
      released to Bellhaven by November 3, 2007 or to include these shares
      on a “piggy-back” in any Registration Statement filed prior thereto by the
      Company During the period from June 25 through July 2, 2007, the
      Company raised $1,100,000.00 through the sale of notes convertible into
      shares of its common stock at $1.00 per share, thereby setting the number
      of shares to be issued to Bellhaven at the total of the 4,000,000 shares
      already issued and deposited in
escrow;




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Table
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•
            The expenditure by the Company of
      the $15,000,000.00 for exploration and development work shall be made: (i)
      $2,000,000.00 by March 5, 2008; of which $1,044,189 has been expended
      by September 17, 2007; (ii) a total of $9,000,000.00 by
      March 5, 2009; and (iii) a total of $15,000,000.00 by
      March 5, 2010. The Company may, at its discretion, pay any of the
      required amounts directly to Cuprum, in lieu of funding exploration or
      development work;





•
            If the Company pays less than all
      of the $17,000,000 cash payments and funding due under the agreement but
      at least 50% of it, the Company will earn an interest in the Cuprum shares
      which will be proportionately reduced from the 65%
      total;





•
            If the Company has earned the
      full 65% of the Cuprum shares by paying or expending the total
      $17,000,000.00, it shall have the option to earn an additional 10% of the
      outstanding stock of Cuprum by completing a Bankable Feasibility Study for
      the subject property. If this study is not completed, the Company by
      March 5, 2010, the Company will have to expend an additional
      $1,000,000.00 for exploration and development work for each successive six
      month period to keep the agreement in force to enable it to earn the
      additional 10% interest in
Cuprum;





•
            When the Company has made all of
      the required payments the operations of Cuprum will continue under the
      terms of an operating agreement of the three
    parties;





•
            If the Company introduces a third
      party mining company, acceptable to Bellhaven and Cuprum, which agrees to
      complete the Company’s payment and expenditure obligations under the
      agreement including the one to complete Bankable Feasibility Study, the
      Company will earn its full 75% interest in Cuprum, Bellhaven’s interest
      will reduce to 25% and the interests of the Company, Bellhaven in Cuprum
      will then be proportionately reduced by the amount of the interest
      acquired by the third party;





•
            If the price of copper on the
      London Metals Exchange falls below $1.25 for 20 consecutive trading days,
      all activities and funding under the agreement shall be suspended for up
      to one year or until that price rises above $1.25 for 90 days,
      whichever occurs first;




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Table
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•
            Cuprum is the designated operator
      to manage and supervise the exploration and development work under budgets
      and exploration plans jointly agreed upon prior to any implementation of
      work on the property and Empire shall have sole final approval of all
      exploration budgets and spending. Empire shall, at its sole discretion,
      have the right to terminate Cuprum as operator at any time with or without
      cause after it has acquired a 50% equity position in the property. Empire
      shall give Cuprum 30 days notice of its intent to terminate Cuprum as
      operator; and





•
            The interest of all parties to
      the agreement are subject to a right of refusal by the other parties to
      any sale or disposal of an interest in the
    agreement.




The
Cerro Chorcha concession consists of 24,241.91 hectares (ha) in five
rectangular blocks and is located in Chiriqui and Bocas Del Toro Provinces of
Panama straddling the continental divide about 290 km west of Panama City as
shown in the following map.







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Table
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The
closest city to Cerro Chorcha is David, Panama’s third largest city, which is
about 40 km to the southwest of the concession site. Travel from Panama City to
David requires approximately six hours by car along a paved two-lane highway.
There are a number of daily commercial flights between these two
cities.




To
both the north and south of the concession site there are a number of small
towns and villages all connected by a system of roads and trails. A north-south
paved mad passes within the northwest portion of the Cerro Chorcha concession,
however this highway occurs on the opposite side of the Continental divide to
the main camp which is accessible only by helicopter or on foot.




Currently
helicopter flights to the main Cerro Chorcha camp and work area arc out of
Rambala a small town 31 kilometers north of the camp. There is a dirt road from
Rambala to the village of Soloy. A foot trail leads from Soloy to the Cerro
Chorcha camp. This route requires one day and a half to traverse by auto and
foot.




Elevations
on the property range from about 600 m to 2213 m at the top of Cerro Chorcha and
slopes are steep. The higher elevations near the Continental Divide are often
cloud covered generated by warm, moist Caribbean air that is lifted daily to
cooler heights by air currents. Due to the weather effects, access to the
concession site by helicopter is best achieved in the early morning and in the
late afternoon.




The
mountain terrain is covered in high altitude rain forest with annual rainfall
reported to be up to about six meters. Temperatures in this locality average 20°
C to 25° C but during some months temperatures can dip down to 5°C at night.
Work on the concession site can be undertaken at any time of the
year.




The
main Chorcha exploration camp consists of four large all-weather buildings
powered by a diesel generator. Within the region, personnel, supplies, fuel,
water and sufficient space for a mining operation are readily
available.




The
Cerro Chorcha Mineral Exploration Concession (Contract # 006,2005) at Cerro
Chorcha was granted to Cuprum on April 4, 2006. This exploration concession
is currently valid and in force.




The
area falls under the local jurisdictions of the District of San Lorenzo in
Chiriqui Province and the District of Chirqui Grande in the Province of Betas
Del Toro.




Mineral
title to Cerro Chorcha was previously held under Exploration Concession 93-71
(Geo-Minas, S.A.). These concessions expired in 1999 and were officially
cancelled by publication in the Official Gazette (No. 25,029) on
April 15, 2004. An application for a new concession (CRC-EXPL 2004-05) was
accepted on May 17, 2004 in the name of Cuprum.


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Table
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Table
1 lists the coordinates of the corner points of the individual five
blocks.




Block
                                      Longitude
                                      
                                      Latitude
                                      
                                      
                                      Area
      (hectares)1
                                      82°
                                      40"
                                      8°
                                      08.61"
                                      
                                      
                                      10,302.9282°
                                      47"
                                      8°
                                      08.61"82°
                                      47"
                                      8°
                                      54.2"82°
                                      40"
                                      8°
                                      54.2"2
                                      82°
                                      47"
                                      8°
                                      03.5"
                                      
                                      
                                      2,250.9582°
                                      03.4"
                                      8°
                                      03.5"82°
                                      03A"
                                      8°
                                      37"82°
                                      47"
                                      8°
                                      37"3
                                      82°
                                      03.4"
                                      8°
                                      03.5"
                                      
                                      
                                      4,705.8782°
                                      21.4"
                                      8°
                                      03.5"82°
                                      21.4"
                                      8°
                                      54.2"82°
                                      03.4"
                                      8°
                                      54.2"4
                                      82°
                                      47"
                                      8°
                                      54.2"
                                      
                                      
                                      4,480.7782°
                                      21.4"
                                      8°
                                      54.2"82°
                                      21.4"
                                      8°
                                      27.7"82°
                                      47"
                                      8°
                                      27.7"5
                                      82°
                                      47”
                                      8°
                                      37”
                                      
                                      
                                      2,501.4082°
                                      0.34”
                                      8°
                                      37”82°
                                      0.34”
                                      8°
                                      54.2”82°
                                      47”
                                      8°
                                      54.2”




The
owners of the former concession lodged legal complaints objecting to the
cancellation of their concession and the re-application by Cuprum. All legal
complaints opposing the cancellation of the concession have been rejected by the
Supreme Court of Panama The new metallic mineral concession at Cerro Chorcha was
granted to Cuprum and published in the Official Gazette (No. 25,517) on
April 4, 2006. A metallic mineral exploration concession is valid for four
years, with extensions available for another four There are various reporting
requirements and a tax on the exploration concessions which begins at US$0.50
per ha the first year and increases to US$1.50 per ha in year five.




The
owner of the exploration mineral concession has an exclusive right to the
application of an exploitation concession. The terms under which major projects
proceed are negotiated with the government.




A
portion of the Chorcha concession occurs on an autonomous aboriginal land
reserve (Comarca) of the Ngobe-Bugle (see figure 2). There are no permanent
habitations in the area of concession.




Cuprum
signed an exclusive mineral exploration agreement (the “Agreement”) with the
Comarca on July 28, 2004. The Agreement grants Cuprum the exclusive rights
to explore for minerals and to negotiate a new agreement with the Comarca for
the “next phase of activity” upon completion of the exploration phase. The
Agreement is valid until the expiration of the Exploration Concession and
strictly follows the Panama Mining Code whereby
an exploitation concession is granted once the presence of commercial ore is
demonstrated.


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Table
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The
Agreement (resolution #1 Feb 12, 2006) was signed by the President of the
Regional Congress of the NoKribo Region (Mr. Enrique Pineda), the Chief of
the NoKribo Region (Mr. Johnny Bonilla), and the president of the Local Congress
of the Kanicintti District of the NoKribo Region (Mr. Julian Palacio) and,
for Cuprum, the General Manager and Secretary of the Board of Directors
(Mr. Alfredo Burgos).




Among
the issues covered by the Agreement are: work progress, budgets and reporting;
employment and training; land rentals and leasing; development programs;
environment, education and culture; force majeure; settlement of conflicts;
notification, continuity and applicable laws.




A
joint committee was created by Cuprum and the peoples of the Comarca. Monthly
meetings of the committee are held to review development and to ensure continued
mutual support. All work planned by the Company and Cuprum to date been formally
reviewed by and the approved by the operating committee.




The
north western portion of the Concession is in the watershed of the Fortuna
Hydroelectric Project. Significant development in the hydra-electric reserve
area would require approval from Fortuna S.A. (a corporation composed equally of
Americas Generation Corp. and the State of Panama) which purchased the publicly
owned Institute deRecursos Hidro-electricos y Electrificacion (IE) in
1998.




The
mineralized area, as presently known, is far outside of reserve, in fact it is
on the other side of the Continental Divide from the Fortuna Project and
therefore does not affect the catchment area.




Exploration
work can be performed within the boundaries of the hyrdo-electric reserve, as
long as we present the plan and procedures that adhere to the respective
regulations they will not affect the watershed.




A
portion of the Palo Seco Reserve Forestal (Forestry Reserve) enters the
concession from the north and extends to within about one kilometer north of the
main mineralized zone, although legal survey of this has not yet been
done




ANAM
(Autoridad Nacional del Ambiente), Panama’s environmental agency, is responsible
for the administration of the forest reserve.




The
Palo Seco Reserve, Forestal is divided into various sub-zones, each of which has
a different level of protection. The current management plan does not
specifically address mineral exploration and development, however the portion of
the Palo Seco Forest Reserve nearest the Chorcha Project is assigned to a highly
protected status with entry permitted only for scientific research. In the past
exploration has been permitted within the limits of forest reserves, however
damages must be mitigated.




Prior
exploration work on Cerro Chorcha has not resulted in anything that could be
considered to be an environmental liability.




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Table
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Most
of Panama consists of island arc assemblages of Cretaceous to Recent age which
have resulted from the subduction of the Cocos tectonic plate underneath the
Caribbean plate.




In
western Panama, where Cerro Chorcha is located, Miocene andesitic to basaltic
flows and volcaniclastic rocks of the Caflazas Group have been intruded by
Pliocene to Miocene granodiorite and monzonitic rocks of the
Tabasara.




The
Porphyry copper deposits in Panama are associated with calc-alkaline intrusives.
Panama hosts two ‘world class’ mineralized systems at Cerro Colorado and at
Petal:pine., each containing in excess of one billion tonnes of mineralized
rock.




At
Cerro Chorcha the main area of interest occurs within a composite intrusion,
consisting of diorite, quartz diorite, and lesser amounts of monzodiorite. Small
bodies and dykes of quartz feldspar porphyry and mafic dykes cut the various
intrusive phases and are considered to he post-mineral.




The
Cerro Chorcha project contains porphyry copper mineralization with related gold
and some reported molybdenum. Oxide and hypogene copper zones are
present.




Distal
propylitic (chlorite, epidote, and actinolite) alteration surrounds proximal
phyllic (sericitie and silicic) zones. Much of the chalcopyrite and bornite
mineralization occurs in a quartz-magnetite stockwork and vein facies within the
intrusive.




There
is a strong structural component to the more or less east-west trending
mineralized body which is cut by conjugate NE-SW and NW-SE trending
faults.




By
analogy with the Cerro Colorado porphyry copper deposit only 35 km to the ESE it
is thought that the porphyry copper mineralization at Cerro Chorcha is between
three and five million years old.




There
are scattered mineralized showings over the entire 242 square kilometer Cerro
Chorcha concession.




Porphyry
copper (Cu) mineralization with associated gold, silver and molybdenum occur at
the main Cerro Chorcha zone (the Guariviara Zone) over an area measuring 1.1
kilometers by 500meters.




Much
of the mineralization is structurally controlled and is related to
quartz-magnetite sulphide veining and stockwork zones within the intrusive
rocks. Laterally outward from the quartz-magnetite zones, sericite-altered
intrusive rock contain fracture/veinlet controlled sulphides. The alteration
outward from the phyllic, sericitic and siliceous material is predominantly
propylitic.




Minerals
encountered in the hypogene zone consist of magnetite, chalcopyrite, pyrite,
bornite
and minor sphalerite and molybdenite. Only minor supergene mineralization has
been observed.


43




Table
of Contents


Exploration
by previous operators has included regional stream sediment geochemistry,
prospecting, trenching, soil and rock chip sampling, aerial and ground
geophysics, and the drilling of 35 drill holes aggregating 7036 in.




ASARCO
Exploration Company of Canada Ltd. discovered the Gu.viviara Zone during a
regional stream sediment program initiated in 1969. In 1976, exploration efforts
included sampling, mapping and trenching resulted in defining porphyry copper
mineralization grading greater than 0.2% Cu over an area of 600 meters by 300
meters,




ASARCO
mobilized a drill onto the property. Negotiations with the Government to improve
the terms of the concession agreement failed and the company abandoned the
project without drilling. A total of over 400 samples were taken and assayed
during the ASARCO tenure.




In
the period 1990 to 1992 Consultores Geologicos S.A. obtained a concession and
confirmed the importance of the zone discovered by ASARCO.




In
1993 the original concession was grouped together in a land package measuring
24,350 ha in an agreement between Consultores Geologicos and GeoRecursos
International SA. and the concession was transferred to Geo-Minas,
S.A.




During
1993 a north-south grid was cut with 200m line spacing. A total of sixty-seven
soil, 30 rock and 64 chip samples were taken as part of a regional prospecting
program.




In
the period 1994 and 1995 GeoRecursos International S.A. and Arlo Resources
(Arlo) expanded the grid, performed geochemical, geological, and magnetic
surveys and regional prospecting work.




GeoRecursos
and Arlo completed 27 helicopter-supported diamond drill holes on the Guariviara
Zone for a total of 5,765metres.




During
1997 and 1998 Cyprus Minera de Panama (Cyprus) obtained an option on the
property. Cyprus expanded the grids, refined the geology of the deposit, mapped
and sampled outlying zones, conducted airborne radiometric and magnetic surveys
and drilled nine diamond drill holes for a total of 1271 meters. Cyprus left
Panama and the concession remained dormant, finally being officially cancelled
April 15, 2004.




Following
approval of the new Chorcha mineral concession Cuprum and Belhaven undertook the
construction of the Chorcha exploration camp and conducted a short program of
geologic mapping and one-meter channel samples were collected from several zones
of structurally-controlled quartz-magnetite stockwork that appears to host the
high-grade copper-gold-silver mineralization. Reported grades within the
stockwork zone, returned a total of 61 meters at an average grade of 1.89% Cu,
1.44 g/t Au, and 23.28 g/t Ag.


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Table
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Based
upon exploration work on the Cerro Chorcha, Bellhaven and Cuprum have procured a
technical report on the property which was prepared in compliance with the
National Instrument (NI) 43-101, “Standards of Disclosure For Mineral
Projects” adopted by Canadian securities regulatory authorities. However, a
company reporting under the U.S. Securities Exchange Act of 1934 may not report
resources designated under NI 43-101 based upon a pre-feasibility study. In
addition, to designate reserves under the Industry Guide 7 of the U.S.
Securities and Exchange Commission a final or bankable feasibility study is
required. Accordingly, while Bellhaven, Cuprum and the Company have used the NI
43-101 report in their evaluation of the property, they are not claiming or
asserting any reserves for the Cerro Chorcha and it must be considered as an
exploration property without any known resources. The proposed program for the
Cerro Chorcha is exploratory in nature.




Unless
changes are required, the three phase program of geologic investigation will be
conducted with Cuprum serving as the operator. Apart from direct geologic work,
each phase of the program includes the funding of some social program with the
local indigenous groups.




Phase
One will include surface prospecting, surface geologic mapping, trenching and
sampling as well as an 11-hole, 3,600 meter diamond drill program. The phase one
program commenced in March 2007 and has a mutually approved annual budget
of 2.1 million dollars.




A
contract with Cabo Drilling Corp. (Cabo), of Vancouver, B.C. Canada was signed
to perform the drill program on March 14, 2007. In preparation for the
drill program, the Company and Cuprum built drill pads and fuel storage
facilities. The 3,600 meter drill program was commenced in June 2007. As of
November 10, 2007, ten drill holes and 3,441 meters have been drilled with
encouraging results.




The first
drill hole, CH-07-01, was drilled to test a structurally-controlled
quartz-magnetite-sulphide stockwork zone that hosts higher grade
copper-gold-silver mineralization than what is observed within the larger
mineralized Chorcha porphyry system.




The main
zone of mineralization in Hole CH-07-01 begins at the surface, and is the
thickest and the highest grade thus far encountered within the Cerro Chorcha
porphyry copper deposit.




Highlights
from Hole CH-07-01 include:




From/To
                        
                        Length
                        
                        Copper
                        
                        
                        Gold
                        
                        
                        Silver0
      to 239.4 m
                        
                        239.4
      meters
                        
                        
                        1.20
                        %
                        
                        
                        0.23
      g/t
                        
                        
                        
                        6.1
      g/tincluding
      0 to 114m
                        
                        114
      meters
                        
                        
                        2.01
                        %
                        
                        
                        0.43
      g/t
                        
                        
                        
                        11.3
      g/tincluding
      52 to 90 m
                        
                        38
      meters
                        
                        
                        2.88
                        %
                        
                        
                        0.73
      g/t
                        
                        
                        
                        14.3
      g/t




45


Table
of Contents


From/To
                                
                                Length
                                
                                Copper
                                
                                
                                Gold
                                
                                
                                Silverincluding
      detailed analyses52
      to 54 m
                                
                                2
      meters
                                
                                
                                3.43
                                %
                                
                                
                                1.29
      g/t
                                
                                
                                
                                23.3
      g/t54
      to 56 m
                                
                                2
      meters
                                
                                
                                2.77
                                %
                                
                                
                                0.82
      g/t
                                
                                
                                
                                12.1
      g/t56
      to 58 m
                                
                                2
      meters
                                
                                
                                2.70
                                %
                                
                                
                                0.50
      g/t
                                
                                
                                
                                8.6
      g/t58
      to 59.6 m
                                
                                1.6
      meters
                                
                                
                                2.83
                                %
                                
                                
                                0.49
      g/t
                                
                                
                                
                                7.6
      g/t59.6
      to 62 m
                                
                                2.4
      meters
                                
                                
                                0.61
                                %
                                
                                
                                0.11
      g/t
                                
                                
                                
                                3.7
      g/t62
      to 64 m
                                
                                2
      meters
                                
                                
                                0.74
                                %
                                
                                
                                0.09
      g/t
                                
                                
                                
                                2.4
      g/t64
      to 65.05 m
                                
                                1.05
      meters
                                
                                
                                1.13
                                %
                                
                                
                                0.14
      g/t
                                
                                
                                
                                5.5
      g/t65.05
      to 66 m
                                
                                0.95
      meters
                                
                                
                                3.67
                                %
                                
                                
                                0.93
      g/t
                                
                                
                                
                                15.2
      g/t66
      to 68 m
                                
                                2
      meters
                                
                                
                                2.02
                                %
                                
                                
                                0.84
      g/t
                                
                                
                                
                                9.2
      g/t68
      to 70 m
                                
                                2
      meters
                                
                                
                                4.26
                                %
                                
                                
                                2.22
      g/t
                                
                                
                                
                                28.1
      g/t70
      to 71.23 m
                                
                                1.23
      meters
                                
                                
                                1.42
                                %
                                
                                
                                0.44
      g/t
                                
                                
                                
                                6.1
      g/t71.23
      to 72.75 m
                                
                                1.52
      meters
                                
                                
                                3.88
                                %
                                
                                
                                1.19
      g/t
                                
                                
                                
                                22.5
      g/t72.75
      to 74 m
                                
                                1.25
      meters
                                
                                
                                3.59
                                %
                                
                                
                                0.92
      g/t
                                
                                
                                
                                14.3
      g/t74
      to 76 m
                                
                                2
      meters
                                
                                
                                3.32
                                %
                                
                                
                                0.62
      g/t
                                
                                
                                
                                22.6
      g/t76
      to 78 m
                                
                                2
      meters
                                
                                
                                3.31
                                %
                                
                                
                                1.57
      g/t
                                
                                
                                
                                14.7
      g/t78
      to 80 m
                                
                                2
      meters
                                
                                
                                2.51
                                %
                                
                                
                                0.57
      g/t
                                
                                
                                
                                9.7
      g/t80
      to 82 m
                                
                                2
      meters
                                
                                
                                3.28
                                %
                                
                                
                                0.54
      g/t
                                
                                
                                
                                14.9
      g/t82
      to 84 m
                                
                                2
      meters
                                
                                
                                4.11
                                %
                                
                                
                                0.70
      g/t
                                
                                
                                
                                20.7
      g/t84
      to 86 m
                                
                                2
      meters
                                
                                
                                3.34
                                %
                                
                                
                                0.35
      g/t
                                
                                
                                
                                11.2
      g/t86
      to 88 m
                                
                                2
      meters
                                
                                
                                3.43
                                %
                                
                                
                                0.50
      g/t
                                
                                
                                
                                17.4
      g/t88
      to 90 m
                                
                                2
      meters
                                
                                
                                4.11
                                %
                                
                                
                                0.40
      g/t
                                
                                
                                
                                26.8
      g/t




Gold
values are by fire assay prep and ICP-MS finish, and copper and silver values by
multi-acid digestion and ICP-MS analysis. Analyses were performed by ACME Labs
in Vancouver.




Hole
CH-07-01 is located about 50 meters east of a 1995 Arlo diamond drill hole,
G95-10. Hole G95-10 (north azimuth, -60 inclined) cored 309.1 meters (1014.1
feet) of 0.78 % copper and 0.07 g/t gold.




Hole
CH-07-01 is a northwest directed -60 degree angle hole that has encountered
extensive quartz-magnetite-sulphide stockwork veins and breccias that host the
high grade copper-gold-silver mineralization. The entire drill hole (0 to 239.4
meters) (785.43 feet) averages 1.2 % copper, 0.23 grams per tonne of gold and
6.1 grams per tonne of silver. The hole indicates a vector toward greater
thickness and grade at depth.




The zone
of higher grade copper-gold-silver mineralization in Hole CH-07-01 is associated
with stockwork veins, breccias and disseminations hosted in a quartz diorite to
quartz monzodiorite porphyry of probable late Tertiary age within the Cerro
Chorcha porphyry intrusive complex. The quartz-magnetite-sulphide stockwork
zones appear to be a late, structurally-controlled mineralizing event within the
porphyry center. Strong silicification and sericite-chlorite-magnetite
alteration are closely associated with quartz-magnetite-sulphide stockwork
veining and silica-flooded breccia zones with copper sulphide (chalcopyrite and
bornite) mineralization. Minor supergene mineralization (covellite, chalcocite,
and native copper) occurs within several meters of the surface and along fault
zones at depth. The copper and gold mineralization is hosted in both the oxide
and sulfide portions of the stockwork, and is open to the northeast, southeast,
southwest, and at depth.


46


Table
of Contents


The true
thickness of the mineralized stockwork zone remains unknown as it is in a
porphyry/stockwork environment.




Hole
CH-07-02 was drilled to test a structurally-controlled quartz-magnetite-sulphide
stockwork zone that hosts higher grade copper-gold-silver mineralization than
what is observed within the larger mineralized Chorcha porphyry
system.




Highlights
from Hole CH-07-02 include:




From/To
                                        
                                        Length
                                        
                                        
                                        Copper
                                        
                                        
                                        Gold
                                        
                                        
                                        Silver5.1
      to 246 m
                                        
                                        
                                        240.9
      m
                                        
                                        
                                        
                                        0.81
                                        %
                                        
                                        
                                        0.08
      g/t
                                        
                                        
                                        
                                        2.9
      g/t16.7
      to 807 ft
                                        
                                        
                                        790.4
      ftincluding5.1
      to 130 m
                                        
                                        
                                        124.9
      m
                                        
                                        
                                        
                                        1.32
                                        %
                                        
                                        
                                        0.15
      g/t
                                        
                                        
                                        
                                        4.8
      g/t16.7
      to 426.5 ft
                                        
                                        
                                        409.8
      ft




Gold
values are by fire assay prep and ICP-MS finish, and copper and silver values by
multi-acid digestion and ICP-MS analysis. Analyses were performed by ACME Labs
in Vancouver.




Hole
CH-07-02 is a southeast directed -60 degree angle hole drilled from the same
site as Hole CH-07-01 (northwest directed, -60 degree angle hole). Hole CH-07-02
has encountered an extensive quartz-magnetite-sulphide stockwork of veins and
breccias that host the higher grade copper-gold-silver mineralization. This
stockwork zone is similar to the style of mineralization in Hole CH-07-01, but
differs in vein density, alteration intensity and the ratio of chalcopyrite to
bornite. The apparent thickness of the stockwork zone in Hole CH-07-02 is about
65 meters. The stockwork zone in Hole CH-07-01 has an apparent thickness of 57
meters. The true thicknesses of the mineralized stockwork zones remain unknown
as they are in a porphyry/stockwork environment.




The zone
of higher grade copper-gold-silver mineralization in Hole CH-07-02 is associated
with stockwork veins, breccias and disseminations hosted in a quartz diorite to
quartz monzodiorite porphyry within the Cerro Chorcha porphyry intrusive
complex. The quartz-magnetite-sulphide stockwork zones appear to be a late,
structurally-controlled mineralizing event within the porphyry center. Strong
silicification and sericite-chlorite-magnetite alteration are closely associated
with quartz-magnetite-sulphide stockwork veining with copper sulphide
(chalcopyrite and bornite) mineralization. Supergene mineralization (chalcocite
and native copper) occurs within several meters of the surface and along fault
zones at depth.


Hole
CH-07-03 was drilled to test the continuation of structurally-controlled
quartz-magnetite-sulphide stockwork zones that have been observed on-surface and
in the two previous drill holes. The stockwork zones typically host higher grade
copper-gold-silver mineralization than what is observed within the much larger
mineralized Chorcha porphyry
system. To date eight drill holes have been
completed.


47




Table
of Contents


Highlights
from Hole CH-07-03 include:




From/To
                                              
                                              Length
                                              
                                              
                                              Copper
                                              
                                              Gold
                                              
                                              Silver4
      to 319.9 m
                                              
                                              
                                              313.9
                                              m
                                              
                                              
                                              0.46
                                              %
                                              pending
                                              
                                              
                                              1.1
      g/t13
      to 1047 ft
                                              
                                              1030
                                              ftincluding
                                                122
      to 154 m
                                              
                                              
                                              32
                                              m
                                              
                                              
                                              0.82
                                              %
                                              pending
                                              
                                              
                                              2.2
      g/t400
      to 505 ft
                                              
                                              105
                                              ft224
      to 242 m
                                              
                                              
                                              18
                                              m
                                              
                                              
                                              1.04
                                              %
                                              pending
                                              
                                              
                                              2.1
      g/t735
      to 794 ft
                                              
                                              59
                                              ft286
      to 319.9 m
                                              
                                              
                                              33.9
                                              m
                                              
                                              
                                              0.62
                                              %
                                              pending
                                              
                                              
                                              1.3
      g/t938
      to 1047 ft
                                              
                                              109
                                              ft




Copper
and silver values are by multi-acid digestion and ICP-MS analysis. Gold values
by fire assay prep and ICP-MS finish are pending final laboratory results.
Analyses were performed by ACME Labs in Vancouver.




Hole
CH-07-03 is a southeast directed -60 degree angle hole drilled from a site
approximately 130 meters northeast of Holes CH-07-01 and CH-07-02. Hole CH-07-03
has encountered three (3) zones of quartz-magnetite-sulphide stockwork
veins and breccias that host the higher grade copper-gold-silver mineralization.
These stockwork zones are similar to the style of mineralization in Holes
CH-07-01 and CH-07-02, but differ in vein density and alteration intensity. The
combined total thickness and grade of the three (3) stockwork zones in Hole
CH-07-03 is 74 meters of 0.84 % copper. The true thicknesses of the mineralized
stockwork zones remain unknown as they are in a porphyry/stockwork
environment.




The
copper mineralization at Chorcha is commonly found directly at surface. The bulk
of the mineralization in Hole CH-07-03 was associated with the phyllic altered
quartz diorite to quartz monzodiorite porphyry that is widespread within the
Cerro Chorcha porphyry complex. From previous drill efforts it is known that the
mineralization may continues to a depth of over 500 meters. It is interesting to
note that the final 33.9 meters of Hole CH-07-03 averaged slightly higher grade
(0.62% Copper).




Results
for Holes CH-07-04, CH-07-05, CH-07-06, CH-07-07, CH-07-08, CH-07-09 and
CH-07-10 are pending. Currently, holes CH-07-04 through CH-07-09 are at
analytical laboratories pending completion of assay results. In an effort to
expedite the turnaround time for drill core assay results, management has
retained, in addition to Acme labs of Canada, the services of an additional ISO
certified laboratory (SGS Labs) in Peru.




The
on-going phase one drill program will serve to test the mineralization at Cerro
Chorcha which has a known surface expression of over 1 kilometer in length and
over 600meters in width.


48


Table
of Contents


Phase
Two will include the creation of access road into the Chorcha main zone This
phase will include a 15,000 meter drill program of systematic drilling utilizing
several diamond drill rigs.




Phase
Three will concentrate on the completion of a bankable feasibility study by
conducting the appropriate meters of drilling necessary to complete this
task.




Throughout
the exploration all samples will be prepared and analyzed by an independent 1S0
certified laboratory.




Cuprum
and Empire’s exploration work on the Cerro Chorcha project is supervised by
Michael D. Druecker, Ph.D., P.Geo a Qualified Person as defined in NI 43-101.
Mr. Druecker has verified that trench and drill results have been
accurately summarized from the official assay certificates provided to the
Company.




Cuprum
and Empire’s drilling sampling procedures follow the Exploration Best Practices
Guidelines outlined by the Mining Standards Task Force and adopted by the
Toronoto Stock Exchange. Samples have been analyzed by ICP (inductively coupled
plasma/mass spectrometry), and gold analysis has been by fire assay with
gravimetric finish on a 30gram split.




Quality
control measures, including check duplicates and sample standard-assaying are
being implemented. A chain of custody review has been completed to ensure the
integrity of all sample data. Samples were assayed by Acme Analytical
Laboratories, independent of Cuprum and Empire.




On
March 1, 2007, the Company entered into an agreement with Silver Global,
SA, a Panamanian corporation (“Silver”). Silver is controlled by
Mr. Abraham Crocamo, its President. There was no previous affiliation
between Mr. Crocamo and the Company or the Nevada Subsidiary. This
agreement provides that Silver will perform consulting services for the Company
related to the identification, location, definition of mineral business
opportunities in Panama and introductions to persons or entities holding
potential acquisition properties involving Panama Mineral Concessions and
related services. Under this agreement:





•
            The Company paid Silver a
      consultancy fee for $75,000.00 for services through February 29,
      2008;





•
            The Company may extend the
      agreement for a one-year term for each year after February 29, 2008
      by paying a consultancy fee of $150,000.00 per
  year;





•
            In addition to the cash
      consultancy fees the Company will pay Silver a non-cash transaction fee
      for any transaction the Company makes involving acquisition of an interest
      in a Panamanian Mineral Concession, directly or indirectly in any form,
      with a party introduced to the Company by Silver. Each transaction will be
      as agreed between then and in the form of a percentage interest in the
      Mineral Concession interest acquired by the Company and/or stock of the
      Company; and




49




Table
of Contents


•
            For the transaction fee for the
      Company, Bellhaven and Cuprum transaction the Company has paid Silver
      1,000,000 shares of the Company’s common stock (issued as “restricted
      securities”) and if the Company completes its acquisition of the 65%
      interest in Cuprum, it will transfer to Silver 7.5% of Cuprum’s
      outstanding stock. If the Company earns the additional 10% interest in
      Cuprum by obtaining the Bankable Feasibility Study, the Company will
      transfer to Silver 5% of Cuprum’s outstanding stock. If the Company
      completes more than 50% of the full payment due to Bellhaven and Cuprum
      but not all and thus earns a reduced interest in Cuprum, the balance of
      the transaction fee to Silver will be proportionally
      reduced.




Panamanian
Regulations




The
operations being conducted on the Cerro Chorcha project by Cuprum are subject to
the supervisory and administrative laws of Panama which govern mining
activities. In addition, these activities are governed by the terms and
conditions of the exclusive mineral exploration agreement between Cuprum and the
Regional Congress of the NoKaibo Region, the Chief of the NoKaibo Region and the
Local Congress of the Kanicintti District of the NoKaibo Region as set out
above. The major Panamanian statutes applicable to these operations are the
“Code of Mineral Resources,” the “General Corporation Law” and the “General
Environmental Law.”




Plan of
Operation




During
the 12 month period commencing September 1, 2007, the Company will
concentrate its efforts on the Panamanian copper prospect and the two Chinese
mineral ventures, and in obtaining additional capital necessary to finance its
operations. It will also continue to evaluate additional mineral
acquisitions.




The
Zhaoyuan Co. will explore the acquisition of other mineral prospects in the
general area of its present property and continue to geologically evaluate its
present property to determine if any further exploration on it is warranted. If
the efforts are unsuccessful, the Company intends to terminate the venture. If
Zhaoyuan acquires another prospect or evidence of other promising mineral
targets on the present property, the Company will evaluate whether or not to
provide additional $500,000 for any future exploration program.




50


Table
of Contents


If
the Institute presents an evaluation satisfactory to the Nevada Subsidiary of
the properties under its business licenses and transfers the properties and
licenses to Tianjin Empire, it will initiate an exploration program for these
properties. If the properties are not so transferred to Tianjin Empire, the
Company presently intends to terminate this venture and not invest any
additional funds in it. We have developed a prepared exploration for Tianjin
Empire which includes (i) a review and evaluation of geophysical, geochemical
and geologic surveys conducted by the Institute on the areas in which the
proposed properties are located during the winter of 2007 and 2008 and the
Spring of 2008; (ii) exploration work including geological mapping,
sampling, trenching and ground geophysical surveys; (iii) drilling to test
high chargeability anomalies where warranted by other exploration results; and
(iv) evaluation of exploration results to determine feasibility of
additional exploration and/or development work. This exploration program would
be conducted over the summer of 2008 and has a tentative budget of
$1,000,000.00. Based on the information available from the surveys conducted by
the Institute on the areas in which the proposed properties are located, the
properties are considered copper prospects.




The
Company will concentrate its efforts on the completion of the phase one
exploration work on the Panamanian Cerro Chorcha property. The programs,
initiated in June of 2007, call for: (i) the drilling of approximately
3,600 meters which has been completed; (ii) further ground exploration work and
topographic survey; (iii) airborne geophysical surveys (magnetic and
electromagnetic); (iv) environmental assessments of and work on access
trails to and on the property; and (v) create a three-dimensional model of
the property based on old and new drilling results. It is estimated the phase
one exploration program will be completed by or during the first quarter of
2008. The program is estimated to cost $2,100,000.00 through March of 2008, of
which approximately $1,400,000.00 had been expended through October of
2007.




Upon
completion of the phase one program, if the exploration results are
satisfactory, a phase two drilling program calling for approximately 15,000
meters of drilling will be initiated at an estimated cost of
$6,900,000.




The
Company will have to raise additional capital of approximately $9,000,000.00 to
finance all of its operations through 2008. There are presently no firm
arrangements under which any capital can be obtained.




Personnel




The
Company presently employs 2 full time employees, Pinchas Althaus, the Chief
Executive Officer, and Diego Roca, the Chief Financial Officer. The Company’s
Vice President of Exploration, Craig Alford, is compensated as an independent
contractor due to his out of the country residency status. Bruce W. Minsky, the
Company’s Senior Vice President, General Counsel, Secretary and a director,
performs legal services for the Company as an independent contractor for those
services on an hourly fee basis the same as his other clients. The Company
anticipates hiring additional personnel for administrative and financial
functions during the year ended 2007.




51


Table
of Contents


ITEM
3A(T). CONTROLS AND PROCEDURES




(a) Evaluation
of disclosure controls and procedures.




Pinchas
Althaus, who serves as the Company’s chief executive officer, and Diego Roca,
who serves as the Company’s chief financial officer, after evaluating the
effectiveness of the Company’s disclosure controls and procedures as of the end
of the period covered by this quarterly report (the “Evaluation Date”) concluded
that as of the Evaluation Date, the Company’s disclosure controls and procedures
were effective to ensure that information required to be disclosed by the
Company in reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported as specified in the SEC’s rules and forms and
to ensure that information required to be disclosed by the Company in reports
that it files or submits under the Exchange Act is accumulated and communicated
to our management to allow timely decisions regarding required
disclosure.




(b) Changes
in internal control over financial reporting.




There
were no changes in the Company’s internal control over financial reporting
during the three and nine months ended September 30, 2007, that have
materially affected, or are reasonably likely to materially affect, internal
control over financial reporting.




We
will be subject to reporting obligations under the U.S. securities laws. The
Securities and Exchange Commission (“SEC”), as required by Section 404 of
the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”), adopted rules requiring
every public company to include a management report on such company’s internal
controls over financial reporting in its annual report, which contains
management’s assessment of the effectiveness of the company’s internal controls
over financial reporting. In addition, an independent registered public
accounting firm must attest to and report on management’s assessment of the
effectiveness of the company’s internal controls over financial reporting. These
requirements will first apply to our annual report on Form 10-K for the fiscal
year ending December 31, 2007. Our management may conclude that our
internal controls over our financial reporting are not effective. Moreover, even
if our management concludes that our internal controls over financial reporting
are effective, our independent registered public accounting firm may still
decline to attest to our management’s assessment or may issue a report that is
qualified if it is not satisfied with our controls or the level at which our
controls are documented, designed, operated, or reviewed, or if it interprets
the relevant requirements differently from us. Our reporting obligations as a
public company will place a significant strain on our management, operational,
and financial resources and systems for the foreseeable future. Effective
internal controls, particularly those related to revenue recognition, are
necessary for us to produce reliable financial reports and are important to help
prevent fraud. As a result, our failure to achieve and maintain effective
internal controls over financial reporting could result in the loss of investor
confidence in the reliability of our financial statements, which in turn could
harm our business and negatively impact the trading price of our stock.
Furthermore, we anticipate that we will incur considerable costs and use
significant management time and other resources in an effort to comply with
Section 404 and other requirements of the Sarbanes-Oxley Act.




52


Table
of Contents


PART
II. OTHER INFORMATION




Item 1.
Legal Proceedings.




None




Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds –




1. (a) On
July 2, 2007, the Company issued its Convertible Promissory Note for
$500,000.00 in principal amount, with interest thereon of $25,000.00 and with
principal and interest due September 29, 2007. The Company also issued to the
note holder 100,000 shares of its common stock. The Company repaid this note on
September 19, 2007.




(b) No
person acted as a principal underwriter for the sale of these securities. The
Company’s common stock was offered directly by the Company through its officers
and directors. The common stock was sold to CYB Trust of Gibraltar, an
accredited investor.




(c) These
securities were sold for $500,000.00 in cash. The Company paid at the closing
total acquisition fees and costs of $25,000.00 and the 100,000 shares of common
stock to the note holder.




(d) In
the issuance of these shares of its common stock, the Company relied upon the
exemption from the registration requirements of Section 5 of the Securities
Act provided in Section 4(2) of the Securities Act and by Regulation D
adopted under the Securities Act. These shares were issued as restricted
securities and a legend denoting the restrictions on their transferability under
the Securities Act was placed upon the certificates or documents representing
the securities.




2. (a) On
July 31, 2007, the Company sold 1,000,000 shares of its common stock and a
warrant to purchase 1,000,000 shares of its common stock exercisable at $1.00
per share during the term ending July 31, 2009.




(b) No
person acted as a principal underwriter for the sale of these securities. The
Company’s common stock was offered directly by the Company through its officers
and directors. The common stock was issued to Mr. Mayer Goldberger of
Brooklyn, New York, an accredited investor.




(c) The
1,000,000 shares of common stock and the warrant to purchase 1,000,000 shares
were sold for cash at $0.50 for each share of common stock purchased for a total
of $500,000.00. No underwriting, sales or other commissions or discounts were
paid or involved in the sale.




(d) In
the issuance of these shares of its common stock and the warrant, the Company
relied upon the exemption from the registration requirements of Section 5
of the Securities Act provided in Section 4(2) of the Securities Act and by
Regulation D adopted under the Securities Act. These securities were issued
as restricted securities and a legend denoting the restrictions
on their transferability under the Securities Act was placed upon the
certificates or other documents issued to represent the
securities.




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(e) The
warrant is exercisable at any time, in whole and in part, for cash at $1.00 per
share. Any shares purchased upon exercise of the warrant are subject to the
right of the holder to have them included in the Registration Statement covering
the sale of the 1,000,000 shares of common stock described in 13(d) immediately
above. The 1,000,000 shares of common stock purchased and any shares purchased
by the warrant holder upon exercise of the warrant are to be included in a
Registration Statement to be filed by the Company under the Securities Act. The
Company is obligated to file the Registration Statement by December 28,
2007 and achieve its effectiveness by February 26, 2008.




3. (a) During
the period from July 31, 2007 through September 30, 2007, the Company
sold 270,000 shares of its common stock.




(b) No
person acted as a principal underwriter for the sale of these securities. The
Company’s common stock was offered directly by the Company through its officers
and directors. The common stock was sold to three “accredited
investors”




(c) The
270,000 shares were sold for cash at $0.50 per share for a total of $135,000.00.
No underwriting discounts, commissions or acquisition costs were paid on the
sale.




(d) In
the issuance of these shares of its common stock, the Company relied upon the
exemption from the registration requirements of Section 5 of the Securities
Act provided in Section 4(2) of the Securities Act and by Regulation D
adopted under the Securities Act. These shares were issued as restricted
securities and a legend denoting the restrictions on their transferability under
the Securities Act was placed upon the certificates issued to represent the
shares.




4. (a) During
the period from August 15, 2007 to October 28, 2007, the Company sold
5,260,000 Special Warrants to acquires shares of its common stock, with each
Special Warrant being converted upon satisfaction of specified conditions into
one share of its common stock and one-half of a stock purchase warrant to
purchase a share of the common stock. If the specified conditions are met, the
Company will issue to the purchasers of the Special Warrants 5,260,000 shares of
common stock and “Stock Purchase Warrants” to purchase 2,630,000 shares of
common stock.




(b) No
person acted as a principal underwriter for the sale of these securities. The
Company’s common stock was offered directly by the Company through its officers
and directors. The common stock was sold to nine “accredited
investors.”




(c) The
5,260,000 Special Warrants were sold for cash at $0.50 each for a total of
$2,630,000. No underwriting discounts or commissions were paid on the
sale.


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(d) In
the issuance of these Special Warrants, the Company relied upon the exemption
from the registration requirements of Section 5 of the Securities Act
provided in Section 4(2) of the Securities Act and by Regulation D
adopted under the Securities Act. These securities were issued as restricted
securities and a legend denoting the restrictions on their transferability under
the Securities Act was placed upon the documents issued to represent the
securities.




(e) The
Special Warrants will be automatically exercised (“Automatic Exercise”) upon the
third business day following the date when all of the following conditions are
met: (i) a final prospectus has been filed qualifying the distribution of
the common stock underlying the Special Warrants and those underlying the Stock
Purchase Warrants for distribution in Canada; (ii) notice has been received
of approval of the foregoing common stock for sale on the Toronto Stock
Exchange; (iii) effectiveness of a Registration Statement under the
Securities Act for the distribution of the foregoing common stock in the United
States; and (iv) notice from the Company that these conditions have been
met and any other necessary regulatory approvals for the sale of the foregoing
common stock have been obtained. Each Special Warrant is convertible into one
share of common stock and a Stock Purchase Warrant to purchase one-half of a
share of common stock.




Each
Stock Purchase Warrant is exercisable, at any time during the term ending
August 31, 2009, for cash at $0.65 per share.




Item 3.
Defaults upon Senior Securities




None




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




None




Item 5.
Other Information




None




Item 6.
Exhibits





31.1
                
                Certification
      pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of
      Principal Executive Officer31.2
                
                Certification
      pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of
      Principal Financial Officer32.1
                
                Certification
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of
      Principal Executive Officer32.2
                
                Certification
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of
      Principal Financial
Officer




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SIGNATURES




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







EMPIRE
      MINERALS CORP.
                  (Registrant)November
      20, 2007
                By:
                /s/
      Pinchas AlthausPINCHAS
      ALTHAUSChief
      Executive Officer and PresidentNovember
      20, 2007
                By:
                /s/
      Diego RocaDIEGO
      ROCAExecutive
      Vice President, Chief
                  Financial
      Officer and Treasurer




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